Speaker 1: I'm Caroline High and every World tad quarters in New York,
Speaker 1: and I'm mad Ludlow in San Francisco. This is Bloomberg
Speaker 1: Technology coming up in the next hour. Sam mag mun
Speaker 1: Free says he's willing to testify before the U S.
Speaker 1: House Financial Services Committee about the collapse of his crypto empire.
Speaker 1: Will tell you what to expect from next week's hearing. Plus,
Speaker 1: Huawei strikes a deal to license tech to a handset rival,
Speaker 1: a bitter pill to swallow for the Chinese tech giant
Speaker 1: that's blocked from selling its tech in the US. We
Speaker 1: speak to two of their key executives, and we continue
Speaker 1: our coverage of China's risk to dropping its COVID zero stance,
Speaker 1: plus changes to Tessa Shanghai factory amid slowing consumer demand.
Speaker 1: We have you covered first, though foremost it is the
Speaker 1: markets day for us. Of course, we are once again
Speaker 1: seeing the wind taken out of the sales of equities.
Speaker 1: We're seeing down three quarters of a percent, so exhausting
Speaker 1: that this camera is getting all over excited by what's
Speaker 1: happening in these markets. Come closer, no back off. We're
Speaker 1: having a look at the nastack off by seven tenths percent.
Speaker 1: Look these basically, these benchmarks are off by at least
Speaker 1: three and a half four percent on the week overall ed,
Speaker 1: and this in large part is because we're worrying about
Speaker 1: where the Federal Reserve is going and concerned, for example,
Speaker 1: about how far they have to hike, when we're seeing
Speaker 1: a PPIP producer price index that shows that prices are
Speaker 1: just showing such resilience, inflation showing such resilience in the
Speaker 1: face of what have been rapid rate hikes by the Fed.
Speaker 1: Ten year yields have been climbing almost ten basis points.
Speaker 1: Let's have a look at what's happening overall in terms
Speaker 1: of our recession risks. As we are anticipating the warrior
Speaker 1: about a recession, we are seeing the entire market just
Speaker 1: getting nervous. If we can flip up the board, we
Speaker 1: really got this chart that has evidence of where we've
Speaker 1: been going in terms of the pickup now sixty chance. Basically,
Speaker 1: the market sees there will be in a recept so
Speaker 1: a contraction in this economy in the US come next year.
Speaker 1: And we've just got to keep talking about this contagion effect,
Speaker 1: keep talking about what happens next week, what clarity. We
Speaker 1: get it for any because we know that the former
Speaker 1: ft X CEO ed Sam bankmin Freed, says he is
Speaker 1: actually willing to testify. How did he tell us? Of course,
Speaker 1: he told us through Twitter. He announced it in a
Speaker 1: series of tweets, in fact, saying he will answer questions
Speaker 1: about the fall of his crypto empire from the U S.
Speaker 1: House Financial Service eximmity. Let's bring in Alison Verstraw from Washington,
Speaker 1: who has been all across this story, and of course
Speaker 1: so too has our own Shinali Bassett, who of course
Speaker 1: we'll be heading out to Washington and to that hearing
Speaker 1: next week. And Alison, just what did you make of
Speaker 1: the transparency we're getting them through the former Twitter. How
Speaker 1: are we seeing the actual senators trying to speak to
Speaker 1: Sam bankma Freed himself. You know, we're seeing everyone is
Speaker 1: using Twitter. We see Maxine Waters from the House Financial
Speaker 1: Services Committee is increasingly used that to put pressure on
Speaker 1: Sam to testify. We've also seen Senator to Me came
Speaker 1: out with his own tweet today that said, Sam, if
Speaker 1: you do show up at the House Committee is hearing,
Speaker 1: you better show up? But are hearing the next day?
Speaker 1: Uh so, you know everyone's using social media. It's kind
Speaker 1: of painful. I mean, I think was it Czi put
Speaker 1: invest himself is like because like, no, I can't watch movies.
Speaker 1: They're not exciting enough. I'm just addicted to crypto Twitter.
Speaker 1: And aren't we all in? Sali Bassaka is Mickey among them?
Speaker 1: Just talk to us about not only what you're going
Speaker 1: to be following through Twitter, but or you're gonna be
Speaker 1: following Shali on the ground because you're going to be there,
Speaker 1: you're going to be expecting testimony from who and all
Speaker 1: think the right kind of people to be giving testimony. Uh,
Speaker 1: that's an interesting question because there are a lot of
Speaker 1: academics that are being called upon the House and the
Speaker 1: Senate hearings. Remember there's only one set of small witnesses
Speaker 1: posted on the Senate Commody side. We don't have everything
Speaker 1: from the House itself at all yet. And remember Sam
Speaker 1: Freed said he's willing to testify. Will he show up
Speaker 1: and testify? There was no subpoena up to all this
Speaker 1: point as well, so a lot of questions about whether
Speaker 1: he will be there in person. Remember he does say
Speaker 1: that what he is trying to do is address not
Speaker 1: only f t X and the pathway to which term
Speaker 1: value to shareholders, but also it led to the crash.
Speaker 1: Will be looking at what he says versus what he
Speaker 1: has said before, as well as he says his own failings.
Speaker 1: He also said he doesn't have access to much of
Speaker 1: his own data, personal or professional, so you have to
Speaker 1: wonder why he doesn't have that access and what kind
Speaker 1: of data he will not be able to allegedly provide
Speaker 1: to the lawmakers as they question him if he makes
Speaker 1: it there to the Hill next week, so again the
Speaker 1: House on Tuesday, the Senate on Wednesday, and remember the
Speaker 1: Senators have also been seeking to try to get them
Speaker 1: there as well, but they did not reply to them
Speaker 1: in time for the testimony so far. So logistically, let's
Speaker 1: see if he makes it to both. Team Shannali has
Speaker 1: just gone to the exact point I want to bring up.
Speaker 1: In fact, super Producers, let's bring his tweet back up
Speaker 1: again and look at what he said, because what I'm
Speaker 1: not understanding, Allison, is what would we learn from SPF
Speaker 1: on Capitol Hill that we haven't already learned in the many, many, many,
Speaker 1: many many appearances and communications that he's made the last
Speaker 1: seven to ten days. That's a great question, and I honestly,
Speaker 1: I feel like we're probably gonna hear a lot of
Speaker 1: the same things. You know. Uh, he'll say that he
Speaker 1: didn't intentionally need to commit any sort of fraud. He'll
Speaker 1: probably talk about the fact that maybe he made some
Speaker 1: managerial mistakes. UM So I'm sort of expecting it to
Speaker 1: be along the same Lise. I'm actually maybe more interested
Speaker 1: in hearing the testimony of John J. Ray, who is
Speaker 1: the furren CEO kind of helping with the restructuring of FTX.
Speaker 1: You know, he has access to all of this data.
Speaker 1: He's sifting through these records. Though he's told this up
Speaker 1: they're not very good. Um So, you know, I'm hoping
Speaker 1: that maybe we get some some extra details from what
Speaker 1: we've seen in the bank from seed filing so far. Actually, Shnali,
Speaker 1: new headlines actually continue to come through about this story.
Speaker 1: I saw a tweet or thread of tweets from the
Speaker 1: editor at large of the block. Could you tell us
Speaker 1: what the story is there? Please? Yeah, you are referring
Speaker 1: to the tweet thread by Frank Tapparo, otherwise known as
Speaker 1: syntech Frank, who four days ago released an almost two
Speaker 1: hour podcast speaking with f SVF about what had happened here.
Speaker 1: But really what had happened is he said he did
Speaker 1: not know, and many employees at the Block did not
Speaker 1: know and felt really UH put in a dark here
Speaker 1: because what happened was an executive, the CEO of the Block,
Speaker 1: which is supposed to be an independent news site related
Speaker 1: to crypto, that was bought out by management about a
Speaker 1: year or so ago. Yeah, absolutely, gotta look at that
Speaker 1: tweet right there. So what they are finding out now
Speaker 1: is that CEO had taken personal loans through UH, a
Speaker 1: entity here that did not disclose that SPF had given
Speaker 1: loans to the CEO that ended up being part of
Speaker 1: what helped that executive lead to the buyout. So listen,
Speaker 1: the CEO has stepped down. You are seeing the employees
Speaker 1: really from this, they are saying they did not know
Speaker 1: at all. This was really found out within the past
Speaker 1: couple of days, and as I was saying, just two
Speaker 1: days ago, they had interviewed SPF himself. And it can,
Speaker 1: I mean, it can seem like inside baseball when journalists
Speaker 1: are talking about other journalists. But your heart does have
Speaker 1: to go out to people who feel completely undone, not
Speaker 1: only by their sector collapsing the industry that they've grown
Speaker 1: to love collapsing, but then their own CEO seemingly catching
Speaker 1: them completely off guard and blindsiding them. I'm sure there's
Speaker 1: more to come from that, but overall, Allison, the transparency
Speaker 1: we're going to get from a regulatory perspective, from a
Speaker 1: lawmaker's perspective, and I asked it to Scenalia earlier. I
Speaker 1: asked it to you now, the people that they're going
Speaker 1: to have in front of them giving evidence. I've seen
Speaker 1: some talk on Twitter again that people who feel very
Speaker 1: legitimate in this space haven't been asked, and some people
Speaker 1: who have been asked to speak, perhaps on deemed so
Speaker 1: legitimate just talked us about who we expect to hear from.
Speaker 1: So on the health side of the only person that's
Speaker 1: actually listed as a witness so far is John J.
Speaker 1: Ray So, the current CEO of FTX. On the Senate side,
Speaker 1: we have a pretty smart list as well. One of
Speaker 1: them is a law professor who specializes in sort of
Speaker 1: financial regulation and in technologies. And then the other one
Speaker 1: is Ben mackenzie. So if you want the o C,
Speaker 1: then you would recognize that name. He was Ryan on
Speaker 1: the f C. He's more recently come out as a
Speaker 1: very anti crypto skeptic and sort of crypto commentator. But
Speaker 1: a lot of people were a little surprised to see
Speaker 1: that name on the list. T Mosey. I think we
Speaker 1: all better get some rest this weekend next week, said
Speaker 1: crypto nervous sleep. Thank goodness that I do sleep Friday
Speaker 1: night through Sunday night. All right, bloombergs Allison Verse Brow
Speaker 1: and Shnali Bassek, thank you both. Coming up, Huawei expands
Speaker 1: on the patent monetizing game. We'll discuss that and much
Speaker 1: more with top executives from the company. Next, this is Bloomberg.
Speaker 1: We wouldn't talk about. Another key story, particularly from a
Speaker 1: genio political perspective, Huawei Technologies has agreed to license some
Speaker 1: of its smartphone technologies well to an old rival called Opo.
Speaker 1: One of China's top smartphone brands now, Hwei is one
Speaker 1: of the biggest holders of five G patterns and many
Speaker 1: patterns in fact, and it's historically not been that aggressive
Speaker 1: in monetizing those patterns. But the telecom giant now seeing
Speaker 1: itself perhaps in a need to look in revenues and
Speaker 1: other areas after it's a lucrative handset business was hit
Speaker 1: pretty hard by US trade sanctions that cut it off
Speaker 1: in terms of access to advanced chips. I'm very pleased
Speaker 1: to welcome, therefore to the show Huawei chief security Officer
Speaker 1: Andy Purdy, alongside Huawei's Chief Intellectual Property counsel for the
Speaker 1: United States, Stephen Geisler. Thank you very much, indeed, gentlemen,
Speaker 1: for both being here. And let's start first and foremost
Speaker 1: where we're thinking about the new areas of revenue. And
Speaker 1: Steve and I address this question to you because how
Speaker 1: important now is the monetization of patterns. How are you
Speaker 1: seeing this driving in terms of percentage wise of revenue
Speaker 1: going forward? So are the revenue we will we will
Speaker 1: realize through patent licensing is not going to make up
Speaker 1: for or be in lieu of products sales UH in
Speaker 1: any given year. We're talking about numbers that are in
Speaker 1: the hundreds of millions versus products sales, products and services
Speaker 1: combined being in tens of billions of US dollars. So
Speaker 1: certainly one is not going to be a replacement for
Speaker 1: the other. We are simply trying to make sure that
Speaker 1: based upon the money we've spent through the years on
Speaker 1: R and D and then patenting that we're getting a
Speaker 1: fair return on our our patent expenditures for patenting our
Speaker 1: technologies and also using the patents to reach agreements with
Speaker 1: our competitors and peers to make sure that the innovation
Speaker 1: that goes into global standards such as four G and
Speaker 1: five G telephony, for WiFi, for the audio video codex
Speaker 1: that allow for streaming for for your viewers to watch
Speaker 1: even today's show, that that is recuperated by not only
Speaker 1: Huawei but other large members of the ICT industry for
Speaker 1: what we spend on R and D. I want to
Speaker 1: bring Andy Purdy, Huawei's chief security officer, into the conversation. Andy,
Speaker 1: how much for a bitter pill to swallow? Is this? Huawei?
Speaker 1: You know, you once had a significant handset business that
Speaker 1: was a driver of revenue growth but also just accounted
Speaker 1: for a big chunk of revenue. Now you are pivoting
Speaker 1: essentially again, is it a bitter pill to swallow? We
Speaker 1: deal with reality, and the reality is that we have
Speaker 1: certain challenges. Our survival is first and foremost. Our ability
Speaker 1: to work with partners and customers to innovate and bring
Speaker 1: five G enabled technologies to the world is what we're about.
Speaker 1: To help bring connectivity to the world. And so that's
Speaker 1: where we look at. We've got tremendous opportunities out there.
Speaker 1: The regiment, the international regime that was just talking about
Speaker 1: the idea that there are certain standards and certain companies
Speaker 1: may own patents relative that standards is the international system
Speaker 1: of making sure there's fairness that competitors can buy licenses
Speaker 1: from other competitors is a huge thing on the international stage.
Speaker 1: They help increase innovation and increase competition around the World's
Speaker 1: a it's a great tribute to hell well at Global
Speaker 1: system Works in the I P area. Andy though those words,
Speaker 1: it's about survival. Just how threatened has your business model
Speaker 1: become through US China attentions and how non ending do
Speaker 1: you think that this shutdown will be? This access to
Speaker 1: the United States, this ability to sell into it. Well,
Speaker 1: when you look at our revenues from our revenue is
Speaker 1: dropped about thirty billion dollars, mostly because of our inability
Speaker 1: to to buy ships for our five G phones. And
Speaker 1: so we are emphasizing tremendous investment of this past year
Speaker 1: in R and D or twenty billion dollars in R
Speaker 1: and D and thousands of partnerships to help RAN five
Speaker 1: digital transformation, the different industries such as smart mining and
Speaker 1: smart courts, and the ability to create safer environments and
Speaker 1: reduce sandergy consumption. And basically we are finding our way
Speaker 1: on the road. And we're even doing hardcore scientific research
Speaker 1: on things like wars law and Shannon's limits so that
Speaker 1: the scientific challenges of five G, five point five G
Speaker 1: and six G can be overcome for the benefit of
Speaker 1: the world. So we take the world as we see
Speaker 1: it and we're working hard and innovating. I think we
Speaker 1: had while we're really proud of how we're moving forward
Speaker 1: with partners around the world. Stephen, you're the US Chief
Speaker 1: Intellectual Property Council, although it is still a Chinese maker
Speaker 1: of handsets, cause you took us through how the deal
Speaker 1: came about and how difficult the deal was to get done.
Speaker 1: Certainly the deal was done through bilateral negotiations without the
Speaker 1: need for litigation. That's important because times these deals are
Speaker 1: are only brought about through litigation because we need the
Speaker 1: intervention of courts to help decide things such as what
Speaker 1: is the proper rate and what products are are should
Speaker 1: be subject to a license agreement? Here that was not necessary.
Speaker 1: We also view that this is a key step forward. Um,
Speaker 1: it's not our first Chinese cross license by any means
Speaker 1: or as it oppos but it is a major sign
Speaker 1: that the Chinese regime for patent protection it continues to mature.
Speaker 1: These are are two large competitors, UH bringing about a
Speaker 1: very important agreement between the two of us. Andy. I
Speaker 1: asked you earlier if having to license your tech rather
Speaker 1: than selling handsets is a bit of pill to swallow,
Speaker 1: and you said, it's the reality where we are. Now.
Speaker 1: What is the reality of Huawei being able to sell
Speaker 1: not just handsets in terms of smartphones, but are the
Speaker 1: hard into the United States directly? When how does that
Speaker 1: come about? Our emphasis for the foreseeable future is in
Speaker 1: those parts of the world, and there are many that
Speaker 1: are open to working with us, helping open the partnering
Speaker 1: from us, and so they're tremendous opportunities around the world,
Speaker 1: and so that's what we're focusing on right now, and frankly,
Speaker 1: as those of us in the United States, and we
Speaker 1: look at some of the things we're doing around the
Speaker 1: world to help bring connectivity to the under connected, we
Speaker 1: hope that in the United States there can be a
Speaker 1: little more action and a little less talk about connecting
Speaker 1: the rural America in a resilient way and frankly, helping
Speaker 1: you connect and have appropriate devices for distressed communities or
Speaker 1: communities in urban areas of the country. Americans really need
Speaker 1: to get the benefit of connectivity overall. Is that argument Landing?
Speaker 1: And who are you speaking to here in the United States?
Speaker 1: Are people do they still want in any way to
Speaker 1: grant access directly or indirectly for your technology they feel
Speaker 1: the need for it, because I was amazed to see
Speaker 1: just how many patterns you put into the United States,
Speaker 1: for example, p a year like you're number one. M Well,
Speaker 1: as I said, our focus is not to do business
Speaker 1: in the United States, and as we talk about the
Speaker 1: lessons we are learning and five G transformation around the
Speaker 1: world is not to enable us in new business. We
Speaker 1: think there are lessons that we're learning. We think there
Speaker 1: are lessons as the United States can learn from success
Speaker 1: stories and other parts of the world. But I mentioned
Speaker 1: the smart mining and smart ports, But but healthcare and
Speaker 1: manufacturing consistency, reducing energy consumption, and telecommunications. The United States
Speaker 1: needs to step up and be much more active in
Speaker 1: these things to help the competitiveness of the United States
Speaker 1: and help the American people. I'm interested, Stephen, and I'm
Speaker 1: wondering if you can take us in the money direction.
Speaker 1: In your focus as Chief Intellectual Property Council, you are
Speaker 1: not only just announcing, of course, to deal with oper
Speaker 1: but you made public for the first time that you're
Speaker 1: also doing licensing five G Samsung. How much with some
Speaker 1: of these partners, particularly when it comes to Samsung, to Apple,
Speaker 1: to the huge players in this space, how much you're
Speaker 1: charging them in terms of patent use, and are you
Speaker 1: thinking about royalties in a different way. You're going to
Speaker 1: have to change the maths and be more aggressive. Well so, so, first,
Speaker 1: we don't view ourselves as aggressive. We are certainly active
Speaker 1: in the licensing space, uh where third parties have done
Speaker 1: independent studies of our licensing, our rates for our patents
Speaker 1: versus many of our competitors. We actually are much more
Speaker 1: in the middle of the pack. So we are not
Speaker 1: looking to set the highest rates in in any industry
Speaker 1: or technology. Um. The importance of of U S patents,
Speaker 1: for instance, which which you've mentioned previously, is still important
Speaker 1: regardless of whether we ever sell a product again in
Speaker 1: the United States. Our patents our technologies are being used
Speaker 1: by US companies. Many of those companies have have freely
Speaker 1: without litigation, have joined into license agreements with Whalwei to
Speaker 1: pay for the rights to use our patent of technology
Speaker 1: in the United States. No one in the United States
Speaker 1: can use WiFi, particularly the new WiFi six which is
Speaker 1: the the a X version without using Quawis technology. Same
Speaker 1: things four genes five G. We are licensing car manufacturers
Speaker 1: and their suppliers all around the world, from Japan to
Speaker 1: China to the UK, to Germany to the United States
Speaker 1: on their use of our four G technology in connected cars.
Speaker 1: And so that is the important thing is making sure
Speaker 1: people understand the difference between global use of standardized technology,
Speaker 1: which which always a leader in in providing that technology,
Speaker 1: versus product sales. Okay, Huawei chief Security Officer Andy Perdy
Speaker 1: and Chief Intellectual Property Council for the U S Stephen
Speaker 1: Guys that thank you both and concerns Linga that some
Speaker 1: of the biggest Chinese tech firms will be delisted in
Speaker 1: the US. As of Wednesday, about one of j D
Speaker 1: dot com shaes was circulating in Hong Kong's settlement system.
Speaker 1: This is in Vesta's move to convert them from US exchanges.
Speaker 1: That's a near doubling from the end of according to
Speaker 1: Bloomberg calculation. Similarly, Ali Barber's Hong Kong listed share portion
Speaker 1: rows eleven percentage points during the same period, a steady
Speaker 1: shift into Asia, which shows traders are continuing to hedge
Speaker 1: risks associated with the US China spat. Now coming up,
Speaker 1: everyone's doing it? Are you? Lenser Ai? It's the latest
Speaker 1: d ai application. You've got to take my word for it.
Speaker 1: That makes yourselfies look even better? Caroline and I, well,
Speaker 1: I don't want to give it too much away. Just
Speaker 1: wait and see all that next. This is Bloomberg. So
Speaker 1: that's us. That's Caroline right there, that's supposedly me using
Speaker 1: the lenser Ai app and all in one image editing
Speaker 1: app for your selfies. Don't yours are really good? You
Speaker 1: look really hot, really smart? Even it does this remotely
Speaker 1: look like me, not in the slightest. I'm kind of
Speaker 1: a bit depressed that. I mean what I've just morphed
Speaker 1: into sort of an artistic Italian gentlemen. I've morphed into
Speaker 1: someone I really don't recognize, but they're kind of hot.
Speaker 1: It was an interesting experience, like a lot of my
Speaker 1: photos were rejected, but we're back the real you and I.
Speaker 1: We just there's one photo where I look so unwell
Speaker 1: and miserable and completely unlike myself that I was kind
Speaker 1: of a bit a bit depressed by it, but probably,
Speaker 1: as I kept saying, it sort of felt like my
Speaker 1: insides after all the holiday parties. But I am interested
Speaker 1: in that. Some people out there, right, one particular noted
Speaker 1: economist thinks this sort of AI, particularly chat GPT for example,
Speaker 1: is great strides in technology, right, I mean, is this
Speaker 1: the best thing since sliced bread? Is this a game
Speaker 1: change of revolutionary? As far as I can tell, it's
Speaker 1: just strange pictures of you and I, but you got
Speaker 1: to experience. Yeah, they've got to sew pll on it.
Speaker 1: Larry Summers says this will change us in terms of
Speaker 1: it's as important as the wheel and fire. Seemingly actually,
Speaker 1: most think it is revolutionary. This is broom back. It's
Speaker 1: not like there's an incredible amount of money that's ready
Speaker 1: to be deployed. I think the pace of investments in
Speaker 1: the venture ecosystem was masked a bit by capital that
Speaker 1: was coming from non traditional ventures and corporate balance sheets
Speaker 1: and so I think today what you're gonna see is
Speaker 1: a shift, probably not in terms of opportunity sets, in
Speaker 1: terms of how fast money gets deployed in the ecosystem,
Speaker 1: but I think you're going to see people look for
Speaker 1: complete different dynamics within the balance sheets and the capital
Speaker 1: structures as the management team that they're investing in. That
Speaker 1: was pitch Books Director of Research needs are To Whooney,
Speaker 1: giving his take on the current dynamics at play in
Speaker 1: the world of VC. It's because someone else's take. Denish A.
Speaker 1: Kiers with us now general partner at Lux Capital, a
Speaker 1: firm focusing on investments in emerging technologies. Four billion dollars
Speaker 1: in assets under management. It's been a week. It's been
Speaker 1: a big week for markets, for the world economics. Karen
Speaker 1: and I have been talking a lot about data. You know,
Speaker 1: there was various data sets, but the big takeaway is
Speaker 1: that whether you do it on a volume basis, deal
Speaker 1: count basis, dollar value basis, two is nothing compared to
Speaker 1: one in your world. Why, well, it's great to be here,
Speaker 1: Thanks for having me. I was expecting my lensa avatar
Speaker 1: to show up instead of myself, but delighted to be here.
Speaker 1: So no denying two was a roller coaster, and I
Speaker 1: think we're still in for a long ride with ahead
Speaker 1: of us. Many would say the exuberance of one needed
Speaker 1: a correction, and that came with a bit of a
Speaker 1: jarring surprise to some but also met the expectations of others.
Speaker 1: It was, in anyway, is a long time coming. But
Speaker 1: I still think we're just at the precipice of understanding
Speaker 1: what the impact will be on valuations across stages, and
Speaker 1: certainly for us it's it's an area where we think
Speaker 1: there's a real exciting opportunity to continue being bullish on
Speaker 1: long term opportunities. I am going to let Caroline have
Speaker 1: all the fun, and I'm going to ask you a
Speaker 1: slightly dull question about economics if you allow me to.
Speaker 1: It's never dullared well, I know it's important. The funny
Speaker 1: thing is that if you're a well i'm assuming if
Speaker 1: you're a venture capitalist, you assess a broad range of data,
Speaker 1: just as a public market analyst would or investor inflation
Speaker 1: in the FED. You know, in every day for US
Speaker 1: inflation in the FED. What does it mean to you
Speaker 1: at this stage in the cycle. Well, you know we're VC,
Speaker 1: so we're long term investors were not day traders. Obviously,
Speaker 1: there's no denying the impact of the macer on the
Speaker 1: micro and we've seen that very clearly in terms of
Speaker 1: the opportunities for exits for for venture backed companies. But
Speaker 1: when we're investing in deep technologies companies that we believe
Speaker 1: our market makers, we have to look with a longer perspective,
Speaker 1: and so you know three does not look particularly promising,
Speaker 1: although none of us are nostra damas, but we're looking
Speaker 1: ahead five to ten years from now and those opportunities
Speaker 1: are very exciting to be investing in their early days.
Speaker 1: Do you know you've just made general partner congratulations And
Speaker 1: you focus a lot in the health space, in particular,
Speaker 1: very much focused on female focused businesses. To what is
Speaker 1: that more recession proof than other areas healthcare? Many have
Speaker 1: turned to in the public market saying that this is
Speaker 1: wanting to be investing for into at the moment with
Speaker 1: higher interest rates and with a slower growth prospect. What
Speaker 1: do you see in terms of the smaller, now growing industries. Absolutely,
Speaker 1: I mean I've often said that health and digital health
Speaker 1: is recession proof. Now that's not to say that it's
Speaker 1: immune to the macro conditions. That's definitely not the case
Speaker 1: in any look at the public markets, no matter how
Speaker 1: well they're faring um, you know, respectively, it's it's very
Speaker 1: clear that they're not. That being said, people will continue
Speaker 1: to get sick, they will continue to have babies, we
Speaker 1: will continue to have needs for therapeutics and for interventioning care,
Speaker 1: perhaps more so in the future even than we do today.
Speaker 1: And I think as a result, what we're seeing is
Speaker 1: really expanded interest and also a bit of of a
Speaker 1: slightly better opportunity than you're seeing, certainly not just on
Speaker 1: the public side, you know. Pitchbook, I think just yesterday
Speaker 1: published a report showing that the media deal valuations for
Speaker 1: venture backed healthcare companies is actually up thirty three percent
Speaker 1: year over a year, which is a really interesting take
Speaker 1: visa of you where the rest of the market seemed
Speaker 1: to be sitting. You know, one of our companies was
Speaker 1: was on your show just a few weeks ago for
Speaker 1: their series E, and that was a really exciting one
Speaker 1: in women's health, where there's a lot of continued interest. Yeah,
Speaker 1: shout out to Maven Clinic and were so pleased to
Speaker 1: be able to stop the new show with that and
Speaker 1: I with joining the show in that respect to bring
Speaker 1: us that series E. But I'm gonna ask a sensitive
Speaker 1: question now, Dia, and I know because you don't want
Speaker 1: to shy away from these sorts of things. Lux Capital,
Speaker 1: of course, has been enbrolled in the ft X situation.
Speaker 1: You roat checks, not you per me, of course, and
Speaker 1: you're not. Therefore, I'm not going to ask you about
Speaker 1: your own due diligence in the space. But what do
Speaker 1: you think internally the lessons you've learned are when you're
Speaker 1: looking at writing checks in a diff more difficult situation
Speaker 1: environment that we currently are, how are you looking for
Speaker 1: companies to be building their corporate governance to be ensuring
Speaker 1: that they're giving you all the accounts that you need
Speaker 1: and the growth stories really there, you know, I think
Speaker 1: this is something that's not necessarily just unique to that situation.
Speaker 1: There are other cases across healthcare in the recent months
Speaker 1: and years that have also really put a lens on
Speaker 1: the importance of due diligence, and so there's no doubt
Speaker 1: that that continues to be very important across the board.
Speaker 1: And I think perhaps some of the slowdown that we're
Speaker 1: anticipating in terms of the exuberance of because of you,
Speaker 1: what we're expecting in three will give all investors more time,
Speaker 1: um and more space to be able to do that,
Speaker 1: which you know is certainly a positive thing. Dina. Come
Speaker 1: back in the new year. Tell us how that is
Speaker 1: starting to unfold for you, Dina Shoka. We love having
Speaker 1: our run. Thank you general partner, Ever it lacks capital.
Speaker 1: Wishing you happy holidays. We don't get to chat before
Speaker 1: me while Let's talk exits now because we were just
Speaker 1: going there and then and there's some are still happening
Speaker 1: in the global startup space. In fact, let's go global
Speaker 1: because Istanbul based quick commerce platform that's getting just for
Speaker 1: its rival Gerrillas Technologies in a deal that was valued
Speaker 1: at one point two billion according to sources. Now it
Speaker 1: marks the increasing consolidation and what we all thought at
Speaker 1: one point was an absolutely booming industry you couldn't move
Speaker 1: for quick deliveries. But Guerrillas raised funds valuing the company
Speaker 1: at about three billion before and I've been exploring its
Speaker 1: options after. Investors just became so much more cautious over
Speaker 1: the industry's path to profitability. I mean ed we were
Speaker 1: all talking about how quickly one could order their various
Speaker 1: groceries and they'd be coming within twenty minutes or so.
Speaker 1: But it just became ever more evident that these companies
Speaker 1: were not going to be able to head to profitability
Speaker 1: with this many players in the space. So there's a
Speaker 1: fantastic quote in the story from the founder of the
Speaker 1: company saying, markets go up and go down for consumers
Speaker 1: love our service. Convenience is here to stay. You know,
Speaker 1: whether that's true or not, we don't yet know. You know,
Speaker 1: the proofs in the pudding, but you know it's holiday
Speaker 1: season and go to a lot of drinks with vcs
Speaker 1: and you know they do say it's a case by
Speaker 1: case basis. There are some fantastic startups that are borne
Speaker 1: out of recession, that grow out of recession, and there's
Speaker 1: opportunity right now if you can pick them out. Yeah,
Speaker 1: and I think that this is what's going to be interesting.
Speaker 1: Where are the exits being made? Are you doing exits
Speaker 1: from acquisition one private company to a private company or ed?
Speaker 1: Are you still managing to get to the public market
Speaker 1: if that dreaded word, well, dreaded is not fair, but
Speaker 1: spack interesting. So let's get more from another guest, Sam's
Speaker 1: id CEO of get Around, which just went public on
Speaker 1: the New York Stock Exchange or listed is shares. Get
Speaker 1: Around is a company I know, you know I've written
Speaker 1: about Get Around. We've reported about broadly, this platform in
Speaker 1: which owners of vehicles can list their cars to be
Speaker 1: rented out. It's like Airbnb for cars, Sam, why list
Speaker 1: via this mechanism? I mean for us, you know, we
Speaker 1: were in public be as you know, we had great partners,
Speaker 1: We found committed capital capital that really allows us to
Speaker 1: x you on our business plan, and it was really
Speaker 1: about just continue to create long term value um and
Speaker 1: to get out into the public markets and able to
Speaker 1: have access to that, you know, uh, the public markets directly.
Speaker 1: We felt it was the right thing for for us
Speaker 1: in this particular circumstance, in this particular category. What sort
Speaker 1: of with the money coming in, what does that now
Speaker 1: create you in terms of space to build? Where are
Speaker 1: you able to now drive forward? Get Around, particularly at
Speaker 1: a time when more people might be incentivized to share
Speaker 1: their car to get money in that way. Yeah, I
Speaker 1: mean it is that type of time. I mean, I
Speaker 1: think a lot of consumers are looking for options to
Speaker 1: make extra money potentially, you know, drive extra income or
Speaker 1: offset costs. And we you know, we just felt that
Speaker 1: opportunity is right given what we see in the category
Speaker 1: and in the market and some of the trends with
Speaker 1: our partners and in more generally with the shift to
Speaker 1: more consumers, you know, moving towards mobility and continuing to
Speaker 1: shift those those those patterns of mobility. Um, you know,
Speaker 1: we felt the time was right. Hey Sam, really quick,
Speaker 1: you're pipping your great rival Turo to the public markets.
Speaker 1: The reception interesting, What do you make of that? Yeah, Look,
Speaker 1: I think there's no denying the macro is. It's just
Speaker 1: a challenging market environment. But we aren't really optimizing for
Speaker 1: that as much as optimizing for you know, really giving
Speaker 1: fuel to the business in order to really execute on
Speaker 1: our plans. And so you know, the way we think
Speaker 1: about that is, really we want to continue to execute
Speaker 1: create long term value, and over time we think that
Speaker 1: you know, the market will respond and start to value
Speaker 1: companies properly on fundamentals. Some thanks for spending some time
Speaker 1: with us from the floor. Then I see Sam' side
Speaker 1: CEO again around Meanwhile, coming up, we're gonna talk much
Speaker 1: more about all the ongoing fall out in the collapse
Speaker 1: of f t X lawmakers questioning officials over a silver
Speaker 1: Gate Capital. It's a small bank that's facing some big
Speaker 1: pain after a decision to really take on cryptoclients. This
Speaker 1: is Bloomberg. It was once pretty obscure, smaller bank, and
Speaker 1: then it got into crypto. Silver Gate Capital is and
Speaker 1: what I'm talking about. It found its niche when it
Speaker 1: started providing banking services to some pretty major crypto clients,
Speaker 1: including well some background Freeze, f t X and Alameda Research.
Speaker 1: Now it's of course facing scrutiny from regulators and lawmakers
Speaker 1: on the back of that decision. Joining us now on
Speaker 1: a great set of reporting Bloomberg's banking reporter Max Rays,
Speaker 1: and Max just talk to us a out how solve
Speaker 1: gate first of all, got in to servicing these sourts
Speaker 1: of clients. Sure, first of all, thank you for having me,
Speaker 1: and I think it might be helpful to back up
Speaker 1: for a second sort of explain sort of the the
Speaker 1: value proposition here for a bank. For for banks that
Speaker 1: aren't dealing with crypto, you know, they're not helping to
Speaker 1: exchange um tokens or anything like that. They're literally just
Speaker 1: holding deposits for crypto customers and sending them, helping them
Speaker 1: to send them back and forth right between themselves. The
Speaker 1: value there is that you can bring these deposits onto
Speaker 1: your balance sheet and you do not have to pay
Speaker 1: out interests, right, so you essentially have a very affordable
Speaker 1: way to fund yourself. And that's sort of what drew company,
Speaker 1: a company like silver Gate into this, and other banks
Speaker 1: have done it as well, Customers Bank, ORPS Signature Bank,
Speaker 1: but obviously a few of them have had banking relationships
Speaker 1: with f t X and Alameda. That has folks raising concerns.
Speaker 1: Short sellers are kind of dog piling the stock, and
Speaker 1: you have bombmakers who are asking questions and it's a
Speaker 1: result of these relationships. From your early reporting and digging
Speaker 1: around just how exposed has silver Gate become. What sort
Speaker 1: of areas within the financial services they offered made it
Speaker 1: more difficult to extricate themselves. Now, Yeah, I think the
Speaker 1: biggest level of exposure is just the deposits they held
Speaker 1: on their bound sheet. Silver Gate has said that they
Speaker 1: did not lend to ft X. They made it very
Speaker 1: clear that their only relationship with f t X and
Speaker 1: related entities including Elomated Research the Hedge Fund, was a
Speaker 1: deposit relationship, and so if you have to deposit with
Speaker 1: silver Gate, you can send money to other clients who
Speaker 1: also have those deposits on a platform they call the
Speaker 1: sent the silver Gate Exchange Network. And what are reporting
Speaker 1: indicating was indicated was that customers had been directed to
Speaker 1: buy f t X to send money to Alometer Research,
Speaker 1: and that was to in at least one case, a
Speaker 1: silver Gate bank account, and that has raised concerns and
Speaker 1: questions from lawmakers. Are reporting doesn't go any further and
Speaker 1: saying sort of how that tied into the kind of
Speaker 1: commingling of funds and so on that have been alleged
Speaker 1: when it comes to at X and Alameda, But it
Speaker 1: does mean that silver Gate is part of these really
Speaker 1: difficult questions being raised by lawmakers, by regulators, by investors.
Speaker 1: You know, how how did no one spot us? Right?
Speaker 1: You raise a good point, Max about the short interests
Speaker 1: on the stock in that it's publicly traded, right, it
Speaker 1: almost has its own rise and full story. I was
Speaker 1: looking my Bloomberg to the end of one when the
Speaker 1: stock was above two dollars a share. Now we're down
Speaker 1: at twenty one dollars a share. I mean, what was
Speaker 1: the invest anxiety here. For Silvergate, it was just their
Speaker 1: exposure to the contagion. So you would you what would
Speaker 1: be helpful to do with his zoom out right, because
Speaker 1: around this time last year we were talking about digital
Speaker 1: assets being at all time highs and that's when the
Speaker 1: stock hit two just about that period. But over the
Speaker 1: last year we've had more events than just f t X.
Speaker 1: We've had the blow up of the Terra Luna ecosystem,
Speaker 1: which in turn led to the collapse of Three Arrow
Speaker 1: Scare Capital, the collapse of Celsius, so publicly traded stocks
Speaker 1: with the exposure to crypto, that's silver Gate, that's other companies,
Speaker 1: that's you know, names like micro Strategy, which literally just
Speaker 1: hold a bit corn on the balance sheet. All of
Speaker 1: those companies have taken a beating in the last year
Speaker 1: because of this anxiety, and just the blow up of
Speaker 1: f t X sort of accelerated and worse than that impact,
Speaker 1: I would say, max would have silver Getting said about
Speaker 1: all of this very quickly. Certainly, silver Gate has been
Speaker 1: pretty clear in saying that the controls that they had
Speaker 1: in place were sufficient, that they again had no sort
Speaker 1: of lending or any other kind of relationship, and that
Speaker 1: they were in one statement to NBC, they describe themselves
Speaker 1: as victims of SPF and is misleading practices the same
Speaker 1: way everyone else's. So the company has been pretty frank
Speaker 1: in denying any claims of wrongdoing. And it should be
Speaker 1: made clear that authorities have not alleged any wrongdoing. They
Speaker 1: have been accused of wrongdoing, yes, by authorities. It's just
Speaker 1: there are questions circling. Yeah, thank you for your reporting.
Speaker 1: Bloomberg's Max rays there coming up. The world's most populous
Speaker 1: nation rapidly pulling back on its COVID zero policies. We'll
Speaker 1: tell you what this means to the health of people
Speaker 1: in China, but also, of course the tech companies doing
Speaker 1: business there. Next this is Bloomberg. While Hong Kong has
Speaker 1: served as a blueprint for China's opening up from COVID,
Speaker 1: it's also a huge, huge cars canary tale. Now. When
Speaker 1: the omicron variants swept through this modern city of seven
Speaker 1: and a half million earlier part of this year, the
Speaker 1: city's sophisticated healthcare system was simply overwhelmed. At one point,
Speaker 1: Hong Kong had the world's highest death rate due to COVID.
Speaker 1: There simply wasn't enough space to put all the patients
Speaker 1: or bodies. Some of the sick were put outside on
Speaker 1: bourneys as body bags, with the deceased stacked up in
Speaker 1: some words, next to the infected living mords two were inundated.
Speaker 1: Most of Hong Kong's nearly eleven thousand total COVID deaths
Speaker 1: happened between February and April of this year. Like Hong Kong,
Speaker 1: China has a largely under vaccinated elderly population, but on
Speaker 1: a much much larger scale, and China too doesn't have
Speaker 1: the more sophisticated mRNA vaccinations available. We have to remembered
Speaker 1: as China has been protected to public for so long,
Speaker 1: there has been no hurt amenity in China. Uh so um.
Speaker 1: This is going to start, and this process is not
Speaker 1: going to be smooth. It will be quite difficult. With
Speaker 1: a sudden dismantling of COVID restrictions, including mandatory PCR testing
Speaker 1: to enter public spaces, China is bracing for a surge
Speaker 1: in infections and death more than two million fatalities by
Speaker 1: one estimate. Criticism of COVID zero is rapidly being replaced
Speaker 1: by concern that the rapid policy shift away from the
Speaker 1: all out eradication of the virus is happening too fast,
Speaker 1: and that China is ill prepared like Hong Kong was
Speaker 1: back in March for a health crisis of unseen proportions.
Speaker 1: Stephen Angel, Bloomberg News, Hong Kong, I mean, clearly a
Speaker 1: very tough story to continue to have to talk about.
Speaker 1: We forget the health impacts, of course, the death impacts,
Speaker 1: and but also we have to talk, because we do
Speaker 1: a bloom Berg time and time again, the economic impacts
Speaker 1: of all of this. We want to thank our Asia
Speaker 1: G correspondent Steven Angle for that piece, because you've been
Speaker 1: doing some really thoughtful leadership in terms of what's happening
Speaker 1: from companies such as Tesla, companies that are desperate to
Speaker 1: get into China and then find for the demand is
Speaker 1: being eroded, but in some ways the supply too. You know,
Speaker 1: we may have stopped tracking the virus um in Europe
Speaker 1: and in North America day to day, but in China.
Speaker 1: You know, look how quickly have we gone from COVID
Speaker 1: impacting production or impacting the ability of tech companies like
Speaker 1: Tesla to carry out their business to now the impact
Speaker 1: on demand. Right, and even though there's this reopening and
Speaker 1: easing of restrictions. There are lots of questions about that.
Speaker 1: The most recent report from Bloomberg. According to sources, they're
Speaker 1: actually going to shut down the assembly lines imminently in
Speaker 1: Shanghai and then later in the Chinese New Year in
Speaker 1: January do the same. Some of that, according to sources,
Speaker 1: is for maintenance upgrades, but there's still this question about demand.
Speaker 1: It's a really difficult situation I supposed to understand and
Speaker 1: how hard is that going to be to peel apart?
Speaker 1: What is just the usual way of things during the
Speaker 1: beginning of January for China and what actually is the
Speaker 1: COVID impact here? Well, usual things for the beginning part
Speaker 1: of January when you had the Chinese New Year and
Speaker 1: normal for Tesla to do maintenance. It's just that Tesla
Speaker 1: doesn't communicate and say here's our plan, and so investors,
Speaker 1: if you look at the share price this week, have
Speaker 1: got a little nervous despite a positive end for the
Speaker 1: stock on Friday. I have a feeling we'll be talking
Speaker 1: about both China, both Tesla planning more next week. But
Speaker 1: for today, Ed, that's it for this addition of Bloomberg Technology. Hey, yeah,
Speaker 1: that does it? Don't forget to check out our podcast.
Speaker 1: You can find it on the Bloomberg Terminal of course,
Speaker 1: on Apple, Spotify and always on iHeart Radio, Big Week Carrow.
Speaker 1: But that's it for us. This is Bloomberg two.