Speaker 1: And Caroline Hide and bloom Mug's world headquarters in New
Speaker 1: York and Amed Lovo in San Francisco. This is Bloomberg
Speaker 1: Technology coming up, Hawks hit stocks, Jerome Poal's spooks markets
Speaker 1: that says Mike Wilson, Open at Morgan Stanley WARN's Growth Equities,
Speaker 1: Face Pressure Ahead will bring you the details class more
Speaker 1: job cuts at Meta, the Facebook parents planning to lay
Speaker 1: off thousands as soon as this week. More on our
Speaker 1: Bloomberg exclusive ahead. And China shakes up oversight of its
Speaker 1: vast tech arena. That's as Sijing ping focuses on fending
Speaker 1: off US sanctions and achieving self sufficiency in areas from
Speaker 1: AI to chips. All that and so much more coming up,
Speaker 1: and there is a lot to digest in the macro
Speaker 1: part of these markets today. It was one of a
Speaker 1: perspective coming from Jerome Poal coming out fighting. And we
Speaker 1: see that maybe the Federals is not done tackling inflation
Speaker 1: NAS that falls one and a quarter percent, So big
Speaker 1: tech on deck. We look at all country World Index.
Speaker 1: In fact, all this worry around what the Federal Reserve,
Speaker 1: the Central Bank to the world will do affected European trading.
Speaker 1: We're off by one point three percent. When you look
Speaker 1: at the all country benchmarks, and I'm looking at this inversion,
Speaker 1: this of course is that the two year bond yields
Speaker 1: the capositor boring at the two year is higher than
Speaker 1: at the tenure at the moment by a four percentage point,
Speaker 1: So we see negative one hundred and four basis points
Speaker 1: when you're looking in the eleven inversion. This signals the
Speaker 1: worry that the market has about a recession. To come
Speaker 1: flick it on a gear. Let's look at the US
Speaker 1: do a strength that we saw on the back of
Speaker 1: that hawkish tone, and then that Bitcoin is under pressure
Speaker 1: too by one point nine percent, and share power ed
Speaker 1: having some fighting words for crypto in particular as well. Yeah,
Speaker 1: those fighting words where they were the main driver when
Speaker 1: it came to single stock names in the equity markets,
Speaker 1: although some individual stocks I look too. Rivian down fourteen
Speaker 1: and a half percent. The company plans to offer one
Speaker 1: point three billion dollars in green convertible notes that could
Speaker 1: potentially have a dilutive effect on outstanding shares down the road.
Speaker 1: Tests are under pressure down three percent. Is must talked
Speaker 1: about Twitter's debt bird and Amazon was down two tenths
Speaker 1: of a percent, Alphabet parent of Google down one point
Speaker 1: three percent. Those two names Goldman's top tech picks for
Speaker 1: twenty twenty three, that didn't do much to support the stock.
Speaker 1: After fed Power made those kinds. Then Meta, I will
Speaker 1: actually just show the trading Meta had been markedly higher
Speaker 1: after my colleagues and I reported that more layoffs are
Speaker 1: coming in the thousands as soon as this week, and
Speaker 1: then post Power completely fell away, actually ending up trading
Speaker 1: down two tenths of one percent. That is the effect
Speaker 1: the chairman Power is having in this market. Carry and
Speaker 1: we go back to basics. We haven't talked about this
Speaker 1: in a little while, but the prospect of higher rates
Speaker 1: discounting the present value of future profits, particularly for that
Speaker 1: tech sector, and then you price in that recession risk,
Speaker 1: which is now back on the table as well. But
Speaker 1: this is the conundrum, of course, that the Federals of
Speaker 1: has to focus on. When you've got inflation still well
Speaker 1: above the two percent target, it affects the labor market,
Speaker 1: as you have been reporting, with the likes of Meta,
Speaker 1: companies have to start to squeeze, they have to put
Speaker 1: jobs on the line. And I thought that Elizabeth Warren
Speaker 1: of course, really coming out lasking look what you say
Speaker 1: to those jobs that are going to be lost, and
Speaker 1: Chef House saying I tell them that everyone is affected
Speaker 1: by inflation. But ed dig into the micro detail that
Speaker 1: you've been reporting out. Just tell us a little bit
Speaker 1: about well, what the under duress over at Meta. Whether
Speaker 1: this is something we can read across to the rest
Speaker 1: of the tech market. Yeah, understanding from sources is that
Speaker 1: vps and director levels staff are making lists. These are
Speaker 1: new layoffs, thousands of new potential job cuts on top
Speaker 1: of the eleven thousand from last year and on top
Speaker 1: of the flattening of middle management earlier this year, because
Speaker 1: they're still under duress. Right, this is the year of efficiency.
Speaker 1: It's just that Moore's needed to get there. And when
Speaker 1: we think about efficiency, many would say that's of course
Speaker 1: why key growthier names are being focused on, because suddenly
Speaker 1: their future growth perhaps looks less certain. It's what we've
Speaker 1: heard time and time again, particularly from some of the
Speaker 1: uber bears out there, one of them being Morgan Stanley
Speaker 1: is Mike Wilson who says, once again, even though we
Speaker 1: saw the sell off of twenty twenty two, you could
Speaker 1: see a twenty percent downside for the growth names. Just
Speaker 1: take a listen. I think there's plenty of stacks that
Speaker 1: are probably gonna your bankrupt, you know. I mean, I
Speaker 1: don't think that's a crazy statement, but that's not the
Speaker 1: bot of the stack market. Okay, So this is as
Speaker 1: a pocket of the stack market. And then I would
Speaker 1: say a bit overall the growthier stuff and the thing
Speaker 1: that even the sign bols names that have gone too
Speaker 1: far now because as much as twenty percent to ask
Speaker 1: no problem growthier stuff. Let's talk about well, one particular
Speaker 1: analyst who looks across the whole gamut of technology TMT
Speaker 1: names in general, Needham Managing Director and senior analyst, Laura Martin.
Speaker 1: Laura is so good to have you on the show
Speaker 1: and just tell us the breadth of companies that you analyze.
Speaker 1: The Are we currently throwing everything out with the bathwater
Speaker 1: at the moment because we're worried about future growth no
Speaker 1: matter who you are. Yes, Because as bond yields go up,
Speaker 1: bonds look more attractive as a substitute to equity. So
Speaker 1: we're getting net equity outflows into the bond market. That
Speaker 1: makes sense economically, and that's a higher level of the
Speaker 1: capital structure, so they have lower risk in cachase somebody
Speaker 1: does go bankrupt. And I think specifically, as you get
Speaker 1: this advertising down draft, advertising has eighty percent margins. So Google,
Speaker 1: specifically Google and Meta per Alphabet and Meta really are
Speaker 1: going to be under margin pressure if we go under
Speaker 1: recession and if advertising demand gets worse. Laura, in the
Speaker 1: context the multiples on some of the names that you
Speaker 1: do you cover. What's the biggest concern to the market
Speaker 1: right now? Is it this idea that rates will go
Speaker 1: higher in bigger increments or are we starting to get
Speaker 1: more and more concerned about how deeper recession might come.
Speaker 1: So the biggest concern is in a discount of cash flow,
Speaker 1: which is the academically rigorous way to value these companies.
Speaker 1: If you have a higher discount rate any cash flow
Speaker 1: that comes from like year four in future, like Amazon
Speaker 1: is making no money, Meta is to have it, you know,
Speaker 1: really in a down draft in his profit marches that
Speaker 1: all those out years become much less valuable. And so
Speaker 1: what you care about a lot is current year cash
Speaker 1: flow and next year's cash flow. And on that score,
Speaker 1: Apple ninety billion dollars a year of cash flow, like
Speaker 1: super Safe feels like a good place to hide super liquid.
Speaker 1: Google still continues to have high free cash flow. We'd
Speaker 1: like them to cut costs faster, but a lot of
Speaker 1: their value is not past year five, which in a
Speaker 1: rising interest rate environment, those past year five cash flows
Speaker 1: are really discounted harshly. Let's dig in on actually the
Speaker 1: only name that you have an underperform on, and it's Meta.
Speaker 1: They are trying to tork up efficiency in particular, they
Speaker 1: are of course looking towards their four jobs that are
Speaker 1: on the line, Laura, But ultimately I've looked at some
Speaker 1: of your decks on this company. After their earnings you
Speaker 1: said you'd like the word efficiency, but are they just
Speaker 1: rearranging all the chairs? And the Titanic is one of
Speaker 1: the phrases you used. True, I mean, I think the
Speaker 1: question we're asking is does Meta have a terminal value
Speaker 1: in its core business? Because one of the data points
Speaker 1: we're reading is most of the layoffs the CEO, Mark
Speaker 1: Zuckerberg is making sit in the core business of Meta
Speaker 1: that's being undermined by TikTok. Assuming TikTok doesn't get banned,
Speaker 1: the question we have is in the core business that
Speaker 1: funds the metavers, does he actually have a terminal value,
Speaker 1: or does he just lose all his creators and all
Speaker 1: his users in the first Royal countries to TikTok instead,
Speaker 1: assuming it stays in business. I think that's a very
Speaker 1: real question for these network effect businesses that benefit from
Speaker 1: network effects on the way up, it gets slaughtered by
Speaker 1: network effects like MySpace did on the way down. Yes, Laura,
Speaker 1: how worried you about brain drain? I find this really interesting.
Speaker 1: One source described this latest round of layoffs to me
Speaker 1: is more of a sledge hammer. If the eleven thousand
Speaker 1: in November were done with a scalpel, this is a
Speaker 1: sledge hammer. And I wonder, what's the risk that they
Speaker 1: lose all of these smart pool that are trying to
Speaker 1: drive this longer term transition, so they don't even get there.
Speaker 1: Agree one hundred percent. I think it's hard for morale
Speaker 1: to layoff people. I think what happens is if you're
Speaker 1: not sure you're going to get laid off, your most
Speaker 1: talented people go and proactively look for another job and
Speaker 1: get hired away. So you end up left with is
Speaker 1: a people who can't get the next job, So you
Speaker 1: end up with the people that are the worst of
Speaker 1: the Bell curve not the best because the best people
Speaker 1: go somewhere else where their job security is intact. Lastly, though,
Speaker 1: when you hear about actually other areas of focus, particularly
Speaker 1: for ANAS at the moment, is saying one area that
Speaker 1: could perhaps be an upside potential is artificial intelligence. Are
Speaker 1: you buying that, Laura, particularly for some of these big
Speaker 1: companies that you monitor. So it's a great question. So
Speaker 1: last year was the year of the metaverse. I think
Speaker 1: this year is going to be the year of AI.
Speaker 1: So the best question is when we're sitting here a
Speaker 1: year from now, in early twenty four, is anybody talking
Speaker 1: about AI or removed on to something else. I think
Speaker 1: most of these big tech companies have been using machine
Speaker 1: learning for a long time to make their recommendations better,
Speaker 1: to sort their search pages. They've all been using machine learning,
Speaker 1: you know, sort of chat, GPT and generative. AI is
Speaker 1: new to the consumer market, but a lot of these
Speaker 1: tech guys would say they've been using AI slash machine
Speaker 1: learning for years. So UM, I don't I don't know
Speaker 1: whether AI is as big a deal for these large
Speaker 1: tech driven companies as it is for the consumer where
Speaker 1: suddenly there's a use case it's really exciting in both
Speaker 1: like um both pictures and in and in you know answers.
Speaker 1: We're going to be putting that to a key salesforce
Speaker 1: executive a little bit later. Needam Managing director and senior analyst,
Speaker 1: Laura Martin. What a day to have you on. Thank
Speaker 1: you so much spending the time. So I'm now full
Speaker 1: VC roundup and we're starting with payment platform startup air
Speaker 1: Wall expect by ten Cent, which just acquired an online
Speaker 1: payment business license in China. The transaction cleared all regulatory
Speaker 1: hurdles with Chinese authorities and now allows air walls to
Speaker 1: become a third party payment provider in the world's second
Speaker 1: largest economy and boost its access to the local market.
Speaker 1: The founders of Argo AI, the autonomous vehicle company that
Speaker 1: was shut down last year, a launching a new self
Speaker 1: driving business that could specialize in trucking and ride hailing.
Speaker 1: According to sources, Amazon which almost rescued Argo last year
Speaker 1: but eventually pulled out, is not an investor in a
Speaker 1: new firm, and finally saleforces VCARM is launching a new
Speaker 1: two hundred and fifty million dollar fund, its largest to date,
Speaker 1: to invest in Guess what generative AI startups. The Enterprise
Speaker 1: Giant also unveiling new tools integrated with open aies technology
Speaker 1: and dubbed Einstein GPT. They will be used for functions
Speaker 1: such as drafting, customer service response or initial sales emails.
Speaker 1: We'll have more on that later this hour. Of course,
Speaker 1: Carrow with Salesforces Service Cloud CEO Clara she and ed
Speaker 1: to that point we were just doing from Laura Martin saying, look,
Speaker 1: so many of these big tech companies I've been using
Speaker 1: machine learning and other forms of artificial intelligence for years,
Speaker 1: and I thought it's really interesting that through Einstein Einstein,
Speaker 1: I'm sure it's mens known as Salesforce AI is Actually
Speaker 1: they've been using what is it, two hundred billion AI
Speaker 1: powered predictions per day anyway, So what really is this
Speaker 1: large language model going to be adding to in terms
Speaker 1: of their overall provision. I think I've got a smile
Speaker 1: in the corner of my mouth right because you say
Speaker 1: it Salesforce Open AI GPT in the headline. But it
Speaker 1: goes back to what everyone's been telling us on the show.
Speaker 1: Enterprise is where they see the most promise for these applications.
Speaker 1: It's just the headlines keep on coming and it's not
Speaker 1: just enterprise focused software companies using it. There's banks. I've
Speaker 1: been hearing a plenty of financial companies really trying to
Speaker 1: harness power of artificial intelligence. We can dive into that
Speaker 1: a little bit now with stephaniely Chun, general partner over
Speaker 1: at Portage. It's a global investment platform focused on fintech,
Speaker 1: on financial services. You've got what three billion dollars in
Speaker 1: assets on a management You've recently just closed a six
Speaker 1: hundred and fifty five million fund three as one of
Speaker 1: the largest early stage venture funds out there in the
Speaker 1: world of fintech, and so therefore step artificial intelligence. Is
Speaker 1: that a height that you're hearing or is it a
Speaker 1: reality that you're investing in. It's definitely the one exception
Speaker 1: to the macro that we've been seeing. And I would
Speaker 1: say we back the world wist innovative financial services companies,
Speaker 1: and we're already seeing interesting applications beyond enterprise and beyond
Speaker 1: the arvious, which I think most people would think, you know,
Speaker 1: how can AI in a large financial institution really improve
Speaker 1: customer service? That's kind of the first most obvious place,
Speaker 1: But I do think it can enable so much more
Speaker 1: in the future. I can imagine a world in which
Speaker 1: your complete financial picture or as a consumer is actually
Speaker 1: completely automated by AI. So it's beyond just being able
Speaker 1: to interact in natural language, but also be able to
Speaker 1: actually have the AI and or machine learning do things
Speaker 1: on your behalf. Steph, I know an area in fintech
Speaker 1: that you're really positive about is vertical sas, And what
Speaker 1: I wanted to ask you is do you make bets
Speaker 1: on AI related startups or do you make bets on
Speaker 1: the companies and startops that will benefit from other AI tools?
Speaker 1: Do you see what I mean. I'm much more excited
Speaker 1: about vertical specific sas than I am about horizontal AI,
Speaker 1: because at the end of the day, I think you
Speaker 1: still need very specific, semantic subject matter expertise and a
Speaker 1: focus on a specific target segment in order to create
Speaker 1: a great product experience. So we have always been focused
Speaker 1: on know your customer, serve your customer well, and AI
Speaker 1: is going to be a tool that allows you to
Speaker 1: better serve that customer and that segment. So ultimately, I
Speaker 1: think we're much more bullish on the vertical focus rather
Speaker 1: than the horizontal technology, which I think, at the end
Speaker 1: of the day is probably going to be owned by
Speaker 1: the likes of open AI ultimately, and I would add
Speaker 1: one other thing, which is in the future, if the
Speaker 1: models are in fact kind of commoditize, what really matters
Speaker 1: is the very specific data that you have, and proprietary
Speaker 1: data becomes the moat and the major advantage, and therefore
Speaker 1: that also favors vertical specific applications versus horizontal applications. Steph,
Speaker 1: I wanted to talk a bit about the environment that
Speaker 1: we're in. Matt Harris from Baying Venture Capital Partner's been
Speaker 1: on the show recently. We had Layliss study from Capital
Speaker 1: g both basically saying, actually, it's a great time to
Speaker 1: be writing checks, particularly at the earliest stage of the curve.
Speaker 1: Do you kind of agree with then there's a lot
Speaker 1: of opportunity in this moment, I would say, I would
Speaker 1: say it depends on how you how you think about
Speaker 1: what early stages. I think across the board, because of
Speaker 1: where the fed rates are, risk assets are now out
Speaker 1: of favor. I would say the largest impact has been
Speaker 1: on Series C in Series D in the market where
Speaker 1: we've seen valuations drop more than fifty percent at Series D,
Speaker 1: really mirroring the public markets dropping seventy percent I would
Speaker 1: say feed in Series A valuations which are on the
Speaker 1: earlier side of the curve have also We've also seen
Speaker 1: a trickle down effect to there, but it's been the
Speaker 1: biggest leg so valuations there have dropped more light ten
Speaker 1: to twenty five percent across the board. I would say
Speaker 1: it is a great time to be a venture investor. However,
Speaker 1: the later stage venture deals, where there's been an exodus
Speaker 1: and an imbalance of supply and demand in terms of capital,
Speaker 1: have seen the largest valuation fallouts. When you're looking at
Speaker 1: the early stages, you do staff where in the world
Speaker 1: do you focus, Because what's really interesting about your portfolios
Speaker 1: is so global. I'm looking at French, German and shottech
Speaker 1: companies for example. Is Europe right? Is it still about
Speaker 1: the US? Is in Asia? I would say, we've got
Speaker 1: a really global portfolio, but a third of our portfolio
Speaker 1: is in Europe. They are very significant, as you guys
Speaker 1: would know, regional differences even within Europe in terms of
Speaker 1: where the regulatory environment is going, in terms of if
Speaker 1: you look at the differences between banking, insurance, and wealth management.
Speaker 1: So we see global macro trends as being really interesting.
Speaker 1: There's investments to be made in Europe, investments to be
Speaker 1: made in North America. I would say in times like
Speaker 1: this where valuations have decreased, globally, we tend to see
Speaker 1: flight to capital two larger more established markets like the US,
Speaker 1: like the UK, etc. But obviously within fintech you need
Speaker 1: to be aware of the regulatory nuances of each specific country.
Speaker 1: And you are breaking steph Tube General partner at Portage,
Speaker 1: thank you so much. You know, we're moving our showtime
Speaker 1: next week earlier in the day, twelve eastern, nine am Pacific,
Speaker 1: and we want to take that global view. You know,
Speaker 1: it's interesting to have a partner on that looks globally
Speaker 1: and outside of North America. And let's turn very quickly
Speaker 1: to crypto. Gray Scales fight over its Bitcoin ETF begins
Speaker 1: in court. We bring you the latest details out from Washington, DC.
Speaker 1: That's next. This is Bloomberg. We're watching what's been happening
Speaker 1: in the crypto space, and you know what we see is,
Speaker 1: you know, quite a lot of turmoil. We see fraud,
Speaker 1: we see a lack of transparency, we see run risk
Speaker 1: lots and lots of things like that. And so what
Speaker 1: we've been doing is making sure that the that the
Speaker 1: regulated financial institutions that we supervise and regulate are careful,
Speaker 1: are taking great care in the ways that they engage
Speaker 1: with the with the whole crypto space. Some of FED
Speaker 1: chair Pal's remarks on the crypto market, of course this
Speaker 1: morning on Capitol Hill, and in fact some other news
Speaker 1: in terms of crypto A few minutes ago, we just
Speaker 1: learned that Finance US hasn't need one court approval to
Speaker 1: buy Voyage, a digital land Voyager, to end its bankruptcy
Speaker 1: repay customers. Of course, all of this following the fallout
Speaker 1: of FTX. Also today was the start of a court
Speaker 1: fight between gray Scale Investments and the SEC over plans
Speaker 1: to convert well It had hoped to convert his fourteen
Speaker 1: billion dollars bitcoin trust into an ETF police to say,
Speaker 1: our new resident in town of DC, one Kyley Line.
Speaker 1: So we miss a lot from New York, but doing
Speaker 1: amazing work from Washington, including your crypto show, Kayley. Just
Speaker 1: talk to us about actually what felt a lot of
Speaker 1: questioning coming out fighting almost on behalf of Grayscale. Yeah. Really,
Speaker 1: the tone of the three judges on their suppellate court
Speaker 1: today really seems to have shifted the odds of many
Speaker 1: people of Grayscale actually coming out with a victory here.
Speaker 1: Our own analyst to Bloomberg Intelligence and Elliot Stein previously
Speaker 1: had a sixty percent chance on the SEC being victorious
Speaker 1: in this case. They now actually think it's seventy percent
Speaker 1: odds in favor of Grayscale, because the judges did seem skeptical,
Speaker 1: skeptical of the SEC's argument that bitcoin futures should be
Speaker 1: treated differently than bitcoin spot. Of course, that's the argument
Speaker 1: that Grayscale has been pushing against, saying you should be
Speaker 1: treating futures and spot the same, the same concerns about
Speaker 1: fraud and manipulation. The SEC has should be applicable to both,
Speaker 1: and it did seem like those three judges maybe more
Speaker 1: sympathetic to Grayscale's view. Heading to the market reaction we're
Speaker 1: seeing today. Saw today GBTC up nine point six percent
Speaker 1: on the day, so that discount to its net asset
Speaker 1: value narrowed, Right, the market's going to try and discern
Speaker 1: what the outcome is going to be. Right. There's a
Speaker 1: risk in that, of course, and you know you're always
Speaker 1: hesitant to sale. What would happen if but in the event,
Speaker 1: ruling fools in gray Scales favor. It opens some doors, right,
Speaker 1: What does it mean for them and for this industry? Yeah,
Speaker 1: I mean if is obviously the operative word there, and
Speaker 1: it could still be a while before we ultimately get
Speaker 1: a ruling like second or third quarter. And then when
Speaker 1: we do, it matters what the language and that ruling is.
Speaker 1: Should the court rule in favor of gay Scale and
Speaker 1: put a gray scale and push back against the SEC's
Speaker 1: rejection of this application, Does it actually force them into
Speaker 1: accepting it or could it leave a door open for
Speaker 1: the SEC to slap it down another way? That will
Speaker 1: be really important. But of course, if gray Scale ultimately
Speaker 1: is able to make this conversion, it would get rid
Speaker 1: of their net asset value discount problem because it would
Speaker 1: allow redemptions. It would potentially turn into an ETF and
Speaker 1: it could mean that other products like it could be
Speaker 1: introduced in the market in the future. And we broke
Speaker 1: just before you came, of course, the news regarding Voyage
Speaker 1: being able to be sold to Binance US. There were
Speaker 1: other assets on deck when it comes to FTX, and
Speaker 1: actually it looks as though they're delaying the auction. Briefly, Yeah,
Speaker 1: ledger X, which was their of it IF's platform. It
Speaker 1: was actually one of the few areas of the FTX
Speaker 1: empire that remains solvent, had its auction delayed from today
Speaker 1: to March twenty second and clear the reason why. But
Speaker 1: that's something we're going to have to following those k lines.
Speaker 1: Our Voice, Finn red Voice add in DC, thank you
Speaker 1: my fashion til. The US claims that it seeks to
Speaker 1: outcompete China, but does not seek conflict. Yet in reality,
Speaker 1: it's so called competition aims to contain and suppress China
Speaker 1: in all respects and get the two countries locked in
Speaker 1: a zero sum game. Welcome back to Room Technology. I'm
Speaker 1: conne Hide in New York and Imed Lovelow in San Francisco.
Speaker 1: And that was just China's new foreign minister there calling
Speaker 1: the US approach to Beijing reckless gamble. And this of
Speaker 1: course is sort of put in stark contrast with what
Speaker 1: was happening on the Hill today, Congress moving yet closer
Speaker 1: to restricting access to China's TikTok app with a new
Speaker 1: Bible heartisan bill aim to protect US user data. Clearly,
Speaker 1: the hostility is front and center when it comes to
Speaker 1: trade technology. We've got the perfect guests to discuss it all.
Speaker 1: Paul Triolo, All bright stone Bridge Group, Senior vice president
Speaker 1: of China and Tech Policy. You're about to go out
Speaker 1: to China soon, Paul, just talk to us a little
Speaker 1: bit about, first and foremost what you heard from Chinese
Speaker 1: leadership today. A really tough stance, finally seemingly that they've
Speaker 1: decided to fight far with fire in some way. Yeah,
Speaker 1: I think it's not surprising. UM, this UM, this sort
Speaker 1: of rhetoric has been teaching, has been very careful not
Speaker 1: to use this, this fairly straightforward rhetoric in calling you know,
Speaker 1: calling out the US policy on China. UM. So it's
Speaker 1: not surprising. It has come on the heels, of course,
Speaker 1: of the balloon incident, the cancelation of Secretary of b
Speaker 1: Lincoln's visit to China, and then a whole host of
Speaker 1: US actions, export controls UM and other other restrictions on
Speaker 1: Chinese technology acquisition. And then of course we've had a
Speaker 1: Congress hil the hearings last week, the kick off a
Speaker 1: season of hearings with a House seleuct Committee on China
Speaker 1: for example, which you know, use some pretty harsh rhetorics.
Speaker 1: So it's not surprising to see China push back a
Speaker 1: bit on this, but it is unusual for SEED to
Speaker 1: use such strong language before we get into the tifatat
Speaker 1: and perhaps what's happening in terms of privacy here in
Speaker 1: the US. I'm interested in what you made of the
Speaker 1: shake up when it comes to trying to ensure AI,
Speaker 1: particularly chip making, is front and center for China that
Speaker 1: they don't somehow lose out despite these trade embargoes and
Speaker 1: issues that are put on hold in terms of getting
Speaker 1: hold and access to certain US technologies. Yeah, I mean,
Speaker 1: I think the restructuring that we're seeing coming out of
Speaker 1: the NPC, and of course it's it's early days here,
Speaker 1: it reflects to some degree in the technology sector, this
Speaker 1: recognition that the US is putting increasing pressure on key
Speaker 1: priorities for Beijing, like advanced computing. So we've seen the
Speaker 1: US take action for example and export controls, and there'll
Speaker 1: probably be some restrictions on a bound investment. So I
Speaker 1: think China is still grappling with the full implications of that,
Speaker 1: and there'll be a lot of focused on domestic investment
Speaker 1: in these key herded core technology sectors, for example, like
Speaker 1: semiconductors and artificial intelligence. But I think that that Beijing
Speaker 1: is really really struggling to figure out a way to invest,
Speaker 1: keep investing inst domestic industry and push back probably at
Speaker 1: some point on some of these restrictions we're seeing the
Speaker 1: US erect around China's company's access to critical technologies. Paul,
Speaker 1: as we came on air about thirty minutes ago, a
Speaker 1: headline hit the Bloomberg terminal, a news story She's frustration
Speaker 1: Abiden grows with warning of conflict, and it talks about
Speaker 1: how a lot of the communications coming from the new
Speaker 1: Foreign Minister Gang but actually g himself is under a
Speaker 1: lot of pressure domestically with the economy having to pivot
Speaker 1: policy to be supportive of industries that they have been
Speaker 1: cracking down on for a number of years now. How
Speaker 1: does he manage that process? To your mind, it's a
Speaker 1: good question. It's very complicated. I think at one level,
Speaker 1: coming out of the zero COVID restrictions, China has sort
Speaker 1: of pivoted in the economic and social sphere to show
Speaker 1: that it's open for business. And so part of the
Speaker 1: game is to show foreign investors and businesses that China
Speaker 1: is sort of back on track after some difficult, a
Speaker 1: difficult period of zero COVID lockdown, So that's one issue.
Speaker 1: But at the same time, China is facing the US
Speaker 1: restrictions on technology, and also of course concerns around China's
Speaker 1: continue support for Moscow and talk in Washington and in
Speaker 1: European capitals about the potential for sanctions. So as as
Speaker 1: Sea surveys. The landscape here it's it's opening up and
Speaker 1: trying to portray business as usual, but China is facing
Speaker 1: a lot of pressure for outside pressure that's going to
Speaker 1: push against that. How successful is your mind, is China
Speaker 1: base in leveraging some of the US partners and allies
Speaker 1: in getting around this this technological blockade? You know, it
Speaker 1: seems as if the US is convincing most of the
Speaker 1: Western world to go along with it. That's very much
Speaker 1: a work in progress. It's tricky because in some areas
Speaker 1: like export controls. Of course, there have been intense negotiations
Speaker 1: between the Dutch government and the Japanese government about aligning
Speaker 1: with some of the tough controls that the US put
Speaker 1: on in October. But with all these kinds of collaborations
Speaker 1: between allies that the US is trying to align to
Speaker 1: contain or constrain China and some of these technology areas.
Speaker 1: The devil really is in the details, and it can
Speaker 1: be tricky to get the countries that may have may
Speaker 1: not have similar kinds of export controls or investment restrictions
Speaker 1: to go along with this. So it's going to it's
Speaker 1: very much a work in progress. But yes, clearly China
Speaker 1: is very concerned about this and is working over time
Speaker 1: to try to push, for example, for better relations with
Speaker 1: Europe and try to sort of drive a wedge between
Speaker 1: the US and Europe on some of these issues. Talking
Speaker 1: relations with Europe, byte Dance CEO has been out there
Speaker 1: trying to woo in many ways European regulators, same as
Speaker 1: they have been here in the United States, but different
Speaker 1: tactics being taken on. At the moment, the EU seeds
Speaker 1: to be more inclined to listen to how byte Dance
Speaker 1: might be able to put in place restrictions to data
Speaker 1: flow from TikTok. Use just talk to us about the
Speaker 1: data the privacy argument that's going on here in the
Speaker 1: US vis of each China. Yeah, and obviously TikTok is
Speaker 1: sort of the poster boy for this. So TikTok has
Speaker 1: been very aggressive as part of its negotiations with the
Speaker 1: US government that they've gone on for about two years
Speaker 1: now installed to be more public about the kinds of
Speaker 1: procedures as putting in place to protect US citizen data.
Speaker 1: So over the last month, yes, the TikTok CEO has
Speaker 1: been very outspoken in discussing all the measures they're taking,
Speaker 1: which are pretty considerable. They spent something like one point
Speaker 1: five billion dollars to architect the sort of US enclave
Speaker 1: that protects user data and protects against things like censorship
Speaker 1: and things like and there are also allowing review, for example,
Speaker 1: of their AI algorithm. Um so, but they have a
Speaker 1: tall order to convince the US Congress and others in
Speaker 1: the Biden administration that they're taking enough steps to protect
Speaker 1: US US privacy and US user data. The CEO will
Speaker 1: testify in front of Congress and on March twenty third
Speaker 1: in front of the House Committee, and that will be
Speaker 1: a key indicator of how how successful TikTok sort of
Speaker 1: you know, spin is in terms of convincing US regulators
Speaker 1: that they've taken enough steps to protect US user data.
Speaker 1: The Europeans are also watching this very carefully, of course,
Speaker 1: to see how that comes out whole. With all your
Speaker 1: knowledge of China and its leadership. Are you convinced, Well,
Speaker 1: I've actually I've seen the I've seen the the TikTok proposal,
Speaker 1: and it looks to me like it's pretty it's pretty tough.
Speaker 1: It's it's they decided not to contest the national security
Speaker 1: concerns that the US government was putting forward, and so
Speaker 1: they architected this system using a lot of a very
Speaker 1: capable cybersecurity and other data privacy experts to try to
Speaker 1: address those concerns head on. So at least from what
Speaker 1: I've seen, again, it's it's it's difficult to know the
Speaker 1: full details, but from what I've seen them present, it
Speaker 1: looks like it's it's a pretty serious effort to address
Speaker 1: the concerns. And they spend a lot of money on this,
Speaker 1: I mean, one point five billion dollars and they estimate
Speaker 1: it will take about a billion dollars to run that Enclay,
Speaker 1: and so I think that, you know, that's that's I
Speaker 1: don't know any other social media company that's taken those
Speaker 1: kinds of actions to try to address head on those
Speaker 1: concerns around data privacy and user user data privacy. So
Speaker 1: it's a pretty impressive effort at least so far. The
Speaker 1: question for DC is if it's sufficient poultry. Ali albright
Speaker 1: Stonebridge Greep, Senior Vice President of China and Tape Policy,
Speaker 1: thank you so much. Coming up, Elon Musk took the
Speaker 1: stage at the Morgan Stanley conference in San Francisco. Will
Speaker 1: bring you the big takeaways next, including his thoughts on
Speaker 1: AI and speaking of earlier of AI, we heard from
Speaker 1: Citadel founder Ken Griffin with this horse on this technology,
Speaker 1: this branch of technology has real impact in our business,
Speaker 1: and I'm actually really excited to see how this changes
Speaker 1: the world. Housing and tech are very quote unquote interest
Speaker 1: rate sensitive. Construction and housing I think is obvious when
Speaker 1: you have a short mortgage cycle, but for tech, we
Speaker 1: had a decade long equity availability of capital and that's
Speaker 1: been shut down by the as well, So those are
Speaker 1: going to feel the impacts. First, a macro perspective, JP
Speaker 1: Morgan's Global Wealth Management chief Tom Kennedy earlier on Bloomberg
Speaker 1: Television these thoughts on just how the tech sector is
Speaker 1: currently evolving amid this new interest rate regime. Let's talk
Speaker 1: a little bit more about tech. First up, Apple adding
Speaker 1: a new color to its palette yellow. The company announced
Speaker 1: a yellow version of the iPhone fourteen plus today, adding
Speaker 1: to the existing Midnight Blue, Purple Red, and Starlight options,
Speaker 1: and sticking with new announcements, Sonos is revamping its line
Speaker 1: of home speakers, aiming to go after the market more
Speaker 1: aggressively as well. Of course, Google and Amazon are rolling
Speaker 1: out a fewer new products at the moment. The audio
Speaker 1: company now has two new models, the Era three hundred
Speaker 1: it's a form of advance around sound, and the Era
Speaker 1: one hundred, a replacement for a Sonos one, a key
Speaker 1: rival of course to Apple's Homeporn and Google's nest products,
Speaker 1: as well as the Amazon Echo. And finally, Uber when
Speaker 1: it's launching some new features of its own to make
Speaker 1: airport travel which I've just done Nestra from step by
Speaker 1: step instructions to guide you through the airport to walking
Speaker 1: ETA's It's also expanding availability for Uber Reserve offerings throughout
Speaker 1: the United States and Canada. Meanwhile, Ed, I've got to
Speaker 1: get your take right now on what we get lost
Speaker 1: in the noise sometimes surrounding Elon Musk. But he did
Speaker 1: take to the stage on the menu Shy around Twitter today.
Speaker 1: It's an a Morgan Stanley event. He took to this stage.
Speaker 1: He gave us ten minutes notice, he tweeted a live link,
Speaker 1: and then the Bloomberg newsroom just erupted into motion and
Speaker 1: we gathered the best and brightest across and we did
Speaker 1: a live blog and well, there are a lot of questions,
Speaker 1: everything from when the Twitter executive bench going to be
Speaker 1: as deep as it is is Tesla, what is going
Speaker 1: on with Twitter's debt? How is Twitter going to be
Speaker 1: different to when it was when you required it so
Speaker 1: much to discuss. Unfortunately, my editor and friend and co
Speaker 1: sufferer through the process, Sarah Fryer, joins me on set.
Speaker 1: There were a lot of takeaways you and I wrote
Speaker 1: about a number of them. One was the debt. I
Speaker 1: think we start there right in this idea that the
Speaker 1: debt is one point five billion dollar annually. But he
Speaker 1: kind of justified the savagery of laying off all of
Speaker 1: those staff. What did he have to say, Well, he said,
Speaker 1: now that debt is about the same as their their
Speaker 1: cash flow, so they're getting to be cash flow equal,
Speaker 1: maybe edging towards cash flow positive, which you know, he
Speaker 1: went on to say that they are now EBBA DA
Speaker 1: positive And I just think that this is part of
Speaker 1: his optimism, and we've seen a lot of optimism from
Speaker 1: from Musk despite spending four to four billion on Twitter,
Speaker 1: despite doing all those layoffs, he really thinks that he
Speaker 1: can turn it around. And and not only does he
Speaker 1: think he can make a cash flow positive, he thinks
Speaker 1: that he can rake in more from Twitter's advertisers. We
Speaker 1: actually kind of learned a little bit about how he's
Speaker 1: measuring success at Twitter, and you know, you know the
Speaker 1: social media landscape so well, he said, don't worry about
Speaker 1: monthly or daily active users. Look at US hours. I
Speaker 1: think he said, one hundred and thirty million US hours
Speaker 1: per day is what Twitter is hitting currently. What does
Speaker 1: he mean by that, Well, what he means is they
Speaker 1: have this platform that really has the pulse of the news.
Speaker 1: It's where everyone's talking about what's happening, and they aren't
Speaker 1: able to monetize that or make money off it through
Speaker 1: advertising at the level that he wants them too. He said,
Speaker 1: actually he was shocked at how poorly they are turning
Speaker 1: that attention into money. And one of the barriers to
Speaker 1: that is he thinks that the ads aren't relevant enough.
Speaker 1: I think partially that's because Twitter just doesn't gather the
Speaker 1: same kinds of data on users that Facebook does that
Speaker 1: other companies are able to based on their activity. And
Speaker 1: then the other factor is that there is this big
Speaker 1: issue about what advertisers called brand safety, which is that
Speaker 1: we don't want ads appearing next to the lab this tragedy,
Speaker 1: or even next to hateful commentary what people are saying
Speaker 1: that that may you may just don't don't want to
Speaker 1: sell next to that. In Twitter, because it's a place
Speaker 1: for the news, is also the place for a lot
Speaker 1: of that kind of content that that perhaps is not
Speaker 1: as inspiring. You know, don't necessarily want to think about
Speaker 1: where you're going to get your next burger while you're
Speaker 1: watching a tragedy. When we think about oversight in particular
Speaker 1: under Elon Musk's watch and safety in many ways, I
Speaker 1: know European regulators have been thinking about this a lot
Speaker 1: and looking towards some new laws that are going to
Speaker 1: put into place to protect consumers come twenty twenty four.
Speaker 1: But it looks as the USFTC, the Federal Trade Commission,
Speaker 1: also plans to depose Elon Musk as part of its probe. Right,
Speaker 1: there are a lot of people interested in this. Yeah,
Speaker 1: I think that this is a company that is going
Speaker 1: to come under a lot of scrutiny in part because
Speaker 1: of the layoffs. You're cutting a lot of staff that
Speaker 1: previously We're hired because of of what regulators wanted. They
Speaker 1: wanted somebody to work on harmful content, to work on
Speaker 1: taking down information operations from from foreign operatives of the
Speaker 1: like that that tried to influence the twenty sixteen presidential election.
Speaker 1: I mean, there were people in place because they were
Speaker 1: needed at the time. And Twitter is going to have
Speaker 1: to untangle, you know, did we cut too deep? Did
Speaker 1: we do we get rid of people that were there
Speaker 1: for a reason? Um and and it's gonna be tough
Speaker 1: to answer regulators, I think Muska saying, you know, we
Speaker 1: will make those hires we need to make of. We
Speaker 1: have a lot of priorities right now. Serifi, thank you
Speaker 1: so much. We were telling you about this earlier in
Speaker 1: the show Salesforce getting in on the generative AI alms race.
Speaker 1: Let's bring it so this cloud CEO Clara shay in
Speaker 1: for more. You've just been on stage, Clara, and you've
Speaker 1: talked about Einstein GPT. Let's start here. Did you partner
Speaker 1: with open ai because it was the best technology or
Speaker 1: because it was good marketing. Einstein GPT we're really thrilled
Speaker 1: to announce today at the Salesforce Trailblazer DX event here
Speaker 1: in San Francisco. Einstein GPT is the world's first AI
Speaker 1: generative AI purpose built for CRM, and we are taking
Speaker 1: an open ecosystem approach. Open AI is our initial partner,
Speaker 1: but we'll be adding additional partners in the coming months.
Speaker 1: How does this improve the offering to your CRM enterprise clients?
Speaker 1: What is it that they're getting out of this now?
Speaker 1: Einstein GPT is really about combining Salesforce's proprietary AI with
Speaker 1: an ecosystem of vetted generative AI partners to create personalized
Speaker 1: content for sellers, service agents, marketers, commerce managers as well
Speaker 1: as IT developers. And it's for the employees, it's about
Speaker 1: making them more productive, and for customers, it's about delivering
Speaker 1: more tailored, relevant experiences. Because I believe you already deliver
Speaker 1: what two hundred billion AIPAD predictions per day anyway, we
Speaker 1: think is customer three sixty Clara, So how does the
Speaker 1: large language model change things up? If you're a user?
Speaker 1: That's a great question. So we've been on this AI
Speaker 1: journey for over seven years now. We introduce the world
Speaker 1: to Einstein in twenty sixteen and there are over two
Speaker 1: hundred and fifteen billion predictions at Einstein. It gives out
Speaker 1: every day today across customer interactions. Einstein GPT is the
Speaker 1: next generation of our Einstein AI and it includes generative technology,
Speaker 1: which means that content gets created for sellers, for example,
Speaker 1: a draft email to a prospective customer for service agents,
Speaker 1: a draft response to a customer service chat or email
Speaker 1: for marketers, generating dynamically generating landing pages and email campaign content.
Speaker 1: The human stays in the loop. They get final say
Speaker 1: before they hit send and open AI say. Look. It
Speaker 1: allows them to learn more about real world usage. That's
Speaker 1: critical to responsible development. I'm interested in that responsible development
Speaker 1: element because it's interesting. Some key financial companies, for example,
Speaker 1: have been limiting their use employees use of chat CHPT
Speaker 1: worried about their IP Basically, how are you going to
Speaker 1: ensure this is a safe space for all your customers
Speaker 1: to work in. It's the difference between consumer and business applications.
Speaker 1: Thus far, a lot of what has been covered in
Speaker 1: the news about generative AI has been consumer applications that
Speaker 1: are open ended and frankly have higher safety and accuracy
Speaker 1: concerns in the business space. We can really focus the
Speaker 1: use case the job to be done on specifically what
Speaker 1: does a salesperson need? Specifically what is a service agent
Speaker 1: need to do his or her job, Clara. The other
Speaker 1: big piece of news is Salesforces Venture m launching a
Speaker 1: new two hundred and fifty million dollar fund specifically targeting
Speaker 1: startups in generative AI. You alluded to it earlier about
Speaker 1: future partnerships, but what are you looking for with that fund?
Speaker 1: That's right, our new generative AI startup fund from Salesforce Ventures.
Speaker 1: It's really focused on investing in and nurturing the next
Speaker 1: generation of AI startups. We believe it's very early days
Speaker 1: and generative AI, and you know, there's a lot that
Speaker 1: we don't know yet, and so being able to have
Speaker 1: an ecosystem play is very important and also to give
Speaker 1: our customers choice ed referenced at the start. This sort
Speaker 1: of feels like a pr offensive around AI or a
Speaker 1: bit of a marketing ploy, but ultimately, you've been doing
Speaker 1: AI for years. Does it frustrate you that suddenly everyone's
Speaker 1: talking about chat GPT? Was it needed this sort of
Speaker 1: conversation I think it's great. It's created consumer excitement in demand.
Speaker 1: My eighty five year neighbor even knows about Chatchi Futi
Speaker 1: and ultimately, you know, businesses they care about AI and
Speaker 1: the context of driving business results, especially in this macro environment.
Speaker 1: How do I close more sales? How do I respond
Speaker 1: to my customer support issues more quickly? And so that's
Speaker 1: our true north in developing these applications in an ethical
Speaker 1: and responsible way. Salesfull Service Cloud CEO Kashy running off
Speaker 1: stage to be with us. We appreciate it, Thank you
Speaker 1: so much. Meanwhile, that does it for this edition of
Speaker 1: Bloomberg Technology ED. But we've got a pretty great lineup
Speaker 1: of top executives tomorrow. It also so it happens to
Speaker 1: be International Women's Day. Yeah, I'm really looking forward to
Speaker 1: some of those conversations, new names, some of them, it's
Speaker 1: some of them long time guests on this program. Don't
Speaker 1: forget been just an incredible newsflow day. You can recap
Speaker 1: all of it in the world of technology on our
Speaker 1: podcast wherever you get your podcasts, Apple, Spotify or iHeart,
Speaker 1: and of course on the Bloomberg terminal. Two days down,
Speaker 1: three to go before the big move. Character this is
Speaker 1: came back m HM.