Speaker 1: From the heart of where innovation, money and power colli
Speaker 1: in Silicon Valley and beyond. This is Bloomberg Technology with
Speaker 1: Emily Jay. I'm Emily checking San Francisco, and this is
Speaker 1: Bloomberg Technology. Coming up in the next hour. Add Snap
Speaker 1: to a list of big tech names laying off hundreds
Speaker 1: of workers. This is two top ad exacts leaves out
Speaker 1: for Netflix. The slowdown and revenue growth being felt across
Speaker 1: the tech industry, and some companies like Netflix are turning
Speaker 1: to ads as the answer. Plus Smark Zuckerberg's conversation with
Speaker 1: Joe Rogan offered a glimpse into his vision or meta,
Speaker 1: but the tough reality is that vision hasn't changed much
Speaker 1: since Facebook oculus back in and people just don't see
Speaker 1: that in to it. And we continue our ed tech
Speaker 1: series after new poll shows less than half of American
Speaker 1: support President Biden student at relief plan. We will also
Speaker 1: chat with the CEO of the text Bookmaker, person who
Speaker 1: thinks n f T S could be a new revenue stream.
Speaker 1: All of that in a moment, but first let's get
Speaker 1: a look at Snap slashing staff, scaling back on investments
Speaker 1: to rain in costs after a broader pullback on ad spending,
Speaker 1: snapping its sales growth this year, Snapchat's parent company, the
Speaker 1: latest in a wave of tech layoffs that has plunged
Speaker 1: the NASDAC into choppy waters. Let's get the latest now
Speaker 1: with Bloomberg's Alex Baringa. So, Alex, this is a pretty
Speaker 1: deep cut we're talking about, and they're cutting a lot
Speaker 1: of businesses that we're generating a lot of buzz What's
Speaker 1: happening here? That's right, It's a deep cut and it
Speaker 1: doesn't just stop at headcount numbers. So snap has its
Speaker 1: core Snapchat platform. They've also kind of rolled out a
Speaker 1: number of buzzy projects like the Pixie drone with which
Speaker 1: flies around and takes pictures, or like a mini games
Speaker 1: within the app. A lot of these projects are falling
Speaker 1: by the wayside. They're either being killed or scaled back
Speaker 1: in the case of something like snaps Spectacles. Now all
Speaker 1: of this has basically come to a head, as the
Speaker 1: company said. The CEO said in an internal memo that
Speaker 1: revenue growth for this quarter is basically going to hit
Speaker 1: single digits for the first time ever since they're a
Speaker 1: public company. Um, So they are looking at the company
Speaker 1: really refocusing on anything that is monetize able on their
Speaker 1: ad business and on any future potential UM places to
Speaker 1: make revenue and culling basically everything als simily, they're also
Speaker 1: losing their chief business officer, Jeremy Gorman going over to Netflix.
Speaker 1: We actually recently had Jeremy right here on the show.
Speaker 1: What do you make of this? Yeah, so this is
Speaker 1: part of this kind of restructure slash re org that
Speaker 1: Snap has. All of Jeremy Gorman's businesses are shifting over
Speaker 1: to a new chief operating officer UM that they have
Speaker 1: promoted from their engineering team him. Look, I think that
Speaker 1: an analyst over at j MP Security summed it up best.
Speaker 1: They said, we don't really know who's in charge of
Speaker 1: the AD business right now. Um. I think it will
Speaker 1: be another bit of this kind of proved me process
Speaker 1: to be sure that leadership there at Snap really can
Speaker 1: show that they can kind of lean into the role
Speaker 1: that Jeremy is exiting. She is a kind of seasoned
Speaker 1: ad executive. She is really strong on the AD sales
Speaker 1: side and has experienced at other big tech companies. So
Speaker 1: they definitely have a bit of a gap there to fill.
Speaker 1: UM and look, that whole business, which is the money
Speaker 1: making arm of Snap will now be reporting into a
Speaker 1: brand new executive new seat. So for investors, they're happy
Speaker 1: to see the cost cuts from the news today, but
Speaker 1: I would guarantee that that's going to be a place
Speaker 1: that they're watching because that is, you know, the bread
Speaker 1: and butter of snaps top line. Now, now there's been
Speaker 1: a lot of tumult in social media, but you know,
Speaker 1: for somewhat different reasons. Obviously meta we reported yesterday they're
Speaker 1: laying off a bunch of contractors, also doing this big
Speaker 1: pivot to the metaverse. Twitter is embroiled in this lawsuit
Speaker 1: with Elon Musk. You've got TikTok, you know, fighting these
Speaker 1: content moderation wars, but kind of winning on the engagement side.
Speaker 1: Can you compare snaps fortunes with these other competitive platforms. Yeah,
Speaker 1: I think it's really interesting, Emily. Snap has really kind
Speaker 1: of benefited from its reputation and its prowess with younger generations. Um,
Speaker 1: that is really when advotagers go there to spend money
Speaker 1: like that is one of the things that's top of mind.
Speaker 1: Snap owns the younger generations. Well, now you have TikTok
Speaker 1: on the scene, who has also really done well to
Speaker 1: win over the downloads and the business of those younger audiences.
Speaker 1: So you have TikTok kind of leaning in and pushing
Speaker 1: in on Snap um and and kind of threatening their
Speaker 1: core user base. And then you have places, as you mentioned,
Speaker 1: like Meta, and I would also throw Google its search
Speaker 1: and YouTube businesses in the mix there too, which are
Speaker 1: a bit more I would say to handable for advertisers.
Speaker 1: So if you're looking at a where is the money
Speaker 1: going basis, we've seen to the last a few earning cycles,
Speaker 1: it's not really going to Snap. TikTok's a private company,
Speaker 1: so we will see Meta and YouTube. Google seem to
Speaker 1: be continuing to kind of break in the cash. So
Speaker 1: it's definitely a fight out and I would toss Instagram
Speaker 1: there in the mix too as well. Um probably somewhere
Speaker 1: in the middle. It's definitely a battle that is raging
Speaker 1: that will we pay a lot of attention to. But
Speaker 1: when it comes to Snap again, like this kind of
Speaker 1: podium they've been on, of owning gen Z, of owning
Speaker 1: the teens and twentysomethings, I think that's really coming under
Speaker 1: threat in a way that perhaps they haven't seen before.
Speaker 1: From the likes of fakesbook Instagram or YouTube. All right,
Speaker 1: Alex Barenka, thank you cover social media for us. Appreciate
Speaker 1: it well. As we mentioned those two Snap executives going
Speaker 1: from snaps ad business to help Netflix launch their ad
Speaker 1: supported platform, Jeremy Gorman, as we mentioned, along with the
Speaker 1: president of ad Sales Peter Naylor, joining Netflix in September.
Speaker 1: Here to tell us more about this, Bloomberg's Lucashaw So Lucas,
Speaker 1: how big a coup is this for Netflix? I mean, look,
Speaker 1: they took two of the top executives in the digital
Speaker 1: ad business right now, Peter Naylor in particular, the Jeremy
Speaker 1: Gorman I believe more senior at Snap. Peter Naylor helped
Speaker 1: build the ad business at Hulu, which, other than YouTube,
Speaker 1: is really the biggest digital video ad business in the US.
Speaker 1: Netflix have spent the past couple of months, if not longer,
Speaker 1: looking for some executives to to lead the charge for
Speaker 1: them as they move into advertising, and now they have,
Speaker 1: you know, two really solid people. So at this point,
Speaker 1: what do we know about Netflix's ad supported to here,
Speaker 1: how it will compare it to Disney's add supported tier, etcetera. Uh,
Speaker 1: we know that it's going to debut either in the
Speaker 1: final three months of this year likely and in November,
Speaker 1: December or at the very beginning of next year. Uh.
Speaker 1: My reporting has suggested that it will be cost about
Speaker 1: half as much as the basic Netflix here, so think
Speaker 1: like eight bucks nine bucks. There will be advertising in
Speaker 1: some programming, but not all, not advertising and kids programming,
Speaker 1: at least not first not advertising in new movies. Uh
Speaker 1: And they'll be ads before and during some programs, but
Speaker 1: not after. And they're aiming for about four minutes of
Speaker 1: advertising per hour. You brought up Disney the four minute
Speaker 1: Netflix or like Disney and like HBO, Max is aiming
Speaker 1: for a low advertising load and they can charge a
Speaker 1: lot for those advertisements. They don't want to have much
Speaker 1: more than four minutes per hour. They don't want to
Speaker 1: make it uncomfortable for the viewers. That's much easier said
Speaker 1: than done. And we'll have a better sense of what
Speaker 1: this looks and feels like when these services come out
Speaker 1: at the end of the year. A couple interesting headlines
Speaker 1: out from Dow Jones, One that Disney is exploring an
Speaker 1: Amazon Prime like membership program to offer various discounts and perks.
Speaker 1: Another that Netflix is looking to charge brands premium pricing
Speaker 1: for this ad supported tier, which is not necessarily a surprise.
Speaker 1: What do you make of these? Yeah, I mean the
Speaker 1: Disney News I think makes a lot of sense. They
Speaker 1: already have a bundle for their three streaming services, and
Speaker 1: they also will charge fans of their parts for what's
Speaker 1: called an annual pass, where you can pay one set
Speaker 1: price and get to go again and again, with the
Speaker 1: exception of certain days. Like Disney is the one media
Speaker 1: company that has a truly loyal fan base. They love
Speaker 1: the brand, they love the characters. Uh, and so them
Speaker 1: trying to create one bundle for their super fan that
Speaker 1: people can pay and reduce churn or the number of
Speaker 1: cancelations for for some of their services makes all the
Speaker 1: sense in the world, you know. As for Netflix, I don't.
Speaker 1: I honestly don't think that's really news. Both the Journal
Speaker 1: and we have reported before that they're looking to charge
Speaker 1: medium prices. All right, that would make sense Bloomberg's look
Speaker 1: a shaw, thank you very much. Meantime, Twitter has subpoena
Speaker 1: at Stanford University as part of its legal battle with
Speaker 1: Elon Musk. Yes, the university. I'll tell you why. Next,
Speaker 1: this is Bloomberg. Let's get the latest now on the
Speaker 1: Musk Twitter trial. The billionaire asking for more time again,
Speaker 1: this time to dissect the claims of a whistle blower.
Speaker 1: And also Elon Musk wants to talk with his alma mater,
Speaker 1: and that is Stanford University here to explain Bloomberg's Jeff Feely. So, Jeff,
Speaker 1: let me get this straight. We thought it was Twitter
Speaker 1: subpoena NG Stanford, but actually it's Musk subpoena NG Stanford.
Speaker 1: Why would Musk? Why would Musk want information from Stanford
Speaker 1: University about the Twitter deal? Okay, so we don't know
Speaker 1: for sure, but one of the Twitter board members, a
Speaker 1: Dr Lee, works at Stanford and the is one of
Speaker 1: the AI experts at Stanford. So it could be that. Uh,
Speaker 1: it also could be wants to check and see who
Speaker 1: she had conversations with among her colleagues about, you know,
Speaker 1: problems with the deal. Uh, you know where exactly could
Speaker 1: this lead? Well, I mean, what's going on here is
Speaker 1: both sides are trying to put together their cases for
Speaker 1: the October seventeenth trial, and Mr Musk wants to know what,
Speaker 1: you know, what conversations the Twitter board members have had
Speaker 1: with people about this. Obviously, looking for material that would
Speaker 1: you help him justify walking away? Interesting? Okay, Well, you know,
Speaker 1: obviously this case is changing by the minute. Yesterday we
Speaker 1: learned Elon Musk wanted to try to get the trial
Speaker 1: pushed to November. Now he's potentially trying to get it
Speaker 1: pushed even further out to December. What exactly do we
Speaker 1: know about what Musk is asking for at this point. Well,
Speaker 1: they're asking to push the trial to late November early
Speaker 1: December to give themselves and the Twitter folks more time
Speaker 1: to dig into the allegations of the whistleblower that have emerged,
Speaker 1: and you know, people need to find out whether his
Speaker 1: allegations are substantial or sour grapes. This gentleman was fired
Speaker 1: from Twitter ashead of its computer security, uh for what
Speaker 1: the company says, we're performance issues. So it's gonna take
Speaker 1: some time to really dig into this, and they're running
Speaker 1: out of time in terms of discovery. Late November to
Speaker 1: state at the obvious is Thanksgiving in the United States,
Speaker 1: So that you know, leads me to potentially December. What's
Speaker 1: the likelihood in your view that this case, this child
Speaker 1: gets moved um and when when will it judge make
Speaker 1: a decision on this, Well, we don't know when Judge
Speaker 1: McCormick will rule, but most people believe she's going to
Speaker 1: grant more time because the emergence of this gentleman was
Speaker 1: a surprise, and there's some inkling there could be other
Speaker 1: so blowers coming down the plate, so there could be
Speaker 1: a need for, you know, to push it back in
Speaker 1: the interests of justice. So here's the question. Elon Musk,
Speaker 1: you know, said he was gonna buy Twitter with no diligence.
Speaker 1: That's on Elon Musk. Why is it all of the
Speaker 1: Why are these additional claims actually relevant? Well, the whistle
Speaker 1: blower raised issues about lacks computer security and privacy concerns.
Speaker 1: If Twitter did not disclose those things to Mr Musk
Speaker 1: as part of the deal, and even though he didn't
Speaker 1: do due diligence, they still have legal duties to disclose
Speaker 1: things like that. It's called representations and warranties. And if
Speaker 1: the judge finds that they should have disclosed those things
Speaker 1: that didn't, it can sink the deal. All right, Uh,
Speaker 1: lots going on here at Jeff, really appreciate you continuing
Speaker 1: to give us the play by play and help us
Speaker 1: make sound to all these moves, bloombergs Jeff Feely in Delaware,
Speaker 1: very busy guy for us. Thank you. You will be
Speaker 1: able to have this experience in the future where like
Speaker 1: you're sitting in a meeting, um, and you know your
Speaker 1: wife text too, and it pops up in the corner
Speaker 1: of your glasses and you want to respond, but you
Speaker 1: don't want to pull out your phone because that's kind
Speaker 1: of rude, right, UM, So you just kind of like
Speaker 1: don't twitch your wrist a little bit, maybe like this
Speaker 1: like some super discreet motion, um that no one even
Speaker 1: knows you're doing it, and you just like send a message.
Speaker 1: And that seems like a massive distraction. I mean people
Speaker 1: are already distracted by their phones, Like when people get
Speaker 1: a text messages and they're like, hang on a second,
Speaker 1: I just can't answer this real quick. And you're like okay,
Speaker 1: and you're sitting there having lunch with someone and they're
Speaker 1: not talking to you anymore because they looking at their phone.
Speaker 1: But now they're going to be looking at these a
Speaker 1: R glasses and just thinking out text messages. Just some
Speaker 1: of Mark Zuckerberg's very lengthy conversation on Joe Rogan's popular
Speaker 1: podcast last week, Three Hours The interview was an opportunity
Speaker 1: for Zuckerberg to defend Meta's pivot to virtual and augmented reality.
Speaker 1: But as you just heard with Rogan's rebuttal, Zuckerberg's vision
Speaker 1: is facing a tough reality here to discuss Max Chafkin.
Speaker 1: So there's a lot here, Max, But overall, what do
Speaker 1: you make of how Mark Zuckerberg portrayed his vision and
Speaker 1: how Joe Rogan reacted to it? Well, So, the thing
Speaker 1: that was just striking to me, as somebody's followed this
Speaker 1: for a long time, is how little Mark Zuckerberg's v R,
Speaker 1: a R metaverse, whatever you want to call it, how
Speaker 1: little that vision has changed. Um, you know, we've kind
Speaker 1: of over the last six months or so been talking
Speaker 1: about it as if it's this, you know, brand new thing. Yeah,
Speaker 1: they they're spending billions of dollars um and kind of
Speaker 1: forgetting that Facebook purchased Oculus, you know, the company that
Speaker 1: seeded the VR effort in it has spent you know,
Speaker 1: even before spending ten billion dollars one, it had spent
Speaker 1: billions and billions of dollars marketing several successive devices. Um,
Speaker 1: you know, they had a Super Bowl at in February
Speaker 1: and really has gotten not a whole lot of traction,
Speaker 1: all things considered, And I think part of the reason
Speaker 1: is what we just heard that this pitch, which is
Speaker 1: that you're gonna kind of want to put Facebook um
Speaker 1: inside of virtual reality, uh and and strap it to
Speaker 1: your face, is just not that compelling, and they and
Speaker 1: they really still haven't figured out a way to to
Speaker 1: sell it. And and for three hours with Joe Rogan,
Speaker 1: we saw Zuckerberg kind of working, you know, basically trying
Speaker 1: to his every trick he could think of to to
Speaker 1: sell it, and and you know, coming up short, I
Speaker 1: would say, now I've actually heard that texting example from
Speaker 1: Zuckerberg before about his wife setting in a text and
Speaker 1: how VR could be cool, uh to help him check
Speaker 1: that text without other people noticing. This one was new
Speaker 1: to me. Take a listen. There's something that's just so
Speaker 1: primal um about it that's I don't I don't know,
Speaker 1: it's it's and I've since then, I've just introduced a
Speaker 1: bunch of my friends to it, and that's been really
Speaker 1: fun because now it's like we're trained together and we
Speaker 1: just like wrestled together and just I don't know, there's
Speaker 1: like a certain intensity to it that I um that
Speaker 1: I I like h Now I understand maybe Zacherberg's trying
Speaker 1: to show a little bit more of his human side. Um,
Speaker 1: but there's a a sort of naivete there or or
Speaker 1: a falling flat I might say, Yeah, you know, one
Speaker 1: of the most successful tech people in the world bringing
Speaker 1: the cringe to Joe Rogan. Um. He maybe it wasn't
Speaker 1: clear if if people were just coming to it cold,
Speaker 1: but he's talking about jiu jitsu. Mark Zuckerberg has gotten
Speaker 1: into I guess, uh, combat sports. Um. And he was
Speaker 1: trying to bond with Joe Rogan and again I think, um,
Speaker 1: you know kind of jokes aside with this just chows
Speaker 1: like this company is trying everything they can to connect
Speaker 1: with people. So you know they they again, they tried
Speaker 1: Super Bowl ads, they tried you know, demos, and now
Speaker 1: Zuckerberg's you know, sort of trying on this like alpha male,
Speaker 1: you know, I'm into fighting sports thing to to convince
Speaker 1: Joe Rogan's audience, which is substantial. I mean, Joe Rogan
Speaker 1: has you know, the most successful podcast in the world
Speaker 1: to you know, give give the you know, Oculus or
Speaker 1: or or the Facebook b our Devices shop. Meantime, let's
Speaker 1: talk about what he had to say about sort of
Speaker 1: screens and television and how he imagines um, all of
Speaker 1: these different screens and interfaces working together. Take a listen
Speaker 1: to what he had to say. I just want the
Speaker 1: time that people spend with screens to be better, because
Speaker 1: I mean, today, so much of it just like you're
Speaker 1: just sitting around and in this like beta state consuming stuff.
Speaker 1: And I think that that's like, oh h so, I
Speaker 1: wonder what he means by beta state there, and if
Speaker 1: his vision of screens is actually what people want. Yeah,
Speaker 1: it's it's hard to understand if you're trying to kind
Speaker 1: of connect with the masses and convince them that this
Speaker 1: new product you have is great, um that you want
Speaker 1: to start out by sort of um, you know, dissing uh,
Speaker 1: what's basically the most popular entertainment medium in the world.
Speaker 1: I think what he was trying to say is that
Speaker 1: television is passive, and he was sort of using this
Speaker 1: kind of Joe Rogan verse alpha meaning active, strong manly,
Speaker 1: passive meaning uh, some beta meaning passive or almost effeminine
Speaker 1: to refer to television. But it really is kind of
Speaker 1: a head scratcher, and I just think it it just
Speaker 1: goes to show how kind of all over the place
Speaker 1: the marketing has been here and and it's it's worked
Speaker 1: in certain ways, right like the the these hardware devices
Speaker 1: have sold reasonably well as as kind of video game consoles.
Speaker 1: But in terms of trying to broaden this out, making
Speaker 1: this something that you know, regular people are going to
Speaker 1: use for meetings or or or for travel or something,
Speaker 1: I mean, really, we're not anywhere. All right, Well, if
Speaker 1: you have three hours, uh, that's just Mark Zuckerberg on
Speaker 1: Joe Rogan. If you want to hear more of Bloomberg's
Speaker 1: Max Chafkin, who also wrote about it Bloomberg Business Week.
Speaker 1: Appreciate your thoughts. Welcome back to Bloomberg Technology. I'm Emily
Speaker 1: Check in San Francisco. We are continuing our education tech
Speaker 1: coverage as we enter the school season. President Biden's unprecedented
Speaker 1: student loan cancelations getting some mixed reactions. A new warning
Speaker 1: consult Political surveys shows only forty eight percent of American
Speaker 1: support Biden's level of forgiveness. Who to discussed Sarah Leaving,
Speaker 1: CEO of the investing in financial planning platform Betterment, So
Speaker 1: not necessarily a popular plan um not everyone supporting this
Speaker 1: and a lot of debate. Sarah, where do you stand?
Speaker 1: So I think there are economists on both sides of
Speaker 1: this issue, and I think we can agree that student
Speaker 1: loans are a major problem for this country, and that
Speaker 1: there's one point seven trillion dollars in student loan debt outstanding,
Speaker 1: and also that this generation is more saddle the student
Speaker 1: loan debt than any of the generations that have come before.
Speaker 1: I think where the conversation gets trickier is what to
Speaker 1: do about it? And so I'm a believer personally that
Speaker 1: what to do about it lies in advice and technology,
Speaker 1: and that the federal government can play a part, but
Speaker 1: the business also needs to play a part. How so, well,
Speaker 1: you know, I think the first the first thing that
Speaker 1: is very true is that, you know, folks are are
Speaker 1: not good at saving and are not necessarily good at
Speaker 1: understanding if I have another disposable dollar, where should I
Speaker 1: put it? Right? And so I think there's sort of
Speaker 1: a regulatory and technology conversion here that's pretty exciting, where
Speaker 1: we now can develop tools, and we had betterment, are
Speaker 1: developing tools to really say to a student loan a
Speaker 1: student loan holder, look, what should you do with your
Speaker 1: next dollar instead of going to Starbucks this week. You know,
Speaker 1: what would five dollars a day do in terms of
Speaker 1: visually we can show you visually what would it do
Speaker 1: in terms of your debt pay down, both your timeline,
Speaker 1: your costs and how can we set you up for
Speaker 1: a better future. And so I think that's one thing
Speaker 1: we can do is offer technological solutions. And the other
Speaker 1: thing we can do is partner with employers, right because
Speaker 1: as with many other great issues of the day, like
Speaker 1: retirement savings, employers have a role to play in supporting
Speaker 1: their employees. How do you see businesses and employers playing
Speaker 1: a bigger role here and how could that also impact
Speaker 1: the choices that students are prospective students make about how
Speaker 1: to access education. Yeah, so I think it's a great question.
Speaker 1: I mean, I think this is you know, for those
Speaker 1: who aren't that excited about the current approach, I think
Speaker 1: the government is take ging. You know, one of the
Speaker 1: concerns is this moral hazard issue of our people going
Speaker 1: to make choices about their education that they're then going
Speaker 1: to expect to be forgiven by the government, and therefore,
Speaker 1: will they make choices that maybe aren't the best choices
Speaker 1: for them? And then similarly, will the costs go up
Speaker 1: because the schools know that they can access this incremental funding.
Speaker 1: So I think this is a real challenge that I
Speaker 1: think we're poised to help with in a couple of ways.
Speaker 1: I mean, number one, there's more legislation if you can
Speaker 1: imagine coming down the pike um in the Secure Act
Speaker 1: two point oh, you know, sort of on the table
Speaker 1: later this year. That's talking about tax incentives for businesses
Speaker 1: to help potentially even with a match where you link
Speaker 1: a four own K and student loan management. So imagine
Speaker 1: if I'm an employee and I can't access my company
Speaker 1: match for retirement because I'm paying down debt from my
Speaker 1: student loan and I just don't have an incremental dollar
Speaker 1: to save, Well, here's an opportunity for the government to
Speaker 1: step in and say, Okay, whether you save by paying
Speaker 1: down your debt or whether you save by putting a
Speaker 1: dollar in your four own k, either way your employer
Speaker 1: can met match that contribution. And that's a really powerful
Speaker 1: way for employers to be able to channel dollars where
Speaker 1: they're going to best serve their employees. What would be
Speaker 1: your message to you know, rising freshmen right now who
Speaker 1: are considering a college education, who have you know, you know,
Speaker 1: innumerable online learning options now available to them, and companies
Speaker 1: that are reducing degree requirements. So you know, you've got
Speaker 1: some people out there saying I don't need a four
Speaker 1: year degree. I think it's true that there's no one
Speaker 1: size fits all. I mean, I think on averaging over time,
Speaker 1: education has helped to lead to better outcomes, you know,
Speaker 1: for society. So but I think we could talk about
Speaker 1: whether that education is about starting young and preschool and
Speaker 1: getting out of the gate stronger, or whether it's about
Speaker 1: a four year college. I think the idea that you know,
Speaker 1: there are vocational programs and other ways to go about
Speaker 1: it are true. But all of these things have costs
Speaker 1: and each has a different r O. I So I think,
Speaker 1: you know, regardless of the path and into visual chooses
Speaker 1: because there are many paths, and I agree they're kind
Speaker 1: of more varied than they were perhaps you know a
Speaker 1: generation ago. Um, there still is going to be this
Speaker 1: problem of people need to borrow to fund any of
Speaker 1: these whether it's vocational school or whether it's a four
Speaker 1: year college. They're borrowing. Sometimes they're not finishing their degree,
Speaker 1: they're borrowing for that and these are costs that then
Speaker 1: they need to understand how to tackle right. And that's
Speaker 1: really the problem we're seeking to solve is how do
Speaker 1: we help employees who have taken on this debt? How
Speaker 1: do we help them tackle this debt in the most
Speaker 1: responsible way to give them the best personal long term outcome?
Speaker 1: All right? Uh, Sarah Leav CEO of Betterment, Thanks for
Speaker 1: waging in what has been a raucous debate. Appreciate it. Okay,
Speaker 1: Coming up, could the future of textbooks be n f
Speaker 1: T s. We're gonna ask Pearson CEO Andy Bird about
Speaker 1: that and more. Next, this is Bloomberg. This week we're
Speaker 1: focusing on education technology and how innovation in this field
Speaker 1: is fueling a new way of teaching and learning. And
Speaker 1: in today's Crypto report, we're talking about how n f
Speaker 1: t s could change the game when it comes to textbooks.
Speaker 1: Like to take a deeper dive into all of that
Speaker 1: with Andy Bird's CEO of Pearson, one of the world's
Speaker 1: largest textbook publishers. So, Andy, I remember buying a lot
Speaker 1: of very heavy, very expensive textbooks. Can you explain to
Speaker 1: me how n f t s could change this industry? Oh? Hi,
Speaker 1: am Luke and thanks very much for having me on
Speaker 1: your show. I remember those days as well, of the
Speaker 1: heavy textbook and a pisson. We're very much leaning into
Speaker 1: digital technology as as a way forward, and in fact,
Speaker 1: now if you subscribe to Pier some plus, you'll be
Speaker 1: able to get those textbooks for just a month and
Speaker 1: it's it's one example of how we as a company
Speaker 1: are really looking at technology to move the whole industry,
Speaker 1: in the whole sector forward. I think the pandemic acted
Speaker 1: as an accelerator in terms of really transforming the world
Speaker 1: of education and the world of learning. Per your earlier
Speaker 1: discussion with Sarah, and in that regard, I've been really
Speaker 1: interested in how technology and how Pierson can utilize technology,
Speaker 1: both in terms of n f t s, nonpuntual tokens
Speaker 1: and blockchain, but the notion of having a transparent ledger
Speaker 1: and the impact that would have on authors and royalties,
Speaker 1: for example. I think it's very very interesting. It also
Speaker 1: allows us to deconstruct the textbook, and you know, once
Speaker 1: the textbook is in digital form, you can look at
Speaker 1: ways as offering not just text by the chat to say,
Speaker 1: but also video. You see some of the examples on
Speaker 1: screen now is some plus you know, a lot of video,
Speaker 1: a lot of animation, a lot of graphics, a lot
Speaker 1: of audio suddenly starts to come into play as you
Speaker 1: look at the way that learning and textbooks are evolving,
Speaker 1: and so as a company, I think it's very important
Speaker 1: that we're sort of trying to lead research and development
Speaker 1: in that space, and that's what we're doing. So give
Speaker 1: an example of how a textbook could be an n
Speaker 1: f T and how that could survive, you know, past
Speaker 1: be passed on to multiple students, and how Pearson could
Speaker 1: still potentially profit from it even if we're talking you know,
Speaker 1: three or four students down the line. Like I used textbook, Yeah,
Speaker 1: I think think of a textbook a modern digital textbook
Speaker 1: curve comprising of various learning modules. So where in the
Speaker 1: past in the analog world you had chapters and illustrations
Speaker 1: and pictures, in the future, those chapters are broken down,
Speaker 1: as I said, into different learning modules. The creator of
Speaker 1: those learning modules could in theory, meant that learning module
Speaker 1: as an n f T and therefore not only get
Speaker 1: paid by Pearson if that's an author. There's a really
Speaker 1: interesting angle in terms of users generated content and all
Speaker 1: of this. By the way, but the the the the
Speaker 1: the author or the creator of that content. It could
Speaker 1: be a video, it could be in a take a
Speaker 1: form of audio. Would then be able to participate as
Speaker 1: that learning module is utilize down the blockchain as it
Speaker 1: were in the blockchain acts as that transparent ledger and
Speaker 1: make sure that everyone gets paid an appropriate amount of money.
Speaker 1: It actually I think could lead to greater accessibility and
Speaker 1: affordability for education as you look more globally now Carmel's fashion.
Speaker 1: But um, as much as I didn't like carrying those
Speaker 1: textbooks around, I still like a paper textbook. I like
Speaker 1: reading a physical uh you know, a physical newspaper, physical book.
Speaker 1: I like underlining it, folding down the pages. Is there
Speaker 1: a place for that in the future. Absolutely absolutely, And
Speaker 1: we we still give you the option to get that
Speaker 1: that printed textbook and will continue to invest behind those.
Speaker 1: You know. As an analogy, I like the music industry,
Speaker 1: recorded music industry, and if you think of the textbook
Speaker 1: has been the vinyl record, and then the e text
Speaker 1: as being the CD, and then in music of course
Speaker 1: you had MP three players and now you have the
Speaker 1: likes of Spotify and Title and others where you pay
Speaker 1: a subscription for access to forty million songs in the
Speaker 1: Board of Education. Up until recently, we've kind of been
Speaker 1: stuck in the c D. And I think the great
Speaker 1: opportunity is, Yeah, you can still buy the vinyl record,
Speaker 1: you can still buy your textbook. But the great opportunity
Speaker 1: is how we utilize technology. You know, we mentioned blockchain.
Speaker 1: I think augmented reality virtually reality is going to play
Speaker 1: very important and significant part in parts of education going forward.
Speaker 1: And so what really excites need the leading person at
Speaker 1: this moment in time is all of these great opportunities
Speaker 1: to really harness you know, the great technological innovations that
Speaker 1: have happened in other sense, sectors like music, like entertainment,
Speaker 1: the introduction of five G, having the ability to store
Speaker 1: everything on the cloud, the way that devices are developing,
Speaker 1: both in terms of mobile phones and the like, and
Speaker 1: bringing all of those together to make learning more accessible
Speaker 1: and more affordable to more people. Because through learning and
Speaker 1: learning throughout your lifetime, of course, we all we all
Speaker 1: improve ourselves and our economic outlook of society. How are
Speaker 1: you thinking about the metaverse and how that could potentially
Speaker 1: impact the textbook industry? Obviously it's early days. Well, a
Speaker 1: couple of examples I'm in Los Angeles, you're in San Francisco,
Speaker 1: and we could both be in the same classroom together
Speaker 1: in the metaverse, and we can participate in experiments. We
Speaker 1: could go up to the white board and and uh
Speaker 1: annotate each other's notes. We could both at the sort
Speaker 1: of click of a button, be transported back to ancient
Speaker 1: Greece and be in a Greek theater watching a Greek play,
Speaker 1: or immediately then transported into the deep you know, Amazon jungle,
Speaker 1: or inside a cell structure, or if you're a medical student,
Speaker 1: look at procedures and be able to practice surgical procedures
Speaker 1: without having to use you know, real bodies as it
Speaker 1: were so many many applications. Again, I think, you know,
Speaker 1: for an urban you know, in K through twelve, the
Speaker 1: ability to open the eyes and open the world to
Speaker 1: those students who previously have never had the opportunity to
Speaker 1: go and visit some of these places in the world
Speaker 1: and to to have some of those experiences. I think
Speaker 1: the meta versus a really really interesting use of technology
Speaker 1: to enable that. Fascinating how much has changed since I
Speaker 1: went to school and how much could continue to change.
Speaker 1: Andy Bird's EO of Pearson appreciate you sharing that vision
Speaker 1: with us pleasure. Now as some analysts are raising the
Speaker 1: alarm about the downturn worsening, one company says that despite
Speaker 1: all the talk of layoffs and fears of a recession,
Speaker 1: they have found evidence to the contrary. While Seem Daher
Speaker 1: is the founder and CEO of Pilot, and accounting firm
Speaker 1: for startups and small businesses that specializes in CFO services, bookkeeping,
Speaker 1: tax prep, he joins me, nowt here in the studio
Speaker 1: with more on their data. So there's a lot of
Speaker 1: women do out there. You know, we've had guests on
Speaker 1: the show who said there's going to be millions of
Speaker 1: layoffs in tech. We just saw a snap and now
Speaker 1: it's a cut across the board. What are you seeing
Speaker 1: that tells you it's not so gloomy. That's a great question.
Speaker 1: And you know, we we sort of saw the same
Speaker 1: stuff in the market, all the VC memo as all
Speaker 1: the headlines. We said, let's take a look at the data.
Speaker 1: And so for us, we're the largest startup accountant in
Speaker 1: the United States. We have thousands of customers. We've processed
Speaker 1: a hundred billion dollars of accounting transactions last year. We said,
Speaker 1: what is the data show, and what we did is
Speaker 1: we took a look at about a thousand of our
Speaker 1: customers and two kind of key data points emerged. The
Speaker 1: verse was that in June we found that of them
Speaker 1: actually maintained or even increased head count. And then from
Speaker 1: a revenue growth perspective, Q one definitely was a bit
Speaker 1: soft for folks, but we saw to choose revenue growth
Speaker 1: to be actually very comparable to late so indicators are
Speaker 1: actually looking pretty good for this kind of early mid
Speaker 1: stage startup segments. Okay, so what's the discrepancy in the numbers.
Speaker 1: That's a great question. And I think here's what's going on,
Speaker 1: which is especially in the early and mid stage. I
Speaker 1: think two things are happening. Of first is that there's
Speaker 1: definitely pain from the downturn, but I think it's more
Speaker 1: specifically and more pronacade felt by companies that really have
Speaker 1: nice to have offerings as supposed to really need to
Speaker 1: have offerings. And the second is, I think the dynamics
Speaker 1: and kind of late stage in public markets are very
Speaker 1: different than what you see in the earlier kind of
Speaker 1: mid stage ecosystem for startups. Okay, well, let's take Snap
Speaker 1: as an example. Cuts we also reported that Metas cutting
Speaker 1: off hundreds of contractors alphabets in the middle of a
Speaker 1: hiring freeze Apple. I talked to Tim Cook. You know,
Speaker 1: they're going to pull back on some hiring and spending
Speaker 1: plans going into next year. He said, they're being very
Speaker 1: deliberate about their spending. Wouldn't it be a more difficult
Speaker 1: world for startups that are relying on, you know, whatever
Speaker 1: they have in the bank to survive, and many of
Speaker 1: which aren't profitable. Yeah, so, I mean, you definitely think so.
Speaker 1: But I think the thing that's interesting is, let's say
Speaker 1: you're a startup. You're targeting in a sixty billion dollar
Speaker 1: market and because of the downturn, maybe it's now only
Speaker 1: a forty billion dollar market. But you're concerned about getting
Speaker 1: from point oh five percent adoption to point one percent adoption.
Speaker 1: You're not running into the ceiling, whereas you know, these
Speaker 1: public companies absolutely are. When there is a twenty or
Speaker 1: thirty percent reduction, they're going to feel that in the financials.
Speaker 1: Your business is interesting, and I wonder what sort of
Speaker 1: trends you're seeing in your own business in the downturn.
Speaker 1: Are more companies turning to outsourcing with services like yours
Speaker 1: rather than having these systems internally because they're trying to
Speaker 1: limit their own internal headcount. Absolutely. I think there are
Speaker 1: kind of two phenomenons were observing. One is, folks that
Speaker 1: might have built the function in house are more interested
Speaker 1: in the flexibility of relying on an external provider. And
Speaker 1: the second is I think the tone has changed among
Speaker 1: startups where in one you know it's really the era
Speaker 1: of growth at all costs. Now it's look, you need
Speaker 1: to know your metrics, you need to know the KPIs.
Speaker 1: You have to be really sharp on the numbers, and
Speaker 1: lots of folks come to us to just to better
Speaker 1: handle on those steps. How are you handling the downturn internally?
Speaker 1: I mean, how are you making decisions? Do we maintain headcount,
Speaker 1: do we continue to hire, do we make cuts? So
Speaker 1: one of the things we feel really strongly about is
Speaker 1: the amount of money you spend cannot be a function
Speaker 1: of how much you have in your bank account. You
Speaker 1: sort of have to earn the right to spend it.
Speaker 1: There's this concept called the burn multiple, which is the
Speaker 1: amount of new recurring revenue you add any given period
Speaker 1: and its relation to your burn rate. That those need
Speaker 1: to stay in lockstep. So for us, we think about
Speaker 1: how those ratios look, and then we also try to
Speaker 1: pre compute a little bit. Look, if revenue trends in
Speaker 1: way X, this is what we'll do. If revenue trends
Speaker 1: in way why, this is what we'll do, so that
Speaker 1: we don't have to be surprised if as the situation changes.
Speaker 1: Some of your investors Sequoia Bezos expeditions. What are they
Speaker 1: telling you you got any advice from Jeff Bezos. Jeff
Speaker 1: Bezos has not given me a call. I'm still waiting
Speaker 1: for the call its X from Jeff. It's been It's
Speaker 1: been interesting because I think the dynamics are highly variable
Speaker 1: depending on what the company is up to. One of
Speaker 1: the things that we like at Pilot is you have
Speaker 1: to do your accounting. I mean, even in tough economic times,
Speaker 1: you're not gonna just not do your tax return. So
Speaker 1: we were hoping, or we feel that our business is
Speaker 1: more recession proof or downturnmproof than the average. Does a
Speaker 1: more hawk ish fed uh change things for you and
Speaker 1: your own business. You know, it's interesting because I think
Speaker 1: the public market dynamics, you know, we're many many years
Speaker 1: away from being a public company and I think for
Speaker 1: the companies we serve, we're really in the private markets.
Speaker 1: There are down rounds, there are layoffs, there is belt tightening,
Speaker 1: there are companies making hard decisions about their priorities. I
Speaker 1: think it's absolutely true, and I think you sort of
Speaker 1: need to kind of keep that hawkish eye on what's
Speaker 1: happening in your bank account, your current runway now more
Speaker 1: than ever, because, as you said, access to capital is
Speaker 1: definitely comparatively limited. So as you look ahead over the
Speaker 1: next year, what are some of the questions you're gonna
Speaker 1: be asking the companies that you're working with to give
Speaker 1: you clues about how the market is changing, Like, maybe
Speaker 1: this is what the data says now, but maybe it's
Speaker 1: there's a delay. Sure, Yeah, I think we look at
Speaker 1: a couple of things. One is our CFO services team
Speaker 1: works very closely with a bunch of our customers who
Speaker 1: helped them build out their own financial models, their own forecasts,
Speaker 1: they're on budget. I think we'll also see really good
Speaker 1: data about what happens in fundraising markets. There's a lot
Speaker 1: of kind of pent up dry powder at BC firms.
Speaker 1: It is not currently being deployed. I think depending on
Speaker 1: sort of when that starts to get released into the market.
Speaker 1: I think we will see potentially very different results. Seager,
Speaker 1: CEO and founder of Pilot. Thank you for joining us
Speaker 1: and good to see her in person. Thank you for
Speaker 1: having me. All Right, that does it for this edition
Speaker 1: of Bloomberg Technology. Coming up Thursday, We've got Crowdstrikes CEO
Speaker 1: George Kurtz. He'll join us to talk about the state
Speaker 1: of cybersecurity, whether that is recession proof. And don't forget
Speaker 1: to check out our podcast wherever you get your podcasts.
Speaker 1: I'm Emily checking in San Francisco. This is Bloomberg