WEBVTT - The "Bear" Necessities in Crypto and Tech 0:00:02.240 --> 0:00:05.600 From the heart of where innovation, money and power collive 0:00:06.360 --> 0:00:10.879 in Silicon Valley and beyond. This is Bloomberg Technology with 0:00:10.920 --> 0:00:26.759 Emily Jay. I'm Emily changing San Francisco, and this is 0:00:26.760 --> 0:00:29.280 Bloomberg Technology coming up in the next hour. A wild 0:00:29.360 --> 0:00:31.600 day to end a wild week. The SMP on the 0:00:31.680 --> 0:00:34.000 rink of a bear market bounces back thanks to a 0:00:34.120 --> 0:00:38.640 dramatic late session rally, though still on its longest losing 0:00:38.680 --> 0:00:40.680 streak in more than twenty years. We'll try to make 0:00:40.720 --> 0:00:45.000 sense of the madness plus panic in both public and 0:00:45.320 --> 0:00:48.720 private markets. We're gonna explore how startups are getting creative 0:00:48.840 --> 0:00:53.840 as they try to stay afloat and Bitcoin dipping below dollars, 0:00:53.840 --> 0:00:56.440 How long does the crypto crunch keep up? And is 0:00:56.480 --> 0:01:00.800 their hope on the horizon. We'll discuss all that in 0:01:00.840 --> 0:01:03.200 a moment. But first it looked like we'd end the 0:01:03.280 --> 0:01:05.440 day for sure in bear market territory. But a late 0:01:05.440 --> 0:01:07.679 afternoon bounce back saved the day. Is it only a 0:01:07.680 --> 0:01:10.280 matter of time though, bloom said Ludlow here to walk 0:01:10.280 --> 0:01:13.760 through the movers and who is feeling the most pain? Right? 0:01:14.040 --> 0:01:16.280 Get you get to Friday afternoon and you see this 0:01:16.360 --> 0:01:19.240 on the screen, zero point zero one percent flat on 0:01:19.280 --> 0:01:22.000 the SMP five and you think it's been a nothing 0:01:22.080 --> 0:01:26.119 kind of day. Not so volatility across equity markets. There 0:01:26.240 --> 0:01:28.400 was this late come back on the SMP five hundred. 0:01:28.640 --> 0:01:32.640 We escaped that bare market territory, that bear market label. 0:01:32.680 --> 0:01:34.480 But you look at the NAZAC one hundred was still 0:01:34.520 --> 0:01:38.040 softed by three tenths and one percent, very tech heavy index, 0:01:38.080 --> 0:01:42.280 trading at its lowest level since November. On a weekly basis, 0:01:42.400 --> 0:01:46.720 SMPI also lower by around three percent in seventh consecutive 0:01:46.920 --> 0:01:49.120 weekly decline, which we'll talk about later in the show. 0:01:49.320 --> 0:01:51.520 Bitcoin has also been interesting. It kind of held its 0:01:51.560 --> 0:01:54.639 own earlier in Friday's session above thirty thousand dollars be token, 0:01:54.880 --> 0:01:59.000 but fell away frankly in the latter hours of Friday's trading, 0:01:59.200 --> 0:02:03.200 now just above dollars per token. In this volatility and 0:02:03.240 --> 0:02:07.360 equity markets, it was much more chill in the bond markets. 0:02:07.400 --> 0:02:10.000 You look at the US tenure yield two point eight percent. 0:02:10.320 --> 0:02:13.120 Yes we're down five basis points, but it wasn't one 0:02:13.160 --> 0:02:15.600 of these days where we saw a big twelve or 0:02:15.639 --> 0:02:20.160 four teen basis point jump or decline. Much more calm 0:02:20.520 --> 0:02:22.519 bond market, even though we did see a move into 0:02:22.560 --> 0:02:25.320 haven assets risk off kind of sentiment. You see the 0:02:25.360 --> 0:02:28.080 dollar getting strength as well. Ultimately, this is the story 0:02:28.160 --> 0:02:31.280 coming me into my Bloomberg terminal. A bear market label 0:02:31.639 --> 0:02:35.280 or a bear market territory is where we're falling on 0:02:35.400 --> 0:02:38.079 an index or an asset from its most recent high. 0:02:38.160 --> 0:02:40.920 We were at that level throughout much of Friday's session, 0:02:41.200 --> 0:02:43.959 but that late comeback sees us down eighteen point six 0:02:44.040 --> 0:02:47.639 percent from that January third high on the SMP five. 0:02:48.080 --> 0:02:50.680 The question really is the direction to travel from this point. 0:02:50.960 --> 0:02:54.000 Do we continue to see pressure on equity markets or 0:02:54.040 --> 0:02:56.359 do we turn a corner going into next week. We're 0:02:56.400 --> 0:02:58.760 hoping to turn a corner m because I'll be honest, 0:02:59.080 --> 0:03:02.799 it's been a stressful week. I'm exhausted, you're exhausted, and 0:03:02.880 --> 0:03:06.080 we could all do with some positivity. Lastly, some specific movies. 0:03:06.120 --> 0:03:08.760 We want to talk about Apple Interesting up two tens 0:03:08.800 --> 0:03:10.440 of one percent on Friday's session, but it's been a 0:03:10.480 --> 0:03:13.400 real drag on the index throughout the week. And Tesla 0:03:13.760 --> 0:03:16.120 actually also it's lost a hundred ten billion dollars a 0:03:16.200 --> 0:03:18.840 market cap over the last five days or so. It 0:03:19.000 --> 0:03:20.919 has been a real drag on the index, and you 0:03:21.040 --> 0:03:23.639 forget and one hand, we're thinking about the FED, we're 0:03:23.680 --> 0:03:26.600 thinking about inflation, we're looking for the outlook on higher rates. 0:03:26.760 --> 0:03:29.519 But we still have supply chain problems, we still have 0:03:29.680 --> 0:03:32.480 lockdowns in China, and we're really focused on the impact 0:03:32.680 --> 0:03:36.240 on US corporates that that's having dear really interesting earnings, 0:03:36.280 --> 0:03:39.600 disappoint a big plunge on that stock down Foard, a 0:03:39.680 --> 0:03:42.320 big drag on the SMP five. What's the story there, 0:03:42.440 --> 0:03:45.560 supply chain issues. And lastly, I'm looking at ross stores down. 0:03:46.560 --> 0:03:49.840 The other big story of the week, retail, the consumer, 0:03:50.280 --> 0:03:54.280 the missed estimates, the cut forecasts, the tepid outlook. The 0:03:54.360 --> 0:03:56.600 world is changing m and there's a lot to considering 0:03:56.640 --> 0:03:59.120 the markets obviously interesting indeed on the back of those 0:03:59.160 --> 0:04:03.119 targeting results, thank you. While we're seeing tech stocks down 0:04:03.160 --> 0:04:05.240 across the board, as and mentioned, I want to talk 0:04:05.240 --> 0:04:07.840 about all this and more with Robert Kentwell, portfolio manager 0:04:07.880 --> 0:04:11.040 at Upholdings, the firm behind the compound Kings et F 0:04:11.120 --> 0:04:14.160 which includes a number of megacat tech stocks, and also 0:04:14.240 --> 0:04:16.680 joined by Dan Eyes, managing director of red Bush Securities, 0:04:16.680 --> 0:04:18.920 who cover some of the biggest names in the eye 0:04:19.040 --> 0:04:20.600 of this storm. Robert, I want to start with you, 0:04:20.760 --> 0:04:22.120 how much farther do you think we have to go 0:04:22.200 --> 0:04:26.680 before we hit bottom here? Well, that was a pretty 0:04:26.720 --> 0:04:30.000 negative setup. Uh, let's see, Uh, let's see if we 0:04:30.040 --> 0:04:32.640 can find a silver lining in all this. Um. You know, 0:04:32.760 --> 0:04:36.000 the one thing that's been particularly unique to us about 0:04:36.200 --> 0:04:39.599 this sell off has been how uniform it's been across 0:04:39.720 --> 0:04:43.080 so many different technology companies, from e commerce to media 0:04:43.720 --> 0:04:47.760 to software, and but that doesn't necessarily reveal what's been 0:04:47.760 --> 0:04:51.480 happening underneath the surface. So in retail and an e 0:04:51.560 --> 0:04:54.320 commerce and the media, you've been seeing subscriptions canceled, you 0:04:54.400 --> 0:04:57.600 can see spending pullback, you've been seeing margins compressed from 0:04:57.600 --> 0:04:59.560 all the supply chain issues that you've been talking about. 0:05:00.200 --> 0:05:03.279 But one area that stuck out to us is cloud computing. 0:05:04.080 --> 0:05:06.919 And you take a business like Amazon that's down thirty 0:05:06.960 --> 0:05:09.719 seven percent year to day, that has an enormous amount 0:05:09.720 --> 0:05:12.680 of wealth destruction in a single in a single security. 0:05:13.279 --> 0:05:17.719 But because AWS has still performed so well, Amazon's prices 0:05:17.800 --> 0:05:22.480 actually down about fifth year sixty on evaluation basis. And 0:05:22.600 --> 0:05:25.080 so what we've been telling investors in an environment like 0:05:25.200 --> 0:05:28.000 this is you're being given one of these few opportunities 0:05:28.080 --> 0:05:30.440 to ditch some of these losers, ditch these companies that 0:05:30.480 --> 0:05:33.520 are burning cash with flawed business models, because you're getting 0:05:33.520 --> 0:05:37.800 opportunities by great businesses like aws or service now that 0:05:37.880 --> 0:05:39.880 have actually been growing in spite of what the market 0:05:39.920 --> 0:05:45.640 has been saying about their share Robert, who are the losers? Well, uh, 0:05:45.839 --> 0:05:49.320 there's you certainly have the carbonas. I mean, the companies 0:05:49.360 --> 0:05:53.960 that have had these extremely marketing driven growth stories that 0:05:54.040 --> 0:05:56.200 are very expensive to fund. You know, you and I 0:05:56.320 --> 0:05:59.320 we talked a lot about the right sharing companies last 0:05:59.320 --> 0:06:02.480 time we were together. Peloton obviously falls into this group. 0:06:02.640 --> 0:06:05.600 But any business where you see them spending more of 0:06:05.640 --> 0:06:10.120 their gross profit on marketing dollars than any other opex 0:06:10.120 --> 0:06:12.880 slide item, that's usually a red flag. And those tend 0:06:12.960 --> 0:06:14.839 to be the companies now if you throw a screen 0:06:14.920 --> 0:06:17.440 up of you know, take gross profit minus marketing, those 0:06:17.480 --> 0:06:19.360 are the businesses that right now are all struggling the 0:06:19.440 --> 0:06:21.840 most because it's only getting more and more expensive to 0:06:21.880 --> 0:06:26.200 acquire customers when you get into these demand m evaporating 0:06:26.240 --> 0:06:29.080 climates like the one that we're in right now. Dan, 0:06:29.440 --> 0:06:31.920 you of course cover some of the biggest names that 0:06:32.160 --> 0:06:35.720 are in focus here. For example, Apple, which you know, 0:06:36.279 --> 0:06:38.880 facing some some some some challenges that are you know 0:06:39.640 --> 0:06:42.560 now facing companies across the board. How do you think 0:06:42.600 --> 0:06:45.360 Apple weathers this? Do you think Apple has further to fall? 0:06:45.960 --> 0:06:49.240 And you know, does Apple keep innovating? Is this is 0:06:49.279 --> 0:06:53.040 safe by right now? I mean, look, I think it 0:06:53.120 --> 0:06:56.000 continues to be a rock with Gibraltar stock and a 0:06:56.080 --> 0:06:59.160 business model in terms of where we see iPhone the 0:06:59.279 --> 0:07:03.040 name on the other side of the storm. And I believe, 0:07:03.240 --> 0:07:06.760 as we've talked about holding up much better, they're expect expectation. 0:07:06.839 --> 0:07:09.360 But I think right now is your other guests talking 0:07:09.360 --> 0:07:11.920 about everything that you can get thrown out in risk 0:07:12.000 --> 0:07:15.800 off environment that creates the opportunities to own these means. 0:07:15.840 --> 0:07:17.640 And when you look at Apple, we think the services 0:07:17.720 --> 0:07:21.440 business and women is worked over a trillion dollars microsofts 0:07:21.440 --> 0:07:24.240 another example, it's all going to be induscriminate and selling. 0:07:24.480 --> 0:07:27.040 That's the opportunity. You know, in terms of how we're 0:07:27.080 --> 0:07:30.920 handholding horns, Robert, is Apple it aimed to you that 0:07:31.080 --> 0:07:34.920 stands out as something that will survive the storm. I 0:07:34.960 --> 0:07:36.640 mean Apple, you know you're not gonna find a lot 0:07:36.640 --> 0:07:39.880 of people who don't think Apple is going to keep innovating. Yeah, 0:07:40.120 --> 0:07:42.360 it's like it's fine. I mean, it's it's a safe 0:07:42.400 --> 0:07:44.920 place to put money. It's probably not the place where 0:07:45.280 --> 0:07:48.600 you're gonna get these, you know, devastatingly awesome investment returns 0:07:48.640 --> 0:07:51.000 for the next ten years. That's what I think is 0:07:51.280 --> 0:07:53.120 also really exciting about a market like this is you 0:07:53.200 --> 0:07:55.480 get to even look past the fundamentals some of these 0:07:55.520 --> 0:07:59.920 businesses right now, and investors are reevaluating saying which pieces 0:07:59.920 --> 0:08:03.040 of technology you're actually gonna matter the most over the 0:08:03.160 --> 0:08:08.400 next ten years. And everything was focused around the iPhone 0:08:08.400 --> 0:08:10.520 in the app store for the last ten years, and 0:08:10.800 --> 0:08:14.400 those are likely to continue to remain important, but they're 0:08:14.400 --> 0:08:16.600 gonna look much more mature, and you see that in 0:08:16.720 --> 0:08:18.800 some of the regulatory dealings that you know, we're having 0:08:18.840 --> 0:08:21.520 to shake out with with businesses like Apple right now. 0:08:22.080 --> 0:08:24.880 But we think, you know, there's opportunities to look, you know, 0:08:25.040 --> 0:08:28.520 deeper down, and you know, you did a great interview 0:08:28.520 --> 0:08:31.480 to the night with Dave Zuoki over roadblocks. We think 0:08:31.560 --> 0:08:33.599 that platform has the potential will be one of the 0:08:33.640 --> 0:08:36.439 most important businesses. It is right now tracking to be 0:08:36.480 --> 0:08:40.440 bigger than Nintendo. How many assets are there that exists 0:08:40.480 --> 0:08:43.079 in the market of public investor can participate in to 0:08:43.160 --> 0:08:47.520 get to live with that type of household recognition. So 0:08:47.559 --> 0:08:50.240 whether it's a business like roadblocks for a cloud computing 0:08:50.280 --> 0:08:54.439 platform like in AWS, or enablers like data down, these 0:08:54.480 --> 0:08:56.440 are some of the enabling technologies that we think are 0:08:56.480 --> 0:09:00.200 gonna matter most um this decade. And you then check 0:09:00.240 --> 0:09:02.840 out that interview with David Buzuki the see of Roadblocks 0:09:02.880 --> 0:09:04.480 on Studio one. Point out, Dan, I want you to 0:09:04.520 --> 0:09:06.160 react to some of the things Robert just said there. 0:09:06.240 --> 0:09:09.160 Let's talk about Apple. Is Apple just the safe that 0:09:09.440 --> 0:09:14.800 maybe too safe in this environment? I mean splin adjusted 0:09:15.120 --> 0:09:18.199 stock six hundred they said the same thing about it 0:09:18.559 --> 0:09:22.400 shape at a hundred hours and now okay, remember it 0:09:22.440 --> 0:09:25.880 goes back to your Apple continues to be so much 0:09:25.920 --> 0:09:30.320 more intervention beyond I think how investors appreciate it because 0:09:30.920 --> 0:09:34.719 what we've seen install base, it's a billion iPhones or 0:09:34.760 --> 0:09:37.600 some having upgrade last three and a half years. Then 0:09:37.679 --> 0:09:40.320 you look at their being intellator room game in terms 0:09:40.360 --> 0:09:43.960 of the chip side, plus services like Robert talked about, 0:09:44.200 --> 0:09:47.760 I think indeeds environments. You have to look at software, 0:09:48.120 --> 0:09:51.600 fiber security and the years when we believe we're gonna 0:09:51.640 --> 0:09:53.880 be in terms on the stalwart side and Apple is 0:09:53.920 --> 0:09:55.959 going to be one of them, and it's one the 0:09:56.080 --> 0:09:58.280 haters will continue to hate. But to see more. In 0:09:58.360 --> 0:10:01.360 my opinion, we will it again to a blue trillion 0:10:01.400 --> 0:10:06.600 dollar mark up once the inscriminate selling stops. Okay uh, 0:10:06.720 --> 0:10:08.600 And I can't let you go without talking about Tesla, 0:10:08.760 --> 0:10:11.040 which is you know now no longer the top stock 0:10:11.280 --> 0:10:15.360 in Kathy Wood's flagship fund of course, facing some um 0:10:15.640 --> 0:10:18.080 different forces based on what's going on with the Musk 0:10:18.520 --> 0:10:21.120 and Twitter deal. What do you think, well, the story 0:10:21.240 --> 0:10:23.959 for Tesla will continue to be here and and and 0:10:24.080 --> 0:10:28.120 how much will Tesla stocks suffer from the uncertainty over 0:10:28.200 --> 0:10:30.040 whether or not it's CEO is going to buy Twitter? 0:10:31.040 --> 0:10:34.400 M Well, the book first off, in terms of China 0:10:34.480 --> 0:10:37.800 and the zero COVID situation, that's been a huge headwind. 0:10:37.880 --> 0:10:40.440 I think you know they're op soft deliveries and that's 0:10:40.440 --> 0:10:43.720 over our price target this week. When it comes to Twitter, 0:10:44.480 --> 0:10:48.040 it's become a full on circus show that's almost turned 0:10:48.040 --> 0:10:51.439 into a twilight zone. And you know, you look at Musk, 0:10:51.880 --> 0:10:55.920 he opened Pandora's box and tomm in about the need 0:10:56.080 --> 0:10:59.479 to hand holding. You know, it continues to be uncertainty 0:10:59.559 --> 0:11:01.800 not just Twitter in terms on the test of stock 0:11:01.920 --> 0:11:06.600 perspective throw distraction situation, that's something he needs to give 0:11:06.679 --> 0:11:10.000 comfort to investors at a turn where risk goships are 0:11:10.000 --> 0:11:14.240 getting thrown out the window. Robert, what's your take on 0:11:14.280 --> 0:11:17.280 this Tesla Twitter situation and and now the fact that 0:11:17.360 --> 0:11:22.360 they are intricately entwined and do I have to have 0:11:22.440 --> 0:11:26.320 a take? Uh? Of course everybody has to have a take. 0:11:28.440 --> 0:11:32.440 Look Twitter Twitters. I actually think no matter what happens, 0:11:32.480 --> 0:11:35.040 whether Elon bias Twitter or not, I do believe that 0:11:35.080 --> 0:11:36.480 Twitter is going to turn out to be a better 0:11:36.559 --> 0:11:38.760 company three or four years down the road as a 0:11:38.840 --> 0:11:42.160 result of this moment of turmoil because it is forcing 0:11:42.200 --> 0:11:45.200 the company looking where to reevaluate its business model. They're 0:11:45.240 --> 0:11:48.800 realizing that they can get away with charging their biggest accounts, 0:11:49.320 --> 0:11:51.720 uh for you know, tweeting, and they should be right. 0:11:51.800 --> 0:11:53.880 We're on Twitter, it's on we pay to be on Twitter, 0:11:54.000 --> 0:11:56.839 but they don't charge us anything. So there's absolutely a 0:11:56.920 --> 0:12:01.199 way to unlock you know, traditional social media modernization mechanisms. 0:12:01.280 --> 0:12:04.080 They haven't taken advantage of that. No matter who's runing 0:12:04.120 --> 0:12:07.520 a company posts all this stuff that's gifts or about um, 0:12:07.600 --> 0:12:10.319 you know, we think that's now much more likely to happen. Um. 0:12:10.960 --> 0:12:14.880 We're actually we're kind of wondering pay you know, Twitter Board, 0:12:15.080 --> 0:12:18.040 maybe you reopen the process up, like why didn't you 0:12:18.120 --> 0:12:20.000 run a full process to begin with? Why didn't we 0:12:20.000 --> 0:12:22.079 get multiple bidders in here? Why did you, you know, 0:12:22.200 --> 0:12:24.760 do a deal with Elon all by himself? You know, 0:12:24.840 --> 0:12:26.599 why didn't you see if Google wanted to take a 0:12:26.640 --> 0:12:29.480 swing at it? Because who knows, the regulators haven't been 0:12:29.559 --> 0:12:31.959 quite as aggressive as people feared that they might be. 0:12:32.520 --> 0:12:35.800 So we think that this saga is far from over 0:12:36.000 --> 0:12:38.839 and that there's a wide range of potential outcomes for Twitter. 0:12:39.440 --> 0:12:42.400 And as it pertains the test lad, it's still a 0:12:42.440 --> 0:12:45.120 car company, um, and so it doesn't kind of fall 0:12:45.200 --> 0:12:48.520 into our software and digital advertising universe that we follow 0:12:48.600 --> 0:12:51.040 really closely. All Right, I knew you'd have a take, 0:12:51.120 --> 0:12:53.040 So I'm glad I've asked. Thank you for sharing that 0:12:53.280 --> 0:12:57.240 with us, Robert Kentwell of Upholdings, Dan, I've always good 0:12:57.280 --> 0:12:59.760 to have you as well. We'll see what next week. 0:12:59.760 --> 0:13:10.840 Called belts are tightening across the board and startups are 0:13:10.920 --> 0:13:15.320 also feeling the pain, with valuations being cut and layoffs underway. 0:13:15.360 --> 0:13:17.839 For more. Now I'm joined by Johnny Price, the vice 0:13:17.880 --> 0:13:21.120 president of fundraising, we founder. So Johnny, first of all, 0:13:21.160 --> 0:13:23.160 you know, we see what's happening in the public markets. 0:13:23.280 --> 0:13:26.000 It's a lot more difficult to understand exactly what's happening 0:13:26.400 --> 0:13:29.240 in the private markets. What are you seeing? Just how 0:13:29.360 --> 0:13:34.000 much uncertainty and quite frankly panic is there. Yeah, there's 0:13:34.040 --> 0:13:36.959 a lot of uncertainty. It's the right word. UM. I 0:13:37.040 --> 0:13:41.480 think we're seeing less contraction, especially early stage. I think 0:13:41.559 --> 0:13:44.959 growth stage is contracting a little more in recent months. 0:13:45.480 --> 0:13:48.160 Early stage, I think we're seeing less to date. UM 0:13:48.600 --> 0:13:52.160 getting kind of mixed reactions from vcs and founders that 0:13:52.240 --> 0:13:55.280 I'm talking to. UM, But obviously I'm not sure if 0:13:55.320 --> 0:13:57.640 you saw that. You know why Combinator, you know, their 0:13:57.679 --> 0:14:03.280 founders recently saying, you know, buckle up, you know, raining 0:14:03.559 --> 0:14:06.839 rain in the spending, get to default alive, get to 0:14:06.920 --> 0:14:10.120 profitability asap because it could be a rough a few 0:14:10.400 --> 0:14:13.319 few months and years ahead. Well exactly, you've got y 0:14:13.400 --> 0:14:16.839 combinators saying that, You've got other vcs sending out their 0:14:16.880 --> 0:14:19.680 black Swan membos. On the other hand, I saw this 0:14:19.880 --> 0:14:24.320 from Ali Partov, who's an early stage investor he tweeted, 0:14:24.520 --> 0:14:28.760 Unlike vcs predicting doom, I'm bullish for early stage startup. 0:14:28.880 --> 0:14:31.880 This downturn differs from two thousand and two thousand eight. 0:14:32.360 --> 0:14:35.080 If you're an early stage CEO, don't panic, don't obsess 0:14:35.080 --> 0:14:38.520 about extending runway, obsessed about making something people want. There's 0:14:38.520 --> 0:14:41.760 a whole thread below it. What's your reaction to that? 0:14:41.880 --> 0:14:47.680 Would you agree? Um? Yeah, I think you could argue that. Um. 0:14:48.600 --> 0:14:51.720 I think I'm I'm a little more pessimistic. Maybe. I 0:14:51.760 --> 0:14:53.840 think it's going to be harder and harder for early 0:14:53.920 --> 0:14:57.280 stage founders to raise counsel over the coming six months. 0:14:57.960 --> 0:15:07.960 Um uh because um there's uh less Um. Vcs are 0:15:08.000 --> 0:15:10.400 gonna just be tightening their belts. You know, we're going 0:15:10.440 --> 0:15:12.760 to see the valuations in the public market compressed the 0:15:12.800 --> 0:15:15.520 great stage early stage. UM. I just think it's going 0:15:15.560 --> 0:15:17.640 to be harder for early stage founders to raise I 0:15:17.680 --> 0:15:20.520 think post post two thousand and eight we saw that. 0:15:20.600 --> 0:15:22.680 I think we're going to see that again in two 0:15:23.560 --> 0:15:27.560 So we found funder focuses on something called community rounds, 0:15:27.640 --> 0:15:30.720 which of course is different from venture capital funding and 0:15:30.840 --> 0:15:34.760 also typical crowdfunding. As I understand it, Can you explain 0:15:34.840 --> 0:15:38.520 what that means. Yeah, absolutely, So we found us a 0:15:38.560 --> 0:15:42.240 platform that's let anyone invest in startups they love UM. 0:15:42.480 --> 0:15:45.600 So for eighty years, the securities laws of this country, 0:15:46.400 --> 0:15:50.320 as you know, didn't allow ordinary Americans to invest in startups. 0:15:50.960 --> 0:15:54.960 You had to be accredited to invest in early stage companies. UM. 0:15:55.280 --> 0:15:57.400 The Jobs Act of twelve that was rolled up to 0:15:57.480 --> 0:16:02.040 the sec now allows everyone and not just created investors, 0:16:02.080 --> 0:16:05.160 not just switch people to invest in startups they love UM. 0:16:05.320 --> 0:16:08.600 And so what we're trying to do we founder UM, 0:16:08.880 --> 0:16:12.480 is to popularize this concept of community around. When the 0:16:12.560 --> 0:16:16.640 Jobs Out was rolled out, it was called equity crowdfunding. UM. 0:16:16.840 --> 0:16:19.200 This is how you introduced this segment. We don't love 0:16:19.320 --> 0:16:22.800 this term crowdfunding. We're trying to rebrand it as a 0:16:22.840 --> 0:16:25.520 community around. You. You owe twenty five cents to the 0:16:25.600 --> 0:16:28.040 square jar Emily fees in the word crowd funding earlier. 0:16:28.400 --> 0:16:30.480 And so the idea with a community around is that 0:16:31.240 --> 0:16:34.520 startup founders can raise up to five million dollars per 0:16:34.680 --> 0:16:39.960 year from their customers from their community UM and uh, 0:16:40.400 --> 0:16:45.120 you know, alongside conventional investors vcs and angels. Mercury is 0:16:45.120 --> 0:16:48.680 a great example UM. Recently they raised a one twenty 0:16:48.720 --> 0:16:52.320 million Series B from Andrewson and Co. Two and then 0:16:52.400 --> 0:16:55.080 opened up a five million dollar allocation to let their 0:16:55.120 --> 0:16:59.160 customers invest on the same terms, um and in my 0:16:59.720 --> 0:17:03.200 ce EO with no factor. Mark and then has called 0:17:03.240 --> 0:17:06.080 those two and a half thousand we founder investors his 0:17:06.240 --> 0:17:10.560 favorite investors, you know, letting his customers invest, he thinks 0:17:10.760 --> 0:17:13.680 is a good thing to do at you know, face 0:17:13.720 --> 0:17:16.240 the avenue puts a little more cash in the bank 0:17:16.320 --> 0:17:18.600 at a time when, as we've been talking about, that's 0:17:18.640 --> 0:17:21.480 probably not the worst thing in the world, and most importantly, 0:17:21.680 --> 0:17:23.639 you know, generally a good thing to do for startup 0:17:23.640 --> 0:17:27.520 founders to be delighting their customers by learning them investing them. Right. 0:17:28.000 --> 0:17:30.879 It give us an idea how much money has actually 0:17:30.960 --> 0:17:33.920 been community raised, though right now it still seems to 0:17:33.960 --> 0:17:36.280 be the exception, not the rule. Doesn't it have to 0:17:36.359 --> 0:17:40.680 scale up dramatically if the next Uber or Facebook or 0:17:40.760 --> 0:17:45.520 Google is going to be community funded. Yeah. Absolutely, It's 0:17:45.520 --> 0:17:49.639 still a very small percent of early stage capital right now. 0:17:49.800 --> 0:17:52.920 So as a signage your VC an angel dollars, community 0:17:52.960 --> 0:17:56.680 arounds are very very small. Um. You know, it's it's 0:17:56.720 --> 0:17:59.720 been growing so that the job the jobs that was 0:17:59.800 --> 0:18:02.360 right up with the sec in twenty sixteen. In March 0:18:02.440 --> 0:18:06.159 of twenty one, the SEC rolled out some improvements to 0:18:06.200 --> 0:18:09.640 the regulations that increased the amount that startup finnessting raised 0:18:09.680 --> 0:18:12.080 from a million to five million per year UM. And 0:18:12.160 --> 0:18:14.760 since then we've seen significant growth in the sector and 0:18:14.960 --> 0:18:18.119 sector overall group by about four acts in one. And 0:18:18.359 --> 0:18:20.800 I think the froth the early stage VC market in 0:18:20.840 --> 0:18:23.080 twenties twenty one was actually a break on the sector. 0:18:23.720 --> 0:18:26.800 I think in twenty two will be countercyclical. We'll see 0:18:27.000 --> 0:18:28.639 you can have me back in a year's time and 0:18:28.800 --> 0:18:31.640 and see if that prediction has has been born out. 0:18:32.320 --> 0:18:35.720 But as early stage VC pulls back in two, which 0:18:35.800 --> 0:18:39.440 we expect, I think that more and more early stage 0:18:39.440 --> 0:18:42.080 founders will be looking to their customers, looking to the community, 0:18:42.400 --> 0:18:45.639 looking to we fund this million investors UM to to 0:18:45.800 --> 0:18:48.080 you know, be a buffer and enable them to raise 0:18:48.119 --> 0:18:52.720 capital where otherwise they might be struggling. To to your point, 0:18:53.320 --> 0:18:56.720 it's not a panacea, you know, this is still uh, 0:18:57.480 --> 0:19:00.480 this is hopefully a silver silver lining on on a 0:19:00.760 --> 0:19:04.200 day of pretty dark clouds. UM. It's still a relatively 0:19:04.280 --> 0:19:07.440 small part of UM you know, tital early stage capital formation. 0:19:07.840 --> 0:19:10.560 You can only rate five million dollars per year. Um. 0:19:10.800 --> 0:19:14.800 But yeah, we're seeing we're seeing positive, positive trends. Another 0:19:15.000 --> 0:19:17.600 string though that can be pulled for sure. Johnny Price, 0:19:17.920 --> 0:19:21.359 vice president of we Funder, thank you. Coming up. We 0:19:21.440 --> 0:19:23.560 are going to Miami, going to get a check on 0:19:23.600 --> 0:19:38.920 the crypto market. That is next. This is Bloomer Bitcoin 0:19:39.040 --> 0:19:43.800 dropping below twenty dollars. What will the weekend hold as 0:19:43.880 --> 0:19:46.720 crypto continues to trade. I'm joined out by Bloomberg Intelligence. 0:19:46.800 --> 0:19:50.359 Is Mike mcglog with us from our Miami bureau, So 0:19:50.680 --> 0:19:52.520 Mike talk to us about the factors at play here. 0:19:52.600 --> 0:19:56.399 It seems like cryptocurrencies are so tightly correlated with what 0:19:56.520 --> 0:19:59.399 we're seeing in equities, which is the opposite of what 0:19:59.560 --> 0:20:03.359 many in masters hope they would do. We're getting there, Emily, 0:20:03.400 --> 0:20:05.159 It's just gonna take a little time. But right now 0:20:05.240 --> 0:20:08.000 it's a significant fact that you've pointed out is the 0:20:08.040 --> 0:20:10.639 stock markets going down. The tide is ebbing. The Fed's 0:20:10.720 --> 0:20:13.600 jaw boning has got to reduce set ability for people 0:20:13.640 --> 0:20:16.840 to buy stuff, reduce set risk those risk assets and 0:20:17.000 --> 0:20:19.959 bitcoining the theorem and cryptos are prime part of that. Remember, 0:20:20.000 --> 0:20:22.080 they went up the most, they have to come down. 0:20:22.400 --> 0:20:24.320 But the way you started this segment, I think is 0:20:24.359 --> 0:20:27.560 the most significant thing is what's going to happen this weekend. 0:20:27.640 --> 0:20:30.320 So it's five thirty on that afternoon and the East 0:20:30.359 --> 0:20:33.480 coast all markets are shut, but Bitcoin is trading, and 0:20:33.680 --> 0:20:35.879 that's what the markets starting to realize. This is the 0:20:35.920 --> 0:20:40.600 world's most fluid seven global trading vehicle with price discovering 0:20:40.960 --> 0:20:43.639 and no one else's liability, and that's starting to trickle 0:20:43.680 --> 0:20:47.120 inch what I'm sensing his bids blow. Bitcoin offers above 0:20:47.200 --> 0:20:49.480 in the stock market. And a key fact this week 0:20:49.600 --> 0:20:52.320 is bitcoins down about two percent and nazex down about 0:20:52.359 --> 0:20:54.560 four percent. So bitcoins actually I'll perform in this week 0:20:54.600 --> 0:20:57.520 despite the fact that it's much higher volatility. Okay, now, 0:20:57.680 --> 0:21:00.159 not all digital tokens are being viewed equally. Are there 0:21:00.160 --> 0:21:03.760 any winners here? Well, I think bitcoin is gonna be 0:21:03.800 --> 0:21:07.399 the biggest winner, along with gold and protectionant potentially long bonds. 0:21:07.560 --> 0:21:09.880 Gold was up about two percent this week in Bitcoin 0:21:10.040 --> 0:21:12.320 is the digital version of gold. But the way I 0:21:12.440 --> 0:21:15.159 view gold now is if you're not allocating some of 0:21:15.200 --> 0:21:17.520 the bigcoin and your gold investor, then you're missing out. 0:21:17.600 --> 0:21:20.080 But that's the key thing to remember. But the bottom 0:21:20.160 --> 0:21:24.080 line that's really happening in this space is the proliferation 0:21:24.160 --> 0:21:26.480 of crypto dollars. Now, we heard about what happened with 0:21:26.560 --> 0:21:30.320 an algorithmic dour crypto dollar that broke down people call 0:21:30.320 --> 0:21:33.119 the stable coins. But on coin market cap now the 0:21:33.320 --> 0:21:37.000 top of among the top four cryptos, there's two crypto dollars. 0:21:37.040 --> 0:21:41.440 There's bitcoin, Ethereum, tether and usdcoin. And this is what 0:21:41.680 --> 0:21:44.119 happened during the bear market two thousand and eighteen. The 0:21:44.200 --> 0:21:46.240 only thing that was going up was the proliferation was 0:21:46.359 --> 0:21:48.920 increasing market cap of dollars. And I think that's what 0:21:49.000 --> 0:21:51.400 we're seeing in the spaces. It's just a better way 0:21:51.440 --> 0:21:55.600 to transact, that's crypto dollars. All right, Well, we'll be 0:21:55.680 --> 0:21:58.840 watching to see just how wild this weekend is. Indeed, 0:21:58.880 --> 0:22:01.440 Bloomberg's Mike mcglow for us in Miami and go and 0:22:01.480 --> 0:22:03.480 I'll let you get started with your weekend. Thanks Mike, 0:22:12.119 --> 0:22:14.520 Welcome back to Bloomer Technology. Emily Chain in San Francisco. 0:22:14.600 --> 0:22:16.320 Want to get back to bloom brooks Ad Ludlow for 0:22:16.440 --> 0:22:19.600 more on the SMP five hundreds losing straight again, the 0:22:19.640 --> 0:22:23.080