Speaker 1: From the heart of where innovation, money and power collive
Speaker 1: in Silicon Valley and beyond. This is Bloomberg Technology with
Speaker 1: Emily Jay. I'm Emily Check in San Francisco, and this
Speaker 1: is Bloomberg Technology. Coming up in the next hour, a
Speaker 1: bounce back for tech stocks. The Nasdaq one hundred seeing
Speaker 1: a bump a day after a sell off, better raised
Speaker 1: trillion spot Will it all be undone with new inflation
Speaker 1: numbers come Wednesday? We'll discuss plus Elon Mosk says banning
Speaker 1: former President Trump on Twitter was quote flat out stupid
Speaker 1: and but he'll reverse it. And Tony Fidel's unorthodox advice
Speaker 1: to founders in these times of market turmoil, so called
Speaker 1: father of the iPod and co found of Nest, talks
Speaker 1: about the most and least exciting inventions coming out of
Speaker 1: Silicon Valley today. That's later this hour. I want to
Speaker 1: dive into this ongoing volatility, especially in the tech sector,
Speaker 1: where we've seen a big sell off since the start
Speaker 1: of the year. I'm joined out by Ellen Hazen. She's
Speaker 1: the chief market strategist at Putnam Investment. Ellen, thank you
Speaker 1: so much for joining us. So, look, what do you
Speaker 1: make of this sell off? Especially when it comes to tech.
Speaker 1: How we hit bottom or is there more to come?
Speaker 1: There's probably more to come. It makes sense that tech
Speaker 1: stocks have pulled back so far because we saw tech
Speaker 1: stocks do so well in the last three years, particularly
Speaker 1: with the pull forward that we saw due to COVID
Speaker 1: of all the stay at home names, but that was
Speaker 1: also really exacerbated by the easy money policies that the
Speaker 1: Federal Reserve is pursuing. And as the Fed begins to
Speaker 1: pull back, a lot of tech is dominated, as you
Speaker 1: know and as your viewers know, by those companies that
Speaker 1: have very little cash flow now, and the market has
Speaker 1: been betting on Ashlands pretty far out into the future.
Speaker 1: We have looked at the tech sector as bifurcated between
Speaker 1: those companies that have dominant market positions, a strong runway
Speaker 1: for growth and cash flow now and those that were
Speaker 1: really hopes and dreams. And I think that Ladder group
Speaker 1: may not come back for a long time, if at all.
Speaker 1: But the former group has come in quite a bit
Speaker 1: as well, and we think those are where the opportunities are.
Speaker 1: So inflation numbers coming out in twenty four hours, how
Speaker 1: is that going to affect this broader story? Certainly if
Speaker 1: inflation remains high, and we think it will probably peak
Speaker 1: sometime in the second quarter. But if we see a
Speaker 1: high inflation print tomorrow, that's very bad for those long
Speaker 1: duration tech stocks because that will give the Federal Reserve
Speaker 1: license to raise rates even faster. Real rates are going
Speaker 1: to continue to increase, and that hurts those cash floads
Speaker 1: that you're discounting for a lot of the far outgrows names.
Speaker 1: So when you say there's more to come, just how
Speaker 1: much more? How low can we go? Uh? It depends
Speaker 1: on the company, of course, but we wouldn't be surprised
Speaker 1: to see another five time percent down and a lot
Speaker 1: of the larger names and some of the smaller names,
Speaker 1: it's really hard to say where they could go, particularly
Speaker 1: those that are that are less profitable. A lot of
Speaker 1: the excess has been wrung out of the bigger names, though,
Speaker 1: and so if you look at some of the largest
Speaker 1: tech names and the outperformance that they had had going
Speaker 1: into two, a lot of that performance has been given back,
Speaker 1: and so we think the larger names are are pretty
Speaker 1: close to bottoming out here. Um. Of course, one can
Speaker 1: never say never, and it's hard to predict day to day,
Speaker 1: but they're getting to be pretty attractively valued um, but
Speaker 1: some of the smaller and less profitable companies it could
Speaker 1: be a while. So let's talk about big tech earnings.
Speaker 1: We've seen a number of companies miss their marks this quarter.
Speaker 1: Do you see that happening again in the current quarter
Speaker 1: and the next quarter? A lot of that is going
Speaker 1: to depend on what happens with underlying economic growth right now.
Speaker 1: It does come back to the consumer and corporate strength.
Speaker 1: The consumer remains strong. We still have that two and
Speaker 1: a half trillion of excess savings on the consumer balance sheets.
Speaker 1: Consumers have pretty good wage growth, and they all have
Speaker 1: jobs for the most part. We saw the unemployment come
Speaker 1: in last week at a very low three point six.
Speaker 1: So as long as the consumer keeps spending and therefore
Speaker 1: the economy keeps going, then we think that they're the
Speaker 1: company's top lines will be okay. I think the biggest
Speaker 1: question is whether or not that slows down materially from here.
Speaker 1: And then the second question is whether or not wage
Speaker 1: pressures are going to catch up and cause big tech
Speaker 1: to have to pay more to their workers. If we
Speaker 1: see inflation take hold in wages, not just in tech
Speaker 1: workers but across the board, then that can really slow
Speaker 1: the economy down and keep inflation high and cause the
Speaker 1: FED to move even faster and harder than they were before.
Speaker 1: But if the FED is able to engineer a soft landing,
Speaker 1: then we think the large cap tech companies are going
Speaker 1: to remain more or less okay. But it does depend
Speaker 1: on the degree of pull forward that has been seen,
Speaker 1: and that's very much accompanied by company evaluation. Now, there's
Speaker 1: certainly a lot of factors that are just out of
Speaker 1: their control, including China's COVID policy, you know, continuing to
Speaker 1: keep Shanghai on lockdown. We know the Tesla factory, for example,
Speaker 1: has experienced a lot of disruptions. We know Apple has
Speaker 1: some big warnings about supply constraints and the impact it
Speaker 1: will have on their quarter to the tune of billions
Speaker 1: of dollars. How much of an impact do you think
Speaker 1: China's COVID policy specifically is having on this broader slowdown.
Speaker 1: It's clearly a factor, and particularly on the hardware side,
Speaker 1: as you point out, because so much hardware, including some
Speaker 1: means but other um other assemblies take place in China,
Speaker 1: and so the zero COVID policy is definitely having an effect.
Speaker 1: I think the question becomes not what effect is it
Speaker 1: having today, but what effect is it going to have
Speaker 1: in one or two more quarters? And does the government
Speaker 1: have the wherewithal and the plan to continue with this
Speaker 1: type of very very sharp lockdown for an indefinite period
Speaker 1: of time. If they ease up on it, either because
Speaker 1: the case numbers get better or it becomes untenable, then
Speaker 1: we can see a lot of those tech products begin
Speaker 1: to flow again. So a lot of it's going to
Speaker 1: depend on the on the policy itself. But if the
Speaker 1: case numbers get better and or the COVID zero COVID
Speaker 1: policy is effective at keeping it um contained in certain areas,
Speaker 1: I do think there will be a relief rally as
Speaker 1: we see a lot of the exports begin to come
Speaker 1: back online. Well, and of course we need to see
Speaker 1: how committed China is to that zero COVID policy. Look,
Speaker 1: what's your advice for tech investors right now? Are there
Speaker 1: any safe havens where should they be putting their money?
Speaker 1: Have a shopping list and come up with the names
Speaker 1: that you want for us, that's the large cap tech
Speaker 1: companies with big motes like Microsoft, like Google, like Apple.
Speaker 1: Stay away from companies whose competitive modes are being eroded
Speaker 1: either by regulatory scrutiny or by consumer preferences or COVID
Speaker 1: and stay at home ending and find companies that are
Speaker 1: actually generating cash flow. Now. I do not think that
Speaker 1: the very low cash flow or negative cash flow companies
Speaker 1: are likely to come back, and I think that could
Speaker 1: really um be a losing trade going forward to try
Speaker 1: to buy some of those, even though they're down six
Speaker 1: seventy eight plus percent, It's probably not a good idea
Speaker 1: to chase those because unless the FED comes back with
Speaker 1: very easy money, I don't think we're going to see
Speaker 1: those valuations again. All Right, have a shopping list. Advice
Speaker 1: from Ellen Hays and chief market strategist at fl Platinum.
Speaker 1: Thank you Ellen for joining us coming up. Elon Musk
Speaker 1: says he'll reverse the permanent ban of former President Trump
Speaker 1: if his deal to buy Twitter goes through. My Musk
Speaker 1: is still casting doubt on his ability to buy the
Speaker 1: platform next Mrs Bloomberg, I would reverse the perma ban, obviously,
Speaker 1: I'm not. I don't own Twitter yet, so this is
Speaker 1: not like a thing that will definitely happen, because what
Speaker 1: if I don't own Twitter. He has publicly stated that
Speaker 1: he will not be coming back to Twitter um and
Speaker 1: that he will only be on truth social And this
Speaker 1: is the point that I'm trying to make, which is
Speaker 1: perhaps not getting across, is that is that fanning Trump
Speaker 1: from Twitter didn't end Trump voice. It will amplify it
Speaker 1: among the rights. And this is why it is morally
Speaker 1: wrung and flat out stupid. Elon Musk, they're speaking at
Speaker 1: the Financial Times the Future of the Car summit his
Speaker 1: thoughts on the permanent ban a former President Trump on
Speaker 1: Twitter following the deadly attack at the US Capitol on January,
Speaker 1: Musk saying, reverse the ban if his four D four
Speaker 1: billion dollar bid to buy Twitter goes through. For more,
Speaker 1: I'm joined by our ad Ludlow, who helps cover Musk
Speaker 1: for US, as well as Bloomberg Sarah Fryer, who covers
Speaker 1: Big tex So. Not only did he say he reversed
Speaker 1: the ban on former President Trump, he repeatedly said if
Speaker 1: if the deal goes through, casting some doubt on it
Speaker 1: going through at all. What did you make of that? Yeah,
Speaker 1: I mean he was couching or caveating that the deal
Speaker 1: is not yet closed, but he did reference at the
Speaker 1: idea that it might not go through. You know, investors
Speaker 1: have speculated that he could walk away potentially, uh, you
Speaker 1: know that there would be some kind of challenge, as
Speaker 1: there has been a pension funders suit must to block it.
Speaker 1: The FDC, according to sources, is investigating it. But also
Speaker 1: mean it wasn't just about the ban reversing the band
Speaker 1: for Trump. He basically said banning doesn't work, and he
Speaker 1: cited Trump setting up Truth Social, his own social media
Speaker 1: platform where his voice is essentially at Hans. It's a
Speaker 1: very right leaning platform, and he kind of used that
Speaker 1: as the basis of his argument that an out right
Speaker 1: band full stop just doesn't work on the Twitter platform.
Speaker 1: Musk confirming what he had hinted at before, saying that
Speaker 1: we should be cautious. Twitter should be cautious about permanent bands.
Speaker 1: That said Sarah. He has said he'd be okay censoring
Speaker 1: some content and potentially banning some individuals. So aside from
Speaker 1: the case of President Trump, what exactly would be different
Speaker 1: when it comes to content moderation under Elon Musk, Well,
Speaker 1: you know, it's it's unclear because he he says he's
Speaker 1: a free speech absolutist, and then when it comes down
Speaker 1: to it, when you sort of drill into the details,
Speaker 1: in these conversations he's been having, he's totally open with
Speaker 1: some content moderation. He says he wants to get rid
Speaker 1: of the spam box, he wants to get rid of
Speaker 1: the bitcoin spams that's happening on Twitter right now. There
Speaker 1: are some kinds of content that he's okay with with
Speaker 1: getting rid of. And he was speaking with the European
Speaker 1: Union Commissioner yesterday um about this very this very problem,
Speaker 1: and we expected there to be a lot of clashing
Speaker 1: there because the E one to have really strict content policy.
Speaker 1: Elon must said, Hey, we have no disagreement here. I'm
Speaker 1: totally on board with other things that you're saying, which
Speaker 1: was very surprising to me. So it's unclear when he
Speaker 1: comes in what will be different besides perhaps a little
Speaker 1: bit more friendliness for the right. And explain Musk's line
Speaker 1: of argument that by removing Trump from Twitter, you amplify
Speaker 1: his voice elsewhere. Yeah, you know, it's it is a
Speaker 1: bit of a head scratcher. But essentially he put it
Speaker 1: in very simple terms that it was foolish to remove
Speaker 1: Trump from the platform. He used a range of words.
Speaker 1: Trump set up his own social media platform, truth Social
Speaker 1: Truth social does not have the potential at least have
Speaker 1: as broader debating conversation as Twitter does. It Must's opinion,
Speaker 1: it is very right leaning. It amplifies Trump's voice with
Speaker 1: that section of American society in American politics, not stifles it.
Speaker 1: And he did display some frustration right because the moderator
Speaker 1: of that FT conference said, Okay, what's your position on
Speaker 1: reversing Trump's ban? Would you do it? Would you not
Speaker 1: do it? His point is it's it's academic to a
Speaker 1: certain point that had we never done that, he may
Speaker 1: never have set up true social and that there would
Speaker 1: be a more moderated or at least bipartisan conversation on
Speaker 1: what Mask describes as the public town square. Right, that's
Speaker 1: what he wants Twitter to be. Now. Musk also go
Speaker 1: so far as to invoke Jack dorsey support, saying Jack
Speaker 1: Dorsey also supports this ban, uh, this unbanning of President Trump.
Speaker 1: Take a listen to what he had to say. My
Speaker 1: opinion and Jack Dorsey, I want to be clear, shares
Speaker 1: this opinion is that we should not have perma bands. Um. Now, now,
Speaker 1: that doesn't mean that somebody gets to say whatever they
Speaker 1: wanted to say. If they say something that is illegal
Speaker 1: or um otherwise uh, just you know, just destructive as
Speaker 1: the world. Then then that there should be perhaps a
Speaker 1: time out, a temporary suspension, or that particular tweet should
Speaker 1: be uh made invisible or or have very limited attraction.
Speaker 1: Now to be clear, former President Trump was banned from
Speaker 1: Twitter under Jack Dorsey's leadership. He responded to a tweet
Speaker 1: to that effect, uh, saying that he does agree there
Speaker 1: shouldn't be permanent bands. There are exceptions, but generally permanent
Speaker 1: bands are a failure of ours and don't work. Sarah,
Speaker 1: what do you make of Elon Musk invoking Jack Dorsey here? Um?
Speaker 1: And if Elon Musk is going to take over Twitter,
Speaker 1: is Jack Dorsey also going to be in the driver's
Speaker 1: seat or or the co pilot. Well, we know that
Speaker 1: they're friends. They have a friendship that goes way back.
Speaker 1: What's strange though about what Jack Dorsey has been saying
Speaker 1: is who was the CEO of Twitter when Trump was banned?
Speaker 1: Who was the CEO of Twitter when they were making
Speaker 1: all these policies about who they needed to to moderate
Speaker 1: on the platform? It was Jack And and he's he's
Speaker 1: made some strange comments like this lately where he he
Speaker 1: talks about how Twitter's board has always been, the dysfunction
Speaker 1: of Twitter, the fact that it's a public company and
Speaker 1: beholds into the markets. These are all big problems. Um,
Speaker 1: he was running the thing, so he could have changed
Speaker 1: a lot of these things while he was in charge. UM.
Speaker 1: I would love to hear more from Jack about why
Speaker 1: he feels like that was impossible. But I do think
Speaker 1: that he feels if Twitter is a private company that
Speaker 1: they might have more latitude to make certain changes that
Speaker 1: he didn't feel comfortable making as a public business, and
Speaker 1: Elon Musk could make that happen through his deal. Now.
Speaker 1: Elon Musk has said he would be Twitter CEO at
Speaker 1: least for a time after this takeover. But is it,
Speaker 1: you know, at all possible that Jack Dorsey comes back
Speaker 1: as as CEO as well. Sure, I I think that's
Speaker 1: definitely possible. And then's it's one of the top names
Speaker 1: that have been speculated. You know, Elon Musk running it
Speaker 1: for a few months, um is maybe something to say
Speaker 1: to try to get investors on board with the plan.
Speaker 1: He has a bit of a mightas touch when it
Speaker 1: comes to the things that he says are going to
Speaker 1: work out. He certainly has some lofty plans that he's
Speaker 1: put forth for Twitter. Um, but he has this cult
Speaker 1: of personality that when he takes charge of something, people
Speaker 1: really do listen and come on board. Maybe he could
Speaker 1: convince Jack to come back to run Twitter, or or
Speaker 1: maybe he has somebody else in mind. And what do
Speaker 1: you make of that thought, given how Elon Musk runs
Speaker 1: his other companies. Yeah, Look, he's not afraid to do
Speaker 1: talent sharing. You look about the sort of software AI
Speaker 1: talent sharing materials, talent sharing that goes on between Tester
Speaker 1: and SpaceX. He's tweeted and commented a lot that Tester
Speaker 1: is principally a software company. He's talked about needing to
Speaker 1: fix at Twitter the underlying technology right open source in
Speaker 1: the algorithm. Also, he talks about Twitter's hardware, needing to
Speaker 1: basically fix their computers to make the process better. Beyond that,
Speaker 1: his suggestions are straightforward, right, Sarah's just talked about them
Speaker 1: strip out the box. He accused Twitter of being slightly
Speaker 1: left leaning or liberal because it's based in San Francisco,
Speaker 1: and Sarah alluded to we've talked a little bit about
Speaker 1: true social Perhaps, you know, he feels that he wants
Speaker 1: to drag Twitter back into the center from a kind
Speaker 1: of content moderation policy standpoint is the only clue we
Speaker 1: have to go on. But beyond that, you know, what
Speaker 1: today may clear is that he is not in favor
Speaker 1: of outright band a time out perhaps making invisible tweets
Speaker 1: that are dangerous or or breach a certain policy perhaps,
Speaker 1: but not outright band all right, So much TBD, Ed Ludlow,
Speaker 1: Sarah Fryar, thank you. A rough ride for Peloton, the
Speaker 1: company tumbling to a record low after deeper than expected
Speaker 1: losses in its latest earning to report, joined out by
Speaker 1: Bloomberg s Mark German, who covers Peloton for So, just
Speaker 1: how quickly is this bike maker going downhill? Mark uh?
Speaker 1: As quickly as you can probably ride a Peloton bike
Speaker 1: with all your energy. This company at this point is
Speaker 1: an unmitigated disaster. I really, quite frankly, don't even know
Speaker 1: why they went public in right, They went public just
Speaker 1: a few months before the pandemic started, right, and that
Speaker 1: really kicked off their sales. So all their success has
Speaker 1: really only been in this pandemic period. This is a
Speaker 1: company generating between three billion and four billion dollars per year.
Speaker 1: This is not the companies like Apple that generate maybe
Speaker 1: three or four billion dollars every week and a half, right,
Speaker 1: So I'm not sure what they see the point in
Speaker 1: being public and why they did that. Their numbers are disastrous.
Speaker 1: They've missed on their revenue numbers for Q three now
Speaker 1: in addition to last quarter Q two, they're projecting to
Speaker 1: miss on estimates for next quarter as well as for
Speaker 1: fiscal two they had to re guide yet again. So
Speaker 1: things are not going so well for new CEO Barry mccar.
Speaker 1: He came into the job on February nine, so just
Speaker 1: about three months ago, right, and at this point the
Speaker 1: stock is down over since he took over. Now, if
Speaker 1: you compare that to the SNP five, I believe the
Speaker 1: Peloton stock is down four or five x the larger market.
Speaker 1: So clearly the problem is not only the market, but
Speaker 1: it's Peloton investor belief, analyst belief, and in some cases
Speaker 1: customer belief as well. So I'm sure Peloton would argue
Speaker 1: with the fact that it's only success came in the pandemic.
Speaker 1: You know, it did have a fairly strong brand name
Speaker 1: going into the pandemic, But now that we're out of it,
Speaker 1: what is Barry McCarthy's turnaround plan. You know, John Foley,
Speaker 1: the former CEO, sold this vision of the pandemic teaching
Speaker 1: more people about Peloton and these numbers being able to continue.
Speaker 1: They completely failed with their ability to project supply and
Speaker 1: demand going out of the pandemic. Barry McCarthy's turnaround plan
Speaker 1: is to hike the subscription fee. So it's gonna go
Speaker 1: from thirty nine months to forty four a month in
Speaker 1: the US starting on June one, so in a bit
Speaker 1: about three weeks from now, so we'll the impact that
Speaker 1: has on subscription margins and subscription revenue. He's also cut
Speaker 1: the prices of the treadmill and there are two major bikes,
Speaker 1: the regular bike and the bike plus from between a
Speaker 1: hundred and five dollars depending on which model you're getting.
Speaker 1: That's obviously going to lower margins and lower revenue on hardware,
Speaker 1: and they're opening over the long term, combined with the
Speaker 1: leasing program that they'll have more you know, continuous revenue
Speaker 1: right coming from subscriptions and coming from people signing up
Speaker 1: on these monthly plans and maybe annual plans in the future.
Speaker 1: So there is a plan in place, but on the
Speaker 1: first three months of the job. It hasn't yet you know,
Speaker 1: resulted in you know, positive momentum. All right, we'll see
Speaker 1: how Peloton tries to retake control. Bloomberg s, Mark German,
Speaker 1: thank you well, come back to Bloomware Technology and Emily
Speaker 1: changes San Francisco. Well, the recent tech sell off is
Speaker 1: alluding to massive valuation haircuts in public and private markets,
Speaker 1: with funding harder to raise in uncertain ten times, how
Speaker 1: do founders keep building? Tony Fidel, one of the key
Speaker 1: players behind the iPod and the iPhone at Apple, and
Speaker 1: of course the co founder of Nest, is out with
Speaker 1: a new book, Build, an Unorthodox Guide to Making Things
Speaker 1: Worth Making. He joins us now with some advice for
Speaker 1: entrepreneurs today. Tony, It's always great to have you back
Speaker 1: here on the show and always appreciate hearing your unorthodox
Speaker 1: advice in times like this. Just what advice would you
Speaker 1: give entrepreneurs batting down the hatches? Well, first, hopefully you
Speaker 1: didn't go into some craziness and overextend yourself. So the
Speaker 1: first thing was, I hope you didn't take a valuation
Speaker 1: you shouldn't have just because it looked great on paper.
Speaker 1: You know it was too high. But if you did
Speaker 1: You're going to have to write the ship. And the
Speaker 1: biggest thing is the UH is reminding your team that
Speaker 1: those numbers were all fabricated, those were all made up
Speaker 1: kind of things, and go back to the business of
Speaker 1: working on your mission and achieving that. Also trimming the sales,
Speaker 1: so you have to go back and to first principles
Speaker 1: and stop, you know, thinking about this overinflated market had
Speaker 1: has changed, It has changed dramatically. It will it will
Speaker 1: levelize again. We're gonna swing in the pendulum, swinging one way,
Speaker 1: swinging the other way. But again, stay focused on the work.
Speaker 1: Go make your mission happen, but don't worry about all
Speaker 1: the craziness around it. We're going to take care of you.
Speaker 1: The biggest thing is taking care of your team. So
Speaker 1: I'm sure we could talk about this next question for hours,
Speaker 1: but in a nutshell, what are some lessons you learned
Speaker 1: the hard way? Oh jeez, let me count um. I
Speaker 1: think the biggest one was understanding timing. You know you
Speaker 1: have you could have great technology, can have great things.
Speaker 1: Understanding timing, you know the market has to be ready
Speaker 1: or ready to listen to what the innovation you have.
Speaker 1: The second thing I think is really understanding how you're
Speaker 1: telling your story, and you have to tell a story
Speaker 1: of why, why, why. That's what's in the book Build.
Speaker 1: It's all about the why. Too many times tech founders
Speaker 1: and engineers and people in the in the tech world
Speaker 1: worry about the what what what? It starts with the why?
Speaker 1: Why do customers need it? What pain are you solving?
Speaker 1: What do you need to do to get that message across?
Speaker 1: And make sure then your product delivers on that. Stop
Speaker 1: worrying about the bits and bites. Start working on the
Speaker 1: story and making sure that story is a pain killer,
Speaker 1: not a vitamin. Now, Google bought one of the things
Speaker 1: you built, and that was Nest. It didn't necessarily go
Speaker 1: as planned. What's your take on what went wrong? Let's
Speaker 1: say there, well was in it was in the book,
Speaker 1: but i'll how can we put it this way? We
Speaker 1: spent six months trying to figure out the right way
Speaker 1: to work together and if this marriage what I called
Speaker 1: was a marriage was going to work out. And so
Speaker 1: it was working okay for the first kind of two
Speaker 1: three quarters and then it was like the tindler swindler,
Speaker 1: Uh what we were sold as bill of goods? We
Speaker 1: were sold in this marriage all of a sudden turned
Speaker 1: to be blown up and it really boiled down to um.
Speaker 1: I thought that a something they would purchase for three
Speaker 1: point two billion would be something they would take in
Speaker 1: and cherish and be and understand that they have to
Speaker 1: nurture it and and take care of it. They were
Speaker 1: making so much money, and they continue to make so
Speaker 1: much money. They went on to other and different things,
Speaker 1: and we were just yet another toy that was uh,
Speaker 1: you know, a period of time. So for us, what
Speaker 1: we thought was going to be a great marriage turned
Speaker 1: out to be like a fling for them, and for
Speaker 1: us we were kind of left hanging at the you know,
Speaker 1: left hanging while they went and did other things. So
Speaker 1: it was really about focus and about leadership, um and
Speaker 1: and And that's what I think happened at the end
Speaker 1: of the day of why it didn't work out. Okay,
Speaker 1: speaking of another unorthodox marriage that that could happen between
Speaker 1: Elon Musk and Twitter, he's proposed, he said a few
Speaker 1: times today. You know it might not go through, But
Speaker 1: what do you make of that deal? Well, look, Elon's
Speaker 1: an innovator, and he's a brash one at that. You
Speaker 1: have to give him credit for what he's manifested in
Speaker 1: this world, and how he's shamed the autumn industry to
Speaker 1: move and all these other things. I think, you know,
Speaker 1: we look at back in the days of the oil
Speaker 1: barons and what have you, and they bought media, right,
Speaker 1: they bought media to control, to share the story, shaped
Speaker 1: the message of what they were doing. I think you
Speaker 1: know that there's some echoes of that in in in
Speaker 1: Elan are trying to purchase Twitter. But I also think
Speaker 1: that there are things that Twitter needs to solve and
Speaker 1: haven't solved for many years, um in terms of the algorithms,
Speaker 1: how they work, UM, some of some of the the
Speaker 1: innovations in terms of editing tweets, the leading tweets, UH
Speaker 1: content moderation that said, you know, you could go all
Speaker 1: the way the other way where there's no controls, where
Speaker 1: you remove everything and it becomes something that is reminiscent
Speaker 1: of a four chan or an eight chan or whatever
Speaker 1: the latest toxic social media network or broadcast one too
Speaker 1: many platform is. So I hope that Ellen is able
Speaker 1: to actually look at this and say, I'm going to
Speaker 1: divorce the world of the algorithm and revenue from the
Speaker 1: tweet stream and amplifying messages that can have misinformation, ugly information,
Speaker 1: things that called genocide and all those those things. We
Speaker 1: need to separate the capital and that revenue from the
Speaker 1: messages that are amplified by the algorithm. If they are
Speaker 1: tied like they have been, that's when we have the
Speaker 1: toxicity that that happens, because if it bleeds, it leads,
Speaker 1: As you know, and and I hope Ellen is going
Speaker 1: to be doing the right thing, even if he brings
Speaker 1: Trump back on Trump shouldn't be amplified for revenue gains.
Speaker 1: So let's talk about that for a moment. I want
Speaker 1: you to take a listen to what Ellen had to
Speaker 1: say about the banning of President Trump today. Take a listen.
Speaker 1: Sure I would reverse the homavan. Obviously I'm not. I
Speaker 1: don't own Twitter yet, So this is not like a
Speaker 1: thing that will definitely happen, because what if I don't
Speaker 1: own Twitter. Is bringing Trump back on Twitter the right call.
Speaker 1: It depends on the algorithms, It depends on the other
Speaker 1: it depends on the environment that he's brought back in.
Speaker 1: So to me, if he can amplify and he can
Speaker 1: continue the misinformation and that he has been doing um
Speaker 1: and and then and that is for revenue purposes, then
Speaker 1: it is wrong. Everyone could have freedom of speech, but
Speaker 1: it has to come with confidence consequences, and it cannot
Speaker 1: be tied to revenue. That says, the more, the more
Speaker 1: toxic it is, or the more you know entertainment value
Speaker 1: it is, you make more revenue. If that's the case,
Speaker 1: then he should not be allowed back onto the platform.
Speaker 1: Everyone should have a level playing field and it shouldn't
Speaker 1: be tied to your revenue dollars that you know that
Speaker 1: is going to be seen by the company itself. Now,
Speaker 1: Apple today, just in time for you to join us,
Speaker 1: discontinued its last iPod model. And obviously the iPod led
Speaker 1: to two decades of of of innovation at Apple, led
Speaker 1: to the iPhone. But how do you reflect on kind
Speaker 1: of the end of an era for the iPod and
Speaker 1: the thing that you are the father of. Well look, um,
Speaker 1: at the end of the day, technology marches on. Okay,
Speaker 1: the beat never stops. You know, you could I I
Speaker 1: remember I lamented the day when the Apple two was dead,
Speaker 1: But the Apple two died in the nineties, well past
Speaker 1: the date when you know the Mac took over and
Speaker 1: in the later eighties. Um, then again, you know, when
Speaker 1: we look at it. The iPod was already starting to
Speaker 1: be cannibalized or dying around the time of the iPhone. Right,
Speaker 1: it was always understood at some point, at some sometimes
Speaker 1: that the cannibalization of the iPod would be complete. I
Speaker 1: can't believe that the iPod has lasted this long, actually,
Speaker 1: to tell you the truth. So you know, it's an
Speaker 1: the end of an era, but it is a cornerstone.
Speaker 1: It's an indelible piece of Apple history, of technology in
Speaker 1: general history, just like the Apple two was the Mac
Speaker 1: is and those things are going to live on well beyond.
Speaker 1: And then if it wasn't for the iPod, we wouldn't
Speaker 1: have the iPhone. So all of these things are stepping stones.
Speaker 1: That's how technology works. So I can, you know, I can.
Speaker 1: I can think fondly of those days and those incredible times,
Speaker 1: and the Apple that we know today would not have
Speaker 1: existed without that development and that that crazy time, that
Speaker 1: fun time that was iPod. So how would you rate
Speaker 1: the innovation and building that's happening at Apple today again
Speaker 1: in a nutshell, especially how they're managing or navigating the
Speaker 1: supply chain issues. Well, you know the supply chain. Let's
Speaker 1: put casts that aside. But if you look at innovation
Speaker 1: in general, and I think they're doing a great job
Speaker 1: on the supply chain given what we're hearing from other
Speaker 1: companies and those sides of things. So I think, you know,
Speaker 1: look at the quarterly results that just came out, so
Speaker 1: I think managing supply chain given the macro environment is
Speaker 1: really difficult, and they're doing a good job trying to
Speaker 1: thread that needle. But when you look at innovation at
Speaker 1: Apple today, innovation at Apple today is very strong. It's
Speaker 1: not the same kind of innovation that the consumer of innovation,
Speaker 1: whether it was the iPod or iPhone or AirPods or
Speaker 1: what have you. When you look at the innovation, it's
Speaker 1: happening all at the lowest levels. The sensor's face, I
Speaker 1: D touch, I D. We have things like um uh,
Speaker 1: the M one processor that has been an innovation that
Speaker 1: was born out of the two thousand and eight time
Speaker 1: frame when I was there and Bob Bansfield and I
Speaker 1: bought p A Semi and created the you know, the
Speaker 1: max silicon for or excusing the Apple silicon for the
Speaker 1: iPhone and now is now the max silicon. It took
Speaker 1: a long time to get there, but those kinds of
Speaker 1: innovations are cement Apple into the future for more and
Speaker 1: more um for more and more transformation, more and more innovation.
Speaker 1: So we're seeing the hints of that. It's happening at
Speaker 1: the lowest levels, but it will come out in other
Speaker 1: products over time. Tony Fidel Future Shape Now you're an
Speaker 1: investment arm Tony. Always great to have you here on
Speaker 1: the show and to hear your thoughts on the broaderst
Speaker 1: tech landscape. Thanks for joining us, and yeah, by the
Speaker 1: book build coming up. Stable Coins used to be the
Speaker 1: safe bet in crypto, but doesny won over world more?
Speaker 1: N xt r is Bloomberg. Stable Coins are serve a
Speaker 1: huge purpose in the crypto and the defied economy, and
Speaker 1: they're here to stay. And I think it will also
Speaker 1: help out um, you know, all activity on the on
Speaker 1: various chains, so I hope the regulators recognized that as well.
Speaker 1: It is time now for our crypto report, and let's
Speaker 1: start with what came out of coin bases latest results.
Speaker 1: Our crypto contributor Sali Bossi here with more. Shanalie take
Speaker 1: it away, Emily, thank you so much. We have coin
Speaker 1: Basis down almost four after market after reporting earnings that
Speaker 1: have missed analysts estimates on Wall Street. You have them
Speaker 1: falling short on monthly transact users, falling by about two
Speaker 1: million from the prior quarter, even though it's higher than
Speaker 1: a year ago. First quarter revenue also below analysts estimates.
Speaker 1: Remember this is already for a stock that is down
Speaker 1: more than seventy percent this year, more than sevent if
Speaker 1: you look at the last twelve months, there was an
Speaker 1: expectation that growth would slow, and they say coin based
Speaker 1: that is that growth would slow into this current quarter,
Speaker 1: the second quarter of this year as well. You have
Speaker 1: coin Based CEO Brian Armstrong addressing analysts at this moment
Speaker 1: saying they will eventually be profitable, but they are guiding
Speaker 1: that they will still be unprofitable for this year. The
Speaker 1: question is will investors be patient with them as they
Speaker 1: make it through a very volatile time in bitcoin, as
Speaker 1: they seek to diversify away from just trading revenues into
Speaker 1: new products like that n f T marketplace and start
Speaker 1: to work with more banks and institutions. Emily alright, Shanali,
Speaker 1: thank you. I want to turn out to algorithmic stable coins.
Speaker 1: This came up recently UH in a discussion with Treasury
Speaker 1: Secretary Janet Yellen. They're more traditional counterparts. Dollar backed stable
Speaker 1: coins as well, supposed to provide calm and the chaos
Speaker 1: of crypto. But the algorithm stable coin called terra USD
Speaker 1: plunge to sixty cents Monday instead of trading at a
Speaker 1: dollar as designed. It's now back around nineties cents. But
Speaker 1: is this assign a trouble for stable coins? More broadly,
Speaker 1: I want to bring in Falconex's head of institutional coverage,
Speaker 1: Ia Kantorovich for her take on all this. Let's zoom
Speaker 1: in here on terra ile. What do you think this
Speaker 1: activity means? So? I think there's a couple of things
Speaker 1: that play here. The first is, uh, you know this
Speaker 1: is there is a difference between an algorithmic stable coin
Speaker 1: versus a stable coin that's backed one to one with
Speaker 1: the US dollar. And so if you look at the
Speaker 1: comparison between USDC and us D T tether, us T
Speaker 1: is a blend of both Luna and ust, which is
Speaker 1: meanted and burned in order to maintain that one to
Speaker 1: one peg. What happened this weekend is we saw a
Speaker 1: large motivated seller go into the market and depressed that
Speaker 1: USD price and deep peg. The algorithmic stable coin, causing
Speaker 1: uh an initial drop down to it was roughly point
Speaker 1: eight cents on the dollar. And really, why is that concerning?
Speaker 1: It's really concerning because the Luna Foundation Guard which manages
Speaker 1: all of these applications on top, also manages a yield
Speaker 1: pool called anchor. Uh An anchor has been generating over
Speaker 1: yields now eighteen percent yield for a number of personas
Speaker 1: anywhere between retail two institutional. And so what happens is
Speaker 1: you had roughly seventeen billion of total value locked in
Speaker 1: anchor now drop significantly due to that deep pegging because
Speaker 1: people were getting liquidated once that peg was no longer
Speaker 1: one to one, and you saw the Luna Foundation have
Speaker 1: to engage in order to repeg that stable coin, and
Speaker 1: as you mentioned yesterday, saw that peg drop all the
Speaker 1: way down to sixty cents on the dollar. Meantime, Treasury
Speaker 1: Secretary Janet Yellen brought up Tara recently and talked about
Speaker 1: stable coins more broadly as a risk to financial stability.
Speaker 1: Take a listen to what Yellen had to say. Terra
Speaker 1: us Dum experienced to run and had declined in value
Speaker 1: and UM, well, so I think that simply illustrates that
Speaker 1: this is a rapidly growing a product and um that
Speaker 1: there there are risks to financial stability and we need
Speaker 1: a framework that's that's appropriate. Hi, what's your response to
Speaker 1: that we need a framework to far more than just
Speaker 1: stable coins and crypto And I would say, you know,
Speaker 1: this strengthens the approach towards stable coins like us d C,
Speaker 1: which is now a forty billion in market cap, as
Speaker 1: well as us d T, which is eight billion in
Speaker 1: market cap. You've also seen other algorithmics stable coins like
Speaker 1: tracks gain in traction. I think the largest question here
Speaker 1: is really, uh, whether or not it's algorithmic or it's
Speaker 1: one to one peg, and whether or not investors, uh,
Speaker 1: you know they have faith in the algorithmic stable coin.
Speaker 1: But again going back to Anchor, if you look at
Speaker 1: where that seventeen billion now six earlier today, it was
Speaker 1: less than seven billion dollars left in Anchor still decreasing,
Speaker 1: really reflecting that I don't think the retail and institutional
Speaker 1: investors have much faith that that PEG maintain algorithmically in
Speaker 1: a decentralized fashion. You know, there's a question here, and
Speaker 1: you do see ust dropping once again removing that peg
Speaker 1: even further at seventy nine cents according to coin based prices,
Speaker 1: So you still see that volatility into today, even when
Speaker 1: you see Bitcoin recovering a little bit. So I am
Speaker 1: wondering here what broader ramification is there, especially for defy
Speaker 1: as the as the market starts to move forward. Here,
Speaker 1: I think the difference is really if you take for example,
Speaker 1: Maker and Die, you have a number of these potential
Speaker 1: runs happened historically, but the market has corrected and shown
Speaker 1: resilience through those market volatility terms. Overall crypto itself, as
Speaker 1: you mentioned Bitcoin eve, we've stayed relatively rangebound last week
Speaker 1: and will likely continue to be rangebound had it not
Speaker 1: been uh this anchor run for the money. And so
Speaker 1: what we'll likely see is we'll likely see that capital
Speaker 1: go into other forms of yield generating assets. I think
Speaker 1: right now what we're hearing across the desk is all
Speaker 1: institutional clients want some level of yield and flat is
Speaker 1: the new up. And so if you can maintain a
Speaker 1: flat return relative to what's happening in public markets and crypto,
Speaker 1: that is what your LPs are looking for, and so
Speaker 1: they will find it either and swaps derivatives and structured products,
Speaker 1: and and that's really where we're focused. All right. Falcon
Speaker 1: X is had of institutional coverage. I A. Kantorovitch along
Speaker 1: with Bloombergtionale Bastik. Thank you. Now to a quick update
Speaker 1: on Elon Musk's bid for Twitter. Apollo plans to lead
Speaker 1: a billion dollars in financing for that BIB. This adds
Speaker 1: to the long list of unusual investors that Musk has
Speaker 1: secured for his deal to buy Twitter, ranging from Larry
Speaker 1: Ellison to Sequoia and Andres and Horowitz, to the crypto
Speaker 1: firm Finance, a Saudi Prince and more. It is time
Speaker 1: now for this week's teconomics segment in our spotlight is
Speaker 1: on solar panel energy. Rooftop solar is a surging sector,
Speaker 1: but only four percent of homes feature solar panels. However,
Speaker 1: investors from Lebron James Arnold Schwarzenegger believe pal Meadow can
Speaker 1: turn that around. I want to bring in Palmetto founder
Speaker 1: and CEO Chris Kemper. Chris, thank you, So, how have
Speaker 1: you gotten folks like Drake and Bono and Arnold Schwarzenegger
Speaker 1: on board? Yeah? Well, thanks, Emily, appreciate having me Um
Speaker 1: I think that these types of investors see what we've
Speaker 1: seen him been working on since two thousand nine, which is,
Speaker 1: you know, linemate change and energy independence is a is
Speaker 1: a big problem um for Palmetto. You know, unlike peers
Speaker 1: in our space, we're primarily those firms are primarily focused
Speaker 1: on construction. We're focused on end end tech platform solving
Speaker 1: for solar delivery. And we can lay that on three
Speaker 1: simple steps for you. So one is, whether it's an
Speaker 1: individual entrepreneur or a fortune company, we provide them with
Speaker 1: the tools to enable to sell the consumers to We
Speaker 1: then provide a seamless, delighted experience to the consumers which
Speaker 1: helps build our brand experience. And then thirdly, we provide
Speaker 1: full supply chain management, financing, quality control to our build
Speaker 1: partners to actually install the physical project in the market
Speaker 1: and that that that delivers about a seventy five net
Speaker 1: promoter score. So now you and Jamath Polyhopatia have pitched
Speaker 1: a three trillion dollar investment by the US government to
Speaker 1: fund solar for the entire country. How exactly would this work?
Speaker 1: And have you got in any feedback from the White House.
Speaker 1: We haven't gotten feedback from the White House to a
Speaker 1: dress that point directly. We do believe that ultimately if
Speaker 1: you kind of look at benefits um you know out
Speaker 1: there that have passed perhaps three PPP or other things.
Speaker 1: The only point trying to be made here is what
Speaker 1: would that quantum of capital, How would that actually impact
Speaker 1: climate change mitigation and energy independence if we were able
Speaker 1: to allocate that capital to by example, renewable specifically solar.
Speaker 1: So otherwise, how do you scale roof top solar without
Speaker 1: three trillion dollars from the government. How are we going
Speaker 1: to get there? Or is that the only way? We
Speaker 1: get there? Simply through three three main things best product,
Speaker 1: best price, and great service to the customer. So back
Speaker 1: to our model. We specifically focus on distribution channels, provide
Speaker 1: them with the tools to acquire consumers. We automate the
Speaker 1: end to end delivery of solar to the customers home
Speaker 1: and then turn key it and then service it. The
Speaker 1: goal is is that you have such a great experience
Speaker 1: and you're saving monthly uh, saving money on a monthly
Speaker 1: basis that then you want to tell your friends and
Speaker 1: then drive the basically the flywheel effect from there. Uh.
Speaker 1: And we've been doing this for about fourteen years now.
Speaker 1: So We're starting to see the momentum in the price
Speaker 1: draw that can grow total TAN. All right, pau Meado
Speaker 1: CEO Chris Kemper will keep our eye on you Andrew investors,
Speaker 1: of course, thank you. And that does it for this
Speaker 1: edition of Bloomberg Technology. Tomorrow we're gonna be joined by
Speaker 1: Rick Oster Loe Alphabet, Senior vice president of Hardware this
Speaker 1: around Google Io, and Patrick Spence, CEO of Sons. We're
Speaker 1: also watching earnings from Disney and a big announcement coming
Speaker 1: from Airbnb. Don't forget to check out our new podcast.
Speaker 1: You can find it anywhere you get your podcasts. I'm
Speaker 1: Emily checking in San Francisco. This is Bloomberg Ran