WEBVTT - Tech Stocks Bounce Back and Tony Fadell's Advice 0:00:02.240 --> 0:00:05.560 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 0:00:10.960 --> 0:00:27.440 Emily Jay. I'm Emily Check in San Francisco, and this 0:00:27.440 --> 0:00:29.800 is Bloomberg Technology. Coming up in the next hour, a 0:00:29.880 --> 0:00:32.720 bounce back for tech stocks. The Nasdaq one hundred seeing 0:00:32.760 --> 0:00:36.160 a bump a day after a sell off, better raised 0:00:36.440 --> 0:00:39.320 trillion spot Will it all be undone with new inflation 0:00:39.400 --> 0:00:44.360 numbers come Wednesday? We'll discuss plus Elon Mosk says banning 0:00:44.400 --> 0:00:48.000 former President Trump on Twitter was quote flat out stupid 0:00:48.360 --> 0:00:53.680 and but he'll reverse it. And Tony Fidel's unorthodox advice 0:00:53.760 --> 0:00:57.440 to founders in these times of market turmoil, so called 0:00:57.600 --> 0:01:01.200 father of the iPod and co found of Nest, talks 0:01:01.240 --> 0:01:04.280 about the most and least exciting inventions coming out of 0:01:04.319 --> 0:01:07.520 Silicon Valley today. That's later this hour. I want to 0:01:07.520 --> 0:01:10.720 dive into this ongoing volatility, especially in the tech sector, 0:01:10.760 --> 0:01:13.240 where we've seen a big sell off since the start 0:01:13.280 --> 0:01:15.720 of the year. I'm joined out by Ellen Hazen. She's 0:01:15.760 --> 0:01:20.200 the chief market strategist at Putnam Investment. Ellen, thank you 0:01:20.240 --> 0:01:23.000 so much for joining us. So, look, what do you 0:01:23.000 --> 0:01:26.080 make of this sell off? Especially when it comes to tech. 0:01:26.120 --> 0:01:27.880 How we hit bottom or is there more to come? 0:01:29.600 --> 0:01:33.120 There's probably more to come. It makes sense that tech 0:01:33.160 --> 0:01:35.720 stocks have pulled back so far because we saw tech 0:01:35.760 --> 0:01:38.720 stocks do so well in the last three years, particularly 0:01:38.760 --> 0:01:41.440 with the pull forward that we saw due to COVID 0:01:41.560 --> 0:01:43.959 of all the stay at home names, but that was 0:01:44.040 --> 0:01:47.039 also really exacerbated by the easy money policies that the 0:01:47.040 --> 0:01:50.200 Federal Reserve is pursuing. And as the Fed begins to 0:01:50.240 --> 0:01:53.520 pull back, a lot of tech is dominated, as you 0:01:53.560 --> 0:01:56.320 know and as your viewers know, by those companies that 0:01:56.400 --> 0:01:58.960 have very little cash flow now, and the market has 0:01:59.000 --> 0:02:01.960 been betting on Ashlands pretty far out into the future. 0:02:02.560 --> 0:02:05.200 We have looked at the tech sector as bifurcated between 0:02:05.240 --> 0:02:09.520 those companies that have dominant market positions, a strong runway 0:02:09.520 --> 0:02:12.519 for growth and cash flow now and those that were 0:02:12.560 --> 0:02:15.640 really hopes and dreams. And I think that Ladder group 0:02:16.000 --> 0:02:18.320 may not come back for a long time, if at all. 0:02:18.639 --> 0:02:20.799 But the former group has come in quite a bit 0:02:20.840 --> 0:02:23.480 as well, and we think those are where the opportunities are. 0:02:24.440 --> 0:02:29.399 So inflation numbers coming out in twenty four hours, how 0:02:29.520 --> 0:02:33.360 is that going to affect this broader story? Certainly if 0:02:33.400 --> 0:02:36.360 inflation remains high, and we think it will probably peak 0:02:36.440 --> 0:02:38.799 sometime in the second quarter. But if we see a 0:02:38.880 --> 0:02:41.639 high inflation print tomorrow, that's very bad for those long 0:02:41.720 --> 0:02:45.040 duration tech stocks because that will give the Federal Reserve 0:02:45.120 --> 0:02:48.160 license to raise rates even faster. Real rates are going 0:02:48.200 --> 0:02:50.760 to continue to increase, and that hurts those cash floads 0:02:50.760 --> 0:02:53.120 that you're discounting for a lot of the far outgrows names. 0:02:54.040 --> 0:02:55.880 So when you say there's more to come, just how 0:02:55.960 --> 0:03:01.160 much more? How low can we go? Uh? It depends 0:03:01.160 --> 0:03:04.520 on the company, of course, but we wouldn't be surprised 0:03:04.560 --> 0:03:06.760 to see another five time percent down and a lot 0:03:06.800 --> 0:03:08.919 of the larger names and some of the smaller names, 0:03:08.960 --> 0:03:12.600 it's really hard to say where they could go, particularly 0:03:12.639 --> 0:03:15.360 those that are that are less profitable. A lot of 0:03:15.400 --> 0:03:18.040 the excess has been wrung out of the bigger names, though, 0:03:18.080 --> 0:03:20.160 and so if you look at some of the largest 0:03:20.200 --> 0:03:23.120 tech names and the outperformance that they had had going 0:03:23.240 --> 0:03:27.200 into two, a lot of that performance has been given back, 0:03:27.240 --> 0:03:29.600 and so we think the larger names are are pretty 0:03:29.600 --> 0:03:33.200 close to bottoming out here. Um. Of course, one can 0:03:33.240 --> 0:03:36.160 never say never, and it's hard to predict day to day, 0:03:36.200 --> 0:03:39.120 but they're getting to be pretty attractively valued um, but 0:03:39.240 --> 0:03:41.840 some of the smaller and less profitable companies it could 0:03:41.840 --> 0:03:46.320 be a while. So let's talk about big tech earnings. 0:03:46.360 --> 0:03:49.440 We've seen a number of companies miss their marks this quarter. 0:03:49.600 --> 0:03:52.480 Do you see that happening again in the current quarter 0:03:52.640 --> 0:03:56.520 and the next quarter? A lot of that is going 0:03:56.600 --> 0:04:00.560 to depend on what happens with underlying economic growth right now. 0:04:00.800 --> 0:04:03.520 It does come back to the consumer and corporate strength. 0:04:03.880 --> 0:04:06.680 The consumer remains strong. We still have that two and 0:04:06.720 --> 0:04:09.520 a half trillion of excess savings on the consumer balance sheets. 0:04:10.280 --> 0:04:13.400 Consumers have pretty good wage growth, and they all have 0:04:13.600 --> 0:04:16.320 jobs for the most part. We saw the unemployment come 0:04:16.360 --> 0:04:18.440 in last week at a very low three point six. 0:04:19.080 --> 0:04:21.679 So as long as the consumer keeps spending and therefore 0:04:21.720 --> 0:04:25.520 the economy keeps going, then we think that they're the 0:04:25.560 --> 0:04:28.400 company's top lines will be okay. I think the biggest 0:04:28.480 --> 0:04:31.680 question is whether or not that slows down materially from here. 0:04:32.240 --> 0:04:34.560 And then the second question is whether or not wage 0:04:34.560 --> 0:04:37.000 pressures are going to catch up and cause big tech 0:04:37.080 --> 0:04:40.039 to have to pay more to their workers. If we 0:04:40.160 --> 0:04:44.200 see inflation take hold in wages, not just in tech 0:04:44.240 --> 0:04:46.920 workers but across the board, then that can really slow 0:04:46.960 --> 0:04:49.440 the economy down and keep inflation high and cause the 0:04:49.480 --> 0:04:52.640 FED to move even faster and harder than they were before. 0:04:53.440 --> 0:04:55.800 But if the FED is able to engineer a soft landing, 0:04:55.839 --> 0:04:58.039 then we think the large cap tech companies are going 0:04:58.080 --> 0:05:01.120 to remain more or less okay. But it does depend 0:05:01.240 --> 0:05:03.799 on the degree of pull forward that has been seen, 0:05:03.800 --> 0:05:07.760 and that's very much accompanied by company evaluation. Now, there's 0:05:07.760 --> 0:05:09.400 certainly a lot of factors that are just out of 0:05:09.400 --> 0:05:14.359 their control, including China's COVID policy, you know, continuing to 0:05:14.440 --> 0:05:17.560 keep Shanghai on lockdown. We know the Tesla factory, for example, 0:05:17.600 --> 0:05:20.960 has experienced a lot of disruptions. We know Apple has 0:05:21.000 --> 0:05:24.160 some big warnings about supply constraints and the impact it 0:05:24.200 --> 0:05:26.799 will have on their quarter to the tune of billions 0:05:26.839 --> 0:05:29.400 of dollars. How much of an impact do you think 0:05:29.839 --> 0:05:35.000 China's COVID policy specifically is having on this broader slowdown. 0:05:36.480 --> 0:05:39.880 It's clearly a factor, and particularly on the hardware side, 0:05:39.920 --> 0:05:42.440 as you point out, because so much hardware, including some 0:05:42.600 --> 0:05:47.320 means but other um other assemblies take place in China, 0:05:47.440 --> 0:05:50.839 and so the zero COVID policy is definitely having an effect. 0:05:51.320 --> 0:05:54.000 I think the question becomes not what effect is it 0:05:54.040 --> 0:05:56.719 having today, but what effect is it going to have 0:05:56.880 --> 0:05:59.240 in one or two more quarters? And does the government 0:05:59.400 --> 0:06:04.240 have the wherewithal and the plan to continue with this 0:06:04.279 --> 0:06:08.320 type of very very sharp lockdown for an indefinite period 0:06:08.320 --> 0:06:11.479 of time. If they ease up on it, either because 0:06:11.520 --> 0:06:14.839 the case numbers get better or it becomes untenable, then 0:06:14.920 --> 0:06:17.880 we can see a lot of those tech products begin 0:06:17.960 --> 0:06:20.280 to flow again. So a lot of it's going to 0:06:20.400 --> 0:06:23.400 depend on the on the policy itself. But if the 0:06:23.440 --> 0:06:26.960 case numbers get better and or the COVID zero COVID 0:06:27.000 --> 0:06:33.000 policy is effective at keeping it um contained in certain areas, 0:06:33.800 --> 0:06:36.119 I do think there will be a relief rally as 0:06:36.320 --> 0:06:38.960 we see a lot of the exports begin to come 0:06:39.000 --> 0:06:42.680 back online. Well, and of course we need to see 0:06:42.680 --> 0:06:45.440 how committed China is to that zero COVID policy. Look, 0:06:45.440 --> 0:06:48.200 what's your advice for tech investors right now? Are there 0:06:48.240 --> 0:06:51.520 any safe havens where should they be putting their money? 0:06:52.160 --> 0:06:55.800 Have a shopping list and come up with the names 0:06:55.800 --> 0:06:57.960 that you want for us, that's the large cap tech 0:06:57.960 --> 0:07:01.200 companies with big motes like Microsoft, like Google, like Apple. 0:07:01.640 --> 0:07:05.159 Stay away from companies whose competitive modes are being eroded 0:07:05.200 --> 0:07:09.960 either by regulatory scrutiny or by consumer preferences or COVID 0:07:10.080 --> 0:07:13.200 and stay at home ending and find companies that are 0:07:13.200 --> 0:07:16.560 actually generating cash flow. Now. I do not think that 0:07:16.640 --> 0:07:19.280 the very low cash flow or negative cash flow companies 0:07:19.320 --> 0:07:21.840 are likely to come back, and I think that could 0:07:22.160 --> 0:07:27.040 really um be a losing trade going forward to try 0:07:27.040 --> 0:07:29.520 to buy some of those, even though they're down six 0:07:29.800 --> 0:07:33.440 seventy eight plus percent, It's probably not a good idea 0:07:33.480 --> 0:07:35.720 to chase those because unless the FED comes back with 0:07:35.920 --> 0:07:38.120 very easy money, I don't think we're going to see 0:07:38.120 --> 0:07:42.679 those valuations again. All Right, have a shopping list. Advice 0:07:42.720 --> 0:07:45.560 from Ellen Hays and chief market strategist at fl Platinum. 0:07:45.560 --> 0:07:49.160 Thank you Ellen for joining us coming up. Elon Musk 0:07:49.200 --> 0:07:52.800 says he'll reverse the permanent ban of former President Trump 0:07:52.920 --> 0:07:55.840 if his deal to buy Twitter goes through. My Musk 0:07:56.000 --> 0:07:58.720 is still casting doubt on his ability to buy the 0:07:58.760 --> 0:08:04.480 platform next Mrs Bloomberg, I would reverse the perma ban, obviously, 0:08:04.520 --> 0:08:06.360 I'm not. I don't own Twitter yet, so this is 0:08:06.400 --> 0:08:08.480 not like a thing that will definitely happen, because what 0:08:08.520 --> 0:08:21.480 if I don't own Twitter. He has publicly stated that 0:08:21.720 --> 0:08:25.080 he will not be coming back to Twitter um and 0:08:25.240 --> 0:08:28.840 that he will only be on truth social And this 0:08:28.920 --> 0:08:30.920 is the point that I'm trying to make, which is 0:08:30.960 --> 0:08:35.800 perhaps not getting across, is that is that fanning Trump 0:08:35.840 --> 0:08:40.360 from Twitter didn't end Trump voice. It will amplify it 0:08:40.960 --> 0:08:43.800 among the rights. And this is why it is morally 0:08:43.880 --> 0:08:48.280 wrung and flat out stupid. Elon Musk, they're speaking at 0:08:48.280 --> 0:08:50.960 the Financial Times the Future of the Car summit his 0:08:51.040 --> 0:08:53.960 thoughts on the permanent ban a former President Trump on 0:08:53.960 --> 0:08:58.920 Twitter following the deadly attack at the US Capitol on January, 0:08:59.160 --> 0:09:02.960 Musk saying, reverse the ban if his four D four 0:09:03.000 --> 0:09:06.000 billion dollar bid to buy Twitter goes through. For more, 0:09:06.000 --> 0:09:08.000 I'm joined by our ad Ludlow, who helps cover Musk 0:09:08.080 --> 0:09:10.600 for US, as well as Bloomberg Sarah Fryer, who covers 0:09:10.640 --> 0:09:13.760 Big tex So. Not only did he say he reversed 0:09:13.760 --> 0:09:17.120 the ban on former President Trump, he repeatedly said if 0:09:17.840 --> 0:09:20.880 if the deal goes through, casting some doubt on it 0:09:20.960 --> 0:09:23.200 going through at all. What did you make of that? Yeah, 0:09:23.240 --> 0:09:26.000 I mean he was couching or caveating that the deal 0:09:26.040 --> 0:09:28.680 is not yet closed, but he did reference at the 0:09:28.800 --> 0:09:31.320 idea that it might not go through. You know, investors 0:09:31.360 --> 0:09:35.800 have speculated that he could walk away potentially, uh, you 0:09:35.840 --> 0:09:37.679 know that there would be some kind of challenge, as 0:09:37.720 --> 0:09:39.960 there has been a pension funders suit must to block it. 0:09:40.040 --> 0:09:43.560 The FDC, according to sources, is investigating it. But also 0:09:43.600 --> 0:09:45.840 mean it wasn't just about the ban reversing the band 0:09:45.880 --> 0:09:48.680 for Trump. He basically said banning doesn't work, and he 0:09:48.760 --> 0:09:52.000 cited Trump setting up Truth Social, his own social media 0:09:52.040 --> 0:09:54.880 platform where his voice is essentially at Hans. It's a 0:09:54.960 --> 0:09:57.920 very right leaning platform, and he kind of used that 0:09:58.000 --> 0:10:00.240 as the basis of his argument that an out right 0:10:00.320 --> 0:10:03.040 band full stop just doesn't work on the Twitter platform. 0:10:03.320 --> 0:10:07.280 Musk confirming what he had hinted at before, saying that 0:10:07.360 --> 0:10:10.680 we should be cautious. Twitter should be cautious about permanent bands. 0:10:10.720 --> 0:10:13.680 That said Sarah. He has said he'd be okay censoring 0:10:13.760 --> 0:10:18.400 some content and potentially banning some individuals. So aside from 0:10:18.800 --> 0:10:21.560 the case of President Trump, what exactly would be different 0:10:21.679 --> 0:10:25.360 when it comes to content moderation under Elon Musk, Well, 0:10:25.440 --> 0:10:28.000 you know, it's it's unclear because he he says he's 0:10:28.040 --> 0:10:30.720 a free speech absolutist, and then when it comes down 0:10:30.760 --> 0:10:32.840 to it, when you sort of drill into the details, 0:10:32.840 --> 0:10:36.240 in these conversations he's been having, he's totally open with 0:10:36.320 --> 0:10:39.120 some content moderation. He says he wants to get rid 0:10:39.160 --> 0:10:40.920 of the spam box, he wants to get rid of 0:10:40.960 --> 0:10:44.640 the bitcoin spams that's happening on Twitter right now. There 0:10:44.679 --> 0:10:47.600 are some kinds of content that he's okay with with 0:10:47.640 --> 0:10:50.719 getting rid of. And he was speaking with the European 0:10:50.840 --> 0:10:55.800 Union Commissioner yesterday um about this very this very problem, 0:10:55.960 --> 0:10:58.600 and we expected there to be a lot of clashing 0:10:58.600 --> 0:11:03.000 there because the E one to have really strict content policy. 0:11:03.160 --> 0:11:05.880 Elon must said, Hey, we have no disagreement here. I'm 0:11:05.920 --> 0:11:09.040 totally on board with other things that you're saying, which 0:11:09.160 --> 0:11:12.120 was very surprising to me. So it's unclear when he 0:11:12.160 --> 0:11:15.319 comes in what will be different besides perhaps a little 0:11:15.320 --> 0:11:19.319 bit more friendliness for the right. And explain Musk's line 0:11:19.320 --> 0:11:23.480 of argument that by removing Trump from Twitter, you amplify 0:11:24.040 --> 0:11:26.719 his voice elsewhere. Yeah, you know, it's it is a 0:11:26.720 --> 0:11:29.360 bit of a head scratcher. But essentially he put it 0:11:29.360 --> 0:11:33.439 in very simple terms that it was foolish to remove 0:11:33.480 --> 0:11:35.559 Trump from the platform. He used a range of words. 0:11:35.640 --> 0:11:39.199 Trump set up his own social media platform, truth Social 0:11:39.280 --> 0:11:42.960 Truth social does not have the potential at least have 0:11:43.000 --> 0:11:46.120 as broader debating conversation as Twitter does. It Must's opinion, 0:11:46.480 --> 0:11:50.560 it is very right leaning. It amplifies Trump's voice with 0:11:50.679 --> 0:11:55.480 that section of American society in American politics, not stifles it. 0:11:55.800 --> 0:11:58.800 And he did display some frustration right because the moderator 0:11:58.880 --> 0:12:01.640 of that FT conference said, Okay, what's your position on 0:12:01.720 --> 0:12:04.280 reversing Trump's ban? Would you do it? Would you not 0:12:04.360 --> 0:12:07.040 do it? His point is it's it's academic to a 0:12:07.040 --> 0:12:10.160 certain point that had we never done that, he may 0:12:10.200 --> 0:12:12.640 never have set up true social and that there would 0:12:12.679 --> 0:12:16.280 be a more moderated or at least bipartisan conversation on 0:12:16.400 --> 0:12:18.880 what Mask describes as the public town square. Right, that's 0:12:18.880 --> 0:12:21.840 what he wants Twitter to be. Now. Musk also go 0:12:22.040 --> 0:12:25.360 so far as to invoke Jack dorsey support, saying Jack 0:12:25.400 --> 0:12:30.160 Dorsey also supports this ban, uh, this unbanning of President Trump. 0:12:30.160 --> 0:12:32.920 Take a listen to what he had to say. My 0:12:33.000 --> 0:12:35.520 opinion and Jack Dorsey, I want to be clear, shares 0:12:35.559 --> 0:12:40.520 this opinion is that we should not have perma bands. Um. Now, now, 0:12:40.600 --> 0:12:43.320 that doesn't mean that somebody gets to say whatever they 0:12:43.320 --> 0:12:46.400 wanted to say. If they say something that is illegal 0:12:46.760 --> 0:12:53.000 or um otherwise uh, just you know, just destructive as 0:12:53.040 --> 0:12:55.200 the world. Then then that there should be perhaps a 0:12:55.280 --> 0:13:00.600 time out, a temporary suspension, or that particular tweet should 0:13:00.640 --> 0:13:07.079 be uh made invisible or or have very limited attraction. 0:13:08.240 --> 0:13:11.199 Now to be clear, former President Trump was banned from 0:13:11.200 --> 0:13:15.959 Twitter under Jack Dorsey's leadership. He responded to a tweet 0:13:16.000 --> 0:13:18.920 to that effect, uh, saying that he does agree there 0:13:18.960 --> 0:13:22.920 shouldn't be permanent bands. There are exceptions, but generally permanent 0:13:22.960 --> 0:13:27.480 bands are a failure of ours and don't work. Sarah, 0:13:27.559 --> 0:13:32.400 what do you make of Elon Musk invoking Jack Dorsey here? Um? 0:13:32.440 --> 0:13:34.440 And if Elon Musk is going to take over Twitter, 0:13:34.760 --> 0:13:37.720 is Jack Dorsey also going to be in the driver's 0:13:37.760 --> 0:13:40.800 seat or or the co pilot. Well, we know that 0:13:40.840 --> 0:13:43.199 they're friends. They have a friendship that goes way back. 0:13:43.559 --> 0:13:47.040 What's strange though about what Jack Dorsey has been saying 0:13:47.120 --> 0:13:50.800 is who was the CEO of Twitter when Trump was banned? 0:13:51.040 --> 0:13:54.040 Who was the CEO of Twitter when they were making 0:13:54.080 --> 0:13:58.000 all these policies about who they needed to to moderate 0:13:58.040 --> 0:14:01.000 on the platform? It was Jack And and he's he's 0:14:01.080 --> 0:14:03.640 made some strange comments like this lately where he he 0:14:03.720 --> 0:14:07.239 talks about how Twitter's board has always been, the dysfunction 0:14:07.280 --> 0:14:09.080 of Twitter, the fact that it's a public company and 0:14:09.080 --> 0:14:12.040 beholds into the markets. These are all big problems. Um, 0:14:12.280 --> 0:14:15.040 he was running the thing, so he could have changed 0:14:15.040 --> 0:14:17.719 a lot of these things while he was in charge. UM. 0:14:18.160 --> 0:14:20.040 I would love to hear more from Jack about why 0:14:20.080 --> 0:14:23.120 he feels like that was impossible. But I do think 0:14:23.160 --> 0:14:26.120 that he feels if Twitter is a private company that 0:14:26.200 --> 0:14:29.680 they might have more latitude to make certain changes that 0:14:29.720 --> 0:14:33.400 he didn't feel comfortable making as a public business, and 0:14:33.520 --> 0:14:37.000 Elon Musk could make that happen through his deal. Now. 0:14:37.040 --> 0:14:39.440 Elon Musk has said he would be Twitter CEO at 0:14:39.480 --> 0:14:42.760 least for a time after this takeover. But is it, 0:14:43.440 --> 0:14:46.640 you know, at all possible that Jack Dorsey comes back 0:14:46.680 --> 0:14:50.440 as as CEO as well. Sure, I I think that's 0:14:50.440 --> 0:14:53.480 definitely possible. And then's it's one of the top names 0:14:53.480 --> 0:14:57.000 that have been speculated. You know, Elon Musk running it 0:14:57.080 --> 0:15:00.480 for a few months, um is maybe something to say 0:15:00.520 --> 0:15:04.880 to try to get investors on board with the plan. 0:15:05.040 --> 0:15:09.200 He has a bit of a mightas touch when it 0:15:09.240 --> 0:15:11.320 comes to the things that he says are going to 0:15:11.320 --> 0:15:15.120 work out. He certainly has some lofty plans that he's 0:15:15.360 --> 0:15:19.280 put forth for Twitter. Um, but he has this cult 0:15:19.320 --> 0:15:21.960 of personality that when he takes charge of something, people 0:15:22.440 --> 0:15:25.600 really do listen and come on board. Maybe he could 0:15:25.600 --> 0:15:28.400 convince Jack to come back to run Twitter, or or 0:15:28.440 --> 0:15:32.160 maybe he has somebody else in mind. And what do 0:15:32.200 --> 0:15:36.000 you make of that thought, given how Elon Musk runs 0:15:36.040 --> 0:15:38.400 his other companies. Yeah, Look, he's not afraid to do 0:15:38.440 --> 0:15:41.480 talent sharing. You look about the sort of software AI 0:15:41.560 --> 0:15:44.280 talent sharing materials, talent sharing that goes on between Tester 0:15:44.400 --> 0:15:47.840 and SpaceX. He's tweeted and commented a lot that Tester 0:15:48.040 --> 0:15:51.560 is principally a software company. He's talked about needing to 0:15:51.640 --> 0:15:55.440 fix at Twitter the underlying technology right open source in 0:15:55.480 --> 0:15:58.560 the algorithm. Also, he talks about Twitter's hardware, needing to 0:15:58.600 --> 0:16:02.680 basically fix their computers to make the process better. Beyond that, 0:16:02.920 --> 0:16:06.000 his suggestions are straightforward, right, Sarah's just talked about them 0:16:06.000 --> 0:16:09.800 strip out the box. He accused Twitter of being slightly 0:16:09.880 --> 0:16:13.000 left leaning or liberal because it's based in San Francisco, 0:16:13.280 --> 0:16:15.840 and Sarah alluded to we've talked a little bit about 0:16:15.840 --> 0:16:18.280 true social Perhaps, you know, he feels that he wants 0:16:18.280 --> 0:16:20.720 to drag Twitter back into the center from a kind 0:16:20.720 --> 0:16:23.200 of content moderation policy standpoint is the only clue we 0:16:23.240 --> 0:16:26.320 have to go on. But beyond that, you know, what 0:16:26.400 --> 0:16:28.800 today may clear is that he is not in favor 0:16:28.800 --> 0:16:32.720 of outright band a time out perhaps making invisible tweets 0:16:32.720 --> 0:16:36.440 that are dangerous or or breach a certain policy perhaps, 0:16:36.600 --> 0:16:41.480 but not outright band all right, So much TBD, Ed Ludlow, 0:16:41.600 --> 0:16:53.880 Sarah Fryar, thank you. A rough ride for Peloton, the 0:16:53.920 --> 0:16:57.040 company tumbling to a record low after deeper than expected 0:16:57.120 --> 0:16:59.760 losses in its latest earning to report, joined out by 0:17:00.040 --> 0:17:02.880 Bloomberg s Mark German, who covers Peloton for So, just 0:17:03.000 --> 0:17:07.240 how quickly is this bike maker going downhill? Mark uh? 0:17:07.280 --> 0:17:10.280 As quickly as you can probably ride a Peloton bike 0:17:10.400 --> 0:17:13.960 with all your energy. This company at this point is 0:17:14.080 --> 0:17:18.199 an unmitigated disaster. I really, quite frankly, don't even know 0:17:18.240 --> 0:17:21.679 why they went public in right, They went public just 0:17:21.720 --> 0:17:24.439 a few months before the pandemic started, right, and that 0:17:24.560 --> 0:17:27.440 really kicked off their sales. So all their success has 0:17:27.480 --> 0:17:30.159 really only been in this pandemic period. This is a 0:17:30.160 --> 0:17:33.399 company generating between three billion and four billion dollars per year. 0:17:33.800 --> 0:17:36.240 This is not the companies like Apple that generate maybe 0:17:36.240 --> 0:17:39.080 three or four billion dollars every week and a half, right, 0:17:39.119 --> 0:17:41.080 So I'm not sure what they see the point in 0:17:41.400 --> 0:17:45.600 being public and why they did that. Their numbers are disastrous. 0:17:45.640 --> 0:17:48.880 They've missed on their revenue numbers for Q three now 0:17:48.880 --> 0:17:51.639 in addition to last quarter Q two, they're projecting to 0:17:51.720 --> 0:17:54.000 miss on estimates for next quarter as well as for 0:17:54.000 --> 0:17:57.560 fiscal two they had to re guide yet again. So 0:17:57.720 --> 0:17:59.960 things are not going so well for new CEO Barry mccar. 0:18:00.480 --> 0:18:03.159 He came into the job on February nine, so just 0:18:03.240 --> 0:18:05.840 about three months ago, right, and at this point the 0:18:05.880 --> 0:18:09.159 stock is down over since he took over. Now, if 0:18:09.200 --> 0:18:12.280 you compare that to the SNP five, I believe the 0:18:12.320 --> 0:18:15.639 Peloton stock is down four or five x the larger market. 0:18:15.720 --> 0:18:17.760 So clearly the problem is not only the market, but 0:18:17.800 --> 0:18:21.439 it's Peloton investor belief, analyst belief, and in some cases 0:18:21.520 --> 0:18:24.840 customer belief as well. So I'm sure Peloton would argue 0:18:24.880 --> 0:18:27.480 with the fact that it's only success came in the pandemic. 0:18:27.880 --> 0:18:30.760 You know, it did have a fairly strong brand name 0:18:30.800 --> 0:18:34.240 going into the pandemic, But now that we're out of it, 0:18:34.280 --> 0:18:37.879 what is Barry McCarthy's turnaround plan. You know, John Foley, 0:18:37.920 --> 0:18:41.159 the former CEO, sold this vision of the pandemic teaching 0:18:41.200 --> 0:18:44.720 more people about Peloton and these numbers being able to continue. 0:18:45.000 --> 0:18:48.040 They completely failed with their ability to project supply and 0:18:48.119 --> 0:18:51.480 demand going out of the pandemic. Barry McCarthy's turnaround plan 0:18:51.680 --> 0:18:53.520 is to hike the subscription fee. So it's gonna go 0:18:53.560 --> 0:18:55.320 from thirty nine months to forty four a month in 0:18:55.359 --> 0:18:57.960 the US starting on June one, so in a bit 0:18:58.320 --> 0:19:00.600 about three weeks from now, so we'll the impact that 0:19:00.640 --> 0:19:03.680 has on subscription margins and subscription revenue. He's also cut 0:19:03.720 --> 0:19:06.560 the prices of the treadmill and there are two major bikes, 0:19:06.560 --> 0:19:08.760 the regular bike and the bike plus from between a 0:19:08.800 --> 0:19:11.280 hundred and five dollars depending on which model you're getting. 0:19:11.640 --> 0:19:14.920 That's obviously going to lower margins and lower revenue on hardware, 0:19:15.160 --> 0:19:17.359 and they're opening over the long term, combined with the 0:19:17.440 --> 0:19:20.880 leasing program that they'll have more you know, continuous revenue 0:19:21.160 --> 0:19:23.879 right coming from subscriptions and coming from people signing up 0:19:23.880 --> 0:19:26.679 on these monthly plans and maybe annual plans in the future. 0:19:27.000 --> 0:19:28.879 So there is a plan in place, but on the 0:19:28.920 --> 0:19:31.199 first three months of the job. It hasn't yet you know, 0:19:31.280 --> 0:19:34.520 resulted in you know, positive momentum. All right, we'll see 0:19:34.520 --> 0:19:38.800 how Peloton tries to retake control. Bloomberg s, Mark German, 0:19:39.000 --> 0:19:49.840 thank you well, come back to Bloomware Technology and Emily 0:19:49.920 --> 0:19:52.720 changes San Francisco. Well, the recent tech sell off is 0:19:52.720 --> 0:19:57.280 alluding to massive valuation haircuts in public and private markets, 0:19:57.280 --> 0:20:01.000 with funding harder to raise in uncertain ten times, how 0:20:01.080 --> 0:20:04.480 do founders keep building? Tony Fidel, one of the key 0:20:04.520 --> 0:20:07.359 players behind the iPod and the iPhone at Apple, and 0:20:07.359 --> 0:20:09.320 of course the co founder of Nest, is out with 0:20:09.359 --> 0:20:13.760 a new book, Build, an Unorthodox Guide to Making Things 0:20:13.800 --> 0:20:16.800 Worth Making. He joins us now with some advice for 0:20:16.920 --> 0:20:19.320 entrepreneurs today. Tony, It's always great to have you back 0:20:19.320 --> 0:20:24.040 here on the show and always appreciate hearing your unorthodox 0:20:24.240 --> 0:20:28.760 advice in times like this. Just what advice would you 0:20:28.800 --> 0:20:33.359 give entrepreneurs batting down the hatches? Well, first, hopefully you 0:20:33.400 --> 0:20:37.119 didn't go into some craziness and overextend yourself. So the 0:20:37.160 --> 0:20:39.760 first thing was, I hope you didn't take a valuation 0:20:39.800 --> 0:20:42.320 you shouldn't have just because it looked great on paper. 0:20:42.560 --> 0:20:44.359 You know it was too high. But if you did 0:20:44.600 --> 0:20:46.679 You're going to have to write the ship. And the 0:20:46.720 --> 0:20:51.159 biggest thing is the UH is reminding your team that 0:20:51.280 --> 0:20:54.200 those numbers were all fabricated, those were all made up 0:20:54.440 --> 0:20:56.760 kind of things, and go back to the business of 0:20:57.160 --> 0:21:01.359 working on your mission and achieving that. Also trimming the sales, 0:21:01.680 --> 0:21:05.040 so you have to go back and to first principles 0:21:05.240 --> 0:21:09.400 and stop, you know, thinking about this overinflated market had 0:21:09.480 --> 0:21:12.800 has changed, It has changed dramatically. It will it will 0:21:12.880 --> 0:21:16.080 levelize again. We're gonna swing in the pendulum, swinging one way, 0:21:16.200 --> 0:21:19.560 swinging the other way. But again, stay focused on the work. 0:21:20.000 --> 0:21:22.840 Go make your mission happen, but don't worry about all 0:21:22.880 --> 0:21:25.000 the craziness around it. We're going to take care of you. 0:21:25.160 --> 0:21:27.720 The biggest thing is taking care of your team. So 0:21:27.800 --> 0:21:30.000 I'm sure we could talk about this next question for hours, 0:21:30.040 --> 0:21:32.720 but in a nutshell, what are some lessons you learned 0:21:32.800 --> 0:21:37.960 the hard way? Oh jeez, let me count um. I 0:21:38.000 --> 0:21:41.159 think the biggest one was understanding timing. You know you 0:21:41.200 --> 0:21:43.440 have you could have great technology, can have great things. 0:21:43.640 --> 0:21:46.320 Understanding timing, you know the market has to be ready 0:21:46.400 --> 0:21:48.520 or ready to listen to what the innovation you have. 0:21:49.080 --> 0:21:52.120 The second thing I think is really understanding how you're 0:21:52.119 --> 0:21:54.640 telling your story, and you have to tell a story 0:21:54.680 --> 0:21:57.320 of why, why, why. That's what's in the book Build. 0:21:57.680 --> 0:22:01.240 It's all about the why. Too many times tech founders 0:22:01.320 --> 0:22:03.680 and engineers and people in the in the tech world 0:22:03.800 --> 0:22:07.480 worry about the what what what? It starts with the why? 0:22:07.680 --> 0:22:10.240 Why do customers need it? What pain are you solving? 0:22:10.600 --> 0:22:13.800 What do you need to do to get that message across? 0:22:13.880 --> 0:22:16.639 And make sure then your product delivers on that. Stop 0:22:16.680 --> 0:22:19.080 worrying about the bits and bites. Start working on the 0:22:19.200 --> 0:22:21.640 story and making sure that story is a pain killer, 0:22:21.880 --> 0:22:25.160 not a vitamin. Now, Google bought one of the things 0:22:25.200 --> 0:22:28.400 you built, and that was Nest. It didn't necessarily go 0:22:28.800 --> 0:22:33.480 as planned. What's your take on what went wrong? Let's 0:22:33.520 --> 0:22:36.160