Speaker 1: From Marhart where Innovation, Money and power Collie in Silicon
Speaker 1: Vallet NBN.
Speaker 2: This is Bloomberg Technology with Caroline Hide.
Speaker 3: And Ed Ludlow. I Meed Ludlow in San Francisco. Caroline
Speaker 3: hides off today. This is Bloomberg Technology coming up on
Speaker 3: the program. Full earnings coverage ahead, Lift Falls after the
Speaker 3: ride sharing company reported its slowest revenue growth in two
Speaker 3: years plus. We sit down with GM president Mark Royce
Speaker 3: as the company unveils its first all electric escalade IQ,
Speaker 3: and Amazon is in talks to be an anchor investor
Speaker 3: in arms IPO in a deal that could raise as
Speaker 3: much as ten billion for the chip company. Those are
Speaker 3: our top stories. First, a check on the markets. Tech
Speaker 3: is lower at the index level than as that one
Speaker 3: hundred down more than a percentage point. It is chip
Speaker 3: stocks where we're seeing the biggest declines. The Philadelphia Semiconductor
Speaker 3: Index or socks softer by one point six percent, underperforming
Speaker 3: the market. We're waiting for the CPI print here in
Speaker 3: the US Thursday. We look at that data and then
Speaker 3: we think to ourselves, what will the Federal Reserve do next?
Speaker 3: And there is some posturing in the market from that
Speaker 3: point of view. But earnings is going to be a
Speaker 3: really big theme of this show. We have a number
Speaker 3: of earnings interviews with CEOs and actually the reaction to
Speaker 3: earnings to the downside also a factor, particularly for the
Speaker 3: NASDAK one hundred US tenure yield continues to go back
Speaker 3: down towards four percent. Remember we've been talking about the
Speaker 3: steady trickle down from four point two percent back nearer
Speaker 3: to four percent, and Bitcoin still at that same twenty
Speaker 3: nine five hundred US dollars per token level. These are
Speaker 3: the two key names where we're starting to show. Lift
Speaker 3: first of all, is going to be one we're going
Speaker 3: to get to in just a moment with man Deep singer.
Speaker 3: Bi Rivian is down seven and a half percent. Eve
Speaker 3: Maaker actually updated its production guidance for the year and
Speaker 3: lowered its guidance for a justed loss to four point
Speaker 3: two billion dollars. But there's something that the street doesn't like.
Speaker 3: We speak to CEO RJ. Scarrange. We asked why didn't
Speaker 3: they do more in terms of raising guidance. Then you
Speaker 3: got Lift. The story is that growth is the slowest
Speaker 3: since the pandemic era. They actually gave a pretty strong
Speaker 3: outlook for the current quarter. There are some other concerns
Speaker 3: though there about Lift versus its peers. This is the reaction.
Speaker 3: Credit Suitee keeps an outperform rating on the shares, but
Speaker 3: it's lowered its price target to eighteen dollars from twenty
Speaker 3: three dollars following those results. What it sees is revenue
Speaker 3: offset by higher insurance costs going into twenty twenty four
Speaker 3: and beyond. That's something we've talked about before. Let's break
Speaker 3: it all down with Bloomberg Intelligence Senior analyst Mandeep Singh.
Speaker 3: The thing is Mandy Lift's growth is below that of
Speaker 3: the rest of the ride share industry. How much is
Speaker 3: that a concern?
Speaker 4: Well, I mean that's where when you look at all
Speaker 4: the market places, the skilled market places like booking, like erebnb,
Speaker 4: you know, it's a venotick all market and I feel
Speaker 4: it's going to pan out the same way in this case,
Speaker 4: simply because Lift doesn't have a differentiated offering when it
Speaker 4: comes to right sharing. I mean, consumers are price sensitive.
Speaker 4: They're going to go with, you know, the company that
Speaker 4: has the lower ETAs, that has more variety in terms
Speaker 4: of the products it's offering, and over time, you know,
Speaker 4: when you look at lift strategy around lowering its prices,
Speaker 4: you have to ask yourself, what can they accomplish. It's
Speaker 4: they're not going to get an Amazon like a subscription
Speaker 4: model where they have a prime subscription and you know,
Speaker 4: that's how you drive engagement. And that's where I feel
Speaker 4: like they're going to be short sighted in terms of
Speaker 4: using pricing as a lever and the marketplaces with the
Speaker 4: most supply growth eventually are the ones that you know
Speaker 4: end up winning. And that's where Uber has an advantage.
Speaker 3: Which is showing a chat on the screen that active
Speaker 3: riders actually grew in the quarter. What are we learning
Speaker 3: from lyft about that business in a sense of engagement?
Speaker 3: You know, a ride is broadly coming back.
Speaker 4: They are coming back, but when you compare it to
Speaker 4: pre pandemic levels, they're still not there. And all this
Speaker 4: is driven by subsidies. We know the biggest problem with
Speaker 4: this business model is the use of subsidies and how
Speaker 4: it affected the unit economics. It's the same thing here. Yes,
Speaker 4: you're going to bring those customers back, but how long
Speaker 4: are they going to stay and what is the repeat
Speaker 4: rate when it comes to you know, driving the transactions
Speaker 4: on a recurring basis. And I think that's where if
Speaker 4: Lift raises prices or Uber lowers its prices, those customers
Speaker 4: are going to go back. And the retention level is
Speaker 4: fairly low at this point of time, I.
Speaker 3: Feel Mandy David Richard, the CEO, told Bloomberg in an
Speaker 3: interview that he's trying to make Lifts healthier business, you know,
Speaker 3: move prices more in line with market. He only just
Speaker 3: joined in April. What's your assessment of the job he's
Speaker 3: done and what he can do really to change the
Speaker 3: fortunes of the company.
Speaker 4: Yeah, And the good thing is I feel he's been
Speaker 4: open minded about all the strategic options, even you know,
Speaker 4: the company being up for sale, and when you look
Speaker 4: at the history of marketplaces, the distance second ones, whether
Speaker 4: it was grub Hub or Postmates or Caviar, these are
Speaker 4: all the small players they got taken out. And so
Speaker 4: in Lift's case, clearly, you know that is an option.
Speaker 4: The valuation is right now at its lowest level. You know,
Speaker 4: it's trading at one time sales and probably a B
Speaker 4: two B partnership. It could be a catalyst. So there
Speaker 4: are a number of catalysts for them to you know,
Speaker 4: think of the next steps. Clearly, I think from a
Speaker 4: standalone perspective, it's a hard job, but at least I
Speaker 4: feel he's quite open minded about the various options on
Speaker 4: the table.
Speaker 3: All right, Bloomberg Intelligence senior around list Man deep saying,
Speaker 3: if you're a rider or even a driver for lifts,
Speaker 3: and you've got to reach out to me on social
Speaker 3: media the other stuff we want Rivian. Rivian's leader doesn't
Speaker 3: see a need to raise capital before the end of
Speaker 3: twenty twenty five, even as the company pursues some costly projects.
Speaker 3: I talked to the EV makers CEO our Jascarrange a
Speaker 3: day after the company reported better than expected earnings. As
Speaker 3: it works through the supply chain snags and accelerates EV production,
Speaker 3: have a listen.
Speaker 5: Ultimately when we think about the path to the positive
Speaker 5: gross margin, ultimately the path the probabilities of business. We
Speaker 5: have a very clear line of site as we now
Speaker 5: have predictability in our production ramp, and we have really
Speaker 5: tight predictability around the supply chain and the contractual cost
Speaker 5: reductions that we're going to start to see. We're already
Speaker 5: witnessing those, as evidenced by the numbers we put up yesterday.
Speaker 5: So we're looking with a lot of excitement towards the
Speaker 5: next several quarters as we march and run, I should
Speaker 5: say as fast as we can towards profitability, and that
Speaker 5: ultimately is the long term necessity for the business is
Speaker 5: to self finance our growth. Now, with that said, we've
Speaker 5: been also very clear that our cash balance and as
Speaker 5: you loose in your question, puts us in a position
Speaker 5: to be able to focus appropriately on the long term
Speaker 5: as well. Meaning while we're very, very focused on ramping
Speaker 5: R one and eDV and driving those to the normal
Speaker 5: facility to twenty five percent gross margin, we're also developing
Speaker 5: and proceeding with the R two program and it's making
Speaker 5: great progress. I don't think I've been as excited as
Speaker 5: I am about R two as have ever been on
Speaker 5: a product. So we're looking forward to showing that. But
Speaker 5: the cash balance we've put ourselves with the cash that
Speaker 5: we have, is put ourselves in a position to not
Speaker 5: need capital through the end of twenty twenty five.
Speaker 3: You have the infrastructure to service the Amazon eDV. Does
Speaker 3: that mean you can now start shipping our one to
Speaker 3: Europe because that infrastructure is in.
Speaker 5: Place today, We're focused in the immediate term on continued
Speaker 5: to ramp sales and deliveries in North America. We have
Speaker 5: so much demand backlog, We have so many customers that
Speaker 5: very much are looking forward to their vehicles that that
Speaker 5: is the focus. And when we think about really going
Speaker 5: heavily into Europe, the R two program and that platform
Speaker 5: contemplates really a significant market entry and we think a
Speaker 5: really nice market fin So that's something that over the
Speaker 5: next few years will become a really important market for us.
Speaker 3: You've talked a lot about trying to get out of
Speaker 3: the exclusivity agreement with Amazon. The other big question that
Speaker 3: your Rivian followers have is what type of deal would
Speaker 3: you do next? Would you go for the big fleet
Speaker 3: operators like ups or FedEx or you try to do
Speaker 3: many different deals with smaller mum and pop shops, smaller
Speaker 3: fleet operators.
Speaker 5: There's elements of both, and we're seeing a broad spectrum
Speaker 5: of use cases from pure last mile delivery to more
Speaker 5: of a commercial ban application, and so we're navigating that
Speaker 5: as we speak. In terms of selecting following our Amazon relationship,
Speaker 5: what are the next big customers and then how to
Speaker 5: those sequence and together, and a lot of it ties
Speaker 5: to use case and trying to minimize the amount of complexity.
Speaker 5: We had to the business by having similar use cases
Speaker 5: with the follow on immediate follow on customers, and then
Speaker 5: over time we'll broaden the use cases of course. As
Speaker 5: a platform, and it's an architecture who we call the
Speaker 5: Rivian Commercial Band Platform. It's designed long term to cover
Speaker 5: a very broad spectrum of three use cases.
Speaker 3: There was Rivian CEO R. J. Scarrin speaking to me earlier.
Speaker 3: You look at the shares were down more than eight percent,
Speaker 3: but off session loads. If we close at this level
Speaker 3: of decline down more than eight percent, it's the biggest
Speaker 3: drop since March. They raised guidance to fifty two thousand
Speaker 3: units this year, but that's only two thousand more than
Speaker 3: they previously said. And there are people out there in
Speaker 3: the market saying, really, guys, come on, because the plant
Speaker 3: in normal Illinois on paper can build many more electric
Speaker 3: vehicles than that even so big focus on cost cuts
Speaker 3: and they're doing well compared to some of those other
Speaker 3: names out there in the EV space. Speaking of coming
Speaker 3: up here on the program, we sit down with GM
Speaker 3: president Mark Royce as General Motors unveils its first all
Speaker 3: electric escalaid IQ. That conversation coming out out from the
Speaker 3: East coast here on Bloomberg Technology. Welcome to our Bloomberg
Speaker 3: television and radio audience worldwide. General Motors unveiling its first
Speaker 3: all electric twenty twenty five Escalaid IQ. Let's send it
Speaker 3: over to Bloomberg's Matt Miller, who's sitting down with General
Speaker 3: Motors president Mark Royce.
Speaker 6: Matted, thanks very much, Mark, We really appreciate you joining us.
Speaker 6: This is a very powerful vehicle with four hundred and
Speaker 6: fifty miles range, but also a very high price tag.
Speaker 6: Who are you aiming this product at.
Speaker 2: Well, if you look at the current Escalade, you know
Speaker 2: we sold over a million units and you know, one
Speaker 2: out of every three of these SUVs in this luxury
Speaker 2: segment is an Escalade. So we've got a very successful brand.
Speaker 2: It's been, you know, an unbelievable vehicle for Cadillac and
Speaker 2: General Motors, but this has added to business. So we
Speaker 2: know there's people that are wanting an electric three to
Speaker 2: row SUV full sized suv. We're going to be the
Speaker 2: first ones that really bring it here with an iconic brand.
Speaker 2: So we know this is in addition to our internal
Speaker 2: combustion engine escalating and you can see it as the
Speaker 2: next step in the design language for Cadillac, both inside
Speaker 2: and out, and so this is going to be right
Speaker 2: on the cutting edge of everything. It's the Escalade standard
Speaker 2: of the world, it really is.
Speaker 6: So you already have the Hummer though, which is definitely
Speaker 6: on the cutting edge of everything, right, and early adopters
Speaker 6: who are waiting for a big electric vehicle, I'm assuming
Speaker 6: went out and got that. Who's left it to buy
Speaker 6: the Escalade A one hundred and thirty thousand to start.
Speaker 2: Yeah, I was going to say, the ultimand platform here
Speaker 2: that we're talking about is very flexible and it's very
Speaker 2: different than the SUV offered from Hummer, and so you'll
Speaker 2: see it in the proportions here where we really are
Speaker 2: going after efficiency. With four hundred and fifty miles of range,
Speaker 2: that's a big deal for families and people who who travel,
Speaker 2: So it's a big range vehicle, but it's also seve
Speaker 2: hundred and fifty horsepower. The Hummers are in the thousand
Speaker 2: horsepower stand in that part of the part of the
Speaker 2: market there, so it's a little bit different customer. It's
Speaker 2: very different from a duty cycle standpoint, but it's still
Speaker 2: built on the twenty four mod pack that we use
Speaker 2: in our battery electric truck platforms.
Speaker 6: There has been some criticism about these big battery packs.
Speaker 6: Bloomberg New Energy Finance, for example, wrote that you're using
Speaker 6: a lot of lithium that maybe should be left for
Speaker 6: the smaller electric vehicles. How do you respond to.
Speaker 2: That, Well, Jeneral Motors is going to make both number one,
Speaker 2: So we're going to make everything from the bolt with
Speaker 2: an LTM based pack here as we bring it back online,
Speaker 2: to the equinox to the So those are right in
Speaker 2: the biggest segments in the world at price points that
Speaker 2: are you know, the most affordable, right in the wheelhouse
Speaker 2: of those big voying segments. So we're going to do
Speaker 2: that too. But you know, technology changes, and so anybody
Speaker 2: that thinks that we're going to have the same technology
Speaker 2: even a year from now chemistry rise with our battery
Speaker 2: systems across the whole industry isn't thinking about it quite right.
Speaker 2: I think it's been mentioned before that the telem of
Speaker 2: communications industry, there is all these people that were fearful
Speaker 2: of copper, right, that all changed, right, and so you
Speaker 2: get into silicon, and you get into chips, you get
Speaker 2: into all those things that are new technologies on a
Speaker 2: breaking transformation of the industry. I can tell you the
Speaker 2: history books will see this as just the first step.
Speaker 6: All right, we're talking again with Mark Roy's, president of
Speaker 6: General Motors, at the introduction of their brand new Cadillacs
Speaker 6: brand new ev Escalate IQ. And you know I have
Speaker 6: driven the Escalade, the v with also about seven hundred horsepower. Right,
Speaker 6: it's got a big V eight eats up a lot
Speaker 6: of gas. That's the problem you're trying to solve with this,
Speaker 6: but there are still going to be people out there
Speaker 6: who want the V eight. How long are you going
Speaker 6: to sell the internal combustion engine Escalade next to the
Speaker 6: Escalade IQ.
Speaker 2: Well, you are very different vehicles again in terms of
Speaker 2: the package. You know, we've got a huge amount of
Speaker 2: storage in this vehicle because of what we have up
Speaker 2: front where the engine used to be, and then also
Speaker 2: a longer wheelbase and the second row package is quite
Speaker 2: different too. So you have those things together, they're different vehicles,
Speaker 2: even though sort of the output on a power basis
Speaker 2: are similar. We're going to do both when as long
Speaker 2: as people want both. And so you know, if you
Speaker 2: look at this over the long term horizon, the market
Speaker 2: and the customer, we haven't sold a vehicle like this ever,
Speaker 2: the market has never seen a vehicle like this. This
Speaker 2: is the first standard of the world, and so we're
Speaker 2: going to see what people do.
Speaker 6: You are going to bring out the Silverado with I
Speaker 6: believe a similar battery pack and range at least as
Speaker 6: an option. Are you seeing price pressure, because as we're
Speaker 6: now seeing forward capitulate and cut prices, Tesla obviously driving that,
Speaker 6: how do you expect the pricing to work out well?
Speaker 2: The pricing though, we're starting with the Silverado with our
Speaker 2: work truck, so you know, our pricing and our ladders
Speaker 2: and our battery capacity and range capacity and duty cycle
Speaker 2: capacity on Silverado and Sierra are going to be for
Speaker 2: everybody's pocket put and price points, so you know, we
Speaker 2: know where people want it from a work truck and
Speaker 2: our fleet standpoint, and then it'll it'll go all the
Speaker 2: way up through the RST, which will you know, again
Speaker 2: be a high range, high module. But you don't have
Speaker 2: to just do that. So we're going to offer those
Speaker 2: things as options. Cutting price though, means that we didn't
Speaker 2: see it right, and I don't think that's true. I
Speaker 2: think we're right in that wheelhouse of what people can
Speaker 2: afford and want, and so you know, I feel good
Speaker 2: about our pricing.
Speaker 6: Are these vehicles going to be profitable when you start
Speaker 6: selling them?
Speaker 2: Yes?
Speaker 6: And are you going to be able to make a
Speaker 6: million of them in twenty twenty five?
Speaker 7: Not?
Speaker 6: Not the escalated IQ electric vehicles.
Speaker 2: Electric vehicle, Yeah, I think so. I think we're well
Speaker 2: on our track. You know, we're well. We did fifty
Speaker 2: thousand here the first half a year. That was our
Speaker 2: our target, and we did that. You got to bring
Speaker 2: cell plants along online as we do the assembly plans
Speaker 2: to make these. Our first plant in Lawstwn, Ohio is
Speaker 2: now full capacity and running really well on the second
Speaker 2: one will be in spring Hill, Tennessee, right next to
Speaker 2: our lyric facility there, so that's coming online next. And
Speaker 2: the third one will be in Lansing, Michigan, and we're
Speaker 2: just you know, doing the construction on that right now.
Speaker 2: So once we get past the first plant in Lordstown, Ohio,
Speaker 2: we learned how to make them, we do it at volume.
Speaker 2: We duplicate that in spring Hill, and we duplicate that
Speaker 2: in Lansing. So the first ones out here we knew
Speaker 2: we're going to be, you know, something we've never done before.
Speaker 2: And we tackled that and we're doing it with high quality,
Speaker 2: and we're doing it rates. So those are you know,
Speaker 2: that's how you get into volume production.
Speaker 6: I got to ask about the negotiations with the UA,
Speaker 6: w are you prepared to make an expense of investment
Speaker 6: and raising those costs because their demands are I think
Speaker 6: they said pretty audacious.
Speaker 2: I can't come on what people say or don't say
Speaker 2: about that. We are negotiating with our represented workforce in
Speaker 2: earnest as we always do, and we're there to make
Speaker 2: a good agreement, a fair agreement, an agreement that works
Speaker 2: for everybody. And that's all I have to say.
Speaker 3: Mark, thanks very much, true time.
Speaker 6: Really appreciate it.
Speaker 2: Mark West, always a pleasure.
Speaker 6: Thank President of General Motors talking to us about Cadillacs
Speaker 6: new Escalade iq.
Speaker 3: ED Bloomberg's Matt Miller, thank you very much. Okay, time
Speaker 3: for work shifting, where we look at the changing landscape
Speaker 3: of the labor market amid advances in technology. First Up
Speaker 3: We Work is saying there's substantial doubt that the Coworking
Speaker 3: startup will be able to stay in business. The New
Speaker 3: York based company is bleeding cash and customers of its
Speaker 3: office rentals are canceling their memberships in droves. CLA overnight
Speaker 3: soft Bank drops as much as four point six percent,
Speaker 3: the most since May, after it reported an unexpected net
Speaker 3: loss for the latest quarter and reframed from announcing any
Speaker 3: plans to buy back shares. The company also said, by
Speaker 3: the way, it's cautiously resuming investments to capitalize on opportunities
Speaker 3: in AI and other emerging technologies, and the US Commerce
Speaker 3: Department has received more than four hundred and sixty statements
Speaker 3: for projects seeking federal funds from last year's Chips and
Speaker 3: Science Acts. Proposals to the Department's office will compete for
Speaker 3: some of the thirty nine billion dollars in direct funding
Speaker 3: and seventy five billion dollars in loans under the law,
Speaker 3: which is aimed at reducing US reliance on Asia's semiconductor
Speaker 3: supply chains and of course, boosting domestic manufacturing of chip technology.
Speaker 3: All right, Sticking with commerce, Amazon in talks to join
Speaker 3: other tech companies as an anchor investor in ARMS initial
Speaker 3: public offering that could raise as much as ten billion.
Speaker 3: That's according to a Bloomberg source. ARM is the chip
Speaker 3: designer that counts the world's biggest tech firms as some
Speaker 3: of its clients has also held to cushions, as we've reported,
Speaker 3: with Intel and Nvidia joining us. For more, Bloomberg Technology
Speaker 3: Executive editor Tom Giles, this is an interesting one, I
Speaker 3: guess the obvious question is why would Amazon be an
Speaker 3: anchor investor in ARM.
Speaker 1: So youah, one word for you, two hundred and fifty
Speaker 1: billion chips. That's how many chips ARM has designed over
Speaker 1: the years. ARM is an incredible player, incredibly important player
Speaker 1: in the design of chips. In particular, it's a leader
Speaker 1: in designing chips that are used in the data centers
Speaker 1: that are running all the all this computing power that
Speaker 1: Amazon Web Services is behind, the data centers that run
Speaker 1: things like Azure for Microsoft, the data centers that work
Speaker 1: for Google for example. These are the kinds of chips
Speaker 1: that that that ARM is behind, and companies like Nvidia,
Speaker 1: Intel and amaz On want a piece of that. That's
Speaker 1: why there's so much interest in the ARM IPO right now.
Speaker 3: Amazon uses, for example ARMS designs and the Graviton server chip.
Speaker 3: These talks about. One of the best stories in covering
Speaker 3: technology is always the big IPO. This feels like the
Speaker 3: Big IPO of twenty twenty three. We're waiting on a huge,
Speaker 3: huge and the anchor investors are notable in video intel,
Speaker 3: they're obviously chip makers as well. What's the vibe in
Speaker 3: the newsroom about this one? What are we trying to
Speaker 3: learn about?
Speaker 1: Well, we're in this incredible lull for IPOs right now,
Speaker 1: and if ARM gets to market around the September timeframe,
Speaker 1: as we've been hearing and reporting, it's going to be
Speaker 1: a huge turning point right for the IPO market, which
Speaker 1: has been moribun for a very long time. We haven't
Speaker 1: seen much. This would be not just an important idea,
Speaker 1: but a very big IPO, the likes of which we
Speaker 1: haven't seen since Facebook many many years ago. And also
Speaker 1: Ali Baba from China. So it's been a long time
Speaker 1: since we've seen IPOs of this size and it would
Speaker 1: be a big sharp in the arm through this market.
Speaker 3: You know, we've been talking about Rivian on the show today.
Speaker 3: That was the last big ipo I covered in twenty
Speaker 3: twenty one in Amazon. One of the anchor investors in that.
Speaker 3: Bloomberg's Tom Giles is active editor. Thank you, Welcome back
Speaker 3: to Bloomberg Technology. Ed Ludlow here in San Francisco. Straight
Speaker 3: back to the earning story. These are the two names
Speaker 3: that we're watching, ak am I Marquetta, both moving to
Speaker 3: the upside. Both CEOs join us on the program now,
Speaker 3: starting with Akamai Infrastructure Software Company out with second quarter
Speaker 3: results that beat expectations. The company also raising its full
Speaker 3: year forecast. Joining us now to discuss CEO and co
Speaker 3: founder Tom Layton. Let's start with the guidance right, you're
Speaker 3: going from it's a slight raise, the latest being twelve
Speaker 3: to fourteen percent. What gave you the common confidence to
Speaker 3: do that, first of all? And could you have gone
Speaker 3: even higher?
Speaker 8: There's a lot of demand for our security solutions. We
Speaker 8: have the market leading products for web app firewall, and
Speaker 8: bought management, and we're really seeing strong demand for our
Speaker 8: market leading solutions to stop ransomware and data xfiltration that's
Speaker 8: in the micro segmentation area, and so that's led to
Speaker 8: increased confidence for how the security product group will do
Speaker 8: this year. We're also really thrilled to see we're back
Speaker 8: in double digit earnings growth now, which was.
Speaker 1: A very nice place to be.
Speaker 3: The number of analysts noting that you've kind of outperformed
Speaker 3: for a few quarters now, but particularly the security story
Speaker 3: is gaining momentum. What is the motivation for customers to
Speaker 3: spend to commit their investment on the security side. Yeah,
Speaker 3: good question.
Speaker 8: You know, across the landscape there's challenging economic conditions and
Speaker 8: so spend is not easy to come by from enterprises.
Speaker 8: But they need to have security. They can't afford to
Speaker 8: have a major ransomware incident or data exfiltration problem, and
Speaker 8: Akamai has the leading solutions to protect them. So that's
Speaker 8: I think driving a lot of the business. Also, I
Speaker 8: think going forward, as you see the advances with jen Ai,
Speaker 8: that is going to give an asymmetric advantage to the attacker.
Speaker 8: We've seen now with you know, the tools that have
Speaker 8: been developed, you know fraud, GPT worm, GPT Darkbard, all
Speaker 8: that stuff makes it a lot easier to make very
Speaker 8: malicious bots and to morph the malware. It's going to
Speaker 8: be easier to get around the traditional security defenses. And
Speaker 8: that's why being able to have that second line of
Speaker 8: defense inside an enterprise is so much more important now
Speaker 8: to know when you've been penetrated and to isolate it
Speaker 8: and to stop it from spreading before you get real damage.
Speaker 3: You raise a point that many in your industry have
Speaker 3: going all the way. That's the RSA conference earlier in
Speaker 3: the year. Generative AI and quantum computing are just as
Speaker 3: much of a tool for the threat actors as they
Speaker 3: are as part of your defense strategy, and I wondered
Speaker 3: if you could just give us a little bit of
Speaker 3: insight into how seriously your customers take that. Do they
Speaker 3: acknowledge that there is a technological competence of the threats
Speaker 3: they face.
Speaker 8: I think quantum computing isn't an issue yet, but genai
Speaker 8: is becoming one, and I think, you know, the realization
Speaker 8: is beginning to set in. You know, with any big
Speaker 8: technical advance and gen AI qualifies, you get a lot
Speaker 8: of good in some bad. And in this case, you know,
Speaker 8: it's an asymmetric advantage to the attacker when it comes
Speaker 8: to trying to get past and enterprisers defenses. And so
Speaker 8: I think probably we're on the cusp of seeing a
Speaker 8: lot more attacks and a lot more effective attacks, and so, yeah,
Speaker 8: enterprises are concerned.
Speaker 3: So it's bed a little bit about what's going on
Speaker 3: inside your company. You've cut costs, the streets, really happy
Speaker 3: with your performance, but what other changes you're making internally
Speaker 3: and what other investments might you make Yeah.
Speaker 8: I think the next frontier in security is API security.
Speaker 8: We're making a lot of investments there. I think we're
Speaker 8: in a really good position to be able to help enterprises,
Speaker 8: and they are asking for help. Pretty much all the
Speaker 8: major enterprises know they've got a problem now with all
Speaker 8: the reliance on APIs and not having them having them
Speaker 8: adequately secured. Also, we're making large investments in our infrastructure
Speaker 8: as a service business, cloud computing, and you know, with
Speaker 8: the idea that you know, we're going to be able
Speaker 8: to spin up and enterprises containers and vms in literally
Speaker 8: hundreds of places which they can't do today, and that
Speaker 8: will let them get much closer to the end user
Speaker 8: and have better performance. And you know, by using our
Speaker 8: other capabilities that came from our delivery business, we think
Speaker 8: we can do that at lower costs than they're spending
Speaker 8: today with the hyper scalers. In many cases, you know,
Speaker 8: the hyperscalers are their competitor, and akam I will be
Speaker 8: their partner, all right.
Speaker 3: A CAMI shares up more than nine percent on an
Speaker 3: interday basis, tracking for their biggest gain since May, highest
Speaker 3: level since May of twenty twenty two. At one point
Speaker 3: in the session, we're up thirteen percent, which would be
Speaker 3: the biggest jump going back to October of twenty eighteen.
Speaker 3: A cam I CEO Tom Layton, thank you very much.
Speaker 3: Another big name that we're tracking. Analysts quite pleased after comments.
Speaker 3: Commerce payments platform Marquetta reported second quarter revenues that beat estimate,
Speaker 3: shares surging after the company renewed a partnership with Block
Speaker 3: to continue powering its popular cash app card product, and
Speaker 3: during the earning score there was talk of expanding its
Speaker 3: services to other markets. A lot to unpack. Who better
Speaker 3: to do it with than Marquetter CEO Simon calaff You know,
Speaker 3: analysts note that the getting the deal done with Block
Speaker 3: Simon extending removes and overhang on the stock. But what
Speaker 3: does it actually do for your company? What kind of
Speaker 3: visibility to you now have in terms of your own
Speaker 3: growth and ability to improve the business?
Speaker 7: First, thanks for having me and having marketa on your show. Indeed,
Speaker 7: the analysts are actually excited about multiple things. It's not
Speaker 7: just the renewal of the cash app contract. We did
Speaker 7: actually beat earnings with innewed the cash app. But actually
Speaker 7: what they're excited about is that embedded finance is not
Speaker 7: a real thing. It's no longer like a buzzword or
Speaker 7: a pivot of fintech and dislocating fintech from crypto. It's
Speaker 7: actually a real thing. It is making a big difference
Speaker 7: in consumers' lives. And also they recognize the role MARKETA
Speaker 7: is playing an embedded finance. In fact, seven out of
Speaker 7: ten Americans are using a fintech or an embedded finance
Speaker 7: product that is built on top of MARKETA. I think
Speaker 7: that's what strive the excitement.
Speaker 3: To this four years more with block actually give you.
Speaker 7: It gives us the ability to continue to innovate with
Speaker 7: cash app. I think the phenomenal success that cash has achieved,
Speaker 7: and it was beyond anybody's expectation, is a combination of
Speaker 7: a phenomenal team at cash app that read the mind
Speaker 7: of the American consumer. They want a seamless banking experience
Speaker 7: or banking like experience that resembles the easy use of
Speaker 7: TikTok of YouTube or something that is not a banking product.
Speaker 7: They want a product that that consumers love. And also
Speaker 7: it is the result of them working with players like
Speaker 7: us that obfuscate the complexity of the banking and financial system,
Speaker 7: so that relationship has led to the phenomenal growth, and
Speaker 7: now we extend that over the next four years. It
Speaker 7: gives both companies the ability to continue to innovate. We
Speaker 7: actually continue to obfuscate the complexity of the of the
Speaker 7: system and cash continues to innovate and take this to
Speaker 7: modern more consumers. So it gets predictability for us as
Speaker 7: a company and give us a nice baseline to grow from.
Speaker 3: Is there other things you can do with blog to
Speaker 3: diversify Markesa further?
Speaker 7: There are so many things we can do with blog.
Speaker 7: Lots is a phenomenal company. I mean, as they've announced
Speaker 7: they have i'd say like low twenty million cards out there.
Speaker 7: They're growing so fast, but only a few percentage of
Speaker 7: those cardholders are putting the paycheck on the cash app.
Speaker 7: That could be extended. We as a company Marketa have
Speaker 7: had phenomenal success with acceleraated wage access, working with shift
Speaker 7: and gig workers for them to make their money instantly
Speaker 7: without burdening the working capital at a company. That is
Speaker 7: something that cash app can do very very successfully. It
Speaker 7: actually speaks to the audience, it speaks to the install
Speaker 7: based So there's so many things we can do with block.
Speaker 3: In terms of doing those things who do you phone?
Speaker 3: I mean, my real question is what's it like to
Speaker 3: do business with Jack Dorsey? Is he actually sort of
Speaker 3: engaged in active block and in your relationship with MARKETA.
Speaker 7: We don't comment on who we work with a block.
Speaker 7: We work with many divisions of block, but I would
Speaker 7: say that we have a phenomenon relationship. It feels like
Speaker 7: it's one team and that's what it takes. These days,
Speaker 7: we no longer live in a world that you just
Speaker 7: have an API and everybody goes in their own direction.
Speaker 7: We actually work with them, We partner with them and
Speaker 7: the nice thing and everybody has them lean So they're
Speaker 7: phenomenal at innovation, understanding the consumer, delivering to the consumer,
Speaker 7: and we're really good at obfuscating the complexities of the
Speaker 7: banking system, allowing them to move very fast on the
Speaker 7: consumer side while we actually focus on eliminating complexity of
Speaker 7: the banking system. It's been a pleasure working with that
Speaker 7: team over there.
Speaker 3: Before we let you go as sign in two countries
Speaker 3: associated with MARKETA right now, our regions are sort of Brazil,
Speaker 3: Latin and Eastern Europe. Where are you looking to expand geographically?
Speaker 3: What are the next market opportunities for you.
Speaker 7: Yes, we definitely see Brazil as a phenomenal opportunity for us.
Speaker 7: We just announced our partner and customer, Fitbank. We see
Speaker 7: tremendous opportunity. It is actually one of the fastest growing
Speaker 7: fintech markets. Everybody is on a mobile device, the technologies accepted,
Speaker 7: it's a large country, regulatory environments are favorable, so we're
Speaker 7: very excited about that.
Speaker 3: And in Europe we've.
Speaker 7: Seen a lot of interest, in a lot of excitement,
Speaker 7: and we've closed quite a few netnew logos in you
Speaker 7: so we are expanding into You're very excited about that.
Speaker 7: I mean, look at a global world. We have a
Speaker 7: lot of customers that have global ambitions and MARKETA is
Speaker 7: going to stand behind them. If they tell us we're
Speaker 7: going to go to the moon, We're going to be
Speaker 7: in the moon before. So we're very excited to put
Speaker 7: the deep relationship we have with our customers.
Speaker 3: All right, Simon Colascio, MARKETA coming to me from over
Speaker 3: the Bay Bridge over in Oakland, Thank you very much.
Speaker 3: Now coming up here on Bloomberg Technology, we're going to
Speaker 3: talk about the rise of generative AI and its impact
Speaker 3: on the European VC ecosystem. That's with Target Global. Coming
Speaker 3: up next, this is Bloomberg. Let's talk about generative AI
Speaker 3: and it's impact on global VC, but what does it
Speaker 3: mean in particular for Europe and tech and European VC.
Speaker 3: Let's discussed with Schmill Chafets for today's VC Spotlight. He's
Speaker 3: the founder and executive chairman of the Pan European VC
Speaker 3: firm Target Global. We've taught us a lot here in
Speaker 3: the United States about the starting gun of last November.
Speaker 3: Everything that's been happening in new companies being founded in
Speaker 3: the field of generative AI. Is that playing out in
Speaker 3: the countries and regions of Europe that you're looking at.
Speaker 9: Yeah, so, first of all, thank you for having me.
Speaker 9: I think it's playing out globally obviously, and I think
Speaker 9: Europe is it's hard to set the boundaries right now
Speaker 9: on this type of technology. But I think it's also
Speaker 9: very easy to overestimate the short term impact that this
Speaker 9: is going to have and grossly underestimate the long term impact.
Speaker 9: And I think that's the one thing that you have
Speaker 9: to really consider when you're thinking about generative AI and
Speaker 9: what's going on in the market today.
Speaker 3: There's this idea that here in San Francisco where I am.
Speaker 3: A lot of new AI and software focused companies are
Speaker 3: being started because of the historic relationship with Stanford. Are
Speaker 3: there any cities in Europe where you recognize there is
Speaker 3: a conveyor belt of talent coming out?
Speaker 9: I mean, I think Europe. One of the interesting things
Speaker 9: about European tech generally speaking, is it's much more distributed
Speaker 9: than US tech. So I think everybody always tries to
Speaker 9: find the Silicon Valley of Europe, of China, of and
Speaker 9: I think that's not the right comparison. I think the
Speaker 9: beautiful thing is that Europe has about sixty five cities
Speaker 9: that have a unicorn. There is a very the ecosystem
Speaker 9: is very spread out, and it means that things can
Speaker 9: grow in very unusual places. So of course you see London, Berlin,
Speaker 9: Tel Aviv being major hubs, but you really see incredible
Speaker 9: companies growing everywhere, and that includes Eastern Europe, Southern Europe
Speaker 9: to place like Spain, Poland Romania. And that's the challenge
Speaker 9: about investing in Europe, but that's also a great opportunity.
Speaker 3: You're usually based in in Tel Aviv, Israel. The recent
Speaker 3: news flow and indeed we had an interview with Benjamin
Speaker 3: ette Ya who here on Bloomberg Television at the weekend
Speaker 3: is around the judicial ruling. Have you reconsidered how you
Speaker 3: view Israeli tech and the startups in in your in
Speaker 3: your home nation.
Speaker 9: Uh? Well, I think, uh this is obviously, ah for
Speaker 9: for us, it's not a business question. It's a it's
Speaker 9: a deeper question about the hard and soul of our country.
Speaker 9: But as and but as an investor, of course, it's
Speaker 9: hard to completely ignore it. I think Israel still has
Speaker 9: incredible talent, a depth of innovation, and I think eventually
Speaker 9: the industry will will prevail as the country will. And
Speaker 9: I think one of the amazing things to see is
Speaker 9: how the the tech industry and the VC industry are
Speaker 9: really in the forefront of the civil society in this
Speaker 9: and you know, it's people talk a lot about ESG,
Speaker 9: but this is actual ESG in the in the streets,
Speaker 9: you know, and it's it's to me, it's amazing.
Speaker 3: On this program, we've had founders from Israel from a
Speaker 3: really broad range of industries, from self driving, the software,
Speaker 3: fintech as well. Are there any sort of sub sect
Speaker 3: is in the nation that you think are a strong
Speaker 3: point right now?
Speaker 9: So cybersecurity is always extraordinarily interesting in Israel. And there's
Speaker 9: a couple of companies being sold now, there's I think
Speaker 9: you saw Whiz highlighted Forbes just now. So there's a
Speaker 9: lot of great things happening in cyber and I think
Speaker 9: Israel is well positioned around AI, around not necessarily the
Speaker 9: core and not maybe not the protocols, but a lot
Speaker 9: of the applications, data security, data integrity, and identity management.
Speaker 9: A lot of those things are things that Israeli tech
Speaker 9: knows how to do and knows how to do well.
Speaker 9: So I think it is very well positioned.
Speaker 3: One of the big stories of the day, Schmuel is
Speaker 3: ARM constant news for about its listing here in the
Speaker 3: United States. How much of a blow is it to
Speaker 3: European tech or the UK, even that I'm elected to
Speaker 3: list here in the States and not in continental Europe
Speaker 3: or in the London markets.
Speaker 9: I mean, it's a great question. I honestly tend to
Speaker 9: think that in the listing venue is a bit of
Speaker 9: a political question. It's a political question, it's a pr question.
Speaker 9: I don't think it's material. I think what matters is
Speaker 9: that ARM is a UK company headquartered in Cambridge. What
Speaker 9: matters is that continues to do businesses in the UK,
Speaker 9: continues to have its IP in the UK, continues to
Speaker 9: employ and train engineers in the UK, and be a
Speaker 9: British company in the forefront of global technology, and continue
Speaker 9: to grow. Where it's listed, where the shares are traded,
Speaker 9: where the financial engineering happens. I think it's there. You
Speaker 9: cannot ignore the fact that it's easier to do it
Speaker 9: in New York. There's more deal there, and it's easier
Speaker 9: for investors that look at global tech to look at
Speaker 9: one market. And I tend to think it's not a
Speaker 9: blow at all. I think it's an amazing outcome for
Speaker 9: the British ecosystem and for Europe to have a company
Speaker 9: like ARM and hopefully will be another one hundred billion
Speaker 9: dollar European company. There aren't There aren't.
Speaker 3: Enough of those, all right, schmiel Chafets, founder and executive
Speaker 3: chairman of Target Global, in today's VC Spotlight. Great to
Speaker 3: get more on the European perspective, all right, this is
Speaker 3: what they're talking about. ESPN has signed a long term
Speaker 3: exclusive agreement with casino operator Penn Entertainment, licensing its brand
Speaker 3: for sports betting and deepening the media giants ties to
Speaker 3: the growing online gambling business. Pen will have the tenure
Speaker 3: right to use the ESPN bet name in the US,
Speaker 3: the company said in a statement Tuesday. Pen will rebrand
Speaker 3: it's Barstool sports book with ESPN starting this full. Pen
Speaker 3: also said it's selling all bits Bartel Sports subsidiary to
Speaker 3: David Portnoy, which is what they're talking about on the
Speaker 3: social media's So go ahead now to Disney's earnings coming
Speaker 3: out later today with our editor Chris Palmery. So, after
Speaker 3: the drama of Eiger's contract renewal, we go back to
Speaker 3: the existential question that you and I posed around some valley.
Speaker 3: How do you become profitable in streaming? I think that's
Speaker 3: what investors are looking for.
Speaker 10: It is, well, you know, one way is deals like
Speaker 10: this one. I was a little surprised the market reaction
Speaker 10: to the Penn Gaming deal. One and a half billion
Speaker 10: dollars guaranteed money for Disney slash ESPN and they can still,
Speaker 10: according to Penn on their car have adds from other
Speaker 10: sports betting companies on ESPN. So nothing really kind of
Speaker 10: an upside it seems in this deal. And that's sort
Speaker 10: of how you invigorate our legacy brand like ESPN, which
Speaker 10: is you know, is struggling with losing traditional cable subscribers.
Speaker 10: So I'm sure Eiger's going to talk a lot about
Speaker 10: that deal on the call, and like we will get
Speaker 10: some questions broader. You know, what we've seen this earning
Speaker 10: cycle is, after all the pessimism about the legacy media businesses,
Speaker 10: a lot of these companies have surprised profit wise. Warner
Speaker 10: Brothers Paramount, you know, they're advertising business on traditional TV
Speaker 10: channels is challenged, but they've cut a lot of costs
Speaker 10: and they're saving a lot of money with the strikes,
Speaker 10: and so the numbers have tended to look better.
Speaker 3: You know, the ESPN pen deal, I wonder how much
Speaker 3: of Igu's fingerprints on it, specifically, because the other question
Speaker 3: a lot of people are asking is when do we
Speaker 3: see the full Eiger effect? What's he going to do
Speaker 3: to restructure Disney's businesses.
Speaker 10: Well, that's one of the things people will be looking
Speaker 10: since they did a lot of cost cutting. Is you know,
Speaker 10: earlier this year seven thousand jobs, five million plus, you
Speaker 10: know in savings they were looking for, so may get
Speaker 10: an update on that. This is definitely an Eiger deal.
Speaker 10: If you remember the history of the sports betting thing.
Speaker 10: Betting was something that Disney historically shunned. It didn't, you know,
Speaker 10: license its Marvel superheroes, the slot machines, didn't allow them
Speaker 10: on the cruise ships. This was a turnaround a few
Speaker 10: years ago under the previous CEO of Bob Chapek. He said, no,
Speaker 10: you know, we really can use the ESPN brand in
Speaker 10: sports betting, but he never got a deal done. There
Speaker 10: were a lot of talks, and so this is one
Speaker 10: that Iiger finally did close and probably at the last minute,
Speaker 10: because the sports betting market has already pretty much consolidated
Speaker 10: around a few players.
Speaker 3: All Right, Bloombat's Chris Palmry is going to be a
Speaker 3: busy afternoon for both you and I with Disney earning.
Speaker 3: It's interesting the stock softer half percentage point in the session,
Speaker 3: but it's basically flat year today, really underperforming the S
Speaker 3: and P five hundred. Do the earnings change that going forward?
Speaker 3: Join us in twenty four hours time, because that does
Speaker 3: it for this edition of bloombats Anology. Recap everything on
Speaker 3: the podcast, Apple, Spotify, iHeart, wherever you get your podcasts,
Speaker 3: as well as on the Bloomberg terminal from here in
Speaker 3: San Francisco. This is Bloomberg,