WEBVTT - Twitter's Whistle-Blower Subpoenaed and Y Combinator's New CEO 0:00:02.240 --> 0:00:05.600 From the heart of where innovation, money, and power collive 0:00:06.360 --> 0:00:10.880 in Silicon Valley and beyond. This is Bloomberg Technology with 0:00:10.920 --> 0:00:28.200 Emily Jay. I'm Katie Grayfield in New York in for 0:00:28.280 --> 0:00:31.760 Emily Chang. This is Bloomberg Technology. Coming up in the 0:00:31.760 --> 0:00:35.560 next hour. Musk's latest subpoena the whistleblower who used to 0:00:35.640 --> 0:00:39.120 run Twitter security. He says the company has been incompetent 0:00:39.280 --> 0:00:42.000 with thoughts and privacy. Is that enough to sway the 0:00:42.040 --> 0:00:46.160 court's opinion? Will discuss. Plus, the tech industry's most prestigious 0:00:46.280 --> 0:00:51.160 business incubator, y Combinator, has named its first American Asian 0:00:51.159 --> 0:00:54.600 American CEO. I'll chat with Gary Tan about what to 0:00:54.720 --> 0:00:59.200 expect under his leadership, and Bitcoin falls below twenty thou 0:00:59.440 --> 0:01:02.440 as investor respond to the fed's hawkish dance. So how 0:01:02.480 --> 0:01:05.560 are the world's largest crypto performed during a recession? We'll 0:01:05.600 --> 0:01:08.160 try to answer that question, But first let's check in 0:01:08.240 --> 0:01:10.759 on the meme trade, because that's really been sort of 0:01:10.959 --> 0:01:13.560 one of the narratives that's emerged over the last few weeks, 0:01:13.560 --> 0:01:16.440 seemingly out of nowhere. It continued today. You saw some 0:01:16.440 --> 0:01:18.880 of the speculative corners of the crypto market, the miners 0:01:19.240 --> 0:01:22.200 up there posting some gains. Then once again you had 0:01:22.200 --> 0:01:26.160 bed Bath and Beyond just crushing it up almost twenty 0:01:26.160 --> 0:01:28.480 five percent, and some of the originals to you had 0:01:28.480 --> 0:01:31.880 game Stop notching gains of about two percent on a 0:01:31.920 --> 0:01:35.319 down day in the broader markets. But speaking of memes, 0:01:35.640 --> 0:01:38.200 let's listen to how some of the Bloomberg television guests 0:01:38.200 --> 0:01:42.840 are reacting to this moment. Memes come and go quickly, 0:01:43.520 --> 0:01:46.720 same thing goes with these prices of alatility down, stock 0:01:46.800 --> 0:01:49.800 market up a perfect precondition for some more meme stock 0:01:49.840 --> 0:01:52.920 action towards the very very big pictu where there's a 0:01:52.960 --> 0:01:55.520 price discovery and market efficiency and all sorts of things 0:01:55.920 --> 0:01:59.360 that do adhere to fundamentals a little bit more. Game 0:01:59.360 --> 0:02:02.360 Stop has been daddy uh, and so the interest there 0:02:02.400 --> 0:02:04.960 from the retail world has has maintained better than some 0:02:05.000 --> 0:02:07.640 of the other stocks you bad, Bathroom Beyond. I think 0:02:07.640 --> 0:02:10.080 there's probably a lot of factors that play here. Gator 0:02:10.120 --> 0:02:12.799 Stop is still not sustainable at the price that it's at. 0:02:13.280 --> 0:02:16.760 If you use fundamental analysis for leadership to be you know, 0:02:16.880 --> 0:02:20.680 maintained in those areas, we wouldn't think that's sustainable moving forward. 0:02:20.720 --> 0:02:22.720 So we've seen a turn both in terms of the 0:02:22.760 --> 0:02:25.480 general market environment and in terms of people interested in 0:02:25.600 --> 0:02:29.000 once again playing equities, getting involved in capital markets, and 0:02:29.000 --> 0:02:30.799 the two of those things together, I think I explain 0:02:30.840 --> 0:02:33.000 why we're seeing a little bit of a meme stock resurgence. 0:02:35.520 --> 0:02:38.600 Let's get more from Bloomberg's Bailey Lipshal. He joins us 0:02:38.680 --> 0:02:41.520 on the phone, and Bailey actually the Market's live blog 0:02:41.600 --> 0:02:45.120 over at Bloomberg News just ran a survey on this topic. 0:02:45.560 --> 0:02:50.560 Will the mean mania fizzle out? Almost two thirds said no. 0:02:50.880 --> 0:02:55.840 So let's start simple why, Katie. I think it's a 0:02:55.880 --> 0:02:58.639 combination of factors. Like some of the guests for Bloomberg 0:02:58.639 --> 0:03:02.000 TV mentioned, is just that you have de free trading 0:03:02.040 --> 0:03:05.400 applications like robin Hood. You have the ability now for 0:03:05.600 --> 0:03:09.040 retail traders to buy far out of the money call options. 0:03:09.320 --> 0:03:11.920 You also just have the sense of camaraderie and really 0:03:11.960 --> 0:03:16.799 community that platforms like Reddit and stock twits have founded. 0:03:17.000 --> 0:03:18.440 So you when you look at it kind of the 0:03:18.480 --> 0:03:21.640 confluence of those uh kind of factors, you see it 0:03:21.680 --> 0:03:24.040 continue to pop up here and there, and that's something 0:03:24.040 --> 0:03:26.680 that we saw most recently last week with bed, Bath 0:03:26.760 --> 0:03:29.000 and Beyond a particular but that really does date back 0:03:29.040 --> 0:03:32.280 to even the hurt stage of late nineteen when this 0:03:32.440 --> 0:03:35.480 trend of retail traders kind of taking up in picking 0:03:35.600 --> 0:03:39.200 up the ability to trade kind of came into Vote 0:03:39.800 --> 0:03:42.280 and Billy. If I think about the last two years 0:03:42.600 --> 0:03:45.640 of living through and reporting on this sort of meme 0:03:45.720 --> 0:03:50.080 craze that still is continuing in markets, these stocks used 0:03:50.120 --> 0:03:52.760 to sort of trade as a block. If one was up, 0:03:52.840 --> 0:03:55.240 you could bet the other was up. You can sort 0:03:55.280 --> 0:03:57.560 of see a little bit of a break apart here 0:03:58.040 --> 0:04:00.760 now though, Are we starting to see any sort of 0:04:00.800 --> 0:04:04.640 fundamental stories returned to some of these names. I wouldn't 0:04:04.680 --> 0:04:07.280 say it's fundamental. The more investors I talked to and 0:04:07.440 --> 0:04:10.240 strategists that each has their own story. And that's really 0:04:10.240 --> 0:04:12.000 what we saw play out in the summer of last 0:04:12.040 --> 0:04:14.560 year when you look at a game Stop obviously kind 0:04:14.560 --> 0:04:17.760 of lifted all boats. Was the titlisted all boats back 0:04:17.800 --> 0:04:22.520 in January one, But then AMC really caught fire in 0:04:22.560 --> 0:04:26.200 the early June late in May area when CEO Adam 0:04:26.240 --> 0:04:29.400 Aaron embrace retail trading. When then you saw that kind 0:04:29.400 --> 0:04:31.080 of play out with bed Bath and Beyond with its 0:04:31.080 --> 0:04:34.680 own way, with Ryan Cohen's Steak which he is subsequently dumped, 0:04:34.920 --> 0:04:36.839 So really you're looking at it where there's not really 0:04:36.880 --> 0:04:39.640 fundamental reasons for these rallies. But Bed Bath and Beyond 0:04:39.720 --> 0:04:42.920 is set to a strategic update on Wednesday, so that's 0:04:42.920 --> 0:04:46.680 another event for speculative investors to play, which is something 0:04:46.680 --> 0:04:49.600 we saw play out today in particular with call options 0:04:50.000 --> 0:04:53.120 on bed baton kind of by itself. Well, let's dig 0:04:53.160 --> 0:04:55.320 into bed Bath and Beyond because actually one of the 0:04:55.440 --> 0:04:58.800 questions in this survey was which stocks of these will 0:04:58.839 --> 0:05:01.960 go bankrupt within a year? You had game stop bed 0:05:02.000 --> 0:05:06.599 Bath and Beyond n a m C expect Bed Bath 0:05:06.640 --> 0:05:09.719 and Beyond to go bankrupt within the next year. What 0:05:09.800 --> 0:05:13.520 are we expecting to hear on Wednesday? The big focus 0:05:13.560 --> 0:05:15.600 was laid out by Morgan Stanley and what they're looking 0:05:15.600 --> 0:05:17.920 for comments on cash burn. This was a company that's 0:05:17.920 --> 0:05:21.839 been continuing to burn cash in the last few years, dwindling, 0:05:22.000 --> 0:05:24.880 dwindling cash position down from over a billion at point 0:05:24.960 --> 0:05:27.039 one point a year ago can now closer to a 0:05:27.080 --> 0:05:30.039 hundred million. So looking for cash burn, comments around vendor 0:05:30.120 --> 0:05:32.560 support because we have seen that Bloomberg report from about 0:05:32.600 --> 0:05:36.040 two weeks ago that maybe they weren't getting uh good 0:05:36.080 --> 0:05:38.800 supplied because they were running back on payment. And another 0:05:38.839 --> 0:05:41.120 thing is just looking at current trend going into the 0:05:41.160 --> 0:05:43.919 holiday season. This is really according to Wall Street analysts, 0:05:43.920 --> 0:05:46.640 they make or break stretch, board, bed, bath, and beyond 0:05:46.720 --> 0:05:50.000 going into the fourth quarter. And what that could mean 0:05:50.320 --> 0:05:52.599 for a company that really, when you look at it 0:05:52.600 --> 0:05:55.200 from a fundamental basis, who was kind of nearing uh 0:05:55.320 --> 0:05:58.120 the end of at least according to some what could 0:05:58.160 --> 0:06:02.719 be a potential light make or brick stretch. Definitely watching 0:06:02.800 --> 0:06:05.039 with bated breath. But Bailey, I know you also cover 0:06:05.440 --> 0:06:08.279 SPACs in addition to memes, and when I think about 0:06:08.360 --> 0:06:11.560 SPACs and memes and crypto, it's sort of all boils 0:06:11.600 --> 0:06:15.719 down to that same speculative urge driving these bets. At 0:06:15.800 --> 0:06:18.279 least in my view, Is that fair though? Is it 0:06:18.400 --> 0:06:23.560 fair to lump SPACs in with some of these mean names? Uh? 0:06:23.680 --> 0:06:26.599 It really depends, obviously when you look at the SPAC 0:06:26.720 --> 0:06:29.800 trade that played out when you go back to Virgin 0:06:29.839 --> 0:06:34.320 Galactic in tween turning into Draft Kings in early one, 0:06:34.360 --> 0:06:37.080 which really set the stage for the craze where pretty 0:06:37.120 --> 0:06:41.200 much any celebrity or investing kind of tighten hat us 0:06:41.240 --> 0:06:43.279 back in some way, shape or form. It just kind 0:06:43.279 --> 0:06:46.359 of caught the enthusiasm and energy of a market that 0:06:46.400 --> 0:06:49.080 seemingly was a bull market that could not run out 0:06:49.080 --> 0:06:52.000 of gas. And that really is why I think when 0:06:52.040 --> 0:06:53.880 I talk to some of my sources, SPACs got caught 0:06:53.960 --> 0:06:57.640 up with meme stocks again with some of these alternative cryptocurrencies, 0:06:57.680 --> 0:06:59.800 because there was so much froth in the market that 0:06:59.839 --> 0:07:02.680 it is able to have some of these speculative corners. 0:07:02.680 --> 0:07:05.480 The market really kind of go mainstream and be adopted 0:07:05.480 --> 0:07:08.839 by professional traders as well as retail investors. Bailey Lips, 0:07:09.160 --> 0:07:11.840 Bloomberg News, thank you so much. I really appreciate your 0:07:11.840 --> 0:07:15.120 time coming up how startups can change their strategy to 0:07:15.200 --> 0:07:29.240 raise capital in the current environment. This is Bloomberg. Restoring 0:07:29.280 --> 0:07:32.880 price stability will likely require maintaining a restrictive policy stance 0:07:33.000 --> 0:07:38.600 for some time. The historical record cautions strongly against prematurely 0:07:38.760 --> 0:07:42.680 loosening policy. The Federal Open Market Committee's overarching focus right 0:07:42.720 --> 0:07:46.680 now is to bring inflation back down to our two gold. 0:07:48.600 --> 0:07:51.680 Price stability is the responsibility of the Federal Reserve and 0:07:51.760 --> 0:07:56.480 serves as the bedrock of our economy. Without price stability, 0:07:56.520 --> 0:08:00.360 the economy does not work for anyone in particular. Without 0:08:00.400 --> 0:08:03.520 price stability. We will not achieve a sustained period of 0:08:03.600 --> 0:08:08.400 strong labor market conditions that benefit all. The burdens of 0:08:08.440 --> 0:08:11.480 high inflation fall heaviest on those who are least able 0:08:11.480 --> 0:08:14.720 to bear them. We are taking forceful and rapid steps 0:08:14.720 --> 0:08:18.320 to moderate demand so that it comes into better alignment 0:08:18.360 --> 0:08:22.520 with supply and to keep inflation expectations anchored. We will 0:08:22.560 --> 0:08:25.640 keep at it until we're confident the job is done. 0:08:27.960 --> 0:08:31.160 And that hawkishness from FED chaired room pal just crushing 0:08:31.200 --> 0:08:33.600 the risk on mood that we've seen from markets in 0:08:33.679 --> 0:08:36.319 recent weeks. And of course that shifting sentiment does not 0:08:36.520 --> 0:08:40.520 bode well for fund ups seeking starting seeking funding. Rather, 0:08:40.559 --> 0:08:42.960 I'm here to discuss this Christina Ras. She is CEO 0:08:43.080 --> 0:08:46.800 of the financial software startup Cube. Christina, you recently raised 0:08:46.800 --> 0:08:50.520 thirty million dollars for your Series B funding round earlier 0:08:50.840 --> 0:08:53.880 this summer. Obviously, that's a much different environment than your 0:08:53.920 --> 0:08:56.360 Series A round from just a couple of years ago. 0:08:56.920 --> 0:09:01.360 Compare and contrast the difficulty. So our Series day was 0:09:01.400 --> 0:09:04.160 about eighteen months prior, so at the end of twenty twenty, 0:09:04.240 --> 0:09:07.240 beginning of one, and that was really the beginning of 0:09:07.240 --> 0:09:10.280 the party. So this was the time when unicorns were 0:09:10.280 --> 0:09:13.280 being crowned nearly every other day. It was the world 0:09:13.360 --> 0:09:16.959 of endless capital without guardrails. And we've now moved into 0:09:17.040 --> 0:09:19.880 a world where certainly the sentiment has changed, but we're 0:09:19.880 --> 0:09:23.000 going back to good old fashioned business fundamentals. So for 0:09:23.120 --> 0:09:25.400 us in particular, we are a planning company and we 0:09:25.440 --> 0:09:28.600 did plan for this, and our business model is really 0:09:28.720 --> 0:09:31.840 lends itself well to both good times and bad. So 0:09:31.880 --> 0:09:34.040 when times they're good, we're a sword in the sense 0:09:34.120 --> 0:09:37.400 that companies need to allocate capital in the most effective 0:09:37.400 --> 0:09:40.120 way possible. Uh, that's actually harder to do the net 0:09:40.120 --> 0:09:42.600 loooks if you think about all of the companies out 0:09:42.600 --> 0:09:45.199 there that have blown billions of dollars and then when 0:09:45.240 --> 0:09:48.400 times are challenging, it's really bad extending runway. So we 0:09:48.520 --> 0:09:52.040 like to say, while cash is king, runways queen um 0:09:52.080 --> 0:09:55.080 and we help companies to do just that. Runway is queen. 0:09:55.160 --> 0:09:57.680 I'm going to write that down and use that. But 0:09:57.760 --> 0:10:00.480 this thirty million dollars that you raised in your Series B, 0:10:00.960 --> 0:10:04.280 what are you spending the proceeds on right now? And 0:10:04.360 --> 0:10:06.920 is that different than what you might have planned to 0:10:06.960 --> 0:10:10.280 spend it on. Had this sort of risk off vibe 0:10:10.440 --> 0:10:13.959 rippled its way through ASSA classes, we would have definitely 0:10:14.000 --> 0:10:17.720 been more aggressive in our go forward growth targets. So 0:10:17.840 --> 0:10:20.600 there was almost a joke going around this startup ecosystem 0:10:20.679 --> 0:10:23.040 last year of six to eight X is the new 0:10:23.080 --> 0:10:26.719 three X, meaning companies are going to grow seven year 0:10:26.760 --> 0:10:30.040 over year, which is what vcs are expecting. UM three X. 0:10:30.040 --> 0:10:32.600 Of course we're sort of the gold standard for growth. 0:10:32.800 --> 0:10:36.559 What we're now hearing in terms of um of sentiment 0:10:36.880 --> 0:10:39.640 is three years is the new three X. So going 0:10:39.679 --> 0:10:42.320 back to how we're sending this capital, we're looking at 0:10:42.320 --> 0:10:45.920 extending runway for a longer period of time, whether rather 0:10:45.960 --> 0:10:49.079 than growing aggressively to the point of maybe putting ourselves 0:10:49.080 --> 0:10:52.160 in a position uh that that that growth is difficult 0:10:52.160 --> 0:10:54.640 to achieve or maintain. UM So I would say that 0:10:54.640 --> 0:10:58.440 that is definitely something different than the world of one. 0:10:58.840 --> 0:11:01.199 But we are in a really great position to get 0:11:01.240 --> 0:11:04.240 to either a path to profitability or extend or runway 0:11:04.240 --> 0:11:06.560 as long as possible. I'd love to expand on that 0:11:06.640 --> 0:11:09.360 a little bit. How do you expand your runway in 0:11:09.360 --> 0:11:12.840 a market environment such as this one. So going back 0:11:12.920 --> 0:11:17.359 to core business fundamentals, every company, especially a tech company, 0:11:17.480 --> 0:11:19.679 has to think about how much they're willing and ready 0:11:19.679 --> 0:11:21.840 to invest in R and D, and for us, in 0:11:21.880 --> 0:11:24.320 our investors and for our customers, this is an area 0:11:24.400 --> 0:11:26.560 that's really important and we don't want to pull back. 0:11:26.880 --> 0:11:29.839 We could certainly get to profitability faster if we pull 0:11:29.880 --> 0:11:33.280 back on R and D because that doesn't generate immediate revenue, 0:11:33.600 --> 0:11:35.960 but it's more of an investment in the future. Where 0:11:35.960 --> 0:11:39.080 it comes down to us is really solid execution around 0:11:39.080 --> 0:11:41.240 our go to market. So that means we're looking at 0:11:41.280 --> 0:11:43.920 a lot of predictive measures around how well our go 0:11:44.000 --> 0:11:47.680 to market is UM is performing. So we look at 0:11:47.760 --> 0:11:50.720 things like magic number, which is how much we're sending 0:11:50.800 --> 0:11:54.240 each quarter versus how much revenue it's generating in the 0:11:54.280 --> 0:11:58.040 following quarter, and a good or best business practices for 0:11:58.080 --> 0:12:00.800 that magic number to be somewhere between point seven five 0:12:00.840 --> 0:12:03.400 and one UM and that's something we're doing to extend 0:12:03.480 --> 0:12:07.000 runway so that we're very efficient with the capital we use. UM. 0:12:07.040 --> 0:12:10.920 And one of my favorite UM sort of business uh 0:12:11.080 --> 0:12:14.760 I guess coaching lines actually came from the Netflix show Cheer, 0:12:15.080 --> 0:12:17.560 which when the coach was saying, it's you know, it's 0:12:17.559 --> 0:12:19.440 not about what the other teams are doing it's what 0:12:19.480 --> 0:12:21.280 we do here on the mat and for us in 0:12:21.320 --> 0:12:24.679 our company internally, it's about how we execute internally um 0:12:24.720 --> 0:12:27.240 and how efficient and effective we are at leveraging the 0:12:27.280 --> 0:12:30.120 capital that we already have. That show made me feel 0:12:30.160 --> 0:12:33.320 so inferior, but I'm glad that you pulled something away 0:12:33.320 --> 0:12:37.360 from it. Christina, someone who recently went through fundraising, who 0:12:37.400 --> 0:12:40.679 recently worked with vcs, I'd love to hear your perspective 0:12:40.679 --> 0:12:43.920 on what's top of mind for those vcs right now, 0:12:43.920 --> 0:12:47.920 what are they looking for in potential investments. First of all, 0:12:48.000 --> 0:12:52.040 it's good old fashioned business fundamentals, and I'm a former CFO, 0:12:52.160 --> 0:12:54.440 so I love to hear it. I love going back 0:12:54.480 --> 0:12:57.720 to basics. The numbers that are really top of mind 0:12:57.760 --> 0:13:01.200 for most investors today are your growth, sin net dollar retention. 0:13:01.640 --> 0:13:04.160 So great, you get customers, but how well are you 0:13:04.200 --> 0:13:07.040 retaining them and growing them? That's the most effective use 0:13:07.040 --> 0:13:11.160 of capital. How quickly and effectively are you growing? Some 0:13:11.280 --> 0:13:13.280 of those terms like magic numbers, so a lot of 0:13:13.360 --> 0:13:16.600 things around go to market fundamentals, and more importantly, of course, 0:13:16.679 --> 0:13:19.120 I haven't mentioned cash yet, but your burn rate and 0:13:19.160 --> 0:13:22.720 your burn ratio, so how well are you using the 0:13:22.720 --> 0:13:25.680 cash that you already have to generate either additional growth 0:13:26.000 --> 0:13:29.440 or moving towards profitability. So a very one of my 0:13:29.480 --> 0:13:32.040 favorite metrics is the rule of forty, which looks at 0:13:32.360 --> 0:13:36.160 how much um profit you have versus how much growth 0:13:36.440 --> 0:13:41.000 and trying to get to or above the number forty. 0:13:41.400 --> 0:13:43.800 And So, if you were to give an advice advice 0:13:43.880 --> 0:13:47.199 to a startup who is trying to attract funding right now, 0:13:47.240 --> 0:13:49.560 who is trying to capture the attention of some of 0:13:49.600 --> 0:13:52.560 those vcs, what advice would you give them to sort 0:13:52.559 --> 0:13:56.600 of tailor their strategy in this environment. So right now, 0:13:56.800 --> 0:13:59.360 what I'm hearing is most sterns are not advised to 0:13:59.440 --> 0:14:02.720 raise right this second. If you can extend runway, that's 0:14:02.720 --> 0:14:05.599 not just going to be you know, through business fundamentals, 0:14:05.600 --> 0:14:08.560 but also looking at other external sources like debt. So 0:14:08.600 --> 0:14:10.880 if you can't raise equity, look for a line of 0:14:10.920 --> 0:14:14.640 credit or another way to extend runaway, maybe reducing burn 0:14:14.720 --> 0:14:18.319 whether it's reducing your growth rate or reducing the amount 0:14:18.320 --> 0:14:20.000 of R and D depending on the type of business 0:14:20.000 --> 0:14:22.800 you're in, are just ways to extend capital until we 0:14:22.840 --> 0:14:24.640 get out of I would say, do we know a 0:14:24.640 --> 0:14:27.600 little bit more of when we hit the bottom of 0:14:27.600 --> 0:14:30.520 the market, or at least when investors are confident enough 0:14:30.560 --> 0:14:34.600 to start really investing heavily. Again, that is cheaper than equity. 0:14:34.680 --> 0:14:37.440 I've heard that one before. Q CEO Christina Ross great 0:14:37.440 --> 0:14:48.240 to spend some time with. You really appreciate it well. 0:14:48.280 --> 0:14:50.200 The U S and China are nearing a deal to 0:14:50.240 --> 0:14:55.640 avoid Massy listings over audit supervision disagreement let's American auditors 0:14:55.720 --> 0:14:58.400 go to Hong Kong to check the records of Chinese 0:14:58.480 --> 0:15:02.240 companies listed New York. But if the agreement falls through, 0:15:02.360 --> 0:15:06.560 more than two hundred US listed Chinese companies face delistings 0:15:06.600 --> 0:15:11.680 from American stock exchanges starting in early Here discuss the 0:15:11.760 --> 0:15:16.520 strategy risks founder and CEO Isaac Stonefish, Isaac, great, to 0:15:16.560 --> 0:15:19.720 have you with us. In your view, how likely is 0:15:19.720 --> 0:15:22.880 it that this agreement actually goes through. I think it's 0:15:23.000 --> 0:15:25.880 very likely that the agreement will go through. What I'm 0:15:25.960 --> 0:15:29.360 more uncertain about is whether it will solve what the U. S. 0:15:29.400 --> 0:15:33.840 Government wants it to solve, namely equal treatment for Chinese 0:15:33.920 --> 0:15:37.600 companies and US companies and other globile companies, and whether 0:15:37.680 --> 0:15:42.000 or not it will actually stem the tide of worsening 0:15:42.120 --> 0:15:46.240 US China relations, which seem increasingly likely to lead to 0:15:46.960 --> 0:15:51.400 all out conflict or war. And do you think such big, 0:15:51.480 --> 0:15:54.680 big hurdles such as that could ever be solved? Is 0:15:54.720 --> 0:15:57.560 there any agreement that could go through that would satisfy 0:15:57.640 --> 0:16:03.240 all of those requirements out? No? Okay, Well, let's talk 0:16:03.240 --> 0:16:06.440 about the ramifications here. If this doesn't of the course, 0:16:06.440 --> 0:16:08.800 this agreement, like you're saying, doesn't go far enough in 0:16:08.880 --> 0:16:12.040 your view, But if it doesn't go through at all, 0:16:12.200 --> 0:16:14.880 what are the ramifications of that? What is actually at 0:16:14.960 --> 0:16:18.640 stake here? It seems what the Chinese side is doing 0:16:18.840 --> 0:16:23.680 is buying time. There still are roughly eighteen months or 0:16:23.720 --> 0:16:26.000 so until the companies would have to delist. I think 0:16:26.080 --> 0:16:30.400 probably the idea is we'll sign this, the U S 0:16:30.400 --> 0:16:33.160 side will try to implement it, They'll find a lot 0:16:33.200 --> 0:16:37.040 of stonewalling on the Chinese side, and by two and 0:16:37.160 --> 0:16:39.840 twenty four things will be different enough that will be 0:16:39.920 --> 0:16:42.920 able to keep moving the goalposts and keep pushing the 0:16:43.000 --> 0:16:45.680 can down the road and figure something out. Then it 0:16:45.920 --> 0:16:48.920 doesn't feel like this is a very big concession. It 0:16:48.960 --> 0:16:52.000 feels like this is a very good stalling technique so 0:16:52.040 --> 0:16:56.000 that companies on both sides and investors on both sides 0:16:56.520 --> 0:17:00.200 don't see Beijing communicating that they're not really open for this. 0:17:00.680 --> 0:17:03.040 So if that's the future we're looking forward to, that 0:17:03.160 --> 0:17:06.199 the goal post just continue to move forward, just a 0:17:06.240 --> 0:17:08.960 series of stalling techniques. Do you think that we'll ever 0:17:09.080 --> 0:17:13.399 actually see these d listings go through? It's a great question. 0:17:13.680 --> 0:17:16.240 I think the question of whether or not these companies 0:17:16.280 --> 0:17:18.600 will be list will depend so much more on the 0:17:18.640 --> 0:17:21.919 macro environment at the time. So we saw significant deal 0:17:21.920 --> 0:17:25.359 listings earlier in the month from several large s o 0:17:25.440 --> 0:17:28.960 e s, presumably because they didn't want any US linked 0:17:28.960 --> 0:17:32.440 auditors anywhere near their books. I think it's possible that 0:17:32.560 --> 0:17:36.879 if US China relations worse in certain companies will be lists, 0:17:36.920 --> 0:17:39.520 maybe not even because of this, but because of other considerations. 0:17:39.520 --> 0:17:43.400 And I think certainly a lot of promising Chinese companies 0:17:43.680 --> 0:17:46.960 are finding it less appealing to list on US markets 0:17:47.119 --> 0:17:49.439 and are looking closer to home for their capital raises. 0:17:50.160 --> 0:17:53.600 So why is that? Why is listing on US exchanges 0:17:53.640 --> 0:17:56.600 Maybe not the holy grail or the big goal that 0:17:56.680 --> 0:17:59.439 it might have once been. A lot of it is 0:18:00.000 --> 0:18:03.080 Aijing and the Chinese Communist Party is increasing paranoia about 0:18:03.280 --> 0:18:06.520 data and data security, and a lot of folks believe 0:18:07.040 --> 0:18:12.240 this has to do with Beijing really fearing that the 0:18:12.400 --> 0:18:16.560 US is going to go to war with China against 0:18:16.600 --> 0:18:20.200 Taiwan if Beijing worre to sees the island, and national 0:18:20.240 --> 0:18:25.280 security is really coming into the forefront. There's an expression 0:18:25.280 --> 0:18:28.720 in China and China politics dominance, and I think we're 0:18:28.760 --> 0:18:32.720 seeing that not only with domestic politics, but really with 0:18:32.760 --> 0:18:36.719 foreign policy and national security as a major major force 0:18:37.040 --> 0:18:42.520 driving Beijing's decisions, Isaac, who has more to lose here? 0:18:42.560 --> 0:18:46.040 If we make it sort of a binary conversation, I mean, 0:18:46.160 --> 0:18:49.600 is it more important for a Chinese company to list 0:18:49.640 --> 0:18:52.560 on a US exchange? Is it more important for that 0:18:52.760 --> 0:18:57.320 US exchange to have those Chinese companies? That's a great question. 0:18:57.400 --> 0:19:00.600 I think it's pretty even. I think from a broader perspective, 0:19:00.960 --> 0:19:06.080 it's investors who lose because of less choice, less efficient markets. 0:19:06.200 --> 0:19:08.919 And really what we're seeing on both sides is the 0:19:09.040 --> 0:19:11.679 U S and China prioritizing national security. And that's what 0:19:11.720 --> 0:19:15.399 governments do, and that's what investors often don't like governments 0:19:15.400 --> 0:19:18.920 to do. But that's really the new reality, the new 0:19:18.960 --> 0:19:23.920 base case for US China relations. So investors thinking about 0:19:24.000 --> 0:19:27.800 various equities should really have a national security strategy in 0:19:27.840 --> 0:19:31.520 mind as they make decisions, and ISAAC going with your 0:19:31.520 --> 0:19:35.639 expectation that really we just continue to stall and stall. 0:19:35.920 --> 0:19:38.719 What do you think could happen along the way in 0:19:38.840 --> 0:19:43.000 terms of the Chinese tech crackdown? For example, do do 0:19:43.080 --> 0:19:46.280 we do we expect to see delistings even if not 0:19:46.400 --> 0:19:50.359 forced to? For example? I think that's really impossible. And 0:19:50.560 --> 0:19:52.400 I think one thing investors have to keep an eye 0:19:52.400 --> 0:19:57.280 out is both Beijing and the US is worried about 0:19:57.440 --> 0:20:01.360 US companies in China and Chinese companies in America. So if, 0:20:01.400 --> 0:20:03.760 for example, this seems to move forward and then there's 0:20:03.800 --> 0:20:08.440 some corruption allegations against a Chinese company on the US exchange, 0:20:08.560 --> 0:20:13.720 Beijing could retaliate against an American company in China. It's 0:20:13.760 --> 0:20:19.520 also possible that investors start to feel like the markets 0:20:19.560 --> 0:20:21.639 in the other country are a lot less appealing, and 0:20:21.720 --> 0:20:25.280 the government's respond accordingly. I do feel like there's a 0:20:25.320 --> 0:20:29.240 lot of people with large positions in China who want 0:20:29.359 --> 0:20:31.439 you to believe that this is business as normal, and 0:20:31.480 --> 0:20:34.760 it's really not, and Beijing has been very explicit about that. 0:20:34.960 --> 0:20:39.520 So this to me is not the key signal. This 0:20:39.640 --> 0:20:42.639 is part of the noise alright, Isaac, we have to 0:20:42.680 --> 0:20:44.840 leave it there. Really appreciate your time, though, That is 0:20:44.880 --> 0:20:57.440 strategy Risks founder and CEO Isaac stone Fish. Well, let's 0:20:57.440 --> 0:20:59.560 move on to the Musk Twitter drama now with the 0:20:59.600 --> 0:21:04.439 Twitter whistleblower now subpoena by Elon Musk's lawyer, that whistle blower, 0:21:04.480 --> 0:21:08.000 Peter Zatko, claims Twitter officials didn't know or care to 0:21:08.080 --> 0:21:10.679 find out how many of its accounts or spam and 0:21:10.760 --> 0:21:14.400 bought accounts. Let's bring in Bloomberg's Kurt Wagner for more 0:21:14.480 --> 0:21:17.840 on that and current The argument that has been made 0:21:17.960 --> 0:21:21.240 is that zach Coe's claims could help Elon Musk actually 0:21:21.240 --> 0:21:24.960 walk away from this deal over those spam accounts. Does 0:21:25.000 --> 0:21:28.159 that theory hold water? You know, I think it's a 0:21:28.160 --> 0:21:30.760 little more complicated than that, right, I Mean, what the 0:21:30.800 --> 0:21:34.840 whistle blowers basically said was that Twitter has not done 0:21:34.840 --> 0:21:37.000 a good job with security and also not a good 0:21:37.080 --> 0:21:40.440 job with identifying how many bots are on the service. 0:21:40.600 --> 0:21:43.840 And when he says that, he's really meaning in total, right, 0:21:43.880 --> 0:21:45.840 how many of all the accounts that are on there, 0:21:45.840 --> 0:21:48.040 how many our bots? He claims that Twitter has no 0:21:48.160 --> 0:21:50.520 idea now where it gets a little bit more complicated 0:21:50.880 --> 0:21:53.360 is that Twitter's argument has long been that, hey, it's 0:21:53.359 --> 0:21:57.000 fewer than five percent of the accounts that we you know, 0:21:57.080 --> 0:21:59.720 count his monthly active users and share with Wall Street, Right, 0:21:59.760 --> 0:22:01.800 So the kind of talking about two different things here. 0:22:02.119 --> 0:22:04.880 What I do think matters here is that this whistleblower 0:22:04.960 --> 0:22:08.120 is a top senior executive at the company, reported directly 0:22:08.160 --> 0:22:10.760 to the CEO, who basically is painting a picture of 0:22:10.800 --> 0:22:14.520 a company who's you know, mismanaged and and not taking 0:22:14.520 --> 0:22:17.320 these issues seriously. Right, So, whether or not the data 0:22:17.400 --> 0:22:19.439 he has is going to help Elon Musk, I think 0:22:19.440 --> 0:22:22.120 he's painting a picture of a company that hasn't taken 0:22:22.119 --> 0:22:24.439 the body issue nearly as seriously as Twitter wants you 0:22:24.480 --> 0:22:27.959 to believe it has, and theoretically za CO would know. 0:22:28.119 --> 0:22:30.720 But is there any world in which this subpoena could 0:22:30.720 --> 0:22:34.879 actually backfire on Elon Musk? I mean sure if if 0:22:34.960 --> 0:22:37.919 he goes and starts answering a bunch of questions that 0:22:38.000 --> 0:22:42.040 basically confirmed that even though maybe Twitter doesn't know how 0:22:42.080 --> 0:22:44.360 many bots are total on the service, they're making their 0:22:44.359 --> 0:22:46.800 best guess right there, They're doing the best that they 0:22:46.840 --> 0:22:50.560