Speaker 1: From Marhard where Innovation, money and power Collie in Silicon Valley, NBN.
Speaker 2: This is Bloomberg Technology with Caroline Hyde and Ed Ludlove.
Speaker 3: I'm Caroline Heinder Blomberg's Weltead quarters in New York, and
Speaker 3: I'med Ludlow in San Francisco.
Speaker 4: This is Bloomberg Technology coming up.
Speaker 3: Tesla recalls two million cars to fix autopilot's safety flows.
Speaker 5: Well breakdown what it.
Speaker 3: Means for drivers and indeed the eed maker as it
Speaker 3: faces its biggest recall ever.
Speaker 4: And Apple is set to be hit by an EU
Speaker 4: antitrust order in its fight with Spotify over rules that
Speaker 4: govern the iPhone makers music streaming rivals. Will break down
Speaker 4: the potential ban.
Speaker 3: Plus, for the first time ever, Netflix is revealing viewer
Speaker 3: data on every show in an effort to boost transparency
Speaker 3: that's in the way of the whole with strikes. We'll
Speaker 3: discuss that and so much more throughout this hour.
Speaker 4: The other top top story is Tesla, and actually Tesla's
Speaker 4: declines have really accelerated. This is a recall in name
Speaker 4: only of two million vehicles. Tesla plans to fix the
Speaker 4: issues around autopilot with over the air software updates. Those
Speaker 4: started on the twelfth, which was yesterday. Let's get the
Speaker 4: full picture and bring in Bloombergs keep laying out of Washington, DC.
Speaker 4: What do we know about this Tesla auto pilot recall? Well,
Speaker 4: this recall is years in the making. Literally.
Speaker 6: NITSA, which is the top auto safety regulator here in Washington,
Speaker 6: first began looking at autopilot in twenty sixteen, and the
Speaker 6: pace of the investigation is definitely picked up under the
Speaker 6: Biden administration. The agency launched the current probe into autopilot
Speaker 6: in twenty twenty one, and then they also launched a
Speaker 6: probe into Tesla's full self drive beta system in twenty
Speaker 6: twenty two, and NITA said that those probes were This
Speaker 6: recalls a product of those probes that Tesla has agreed
Speaker 6: to recall almost all of their cars across all models
Speaker 6: and push out this update, which they say will address
Speaker 6: some of the flaws with making sure drivers are fully
Speaker 6: engaged and aware that the cars are not capable of
Speaker 6: driving themselves. The autopilot system is also subject to several
Speaker 6: other investigations of other agencies. Tesla's faced criticism of their
Speaker 6: marketing of the systems, with people pointing out that there
Speaker 6: are no cars currently on the road that are capable
Speaker 6: of full self driving.
Speaker 5: I mean, what is it?
Speaker 3: The agency has open more than fifty special crash investigations
Speaker 3: involving Tesla cars that are suspected to be linked with
Speaker 3: the autopilot. Ultimately, it feels as though this is just
Speaker 3: an awareness an education process to the driver. Why isn't
Speaker 3: this something that other regions are looking into, not just
Speaker 3: the United States.
Speaker 6: I think a lot of this is centered on Tesla's marketing.
Speaker 6: As I mentioned of the systems in the view hicles.
Speaker 6: I mean, they have the system that they're calling full
Speaker 6: self drive, and even they acknowledge that the cars are
Speaker 6: not capable of driving themselves. So I think that's why
Speaker 6: there's a bigger focus on this in the United States
Speaker 6: right now, a.
Speaker 3: Little bit more of a marketing message perhaps, and indeed
Speaker 3: just making people, oh, basically have their hands on the
Speaker 3: steering wheel that little bit more. Keith Lang, really great
Speaker 3: to have you on the show. Thank you so much
Speaker 3: for joining us. Meanwhile, let's stick on Tesla and at
Speaker 3: least it's leader Elon Musk because x we understand a course,
Speaker 3: his social media platform is on track to bring in
Speaker 3: roughly two and a half billion dollars in advertising revenue
Speaker 3: in twenty twenty three. It's a significant slump from priors.
Speaker 3: It's all according to people familiar with the matter. We know,
Speaker 3: we want to talk to one Kirk Wagner now who
Speaker 3: put out this story and just give us the context here.
Speaker 5: How much of a fall off is it?
Speaker 7: Yeah, I mean it's well over forty percent from the
Speaker 7: last full year that the company reported, which is twenty
Speaker 7: twenty one. Obviously last year we didn't get full numbers
Speaker 7: because the deal had closed in the middle of the year.
Speaker 4: But you know, this is a huge deal.
Speaker 7: Twitter or now X has historically made about ninety percent
Speaker 7: of its revenue from advertising, right, And so when you
Speaker 7: see this big decline in their core main business, it's
Speaker 7: obviously not a great sign.
Speaker 4: And that's why you see Elon out.
Speaker 7: You know, a couple of weeks ago, he was saying, hey,
Speaker 7: this advertising issue could lead to real trouble for the company.
Speaker 7: He's talked about bankruptcy before, right, And that's because this
Speaker 7: core part of their business is really struggling.
Speaker 4: Ka, you and I have been crunching numbers and talking
Speaker 4: as sources about what's happening right now because a lot
Speaker 4: changed from the second to the third quarter, third quarter
Speaker 4: to fourth quarter. Minderstanding is it's seventy five percent ads,
Speaker 4: and then the twenty five percent that remains isn't just
Speaker 4: subscriptions for premium or premium plus, right, it's data licensing.
Speaker 7: Yeah, actually more data licensing than subscriptions. You know, what
Speaker 7: our understanding is that the subscription part of that business
Speaker 7: is very small. I think the external estimates are about
Speaker 7: one hundred and twenty million a year. We'd heard that
Speaker 7: there's just over like a million PAIN subscribers right now.
Speaker 7: The data licensing historically has been you know, a much
Speaker 7: bigger business, five hundred.
Speaker 4: Plus million dollars.
Speaker 7: And that's for you know, people who are paying for
Speaker 7: access to what we call the fire hose of tweets, right,
Speaker 7: all of the tweets that are coming through public tweets.
Speaker 7: And so that business I believe has stayed maybe a
Speaker 7: little bit stronger because it's not as impacted by you know,
Speaker 7: Elon Musk coming out and saying the things that he
Speaker 7: says that advertisers are bothered by.
Speaker 4: Right and real quick. An ex executive did respond to
Speaker 4: our story. You can read his full statement in the story,
Speaker 4: which says, we gave an incomplete picture of what their
Speaker 4: business currently looked like Bloombo's technologies. Kirt Wagner, thank you, Kara,
Speaker 4: what you got?
Speaker 3: Well, let's dive into time for talking tech head because
Speaker 3: we're going to stick on the world of Elon Musk.
Speaker 3: But SpaceX this time will sell insider shares ninety seven
Speaker 3: dollars apiece and a tender offer a price increase that
Speaker 3: moves the value of the space and Satellite company closer
Speaker 3: to one hundred and eighty million dollars, according to sources. Meanwhile,
Speaker 3: Tesla posted a video showing improvements it's made in its
Speaker 3: humanoid robot prototype dubbed the Optimus. But the human Mimicking
Speaker 3: Machine is part of Tesa's venture into developing AI, and
Speaker 3: it utilizes a trained neural nets work to perform basic
Speaker 3: tasks mat me have a bit of a dance as well,
Speaker 3: as you can see in this current video. Banwhile ever,
Speaker 3: in New York, the law could require social media platforms
Speaker 3: to provide data app nom charge to third party apps
Speaker 3: that allow users to block hate speech, which has been
Speaker 3: surging online now. This comes after x and Reddit began
Speaker 3: charging third party apps earlier this year.
Speaker 4: Ed what for Got coming up on the show. Apple
Speaker 4: is in the crosshairs of EU antitrust regulators about its
Speaker 4: app store rules for music. Rival's going to bring all
Speaker 4: those details on that Bloomberg exclusive plus Netflix ready to
Speaker 4: tell the world how many people watch it shows. We
Speaker 4: will have all of that data next. Very quickly shares
Speaker 4: a Betsy of pair the decline of as much as
Speaker 4: eight and a half percent, currently down five percent, on
Speaker 4: track for their biggest drop since September, cutting eleven percent
Speaker 4: of the marketing workforce, and also giving us an update
Speaker 4: on their outlook for the fourth quarter. Gross merchandise volume
Speaker 4: is going to drop in the low single digits. Top
Speaker 4: line growth two to three percent. But this is a
Speaker 4: real slow down and clearly things not going well for Etsy.
Speaker 4: The stockdown four percent. This is Bloomberg technology. Apple is
Speaker 4: set to be hit by a ban on its app
Speaker 4: store rules that govern music streaming rivals and a potential
Speaker 4: hefty fine that according to Bloomberg sources, the EU regulators
Speaker 4: are putting the finishing touches to a decision that would
Speaker 4: prohibit Apple's practice of blocking music services from pushing their
Speaker 4: users away from the app store and iOS to alternative
Speaker 4: subscription options. The decision is slated to come early next year.
Speaker 4: Let's bring in Bloomberg's Aggie Cantrell out of Germany for
Speaker 4: more on this. This is anti steering provisions that the
Speaker 4: EU is trying to address, and the potential penalty for
Speaker 4: Apple is large. A fine, what do we know about it?
Speaker 8: Yes, so essentially the fine itself could be up to
Speaker 8: ten percent of annual sales to Apple and that's a
Speaker 8: real concern for the company, of course, and in the
Speaker 8: past we've seen that the EU has really been at
Speaker 8: the forefront of incredibly tough regulations on big tech. This
Speaker 8: is especially coming from the EU's antitrust Amodivestia and this
Speaker 8: is also coming at a time when the EU is
Speaker 8: about to launch its digital markets at Provision next year
Speaker 8: in March, and that's going to be a critical focus
Speaker 8: for big tech because essentially that's designating companies like Apple
Speaker 8: as gatekeepers for our online ecosystem, and that really means
Speaker 8: that those companies need to conduct their business practices in
Speaker 8: a way that is not anti competitive for the smaller
Speaker 8: players in the market, and that is what is.
Speaker 1: Being discussed here.
Speaker 8: This suit was originally brought forward by Spotify almost four
Speaker 8: years ago. And what we're essentially seeing now is that
Speaker 8: Apple may have to change its practices. It may have
Speaker 8: to allow for platforms to facilitate the app store to
Speaker 8: facilitate people being able to.
Speaker 1: Go to other subscription platforms like Spotify.
Speaker 8: And the reason for this for Apple to changing their praxices,
Speaker 8: this isn't the first time that they've actually thought about
Speaker 8: doing this off the back of EU legislation.
Speaker 1: We also saw this, for instance when the app Apple
Speaker 1: app Store.
Speaker 8: The Apple announced earlier this year that they would make
Speaker 8: we would most likely have to consider allowing third party
Speaker 8: app stores to access access to iPhones as of twenty
Speaker 8: twenty four off the back of the Digital Markets app.
Speaker 3: Other than competition, the EU is being pretty busy. Aggie
Speaker 3: is also being busy when it comes to labor protection.
Speaker 3: Just tell us what they're considering or proposing when it
Speaker 3: comes to workers of well delivery for example or over.
Speaker 4: Yes.
Speaker 8: So essentially, the Platform Workers Directive is about trying to
Speaker 8: standardize the labor rights for gig economy workers. Essentially, there
Speaker 8: are a lot of people who work for these platum
Speaker 8: forms that are currently deemed self employed, and the EU
Speaker 8: believes that around five million so about nineteen percent of
Speaker 8: the self employed platform workers in the EU are misclassified
Speaker 8: and should actually be considered employees, and they have bailt
Speaker 8: out a system of criteria. These criteria include, does the
Speaker 8: platform you work or have control over your hours? Do
Speaker 8: you have an upper limit on how much you can
Speaker 8: earn on that platform? Is their control over your appearance
Speaker 8: or your conduct while you're working on their platform? And
Speaker 8: so what most people would consider standard aspects of being employed.
Speaker 8: And if two of those five criteria are fulfilled, the
Speaker 8: proposal is essentially that then those people would be considered employees.
Speaker 1: But this is still in a preliminary discussion.
Speaker 8: The deal has been met, but it's still awaiting approvals
Speaker 8: from the European Parliament.
Speaker 3: Business models under fire, Aggie Cantrell, thank you so much
Speaker 3: for joining us.
Speaker 5: Meanwhile, let's stick on a part of Europe. Because Airbnb's Irish.
Speaker 3: Unit has agreed to pay the Italian tax authorities five
Speaker 3: hundred seventy six million euros, which is two hundred and
Speaker 3: six hundred twenty one million US dollars, to settle allegations
Speaker 3: that it hadn't paid enough tax from twenty seventeen to
Speaker 3: twenty twenty one. Now the home showing company says it
Speaker 3: doesn't acknowledge quote any liability as part of the settlement,
Speaker 3: according to the regulatory filing ed what's going viral?
Speaker 4: Yeah, what has been going viral is Netflix releasing viewer
Speaker 4: data on every single show a movie on its service.
Speaker 4: Is the first time that what the streaming giant says
Speaker 4: will be regular, reports Bloomberg's Flex Gillette joins us, Now,
Speaker 4: this is the biggest disclosure from Hollywood or any streaming
Speaker 4: service anyway. Infinite amounts of data on eighteen thousand titles.
Speaker 4: What do we actually learn from it? Or we learned
Speaker 4: a lot.
Speaker 9: I mean, we've been waiting for this moment for ten years,
Speaker 9: wondering what exactly people are watching on Netflix. And I
Speaker 9: think the biggest takeaway from yesterday is that, you know,
Speaker 9: more than fifty percent of the view in the first
Speaker 9: six months of the year was driven by Netflix originals,
Speaker 9: so original movies, original TV series, And that's sort of
Speaker 9: a validation of all the spending that has been done
Speaker 9: on original programming by these streaming services over the past
Speaker 9: several years.
Speaker 3: I got to say, I haven't watched a single minute
Speaker 3: and in any of those I mean, maybe that's what's
Speaker 3: more to a parent than it is to intend netflix
Speaker 3: lack of addiction. But ultimately this has been forced in
Speaker 3: some way by the strikes. Why was this transparency wanted.
Speaker 9: Well, the creative community has been demanding more transparency for years.
Speaker 9: I mean, there was really no way to know of
Speaker 9: your show was a hit, was it a failure. You
Speaker 9: kind of had to take this streamer's word for it.
Speaker 9: And so Netflix, you know, yesterday acknowledged that part of
Speaker 9: this was that by keeping this data to themselves, it
Speaker 9: had built up all this mistrust with their creative partners.
Speaker 9: And so yeah, this is a way for everybody to
Speaker 9: know this is where you stand, this is what people
Speaker 9: are watching. And it's a big flex by Netflix also
Speaker 9: because it's going to show the world how much more
Speaker 9: people are watching on Netflix than any of the competitors.
Speaker 4: And it's important for the act is in the context
Speaker 4: of the strikes we just had, because this was at
Speaker 4: the center of tools.
Speaker 9: Yeah, I mean, also the compensation model in terms of
Speaker 9: you know, rewarding you know, creators and actors you know,
Speaker 9: and writers residuals based on you know, if your show
Speaker 9: was really popular. Part of that was you need to
Speaker 9: know what's popular. Now that data is going to go
Speaker 9: to the guilds anyways, but it also now allows the
Speaker 9: rest of the world to check this out. You know,
Speaker 9: you can bet that every writer, actor, producer, even the
Speaker 9: competitors are going to be pouring through this data wanting
Speaker 9: to know, Okay, this is what people are actually watching.
Speaker 4: Thin begs for Lexilatt, thank you so much.
Speaker 10: I think investors need to get confident that the.
Speaker 4: FED is done raising rates. I don't think they need
Speaker 4: to lower them a.
Speaker 10: Bunch for the IPO market to happen, but I think
Speaker 10: are to pick up. But I do think they need
Speaker 10: to get a sense that may rate rising is done,
Speaker 10: which you know, who knows. I expect we'll see more
Speaker 10: tech IPOs in twenty twenty four than we saw on
Speaker 10: twenty twenty three, but that's not very hard to do.
Speaker 10: You don't need many.
Speaker 3: Important As we look ahead to FED Day, which is
Speaker 3: today a little few hours ahead of time, Mitchell Green
Speaker 3: of lead Edged Capital with his outlook on what fed's decisions.
Speaker 5: Mean for the IPO market.
Speaker 3: Joining us now with her perspective Rachel Gering's just Ey
Speaker 3: ipo practice cohed and is Rachel the IPO market, particularly
Speaker 3: tech IPOs go be dictated by Macro or is there
Speaker 3: some more well LP pressure that's going to come in.
Speaker 1: I think it'll actually be a combination of both.
Speaker 11: But the improving macro backdrop is certainly going to help
Speaker 11: the situation and making it encouraging. Sitting here today, as
Speaker 11: I look ahead to twenty twenty.
Speaker 4: Four, Rachel, just like me getting organized with my holiday shopping.
Speaker 4: My understanding is and behind the scenes, there's a lot
Speaker 4: of work going in to preparing for IPOs in twenty
Speaker 4: twenty four, the groundwork and confidential filings. Does that tally
Speaker 4: with what you're hearing from clients and from your network.
Speaker 11: Absolutely, not only what we're hearing from clients, but what
Speaker 11: we're experiencing firsthand. Really encouraged by the amount of preparation
Speaker 11: companies are putting into their IPO plans, whether that's for
Speaker 11: twenty twenty four or even beyond into twenty twenty five.
Speaker 11: Clients are really taking this opportunity.
Speaker 2: Of the lacking of IPOs happening today, that's being used
Speaker 2: and the time is being used today to prepare for
Speaker 2: the future and really to be able to optimize when
Speaker 2: the market does return, allowing these companies that optionality to
Speaker 2: take hold of that market opportunity when it's right for them.
Speaker 4: There is a market mechanics story happening where companies are
Speaker 4: filing confidentially and then doing nothing sitting on it. In
Speaker 4: your experience, how much flexibility does that actually give a
Speaker 4: company filing confidentially on the timing and method of going public.
Speaker 11: I think it really does provide a lot of optionality,
Speaker 11: and it's definitely a course we would always recommend for clients. One,
Speaker 11: it's allowing companies confidentially, as you mentioned, to work through
Speaker 11: that process with the Securities and Exchange Commission, work through
Speaker 11: those comments and so forth, without the pressure of needing
Speaker 11: to go on file publicly eminently, and as the broader
Speaker 11: macro backdrop continues to play out and continue to improve,
Speaker 11: that's when companies can really choose the timing that's right
Speaker 11: for them, but be ready have that, have a lot
Speaker 11: of the review process complete, be ready for that roadshow,
Speaker 11: and then really complete a very efficient process in that
Speaker 11: last part of the IPO journey.
Speaker 3: And then be ready to be a public facing company
Speaker 3: in many ways. Member, speaking to Fijisimo over at Instacart
Speaker 3: after their listing, I was like, well, how is it off?
Speaker 3: Your first cord rouping in public companies, just like I've
Speaker 3: kind of been doing this for ages because they've been
Speaker 3: waiting to go public for so long, they've had all
Speaker 3: that documentation and rythmarole.
Speaker 5: Anyway to that point, are you likely.
Speaker 3: To see, well, some of the companies that do eventually
Speaker 3: becoming go public have a similar sort of business model
Speaker 3: to an instacot in terms of showing some sort of.
Speaker 5: Evidence of profitability.
Speaker 3: Do they have to be talking up AI a lot
Speaker 3: at the moment or will more types of companies come.
Speaker 11: I think we're going to continue seeing companies come to
Speaker 11: market from a broad range of sectors. I anticipate looking
Speaker 11: ahead to twenty twenty four, it will probably be much
Speaker 11: of the same, so meaning large companies scale already with
Speaker 11: profitability or eminently reaching profitability. So I don't anticipate that
Speaker 11: changing immediately. But as the current crap of IPOs continue
Speaker 11: to perform, this very next crap of IPOs perform, well,
Speaker 11: then I see the IPO opportunities broad mean to others
Speaker 11: kind of that more traditional tech type company, probably in
Speaker 11: the later part of twenty twenty four.
Speaker 3: Ultimately, do you think the sort of pressure that a
Speaker 3: lot of these companies are on the to go public
Speaker 3: for a liquidity event to give money back to LPs
Speaker 3: to employees. Has it become in some way unsustainable? Have
Speaker 3: there been too many VC backed companies of late?
Speaker 11: Well, when we definitely are seeing you know, a rise
Speaker 11: in VC backed companies and then long long holdings, right,
Speaker 11: So there's definitely pent up demand. When you think about
Speaker 11: pe VC investors, they've been holding these investments for a
Speaker 11: long period of time, definitely anxiously awaiting a monetization event
Speaker 11: of some sort. We're seeing the IPO market, you know slow,
Speaker 11: the m and A market slow, So definitely a lot
Speaker 11: of pent up demand. But at the same time, the
Speaker 11: PE investors, those VC investors are also recognizing the importance,
Speaker 11: particularly around valuation. We still have that valuation tension of
Speaker 11: what you know, buyers want to sell and buy at
Speaker 11: versus what companies want, you know, what companies are targeting themselves,
Speaker 11: So that valuation tension is still there.
Speaker 1: I think to get.
Speaker 11: Deals done going into twenty twenty four, having realistic pricing
Speaker 11: expectations as an absolute must.
Speaker 4: Rachel, what about the competing forces? What are the biggest
Speaker 4: factors that are causing technology companies in particular to hit pause,
Speaker 4: hit the brakes and hold them ongoing public.
Speaker 11: Really, I think the broader macro backdrop, I think is
Speaker 11: one reason why companies are waiting on the sidelines.
Speaker 1: We'll see what happens today.
Speaker 11: I think everyone is expecting the Fed to hold tight
Speaker 11: on interest rates. You know, we've had IPOs and high
Speaker 11: interest rate environments before, so it doesn't mean that we
Speaker 11: can't continue.
Speaker 1: It's the predictability.
Speaker 11: I think companies want to know that rate hikes have
Speaker 11: stopped and then even see some encouragement that they might
Speaker 11: even start to come down sometime in twenty twenty four.
Speaker 11: So that level of predictability will be definitely helpful for
Speaker 11: the IPO backdrop, and then broader macro trends that the
Speaker 11: data is trending in the right direction. So it provides
Speaker 11: hope for twenty twenty four, absent any unforeseen shack.
Speaker 4: Rachil Gering of Ey, thank you so much.
Speaker 5: Welcome back to Blue meag Technology. IM Caline Hide in
Speaker 5: New York.
Speaker 4: I met love though in San Francisco, Caro. I was
Speaker 4: going to bring you a magic market moment, but then
Speaker 4: trading on the NAZAQ one hundred in the session conspired
Speaker 4: against me. This is what the NAZAT one hundred looks
Speaker 4: like here to date, and we're way off session highs
Speaker 4: this this morning, but for just a moment, we're at
Speaker 4: a fifty percent year to date gain on the Nasdaq
Speaker 4: one hundred. And the reason I bring you up bring
Speaker 4: that up so you look at the far left n
Speaker 4: side of the screen. A lot of that recent momentum
Speaker 4: has come since November first, which was the last FED
Speaker 4: meeting on the Nasdaq one hundred. More than one hundred
Speaker 4: names that largely hire multiple software stocks than megacaps, some
Speaker 4: of the EV names as well, and that's why I
Speaker 4: track that index. It is FED decision day. The expectation
Speaker 4: for this meeting absolutely nothing's going to happen, But think
Speaker 4: about twenty twenty four and the narrative that's coming. The
Speaker 4: white numbers that you're looking at are the forecast for
Speaker 4: cuts at the next meetings across twenty twenty four. The
Speaker 4: red numbers are the one day changes in expectations for
Speaker 4: each of those meetings. And whether you think about private
Speaker 4: markets like bench Capital, you think about public markets. Historically,
Speaker 4: when rates are high, investors assign more money to bond
Speaker 4: funds less to equity funds, so the world is watching.
Speaker 4: If you're a VC or you're an equity market trader
Speaker 4: and you think about technology, then you care. Let's continue
Speaker 4: the FED conversation and bring in Joe Chaw Matt co
Speaker 4: founder a managing partner at Leniar Capital, and Joe, I
Speaker 4: guess is that where your head is at this morning
Speaker 4: as you wait for the FED?
Speaker 8: Well?
Speaker 4: Thanks, Ed, good to see you again. Yeah exactly.
Speaker 12: So, I mean, you know, we're expecting the FED to
Speaker 12: pause and to start cutting twenty twenty four. And when
Speaker 12: the first against cutting twenty twenty four, then market parta'
Speaker 12: spens like us probe Que hundred capital funds, we began
Speaker 12: to build in these rate path into our financial models
Speaker 12: and really began to do more deals and all things.
Speaker 4: Eeople.
Speaker 12: You know, prices of companies are just a future casual
Speaker 12: divided by discount rate, which is basically the fund rate
Speaker 12: plus a premium. So when the gnometer goes down, the
Speaker 12: present of these stat should go up. And that's why
Speaker 12: you're seeing the market reactions in public markets, and I
Speaker 12: expect that will extractly to the private markets in twenty
Speaker 12: twenty four as well.
Speaker 8: Jo.
Speaker 3: The reason we love you is not only because you're
Speaker 3: so active in the VC community but also used to
Speaker 3: work within monetary policy over at the FED, and I'm
Speaker 3: interested as to how much your view on valuation has shifted.
Speaker 3: All your pitches have ultimately been based upon the fact
Speaker 3: that all these valuations we see at very heavy heights.
Speaker 3: It feels like the AI is still happening when interest
Speaker 3: rates are pretty high, and they might come down.
Speaker 4: Well, a couple of points.
Speaker 12: One is, you know, the last time I was I
Speaker 12: was on your show and made the point that if
Speaker 12: AI is this big in a very tough monitored policy environment,
Speaker 12: imagine when monitor policy and financial conditions received, how much
Speaker 12: bigger they a phenomenon is going to be.
Speaker 4: And AI did be here.
Speaker 12: The total jule market is unthinkably big. But when it
Speaker 12: comes to fintech and VC investments, you know right now,
Speaker 12: you know, you know, I speak with a lot of LPs,
Speaker 12: whether they're some wealth funds and two stands, pensions, family offices.
Speaker 12: You know, if you're an LP, if you put yourselfing,
Speaker 12: they're shoes. And the math is pretty simple. If you
Speaker 12: can put your allokay, your capital into a fixing confined
Speaker 12: and generate let's say five percent in treasuries in ten
Speaker 12: twelve percent in credit and probably will be even though
Speaker 12: a little bit higher fifteen to eighty percent in some
Speaker 12: of the adventure private credit. Why would you out here
Speaker 12: capital the venture capital and get five percent, So that's
Speaker 12: sort of what they're thinking so right now, and that's
Speaker 12: what that's what we've seen in the last couple of
Speaker 12: eighteen months. But what we're seeing is right now alps
Speaker 12: are active in venture secondary funds provactly secondary is funds
Speaker 12: because secondary you can you can actually buy some of
Speaker 12: these shares at fifty to eighty percent down in private markets.
Speaker 12: And the second thing is is is as soon as
Speaker 12: the the ip of market reopens and you're seeing sort
Speaker 12: of the is getting their capital back, then LPs will
Speaker 12: be bele to reshuffle their capital back in the VC.
Speaker 12: So what what I'm trying to say here is the
Speaker 12: last eighteen month indventure has been probably one of the
Speaker 12: toughest period in recent memory in the last and the
Speaker 12: fifteen years sens of GFC. If you're a VC fund,
Speaker 12: you're a founder, and you basically you know house your ground.
Speaker 12: The last eighteen months you basically may have passed the test.
Speaker 12: So right now where you got to do with. You
Speaker 12: got to just hand tight, keep working, and twenty twenty
Speaker 12: four should be a much better You're for asset class.
Speaker 3: I just think of, for example, those that did decide
Speaker 3: to take it on the chin when it came to valuation.
Speaker 3: I think of a Stripe for example, and still some
Speaker 3: of those shares are available on the secondary market for
Speaker 3: a lot less than their peak valuation, but not all
Speaker 3: are below. I think of SpaceX for example, that I
Speaker 3: know is in your portfolio, and they're currently looking to
Speaker 3: be selling inside shares at the moment at what huge valuation.
Speaker 5: What do you make of that?
Speaker 12: Yeah, I would say, you know, you know, when I
Speaker 12: look at the name, let's stripe, you know the fact
Speaker 12: that it's evaluation, the new round is down fifty percent
Speaker 12: from the last round is actually not a surprise.
Speaker 4: There's a couple of reasons.
Speaker 12: One is, know, you know, just you just put in
Speaker 12: a higher interest rate in the financial model that the
Speaker 12: fifty billion or so invaluation is actually you know, fair value,
Speaker 12: right o versus the ninety five billion dollars that they
Speaker 12: had to raise that lash round. And the second thing is,
Speaker 12: you know, in public markets, whether you look at you
Speaker 12: look at the peer group, of so far marketa you
Speaker 12: look at you know, New Bank, the local et cetera, Robins.
Speaker 12: You know, the public peers are also down, you know,
Speaker 12: more than fifty percent, So it makes sense that the
Speaker 12: private name are also going to be down a little
Speaker 12: fifty person a little bit more so, so the valuations
Speaker 12: are adjust based on a DCF model.
Speaker 4: Hey, Joe, been writing any checks in the world of AI,
Speaker 4: do you want to tell us about.
Speaker 12: I've been working a lot on these names again. You know,
Speaker 12: AI is you know, as we look at you know,
Speaker 12: let's not. I was going to show me the point.
Speaker 4: That AI is really software squared.
Speaker 12: AI is the next generation of technology as we think
Speaker 12: about you know, the evolution of tech from mobile to internet,
Speaker 12: the cloud, the AI. AI is just the next generation
Speaker 12: of technology. And so you know, right now, I guess
Speaker 12: what I'm seeing in in the private markets. You know,
Speaker 12: we started in twenty twenty one. A lot of the
Speaker 12: deal flow that begin se in twenty twenty one was
Speaker 12: getting a little bit repetitive. For example, you will see
Speaker 12: many many payments businesses for every single bit, for every
Speaker 12: single purpose. But AI is really going to lead every
Speaker 12: vertical into the new generation. And so when we when
Speaker 12: we think about AI. You know, we've invested in several
Speaker 12: of these AI companies. We're really investing in the infrastructure layer,
Speaker 12: betting on the whole industry. And in the next five
Speaker 12: to ten years, we expect to see existing tech verticals
Speaker 12: like software, cyber and fin tech to marry AI and basically,
Speaker 12: you know, become drive the next legged growth.
Speaker 4: Joe, what's going to be keeping you busy in twenty
Speaker 4: twenty four, you know, whether it's thematically or you're just
Speaker 4: under pressure to find some exit somewhere from your existing portfolio.
Speaker 12: Yeah, you know, we have several companies in the preactial
Speaker 12: pipeline and we expect them to file in twenty four
Speaker 12: and twenty five. And then second to that is when
Speaker 12: we look at new opportunities. There's two strategies. One is
Speaker 12: we're working at a lot of secondary opportunities because some
Speaker 12: of the early shareholders would like to cash out, they'd
Speaker 12: be in the company for ten to fifteen years. Some
Speaker 12: of the early vcs also need to seek access because
Speaker 12: their funds have to be shut down their LPs for
Speaker 12: commanding their capital to be returned. So this creates a
Speaker 12: really good opportunity for secondaries focused funds to be able
Speaker 12: to be able to find some value in private markets.
Speaker 12: And then secondarily it's ai you know, we think AI
Speaker 12: is is the driver of growth. And as we're going
Speaker 12: to the new business cycle, looks like the fat is
Speaker 12: almost done or is done. And if the fat begins
Speaker 12: to cut and you know, equity is received more capital
Speaker 12: from allocations from LPs. You know, we're seeing sort of
Speaker 12: you know, everything kind of rebounding for a venture. So
Speaker 12: we think that starting in twenty twenty four, twenty twenty
Speaker 12: twenty five, I think its inventor should be a lot easier.
Speaker 3: Has and has not show jaw. Thank you so much,
Speaker 3: Millennia Capital. Great to have you on. Meanwhile, let's just
Speaker 3: you gears a little bit and go back to the world.
Speaker 3: That was all the hype back in twenty twenty one.
Speaker 5: Not so much now.
Speaker 3: Crypto three Hourrows Capital co founder Sushow for the first
Speaker 3: time faced questioning in the Singapore court about the crypto
Speaker 3: fund's collapse, giving liquidators their best chance yet to gather
Speaker 3: information as they seek to.
Speaker 5: Recoup some of the billions of dollars for creditors.
Speaker 3: Now, the two day court hearing this week requires you
Speaker 3: to respond to lawyers for the liquidator to know people
Speaker 3: familiar with the matter, said ed, all.
Speaker 4: Right, coming up here on Bloomberg Technology, Charlotte Slayman from
Speaker 4: Public Knowledge joins us in the efforts to rain in
Speaker 4: the power that Google and Apple wheeled over the wrapp stores.
Speaker 4: We will get back to that top story about Apple's
Speaker 4: antitrust action in the EU as well. This is Bloomberg Technology.
Speaker 3: Let's just take another look at the shares of Apple
Speaker 3: and Spotify, because, as we were mentioning earlier, Apple is
Speaker 3: set to be hit by an EU antitrust order in
Speaker 3: its fight with rival music streaming platforms such as Spotify.
Speaker 3: Greenberg's Mark German joins us now to discuss what seems
Speaker 3: to be everyone taking aim and these app stores.
Speaker 5: What's the nuance in this one? Mark?
Speaker 13: Yeah, So today we reported the European Union is going
Speaker 13: after Apple about this interesting rule, right that actually Apple
Speaker 13: mitigated a couple of years ago.
Speaker 4: Right, So, Apple for.
Speaker 13: A long time did not allow outside developers to advertise
Speaker 13: lower pricing from outside the app store. The other thing
Speaker 13: Apple didn't allow or developers like Spotify to include a
Speaker 13: button in their app where you can click the button
Speaker 13: to go to Spotify's website. To sign up, they made
Speaker 13: you sign up via the app store through in app purchase,
Speaker 13: which gives Apple a thirty percent cut. Now, Apple mitigated
Speaker 13: this starting in late twenty twenty one, they allowed developers
Speaker 13: to advertise lower pricing via email to customers. They also,
Speaker 13: starting in early twenty twenty two, allowed Spotify in other
Speaker 13: what they call reader apps, anything having to do with
Speaker 13: video CloudStore like Dropbox, some business apps, music, magazine books,
Speaker 13: newspaper apps. Reader apps is the name for that category,
Speaker 13: allowed them to point out to finish their transactions online.
Speaker 13: But now the European unit is going after Apple for
Speaker 13: that old practice, ensuring that that practice doesn't come back
Speaker 13: into effect, and potentially the company could be fine for
Speaker 13: having done that. Obviously, Spotify is a European company. It
Speaker 13: has been pushing against Apples rules for some time now.
Speaker 13: In that combined with other lawsuits we've seen the Epic
Speaker 13: Games lawsuit a couple of years ago, different settlements Apples
Speaker 13: had with the Japanese Fair Trade Commission with developers. In
Speaker 13: the US, the app store is starting to craft open
Speaker 13: a little bit, as is Google Play, the application download
Speaker 13: store on Android.
Speaker 4: Bloomberg's Mark Guman there with a pretty decent explanation of
Speaker 4: anti steering provisions and on that fine up to ten
Speaker 4: percent of global revenue, which if you take fiscal twenty
Speaker 4: two or the estimate for twenty three, is forty billion
Speaker 4: dollars potentially in fines. Whether or not it happens, we
Speaker 4: will see. Let's keep the conversation going on Apple and
Speaker 4: also talk about Google after its defeat to Fortnite maker
Speaker 4: Epic Games in court earlier this week. Now, with key
Speaker 4: legislation in Europe, investigations in the US and the UK,
Speaker 4: and an expected wave of follow on suits, the pressure
Speaker 4: keeps on piling onto the tech giants, which Epic describes
Speaker 4: as a duopoly. I want to bring in public knowledge
Speaker 4: Competition Policy Director Charlotte Slayman to go over what has
Speaker 4: been an incredible week in the world of anti trust.
Speaker 4: Let's start with the anti steering provisions in Europe and
Speaker 4: Bloomberg's report on that action against Apple. What do you
Speaker 4: make of that?
Speaker 14: Yeah, so this is a problem that we've seen in
Speaker 14: the US as well, and we don't have that legislation
Speaker 14: in place right there's legislation in Congress right now, the
Speaker 14: Open App Markets Act, that would address this rule that
Speaker 14: Apple usually uses in the US that prevents apps from
Speaker 14: being able to tell customers you can get a cheaper
Speaker 14: price if you come directly to our website. So that
Speaker 14: continues to be a problem here. Consumers are paying more
Speaker 14: as a result.
Speaker 4: These are big stories, but what is always so surprising
Speaker 4: is the lack of response in the stock or the
Speaker 4: share price. I know that's not your domain, but it
Speaker 4: begs the question, how likely is it that the courts
Speaker 4: in the United States or the European Commission in Europe
Speaker 4: will actually follow through in making Apple, as an example, Google,
Speaker 4: a just policy.
Speaker 1: Yeah, so I think they've been learning over time.
Speaker 14: We absolutely have seen antitrust cases in Europe that have
Speaker 14: been successful until you get to the remedy stage and
Speaker 14: the remedy that they choose is not effective and so
Speaker 14: competition doesn't really come in and that's really frustrating from
Speaker 14: the perspective of a consumer advocate. But I think that's
Speaker 14: something that the enforcers are learning. Those remedies can be
Speaker 14: really difficult to craft, but they're learning over time, and
Speaker 14: so I'm hopeful that they can be more effective going forward.
Speaker 3: And how will they become more effective? Because thus far,
Speaker 3: I mean Congress has been looking into competition policy more broadly,
Speaker 3: but to put it bluntly, that nothing much of significance
Speaker 3: has been done. The FDC, meanwhile, has been trying to
Speaker 3: stop certain deals going through and failing there.
Speaker 5: I'm interested as to whether you think there will be.
Speaker 3: A shift from a actual putting the right laws in place,
Speaker 3: even if the courts We're.
Speaker 5: All not going to hold our breath in the Supreme Court,
Speaker 5: I guess where Epic Games goes next.
Speaker 14: Yeah, So I think we need to be using both
Speaker 14: of those tools right. Congress needs to pass the legislation
Speaker 14: that they've been working on. It's not just the Open
Speaker 14: App Markets Act, but there's the American Innovation and Choice
Speaker 14: Online Act. There's the America Act, which focuses on ad
Speaker 14: technology stack. So Congress needs to work on that legislation
Speaker 14: so that they can get it over the finish line.
Speaker 14: At the same time the agencies are bringing these cases.
Speaker 4: These can both be long processes.
Speaker 14: Unfortunately, to move the law forward by bringing case after
Speaker 14: case it can take a long time, and it makes
Speaker 14: perfect sense that the agency would lose the first few cases.
Speaker 14: This is a strategy that the FTC and DOJ have
Speaker 14: used in the past. In other areas, in pharmaceuticals, in
Speaker 14: hospital mergers, they are slowly improving the law. That's why
Speaker 14: I think Congress really needs to jump in because we
Speaker 14: cannot wait for that long process of bringing case after
Speaker 14: case to show fruit.
Speaker 1: We need to move now.
Speaker 3: Do you think business models will change because of well
Speaker 3: legislation in the EU? When we think of the DMA,
Speaker 3: do you think I mean South Korea is twenty twenty
Speaker 3: one when they had the first law to require other
Speaker 3: payment systems within these app stores?
Speaker 4: Yees.
Speaker 14: So I think that's another example where I'm hopeful that
Speaker 14: some learning will take place because Apple was able to
Speaker 14: make some small changes but still prevent competition from coming in.
Speaker 14: But yes, I think these companies may sometimes as they're
Speaker 14: making changes for one jurisdiction, they may find it more
Speaker 14: efficient to make that change across the globe, or they
Speaker 14: may not. So I think it's also on the other jurisdictions, governments,
Speaker 14: and on consumers to notice. This is what I'm hoping
Speaker 14: American consumers will notice. Wait a minute, EU consumers are
Speaker 14: getting the benefits of competition. They are getting lower prices,
Speaker 14: they're getting better products, they're getting easier access and fight
Speaker 14: for that.
Speaker 1: For ourselves, we.
Speaker 3: Want to thank you Public Knowledge Competition Policy director Charlotte's Layman.
Speaker 3: Really interesting take on what has been a thick and
Speaker 3: fast week when it comes to competition. Meanwhile, let's just
Speaker 3: go out to Germany right now, because Actual Springer is
Speaker 3: granting chat GPT maker open Ai the right to use
Speaker 3: content from its news outlets to develop artificial intelligence models
Speaker 3: and respond to queries from users.
Speaker 4: Now.
Speaker 5: It's all part of a deal announced today.
Speaker 3: San Francisco based open Ai will pay Actual Springer for
Speaker 3: articles and other content from the publications that include like
Speaker 3: political business inside it properties like build and develot, the
Speaker 3: company said in a joint statement Fit Dance Well. It's
Speaker 3: reportedly backing away from plans for its next virtual reality
Speaker 3: headset from its Pico subsidiary.
Speaker 4: Now.
Speaker 3: The information says that Pico will instead focus it efforts
Speaker 3: on an updated version of the latest headset, the Pick
Speaker 3: of Four.
Speaker 5: This comes them in some pressure, of course, and in
Speaker 5: terms of competing with Meta in.
Speaker 4: The VR market right I reported earlier this year that
Speaker 4: Meta and Tencent are teaming up on a headset in China.
Speaker 4: It's a good segue into the broader topic of augmented reality.
Speaker 4: Our next guest founded a company that uses AR to
Speaker 4: help monetize tasks in the manufacturing industries. Joining us now
Speaker 4: with more is Devin Bouchan, CEO of Squint, which recently
Speaker 4: announced a thirteen million dollar Series A funding round led
Speaker 4: by Sequa Capital. The use case is fascinating, right, think
Speaker 4: of an assembly line, training workers, visualizing the industrial workspace.
Speaker 4: But what it's unique about your technology? What is it
Speaker 4: that you do?
Speaker 15: Thanks for having me ed, It's great to be here.
Speaker 15: So Squint is an augmented reality product that lets you
Speaker 15: create a how to guide for every machine on the
Speaker 15: factory floor. So manufacturing today is going through a period
Speaker 15: of really high turnover and as a result, they're having
Speaker 15: to hire more workers than they ever have. Traditionally, the
Speaker 15: way that they trained these workers was they would actually
Speaker 15: pair them with an experience operator and that person would
Speaker 15: look over their shoulder and guide them through the process
Speaker 15: as they worked, and this would take weeks. Now this
Speaker 15: doesn't scale as you hire more and more people. So
Speaker 15: that's where Squint comes in. Squint is that app that
Speaker 15: lives in that new operator's hands and it lets them
Speaker 15: point it at a machine and it actually recognizes what
Speaker 15: they're looking at, and then guides them through that process
Speaker 15: as if they were the expert themselves, and now they
Speaker 15: can do it without any help from that experience operator.
Speaker 4: You're clear, you are not an OEM, You're not a
Speaker 4: maker of a headset. What you're doing is providing a
Speaker 4: very specific software platform best use of the headset exactly.
Speaker 15: So Squint actually works on any phone or tablet today
Speaker 15: and manufacturers can pull it up instantly and basically go
Speaker 15: through this process and make any operator and expert.
Speaker 3: You have a pretty lean team when it comes to
Speaker 3: building this sort of software and technology. I'm interested, Devin
Speaker 3: in Ultimately, therefore, what you do with this capital?
Speaker 5: Where do you need to be driving now?
Speaker 3: Because you've already got a lot of well known customers
Speaker 3: and think involve those emas Culgate.
Speaker 5: Palm on it for example.
Speaker 15: Yeah, you know, we're really excited that we raise this
Speaker 15: Series A and really now we're looking to invest in
Speaker 15: our go to market efforts as well as our engineering,
Speaker 15: product and design org. And you know, we're thrilled to
Speaker 15: basically grow this footprint of impact that we've created with
Speaker 15: our customers.
Speaker 3: How expensive is talent now to get with Squint is
Speaker 3: that one of the top costs right now?
Speaker 15: Yeah, yeah, so I think you know, talent is always
Speaker 15: a hard thing to procure, especially in the Bay Area,
Speaker 15: and with Squint, you know, I think the attraction with
Speaker 15: working on new technology like this is a big help.
Speaker 15: And you know, when we work with our customers, we
Speaker 15: repeatedly hear that they've cut their training time in half,
Speaker 15: and that's really attractive to new talent.
Speaker 4: And you know, in Silicon Valley, Devin Squint's essentially a developer,
Speaker 4: right And I wonder how much fiction straint. The hardware
Speaker 4: is a you kind of technology agnostate, whether your customers
Speaker 4: use devices that are iOS or Android, how does it
Speaker 4: work in practice inside a customers factory.
Speaker 15: Yeah, so we are technology agnostic. This works on an
Speaker 15: iOS tablet or an Android tablet or phone. The way
Speaker 15: that it really works is, let's say, I'll give you
Speaker 15: an example. So a couple of weeks ago, I was
Speaker 15: at a large food and beverage manufacturer.
Speaker 4: Which one I can.
Speaker 15: I'll keep going, But they had a robot arm that
Speaker 15: only one expert knew how to use, and I was
Speaker 15: only there for a couple hours. So what we did
Speaker 15: was we actually walked up to this arm and I
Speaker 15: made a map in Squint. This takes about a minute.
Speaker 15: It just uses the camera, no additional expertise required. And
Speaker 15: then I filmed a video of that operator doing their job.
Speaker 15: And later in the day we pulled in their HR
Speaker 15: manager literally someone who has never used a machine before,
Speaker 15: and they used Squint and they were able to perform
Speaker 15: that procedure at the same quality as the expert in minutes.
Speaker 3: Therein lies the selling point for Squint. Right now, we
Speaker 3: thank you so much CEO Devin Brashan joining us on
Speaker 3: the technology in the manufacturing, particularly arena.
Speaker 5: Meanwhile, that does it for this edition of Bloomberg Technology.
Speaker 4: In Yeah, it's been a busy world week from AI
Speaker 4: to anti trust, Loot's recap on the podcast. Lots of
Speaker 4: you listening to the podcast wherever you get it, Apple, Spotify, iHeart,
Speaker 4: and every day we're publishing it to the Bloomberg platform
Speaker 4: and don't forget the show is also on YouTube on
Speaker 4: the Bloomberg Technology YouTube account. Big week still to come
Speaker 4: for San Francisco and New York City. This is Bloomberg
Speaker 4: Technology