Speaker 1: From Marhart where Innovation, Money and Power Collie in Silicon Valley, NBN.
Speaker 2: This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 3: I'm Caroline Hyder Bloomberg's world headquarters.
Speaker 4: In New York and Imed Ludlow in San Francisco. This
Speaker 4: is Bloomberg Technology.
Speaker 3: Coming up armed files for its IPO, which is set
Speaker 3: to be one of the biggest of the year. We
Speaker 3: bring you the biggest takeaways from its filing.
Speaker 4: Plus we talk earnings with the CFO of Zoom as
Speaker 4: analysts sour on long term growth for the video conferencing company.
Speaker 3: And Microsoft pushes to get its activision deal done, finally.
Speaker 5: Submitting a new bid to the CMA in the UK.
Speaker 3: We'll discuss that and so much more throughout this hour,
Speaker 3: of course, including the macro environment we find ourselves the
Speaker 3: way in which tech has continued to outperform other benchmarks
Speaker 3: on the day, even in the face of rising yields.
Speaker 3: Once again, in the borrowing mark market, we're seeing the
Speaker 3: NASDA C cup just a quarter of percent. We've seen
Speaker 3: whipsawing coming from some key names. All eyes on video,
Speaker 3: of course, as we head towards the closing bell, the
Speaker 3: two year yield just top about a basis point.
Speaker 5: And in fact, we're seeing a bit of a calmness.
Speaker 3: In the bond market that has seen sustained pressure all
Speaker 3: eyes of course, not only on earnings coming this week
Speaker 3: for some big, big tech bellwethers, but Jay Powell come Friday,
Speaker 3: of course from Jackson Hole, what he says about the
Speaker 3: future of boring costs here in the US.
Speaker 5: I'm looking and what's happening in China.
Speaker 3: Interesting volatility in China's trading, the fact that we actually
Speaker 3: saw a pickup in buying, particularly on the CSI, and
Speaker 3: I'm looking at the crane shares, the kewbers. It's known
Speaker 3: basically some of the key et key internet names traded
Speaker 3: here in the US just holding on to gains for
Speaker 3: about a tenth of percent, but coming off of their highs.
Speaker 3: Moving on to what is the key risk gus under
Speaker 3: choice often in this show we're seeing off about seven
Speaker 3: tens of percent now Crypto bitcoin, as we see under
Speaker 3: continued pressure at about twenty six thousand there thereabout said
Speaker 3: but what if you've got on the.
Speaker 4: Micro Yeah, there's a lot to get through this Tuesday
Speaker 4: earnings is a part of it. Zoom is off by
Speaker 4: nine tenths percent, but off session lows a slight adjustment
Speaker 4: higher for guidance on sales strengthen enterprise, but single digit
Speaker 4: declines are happening with individual customers small businesses that we're
Speaker 4: using the video platform from Zoom.
Speaker 6: We will speak to the CFO.
Speaker 4: Lots of questions from the street about well, what happens
Speaker 4: if the macro picture gets better and what are you
Speaker 4: guys going to do with your capital? Those are questions
Speaker 4: that we'll ask. As you pointed out, Activision and Microsoft
Speaker 4: is a big, big story. The concession from Microsoft is
Speaker 4: to allow another video games publisher, Ubisoft, to sell Activision's
Speaker 4: titles through cloud gaming markets globally. Will that be enough
Speaker 4: for the CMA to get the deal over the line?
Speaker 4: We will go to our reporter on that one. The big,
Speaker 4: big story, the one we've all been waiting for, and
Speaker 4: finally it's here, is ARM, the chip design software name,
Speaker 4: finally filing for its IPO. We didn't actually learn much
Speaker 4: about the share sale in the documents. What we do
Speaker 4: know is that SoftBank will still be the single biggest
Speaker 4: controlling shareholder after the transaction. Bloomberg's reported that the target
Speaker 4: valuation sixty to seventy billion US dollars. If they raise
Speaker 4: around ten billion dollars, this will be not just the
Speaker 4: biggest IPO of the year here in the United States, Caroline,
Speaker 4: but the biggest IPO going back to Rivians in November
Speaker 4: twenty twenty one. There's this big idea that could this
Speaker 4: be the starting gun for the IPO market when it
Speaker 4: comes to tech lots to cover?
Speaker 3: And that is so much of where the narrative has
Speaker 3: been what this means for the broader market, But what
Speaker 3: does it mean in terms of the actual technology that
Speaker 3: is driving this name. Bloomberg's in King of forse have
Speaker 3: been all over not only the entire semiconductor space, but
Speaker 3: what arm brings to that space and in what struck
Speaker 3: you For many it was exposure to China.
Speaker 5: But where did you get the narrative.
Speaker 3: Of what this business actually does in the filing?
Speaker 7: Yeah, I mean fundamentally, they're trying to reposition themselves as
Speaker 7: being a different, more evolved company from where they were
Speaker 7: when they were originally publicly traded and brought by a
Speaker 7: soft bank. And really, while it's not really appealing in
Speaker 7: the filings, what we're understanding is that the real sales
Speaker 7: pitch here is going to be focused on. Look, this
Speaker 7: is how important we are in the data center. We're
Speaker 7: more than just a mobile phone technology company.
Speaker 4: The history of ARM is the provider of blueprints for
Speaker 4: smartphone processes that their designs led to energy efficiency you
Speaker 4: think about battery life on a cell phone crucial.
Speaker 6: They also have the.
Speaker 4: IP or the code that determines how a chip interacts
Speaker 4: with the software you want to run through it. This
Speaker 4: is a big publicity stunt, right, It's like saying to
Speaker 4: the world, we're here, we're ARM. But how does it
Speaker 4: help them move that company forward? Because automotive data center,
Speaker 4: it's not what they've done historically.
Speaker 7: Yeah, I mean, you know they are spreading right. Their
Speaker 7: story has always been one of how quickly can we
Speaker 7: become as pervasive as we think we can be, And
Speaker 7: you know, that's really been a very strong story for them.
Speaker 7: Whether at the same time they're trying to do more
Speaker 7: than that. They're trying to kind of move up the
Speaker 7: stack to be more of a technology provider, to do
Speaker 7: more of the designs, to provide more of the complete
Speaker 7: sort of picture, and be less reliant on the actual
Speaker 7: chip makers, and that in theory brings their market a
Speaker 7: broader audience. So companies like Amazon, not traditionally a chip maker,
Speaker 7: can design their own.
Speaker 4: Chips, right, they use ARM as part of what they
Speaker 4: goes into the AWS offering. Thirty five hundred words were
Speaker 4: dedicated to China. Explain ARMS business exposure in China.
Speaker 7: Well, I mean it's like many semiconductor companies in this country.
Speaker 7: It's China is the biggest market for chips. You want
Speaker 7: to be there. Whether at the same time, Washington is
Speaker 7: more and more concerned about China's capabilities in chips and
Speaker 7: is taking steps to limit what US or other companies
Speaker 7: outside of China can do inside China. So that's the
Speaker 7: conflict there, and that's why you saw the detailed discussions
Speaker 7: about these are the risks is what we have to
Speaker 7: think about.
Speaker 3: A slowing mobile environment a China risk factor.
Speaker 5: But to be fair, since twenty.
Speaker 3: Fourteen, twenty fifteen, when I was back in London, I
Speaker 3: remember that ARM taking me to their headquarters I was
Speaker 3: in Cambridge. They were desperate to tell this whole Internet
Speaker 3: of things discussion point under Simon Segers at the time
Speaker 3: that it has been a narrative they've been trying to
Speaker 3: build as to how they are more than mobile. What
Speaker 3: are they in terms of soft Bank's pitch? Why would
Speaker 3: SoftBank not be wanting to sell into also this AI euphoria.
Speaker 5: At the moment?
Speaker 3: Are they wanting to perhaps keep hold of ARM a
Speaker 3: little bit longer in the near term?
Speaker 7: Well, I mean the you, I mean where we're going
Speaker 7: to come to market earlier this year, and chip stocks
Speaker 7: were obviously not doing very well then, so I wouldn't
Speaker 7: read too much into the timing. I think SoftBank obviously
Speaker 7: needs a win given some of the other investments that
Speaker 7: it's made which haven't panned out. But in terms of
Speaker 7: the timing, and you mentioned the AI euphoria quite accurately, Caroline,
Speaker 7: that's where we are now. And the best way I
Speaker 7: think to think about what ARM has to say there
Speaker 7: is who's in Who's reporting tomorrow?
Speaker 6: In video?
Speaker 7: Half of in Video's sort of top line product is
Speaker 7: a processor based on ARM technology. So they have a play,
Speaker 7: and that's something that they'll be trying to, I think,
Speaker 7: pitch to investors more strongly.
Speaker 4: Bloomberg's ian king, mister Chip we call him, and I
Speaker 4: take it from me, it's been a busy few days
Speaker 4: for him. Let's stick with the story and bringing Glen
Speaker 4: O'donnald Forrester Research director and vice president. Glenn just very simply,
Speaker 4: you've been through the filing. What was the main takeaway
Speaker 4: from you of what we learned about ARMS?
Speaker 1: I poll it's it's it's trying to capitalize. As Ian
Speaker 1: pointed out, Uh, you know, with the AI craze going
Speaker 1: on right now, this is a good time to capitalize
Speaker 1: on that because even though with AI most of the
Speaker 1: talk is about in video, in video's process processors need
Speaker 1: CPUs a different kind of processor to to work properly.
Speaker 1: And you know it has licensed ARMS technology to you
Speaker 1: to give it that capability, but lots of other players
Speaker 1: have these ARMED designs and it's really the brains behind
Speaker 1: a lot of what's what's what's to come. So I
Speaker 1: think the timing of this I p o is is
Speaker 1: really perfect.
Speaker 3: And put ARM in the ecosystem. Who are the competitors,
Speaker 3: who are they managing to work with and against?
Speaker 1: Well, the biggest competitor is the established Intel a m
Speaker 1: D base what we call X eighty six processors, and
Speaker 1: you know, just about every PC has an X eighty
Speaker 1: six processor, and most data center systems have X eighty six.
Speaker 1: These things are ubiquitous and they're not going to lose
Speaker 1: that ubiquity. However, ARM is going after a slice of that.
Speaker 1: And it's interesting that even though these are two you know,
Speaker 1: hyper competitor of companies, let's say Intel and AMD, Intel
Speaker 1: has actually entered into an agreement to manufacture chips or ARM.
Speaker 1: So you know, this whole concept of frenemies is pretty
Speaker 1: common in the tech space.
Speaker 3: It's too small a world not to have a few frenemies, Glenn.
Speaker 3: But Ed, it's interesting, isn't it that even as we
Speaker 3: talk up this AI hype, even as we look towards
Speaker 3: in video after the bell, we did get numbers in
Speaker 3: the filing and quite clearly there is a slight slowdown
Speaker 3: being felt by ARM in this macro environment.
Speaker 4: Yeah, you can't outrun your main business, which I think, Glenn.
Speaker 4: The numbers showed sales were down one percent in the
Speaker 4: period ending March of this year on the year. You know,
Speaker 4: what did that tell you about the health of their
Speaker 4: main business, principally the association with smartphone processes.
Speaker 1: Well, smartphones are down, as we all know, and you know,
Speaker 1: the semiconductor stocks and companies have been suffering the economic
Speaker 1: slowdown has has had a a really strong impact on
Speaker 1: all of them. And you know, it hasn't been a
Speaker 1: good couple of quarters for these companies, but you know
Speaker 1: there is a turnaround in underway, and again it's fueled
Speaker 1: by all this AI stuff, most notably generative AI. And
Speaker 1: I've been through a number of AI waves that didn't
Speaker 1: pan out, but this one's different. And you know, we're
Speaker 1: going to see we're going to see a huge surge
Speaker 1: in demand for chips that are able to process these
Speaker 1: uh these workloads that people are going to be throwing
Speaker 1: at it. And we're seeing that with Nvidia and VideA
Speaker 1: is already saying, hey, we can't make enough of these things,
Speaker 1: and demand is just off off the charts. So ARM
Speaker 1: is going along for that ride in a big way
Speaker 1: because it has that complementary connection to what in video
Speaker 1: is writing.
Speaker 6: Glenn, I get it. You're you're a financial analyst, right.
Speaker 4: We love to pour over the numbers that The thing
Speaker 4: I love about I POS is just hype, the story,
Speaker 4: the publicity. How important is it to your the world
Speaker 4: knows about ARM, that they hear about this big IPO
Speaker 4: of a company called ARM that they may never have heard.
Speaker 1: Of Yeah, well they never have heard of it. Most
Speaker 1: people haven't. And you know, for the most part, they
Speaker 1: don't really make the chips, they license the technology. So
Speaker 1: you may have heard of Samsung, and of course you've
Speaker 1: heard of Apple and Qualcomm, all of these companies and
Speaker 1: of course Nvidia. All these companies are building their chips,
Speaker 1: their processors on ARM based designs the architecture. So ARM
Speaker 1: is really an intellectual property company, and you know, they
Speaker 1: make their money off licensing and other intellectual property that
Speaker 1: they've developed that other companies can use. And the more
Speaker 1: companies that build their processors based on ARM, the better
Speaker 1: ARM is going to do. And I just see that
Speaker 1: there's good times ahead for that.
Speaker 3: Planel Donald, finishing on an optimistic wrote, we thank you
Speaker 3: of Forrester Research. Zoom, of course, the video conferencing company
Speaker 3: we all know, reported second quarter results on boosted the
Speaker 3: outlook with a move beyond video calls of course about
Speaker 3: phones and the like, but let'stick into the future visibility
Speaker 3: of strength for this business. Kelly Steckelberg, Zoom CFO, joins
Speaker 3: US now and it's interesting we saw some excitement around
Speaker 3: the numbers being posted after the bell yesterday and then
Speaker 3: reality hits a little bit today amid a macro picture
Speaker 3: that is worrying. Can you give your investor base, our
Speaker 3: audience just some visibility into the future growth story for
Speaker 3: Zoom right now?
Speaker 6: Sure?
Speaker 8: So, we were really pleased with our q tube results.
Speaker 8: As you said, we beat both our top line revenue
Speaker 8: guidance as well as our profitability outlook, and we raise
Speaker 8: those numbers for the full year of f y twenty four,
Speaker 8: both top and bottom line guidance.
Speaker 5: And what I.
Speaker 8: Think people are looking for is long term growth which
Speaker 8: will be driven from the expansion of our platform, new products.
Speaker 8: Some of our newer products like Zoom Foam, which is
Speaker 8: our cloud PBX solution. Also Zoom Contact Center, which is
Speaker 8: only six quarters old and already has five hundred customers
Speaker 8: on it, and that is our natively built, fully modern
Speaker 8: cloud contact center. We have lots of other products across
Speaker 8: our platform to like Zoom Scheduler, and all of this
Speaker 8: brings together a platform that as those products into neue mature,
Speaker 8: will drive growth. We're also looking for stabilization the overall
Speaker 8: macro as you mentioned, both in the US and internationally,
Speaker 8: which is really important for us for both segments of
Speaker 8: our business. And as we work with our customers, as
Speaker 8: some of them you have gone through reductions in their
Speaker 8: own employe base, we help them transition that spend potentially
Speaker 8: from meetings into some of our newer products.
Speaker 4: You know, Kelly, the Zoom story was really clear in
Speaker 4: the fiscal second quarter earnings gone right, So top line
Speaker 4: growth of ten percent overall, but sales to individuals and
Speaker 4: small businesses down four point three percent. Okay, So in
Speaker 4: other words, enterprise great, but the individual user every day
Speaker 4: you and I falling away. How permanent is that dynamic
Speaker 4: in that story for your company?
Speaker 8: So the online segment of our business that you're referring
Speaker 8: to is about forty percent of our business today, and
Speaker 8: it is individuals like you and I that are using
Speaker 8: their product, but it's also small businesses, which is really
Speaker 8: important to remember. A lot of these customers buy online
Speaker 8: and we are continuing to expand the opportunity by adding
Speaker 8: more currencies in which we sell, adding more products to
Speaker 8: the platform. So it's a very important part of our business,
Speaker 8: and the team is consistently innovating around how do we
Speaker 8: bring more products to them and how do we expand
Speaker 8: the top of the funnel. We've seen a lot of
Speaker 8: stabilization in the churn rate there. We're down to three
Speaker 8: pandemic levels, which is really great. It's just going to
Speaker 8: take a little longer than we expected to stabilize over time.
Speaker 3: Though. What about the euphoria that everyone wants to discuss
Speaker 3: that is AI.
Speaker 5: How much are you trying to.
Speaker 3: Lean into that for you're an investor base that wants
Speaker 3: to hear it, or how much are you trying to
Speaker 3: be realistic about what it adds to your product portfolio.
Speaker 8: Yeah, so we think that AI is a really important
Speaker 8: strategic part of our product portfolio going forwards. We just
Speaker 8: hired xd Wong, for example, to lead that initiatives. We're
Speaker 8: thrilled to have him as part of our team, and
Speaker 8: Eric talked about it a little bit on the call yesterday.
Speaker 8: We have individual skews today that al already leverage a
Speaker 8: lot of AI. We have Zoom Virtual Agent, for example,
Speaker 8: which is part of our contact center solution. But we
Speaker 8: also will bring those benefits into the broader platform without
Speaker 8: necessarily adding a lot of cost to our customer base.
Speaker 8: We want them to get the benefit from it, and
Speaker 8: we will talk more about additional features or products that
Speaker 8: really leverage AI to the hilt when it comes out
Speaker 8: in Zoomtope, which is our users conference in October.
Speaker 4: Kelly, there was a pretty strong reaction to news that
Speaker 4: Zoom was pushing its workforce back to the office. Many
Speaker 4: saw that with a sense of irony. Right, given the
Speaker 4: role that your technology played in the work from home era,
Speaker 4: was that severe reaction justified. You might be surprised that
Speaker 4: people were so surprised in their own mind that you
Speaker 4: have made that move.
Speaker 8: Well, we believe that a structured hybrid approach is best
Speaker 8: for Zoom. We hear from our employees they want to
Speaker 8: be together for collaboration. So by structuring days in the
Speaker 8: office just two days in the office, by the way,
Speaker 8: it ensures that when they come to the office, they're
Speaker 8: going to see their colleagues, they're going to see their friends.
Speaker 8: It also really helps drive innovation. We are the best
Speaker 8: to leverage our products to ensure that we're meeting the
Speaker 8: needs of our customers who are also in a hybrid environment.
Speaker 8: And so by leveraging Zoom Rooms and new features like
Speaker 8: Intelligent Director, we're able to ensure that we're being the
Speaker 8: best possible products to market.
Speaker 4: All right, Kelly Steckelberg, Zoom ZFO. Thank you for joining
Speaker 4: us so close after earnings Here Blue Technology coming up
Speaker 4: on the show, Microsoft looks to push its Activision deal
Speaker 4: over the finish line with a new proposal to the
Speaker 4: uk CMA.
Speaker 6: We're gonna have those details next character and it.
Speaker 3: Is earning season. They can fast. I want to shine
Speaker 3: a light on one that you might not automatically associate
Speaker 3: with technology, but you should. May sees of course owner
Speaker 3: a Bloomingdale's Blue Mercury, and of course the actual brand
Speaker 3: mass itself having its worst days. It's March twenty twenty two.
Speaker 3: The lowest it is January twenty twenty one.
Speaker 5: This is a macro play.
Speaker 3: This is a worry about the consumer, about a build
Speaker 3: up in delinquencies. But they are still focused very much
Speaker 3: on technology and on AI. Let's just have a quick
Speaker 3: look at how they're focusing on digital. This helped could
Speaker 3: really trim some of their inventory. They're pulling back by
Speaker 3: ten percent. They're still saying they've got more to go.
Speaker 3: Jeff Gonnette telling me on the phone, our aspirations in
Speaker 3: digital are quite high and we want it to be
Speaker 3: help than it is today. We do believe that in
Speaker 3: the future digital can grow more aggressively when the balance
Speaker 3: of the company. Of course, they're leaning into marketplace, which
Speaker 3: where they offer far more products through their online offering.
Speaker 3: They've also got a new chief for digital on this
Speaker 3: particular announcement from New York from San Francisco, this is
Speaker 3: Blomberg Technology.
Speaker 4: Time for talking tech and first st up by Doo
Speaker 4: reporting revenue that rose by the most in more than
Speaker 4: a year. Sales jumped fifteen percent, which was a head
Speaker 4: of expectation. China's search leader is joining its tech peers
Speaker 4: in rediscovering growth as Beijing relaxes its grip on the
Speaker 4: private sector.
Speaker 6: And Microsoft got.
Speaker 4: A new chance at winning approval from UK regulators after
Speaker 4: the tech giants submitted a substantially different deal to the
Speaker 4: country's antitrust watchdog for its sixty nine billion dollar takeover
Speaker 4: of Activision Blizzard. The CMA will now owe and a
Speaker 4: new deal probe after Microsoft said it would give Ubisoft
Speaker 4: rights to distribute Activision games globally.
Speaker 6: Carrect what a move.
Speaker 3: Let's get more on that story. Microsoft and Activision with
Speaker 3: bloombags leaon Nylan and well, we were waiting to hear
Speaker 3: how they were perhaps going to appease the regulators in
Speaker 3: the UK.
Speaker 5: And this won't take you by surprise.
Speaker 9: Well, we had reported a little bit ago that they
Speaker 9: were looking at this potential move.
Speaker 6: So what they're going to do.
Speaker 9: Is they are divesting globally the cloud gaming rights to ubersoft.
Speaker 9: It'll be a non exclusive license in the EU, so
Speaker 9: that Microsoft is still abiding by the commitments that it
Speaker 9: made to European Commission any trust authorities. The CMA will
Speaker 9: now do sort of a redo of the probe to
Speaker 9: see if this resolves their concerns.
Speaker 3: About cloud gaming.
Speaker 9: The EU also said today that they may need to
Speaker 9: look at it again just to make sure that it
Speaker 9: still complies with all of the commitments Microsoft made to them.
Speaker 4: We actually had an interview with the CMA chief, Sarah
Speaker 4: card Or on Bloomberg Radio earlier. This for me was
Speaker 4: the most tressing part of what she said. What we
Speaker 4: see with this new deal, and we have to test
Speaker 4: it carefully through our review, is that rather than Microsoft
Speaker 4: being able to control how those cloud streaming rights to use,
Speaker 4: that control will shift to an independent company. It's always
Speaker 4: been a battleground for the cloud right lea. This is
Speaker 4: what the CMA's bug bear has been.
Speaker 9: Yeah, the CMA and the EU have been very focused
Speaker 9: on the cloud because they think that's sort of the
Speaker 9: next generation of gaming here, you know, right now, so
Speaker 9: much of stuff relates to consoles, whether you have an
Speaker 9: Xbox or a PlayStation. But in the future, people think
Speaker 9: that you might just you know, connect to your TV
Speaker 9: or your phone to play these games, sort of in
Speaker 9: the same way that you know, we used to watch
Speaker 9: DVDs and now everybody streams TVs and movies, and so
Speaker 9: they've been very, very focused on the cloud and how
Speaker 9: they were concerned that Microsoft would sort of dominate in
Speaker 9: this industry and now by having them license these rights
Speaker 9: to somebody else that might resolve some of their concerns.
Speaker 9: They've been very clear that they still need to look
Speaker 9: at it. This is still an ongoing process. They're not
Speaker 9: definitely saying that they're going to accept it, but they'll
Speaker 9: start reviewing it and they will be done before the
Speaker 9: October eighteenth deadline, all.
Speaker 6: Right, Bloombos Lea Niel out of DC.
Speaker 4: The cloud it really was such a preoccupation Caroline, for
Speaker 4: both parties as well, because they tried so hard to
Speaker 4: point out to all regulators that it's now right in
Speaker 4: this moment teeny tiny, you know, and the whole point
Speaker 4: of the deal originally anyway, was mobile. Microsoft wanted Activision.
Speaker 4: We continue to chase this one. It's unbelievable, the drama
Speaker 4: behind macropism Activision.
Speaker 3: Wellcome back to Blue Meg Technology. I'm Caroline Hyde in
Speaker 3: New York.
Speaker 6: I Med Ludlow in San Francisco. It's going to quick
Speaker 6: check on the markets.
Speaker 4: Karen, Now's that one hundred actually a little bit softer,
Speaker 4: down two tens to one percent. We're coming off the
Speaker 4: biggest jump on that tech heavy index in Monday session
Speaker 4: in more than three weeks. Tech had kind of turned
Speaker 4: a corner, and now we're treading water a little bit.
Speaker 4: Factors include, but are not admitted to what we're seeing
Speaker 4: in earnings, what we're seeing ahead of earnings, of course,
Speaker 4: Nvidia reports after the bell tomorrow, but also a few
Speaker 4: jitters about the global economy. Jackson whole is this week.
Speaker 4: My goodness, what a lot for investors to take on board.
Speaker 4: There are two pieces of news out there that are
Speaker 4: also particularly relevant to the fintech and crypto space. I'm
Speaker 4: looking at a gin and coinbase agin. You'll remember we
Speaker 4: covered in the show last week a record drop after
Speaker 4: sales really pulled away, but kathe Woods Arc across two
Speaker 4: ETFs has been buying both the Amsterdam listed shares and
Speaker 4: some of the US listed shares as well, not doing
Speaker 4: much to support anything. Today we're down two point eight
Speaker 4: percent in the session. Coinbase also down one percent. It's
Speaker 4: taken a stake in Circle saying in the filing that
Speaker 4: it sees some MOMENTUMUS stable coins, but we don't have
Speaker 4: any details of agreements. In the cell side are looking
Speaker 4: at this and trying to make their mind up. But
Speaker 4: that stock down two percent.
Speaker 3: Carrot Let's taken with crypto for a moment because Moonpay,
Speaker 3: it's a leading web three infrastructure provider's taking a kind
Speaker 3: of hands on interactive spotise to New York City's waterfront
Speaker 3: seaport neighborhood. I just got a little bit of a
Speaker 3: taste of what the experience would entail. Take a look
Speaker 3: New York, New York.
Speaker 5: Who's here? What are they doing?
Speaker 10: Are they working?
Speaker 3: Are they visiting?
Speaker 5: Are they coming back for more information?
Speaker 10: Many would love, particularly owners of buildings and attractions, Well,
Speaker 10: could webs three.
Speaker 2: Help with that?
Speaker 10: That's what the South Street Seaport owner is banking on.
Speaker 10: How Hughes is working with Moonpey to gamify its real estate.
Speaker 10: The three months, there'll be a scavenger hunt where real
Speaker 10: and digital worlds collide. Find the purple pearls, scan the codes,
Speaker 10: and collect the cool New York City inspired digital tokens
Speaker 10: or NFTs if you.
Speaker 3: Want to use the crypto jargon.
Speaker 10: If you're collecting up, you'll be entered in for wheel
Speaker 10: life prizes think Hotels Days, concept ticket and they're like
Speaker 10: experiences you can use or perhaps sell on the secondary
Speaker 10: market thanks to the blockchain technology being used here. What
Speaker 10: does Howard Hughes get in return if you opt in
Speaker 10: and zip code and a great understanding of where you
Speaker 10: come from, how you move through its seaport, and crucially
Speaker 10: if you return.
Speaker 3: So here's a case for crypto being used in the
Speaker 3: wild with a purpose and application.
Speaker 5: Let's see how well people adopt it.
Speaker 3: I stick into it. We welcome Munpe's co founder CEO
Speaker 3: of the program, Ivan Soto. Right, great to have you
Speaker 3: with us.
Speaker 6: Ivan, thanks for having me.
Speaker 5: So this is it, isn't it?
Speaker 3: This is how web three, How crypto NFTs are applicable
Speaker 3: in our everyday life and applicable to companies.
Speaker 5: Is that the proof point that you need at the
Speaker 5: moment in this mar market environment.
Speaker 11: I mean, for us at Moonpey, we're all about bringing
Speaker 11: this technology mainstream, and for us, we have to leave
Speaker 11: with the experience. The experience needs to be so simple,
Speaker 11: so intuitive, so easy for people to understand.
Speaker 6: In this case, it's really fun. It's a digital scavenger hunt.
Speaker 11: You go to the seaport, You'll see these QR codes
Speaker 11: all around the seaport. There's ten of them. It's actually
Speaker 11: quite a challenging scavenger hunt. So I'm excited to see
Speaker 11: how people get on with it once you scan one
Speaker 11: of these things. What's really cool is behind the scenes
Speaker 11: we're using our technology, so we're actually setting up a
Speaker 11: wallet for each individual person. They're claiming one of these tokens,
Speaker 11: and then they get that prize every week, and that
Speaker 11: prize can be sold in the secondary market.
Speaker 5: I mean I used it.
Speaker 3: I automatically had what it formed and it was very seamless.
Speaker 3: I'm interested though that you're not at any point saying blockchain,
Speaker 3: web three, crypto. It's very much just use the tech
Speaker 3: and see what it's all about. How much you see
Speaker 3: in companies wanting to use and adopt nftscrypto. In this environment,
Speaker 3: how much you managing to scale a business?
Speaker 11: Yeah, well, I think it's really analogous if you think
Speaker 11: about the Internet, right, so we don't really talk about
Speaker 11: the technical components of using social media or using the
Speaker 11: applications that you use in every single day, every day life.
Speaker 6: It's very similar for blockchain.
Speaker 11: We need to get to a place where we remove
Speaker 11: that jargon and we just really focus on the use cases.
Speaker 11: For us, we really believe the future of the digital
Speaker 11: economy will be powered by a number of these digital wallets.
Speaker 11: Our core business at moon Pay is making it easy
Speaker 11: for people to top up their digital wallets, and so
Speaker 11: first we've got to get people their digital law to
Speaker 11: begin with, and we think that's going to happen through
Speaker 11: working with brands, working with enterprises. Here we're working at
Speaker 11: the Howard Q's Corporation. This is an awesome initiative. We're
Speaker 11: really excited. There are some companies out there that are
Speaker 11: really forward looking around how to actually use technology and
Speaker 11: think about the latest advancements, and so for us, there's
Speaker 11: just a great use case, a really good case study.
Speaker 11: We can't wait to show the data, the analytics around
Speaker 11: all this for traffic coming in. How do we increase
Speaker 11: that food traffic, How do we actually get more spinning behavior?
Speaker 11: How can they justify their rents? So it'll be really exciting.
Speaker 3: So there we have it, like in terms of real
Speaker 3: estate wanting to justify their rents. We're also hearing more
Speaker 3: and more kind of NFT's crypto. It's more becoming about
Speaker 3: loyalty in some way for companies as well. That seems
Speaker 3: to be some sort of proof point ed.
Speaker 4: You know, I'm not surprised to see you out there
Speaker 4: in the real world engaging with the technology.
Speaker 6: That's the space you know really well.
Speaker 4: But to your point, Karen, what you were just outlining, Ivan,
Speaker 4: how much is this about education? Actually for the majority
Speaker 4: of the public out there, they're not competent in the area,
Speaker 4: all familiar, and they just need some basic help in
Speaker 4: understanding use cases why they should.
Speaker 6: Be using it.
Speaker 11: Yeah, I mean, I think it'll always starts with education.
Speaker 11: I think that's probably the most important thing that we
Speaker 11: think about. And how do we have that education in
Speaker 11: a way that's delivered in a really actually fun way
Speaker 11: where we're not actually opening up a textbook and learning
Speaker 11: about blockchain technology, we're actually out there in the wild,
Speaker 11: you know, scanning a QR code, but actually, wow, I'm
Speaker 11: getting this reward. And actually, when we think about loyalty
Speaker 11: and rewards, one of the biggest problems that we've had
Speaker 11: is actually engagement with loyalteam award programs. A lot of
Speaker 11: companies have struggled to have people actually use loyal team awards,
Speaker 11: and so in this case, I think the secondary market
Speaker 11: component of a blockchain is really powerful. Anyone with an
Speaker 11: open Internet connection. Let's say you win the prize tickets
Speaker 11: to the concert. Let's say you're not going to be
Speaker 11: in the seaport for a couple of weeks, you're not
Speaker 11: going to be able to go to that concert. You
Speaker 11: can actually list them on a platform like open See
Speaker 11: on the open Internet, and anyone can go and purchase them.
Speaker 4: I mean, you've operated an NFT checkout since twenty twenty two.
Speaker 4: How is the market for NFTs right now? I feel
Speaker 4: like when Caroline and I discussed that market on the
Speaker 4: show of Late it's because values have come down in
Speaker 4: a shocking way, you know, justin Bieber is the example
Speaker 4: that we've inboard Eate, which we constantly bring up on
Speaker 4: this show.
Speaker 6: Yeah, I mean from our perspective. We take a very
Speaker 6: long term view.
Speaker 11: Right, this is a nasonassa class, and when I think
Speaker 11: about NFTs, they're more than just collectibles. There are new
Speaker 11: file format there are file formats to things that live
Speaker 11: natively on the blockchain. And so really, when we think
Speaker 11: about Moonpe, we're an infrastructure business. We want to be
Speaker 11: behind the scenes. We want to enable as much activity.
Speaker 11: When you look at the developers that have come into
Speaker 11: the space, we're actually up to ninety percent of developer
Speaker 11: activity since twenty twenty.
Speaker 3: Interesting that you mentioned developers. What about talent more broadly?
Speaker 3: Ivan at the moment, are you actively hiring? We've understood
Speaker 3: at one point that maybe people were leaving the company.
Speaker 3: Was that because it was time that they wanted to
Speaker 3: have new opportunities where you're having to let.
Speaker 5: Go of people.
Speaker 11: So at Mompei, we operate with an operating principle of
Speaker 11: called Kaizen, which means change for the better in Japanese,
Speaker 11: and so we're continuously looking at our company making sure
Speaker 11: that we have the best people in every single seat.
Speaker 11: So we've actually remained flat as an organization. We've had
Speaker 11: people leave, we've had people come in, but you know,
Speaker 11: we're consistently building here for the long term. We really
Speaker 11: believe we are a player here to stay of the
Speaker 11: long term.
Speaker 5: Do you need more money?
Speaker 3: We just mentioned Justin Bieber as a pin up of
Speaker 3: who's lost money on NFTs. He's also a man who
Speaker 3: invested in you back in the day. Are you looking
Speaker 3: at raising more funds?
Speaker 11: No, We're in a really good financial position.
Speaker 2: You know.
Speaker 11: We're going to continue to just continue to build and
Speaker 11: just continue to focus. We've actually managed to outperform the
Speaker 11: market by over thirty percent this year, even the market
Speaker 11: being down fifty percent.
Speaker 6: So for us, that's really our benchmark.
Speaker 11: We compare ourselves against the market, and we're taking a
Speaker 11: long term view that this market will grow.
Speaker 4: I've a moon Paced partnership with Binance US, which is
Speaker 4: the American affiliate of Binance in the US. There are
Speaker 4: banks that have walked away from Binance US. They don't
Speaker 4: want to do business with them. Why are you doing
Speaker 4: a partnership there?
Speaker 11: So we work with a range of partners Finance US.
Speaker 11: They have a infrastructure around wallets, right, so we can
Speaker 11: make it easy for them to top up their wallets.
Speaker 11: Moonpay we obviously perform KYC. We follow all the regulatory
Speaker 11: rules across every single jurisdiction which we operate, and so
Speaker 11: we can make it easy for people to top up
Speaker 11: their wallets. But we have a number of different partners
Speaker 11: including finance.
Speaker 3: US banking partners, and more broadly just the environment. How
Speaker 3: is the regulatory environment to operate in the US At
Speaker 3: the moment, you're feeling like you're supported? Are you feeling like, gosh,
Speaker 3: shall we make sure that we're looking abroad to beefar
Speaker 3: par our presence a little bit more so Moonpay.
Speaker 11: We're international business. We operate one hundred and sixty countries.
Speaker 11: United States obviously a very important jurisdiction for US. We
Speaker 11: operate here, we have money transmitters and the majority of
Speaker 11: the United States for US. We're continuing to work for
Speaker 11: actively with regulators. That's an incredibly important part of our business.
Speaker 11: We want to make sure that we can comply. I
Speaker 11: think we're going to a place where we're trying to
Speaker 11: get clarity over how to define these different assets. They're
Speaker 11: going to be commodities, so they're going to be securities.
Speaker 11: How do we get them into these respective buckets? And
Speaker 11: I think hopefully do the You've probably seen the upcoming
Speaker 11: rulings that are coming in place. You know, obviously we
Speaker 11: have jurisdiction between the different regulators trying to figure out
Speaker 11: who should have jurisdiction over these digital assets. I think
Speaker 11: we will get to a conclusion hopefully within the next year.
Speaker 4: All right, I've been so to write co founder and
Speaker 4: see of Moonpay and also Carrow on the road to
Speaker 4: test your tech in real time.
Speaker 6: Really appreciate that one. Thank you for your time.
Speaker 4: Now coming up here on Bloomberg Technology, we're going to
Speaker 4: discuss the state of the venture capital industry with John Kayden,
Speaker 4: founder and managing partner of Torch Capital.
Speaker 6: This is Bloomberg.
Speaker 5: Technology time now for VC roundup and first up. Venture
Speaker 5: capital activity here in Canada.
Speaker 3: Staged a rebound in the second quarter, ned by an
Speaker 3: artificial intelligence company in Toronto in particular that drew out
Speaker 3: money from Nvidia, plus Turkish startup get It.
Speaker 5: Will come more than ten percent of its global workforce.
Speaker 3: There's a rapid delivery service struggles with losses in more
Speaker 3: markets in which it operates. Meanwhile, also Global Africa's largest startup,
Speaker 3: that's flutter Wave, is pressing ahead with plans for initial
Speaker 3: public offering after making headway and resolving allegations of financial
Speaker 3: improprietary in Kenya so that it can access more and
Speaker 3: bigger international partners. That's all, according to the CEO.
Speaker 4: ED those are your VC and startup headlines for more
Speaker 4: on the state Evnch Capital specifically looking at consumer tech,
Speaker 4: You're going to bring in John Keaden, founder and managing
Speaker 4: partner of Torch Capital, a leading consumer VC firm. The
Speaker 4: big news of the day John is ARM filing for
Speaker 4: its IPO, And while I won't ask you about ARMS specifically,
Speaker 4: I just wonder how much of a starting gun this
Speaker 4: is going to be for the tech IPO market broadly.
Speaker 12: Well, we hope with There have been a few successful
Speaker 12: IPOs recently, and I think it's slowly starting to open
Speaker 12: back up. That said, I'm not convinced yet that this
Speaker 12: is the start of the rush. I think these are
Speaker 12: trickles and we'll see how things how things move. I mean,
Speaker 12: I think the economy is still very uneven. I think
Speaker 12: investors are still very and even both on the retail
Speaker 12: side and within the private side. So fingers crossed that
Speaker 12: it goes well and that will encourage more IPOs. But
Speaker 12: I still think it's a obia volatile time for tech
Speaker 12: for the short medium term, and of.
Speaker 3: Course arm itself very much be to B John, You've
Speaker 3: got a lot of expertise in the B two C space.
Speaker 3: And interesting, I'm speaking with the CEO Macy's just a
Speaker 3: little bit earlier, how much concern there is lack of
Speaker 3: clarity on a consumer in the US right now? How
Speaker 3: are your consumer tech enabled businesses doing in this environment?
Speaker 6: So I think you have to divide them.
Speaker 12: We saw obviously a lot of froth around sort of
Speaker 12: traditional consumer tech companies using tech enablement. They went public,
Speaker 12: they got hammered, They weren't really probably public ready companies,
Speaker 12: even though they were funded like they were. I think
Speaker 12: real consumer tech is still always a massive opportunity because
Speaker 12: tech is constantly changing consumer behavior. I think we see
Speaker 12: that in AI. I mean, look at the explosion of
Speaker 12: usage of the average everyday consumer with chatch EPT and
Speaker 12: open AI and bard and so on, and I think
Speaker 12: we're at the very beginning of that. And that's what's
Speaker 12: really exciting about investing in consumer tech because tech is
Speaker 12: always changing, consumer behavior is always evolving, creating new opportunities
Speaker 12: in new markets. You know, for example, sorry, go ahead,
Speaker 12: well it's.
Speaker 3: Interesting I was speaking of course with other keyvcs in
Speaker 3: this space, some who know an awful lot around the
Speaker 3: consumer as well. And when we're talking to companies around
Speaker 3: AI that before that there's froth at the moment in particular,
Speaker 3: and valuations have got too heady.
Speaker 5: Are you feeling the same at the moment?
Speaker 12: Absolutely agree with that. If we look back in history,
Speaker 12: you know, Google wasn't the first search engine, it wasn't
Speaker 12: the second search engine. It was like the tenth, eleventh,
Speaker 12: or twelfth. And we are at the very very beginning
Speaker 12: of the first inning with AI, and so trying to
Speaker 12: anoint winners and king makers is very challenging because we
Speaker 12: have no idea those will be the companies that get
Speaker 12: it right in the next three, five, ten years of
Speaker 12: where consumers are truly using it and what the commercialization is.
Speaker 12: So there are a lot of baby AI companies that
Speaker 12: are getting enormous valuations, and I think in the last
Speaker 12: year and a half overall in tech valuations have been
Speaker 12: deeply compressed, but where they're inflated is around AI, and
Speaker 12: so there's just a lot more uncertainty, and I think
Speaker 12: VC funds are going after them like they're sure things,
Speaker 12: which they're not. We're still very early, very exciting revolutionary opportunity,
Speaker 12: but we're early to pick the winners.
Speaker 4: John Towards Capital was in the headlines earlier this year
Speaker 4: the Information reported you'd raise about two hundred million for
Speaker 4: a second fund. What's the status of that fund. We've
Speaker 4: been shopping yet with any of the funds raised.
Speaker 12: Yeah, I think you know, last year we did very
Speaker 12: few deals. I mean, Torch, We've part of our thesis
Speaker 12: and how we operate is to be very focused and disciplined,
Speaker 12: which I think we did pretty well over the last
Speaker 12: two years in the froth around the whole tech arena.
Speaker 12: But right now we are seeing valuations come down, especially
Speaker 12: in early stage. We're seeing a lot of very smart
Speaker 12: focus founders. This is not a fun time to start
Speaker 12: and build a company and try to raise funds for that,
Speaker 12: and so you're seeing very determined founders or experienced founders.
Speaker 12: And with valuations down, we're seeing and technology again changing,
Speaker 12: We're seeing a lot of interesting opportunities. For example, one
Speaker 12: of our portfolio companies called Durable. One of an area
Speaker 12: that we're investing a lot behind is the rise of
Speaker 12: the solopreneur and small small business owners. It is the
Speaker 12: fastest growing part at the US economy, and they actually
Speaker 12: use AI, but they're basically helping founders get from zero
Speaker 12: to one to start a business. And part of that
Speaker 12: is their website. And they can build a website in
Speaker 12: under thirty seconds that's customized and it can take payments
Speaker 12: and really get a business up and running. And in
Speaker 12: their first six months they've built four million websites and
Speaker 12: helped four million businesses get off the ground. And so
Speaker 12: we're seeing starting to see flashes of where the next
Speaker 12: generation of companies are going to come from. And so
Speaker 12: we've actually done three times as amount of deals that
Speaker 12: we did last year already in the first half of
Speaker 12: this year.
Speaker 6: So we're very active in the space.
Speaker 4: You know, at Day's point we've been talking a lot
Speaker 4: about on the show, is that in the first half
Speaker 4: of this year, fifty percent or more of all of
Speaker 4: the VC dollars going to an AI startup went to
Speaker 4: one in San Francisco. He talked about where the next
Speaker 4: generation in the world you operate is coming from. Is
Speaker 4: there any clear geographical divide and where you're investing and
Speaker 4: where new companies are being started.
Speaker 12: I think it's free the question. Differently, I think it's
Speaker 12: all over. I think this company's basically Vancouver. We actually
Speaker 12: invest in another very exciting company Vancouver. We're seeing companies
Speaker 12: all over the country. It's not completely focused on San
Speaker 12: Francisco and New York. And I think between COVID and
Speaker 12: the ability to get talent and the commonality of remote work,
Speaker 12: amazing startups to be built all over the country, which
Speaker 12: I think is very exciting. And also there's not just
Speaker 12: a pure concentration as there used to be, so we're
Speaker 12: looking everywhere and we're very excited about a number of regions.
Speaker 3: And John just to bring this sort of full circle,
Speaker 3: we started by discussing ARM and whether the IPO pipeline
Speaker 3: might be able to well start to flesh out a bit.
Speaker 3: But X is more broadly, are they just on icy
Speaker 3: and you're seeing that big companies are willing to start
Speaker 3: to make a bit of M and A as an
Speaker 3: exit choice.
Speaker 6: They're on ice.
Speaker 12: I think there has been a valuation you set. We
Speaker 12: are not near the bottom. I think growth companies and
Speaker 12: pre companies are much better at cutting costs and extending runway,
Speaker 12: so they haven't really hit the open market with new raises.
Speaker 12: We've seen some like Stripe and some others some of
Speaker 12: the biggest ones, but the true reach that hasn't happened.
Speaker 12: And I think both growth funds and M and A
Speaker 12: strategics are all just sort of waiting on the sidelines
Speaker 12: and saying not until we know we're hitting the bottom
Speaker 12: or are we going to start deploying capital. So I
Speaker 12: think we have a little bit to ways to wait.
Speaker 12: I think it'll be toward the end of this year
Speaker 12: and early next year that we'll see true where true
Speaker 12: valuations sit, and then I think M and A is
Speaker 12: going to be explosive. It may not always be pretty
Speaker 12: for some of the valuations we saw in twenty one,
Speaker 12: but I think it's it's going to be a minute
Speaker 12: before we see a full fledged M and A back
Speaker 12: to market.
Speaker 3: We keep on waiting, John Kine, great tow has some
Speaker 3: time when you and tortch capital wait.
Speaker 12: Thank you, thank you for having me.
Speaker 3: Time today. Look at what the internet is talking about.
Speaker 3: In today's going viral letsco to Braun, the manager to
Speaker 3: music superstars, think Justin bieber Well, he's losing two key
Speaker 3: clients Ariana Grande, Demi Levado and Umyo Braun from Pretty
Speaker 3: famously embroiled in that feud with Taylor Swift when he purchased,
Speaker 3: of course, the master recordings of her first six studio
Speaker 3: album Zed that prompted her to go and re record them.
Speaker 3: Spot them being used in ads, basically stot the money
Speaker 3: flowing to the entity that he had purchased it with.
Speaker 5: He's then since sold that entity.
Speaker 3: In fact, he's made disposals to South Korean companies in particular.
Speaker 3: But it is fascinating that many are now trying to
Speaker 3: wonder as to whether there's love lost here. Apparently Demi Levato.
Speaker 3: Actually they're still good friends, according to the Internet.
Speaker 6: It's what people are talking about.
Speaker 4: But interesting that story just outlined could be one of
Speaker 4: the headlines potentially scrubbed from X That's right. According to reports,
Speaker 4: the social media platform previously known as Twitter is planning
Speaker 4: to remove headlines from news articles and other texts that
Speaker 4: shared on the platform. Bloomberg's ash accounts joins me on set.
Speaker 6: Explain it to me.
Speaker 3: Yeah, so it's exactly what you said, right.
Speaker 13: If you post an article, the headline's not going to
Speaker 13: be there, so it's just going to be an image
Speaker 13: and then you'll have to, you know, whatever you want
Speaker 13: to post around it. But it's kind of a weird thing, right,
Speaker 13: Like there's going to be no headlines, no descriptions, just
Speaker 13: an image.
Speaker 4: I thought this was supposed to be the global town
Speaker 4: square where people are free to share what they want.
Speaker 13: I guess you can as long as it fits within
Speaker 13: the rules of X right, right within the rules and
Speaker 13: sort of the boundaries there.
Speaker 5: But yeah, it's interesting change.
Speaker 6: I mean, it'll make things look.
Speaker 13: Very kind of like tiktoki, I guess, very visual, or
Speaker 13: like an Instagram. Whether it's good or bad, I think
Speaker 13: that we'll have to see.
Speaker 3: And this is all about bringing eyeballs, right. It feels
Speaker 3: that all of these changes that perhaps seem odd to
Speaker 3: the lay consumer, it's all about trying to jup us
Speaker 3: to go back in there and use it more.
Speaker 13: It's all about engagement, right if you think about people
Speaker 13: like pictures, and so Musk has been pretty vocal about
Speaker 13: wanting to do pictures and videos and sort of move
Speaker 13: that way. But the challenges that you lose a lot
Speaker 13: of context, right. You imagine, like an image, you don't
Speaker 13: know if it's an article, you don't know if someone
Speaker 13: just hosting a picture, and so you lose a lot
Speaker 13: of information there. And I think that's what's challenging. I
Speaker 13: think that's why people are sort of struggling with this idea.
Speaker 3: And we wonder again how the advertisers are going to
Speaker 3: react to all of this. I'm sure lots of calls
Speaker 3: still coming. Linda yacroniz direction. We thank you, Asha Counts,
Speaker 3: great breakdown and fat ed You're back. We're back together.
Speaker 5: But that's for this edition of Bloomberg Technology.
Speaker 6: Yeah, massive week.
Speaker 4: You know, we have our IPO news, we have earnings
Speaker 4: continuing with Nvidia in twenty four hours of time.
Speaker 6: But good starts the week. Don't forget the podcast.
Speaker 4: Wherever you get yours, Spotify, iHeart, and on the Bloomberg
Speaker 4: platforms New York and SF.
Speaker 6: This is Bloomberg