Speaker 1: From Mahard where Innovation of Money and Power Collie in
Speaker 1: Silicon Valley, NBM.
Speaker 2: This is Bloomberg Technology with Caroline Hyde and Ed Ludlove.
Speaker 3: I'm Caroline. He had of Rumberge's world headquarters in New York.
Speaker 3: Ed Ludlow, He's off. This is Bruebag technology coming up
Speaker 3: well as the market's drop. We'll talk all things ipo
Speaker 3: ARM completes the biggest of the instacart gives up to
Speaker 3: go public next week. We have so much more ahead
Speaker 3: and we'll talk the state of fintech with a former
Speaker 3: CEO of so far as his company joins others in
Speaker 3: withdrawing applications for banking charters. Why, plus how will the
Speaker 3: uaw's unprecedented strikes impact automakers and the electric vehicle market.
Speaker 3: An ARM still managing to treadwater buck the trend. We're
Speaker 3: at more than two percent after its initial public offering,
Speaker 3: and let's stick with that theme. The comeback. It's here
Speaker 3: and of course this week was the biggest debut of
Speaker 3: the year. We of course were speaking with the CEO,
Speaker 3: Renee Has, who was confident in the outlook for his business.
Speaker 1: We also have a very unique business model that gives
Speaker 1: us the ability to have a very very good vision
Speaker 1: in the future in terms of when people use our products.
Speaker 1: So relative to our confidence in the outlook, we have
Speaker 1: a very very high confidence that the growth rate that
Speaker 1: we have talked about will be sustained.
Speaker 3: So how do your syncratic was that event or how
Speaker 3: can we read across the rest of the IPO's Katie
Speaker 3: Roof is here in New York discuss it all. You
Speaker 3: are the person who marries venture backed businesses as well
Speaker 3: as M and A as well as into the public
Speaker 3: markets and the banks, and I'm ultimately interested as to
Speaker 3: how your sources are saying this read across for armor
Speaker 3: is for the likes of instacrat, for Clevio and other
Speaker 3: companies that want to hit this market running.
Speaker 2: Well, the IPO window is open.
Speaker 4: We've been talking about this for almost two years. You know,
Speaker 4: tech IPAs came to a halt in late twenty twenty one,
Speaker 4: and arm is just been the first big one and
Speaker 4: it went well. It went up twenty five percent, which
Speaker 4: is you know where they often aimed for these things
Speaker 4: to go. So, you know, we saw instacart they raised
Speaker 4: their price range probably partly because of this. It shows
Speaker 4: that there's public investor enthusiasm. Of course, ARM and instacart
Speaker 4: are very different companies, but bankers are still going to
Speaker 4: argue that this is, you know, a sign of tech enthusiasm. Broadly,
Speaker 4: instacart raised their range from twenty six to twenty eight
Speaker 4: to twenty eight to thirty. At the top of that
Speaker 4: range they would be ten billion dollars on a fully
Speaker 4: deleuted basis, so still lower than where they were, but
Speaker 4: better than where they were hoping.
Speaker 5: A few days ago.
Speaker 3: One we hear the reports of just how hands on
Speaker 3: Massa was in this process, and the idea that maybe
Speaker 3: he decided to undershoot in the overall price range that
Speaker 3: he could have got for the shares, leave money on
Speaker 3: the table to get that pop. I mean, we'd like
Speaker 3: you to see that replicated by the others that want to
Speaker 3: come to this market. How how difficult to balancing act.
Speaker 4: Is this at the moment, So what happened was pretty
Speaker 4: unusual where they thought, you know, they could have priced
Speaker 4: a banker spot that they could have priced the company
Speaker 4: at fifty two a share, but ARM went with fifty one,
Speaker 4: partly because Masa just wanted to ensure, you know, a
Speaker 4: big pop on the first day, but of course that
Speaker 4: means that a little less money was raised for the company.
Speaker 4: I would say usually companies are going to take the
Speaker 4: banker recommendation where whatever it may be. They do these
Speaker 4: pops to incentivize new investors for taking a risk on
Speaker 4: day one. Otherwise, why would you invest on day one?
Speaker 4: You'd wait until and see how it went. But you know,
Speaker 4: if you leave, if you do too much of a pop,
Speaker 4: then that's more that the company could have raised, So
Speaker 4: they try to time it. But of course it's all
Speaker 4: just a guess. They do these road shows where they're
Speaker 4: talking to all these public investors trying to figure out
Speaker 4: what they're going to buy, how much they're going to buy,
Speaker 4: and it. You know, they do some math, but it's
Speaker 4: also a lot of.
Speaker 3: Guessing, and they've gotten art of a guess that you
Speaker 3: were just telling me before that. Well, the CFO of
Speaker 3: instacart knows these banking worlds well, having come from Goldman.
Speaker 4: Yeah, exactly. Nick Giovanni, the CFO of Instacart, he used
Speaker 4: to run Gordman's TMT, their investment banking group for tech,
Speaker 4: so he was the one praising all these tech IPOs
Speaker 4: in the past. So if there's anyone that knows how
Speaker 4: to optimize Instacar's success, it would be him.
Speaker 3: All lies on him or lives in Clavio as well.
Speaker 3: For next week, we wait with beta breath, Katie Rufe,
Speaker 3: We thank you for being here and save trip back
Speaker 3: to La. Meanwhile, well, let's dig into more broadly the
Speaker 3: market here and sentiment around technology names as we look
Speaker 3: for this IPO window to be back up and running
Speaker 3: with Laura Cooper black Rock, senior macro strategist for ices EMEA,
Speaker 3: indeed a former strategist over here at Bloomberg as well. Laura,
Speaker 3: and I'm interested as to you're in the world of ETFs,
Speaker 3: So what's so interesting about the ARM listing? And I
Speaker 3: know you can't go into individual names, but it's like
Speaker 3: not going to get into ETFs more broadly as it
Speaker 3: is an ADR of course a foreign company, but also
Speaker 3: very small floats overall. What sort of focus are you're
Speaker 3: putting for your clients on these new companies to come
Speaker 3: to the market.
Speaker 6: Well, I think probably what's the most interesting is that
Speaker 6: we've seen a fairly muted IPO backdrop this year. It
Speaker 6: has been a little bit stronger than last year, but
Speaker 6: well below the levels that we saw back in twenty
Speaker 6: twenty one, for example. And I think this reflects a
Speaker 6: couple of factors. One is the fact that we are
Speaker 6: in this environment of heightened macro uncertainty. Investors have uncertainty
Speaker 6: about wherely where rates are going, what's the growth dynamics
Speaker 6: going to be, like, will this actually be a profitable
Speaker 6: type of backdrop to enter into this market? And then second,
Speaker 6: I think there's this greater scrutiny around valuations because investors
Speaker 6: aren't necessarily chasing the next big growth stock, but it's
Speaker 6: really about looking at those margins, looking at the profitability
Speaker 6: and demand dynamics to gauge is this actually you know
Speaker 6: something we want to invest in at this uncertain time.
Speaker 3: Uncertainty also geopolitical in when we think of the China
Speaker 3: expose that ANAM has, we also think of the AI
Speaker 3: hype that was satisfying at that moment. How much is
Speaker 3: artificial intelligence leaning into the valuation conundrum for many of
Speaker 3: your clients.
Speaker 6: I think certainly the AI hype has been a key
Speaker 6: driver around just the outperformance that we've seen in some
Speaker 6: of those US tech stocks a year to date, Yes,
Speaker 6: we have seen that come off a bit in recent weeks,
Speaker 6: but I think underlying this AI euphoria there is still
Speaker 6: strong fundamentals, and it's one of the reasons why we
Speaker 6: do see artificial intelligence as a key secular megaporce over
Speaker 6: the coming years. If we think about the profitability backdrop,
Speaker 6: this was clearly coming through in earnings. These are really
Speaker 6: those companies that can generate the type of earnings that
Speaker 6: investors are demanding. If we look at earnings estimates for
Speaker 6: the next twelve months, they're sitting at about that fifteen
Speaker 6: percent mark. That's well above other sectors, and it's probably
Speaker 6: the only sector that can actually meet those earnings expectations.
Speaker 6: So as those earnings potentially are justified in the coming quarters,
Speaker 6: we do think there's further scope for this tech rally
Speaker 6: to run. Even as we start to see probably greater
Speaker 6: bouts of volatility around some of the negative headlines coming through,
Speaker 6: it doesn't really curb what we still see as a
Speaker 6: favorable long term demand backdrop for these tech stocks.
Speaker 7: Go global.
Speaker 3: As of course, you currently sit in that NEA role
Speaker 3: and I'm looking at technology on the stock six hundred,
Speaker 3: the worst performing sector over the last three months overall,
Speaker 3: it's one of the worst performing on the day as well. Laura,
Speaker 3: how global is this view that technology is a sected
Speaker 3: to be in.
Speaker 6: I think it really depends on where we're going to
Speaker 6: see those beneficiaries from some of the long term trends
Speaker 6: around for example, re shoring in some of that semiconductor
Speaker 6: space that is probably tilted a little bit more towards
Speaker 6: the US, but it really does reflect this market concentration,
Speaker 6: So that's leaning US probably more of a US equity
Speaker 6: tilt over Europe at this juncture. But if we think
Speaker 6: about kind of broader in the tech space, it's not
Speaker 6: really known to be kind of the driver of those
Speaker 6: European benchmarks. So I think overall, when we look at
Speaker 6: positioning in these tech stocks, it's probably tilted towards the US.
Speaker 6: That's probably where it's going to be the greatest demand resiliency.
Speaker 6: But for example, semiconductors is a very strong conviction call
Speaker 6: for US on the back of these medium term AI dynamics,
Speaker 6: and that we advocate for taking a global exposure because
Speaker 6: we do think there's pockets of opportunity and really not
Speaker 6: taking too much of a concentrated risk because some of
Speaker 6: those geopolitical fragmentations could arise and we don't want to
Speaker 6: have any particular exposure in that broader semiconductor space.
Speaker 3: Good on the day. If you're looking at the socks,
Speaker 3: I'm interested in digging into some of the individual intricacies
Speaker 3: of what makes an AI company an AI company for you,
Speaker 3: or indeed an AI opportunity. Which are the areas of
Speaker 3: application that you think is most profuitful.
Speaker 6: Well, I think there's really three ways of framing artificial
Speaker 6: intelligence from an investment perspective. The first would be around, Okay,
Speaker 6: how does AI actually boost a company's earnings? How are
Speaker 6: we going to see this kind of change pricing models,
Speaker 6: revenue growth going forward, Particularly if we think about software providers,
Speaker 6: how are they actually going to deploy this to the
Speaker 6: broader landscape. So those companies that have actually been able
Speaker 6: to secure AI patents actually have seen an increase in
Speaker 6: their economic value, so they're already showcasing the impact of
Speaker 6: AI at the company level. Then we can think about, okay,
Speaker 6: how is AI going to impact operational efficiency? Are we
Speaker 6: going to see more streamlined businesses, more cost cuts, or
Speaker 6: the other side of that, are we going to see
Speaker 6: this AI generated boom drive this efficiency, this productivity gains
Speaker 6: that in turn will have some benefits for some of
Speaker 6: these companies. And then third, I think is probably the
Speaker 6: key question that we've been asked by clients more recently,
Speaker 6: is really around how is AI going to disrupt this
Speaker 6: on a sector basis? So which of those sectors are
Speaker 6: going to be the greatest beneficiaries. Some are quite obvious,
Speaker 6: for example, the software providers, semiconductors as well if we
Speaker 6: think the next step around cybersecurity, some of those proprietary
Speaker 6: data providers. But it's also the thing about healthcare, medical
Speaker 6: device innovation, in the legal field, where are we going
Speaker 6: to see a disruptions. So it's about capturing those areas
Speaker 6: where we think is not actually in the price yet,
Speaker 6: but they're probably going to be net beneficiaries. As is
Speaker 6: AI trend.
Speaker 3: Unfolds still totally all encompassing this AI conversation or a
Speaker 3: cooper create us some time with you happy weekend, of course,
Speaker 3: a black roll meanwhile coming up well before AI, we're
Speaker 3: all talking about the hype around crypto. We're going to
Speaker 3: go back to that hype, but talk about its application
Speaker 3: right now, and indeed, more broadly, where we're seeing fintech
Speaker 3: firms finding some concerns around actually wanting to become banks.
Speaker 3: We'll discuss with a figure co founder of Mike Cagney.
Speaker 3: That's next. This is Bloomback. Now we wait with Beta
Speaker 3: breath for potentially a statement coming from the White House.
Speaker 3: President Biden going to be speaking about the strike action
Speaker 3: currently underway. We know it's actually kind of been a
Speaker 3: focus across many in industry, but members of the moment
Speaker 3: united at Auto Workers Union, they voted to strikers midnight
Speaker 3: after negotiations with what Fords, Atlantist General Motors they all
Speaker 3: fell through. In fact, GM CEO Mary Barrow weighed in
Speaker 3: earlier today on Blue Make Tevitlevision. Take a listen.
Speaker 8: I will say we're ready for this. You know, as
Speaker 8: we've dealt with the COVID and dealt with the semiconductor
Speaker 8: shortage as well as other supply chain challenges that have
Speaker 8: you know, continued to persist from COVID. Our team knows
Speaker 8: how to manage these situations. They're staying agile and we're
Speaker 8: going to do what's right for the company. We're going
Speaker 8: to make sure everyone stays safe.
Speaker 3: We now can go to the White House. We understand
Speaker 3: where President Biden is addressing the nation.
Speaker 9: Began the last few weeks and over the last the
Speaker 9: past decade, auto companies have seen record profits, including the
Speaker 9: last few years, because of the extraordinary skill and sacrifices
Speaker 9: of the UAW workers. Those record profits have not been
Speaker 9: shared fairly, in my view, with those workers. Just as
Speaker 9: the Treasury Department has released the report pointing out that
Speaker 9: the most Comperhence report ever dealing with how unions are
Speaker 9: good for both union workers and non union workers to
Speaker 9: the annual overall economy.
Speaker 2: Unions raise workers wages, they.
Speaker 9: Said, incomes, increase home ownership, increased retirement savors, increase access
Speaker 9: to critical benefits like sickly and childcare, and reduced inequality,
Speaker 9: all of which strengthen our economy for all workers. That's
Speaker 9: because unions. Unions raised standards across the workplaces and entire industries,
Speaker 9: pushing up wages and strengthening benefits for everyone. That's why
Speaker 9: strong unions are critical. They're growing economy and growing from
Speaker 9: the middle out the bottom up, not the top down.
Speaker 9: That's especially true as we transition to a clean energy future,
Speaker 9: which are in the process of doing. I believe that
Speaker 9: transition should be fair and a win win for issued me,
Speaker 9: for auto workers and auto companies. But I also believe
Speaker 9: in the contract agreement must lead to a vibrant, made
Speaker 9: in America future that promotes good, strong, middle class jobs
Speaker 9: that workers can raise a family on, where the UAW
Speaker 9: remains at the heart of auto economy, and where the
Speaker 9: Big three companies continue to lead an innovation, excellence, quality
Speaker 9: and leadership. Last night, after negotiations broke down, the UAW
Speaker 9: announced the targeted strike and a few Big three auto plants.
Speaker 9: Let's be clear, no one wants to strike. Say it again,
Speaker 9: no one wants to strike. But I respect workers right
Speaker 9: to use their options under the collective bargaining system, and
Speaker 9: I understand the worker's frustration over generations. Auto workers sacrifice
Speaker 9: so much to keep the industry alive and strong, especially
Speaker 9: the economic crisis and the pandemic. Workers deserve a fair
Speaker 9: share of the benefits they help create for an enterprise.
Speaker 9: I do appreciate that the parties have been working around
Speaker 9: the clock, and when I first call them at the
Speaker 9: very first day of the negotiation, I said, please stay
Speaker 9: at the table as long as you can to try
Speaker 9: to work this out. And they've been around the clock,
Speaker 9: and the companies have made some significant offers.
Speaker 2: But I believe they.
Speaker 9: Should go further to ensure record corporate profits mean record
Speaker 9: contracts for the UAWM stated again, record corporate profits which
Speaker 9: they have should be shared by record contracts for the
Speaker 9: uaw And just as we were building an economy of
Speaker 9: the future, we.
Speaker 2: Need labor agreements for the future.
Speaker 9: It's my hope that the parties can returned the negotiation
Speaker 9: table to forge a win win agreement to continue our
Speaker 9: active engagement. I'm deplug dispatching two members of my team
Speaker 9: to Detroit, Acting Labor Secretary Julie Schue and White House
Speaker 9: Senior Advisor Gene Sperling. Both of them have been involved
Speaker 9: loutching now to offer their full support for the parties
Speaker 9: and reaching a contract. The bottom line is that auto
Speaker 9: workers help create America's middle class. They deserve a contract
Speaker 9: that sustains them in the middle class. So thank you
Speaker 9: very much. It's on. I'm going to say thanks you.
Speaker 5: You can directly involved in negotiations, should Hunter get a
Speaker 5: part in.
Speaker 3: Mister President President Joe Biden there speaking on the uaw
Speaker 3: workers strike, really reiterating that the workers have his support.
Speaker 3: Nobody wants to strike, he says, but they are dispatching
Speaker 3: officials to offer support in the talks, and he wants
Speaker 3: the parties to return to the negotiating table and reach
Speaker 3: an agreement that he says would be a win win.
Speaker 3: Let's first and almost then go out to Washington. I
Speaker 3: think we have Katie Lion standing by just to wrap
Speaker 3: up what is quite a difficult balancing act for the
Speaker 3: president because he wants to be pro worker, pro union,
Speaker 3: but also wants to be pro ev transition.
Speaker 10: Yeah, that's exactly right, Caroline, and you certainly see that
Speaker 10: pro union sentiment coming through in the remarks he just made,
Speaker 10: among many other things, him saying that they should go
Speaker 10: further because record corporate profits should be shared with a
Speaker 10: record contract for the United Auto Workers, saying that autoworkers
Speaker 10: help build the middle class and deserve a contract that
Speaker 10: helps sustain them and the middle class. So clearly trying
Speaker 10: to be on the side of the union here, even
Speaker 10: as he says that nobody does want to strike, because
Speaker 10: that strike also puts the other objective this administration has,
Speaker 10: or one of them, at least, Caroline, which you alluded to.
Speaker 10: They're desire for a clean energy economy of transition to
Speaker 10: EVS potentially at risk depending on how long this strike goes.
Speaker 10: Remember this is an administration that, through the Inflation Reduction Act,
Speaker 10: is offering massive subsidies on new electric vehicle sales. It
Speaker 10: also has a goal of having half of all vehicle
Speaker 10: sales new vehicle sales by twenty thirty be electric. So
Speaker 10: these two goals are really in conflict here for this administration,
Speaker 10: it is a very difficult line to walk, but obviously
Speaker 10: what they ultimately want at the end of the day
Speaker 10: is this conflict resolved, which is why he is dispatching
Speaker 10: both being Spurling and acting Labor Secretary. Julie's to Detroit.
Speaker 3: Perfect wrap up, Thank you so much, Kaylie. Lions on
Speaker 3: the ground in Washington. Let's get you more contacts from
Speaker 3: the auto perspective for a moment as well, being most
Speaker 3: Gabrielle coomfolos with us and Gabby. What's what's so interesting
Speaker 3: is I immediately think of Tesla in all of this
Speaker 3: ev race and of course doesn't work with unionized workers.
Speaker 3: So how much is this going to be affecting basically
Speaker 3: the competition against Tesla of this moment, If Ford, if Stilantis,
Speaker 3: if GM are affected by such strikes.
Speaker 11: Yeah, you know, I think it does make it even
Speaker 11: harder for the Detroit three to compete with Tesla, at
Speaker 11: least in this moment, because you know, they are plowing
Speaker 11: all those record profits and you know these record car
Speaker 11: car prices we've been paying, they've been putting that money
Speaker 11: into battery plants, into designing new electric vehicles. So but
Speaker 11: they have a long way to go to catch up
Speaker 11: with Tesla. Tesla has a ten year head start. And
Speaker 11: let's not forget about even though we don't see a
Speaker 11: lot of Chinese automakers here in the US, they are
Speaker 11: you know, not on the door around the world, So
Speaker 11: they are under a lot of pressure, and you know,
Speaker 11: it's attention because I think what the problem is that
Speaker 11: the automakers for the last ten years have kind of
Speaker 11: you know, after two thousand and eight, they kind of
Speaker 11: that was it. They got the monkey off their back.
Speaker 11: You know, they had mass they really you know, at
Speaker 11: the bargaining table in two thousand and seven or at a
Speaker 11: financial crisis, the workers really sacrificed a lot, and I
Speaker 11: think the automakers kind of thought that was the end
Speaker 11: of the story and we're moving on now. And I
Speaker 11: think what Sean Fayn the UAW is doing is showing them, hey,
Speaker 11: not so fast, you're not we're not going to agree
Speaker 11: that this you know now or and over man, that's
Speaker 11: what's happening.
Speaker 3: A new tactic at work, new leader to carry a
Speaker 3: couple of absolutely brilliant to talk to you. Thank you
Speaker 3: very much. Indeed, we're going to do a hard pivot
Speaker 3: now we're going to return back to a conversation that
Speaker 3: is much more about tech, but actually largely maybe about regulation,
Speaker 3: about an administration, and it's desired to be adopting blockchain
Speaker 3: companies in particular. We just want to be talking to
Speaker 3: the chain firm Figure, in the latest fintech company actually
Speaker 3: to withdraw its application for a bank charter, a move
Speaker 3: made after years of waiting for answers from US financial
Speaker 3: regulators joining us. I'm very peace to welcome Mike Cagney,
Speaker 3: here's the former CEO of SOFI, co founder of Figure,
Speaker 3: which uses blockchain to build financial products such as loan origination,
Speaker 3: for example. But also very pleased to welcome Shananali Bessett
Speaker 3: to the shows. Help bring about this interview, and I think,
Speaker 3: first and foremost a great article that you've helped pen
Speaker 3: in other media. At the moment, Mike just talking about
Speaker 3: the decision making process of not becoming a bank, and
Speaker 3: it is in large part because of regulators.
Speaker 12: Well, it's really around the state of regulation with blockchain,
Speaker 12: and the Figure is a Blochain holding company. We have
Speaker 12: two Blochain centric businesses one and lending one in markets
Speaker 12: and we have over two hundred state licenses. So you
Speaker 12: can see the appeal of having a national charter and
Speaker 12: not having to deal with the overhead of two hundred
Speaker 12: state licenses. Also the ability to have liabilities to fund
Speaker 12: the assets that you generate. But Figure fundamentally is a
Speaker 12: market's business and are lending business is more of a
Speaker 12: means to an end to build that marketplace out, and
Speaker 12: we felt without clear identification of what we could and
Speaker 12: couldn't do as a bank, it didn't make sense for
Speaker 12: us to move forward. There were other reasons as well,
Speaker 12: but that was the key one.
Speaker 13: I'm curious what you think this means about the future
Speaker 13: of financial technology. Your alma mater so far is really
Speaker 13: leaning into the idea of being a bigger and bigger bank.
Speaker 13: You have the regional banking system that may not be
Speaker 13: the ultimate form of capital for people like you moving forward,
Speaker 13: So what role do the upstarts start to play.
Speaker 12: So I think you're in a macro trend right now
Speaker 12: where the banks are contracting credit and that would be
Speaker 12: exacerbated in the basal three M game went through that
Speaker 12: that's unlikely to happen at least you know, with the
Speaker 12: current regulatory or the legislative position. But you're in a
Speaker 12: situation you're aspected where banks are pulling back. You're also
Speaker 12: in a situation where the asset liability ratio, where banks
Speaker 12: traditionally have at least over the last several years, especially
Speaker 12: through COVID, have had massive amounts of excess liabilities and
Speaker 12: had to deploy that into assets that's now flipped. Those
Speaker 12: banks are now liability constrained, they're having to sell those assets.
Speaker 12: And so I think systemically, over the next five years
Speaker 12: you're going to have a situation where non bank lenders
Speaker 12: are going to be able to lean in and participate
Speaker 12: access wholesale capital markets in a way that the banks
Speaker 12: are going to not be able to do. So they're
Speaker 12: going to fill that gap.
Speaker 13: It's also we'd be remiss not to talk about this
Speaker 13: idea of it being a humongous week in the IPO
Speaker 13: market after such a massive drought. We've reported that your
Speaker 13: lending business you're considering.
Speaker 6: An IPO for.
Speaker 13: How has this week changed your calculus about how you're
Speaker 13: thinking about speaking to investors?
Speaker 12: Sure, I think rather than talking to the IPO per se,
Speaker 12: I'd say that the lending business itself is a mature business.
Speaker 12: Although it's still doubling every year, it's a profitable business,
Speaker 12: and it's really found an interesting opportunity in terms of
Speaker 12: lending technology. But what it is, again is ultimately a
Speaker 12: marketplace business. And so when you think about what that
Speaker 12: vertical really looks like, it's not so much that it
Speaker 12: looks like an upstart or a sofar with multi product solution.
Speaker 12: It actually looks a lot more like ice. And that's
Speaker 12: ultimately the objective we're trying to go to is to
Speaker 12: stand up private capital markets to take advantage of this
Speaker 12: contraction that's happening in the banking system. And we think
Speaker 12: there's a great opportunity to do that.
Speaker 3: When you're thinking about being that marketplace, when you're thinking
Speaker 3: about intertwining trad fi with qrypto and blockchain technology, how
Speaker 3: much institutional buyd have you had of your product, of
Speaker 3: your offerings, of the way in which you want to
Speaker 3: be servicing.
Speaker 12: Sure. So we've done over fifteen billion dollars of transactions
Speaker 12: on blockchains with banks, with institutions, and right now we're
Speaker 12: in the middle of a transaction with two very large
Speaker 12: private equity firms where we're issuing an asset backed security,
Speaker 12: a triple A rated asset back security Native two blockchain,
Speaker 12: so it won't be on DTC, it'll actually be trading
Speaker 12: on the blockchain. And this is the beginning of what
Speaker 12: I think is going to be a systemic trend. I
Speaker 12: think by the middle of next year, we'll have tens
Speaker 12: of billions of dollars of native assets on chain in
Speaker 12: a true marketplace being developed out serial entrepreneur.
Speaker 3: Nice having a talking about your latest one and indeed
Speaker 3: well the views towards maybe even a public listing in
Speaker 3: the next year or so. Mike, great to have you
Speaker 3: in the show. Thank you, Mike Cagney. Of course we
Speaker 3: want to thank Shnanibasset as well for that conversation with Figure.
Speaker 3: Welcome back to roomback Technology and Caroline had in New York.
Speaker 3: But now let's pivot into the world of where private
Speaker 3: money is flowing at the moment, and is it tackling
Speaker 3: climate Climate tech investments may be dipping actually this year,
Speaker 3: but Galvanized Climate Solutions still managed to close its first
Speaker 3: venture and growth equity fund over one billion dollars. Let's
Speaker 3: bringing Code executive chair Tomstire for more and how you're
Speaker 3: going to be deploying this capital. This is about startups,
Speaker 3: but with real world implications right here, right now.
Speaker 14: Tom, Absolutely, Caroline, I mean we are the need to
Speaker 14: solve the climate crisis is an immense tailwind for investment.
Speaker 14: So these companies can take advantage of an absolute necessity
Speaker 14: to solve a multitude of problems in terms of the
Speaker 14: waves we generate, use energy, and build huge profitable companies
Speaker 14: as a result, so that in fact, solving a huge
Speaker 14: crisis is what is built for to serve the needs
Speaker 14: of society.
Speaker 2: And that's exactly what we're trying to do.
Speaker 3: And how will was the appetite to want to come
Speaker 3: and invest behind this at the moment when we have
Speaker 3: seen valuations hit, we have seen a pull away from
Speaker 3: risk taking and particularly venture having a tough time of it.
Speaker 14: Well, I think that there are a lot of people
Speaker 14: in the world of professional investing who are just getting
Speaker 14: educated about the need to invest in climate response and
Speaker 14: let me say this, Caroline. You know, in investing, when
Speaker 14: it's hard to get money and when valuations are coming down,
Speaker 14: that's a great time to have money.
Speaker 2: And you know, so it's you shouldn't feel the head.
Speaker 14: For us, we think of that as this is a
Speaker 14: huge generational opportunity in general and very specifically, this is
Speaker 14: a good time to have money and to be looking
Speaker 14: at investments and to be, you know, looking five to
Speaker 14: ten years at.
Speaker 3: What's't been so interesting is who you've been working with.
Speaker 3: You set up with Katie Hall, of course deeply experienced
Speaker 3: way in which of managing money and cross asset perspective,
Speaker 3: but you've brought on some well, some real experience here
Speaker 3: when it comes to this particular fund. How are you
Speaker 3: thinking of intertwining it with Galvanized more broadly, because you
Speaker 3: do have a cross asset perspective. You're not only in
Speaker 3: bench capital and growth equity, but you're in real estate
Speaker 3: and you're in public equities.
Speaker 14: Absolutely, I mean Galvanized the company is very specifically trying
Speaker 14: to take a multi strategy approach and investing behind the
Speaker 14: need to solve climate in a very variety of investment areas,
Speaker 14: but specifically this fund innovation and expansion. We were lucky
Speaker 14: enough to get three partners to lead it, very Maxwell,
Speaker 14: Cliff Ryan, and Sloni Multani, who have long professional expertise,
Speaker 14: great track records, but also great experience and great knowledge
Speaker 14: about the climate space specifically. That's very unusual, and as
Speaker 14: somebody who started a number of investment activities and investment
Speaker 14: business says, you really don't have anything unless you have
Speaker 14: great partners to lead it. So anytime you're talking about
Speaker 14: a specific investment effort, you have to start with great people.
Speaker 2: With experience, great track roads, and knowledge of the place.
Speaker 3: I mean you speak to your background having led parrel
Speaker 3: and capital management, hedge fund owner in San Francisco, but
Speaker 3: then you pivoted more mission driven and indeed more political
Speaker 3: in the way in which you've navigated these waters. I'm
Speaker 3: interested when you're thinking about galvanizing a youth voter in
Speaker 3: this moment, when we're looking at strikes within the UAW,
Speaker 3: when you're thinking of a president has to navigate a
Speaker 3: desire for an auto industry that needs to pivot into
Speaker 3: a more responsible climate focused to gender, but at the
Speaker 3: same time needs to share profits with its workers. How
Speaker 3: are you seeing the administration navigate the need for climate
Speaker 3: solutions too.
Speaker 14: Look, I think the Biden administration has done a fantastic
Speaker 14: job actually of trying to address our climate crisis in
Speaker 14: a sense, sable and economically sensitive way. And I think
Speaker 14: that one thing Caroline to remember, and the reason really
Speaker 14: that all of us, Katie and the three people running
Speaker 14: this fund and everybody else in Galvinize is doing it,
Speaker 14: is we believe that we're going to win in the marketplace.
Speaker 2: We believe this is a generational investment opportunity.
Speaker 14: And then in fact, the way that capitalism is going
Speaker 14: to solve this crisis is by producing cheaper, better, faster,
Speaker 14: and cleaner solutions. And so when we think about what
Speaker 14: the Biden administration is doing hand in hand with the
Speaker 14: private sector, it's really to come up with new technologies,
Speaker 14: new solutions that are better for consumers, so that it's
Speaker 14: not a question of asking people to sacrifice. It's a
Speaker 14: question of asking people to make sensible, smart decisions on
Speaker 14: their own behalf. That's how it's supposed to work, and
Speaker 14: that's what we're driving for.
Speaker 3: So let's go back to the capitalism and the money
Speaker 3: being deployed. You've already invested in eleven companies. Now, I
Speaker 3: know you're not managing this exact fund. You've just talked
Speaker 3: about the three experience people that you've got very Maxwell
Speaker 3: for example. But talk about some of the companies that
Speaker 3: you are choosing to back and why when I'm looking
Speaker 3: at the routing company, when looking at regrow Pulsora, what
Speaker 3: are they doing differently?
Speaker 14: Look in every one of these companies, they're coming up
Speaker 14: with a need to solve an existing problem with a
Speaker 14: new technology, with progressive new ideas in ways that people
Speaker 14: are going to spend money, and they're going to drive
Speaker 14: revenue in a way that produces a large company that's
Speaker 14: going to grow really fast. That's what we're looking for,
Speaker 14: early stage companies that can grow and scale. And if
Speaker 14: you're going to address a global problem, which is our
Speaker 14: climate crisis, that means by definition, you have to have
Speaker 14: a significant, important company that's going to be very valuable.
Speaker 14: So when we look at any one of those eleven companies,
Speaker 14: we're looking at a huge existing problem that is going
Speaker 14: to create huge companies. And the question is can you
Speaker 14: figure out which ones are the great companies? Can you
Speaker 14: have them want, can you be the best partner for them,
Speaker 14: and can you help them scale and grow in such
Speaker 14: a way that you create real returns for your investors
Speaker 14: and have measurable impact. That's what we're trying to do
Speaker 14: in this fund. That's what those three professionals have a
Speaker 14: history of doing and a specific long knowledge of this
Speaker 14: area in terms of how we're going to solve these
Speaker 14: different problems.
Speaker 3: And what about companies that are sizable already in the
Speaker 3: public sector that maybe you could invest in as you
Speaker 3: go for public equities to responding to basically, well, California
Speaker 3: where you sit, maybe the EU taking desire for more regulation,
Speaker 3: but more transparency, but maybe broader US being slower than
Speaker 3: the rest of the EU. How do you see compliance
Speaker 3: affecting bigger companies going forward?
Speaker 14: Well, I think that this has always been solving this
Speaker 14: problem has always been a question of a public private partnership.
Speaker 14: And if you look at the Inflation Reduction Act, which
Speaker 14: was by the Biden administration last year, in which I
Speaker 14: think is having a huge impact, that's really a question
Speaker 14: of saying to people, we're going to give you a
Speaker 14: carrot to get this done faster. We're going to help
Speaker 14: you get it done. If you look at what the
Speaker 14: EU is doing, by and large, they're more going towards
Speaker 14: policies and rules that insists that you get it done.
Speaker 14: In each case, what we're really trying to do is
Speaker 14: accelerate the move, to make it possible for people to
Speaker 14: invest more successfully, move faster and bigger because the crisis
Speaker 14: is very much at hand. And last thing I'd like
Speaker 14: to say, Caroline is when you look at transparency, when
Speaker 14: we start to get real information. You know, the old
Speaker 14: saying is if you can't measure it, you can't manage it.
Speaker 14: We're seeing a demand for transparency about who is creating
Speaker 14: the real emissions because once we have that, the managers
Speaker 14: can solve it. And really companies can look and say, okay,
Speaker 14: we absolutely have to get that down.
Speaker 2: How can we do it? And that's why they're going
Speaker 2: to look to those kinds of companies.
Speaker 3: Tom screat to have some time in the Tomstyre Galvanized
Speaker 3: Climate Solutions Co Executive Chair on the latest funding one billion.
Speaker 3: It's today's VC spotlight moment and we're going to be
Speaker 3: talking about Moto. It's a Brazilian motorcycle rental company, but
Speaker 3: actually more than that, it's last mile delivery marketplace as well.
Speaker 3: It's just announced a fifty million dollar series c CO
Speaker 3: led by QD Investors and also Bicycle Capital, New Benu
Speaker 3: firm by form A soft Bak executive Marsda Clari and
Speaker 3: of course Shunietta. And please to say that joining us
Speaker 3: now is Shoeieta as well as motor Ceo Roomen's Ruins
Speaker 3: Zenlato coming all the way from Brazil, and we thank
Speaker 3: you very much, gentlemen, both of you coming in from Miami,
Speaker 3: Brazil to talk about the global VC opportunity here and
Speaker 3: just paint the picture with men's about exactly what Motu
Speaker 3: is doing, how it's disrupting because it's not just a
Speaker 3: cleaner way of doing motorcycles.
Speaker 14: Yeah.
Speaker 15: Actually, the problem we're trying to solve there is high
Speaker 15: unemployment in Brazil in Latin and people don't have access.
Speaker 2: To credit either.
Speaker 15: So we are providing them too to work by ranting
Speaker 15: motorcycles out to people without any requirements of credit. And
Speaker 15: we started about three years ago and just fifty bikes.
Speaker 15: In the first year, we deployed one thousand motorcycles and
Speaker 15: now we are deploying one thousand every ten days. Very
Speaker 15: excited to be here.
Speaker 3: You're looking across Brazil, across Mexico, I mean that must
Speaker 3: be water your attention the growth, But is it also
Speaker 3: the opportunity issue here in terms of it being more
Speaker 3: about delivery as well and engagement on the population.
Speaker 5: Yeah, there are two things that got us really excited.
Speaker 5: First is the metrics. The numbers always speak for themselves,
Speaker 5: and Moto has incredible numbers. They're growing over three hundred percent.
Speaker 5: They're not just gross profit profitable, They're not just keep
Speaker 5: it that profitable. They're net income profitable, which is very
Speaker 5: rare for a startup, and they're very capital efficient. So
Speaker 5: that caught our attention. But then the opportunity is huge.
Speaker 5: Brazil is dominated in the motorcycle industry by one company, Honda,
Speaker 5: that has seventy percent of the market, and it's right
Speaker 5: for someone to come in and offer something different. So
Speaker 5: you put those together and you have the chance to
Speaker 5: create something really big and meaningful. And then you just
Speaker 5: export that playbook to Mexico and do the same thing.
Speaker 3: Do you export it to elsewhere? You've just raised money?
Speaker 3: Is the idea about geographical reach? Is it more about
Speaker 3: building up the engineering, the talent. How do you deploy money?
Speaker 15: We are focusing on Brazil and Mexico. Now our growth
Speaker 15: from the assets comes from debt investors. So the way
Speaker 15: we were able to build a profitable company with very
Speaker 15: good economics is a very safe investment for debt investors
Speaker 15: as well the capital markets. And the money now is
Speaker 15: just to bring global talents for the company. We got
Speaker 15: huge companies like New Buying, GMPEZ and Brazil that we're
Speaker 15: able to bring top talents and we want.
Speaker 2: To do the same.
Speaker 3: It's interesting that you went for equity financing that you
Speaker 3: have taken debt financing in the past. Is that something
Speaker 3: analyze and look to.
Speaker 15: We we are all about doing that. We raised more
Speaker 15: than seventy million dollars in that so far. One hundred
Speaker 15: percent of our capects is done with the keptal markets
Speaker 15: with debts.
Speaker 3: Sure, in this moment when you're looking at writing these
Speaker 3: sorts of checks and seeing this sort of growth, how
Speaker 3: competitive is it? And I mean there's Tiger Globals on
Speaker 3: this round as well, there's plenty of other big name
Speaker 3: vcs and I'm interested as to what valuations you're currently
Speaker 3: looking at and how you're talking amongst other bench partner.
Speaker 5: Yeah, the growth equity market globally has been a bit
Speaker 5: of a comma. I'd say the patient's toes are twitching,
Speaker 5: so opportunities are starting to come up, but it's only
Speaker 5: the ones with really exceptional numbers that are getting people's attention,
Speaker 5: and those are getting people's attention. We're co leading this
Speaker 5: with QD, which is a from a respect we've worked
Speaker 5: with before. The existing investors are all investing, so a
Speaker 5: company like Moto will never struggle to attract capital. The
Speaker 5: valuations are much more reasonable, though, so nobody is over
Speaker 5: when it comes to the number that they want, and
Speaker 5: I think that's healthy for everybody. It's healthy for the company.
Speaker 5: The other thing that's different is the time that these
Speaker 5: deals are taken to get done is slower, and that's
Speaker 5: also good for everybody. The companies get a chance to
Speaker 5: have investors really digin, give them some feedback. Investors get
Speaker 5: much more comfortable with the companies. So I'd say we're
Speaker 5: entering a fairly healthy moment in the market. But only
Speaker 5: the best companies are able to.
Speaker 3: Attract capital right now, and you do your due diligence.
Speaker 3: You also look at the landscape of Latin America, the
Speaker 3: countries you know and how to invest in, so well,
Speaker 3: how does that regulatory landscape look for a company such
Speaker 3: as Moto. How do you look at other players in
Speaker 3: this space.
Speaker 5: Yeah, the nice thing about tech in Latin America in
Speaker 5: Brazil is it's inclusive. The government is very supportive. It
Speaker 5: doesn't matter if it's the right or the left. The
Speaker 5: tech opportunities about bringing more people into the economy. They're
Speaker 5: so deeply underserved, consumers and businesses both so deeply underserved.
Speaker 5: So in the US we tend to think of technology
Speaker 5: AI is the latest boogeyman as a threat to livelihoods.
Speaker 5: In Brazil, technology is often a key that unlocks livelihoods,
Speaker 5: and that's a fundamental difference, and so the governments get
Speaker 5: very behind that kind of idea. It's what makes tech
Speaker 5: in emerging markets so attractive. It's inclusive, it's not disruptive,
Speaker 5: and that tailwind helps all kinds of companies, especially like
Speaker 5: more Too, that are so obviously bringing opportunity to people.
Speaker 3: What you've done is you're saying you're able to provide
Speaker 3: these motorcycles, this way of making money to do deliveries
Speaker 3: to people who have either bad credit no credit. But
Speaker 3: you must be using technology to understand what the risks
Speaker 3: are there. How have you managed to build out a
Speaker 3: credit company, an insurance company, a maintenance company out of
Speaker 3: basically a motorcycle company.
Speaker 15: Basically, we know that we need to be the best
Speaker 15: option for people every day, so we use technology and
Speaker 15: everything and to do a no touch experience. In our
Speaker 15: team also have these through Gallety mentality to do more
Speaker 15: and less. So this is how we were able to
Speaker 15: build such a good economy net income company in these
Speaker 15: three years. I believe that very few companies got to
Speaker 15: really net profit company. And we are all about serving
Speaker 15: people and if we need to help them, we need
Speaker 15: to do a product that's cheap and better than they
Speaker 15: have their own motorcycles.
Speaker 3: Many would think Brazil political instability at times, economic instability
Speaker 3: at times. How do you push away from that narrative?
Speaker 3: How do you ensure that big, great successful businesses can
Speaker 3: be built out in emerging markets in the Latin America.
Speaker 15: We are really a social business. We are pushing to
Speaker 15: help people and be a way of Latin to make
Speaker 15: a better place to people drive and people have an
Speaker 15: opportunity to work. And doesn't matter who is the governing place,
Speaker 15: we are there to be part of the good.
Speaker 3: Sure, you and Macello have really shone a light on
Speaker 3: Latin America. That's what Bicycle Ventures is all about, and
Speaker 3: the idea that people aren't seeing the opportunities, but are
Speaker 3: people seeing them more? When you're having Qued alongside you,
Speaker 3: when you're seeing repeat investors in the space, is that
Speaker 3: starting to grow in consensus?
Speaker 12: Not really.
Speaker 5: Quid are unique. They've been in Latin America on the
Speaker 5: ground for quite a while, which is unusual for a
Speaker 5: global firm. We respect them for doing that. They have
Speaker 5: people in some power or people in Mexico City, so
Speaker 5: they see what we see, which is markets that are
Speaker 5: ignored by global capital markets. They're side notes compared to
Speaker 5: the US and China, maybe even Europe. But the opportunity
Speaker 5: is much bigger than the capital available. So our fundamental
Speaker 5: view is there's just a dislocation of the market. People
Speaker 5: don't have the appetite or the patients to look past
Speaker 5: to the headlines that you just called out, political instability, crime,
Speaker 5: inflation and see the opportunities beneath. But if you look,
Speaker 5: they're great opportunities. So New Bank is the latest stunning example,
Speaker 5: probably the most valuable digital bank in the world, forty
Speaker 5: billion dollar market cap. There are many other companies coming
Speaker 5: that will go public in the next couple of years.
Speaker 5: That'll keep proving that Latin America can create a lot
Speaker 5: of equity value. And we like the situation where people
Speaker 5: are not paying as much attention because it's better for us.
Speaker 3: M hmmm when you're doing a due diligence. It's great
Speaker 3: to have some time with you Moto for CEO. Rubin's Senlato,
Speaker 3: who I say, flying out for this and we appreciate
Speaker 3: it very much, just for this back to yeah, yeah,
Speaker 3: lovely to have you over here to fly back to
Speaker 3: Brazil and Juniata is always flying in from Miami.
Speaker 2: We really appreciate it.
Speaker 3: Meanwhile, coming up, look, initial talk to the sale of
Speaker 3: Disney's ABC are getting up. We'll have all the details next.
Speaker 3: There's some blue meg technology here is what has been
Speaker 3: going viral. Disney holding initial talks. We understand about selling
Speaker 3: it's ABC network and TV stations to local broadcaster next Star.
Speaker 3: That's according to sources. But then media mogul Byron Allen,
Speaker 3: who are a string of TV outlets Weather Channel as well,
Speaker 3: also has discussions with Disney. We understand about acquisition of
Speaker 3: the network and his stations. It's all according to sources
Speaker 3: familiar with the matter, let's get more familiar with it,
Speaker 3: because Disney is saying in a statement that the company
Speaker 3: still has made no decision with respect to the divestshire
Speaker 3: of ABC or any other property. Next TI meanwhile declined
Speaker 3: to comment. Let's bring in Chris Palmery, who's been really
Speaker 3: managing to cut through what feels like sometimes noise in
Speaker 3: the media industry. But the noise had always been for
Speaker 3: a little while that maybe this would be an asset
Speaker 3: for Disney to dispose of.
Speaker 7: Right well, if you remember, this started in July when
Speaker 7: Bob Iger said that, you know, maybe these traditional channels
Speaker 7: were no longer core to the business, and that's set
Speaker 7: off a frenzy of people looking at the assets who
Speaker 7: might be interested. And I think that the fact that
Speaker 7: there hadn't been any progress really since then got people thinking, well,
Speaker 7: maybe we can start a fire here. If you read
Speaker 7: the public comments that next our executives have given, they said, hey,
Speaker 7: you know, we're interest, did Disney, But you know, what's
Speaker 7: the real terms here? Because there are a lot of
Speaker 7: complications with buying a network like ABC, for example, you know,
Speaker 7: how do you handle the sports that ESPN sometimes simulcasts
Speaker 7: on ABC, or all the shows that presumably Disney would still.
Speaker 2: Own that air on the networks. So there's a lot
Speaker 2: of questions.
Speaker 7: But I think we're starting to see people starting to
Speaker 7: raise their hand and say, yes, I might be interested
Speaker 7: in this, and it puts a little pressure on Bob Iger.
Speaker 9: To do something.
Speaker 3: What about at this moment when he's also trying to
Speaker 3: navigate strikes, right to strikes, Act to strikes? How is
Speaker 3: that sort of conversation progressing?
Speaker 2: Well?
Speaker 7: Again, it's part of this all you know situation in
Speaker 7: media today where everyone knows it's shifting towards streaming, but
Speaker 7: the streaming business isn't profitable and there are issues with labor,
Speaker 7: there's issues with how do you produce the content, and
Speaker 7: the traditional TV networks are losing viewers and so that's
Speaker 7: that's a long term drag on the business. So do
Speaker 7: you keep them because they're making money now and you
Speaker 7: can sort of run shows across the different platforms, or
Speaker 7: do you sell and cash out? And that's uh, that's
Speaker 7: what the Disney management and lots of other managements are
Speaker 7: wrestling in the media in business with right now.
Speaker 3: We'll see how those conversations progress next week. Chris Palm,
Speaker 3: Mary we thank you. Meanwhile, that does it for this
Speaker 3: edition of Bloomberg Technology. Don't forget about our podcast. This
Speaker 3: is Bloomberg Technology.
Speaker 2: CEE S.