WEBVTT - Afghanistan, The Fed, VC, And Inflation (Podcast) 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day, we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:23.120 at Bloomberg dot com slash podcast. I don't know, for me, 0:00:23.280 --> 0:00:26.760 the most compelling read on the Bloomberg terminal today as 0:00:26.800 --> 0:00:28.640 the article I first read on the train coming in 0:00:29.080 --> 0:00:33.000 entitled how a Bloomberg reporter's family escaped the Taliban an 0:00:33.040 --> 0:00:35.760 account of the extreme measures it takes to get out 0:00:35.800 --> 0:00:38.200 of Afghanistan. And clearly we have a lot of news 0:00:38.280 --> 0:00:40.519 items about, you know, the folks that were helping the 0:00:40.640 --> 0:00:43.680 US and Afghanistan UH and are still left behind and 0:00:43.760 --> 0:00:45.560 trying to get them out. And this is a first 0:00:45.960 --> 0:00:50.120 hand account. And Reharden was there. She is the reporter 0:00:50.200 --> 0:00:53.199 on the story. She's a Washington carsponting for Bloomberg Television. 0:00:53.520 --> 0:00:56.080 And Marie, thanks so much for joining us. Tell us 0:00:56.080 --> 0:00:59.480 about this Bloomberg reporter's family who was able to escape 0:00:59.480 --> 0:01:02.320 the Taliban and and what are your connections to the story. 0:01:02.760 --> 0:01:04.880 Thanks so much and thanks thanks for reading the piece. 0:01:05.280 --> 0:01:12.000 Uh this family that I helped evacuate alongside with completely 0:01:12.000 --> 0:01:15.560 the support of Bloomberg and Bloomberg Security operations, we had 0:01:15.600 --> 0:01:18.720 devised this plan. They are a colleagues family. It was 0:01:18.840 --> 0:01:22.360 nine of them. They were in Hara, Afghanistan, and we 0:01:22.360 --> 0:01:24.880 were able to get them to Pakistan and then finally 0:01:25.040 --> 0:01:27.520 get a country to agree to asylum because we reached 0:01:27.520 --> 0:01:31.360 out to a ton for Greece and so I had 0:01:31.440 --> 0:01:33.880 met them when they made it over the border in 0:01:34.000 --> 0:01:38.000 Islamabad to go through some paperwork. UM, given how chaotic 0:01:38.160 --> 0:01:41.240 evacuations were not, a lot of paperwork was completely in order, 0:01:41.280 --> 0:01:44.920 but we were still able to UM. Pakistan has been 0:01:44.959 --> 0:01:46.839 dealing with a lot of these issues, over a hundred 0:01:46.840 --> 0:01:49.440 thousand people like this. They were working as what they 0:01:49.440 --> 0:01:53.240 would call humanitarian corridor. And so that was my involvement, 0:01:53.400 --> 0:01:56.160 and really we thought I should. I felt like I 0:01:56.160 --> 0:01:58.320 should write this piece because I was given such a 0:01:58.360 --> 0:02:02.760 first hand a count and glimpse of how hard it 0:02:02.840 --> 0:02:06.240 is this whole process. There's so many nose there's so 0:02:06.320 --> 0:02:10.080 many false hopes, and it's like every other next step 0:02:10.160 --> 0:02:12.799 almost feels like a miracle until the very end, and 0:02:12.880 --> 0:02:18.519 even though the family is safe and they definitely are 0:02:18.680 --> 0:02:21.640 so fortunate and realize their fate is so different than 0:02:21.680 --> 0:02:25.000 their friends at home. I'm a far had our colleagues 0:02:25.080 --> 0:02:27.440 brother who I spent a lot of time with, said 0:02:27.480 --> 0:02:30.320 that his friends at home say to him, we are 0:02:30.440 --> 0:02:33.800 alive but dead mentally given the fate of the country 0:02:33.880 --> 0:02:37.799 under Taliban rule. The fact of the matter is that 0:02:37.919 --> 0:02:40.400 even if you're lucky enough to get out and have 0:02:40.560 --> 0:02:44.480 the support, it's such an uphill battle for refugees and 0:02:44.560 --> 0:02:47.320 there's really no centralized system. And now the world is 0:02:47.480 --> 0:02:50.040 grappling with another refugee crisis when it looks at Ukraine. 0:02:50.120 --> 0:02:52.400 So the numbers just continue and I don't feel like 0:02:52.440 --> 0:02:55.720 there's a lot of attention put on it. So, um, 0:02:55.800 --> 0:02:57.680 let's hear first of all about the family, I mean, 0:02:58.320 --> 0:03:02.000 big extended family. I wish, you know, we could show 0:03:02.040 --> 0:03:04.480 all of our radio listeners their their picture that we 0:03:04.520 --> 0:03:06.519 had on television this morning, because they look so happy 0:03:06.560 --> 0:03:11.120 and healthy. Now where are they, How are they doing well? 0:03:11.360 --> 0:03:14.560 The family is in Greece, They're doing very well. Um. 0:03:14.600 --> 0:03:16.799 It was nine of them, right, so quite a lot. 0:03:16.880 --> 0:03:20.560 Not everyone spoke English. They speak dry, which is like 0:03:20.600 --> 0:03:26.079 the Afghan version of farsi Um and they're very educated people, 0:03:26.320 --> 0:03:29.840 so they left jobs. His sister, Frey Doune, our colleague. 0:03:29.880 --> 0:03:32.520 His sister Lena was working for you in Habitat. His 0:03:32.600 --> 0:03:35.320 brother Farhad was a web developer. He also was running 0:03:35.320 --> 0:03:40.960 a very uh Western focused cultural site about human rights 0:03:41.800 --> 0:03:46.000 in Afghanistan as well. And his younger brother, Hamaiun was 0:03:46.080 --> 0:03:49.840 just finishing up. He's incredibly bright, his engineering degree at 0:03:49.880 --> 0:03:53.080 Harat University. So they had they left this all behind. 0:03:53.200 --> 0:03:57.400 But of course for them they could not stay. And 0:03:57.480 --> 0:04:00.680 so much of that was because the answer you get 0:04:00.720 --> 0:04:03.520 from so many people is because of the outlook for 0:04:03.560 --> 0:04:06.640 women and girls in the country now. So his sister 0:04:06.720 --> 0:04:08.440 that worked for you in Habitat, that would have come 0:04:08.480 --> 0:04:10.880 to an end. His other sister, if she wanted to 0:04:10.920 --> 0:04:13.800 go to college a little bit younger, that would be impossible. 0:04:14.680 --> 0:04:18.320 Women's lives are back to talibanes, covering up from head 0:04:18.360 --> 0:04:21.960 to toe. They've pretty much disappeared from the streets many 0:04:22.000 --> 0:04:24.880 of them. Only a few really are able to keep 0:04:24.920 --> 0:04:27.520 their jobs. So many of them are now relegated back 0:04:27.560 --> 0:04:29.960 to their homes. They can't even go out and travel 0:04:30.279 --> 0:04:33.560 without a male chaperone. Uh so for so many of 0:04:33.600 --> 0:04:36.960 these women, and some of them were even born during 0:04:37.120 --> 0:04:40.159 US when the US was in the country during this 0:04:40.320 --> 0:04:43.279 US occupation, so they don't even understand what the Taliban 0:04:44.040 --> 0:04:47.479 rule feels like. And that that's that was like a 0:04:47.520 --> 0:04:50.880 heartbreaking moment getting to know his sisters and what their 0:04:50.920 --> 0:04:53.800 fate could have been. So emrie. I mean, this is 0:04:54.040 --> 0:04:57.680 a positive story with a positive ending thanks to you 0:04:57.800 --> 0:05:02.719 and the folks at Bloomberg. What is the expected fate 0:05:02.800 --> 0:05:04.760 of the other folks who would like to get out 0:05:04.800 --> 0:05:08.440 of Afghanistan? How many people are stuck there? Are stuck there? Yeah, 0:05:08.480 --> 0:05:12.719 I mean it's incredibly difficult. So it's a it's a 0:05:12.760 --> 0:05:16.880 country of about forty million um inside. They also recently 0:05:16.920 --> 0:05:22.800 had a a earthquake. They face dire hunger. So many 0:05:22.800 --> 0:05:26.960 people in Afghanistan um there are serious, serious issues and 0:05:27.000 --> 0:05:30.040 so much as that is because more than forty of 0:05:30.080 --> 0:05:34.200 their budget GDP came from international aid and not all 0:05:34.360 --> 0:05:38.400 was pulled given the Taliban is running the country now 0:05:38.920 --> 0:05:44.640 and they just don't have the infrastructure to supply basic 0:05:44.760 --> 0:05:49.279 needs for people heating, hung being able to eat, the 0:05:49.320 --> 0:05:51.479 price of food, the price of energy. We talked about 0:05:51.520 --> 0:05:53.720 it every day in the West, but it's gone up 0:05:54.320 --> 0:05:58.320 in Afghanistan. Even some people have come to sell their 0:05:58.360 --> 0:06:01.120 young daughters into marriage so they can feed the rest 0:06:01.120 --> 0:06:03.760 of the family. And when you look at those that 0:06:03.839 --> 0:06:07.400 are trying to flee, many of them are in limbo. 0:06:07.480 --> 0:06:10.760 Whether it's Pakistan that has more than a million Iran 0:06:10.839 --> 0:06:14.760 that likely has a million Afghans. And then you look 0:06:14.800 --> 0:06:16.440 at the schemes at some of the countries in the 0:06:16.480 --> 0:06:20.600 West are doing, they haven't actually been fully successful. In 0:06:20.640 --> 0:06:23.080 the United Kingdom alone, ten thousand Afghans are still being 0:06:23.080 --> 0:06:26.080 housed in hotels. Right, and Marie, thank you so much 0:06:26.120 --> 0:06:29.400 for this reporting. Just said an extraordinary story, folks. Please 0:06:29.480 --> 0:06:32.040 check it out Bloomberg dot com. Uh and you can 0:06:32.080 --> 0:06:35.000 also find it on the terminal And Marie Hordern, Washington 0:06:35.080 --> 0:06:40.120 correspondent Bloomberg Television. Fascinating story, outstanding reporting of just a 0:06:40.120 --> 0:06:47.839 compelling story here all right, next week Bloomberg is sending 0:06:47.880 --> 0:06:52.840 the surveillance radio slash TV team out at Jackson Hole, Wyoming. 0:06:53.040 --> 0:06:55.520 Why because a bunch of central bankers get out there, 0:06:55.600 --> 0:06:57.279 get together out there this time of year, and they 0:06:57.320 --> 0:07:01.320 talk about economic stuff, monetary policy, all that kind of stuff. 0:07:01.360 --> 0:07:03.640 I did not rate a ticket. I'll let you know, 0:07:04.160 --> 0:07:06.560 so I'll be here. But we want to get a 0:07:06.560 --> 0:07:08.480 sense of what might be happening at in Jackson Hole, 0:07:08.560 --> 0:07:10.400 what might be going on in the minds of our 0:07:10.440 --> 0:07:12.200 good friends at the Federal Reserve. And we do that. 0:07:12.240 --> 0:07:15.040 We go to our good friend Danielle di Martino, Booth 0:07:15.120 --> 0:07:18.400 CEO and chief strategist for Quill Intelligence. She was a 0:07:18.440 --> 0:07:21.720 former adviser at the Federal Reserve Bank of Dallas, so 0:07:21.760 --> 0:07:24.600 she knows a thing or two about the fit. Um. 0:07:24.640 --> 0:07:26.880 All right, so Tom and company will be out in 0:07:27.080 --> 0:07:30.520 Jackson Hole. H Danielle, what do you think they should 0:07:30.560 --> 0:07:32.840 be looking out for? What? Maybe? What questions should they 0:07:32.880 --> 0:07:36.520 be asking? Well, I think that before we go there, 0:07:36.560 --> 0:07:37.960 I think I should point out that I'm at the 0:07:38.040 --> 0:07:41.400 st four where Tom Keane stocks up nice and um, 0:07:41.440 --> 0:07:44.200 I'm actually getting his entire line as we speak at 0:07:45.200 --> 0:07:48.520 music in the background. Yes, indeed, Uh, I think the 0:07:48.640 --> 0:07:52.400 question that really needs to be asked is about quantitative tightening, 0:07:52.960 --> 0:07:55.880 because even if we do see kind of a dissipation 0:07:55.960 --> 0:07:58.920 in the magnitude of the rate types, let's say we 0:07:58.960 --> 0:08:02.200 get tifty basis point since September maybe and November maybe 0:08:03.000 --> 0:08:06.760 in December. I think the FED intends to and certainly 0:08:06.960 --> 0:08:11.080 wants to keep quantitative tightening, ramping up to being full 0:08:11.080 --> 0:08:14.280 speed by the end of September and and moving forward 0:08:14.320 --> 0:08:17.240 with that in the background. To use j Pale's words, 0:08:17.800 --> 0:08:20.480 the effect of that liquidity depletion, I think is the 0:08:20.560 --> 0:08:24.600 great unknown for marketing, for investors in the market as 0:08:24.600 --> 0:08:27.440 well as central banks bankers. And I'd love to hear 0:08:27.480 --> 0:08:30.200 a little bit more about where they think that's going, 0:08:30.320 --> 0:08:33.480 how how that's going to play out. Alright, So hopefully 0:08:33.480 --> 0:08:35.040 we get more on that, and I know that's been 0:08:35.080 --> 0:08:37.840 a black box for a lot of people in terms 0:08:37.880 --> 0:08:41.160 of the minutes that we got yesterday. Danielle Um. The 0:08:41.280 --> 0:08:45.480 debate rages on today was that did we witness a 0:08:45.520 --> 0:08:49.520 Dovish pivot or um are they saying, you know, we're 0:08:49.520 --> 0:08:54.480 gonna get stuck in raising rates higher for longer? Well? 0:08:54.520 --> 0:08:57.480 I think I think what the key kakeaway yesterday was 0:08:57.520 --> 0:09:00.720 that they introduced to risk, and risks are not introduced 0:09:00.720 --> 0:09:04.800 into FED language without purpose, And because they introduced that 0:09:04.840 --> 0:09:07.400 downside risk, I think that that's why they've been perceived 0:09:07.720 --> 0:09:11.400 as dubblish, even though they were more emphatic in terms 0:09:11.480 --> 0:09:15.080 of their inflation goals. So but again these there there's 0:09:15.120 --> 0:09:18.400 no happenstance in FED language, and everything is debated deeply 0:09:18.840 --> 0:09:21.360 before any bourbage is at it. So I think that 0:09:21.360 --> 0:09:24.679 that market participants were correct to to deduce that there 0:09:24.760 --> 0:09:28.960 might be a pause coming up. You know, it's it's interesting, Daniel. 0:09:28.960 --> 0:09:31.840 We heard from a lot of the retailers this week here, 0:09:31.880 --> 0:09:35.400 and you know they all have various levels of caution 0:09:35.520 --> 0:09:40.440 in their outlook. Here. What is the quill uh view 0:09:40.640 --> 0:09:44.560 of the economy? Is there a recession in? Are we 0:09:44.760 --> 0:09:46.960 in one today? If you define up by two quarters 0:09:46.960 --> 0:09:51.480 of negative GDP growth? You know, I've been watching SMP 0:09:51.600 --> 0:09:56.839 Global's GDP estimate tickdown, tickdown, tickdown. Um, it's it's now. 0:09:56.880 --> 0:10:00.280 I believe at point seven for the third quarter and 0:10:00.440 --> 0:10:02.600 the second quarters kind of going to come out a 0:10:02.600 --> 0:10:07.040 whisper under uh under the zero line negatives. And if 0:10:07.080 --> 0:10:10.080 that's the case, then we'll probably see three consecutive prints 0:10:10.480 --> 0:10:13.120 in in the negative column and and and that is 0:10:13.400 --> 0:10:16.040 truly a trend. Once you see that number three economists 0:10:16.040 --> 0:10:18.800 will tell you that a trend has indeed been established. 0:10:19.040 --> 0:10:21.240 And you know what we're looking at is the leading 0:10:21.800 --> 0:10:24.600 sectors for the economy. We're looking at the used car 0:10:24.679 --> 0:10:28.400 market really flat out collapse here, when when you're looking 0:10:28.400 --> 0:10:31.120 at the wholesale side and we're looking at housing, you 0:10:31.160 --> 0:10:34.000 know it's at quill we've actually gotten rid of We've 0:10:34.200 --> 0:10:38.360 we've expunged all worse since the pandemic markers. We now 0:10:38.400 --> 0:10:40.480 go back and look at trends prior to the pandemic, 0:10:40.640 --> 0:10:42.439 and if you look at the existing home sales report 0:10:42.480 --> 0:10:44.720 this morning, we haven't seen home sales falling like this. 0:10:46.320 --> 0:10:48.040 That's a long time ago, and I think you need 0:10:48.080 --> 0:10:51.840 to have perspective when it comes to interstrate sensitive leading 0:10:52.360 --> 0:10:56.320 sectors of the economy. Those were the days the nineties, right, 0:10:57.360 --> 0:11:00.280 um in terms so in terms of the inflation that 0:11:00.320 --> 0:11:03.120 we're seeing and and the problems that people are facing, 0:11:03.480 --> 0:11:06.960 does the FED take that into account? For example, their 0:11:07.120 --> 0:11:11.840 rates mean that home sales are too expensive, but then 0:11:12.160 --> 0:11:14.440 those who are looking to buy a home are also 0:11:14.520 --> 0:11:20.240 seeing rent climb rapidly. Does that discussion, um, you know, 0:11:20.320 --> 0:11:25.320 yield any kind of sympathy from the Fed. I'm not 0:11:25.400 --> 0:11:27.679 sure if it's I'm not sure if we should be 0:11:27.720 --> 0:11:30.800 calling it sympathy. Because of the way that housing and 0:11:30.880 --> 0:11:34.920 shelter insflation. Rental inflation moves through the CPI is so 0:11:35.080 --> 0:11:38.320 slowly that's that's going to be problematic. A goodfriend amount 0:11:38.320 --> 0:11:40.280 Ivy's element, who has been following the housing industry for 0:11:40.400 --> 0:11:43.040 more than two decades, she anticipates that we're going to 0:11:43.120 --> 0:11:46.400 see that shelter print it's seven point zero percent from 0:11:46.440 --> 0:11:49.120 what we saw in July, which was five. That will 0:11:49.160 --> 0:11:53.560 be problematic for the FED, regardless of how impossible affordability is, 0:11:53.679 --> 0:11:56.800 whether you're talking about buying or renting, because you know 0:11:56.920 --> 0:11:59.000 a lot of there's there was talk over the last 0:11:59.040 --> 0:12:02.319 decade or two of out the FED put, and the 0:12:02.360 --> 0:12:05.080 idea was that, I guess sympathy is not the right word, 0:12:05.120 --> 0:12:06.960 but the FED doesn't like to see the market go 0:12:07.040 --> 0:12:09.960 down for a variety of reasons, and when it does, 0:12:10.040 --> 0:12:12.760 they sort of rushed to the rescue in the past. Now, 0:12:12.800 --> 0:12:14.920 I guess the messages there is no FED put And 0:12:15.040 --> 0:12:16.880 I don't think a lot of people feel bad for 0:12:16.920 --> 0:12:19.160 market participants, but you've gotta feel bad for people who 0:12:19.160 --> 0:12:24.080 can't afford housing. You do, and whether you feel quote 0:12:24.120 --> 0:12:27.520 unquote bad for market participants, right the markets are operating 0:12:27.520 --> 0:12:30.120 into the assumption that the FED put is alive and well, 0:12:30.679 --> 0:12:33.040 that's what we've seen since July. I don't think anybody 0:12:33.120 --> 0:12:39.679 actually believes and that is a reflection of people assuming 0:12:39.720 --> 0:12:43.520 that that Powell will indeed pivot all right. Daniel D. 0:12:43.600 --> 0:12:46.920 Martino Booth thanks once again. Danielle is CEO and chief 0:12:46.960 --> 0:12:53.920 Strategies for Quill Intelligence. Video gaming, one of the fastest 0:12:53.920 --> 0:12:57.280 growing areas in the media slash tech space over the 0:12:57.360 --> 0:12:59.839 last decades, certainly got a big, big bump with the 0:13:00.440 --> 0:13:03.400 stay at home during the pandemic. But we saw in Video, 0:13:03.800 --> 0:13:07.320 which makes a lot of video gaming stuff on the 0:13:07.360 --> 0:13:11.000 technology side, post some disappointing results calling out their gaming business. 0:13:11.040 --> 0:13:12.480 So the question is kind of where are we in 0:13:12.520 --> 0:13:15.360 that whole video gaming biz. It's such a big business 0:13:15.360 --> 0:13:17.560 for a lot of folks. Josh Chapman, managing partner for 0:13:17.640 --> 0:13:21.080 Convoy Ventures, joins his Convoy Ventures is an early stage 0:13:21.160 --> 0:13:24.480 venture fund dedicated to the video gaming market. Josh, thanks 0:13:24.480 --> 0:13:26.320 so much for taking the time here, love to get 0:13:26.360 --> 0:13:29.079 in light of in videos results in some of the 0:13:29.160 --> 0:13:31.960 commentary on the gaming business. What's your view of the 0:13:32.160 --> 0:13:36.800 of the state of the video gaming business these days? Absolutely, 0:13:36.840 --> 0:13:40.600 and Paul, thanks, Matt, thank you so much for having me. Um. 0:13:40.640 --> 0:13:44.360 You know, although historical indicators are certainly valuable resources, we 0:13:44.480 --> 0:13:47.760 looked at the economic downturn. We are living in a 0:13:47.880 --> 0:13:50.120 kind of a new era of the video gaming industry. 0:13:50.480 --> 0:13:55.000 Is models and evolved. Social stigmas have really evaporated around gaming. 0:13:55.040 --> 0:13:56.920 It used to be not very cool to game. Now 0:13:56.960 --> 0:14:03.600 it's totally socially acceptable. Still thinks sort of. It's uh, 0:14:03.640 --> 0:14:07.040 it's certainly an exciting space to be in and has 0:14:07.120 --> 0:14:11.240 lots of controversy, but uh, three point two billion people 0:14:11.280 --> 0:14:14.280 play video games today, right, this is now the news 0:14:14.320 --> 0:14:17.560 social square in many senses, and COVID showed that in 0:14:17.720 --> 0:14:22.320 spades where video gaming allowed for a community platform to 0:14:22.400 --> 0:14:26.040 continue where people weren't just talking, they were also having 0:14:26.080 --> 0:14:28.720 fun and exploring, whether it was virtual worlds or not. 0:14:28.880 --> 0:14:31.280 It's it really played a key role to your point 0:14:31.280 --> 0:14:33.960 about in video and some of the brains calls that 0:14:34.000 --> 0:14:36.880 are showing sort of this dip. What we're really seeing 0:14:36.880 --> 0:14:39.640 here is a correction to more the eight to twelve 0:14:39.640 --> 0:14:42.840 percent annual growth that video gaming has seen for over 0:14:42.880 --> 0:14:46.240 two decades now. Um So, COVID kind of pushed the 0:14:46.320 --> 0:14:49.360 video game industry up to a you know, fifteen to 0:14:50.440 --> 0:14:53.240 annual growth rate. Really we're we're talking about is the 0:14:53.360 --> 0:14:56.400 reversion to the mean for video gaming, and so this 0:14:56.480 --> 0:14:58.880 is sort of a COVID correction that we're seeing across 0:14:58.920 --> 0:15:01.560 earnings on the public side and then obviously what we 0:15:01.720 --> 0:15:05.160 do on the you know, early stage video gaming BC side, 0:15:05.160 --> 0:15:08.320 as we're looking at the video gaming tech and platforms 0:15:08.360 --> 0:15:10.520 that are you know, hopefully going to be on your 0:15:10.560 --> 0:15:13.000 Bloomberg derminal in five to ten years. Josh, what are 0:15:13.040 --> 0:15:15.600 the games? What are the games right now that are 0:15:15.640 --> 0:15:19.080 the most successful that that you care about as a 0:15:19.080 --> 0:15:21.200 as someone in finance. I mean, when I was a kid, 0:15:21.200 --> 0:15:25.720 it was all about Mario and Um and friends. And 0:15:25.920 --> 0:15:28.520 as I got older, I got really into Halo because 0:15:28.520 --> 0:15:30.960 you could play that. Again, since you're really people all 0:15:30.960 --> 0:15:32.520 over the world, that was the best, dude. When I 0:15:32.560 --> 0:15:35.120 first moved to Berlin, I had friends moving to Paris, 0:15:35.520 --> 0:15:38.160 friends moving to Washington, d C. Friends moving to San Diego, 0:15:38.640 --> 0:15:41.480 and we could all buy an Xbox and hang out 0:15:41.680 --> 0:15:45.280 every night. It was just a cool, um way to 0:15:45.280 --> 0:15:48.280 to chill with your boys. And now I play Call 0:15:48.320 --> 0:15:51.320 of Duty all the time, even sometimes I spend way 0:15:51.360 --> 0:15:54.200 too many hours in Red Dead Redemption, but I'm a 0:15:54.320 --> 0:15:58.200 very mainstream h forty eight year old gamer. What is it? 0:15:58.240 --> 0:16:02.800 What are the kids playing? Well, I'll kind of what 0:16:02.960 --> 0:16:06.480 you're highlighting there is that gaming is allowing people to 0:16:06.520 --> 0:16:09.800 build community and connect globally. Right, that's case in point 0:16:09.840 --> 0:16:12.840 exactly what you just described. Secondly, there's a really interesting 0:16:12.880 --> 0:16:15.320 staff that the average gamers an age of thirty six, 0:16:15.680 --> 0:16:18.440 and so while you know the there is certainly a 0:16:18.480 --> 0:16:21.520 cohort of younger and what they're playing like Fall Guys 0:16:21.680 --> 0:16:25.120 or Fortnite or um lots of other different games that 0:16:25.160 --> 0:16:28.200 are coming out all around the world. Um, things like 0:16:28.240 --> 0:16:30.840 Call of Duty. I play that as well, and I 0:16:30.880 --> 0:16:33.280 grew up playing tons of pale and hosting land parties 0:16:33.320 --> 0:16:35.360 in Africa and Latin America where I grew up, and 0:16:35.400 --> 0:16:38.800 so community has always been at the core of what 0:16:39.000 --> 0:16:42.120 gaming is. But what we focus on a lot is 0:16:42.160 --> 0:16:45.120 really looking at on the investment, looking at tech in 0:16:45.200 --> 0:16:49.000 platforms instead of content content, which is studios and like 0:16:49.080 --> 0:16:52.880 games themselves at maturity trade between point five to two 0:16:52.920 --> 0:16:56.880 times revenue UM. Tech in platforms and staff businesses whether 0:16:56.920 --> 0:16:59.240 there be two B or B two C trade at 0:16:59.320 --> 0:17:03.400 eight forty times revenue at full maturity. So from an 0:17:03.400 --> 0:17:07.199 investment thesis. You want to own things like Roadblocks, Discord, Unity, 0:17:07.280 --> 0:17:11.120 app Love and Twitch, things like those companies, because at 0:17:11.160 --> 0:17:15.240 maturity that's a dramatically different investment profile and return profile 0:17:15.320 --> 0:17:19.000 for LPs. So give us a sense, Josh of kind 0:17:19.000 --> 0:17:23.520 of the VC environment today for the video gaming business. 0:17:23.520 --> 0:17:27.600 How robust is it? You know, where's the smart money going? 0:17:27.600 --> 0:17:29.880 Where do you think the opportunities are? Has it taken 0:17:29.880 --> 0:17:33.400 a hit as you can come out of the pandemic? Yeah, 0:17:33.480 --> 0:17:37.040 so gaming is certainly not immune to what's going on 0:17:37.080 --> 0:17:40.040 across all adventure. You know, the venture capital market, fuel 0:17:40.080 --> 0:17:43.720 volume is down year to date, dollars invested is down 0:17:43.840 --> 0:17:48.800 six here today, valuations have come down forty six, especially 0:17:48.800 --> 0:17:52.320 at series being later given the halt of the I 0:17:52.400 --> 0:17:54.560 p O window that's really led to growth equity and 0:17:54.640 --> 0:17:57.720 late stage venture to come to a grinding halt since 0:17:57.760 --> 0:18:00.520 we're focused more on speed Series A. You know, the 0:18:00.720 --> 0:18:05.040 venture market around gaming specifically. You know, five years ago 0:18:05.240 --> 0:18:08.000 there was less than five at a million of dedicated 0:18:08.000 --> 0:18:12.240 asset management towards video gaming. Now there's well over four billion. 0:18:12.600 --> 0:18:15.560 We're one of those firms. Uh, and now we've launched 0:18:15.560 --> 0:18:18.199 our third fund looking at this space. But you know, 0:18:18.800 --> 0:18:21.920 the the video game industry continues to drive and that's 0:18:21.960 --> 0:18:25.360 what's driving LP capital into dedicated funds. You can see 0:18:25.400 --> 0:18:28.560 this with Entrees and Horrors just launched their third vertical 0:18:28.640 --> 0:18:33.439 focus gaming funds. Uh, their third vertical of industry focus 0:18:33.600 --> 0:18:36.679 is gaming. And that's really a signal to sort of 0:18:36.680 --> 0:18:41.440 the bulge bracket BC market that gaming deserves dedicated attention 0:18:41.440 --> 0:18:45.560 and investment and can't be lumped in anymore to just 0:18:45.680 --> 0:18:48.880 your media team or your BtoC team. At what point 0:18:48.880 --> 0:18:54.840 do we see games really merge with movies and TV shows, 0:18:54.840 --> 0:18:58.959 with you know, radio and television entertainment as well as 0:18:59.160 --> 0:19:03.360 theater stuff. Yeah, we're already seeing that. If you remember 0:19:03.520 --> 0:19:07.600 the popular Netflix showed the witcher um that was originally 0:19:07.600 --> 0:19:10.400 a video game, and so video games are becoming shows. 0:19:10.520 --> 0:19:13.520 And then we've already seen things like Spider Man becoming 0:19:13.560 --> 0:19:17.480 one of the most successful franchises on PlayStation. The emergence 0:19:18.040 --> 0:19:22.320 the merging of media and video gaming is absolutely converging. 0:19:22.440 --> 0:19:24.640 A fund stat here is that the video game industry 0:19:24.720 --> 0:19:27.520 brings in well over two hundred billion dollars in revenue 0:19:27.520 --> 0:19:30.399 per year. To put that into context, Hollywood brings in 0:19:30.480 --> 0:19:36.040 about forty billion, and music globally brings in about So 0:19:36.160 --> 0:19:41.639 gaming is the predominant entertainment media industry in the world. 0:19:41.800 --> 0:19:44.520 But now video gaming is going from just being about 0:19:44.600 --> 0:19:48.320 fun to now merging with other industries like healthcare and education. 0:19:48.359 --> 0:19:50.959 We've made investments in this space, so think you know, 0:19:51.240 --> 0:19:56.080 VR oculus meditation things instead of the high cost of 0:19:56.119 --> 0:20:00.639 going to therapy, or think of in you know, education specifically, 0:20:00.640 --> 0:20:03.400 were invested in a company called Legends of Learning. Five 0:20:03.840 --> 0:20:06.679 of elementary and middle school kids in America used this 0:20:06.720 --> 0:20:09.520 platform to play games and learn. Matt play games and 0:20:09.600 --> 0:20:13.760 learn science, and so games are interacting with other industries 0:20:14.280 --> 0:20:17.119 in a really really cool way. Yeah, good stuff. Josh Chapman, 0:20:17.160 --> 0:20:21.399 thanks so much for joining us there managing partner Convoy Ventures. 0:20:21.440 --> 0:20:24.200 I was aware of the size of gaming visa VI 0:20:24.720 --> 0:20:27.240 you know, the movie business or the music business. It 0:20:27.400 --> 0:20:30.280 is huge. It's been one of the fastest growing pieces 0:20:30.400 --> 0:20:34.320 of the media. Pie just not my demo, but I 0:20:34.359 --> 0:20:41.560 know it's a big biz. Matt. So, this inflation Reduction Act, 0:20:42.000 --> 0:20:44.120 it's got a bunch of stuff in it that I'm 0:20:44.160 --> 0:20:46.240 not sure it's necessary. I mean, it touches a lot 0:20:46.240 --> 0:20:49.359 of industries, even your beloved auto. I think it should 0:20:49.840 --> 0:20:53.840 maybe you've had a different name. Yes. In any case, UM, yeah, 0:20:53.920 --> 0:20:57.000 it's it touches the car industry. And Keith lang Um, 0:20:57.040 --> 0:20:59.520 an automotive regulations reporter, wrote a great piece on it 0:20:59.560 --> 0:21:02.359 a couple of days ago that just UM prompted so 0:21:02.400 --> 0:21:06.760 many questions. Keith Um joins us now and it's great 0:21:06.800 --> 0:21:10.119 to have you on the program. UM. My question and 0:21:10.440 --> 0:21:13.800 the questions that are asked of me most most often 0:21:13.800 --> 0:21:17.560 are how can I get tax credit? And your piece 0:21:17.640 --> 0:21:21.640 points out that, UM, not everybody's gonna not every electric 0:21:21.680 --> 0:21:24.119 car gives you that tax credit, and next year, no 0:21:24.880 --> 0:21:27.240 current offerings are going to give you that credit. How's 0:21:27.280 --> 0:21:30.680 that work? Well? Even under the current system, UM, not 0:21:30.720 --> 0:21:33.199 only not every electric car qualified, it had to be 0:21:33.200 --> 0:21:37.120 a specific type of plug in high, plug in electric 0:21:37.359 --> 0:21:41.040 or plug in hybrid. UM. Under the new system, starting 0:21:41.040 --> 0:21:43.960 as soon as the President signed the bill, there's a 0:21:44.000 --> 0:21:47.520 requirement UM that most of the cars parts the car 0:21:47.560 --> 0:21:51.239 had to be assembled in North America to qualify. UM. 0:21:51.280 --> 0:21:54.960 Basically to comply with the the U s m c A, 0:21:55.080 --> 0:21:57.720 the trade deal that was passing the Trump administration that 0:21:57.800 --> 0:22:01.720 replaced NAFTA, and UM, the auto industry groups here in 0:22:01.760 --> 0:22:04.240 Washington say that that would take the number of models 0:22:04.240 --> 0:22:08.040 that qualify qualified last week there were seventy two models 0:22:08.119 --> 0:22:12.840 and now about se those won't qualify today, which takes 0:22:12.880 --> 0:22:15.960 this down to about twenty two that qualify. Yes, I 0:22:15.960 --> 0:22:18.840 mean some some very popular models like the Hunda and 0:22:18.920 --> 0:22:22.520 Kiya's out there. They're not gonna, I guess um qualify 0:22:22.640 --> 0:22:25.360 under that. And then next year even cars that are 0:22:25.400 --> 0:22:30.200 built here, uh like by GM or Ford or bmw UM, 0:22:30.240 --> 0:22:33.560 because their components are sourced from the wrong places, they 0:22:33.560 --> 0:22:36.840 won't qualify as that right. Yeah, there are mineral requirements 0:22:36.840 --> 0:22:39.600 for the batteries, which is the minerals are the key 0:22:39.680 --> 0:22:44.600 to UM electric electric vehicle production and most of those 0:22:44.640 --> 0:22:47.840