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Speaker 1: Global business news twenty four hours a day at Bloomberg

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Speaker 1: dot Com. The Radio plus Globo Last and on your

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Speaker 1: Radio is a Bloomberg Business Flash from Bloomberg World Headquarters

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Speaker 1: on Katherine Cowdery. The stock market is extending its losses,

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Speaker 1: heading for a three week low. A report on job

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Speaker 1: creation is fueling concern over the state of the economy.

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Speaker 1: A survey by the Payroll Processor a DP showed US

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Speaker 1: companies hired workers at the slowest pace in three years

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Speaker 1: last month. A DP said private companies added one hundred

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Speaker 1: fifty six thousand workers in April, falling short of economiss

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Speaker 1: estimates which I can markets every fifteen minutes throughout the

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Speaker 1: trading session. DOWL Industrial Average narrowing earlier losses, currently down

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Speaker 1: seventy four points four tons of a percent at seventeen thousand,

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Speaker 1: six hundred seventy six. SMP five foundered down ten points,

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Speaker 1: a loss of half a percent at two thousand fifty three.

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Speaker 1: The NASTAC is down thirty points at two thirds of

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Speaker 1: a percent at forty seven thirty three. West Texas Intermedia

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Speaker 1: crude oil twenty five cents a very spot gold is

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Speaker 1: up is down ten dollars thirty cents announce at and

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Speaker 1: the tenure treasury is up five thirty seconds with the

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Speaker 1: yield of one point seven seven percent. And that's a

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Speaker 1: Bloomberg business flashy. It's the anthem for marijuana legalization. And

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Speaker 1: the man who helped put this song together moon Alis,

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Speaker 1: the band singing and playing it together, is Roger McNamee.

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Speaker 1: He's joining me here at the Hoover Institution at Stanford University.

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Speaker 1: He's the co founder of Elevation Partners. They have many

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Speaker 1: claims to fame, early investors in Facebook, another very success

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Speaker 1: full companies and Rogers joining us today to talk about

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Speaker 1: tech and also talk about the cannabis industry some of

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Speaker 1: the latest political developments which which could have huge implications

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Speaker 1: for the industry, for farmers, etcetera. So a very definite

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Speaker 1: business angle there as well. Roger, welcome back, Kathleen. It's

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Speaker 1: a pleasure. It's great to have you here, and it's

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Speaker 1: great to be here in Palo Alto, Stanford, such a

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Speaker 1: gorgeous part of the world. You're very smart to live here.

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Speaker 1: Roger Mcamie. I do my best. So let's start with Apple,

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Speaker 1: because they've had some announcements that weren't so great today

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Speaker 1: they've got to revamp the music service. They've lost that

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Speaker 1: fight to keep the iPhone protected that brand name in China.

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Speaker 1: So the thing to remember is that we are in

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Speaker 1: a year where I think investors are going to struggle

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Speaker 1: to get great returns from tech stocks. And there are

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Speaker 1: lots of reasons for it, but the important one is

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Speaker 1: the issue that's driving Apple today, which is their success

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Speaker 1: in the last five years has been about the iPhone.

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Speaker 1: It has been about smartphones, and the smartphone was for

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Speaker 1: the whole industry, mother of all product cycles, and it's

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Speaker 1: much much larger than we have personal computers, larger than

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Speaker 1: anything that came before it. And so it's no shock

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Speaker 1: that now that we've hit saturation that we're going to

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Speaker 1: see a very different environment going for it because there

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Speaker 1: is nothing available coming along that is of anything like

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Speaker 1: that scale. So Apple is a value stock today. And

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Speaker 1: I think, Kathleen, the last time I spoke with you,

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Speaker 1: which is about a year ago, uh, we we're already

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Speaker 1: very cautious about the outlook for tech because of the

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Speaker 1: saturation in the smartphone market, and I think Apple reflects

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Speaker 1: all the challenges that are there. The thing to understand

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Speaker 1: is it's not going to be a high growth stock

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Speaker 1: from here. It's just not. It's the law of large

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Speaker 1: numbers gets in the way. But that doesn't mean it

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Speaker 1: can't be a good value. It pays a nice dividend.

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Speaker 1: It's a brilliantly managed company. There there are no competitive

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Speaker 1: issues driving them right now that are unrelated to the

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Speaker 1: saturation of the industry. So, you know, I think it's

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Speaker 1: a good value stock. I think this is actually pretty

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Speaker 1: reasonable entry point because everyone is so pessimistic. But you know, again,

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Speaker 1: you should not anticipate that's going to return to the

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Speaker 1: old growth rate. Facebook tell us that Facebook and their

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Speaker 1: outlook what you see for them in this US so.

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Speaker 1: So the thing that Facebook that is so amazing is

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Speaker 1: that this is a company that when it began, the

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Speaker 1: product was it was very simple, very simplistic. It is

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Speaker 1: now evolved to be the most important media company in America.

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Speaker 1: With all due respect to Bloomberg and everyone else, they

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Speaker 1: are the ones Facebook is capturing all of the growth

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Speaker 1: in online advertising. So they first dominated mobile, now they're

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Speaker 1: moving on to video. I think the outlook for them

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Speaker 1: remains outstanding. The stock is not cheap, but it has

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Speaker 1: a unique position in the list of available stocks. And

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Speaker 1: that it is the largest, most stable company with which

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Speaker 1: continues to have a very high rate of growth. I

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Speaker 1: think that will persist. I'm not sure what causes it

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Speaker 1: to end. I think we've got several more years of

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Speaker 1: really solid numbers coming from from Facebook. Uh. You know,

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Speaker 1: if you're uncomfortable with the market, as I am, you

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Speaker 1: might want to be cautious about entering here. There will

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Speaker 1: be days when people do get pessimistic, and I do

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Speaker 1: think you want to buy the stock on dips, But

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Speaker 1: it is I think the single best position company in

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Speaker 1: all of it. And Roger, of course, putting his money

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Speaker 1: where his mouth is, he owns both faces, own both

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Speaker 1: of those stocks and have for a long time. Notwithstanding

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Speaker 1: my concerns about the market, I have a very very

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Speaker 1: high t build position, but my equities have been focused

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Speaker 1: in those two stocks. You wanna talk to us about

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Speaker 1: unicorns in the corraps, you know, corn bubble yikes sound

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Speaker 1: scar No, not in the least. Here's the really the

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Speaker 1: cool things. So unicorn is the term of art that

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Speaker 1: has been applied to these private tech companies which have

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Speaker 1: received private market valuations of a billion dollars or more.

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Speaker 1: And there were at one time more than two hundred

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Speaker 1: of those UH since the end of last year, we

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Speaker 1: have seen UH, gravity and reality rear their ugly heads

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Speaker 1: and the unicorns are coming back down to earth. The

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Speaker 1: whole thing was essentially bologny from the word go, that

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Speaker 1: the transactions that were being done had a high notional prices,

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Speaker 1: but the terms associated with penalized the companies for any

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Speaker 1: kind of set back, so they weren't real prices. And

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Speaker 1: the good news for public investors is you're going to

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Speaker 1: be a beneficiary of this. The public market has been

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Speaker 1: very smart. It said it didn't want to take these

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Speaker 1: companies private or public excuse me, at the prices people

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Speaker 1: were asking. And the result is that Fidelity and tiro Price,

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Speaker 1: the two biggest mutual fund companies that were participating in

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Speaker 1: this space, have marked down their portfolios, bringing the whole

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Speaker 1: sector down, which, oddly enough, because they were small positions,

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Speaker 1: didn't harm those funds, but they've set up an opportunity

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Speaker 1: where those funds are going to get a chance to

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Speaker 1: participate in the recapitalization of these companies and then when

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Speaker 1: they go public, because many of them are real businesses.

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Speaker 1: So the unicorns, there were some that were silly, but

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Speaker 1: many of them are real, and you want to keep

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Speaker 1: your eyes open because their company in their like Asana,

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Speaker 1: which I'm a sureholder of um that isn't yet officially

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Speaker 1: a unicorn because they've been smarter than that, but they

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Speaker 1: look like I'm rapidly growing enterprise software company. And you'll

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Speaker 1: see a lot of those coming over the next couple

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Speaker 1: of years. And the ones that do a good job,

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Speaker 1: we're gonna make you money. And the ones that don't

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Speaker 1: are going to disappear before you ever see them. The

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Speaker 1: November election November eight, many people will be voting for president.

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Speaker 1: There will also be many people in the state of

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Speaker 1: California voting for the control, regulation and tax for the

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Speaker 1: adult use of marijuana. Tell us about this initiative. So

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Speaker 1: they're going to be nine states that vote in this

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Speaker 1: presidential election cycle, so nearly a fifth of the states

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Speaker 1: in the country will be voting either on medical or

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Speaker 1: adult use recreational. And the reason this is so important

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Speaker 1: is that we've now got forty years of the history

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Speaker 1: of the War on drugs to reflect on and have

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Speaker 1: discovered one the War on drugs didn't reduce crime. It

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Speaker 1: actually increased violence. It didn't you reduce drug use. It

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Speaker 1: just made a lot of people miserable, and it was

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Speaker 1: enforced in a way that created huge civil rights violations.

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Speaker 1: What they now know because testing has been done, is

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Speaker 1: that cannabis is not the same class as the drugs

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Speaker 1: that people have been about, things like heroin or cokinge.

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Speaker 1: It is a natural product that it has many positive

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Speaker 1: medical benefits. The result is that twenty four states have

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Speaker 1: now made it legal for medical use. In California and

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Speaker 1: three others are going to vote this year on adult

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Speaker 1: use for applications other than medical. It's really important to California,

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Speaker 1: where the largest agricultural country state in the country. The

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Speaker 1: illegal business in marijuana and California is between twenty and

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Speaker 1: fifty billion dollars a year. It's totally outside of taxation,

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Speaker 1: it's outside the environmental rules, it's outside the labor rules.

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Speaker 1: And in the state. There are three compelling reasons to

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Speaker 1: vote for approval of this. One is you get to

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Speaker 1: bring a portion of that black market into the daylight.

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Speaker 1: This is good for labor, it is good for taxation,

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Speaker 1: it is good for the environment. Uh. Secondly, marijuana maybe

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Speaker 1: the only available thing to the state of California that

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Speaker 1: generates huge tax revenues for which there is no opposition.

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Speaker 1: And then thirdly the environment. There are currently literally billions

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Speaker 1: of dollars of illegal cultivation in state and national parks,

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Speaker 1: causing huge environmental damage. To get rid of all that,

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Speaker 1: another benefit you make is uh water. It's true in

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Speaker 1: our state, California has been in a drought for many years.

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Speaker 1: Believe it or not, fifty percent of the state's water

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Speaker 1: is effectively shipped to China in the form of alfalfa.

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Speaker 1: Alfa is a crop that is used for dairy cattle

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Speaker 1: and it has essentially no value. It's just the California

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Speaker 1: farmers get their water for free, so they have no

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Speaker 1: incentive to apply it intelligently, and the result is our

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Speaker 1: drought is effectively the result of this one crop. And

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Speaker 1: because alfafa has a low value, marijuana is worth at

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Speaker 1: least a hundred times per acre. You could take nine

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Speaker 1: of the alfalfa crop out of line, saving nine of

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Speaker 1: the water, and have the farmers grow marijuana instead. They

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Speaker 1: would have ten times the economic value in ten percent

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Speaker 1: of the acreage. Now, this state's not ready to do

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Speaker 1: that yet, but that kind of thing is there, and

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Speaker 1: for California it's important to embrace this industry because there

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Speaker 1: are the liquor industry is trying to corner the market.

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Speaker 1: They're trying to monopolize it, using their very powerful lobbying

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Speaker 1: to do that, and people like me are saying, you

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Speaker 1: know something, Agriculture is too important to California. Technology is

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Speaker 1: too important, travel and vacations are too important to California.

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Speaker 1: We need this to be a highly fragmented business with

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Speaker 1: lots of small businesses. And that means there's nothing wrong

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Speaker 1: with the liquor guys participating. They just can't control it

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Speaker 1: and take all the rules and tilt them in their

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Speaker 1: favor and block everybody from being in Roger mcam thank

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Speaker 1: you very much for spending time with us. Co founder

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Speaker 1: Elevation Partners as band member fan leader Moon Alice, joining

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Speaker 1: us from Stanford University along with n colleague and co

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Speaker 1: host Kathleen Hayes. This is taking Stock and perhaps we'll

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Speaker 1: leave you with a little of Roger McNamee's music. Gold

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Speaker 1: Production