Speaker 1: From the heart of where innovation, money and power collive
Speaker 1: in Silicon Valley and beyond. This is Bloomberg Technology with
Speaker 1: Emily Jay Imed Ludlow in New York in for Emily Chang.
Speaker 1: This is Bloomberg Technology coming up in the next hour.
Speaker 1: Tech continues to tumble, then as that one falls for
Speaker 1: a fifth day, it's worst streak since February, as angst
Speaker 1: amongst global central banks and a strong dollar grows. Plus,
Speaker 1: Amazon goes after deal hungry shoppers. As retailers braced for
Speaker 1: a lackluster holiday season, the econmost Giant will hold a
Speaker 1: second Prime Day sale this October. In the fight back
Speaker 1: against inflation. And is it a bird? Is it a plane? No,
Speaker 1: it's your delivery falling from the sky. We talked a
Speaker 1: zipline about the drone startucks, new sound technology, the latest
Speaker 1: play to win over regulators. We'll get to that in
Speaker 1: a moment, but first, Amazon's trying Prime Day again. The
Speaker 1: company is offering a two day early access sale on
Speaker 1: October eleventh and twelve, ahead of the holiday season. It's
Speaker 1: the first time it's done two Prime Day events in
Speaker 1: the same year. This as retailers across the world one
Speaker 1: of a slowdown in holiday shopping here to discuss Bloomberg's
Speaker 1: Spencer Soper Spencer, what's the play here from Amazon? Hey?
Speaker 1: Why not? You know, try to slap Prime Day on it,
Speaker 1: Try to get people excited, Try to get a bunch
Speaker 1: of them to your to your site, so as much
Speaker 1: stuff as you can. They definitely got a lot of
Speaker 1: merchants dealing with an inventory blood like a lot of
Speaker 1: other a lot of other retailers, they want to move
Speaker 1: into quickly and they want to try to get people's
Speaker 1: money before somebody else does. So we've got this kind
Speaker 1: of race going on of Christmas creeping earlier and earlier
Speaker 1: into the season. Was this a surprise that they would
Speaker 1: add a second Prime Day or did we know that
Speaker 1: it was in the works now? Really there were some
Speaker 1: reports about it about it happening. I think it was
Speaker 1: the precise day was really the the only the only
Speaker 1: news and that they're kind of rebranding it as uh
Speaker 1: as a Prime Early Access as as opposed to calling
Speaker 1: it Prime Day two because Prime Day two just doesn't
Speaker 1: sound fresh enough or something. You told us a little
Speaker 1: bit about inventories. You know, I think a lot of
Speaker 1: the sellers on Amazon had to do this juggling acts
Speaker 1: right of supply chain crunch getting things in the last
Speaker 1: holiday season. A lot of that didn't turn up until
Speaker 1: the middle of this year. So what's the risk here
Speaker 1: for the sellers on on the Amazon platform. Well, the
Speaker 1: risk is that they don't sell it, you know. So
Speaker 1: I think we're gonna see prices drop drop a lot
Speaker 1: on consumer goods, you know, on on nondiscretionary I'm sorry,
Speaker 1: on discretionary purchases, right, so, you know, and then and
Speaker 1: then they're trying to align with consumer case. A lot
Speaker 1: of things people want to past couple of years during
Speaker 1: the pandemic, they just don't want anymore. So, um, how
Speaker 1: do you entice somebody to buy that? If they don't
Speaker 1: want it, You've got to give him a great, great,
Speaker 1: great deal. So you know that that's going to be
Speaker 1: the danger there, And a lot of these merchants anticipating
Speaker 1: taking taking haircuts on a lot of the even retooling,
Speaker 1: retooling their product line to try to try to align
Speaker 1: better with with what people are buying. Now, what's the
Speaker 1: mood music been from Andy Jasse and Amazon about the
Speaker 1: state of the global consumer, about the economic pain that
Speaker 1: we're seeing around the world. They haven't given a whole
Speaker 1: lot of guidance on it or set a whole lot
Speaker 1: you know, they're still just trying to, uh, you know,
Speaker 1: promote their business, be the place to go for for deals,
Speaker 1: be the place to go for your holiday shopping, preach convenience, um,
Speaker 1: and just try to try to stand out, you know.
Speaker 1: So uh, you know, basically, it's just going to be
Speaker 1: a dog bite for every consumer dollar, and they want
Speaker 1: to They want to get everyone they can. I remember
Speaker 1: the conversation you and I were having last year. I
Speaker 1: was in London at the time. But Black Friday, Cyber Monday.
Speaker 1: What does the second Prime Day event mean in terms
Speaker 1: of how consumers spend with those kind of other traditional
Speaker 1: holiday shopping periods. Yeah, we don't know. If they're kind
Speaker 1: of borrowing tomorrow's spending today. I think a lot of
Speaker 1: this is retailers just racing realizing that people are probably
Speaker 1: gonna be coming up against the edges of their spending
Speaker 1: limits come to the holiday season. You know, it's like
Speaker 1: people are leaning on their credit cards to pay for
Speaker 1: things like food and fuel. You know, that's how they've
Speaker 1: been dealing with inflation. So come holiday season, they might
Speaker 1: not have a lot of room even on their credit cards,
Speaker 1: let alone money to spend. So I think they're just
Speaker 1: trying to lock those sales in while people still have
Speaker 1: money hey spend. So what are we hearing from the
Speaker 1: retailers themselves to have their small businesses on the Amazon platform.
Speaker 1: I've just said there, they're not expecting the best holiday.
Speaker 1: You know. Again, they recognize as an inventory glut. They
Speaker 1: know that they're competing with against a lot a lot
Speaker 1: of other sellers, so they're gonna have to pay for
Speaker 1: advertising to stand out. Then they're gonna have to have,
Speaker 1: you know, good discounts to get buyers, to compel buyers
Speaker 1: to buy. So they're not looking for a great holiday. Alright,
Speaker 1: spens a sofa, Thank you very much. Let's talk megacaps.
Speaker 1: Shares of Microsoft have dropped about year to date, almost
Speaker 1: double the decline Apple is seen in its stock, But
Speaker 1: research from Bloomberg Intelligence finds if you get the microscope out,
Speaker 1: Microsoft is outperforming the iPhone maker on almost every single
Speaker 1: financial metric and might be better positioned to survive a recession.
Speaker 1: Joining us to discuss is the author of that research.
Speaker 1: Bloomberg Intelligence, senior tech analysts and a rag Rona anag
Speaker 1: What is the thesis here? So the pizzas is very simple.
Speaker 1: When you look at the tech space, software has been
Speaker 1: killed quite a bit over the last one year or
Speaker 1: I would say nine months because of rising grade, because
Speaker 1: it's one of the highest growth sectors. And you know,
Speaker 1: we think Microsoft has been punished unjustly compared to the
Speaker 1: likes of Apple, who has performed better than in the
Speaker 1: same frame. And our pieces is if you look at
Speaker 1: the growth profile of Microsoft, it's better than Apple. If
Speaker 1: you look at the margin profile, it's better than Apple.
Speaker 1: And and finally, in most importantly, it is a lot
Speaker 1: less dependent or exposed to China than Apples. I think
Speaker 1: we have a bloom bag terminal a chart that shows
Speaker 1: us the twelve months price to earnings multiples on both
Speaker 1: Apple and Microsoft. Microstoft come down a little blow Apple
Speaker 1: in recent trading sessions. Our investors just sort of more
Speaker 1: focused on Microsoft's near term, what it's doing right now what,
Speaker 1: rather than what it could do. See I think in
Speaker 1: both cases, the Microsoft has not disappointed anybody in the
Speaker 1: last time I would see quartered and then think if
Speaker 1: you go into the next quarter, also, you know they
Speaker 1: haven't realized their guidance. Now dollar is going to be
Speaker 1: an issue, so translation risk is there and which we
Speaker 1: all know. But if you look at the constant guardency growth,
Speaker 1: we see no reason why Microsoft cannot grow twelve to
Speaker 1: fifty percent in constant guardency at least for the next
Speaker 1: two quarters. And even if we had a bad recession
Speaker 1: next year, you know, we still argue that it can
Speaker 1: grow north of ten percent in constant guardency. It has
Speaker 1: a very diverse portfolio of software prod from cloud to
Speaker 1: office to Windows and you know, a mixture of all
Speaker 1: of this. Should let should you know, allow them to
Speaker 1: grow north of Temple sent silicior into that idea of
Speaker 1: being recession prof or at least better positions to weather
Speaker 1: a recession. You know, Microsoft and Apple do have different businesses.
Speaker 1: Why is Microsoft better positions and weather a recession than Apple?
Speaker 1: So we argue that enterprises are in a better position
Speaker 1: than consumers are now. In the case of Apple, you know,
Speaker 1: Apple consumers in most cases are rich people and they
Speaker 1: will continue to buy Apple the iPhones. But if you
Speaker 1: look at a year, will be your growth comparison? You know,
Speaker 1: Apple's consensus if you just go by consensus for the
Speaker 1: next two years it's high single digits. If you look
Speaker 1: at Microsoft, it's going to be in low double didgets
Speaker 1: at least for that timeframe. So even without you know,
Speaker 1: diving deep into that, they can surprise on the upside
Speaker 1: because of cloud or because of any other reason. And
Speaker 1: this is not even accounting for the Activision acquisition going through.
Speaker 1: Microsoft is better position because of its enterprise presence. There's
Speaker 1: one key market there were all zeroed in on right now,
Speaker 1: and that's China. Where does China fit into this idea
Speaker 1: that Microsoft may be better position right now in some
Speaker 1: sense relative to Apple. So if you look at Apple,
Speaker 1: Apple is very exposed to the Greater China region and
Speaker 1: you know it generates over its revenue there, but more
Speaker 1: importantly from its supply chain. You know, bulk of the
Speaker 1: phones are assembled in that market. Any disruptions googlely because
Speaker 1: of you know, COVID reasons, are any to your political tensions,
Speaker 1: you know, Apple will love a hard time to fulfill
Speaker 1: the demand for its products. While when you look at Microsoft,
Speaker 1: it does depend on China for its expansion of its
Speaker 1: cloud data centers, but other than that, it does not
Speaker 1: generate that much revenue away from from China or for
Speaker 1: that matter um you know is exposed to it either
Speaker 1: from a supply chain a lot less than what Apple is.
Speaker 1: We broke some news the other day here on Bloo
Speaker 1: Days Technology about Microsoft's confidence that this activision deal gets done,
Speaker 1: and the market really seems to be paying attention. What
Speaker 1: was your read on that. I think this is going
Speaker 1: to be a very interesting acquisition for everybody in the
Speaker 1: tech cline because I think the journal consensus is that
Speaker 1: the regulators are going to be very tough on Microsoft,
Speaker 1: and which is partially the easy you see a massive
Speaker 1: price cap, but it's you know, I think every every
Speaker 1: couple of months we will see if there are no major,
Speaker 1: i say, hang ups from the regulators, you would see
Speaker 1: that price cap closing. In fact, that I touch our
Speaker 1: sanalist thinks that the dealer is going to go through
Speaker 1: because of the nature of the deal rather than you know,
Speaker 1: the size of Microsoft all the size of the deal
Speaker 1: Apple fundamental strong near term risk. Why did you write that? Yeah,
Speaker 1: I mean the reason we say that is because if
Speaker 1: you look at Apple for right now, their revenue comes
Speaker 1: from both to Europe and China, and those are two geographies,
Speaker 1: are two regions that are facing economic slowdown, right now
Speaker 1: in fact Europe, we think is things are probably going
Speaker 1: to get worse before, you know, in the near term,
Speaker 1: before they get better. The second thing we want to
Speaker 1: point out is that the iPhone fourteen is not a
Speaker 1: moving leader, a needle move of four a Apple, just
Speaker 1: because the hardware design is still old and in most
Speaker 1: cases and the base model even the processor is a
Speaker 1: bit old, and like the next year's model is going
Speaker 1: to be a big shift. When you look at the
Speaker 1: Apple's installed base of let's say eight hundred million I
Speaker 1: phone and with the refars cycle of about three points
Speaker 1: in seven million phones three point six years, you're gonna
Speaker 1: sell about two hundred twenty million phones. We don't see
Speaker 1: that needle changes. They see it as much, alright, man
Speaker 1: I agran A crunching the numbers of Bloomberg Intelligence, Thank
Speaker 1: you very much. Sticking with Apple, the company has begun
Speaker 1: manufacturing it's new iPhone fourteen in India much sooner than expected.
Speaker 1: Production is weeks ahead of schedule after Fox con found
Speaker 1: the process. Surprisingly s Apple is expanding manufacturing a tensions
Speaker 1: in China, where most iPhones are made, escalate with the US.
Speaker 1: At the same time, India has been keyed to make
Speaker 1: the country into a viable competitor to China in technology
Speaker 1: and production capabilities, and Apple's aggressive push into audio, specifically
Speaker 1: wireless headphones, has been one of the company's most successful bets.
Speaker 1: Bloomberg's Max Chafkin explains the controversial strategy around the AirPods
Speaker 1: good Morning. For years, investors and fans of Apple have
Speaker 1: been waiting to see if the company's CEO, Tim Cook
Speaker 1: can release a product to match the success of the iPhone.
Speaker 1: But Apple's next big thing might be in your pocket already.
Speaker 1: I'm talking about these little things, AirPods. Third party estimates
Speaker 1: suggest Apple sold around a hundred twenty million pairs last year,
Speaker 1: taking in about twenty billion dollars. And the reason for
Speaker 1: their success also gets to the heart of why Apple
Speaker 1: is so controversy. Partly it's a credit to the headphones themselves,
Speaker 1: but only partly. It's sort of easy to forget that
Speaker 1: when these were released, reviewers hated them. They didn't sound great,
Speaker 1: they got lost easily, they're not durable, they're environmentally questionable.
Speaker 1: But they had one thing going for them. They were
Speaker 1: easy to set up. With the iPhone. This wasn't in
Speaker 1: an accident. It was the culmination of cook strategy to
Speaker 1: transform the phone from a one off product to an
Speaker 1: ecosystem of services like iCloud and accessories like the Apple
Speaker 1: Watch and AirPods. Non these extras really do much without
Speaker 1: the phone, and the phone doesn't work particularly well without them.
Speaker 1: Back in when Apple announced air pods, the company also
Speaker 1: made everybody else's headphones worse by getting rid of the
Speaker 1: audio jack on the iPhone. To use normal headphones, you
Speaker 1: need an adapter. The company's VP of marketing said this
Speaker 1: was about one thing, courage, which okay, sure, but it
Speaker 1: was also about Apple's awesome market power that makes a
Speaker 1: company controversial Spotify, Epic Games, Tile and even Google. I'll
Speaker 1: say it abuses its power, but antitrust litigation will take years,
Speaker 1: and until then Apple can extract ever more money out
Speaker 1: of its fifteen years young cash cow the iPhone who
Speaker 1: needs the next big thing? Thanks to Max Chafkin for
Speaker 1: that coming up. Remote working during the pandemic has left
Speaker 1: many New York office is empty. How the trend is
Speaker 1: part of a larger property dilemma in major cities across
Speaker 1: the world. This is Bloomberg. The rise of remote work
Speaker 1: during the pandemic has put New York City at this
Speaker 1: center of a global property dilemma, where multibillion dollar buildings
Speaker 1: sit vacant, leaving property owners in a buying Bloomberg's Natalie
Speaker 1: Wong has the details. Now, as you know, I'm visiting
Speaker 1: from San Francisco. If I take a stroll down Third Avenue,
Speaker 1: there's far fewer workers going through revolving doors than there were,
Speaker 1: say four years ago, when I was last here. What's
Speaker 1: the story, right? And you see a lot of vacant
Speaker 1: storefronts as well. Um as you well know, a lot
Speaker 1: of workers are just not coming into the office, and
Speaker 1: companies are reducing their real estate footprint because of that,
Speaker 1: and those that are looking to expand are simply just
Speaker 1: not looking at an office building on Third Avenue. You know,
Speaker 1: we're all still using tools like Zoom and teams, Microsoft teams.
Speaker 1: You know, there's a multiple options. But what are the
Speaker 1: landlords going to do to fix this? To get workers
Speaker 1: and companies back into the buildings themselves. A lot of
Speaker 1: landlords all across the city are adding amenities. They're putting
Speaker 1: in hundreds of millions of dollars into their office building
Speaker 1: to add stuff like outdoor spaces, new lobbies and new
Speaker 1: elevators to entice new tenants and then hopefully those tenants
Speaker 1: will get their workers to come back in as well.
Speaker 1: As we're slowly starting to see happen across the city.
Speaker 1: It's a longstanding problem. Same in San Francisco. There's just
Speaker 1: not enough apartments an affordable price point. But there's a
Speaker 1: lot of empty buildings. You just told me, how do
Speaker 1: we convert? And why is it so hard to convert
Speaker 1: those office buildings into residential That's a question that everyone's asking,
Speaker 1: you know. The reality is a lot of the midtown
Speaker 1: office buildings are so big and rectangular, and there's just
Speaker 1: so much dark spaces within those buildings that it's hard
Speaker 1: to convert into livable residential areas. And on top of that,
Speaker 1: there's zoning restrictions with the city that doesn't allow for
Speaker 1: these types of UM renovations to be made, and there's
Speaker 1: no tax or financial incentives that are provided to landlords
Speaker 1: to embark on this super costly UM renovation. That's the
Speaker 1: building owners perspective. What are the tenants want? You know,
Speaker 1: what are they asking for? Tenants want the best in
Speaker 1: the newest places. They want to be near Grand Central Terminal,
Speaker 1: they want to be near their peers. You know, private
Speaker 1: equity finance firms, mega big tech firms that are expanding
Speaker 1: on far west side of Manhattan, and they have a
Speaker 1: lot of options to choose from. So if they're going
Speaker 1: to choose between you know, a Third Avenue nineteen fifties
Speaker 1: building that has sort of been renovated but not really
Speaker 1: or look at Hudson Yards where there's new skyscrapers and
Speaker 1: landlords are providing incentives to get you to move in.
Speaker 1: They're going to choose the newer ones, right, This is
Speaker 1: part of our Bloomberg Big take. Of course, what was
Speaker 1: the thing that surprised you most reporting this out? I
Speaker 1: think the thing that surprised me the most was really
Speaker 1: just how much this impacts everyone, not just landlords, but
Speaker 1: tenants and also the city. You know, the city has
Speaker 1: lost a lot of tax revenue due to the decline
Speaker 1: in the values of these office buildings, and it doesn't
Speaker 1: look like it's going to turn around anytime soon. All Right,
Speaker 1: Thank you to Bloomberg's Natalie wog This is Bloomberg Technology
Speaker 1: im Ed Ludlow in New York. Let's get back to
Speaker 1: that market volatility. Major benchmarks like the NASA continue to
Speaker 1: fluctuate is economic uncertainty and monetary policy changes sper concern
Speaker 1: and that includes a hit to all corners of the
Speaker 1: technology universe, making this a tough environment for everyone from
Speaker 1: megacats to Silicon Valley startups. Let's bring Embrace Capital General
Speaker 1: partner Alfred Schwang, He's known as the v least CEOs CEO, Alfred,
Speaker 1: what is your read on these markets right now? Well,
Speaker 1: and thank you for having me um At Raised Capital.
Speaker 1: We are seed in earliest invested in infrastructure companies like
Speaker 1: Data Breaks, Salana and ft x. So. When I saw
Speaker 1: Raised Capital founder sound Free, Sam Bank win Free in
Speaker 1: New York Lass Week, we talked about how the crypto
Speaker 1: market was in much worse shape in two thousand nineteen
Speaker 1: as it is compared to today when he first started
Speaker 1: ft X. So. The growth stage and the late stage
Speaker 1: venture market may have been dampened obviously by the recent
Speaker 1: market crash, but we are seeing early stage deals thing
Speaker 1: very strong. I think because of a few reasons. Number one,
Speaker 1: seed funding is not tied revenue. Market slowdown has very
Speaker 1: little little impact to early stage founders. So when we
Speaker 1: inveus we look for a founder market it right right,
Speaker 1: So and mostly stage companies race eighteen twenty four months.
Speaker 1: Our runway to find that fit. The soup number two
Speaker 1: I peel is not the only rather exiit anymore. I
Speaker 1: mean we look at the reason Adobe fig twenty billion
Speaker 1: dollar mega deal. We can see um the next two
Speaker 1: years it's going to be very strong and animaking. So
Speaker 1: that's the colical and three Francier capital investors are sitting
Speaker 1: on a hundred and sixty two billion dollars of cash
Speaker 1: for new investments. So these dry powders the driving energy
Speaker 1: to fine the best founder and a lot of early
Speaker 1: stage deals. So what you're saying is not risk aversion
Speaker 1: like we see in the public markets, like we see
Speaker 1: in the later stages. Are you guys ready to spend,
Speaker 1: you're ready to deploy capital or are you sitting on
Speaker 1: the sidelines. No, no, We're definitely not sitting on the sideline.
Speaker 1: We've been extremely active in investing. In fact um, if
Speaker 1: you look at the cycle posts a you two thousands
Speaker 1: post two thousands in name the very best you know,
Speaker 1: brick out company, we're invested soon after those crashes, really
Speaker 1: good companies and strong founders you know, bubble up to
Speaker 1: the top and then valuations are very rational, so you
Speaker 1: can make bets and be able to have drive large
Speaker 1: ownership much easier. So this is definitely a good time.
Speaker 1: It talks about valuations being rational. There's hundreds of startups
Speaker 1: out there, potentially more with unicorn status, right, billion dollar valuations.
Speaker 1: What's the risk that we see those valuations come down,
Speaker 1: that there's a major repricing of startups of a certain size. Well,
Speaker 1: this happens in every cycle. So the lay stage deal
Speaker 1: obviously will be highly impacted by the equity market and
Speaker 1: where it's going, because that's where people thought liquidity would be.
Speaker 1: But now we're also seeing, you know, going back to
Speaker 1: the Figma deal, twenty billion dollars in size, right, because
Speaker 1: any I P or could possibly drive for investors along
Speaker 1: the way. So I'm actually not concerned because tax always
Speaker 1: needed and we're about to see one major revolution of
Speaker 1: going the centralization through work free of the type of
Speaker 1: application that will we emerge in the next generation. So
Speaker 1: very good time. Indeed, they call you the Silicon Valley
Speaker 1: CEOs CEO. You were an early investor in a lot
Speaker 1: of names we now know, right f tx Selana, you
Speaker 1: founded and took public be A Systems right, give me
Speaker 1: the founder's perspective. How hard is it right now to
Speaker 1: be a fledgling startup or a founder with an idea
Speaker 1: to sit in front of an investor and come away
Speaker 1: with some cash in your pocket. Well, without doubt, raising
Speaker 1: money is not quite like last year. And founder has
Speaker 1: to be willing on the game to be able to
Speaker 1: have a story about how they will be able to
Speaker 1: generate revenue. So, thank goodness the world revenue and cash
Speaker 1: for matters a game, So we which a crucial thing
Speaker 1: or running wheel businesses. So and the other thing is,
Speaker 1: you know, runway and costs and expenses. We're seeing a
Speaker 1: slew of layoffs, mostly not because those companies cannot afford
Speaker 1: those people, but they're rethinking how to get the profitability
Speaker 1: and cash for positive. So those are things I think
Speaker 1: it's good discipline that we should be seeing. Good see
Speaker 1: you driving great companies that will last a long long time.
Speaker 1: There's maryas I know that you have a keen interest
Speaker 1: in Web three, being when we talk about that in
Speaker 1: such big abstract terms, you know, what will big tech
Speaker 1: do when it comes to Web three? Will they do
Speaker 1: anything at all when it comes to Web three? Do
Speaker 1: you think investors are starting to lose a bit of
Speaker 1: patients there. Well, Um, web free is much more cyclical
Speaker 1: than the regular market. So you look at the cycle.
Speaker 1: Web free is pacing on about three years because we
Speaker 1: saw the last crash in about two nineteen. We saw
Speaker 1: a crash in two thousand two. So we look at
Speaker 1: regular cycle, it's about eight to ten years. Web Free
Speaker 1: cycles about every three years. It's just showing the maturation
Speaker 1: of the technology is moving a lot faster than other
Speaker 1: cycles we've seen. You know, um, you know, look at it.
Speaker 1: You know, you know, like Amazon Web Service to say,
Speaker 1: BS from Amazon controls over one foot of Western's world's
Speaker 1: internet infrastructure, right, that really is unheard of. You have
Speaker 1: such you know, large concentrated control of the Internet itself,
Speaker 1: and then you have the other two players you know
Speaker 1: following them combined, they control almost almost all of the
Speaker 1: Western Internet infrastructure itself. So decentralization of the Internet is
Speaker 1: greatly needed. We are have been frustrated with centralized social
Speaker 1: media control. So the only way to solve is some
Speaker 1: of that have to be our technology. So this has
Speaker 1: to happened. Pay off it before I let you go,
Speaker 1: let me draw and your experience. You've been through the
Speaker 1: tech bubble, You've been through economic ups and downs. How
Speaker 1: does what we're saying now in the global economy compared
Speaker 1: to what you've seen before. Well, um, there were scarier times.
Speaker 1: So in the two thousand bubble, we're all super early
Speaker 1: stage companies that were listed publicly and getting trashed. You know,
Speaker 1: when they don't make ownings and the market you don't
Speaker 1: have no escape because it's all publicly done. So when
Speaker 1: the rug got pulled on there was over in two thousands.
Speaker 1: It was the financial crisis. We weren't to make sure
Speaker 1: if our banking system was sound and was could be
Speaker 1: a continued Now this is very different, I believe. Obviously
Speaker 1: we have major issue in the world. We have inflation,
Speaker 1: We have repidly rising interest rate which costs the market
Speaker 1: to be retreating to the level they are, and now
Speaker 1: a T bills generating four percent in a whole different world.
Speaker 1: So I think from that perspective, investment has to change.
Speaker 1: But from the tech perspective, we're gonna see insanely remarkable
Speaker 1: productive applications in the next three yewrself. It will be
Speaker 1: better than anything we've experience. It's gonna be a great
Speaker 1: time ahead. Race Capital General partner Alfred Shwang, thank you now.
Speaker 1: Autonomous delivery drone startup zip Line has developed a new
Speaker 1: sound based technology to help its aircraft better identify other
Speaker 1: airspace users. The company hopes the new tech will convince
Speaker 1: regulators to open up the skies for more drone based deliveries.
Speaker 1: I took a trip to a Walmart in Northwest Arkansas
Speaker 1: where zip lines trialing the tech and caught up with
Speaker 1: CEO Kella Ronaldo. Is this about to become a more
Speaker 1: common site? Zip Line thinks. So we're in the up Summit,
Speaker 1: and the up Summit is held in Bentonville, Arkansas. Let's
Speaker 1: talk about zip Line. What is zip line? Zip Line
Speaker 1: is providing teleportation as a serverse to countries, to companies
Speaker 1: and now directly to holmes. We started with medical products.
Speaker 1: Today we deliver many different things to primary care authorities hospitals.
Speaker 1: Whatever people need quickly can be delivered via an autonomous aircraft.
Speaker 1: Zipline launched in Rwanda in sixteen. Since then the service
Speaker 1: has grown a lot. We actually initially launched just serving hospitals.
Speaker 1: Today we serve almost three thousand hospitals across Rwanda, Ghana, Nigeria. Cotivar, Kenya,
Speaker 1: and now the United States. In Japan, I mean we've
Speaker 1: delivered one and a half million dozars of COVID nineteen vaccine,
Speaker 1: five million dollars of traditional vaccine. We deliver the national
Speaker 1: blood supply of a couple of countries at this point
Speaker 1: fully autonomously, in a way that saves lives and saves
Speaker 1: countries money. Quotes to me how in Prentice that would
Speaker 1: actually work. Loading the drone and going from the tows
Speaker 1: me through the whole process points. The vehicle launches from
Speaker 1: the distribution center, it's flying completely autonomously, making all of
Speaker 1: its own decisions, will fly to the GPS coordinates, deliver
Speaker 1: the package, and we use a really simple, basically parachute drop,
Speaker 1: which means that anybody can receive a delivery. You don't
Speaker 1: need any special infrastructure receive a delivery. Then the vehicle
Speaker 1: comes home lands, we can swap the battery and have
Speaker 1: the plane back in the air two minutes later. Zip
Speaker 1: lines latest gambit is taking on the US retail an
Speaker 1: e commerce market large exip by three and three two one.
Speaker 1: So when the zip Line drone shoots off, the launcher
Speaker 1: is doing zero to sixty miles an hour in zero
Speaker 1: point eight seconds, and the battery on the drone means
Speaker 1: that it could travel two north care miles technically on paper,
Speaker 1: but they're limited to this one point four mile radius
Speaker 1: because the f A have straight regulations on drones. Right,
Speaker 1: This is what the whole story is about using this
Speaker 1: technology in the real world. But this pilot in p Ridge,
Speaker 1: Northwest Arkansas. Here at the Walmart store. If you live
Speaker 1: within that one point four mile radius, you can order
Speaker 1: your hamburger helper, or your toothpaste or Q tips or
Speaker 1: an orange, whatever you need, and I'll deliver it to
Speaker 1: your home to get regulators on board ziplines. Hoping a
Speaker 1: new sound based technology will give other air users more confidence.
Speaker 1: The skys full of drones a safe explain to me
Speaker 1: the basics of the technology. D A stands for to
Speaker 1: detect and avoid. And it's kind of a core problem
Speaker 1: for autonomy in the United States airspace right now. When
Speaker 1: you have a really busy airspace for autonomous vehicles, you
Speaker 1: must be able to guarantee two mile all clear hockey
Speaker 1: puck around the vehicles. And there really is no good
Speaker 1: solution for that problem. We've tried using radar, we tried
Speaker 1: using lighter. We tried using cameras. Those systems are expensive,
Speaker 1: they're heavy, they're energy consumptive, and a lot of times
Speaker 1: they just plane don't work. Is Zipline is solving this
Speaker 1: problem using a microphone array. It's an extremely weird practical
Speaker 1: approach to this problem and one that we frankly thought
Speaker 1: was impossible four years ago as we started working on it.
Speaker 1: When you're flying through the air really fast, microphones are
Speaker 1: picking up a lot of ambient noise. You're also having
Speaker 1: to manage the noise of your own propellers because the
Speaker 1: aircraft is make noises, it is flying, and you're listening
Speaker 1: for something that is somewhere within two miles of you.
Speaker 1: The amazing thing is that by using really intricate, mechanical,
Speaker 1: enduring design different ways of this eyeing, this microphone array,
Speaker 1: and then combining that with like signal processing and neural
Speaker 1: nets that can listen to the sound that you're getting
Speaker 1: from the microphones, we can actually determine not only exactly
Speaker 1: where a vehicle is, but we can also determine the
Speaker 1: exact megan model of that aircraft. We think that this
Speaker 1: technology is going to have a big impact on autonomy
Speaker 1: in the airspace is broadly not just for zip line.
Speaker 1: Will this new tech take zip line mainstream? Bloomberg any
Speaker 1: f analysis suggests the use of drones would only be
Speaker 1: economical in highly specialized or NIE situations like surveillance or mapping.
Speaker 1: Is delivery in the retail context the biggest market opportunity
Speaker 1: for you. There's a global transformation coming in logistics, and
Speaker 1: that is away from these big, heavy, slow gas combustion
Speaker 1: vehicles toward light, fast, electric, autonomous. It's really our mission.
Speaker 1: Our exclusive focus is just on approximating teleportation as the company.
Speaker 1: As currencies around the world fluctuate, the sterling dropping to
Speaker 1: a record low against the dollar, there's widespread pessimism rocking markets.
Speaker 1: But cryptocurrencies during the quarter have performed well pretty well.
Speaker 1: What does this mean? Bloomberg Sinali Bassett? Who else is
Speaker 1: here to explain the relative performance? I see volatility everywhere.
Speaker 1: I see volatility and crypto, but if you dig a
Speaker 1: little deeper, there is some out performance there. It's really
Speaker 1: interesting to watch how the last couple of months have gone,
Speaker 1: because even though there are a lot of folks in
Speaker 1: the market that are worried that crypto will break again,
Speaker 1: below that seventeen thousand, five hundred mark. You still have
Speaker 1: the last quarters since the end of June, crypto doing
Speaker 1: pretty well overall. So if you look at a specific
Speaker 1: index that we look at, and this is an index
Speaker 1: of a hundred digital currencies tracked by Bloomberg, you're looking
Speaker 1: at the NBA as Crypto Compared Digital Assets one hundred index.
Speaker 1: It has added almost seven percent since then. That is
Speaker 1: pretty close to its second performer there, that is the
Speaker 1: dollar at about eight percent. That gold even has fallen
Speaker 1: that time. So you're not looking at, of course, all
Speaker 1: of those classic risk haven's performing all that well here.
Speaker 1: Now there's some interesting questions here about whether that will
Speaker 1: continue on. Of course, crypto has fallen pretty meaningfully this year.
Speaker 1: I don't want to make three months a trend, but
Speaker 1: it certainly is something that has not fallen below that
Speaker 1: lower bound that we saw earlier this year, and in
Speaker 1: the last three months at least has been a pretty
Speaker 1: stround perform. Not a trend necessarily, but we are looking
Speaker 1: for sort of the direction of travel. Sam Bankman Freed,
Speaker 1: somebody that you know well, has been tweeting, I think
Speaker 1: we can bring it up here. Boy, with the world
Speaker 1: thinking differently about crypto price moves they measured if I
Speaker 1: think he means they measured it versus world currency baskets
Speaker 1: instead of just the US dollar. And I think that's
Speaker 1: a great point that he made. Because of over the
Speaker 1: weekend when saw these massive fluctuations in currencies across the world,
Speaker 1: you have the crypto crowd stand up and say what
Speaker 1: does this mean for cryptocurrencies? And if you work in
Speaker 1: a live in a country where assets digital assets can
Speaker 1: be less volatile than your actual currency. You have people,
Speaker 1: for example in Argentina that have flocked to digital assets
Speaker 1: in a very meaningful way, even El Salvador. Even with
Speaker 1: that volatility, then what does the digital asset mean? It
Speaker 1: means a lot more than if you're living in a
Speaker 1: much state more stable nation. There is still some dissenting voices,
Speaker 1: some of them louder than others. I'm thinking, of course,
Speaker 1: of Jamie Diamond, CEO JP Morgan. What did he have
Speaker 1: to say recently about bitcoin in patatular Yes, of course,
Speaker 1: if you're looking in the traditional finance world trade fire,
Speaker 1: you're looking at bitcoin as a decentralized Pondzi scheme is
Speaker 1: what Jamie Diamond told regulators and lawmakers last week. However,
Speaker 1: let's think about what crypto has done and what it
Speaker 1: looks like. I wanted to point this out just as
Speaker 1: a you know, an exercise here, ed we had TIPS
Speaker 1: inflation protected bonds up. Why does that matter here in
Speaker 1: the stake of crypto. Crypto has long been you know,
Speaker 1: pitched as an inflation hedge, and I want to say,
Speaker 1: for the people who even say that if that as
Speaker 1: an inflation hedge has fallen apart, so has TIPS, which
Speaker 1: our inflation protected bonds, which was a hedge fund favorite
Speaker 1: this year. So you do see both traditional finance and
Speaker 1: defy hitting a little bit of what do you call
Speaker 1: it a roadblock here in the narrative in terms of
Speaker 1: what crypto means for many people. Hey, very quick, we
Speaker 1: just had the merge. What's the next kind of calendar
Speaker 1: event that the crypto world looks too. Yeah, Well, it's
Speaker 1: funny that you mentioned the merge because Ethereum was a
Speaker 1: big part of that performance in that index in the
Speaker 1: last three months. But again, does that continue on into
Speaker 1: what extent is that filtered into other assets? Do you
Speaker 1: see that same love and other proof of stake networks,
Speaker 1: things like Salana and the n f T World as
Speaker 1: we know, there are a lot of interesting things happening
Speaker 1: when you look at the ape community for example, and
Speaker 1: we've we've talked about it here the moon birds as well,
Speaker 1: So again the tangential assets to theoryum we're looking at
Speaker 1: all right, clean bugs and labasac thank you. Coming up
Speaker 1: a delay in depositions. Both Elon Musk and Twitter CEO
Speaker 1: Parag pushed their pretail depositions before the October seventeen buyout trial.
Speaker 1: Will bring you the latest next this is Bloomberg. We're
Speaker 1: three weeks away from a court showdown between Elon Musk
Speaker 1: and Twitter. Starting October seventeenth, a Delaware Chance rejudge will
Speaker 1: decide whether the world's richest person has legitimate grounds to
Speaker 1: walk away from a deal to buy the social media
Speaker 1: platform for four billion dollars. Monday was supposed to be
Speaker 1: a key moment in the lead up to the trial,
Speaker 1: but it didn't pan out that way. Joining us to
Speaker 1: discuss Bloomberg's Curt Wagner. So Curt Ellen and Parag was
Speaker 1: supposed to be deposed Monday. It didn't happen. What happened, Yeah,
Speaker 1: Both Ellen and Parague essentially are trying to reschedule their
Speaker 1: depositions here. Ellen was scheduled to be deposed in Delaware,
Speaker 1: Parague Agera Wall the City of Twitter was going to
Speaker 1: do so here in San Francisco. And in both cases
Speaker 1: it seems like, um, you know, the timing isn't right,
Speaker 1: and and we're told or my understanding is that this
Speaker 1: is not super rare in a in a situation like this.
Speaker 1: But what makes it interesting, of course, and it is
Speaker 1: that we're three weeks away from this trial. The trial
Speaker 1: is three weeks from today, right, so there's only so
Speaker 1: many more days for them to push this thing before
Speaker 1: everyone has to sit down and share their side of
Speaker 1: the story. I want to bring up this chart in
Speaker 1: my Bloomberg terminal, which I feel like I've looked at
Speaker 1: for years but probably just months. And he shows the
Speaker 1: spread right of the current share price versus four dollars
Speaker 1: twenty cents a share that Musque originally offered. And the
Speaker 1: idea is that, you know, as the spread closes and
Speaker 1: the current share price gets closer to that that offer price,
Speaker 1: the markets indicating that it thinks this deal will get done.
Speaker 1: Monday was weird when we got the news that the
Speaker 1: depositions were delayed. The stocks shut up and very quickly
Speaker 1: came back down again. There was speculation, it seems in
Speaker 1: the market that we might be talking about settlement behind
Speaker 1: the scenes. It's not clear. What do you make of that? Yeah, well,
Speaker 1: obviously when two key players like this suddenly pushed their depositions,
Speaker 1: you know, as you pointed out, you could see people
Speaker 1: jump to a conclusion here. Now, we have not heard
Speaker 1: anything about a settlement, and my guess would be that
Speaker 1: if there is a settlement, it will come much closer
Speaker 1: to the trial, because both sides want to figure out
Speaker 1: what information they can get from these depositions, right, I mean,
Speaker 1: they don't want to to come to a settlement without
Speaker 1: uncovering every rock here, and so I think because there
Speaker 1: are so many people that they still have to talk to,
Speaker 1: it seems a little premature at this point. But as
Speaker 1: you point out, there are a lot of people who
Speaker 1: saw that news and probably thought this is interesting. Why
Speaker 1: are these two people pushing their depositions. Maybe there's something
Speaker 1: happening behind the scenes. Right, So the countdowns on three
Speaker 1: weeks ago. What happens next, Well, a lot more of
Speaker 1: of this type of stuff, a lot more behind the
Speaker 1: scenes lawyer work, right, These teams for both Musk and
Speaker 1: Twitter are trying to position themselves. Um, you know, with
Speaker 1: the judge, there's going to be hearing tomorrow to even
Speaker 1: find out, you know, who can be deposed and who
Speaker 1: can't be. They're still fighting over stuff like that. So
Speaker 1: there's just a lot of jockeying for position at this point,
Speaker 1: right and and maybe there will be a settlement discussion
Speaker 1: at some point again as we get closer, But for now,
Speaker 1: I think both sides are just putting together their cases.
Speaker 1: They're kind of in that free trial preparation stage. Hey,
Speaker 1: you're excited for our trip to Delaware. I am ecstatic.
Speaker 1: We're gonna have a great time. It's gonna be a
Speaker 1: busy week, but it will be fun, all right, Bloomberg's
Speaker 1: kut Wagner, Thank you very much. I'll see that. That
Speaker 1: does it for this edition of Bloomberg Technology Tuesday, we
Speaker 1: have our invest chief futurist Brett Winton to share the
Speaker 1: latest on their investment strategy. Don't forget to check out
Speaker 1: our podcasts. You can find it on the terminal as
Speaker 1: well as online on Apple, Spotify, and of course on
Speaker 1: iHeart Radio. This is Bloomberg