Speaker 1: From the heart of where innovation, money and power CALLI
Speaker 1: in Silicon Valley and beyond. This is Bloomberg Technology with
Speaker 1: Emily Jay. I'm Caroline Hyde in New York in for
Speaker 1: Emily Chang, and this is Bloomberg Technology coming up in
Speaker 1: the next hour. Jumping's power grabs over in Beijing, but
Speaker 1: it led to a historic route in tech stox globally,
Speaker 1: equities had their worst day in Hong Kong, for example,
Speaker 1: since two thousand and eight financial crisis. How will tech
Speaker 1: navigate this new era? Plus a huge earnings week? Alphabet, Amazon, Apple,
Speaker 1: matter to name, but a few will break down what
Speaker 1: to expect and after Washington's moved to reclassify gig workers,
Speaker 1: what happens to Uber to Go Pass. Of course, the
Speaker 1: Silicon Valley, we dive into the fifteen billion dollar delivery
Speaker 1: arcket that's on the brink. We'll get into all of
Speaker 1: those stories in a moment, but first let's get you
Speaker 1: up to speed with the relationship going forward between US
Speaker 1: China what it means to some of those companies that
Speaker 1: try to cross that rubicon. Let's talk about it all
Speaker 1: now on the impact of the changes in China and
Speaker 1: particularly let's look at the chip sector, and with one
Speaker 1: at Debbie Wu Broomberg's who's usually based in Taipei. We
Speaker 1: are so thankful that's just right now in the United
Speaker 1: States and your expertise here, Debbie, at this moment with
Speaker 1: companies such as TSMC trying to navigate this new world
Speaker 1: order of the relationship that is disintegrating between China and
Speaker 1: the United States, and and an international investor that worries
Speaker 1: what on earth this new consolidation of power means for
Speaker 1: companies trying to work their way around just talk us,
Speaker 1: for example, through your breaking news story you had over
Speaker 1: the weekend of what TSMC is trying to do. So
Speaker 1: we have seen that needs said that for US export
Speaker 1: control rules have impact not just on American firms but
Speaker 1: also well foreign companies that have business relationship with China's
Speaker 1: of what we reported over the weekend is that t
Speaker 1: s m C has stopped production for this Chinese AI chip.
Speaker 1: Stop bearing because based on public domain information that Bearings
Speaker 1: products actually outperform and medias A one hundred chips which
Speaker 1: is now banned for the Chinese market. So it's really
Speaker 1: interesting to see that the foreign companies now I also
Speaker 1: have to follow the US rules like they did back
Speaker 1: a couple of years ago when the US blacklisted Huawei.
Speaker 1: So a lot of companies are kind of their business
Speaker 1: ties with UH Huawei. And then what's happening now is
Speaker 1: also UH companies are sort of tightening China's access to
Speaker 1: layer technologies or their products. And we have seen all
Speaker 1: the Dutch equipment supplier SML also told it's US based
Speaker 1: staff to UH hold their services to Chinese customers due
Speaker 1: to a listen new US regulations restricting US persons from
Speaker 1: open without China's chip industry. Given the news that uphended
Speaker 1: the market, that this consolidation of power in China, that's
Speaker 1: focus on well perhaps moving away from such growth tech names,
Speaker 1: the fact that we saw Ali Baba for so much,
Speaker 1: But what does that mean for the chip sector? Do
Speaker 1: you think, Debbie at the moment, So, following the US
Speaker 1: announcement of this new set of rules, chip stocks have
Speaker 1: plummeted and we have seen the Fildelphia Stock Exchange Semiconductor
Speaker 1: index fallen up more than four the percent this year,
Speaker 1: partly due to of the new curves and partly due
Speaker 1: to the growing head winds in the chip sector. So
Speaker 1: I mean it is going to be quite challenging for
Speaker 1: the chip companies to navigate this UH growing up, weakening
Speaker 1: demand amid high inflat high inflation environment and also potential
Speaker 1: recessions UH and also given the reflections for their business
Speaker 1: in China, I think it's going to be quite challenging.
Speaker 1: So we're here more about this ub with Texas Instruments
Speaker 1: and Intel giving their are earnings and also forecast later
Speaker 1: this week and therefore going forward. Are people starting to
Speaker 1: say to you these negative headwinds, whether it be a
Speaker 1: relationship and more difficult business being done with China, whether
Speaker 1: it's the curbs of the US put in, whether or
Speaker 1: not it's just a slowing fundamental story that's happening in
Speaker 1: terms of where we are in the chip cycle. People
Speaker 1: started to say that this is priced in some way
Speaker 1: or not yet I think it's a really sort of
Speaker 1: like a conversions so for these different sect these elements,
Speaker 1: so it's hard to say that, Okay, so the chip
Speaker 1: chips company, chips companies are taking a bigger here from
Speaker 1: certain things, but it's more like these are UH, different
Speaker 1: elements are putting up growing pressure on the earnings and
Speaker 1: themselves of chip companies around the world. Yeah, we keep
Speaker 1: a close eye on this week. Of course, the Texas
Speaker 1: instruments and Intel w we thank you for your expertise them. Meanwhile,
Speaker 1: turning to some of the changes and the look ahead
Speaker 1: to one key play, Apple's got its earnings, but it
Speaker 1: has some interesting news and who helped write that was
Speaker 1: one Mark? Mark talk to us about, well, the inflation
Speaker 1: that maybe Apple is serving us up at the moment. Yeah,
Speaker 1: So a few Apple services, actually their main ones, all
Speaker 1: got price hikes this morning. So Apple TV Plus that
Speaker 1: we talked about often, Apple Music, and Apple One subscription bundles,
Speaker 1: where TV Plus and Apple Music are obviously at the
Speaker 1: forefront of their streaming packages, right. So Apple Music is
Speaker 1: moving from ten dollars per month in the US to
Speaker 1: eleven dollars per months, so at ten percent price increase,
Speaker 1: Apple TV Plus moving from five dollars a month to
Speaker 1: seven dollars a month, and the Apple One bundles those
Speaker 1: are rising between two and three dollars depending on what
Speaker 1: packages you get, so in the mid teens, up to
Speaker 1: thirty three dollars for that highest end package we can
Speaker 1: get gaming and news and whatnot. Apple saying this has
Speaker 1: to do with higher costs for licensing related to music,
Speaker 1: and then the TV plus front. An Apple TV Plus
Speaker 1: launched in the company correctly says that there were basically
Speaker 1: no shows are very few shows at the get go
Speaker 1: now TV plus has dozens of shows. Still no back catalog,
Speaker 1: but certainly you're getting more bang for your buck now
Speaker 1: than you did before, which means they're now raising those
Speaker 1: prices and we saw the impact. Don't say the stock
Speaker 1: of Spotify w many now preempting they might pass on
Speaker 1: some of their prices to the consumer as well. Talk
Speaker 1: to us about more what we expect from Apple's numbers
Speaker 1: as well out late this week. Of course, most valuable company,
Speaker 1: it's important to us. Yes, So analysts sticking to services
Speaker 1: believe that Apple is going to come in almost to
Speaker 1: twenty billion dollars right. Wouldn't be an all time record, right,
Speaker 1: but would be fairly significant for a fourth quarter. That's
Speaker 1: for services specifically. In terms of overall, we're talking about
Speaker 1: between the mid eighty billions to low ninety billions. Those
Speaker 1: are the estimates I've seen between about five and eight
Speaker 1: percent year of your growth. Now, that growth is not
Speaker 1: going to be as significant as the year of year
Speaker 1: growth you saw a year ago. In the fourth quarter
Speaker 1: that was about year over year growth. Obviously that was
Speaker 1: COVID induced more iPad and Mac purchases, but any growth
Speaker 1: given the current conditions of the economy is a pretty
Speaker 1: good thing for Apple at this point. One major thing
Speaker 1: you can probably attribute to that, however, is the iPhone
Speaker 1: four Team Pro and Pro Max line that you're showing
Speaker 1: right now on TV. Those phones have done especially well
Speaker 1: with some of the new features like the better camera,
Speaker 1: satellite features, the dynamic island in the screen. People have
Speaker 1: been buying those up. And Apple got an extra week
Speaker 1: of sales for that device because they released it one
Speaker 1: week earlier than they historically do for new iPhones. So
Speaker 1: that's where you're going to see the growth from this
Speaker 1: quarter of a seasonality issue. In these endings, we thank
Speaker 1: you Mortgum, and let's talk about some of the dry
Speaker 1: powder that Andrews and Harrow. It's has a lot of
Speaker 1: and it's putting it to work, betting on a key
Speaker 1: platform that's meant to perhaps allow founders in particular to
Speaker 1: access private markets more diversification. The coterie, which let's uses
Speaker 1: invest in funds and include companies like SpaceX or Stripe
Speaker 1: just landed forty million dollars in funding round led by
Speaker 1: A sixty and Z. Here to discuss it is the
Speaker 1: Coachy CEO and co founder Ethan Ago. All Right, we
Speaker 1: wanted a little bit first and foremost remind people of
Speaker 1: your story why the Coachery was born, and it was
Speaker 1: through frustrations that you found as a founder. Right. Yeah,
Speaker 1: So I was the founder of a company called Active
Speaker 1: before this. We were growing. We did about a hundred
Speaker 1: million of revenue, and I turned off my salary and
Speaker 1: I went to apply for a mortgage and the guy
Speaker 1: says to me, we can't give you a mortgage. You
Speaker 1: don't have a salary. And you know, I realized it's
Speaker 1: kind of silly, because most of the people that I
Speaker 1: know make a lot more money from their assets or
Speaker 1: their equity than they do from their salary, probably a
Speaker 1: lot of the people that watch your show. And so
Speaker 1: there's clearly a disconnect that's emerged between the way that
Speaker 1: the legacy financial guys think about risk and think about
Speaker 1: asked allocation and the way that me and everyone that
Speaker 1: I know thinks about it. Because most of us make
Speaker 1: most of our money from carry or equity than we
Speaker 1: do from salary, and so we realize there's an opportunity
Speaker 1: to build financial products targeted towards people who make more
Speaker 1: money from assets than they do from their salary. So
Speaker 1: you're looking at an individual in a different way, at
Speaker 1: their own credit risk. But then you're looking at that
Speaker 1: individual and being like, I know you need diversification in
Speaker 1: your life as well. Well. If you think about a founder,
Speaker 1: most of their wealth is concentrated in one specific, highly
Speaker 1: liquid asset, and anybody will tell you that's not a
Speaker 1: great way to manage your risk. So what we do
Speaker 1: is we provide access to invest in some of the
Speaker 1: best fund managers in the world, like Injuries and Horowitz,
Speaker 1: like Initialized, and it allows a founder to diversify their
Speaker 1: risk away from just their own company. We also provide liquidity.
Speaker 1: We also provide a state planning. We're looking at all
Speaker 1: the different areas that founders need help in and where
Speaker 1: we feel like the banks have dropped the ball, and
Speaker 1: we're building products designed to help founders alleviate some of
Speaker 1: that mental pain that they have to experience when they
Speaker 1: try to deal with the legacy institution. Dare I say,
Speaker 1: at this moment where you're a one is a founder?
Speaker 1: Do they want to be doubling down in still private
Speaker 1: companies given valuations are indeed under pressure. Yeah, so, um,
Speaker 1: it's key that their portfolio, Well, my opinion is that
Speaker 1: their portfolio is not just going to be privates, right,
Speaker 1: They're going to have a four oh one K, they're
Speaker 1: going to have public, They're going to have probably some crypto.
Speaker 1: Our pitch is not that we're trying to provide advice
Speaker 1: as to how you construct your portfolio. Our pitches that
Speaker 1: if you want access to some of the best privates
Speaker 1: or some of the best managers, this is the place
Speaker 1: to get it, and you can really invest in Injuriesent
Speaker 1: Horowitz or some of these other funds managers that we
Speaker 1: have prior to the Coterie coming around, And so we're
Speaker 1: there as an access play as opposed to an advice player.
Speaker 1: How deep does this sort of democratization go because you're
Speaker 1: focusing on a very specific sphere of investing. Yeah, today
Speaker 1: we target people with one to fifty million of oursets
Speaker 1: And what about Therefore, when you're looking at well alk
Speaker 1: is getting into the space of wanting to make venture
Speaker 1: investing more accessible to those who only have five dollars
Speaker 1: who wants in a credited investor are you looking at
Speaker 1: democratization to that level or are you still very specific?
Speaker 1: You know, we're focused on a specific band, but more importantly,
Speaker 1: we're focused on a specific type of person. So um, honestly,
Speaker 1: the band is less important. It's more about how you
Speaker 1: make your money and what your ambitions are for the future.
Speaker 1: I think if you can get access through I think
Speaker 1: our arts partnership was with Titan, I think you can
Speaker 1: get access to them, that's excellent. But we're looking more
Speaker 1: at someone who has a comprehensive set of needs. They
Speaker 1: want diversification, they need liquidity because of all their assets
Speaker 1: are tied up in an in liquid asset. They need
Speaker 1: tax planning because they're sitting on an asset that has
Speaker 1: potentially a thousand x appreciation and they haven't done any
Speaker 1: of their state planning. Those are the kinds of needs
Speaker 1: that we solve as opposed to someone who's looking to,
Speaker 1: you know, dip their toe into venture for the first time.
Speaker 1: A huge check to be written for a total addressable market,
Speaker 1: that is what is it? Yeah, so talk to how
Speaker 1: how big is that? Because I'm thinking, well, this is
Speaker 1: a pretty un nique, relatively privileged part of society we
Speaker 1: have in the in America, there's twenty five million millionaires,
Speaker 1: about three million of them are under the age of
Speaker 1: forty five, and we go after people to forty five
Speaker 1: one to fifty million of assets, and so the end
Speaker 1: of people we're talking about as a couple million people
Speaker 1: in the United States. But the most important thing is
Speaker 1: that the lifetime value of these people is extraordinarily high. Right,
Speaker 1: So we're not building Bank of America. We're never gonna
Speaker 1: have a hundred and fifty million customers. That's not the
Speaker 1: game we're playing. We're going after a very specific demo
Speaker 1: and offering them very specific solutions that are going to
Speaker 1: make their lives easier. And if we're right, and if
Speaker 1: we do a good job, they're going to stick with
Speaker 1: us for decades. We're trying to build decades long relationships
Speaker 1: with our customers which will generate hopefully lots of lifetime
Speaker 1: value for them and for us. Because so at what
Speaker 1: point do you not how do you stop people checking
Speaker 1: out and having the family office or starting to move
Speaker 1: on to a different level of private wealth manager that
Speaker 1: I think it really depends on what they need. So
Speaker 1: if they like a family office, which provides a lot
Speaker 1: of things, we don't by all means, go use the
Speaker 1: family office. We're looking for people who are struggling with
Speaker 1: the solutions that are currently available to them relative to
Speaker 1: what they want. And so if you're looking for access,
Speaker 1: if you're someone who likes to do your own investing
Speaker 1: or likes to think about solutions yourself, as opposed to
Speaker 1: someone who likes to give it to a family office
Speaker 1: and say, you know, I want someone else to manage it,
Speaker 1: there's nothing wrong with that. That's just not the space
Speaker 1: that we're in. So if you choose to graduate there,
Speaker 1: by all means go ahead. This of course is a
Speaker 1: long term bet and new out building a business for decades,
Speaker 1: not a year. But how has the fundraising process been
Speaker 1: or how has your current outlook had to just cool
Speaker 1: down a little bit as the market cools down. Yeah. Look,
Speaker 1: first of all, this is my second time around, and
Speaker 1: it's a lot easier to start a company and raise
Speaker 1: money the second time around. I also have two phenomenal
Speaker 1: co founders, both of whom this is their second and
Speaker 1: third time around. So I think, what what do we say?
Speaker 1: Is um, the market is still open, there's still dry
Speaker 1: padder to be allocated, the best funds are still investing.
Speaker 1: You just have to make sure that your story and
Speaker 1: your substance is tight. And what we found is, you know,
Speaker 1: some of the stories that were perhaps a little bit
Speaker 1: lighter that we're getting funded twelve months ago, maybe are
Speaker 1: not getting funded today. But the ones that still have
Speaker 1: a lot of gravy tasks behind them are going to
Speaker 1: get funded. And in a way they're actually more attractive
Speaker 1: because that powder needs to get invested somewhere, and you know,
Speaker 1: they can't be sitting on the sideline, so they need
Speaker 1: to allocate that powder into really good companies. And I
Speaker 1: think you've seen, you know, today and even in the
Speaker 1: last couple of weeks, the market's picking up and a
Speaker 1: lot of companies are raising reasonably large rounds Ethan, great
Speaker 1: house and time with you, Thanks for your time, Thanks
Speaker 1: for coming on of course the COACHERI, CEO and co
Speaker 1: founder Ethan. I meanwhile coming up, what is the bar
Speaker 1: for tech runnings this week? How low has it gone?
Speaker 1: Well to the point? Rod Erickson and BBC is up next.
Speaker 1: This is back. This week is going to be busy, Apple, Alphabet, Amazon, Meta, Twitter,
Speaker 1: huge week for tech things springing obviously Capital markets Internet
Speaker 1: equity analyst Brad ericson Brad, Wow, I mean the bell
Speaker 1: Weather almost could have been Snap. How much you're reading
Speaker 1: the concerns about the advertising spend from Snap as a
Speaker 1: read across to some of the key players like a
Speaker 1: meta for example, Yeah, nice to be here, thanks for
Speaker 1: having me. So yeah, that's that's always the tough part.
Speaker 1: Snap leads us off right in earning season, and I
Speaker 1: think the last few quarters it's safe to say they
Speaker 1: are not a bell Weather, um, so we're and frankly,
Speaker 1: when you think about the stocks and how they traded
Speaker 1: on Friday, right, so I think Snap closed down for
Speaker 1: the day clearly if you look at sucks like alphabet
Speaker 1: like Meta and the direction that those traded, I think
Speaker 1: I think investors are are not inferring Snap as that
Speaker 1: sort of canary in the coal mine at this point.
Speaker 1: So okay, so let's dig it on Meta. For example,
Speaker 1: are you anticipating decent advertising commitment deefcent marketing spend still
Speaker 1: going through their platforms? Are you worrying about what the
Speaker 1: Apple out where them has done to them? Again? Um? Yeah,
Speaker 1: So a couple puts in takes and we just put
Speaker 1: out a report on this where we had talked to
Speaker 1: almost twenty five small and medium sized business ad agencies.
Speaker 1: In the last few weeks, what we sort of heard
Speaker 1: was that, you know, number one, in terms of overall spend,
Speaker 1: things actually got a little bit better through the quarter.
Speaker 1: I think between things like lower fuel prices and maybe
Speaker 1: some consumer package goods becoming more available um from an
Speaker 1: inventory perspective, and then lower shipping and freight costs. I
Speaker 1: think actually that may have actually freed up a little
Speaker 1: bit of budget on the advertiser front. So overall we
Speaker 1: actually heard things directionally got a little bit better on
Speaker 1: the algorithm front. Uh. Also on the positive side for Meta,
Speaker 1: we heard sort of what we'd called green shoots of
Speaker 1: positive development around the targeting algorithm and campaign performance. We
Speaker 1: were very careful to say though that we do think
Speaker 1: it's very early. We don't see this necessarily impacting revenue.
Speaker 1: Uh certainly not in Q three, and it it probably
Speaker 1: is minimal and que for but it was encouraging when
Speaker 1: you think about Meta trying to restore some that signal
Speaker 1: they last from Apple, we do think that sets up
Speaker 1: as a potential till and in twenty three. Okay, that
Speaker 1: nicely drives us onto the Apple conversation because interesting that
Speaker 1: they're raising prices in services, were expecting a strong set
Speaker 1: of data coming from the services part of the business.
Speaker 1: Where are you looking for Apple's growth trajectory? So I
Speaker 1: hate to be a big disappointment, but actually don't cover Apple,
Speaker 1: so I can't speak to the apologies. What do you
Speaker 1: make the therefore of the rad across? Therefore, what about
Speaker 1: some of the other social media because Apple is having
Speaker 1: such a knock on effect, not just on Snap, not
Speaker 1: just on Meta, but other players within the field. Let's
Speaker 1: talk a little bit more about the strength of social
Speaker 1: media in general. And I do believe that you cover Twitter.
Speaker 1: Are we expecting anything particularly from their earnings there in
Speaker 1: terms of advertising commitment or is this just a more
Speaker 1: look ahead to what happens if the business is born. Yeah,
Speaker 1: so I think broadly for the social media companies, and
Speaker 1: we've heard this consider instantly in our advertising channel work
Speaker 1: over last year. The Apple signal, I hate to sound
Speaker 1: so absolute, but the Apple signal is never coming back.
Speaker 1: This is never going to change now. The way when
Speaker 1: we talk about the potential to restore signal, we're not
Speaker 1: saying doing it in the old fashioned way the way
Speaker 1: they used to do it. They're trying new first and
Speaker 1: third party alternatives, and so I think whether it's pinterest
Speaker 1: or um or any of the other social media certainly
Speaker 1: YouTube we lump into there as well, and obviously you
Speaker 1: have to talk about TikTok these days. I think all
Speaker 1: of those companies are looking for any sort of way,
Speaker 1: be at a first party solution, third party to try
Speaker 1: and restore that signal, and we do expect it to
Speaker 1: get marginally better over time. I think the issue is
Speaker 1: it's just going really slow here and we're still we're
Speaker 1: now through that period lapping when Apple started, still not
Speaker 1: going that much improvement. What about I mean, you have
Speaker 1: Amazon at an outperform I believe, Brad. What about the
Speaker 1: advertising impact is that becoming any sort of residents at
Speaker 1: Verrir strength? Oh? Absolutely. I think you know, when you
Speaker 1: think about just going back to the Apple thing, that
Speaker 1: the segment of the economy that that really affected was
Speaker 1: small and medium sized businesses and e commerce vendors, and
Speaker 1: so when you figure those guys frequently also sell on Amazon,
Speaker 1: that's been a huge source of strength. And we've actually
Speaker 1: talked to some of those aggregators and there's a lot
Speaker 1: of profit margin that those companies do make they're actually
Speaker 1: nicely profitable businesses, surprisingly profitable, and so they do have
Speaker 1: margin to be able to spend on advertising on Amazon.
Speaker 1: And we think Amazon is actually sort of working the
Speaker 1: site to be able to to uh not require but
Speaker 1: but in some ways sort of force a lot of
Speaker 1: those third party vendors to advertise more in to become
Speaker 1: discoverable on the site. So yeah, huge driver, very positive
Speaker 1: for Amazon. Since those Apple changes hit, Amazon outperform, Meta outperform,
Speaker 1: Alphabet outperform. We look ahead to how those earnings shape up.
Speaker 1: Internet Equity analyst SABC Capital Markets Brad Erickson. Chinese presidence
Speaker 1: Seizing Ping has unnailed the country's new leadership lineup, and
Speaker 1: it twice a decade reshuffle. Powerful seven member polygara Standing
Speaker 1: committee is led by Sea. The others include Shanghai chief
Speaker 1: leads former anti grafzar Jola Ze, former party Secretary at
Speaker 1: Chief walf Mee, Beijing Party secretary tight See, See's chief
Speaker 1: of staff Dingo, and Guangdong leader Li Se. This final
Speaker 1: lineup has been beyond many analysts most extreme predictions, as
Speaker 1: it marks a clear break from the collective leadership model
Speaker 1: that's underpinned China's rise It's also a historic moment because
Speaker 1: it breaks so many norms, from term limits to early retirement,
Speaker 1: to age norms, to female representation Asian as well as
Speaker 1: the resume prerequisites. For example, Shanhaiji leaves Young, who is
Speaker 1: likely to become China's next premier, does not have national
Speaker 1: governance experience, and for the first time in a quarter century,
Speaker 1: China won't have a woman sitting on its current twenty
Speaker 1: four member poly bureau, marking a major step back in
Speaker 1: gender representation. What these powerful men have in common is
Speaker 1: that they've shown the utmost loyalty to see any signature policies.
Speaker 1: Critics worried though, that the move could present new risk
Speaker 1: for lack of opposing voices. Mh. This is Bloomberg technology.
Speaker 1: That was a broad look at the changes in China. Now,
Speaker 1: of course, the global ramifications went far and wide. Some
Speaker 1: of the Chinese technology giants listed not only in Hong
Speaker 1: Kong but in New York absolutely tanked. That's a technical term.
Speaker 1: On Monday, after Presidency's in paying its power grab, as
Speaker 1: it's being deemed the market meltdown followed a reshuffle in
Speaker 1: Chinese running communist parties. We heard, but it means a
Speaker 1: solidation of control by she and Ludlow right here to
Speaker 1: talk about what were the moves that mattered to you
Speaker 1: most dead right, But we talked about the size and
Speaker 1: scope right The NASA Golden Dragon China Index biggest drop
Speaker 1: on record, closes at the lowest level since the Hang
Speaker 1: saying China Enterprises Index dropping by the most since two
Speaker 1: thousand and eight, closes at lowest level since two thousand eight.
Speaker 1: But really the stat that stood out to me was
Speaker 1: this was the most severe, biggest drop in reaction to
Speaker 1: a Communist Party congress going back to when the index
Speaker 1: was first founded, right first conceived, and it gives you
Speaker 1: a sense of the angst and concerned that investors had,
Speaker 1: particularly about the technology sector under what a third term
Speaker 1: g presidency looks like. Under what this administration with new
Speaker 1: faces lacking economic experience, if not competants, looks like for
Speaker 1: the technology sector. There's another angle to this too, coming
Speaker 1: into my Bloomberg term. Or look at this chart, which
Speaker 1: is the Hang saying China Enterprises Index at its lowest
Speaker 1: level relative to the SMP five since two thousand and one.
Speaker 1: There's a concern here about the value of the Czech
Speaker 1: tech sector in China what jumps out of me as
Speaker 1: well as the data around foreign investors selling out of
Speaker 1: China assets. On Monday, around two point five billion dollars
Speaker 1: of mainland shares via the trading links with Hong Kong
Speaker 1: was sold Monday. That's another record going back to when
Speaker 1: they first started tracking the data in two thousand and sixteen.
Speaker 1: Foreign investors concerned. There's also tied together with what we
Speaker 1: saw from Tesla cutting prices in China and now raising
Speaker 1: questions about the demand in that country. But they also
Speaker 1: announced that they would raise manufacturing and reading across the
Speaker 1: analyst reaction, the expert reaction to this move by Jijing Ping.
Speaker 1: One of the pretty firm reactions is that we will
Speaker 1: not see an end to COVID zero and some of
Speaker 1: the restrictions in that economy. That's a concern for Tesla
Speaker 1: because most recently fifty output is coming from its plant
Speaker 1: in Shanghai. How will they navigate that and what does
Speaker 1: it mean for the strength of consumer in an economy
Speaker 1: that's serving size of cracking shorter term concerns, longer term
Speaker 1: concerns That Ludlowy does it all for us, We thank you. Meanwhile,
Speaker 1: let's talk about well, what it means to be navigating
Speaker 1: what are becoming less and less global stories in what
Speaker 1: I'm meant to still be global markets, tensions, global advisors
Speaker 1: all bright Stone Bridge Group principle Amy Selco is with us, Amy,
Speaker 1: your perspective the biggest risk at the moment. We heard
Speaker 1: a listening sort of laid out by ed there. But
Speaker 1: is it short term in nature? Is it like a
Speaker 1: COVID shutdown? Or is it more broad and long term
Speaker 1: in nature? Now on the seizing pains next decade, Well,
Speaker 1: I really appreciated hearing your colleagues talking about the meeting
Speaker 1: in those terms, how the markets have reacted, and I
Speaker 1: think what it's underscores is there's still a lot of
Speaker 1: uncertainty coming out of this week long meeting while a
Speaker 1: political leadership has been formed, And as your colleagues reference,
Speaker 1: she Jimping really did stack the deck in ways that
Speaker 1: analysts myself included did not foresee. We didn't think that
Speaker 1: he would take out so many capable leaders who were
Speaker 1: not at retirement age, particularly those with national experience overseeing
Speaker 1: the economy. He did, um, but his new economic leadership
Speaker 1: is not formed yet. We have to wait until next
Speaker 1: spring for that and so for foreign investors, for those
Speaker 1: of us who want to continue to see growth in
Speaker 1: the China market of our operations, We're just not sure
Speaker 1: what direction the Chinese government is going to be pushing
Speaker 1: beyond very broad, broad stroke pronouncements at the Party Congress
Speaker 1: that development remains important, not a focus on reform, but
Speaker 1: a focus on growth. And you know, to be perfectly frankly,
Speaker 1: if you've got the risk tolerance for it, you know,
Speaker 1: Kalonovitch over at JP Morgan Key Strategist says saying this
Speaker 1: is a buying opportunity in Chinese related text talks. But
Speaker 1: from your perspective, is the narrative becoming less global? Are
Speaker 1: we likely to see further tensions for example affecting a
Speaker 1: chip sector where US and China relations are deltailing? La
Speaker 1: Undoubtedly the long term prospects are for more risk, unfortunately,
Speaker 1: But I think that's pretty uh pretty much true. For
Speaker 1: one thing, we heard that from the Chinese government a
Speaker 1: real focus over the past week was on the external
Speaker 1: environment and it being very threatening and dangerous to China.
Speaker 1: Not that the Chinese government was shoring up to do
Speaker 1: anything aggressive in response, but it was notable that Shi
Speaker 1: Jimpying other top leaders focused very much on security issues
Speaker 1: and an unfriendly environment that China has to struggle against.
Speaker 1: And so what that means for US, I think, is
Speaker 1: that we're looking at prolonged tensions in US China relations,
Speaker 1: prolonged self reliance pursuits within China and here in Washington,
Speaker 1: of course, prolonged focus on China as a strategic competitor
Speaker 1: of the United States. And so those technolo oology controls
Speaker 1: that you were talking about absolutely are going to continue
Speaker 1: to grow talking a competition. What's been interesting was today
Speaker 1: rumors and I will call them rumors, swirled if at
Speaker 1: one thirty pm New York time, in tandem, both meta
Speaker 1: and snaps share prices suddenly took a leg lower. Many
Speaker 1: were talking about ongoing narrative of whether TikTok, for example,
Speaker 1: will be able to carry on in its current form
Speaker 1: here in the United States. How much do you see
Speaker 1: that becoming a continued political football between China and the US,
Speaker 1: and whether or not it does remain having a presence
Speaker 1: here for example, I think it is going to be
Speaker 1: a challenge because data and particularly control of personal information
Speaker 1: is arising. Concern in Washington about China's access to American
Speaker 1: citizens data and in China about US companies having having
Speaker 1: access to Chinese citizens data. It's considered a national security issue,
Speaker 1: and so I do think that is going to continue
Speaker 1: to grow as a problem. Of course, today we saw
Speaker 1: that there were two indictments against Chinese Chinese spies who
Speaker 1: were seeking to influence the investigation the Department of Justice
Speaker 1: investigation against Huawei, and so again technology focused issues are
Speaker 1: at the four of US China competition. That is going
Speaker 1: to make it a challenging environment for companies in the
Speaker 1: United States and in China to continue to be interdependent.
Speaker 1: And then we have just a show of how the
Speaker 1: share price did erode somewhat on Snap on the day,
Speaker 1: just at about one thirty. I'm interested Amy on your perspective.
Speaker 1: We've been talking about how this is impacting the investors.
Speaker 1: Of course, as many of you as are talked to
Speaker 1: us about a CEO of a business that has wanted
Speaker 1: to peg themselves to the growth story that is China
Speaker 1: that is now trying to understand whether that's something that
Speaker 1: they already stick to. Well, I think coming out of
Speaker 1: the Party Congress there are probably c e U s
Speaker 1: and many boards that are saying what did we see here.
Speaker 1: We saw continuation of a real focus on national security.
Speaker 1: We saw some some norm busting behaviors of early retirements
Speaker 1: of some very capable economic officials and some promotions of
Speaker 1: officials that don't necessarily have a strong national economic background.
Speaker 1: And so those are challenges when foreign CEOs are thinking
Speaker 1: about the direction in which Chinese policymakers are going to
Speaker 1: take China's economic development and the role of foreign investment
Speaker 1: in the market. We just saw Q three numbers drop
Speaker 1: on Monday. They were delayed, they were supposed to be
Speaker 1: released out of China last week, was delayed until after
Speaker 1: the Party Congress. And while there was some suggestion that
Speaker 1: the numbers were a little bit better than we predicted,
Speaker 1: certainly the export led growth is down and it's going
Speaker 1: to continue to be down, and so within China, I
Speaker 1: think there's going to be a focus on consumption led growth.
Speaker 1: So for the clients I serve and other global companies
Speaker 1: who are focused on the China consumption story, it will
Speaker 1: remain important. But it does depend on the sector in
Speaker 1: which you operate, because there is continued concerns engaging over
Speaker 1: the kinds of activities foreign investors can can you know
Speaker 1: it can do in the China market if there's an
Speaker 1: overlay of national security concern. That was a key theme
Speaker 1: coming out of the Party Congress, even though it was
Speaker 1: not tied to foreign investment. That's what CEOs are looking at,
Speaker 1: Amy Selca Principle over at Denton's Global Advice of old
Speaker 1: bright Stone Bridge Group. We thank you so much for
Speaker 1: keeping us on top of it. Or meanwhile, coming up, well,
Speaker 1: the government's crypto crackdown here in the US, is it
Speaker 1: scaring away potential investors or is it a complete opposite transparency.
Speaker 1: We'll discuss that in our Crypto Report US. Next, this
Speaker 1: is bring back time now for our crypto report. And
Speaker 1: it seems like the recent attention on crypto by the
Speaker 1: SEC and other watchdogs well actually proving to be pretty
Speaker 1: good for the industry. That's bringing our crypto contributor Nale
Speaker 1: Bassett for more on this. And you hear it from
Speaker 1: many a player, maybe a CEO and executive saying we
Speaker 1: bring on regulation, we want to therefore be deemed sort
Speaker 1: of more legitimate. But our investors seeing it that way,
Speaker 1: I think you have to break down what kind of investors.
Speaker 1: First of all, six of those who are surveyed by Bloomberg,
Speaker 1: this is more than five dred and sixty investors said yes.
Speaker 1: And interestingly enough, if you look at the type of investors,
Speaker 1: retail investors were saying so at a greater rate than
Speaker 1: professional investors. And when you look at the crypto industry
Speaker 1: at large, you are seeing a lot of divergence still
Speaker 1: and the types of investors that are more likely to
Speaker 1: buy crypto over the next twelve months. Off of the
Speaker 1: back of that, for example, you're seeing more south side
Speaker 1: traders say yes as opposed to those high level asset
Speaker 1: allocators and executives saying yes. So you do have divergence
Speaker 1: between the type of investor, but generally whether it's on
Speaker 1: their own personal book or whether it's for their exactly,
Speaker 1: I think there's a huge difference there on the volumes
Speaker 1: you're buying at that level, right, But do say yes
Speaker 1: that the regulatory clarity means a lot. Interestingly enough, um,
Speaker 1: some of these investigations, as we know, are pretty nascent,
Speaker 1: and the things that the SEC are looking at, whether
Speaker 1: it's at n f T S and YUGA labs or
Speaker 1: whether we're thinking about the way they're approaching three arrows capital,
Speaker 1: which is a little further down the road in terms
Speaker 1: of the hiccups we saw a lot earlier this year
Speaker 1: that we're much more blatant and detrimental to the market.
Speaker 1: That a little bit of regulation might have protected some
Speaker 1: people against you cool some enchin well throughous capital was
Speaker 1: a pretty you were very experienced in the space of
Speaker 1: perhaps you were going into that area or indeed, if
Speaker 1: you're buying n f T s, it's a different type
Speaker 1: of usset class perhaps than bitcoin the o G. So
Speaker 1: how are people feeling about just that as an area
Speaker 1: to be going into the moment. One interesting about bitcoin
Speaker 1: in particular is I think the difference that they these
Speaker 1: investors have felt about the trading range. So when they
Speaker 1: were asked in the summertime, they thought that bitcoin by
Speaker 1: and large most investors had thought that bitcoin crashed down
Speaker 1: to ten tho dollars. Now generally investors are feeling that
Speaker 1: there's a range bound view here between seventeen thousand and
Speaker 1: twenty five thousand until the end of this year, which
Speaker 1: is a little bit brighter than the summer but still
Speaker 1: range bound. I think that there's a lack of consensus
Speaker 1: here about how much correlation there is also to other
Speaker 1: assets I think that's very important because we do see
Speaker 1: some professional actors seeing that correlation breakdown, but respondents think
Speaker 1: that the correlation to tech stocks will a similar So
Speaker 1: you see that interest rate worries still exist among investors.
Speaker 1: So much for a diverse quite yet interesting. I just
Speaker 1: want to deviceify the conversation a little bit because I'm
Speaker 1: a brit sat here looking at the political extraordinary occurrence
Speaker 1: is happening over the UK, and I remember, you know,
Speaker 1: Richie Sunac, now Prime Minister, was at one point talking
Speaker 1: about making the UK a crypto hub, making sure that
Speaker 1: their regulation was ready for the space. What did that
Speaker 1: news have for many a crypto investor today, Well, obviously
Speaker 1: the crypto meme traders are blowing up about it. There's
Speaker 1: a lot of great videos about Richie Sunac on Twitter
Speaker 1: right now. But remember it was only April when he
Speaker 1: said that he wanted to make the UK a crypto hub.
Speaker 1: He really wanted to put more framework round stable coins
Speaker 1: being recognized as a valid form of payment. One quick
Speaker 1: thing I would say about this too is if you
Speaker 1: look at the actions that have taken outside of that
Speaker 1: takes CBDC Central Bank digital currencies for example, the UK
Speaker 1: is still only one of forty six countries that are
Speaker 1: still in research phase. There twenty six countries and development
Speaker 1: there are fifteen and pilot programs. So if you look
Speaker 1: at the CBDC world, when it comes to how fast
Speaker 1: the UK is moving, it is less fast than for example, Australia,
Speaker 1: but about the same as the United States. But he
Speaker 1: is a crypto friendly executive, of course, crypto friendly now
Speaker 1: Prime Minister who has a rather long to do list,
Speaker 1: so he whether it ends up anywhere near the top, Shenale,
Speaker 1: it's always great to have you on. Thank you, Shenali
Speaker 1: Bastic courseor Crypto report. We're gonna have a deep dive
Speaker 1: now on the gig economy, which has seen a pretty
Speaker 1: rough transition from peak pandemic to a pretty difficult new normal,
Speaker 1: shoppers going back to stores, inflation hurting everyone's wallets, and
Speaker 1: the market value. Of course of door Dash is followed
Speaker 1: by some This year, Uber thirty four, Instacot, after slashing
Speaker 1: its valuation for a third time on the private markets,
Speaker 1: keep on pushing towards an IPO amid pretty uncertain market conditions.
Speaker 1: Let's talk about what's in store for these companies for
Speaker 1: their workforce as well, for their regulation. Bradley Tusk, founder
Speaker 1: CEO of Task Ventures, which takes a novel approach to
Speaker 1: invest in. You really double down in areas that are
Speaker 1: going through regulatory changes and hurdles, and you help with
Speaker 1: your expertise to decide what's the best bet and not, Bradley,
Speaker 1: at the moment the erosion of value in these sorts
Speaker 1: of companies, and we see a deep dive going into
Speaker 1: Go Puff for example on the terminal today. How difficult
Speaker 1: is it with the changing of their how their view
Speaker 1: workers are assessed. Yeah, look, it certainly doesn't help. So
Speaker 1: right now you've got two different camps in a buyinary position.
Speaker 1: So they're sharing economy companies all say, should all of
Speaker 1: our workers become wtube We expect our our great expenses
Speaker 1: to increase buyers much just twenty percent, so that they've
Speaker 1: done a view that you know, in a business for
Speaker 1: already tired margins, they really can't afford more cost. The
Speaker 1: unions will say we believe that every single person in
Speaker 1: the sharing economy has to be a W two employee.
Speaker 1: The reason they say that is their main concerns, of
Speaker 1: course members and union paying dues. You can't get dudes
Speaker 1: from someone if they're not a member, and they can't
Speaker 1: be a member if not a full time employee, So
Speaker 1: you have each side kind of taking a fairly extreme position. UM.
Speaker 1: The Biden administration has now outsided, not surprisingly with the unions. UM.
Speaker 1: They issued a proposed rule at the Department of Labor
Speaker 1: about a week and a half ago that effectively presumes
Speaker 1: that everybody in the sharing economy is a full time
Speaker 1: employee and not a to ninety nine. So that will
Speaker 1: likely go into a factor if you're thinking about the
Speaker 1: cost structure for door dash for left Uber potentially burned
Speaker 1: into car wherever they go to public UM, I do
Speaker 1: think you have to factor that in. However, UM, there
Speaker 1: are some other mitigating pieces. Which is, first, if the
Speaker 1: Republicans win the White House in four that rule likely
Speaker 1: gets prescinded right away, so it's actual from amount of
Speaker 1: time that it existed, so that we're sent it will
Speaker 1: be pretty minimal. The impa actually pretty minimal. Also, you know,
Speaker 1: the buying administrations, they're just picking politics as opposed to
Speaker 1: the actual well being or desires of the workers. They're
Speaker 1: gonna find that millions and millions of people who currently
Speaker 1: work as independent contractors are there really resists becoming full
Speaker 1: term employees and joining unions because they don't want to
Speaker 1: write the While they may say, of course everyone wants
Speaker 1: to be in the union, of course they wants to
Speaker 1: be W two, all of the data of our shows
Speaker 1: that people who are in the sharing economy really value
Speaker 1: the flexibility that they have or setting their schedule's choosing
Speaker 1: what kind of work they do when they work, and
Speaker 1: so that has to get balanced against it. So, you know,
Speaker 1: just to interject that rightly said, and I've heard the
Speaker 1: lobby and go on. It's been going thick and fast
Speaker 1: in the UK as well for many a company that
Speaker 1: I covered over there as well. When you think about
Speaker 1: delivery and they're like, from your perspective, is it a
Speaker 1: useful use of resource of the companies you back that
Speaker 1: they have to just lobby pay for lobbying in this way. Yeah,
Speaker 1: unless the lobby expenses are greater than what you believe
Speaker 1: the total increase and costs are going to be for
Speaker 1: converting everyoneted W two, then yes it's a good expense. Right.
Speaker 1: So if you're talking about a operating increase um, you're
Speaker 1: a lot of expenses are I don't know, less than
Speaker 1: more percent of that reality. So it's it's not that
Speaker 1: it's it's not that material. Yeah, companies have to work
Speaker 1: on this stuff for sure. Let's go through your list. Then,
Speaker 1: as a VC at the moment in this landscape, how
Speaker 1: high up does the regulatory concern come to you? Or
Speaker 1: are you more likely just looking at the broad landscape
Speaker 1: of tech investing right now and being like, oh boy,
Speaker 1: that the tectonic plates have shifted a bit here, right.
Speaker 1: It's a good question. So we're early stage investors see
Speaker 1: in the series A, and we look for all the
Speaker 1: same stuff as every early stage founder and every really
Speaker 1: stage investors. So the founder, the tam, the underlying technology
Speaker 1: and underlying idea all we use all stuff. Then at
Speaker 1: touch fansures, we have two more questions. One is there
Speaker 1: a gating regulatory issue or opportunity that if it war solved,
Speaker 1: can really draw growth and evaluation. And if so, can
Speaker 1: we help solve But when the answer is yet to both,
Speaker 1: that didn't really make sense for us specifically to deploy capital.
Speaker 1: So if you take the company that you just listed.
Speaker 1: For FanDuel, we're in all the campaigns helped legalized daily
Speaker 1: fantasy sports fatting. For Bird, we legalized electric students. For Lemonade,
Speaker 1: we've got that their insurance licenses in every state. For Roman,
Speaker 1: we help digitize legalize digital prescriptions. So for us specifically,
Speaker 1: we need to see a significant regulatory issue for us
Speaker 1: to invest in the first place. Typically, seeking those issues
Speaker 1: come at the front end um, so that that attached
Speaker 1: how we look at it. If we do our jobs properly,
Speaker 1: later stage investors won't even have to think about this
Speaker 1: all that much because we've already legalized the product, gotten
Speaker 1: the license, whatever it is that the company needs. Riley,
Speaker 1: we could talk to you for so much longer. We
Speaker 1: thank you for giving you inside track on today. Bradley
Speaker 1: Tusk always great to sit down and founder and CEO
Speaker 1: of Tusk venches. Meanwhile, well that does it for this edition.
Speaker 1: A bloom Beg Technology goes by so fast. Tuesday, We're
Speaker 1: gonna have so far as Lizzie Young stop all things Earnings,
Speaker 1: and do not forget to check out the podcast, where
Speaker 1: we amalgamate some of the best parts of our conversations
Speaker 1: in a really unique and easy to digest format. From
Speaker 1: New York Wishing Well, there's a Broomberg