Speaker 1: I'm Caroline Hide of Blomberg's World headquarters in New York
Speaker 1: and Imed Ludlow in San Francisco. This is Bloomberg technology
Speaker 1: coming up old fashioned embezzlement, positioned to fail. Any regulation
Speaker 1: would have helped. They're just some of the CEO John
Speaker 1: Ray the third and the words he had to say
Speaker 1: of f t X. Understand Bankminfried. We dig into the
Speaker 1: testimony and what's to come of it. And the fd
Speaker 1: X fallout is creating headaches at other exchanges, mainly Binance,
Speaker 1: which has seen nearly four billion dollars in outflows in
Speaker 1: the past week. And Bloomberg has learned Apple's potential solution
Speaker 1: to anti competitive concerns over its app store. But first,
Speaker 1: let's get back to that huge story of the day
Speaker 1: after ft x is swift collapse sent shock waves across
Speaker 1: crypto markets. Of course, the House Financial Services commit he
Speaker 1: was out to get some answers from the senior f
Speaker 1: t X executives, a task that's been made are now
Speaker 1: more complicated by the fact that will He is arrested.
Speaker 1: Sa bakmafreed himself in the Bahamas on Monday. Williams Chris
Speaker 1: so much as with us on the latest. Just walk
Speaker 1: us through, Chris, what happens now from illegal perspective for
Speaker 1: Sam Magminfried. Yeah, well, as we can see on the screen,
Speaker 1: things are breaking right now that he's uh denied bail
Speaker 1: and the Bahamas and it's gonna be in jail if
Speaker 1: I believe the report I saw said tebrutary eight. So
Speaker 1: that pushes things down the road from the immediate future
Speaker 1: to then and uh, you know he's apparently going to
Speaker 1: fight extradition, which could take a while, could take months,
Speaker 1: could take years. Some people say, we've had people poor
Speaker 1: who have bought extraditions successfully or stolen the Bahamas and
Speaker 1: had not um. So it's a real question as to
Speaker 1: how that will proceed before he even gets here to
Speaker 1: face the charges that are facing him, which are pretty substantial. Chris,
Speaker 1: I've sat alongside you covering financial crime in the courtroom,
Speaker 1: preparing and anticipation of being in the courtroom. It's never straightforward.
Speaker 1: The burden will have to force the prosecution. Of course.
Speaker 1: What is it that they'll have to demonstrate and prove
Speaker 1: when it comes to the action Sam Bankman free took
Speaker 1: or did not take, Well, they're going to happen to
Speaker 1: show that he used. You know, either he's charged with
Speaker 1: wire fraud, UM, securities fraud, commodities fraud, and conspiracies to
Speaker 1: commit those as well, So they're gonna have to show
Speaker 1: that he used basically that he lied to investors or
Speaker 1: lied to customers by misrepresenting the state of the company's
Speaker 1: finances or omitting material facts about the company's finances. And
Speaker 1: when we say material, we mean things that would matter
Speaker 1: to a reasonable investor when they when they invest, if
Speaker 1: that would matter to them in their decision to invest
Speaker 1: with him or to give them money. Um, And that
Speaker 1: would be the burden that they would have to show
Speaker 1: on each of those accounts. The jury to convict Bloomberg's
Speaker 1: christ almost there on the legal and court speat thank you. Meanwhile,
Speaker 1: f t X is new chief executive and the man
Speaker 1: handling its restructuring, John Ray the third did take the
Speaker 1: stand on Capitol Hill where he called the former ft
Speaker 1: X team as quote, grossly inexperienced and unsophisticated. Take a listen,
Speaker 1: not sophisticated at all. Sophisticated perhaps in the way, uh
Speaker 1: they were able to sort of hide it from people,
Speaker 1: uh frankly, right in front of their eyes. But this
Speaker 1: isn't This isn't uh, you know, sophisticated whatsoever. This is
Speaker 1: just plain old embezzlement. Bloomberg Shnali Bassak on the ground
Speaker 1: in Washington following it blow by blow, What did we learn?
Speaker 1: F t x c O. John Ray really talking about
Speaker 1: how this is like a paperless bankruptcy and that he
Speaker 1: doesn't trust a lot of the paper trail he sees. Meanwhile,
Speaker 1: on the lawmaker side, you have recognition by some such
Speaker 1: as Congressman at french Hill who says that the losses
Speaker 1: here could really dwarf what you saw even with Bernie
Speaker 1: made off so one of the biggest bankruptcies here in
Speaker 1: American history. There's also this recognition of whether there could
Speaker 1: have been anything done to prevent something like this via regulation,
Speaker 1: via better rules of the law of land when it
Speaker 1: comes to what's happening in the United States when it
Speaker 1: comes to digital assets. But at the end of the day,
Speaker 1: you did have John Ray also saying this could have
Speaker 1: happened anywhere. Remember you had charges civil and criminal here
Speaker 1: of fraud, and also the SEC saying that the commingling
Speaker 1: of funds here were happening as he was misleading investors
Speaker 1: about certain facts about f t X, and Alameda talked
Speaker 1: to us through Shannali, really what the answer is for
Speaker 1: people who have lost money here? Was there any sort
Speaker 1: of explanation for those who have been so emotionally and
Speaker 1: but also financially involved in this as to where the
Speaker 1: buck will potentially flow for us or for international users.
Speaker 1: There's a few things here. You did have John Ray
Speaker 1: say that it's impossible to recoup everything, but you also
Speaker 1: had him say that in the United States it might
Speaker 1: be a little bit easier than other places given how
Speaker 1: the firm structured. But I would also say that remember
Speaker 1: when you look at the sec complaint, for example, they
Speaker 1: talk about how the funds were used and where the
Speaker 1: funds were used, real estate purchases, political contributions, venture capital.
Speaker 1: Remember we've already had the FTX executives say the venture
Speaker 1: capital in particular are assets, and how they treat that
Speaker 1: in the bankruptcy when they try to make customers whole
Speaker 1: again will be interesting because they're going to have to
Speaker 1: track all these assets down at the end of the day,
Speaker 1: and will they get full dollar for them at the end,
Speaker 1: and are they even going to be able to find
Speaker 1: all the assets? Meanwhile, I just want to go to
Speaker 1: your expertise, HETIONALI in the contagion effect. You've been looking
Speaker 1: a lot at the other exchanges that edged on a
Speaker 1: light on some of the crypto related names that have
Speaker 1: been sunk by this. But there has been a lot
Speaker 1: of reporting and focus on Binance, for example, on Twitter
Speaker 1: and on other areas of the media. Is that something
Speaker 1: that you think Washington is paying attention to at the moment.
Speaker 1: I think they're pretty tied up with f t X
Speaker 1: at the moment, So that's a great question if I
Speaker 1: asked anything about whether it's finance or stable coin industries
Speaker 1: or anything else. Really, the focus really here is on
Speaker 1: f t X right now because people have lost so
Speaker 1: much money and there is a lot of anger. But
Speaker 1: to the point that you're making their finance is a
Speaker 1: largely international exchange. Of course, there's also finance US. But
Speaker 1: the issue you were talking about earlier in the show
Speaker 1: was net outflows to the tune of about four billion
Speaker 1: dollars in a week. I thought Nansen's analysis of this
Speaker 1: was interesting. Kind of not to fret this is the
Speaker 1: small percentage of total assets, but it does goes to
Speaker 1: show the cost to mur fears around holding money in
Speaker 1: an exchange, especially as the industry gets more concentrated. Plus
Speaker 1: that issue with stable coin withdrawals, to keep an eye
Speaker 1: on as the industry faces pressure. What happens to the
Speaker 1: stable coin industry. Whenever you have a congressional committee hearing
Speaker 1: like this, Nali, Yes, you get the testimony from those
Speaker 1: called as witnesses. We also kind of get this broad
Speaker 1: range of opinion from those committee members that pose questions.
Speaker 1: Do we get any sense of what the committee members
Speaker 1: want to happen next? What happens next based on what
Speaker 1: was discussed in that room? Well, one thing actually and
Speaker 1: no shocker here, but when there's frustration in the committee
Speaker 1: often it's backward looking, and so there were a lot
Speaker 1: of questions about what had happened, how does it happened?
Speaker 1: But there was also a fair bit of frustration that
Speaker 1: he was arrested yesterday before he was able to testify
Speaker 1: here today under oath to give Americans more clarity on
Speaker 1: what had happened here, I would say also, if you
Speaker 1: want that clarity, go to the indictment from the Southern
Speaker 1: District of New York, go to the SEC complaint and
Speaker 1: the CFTC complained. There's a lot of detail in there,
Speaker 1: but there was certainly a lot of frustration here we're
Speaker 1: not hearing from Sam BigMan freed himself under oath, which
Speaker 1: we know he had said he didn't have all the
Speaker 1: details because he didn't have all the data. Shanali Bassek
Speaker 1: just fantastic day of reporting in of course the White
Speaker 1: House or indeed in Washington or generally. We thank her
Speaker 1: so much, and let's just talk a little bit for
Speaker 1: a moment about what's been happening. The update that, of
Speaker 1: course Sam Backminfried has been denied bail by a judge
Speaker 1: in the Bahamas in order to return to jail. We
Speaker 1: understand in the island country. Now what's interesting here is
Speaker 1: the judge is also setting the extradition hearing for bank
Speaker 1: Win freed for February the eighth, and learn the arraignment
Speaker 1: on Tuesday. Has Laways said that he would fight plans,
Speaker 1: of course, to send him back to the United States
Speaker 1: to face charges. I mean, while coming up the future
Speaker 1: of the cybersecurity industry and as we head towards three,
Speaker 1: what that really looks like. We're going to get you
Speaker 1: the perfect insight an exclusive conversation. Palo Alto Neck Works
Speaker 1: CEO of Nikesha Aura US next a Bloomberg. We've got
Speaker 1: to talk cyber right now because it's been an increasingly
Speaker 1: important focus for companies, for governments, and of course this
Speaker 1: year we're going to talk about cyber crime as it persists.
Speaker 1: Plo Alto Network CEO Nikesha Aura Choice US from its
Speaker 1: Global Cybersecurity Conference in Las Vegas, bringing together more than
Speaker 1: cybersecurity professionals to discuss just that the increasing nature and
Speaker 1: all encompassing global nature of cyber crime. Nikesh, But what
Speaker 1: about cyber spending? We want to understand right now when
Speaker 1: you're getting up on your fireside chats, when you're thinking
Speaker 1: about innovation in the space, as you have been with
Speaker 1: the course with Glogle Cloud, are people still willing to
Speaker 1: spend as much as they used to in this this
Speaker 1: environment of economic downturn. Well, Caroline, first of all, thank
Speaker 1: you for having me as we kick off our IGNITE
Speaker 1: conference in Las Vegas. I know there's a lot of
Speaker 1: conversation around the macro environment and what is going on
Speaker 1: with potential budgets and cyberspending and I T spending to
Speaker 1: be honest in the future, and whilst we are seeing
Speaker 1: some degree of caution from the customers out there. I
Speaker 1: don't think the demand is going away because there's a
Speaker 1: lot of historical debt that needs to be paid. Because
Speaker 1: we've built infrastructure over the last thirty years which needs
Speaker 1: to be replaced. Because everyone's relying on technology and that
Speaker 1: requires a lot of our customers to upgrade their capabilities
Speaker 1: to get more and more up to speed with the
Speaker 1: current techniques in the market. And as you know, the
Speaker 1: bad actors aren't waiting in an economic downturn. They're attacking
Speaker 1: with fugusto they are. And therefore, what of the space,
Speaker 1: the competition in the space, the people, the customers do
Speaker 1: they turn to in this moment? Is it market shap
Speaker 1: that's been growing for you? And how have you been
Speaker 1: winning that? If so? Well, Caroline, four and a half
Speaker 1: years ago we were a single product company. In the
Speaker 1: last four and a half years we have built a
Speaker 1: portfolio where we lead in thirteen categories of cybersecurity. This
Speaker 1: is a few which hasn't been done before by any
Speaker 1: cybersecurity companies. So, you know, the silver lining in this
Speaker 1: macroeconomic environment is that customers are looking to reduce their
Speaker 1: total cost of ownership and increase their security posture. Security
Speaker 1: outcome as you'd like to call it, and that makes
Speaker 1: us a perfect partner for them because we have spent
Speaker 1: the time in the last four or five years trying
Speaker 1: to put our platform together and that's helping us because
Speaker 1: you know, people are coming to us in this consolidation
Speaker 1: seat of driven market the cash. It's been a busy
Speaker 1: week for Caroline and I'm we're only two days in.
Speaker 1: We called Monday Merging Monday because of just the relentless
Speaker 1: news for an M and A. You're in ignite two
Speaker 1: of your friends and peers and industry colleagues. Historically, I
Speaker 1: look at your M and A track record, semin a
Speaker 1: an option for you guys right now. Well, you know
Speaker 1: we've bought seventeen companies so far since I've been here
Speaker 1: for four and a half years. So yes, you know
Speaker 1: we have appetite for M and A as you can
Speaker 1: probably tell. But we really focus done expanding our product
Speaker 1: capability and product portfolio, and we've done M A slightly
Speaker 1: differently than traditionally an enterprise. We've actually looked for number
Speaker 1: one or number two in our in a particular category.
Speaker 1: We made sure that the founders have come to work
Speaker 1: at Bolt stayed with us. We made made sure they
Speaker 1: run our business. In fact, you know, I was noticed
Speaker 1: noting the statistics this morning. We have fourteen thousand employees.
Speaker 1: Eighty percent of those people are new to Poulto in
Speaker 1: the last four years. So we have made sure that
Speaker 1: this transition that we've undergone through M and A and
Speaker 1: through organic development has been sort of balanced with increasing
Speaker 1: in our own capabilities. So we think we've paid off
Speaker 1: all the cybersecurity technical debt we've had to pay to
Speaker 1: build this into a large platform company for the future.
Speaker 1: I didn't I didn't hear enough. I didn't hear no. Yes.
Speaker 1: Well I didn't hear yes either. Fair enough. Caroline made
Speaker 1: a really good point earlier when we were talking before
Speaker 1: the show that when it comes to cyber security, cyber
Speaker 1: crime is not moderating, even if the spend of your
Speaker 1: customers is. What are the drivers behind corporates who think, right,
Speaker 1: I better now protect myself and invest in this area.
Speaker 1: What are the key events from this year that has
Speaker 1: pushed executives to get their checkbook out? Well I did
Speaker 1: last year. In two we had twenty confirmed randsomwhere victims,
Speaker 1: which means companies had to deal with an environment where
Speaker 1: their technology did not help them. They got breached, their
Speaker 1: systems were shut down, they had business interruption, and they
Speaker 1: either had to negotiate their way out of a situation
Speaker 1: or had to pay rand somewhere to get out of it,
Speaker 1: to get to you know, get back to business. Now
Speaker 1: that leaves boundarily of a scar on you. You're gonna
Speaker 1: sit down with your I T team and their security
Speaker 1: teams like this should never happen again. So the market
Speaker 1: just in Mint Mint customers who are not paying attention
Speaker 1: to cybersecurity, and what's happening is, you know, the whole pandemic,
Speaker 1: the whole rework from home, the whole fact that you
Speaker 1: have you know, online was the only way to get
Speaker 1: business done because your stores were closed. Has put a
Speaker 1: tremendous focus on making sure that your technology infrastructure is
Speaker 1: working at the time that requires it to be uninterruptable,
Speaker 1: It requires it to have business continuity, and their cyber
Speaker 1: becomes your biggest risk if something happens to your tech infrastructure.
Speaker 1: Because you do a global cyber survey, and what caught
Speaker 1: my eye was not only just how everyone has experienced
Speaker 1: it was reported experience of cybersecurity incident, but What really
Speaker 1: interested me was the talent issue, and you talk about
Speaker 1: a cyber skills shortage, and that basically most respondents is
Speaker 1: saying that having to tend to automated ways of tackling
Speaker 1: cybersecurity because of talent shortage. How are you looking to
Speaker 1: tackle that talent shortage in this market? So, Caroline, like
Speaker 1: you already gave the answer and what you said, I
Speaker 1: don't think we have a talent shortage. I think we
Speaker 1: have a you know, sort of a perpetration of too
Speaker 1: many vendors, too much integration, which is done by our
Speaker 1: customers who in some cases don't have all the skills
Speaker 1: needed because they're running a two thousand, five thousand, ten
Speaker 1: thousand people organization, and they should be busy doing their business,
Speaker 1: not worrying about protecting their infrastructure by stitching cybersecurity solutions.
Speaker 1: That job should be our job, that should be the
Speaker 1: industry's job. And that's kind of what we've been working
Speaker 1: on phil last four and a half years. Four and
Speaker 1: a half years ago, we went out and said, listen,
Speaker 1: this is a data problem, this is an AI problem.
Speaker 1: It was funny I was remarking earlier that I played
Speaker 1: with GPT three and chat GPT over the weekend, and
Speaker 1: it is giving you a little window into what AI
Speaker 1: is capable of. How natural language processing should be able
Speaker 1: to answer you a question without requiring humans to get
Speaker 1: involved and looking at screens and trying to figure out
Speaker 1: what the problem is. So I think this is a
Speaker 1: data problem. I think this is an AI problem. We
Speaker 1: need more data and AI professionals, not really cybersecurity professionals.
Speaker 1: We can understand fifty different vendors in the infrastructure and
Speaker 1: stitch it one at a time for each customer. So
Speaker 1: this is an automation problem. This is an AI problem.
Speaker 1: This can be solved, but our customers have to step
Speaker 1: up and embrace automation and AI because if they don't,
Speaker 1: we're gonna have more ransom of our victims next year
Speaker 1: than we had last year. We had a chat GBT
Speaker 1: ease there on a hands carry How familiar with that?
Speaker 1: Palo Alto Network CEO Nikesha are a really good to
Speaker 1: catch up, Caroline. Not grateful to have you on the show.
Speaker 1: Let's talk about Twitter's Trust and Safety Council. It's no
Speaker 1: more a group of independent experts. It was created in
Speaker 1: to help tackle child sexual exploitation, hate speech, harassment other
Speaker 1: problems on the platform, but it's now been disbanded and
Speaker 1: a letter was sent to the team saying, as Twitter
Speaker 1: moves into a new phase, we are reevaluating how best
Speaker 1: to bring external insights into our product and policy development work.
Speaker 1: Several members recently quit the group over concerns about the
Speaker 1: company's ability to police the platform for harmful contented Yeah,
Speaker 1: that's right, Kara and Apples making some changes of its own,
Speaker 1: preparing to allow alternative app stores on its iPhones and
Speaker 1: iPads as part of a sweeping overhaul to comply with
Speaker 1: strict European Union requirements coming in bloom Bus. Mark Goerman
Speaker 1: broke that story and joins us. Now, Mark, what have
Speaker 1: you learned in your reporting about the changes that Apple
Speaker 1: is working on internally? Thank you both for having me. Yeah,
Speaker 1: have you explained it well. Basically, Apple has a major
Speaker 1: project in the works across its software and services organizations
Speaker 1: to really revamp the underpinnings of iOS and iPad os,
Speaker 1: some of its other operating systems to meet these very
Speaker 1: stringent and very broad requirements coming into place from the
Speaker 1: European Union. Now, as part of these requirements, they're really
Speaker 1: going to start making the iPhone a little bit more
Speaker 1: like Android. Right. I'm sure some people aren't gonna like, uh,
Speaker 1: you know, to hear that comparison. But there's the reality.
Speaker 1: You're gonna see some sideloading, which means installing apps from
Speaker 1: third party app stores, from different websites, from other sources
Speaker 1: on the Internet. You're going to see them begin to
Speaker 1: slightly open up the NFC processor on the phone, which
Speaker 1: is the chip that allows you to do mobile pay
Speaker 1: with Apple pay, so it's Apple to pay payments for
Speaker 1: the first time, may be able to come to third
Speaker 1: party apps like your bank or Venmo or PayPal. You're
Speaker 1: also going to see a change to the browsing engine.
Speaker 1: So there's third party web browsers available on the iPhone,
Speaker 1: whether that's Firefox or whether that's Chrome. But what most
Speaker 1: people don't know is that those applications still use the
Speaker 1: underlying mechanics, the underlying engine of an Apple Safari web browser.
Speaker 1: There's also some work being done to open up the
Speaker 1: Fine My network. Do you remember Tile that Square competitors
Speaker 1: to the air tag. They've complained for months about not
Speaker 1: being able to have the same iPhone based pairing functionality
Speaker 1: as the air tag. So Apple is going to try
Speaker 1: to bridge that gap as well. That's interesting, of course,
Speaker 1: because you bring up a competitor basically that Apple wouldam
Speaker 1: built something pretty similar to all of this is about competition.
Speaker 1: We've are gonna gotten thirty seconds left. But will this
Speaker 1: ultimately satisfied you think, because you're saying it's like Android,
Speaker 1: but Google is also they think it's too powerful. As
Speaker 1: long as Apple hits all the requirements that the European
Speaker 1: Union is outlined with the Digital Markets Act for I'm
Speaker 1: not really sure what else people or the government can
Speaker 1: complain about. Out the downside for Apple if they don't comply.
Speaker 1: We're talking ten to of annual global revenue as fine
Speaker 1: switch for Apple as of last year. That's eighty billion dollars.
Speaker 1: Quite the chunk of change. Mark German Money talks always.
Speaker 1: We thank you so much. Is always great to have
Speaker 1: him on with a scoot. Welcome back to Bloomberg Technology.
Speaker 1: I'm Caroline Hyde in New York with Ed Ludlow in
Speaker 1: San Francisco, and you are always a busy man across
Speaker 1: our screens, but also by writing scoop after scoop. Just
Speaker 1: tell us about the SpaceX fundraising one. Yes, so Bloomberg
Speaker 1: has learned that Elon must SpaceX wants to sell insider
Speaker 1: shares at a price that would raise the company's valuation
Speaker 1: to about a hundred and fifty forty billion dollars. According
Speaker 1: to sources, this makes SpaceX the most valuable private company
Speaker 1: in the US. It's up from a seven billion dollar
Speaker 1: valuation in July. That's according to pitchbook data. You know,
Speaker 1: this is a company that's dominated ting right the market
Speaker 1: for commercial space launch. They have Starlink, which is their
Speaker 1: satellite based internet and you know, in the past, Musk
Speaker 1: has said that Starlink could be spun off in a
Speaker 1: listing right once cash flows more predictable. I'm really interesting
Speaker 1: your take on this story. You know, it's a tender offer.
Speaker 1: We don't know yet for certain if they'll do a
Speaker 1: primary as well. And I know, you know, you know
Speaker 1: this bending on for every seller, there's a buyer, and
Speaker 1: buyer there's a seller. But what what gets me is
Speaker 1: that there's clearly an appetite from investors to get involved
Speaker 1: in SpaceX, and when it's led by well, ostensibly one
Speaker 1: Elon Musk. I know that he of course has very
Speaker 1: powerful CEOs and operational chief's female at that. But I'm
Speaker 1: interested in why on the one side, you're talking earlier
Speaker 1: about Tessa shares have been under pressure. Worry about the distraction,
Speaker 1: but then the privately held business people answer worried. Yeah.
Speaker 1: I mean it's a very hard one to answer. Gwin
Speaker 1: shot well, as you alluded to, you know runs day
Speaker 1: to day SpaceX. But Elon Musk is still involved, you know,
Speaker 1: in his pay testimony the other day, he's said that
Speaker 1: that's still a key area of focus for him. So
Speaker 1: it's a question that overhangs both companies. But the private
Speaker 1: entity SpaceX at least seems more immune to this key
Speaker 1: man risk element that tests the shares appear to be
Speaker 1: under yeah for now, well, still going to the moon,
Speaker 1: it would seem in terms of overall valuation of that business.
Speaker 1: And let's talk about valuations and businesses private and whether
Speaker 1: the exit strategies are still there. We want to talk
Speaker 1: about fundraise, we want to want to talk about deal sentiment.
Speaker 1: We've got great local focus for that here in New York.
Speaker 1: Cameron and Sary's with us board partner at Greycroft is
Speaker 1: also the former head of M and A at Pinterest.
Speaker 1: So basically, Cameron, you can talk about everything that we
Speaker 1: want to talk about the moment because it's a hot
Speaker 1: week for M and A and also clearly for valuations,
Speaker 1: but all certain businesses just talk to us. You're very
Speaker 1: focused on flin texts, in particular to some consumer focused businesses.
Speaker 1: I know that the likes of billion under your focus.
Speaker 1: But talk to us about what the landscape feels like
Speaker 1: right now for these companies. Well, it's been a slow
Speaker 1: market for certainly for I pos F, M and A
Speaker 1: and for fundraising all the above right uh, and it's
Speaker 1: been down significantly. But I think in these last few
Speaker 1: weeks of the year, certainly on the fundraising front, you know,
Speaker 1: we're seeing more activity. I'm seeing more companies trying to
Speaker 1: close deals before the end of the year. And then
Speaker 1: on the M and A front, you saw a very
Speaker 1: large deal announced yesterdayan text space where Coupa Software is
Speaker 1: going to be bought by Toma Bravo off the public
Speaker 1: markets for about eight billion dollars. So and that comes
Speaker 1: in the heels of Avolara, another software company is bought
Speaker 1: by um vis To Equity for about the same price
Speaker 1: eight billion dollars about a month or two ago. So
Speaker 1: I think you're gonna see more and more these deals
Speaker 1: where private equity buyers see great valuations and and values
Speaker 1: really on the public market for some of these great
Speaker 1: companies that have um earnings but cash flow and that
Speaker 1: you know, the price that it's really been depressed in
Speaker 1: the last year, and that's we've throwed the needle for
Speaker 1: us a little bit of whether there's any themes. Then
Speaker 1: you say, if they basically caught earnings, basically if they
Speaker 1: are a profitable business, so what do most of the
Speaker 1: companies in your portfolio more generally have that right now
Speaker 1: or more changes needed from within before they can go
Speaker 1: out and fundraise. Well, I think in the venture space obviously,
Speaker 1: when you're talking about early stage companies, the majority of
Speaker 1: them do not have a out of EBA D or profit.
Speaker 1: They're they're focused on growth to maybe growing for a year,
Speaker 1: but they're still burning cash on the public markets. However,
Speaker 1: you have a number of great companies that went public
Speaker 1: in the last couple of years, particularly sas Space, um
Speaker 1: software companies that are still public but the valuations have
Speaker 1: come down significantly. UM you still have you know, Zora, Smartsheet, Docuside, dropbox, Box, um, HubSpot.
Speaker 1: These are all terrific companies, and I'm you know, I'm
Speaker 1: willing to bet that the folks at this done too,
Speaker 1: Moravo and elsewhere, probably the salesforce, probably Adobe. They're shopping
Speaker 1: their pencils and look at these valuations and thinking, you know,
Speaker 1: when is the right time to make an offer for
Speaker 1: one of these businesses because those companies do have strong clients,
Speaker 1: good growth, good margins and cash. Cameraon Monday was I mean,
Speaker 1: it was Merge of Monday. It was madness. I don't
Speaker 1: know where you were or what you were doing, but
Speaker 1: as those headlines kept coming, seventy billion dollars worth of
Speaker 1: deals Sunday night through Monday evening, what was your reaction
Speaker 1: to that? The timing, the volume, that the velocity at
Speaker 1: which those M and A deals are announced. Yeah, I mean,
Speaker 1: I think it ties back to the as we've talked about,
Speaker 1: which is you have a lot of strategics as well
Speaker 1: as private equally firms of massive cash talg piles. You
Speaker 1: have attractive valuations in both the private and the public markets,
Speaker 1: and you have end of the year right, so it's
Speaker 1: that time where people want to get things on their
Speaker 1: books and try to get deals announced before folksy for
Speaker 1: the holidays, so uh, you know, we're seeing that, you know,
Speaker 1: even on the venture side, where people are trying to
Speaker 1: really get deals done and fundraising completed before uh, you know,
Speaker 1: we hit the Christmas and years holidays. What happens next
Speaker 1: is the big question. You know, there are a number
Speaker 1: of private companies out there across subsectors. There are names
Speaker 1: that are associated with going public in the near term,
Speaker 1: long term. You know, I'm essentially asking you for your
Speaker 1: outlook and where you see this market going into. Right,
Speaker 1: we'll look in in one we had something like Nino
Speaker 1: I p o S and they raised about a hundred
Speaker 1: forty six billion dollars in proceeds. This year, we've had
Speaker 1: roughly half of that. I think is is the ballpark metrics.
Speaker 1: So it's been down significantly, and even the companies that
Speaker 1: felt i P already I think have pulled back and
Speaker 1: are waiting. Um the two largest on the private side
Speaker 1: in the tech space, I think or Space Sex with
Speaker 1: you guys just mentioned, and then probably Stripe, the large
Speaker 1: payments company, which you know, many folks expect, you know,
Speaker 1: it is going to go public in the next you know,
Speaker 1: who knows, six twelve months, maybe eighteen months. I think
Speaker 1: those are the two big kind of grand daddies that
Speaker 1: everyone's waiting for in the tech space to go public,
Speaker 1: and then their number of companies kind of behind that
Speaker 1: that are smaller um. But I think those are the
Speaker 1: ones that I really looked to to be bell Weathers
Speaker 1: for when when the market's kind of back open. You've
Speaker 1: got so much experience in house but also externally in
Speaker 1: VC and early stage. I'm interested in your perspective at
Speaker 1: the moment in the lead the lamb of regulation because
Speaker 1: you are exposed to, say, by now pay data companies,
Speaker 1: credit keeping one of them. The focus on fintech right
Speaker 1: now very very much in the crypto space, but more generally,
Speaker 1: do you think it's going to be a head wind
Speaker 1: or tail wind some of the businesses you're in Well,
Speaker 1: I think one of the nice things about fintech historically
Speaker 1: leaving crypto side, because crypto has famously been largely unregulated,
Speaker 1: but most of the fintech businesses that were involved in
Speaker 1: that I'm involved with. If it's a payments company, you
Speaker 1: have to have money transfer licenses. If you're a lending company,
Speaker 1: you have to be a regular lender. If you're an
Speaker 1: insurance like you've gotta be licensed. So all of these
Speaker 1: businesses that by and large in the fintech space, whether
Speaker 1: it's payments, insurance, lending, are regulated. Uh, and you have
Speaker 1: to go state by state and these are complicated processes.
Speaker 1: You have to get bank licenses. But because if you
Speaker 1: do that, it makes it harder for someone to replicate
Speaker 1: your company. It also takes several years to get started.
Speaker 1: Typically you can spend from you know, two to three
Speaker 1: years just getting from zero to your first loan or
Speaker 1: your first payment. But it adds a level, you know,
Speaker 1: obviously of sophistication of the business and oversight. So I
Speaker 1: think that you know, in the fintech space, by and large,
Speaker 1: you do have a quite a bit regulation already built
Speaker 1: in and with your expertise, your M and a hat
Speaker 1: on as well. I mean, your perfect guests really to
Speaker 1: for the whole show because you're also was an early investor,
Speaker 1: I believe in most Palo Alto networks right a long time,
Speaker 1: like well, we just have the CEO then cashase terrific. Yeah,
Speaker 1: and Nikosh is a big m and a guy. You know,
Speaker 1: he's done what was it seven deals he said since
Speaker 1: he started. I'm interested in your respective M and A
Speaker 1: and regulation because look, you look at the deal with Activision,
Speaker 1: Blizzard and Microsoft. People don't like these sorts of deals.
Speaker 1: How much do you think companies were big hefty pockets.
Speaker 1: Are they gonna be able to make purchases they want
Speaker 1: to do? Well? You've seen buying large and I see
Speaker 1: the Google Mandian deal. But but Google and Facebook and
Speaker 1: the big tech giants Apple, which is famously not very
Speaker 1: inquisitive anyway, they've been very quiet on the M and
Speaker 1: A front. They really have not wanted to do much
Speaker 1: because I think most of the deals do get scrutinized.
Speaker 1: You know Facebook about Giffe and that deal is getting
Speaker 1: unwotot because of the European regulation. And you see the
Speaker 1: Adobe Figma deal, which is one of the larger deals
Speaker 1: in tech, twenty billion dollars, that's being scrutinized now potentially.
Speaker 1: So the large tech buyers are hesitant I think to
Speaker 1: make big splashy deals happen because they fear it is
Speaker 1: gonna be subjects regulation. Now. The one exception is Amazon
Speaker 1: which bought Whole Foods and MGM, and you know the
Speaker 1: one medical and all these answorry businesses that but you
Speaker 1: know what The key point is those are not e
Speaker 1: commerce companies, right, so they're staying clear of buying things
Speaker 1: in their core wheelhouse because I think they feel these
Speaker 1: other businesses will have less of a chance of getting
Speaker 1: scrutinized from a FC perspective. Cameron, I just want to
Speaker 1: go back to your your kind of career and your
Speaker 1: experience in deal making former head and of M and
Speaker 1: A pintrest now at great scale. You mentioned about some
Speaker 1: of the deals that might hit barriers, some of the
Speaker 1: deals that might not get done, deals that have got
Speaker 1: done in the past. If you're sitting around the table
Speaker 1: right now with your bankers, with two CEOs that want
Speaker 1: to get a deal done, what do you imagine the
Speaker 1: frustrations are, or at least the I guess, the anxiety
Speaker 1: that if you proceed with with a deal then you
Speaker 1: know it might not happen anyway, certainly, And I mean
Speaker 1: I think you're seeing on these types of deals now
Speaker 1: a lot more safe cards being built in um s
Speaker 1: grows and people asking for you know, breakup fees and
Speaker 1: kids the deal doesn't go through UM you know. I
Speaker 1: think one of the deals that was announced did not
Speaker 1: have a no shop so that the company is still
Speaker 1: allowed to look for other buyers and they might have
Speaker 1: been cooper um. So I think these are unusual provisions
Speaker 1: that you to pebably don't see. But I think in
Speaker 1: this market where there is uncertainty, where buyers might try
Speaker 1: to back out, I mean, obviously Elon must try to
Speaker 1: back out of Twitter before the deal closed, uh, you know,
Speaker 1: pretty significantly, um, And so I think that's the reality
Speaker 1: of the current market. And I think in the boardroom
Speaker 1: that the venture investors and the others are making sure
Speaker 1: that these safe cards are put in and try to
Speaker 1: prevent um these deals from falling apart, or to at
Speaker 1: least have backup options and insurance policies. All right, Cameron,
Speaker 1: and sorry a slip of the tongue there. I think
Speaker 1: I said that you worked at gray Scale, which is
Speaker 1: of course not true. You're a board partner at gray
Speaker 1: Croft and a former head of m and A at Pinterest,
Speaker 1: which I got right. And we're grateful to have you on.
Speaker 1: Thank you, Thank you. Now coming up, how will the
Speaker 1: ft X implosion jump start crypto regulation? We have the
Speaker 1: perfect guest for the conversation, the Blockchain Association's Kristin Smith.
Speaker 1: But before we got to break let's take a look
Speaker 1: at how bitcoin has performed since Sam Bankman Free's arrest.
Speaker 1: Is not the most since FTX filed for bankruptcy. Some
Speaker 1: near term performance, but around just shy of the eighteen
Speaker 1: thousand u s thought us to taken. This is blatan dyk.
Speaker 1: The ft X groups collapse, the implosion of f t
Speaker 1: X fair system from absolute concentration of control in the
Speaker 1: ends of a small group of grossly inexperienced, nonsophisticated individuals.
Speaker 1: Appears to have all the hallmarks of En Run and
Speaker 1: Bertie Maynoff blended together named Sam Bankman Freed. This is
Speaker 1: the antithesis of anything that is permitted in regulated markets.
Speaker 1: Failed to implement virtually any of the systems or controls
Speaker 1: that are necessary for a company and trusted with other
Speaker 1: people's money, year assets. Justice seems to be you know,
Speaker 1: in process, which I think is welcome by those in
Speaker 1: the in the crypto industry. It's more more information comes
Speaker 1: to a lot. I suspect there is a good chance
Speaker 1: they'll be more people under the microsy go Sure. This
Speaker 1: isn't you know, sophisticated whatsoever. This is just plain old embezzlement. Busy,
Speaker 1: busy today, in the U. S. District Attorney Damian Williams,
Speaker 1: of course, calling the ft X scandal one of the
Speaker 1: biggest financial frauds in American history. But from all the
Speaker 1: fallout of the ft X downfall, will regulators actually get
Speaker 1: a grip on crypto to make it fairer, more reliable,
Speaker 1: so this won't happen again. For more on the regulatory outlook,
Speaker 1: we turned to christ And Smith, the executive director of
Speaker 1: the Blockchain Association, which assists in key policy solutions among regulators, lawmakers,
Speaker 1: public for the digital assets space in particular. You're, of
Speaker 1: course there are said sort of talking some would say
Speaker 1: lobbying on behalf of your members ever labs BH, digital
Speaker 1: bit dear, not f t X, not f t X,
Speaker 1: Thank goodness. We actually had tremendous differences on strategy with
Speaker 1: ft X, and so they were never part of the
Speaker 1: Blockchain Association, And so if there's a silver learning in
Speaker 1: all of this, it's that we don't have to be
Speaker 1: competing with them for strategy in Washington anymore. Okay, So
Speaker 1: talk about strategy, talk about out out of the ashes,
Speaker 1: the roses that will grow that many will hope is
Speaker 1: is an easier playing field. More clear playing field, a
Speaker 1: more transparent playing field. Is that likely because we asked
Speaker 1: our audience, we had a Twitter poll, We asked and
Speaker 1: whether they're confident or not as to whether crypto regulation
Speaker 1: will meet the mark at this moment, and as we
Speaker 1: can bring up like say, don't hold your breath, people
Speaker 1: are on the fence. Yeah, well listen. I think there
Speaker 1: was a really healthy discussion going on in Washington prior
Speaker 1: to the collapse of xd X on what we need
Speaker 1: to do to move forward with crypto regulation. I think
Speaker 1: there's two key areas. One dealing with fiat or dollar
Speaker 1: back stable coins and what those regulatory parameters should look like.
Speaker 1: I also think we were starting to have a healthy
Speaker 1: conversation around what crypto exchange, you know, the spot markets,
Speaker 1: were consumers buy and sell crypto, what the appropriate regulation
Speaker 1: for that should look like. Those are two very clear gaps.
Speaker 1: I think the challenge we have now with this FTX
Speaker 1: situation is the conversation has moved from a small group
Speaker 1: of policymakers who had really taken the time to understand
Speaker 1: this space, to a much broader audience within Congress who
Speaker 1: wants to get involved and do something. So I think
Speaker 1: this is going to slow the legislative process down. But
Speaker 1: I don't think it's going to end the legislative process.
Speaker 1: I think there are tens of millions of American consumers
Speaker 1: who own crypto. Crypto networks are providing incredibly valuable services
Speaker 1: that are going to be the future of a new internet,
Speaker 1: a future of new financial infrastructure. This is innovation that
Speaker 1: we cannot undo and we want to be competitive with
Speaker 1: here in the US, and the regulation. Getting that regulation
Speaker 1: right is key to doing that. Kristen, it's good to see.
Speaker 1: I hope you're well. The mission statement of the Blockchain
Speaker 1: Association is to advance the future of crypto in the
Speaker 1: United States. Has what's happened with FTX, what we've learned
Speaker 1: about Sam bank Man Freed impacted or jeopardize that mission? Well, listen,
Speaker 1: think it's certainly a setback. I mean we've had today,
Speaker 1: we heard about the incredible shortcomings at at f t
Speaker 1: X International UH and its related companies. UM, We've seen
Speaker 1: the charges in the indictments that have come down today.
Speaker 1: I mean, this is really serious stuff. But this is
Speaker 1: incredibly abnormal behavior compared to how most people in the
Speaker 1: crypto community operate. Most people are here because they want
Speaker 1: to empower people because they value transparency. Uh. This is
Speaker 1: a technology, Uh you know that that can empower good
Speaker 1: for the world. And I think it's going to be
Speaker 1: incumbent upon us in the crypto industry to pick up
Speaker 1: the pieces that Sam has left with the mess that
Speaker 1: he has made um and I think it will take
Speaker 1: some time, but I'm optimistic that we will be able
Speaker 1: to move beyond this and return to having positive discussions
Speaker 1: around policy. But more importantly, the builders in this space
Speaker 1: are continuing to create and they're they're bringing forward ideas
Speaker 1: and I think ultimately it will become incredibly obvious to
Speaker 1: everyday people that crypto is a force for good and
Speaker 1: it's here to stay. As you mentioned, Kristen sam Bankmin
Speaker 1: freed charged with eight criminal counts, including conspiracy and wire fraud.
Speaker 1: What was interesting to me is during the testimony of
Speaker 1: the current FCS CEO, you know, he kind of laid
Speaker 1: bare some of the shortcomings of the humans behind f
Speaker 1: t X and Alameda, lack of financial controls, lack of experience.
Speaker 1: My question to you is, what did we learn about
Speaker 1: some of the structural issues in this industry? What are
Speaker 1: the concrete things that need to be fixed with the
Speaker 1: crypto industry and also the underlying technologies that support it. Yeah. Well,
Speaker 1: I think my takeaway from listening to the hearing today
Speaker 1: was that this is not a structural problem within the
Speaker 1: broader crypto industry. This was a structural problem with f
Speaker 1: t X. They didn't have internal controls, they weren't following
Speaker 1: local laws, they weren't meeting their own in terms of service,
Speaker 1: they didn't have any record keeping. UM. I mean, this
Speaker 1: company was a mess. It was it was in some
Speaker 1: ways barely a company. And I think that if you
Speaker 1: look at the way companies in the US that are
Speaker 1: regulated by state money transmitter licenses, who are registered with
Speaker 1: the Financial Crimes Enforcement Network as money services businesses, uh,
Speaker 1: these companies are doing the right things and have taken
Speaker 1: the steps as required under law in order to protect consumers. Um.
Speaker 1: We've also seen companies take further steps and do things
Speaker 1: like proof of reserves, where they're able to show that
Speaker 1: all all customer assets are being held and segregated and
Speaker 1: accounted for. And so I think that this is something
Speaker 1: that policymakers are going to be grappling with as we
Speaker 1: head into three. I do think that they're going to
Speaker 1: have additional hearings with the start of the new Congress
Speaker 1: starting in January, and we're going to see a lot
Speaker 1: of legislative proposals in both the House and the Senate
Speaker 1: that take in attempt to tackle different pieces of this.
Speaker 1: So I think there's a lot of work to do,
Speaker 1: a lot of discussion that's going on, but this is
Speaker 1: an important space and one that we need to make
Speaker 1: sure a lot of maakers get reaped. Blockchain Association Executive
Speaker 1: Director Christin Smith, thank you very much, thanks for having
Speaker 1: coming up. Why the leaderboard of Bloomberg's Billionaire index shifted.
Speaker 1: This is Bloomberg going viral today. There's a new lineup
Speaker 1: of the world's richest people on the Bloomberg Billionaires Index.
Speaker 1: Elon Mask, once worth as much as three and forty
Speaker 1: billion dollars, was dethroned as the world's richest person today.
Speaker 1: Bernard oh No, the founder of LVMH, took the title
Speaker 1: instead for now a mask of force. He has lost
Speaker 1: more than a hundred billion dollars just this year and
Speaker 1: it's now worth well only a hundred and sixty seven billion.
Speaker 1: His drop as the world's richest came as Tesla's market
Speaker 1: value fell below five hundred billion for the first time
Speaker 1: November twenty And of course this is amid concerns about
Speaker 1: the slowing demand for electronic vehicles and Elon Musk's focus
Speaker 1: running Twitter and ed we kind of come full loop here.
Speaker 1: We've talked about the increasing overall valuation of SpaceX no
Speaker 1: distraction there, but the issue with Tesla, and of course
Speaker 1: that is behind in non Musk's wealth. Yeah, this is
Speaker 1: the first time Musk has dropped from the number one
Speaker 1: spot or since he's been number two since September of
Speaker 1: last year, and there's this micro focus on his wealth.
Speaker 1: But we use that Tesla proxy as a proxy for
Speaker 1: kind of the confidence in him. But it is interesting
Speaker 1: that the valuation of SpaceX can continues to go up
Speaker 1: because his fate and their fates are kind of a
Speaker 1: weakly tied at least that's what it says in the
Speaker 1: regulatory filings exactly. And I mean, it's still it's interesting
Speaker 1: that we've got basically a focus on luxury and a
Speaker 1: focus on technology are the still the names that dominate
Speaker 1: in terms of wealth and wealth building. They are still
Speaker 1: dominated by white males, largely at the top of the
Speaker 1: billionaires in next and we hope that that will change
Speaker 1: some way over in the focus on inclusion. But it
Speaker 1: is notable just how far the wealth has fallen just
Speaker 1: still told what was, it's basically half from where it
Speaker 1: used to be. For Elon Usk, Yeah, there's one thing
Speaker 1: you and I Carrow's stocks go up, and stocks go down,
Speaker 1: and they go back up again. And I wouldn't be
Speaker 1: surprised to see you on us wealth climb a little
Speaker 1: bit more exactly. For now, he's number two that does
Speaker 1: it with this addition of Bloembang technology. Do not forget
Speaker 1: to check out our podcast