Speaker 1: From the heart of where innovation, money and power COLLI
Speaker 1: in Silicon Valley and beyond. This is Bloomberg Technology with
Speaker 1: Emily jay I. Remember ly check in San Francisco and
Speaker 1: this is Bloomberg Technology coming up the next hour. Multiple
Speaker 1: SpaceX employees fired after an open letter criticizing Elon Musk.
Speaker 1: What this says about his leadership and what it means
Speaker 1: for Twitter Plus? Does AI have feelings? Google just suspended
Speaker 1: an engineer who claims the answer to that question is yes.
Speaker 1: We will have an in depth conversation with Google's former
Speaker 1: AI ethicist about the limits and power of this technology
Speaker 1: and cryptotraders go from feeling the fear of missing out
Speaker 1: to straight up fear. We'll talk to micro Strategy CEO
Speaker 1: Michael Saylor about his big bet on bitcoin and if
Speaker 1: he has any regrets. SpaceX now has fired several employees
Speaker 1: involved in an open letter criticizing the behavior of CEO
Speaker 1: Elon Musk. This according to an internal memo that began
Speaker 1: circulating among staff this week. The letter, seen by Bloomberg
Speaker 1: called Musk's behavior and tweets quote a frequent source of
Speaker 1: distraction and embarrassment, and called on SpaceX leadership to condemn
Speaker 1: and distance itself from his quote personal brand. Bloomberg's bad
Speaker 1: Ludlow here now to discuss. So Bloombook obtained a copy
Speaker 1: of the Soper letter. What exactly did it say? Yes,
Speaker 1: so this is a small select group of employees who
Speaker 1: called on SpaceX Is management, including Gwin short World, the
Speaker 1: CEO and president, to basically publicly distance itself from Musk
Speaker 1: what he says, what he believes, what he was doing,
Speaker 1: because they felt that it was quote, an embarrassment and
Speaker 1: that it was basically impacting the work that space It
Speaker 1: was trying to do. This was the view of a
Speaker 1: small number of employees. It was shared as sort of
Speaker 1: something you could sign vera QR code through internal messaging channels,
Speaker 1: and it picked up some momentum. You know, they did
Speaker 1: get signatures until management acted. What exactly did management then?
Speaker 1: So in a second internal memo which was sent by
Speaker 1: Gwyn shot Well, the company's CEO, which Blomberg has seen,
Speaker 1: they basically said this wasn't helpful. You know, they conducted
Speaker 1: an investigation into the origins of this open letter from staff,
Speaker 1: and as you said, and I think we had the
Speaker 1: quote from Gwyn shot Well about sort of the broader
Speaker 1: impact of it. They ended up firing that what they
Speaker 1: said a number of employees, we don't have a firm
Speaker 1: number and how many it is. But this is what's interesting.
Speaker 1: She calls this overreaching activism. You know, so clearly there's
Speaker 1: a group of employees within the business who have strong opinion.
Speaker 1: And this what she says elsewhere in the memo that's
Speaker 1: frankly too long for us to share on the screen,
Speaker 1: is that this select group of employees were putting pressure
Speaker 1: on their peers to sign something that they didn't believe in.
Speaker 1: These are paraphrasing Gwin Shotwell's words, did a bunch of
Speaker 1: employees sign it? And are we've seen arranging numbers up
Speaker 1: there from several hundreds several thousand. SpaceX has twelve thousand
Speaker 1: employees around the world essentially, so it gained traction um.
Speaker 1: But ultimately, you know, what Gwyn Shotwell goes on to
Speaker 1: say in that memo is that this is a distraction
Speaker 1: from their end goal and their own goals we know
Speaker 1: is getting to mars Well. This isn't the first story
Speaker 1: in the last few weeks about Elon Musk's behavior at SpaceX.
Speaker 1: There was another story about accusing him of sexual harassment. Right,
Speaker 1: and Gwen shot Well also defended him in that instance
Speaker 1: as well. Correct. So last month, Business Insider reported that
Speaker 1: the company space X settled with a former contract employee
Speaker 1: in two thousand eighteen for two fifty thousand U S
Speaker 1: dollars and that employee in question was a contract air
Speaker 1: steward aboard a space x jet that Must would used
Speaker 1: to travel. And straight away we should point out must
Speaker 1: denies not only denies the claims made, but he actually
Speaker 1: goes on to say in a series of tweets earlier
Speaker 1: in the month or last month that he basically saw
Speaker 1: this as a political attack on him, that it was
Speaker 1: sort of a calculated initiative to to impact his reputation. Um,
Speaker 1: you know, and he questioned the source who is the
Speaker 1: original source of the business inside of story. So regardless,
Speaker 1: we don't get to the bottom of it. I should
Speaker 1: point out SpaceX does have a comms team, a PR team.
Speaker 1: I messaged them regularly. They are real people, but they
Speaker 1: have not responded to multiple recomment on this story, on
Speaker 1: the open letter story, so you know, what we have
Speaker 1: to go on is these internal messages that Bloomberg has
Speaker 1: scene interesting. There has been some other news for SpaceX
Speaker 1: today they did have another successful life. I mean, this
Speaker 1: is what it all comes back to down to. So
Speaker 1: today was kind of another bog standard style launch, another
Speaker 1: three fifty three Starlink satellites deployed to orbit. But it
Speaker 1: was also a milestone for reusability. It was the hundred
Speaker 1: of launch using a proven, a flight proven rocket or booster.
Speaker 1: In other words, this is the hundred of time that
Speaker 1: SpaceX has sent up a rocket that has previously flown
Speaker 1: and landed it successfully, and it's just changed the game, right.
Speaker 1: This is the whole point of the space X story
Speaker 1: that this reusability angle allows them to go with such
Speaker 1: regularity that it becomes routine, but also that it makes
Speaker 1: access to space much more affordable for little satellite providers
Speaker 1: and themselves building out the Starlink network. All right, well,
Speaker 1: TBC to be continued as I'm sure this narrative will
Speaker 1: be Thank you thanks. Earlier this week, a Google engineer
Speaker 1: working on the company's AI development team was suspen ended
Speaker 1: after claiming a chatbot actually has feelings. Blake Lemoyne was
Speaker 1: placed on paid leave last week after he posted on
Speaker 1: Medium that he had encountered a quote Sentien AI, igniting
Speaker 1: a fiery debate about the possibilities and limits of this
Speaker 1: cutting edge technology. Dr Margaret Mitchell, Hugging Face, Chief Ethics
Speaker 1: Scientists and researcher and former Google AI employee who worked
Speaker 1: on the AI development team, joins us now to discuss Margaret,
Speaker 1: thank you so much for joining us, or I should say,
Speaker 1: Dr Mitchell, given your expertise, do you think Blake Lemoyne
Speaker 1: is right? Does this AI? Does this spot have feelings? Uh? Okay,
Speaker 1: well no, I don't think it does. Um. I certainly
Speaker 1: don't think it has feelings definitely not consciousness or sentience,
Speaker 1: which which is what the claims have been. So what
Speaker 1: does this, though tell us about the potential or power
Speaker 1: four AI am bought to full human beings into thinking
Speaker 1: that they're real. Yeah, there's a few things going on. UM.
Speaker 1: On the one hand, we have uh psychological effects of
Speaker 1: UM interacting with things that are human like UM. So uh,
Speaker 1: we we tend to anthropomorphize UM. We tend to put
Speaker 1: intentionality UM into things that we're that we're inter interacting
Speaker 1: with that seem human like. I think people are sort
Speaker 1: of used to doing this with our pets and things,
Speaker 1: you know, creating like whole dialogues and conversations UM, but
Speaker 1: also with like you know, uh, stuffed animals and tamagotchis
Speaker 1: and things like that. And there's also been psychological studies
Speaker 1: showing that we have a propensity to um impute intentionality
Speaker 1: into um non conscious beings UM when they show some
Speaker 1: sort of properties like speaking uh, like vulnerability UM or
Speaker 1: or movement that's aligned with human like movement UM. On
Speaker 1: the other hand, we also have a lot of companies
Speaker 1: working in AI using the language of human cognition UM
Speaker 1: so saying things like chain of thought, saying things like
Speaker 1: reasoning um, you know, essentially comparing the models that they're
Speaker 1: working with to the brain, which makes some sense, but
Speaker 1: you really have to temper that with with the details
Speaker 1: of this essentially being um a bunch of a bunch
Speaker 1: of calculations UM. So we have a few things going on,
Speaker 1: the psychological illusions UH and the language that companies are
Speaker 1: using around the technology they're building. So, given the complexity
Speaker 1: of this, what are your biggest concerns about? For example,
Speaker 1: these transcripts that that Blake Lamoyne published where the computer
Speaker 1: is saying I'm scared of dying, I'm scared of being
Speaker 1: turned off. Yeah, I mean I I think I echo
Speaker 1: UM a lot of researchers in this space, UM, where
Speaker 1: I think we all sort of feel like sentience is
Speaker 1: not the point here. UM. I think it's I think
Speaker 1: it's important to note that we are not going to
Speaker 1: get an agreement on sentience or consciousness anytime soon. People
Speaker 1: are going to see sentience, people are going to see
Speaker 1: consciousness UM, and that will probably go on, you know,
Speaker 1: indefinitely where we just have a disagreement. UM. But when
Speaker 1: you do have people starting to see sentience in consciousness, UM,
Speaker 1: it starts to bring up things like, UM, you know,
Speaker 1: like robot rights, all this work that's been done on
Speaker 1: what the personhood of these models might be. UM. Well,
Speaker 1: at the same time, you have technology that you know,
Speaker 1: essentially discriminates, you know, against black, black and brown people, UM,
Speaker 1: poorly represents women and reflects misogynistic viewpoints. Uh. So there's
Speaker 1: something to be said for an obsession with the personhood
Speaker 1: of AI and systems UM and thinking about the rights
Speaker 1: that they might have while not actually doing good work
Speaker 1: on the rights of actual people. UM. On top of Oh,
Speaker 1: I have so much to say, but yeah, you have
Speaker 1: another question. I'm sure well, you know, and of course
Speaker 1: you know the history behind this is that you were
Speaker 1: fired for your work and sounding the alarm about sexism
Speaker 1: and racism in a in AI at Google. So it
Speaker 1: sounds to me like you're saying, this isn't the problem.
Speaker 1: We shouldn't be asking if robots have feelings and rights.
Speaker 1: We should be asking if AI is gender blind and
Speaker 1: color blind and making sure, um that we're focusing on
Speaker 1: all of these other things that are far more important. Yeah,
Speaker 1: I mean, so it's not gender blind, it's actually uh
Speaker 1: targeting gender and negative ways. UM. And so for example,
Speaker 1: we know that a lot of these systems are trained
Speaker 1: on UM text data from from websites that have misogynistic
Speaker 1: tendencies UM and UH websites that are predominantly white and
Speaker 1: male UM and and actually US based. UM. So there's
Speaker 1: all these kinds of things that are being UM propagated
Speaker 1: by these systems that are really problematic. UM. And they
Speaker 1: become even more problematic when people start to be affected
Speaker 1: by the systems as they interact with them. UM. So,
Speaker 1: in the case of consciousness, UM, you have the concern
Speaker 1: that people might be persuaded to do horrible things. UM.
Speaker 1: You also have you know, concerns around bullying and hate bots,
Speaker 1: uh and these kinds of things that can you know,
Speaker 1: really hurt people. Um. And then you know you also
Speaker 1: have um, these subtle effects of you know, in search
Speaker 1: ranking results, what will tend to appear at the top
Speaker 1: of that ranking And if it's a function of these
Speaker 1: sorts of language models um as Google, for exap people
Speaker 1: has said, UM, they are, then you're going to have
Speaker 1: these bias effects influencing search results in such a way
Speaker 1: that you tend to see the viewpoints of white men,
Speaker 1: you know, at the top of the search drinking results
Speaker 1: as opposed to you know, black women, And that is
Speaker 1: sort of a echo a chamber effects where it's like
Speaker 1: the privileged gets more privileged, right, privilege gets privileged, while
Speaker 1: the marginalized become more marginalized. Now Google has come out
Speaker 1: saying that in this particular case, when it comes to
Speaker 1: Blake Lemoyne, that you know, hundreds of researchers have interacted
Speaker 1: with the same technology haven't expressed these concerns. I also
Speaker 1: sat down with Alphabet and Google CEO Sundar pacha I
Speaker 1: last year and asked him about concerns around AI from
Speaker 1: within Google itself. From people like yourself. I asked him
Speaker 1: what keeps him up at night? Take a listen to
Speaker 1: what he had to say. Anytime you're developing technology, there
Speaker 1: is a dual site to it. I think the journey
Speaker 1: of humanity is harnessing the benefits while minimizing the downsides.
Speaker 1: The good thing with AI is it's both going to
Speaker 1: take time. I think I've seen more focus on the
Speaker 1: downsides early on than most of the technology we've developed.
Speaker 1: So in some ways I'm encouraged by how much concerned
Speaker 1: there is. And you're right, even within Google, you know,
Speaker 1: you know people think about it deeply. Margaret, Do you
Speaker 1: think he and Google are leading on these issues in
Speaker 1: the right way? No, clearly not. I mean everyone I think,
Speaker 1: at least in tech is familiar with this notion of
Speaker 1: tech solutionism UM. And there's no lack of pr and
Speaker 1: calms around the benefits of AI and really trying to
Speaker 1: push it as beneficial for humanity and all these sorts
Speaker 1: of things. It's it's a very small minority who speaks
Speaker 1: up about the downside. So I would say that UM
Speaker 1: soon Dar's characteration characterization is false UM and frustrating false UM.
Speaker 1: And one of the reasons. I think that there's a
Speaker 1: desire to stay away from the downsides. UM. In addition
Speaker 1: to you know, concern around profit is that it also
Speaker 1: starts to open up liability. Right, so if you have
Speaker 1: systems that you can show work worse on black women,
Speaker 1: then now it starts to bring up questions of discrimination
Speaker 1: within the systems. UM. So it behooves companies to try
Speaker 1: and say, oh, the downsides are you know, are being
Speaker 1: over examined, and try and kind of shut that conversation down.
Speaker 1: But I think what's actually happening is that the small
Speaker 1: set of people who have been speaking about ethical concerns
Speaker 1: are starting to be listened to because people are seeing
Speaker 1: the negative effects. UM. And I think that's really what's
Speaker 1: happening is a desire on the corporate side to shut
Speaker 1: the conversation down for a lot of sort of incentives
Speaker 1: they have, and then people actually seeing the downside it's
Speaker 1: and not having an effect on what gets reported. Do
Speaker 1: you think a little wine should have been suspended? Uh? No,
Speaker 1: I don't. UM. I so I should say that um.
Speaker 1: Blake and I are really good friends. We worked together
Speaker 1: at Google. We wrote a paper together actually on how
Speaker 1: to um mitigate problematic biases in UM in machine learning systems. Um.
Speaker 1: He's a very very bright guy. UM. So I'm a
Speaker 1: little bit worried that there's sort of this reductive narrative
Speaker 1: that there's something like fundamentally wrong with him or something. UM.
Speaker 1: He he has a lot of dimensions. UM. And I
Speaker 1: think Google could have done a much better job at
Speaker 1: engaging with him rather than this you know, very alienating
Speaker 1: sort of experience that they gave him instead. UM. I
Speaker 1: think it shows a weakness on Google's part to be
Speaker 1: able to um uh, to be able to be open
Speaker 1: to different kinds of experiences and perspectives. So one, are
Speaker 1: your biggest fears if Google continues to develop the technology
Speaker 1: at the pace that it is developing, this technology continues
Speaker 1: to you know, potentially not listen to this as you say,
Speaker 1: minority of voices that are speaking up paint the picture
Speaker 1: of of what you fear the world could look like
Speaker 1: if Google continues on this path. Oh no, that is
Speaker 1: a very big question. UM. And I'm not a good painter,
Speaker 1: I should mention I'm a computer scientist, so I might
Speaker 1: not you know, be as elephant at this UM. But
Speaker 1: you know, we're already seeing a lot of what we
Speaker 1: can expect to happen in the future, but even worse. UM.
Speaker 1: So just recently, someone released a ton of hate thoughts
Speaker 1: UM and then made the model available to the public UM.
Speaker 1: And so we are going to likely see an increase
Speaker 1: of hateful UM intelligence seeming systems across our interactions online
Speaker 1: and on social media. UM. And this includes things like
Speaker 1: bullying as is really problematic, persuasion into sort of more
Speaker 1: extremist UM areas. UM. I think we're going to see
Speaker 1: UH further sort of marginalization and worsening of power differentials.
Speaker 1: So as you know, a company like Google a mass
Speaker 1: is more and more um ability to affect people's sense
Speaker 1: of of what's true in the world through search ranking results,
Speaker 1: through the sort of UH products they're making. UM. It
Speaker 1: means that the voices of people who have less access
Speaker 1: to the Internet, for example, are going to disappear more
Speaker 1: and more, while Google a mass is more and more
Speaker 1: power UM. And so I'm very very concerned about how
Speaker 1: much the sort of technology moving forward empowers Google UM
Speaker 1: and sort of lack of respects that I've seen for
Speaker 1: very serious ethical concerns. You know, misinformation obviously is one
Speaker 1: alongside some of the models that have come out recently,
Speaker 1: We're not gonna know what's real. There's going to be
Speaker 1: text text based misinformation, so so news that's wrong, uh,
Speaker 1: image based missed information so images that look real that
Speaker 1: that are not real. UM. And video based as well,
Speaker 1: and also audio based. So essentially all of the main
Speaker 1: ways that we consume information online will now no longer
Speaker 1: be very easy uh to trace back to reality. UM.
Speaker 1: And that means mass misunderstanding. UM. So yeah, scary, Dr Mitchell. Uh.
Speaker 1: This we could have this conversation for hours, and I
Speaker 1: know we're gonna be having it for years. I'd love
Speaker 1: to have you back to talk more about your work
Speaker 1: at Hugging Face. I know that there you are taking
Speaker 1: a different approach to a lot of these issues. UM,
Speaker 1: But because of commercials, we're gonna have to leave it here. Um.
Speaker 1: Dr Margaret Mitch and Mitchell Hugging Face chief ethics scientists
Speaker 1: and researcher. UM, thank you uh for joining us today
Speaker 1: and help us work through some of these very complex issues.
Speaker 1: Will have much more ahead stay with us. This is Bloomberg.
Speaker 1: TikTok says it has reached an agreement with Oracle to
Speaker 1: store data from US users on Oracle servers. The deal
Speaker 1: has been in the work since following concerns of security
Speaker 1: risks linked to the Chinese owned app. This news comes
Speaker 1: the same day BuzzFeed shared that leaked audio from dozens
Speaker 1: of internal TikTok meetings revealed US user data has been
Speaker 1: repeatedly accessed from China. Welcome back to bloomber Technology and
Speaker 1: Emily Chang in San Francisco. I want to dig into
Speaker 1: this and how the fed rate hike is impacting the
Speaker 1: world of VC with Mike Volpi and partner at Index Ventures.
Speaker 1: Might great to have you back with us. Look, it's
Speaker 1: been an incredibly vi all of the week, a lot
Speaker 1: of uncertainty about the future, a lot of people saying
Speaker 1: the R word is inevitable. What do you think. Yeah,
Speaker 1: I'm gonna start by saying that I'm a Lakers fan,
Speaker 1: so I'm relatively different all of the events. Well, we're
Speaker 1: not sorry, but thank you for clarifying, Okay, So, um, yeah,
Speaker 1: it's it's definitely a very tricky time right now. Um,
Speaker 1: and I think that when we look at the portfolio
Speaker 1: of companies that we look after, there are certainly ones
Speaker 1: that are more in the consumer side of business that
Speaker 1: are seeing some softness happened. They're seeing that consumers in
Speaker 1: general have read enough in the news, seeing enough tweets
Speaker 1: about inflation and interest rates and all that, and they
Speaker 1: are moderating their behavior. And you can see that even
Speaker 1: in the statements that the larger companies are making. So
Speaker 1: whether it's Amazon or Target or Walmart saying they don't
Speaker 1: the right inventory or they may not be expanding as
Speaker 1: quickly as they thought, there's clearly something happening out there.
Speaker 1: I think what we don't know is whether it's a
Speaker 1: little Our recession, sort of like a quick one that's
Speaker 1: you know, quick one a quarter or two where it
Speaker 1: fixes things, or a big Our recession. But there's clearly
Speaker 1: something signaling that's going on out there. And I would
Speaker 1: say that on a relative basis, it's happening sooner than
Speaker 1: people expected, because there was sort of this notion that, oh,
Speaker 1: maybe next year. I don't think if something, if the
Speaker 1: economy is to slow down with some significance, it's probably
Speaker 1: not next year, but it's like next quarter or the
Speaker 1: quarter after that. So just how bad then do you
Speaker 1: think is the wreckage is going to be? How many
Speaker 1: more companies will have layoffs? How many people will get
Speaker 1: laid off? How many companies will make it out of this?
Speaker 1: How long does this last? Yeah? In all candor, I
Speaker 1: don't think it's going to be that bad. There will
Speaker 1: be some high profile situations where well known companies are
Speaker 1: letting people go, and that will be painful, undoubtedly, But
Speaker 1: I think that generally speaking, over the last couple of years,
Speaker 1: in and especially private companies have been able to raise
Speaker 1: uh amounts of money that we've never seen in the past,
Speaker 1: and that puts their balance sheets in a pretty good condition.
Speaker 1: Now they may have over hired, so they might trim
Speaker 1: a little bit here or there, but by and large,
Speaker 1: I think the majority of companies have the strongest balance
Speaker 1: sheets that they've had in a while, and in many
Speaker 1: cases have enough in the tank to get through a
Speaker 1: difficult period and to come out at the end of it.
Speaker 1: So I do think that we will surely see uh
Speaker 1: some challenges, and perhaps the ones that we most challenge
Speaker 1: would be the public companies because they obviously have to
Speaker 1: respond to a stock price and the fact that right
Speaker 1: now investors want shorter term earnings or less losses in
Speaker 1: the short term, so I think we'll see more from those,
Speaker 1: But by and large. I don't see the kind of
Speaker 1: quote wreckage that Mamy we saw in two thousand and
Speaker 1: If anything, I would expect this to happen more quickly,
Speaker 1: both the downturn and the upside to happen more quickly
Speaker 1: than in the past. Let's talk about some of these
Speaker 1: more high profile situations, and I want to focus on Cisco.
Speaker 1: Cisco CEO Chuck Robbins was on the show earlier this week.
Speaker 1: I asked for his perspective. Take a listen to what
Speaker 1: he had to say. We are always planning for different scenarios,
Speaker 1: but we've been around long enough and been through enough
Speaker 1: downturns that we have playbooks and we know how to
Speaker 1: we know how to deal with those appropriately. Now, Cisco
Speaker 1: is one of the companies that hit its peak in
Speaker 1: the dot com boom, and the stock Mike has never recovered.
Speaker 1: And what's interesting is you worked there for over a
Speaker 1: decade through the dot com boom and bust, and I'm
Speaker 1: just so curious how you reflect on on the fact
Speaker 1: that Cisco, you know, never has, at least from a
Speaker 1: stock perspective, gone back to what it was. Yeah, I
Speaker 1: think that there's a couple of things though that contribute
Speaker 1: to that, and it's true, by the way, it was
Speaker 1: incredibly unpleasant to go from eighty some dollars a share
Speaker 1: to like nine dollars a share and the span of
Speaker 1: six months when I used to work there. Um, But
Speaker 1: I think that there's a couple of factors that are
Speaker 1: happening in Cisco's case. If you look at where Cisco
Speaker 1: is today, they're a single digit grower, you know, five
Speaker 1: percent grow or three percent grower. And fundamentally what happened
Speaker 1: there is, yes, there was a downturn, but in parallel
Speaker 1: with that, the technologies that they were pervading became much
Speaker 1: more broadly available commoditized, competitive, etcetera, etcetera, and the company
Speaker 1: never really reachieved the kind of growth rate that occurred
Speaker 1: during the pre dot COM's scenario. If you take another
Speaker 1: example like Amazon all Contrair, they did much better afterwards
Speaker 1: because they were able to strategically expand the product lines,
Speaker 1: the capabilities, the offerings, the sectors that the company was in.
Speaker 1: And so really what comes out of this is that
Speaker 1: you know, companies go into a difficult downturn like this,
Speaker 1: and when they come out of it, do they have
Speaker 1: the correct strategy for coming out of it. Most people
Speaker 1: will say exactly what Chuck said, which is, we have
Speaker 1: a playbook, we know how to deal with crises, We're
Speaker 1: gonna cut this, we're gonna cut that, and so forth.
Speaker 1: It's actually much more about how do you strategically align
Speaker 1: your business to come out of it than it is
Speaker 1: how to survive that period. And if you look at
Speaker 1: today's technology companies, the very very large majority of will
Speaker 1: survive it. The question is do they have the strategy
Speaker 1: to thrive afterwards? And the strategy has to be aligned
Speaker 1: with the fact that things that may have been hot
Speaker 1: before are no longer hot later. I don't have a
Speaker 1: crystal ball. I couldn't say exactly what the differences will be,
Speaker 1: but I'm pretty sure that pre the themes that matter
Speaker 1: will not be exactly mirrored in the post. And the
Speaker 1: companies that are more thoughtful and strategic about how to
Speaker 1: be aggressive and answer in the recovery cycle, well, the
Speaker 1: ones that will benefit and look more like Amazon, and
Speaker 1: the ones that stick to their knitting and do the
Speaker 1: same thing they were doing before, we'll probably end up
Speaker 1: looking a little more aft Mole Cisco in terms of
Speaker 1: their stock performance. Interesting, we'll really appreciate having your historical
Speaker 1: perspective there, and I know you've been sharing some of
Speaker 1: that advice with founders as well. Mike Volpi of Index
Speaker 1: Venture is good to have you back with us coming
Speaker 1: up micro Strategies Bitcoin Strategy. As crypto crashes, judds chairman
Speaker 1: and CEO Michael Saylor, have any regrets, he joins me. Next,
Speaker 1: this is Bloomberg time now for our crypto report, with
Speaker 1: cryptocurrency and the market still seeing major fluctuations, prompting companies
Speaker 1: as biggest coin base to cut costs. Bitcoin ow over
Speaker 1: just the last five days, it's worse week in a year.
Speaker 1: Let's bring in Michael Saylor now of micro Strategy for
Speaker 1: more on his take. And Michael, I know this is
Speaker 1: probably a rhetorical question, but do you have any regrets?
Speaker 1: You know, UM we did a lot of a lot
Speaker 1: of back testing, and I've gone back and I've looked
Speaker 1: at the numbers and on August ten when we announced
Speaker 1: our two million dollar bitcoined by UM. Since then, bitcoins up,
Speaker 1: the money supplies up, the nazacs down two percent, goals
Speaker 1: down nine, the S and P is up nine and
Speaker 1: the only thing that looks better than the money supply
Speaker 1: expansion is single family homes. I couldn't have bought billions
Speaker 1: of dollars of single family homes and so that's not
Speaker 1: been practical. So the bottom line is the bitcoin strategies
Speaker 1: ten x better than any other alternative, and so now
Speaker 1: I don't regret it. We've got two point eight billion
Speaker 1: dollars worth the bitcoin on our balance sheet right now,
Speaker 1: and we feel like we're positioned well for when the
Speaker 1: markets turn around. And our only other choice would be
Speaker 1: to give all the capital back to the shareholders, in
Speaker 1: which case we would have nothing and we would be struggling,
Speaker 1: uh to get by without any assets. Okay, how about
Speaker 1: this is cash still trash? Yeah? I mean the money
Speaker 1: supplies expanded by since January one, when we went into
Speaker 1: this kind of COVID crisis, and we know that scarce
Speaker 1: desirable assets are getting bit up in price. I mean
Speaker 1: everybody wants to buy Rolex watches, they're buying luxury real estate,
Speaker 1: they're buying everything to get their hands on, creating shortages.
Speaker 1: So you know, we are an institution. We have to
Speaker 1: take a ten year of you. And the only thing
Speaker 1: that's for sure is if we hold cash over a decade,
Speaker 1: we're gonna have a negative real yield. The only question
Speaker 1: is how much. So we have to invest in something,
Speaker 1: and we've chosen as a business strategy to FoST focus
Speaker 1: on what we believe is the most exciting investment idea
Speaker 1: because it's a digital commodity that's absolutely scarce and only
Speaker 1: getting technically better every year. So are you considering buying
Speaker 1: more bitcoin at these prices? I mean it's bitcoin on sale? Yeah,
Speaker 1: I think it is on sale. Um. You know that
Speaker 1: the number that I look at to figure out sort
Speaker 1: of the a surrogate for the book value of bitcoin
Speaker 1: is the four year simple moving average because it trades
Speaker 1: billions of dollars a day, and so after fourteen hundred
Speaker 1: days of billions of dollars a day, that number is
Speaker 1: twenty one thousand, seven hundred. Bitcoin touched that in the
Speaker 1: March crisis. It touched it around sev it's touching it
Speaker 1: right now. Generally a trades above there. You know. Our
Speaker 1: strategy is, uh, we're going to acquire bitcoin with our
Speaker 1: free cash flows from time to time, so we're kind
Speaker 1: of dollar cost averaging into bitcoin, and we're gonna hold
Speaker 1: a bitcoin for the long term. And uh, and so
Speaker 1: it wouldn't really matter whether the price was ten more, more,
Speaker 1: fifty more. We're just going to progressive. We acquire more
Speaker 1: bitcoin because that's our strategy. But you want in terms
Speaker 1: of for sale, Yeah, I mean it's like not a
Speaker 1: bad price and we will keep buying more. Okay, what
Speaker 1: if it gets below that nineteen thousand, five eleven number,
Speaker 1: which was that top of the I believe will run. Yeah,
Speaker 1: what you know that is that a time to panic?
Speaker 1: We don't panic. We have a we have a strategy.
Speaker 1: We're not traders. If your time arising is less than
Speaker 1: four years, you're sort of a trader. If it's in
Speaker 1: the months, you're definitely a trader. I'm not an expert trader.
Speaker 1: I don't have a crystal ball. I don't where the
Speaker 1: market's going to go week by week, month by month. Uh.
Speaker 1: If you're time arizon is more than four years, you're
Speaker 1: an investor. And when you're time arizing is ten years,
Speaker 1: you're kind of a saver. So we have a very
Speaker 1: long term tenure time horizon, and our view is over
Speaker 1: the ten years, bitcoin is going to be a good
Speaker 1: idea and it's just going to keep a creating and value. Uh.
Speaker 1: You know, I can't tell you whether it'll go down
Speaker 1: a bit here and there. It's in the near term, Emily.
Speaker 1: It trades like a high beta risk asset, and there's
Speaker 1: no denying that. Over the long term, we believe it's
Speaker 1: a low risk store of value asset. There's about ten
Speaker 1: things that have to happen over the next decade to
Speaker 1: make it a better asset, and we kind of know
Speaker 1: what those ten things are. And so we're waiting and
Speaker 1: uh and biding our time, and we think that it's
Speaker 1: going to improve as an asset class over time, and
Speaker 1: we're not in a hurry. So what do you see
Speaker 1: in the let's talk to take this tenure horizon. For example,
Speaker 1: we've seen what the FED is doing with rate hikes.
Speaker 1: There's all of this concern we're heading into a recession,
Speaker 1: whether it's a capital are or a lower case our recession.
Speaker 1: What do you see on the road ahead? And how
Speaker 1: is that impacting your strategy too? You know, just buy
Speaker 1: more and hold. Yeah, so let's take the ten sources
Speaker 1: of my pain. Um, there's no wash trading rules, so
Speaker 1: people can they can sell their bitcoin and buy it
Speaker 1: back and harvest the tax gain. And that's not the
Speaker 1: same with Apple, So if that gets fixed by the
Speaker 1: House Ways and Means Committee, that's a big plus for
Speaker 1: the asset. There's five twenty unregistered crypto exchanges offering twenty
Speaker 1: x leverage. That's a negative for the asset class. As
Speaker 1: they get regulated, and I expect they will, and as
Speaker 1: the twenty x leverage disappears, that will be a positive.
Speaker 1: There's nineteen thousand unregistered securities in the crypto industry cross
Speaker 1: collateralized to get bitcoin. As as those things have to
Speaker 1: have to get eliminated or they have to convert them
Speaker 1: into publicly traded instruments, that's going to decrease the volatility
Speaker 1: to be a big shakeout. The wildcat banks like the
Speaker 1: you know, the terrorism and Lunas and Celsius, they actually
Speaker 1: create massive volatility. And as they get regulated and they
Speaker 1: disappear and they grow up and become institutionalized banks. Uh,
Speaker 1: the asset class, I'm mature. There's a lot of ignorance
Speaker 1: and fear. People think crypto is the same as bitcoin.
Speaker 1: If they think that, that means they don't understand either
Speaker 1: of those two things. We don't have a stable coin
Speaker 1: Emily like us t isn't a stable coin. Tether is
Speaker 1: an opaque security. No one understands if we ever have
Speaker 1: an f d i C issued stable coin or something
Speaker 1: from a public entity that's endorsed by the SEC, that's
Speaker 1: gonna be very bullish for the industry. There's no spot
Speaker 1: et F. I think it's only a matter of time
Speaker 1: before there is. Want to prove that will be very
Speaker 1: bullish for the industry. The fast by accounting is detrimental.
Speaker 1: The lack of f d i C guidance makes it difficult,
Speaker 1: if not impossible, for banks to hold this stuff. We're
Speaker 1: waiting for clear SEC CFTC guidance, and those ten things
Speaker 1: they're gonna get cured over the next decade. They're just
Speaker 1: not gonna get cured over the next ten weeks. Okay,
Speaker 1: So how are you looking then, more broadly at what
Speaker 1: happens to the industry after this? You know, we're seeing
Speaker 1: coin Base and a number of different crypto companies having
Speaker 1: major layoffs. Do you think we'll look back on this
Speaker 1: moment as some sort of inflection point for the industry
Speaker 1: And if so, how does it look different in the
Speaker 1: fewer we're crossing the chasm? Uh, there's about a trillion
Speaker 1: dollars in the asset class. Four billion is bitcoin, the
Speaker 1: other four billion is nineteen thousand unregistered securities. We're moving
Speaker 1: from the era of the off shore entrepreneur to the
Speaker 1: to the onshore public institution. And it's pretty clear from
Speaker 1: share gains Lare's comments that he made in the last
Speaker 1: few days that uh, they want to see all the
Speaker 1: crypto exchanges regulated. Uh, they want to they want to
Speaker 1: clean up this industry. The stable coin is gonna have
Speaker 1: to be cleaned up as well. And uh, the winners
Speaker 1: are going to be the public investors in public banks
Speaker 1: and public companies, and the losers are going to be
Speaker 1: the wildcatters, you know, and the entrepreneurs the gots got started.
Speaker 1: They're flying by the seat of their pants. And I
Speaker 1: think it's essential for us to move from a one
Speaker 1: trillion dollar industry to a ten trillion dollar industry, so
Speaker 1: I welcome it. I think the bitcoin has been held
Speaker 1: back by its association with the with the anything goes
Speaker 1: crypto industry, and as that gets regulated, then that's going
Speaker 1: to actually create a green light for public institutions and
Speaker 1: public companies to get much more heavily involved in bitcoin
Speaker 1: and is going to catalyze the next leg of the
Speaker 1: bull run All right, Michael Sailor, who apparently has no regrets. Michael,
Speaker 1: always good to have you here on the show. Chair
Speaker 1: and CEO of micro Strategy, have a great weekend. Every
Speaker 1: new generation of media has been subsidized by advertising, making
Speaker 1: it cheaper or free for consumers. There's little reason to
Speaker 1: think that the metaverse will be any different. But our
Speaker 1: brands actually taking the metaverse seriously quick takes Alex Webb
Speaker 1: walks us through what the future of advertising may or
Speaker 1: may not look like in the metaverse. We've heard a
Speaker 1: lot about the metaverse in the past year, but is
Speaker 1: it really going to be creating new digital economies or
Speaker 1: is it just about selling existing real world goods. Every
Speaker 1: new generation of media has been subsidized by advertising, making
Speaker 1: it cheap or even free for consumers, from newspapers to
Speaker 1: the radio, to TV and indeed the Worldwide Web. There's
Speaker 1: little reason to think that the metaverse will be any
Speaker 1: different meta platforms. That's Facebook, You or me said so
Speaker 1: explicitly when it unveiled its vision for the metaverse last year.
Speaker 1: Businesses will be creators to building out digital spaces or
Speaker 1: even digital worlds, and they'll be able to use ads
Speaker 1: to ensure the rate customers find what they've created. So
Speaker 1: there we have it. For Mark Zuckerberg and co. The
Speaker 1: business model for the metaverse will be the same as
Speaker 1: it was for social media ads. Pair that with a
Speaker 1: R and VR's ability to track your eyeballs and maybe
Speaker 1: even gauge your mood, and it starts to become a
Speaker 1: little creepy. But to what extent a brand's taking the
Speaker 1: metaverse seriously? Big names like Nike and Samsung are building
Speaker 1: virtual worlds. Facebook meta has teams selling virtual billboards in
Speaker 1: those worlds, but they remain a relatively small slice of
Speaker 1: firms overall marketing governments, and you can see why. Just
Speaker 1: sixty seven million Americans will experience v our content at
Speaker 1: least once a month in two and they'll be split
Speaker 1: between a range of different platforms and roadblocks to minecraft
Speaker 1: and beyond. Facebook alone had two hundred and sixty three
Speaker 1: million users in the start of this year in North America. Crucially,
Speaker 1: though most of the efforts have so far focused on
Speaker 1: selling real world goods, Nike wants you to buy actual sneakers, Samsung,
Speaker 1: real cell phones. The luxury brand Burbery might have made
Speaker 1: four hundred thousand dollars selling digital skins with an associated
Speaker 1: n f T last year, but that's really just a
Speaker 1: rounding era in its three billion dollars in annual revenue.
Speaker 1: In other words, they were a marketing gimmick to attract
Speaker 1: young crypto enthusiasts you might hope as a brand are wealthy.
Speaker 1: Metas ideal is of brands to pay to advertise virtual
Speaker 1: goods in the virtual world that will let it monitor
Speaker 1: the entire customer journey from seeing the ad campaign to
Speaker 1: buying the product, then even seeing how they use it.
Speaker 1: It feels like we're a long way away from that happening.
Speaker 1: Just yes, if the metaverse takes off, there of course
Speaker 1: will be big money if you made in advertising. It
Speaker 1: just seems we're a long way right now from that happening,
Speaker 1: and face Swooke's vision is a distant prospect. H