Speaker 1: From Bahard of We're Innovation, Money and power can lie
Speaker 1: in Silicon Valley, NBR. This is Bloomberg Technology with Caroline
Speaker 1: Hyde and Ed Ludlow. I'm Caroline Hyder Blom Mugs World
Speaker 1: Taquarters in New York and Ludlow is off today. This
Speaker 1: is Bloomberg Technology coming up. We count you down to
Speaker 1: the f O MC rate decision. Is VC exposed? Banks
Speaker 1: continue to struggle? We assess what it all means, protect
Speaker 1: your investments, the jobs in the sector with VC's and
Speaker 1: founders across this show, and as we get the c
Speaker 1: suite perspective for you too, Adobe CEO, we go live
Speaker 1: to the Creative Software Giants Summit conference in Las Vegas,
Speaker 1: whilst full coverage on TikTok as it's chief prepares to
Speaker 1: defend the social media company on Capitol Hill tomorrow Canny
Speaker 1: as wage lawmakers push a ban or a forced sale.
Speaker 1: We'll bring you those details and so much more throughout
Speaker 1: the show. First, let's go to the CEO perspective on
Speaker 1: the micro on their own news on the Macro. Joining
Speaker 1: us from the Adobe Summit conference in Las Vegas is
Speaker 1: Adobe CEO Chintannu Narayan, and it's great to have you
Speaker 1: chanton making important announcements as you do on the day
Speaker 1: in new generative AI offerings. But first, chantonneu your perspective, Sir,
Speaker 1: you've led this business as CEO since two thousand and seven.
Speaker 1: You know what it's like to lead a giant through
Speaker 1: a financial instability issue, through a bank crisis. What do
Speaker 1: you make of the macro economic environment for Adobe right now? Well, Caroline,
Speaker 1: thank you so much for having me on your show.
Speaker 1: And as you know, we just announced our Q one
Speaker 1: results and for us, digital really just continues to be
Speaker 1: a massive tailwind because it's reshaping how we live, how
Speaker 1: we work, how we're entertained. And Adobe has always really
Speaker 1: focused on ensuring that we build a company for the
Speaker 1: long run. You're absolutely right their business cycles, but whether
Speaker 1: it's consumer sentiment or whether it's small and medium business
Speaker 1: creation or larger enterprises. While there's perhaps more scrutiny on
Speaker 1: the expense, people realize that in order to drive profitable growth,
Speaker 1: technology is one of those areas that you have to
Speaker 1: continue to invest in. So maybe we're a little more
Speaker 1: fortunate because we have more mission critical solutions and we
Speaker 1: have a more diverse portfolio. As it relates to geographic exposure.
Speaker 1: But you know the company posted really strong results. Let's
Speaker 1: talk about amid this desire to continue to focus on
Speaker 1: R and D. You are, of course today announcing all
Speaker 1: indeed and the last couple of days that your summit
Speaker 1: announcing new artificial intelligence iterations in your product, in particular
Speaker 1: fire Fly defaminative of generative AI tools, and boy, the
Speaker 1: one silver lining, the one area of growth that we
Speaker 1: keep continuing to talk about. No matter what the MAC
Speaker 1: environment is generative AI models, it's in beta. Can you
Speaker 1: just give our audience really what this means in terms
Speaker 1: of text in generating image, what sort of is this actually?
Speaker 1: As a user of Adobe, we think it is really
Speaker 1: a transformational moment, both for the company as well as
Speaker 1: for the industry. And Caroline, where we focus on is
Speaker 1: our vision is how do we unleash creativity for all.
Speaker 1: It's our assertion and hypothesis that everybody has a story
Speaker 1: to tell, they would like to tell that story on
Speaker 1: different media. I was listening to your show and you
Speaker 1: were talking about what's happening with other platforms like TikTok.
Speaker 1: But people fear the blank a page or the blank slate,
Speaker 1: and so I think generative AI is a great way
Speaker 1: to have an on ramp into being able to take
Speaker 1: your idea, describe that in words, and then generate an
Speaker 1: image associated with it. And you know, I think people
Speaker 1: are also really focused on what are the ethical issues
Speaker 1: associated we're generating you know, these images, and I think
Speaker 1: we've taken a very prudent and correct approach. So we
Speaker 1: think it helps people make our products more accessible, more productive,
Speaker 1: and more fun. How are you chucking those legal concerns
Speaker 1: for creators that perhaps don't want their images used. That's
Speaker 1: part of the reason that we are actually starting with
Speaker 1: a beta, because engaging with the community has been a
Speaker 1: really important aspect of how we introduce this. We've had
Speaker 1: a site called be Hans. Be Hans is, you know,
Speaker 1: the most popular site for creative professionals in terms of
Speaker 1: how they showcase their content and get inspired. So, you know,
Speaker 1: Adobe has had a multi decade history of engaging with
Speaker 1: our customers. In this particular case, we were very, very
Speaker 1: ruthless about ensuring that the content on which our models
Speaker 1: were trained is content that we have absolute license for.
Speaker 1: I think other companies have not been as strict or
Speaker 1: as diligent about ensuring that the content that they used
Speaker 1: to train the models. As we all know, the more
Speaker 1: data that you have to train the models, the better
Speaker 1: the models are. And so our approach has been always
Speaker 1: to make sure that this is bulletproof in terms of
Speaker 1: having rights to it and just engaging with the community.
Speaker 1: We've also talked about how as we continue to have
Speaker 1: our stock service, which is a very popular image three
Speaker 1: D service, that we will compensate the people who are
Speaker 1: participating in that. So it's a thoughtful approach. It's the
Speaker 1: beginning of the journey, but most important, it's transparency and
Speaker 1: engagement with our community. Chantony, you are full and you
Speaker 1: all think about ethics, and you just mentioned TikTok, so
Speaker 1: I just have to go there for a moment. What
Speaker 1: do you make of the business? Well, I think from
Speaker 1: my perspective, you know, every few years you have multiple platforms,
Speaker 1: and for me, when I think about TikTok or I
Speaker 1: think about the other platforms, it's really this insatiable appetite
Speaker 1: that people have for both consuming and for creating content.
Speaker 1: And so you know, I am not as familiar with
Speaker 1: all of the issues that others are perhaps concerned about,
Speaker 1: but from my perspective and the role that Adobe can play.
Speaker 1: It's like, how do we allow people to express themselves?
Speaker 1: And I think that insatiable appetite is not going to
Speaker 1: go away. Of course, when it comes to authorities analyzing
Speaker 1: tech businesses like TikTok, there's some authorities eyeing M and
Speaker 1: A here in the US, in particular the DJ analyzing
Speaker 1: your deal for Figma at the moment, how integral is
Speaker 1: the Figma deal to your generative AI movement forward? How
Speaker 1: integral is that deal? Full stop? Will you fight to
Speaker 1: protect it? Well? From our perspective, the strategic rationale for
Speaker 1: why we are excited about Figma is three things. We
Speaker 1: believe that we can accelerate product design, which enables new
Speaker 1: interactive experiences to be built for digital medium. The second
Speaker 1: reason is we think we can actually extend all of
Speaker 1: our products to do creative collaboration on the web and
Speaker 1: allow more stakeholders to participate, much like we did with
Speaker 1: our acquisitions of Workfront and frame Io. And third, I
Speaker 1: think that there's this new emerging paradigm where the distinction
Speaker 1: between collaboration, creativity and productivity is rapidly diminishing, and everybody
Speaker 1: who wants to create a school project or a document
Speaker 1: wants to engage in it, both using words in text
Speaker 1: and images and animation. So strategically we think that it
Speaker 1: is a real extension of what we do. The Figma
Speaker 1: business is an adjacency for us. I know there've been
Speaker 1: some questions about what does this mean for our core business.
Speaker 1: As we showed our core business is extremely strong, So
Speaker 1: we're doing this from a position of strength. We're confident
Speaker 1: about our position in this. It's such an adjacency. The
Speaker 1: overlap is diminimous to but we will engage with the authorities.
Speaker 1: Would you ever abandon the deal of you had to, Well,
Speaker 1: at this point, you know, given we are confident about
Speaker 1: you know, the deal terms, we will just continue to
Speaker 1: operate with the authorities. And you know that's what we're
Speaker 1: focused on, which is how do we you know, continue
Speaker 1: to deliver value to customers and demonstrate why this is
Speaker 1: a good thing for the community, for customers and another
Speaker 1: important thing for the economy. If companies that are being
Speaker 1: created the US has been the hotbed of entrepreneurship, it
Speaker 1: is really critical that you know, there be economic outcomes
Speaker 1: that are appropriate for startups as well. So at this
Speaker 1: point we're really focused on continuing to impress upon the authorities.
Speaker 1: Why this is good? Full circle back to the macro there,
Speaker 1: Adobe CEO, We thank you so much, Chantanoon or Ayan,
Speaker 1: whether you get back to your summit now, speaking of
Speaker 1: ultificial intelligence, can send President Martin Law played well company's
Speaker 1: prospects in international gaming and AI this year. He called
Speaker 1: it a growth multiplier and said that ten Cent will
Speaker 1: gradually integrate AI capabilities across its suite of products, from
Speaker 1: we chat to online media. Now the news comes as
Speaker 1: ten cents revenue inch to one percent higher after two
Speaker 1: successive quarters of contractions. That's where a fifteen percent jump
Speaker 1: in online advertising revenue, in particular in the final three
Speaker 1: months of twenty twenty two. Wall Street leaders and US
Speaker 1: officials are discussing an intervention at First Republic Bank, exploring
Speaker 1: the possibility of government backing to encourage a deal that
Speaker 1: would shore up the lender. This after we learned today
Speaker 1: that pat West has beefed up liquidity after a deposit
Speaker 1: exodus from its venture banking segment. So much going on
Speaker 1: with these lenders. Meanwhile, fintech startups like Arc, like Trance,
Speaker 1: like Brex, they have moved to provide emergency funding two companies.
Speaker 1: Brex told Bloomberger had seen record business and an excess
Speaker 1: of one billion dollars in payroll loan requests from startups
Speaker 1: that have funds trapped in Silicon Valley Bank joining us
Speaker 1: now to discuss the macro but also innovations of their own.
Speaker 1: And Rique Doubograss is brex Co CEO, who is not
Speaker 1: only onboarding at a rapid rate, but you're also announcing
Speaker 1: new product offerings to boot. And Rique just talked to
Speaker 1: us as a highly valued startup in this environment that's
Speaker 1: been looking to service finance professionals in particular with your offerings.
Speaker 1: How have you managed to deal with the rapid uptick
Speaker 1: in people wanting to be onboard? How you what's the
Speaker 1: SBB fall up in Like, yeah, absolutely so First, thank
Speaker 1: you so much for having me on the show. It's
Speaker 1: been honestly one of the craziest weeks in my professional
Speaker 1: career of everything that's happening and something sad for the
Speaker 1: technology industry. You know, we definitely saying our support to
Speaker 1: sub and hope they have a successful outcome with the regulators.
Speaker 1: What happened was, you know, since the fallout, I think
Speaker 1: a lot of customers moved from wanting to have a
Speaker 1: relationship with one bank to wanting to have multiple relationships.
Speaker 1: And I think Brex, you know, as kind of like
Speaker 1: another company that has startup friendly and knows this startup
Speaker 1: market has been one of the I would say most
Speaker 1: common choices for startups wanting to diversify their funds, you know,
Speaker 1: from keeping maybe someone sub some on Brex and some
Speaker 1: on some of the big banks as well. So we've
Speaker 1: been seeing a lot of inflow of deposits and new
Speaker 1: customers because of that. And Okay, I asked this to
Speaker 1: the pilot CEO yesterday again another company servicing largely startups
Speaker 1: in the space, do you worry about your own consolidation
Speaker 1: of the types of people that you're offering your products too? Yeah,
Speaker 1: absolutely so. Even though Brex started a startups and we're
Speaker 1: very well known for it back in twenty seventeen, we
Speaker 1: actually serve a variety of industries today, like we serve
Speaker 1: media companies and you know, a beer company CpG. So
Speaker 1: we have a pretty diversified industries in our products. And
Speaker 1: because we're not a bank, right, we're not succeptable, I
Speaker 1: would say to bank runs because we're a cash management account.
Speaker 1: So I'm not super worried about the same problems that
Speaker 1: the banks are having because we are not a bank.
Speaker 1: That's even though we got a lot of you go ahead,
Speaker 1: well no, and okay, let's talk about what you are.
Speaker 1: Let's talk about what in particularly empower platform is because
Speaker 1: it's cards, it's expenses management, but it's also travel. Now
Speaker 1: this is a new iteration and new announcement that you've got.
Speaker 1: How hard is it to iterate to bring new offerings
Speaker 1: to the table when you're also trying to onboard like
Speaker 1: mad Yeah for sure. So think about it as all
Speaker 1: spend right, So we have corporate cards that we started,
Speaker 1: and we went to expense management, our business account products
Speaker 1: so you can make wires, ah checks and today we're
Speaker 1: announced and travel. So now not only are going to
Speaker 1: be able to book your travel on different websites, while
Speaker 1: inside of brex app, you can book all your travel
Speaker 1: on a super easy way and you can have the
Speaker 1: experience from your entire travel from booking the trip to
Speaker 1: swiping through your credit card and restaurants and ubers that
Speaker 1: you may need on your business expenses that you don't need, receipts,
Speaker 1: you don't need memo. Everything is automated to you. All
Speaker 1: the approvals are automated. You can keep everyone on budget
Speaker 1: with our live budget systems. So a lot of companies
Speaker 1: we're seeing are trying to control their travel costs and
Speaker 1: a lot of them are saying, hey, you should just
Speaker 1: travel take two stops, you know, on the way to
Speaker 1: San Francisco, New York because it's cheaper. We're saying, don't
Speaker 1: do that. Give accountability to your managers to actually choose
Speaker 1: the trips that they let their teams do and keep
Speaker 1: everyone on budget. What are you seeing with your clients
Speaker 1: in this macro environment we're thinking of the FED today
Speaker 1: with thinking of well financial issues in terms of well
Speaker 1: the conditions are contracting in many ways. Are you seeing
Speaker 1: that from your client perspective in terms of the trimming
Speaker 1: their costs? Absolutely? And I think that's, you know, a
Speaker 1: met positive for our industry. I think everyone is learning
Speaker 1: how to do more or less and using even more
Speaker 1: technology to learn how to do more or less right.
Speaker 1: I think a lot of the AI revolution, for example,
Speaker 1: that we're seeing of general AI. We announced an AI
Speaker 1: product also a few weeks ago that you're going to
Speaker 1: be able to ask any questions you would want to
Speaker 1: de finance team and have an AI response to you,
Speaker 1: can I buy this, how do I buy this? Where
Speaker 1: do I get this approve of how you know, how
Speaker 1: I'm budget I'm spending too much on this? These are
Speaker 1: all questions that would take up the finance team to
Speaker 1: go and do reports and now can be answered by
Speaker 1: an AI. Right. So, I think this part of doing
Speaker 1: more with less is something that is actually going to
Speaker 1: be really positive for the technology industry, which was a
Speaker 1: little bit you know, bloated over the last few years
Speaker 1: because of the excess money, and I think it will
Speaker 1: be super positive and a lot of our products are
Speaker 1: helping companies do that, like I mentioned with our travel
Speaker 1: products and the live budgets. Enrik, thank you for coming
Speaker 1: on telling us your story and what it's been like
Speaker 1: in the last week or so. Enrik Dograss, thank you,
Speaker 1: Brex co CEO. Mean, while coming up, we're going to
Speaker 1: walking through everything you need to know before tomorrow's TikTok
Speaker 1: hearing on Capitol Hill from New York. This is m
Speaker 1: back to achieve our resales target intentivistory. So in short,
Speaker 1: Germany gross to gegu is tired and the spending are
Speaker 1: the key for the improvement of our profitability. That one's
Speaker 1: the CFO of Chinese EV maker NEOs saying they will
Speaker 1: be meeting their target of doubling sales at two hundred
Speaker 1: fifty thousand electric vehicles this year. Now that exists to
Speaker 1: today's talking tech, and we're sticking with EV's first up forward,
Speaker 1: the company taking a small steps towards revealing losses in
Speaker 1: the EV business. Now, the automaker will unveil an overhaul
Speaker 1: financial reporting structure for its redesign company that really lays
Speaker 1: out the profit and the loss of each business line.
Speaker 1: The new look balance sheet will give investors a more
Speaker 1: complete view of forwards at nascent EV business, including expenses,
Speaker 1: of course, and revenue how much money it's actually losing.
Speaker 1: Turning down to chips, the Biden administration unveiling tight restrictions
Speaker 1: on new operations in China by chipmakers that get federal
Speaker 1: funds to build in the United States at the fifty
Speaker 1: billion dollar Chips and Science Act will now bar firms
Speaker 1: that win grants from expanding output in China by five
Speaker 1: percent for advanced chips or ten percent for older technology.
Speaker 1: The Commerce Department also outlined other measures, including look at
Speaker 1: and one hundred thousand dollars spending cap on investments in
Speaker 1: advanced capacity in the country and sticking with China and
Speaker 1: the Biden administration, the US is assessing whether Silicon Valley
Speaker 1: banks collapse infected more pain on Chinese technology startups than
Speaker 1: the government in Beijing, and indeed Chinese companies have disclosed.
Speaker 1: The Biden administration is pulling together data on Chinese companies
Speaker 1: that may have accounts with regional US banks. The key
Speaker 1: question is whether there is any risk of broader contagion
Speaker 1: in the world's second largest economy. Sticking with Chinese companies,
Speaker 1: the CEO of TikTok will appear before the House Energy
Speaker 1: Commerce Committee tomorrow in an effort to prevent TikTok's ban
Speaker 1: or for sale. We go now to Capitol Hill, where
Speaker 1: our own Alex Barnka is standing by, and overall, what
Speaker 1: are you expecting to do? We think the show Chow,
Speaker 1: the CEO company, pushed back on the viewpoint coming from
Speaker 1: the lollmakers right now. Well, according to his prepared remarks
Speaker 1: that he plans on giving tomorrow, pushback is exactly what
Speaker 1: he's trying to do. His remarks are very definitive, saying
Speaker 1: things like byte dance TikTok's parent company is not an
Speaker 1: agent of the Chinese government or any other country. He'll
Speaker 1: also say that the security plan in concert with Oracle
Speaker 1: is a American plan storing American users data on American
Speaker 1: soil by an American company. So he's coming in with
Speaker 1: kind of a really definitive tone here for his first
Speaker 1: testimony on Capitol Hill overall. Has the lot being been present?
Speaker 1: Has the viewpoint anything, is anything that we're going to
Speaker 1: hit tomorrow actually going to be new in some way?
Speaker 1: Do you think it's really interesting you ask that, Carolina.
Speaker 1: It is sounding like a lot of the same talking points,
Speaker 1: the facts that Cho likes to lean into. He's going
Speaker 1: to be bringing those into the Hill tomorrow, talking about
Speaker 1: the security plan, talking about how he believes that TikTok
Speaker 1: is doing more to protect young users, which will definitely
Speaker 1: be on the mind of the representatives who are in
Speaker 1: the room. Now, Look, these are a lot of points
Speaker 1: that we are familiar with. They're the points that our
Speaker 1: sources tell us they have been bringing to lawmakers in
Speaker 1: those closed door meetings ahead of the Hill. So he's
Speaker 1: facing a pretty tough crowd. Honestly, when you think about
Speaker 1: what is a win for him tomorrow. It's almost to
Speaker 1: do no more damage than the sentiment has already been done.
Speaker 1: And if anything starts to ingratiate or kind of humanize
Speaker 1: TikTok and lay that line clear that he believes there's
Speaker 1: no chance that the Chinese government can exert any influence
Speaker 1: on the app. Very briefly addicts, do you think he'll
Speaker 1: reference us social media companies? I think he will, if
Speaker 1: not by name, then by tune, saying hey, look, we're
Speaker 1: actually doing more on data protection, we're doing more on
Speaker 1: trust and safety policy. So maybe you should be worried
Speaker 1: about all of us and access TikTok Alex Sparenka, great
Speaker 1: to have you on from DC. Welcome active Bluemo technology.
Speaker 1: I'm Caroline Hyde in New York. It is nine thirty
Speaker 1: on the West Coast, it is twelve thirty right here
Speaker 1: in New York is four thirty pm in London. All
Speaker 1: eyes in the financial and economic world are laser focused,
Speaker 1: of course, on what Federal Chair J. Powell is going
Speaker 1: to be saying today. He's going to be trying to
Speaker 1: balance his fight against inflation. Let me just saw in
Speaker 1: the UK against look, a sudden banking crisis that's erupted,
Speaker 1: and as part of that, there are ongoing concerns about funding,
Speaker 1: funding for startups, funding for those that have been hit
Speaker 1: by the SVB collapse, and ongoing concerns that we have
Speaker 1: today on First Republic and now pack West. And yes,
Speaker 1: you may not realize it, for not all of these
Speaker 1: people are tech bros, because there are also non traditional founders,
Speaker 1: many that don't necessarily get thought of when we see
Speaker 1: and say Silicon Valley, who also been affected by this crisis.
Speaker 1: In a Bloomberg opinion piece, Midi Health co founder and
Speaker 1: CEO Joanna Stroba writes that while the Silicon Valley ecosystem
Speaker 1: has plenty of men with bulging egos, there is another
Speaker 1: group quietly building startups there, many of whom were supported
Speaker 1: by Silicon Valley Bank and First Republic Bank. Founders like yourself, Joanna,
Speaker 1: and very produced to say, I can welcome to the program,
Speaker 1: and I'm glad you got the blue memo. I'm really interested,
Speaker 1: Joanna in this piece, this thought leadership and how has
Speaker 1: business like yours been affected by the last couple of weeks,
Speaker 1: you know, like anyone else that's been a really stressful experience.
Speaker 1: It was not clear over the weekend whether we would
Speaker 1: be able to make our pay roll. But this the
Speaker 1: following way week, it wasn't paid clear whether the company
Speaker 1: would would succeed, and so it was it was definitely
Speaker 1: an extressful experience trying to figure out how to get
Speaker 1: how to get everything secured and be sure we'd be
Speaker 1: able to continue to keep all of our employees. You know,
Speaker 1: we have employees all over the country and we wanted
Speaker 1: to make sure they would they would still have jobs.
Speaker 1: Employees like nurses, health practitioners or women's health startup you
Speaker 1: have founded to focus on menopause, on perimenopause in particular,
Speaker 1: and it's almost the antithesis of what perhaps we all
Speaker 1: started to think of and got a lot of notoriety
Speaker 1: during the unfolding of the collapse of SVB. We all
Speaker 1: thought about these rather lyld you know, white male tech
Speaker 1: bros who were on Twitter complaining loudly in all caps. Meanwhile,
Speaker 1: this was about to effect the broader economy. How has
Speaker 1: the conversation gone behind the scenes among women, diverse founders,
Speaker 1: people of color who perhaps felt that this wasn't a
Speaker 1: great pr exercise for their industry. Many of them felt
Speaker 1: very ignored quite honestly, when you read Twitter over the weekend,
Speaker 1: or you read the mainstream media, no one was talking
Speaker 1: about the healthcare the healthcare companies, or the education companies,
Speaker 1: or the clean technology companies. No one was talking about
Speaker 1: female founders are The discussion was about this very small
Speaker 1: group of very verbal, outspoken men on Twitter who were
Speaker 1: loudly protesting the fact that their companies would be hurt.
Speaker 1: But the reality is there are so many more people
Speaker 1: are reflected in Silicon Valley. There were also people who
Speaker 1: run nonprofits whose money was in these banks. There's people
Speaker 1: who run camps who's many in these banks, and so
Speaker 1: none of those people felt hurt during this, and I
Speaker 1: think there was a lot of sense of wow, like
Speaker 1: we have tens of thousands around of employees around the
Speaker 1: country doing really important things that no one is talking
Speaker 1: about us, And it almost felt sort of insult injury
Speaker 1: was that we were just coming off the back. I'm
Speaker 1: sure you were of a lot of female focused events.
Speaker 1: It was of course International Women's Day the week before,
Speaker 1: and there was a lot of talk about diversity and
Speaker 1: trying to build that momentum within the tech scene among vcs.
Speaker 1: You used to be one among founders. You now are one,
Speaker 1: and I'm interested as to whether people are now banding
Speaker 1: together a little bit more to try and amplified voices
Speaker 1: rather than just you single handedly trying to put about alpeds.
Speaker 1: At the moment, I think I think there's a lot
Speaker 1: of sense that we need to be part of the story, right,
Speaker 1: that we need to be part of the narrative, and
Speaker 1: the women realize that they need to be a much
Speaker 1: bigger part of the of the discussion about what's going
Speaker 1: on in Silicon Valley. The percentage of women who are
Speaker 1: funding companies is increasing, the percentage of women who are
Speaker 1: founding companies are increasing, and we need to be part
Speaker 1: of that narrative. We need to be in the mainstream
Speaker 1: press and not just doing this quietly behind the scenes.
Speaker 1: We need to be much more verbal about what we're doing,
Speaker 1: and I think there's certainly a sense of a lot
Speaker 1: of founders that we need to be expressing much more
Speaker 1: about the importance of our companies and the importance of
Speaker 1: our companies to the overall nation, because these companies are
Speaker 1: making a really big impact in all sorts of areas,
Speaker 1: including education and healthcare, and we need to make sure
Speaker 1: those voices are amplified. Are you worried that any of
Speaker 1: those businesses aren't going to make it at the moment
Speaker 1: that all solving key issues. I think that the Silicon
Speaker 1: Value Bank issues this week are going to make it
Speaker 1: harder for at least in the short term, for companies
Speaker 1: to get funded. And I also think that often when
Speaker 1: these things happen, there's a retrenching to entrepreneurs that you're
Speaker 1: most careful, they're most confident in. And also those are
Speaker 1: often more traditional entrepreneurs. Silicon Valley Bank and First Republic
Speaker 1: Bank did a great job at supporting non traditional entrepreneurs
Speaker 1: and women, and I'm hoping that, however those go forward,
Speaker 1: those new organizations will continue to be really supportive and
Speaker 1: not just focus on a core group, but on expanding
Speaker 1: the percentage of entrepreneurs in the country. And actually I
Speaker 1: really hope that it gets expanded nationwide and not just
Speaker 1: in the United States. Well, we were just speaking with
Speaker 1: one of those companies, a fintech that has sort of
Speaker 1: been lent upon more in this current environment, like brex.
Speaker 1: All these FinTechs or indeed more mature, all the banks
Speaker 1: that people have turned to, some of them leaning on
Speaker 1: some of the most well systemically important banks in the country.
Speaker 1: They is open to lending to companies like yours. Yes,
Speaker 1: they are actually, I mean, I think there's been an
Speaker 1: acknowledgement that women are a much bigger part of the ecosystem.
Speaker 1: People of color are much bigger part of the ecosystem,
Speaker 1: and they are starting to get access to capital. And
Speaker 1: that's what's really important is they have great ideas. In
Speaker 1: order to make those ideas come to fruition, you need
Speaker 1: access to capital. And so anything you can do, like
Speaker 1: those non traditional funding sources that can enable more people
Speaker 1: to get the funding to start these companies, then you're
Speaker 1: able to grow. And that's that's really the key to
Speaker 1: starting a company in Silicon Value or any place else
Speaker 1: is getting access to capital to do that, and we
Speaker 1: need to expand the number of people who are able
Speaker 1: to get access to that capital. Now, media organizations such
Speaker 1: as ourselves care about getting your voice on the media.
Speaker 1: Organizations such as ourselves help train people to ensure that
Speaker 1: we can get enough new voices coming on certain programs.
Speaker 1: But I'm interested in what else you can do other
Speaker 1: than write and cap blocks on certain social media companies
Speaker 1: to hear voices said, what do you think underneath the
Speaker 1: system is happening at the moment, so that you're all galvanized.
Speaker 1: You know, it's easy sometimes to write about the loudest people,
Speaker 1: and so part of it is encouraging people who maybe
Speaker 1: are quietly building very large companies to spend more time
Speaker 1: on the press. I think awesome when when you're building
Speaker 1: a company, you spend so much time doing that that
Speaker 1: you're actually not enough in the spotlight and talking about
Speaker 1: these issues to the national audience. And so probably training
Speaker 1: people to do that and to be more aware of
Speaker 1: what's going on in the world. We started doing a startup,
Speaker 1: you're really focused every day. I mean, we are spending
Speaker 1: time every day find to make sure that things run,
Speaker 1: that we do a great job with our care, that
Speaker 1: we're taking care of all these women, and then you
Speaker 1: forget to actually look up once in a while and go, oh,
Speaker 1: you know, I really need to be thinking about the
Speaker 1: national press as well, and so it's actually important that
Speaker 1: everyone knows how to do that. MADI Health co found
Speaker 1: ercio John Ostroba, thank you so much for coming sharing
Speaker 1: your journey of late with us. So you assume meanwhile,
Speaker 1: coming up, we're going to be joined by initialized capitals.
Speaker 1: Kim My Cutler, who actually was one of those vcs
Speaker 1: behind the scenes, working amid the svv S foolout to
Speaker 1: educate policymakers what was happening in the unfolding banking crisis,
Speaker 1: and staying in Washington taking a look at bank stocks
Speaker 1: right now, the US officials discussing an intervention perhaps at
Speaker 1: first Republic Bank. That's Bloomberg exclusive reporting. We've got packed West,
Speaker 1: of course, taking help on the liquidity side today, both
Speaker 1: down free that federal reserve decision from New York from Washington,
Speaker 1: this is Bloomberg. Shortly we'll be getting the right decision
Speaker 1: from the Fed. Will also be hearing about what Jpale
Speaker 1: thinks about the ongoing bank crisis. Of course svb's collapse,
Speaker 1: the fallout, and it's impact. We're going to now digest
Speaker 1: on startups on the VC world at large. Kim My
Speaker 1: Cutlers with us some place to say, partner over an
Speaker 1: initialized capital joining us now. And what's so fascinating about
Speaker 1: your role in the last couple of weeks is, of
Speaker 1: course that you were one of perhaps fifty or so
Speaker 1: at least leaders in VC quietly trying to help policymakers
Speaker 1: understand the ripple effects of what an SVB true collapse
Speaker 1: would have meant. We ultimately got well the support of
Speaker 1: the depositor. What do you make of government intervention thus far? I,
Speaker 1: you know, I've actually been very engaged with public policymakers
Speaker 1: over the last ten years. You know, I started writing
Speaker 1: about issues around housing affordability in the bearing California about
Speaker 1: ten years ago and then helped for I was part
Speaker 1: of the information of an organization that shepherd's about half
Speaker 1: a dozen pieces of legislation into state law every year.
Speaker 1: And so I have this kind of deep bench of
Speaker 1: expertise and a deep network around engaging with public policymakers.
Speaker 1: And so there are a circle of us that are
Speaker 1: about you know, fifty hundred or more folks in the
Speaker 1: venture capital industry and tech founders who have been communicating
Speaker 1: for a very very long time around you know, the
Speaker 1: implications of our industry with respect to you know, governance
Speaker 1: in the larger community and society at large. And so,
Speaker 1: you know, on Friday morning, when we saw that the
Speaker 1: FDIC had put Silk and Valley Bank injury severership, there
Speaker 1: was all the internal work that we were doing at
Speaker 1: initialized capital of the firm in terms of triaging our portfolio,
Speaker 1: figuring out who had to make payroll you know, the
Speaker 1: next week. And then also at the same time, I
Speaker 1: was doing a lot more external facing work with this
Speaker 1: group of fifty or so folks, literally in a WhatsApp
Speaker 1: chat group, figuring out how to draft memos to send
Speaker 1: out to policymakers to help them understand the real the
Speaker 1: real world implications of this UM you know, for a
Speaker 1: startup UM, not only was it the issue of figuring
Speaker 1: out how to pay talent and to pay employees the
Speaker 1: following week, even the level of uncertainty around you know,
Speaker 1: what the initial dividend was going to be. You know,
Speaker 1: startups to make very explicit plans over you know, how
Speaker 1: they're going to spend their burn and runway over a
Speaker 1: matter of months and years, and then not having certainty
Speaker 1: over that really, you know, throws a wrench into their
Speaker 1: ability to provide their team members with UM you know,
Speaker 1: the kind of long term support that they need. And
Speaker 1: so just getting that message of that the pool was
Speaker 1: really important because have you had to decide who you'll win,
Speaker 1: is who you'll lose? Is all you having to doll
Speaker 1: back on writing checks at this moment, just because of
Speaker 1: the enveloping crisis that surround us. No, no, not at all.
Speaker 1: I mean we're doing We're doing deals every week, and
Speaker 1: I mean I made an offer last week in fact,
Speaker 1: so I mean we're we're very very active. But for
Speaker 1: what for what we needed to do? You know, last
Speaker 1: last Fridays we went through the portfolio. We had to
Speaker 1: figure out who banked with whom, Um, you know, if
Speaker 1: they banked with SPB, what was their level of exposure,
Speaker 1: how much they were able to transfer out versus not
Speaker 1: if they had to make payroll the following week. And
Speaker 1: then we had to go and figure out what our
Speaker 1: actual like literal immediate exposure was and that was actually, thankfully,
Speaker 1: pretty small. But you know, we had to be prepared
Speaker 1: to be in a position to help our companies, you know,
Speaker 1: pay their employees. So you know, you know, we didn't
Speaker 1: end up having to do that because of the announcement
Speaker 1: on Sunday afternoon, thankfully, But it was definitely an incredibly
Speaker 1: stressful weekend. And I remember getting the news that learning
Speaker 1: I actually worked at for Bloomberg Show, and so you know,
Speaker 1: I was just I had this feeling of oh my gosh,
Speaker 1: this is this is like the Lehman day. This is
Speaker 1: going to be a Lehman this is going to be
Speaker 1: a Leman weekend. But but then you're still writing checks
Speaker 1: and so yeah, who do you write checks too? Is
Speaker 1: it only generative AI companies? You still able to remain
Speaker 1: focused on the breadth of types of founders that you
Speaker 1: back because you've got one hundred and seventy five plus
Speaker 1: active portfolio companies, your class climate to fintech, to you know,
Speaker 1: you name it, the sector you're on. Yeah, Initialist Capital
Speaker 1: has always been a generalist seed firm, and we've always
Speaker 1: kind of led the you know, let the best and
Speaker 1: brightest founders kind of take us to, you know, whatever
Speaker 1: the next trend is. Um, I've done all. I've been
Speaker 1: doing a lot of deals in the climate space. UM.
Speaker 1: We have another you know, our managing partner, Bret Gibson,
Speaker 1: has done a lot of deals. He's increasingly looking at
Speaker 1: generative AI and has a long, deep and deep history
Speaker 1: and in doing you know, crypto and crypto deals as well,
Speaker 1: and so you know, we do a lot of deals
Speaker 1: in a lot of different spaces. UM. You know, for me,
Speaker 1: because of my background, as I mentioned at the beginning, UM,
Speaker 1: climate obviously has a lot of implications, you know, in
Speaker 1: terms of getting the private sector and private entrepreneurs to
Speaker 1: innovate and getting them to work with public policymakers to
Speaker 1: address this, um, you know, just enormous, enormous problem. How
Speaker 1: confident are you the problems like that can be solved
Speaker 1: at this moment when you're having to put together memos
Speaker 1: policymaker is called cascade bank failure scenarios. Are we still
Speaker 1: in that scenario right now? Or do you think you
Speaker 1: can get back to the job of writing checks and
Speaker 1: founders building companies? Um? I mean, I mean, I honestly
Speaker 1: think more of the you know, obviously, in you know,
Speaker 1: the day to day bank stability coverage that you're doing,
Speaker 1: I think it's probably affecting your side more than it
Speaker 1: is ours now. I think, um, the you know, the FEDS,
Speaker 1: the FDIC coming to assure depositors at SVB was a
Speaker 1: really important signal for a lot of founders and investors
Speaker 1: in the space, and so like the immediate payroll needs
Speaker 1: and that concern has been a suage and so we
Speaker 1: are continuing to do new deals. Obviously, we're making you
Speaker 1: know much We're being much more proactive about the advice
Speaker 1: we're giving in terms of how founders and companies should
Speaker 1: diversify where they're having holdings and being much more thoughtful
Speaker 1: around you know, where they have access to short term
Speaker 1: cash versus where they're keeping their kind of mid term needs.
Speaker 1: We all learn a lot about treasury management all of
Speaker 1: a sudden. Initial House Capital partner, ki My Cutlet, it's
Speaker 1: great to have some time with you. Thank you. By
Speaker 1: the way, the all important FED decision is just what
Speaker 1: abo an hour away? What will the FED say about
Speaker 1: the state of jobs. I mean, we're going to talk
Speaker 1: about it from a tech sector perspective, but lay us
Speaker 1: more broadly and what will all this mean? Of course,
Speaker 1: amid risk assad appetite following a bank crisis that still
Speaker 1: seems to be looming, Let's bring in Brimberg's Michael McKay
Speaker 1: he's over there and Washington, Blombag, Shinani Bassek right here
Speaker 1: in New York and Mike to start the balancing act
Speaker 1: from j POW is going to be a tough one.
Speaker 1: The bank crisis on one side, inflation on the other.
Speaker 1: The FED doesn't want to mix the two, but it's
Speaker 1: sort of impossible. The Chairman is obviously going to talk
Speaker 1: about whatever they do on the monetary policy side, but
Speaker 1: they've always believed the monetary policy is not a good
Speaker 1: tool for banking issues. They want to use supervisory regulatory
Speaker 1: powers that they have to deal with those. So he'll
Speaker 1: talk about the banking system in general being in good
Speaker 1: shape and that the FED is doing whatever it needs
Speaker 1: to do to keep the banking system from imploding, but
Speaker 1: they want to separate that out from the monetary policy
Speaker 1: implications of inflation and the fact that inflation is still
Speaker 1: their biggest concern. Shanani, is the banking sector in good shape.
Speaker 1: I think something to look at here is what happened
Speaker 1: over at Pack West, because you see them disclosing the
Speaker 1: twenty percent of their deposits were under pressure this year alone. Listen,
Speaker 1: a lot of that was tied to the venture commune
Speaker 1: as well. So while you've seen First Republic really have
Speaker 1: ripple effects filling into other banks, there's a question about
Speaker 1: which deposits, whose depositors at what banks are really under pressure.
Speaker 1: Certainly the technology community their ripple effect into other banks,
Speaker 1: as you see with fat Pack West, as you see
Speaker 1: with First Republic, is still of alarm and of concern. Here, Now,
Speaker 1: how this continues to ripple on is still an unknown.
Speaker 1: And you did see pack West find a private sextra
Speaker 1: solution here with an entity that was really created by
Speaker 1: Apollo stepping in to provide a loan. Something interesting here
Speaker 1: is we had reported that Apollo is among the potential
Speaker 1: buyers of Silicon Valley Bank assets. This shows you that
Speaker 1: not allosses are all that attractive to every private equity firm.
Speaker 1: And Mike with well the no stock on the pressure,
Speaker 1: we've got thirty seconds? Is it twenty five basis points
Speaker 1: with piketon it looks like it. It's about an eighty
Speaker 1: percent chance according to futures trading, which is not quite certain,
Speaker 1: but that's the way the more it's leaning, Mike McKee,
Speaker 1: We'll let you get back to preparing for the all
Speaker 1: important drop a news. Shnali Bassac all over the things
Speaker 1: with the banks, will thank her stay with Bloomberg a
Speaker 1: special Bloomberg surveillance. The FED decides the coverage is starting
Speaker 1: at one thirty pm New York time. That does it
Speaker 1: for this edition of Bloomberg Technology. Ed get well soon.
Speaker 1: This is Bloomberg