Speaker 1: From Mahard where Innovation, money and power Collie in Silicon
Speaker 1: Vallet NBN.
Speaker 2: This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 3: And Caroline heind of Bloomberg's World headquarters in New York,
Speaker 3: and I'm Ed Ludlow in San Francisco.
Speaker 4: This is Bloomberg Technology coming up.
Speaker 5: Crypto assets.
Speaker 3: They surge as a court overturns the SEC and paves
Speaker 3: the way for the first US Bitcoin ETF will keep
Speaker 3: you covered throughout the hour.
Speaker 6: Claus will bring you the latest from the earnings front
Speaker 6: as China's PDD surges, MIDA revenue b and show me
Speaker 6: tops profit estimates.
Speaker 3: More ahead, an Apollo io raises one hundred million dollars
Speaker 3: to reach a one point six billion dollar valuation and
Speaker 3: up round.
Speaker 5: We'll sit down with the CEO later this hour to discuss.
Speaker 3: But first, well, let's hone in on what has been
Speaker 3: the story of the last hour. Bitcoin surging, that sudden
Speaker 3: move to the upside. We're back in that twenty seven
Speaker 3: thousand dollars range on the og of the crypto space,
Speaker 3: up five point six percent. Why because it seems as
Speaker 3: though this federal court has gone against the grain of
Speaker 3: the SEC has a side that maybe we can carve
Speaker 3: away for a spot bitcoin ETF.
Speaker 5: This is all about the Grayscale ruling ED.
Speaker 6: Yeah, and we're also seeing that app unsurprisingly play out
Speaker 6: in crypto related stocks, coinbased, for example, jumping by the
Speaker 6: most in more than six weeks. Our colleagues at Bloomberg
Speaker 6: Intelligence have a note out that kind of applies to
Speaker 6: all of these names, that each part of the universe relates.
Speaker 6: Crypto may benefit as more ETF SKED approved, but they
Speaker 6: do note that there are multiple applications, right, so black
Speaker 6: Rock being one institution that has an ETF application in
Speaker 6: how does coinbase benefit, as an example, from servicing those
Speaker 6: up thirteen point four percent. I think we've got to
Speaker 6: go to the understanding what has happened. It was a
Speaker 6: bit of a surprise. That's bringing Bloomberg's Shnale Bassek, and
Speaker 6: I guess a good place to start Shanale is what
Speaker 6: did the appeals court say about the original SEC decision
Speaker 6: to block an application for a bitcoin ets.
Speaker 7: Now, I think the part that's very important here at
Speaker 7: is this idea that the denial of Grayscale's proposal, and
Speaker 7: this is according to the ruling that the denial was
Speaker 7: arbitrary and capricious because the Commission failed to explain the
Speaker 7: difference of treatment of similar products, which was a key
Speaker 7: part of the Grayscale argument.
Speaker 2: Here.
Speaker 7: When you look at the decision here by the court,
Speaker 7: and remember there are three drudges that ruled in Greyscale's favor,
Speaker 7: there is a process that you have to understand. This
Speaker 7: is this idea that there are now forty five days
Speaker 7: in which both sides review this ruling and the sec
Speaker 7: could always push back. Now, the other thing that is
Speaker 7: a big open question for Grayscale is the idea of
Speaker 7: whether they have to refile for an etf Remember when
Speaker 7: you look at grayscales filing relative to many other filings,
Speaker 7: including black Rock's own filing. Is this idea of a
Speaker 7: surveillance sharing agreement that is something that has largely been
Speaker 7: said to be benefiting some of the filings such as
Speaker 7: black Rocks. Actually, in the next hour or so, we're
Speaker 7: also going to be speaking to coinbases top lawyer about
Speaker 7: the benefits of, for example, a surveill lancher and agreement,
Speaker 7: in which Coinbase has been a big part of that push.
Speaker 7: It is unclear how soon Rayscale can get from a
Speaker 7: GBTC to an ETF conversion, and really right now when
Speaker 7: you look at GBTC, it has narrowed. The discount to
Speaker 7: its net asset value has narrowed quite meaningfully. But in
Speaker 7: recent years the reason to hold GBTC has really become
Speaker 7: part of the idea that it would eventually convert to
Speaker 7: an ETF. Even just today, in the wake of the ruling,
Speaker 7: you were looking this morning at a twenty five percent
Speaker 7: nearly discount to net asset value that has narrowed to
Speaker 7: fifteen percent, and so you are seeing it come much
Speaker 7: closer to its net asset value in the wake of
Speaker 7: this ruling, in the expectation of even with this uncertainty,
Speaker 7: this is still a large win for Grayscale and the
Speaker 7: crypto industry, and are seeing to the point you're making
Speaker 7: earlier bitcoin.
Speaker 5: Prices and other crypto related stacks rise.
Speaker 3: And synchrony SEC saying that the agency is reviewing the
Speaker 3: court decision on gray Scale, and of course gray Scale
Speaker 3: anticipating what five point seven billion dollars could be on
Speaker 3: Earth could be of value could be sort of given
Speaker 3: back to the investor base if indeed it could turn
Speaker 3: from a trust into an ETF Shnali Bassac all over
Speaker 3: the sort of nuance and really going into some of
Speaker 3: the micro but let's go a bit more macro. What
Speaker 3: this means for the industry. And please to say Aya
Speaker 3: Kantorovich is with us. She is the co founder and
Speaker 3: Coco Fractal, it's an infrastructure provider for institutional crypto training
Speaker 3: on chain. Does this law in more institutional players? Does
Speaker 3: this mean?
Speaker 5: And this is almost a safer space to get into now.
Speaker 8: Absolutely, and you can see that in terms of overall
Speaker 8: market sentiment. So Coinshares published a very interesting report this
Speaker 8: morning that showed the outflow of dollars into crypto products
Speaker 8: institutional products was at its highest similar to March during
Speaker 8: the banking crisis, And so overall sentiment was really negative
Speaker 8: leading into this news, and I think to all the
Speaker 8: points mentioned before, the market was really caught off guard
Speaker 8: in terms of the announcement this morning.
Speaker 5: It's really great.
Speaker 8: It changes the sentiment in the US and globally for
Speaker 8: institutions around this is moving forward. We're actually going to
Speaker 8: get the guidelines we've been looking for in terms of
Speaker 8: how to approach the space at large and.
Speaker 3: Go global for a moment with us, because look, other
Speaker 3: places have spot bitcoin ets. What has been the US's
Speaker 3: issue with it? What more broadly, have you felt as
Speaker 3: different with the SEC versus other regulators.
Speaker 8: At a high level, it's really the different players that
Speaker 8: are in the space today, whether it is on the
Speaker 8: fact of the SEC working closely with Coinbase and obviously
Speaker 8: there's a lawsuit there that they're working through the SEC
Speaker 8: and Greyscale. There's a bunch of intermediaries today that the
Speaker 8: SEC is working with, and it is just simply unclear
Speaker 8: in terms of how the SEC is going to regulate
Speaker 8: versus them pushing out a rule book or Congress having
Speaker 8: to just take the step and make guidelines for everyone
Speaker 8: in the United States to follow. And unfortunately, even if
Speaker 8: you compare to the UK with Micah, you know, we
Speaker 8: just haven't seen that level of proactive guidelines in the
Speaker 8: United States.
Speaker 6: Judge Naomi Rao, who was on the appeals panel, pointed
Speaker 6: out that specifically the SEC's treatment of Grace the Scale
Speaker 6: was arbitrary and capricious because they hadn't treated others in
Speaker 6: the same way. And our colleague Katie Greifeld, who leads
Speaker 6: our ETF coverage, points out that this is just one
Speaker 6: thing that might happen this week. There's a deadline Friday
Speaker 6: for black Rock, there's a twenty one shares in a
Speaker 6: Vesco deadline Saturday. What happens next to your mind?
Speaker 8: Yeah, again, I think the market was just simply caught
Speaker 8: off guard. We were expecting this GBTC news to come
Speaker 8: out in the last two weeks, and so on the
Speaker 8: backs of Mackerel, on the backs of Jackson Hole, you're
Speaker 8: just seeing that the market was not expecting this news.
Speaker 8: An overall sentiment was implied, volatility was at its lowest,
Speaker 8: and so really what that sets us up for is
Speaker 8: a very volatile Q three and Q four. We're probably
Speaker 8: going to see the next three months have a lot
Speaker 8: of activity between these different players. And listen, the legal
Speaker 8: bandwidth of Blackrock and Fidelity as well as ARC is
Speaker 8: going to be far far larger than some of the
Speaker 8: crypto players, and we will likely see those conversations get
Speaker 8: pushed further than what we've seen to date. So it's
Speaker 8: very exciting for the United States.
Speaker 6: Who benefits the most from this if an ETFs approved
Speaker 6: beyond the ETF provided themselves.
Speaker 8: Who wins institutional investors, And really the reason they win
Speaker 8: is institutional investors are looking for regulated paths to get
Speaker 8: exposure to these assets in structures that they're used to
Speaker 8: in traditional finance, and that just hasn't been available yet
Speaker 8: today in the United States. And so really this is
Speaker 8: a huge push forward for us. We've all said that
Speaker 8: the institutional wave is coming, but it really can't come
Speaker 8: until we have very simple, regulated products available in the market.
Speaker 8: And this is a bit push forward towards that. And
Speaker 8: that's exactly what fractal is a little about.
Speaker 3: I mean, at atf it's pretty basic at best futures
Speaker 3: ETF too. You're thinking about options offerings, you're thinking about
Speaker 3: how you can get basically traditional finance the tradi fly
Speaker 3: world to see what they can do in normal finance
Speaker 3: and bring it to crypto.
Speaker 5: How easy a role, slow a process.
Speaker 8: Is that that's exactly where it's a slow process only
Speaker 8: because it's taken so long for us to get this
Speaker 8: to this first base with the SPOTTYTF. But to your point,
Speaker 8: once we get the SPOTTYTF, it's going to be so
Speaker 8: much clearer for us to be able to give access.
Speaker 8: You saw coinbase CME, who are all able to trade
Speaker 8: futures in the United States, and that took a long
Speaker 8: time for that to happen as well in the States,
Speaker 8: and so you're able to see a path forward for
Speaker 8: us to really be able to offer not only options
Speaker 8: but structure products in a regulated way that institutions are
Speaker 8: comfortable getting access to it.
Speaker 5: It's really very exciting, great to have you here.
Speaker 3: So we'll talk walk us all through the sort of
Speaker 3: ramifications more broadly of this very specific ruling that's come
Speaker 3: from the Appeals court. Ayakon Torovich of course has confractal
Speaker 3: which is basically.
Speaker 5: In the New York.
Speaker 6: All right, we're checking in on some earnings movies out
Speaker 6: of China. These are the US listed shares of some
Speaker 6: China tech names PDD top line growth sixty six percent,
Speaker 6: way outperforming names like Ali, Barbera and JD. But it's
Speaker 6: actually about Timu, their US based business that we're kind
Speaker 6: of interested in. It came out at the Super Bowl
Speaker 6: with an ad. We'll dig into that with our team
Speaker 6: in a second. BYD doubled net income in the quarter.
Speaker 6: We'd already talked about how BYD had had a record
Speaker 6: with both plug in hybrids and battery electric cars in
Speaker 6: the course had just gone now showing up on the
Speaker 6: bottom line in terms of profit neo a wide and
Speaker 6: expected quarterly loss, deletely different story in the EB space,
Speaker 6: and then show me an interesting one in kind of
Speaker 6: the smartphone handset discussion. Better than expected financial results so
Speaker 6: much one pick. I think what they all have in
Speaker 6: common is that we're getting some more signals about the
Speaker 6: Chinese economy and the Chinese consumer. Joining us from with
Speaker 6: more Bloombergs Isabelle in New York and Henry Wren out
Speaker 6: in London. Henry, let's start with you with some of
Speaker 6: the specific names. And I think we'll start with show
Speaker 6: me first because this was one there was a little
Speaker 6: bit surprising to some investors.
Speaker 9: Yeah, so shall mes revenue fell by about four percent
Speaker 9: during the last quarter, but that decline has been better
Speaker 9: than analyst expectations, so that does show that the smartphone
Speaker 9: market slumb might have been past its worst period. Remember
Speaker 9: shall Me sells smartphone devices to all over the world,
Speaker 9: so it's not just in mainland China, but also in India,
Speaker 9: in many emerging market countries, and Latin America some parts
Speaker 9: of Europe as well, So its results does seem to
Speaker 9: be a buometer for the global smart market sentiment. And
Speaker 9: remember that shell Me is also prioritizing its profitability, and
Speaker 9: it's pushing through its strategy for premium offerings, and it
Speaker 9: does seem to be bearing fruit. Its average selling price
Speaker 9: in China has expanded by twenty four percent in the
Speaker 9: last quarter, and the company set our earnings call is
Speaker 9: that it seeks to expand its strategy to not just
Speaker 9: in China, blosso overseas. It says, we just need to
Speaker 9: focus on these premium products like these voldable phones, and
Speaker 9: we do well in this category.
Speaker 3: It's interesting, isn't it that they're saying, yeah, let's go
Speaker 3: for a higher price point, let's actually still be thinking
Speaker 3: about overall profitability over growth when their overall macroeconomy as well.
Speaker 5: It's a pretty painful place.
Speaker 3: We just look at how much they're having to up
Speaker 3: the ante with what we understand going to be cutting
Speaker 3: mortgage rates for example, to try and spur on the
Speaker 3: Chinese ecomy.
Speaker 5: What do any of these earnings really tell us about that?
Speaker 1: So I think these two and Henry can go way
Speaker 1: into more detail, especially with PDDs. They're good earnings. As
Speaker 1: you can see, the stocks are really just reacting very
Speaker 1: positively to them. But then they come with a new one.
Speaker 1: So for instance, just to touch on lightly and PDD
Speaker 1: its focus is more lower income consumers, so then that
Speaker 1: might bode well for China's faltering economy. So it kind
Speaker 1: of works reversed in that way, but Chinese economy still
Speaker 1: really isn't doing as well. Nearly every day you see
Speaker 1: one gloomy headline after the other. For instance, today we
Speaker 1: have Country Garden Holdings, it's a big property giant, it's
Speaker 1: making fresh effort to avoid a default. And then we
Speaker 1: have China Great Weall Asset Management. That's a state that
Speaker 1: run manager and it's also suffering a bond slum. So
Speaker 1: one after the other, the ceaseless warning we're just seeing,
Speaker 1: especially from their credit market. It's just really underscoring one
Speaker 1: thing that the economy is weak. And to your point,
Speaker 1: we also have a lot of developments in the regional
Speaker 1: bank space and the mortgage space, so it's not looking
Speaker 1: that good to see it. Although I mean it's not
Speaker 1: all gloom and doom because as we can see, some
Speaker 1: standout companies like PDD and cl ME are doing well.
Speaker 1: So sometimes what's good for one thing can be bad
Speaker 1: for another.
Speaker 6: You know, Henry, we're showing that big jump on the
Speaker 6: pdd A DR's US listed shares. You know, there's a
Speaker 6: story here about them beating out other domestic Chinese names
Speaker 6: in terms of top line growth. But we learned a
Speaker 6: lot about their US business that we don't discuss pdd
Speaker 6: A lot on this show. Just explain what happened in
Speaker 6: the quarter.
Speaker 4: Yeah.
Speaker 9: Sure, So the overall results are good, as we can
Speaker 9: see in the market reaction, it's a sharp positive reaction
Speaker 9: from investors, twenty percent of sheer price expansion like during
Speaker 9: the during the session.
Speaker 4: But as you.
Speaker 9: Said, the focus is really on Tea Mood. It's a
Speaker 9: but just shopping app overseas. That app has been expanding
Speaker 9: very fast in Europe, but.
Speaker 4: As well as in US as well.
Speaker 9: So the company disclosed very little about this team mod
Speaker 9: shopping app, but it does include that in one of
Speaker 9: its lines called transactional services revenue.
Speaker 4: So that transactional services.
Speaker 9: Revenue includes some things including the t mood, the international business,
Speaker 9: but also the grocery buying business. But that revenue has
Speaker 9: been well above analyst estimates. So it does seem to
Speaker 9: show that that team who has been gaining tractions overseas. However,
Speaker 9: there's another concern. It's on the profitability side, on the margins.
Speaker 9: So the company is there expending overseas, so it's investing more,
Speaker 9: so the margins could be hit because of that.
Speaker 3: We want to thank both of you, of course, Henry
Speaker 3: ren Isbelli across the macro micro picture of China and
Speaker 3: indeed a little bit of what the US consumer is
Speaker 3: telling us as well. And let's dig in there for
Speaker 3: a moment, because best Buy says that.
Speaker 5: Look, it's reached the low point in tech.
Speaker 3: Demand after a pretty strong second quarter report pointed to
Speaker 3: an optic or maybe at least a bottoming in demand
Speaker 3: for consumer electronics and household of plants. Is let's go
Speaker 3: to our own running casees in Dallas with more. Look,
Speaker 3: it's still pretty ugly in the court.
Speaker 5: Ha just gone. But it seems as though maybe they
Speaker 5: think there's a turning of the tide.
Speaker 10: Yeah, they're What they're saying is that they're starting to
Speaker 10: see light at the end of the tunnel. The backdrop
Speaker 10: of course here is that the sales declines at best
Speaker 10: Buy has been among the biggest, you know, in the
Speaker 10: world of big US retailers. And what they're saying now
Speaker 10: is that, you know, they're starting to get a little
Speaker 10: bit less bad, and they have a line of sight
Speaker 10: to you know, being kind of flat, maybe even growing
Speaker 10: a little bit next year.
Speaker 6: They also said that short refresh cycles and the tech
Speaker 6: are being driven by guess what, Caroline, artificial intelligence our
Speaker 6: thanks to Bloomberg's Brending case. Now coming up here on
Speaker 6: the show, we're going to talk about the state of
Speaker 6: buy now, pay later and speak to a CEO of
Speaker 6: a company that launches in opposition to the movement.
Speaker 4: This is Bloomberg, all right.
Speaker 6: We're checking in on some earnings movies out of China.
Speaker 6: These are the US listed shares of some China tech names.
Speaker 6: PDD top line growth sixty six percent, way outperforming names
Speaker 6: like Ali, Barbera and JD. But it's actually about Timu,
Speaker 6: their US based business that we're kind of interested in.
Speaker 6: It came out at the Super Bowl with an ad.
Speaker 6: We'll dig into that with our team in a second.
Speaker 6: BYD doubled net income in the quarter. We'd already talked
Speaker 6: about how BYD had had a record with both plug
Speaker 6: in hybrids and battery electric cars in the court had
Speaker 6: just gone now showing up on the bottom line in
Speaker 6: terms of profit. Neo a wide and expected quarterly lost,
Speaker 6: a completely different story in the EB space, and then
Speaker 6: jaw Me an interesting one in kind of the smartphone
Speaker 6: handset discussion. Better than expected financial results so much to
Speaker 6: one pick. I think what they all have in common
Speaker 6: is that we're getting some more signals about the Chinese
Speaker 6: economy and the Chinese consumer.
Speaker 4: Joining us from with.
Speaker 6: More Bloombergs Isabella Leie in New York and Henry ren
Speaker 6: Out in London. Henry, let's start with you with some
Speaker 6: of the specific names, and I think we'll start with
Speaker 6: Shaumi first because this was one there was a little
Speaker 6: bit surprising to some investors.
Speaker 9: Yeah, so shall We's revenue fell by about four percent
Speaker 9: during the last quarter, but that decline has been better
Speaker 9: than annas expectations, so that does show that the smart
Speaker 9: form markets plumb might have been past its worst period.
Speaker 9: Remember shall Me sells smartphone devices to all over the world,
Speaker 9: so it's not just in mainland China, but also in India,
Speaker 9: in many emerging market countries, and Latin America some parts
Speaker 9: of Europe as well, so its results does seem to
Speaker 9: be a barometer for the global smartphone market sentiment. And
Speaker 9: remember that show Me is also prioritizing its profitability, and
Speaker 9: it's pushing through its strategy for premium offerings and it
Speaker 9: does seem to be bearing fruit. Its average selling price
Speaker 9: in China has expanded by twenty four percent in the
Speaker 9: last quarter, and the company set on earnings calls so
Speaker 9: that it seeks to expand its strategy to not just
Speaker 9: in China, blosso overseas. It says, we just need to
Speaker 9: focus on these premium products like these votable phones, and
Speaker 9: we do well in this category.
Speaker 3: It's interesting, isn't it that they're saying, yeah, let's go
Speaker 3: for a higher price point, let's actually still be thinking
Speaker 3: about overall profitability of growth when their overall macro economy
Speaker 3: is about it's a pretty painful place.
Speaker 5: We just look at how much.
Speaker 3: They happen to the ante with well, we understand going
Speaker 3: to be cutting mortgage rates for example, to try and
Speaker 3: spur on the Chinese economy. What do any of these
Speaker 3: earnings really tell us about that?
Speaker 1: So I think these two and Henry can go way
Speaker 1: into more detail, especially with PDDs. They're good earnings. As
Speaker 1: you can see, the stocks are really just reacting very
Speaker 1: positively to them.
Speaker 5: But then they come with a new one.
Speaker 1: So for instance, just to touch on lightly, and pdd
Speaker 1: its focus is more lower income consumers, so then that
Speaker 1: might bode well for China's faltering economy. So it kind
Speaker 1: of works reversed in that way, but Chinese economy still
Speaker 1: really isn't doing as well. Nearly every day you see
Speaker 1: one gloomy headline after the other. For instance, today we
Speaker 1: have Country Garden Holdings, it's a big property giant, it's
Speaker 1: making fresh effort to avoid a default. And then we
Speaker 1: have China Great Wall Asset Management. That's a state that
Speaker 1: run manager and it's also suffering a bond slum. So
Speaker 1: one after the other, the ceaseless warning we're just seeing,
Speaker 1: especially from their credit market.
Speaker 2: It's just really.
Speaker 1: Underscoring one thing. The economy is weak, and to your point,
Speaker 1: we also have a lot of development in the regional
Speaker 1: bank space and the mortgage space, so it's not looking
Speaker 1: that good to see it, although I mean it's not
Speaker 1: all gooom and doom, because as we can see, some
Speaker 1: standout companies like PDD in me are doing well. So
Speaker 1: sometimes what's good for one thing can be bad for another.
Speaker 6: You know, Henry, we're showing that big jump on the
Speaker 6: pdd A DR's US listed shares. You know, there's a
Speaker 6: story here about them beating out other domestic Chinese names
Speaker 6: in terms of top line growth.
Speaker 4: But we learned a lot about their.
Speaker 6: US business that we don't discuss PDD a lot on
Speaker 6: this show. Just explain what happened in the quarter.
Speaker 9: Yeah, sure, So the overall results are good, as we
Speaker 9: can see in the market reaction, it's a sharp positive
Speaker 9: reaction from investors, twenty percent of sheer price expansion like
Speaker 9: during the session. But as you said, the focus is
Speaker 9: really on Timu. It's but just shopping up overseas. That
Speaker 9: app has been expanding very fast in Europe, but.
Speaker 4: As well as in US as well.
Speaker 9: So the company disclosed very little about its team shopping app,
Speaker 9: but it does include that in one of its lines
Speaker 9: called transactional services revenue. So that transactional services revenue includes
Speaker 9: some things including the tea mood, the international business, but
Speaker 9: also the grocery buying business. But that revenue has been
Speaker 9: well above analyst estimates, so it does seem to show
Speaker 9: that that team has been gaining tractions overseas. However, there's
Speaker 9: another concern. It's on the profitability side, on the margins,
Speaker 9: So the company is expanding overseas, so it's investing more,
Speaker 9: so the margins could be hit because of that.
Speaker 3: We want to thank both of you, of course, Henry
Speaker 3: ren Isabeli across the macro micro picture of China and
Speaker 3: indeed a little bit of what the US consumer is
Speaker 3: telling us as well. And let's dig in there for
Speaker 3: a moment, because best Buy says that, look, it's reached
Speaker 3: the low point in tech demand after a pretty strong
Speaker 3: second quard a report pointed to an optic or maybe
Speaker 3: at least a bottoming in demand for consumer electronics and
Speaker 3: household plants. Is let's go to our own running cases
Speaker 3: in Dallas with more Look, it's still pretty ugly in
Speaker 3: the court had just gone, but it seems as though
Speaker 3: maybe they think there's a turning of the tide.
Speaker 10: Yeah, they're What they're saying is that they're starting to
Speaker 10: see light at the end of the tunnel. The backdrop
Speaker 10: of course here is that the sales declines at best
Speaker 10: Buy have been among the biggest, you know, in the
Speaker 10: world of big US retailers. And what they're saying now
Speaker 10: is that, you know, they're starting to get a little
Speaker 10: bit less bad and they have a line of sight
Speaker 10: to you know, being kind of flat, maybe even growing
Speaker 10: a little bit next year.
Speaker 6: They also said that short refresh cycles in the tech
Speaker 6: are being driven by guess what, Caroline, artificial intelligence and
Speaker 6: thanks to Bloomberg's Brending cases.
Speaker 5: Welcome back to Bloomberg Technology. I'm Caroline Hyde in.
Speaker 6: New York and I met Ludlow in San Francisco. Let's
Speaker 6: get a talking tech and first up. Open Ai is
Speaker 6: now a corporate version of chat geep with privacy safeguards
Speaker 6: and added features like longer text prompts. This in an
Speaker 6: effort to make money from its well known chatbot. And
Speaker 6: speaking of AI, Google is adding AI tools from companies
Speaker 6: like Meta and Anthropic to its cloud platform, weaving more
Speaker 6: generative AI into its products and positioning itself as a
Speaker 6: one stop shop for cloud customers seeking to tap into
Speaker 6: the technology.
Speaker 4: Plus.
Speaker 6: Senate majority leader Chuck Schumer plans to bring together several
Speaker 6: tech industry chiefs to discuss the ramifications of AI next month.
Speaker 6: That meeting includes Tesla CEO Elon Musk, Meta CEO Mark Zuckerberg,
Speaker 6: but also the CEOs of Google, Microsoft, and many others.
Speaker 6: This will be the first of Schumer's AI Insight Forums,
Speaker 6: aimed at giving Congress more influence over the future of AI.
Speaker 5: Caroline now mentioned forcage match. Meanwhile, let's stick with AI though.
Speaker 3: How is well changing the game of basically everything, but
Speaker 3: particularly your wealth management.
Speaker 5: Let's talk about it.
Speaker 3: With Braggenzer Founer, CTO of Father, a startup focused on
Speaker 3: utilizing pretty cunning edge to anology to advance wealth management
Speaker 3: in particularly the sort.
Speaker 5: Of mass affluent area. I suppose and you.
Speaker 3: Of course were busy building the AI team over at
Speaker 3: Goldman when it came back to sort of the wealth
Speaker 3: private wealth management part.
Speaker 5: How have you brought that over with Father? What are
Speaker 5: you offering this different?
Speaker 11: He Caroline first ed, Caroline, thanks for having me on.
Speaker 11: It's fun to be here. It's a fun time to
Speaker 11: be in wealth management technology. And you know, when you
Speaker 11: talk to someone like me, it's really been four years
Speaker 11: in the trenches farther kind of grinding away and realizing
Speaker 11: the opportunity ahead, and now we have these big moments
Speaker 11: where it comes out to the public. So we've been
Speaker 11: at this for a very long time and just really
Speaker 11: quickly to sort of adjust there. We are focused on
Speaker 11: kind of the core high net worth market, but you'll
Speaker 11: find that if you use technology, you can actually.
Speaker 2: Broaden your audience. It's an operational problem.
Speaker 11: We put these wealth management kind of verticals around wealth
Speaker 11: because it's profitable operationally, sort of higher net worth. It's
Speaker 11: all the same operations all the way down. So just
Speaker 11: to your question about about how we're bringing forth AI,
Speaker 11: we broadly believe that quantitative methods are going to help
Speaker 11: us to meet the opportunity in our industry.
Speaker 2: And if we look at how our industry.
Speaker 11: Is is covering the opportunity, there's about four hundred and
Speaker 11: twenty trillion dollars of net worth in the United States,
Speaker 11: and if I add up what the biggest players are doing,
Speaker 11: it's hard for me to get to twenty trillion. So
Speaker 11: we're talking about a massive opportunity to bring everything out
Speaker 11: towards out to a broader set of people.
Speaker 2: And that's what AI can bring us.
Speaker 3: But ken it in the here and the now, when
Speaker 3: we're still looking at perhaps regulatory headwinds.
Speaker 5: At least it seems to be garnering more oversight.
Speaker 11: From Garaganzweth, Well, it certainly does seem to be guarding
Speaker 11: more oversight. But you know, I think that we're fortunate
Speaker 11: in this in this time to say, to have someone
Speaker 11: heading the SEC for example, who knows about this technology
Speaker 11: and actually is able to talk talk about it, because
Speaker 11: I don't know that you have that across the board
Speaker 11: and government right now. You know, if you look back
Speaker 11: at how Gary Gensler has written about AI technology, he.
Speaker 2: Wrote a paper in twenty twenty.
Speaker 11: This is three years ago, one year after Father was founded,
Speaker 11: and this is really the time that we started to
Speaker 11: see all the pieces come together for AI to start
Speaker 11: to start delivering. So he has a mission to do
Speaker 11: here and now it's protect investors.
Speaker 2: I hope that as we go forward he.
Speaker 11: Also realizes and sort of leans into protect investors but
Speaker 11: also get maximum number of people exposure to markets, because
Speaker 11: this is a true miracle being in the markets.
Speaker 4: Right.
Speaker 6: Could you explain how your technology for proprietary tech works.
Speaker 6: I see that you know on your website you still
Speaker 6: toolk up the experience of the human advisors that work
Speaker 6: with you at Father.
Speaker 11: Yes, And I think it's really really important that you
Speaker 11: hit on that d that we fundamentally believe and this
Speaker 11: is from this is from deep knowledge of the technology
Speaker 11: as someone who's been a leader and been around it
Speaker 11: for a very very long time that humans are are
Speaker 11: required to have a great wealth experience and will be
Speaker 11: for the foreseeable future. I think that if you ask anyone,
Speaker 11: and we ask people, hey, would you like would you
Speaker 11: like AI to fully manage your money in a general
Speaker 11: in a very very general way, people say, well, one,
Speaker 11: what doesn't mean to manage my money?
Speaker 2: And advisors helping that?
Speaker 11: And also they tend to say, no, we want to
Speaker 11: interact with people. It's just that technology can allow more
Speaker 11: humor human interaction.
Speaker 6: Really, Brad, you talked about, you know, your your leadership
Speaker 6: of the technology. You were at Goldman Sachs for for
Speaker 6: several years. His David Solomon phoned you up and said, Brad,
Speaker 6: I need your help with this AI thing.
Speaker 4: I don't get it. Come in here and help us.
Speaker 2: You know, I don't know.
Speaker 11: I must be off his text chain, and you know,
Speaker 11: Chuck Chuck Schumer also hasn't hasn't texted me yet and
Speaker 11: I'm still waiting for the invite.
Speaker 3: Well, we'll get I'm sure you'll get win to them
Speaker 3: and with some of the backers that you have.
Speaker 5: Of course you've got back as like some adventures.
Speaker 3: Coast Adventures was these sort of the vcs of the
Speaker 3: AAR in Washington many a time. I'm interested in the
Speaker 3: high network professionals that you serve.
Speaker 5: What weren't they getting when you were at Gorman.
Speaker 3: Why did you feel you had to get out, had
Speaker 3: to serve and build something different.
Speaker 11: So when you think about where we are, if we
Speaker 11: look back at the history of wealth management, we had
Speaker 11: for the fidelity of the world, vanguards of the world
Speaker 11: who were bringing mutual funds. That's like execution and some
Speaker 11: strategy involved. What we really get to do now in
Speaker 11: AI is we get to have a deeply personalized plan.
Speaker 11: And personalization is an overused thing in our industry, but
Speaker 11: really we are fully contextualizing and able to fully contextualize
Speaker 11: the relationship. So that's based on your taxes, where you live,
Speaker 11: what's going on in your bank accounts, and we can
Speaker 11: broaden the breadth of what wealth management is to provide
Speaker 11: much better experience and deliver it at scale. And again
Speaker 11: I've talked about how we're not really covering the opportunity
Speaker 11: that well as an industry.
Speaker 6: Brad, how concerned are your clients about their data, you know,
Speaker 6: protection of it and how it's used. And by extension,
Speaker 6: I already asked you about the technology but is it
Speaker 6: a case that you're kind of technology agnostic you take
Speaker 6: an existing large language model and vectorize your own client data,
Speaker 6: or how does that work.
Speaker 11: So one of the things that and this is where
Speaker 11: you'll continue to hear me say as I talk about
Speaker 11: AI and the broad market, we have a lot of
Speaker 11: frameworks in history that's already been solved around these problems.
Speaker 11: In wealth management, discretion is one of the most important
Speaker 11: things that the advisors bring to the table. You are
Speaker 11: talking about the most deeply sensitive subjects in your life.
Speaker 11: You're talking about how you feel about your family, you're
Speaker 11: talking about how you feel about your job. And that
Speaker 11: has always been a core tenant of a good wealth advisor,
Speaker 11: and it extends to technology as well. So when we
Speaker 11: think about when we think about data in managing it,
Speaker 11: we actually don't ever send your.
Speaker 2: Personal data to large language models. We may send ten.
Speaker 11: Plates to populate that data, but we retain all of
Speaker 11: that data. And as you pointed to chat, GPT has
Speaker 11: an enterprise version, but still we're waiting for more robust
Speaker 11: tools before we start sending across Brad Genser, founder and
Speaker 11: CTO father, just really interesting to draw the link between
Speaker 11: the technology and your industry.
Speaker 4: Thank you so much for your time.
Speaker 6: Now coming up here on Bloomberg Technology, Apollo Io, a
Speaker 6: platform for sales and marketing workflow tools, nabs a one
Speaker 6: point six billion dollar valuation. Our exclusive conversation coming up
Speaker 6: with Apollo Io CEO Tim Jeng and Baine Ventures Merritt Hammer.
Speaker 4: That's coming up next. Character.
Speaker 11: Yeah.
Speaker 3: Meanwhile, before we puvot to the world of BC, let's
Speaker 3: just well, shiner light, what's happening in crypto?
Speaker 5: It is the story of the day.
Speaker 3: It feels like up seven percent on bitcoin at the moment,
Speaker 3: in fact, the biggest move for the asset since March
Speaker 3: of twenty twenty three, so clearly managing to trade though
Speaker 3: basically that's higher since August sixteenth. Remember we have significantly
Speaker 3: sold off throughout the month of August, as we have
Speaker 3: across most of the tech asset classes from New York
Speaker 3: and San Francisco.
Speaker 5: This is Bloomberg.
Speaker 6: Technology sales tech platform. Apoloio has raised one hundred million
Speaker 6: dollars in new financing, placing it at a one point
Speaker 6: six billion dollar valuation. The Series D investment was led
Speaker 6: by Baine Capital Ventures, with participation from existing investors including
Speaker 6: Sequoia Capital Tribe Capital and Nexus Venture Partners at a
Speaker 6: higher valuation than it had before. Let's bring in a
Speaker 6: poloio CEO Tim Jeng and Bain Ventures partner Merrit Humma
Speaker 6: for this.
Speaker 4: Marrit, I'll start with you. I Apollo's a great.
Speaker 6: Example of a company where AI is basically adding to
Speaker 6: the value and utility of customer data. But you point
Speaker 6: out their track record is why you were interested to
Speaker 6: do this round and indeed at a higher valuation.
Speaker 12: Yes, absolutely so. You know, we were really struck by
Speaker 12: the fact that Apollo is growing so quickly and so
Speaker 12: officially at scale, more so than the vast majority of
Speaker 12: companies in the market today, and it was a very
Speaker 12: unusual combination of characteristics that God is very excited about
Speaker 12: the company.
Speaker 6: Now, Tim, you have more than five hundred thousand companies,
Speaker 6: millions of uses. Why do you need one hundred million dollars?
Speaker 13: Yeah, I feel like it's the perfect time for us
Speaker 13: to raise money right now.
Speaker 4: We've grown our revenue over in Nix in the last
Speaker 4: couple of years.
Speaker 13: We're according after a giant market. Although we're still really efficient.
Speaker 13: We just feel like now is the perfect time to
Speaker 13: pour poor fuel under the fire.
Speaker 5: Okay, let's talk about that fuel.
Speaker 3: You said you're gonna be investing in product, Tim, You're
Speaker 3: gonna be investing in R and D.
Speaker 5: But also talent.
Speaker 3: Just how expensive has that talent become and where do
Speaker 3: you add to it?
Speaker 5: Tim?
Speaker 13: Yeah, we're definitely an R and D company first and foremost,
Speaker 13: so we're investing over sixty percent of our revenue typically
Speaker 13: on R and D hiring.
Speaker 2: Very very globally.
Speaker 13: The market is definitely not as crazy as it was
Speaker 13: before in terms of the talent market, hiring a lot
Speaker 13: of engineers, designers, product pms across the world, especially within.
Speaker 3: AI, talking about things that aren'swers crazy. Well, funding isn't
Speaker 3: as crazy at the moment merit, and it's been a
Speaker 3: tougher time for venture capitalists who've just raised big funds,
Speaker 3: just as Bain Ventures has to be trying to allocate
Speaker 3: in this environment where perhaps there's fewer to choose from.
Speaker 3: What sort of growth do you want to see from companies?
Speaker 3: Is it all about annual recovering revenues? Is it about
Speaker 3: being able to retrench on spending and ensure they're focused
Speaker 3: on the bottom line?
Speaker 5: Is there a rule of thumb here?
Speaker 12: Yes, it's a great question. Very timely question. I think
Speaker 12: what we've seen in the market is, you know, a
Speaker 12: couple of years ago, topline momentum was really the primary
Speaker 12: thing that investors were paying attention to in the venture space,
Speaker 12: and I think that has really shifted to thinking more
Speaker 12: about effhisient growth. What is the investment required to drive
Speaker 12: that that topline momentum, And that's where really where Apolo
Speaker 12: really stands out. When you look at their efficient growth metrics,
Speaker 12: metrics like rule of forty, they're really best in class
Speaker 12: and that's what got us so excited about making the investment.
Speaker 6: Tim, what I find interesting about your company is you're
Speaker 6: based here in San Francisco, but you are remote first.
Speaker 6: It's a topic we've discussed in the show quite a
Speaker 6: lot recently. Just explain your thesis of why that's the
Speaker 6: best way to work.
Speaker 4: Yeah, definitely.
Speaker 13: I mean, there's so much talent all around the world,
Speaker 13: and we definitely just want the best access to talent.
Speaker 4: Regardless for ever they've located.
Speaker 13: Especially you know, there's definitely an exodus of talent from
Speaker 13: SF as well. It's still the Bay Area, still the
Speaker 13: center of tech, but now great talent is everywhere in
Speaker 13: a world.
Speaker 4: So really, Mary I.
Speaker 6: Know a number of VC board members that don't agree
Speaker 6: with that thesis. They want to see their port photo
Speaker 6: companies work together, you know, be in one place. What
Speaker 6: do you make of the remote work position that Apollo has.
Speaker 12: Yeah, you know, I think our view is there's not
Speaker 12: one size fit's all answer to that. I think for
Speaker 12: every company it's different. And for some companies a distributed
Speaker 12: workforce can work really well depending on the nature nature
Speaker 12: of what they do, and for others it's really important
Speaker 12: to be es centrally located in one place.
Speaker 3: I'm just going to go back to Tim what it
Speaker 3: is that you offer. I mean, I think what you're
Speaker 3: the first sales tech unicorn minted in twenty twenty three,
Speaker 3: and you've been sort of saying what makes you stand out?
Speaker 3: And of course it's about allowing sales reps to do
Speaker 3: what exactly that is to sell, to not be having
Speaker 3: to permanently moving between tools and having cumbersome interaction with CRM.
Speaker 3: But one thing that took my eye was the fact
Speaker 3: that you were saying that some of your competitors, dare
Speaker 3: I name one of them, zoom Info for example, You
Speaker 3: say they seem unified, but they're not because they've acquired.
Speaker 3: Does that therefore mean you won't be using funds to
Speaker 3: ever acquire other companies?
Speaker 4: I'll never see never.
Speaker 13: But we're really focused on building the absolute best user
Speaker 13: experience for the end user from day one. Our goal
Speaker 13: is to build a unified anoline solution from the bottoms
Speaker 13: up that is the simplest to use and most successful
Speaker 13: to get started, and the most delightful user experience. We're
Speaker 13: now build the most number one rated product for sales.
Speaker 13: It's the most loved product, and a lot of that
Speaker 13: has been the way that we've architected the product from
Speaker 13: from day one.
Speaker 6: Mary, on this program, we made the distinction between AI
Speaker 6: native and sort of AI adjacent companies, those set to
Speaker 6: most benefit from this next generation of artificial intelligence technology.
Speaker 6: Does your investment thesis fit that split as well?
Speaker 12: Absolutely, although I would frame it differently. I would call
Speaker 12: it AI enabled. So Apollo is absolutely an AI company,
Speaker 12: but it had an established distribution and product that wasn't
Speaker 12: AI native from the start, but it has unique right
Speaker 12: embed AI into the product over time.
Speaker 3: We want to thank both of you fascinating to be
Speaker 3: able to get into the inner workings of what makes
Speaker 3: an upround. We congratulated on Apollo Io. Of course, CEO
Speaker 3: Tim Jang and Bain Ventures partner Merret Hammad.
Speaker 6: Almart is planning its longest distance drone deliveries yet by
Speaker 6: teaming up with Alphabet's Wing unit at two Dallas Areas stores.
Speaker 6: The Wing drones will be able to drop off food
Speaker 6: and household essentials as far as six miles from the stores.
Speaker 6: Let's bring in Wing CFO Shannon Nashal's here with me
Speaker 6: in San Francisco. There is a caveat, which is that
Speaker 6: a spotter is needed to look out for any aircraft
Speaker 6: that can't transmit their location. Just explain that caveat and
Speaker 6: how the technology works.
Speaker 14: So at Wing, we're actually we have permission from the
Speaker 14: FAA to fly what's called beyond the visual line of sight, right,
Speaker 14: So for us, we don't have the said spotter that
Speaker 14: you're talking about. The way that we operate is we
Speaker 14: have somebody and we have pilots that are able to
Speaker 14: really look at the area, if you will, in terms
Speaker 14: of where our drones are flying as opposed to looking
Speaker 14: at I think people think that there's somebody just looking
Speaker 14: at the drone and flying and seeing how far I
Speaker 14: can go. I've had people say they think there's somebody
Speaker 14: with a joystick actually controlling the drone. We're completely autonomous,
Speaker 14: and so that's what we're super excited about this opportunity.
Speaker 6: You're the CFO of Wing, So I got to ask,
Speaker 6: you know, it's two stores, but big stores in Dallas.
Speaker 6: How big a deal is this for Wing commercially speaking?
Speaker 5: Yeah, this is a This is a huge deal.
Speaker 14: Just just take a step back. Wing has operated and
Speaker 14: done over three hundred and fifty thousand commercial deliveries and
Speaker 14: three continents. This allows us to expand in the US.
Speaker 14: With this Walmart partnership, we will be able to reach
Speaker 14: sixty over sixty thousand households in the Dallas Fort Worth
Speaker 14: area and so this is again just part of our
Speaker 14: scaling opportunity and we're super excited to be working with Walmart.
Speaker 5: What sort of demand are you seeing?
Speaker 3: How many people are wanting to rush to get to
Speaker 3: the app to make sure that they can in the
Speaker 3: Dallas area receive these sourts of well deliveries that we
Speaker 3: just saw on our screen.
Speaker 4: Yeah.
Speaker 14: So we spend a lot of time working on community
Speaker 14: engagement and really and really engaging on the need for
Speaker 14: our services and local area. We've already been operating in Dallas.
Speaker 14: We have a partnership with Walgreens, and people have been
Speaker 14: asking for us to do more. So we're super excited
Speaker 14: that we're able to come back to the Dallas area.
Speaker 14: Not only do more with Walmart, we've expanded our hours
Speaker 14: and we'll be able to reach a lot more of
Speaker 14: the Dallas Fort Worth area.
Speaker 5: And it's interesting.
Speaker 3: Medicine medical drone delivery also a focus of yours in Ireland,
Speaker 3: for example. I'm really interested though in what this stepping
Speaker 3: stone means because sixty thousand, that's a lot of people,
Speaker 3: but it's certainly not the millions in the US.
Speaker 5: What gets us there?
Speaker 3: What's some timeline, What sort of regulatory approval do you
Speaker 3: need so that me and New York can also get
Speaker 3: it delivered.
Speaker 14: I think those are great questions, and we've spent a
Speaker 14: lot of time, you know, working with industry partners on
Speaker 14: really expanding some of those approvals. I say, I think, look,
Speaker 14: the reality is we are.
Speaker 4: Partnering with Wallwright.
Speaker 14: Now that is the stepping stone to get to what
Speaker 14: you're talking about, where this has expanded to the millions.
Speaker 14: We think that we are building a safe, liable, efficient
Speaker 14: drone delivery system that is capable of getting to those millions,
Speaker 14: and so this is the journey that we're taking in
Speaker 14: Walmart is very important to us expanding in that way.
Speaker 6: There's this sort of FAA regulation factor that impacts how
Speaker 6: quickly you can grow. But there's also different attitudes from
Speaker 6: different cities states retailers. Where do you feel like you're
Speaker 6: making most progress, Which areas are most supportive to deploying
Speaker 6: drone technology.
Speaker 14: You know, I think that there's a study that Virginia
Speaker 14: Tech did in Christiansburg, Virginia, were actually we are doing
Speaker 14: drone delivery, and it showed that almost ninety percent of
Speaker 14: those who took that study were very positive about drone
Speaker 14: delivery and wanted it to come of their communities. We
Speaker 14: even just recently showcased a couple who's in their eighties
Speaker 14: who actually have had the most drone deliveries in set
Speaker 14: of world record. They've gotten over twelve hundred deliveries in
Speaker 14: the last couple of years. And my favorite part of
Speaker 14: about their twelve hundred deliveries is they got almost the
Speaker 14: one hundred boxes of Girl Scouts delivered to their house.
Speaker 14: So we think the demand is there.
Speaker 5: That's a brilliant story.
Speaker 3: I'm not going to ask how many eggs they got
Speaker 3: delivered as well as I know you do that pretty efficiently.
Speaker 5: I mean it needs.
Speaker 3: Some like power players, some mass adoption and people to
Speaker 3: really show how much this works. But ultimately, what are
Speaker 3: the things sort of the teething issues in your scaling?
Speaker 5: I mean, what about talent? What about bringing in then
Speaker 5: know how.
Speaker 3: To continue to expand and ensure that this delivery can
Speaker 3: happen so succinctly.
Speaker 5: Is it something that you think about a lot.
Speaker 4: Yeah.
Speaker 5: Absolutely.
Speaker 14: As most tech companies, innovative companies, you think about attracting
Speaker 14: and retaining the best talent out there. I think, look,
Speaker 14: we are very fortunate to be a part of Alphabet.
Speaker 14: Alphabet is our parent company, and so I think that
Speaker 14: you know, we continue to attract and try to retain
Speaker 14: the best talent out there. I think there's a lot
Speaker 14: of opportunities for people looking to get into new industries.
Speaker 14: I think drone delivery industry offers a lot of opportunity,
Speaker 14: and I think are going to see a lot more
Speaker 14: talent coming into the industry.
Speaker 6: CFO Shannon, Oh, sorry, carry CEO Shann, Actually I get
Speaker 6: excited about drones. You know that I do, and it's
Speaker 6: interesting to see and willed real world deployment character.
Speaker 4: Yeah.
Speaker 3: I get excited about breaking news as well, ed, which
Speaker 3: is entirely why I tried to step on on your
Speaker 3: funder there a little bit, because we've got some news
Speaker 3: coming from X musks X in fact, we understand is
Speaker 3: going to allow political advertising.
Speaker 5: The company is saying in a blog post. When you
Speaker 5: go to the blog.
Speaker 3: Post, it's called supporting People's right to accurate and safe
Speaker 3: political discourse on X, and they're really talking about how
Speaker 3: they're currently expanding their safety and elections teams to focus
Speaker 3: on combating manipulation, servicing and authentic accounts, and closely.
Speaker 5: Monitoring the platform for emerging threats.
Speaker 3: But notable ed that they're actually thinking of beeping up
Speaker 3: teams in that area after the head count cuts that
Speaker 3: we've seen in that business.
Speaker 4: Yeah, look, it starts in the US.
Speaker 6: They're going to allow paid for promoted political votes, but
Speaker 6: prohibit false or misleading content.
Speaker 4: Sounds familiar, that does it?
Speaker 3: In this addition of believe their technology. Tomorrow, we've got
Speaker 3: a big one. Michael Sonershine is going to be from
Speaker 3: Graysale CEO, joining at ten thirty am on that landmark
Speaker 3: ruling the head.
Speaker 6: Yeah recap with the podcast wherever you get your podcasts, Apples, Spotify,
Speaker 6: and Bloomberg.
Speaker 4: This is Bloomberg.