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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside

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Speaker 1: my co host Matt Miller.

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Speaker 2: Every business day we bring you interviews from CEOs, market pros,

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Speaker 2: and Bloomberg experts, along with essential market moven news.

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Speaker 3: Find the Bloomberg Markets podcast called Apple Podcasts or wherever

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Speaker 3: you listen to podcasts, and at Bloomberg dot com slash podcast.

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Speaker 4: We are going to continue to monitor markets throughout the

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Speaker 4: day here, of course, but right now we have a

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Speaker 4: very special guest with us here in New York City.

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Speaker 4: We've got Kristin Olsen. She's a partner of Alternative capital

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Speaker 4: Markets at Goldman Sachs. She's here to discuss investing strategies

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Speaker 4: and give us her outlook for alternative markets. She was

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Speaker 4: also in a great panel this morning that was far

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Speaker 4: too short about positioning for a recession, so we're gonna

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Speaker 4: get some more time with her. Thankfully, Kristen, thank you

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Speaker 4: for being here with us in person. I imagine that all

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Speaker 4: capital markets are very attractive right now as we're in

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Speaker 4: this recessionary environment.

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Speaker 5: Can you talk to me.

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Speaker 4: About what business is looking like for you?

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Speaker 6: Sure?

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Speaker 7: Well, I would say clients are increasingly upping their allocations alternative.

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Speaker 7: So we've always had a very big strategic weight towards

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Speaker 7: alternative investments. And I think what our clients have seen

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Speaker 7: over the past twenty five years is the private markets

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Speaker 7: have generated real alpha versus the public markets, and they've

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Speaker 7: seen it with less perceived volatility and correlation to traditional markets.

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Speaker 7: And so obviously that's attractive right now. I think when

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Speaker 7: people are looking under the hood at where an alternatives,

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Speaker 7: they focused traditional private equity. In this market, secondary private

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Speaker 7: equity is particularly compelling. Obviously, liquidity is at a premium,

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Speaker 7: and so the opportunity to buy private equity at a

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Speaker 7: discount is pretty compelling right now. And then in this

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Speaker 7: environment private credit, the ability to be top of the

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Speaker 7: capital structure and in this market yet double digit un

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Speaker 7: levered returns is very very compelling.

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Speaker 3: Christian, I'm down here in Orlando, Florida today at the

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Speaker 3: B and Y Melon Persihing Insight Conference, and what we've

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Speaker 3: heard of yours, retail investors really have an appetite for

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Speaker 3: alternative investments.

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Speaker 1: How do you view that source of wealth, that pool

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Speaker 1: of capital.

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Speaker 7: Certainly we see that as a very big growth opportunity.

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Speaker 7: I think that market and those investors have not has

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Speaker 7: had as many opportunities to get into alternatives. And what

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Speaker 7: we're seeing over the last couple of years or some

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Speaker 7: new opportunities in private credit, in particular with the advent

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Speaker 7: of a number of these non traded BDCs that provide

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Speaker 7: quarterly yield and access to this type of private credit market. Similarly,

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Speaker 7: we've seen the private real estate side non traded wreaths,

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Speaker 7: and both of those are structured to accommodate a broader

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Speaker 7: universe of investors than traditional alternatives are available to. And

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Speaker 7: then I think the next question will be how does

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Speaker 7: that investor based access private equity and what structures will

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Speaker 7: become available in that space.

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Speaker 4: Within reads which is so interesting that you bring up

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Speaker 4: Can you talk to me a little bit more about

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Speaker 4: that and what clients are interested in.

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Speaker 7: So from from my client base, they're looking more at

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Speaker 7: the and this is on the private well side, ultrahigh

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Speaker 7: net worth and if we even go down to kind

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Speaker 7: of mass affluent, it's more of the private rate market

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Speaker 7: as opposed to the public rate market. But you know,

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Speaker 7: I think there's some hesitancy right now. You know, those

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Speaker 7: investments have a fixed yield in an environment where private

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Speaker 7: credit with floating rate, floating yields are probably a little

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Speaker 7: bit more attractive, and I think there's a little bit

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Speaker 7: of a wait and see as where do the real

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Speaker 7: estate values for existing pools of assets shake out, and

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Speaker 7: probably some concerns in the near term about where evaluations

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Speaker 7: are going.

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Speaker 3: So Christian, you mentioned earlier private credit, and that's a

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Speaker 3: business that I think if I were to come back

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Speaker 3: again and start my Wall Street career all over again,

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Speaker 3: that would be an area that I would look really

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Speaker 3: hard at. I'm just amazed at the amount of capital

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Speaker 3: flowing to private credit.

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Speaker 1: What's your view of that that market?

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Speaker 7: We think right now it's quite compelling. Look, obviously, there's

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Speaker 7: been a big pivot post the global financial crisis. Right

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Speaker 7: banks pulled back significantly from this type of direct lending,

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Speaker 7: and alternative credit providers stepped in. So I think you have,

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Speaker 7: you know, five times the amount of capital in that

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Speaker 7: space then you did back in two thousand and nine.

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Speaker 7: And then if you sit here today and you look

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Speaker 7: at you know, base rates up five hundred basis points,

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Speaker 7: credit spreads widening. If you can pick the right managers

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Speaker 7: that can select the right credits. Unlevered yields of ten

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Speaker 7: plus percent and levered returns that are low teens, you're

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Speaker 7: not that far off from the returns that investors might

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Speaker 7: be thinking of for private equity. And so, you know,

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Speaker 7: we think that risk return today is very attractive and

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Speaker 7: hence you're seeing a lot of capital flow into that space,

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Speaker 7: and particularly if we've been in a yield starb environment

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Speaker 7: and that yield's pretty attractive today.

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Speaker 4: Is that changing the calculation of the traditional sixty forty portfolio?

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Speaker 4: Have we moved past that at this point?

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Speaker 1: Well?

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Speaker 7: Look, I mean I think underneath sixty forty there's always

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Speaker 7: a lot of asset classes in there, and from my perspective,

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Speaker 7: we have a big strategic weight to alternatives, and so

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Speaker 7: private credit would be part of that, you know. And

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Speaker 7: so for us, we think about a moderate client approaching

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Speaker 7: twenty five percent, and alternatives and private credit would be

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Speaker 7: a part of that twenty five percent.

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Speaker 3: Christin, you know, I've done some work with some university

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Speaker 3: endowments and I am just I'm not shocked, but I'm

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Speaker 3: just really surprised at how much endowments have leaned into

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Speaker 3: alternative investments, some of them at thirty to forty percent

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Speaker 3: of their endowment in alternatives.

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Speaker 1: How do you view that source of capital.

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Speaker 7: Yeah, look, they've traditionally you know, I think they're leaning in.

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Speaker 7: I would bet they're leaning in even more than that today.

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Speaker 7: So they've always been one of the largest allocators allocators alternatives.

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Speaker 7: I think what you're seeing is the individual investor kind

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Speaker 7: of getting up closer to those levels. You know, we

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Speaker 7: just did our Family office survey and you know, when

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Speaker 7: we went out to that universe of investors, we saw

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Speaker 7: that they were on average allocated forty four percent to alternatives,

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Speaker 7: so even higher than where you see kind of the

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Speaker 7: endowment community. And then further, they're actually mostly looking to

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Speaker 7: actually increase that in the coming year. So you know,

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Speaker 7: I think you're seeing a bit of a pivot. Obviously,

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Speaker 7: we talk a lot about the institutional world having a

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Speaker 7: bit of a denominator effect right where their alternatives have performed,

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Speaker 7: their traditional assets values have you know, declined, and as

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Speaker 7: a result, they're actually not able to keep adding as

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Speaker 7: much as they have historically, whereas the individual community, the

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Speaker 7: family office community, is actively adding to their alternatives allocations.

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Speaker 4: When did this start? When did the interest start to

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Speaker 4: really pick up?

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Speaker 7: I would say for the ultra high net worth community,

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Speaker 7: there's always been very meaningful interest, and the reason being

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Speaker 7: that that investor base has the ability to endure the

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Speaker 7: ill liquidity and thus benefit from the ill liquidity premium

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Speaker 7: in those markets. But over the past several years, I

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Speaker 7: think you've seen even more of a lean in to

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Speaker 7: alternatives from that channel. And then I think you're seeing growth,

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Speaker 7: you know, as we alluded to in the in the

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Speaker 7: retail space and the ultra high net and the mass

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Speaker 7: affluent space, as more and more people want to access

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Speaker 7: the alpha that is generated in these markets.

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Speaker 3: Kristin, what does the data show historically about how alternatives

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Speaker 3: as an asset class perform in what could be a

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Speaker 3: recessionary environment, however shallow it may prove to be.

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Speaker 7: Yeah, Look, I think if we look at the past

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Speaker 7: twenty five years private equity, the median private equity manager

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Speaker 7: has generated positive returns, although they've varied every single year

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Speaker 7: for the last twenty five years. And if you think

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Speaker 7: about what the alpha, so the outperformance that they're generating

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Speaker 7: relative to traditional markets, the median managers across buyot and

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Speaker 7: growth have done three to five hundred points basis points

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Speaker 7: a year better than their public market equivalent. And if

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Speaker 7: you go to top quartel managers that our performance is

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Speaker 7: going to be even higher. And so again, if you

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Speaker 7: have the ability to endure the illiquidity in this asset class,

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Speaker 7: you are getting rewarded even with the median manager, but

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Speaker 7: obviously more important to pick top quartel managers in this space.

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Speaker 4: Looking a little bit more broadly, kristin, what's your outlook

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Speaker 4: for the rest of the year. What are you most

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Speaker 4: concerned about and what are you excited about? What's keeping

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Speaker 4: you up at night and helping you go to sleep?

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Speaker 7: Oh gosh, one of my most concerned about. Well, look,

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Speaker 7: I mean I think everyone is concerned about, you know,

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Speaker 7: the possibility of actually going into a recession, although it

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Speaker 7: seems like some of those fears are abating a little bit.

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Speaker 7: I think the beauty in the ASCID class I focus

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Speaker 7: in though, is all of these things create different types

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Speaker 7: of opportunity. So when you look at the hood under

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Speaker 7: the hood, if we do go into a recession or

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Speaker 7: hip bumps in the road, you know, we'll start looking

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Speaker 7: at managers that can think about how to provide capital

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Speaker 7: into those disruptions, right, whether it's a special situations manager,

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Speaker 7: strategic lenders, distressed managers. So I think you know, the

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Speaker 7: theme of this right as we think about a recession,

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Speaker 7: we were there opportunities. I think in alternatives you will

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Speaker 7: see opportunities. They'll just be different than the opportunities that

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Speaker 7: we were excited about maybe three or four years ago,

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Speaker 7: which happened to lean a lot into growth and tech

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Speaker 7: and venture. That being said, you know, with valuations down

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Speaker 7: a lot, there's going to be opportunity in that space

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Speaker 7: as well going forward.

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Speaker 3: Kristin, thank you so much for joining us. Really appreciate

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Speaker 3: getting some of your time. Christin Olsen, she's a partner

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Speaker 3: Alternative Capital Markets at Goldman Sachs, so getting some good

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Speaker 3: thoughts there on the alternatives market.

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Speaker 6: You're listening to the team. Ken's her live program, Bloomberg Markets,

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Speaker 6: weekdays at ten am Eastern on Bloomberg dot Com, the

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Speaker 6: iHeartRadio app and the Bloomberg Business App, or listen on

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Speaker 6: demand wherever you get your podcasts.

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Speaker 1: Madison Mills in New York.

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Speaker 3: I'm down here in Orlando, Florida at the BNY Melon

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Speaker 3: Pershing Insight Conference. Having a great time down here, but

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Speaker 3: unfortunately I miss hanging out with my buddy and Maletti.

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Speaker 3: She's Offsprings, head of Active Equity. She's in New York

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Speaker 3: with Madison and great to talk to you as always.

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Speaker 3: I'm seeing a market here in where I've got seven

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Speaker 3: stocks basically driving the entire bu for the S and

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Speaker 3: P five hundred. Is it time to look for some

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Speaker 3: names that might be getting lost here?

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Speaker 8: I think it is, Paul, and I'm sorry I'm missing

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Speaker 8: you here in person, but good for you to be

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Speaker 8: in Florida. It is the interesting thing, though, is if

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Speaker 8: you do look underneath and find time to dig around,

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Speaker 8: there are some really interesting stocks and more dispersion when

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Speaker 8: you look down cap, when you look in the mid

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Speaker 8: cap space, and when you look in the small cap space,

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Speaker 8: there's a lot more dispersion. And believe it or not,

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Speaker 8: companies are really moving on fundamentals.

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Speaker 4: What are the fundamentals that you feel are most important

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Speaker 4: to you when sussing out these quality companies?

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Speaker 8: Yeah, you know, Madisine, I'm glad you said it, because

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Speaker 8: the key really is quality, and I know people are

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Speaker 8: tired of hearing it. But when you have uncertain futures

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Speaker 8: like we do now, an uncertain future and so many

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Speaker 8: macro things that are quite honestly just nobody really knows

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Speaker 8: what's going to come next, you have to look at quality.

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Speaker 8: For us, that's really balance sheets. It's do they have

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Speaker 8: free cash flow? Can they support and direct their own future?

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Speaker 8: And clearly, and Paul, you know this probably better than

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Speaker 8: I do. Management teams that have had experience dealing with

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Speaker 8: difficult times too really helps.

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Speaker 3: Sounds that sounds a lot like active management. And so

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Speaker 3: I mean, I mean, how do you think about it?

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Speaker 3: I mean, one of the things I'm concerned about is

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Speaker 3: there's still maybe some earnings risk in this market here.

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Speaker 1: How do you think about that issue, that potential headwind?

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Speaker 8: Yeah, you know, Paul, we've been in an earnings recession

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Speaker 8: and I think that is something also that gets lost.

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Speaker 8: Up until this last quarter, you know, we have seen

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Speaker 8: earnings declines almost across the board, except for again a

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Speaker 8: few names here and there. Even this quarter we had

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Speaker 8: very little earnings growth. In fact, I think it only

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Speaker 8: came from two sectors, technology and industrials. But we are

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Speaker 8: seeing companies that are being able to hold margins pretty well,

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Speaker 8: being able to hold arnians pretty well. Those are the

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Speaker 8: type of companies that we're looking for. We do think

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Speaker 8: the future is going to continue to be uncertain, but

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Speaker 8: wouldn't exit the equity markets because we still even if

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Speaker 8: there is a downturn, think there's going to be opportunity

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Speaker 8: and companies that can adapt and do well, and so

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Speaker 8: still kind of bullish on the unique opportunities, not the

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Speaker 8: overall opportunity.

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Speaker 4: And as Paul mentioned, it's these seven names driving a

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Speaker 4: lot of the rally that we've been seeing. When you

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Speaker 4: look further down the pipeline, what are some of the

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Speaker 4: names or themes if you don't want to talk about

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Speaker 4: names that are that investors are missing out on right now?

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Speaker 8: You know, the small and mid cap space I think

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Speaker 8: has almost been left for dead. They've underperformed. The Russell

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Speaker 8: two thousand has underperformed the Russell three thousand five of

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Speaker 8: the last consecutive years and nine the last eleven years.

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Speaker 8: History would suggest that can't go on for much longer.

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Speaker 8: So whether or not we're going to see the larger

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Speaker 8: cap names start to sell off or the smaller cap

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Speaker 8: names start to outperform, I'm not sure what's going to

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Speaker 8: close the gap, but something has to give there, and

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Speaker 8: so I think the smaller and mid cap space has

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Speaker 8: a lot of opportunity. And what I'm hearing from our

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Speaker 8: investment teams is they're seeing it and they're finding it there. Also,

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Speaker 8: when the economy slows and we've gone from six percent

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Speaker 8: growth down to one, those smaller cap companies tend to

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Speaker 8: have faster growth. The only thing I would caution is

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Speaker 8: if we do head into a recession, you could see

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Speaker 8: a little bit of pause before you see that acceleration.

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Speaker 3: Hey, and in a world where an investor can get

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Speaker 3: four and a half percent into two year treasury, you

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Speaker 3: know how important now are dividends to you and your

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Speaker 3: teams here. We had a guest on a few months

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Speaker 3: ago that said, you know, this is going to be

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Speaker 3: the decade of the dividend.

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Speaker 1: How do you guys think about that?

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Speaker 8: I do think it's really and Paul, I mean, if

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Speaker 8: you can get dividends on top of an equity return,

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Speaker 8: that's going to be much more attractive than it was before.

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Speaker 8: I think investors, you know, in a double digit teen

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Speaker 8: high teen twenty percent return market, people don't really care

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Speaker 8: about the dividend. But if we are now in a

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Speaker 8: lower return environment where equities return you know, high single digit,

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Speaker 8: if we're lucky, that's going to be the return. A

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Speaker 8: company that can produce a dividend on top of that,

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Speaker 8: that's going to be pretty interesting. And by the way,

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Speaker 8: it's also a sign of quality that a company has

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Speaker 8: the ability to pay the dividend and maybe increase the

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Speaker 8: dividend over time.

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Speaker 4: Quality always makes me think about Apple. Uh what do

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Speaker 4: you think about the Apple? I mean, is it just

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Speaker 4: way overplayed at this point?

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Speaker 8: You know, it's interesting because I don't think I mentioned

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Speaker 8: the stat but you know, the entire market cap of

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Speaker 8: Apple near three trillion dollars. You know, it might be

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Speaker 8: well deserved. I'm not going to sit in the seat

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Speaker 8: and say that it's not. We probably won't know that

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Speaker 8: for the next.

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Speaker 5: Year or two.

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Speaker 8: But the entire market cap of Apple is bigger than

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Speaker 8: the entire market cap of the Russell two thousand. So

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Speaker 8: do you want to own some of those two thousand

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Speaker 8: companies or one individual company? And I just think the

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Speaker 8: risk reward is a little bit less certain with Apple

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Speaker 8: at these prices.

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Speaker 3: And you know it just you know, a month or

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Speaker 3: two ago, all we were talking about was the health

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Speaker 3: or the potential headwindow of the US banking system, and

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Speaker 3: you know, a handful of names really had had some trouble.

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Speaker 1: There is it time to look at some of those regional.

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Speaker 3: Banks because it seems to have, you know, kind of

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Speaker 3: those concerns seem to have been laid a little bit.

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Speaker 8: Yeah, Paul, what I'm hearing from our investment teams on

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Speaker 8: the banks, you know, there are probably some opportunities, but

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Speaker 8: I think there is also, you know, a real, a

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Speaker 8: real thoughtful approach that our teams are taking because they

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Speaker 8: know that more change is coming. We're seeing regulators suggests

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Speaker 8: that more capital is needed at the big banks. Clearly

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Speaker 8: that's coming down to the smaller banks as well. I

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Speaker 8: don't know that we've seen the last shoe to drop

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Speaker 8: on the smaller regional banks from everything that I'm hearing

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Speaker 8: from our investment teams, So I you know, I'm not

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Speaker 8: sure that it's time to run and grab all you

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Speaker 8: can get in that space.

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Speaker 4: We have like thirty seconds left here. What does that

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Speaker 4: shoe drop look like?

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Speaker 8: You know, That's that's the million dollar questions, And I

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Speaker 8: wish I could answer that. I think, you know, we're

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Speaker 8: all trying to figure out. You know, there's there's always

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Speaker 8: cracks that you see in the market, and you're always

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Speaker 8: trying to figure out. I'm certainly a big warrior. I

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Speaker 8: would I would say that the likely next shoot to

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Speaker 8: drop is the economy is going to see, you know,

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Speaker 8: more pressure, the credit tightening that's likely to come from

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Speaker 8: these This bank weakness could create pressure across the board,

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Speaker 8: and that's that's probably the most likely scenario with Aunay Blackslaw, Yeah.

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Speaker 1: And great stuff.

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Speaker 3: As always, I always appreciated getting a few minutes of

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Speaker 3: your time, particularly when you are in the big town.

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Speaker 3: And Maletti, she's all Springs, head of Active Equity and

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Speaker 3: as I say, time and time again, pound for pound,

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Speaker 3: I think some of the smartest investors are from Milwaukee, Wisconsin.

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Speaker 1: And I don't know why, but there's a lot of

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Speaker 1: good folks out there doing a lot of good work.

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Speaker 6: You're listening to the tape. Catch are live program Bloomberg

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Speaker 6: Markets weekdays at ten am Eastern on Bloomberg Radio, the

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Speaker 6: tune in app, Bloomberg dot Com, and the Bloomberg Business App.

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Speaker 6: You can also listen live on Amazon Alexa from our

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Speaker 6: flagship New York station, Just say Alexa play Bloomberg eleven thirty.

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Speaker 3: Now we're going to go to an interview with coinbased

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Speaker 3: CEO and co founder Brian Armstrong. He sits down with

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Speaker 3: Bloomberg shanale Bassic after the sec suit Coin base for

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Speaker 3: a range of alleged violations.

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Speaker 1: Let's go to the conversation right now.

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Speaker 9: Do you think you're going to have to go here?

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Speaker 10: Yeah, Well, this was not unexpected. You know, we've been

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Speaker 10: in discussion with the SEC for a long long time,

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Speaker 10: even going back to before we were a public company.

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Speaker 11: We started sharing with them how we.

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Speaker 10: Operate our business, how we list assets on the platform,

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Speaker 10: how we think about our staking program, and through a

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Speaker 10: large number of dialogues back and forth, they allowed us

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Speaker 10: to become a public company. You know, we had many

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Speaker 10: discussions with them in the last year when their tones

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Speaker 10: started to change and they started to come to us

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Speaker 10: with more questions about the business.

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Speaker 11: So we were very forthcoming.

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Speaker 10: We met with them probably thirty times over the last year,

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Speaker 10: and we started to kind of ask them for feedback,

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Speaker 10: and we said, you know, we would like there to

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Speaker 10: be a robust market in the US to trade crypto securities.

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Speaker 10: Of the thousand plus assets we've reviewed today, we've rejected

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Speaker 10: ninety percent of them, the ones we we believe our commodities.

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Speaker 10: What feedback do you have for this for us? How

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Speaker 10: can we come in and register, how can we work together?

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Speaker 10: And unfortunately we were met with silence. We really got

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Speaker 10: no feedback in those thirty meetings. The first meeting where

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Speaker 10: they were scheduled to come and give us feedback, they

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Speaker 10: canceled it a few days before that, and then we

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Speaker 10: got a wells notice a few days after that. So

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Speaker 10: it's really unfortunate. We work with regulators all over the world,

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Speaker 10: other regulators here in the US. I think I'm a

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Speaker 10: reasonable person to get along with, but unfortunately the SEC

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Speaker 10: under this chair has taken a regulation by enforcement approach

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Speaker 10: instead of creating a clear rule book in the US

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Speaker 10: that can allow this industry to be built in a

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Speaker 10: safe and trusted way.

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Speaker 9: You know, when was the last time you personally met

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Speaker 9: with Gary Gensler and what did you say?

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Speaker 11: Right?

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Speaker 10: So, when he first came in as the chair, I

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Speaker 10: flew out to New York. I reached out to him.

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Speaker 10: Our team has reached out. I tried to make an

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Speaker 10: effort to connect with him in person, because that's what

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Speaker 10: I try to do whenever a new regulator kind of

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Speaker 10: comes in. Unfortunately, we were not able to connect at

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Speaker 10: that time. I'm not sure why we couldn't get on

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Speaker 10: his calendar, and we followed up a few times in

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Speaker 10: the in the year after that, we eventually got a

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Speaker 10: meeting that was virtual. You know, it may have been

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Speaker 10: COVID related or something like that, but we were able

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Speaker 10: to get a virtual meeting. But unfortunately, it was frankly

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Speaker 10: like a pretty icy reception. I would say, you know,

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Speaker 10: we sort of came in hat in hand and said, hey, chere, Gensler.

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Speaker 10: You know you've asked people to come in and register respectfully,

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Speaker 10: We're here to register. What would you like us to do?

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Speaker 10: What process would you like us to go through? And

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Speaker 10: his response was, you know, talk to your lawyer. I'm

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Speaker 10: not here to advise you. And that was kind of

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Speaker 10: how the conversation started. And so and at that point,

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Speaker 10: you know, we realized there was a gap. You know,

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Speaker 10: we felt like this was an important technology that we

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Speaker 10: felt needed to be built in a safe and trusted

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Speaker 10: way here in the US, in a way that consumers

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Speaker 10: were protected. And I don't know what his motivations or person,

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Speaker 10: you know, his personal views were, but it didn't seem

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Speaker 10: like he was on the same page.

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Speaker 9: So what does this mean for you? If the government

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Speaker 9: cracks down so hard on crypto on coinbase sec? Does

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Speaker 9: coinbase exist in five years?

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Speaker 11: Absolutely?

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Speaker 10: We do, And I want to make an important point,

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Speaker 10: which is that the SEC chair may have a certain

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Speaker 10: point of view, but that's not representative of the whole

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Speaker 10: US government. In fact, quite the opposite. I would say

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Speaker 10: the SEC Chair as a bit of a really an

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Speaker 10: outlier here kind of in the US government. So when

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Speaker 10: I meet with members of Congress, I think the broad

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Speaker 10: consensus probably amongst eighty percent of people I talk to

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Speaker 10: both sides of the aisle, it's a pretty it's a

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Speaker 10: pretty reasonable view they have, which is, we don't know

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Speaker 10: exactly what this technology is going to become, but we're

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Speaker 10: seeing every other major financial hub in the world move

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Speaker 10: towards clear legislation. We need to make sure that this

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Speaker 10: innovation happens in the US in a way that again,

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Speaker 10: let's just protect consumers. Let's supply some basic good ideas

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Speaker 10: around a mlky C and audited financial statements and make

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Speaker 10: sure there's no wash trading. Let's create a clear market

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Speaker 10: structure where you know, businesses cannerstand, which is CFTC, SEC,

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Speaker 10: who should who should they talk to about which types

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Speaker 10: of assets? So Congress is recognizing this, and the White

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Speaker 10: House is as well. Actually, the Biden administration put out

439
00:22:10,800 --> 00:22:13,639
Speaker 10: in an executive order about a year ago, kind of

440
00:22:13,680 --> 00:22:15,800
Speaker 10: asking all the branches of government to sort of say,

441
00:22:15,840 --> 00:22:18,920
Speaker 10: get your act together on crypto. We don't there's some risks,

442
00:22:18,920 --> 00:22:21,320
Speaker 10: but there's some real important opportunities with this technology.

443
00:22:21,640 --> 00:22:23,320
Speaker 11: Let's create a clear regulatory framework.

444
00:22:23,880 --> 00:22:26,200
Speaker 9: Will you fight this all the way to the Supreme Court?

445
00:22:26,720 --> 00:22:28,639
Speaker 9: Do you think you'll have to? And do you have

446
00:22:28,680 --> 00:22:30,320
Speaker 9: the financial resources to do that?

447
00:22:31,359 --> 00:22:31,639
Speaker 11: Yeah?

448
00:22:31,680 --> 00:22:35,760
Speaker 10: So even if this takes some time, you know, that's okay.

449
00:22:36,480 --> 00:22:39,320
Speaker 10: We've so in Q one we were adjusted a bit

450
00:22:39,320 --> 00:22:41,440
Speaker 10: a positive as a company, even in the depths of

451
00:22:41,480 --> 00:22:43,399
Speaker 10: this crypto bear market, if you want to call it that.

452
00:22:43,720 --> 00:22:46,240
Speaker 11: We have over five billion dollars a balance on the balance.

453
00:22:45,960 --> 00:22:49,960
Speaker 10: Sheet, right, So, and frankly, even though that this complaint

454
00:22:49,960 --> 00:22:53,080
Speaker 10: came in from the SEC, it's really business as usual today, right.

455
00:22:53,680 --> 00:22:55,720
Speaker 10: We're continuing to trade the assets that we have on

456
00:22:55,760 --> 00:22:58,879
Speaker 10: our platform. You know, we trade over two hundred assets

457
00:22:58,920 --> 00:23:01,720
Speaker 10: on our platform. The SEC complaint mentioned just thirteen of them,

458
00:23:01,800 --> 00:23:04,199
Speaker 10: so a relatively small percentage of the assets we trade.

459
00:23:04,960 --> 00:23:07,680
Speaker 10: We also have business overseas and other countries.

460
00:23:07,760 --> 00:23:09,000
Speaker 11: We arrive a lot of.

461
00:23:09,280 --> 00:23:11,960
Speaker 10: Revenue from other sources that are not related to trading fees.

462
00:23:12,600 --> 00:23:16,520
Speaker 10: So you know, Coinbase is well capitalized and adjusted a

463
00:23:16,600 --> 00:23:18,320
Speaker 10: bit A positive and key one. I think we're going

464
00:23:18,359 --> 00:23:21,480
Speaker 10: to be fine going to court. In fact, it's a

465
00:23:21,520 --> 00:23:23,639
Speaker 10: relatively small portion of our company that you know, we

466
00:23:23,680 --> 00:23:26,120
Speaker 10: have a great legal team, policy team, et cetera that's

467
00:23:26,160 --> 00:23:28,560
Speaker 10: working on this, and what I really want, you know,

468
00:23:28,640 --> 00:23:30,840
Speaker 10: ninety ninety five percent of the company to be focused

469
00:23:30,880 --> 00:23:33,840
Speaker 10: on is just building great products for our customers and

470
00:23:33,880 --> 00:23:35,720
Speaker 10: making sure we don't lose sight of that. And so

471
00:23:36,440 --> 00:23:38,119
Speaker 10: this is a very serious matter that I'm going to

472
00:23:38,240 --> 00:23:41,600
Speaker 10: work on with a couple of our executives, but really

473
00:23:41,600 --> 00:23:43,680
Speaker 10: the vast majority of the company needs to keep building

474
00:23:43,720 --> 00:23:46,439
Speaker 10: because that's how this technology is going to ultimately benefit

475
00:23:46,440 --> 00:23:47,480
Speaker 10: a billion people hopefully.

476
00:23:48,000 --> 00:23:52,440
Speaker 9: How long does the regulatory overhang last? The reality is

477
00:23:52,520 --> 00:23:54,840
Speaker 9: this could take many, many months. And do you think

478
00:23:54,880 --> 00:23:57,000
Speaker 9: that your investors might lose some faith or even your

479
00:23:57,000 --> 00:23:58,440
Speaker 9: customers while you go through this?

480
00:23:59,440 --> 00:23:59,680
Speaker 11: Yeah?

481
00:23:59,720 --> 00:24:02,480
Speaker 10: Well, I mean, look, this is not a new concept, right,

482
00:24:02,920 --> 00:24:05,840
Speaker 10: There's been lots of discussion. The SEC has had rhetoric

483
00:24:05,880 --> 00:24:09,120
Speaker 10: around this for several years that I think has influenced

484
00:24:09,160 --> 00:24:13,439
Speaker 10: the market. And so the investors in coinbase, are you know,

485
00:24:13,560 --> 00:24:16,720
Speaker 10: comfortable with that if they're because there. It's all public, right,

486
00:24:16,760 --> 00:24:19,120
Speaker 10: and it's not like some secret thing that's being revealed.

487
00:24:20,240 --> 00:24:22,360
Speaker 10: And I think they're taking a long term view that

488
00:24:22,800 --> 00:24:24,919
Speaker 10: Coinbase is a very different company. We're kind of in

489
00:24:25,320 --> 00:24:28,000
Speaker 10: an end of one right, We're we're really the only

490
00:24:28,160 --> 00:24:30,040
Speaker 10: company that was based here in the US that went

491
00:24:30,119 --> 00:24:33,440
Speaker 10: public that has audited financial statements that's taken a compliance

492
00:24:33,480 --> 00:24:34,200
Speaker 10: first approach.

493
00:24:35,040 --> 00:24:35,880
Speaker 11: You know, even in this.

494
00:24:35,800 --> 00:24:38,080
Speaker 10: Recent sec complaint by the way that came out yesterday,

495
00:24:38,600 --> 00:24:40,560
Speaker 10: it was unfortunate they sort of did it back to

496
00:24:40,600 --> 00:24:43,320
Speaker 10: back with other another complaint that went out there. You know,

497
00:24:43,359 --> 00:24:45,360
Speaker 10: that may have been intentional to try to conflate the two,

498
00:24:45,480 --> 00:24:47,679
Speaker 10: but I think people are smarter than that, and they

499
00:24:47,720 --> 00:24:51,040
Speaker 10: recognize that. You know, this complaint against Coinbase, there were

500
00:24:51,040 --> 00:24:55,439
Speaker 10: no allegations, no allegations of misappropriation of customer funds, there

501
00:24:55,480 --> 00:24:58,439
Speaker 10: was no allegations of wash trading. You know, myself and

502
00:24:58,480 --> 00:25:02,160
Speaker 10: the executive team were not named person only. It's really

503
00:25:02,400 --> 00:25:05,760
Speaker 10: debating this more technical legal question of are some of

504
00:25:05,760 --> 00:25:07,760
Speaker 10: these assets commodities or are these securities?

505
00:25:07,800 --> 00:25:09,480
Speaker 11: And I think that's.

506
00:25:09,320 --> 00:25:11,119
Speaker 10: Something the court will have to decide to sort of

507
00:25:11,119 --> 00:25:13,720
Speaker 10: get some legal pres some case law out there, which

508
00:25:13,760 --> 00:25:16,600
Speaker 10: will ultimately benefit us, because that's what we've been asking

509
00:25:16,600 --> 00:25:18,879
Speaker 10: the sec for for a long time, is how do

510
00:25:18,920 --> 00:25:20,960
Speaker 10: we get more clarity? So if we need to go

511
00:25:21,040 --> 00:25:23,680
Speaker 10: to the courts to do it, it's not our first choice.

512
00:25:23,680 --> 00:25:26,200
Speaker 10: We'd rather the regular had just published a clear rule book.

513
00:25:26,280 --> 00:25:27,959
Speaker 10: But if they're not going to do that, the courts

514
00:25:28,000 --> 00:25:30,560
Speaker 10: are there in the US to avail ourselves up.

515
00:25:31,400 --> 00:25:35,879
Speaker 9: So part of this was about securities being registered or

516
00:25:35,880 --> 00:25:39,320
Speaker 9: not in terms of how they're listed on your exchange,

517
00:25:39,480 --> 00:25:42,840
Speaker 9: But part of this was about staking also, So staking

518
00:25:42,840 --> 00:25:45,800
Speaker 9: obviously is becoming a more important part of the crypto ecosystem.

519
00:25:46,000 --> 00:25:48,600
Speaker 9: Do you plan based on how the regulators are treating

520
00:25:48,680 --> 00:25:51,280
Speaker 9: staking to wind down your staking service?

521
00:25:52,040 --> 00:25:54,240
Speaker 10: No, we're not going to wind down our staking service.

522
00:25:54,840 --> 00:25:58,040
Speaker 10: Again as these court cases play out, it's really business

523
00:25:58,040 --> 00:25:59,800
Speaker 10: as usual. We're going to continue to operate.

524
00:25:59,840 --> 00:25:59,919
Speaker 12: That.

525
00:26:00,920 --> 00:26:03,320
Speaker 10: You know, snake staking only represents about three percent of

526
00:26:03,320 --> 00:26:05,679
Speaker 10: our net revenue, but it is a it's a very

527
00:26:05,720 --> 00:26:09,480
Speaker 10: important function in the crypto community, and it serves an

528
00:26:09,520 --> 00:26:12,159
Speaker 10: important part of these decentralized blockchains. And I guess I

529
00:26:12,160 --> 00:26:15,880
Speaker 10: should mention also that you know, Coinbas's staking product is

530
00:26:16,080 --> 00:26:19,160
Speaker 10: architected and built in a way to be compliant, and

531
00:26:19,200 --> 00:26:21,119
Speaker 10: we've actually think it's materially different than some of the

532
00:26:21,119 --> 00:26:24,520
Speaker 10: other ones out there which have been called staking, and

533
00:26:24,560 --> 00:26:27,080
Speaker 10: so yeah, we're going to continue to operate our staking business.

534
00:26:27,320 --> 00:26:30,960
Speaker 9: So if users wanted their funds back in the staking

535
00:26:31,040 --> 00:26:34,240
Speaker 9: service at this point in time, does Coinbase have the

536
00:26:34,280 --> 00:26:37,600
Speaker 9: ability to service that at scale in case that there

537
00:26:37,760 --> 00:26:40,120
Speaker 9: is a larger run on the staking business.

538
00:26:40,720 --> 00:26:44,159
Speaker 10: Yeah, So you know, staking is really something that's a

539
00:26:44,200 --> 00:26:48,040
Speaker 10: decentralized part of part of these decentralized protocols. So Coinbase

540
00:26:48,119 --> 00:26:50,720
Speaker 10: is really just you know, it's a pass through mechanism.

541
00:26:50,720 --> 00:26:53,600
Speaker 10: We're helping people access these decentralized protocols. So some of

542
00:26:53,600 --> 00:26:55,800
Speaker 10: the decentralized protocols have, for instance, like a lock up

543
00:26:55,840 --> 00:26:58,240
Speaker 10: period of you know, some number of days when you

544
00:26:58,240 --> 00:27:00,840
Speaker 10: initiate the withdrawal request, and so we're just making that

545
00:27:00,920 --> 00:27:04,800
Speaker 10: kind of information available to the customer. But it's yeah,

546
00:27:05,080 --> 00:27:07,600
Speaker 10: you know, all the the funds are there backed one

547
00:27:07,600 --> 00:27:09,400
Speaker 10: to one that when you're when you're staking something, it's

548
00:27:09,440 --> 00:27:12,960
Speaker 10: being pledged into these these decentralized protocols, and we actually

549
00:27:12,960 --> 00:27:14,800
Speaker 10: don't even have the ability to you know, move it

550
00:27:14,840 --> 00:27:18,120
Speaker 10: somewhere else at that point it's we're just giving people

551
00:27:18,200 --> 00:27:19,800
Speaker 10: access to these centralized protocols.

552
00:27:19,880 --> 00:27:23,080
Speaker 9: So the business face withdrawals, does that have a material

553
00:27:23,119 --> 00:27:26,639
Speaker 9: impact on Ethereum's price? And how does claimities prepare for

554
00:27:26,680 --> 00:27:31,040
Speaker 9: something like that? What do you mean is there kind

555
00:27:31,080 --> 00:27:33,280
Speaker 9: of a broader run that you have to be prepared for?

556
00:27:33,920 --> 00:27:37,119
Speaker 10: Oh well, okay, so in in our business, we're not

557
00:27:37,280 --> 00:27:39,520
Speaker 10: We're not a bank, right, we don't do fraction reserve,

558
00:27:40,560 --> 00:27:43,200
Speaker 10: and so there's not really this concept of a run. Right,

559
00:27:43,240 --> 00:27:45,000
Speaker 10: all the all the funds are there, backed one to

560
00:27:45,040 --> 00:27:46,879
Speaker 10: one and you don't have to take our word for it.

561
00:27:46,920 --> 00:27:49,360
Speaker 10: You know, are as a public company, we have auditors

562
00:27:49,400 --> 00:27:51,800
Speaker 10: Deloitte in this case, who's gone in and verified all

563
00:27:51,800 --> 00:27:53,680
Speaker 10: of that. You can kind of confirm it in our

564
00:27:53,680 --> 00:27:57,280
Speaker 10: financial statements. So you know, if people want to withdraw funds,

565
00:27:57,280 --> 00:27:58,879
Speaker 10: they one hundred percent of it is there.

566
00:27:58,920 --> 00:28:00,600
Speaker 11: There's no such thing as a run really.

567
00:28:01,040 --> 00:28:04,239
Speaker 9: So how do you answer the question of you know,

568
00:28:04,359 --> 00:28:08,080
Speaker 9: on one hand, there is sec that is, you know,

569
00:28:08,200 --> 00:28:10,840
Speaker 9: causing a big overhand in terms of both you guys

570
00:28:10,880 --> 00:28:13,879
Speaker 9: and the industry. On the other hand, just financially, you know,

571
00:28:14,000 --> 00:28:16,880
Speaker 9: rates are higher in the United States, people are more

572
00:28:16,880 --> 00:28:18,240
Speaker 9: inclined to keep their money in a bank.

573
00:28:18,359 --> 00:28:19,240
Speaker 11: Why should they keep their.

574
00:28:19,200 --> 00:28:22,960
Speaker 10: Money with you? Well, what's interesting in crypto, there's been

575
00:28:23,000 --> 00:28:25,800
Speaker 10: the evolution of something called stable coins, right, and so

576
00:28:26,400 --> 00:28:29,800
Speaker 10: we're actually in consort with another company Circle in the space.

577
00:28:29,840 --> 00:28:33,080
Speaker 10: We've created a USD coin, which is the second largest

578
00:28:33,080 --> 00:28:36,360
Speaker 10: stable coin out there. And as you've mentioned, interest rates

579
00:28:36,400 --> 00:28:38,680
Speaker 10: in this environment, that's been both a good source of

580
00:28:38,720 --> 00:28:41,440
Speaker 10: revenue for US, but it's also something that we've passed

581
00:28:41,440 --> 00:28:45,400
Speaker 10: along to customers, so customers can actually earn rewards on

582
00:28:45,720 --> 00:28:49,880
Speaker 10: USDC and get access to some of these higher interestate environments.

583
00:28:51,360 --> 00:28:54,320
Speaker 9: Brought our question not just about coinbase, but about the industry.

584
00:28:54,400 --> 00:28:58,800
Speaker 9: As you know, more regulatory enforcement actions come to the forefront,

585
00:28:59,120 --> 00:29:00,960
Speaker 9: how much of an over do you think that will

586
00:29:00,960 --> 00:29:02,000
Speaker 9: have on crypto pricing?

587
00:29:03,280 --> 00:29:04,440
Speaker 11: You know, it's hard for me to say.

588
00:29:04,720 --> 00:29:07,680
Speaker 10: It was actually kind of surprising yesterday with this complaint

589
00:29:07,680 --> 00:29:10,600
Speaker 10: that came out, crypto was up, which I would not

590
00:29:10,640 --> 00:29:11,200
Speaker 10: have expected.

591
00:29:11,520 --> 00:29:12,600
Speaker 11: So I don't know what to make of that.

592
00:29:12,680 --> 00:29:15,040
Speaker 10: I don't know if it means that people knew something

593
00:29:15,080 --> 00:29:17,120
Speaker 10: was coming but they expected it to be worse.

594
00:29:17,280 --> 00:29:19,040
Speaker 11: Than it actually was, or.

595
00:29:20,920 --> 00:29:24,520
Speaker 10: If they just felt that, you know, they're still a

596
00:29:24,520 --> 00:29:27,120
Speaker 10: believer in it or something. But you know, I don't

597
00:29:27,160 --> 00:29:29,080
Speaker 10: try to predict what's going to happen in these markets.

598
00:29:29,120 --> 00:29:32,040
Speaker 10: You know, we don't operate a hedge fund or anything

599
00:29:32,120 --> 00:29:34,400
Speaker 10: like that. We just want to provide a good service

600
00:29:34,440 --> 00:29:36,680
Speaker 10: to our customers around the exchange and all the products

601
00:29:36,720 --> 00:29:37,040
Speaker 10: we offer.

602
00:29:37,160 --> 00:29:38,960
Speaker 9: Before I let you go, I want to ask about

603
00:29:39,120 --> 00:29:41,840
Speaker 9: not crypto. I want to ask about artificial intelligence. Even

604
00:29:42,240 --> 00:29:45,440
Speaker 9: talking about it all day as a crypto entrepreneur, how.

605
00:29:45,240 --> 00:29:46,960
Speaker 11: Do you see AI?

606
00:29:47,520 --> 00:29:49,880
Speaker 9: Do you see it as a competing factor in terms

607
00:29:49,920 --> 00:29:53,400
Speaker 9: of dollars going towards technology? Do you see dovetailing with

608
00:29:53,480 --> 00:29:55,480
Speaker 9: your industry at all?

609
00:29:55,680 --> 00:29:59,080
Speaker 10: Well, AI is certainly one of those couple really important

610
00:29:59,080 --> 00:30:01,960
Speaker 10: technology trends the US needs to get right, along with crypto,

611
00:30:02,520 --> 00:30:04,400
Speaker 10: and I think we're seeing a similar question start to

612
00:30:04,440 --> 00:30:06,440
Speaker 10: happen in Congress along with crypto, is like, hey, how

613
00:30:06,440 --> 00:30:07,000
Speaker 10: should this be.

614
00:30:06,960 --> 00:30:09,120
Speaker 11: Regulated so it can be done in a safe, trusted way.

615
00:30:10,080 --> 00:30:13,080
Speaker 10: I do think there's a couple interesting intersections between AI

616
00:30:13,120 --> 00:30:16,880
Speaker 10: and crypto. One of them is that you know, in

617
00:30:16,920 --> 00:30:19,960
Speaker 10: the world of AI, there you know it's so easy

618
00:30:19,960 --> 00:30:22,800
Speaker 10: to mass generate things, whether it's a news article or images,

619
00:30:23,960 --> 00:30:26,880
Speaker 10: and so the provenance of those and the authenticity of

620
00:30:26,920 --> 00:30:29,120
Speaker 10: it can be a little bit hard to figure out.

621
00:30:29,160 --> 00:30:30,240
Speaker 11: And in a world of crypto.

622
00:30:31,240 --> 00:30:32,680
Speaker 10: One of the great things about crypto, you know, with

623
00:30:32,800 --> 00:30:35,160
Speaker 10: NFTs and whatnot, you can actually have a.

624
00:30:35,120 --> 00:30:37,960
Speaker 11: Digital signature that proves, you know, this.

625
00:30:38,040 --> 00:30:41,960
Speaker 10: Was issued by Bloomberg or by Brian Armstrong or whoever.

626
00:30:43,000 --> 00:30:44,400
Speaker 10: So I think it could be useful to track the

627
00:30:44,440 --> 00:30:48,160
Speaker 10: provenance of creative works, whether that's text, audio, video, et cetera.

628
00:30:49,280 --> 00:30:51,560
Speaker 10: The other thing that might be interesting is that a

629
00:30:51,560 --> 00:30:54,600
Speaker 10: lot of these these you know, bots or autonomous agents

630
00:30:55,080 --> 00:30:57,280
Speaker 10: in the AI sphere, they're going to need to go

631
00:30:57,520 --> 00:30:59,600
Speaker 10: get things done in the world. Right people are already

632
00:30:59,640 --> 00:31:01,880
Speaker 10: using them to sort of say, hey, order my groceries

633
00:31:02,000 --> 00:31:04,320
Speaker 10: or you know, maybe build this website and spin up

634
00:31:04,320 --> 00:31:08,480
Speaker 10: this server. And so they're gonna need financial money. They're

635
00:31:08,520 --> 00:31:10,640
Speaker 10: gonna need money to go do things in the world,

636
00:31:10,680 --> 00:31:13,600
Speaker 10: these these AI agents, and so I think that actually

637
00:31:13,600 --> 00:31:15,040
Speaker 10: in the future you're probably gonna see a lot of

638
00:31:15,040 --> 00:31:20,360
Speaker 10: crypto transaction happening between AI agents or AI and various

639
00:31:20,360 --> 00:31:22,760
Speaker 10: businesses around the world because crypto is kind of the

640
00:31:22,840 --> 00:31:24,120
Speaker 10: native money of the Internet.

641
00:31:24,120 --> 00:31:26,200
Speaker 11: The Internet. Internet is global, it's decentralized.

642
00:31:26,200 --> 00:31:28,280
Speaker 10: Every country everybody in the world can participate in it,

643
00:31:29,000 --> 00:31:31,960
Speaker 10: and so it wouldn't really make sense to use you know,

644
00:31:32,080 --> 00:31:34,760
Speaker 10: the dollar, the euro in a truly global context. If

645
00:31:34,800 --> 00:31:37,040
Speaker 10: you you know what you want to be country agnostics.

646
00:31:37,080 --> 00:31:38,640
Speaker 10: I think AI will use crypto more.

647
00:31:38,960 --> 00:31:42,560
Speaker 9: How much are you actually working on that future?

648
00:31:44,720 --> 00:31:48,719
Speaker 10: So our we're not trying to build something that is

649
00:31:49,240 --> 00:31:51,520
Speaker 10: allowing bots to like transact.

650
00:31:51,000 --> 00:31:52,760
Speaker 11: In crypto at the moment. But what we are doing

651
00:31:52,800 --> 00:31:53,560
Speaker 11: is we're building.

652
00:31:53,280 --> 00:31:55,760
Speaker 10: Good infrastructure, you know, picks and shovels, if you will.

653
00:31:55,800 --> 00:31:59,920
Speaker 10: So with coinbas Cloud, for instance, we're making our APIs

654
00:32:00,000 --> 00:32:03,080
Speaker 10: around how crypto is stored and transacted and commerce happens,

655
00:32:03,080 --> 00:32:05,680
Speaker 10: and we're just exposing those kind of like Amazon Web services,

656
00:32:05,720 --> 00:32:07,080
Speaker 10: but to any business that.

657
00:32:07,080 --> 00:32:07,880
Speaker 11: Wants to integrate it.

658
00:32:07,920 --> 00:32:10,600
Speaker 10: So I suspect more businesses will integrate that over time,

659
00:32:10,600 --> 00:32:13,640
Speaker 10: and some of those may use AI. We're also using

660
00:32:13,680 --> 00:32:15,600
Speaker 10: AI in our business in a few other ways. I mean,

661
00:32:15,600 --> 00:32:18,360
Speaker 10: we use it a lot for fraud prevention, you know,

662
00:32:18,400 --> 00:32:22,040
Speaker 10: and unfortunately we get people signing up putting in stolen

663
00:32:22,040 --> 00:32:24,040
Speaker 10: credentials and things like that, and so we've developed a

664
00:32:24,080 --> 00:32:27,760
Speaker 10: lot of really good machine learning to detect that, and

665
00:32:28,640 --> 00:32:30,440
Speaker 10: you know, we're occasionally we're testling it in a few

666
00:32:30,480 --> 00:32:33,280
Speaker 10: other areas too, just like around Actually, like you know,

667
00:32:33,320 --> 00:32:37,000
Speaker 10: our design teams, they'll sometimes look at mid Journey or

668
00:32:37,040 --> 00:32:40,120
Speaker 10: DOLLI and sort of generate an interface using ANI at least,

669
00:32:40,120 --> 00:32:42,080
Speaker 10: like you know, show me five ideas for what an

670
00:32:42,120 --> 00:32:45,880
Speaker 10: interface might look like to do remittances in crypto or

671
00:32:46,280 --> 00:32:49,560
Speaker 10: for content creators to have a direct relationship with their audience,

672
00:32:49,600 --> 00:32:51,160
Speaker 10: and what with the interface for that? And AI is

673
00:32:51,200 --> 00:32:53,920
Speaker 10: just like a great assistant, you know, it doesn't. I

674
00:32:53,920 --> 00:32:56,800
Speaker 10: don't think AI really is taking people's jobs. It's taking

675
00:32:56,920 --> 00:33:01,200
Speaker 10: tasks off their plates, largely to make their jobs more efficient.

676
00:33:01,480 --> 00:33:04,760
Speaker 10: And so having like a you know, a research assistant

677
00:33:04,800 --> 00:33:07,000
Speaker 10: or someone like that, you know, a tutor or a

678
00:33:07,040 --> 00:33:09,400
Speaker 10: mentor or a therapist whatever. Everybody can have one of

679
00:33:09,400 --> 00:33:11,800
Speaker 10: these paired with them, and I think it'll just make

680
00:33:11,880 --> 00:33:12,880
Speaker 10: humans more productive.

681
00:33:13,480 --> 00:33:15,040
Speaker 9: Ran we're out of time, but thank you so much

682
00:33:15,040 --> 00:33:16,400
Speaker 9: for your time as for taking our questions.

683
00:33:16,400 --> 00:33:18,240
Speaker 11: Thank you.

684
00:33:18,240 --> 00:33:21,640
Speaker 6: You're listening to the team Ken's are Live program Bloomberg

685
00:33:21,680 --> 00:33:25,040
Speaker 6: Markets weekdays at ten am Eastern on Bloomberg dot com,

686
00:33:25,120 --> 00:33:28,280
Speaker 6: the iHeartRadio app, and the Bloomberg Business app, or listen

687
00:33:28,360 --> 00:33:31,160
Speaker 6: on demand wherever you get your podcasts.

688
00:33:32,440 --> 00:33:35,680
Speaker 3: Bn Y Melan Pershing, it's a conference boy. The story

689
00:33:35,680 --> 00:33:37,400
Speaker 3: for me over the last twenty four hours as an

690
00:33:37,400 --> 00:33:39,720
Speaker 3: avid golfer, an avid watcher of the world of the

691
00:33:39,760 --> 00:33:42,880
Speaker 3: business of golf, is the merger between the PGA Tour

692
00:33:43,000 --> 00:33:44,640
Speaker 3: and the Live Golf.

693
00:33:45,280 --> 00:33:48,240
Speaker 1: No, what's all that coming? Including me? Leanna Baker joins us.

694
00:33:48,240 --> 00:33:51,640
Speaker 3: She's a US deal's team managing director with Bloomberg News.

695
00:33:52,040 --> 00:33:53,880
Speaker 1: Leanna, what what happened?

696
00:33:53,960 --> 00:33:56,360
Speaker 3: Because this is one hundred and eighty degree return for

697
00:33:56,480 --> 00:33:58,960
Speaker 3: the PGA who said they would never merge with Live.

698
00:34:00,520 --> 00:34:03,040
Speaker 12: You mentioned that you're still shocked by this news. I

699
00:34:03,120 --> 00:34:06,480
Speaker 12: am too. But from what we understand, over the past

700
00:34:06,560 --> 00:34:10,920
Speaker 12: seven weeks, both sides had been talking. It had very secretive,

701
00:34:11,360 --> 00:34:15,400
Speaker 12: very few bankers or wars involved. It seems like meetings

702
00:34:15,480 --> 00:34:18,160
Speaker 12: happened all over the world. We heard in Venus, Italy,

703
00:34:18,200 --> 00:34:21,360
Speaker 12: there was a meeting they closed the deal. In San Francisco.

704
00:34:21,400 --> 00:34:24,319
Speaker 12: There's also meetings in London, and they really kept us

705
00:34:24,360 --> 00:34:26,160
Speaker 12: close to the best and they didn't want it leaking

706
00:34:26,200 --> 00:34:28,920
Speaker 12: out to anyone because they knew how controversial and explosive

707
00:34:28,960 --> 00:34:29,799
Speaker 12: this merger would be.

708
00:34:30,680 --> 00:34:35,359
Speaker 4: And now we're hearing about potential antitrust scrutiny. What's the

709
00:34:35,560 --> 00:34:38,680
Speaker 4: likelihood of that becoming a big issue for both sides here.

710
00:34:40,239 --> 00:34:42,960
Speaker 12: This is something the government will definitely review. They look

711
00:34:43,000 --> 00:34:46,640
Speaker 12: at most mergers. You might recall that LIVE PGA had

712
00:34:46,680 --> 00:34:51,280
Speaker 12: been suing each other over things related to anti trust,

713
00:34:51,440 --> 00:34:54,719
Speaker 12: so it had already been kind of kicked up as

714
00:34:54,760 --> 00:34:59,680
Speaker 12: an issue. Live had been accusing PGA of, you know,

715
00:34:59,719 --> 00:35:02,680
Speaker 12: blo walking them out and being a monopoly. So this

716
00:35:02,760 --> 00:35:06,200
Speaker 12: is something that you know, they've dropped all litigation. So

717
00:35:06,320 --> 00:35:11,120
Speaker 12: the question is who will really oppose this deal, Who

718
00:35:11,160 --> 00:35:14,800
Speaker 12: would really complain to the government. The Saudi's clearly of

719
00:35:14,960 --> 00:35:17,399
Speaker 12: very deep pockets. There's probably going to be a lot

720
00:35:17,400 --> 00:35:20,239
Speaker 12: of lobbying happening. So at this point it's too early

721
00:35:20,320 --> 00:35:22,839
Speaker 12: to know if this is something that'll be blocked because

722
00:35:22,840 --> 00:35:24,800
Speaker 12: it seems like both sides really wanted to happen.

723
00:35:25,840 --> 00:35:28,520
Speaker 3: Lean The timing here seems really odd that, like they

724
00:35:28,560 --> 00:35:32,840
Speaker 3: announced this yesterday, nobody knew, including you know, presumably Jack Nicholas,

725
00:35:32,840 --> 00:35:36,399
Speaker 3: Tiger Woods, Rory McElroy, those types of people nobody really knew.

726
00:35:36,400 --> 00:35:39,759
Speaker 3: Agents didn't know. They had little to no information to

727
00:35:39,800 --> 00:35:43,120
Speaker 3: disclose so far about the details here, does it feel

728
00:35:43,200 --> 00:35:45,480
Speaker 3: kind of half baked here that maybe they were their

729
00:35:45,480 --> 00:35:47,080
Speaker 3: hand was forced to disclose something.

730
00:35:49,440 --> 00:35:51,400
Speaker 12: So I'm the managing editor of the deal's team of

731
00:35:51,480 --> 00:35:54,240
Speaker 12: Bloomberg and we follow mergers all the time. It's really

732
00:35:54,360 --> 00:35:57,239
Speaker 12: common for only a small group of people to know

733
00:35:57,480 --> 00:36:00,600
Speaker 12: about a really important merger because leaks could kill a deal.

734
00:36:00,719 --> 00:36:08,360
Speaker 12: Let's say uh Yasir el Rumayan, the Saudi executive charge

735
00:36:08,440 --> 00:36:11,759
Speaker 12: was seen with the commissioner of PGA like that could

736
00:36:11,760 --> 00:36:17,000
Speaker 12: have blown the cover. So it's not that unique that

737
00:36:17,040 --> 00:36:19,200
Speaker 12: these people weren't involved. What's unique is that there were

738
00:36:19,280 --> 00:36:21,640
Speaker 12: so many high profile people who maybe could have known

739
00:36:22,120 --> 00:36:25,040
Speaker 12: and didn't. What does still have baked is that there's

740
00:36:25,120 --> 00:36:28,359
Speaker 12: no value on any of this. If you look at

741
00:36:28,360 --> 00:36:32,719
Speaker 12: the statement yesterday, there's nothing mentioned. L Raumayan said that

742
00:36:33,280 --> 00:36:36,240
Speaker 12: Saudi Pis is prepared for the best billions in the entity,

743
00:36:36,480 --> 00:36:39,560
Speaker 12: but we don't have the details. That's something we're really

744
00:36:39,600 --> 00:36:42,600
Speaker 12: trying to dig into. What is this merger work, What

745
00:36:42,719 --> 00:36:44,440
Speaker 12: is the value of PGA, What is the value of

746
00:36:44,520 --> 00:36:47,200
Speaker 12: live We here it'll be sorted out over the summer.

747
00:36:47,560 --> 00:36:49,920
Speaker 12: That's what's strange though, that we don't have any information

748
00:36:50,200 --> 00:36:50,800
Speaker 12: at this point.

749
00:36:51,239 --> 00:36:55,200
Speaker 4: Is there any chance of this relationship alienating some fans

750
00:36:55,480 --> 00:36:58,520
Speaker 4: or is that is that a concern for either side

751
00:36:58,520 --> 00:37:00,800
Speaker 4: here or is it just you know, money wins.

752
00:37:02,320 --> 00:37:04,840
Speaker 12: Money definitely wins. That seems to be the lesson here.

753
00:37:05,640 --> 00:37:08,520
Speaker 12: The question is, well the fans when I saw that,

754
00:37:08,600 --> 00:37:10,960
Speaker 12: Rory mackelroy came out with a statement saying that this

755
00:37:11,080 --> 00:37:14,640
Speaker 12: is going to be good for the sport. But long term,

756
00:37:15,120 --> 00:37:19,520
Speaker 12: you know, Saudi has a history of human rights violations,

757
00:37:19,560 --> 00:37:21,640
Speaker 12: and the question will be will fans be able to

758
00:37:21,680 --> 00:37:24,720
Speaker 12: look past that when they're rooting for you know, another

759
00:37:24,760 --> 00:37:28,440
Speaker 12: Tiger Woods comeback. So it's a great question. But the

760
00:37:28,520 --> 00:37:33,040
Speaker 12: PGA must have decided that for the long term health

761
00:37:33,080 --> 00:37:35,040
Speaker 12: of the sport they were going to make more money

762
00:37:35,080 --> 00:37:36,520
Speaker 12: with the Saudis than not.

763
00:37:38,080 --> 00:37:41,799
Speaker 3: So Leandy is getting you covered deals for a living here.

764
00:37:41,840 --> 00:37:44,000
Speaker 3: What's the I mean, what's the next step here?

765
00:37:44,360 --> 00:37:44,640
Speaker 11: I mean?

766
00:37:45,000 --> 00:37:46,880
Speaker 3: Are are they going to try to release more information?

767
00:37:46,920 --> 00:37:48,680
Speaker 3: What do you what do you expect to see?

768
00:37:48,960 --> 00:37:51,520
Speaker 12: So sources tell us that over the course of the

769
00:37:51,560 --> 00:37:55,600
Speaker 12: summer more information will come out around the value of

770
00:37:55,640 --> 00:37:59,120
Speaker 12: the deal. We've heard the Saudis are going to study

771
00:37:59,840 --> 00:38:03,280
Speaker 12: the valuation of what each party brings to the table.

772
00:38:03,320 --> 00:38:06,000
Speaker 12: In terms of assets. There could be an investment bank

773
00:38:06,080 --> 00:38:08,720
Speaker 12: that's brought on. There already were bankers involved, but there

774
00:38:08,760 --> 00:38:11,080
Speaker 12: could be another one brought on. So I think the

775
00:38:11,160 --> 00:38:15,120
Speaker 12: financial details will leak out over the summer, and this

776
00:38:15,239 --> 00:38:17,960
Speaker 12: is a framework agreement, so we can see something more

777
00:38:17,960 --> 00:38:20,400
Speaker 12: official tied up over the next few months.

778
00:38:20,800 --> 00:38:22,040
Speaker 1: Leanna, thanks so much for joining us.

779
00:38:22,040 --> 00:38:24,200
Speaker 3: Really appreciate getting the update, and you raise a fantastic

780
00:38:24,200 --> 00:38:26,120
Speaker 3: point which I hadn't even thought about, which is no

781
00:38:26,280 --> 00:38:28,480
Speaker 3: valuations were assigned here, and you just kind of get

782
00:38:28,480 --> 00:38:31,040
Speaker 3: a sense like who can see upper handers from an

783
00:38:31,080 --> 00:38:34,040
Speaker 3: economic perspective in terms of valuation. So we really appreciate

784
00:38:34,120 --> 00:38:37,799
Speaker 3: Leanna Baker us Deal's team at Managing director with Bloomberg News.

785
00:38:37,800 --> 00:38:38,840
Speaker 1: Give I guess the latest.

786
00:38:38,600 --> 00:38:42,760
Speaker 3: Here on the PGA and the live tour coming together,

787
00:38:43,200 --> 00:38:45,640
Speaker 3: a huge, huge develop in the world.

788
00:38:45,440 --> 00:38:48,399
Speaker 1: Of professional golfers. We're gonna have more coming up. This

789
00:38:48,920 --> 00:38:49,480
Speaker 1: is Bloomberg.

790
00:38:49,640 --> 00:38:52,160
Speaker 6: You're listening to the tape. Can's a our live program

791
00:38:52,200 --> 00:38:56,160
Speaker 6: Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio,

792
00:38:56,320 --> 00:38:59,040
Speaker 6: the tune in app, Bloomberg dot Com, and the Bloomberg

793
00:38:59,080 --> 00:39:02,560
Speaker 6: Business app. Also listen live on Amazon Alexa from our

794
00:39:02,560 --> 00:39:06,920
Speaker 6: flagship New York station. Just say Alexa playing Bloomberg eleven thirty.

795
00:39:08,719 --> 00:39:10,520
Speaker 1: Marty, thanks so much for joining us in New York.

796
00:39:10,520 --> 00:39:13,440
Speaker 3: We're all over the place here on a remote broadcast,

797
00:39:14,080 --> 00:39:16,239
Speaker 3: and thanks so much for joining us. You know, I

798
00:39:16,320 --> 00:39:19,600
Speaker 3: want to start with the issue that has been on

799
00:39:19,800 --> 00:39:22,279
Speaker 3: every CEO's mind. I don't care if they're in the

800
00:39:22,320 --> 00:39:25,160
Speaker 3: dog food business or in the technology business, they have

801
00:39:25,239 --> 00:39:28,080
Speaker 3: to lead with AI, which back in the day we

802
00:39:28,160 --> 00:39:31,080
Speaker 3: called it artificial intelligence. Marty, you sit on the board

803
00:39:31,120 --> 00:39:34,800
Speaker 3: of Alphabet aka Google. One could argue that that is

804
00:39:34,840 --> 00:39:38,200
Speaker 3: an existential threat to Google and a search business.

805
00:39:38,200 --> 00:39:40,480
Speaker 1: How do you guys think about AI?

806
00:39:41,000 --> 00:39:43,840
Speaker 13: Well, I think about AIS something that's the natural evolution

807
00:39:44,040 --> 00:39:47,160
Speaker 13: of software. And it's amazing what's been going on in

808
00:39:47,160 --> 00:39:52,360
Speaker 13: this latest evolution. And Google has been for some time

809
00:39:52,440 --> 00:39:56,000
Speaker 13: an AI first company. It's been at least a decade

810
00:39:56,040 --> 00:40:01,919
Speaker 13: since Sundar CEO made that declaration and and specifically bold

811
00:40:02,000 --> 00:40:06,080
Speaker 13: and responsible AI. I think it's an incredible opportunity space

812
00:40:06,440 --> 00:40:09,759
Speaker 13: for Google, and few institutions on the planet have the

813
00:40:09,880 --> 00:40:14,560
Speaker 13: kind of the kind of human capital and other capital

814
00:40:14,640 --> 00:40:19,880
Speaker 13: resources dedicated to AI like Google does. It's an incredibly.

815
00:40:19,360 --> 00:40:22,680
Speaker 4: Exciting time, and you were just saying, the question is

816
00:40:22,680 --> 00:40:25,200
Speaker 4: is it going to be five AI or is it

817
00:40:25,239 --> 00:40:26,360
Speaker 4: going to be five billion?

818
00:40:26,480 --> 00:40:26,719
Speaker 1: Right?

819
00:40:27,920 --> 00:40:30,000
Speaker 4: If you had to bet, which of the two would.

820
00:40:29,760 --> 00:40:30,200
Speaker 5: You bet on?

821
00:40:30,640 --> 00:40:34,600
Speaker 13: Yeah, that's a great question. I really don't know the answer.

822
00:40:35,400 --> 00:40:41,120
Speaker 13: It's these ais take incredible amounts of resources to train them, right,

823
00:40:41,320 --> 00:40:44,960
Speaker 13: hundreds of millions of dollars, And so right now it

824
00:40:45,000 --> 00:40:47,839
Speaker 13: looks like there's going to only be a few of

825
00:40:47,920 --> 00:40:50,719
Speaker 13: these frontier models that have been heavily trained because they

826
00:40:50,719 --> 00:40:53,640
Speaker 13: cost hundreds of millions of dollars to train. There could

827
00:40:53,640 --> 00:40:57,400
Speaker 13: always be some kind of breakthrough. The transformer paper that

828
00:40:57,440 --> 00:41:00,960
Speaker 13: Google published in twenty seventeen, well that's the e in

829
00:41:01,080 --> 00:41:04,279
Speaker 13: chat GPT that lopped off at least three orders of

830
00:41:04,320 --> 00:41:07,480
Speaker 13: magnitude and the cost of training these models, maybe somebody

831
00:41:07,480 --> 00:41:10,400
Speaker 13: will think of another one. There is a model that

832
00:41:10,520 --> 00:41:13,080
Speaker 13: started with Meta that's out in the open right now

833
00:41:13,320 --> 00:41:15,680
Speaker 13: and a lot of people are experimenting with that. To

834
00:41:15,719 --> 00:41:17,279
Speaker 13: get to answer your question, if I have to call,

835
00:41:17,320 --> 00:41:19,840
Speaker 13: I would say it's probably gonna be a lot. Like

836
00:41:19,880 --> 00:41:23,160
Speaker 13: cloud services generally, there's a lot of reasons why you

837
00:41:23,200 --> 00:41:26,040
Speaker 13: want the compute to be in the cloud, and you're

838
00:41:26,080 --> 00:41:29,160
Speaker 13: probably gonna want one of those lms that's been trained

839
00:41:29,239 --> 00:41:32,200
Speaker 13: up on so much information, and you're definitely going to

840
00:41:32,280 --> 00:41:36,640
Speaker 13: want data privacy and security and enterprise grade around it.

841
00:41:36,800 --> 00:41:39,000
Speaker 13: And so I don't know how many of those they're

842
00:41:39,000 --> 00:41:41,960
Speaker 13: going to be. And then I think open source AIS

843
00:41:42,000 --> 00:41:45,279
Speaker 13: will be great for certain very specific vertical applications.

844
00:41:46,280 --> 00:41:48,520
Speaker 1: Marty. That's kind of where I wanted to go here.

845
00:41:48,600 --> 00:41:51,760
Speaker 3: I mean, you think about some of the applications of AI,

846
00:41:51,840 --> 00:41:54,520
Speaker 3: and it gets very scary very quickly.

847
00:41:55,400 --> 00:41:58,560
Speaker 1: Is this thing? Is it even able to be regulated?

848
00:41:58,719 --> 00:42:01,720
Speaker 1: If so, how do you think it might develop? Sure?

849
00:42:01,760 --> 00:42:07,880
Speaker 13: So I am for years a proponent of regulation. Of course,

850
00:42:08,000 --> 00:42:11,280
Speaker 13: the right regulation, and that's the hard part.

851
00:42:11,800 --> 00:42:12,960
Speaker 1: Usually we need.

852
00:42:12,760 --> 00:42:16,280
Speaker 13: Some kind of crisis or calamity, and then the regulation

853
00:42:16,520 --> 00:42:20,880
Speaker 13: happens after that. The financial crisis is a pretty good example.

854
00:42:21,440 --> 00:42:26,680
Speaker 13: And then in the regulation you get ten thousand different things,

855
00:42:27,200 --> 00:42:30,360
Speaker 13: most of which are probably not that necessarily or useful.

856
00:42:30,719 --> 00:42:33,120
Speaker 13: But for instance the financial regulation, there was something that

857
00:42:33,160 --> 00:42:36,080
Speaker 13: was incredibly useful, which was the capital adequacy tasks. Right,

858
00:42:36,120 --> 00:42:39,160
Speaker 13: so we got something powerful and necessary out of it.

859
00:42:39,600 --> 00:42:42,280
Speaker 13: And so here I would like to get in front

860
00:42:42,520 --> 00:42:45,880
Speaker 13: of it but still have a light touch right, So

861
00:42:45,960 --> 00:42:48,120
Speaker 13: maybe there will be a thousand, or a million, or

862
00:42:48,160 --> 00:42:51,200
Speaker 13: a billion flowers blooming with all of these With all

863
00:42:51,239 --> 00:42:53,920
Speaker 13: of these AIS, I think we can take some pages

864
00:42:53,960 --> 00:42:57,000
Speaker 13: from things that we have already learned about. So, for instance,

865
00:42:57,080 --> 00:42:59,799
Speaker 13: electronic trading, there was a time when you could just

866
00:43:00,280 --> 00:43:02,839
Speaker 13: a lot of orders into the exchange and maybe if

867
00:43:02,880 --> 00:43:04,920
Speaker 13: your algo had a mistake in it, you had runaway

868
00:43:05,040 --> 00:43:07,480
Speaker 13: orders and you lost a lot of money, and that

869
00:43:07,640 --> 00:43:10,400
Speaker 13: was really bad and it could destabilize markets. And so

870
00:43:10,560 --> 00:43:13,640
Speaker 13: you ad you add some throttles, you add some checkpoints,

871
00:43:13,680 --> 00:43:16,800
Speaker 13: you make sure that every so often you've once again

872
00:43:16,800 --> 00:43:19,799
Speaker 13: demonstrated that you've got adequate capital to put those trades in.

873
00:43:19,920 --> 00:43:23,680
Speaker 13: So we got to be extremely careful about the interface

874
00:43:23,719 --> 00:43:28,120
Speaker 13: points between the AIS and the APIs into the banking system,

875
00:43:28,160 --> 00:43:30,920
Speaker 13: the stock trading system, the air traffic control system, the

876
00:43:31,800 --> 00:43:35,040
Speaker 13: electricity grid, all of those points. We need to have

877
00:43:35,200 --> 00:43:38,200
Speaker 13: a lot of belts and suspenders and controls around. We

878
00:43:38,320 --> 00:43:39,920
Speaker 13: know how to do this. Actually we've been doing it

879
00:43:39,960 --> 00:43:42,600
Speaker 13: since the railroad, so we've been doing this for hundreds

880
00:43:42,600 --> 00:43:45,640
Speaker 13: of years, and so I might need some regulatory help

881
00:43:46,320 --> 00:43:50,080
Speaker 13: to galvanize attention. A pattern might be something that happened

882
00:43:50,120 --> 00:43:52,840
Speaker 13: with gene editing. I'm old enough to remember back in

883
00:43:52,880 --> 00:43:56,920
Speaker 13: the seventies when gene editing first came up as a possibility,

884
00:43:56,920 --> 00:44:00,200
Speaker 13: there was a famous conference in a silomar where all

885
00:44:00,239 --> 00:44:04,720
Speaker 13: the scientists and US, Chinese, everybody got together and said,

886
00:44:05,040 --> 00:44:07,640
Speaker 13: let's put down some guardrails. So one of the things

887
00:44:07,680 --> 00:44:09,640
Speaker 13: that came out of there is we can do gene

888
00:44:09,719 --> 00:44:12,560
Speaker 13: editing in an organism, but not in the germ line,

889
00:44:12,640 --> 00:44:17,040
Speaker 13: not the osites, not what could go on and permanently

890
00:44:17,120 --> 00:44:19,920
Speaker 13: alter the human race. We're not going to touch that.

891
00:44:20,400 --> 00:44:24,879
Speaker 13: And those guardrails have served us reasonably well. They've been imperfect.

892
00:44:25,200 --> 00:44:27,600
Speaker 13: There was a scientist in China, as it turned out,

893
00:44:27,800 --> 00:44:30,880
Speaker 13: who went and edited the germ line, and the Chinese

894
00:44:30,920 --> 00:44:32,520
Speaker 13: came down really hard on them. And I think this

895
00:44:32,680 --> 00:44:35,239
Speaker 13: is something that we can share with China, is that

896
00:44:35,360 --> 00:44:37,800
Speaker 13: nobody wants this to end up in a bad place

897
00:44:37,880 --> 00:44:40,800
Speaker 13: for human civilization. Generally we have that alignment.

898
00:44:41,160 --> 00:44:44,360
Speaker 4: Are we already late on getting that for AI?

899
00:44:45,680 --> 00:44:51,560
Speaker 13: No, No, there's time, but time's a wasting and so

900
00:44:51,840 --> 00:44:55,560
Speaker 13: in the short term, like this year, we need to

901
00:44:55,600 --> 00:44:58,320
Speaker 13: start having the discussions, and they need to be done

902
00:44:58,680 --> 00:45:02,360
Speaker 13: at an Internet national framework and there may be needs

903
00:45:02,400 --> 00:45:05,960
Speaker 13: to be an international agency along the lines of the

904
00:45:06,000 --> 00:45:11,120
Speaker 13: Atomic Energy Agency that sets standards on these controls, and

905
00:45:11,120 --> 00:45:15,120
Speaker 13: then people can attest that their AI meets these standards

906
00:45:15,520 --> 00:45:17,719
Speaker 13: and do it in a way. I think this is

907
00:45:17,760 --> 00:45:21,400
Speaker 13: also important where a lot of flowers can bloom, right,

908
00:45:21,480 --> 00:45:23,120
Speaker 13: we want to do this in a careful way. But

909
00:45:23,239 --> 00:45:26,000
Speaker 13: this kind of regulation does need to happen, and it

910
00:45:26,080 --> 00:45:29,279
Speaker 13: needs to happen promptly. I'm not one of those alarmists.

911
00:45:29,320 --> 00:45:32,560
Speaker 13: I do not see AI ending in the extinction of

912
00:45:32,600 --> 00:45:35,799
Speaker 13: the human race. It is fascinating. If anything I see

913
00:45:35,800 --> 00:45:38,880
Speaker 13: parallels to the dot com boom. Right, It's wonderful to

914
00:45:38,920 --> 00:45:40,960
Speaker 13: see all this hype and then all the CEOs are

915
00:45:41,000 --> 00:45:43,880
Speaker 13: talking about it, and out of the dot com boom,

916
00:45:43,920 --> 00:45:47,120
Speaker 13: we got pets dot Com, and we also got Amazon

917
00:45:47,160 --> 00:45:47,600
Speaker 13: and Google.

918
00:45:47,800 --> 00:45:50,480
Speaker 3: Right, yep, Marty, you know it feels like we're at

919
00:45:50,480 --> 00:45:52,640
Speaker 3: the let's call it the top of the first inning,

920
00:45:52,880 --> 00:45:54,759
Speaker 3: if you will, of this AI game year, and I

921
00:45:54,760 --> 00:45:58,359
Speaker 3: think investors are struggling to maybe try to get some

922
00:45:59,040 --> 00:46:02,200
Speaker 3: exposure to the opportunity here in for better or worse,

923
00:46:02,239 --> 00:46:04,480
Speaker 3: in Vidia has I think kind of become that name

924
00:46:04,520 --> 00:46:07,200
Speaker 3: where sure, if I got to own AI, I have.

925
00:46:07,080 --> 00:46:07,799
Speaker 1: To own in VideA.

926
00:46:07,880 --> 00:46:11,120
Speaker 3: But where else do you think investors should be thinking

927
00:46:11,160 --> 00:46:13,640
Speaker 3: about investing in in what is you know, kind of

928
00:46:13,640 --> 00:46:15,680
Speaker 3: an application or that we don't really know how it's

929
00:46:15,680 --> 00:46:16,520
Speaker 3: going to evolve.

930
00:46:16,680 --> 00:46:16,919
Speaker 1: Sure?

931
00:46:16,960 --> 00:46:20,360
Speaker 13: Well, I'm a big believer that history doesn't necessarily repeat,

932
00:46:20,400 --> 00:46:22,560
Speaker 13: but it does rhyme. And so if you look at

933
00:46:22,680 --> 00:46:26,920
Speaker 13: past past booms, you see that there's this migration up

934
00:46:27,000 --> 00:46:29,960
Speaker 13: the stack, up the logical stack of abstraction. Right so,

935
00:46:30,120 --> 00:46:33,360
Speaker 13: right now in video is absolutely an obvious place to go.

936
00:46:33,600 --> 00:46:36,080
Speaker 13: You can't get h one hundreds for lover money. They

937
00:46:36,120 --> 00:46:39,200
Speaker 13: cost forty thousand dollars a pop and they've all been

938
00:46:39,400 --> 00:46:42,799
Speaker 13: ordered years in advance, right, so that's great. What is

939
00:46:43,040 --> 00:46:46,399
Speaker 13: a higher level abstraction than video? Will You could look

940
00:46:46,440 --> 00:46:49,440
Speaker 13: back at previous booms and you could say, well, and

941
00:46:49,480 --> 00:46:53,120
Speaker 13: the next level of abstraction past the chips, was the phones,

942
00:46:53,160 --> 00:46:56,319
Speaker 13: the smartphones, and those are pretty good investments. And then

943
00:46:56,480 --> 00:46:58,640
Speaker 13: that would lead you, of course to Apple among the others,

944
00:46:58,960 --> 00:47:02,480
Speaker 13: and then you got into the provider of software services

945
00:47:02,840 --> 00:47:07,080
Speaker 13: around that mobile ecosystem, and that included many other companies Google,

946
00:47:07,160 --> 00:47:09,319
Speaker 13: Amazon and so on. So I would look for the

947
00:47:09,360 --> 00:47:11,920
Speaker 13: same thing here, I would just see who's going to

948
00:47:11,960 --> 00:47:16,560
Speaker 13: be building the software applications on top of the cheps

949
00:47:16,760 --> 00:47:17,760
Speaker 13: yea and those would.

950
00:47:17,520 --> 00:47:19,800
Speaker 7: Be places to look looking kind of further down.

951
00:47:19,640 --> 00:47:23,640
Speaker 13: The line that yes, absolutely the next few years. And

952
00:47:23,800 --> 00:47:27,000
Speaker 13: Nvidia is an amazing company. I had the opportunity to

953
00:47:27,000 --> 00:47:29,480
Speaker 13: be there in twenty seventeen early, kind of a long

954
00:47:29,520 --> 00:47:33,000
Speaker 13: time ago, and they had this unbelievable demo that kind

955
00:47:33,040 --> 00:47:35,880
Speaker 13: of clued me into what was coming. They had this

956
00:47:36,000 --> 00:47:38,799
Speaker 13: monitor with beautiful, a beautiful person on it, and the

957
00:47:38,840 --> 00:47:42,920
Speaker 13: picture changed every thirty seconds, another beautiful person, different ethnicity,

958
00:47:43,000 --> 00:47:45,840
Speaker 13: different gender, different height, different everything. And then after an

959
00:47:45,880 --> 00:47:48,160
Speaker 13: hour of this, they said, oh, by the way, none

960
00:47:48,200 --> 00:47:52,440
Speaker 13: of those people has actually existed. We trained an AI

961
00:47:52,520 --> 00:47:55,160
Speaker 13: model on people that were thought to be beautiful, and

962
00:47:55,200 --> 00:47:57,400
Speaker 13: then we ran it in reverse and asked it to

963
00:47:57,440 --> 00:48:01,719
Speaker 13: generate beautiful people. And so this is seventeen, so they've

964
00:48:01,719 --> 00:48:03,279
Speaker 13: been on it. So I would look for all of

965
00:48:03,280 --> 00:48:06,879
Speaker 13: the companies that are building these incredible applications and those

966
00:48:06,880 --> 00:48:08,960
Speaker 13: would be places to invest.

967
00:48:10,760 --> 00:48:11,000
Speaker 11: Great.

968
00:48:11,080 --> 00:48:14,600
Speaker 4: Well, yeah, Paul, Paul, all right, we've got thirty seconds

969
00:48:14,680 --> 00:48:17,640
Speaker 4: left here. Do you see this as a bubble similar

970
00:48:17,640 --> 00:48:19,839
Speaker 4: to the dot com era or it sounds like you're

971
00:48:19,840 --> 00:48:20,840
Speaker 4: too optimistic for that.

972
00:48:21,280 --> 00:48:23,799
Speaker 13: I look, I have been working in AI for a

973
00:48:23,920 --> 00:48:28,759
Speaker 13: long long time, back back since the eighties, and and

974
00:48:29,080 --> 00:48:32,200
Speaker 13: what is happening is truly exciting, right And what has

975
00:48:32,239 --> 00:48:35,440
Speaker 13: happened is we've gotten to the second half of the chessboard,

976
00:48:35,440 --> 00:48:38,319
Speaker 13: the proverbial chessboard, where you're doubling the grains of rice

977
00:48:38,360 --> 00:48:41,080
Speaker 13: at every square. And it's not that interesting for the

978
00:48:41,120 --> 00:48:44,359
Speaker 13: first thirty two squares, but right right around forty or so,

979
00:48:44,480 --> 00:48:47,920
Speaker 13: it gets incredibly interesting. And we are we're in that

980
00:48:48,040 --> 00:48:50,799
Speaker 13: spot right now. So as it is the bubble, there

981
00:48:50,800 --> 00:48:52,560
Speaker 13: are going to be some companies that are pure hype

982
00:48:52,600 --> 00:48:54,279
Speaker 13: and they don't bound to anything, and there's a lot

983
00:48:54,280 --> 00:48:57,520
Speaker 13: of crazy capital going in and there's going to be

984
00:48:57,640 --> 00:49:00,600
Speaker 13: some amazing things coming out of this. You want to

985
00:49:00,600 --> 00:49:01,280
Speaker 13: own those.

986
00:49:01,600 --> 00:49:03,680
Speaker 3: Marty, thanks so much for joining us. Really really appreciate

987
00:49:03,680 --> 00:49:06,000
Speaker 3: getting some of your time. Marty Schabas, Vice chairman of

988
00:49:06,040 --> 00:49:07,440
Speaker 3: partner at six Street Partners.

989
00:49:07,600 --> 00:49:10,680
Speaker 6: You're listening to the tape cats our live program Bloomberg

990
00:49:10,760 --> 00:49:14,360
Speaker 6: Markets weekdays at ten am Eastern on Bloomberg Radio, the

991
00:49:14,400 --> 00:49:17,640
Speaker 6: tune in app, Bloomberg dot Com, and the Bloomberg Business app.

992
00:49:17,680 --> 00:49:20,480
Speaker 6: You can also listen live on Amazon Alexa from our

993
00:49:20,520 --> 00:49:25,560
Speaker 6: flagship New York station. Just say Alexa play Bloomberg eleven thirty.

994
00:49:26,680 --> 00:49:29,200
Speaker 4: All right, I'm sitting here in New York with Mark Blasri.

995
00:49:29,360 --> 00:49:32,120
Speaker 4: He's co founder and CEO of Avenue Capital Group and

996
00:49:32,200 --> 00:49:35,319
Speaker 4: the former owner of the NBA's Milwaukee Bucks. He is

997
00:49:35,320 --> 00:49:37,880
Speaker 4: here with us to discuss a lot of money and

998
00:49:37,960 --> 00:49:41,200
Speaker 4: sports topics. But I want to start on pickleball because

999
00:49:41,239 --> 00:49:43,280
Speaker 4: I love it and I'm excited to get your thoughts

1000
00:49:43,520 --> 00:49:46,399
Speaker 4: on it. Mark, talk to me about why pickleball has

1001
00:49:46,640 --> 00:49:50,120
Speaker 4: more growth potential than the NBA or than any other

1002
00:49:50,160 --> 00:49:51,120
Speaker 4: spot in your eyes.

1003
00:49:51,000 --> 00:49:54,440
Speaker 5: Right now, I don't know if it has more growth potential.

1004
00:49:54,920 --> 00:49:59,919
Speaker 5: I think what it has is massive potential, and it's

1005
00:50:00,560 --> 00:50:05,040
Speaker 5: I think it's fastest growing sport today. And part of

1006
00:50:05,080 --> 00:50:08,520
Speaker 5: that is just that everybody from all different walks of

1007
00:50:08,520 --> 00:50:11,640
Speaker 5: life are able to play it. Right. So, before we

1008
00:50:11,680 --> 00:50:13,560
Speaker 5: got on, you told me you love to play it.

1009
00:50:13,920 --> 00:50:16,080
Speaker 5: When I was talking to somebody here earlier, they were

1010
00:50:16,120 --> 00:50:20,040
Speaker 5: explaining to me how they love pick a ball, And

1011
00:50:20,080 --> 00:50:25,439
Speaker 5: what you find is it's just a wide mixture of

1012
00:50:25,440 --> 00:50:28,640
Speaker 5: different people who want to play it. Whether you're super athletic.

1013
00:50:28,680 --> 00:50:32,960
Speaker 5: Whether you're not right basketball, you've got to be somewhat athletic, yes, right,

1014
00:50:33,120 --> 00:50:38,160
Speaker 5: and pick a ball. It's you can get very good

1015
00:50:38,160 --> 00:50:41,080
Speaker 5: at it, very quickly, and I think that's why people

1016
00:50:41,120 --> 00:50:46,400
Speaker 5: love playing it, and so I think it's got massive potential.

1017
00:50:47,120 --> 00:50:49,600
Speaker 5: When you try to look around the United States, every

1018
00:50:49,600 --> 00:50:53,359
Speaker 5: time I turn. You know you mentioned it earlier. Think

1019
00:50:53,400 --> 00:50:56,880
Speaker 5: of Central Park. You know here in New York. The

1020
00:50:57,000 --> 00:50:59,719
Speaker 5: last thing we would have thought five years ago was

1021
00:50:59,719 --> 00:51:02,920
Speaker 5: that you would have sixteen pickleball courts, right all of

1022
00:51:02,960 --> 00:51:05,080
Speaker 5: a sudden, Now you have it here in the middle

1023
00:51:05,120 --> 00:51:08,560
Speaker 5: of the most populous city in the United States, and

1024
00:51:08,600 --> 00:51:12,879
Speaker 5: they're turning a part of Central Park in there where

1025
00:51:12,920 --> 00:51:16,719
Speaker 5: you've got pickleball courts. Why because there's this demand and

1026
00:51:17,360 --> 00:51:20,000
Speaker 5: so all that is just going to keep on growing.

1027
00:51:20,719 --> 00:51:24,360
Speaker 5: And it's not that they put on sixteen basketball courts.

1028
00:51:24,600 --> 00:51:28,520
Speaker 5: They've already got basketball courts in Central Park. So I

1029
00:51:28,560 --> 00:51:31,400
Speaker 5: think you're gonna have You just have a sport that

1030
00:51:31,520 --> 00:51:34,759
Speaker 5: is growing by leaps and bounds, and I hope it continues.

1031
00:51:35,719 --> 00:51:38,520
Speaker 3: Hey, Mark, getting back to the basketball, you sold your

1032
00:51:38,560 --> 00:51:41,200
Speaker 3: stake in the Milwaukee Bucks for at evaluation, about three

1033
00:51:41,200 --> 00:51:43,799
Speaker 3: and a half billion dollars, So nice trade there. But

1034
00:51:43,840 --> 00:51:46,400
Speaker 3: I have to ask you about one of the pillars

1035
00:51:46,680 --> 00:51:50,120
Speaker 3: evaluation in the NBA, in Major League Baseball, in the

1036
00:51:50,200 --> 00:51:53,440
Speaker 3: NHL is the regional sports network and that industry is

1037
00:51:53,480 --> 00:51:56,920
Speaker 3: in complete disarray. The leading player out there back by

1038
00:51:56,920 --> 00:51:58,960
Speaker 3: a Sinkler Broadcast group filing for bankruptcy.

1039
00:51:59,600 --> 00:52:00,799
Speaker 1: How do you see that playing out?

1040
00:52:02,360 --> 00:52:05,480
Speaker 5: Well, I think it's a great question. I think the

1041
00:52:05,560 --> 00:52:10,520
Speaker 5: regional players have had issues. I think what has not

1042
00:52:10,680 --> 00:52:14,400
Speaker 5: had an issue is obviously on the national level. So

1043
00:52:14,600 --> 00:52:17,520
Speaker 5: when you take a look at sort of media rights nationally,

1044
00:52:18,120 --> 00:52:21,200
Speaker 5: those have continued to grow. You saw that with the NFL,

1045
00:52:21,280 --> 00:52:23,920
Speaker 5: You're going to see it with the NBA, You're seeing

1046
00:52:23,960 --> 00:52:27,359
Speaker 5: it with baseball. You'll see it. I think you'll see

1047
00:52:27,400 --> 00:52:30,759
Speaker 5: that everywhere. So I think nationally those rights are going

1048
00:52:30,840 --> 00:52:34,080
Speaker 5: to keep on growing, Whereas I think on the regional

1049
00:52:34,200 --> 00:52:38,879
Speaker 5: side that's had more issues. And you know, I think

1050
00:52:39,000 --> 00:52:42,239
Speaker 5: obviously it's always Sinclair with about you know, sixteen at

1051
00:52:42,320 --> 00:52:45,080
Speaker 5: least in the NBA, you've got sixteen teams that were

1052
00:52:45,080 --> 00:52:49,440
Speaker 5: affected by that when you had the bankruptcy. So I

1053
00:52:49,480 --> 00:52:52,799
Speaker 5: would be positive on the national side, and obviously I'm

1054
00:52:52,800 --> 00:52:54,320
Speaker 5: negative on the regional side.

1055
00:52:55,520 --> 00:52:58,600
Speaker 4: Going into streaming though and circling a little bit back

1056
00:52:58,640 --> 00:53:01,319
Speaker 4: to the pickuball conversation, and are you concerned at all

1057
00:53:01,440 --> 00:53:05,520
Speaker 4: that people don't necessarily want to watch pickleball at that

1058
00:53:05,600 --> 00:53:08,120
Speaker 4: big of a scale, that an Apple TV is not

1059
00:53:08,160 --> 00:53:12,279
Speaker 4: necessarily going to be streaming pickleball tournaments anytime soon?

1060
00:53:13,120 --> 00:53:16,520
Speaker 5: I actually am not. Hopefully I'll try to prove it

1061
00:53:16,560 --> 00:53:19,800
Speaker 5: to you right now. So would you say you're a

1062
00:53:19,840 --> 00:53:20,640
Speaker 5: big sports fan?

1063
00:53:21,360 --> 00:53:21,600
Speaker 1: Mark?

1064
00:53:21,640 --> 00:53:22,280
Speaker 7: You know the answer?

1065
00:53:22,400 --> 00:53:26,719
Speaker 5: Okay, so you're you're Medza Medza happen right, You'll watch

1066
00:53:26,760 --> 00:53:28,000
Speaker 5: it a little bit, not a good all?

1067
00:53:28,080 --> 00:53:28,239
Speaker 11: Right?

1068
00:53:28,600 --> 00:53:31,760
Speaker 5: Have you ever watched the Olympics? Have you watched curling

1069
00:53:31,800 --> 00:53:33,440
Speaker 5: on the Olympics?

1070
00:53:33,480 --> 00:53:34,280
Speaker 4: Happened before?

1071
00:53:34,440 --> 00:53:37,560
Speaker 5: Okay? So if you have, that means you will watch

1072
00:53:37,600 --> 00:53:42,640
Speaker 5: anything on sports. Just think of it that way, because

1073
00:53:42,640 --> 00:53:47,040
Speaker 5: if you're watching curling and you just admitted that you are,

1074
00:53:47,040 --> 00:53:49,480
Speaker 5: and you're not even a sports fan and you're watching curling,

1075
00:53:49,600 --> 00:53:51,680
Speaker 5: I mean, have I been in the room while curlings?

1076
00:53:51,719 --> 00:53:56,120
Speaker 5: On the fact that people will watch curling. So here's

1077
00:53:56,160 --> 00:54:00,080
Speaker 5: the reason why the reason why people watch curling, and

1078
00:54:00,120 --> 00:54:02,000
Speaker 5: the reason why people will watch pick a ball, and

1079
00:54:02,000 --> 00:54:05,279
Speaker 5: the reason why they will watch darts or anything is.

1080
00:54:05,320 --> 00:54:09,680
Speaker 5: People love watching the best in the world compete, and

1081
00:54:09,719 --> 00:54:13,360
Speaker 5: that's really what it is. So you're gonna love watching

1082
00:54:13,360 --> 00:54:15,279
Speaker 5: pick a ball because when you're watching the best people

1083
00:54:15,320 --> 00:54:19,600
Speaker 5: in the world compete at something, average people love that.

1084
00:54:20,040 --> 00:54:23,040
Speaker 5: They want to aspire to something, they want to see, Hey,

1085
00:54:23,080 --> 00:54:24,920
Speaker 5: what is it that the best we're able to do?

1086
00:54:24,960 --> 00:54:28,440
Speaker 5: That I'm not right, And that's what you're gonna find.

1087
00:54:28,880 --> 00:54:33,080
Speaker 5: So there's this massive demand for sports because people and

1088
00:54:33,120 --> 00:54:36,680
Speaker 5: you're seeing it, whether it's on streaming, that it's not

1089
00:54:36,680 --> 00:54:39,560
Speaker 5: gonna be how you and I grew up watching sports,

1090
00:54:39,600 --> 00:54:42,200
Speaker 5: which was sitting in the living room watching a game

1091
00:54:42,280 --> 00:54:44,799
Speaker 5: on a TV. It's gonna be streaming. When I look

1092
00:54:44,840 --> 00:54:47,480
Speaker 5: at my kids or I look at any young person,

1093
00:54:48,000 --> 00:54:49,880
Speaker 5: it's much more on their phone. It's much more on

1094
00:54:49,920 --> 00:54:52,520
Speaker 5: a tablet. The other thing that's going on and you're

1095
00:54:52,560 --> 00:54:56,680
Speaker 5: seeing it is the gambling aspect of it. People love

1096
00:54:56,800 --> 00:55:00,000
Speaker 5: gambling on it. It's not where you went to your bookiet,

1097
00:55:00,080 --> 00:55:03,319
Speaker 5: it's betting a dollar here, a dollar there, and so

1098
00:55:04,080 --> 00:55:08,080
Speaker 5: sports and gambling have become very interrelated. So I think

1099
00:55:08,120 --> 00:55:09,879
Speaker 5: you're going to find that going forward. You've got these

1100
00:55:09,920 --> 00:55:13,160
Speaker 5: massive opportunities and all these different sports teams and sports leagues.

1101
00:55:13,600 --> 00:55:15,920
Speaker 3: Hey, Mark, how about some of the big technology companies,

1102
00:55:15,920 --> 00:55:19,080
Speaker 3: whether it's an Apple or an Amazon, do you expect

1103
00:55:19,080 --> 00:55:22,040
Speaker 3: them at any time to really jump into the deep

1104
00:55:22,120 --> 00:55:24,880
Speaker 3: end of the pool and you know, get into the

1105
00:55:24,880 --> 00:55:28,200
Speaker 3: sports business, whether it's you know, taking an NFL uh

1106
00:55:28,600 --> 00:55:31,400
Speaker 3: TV package and really make the big the big dive.

1107
00:55:31,480 --> 00:55:32,440
Speaker 1: Do you expect that to happen?

1108
00:55:33,560 --> 00:55:36,040
Speaker 5: Well, let's put it this way. It should if you

1109
00:55:36,080 --> 00:55:40,719
Speaker 5: are Apple at any of these other companies, what do

1110
00:55:40,760 --> 00:55:44,080
Speaker 5: you want? You want people watching your product? So what's

1111
00:55:44,120 --> 00:55:47,120
Speaker 5: the problem with Apple or what's the problem with Netflix?

1112
00:55:48,680 --> 00:55:52,799
Speaker 5: You can record and you'll end up watching something you don't.

1113
00:55:52,840 --> 00:55:55,359
Speaker 5: You never watch it live. You watch it a week later,

1114
00:55:55,440 --> 00:55:58,319
Speaker 5: a month later. You know, some of us only want

1115
00:55:58,360 --> 00:56:02,200
Speaker 5: to watch these shows after the all sixteen episodes have

1116
00:56:02,280 --> 00:56:05,200
Speaker 5: come in. Right, So I love watching ted Lasso, but

1117
00:56:05,280 --> 00:56:07,399
Speaker 5: I want to watch it all at once. I don't

1118
00:56:07,400 --> 00:56:09,040
Speaker 5: want to wait once a week, so I'll wait till

1119
00:56:09,040 --> 00:56:12,200
Speaker 5: the whole season's over. You can't do that with sports,

1120
00:56:12,520 --> 00:56:14,480
Speaker 5: You really can't. You can't say, well, I'm gonna record

1121
00:56:14,480 --> 00:56:17,439
Speaker 5: the Super Bowl and I'm gonna watch it six months later.

1122
00:56:17,520 --> 00:56:20,480
Speaker 5: I'm recording the NBA Finals and I'll watch it in

1123
00:56:20,520 --> 00:56:24,040
Speaker 5: three months, You've got to watch it live. So for Apple,

1124
00:56:24,160 --> 00:56:28,279
Speaker 5: for Netflix, for any of these companies, for Meta, if

1125
00:56:28,360 --> 00:56:31,480
Speaker 5: what you want is more young people, if what you

1126
00:56:31,560 --> 00:56:34,799
Speaker 5: want is more consumers, you're gonna want consumers who are

1127
00:56:34,800 --> 00:56:38,279
Speaker 5: able to see something watching it live, and that will

1128
00:56:38,320 --> 00:56:41,439
Speaker 5: go on to your other products. So that's actually why

1129
00:56:41,480 --> 00:56:42,600
Speaker 5: I think they'll get into it.

1130
00:56:42,800 --> 00:56:47,560
Speaker 4: But the youngest consumers are watching their content on TikTok,

1131
00:56:47,600 --> 00:56:50,920
Speaker 4: they're not even on Netflix. How are you thinking about

1132
00:56:51,000 --> 00:56:53,759
Speaker 4: positioning content for that type of platform?

1133
00:56:53,880 --> 00:56:55,480
Speaker 5: Oh, that's easy. All you have to do is just

1134
00:56:55,520 --> 00:56:58,440
Speaker 5: make an NBA game one minute long, and I think,

1135
00:56:58,640 --> 00:57:01,040
Speaker 5: and I think you're fine, give me a high. That's

1136
00:57:01,080 --> 00:57:03,280
Speaker 5: all it is. You know, if you can make baseball

1137
00:57:03,320 --> 00:57:07,560
Speaker 5: one minute long, if you can do all these sports.

1138
00:57:05,960 --> 00:57:10,120
Speaker 5: If so, I think I think I've solved the dilemma

1139
00:57:10,239 --> 00:57:12,680
Speaker 5: for you. Okay, you know, now you've just got to

1140
00:57:12,719 --> 00:57:15,640
Speaker 5: go convince the NBA, Major League Baseball, and everybody else

1141
00:57:16,040 --> 00:57:18,320
Speaker 5: to have their games on TikTok and have them no

1142
00:57:18,400 --> 00:57:19,240
Speaker 5: more than one minute.

1143
00:57:19,280 --> 00:57:22,840
Speaker 4: But but my broader question is, you know, sure we're

1144
00:57:22,880 --> 00:57:25,800
Speaker 4: all in on Netflix and streaming, but is there any

1145
00:57:27,000 --> 00:57:27,840
Speaker 4: downside to that?

1146
00:57:27,960 --> 00:57:28,320
Speaker 11: Thinking?

1147
00:57:28,480 --> 00:57:31,760
Speaker 4: Is there a miss on the social media play that

1148
00:57:31,880 --> 00:57:34,800
Speaker 4: could be the next generation's only way of watching.

1149
00:57:35,160 --> 00:57:37,800
Speaker 5: Yeah, but look, if the next generation is only going

1150
00:57:37,840 --> 00:57:40,160
Speaker 5: to want to focus on things over a minute, you know,

1151
00:57:40,200 --> 00:57:43,240
Speaker 5: that are under a minute, then they're going to miss

1152
00:57:43,280 --> 00:57:46,160
Speaker 5: out on sports. That's you know, you've got to sort

1153
00:57:46,200 --> 00:57:48,600
Speaker 5: of just say there are things in life that are

1154
00:57:48,600 --> 00:57:51,919
Speaker 5: going to take longer than a minute, right, So that's

1155
00:57:51,960 --> 00:57:56,800
Speaker 5: what's going to happen. And whether it's baseball, basketball, hockey,

1156
00:57:57,000 --> 00:57:59,640
Speaker 5: no matter what sport it is, it's going to take longer.

1157
00:58:00,080 --> 00:58:01,680
Speaker 5: And if you want to watch it, here's what's going

1158
00:58:01,720 --> 00:58:04,280
Speaker 5: to happen. And if you want things that are going

1159
00:58:04,360 --> 00:58:08,080
Speaker 5: to only be you know, in thirty second increments, you're

1160
00:58:08,120 --> 00:58:10,080
Speaker 5: going to miss out on a lot of things in life.

1161
00:58:10,760 --> 00:58:12,640
Speaker 3: Hey, Mark, you know, probably the biggest story in sports

1162
00:58:12,680 --> 00:58:15,160
Speaker 3: over the last twenty four hours has been the merger

1163
00:58:15,200 --> 00:58:17,720
Speaker 3: of the PGA Tour and Live Golf. I'm not sure

1164
00:58:17,720 --> 00:58:21,000
Speaker 3: if you're a golf industry enthusiast, but was that just

1165
00:58:21,040 --> 00:58:23,600
Speaker 3: a case of just you gotta go where the money is.

1166
00:58:25,160 --> 00:58:27,479
Speaker 5: Like, I don't know, I mean, I'm reading the same

1167
00:58:27,520 --> 00:58:32,000
Speaker 5: things you are. It seems a bit odd as to

1168
00:58:32,080 --> 00:58:36,400
Speaker 5: what's happened. I probably will refrain from talking about it

1169
00:58:36,480 --> 00:58:41,360
Speaker 5: until I've read more or understood more. But you never

1170
00:58:41,400 --> 00:58:43,280
Speaker 5: would have thought that was going to happen, And the

1171
00:58:43,320 --> 00:58:46,080
Speaker 5: fact that it happened overnight, there's got to be a

1172
00:58:46,080 --> 00:58:50,120
Speaker 5: lot of other reasons for it. So I'll wait until

1173
00:58:50,200 --> 00:58:54,840
Speaker 5: you can figure out and tell me why something where

1174
00:58:54,920 --> 00:58:57,360
Speaker 5: two people were so against each other all of a sudden,

1175
00:58:57,400 --> 00:58:58,840
Speaker 5: now are the best of partners.

1176
00:58:59,240 --> 00:59:01,360
Speaker 1: Yeah, just kind of goes I guess Mark too.

1177
00:59:01,920 --> 00:59:03,760
Speaker 3: You know, you got to think about the valuation here,

1178
00:59:03,760 --> 00:59:06,760
Speaker 3: and you know our our deals reporter Bloomberg News was

1179
00:59:06,960 --> 00:59:10,040
Speaker 3: she pointed out something very interesting in the whatever it

1180
00:59:10,080 --> 00:59:13,880
Speaker 3: was at least yesterday, which was very very little. There

1181
00:59:14,000 --> 00:59:16,840
Speaker 3: was no value, no mention of valuation. What's the PGA

1182
00:59:16,920 --> 00:59:20,440
Speaker 3: tour work, what's livedtour worth? And that's typically what you

1183
00:59:20,440 --> 00:59:23,360
Speaker 3: would get in an Emerger announcement and we don't have

1184
00:59:23,440 --> 00:59:25,480
Speaker 3: any of that. So this just seems so I don't know,

1185
00:59:25,480 --> 00:59:27,560
Speaker 3: a little half baked, I guess, But as you say,

1186
00:59:27,600 --> 00:59:29,800
Speaker 3: we'll have to see how the the more details come out.

1187
00:59:29,880 --> 00:59:31,640
Speaker 5: Now you could it on the head. I mean, it's

1188
00:59:32,920 --> 00:59:35,960
Speaker 5: what are the valuations? I don't even know what the

1189
00:59:35,960 --> 00:59:39,920
Speaker 5: PGA tour was worth before, right, right, So it'll be

1190
00:59:40,000 --> 00:59:44,160
Speaker 5: interesting to see where these values are and I think

1191
00:59:44,240 --> 00:59:47,360
Speaker 5: all that will come out in the next couple of weeks.

1192
00:59:47,760 --> 00:59:50,800
Speaker 5: But yeah, it's been it's been very surprising.

1193
00:59:51,560 --> 00:59:54,600
Speaker 4: There's a portion of the audience too here and we

1194
00:59:54,640 --> 00:59:57,920
Speaker 4: saw this in the Netflix show about the PGA tour

1195
00:59:58,080 --> 01:00:02,480
Speaker 4: and their relationship with Saudi that is not going to

1196
01:00:02,560 --> 01:00:06,280
Speaker 4: watch because of that relationship. Is that something that you

1197
01:00:06,800 --> 01:00:08,760
Speaker 4: would have thought about if you were at the helm

1198
01:00:08,800 --> 01:00:11,160
Speaker 4: of this deal or is it just the idea that

1199
01:00:11,200 --> 01:00:13,960
Speaker 4: and I keep stealing this from Paul that money wins

1200
01:00:14,000 --> 01:00:16,840
Speaker 4: in the end regardless of any loss of audience.

1201
01:00:18,440 --> 01:00:22,280
Speaker 5: I don't know. I think part of it is their

1202
01:00:22,440 --> 01:00:27,960
Speaker 5: job will be to get back people who are not

1203
01:00:28,000 --> 01:00:30,280
Speaker 5: going to be happy about that, right, And that's the

1204
01:00:30,400 --> 01:00:33,680
Speaker 5: challenge with anything. I think it's you know, the challenge

1205
01:00:33,720 --> 01:00:37,880
Speaker 5: the NBA had was during COVID getting people to come

1206
01:00:37,880 --> 01:00:40,320
Speaker 5: back and watch games, and I think you've seen that

1207
01:00:40,440 --> 01:00:42,760
Speaker 5: not only have they been able to do that, it's

1208
01:00:42,800 --> 01:00:45,280
Speaker 5: actually been record ratings, all right. It was the same

1209
01:00:45,280 --> 01:00:48,520
Speaker 5: thing if you think about Baseball when they had their strike, right,

1210
01:00:48,600 --> 01:00:52,800
Speaker 5: So there's always an issue. I think the challenge is

1211
01:00:52,840 --> 01:00:57,040
Speaker 5: going to be for the sport, to get those customers

1212
01:00:57,080 --> 01:01:00,000
Speaker 5: back or get those fans back. Yeah, and if they're

1213
01:01:00,120 --> 01:01:02,640
Speaker 5: able to, then it'll be fine. If they're not able to,

1214
01:01:03,280 --> 01:01:04,960
Speaker 5: then it's gonna have been a big miss.

1215
01:01:05,360 --> 01:01:07,560
Speaker 3: Hey, Mark, just about thirty seconds left here, we got

1216
01:01:07,600 --> 01:01:10,520
Speaker 3: the Heat and the Nuggets in the NBA Finals.

1217
01:01:10,680 --> 01:01:11,280
Speaker 1: What's your take.

1218
01:01:12,160 --> 01:01:14,480
Speaker 5: I think it's great. I mean, uh, you know what

1219
01:01:14,560 --> 01:01:16,439
Speaker 5: I love about it is the fact that the Heat

1220
01:01:16,440 --> 01:01:20,320
Speaker 5: in every series have been the massive underdogs and sort

1221
01:01:20,400 --> 01:01:24,800
Speaker 5: of proved everybody wrong. They were the undogs against the Bucks,

1222
01:01:24,800 --> 01:01:28,160
Speaker 5: they were the undogs against the Knicks, against the Celtics.

1223
01:01:29,120 --> 01:01:31,959
Speaker 5: All those teams were supposedly better, and yet the Heat

1224
01:01:31,960 --> 01:01:35,120
Speaker 5: went out they were supposed to get swept. I think

1225
01:01:35,160 --> 01:01:39,200
Speaker 5: they're doing great. I'm I'm just a big fan of

1226
01:01:39,320 --> 01:01:41,760
Speaker 5: watching people compete. So when you get to see the

1227
01:01:41,760 --> 01:01:45,920
Speaker 5: best in the world compete, it's it's fabulous. So I

1228
01:01:45,960 --> 01:01:47,280
Speaker 5: hope it goes to seven games.

1229
01:01:47,920 --> 01:01:48,120
Speaker 1: Yeah.

1230
01:01:48,120 --> 01:01:50,400
Speaker 3: It's just been an amazing season so far, an amazing

1231
01:01:50,480 --> 01:01:52,960
Speaker 3: run for the Heat. So we'll see how that plays out.

1232
01:01:53,000 --> 01:01:55,000
Speaker 3: Mark Laswi, thank you so much for giving us some

1233
01:01:55,040 --> 01:01:57,520
Speaker 3: of your time here. Thank Mark Lazary, co founder and

1234
01:01:57,600 --> 01:01:59,960
Speaker 3: CEO of Avenue Capital Group.

1235
01:02:04,200 --> 01:02:07,280
Speaker 2: Thanks for listening to the Bloomberg Markets podcast. You can

1236
01:02:07,320 --> 01:02:11,080
Speaker 2: subscribe and listen to interviews at Apple Podcasts or whatever

1237
01:02:11,200 --> 01:02:14,920
Speaker 2: podcast platform you prefer. I'm Matt Miller. I'm on Twitter

1238
01:02:15,120 --> 01:02:17,040
Speaker 2: at Matt Miller nineteen seventy three.

1239
01:02:17,480 --> 01:02:19,840
Speaker 1: And I'm Fall Sweeney. I'm on Twitter at pt Sweeney.

1240
01:02:20,000 --> 01:02:22,680
Speaker 3: Before the podcast, you can always catch us worldwide at

1241
01:02:22,680 --> 01:02:25,360
Speaker 3: Bloomberg Radio