Speaker 1: From Mahard. We're Innovation of Money and Power Collie in
Speaker 1: Silicon Valley, NBN.
Speaker 2: This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 3: I'm karenine Heide of Bloomberg's worldeadquarters in New York and
Speaker 3: Amed Loveler in San Francisco.
Speaker 2: This is Bloomberg Technology.
Speaker 3: Back together and coming up full earning coverage Ahead, we
Speaker 3: break down results from the social giant Meta and sit
Speaker 3: down with the chief financial officer, Susanly.
Speaker 4: Plus we speak to the CEO of startup Plaid, which
Speaker 4: now valued the more than thirteen billion dollars, his outlook
Speaker 4: on the fintech space in the future of digital banking,
Speaker 4: and you may love.
Speaker 3: Your tesla, but do you love the man who's building them.
Speaker 3: We'll break down the results from our Bloomberg Big Take
Speaker 3: that tackles just that, but first let's go to Meta.
Speaker 3: Let's stick with it at Deborah ajo Williamson Insider Intelligence,
Speaker 3: Principle analyst and anything left unsaid on that cool Deborah,
Speaker 3: anything that you really want to guide on with Meta
Speaker 3: because it looks as though well they're back back to
Speaker 3: growth as the economy comes back. In digital advertising too.
Speaker 5: Yeah, it's been an incredible quarter. All the news that
Speaker 5: I heard was very positive, and it's pretty incredible considering
Speaker 5: that not too long ago, sometime in the middle of
Speaker 5: last year, I had very significant concerns about the company.
Speaker 5: We saw revenue challenges, we saw issues with the metaverse
Speaker 5: not taking off as fast as Mark Zuckerberg thought it
Speaker 5: was going to. That's still the case, by the way,
Speaker 5: but the company I think has become leaner and meaner
Speaker 5: and has been able to really focus on what it
Speaker 5: needs to accomplish now to be relevant now. I think,
Speaker 5: for example, the launch of Threads a couple of weeks
Speaker 5: ago is a perfect example of the way that Meta
Speaker 5: has been able to just double down with a small team,
Speaker 5: smaller the team than it has it's had in the past,
Speaker 5: put out an app that got huge publicity, great attention
Speaker 5: for Meta. And we'll see what happens with Threads when
Speaker 5: it actually rolls out a little bit further.
Speaker 2: But so far, the quarter.
Speaker 5: Really looked good, and as you pointed out ed Q three,
Speaker 5: if they meet that guidance that twenty percent or above
Speaker 5: revenue growth would be an amazing accomplishment after the twenty
Speaker 5: twenty two that they had, which was not a good year.
Speaker 4: Did we learn anything new about Threads? I mean, Mark
Speaker 4: Zuckerberg Susan Lee very restrained about making money through that platform.
Speaker 5: Absolutely, So Threads launched after the quarter ended, so there
Speaker 5: was no impact to Q two for Threads. But they
Speaker 5: did say, and this is a pretty typical pattern that
Speaker 5: Meta follows with any new feature that they launch, voting
Speaker 5: stories back in the day in reels. More recently, they
Speaker 5: want to build an audience first before they start to
Speaker 5: monetize it. They did mention on the call that they
Speaker 5: think that there is room for a text based app
Speaker 5: to reach a billion users. They did name check Twitter
Speaker 5: at one point, which is very rare for Meta executives
Speaker 5: to talk about other companies. On the call, they did
Speaker 5: mention Twitter, you know, I caught that and I thought, wow,
Speaker 5: that's pretty interesting. But they do think that there is
Speaker 5: room for a one billion user text based communication app,
Speaker 5: and so if Threads can get there, that will add
Speaker 5: to Instagram and Facebook and WhatsApp as the other three
Speaker 5: of one billion plus apps in their roster.
Speaker 3: There are money making machine bought people now questioning whether
Speaker 3: people are remaining on the Threads app and is addicted
Speaker 3: can they really take on the competition taketok on the
Speaker 3: one front, when you look at X on the other,
Speaker 3: when you're seeing all of really a very competitive space
Speaker 3: who all want time and indeed advertises to have confidence.
Speaker 5: Yeah, well, it is going to take time for Threads
Speaker 5: to find itself. One of the benefits of having the smaller,
Speaker 5: leaner team that I just talked about was that they
Speaker 5: were able to launch Threads very quickly and bring it
Speaker 5: online probably before it had some of the features that
Speaker 5: people were looking for. So the downside to that is
Speaker 5: didn't have the features that people were looking for, and
Speaker 5: so maybe some people decided, oh, this isn't.
Speaker 2: For me right now.
Speaker 5: So the challenge is going to be to get people
Speaker 5: to come back and to continue to use it. But
Speaker 5: I do think Threads needs to be more than just
Speaker 5: a Twitter killer or something like that. Threads needs to
Speaker 5: find itself as a place for creators and people to
Speaker 5: communicate in the way that they want to communicate On Threads.
Speaker 5: It's not going to be enough to just try to
Speaker 5: completely mimic or replace Twitter. So that's going to be
Speaker 5: the dividing line for me in terms of what makes
Speaker 5: a Threads an app to stand out.
Speaker 2: But you mentioned TikTok.
Speaker 5: The other factor here is that TikTok is Meta's number
Speaker 5: one competition.
Speaker 2: It's not Twitter.
Speaker 5: Twitter hasn't been metas competition for quite a long time.
Speaker 5: As much as as everybody likes to think about Twitter
Speaker 5: versus threads, right now, it's really Meta versus TikTok.
Speaker 2: That is the battle.
Speaker 4: So ten billion and you'll run rate for reels. I
Speaker 4: think you, guys, Adie mark to have the inside intelligence, sorry,
Speaker 4: have the math on this. TikTok did like nine billion
Speaker 4: last year worldwide, so did you hear it?
Speaker 2: Very good?
Speaker 5: Our forecast was for actually just under ten billion, so
Speaker 5: very okay close?
Speaker 2: Yeah, So are they competitive?
Speaker 4: Is reels a TikTok competitor in terms of its ability
Speaker 4: to not just get eyeballs but make a bit more money.
Speaker 5: It's absolutely become a very strong competitor. We heard on
Speaker 5: the call yesterday the three quarters of out of ever
Speaker 5: tisers on Meta are using reels right now, or excuse me,
Speaker 5: three quarters of Instagram advertisers are using reels right now.
Speaker 5: And that just speaks to the ability of Meta to
Speaker 5: get advertisers who are already ingrained in its other properties
Speaker 5: to try something new.
Speaker 2: So That's one thing that I noticed.
Speaker 5: Another thing I think that is worth paying attention to
Speaker 5: is that more people are seeing reels. Meta is using
Speaker 5: its AI to show recommended content, and so people are
Speaker 5: seeing reels in their feeds that are very attuned to
Speaker 5: their interests, and so they're more likely to watch them.
Speaker 2: It is still true that I.
Speaker 5: Think some reels are maybe many reels are pulled from
Speaker 5: TikTok or very similar to TikTok, so it does have
Speaker 5: that as an issue, But overall, as a platform, I
Speaker 5: think reels is doing very very.
Speaker 3: Well right now.
Speaker 4: Debrajo Williamson insider intelligence. Always good to get that real
Speaker 4: time perspective on learning. Thank you so much for joining.
Speaker 4: We keep a conversation going coming up. We're joined by
Speaker 4: Zach pere claud c discuss fed now is causing a
Speaker 4: bit of a buzz in the fintech industry, so that's
Speaker 4: coming up next. This is Bloomberg technology.
Speaker 3: While the consumer is strong clear from GDP today, let's
Speaker 3: talk about who you and I make payments at the moment,
Speaker 3: because the space is really changing. We all want instant
Speaker 3: gratification and said now is actually enabling more instant payments.
Speaker 3: Twenty four to seven thanks to the Federal Reserve. Now
Speaker 3: fintech company Plaid, financial services firm that really serves as
Speaker 3: the plumbing for more than what eight thousand that leads
Speaker 3: today's most popular financial apps, just announced integration with that
Speaker 3: FED now where it's transfer service for more. Let's bring
Speaker 3: in Zach Parrey, Plaid CEO, who is here to talk
Speaker 3: about the whole ecosystem for us. Zach, how is FED
Speaker 3: now going to change the game? How is payments and
Speaker 3: you're placed within the payments ecosystem going to change?
Speaker 2: Thank you so much for having me.
Speaker 6: Services is changing very rapidly, and payment specifically is changing
Speaker 6: very rapidly right now. We're going from a payment system
Speaker 6: that was really oriented around cards for quite a long time,
Speaker 6: so now adding new payment trails into the system, and
Speaker 6: that hasn't happened since AH and cards really started to
Speaker 6: scale back in the seventies and eighties. As we're starting
Speaker 6: to look at FED now, this is going to be
Speaker 6: a brand new payment rail coming in and we expect
Speaker 6: it to increase consumer choice, increase competition, increase optionality for
Speaker 6: people out there. So we're really excited for where the
Speaker 6: potential of it is. But it's very early. We've just
Speaker 6: launched that now with thirty five banks, and hopefully it
Speaker 6: goes from thirty five to many many more soon, but
Speaker 6: it's still in the early stages.
Speaker 3: How much of a competitive threat is it to fintech
Speaker 3: in and of its self?
Speaker 6: So I actually think that fed now is a large
Speaker 6: accelerant to fintech. So when you think about the way
Speaker 6: that you get paid, perhaps for payroll, when you think
Speaker 6: about the way that you send money to a friend,
Speaker 6: when you think about the way that you maybe transfer
Speaker 6: funds from your brokerage application back into your checking account
Speaker 6: today it oftentimes takes three days. You're using the legacy
Speaker 6: ACCH system, which is a wonderful system, has scaled incredibly far,
Speaker 6: but it's slow. As you look at fed now, fed
Speaker 6: now is going to be an instant addition to that.
Speaker 6: So you could run, yes, a slow transaction on ach
Speaker 6: still for quite a long time, or you could use
Speaker 6: fed now to deposit those funds instantly or move them
Speaker 6: a lot faster than you would otherwise.
Speaker 4: As Zach, good morning from San Francisco. Good afternoon to
Speaker 4: you in New York. There'll be viewers of bloom Bay
Speaker 4: Technology here in America that say the instant transfer of
Speaker 4: funds twenty four to seven, three hundred.
Speaker 2: And sixty five days a year.
Speaker 4: Yes, that's what I want, but it sounds like the
Speaker 4: reality of this kind of nationwide rollout is still a
Speaker 4: way away. When do you see it as sort of
Speaker 4: a commonplace standard for transactions in this nation.
Speaker 6: That's a great question. Hopefully soon, but the reality is
Speaker 6: it will take years. It won't be an instant thing,
Speaker 6: and it's going to take us maybe two three four years,
Speaker 6: perhaps even a little bit longer than that, to get
Speaker 6: it to total mainstream. But what we are going to
Speaker 6: start to see is that certain use can are going
Speaker 6: to accelerate a lot faster. So, for example, if you
Speaker 6: think about payroll, getting payroll delivered more quickly is better
Speaker 6: for employers. They have less time with the funds floating
Speaker 6: out there. It's better for employees and they're able to
Speaker 6: actually receive their funds faster. So I suspect that there
Speaker 6: are going to be certain sub segments of the industry
Speaker 6: that are really focused on making it go quickly. The
Speaker 6: big question in my mind is actually how fast banks
Speaker 6: are going to adopt it. So we've seen fed now
Speaker 6: launch with thirty five banks. It's a non trivial but
Speaker 6: still fairly straightforward amount of work that the bank has
Speaker 6: to do to implement fed now and get up and
Speaker 6: running on the system. The big question in my mind
Speaker 6: is how fast are we going to go from thirty
Speaker 6: five to three hundred and fifty to thirty five hundred
Speaker 6: financial institutions they're using fed now and enabling all of
Speaker 6: those millions of consumers to actually use it on the
Speaker 6: back end.
Speaker 4: You announced a deeper partnership with cross River this morning
Speaker 4: on real time payments, and one of the things that
Speaker 4: you highlighted was their proprietary technology, their own ability to
Speaker 4: do this. What is it that they have that other
Speaker 4: banks lack that you think need to be more common
Speaker 4: in place to make this a reality.
Speaker 6: So we very much appreciate the partnership with cross River,
Speaker 6: and they're very much leaning into these newer real time
Speaker 6: payment rails, which is great. And we have fed now,
Speaker 6: which we're very excited and obviously as lun As recently
Speaker 6: we are continuing to lead into. And we also have RTP,
Speaker 6: which is a protocol that's built by many of the
Speaker 6: large banks. So I think with a combination of these
Speaker 6: two we're going to be able to get to a
Speaker 6: lot more consumers a lot more quickly. And of course
Speaker 6: we work at a number of banking partners, but cross
Speaker 6: rivers leaning in to help us get these products to
Speaker 6: the market as quickly as we can.
Speaker 3: What's funny is when ed started to describe what's coming
Speaker 3: via fed now, I thought of crypto three hunt and
Speaker 3: sixty five days all time, twenty four to seven. Ability
Speaker 3: to get access to money directly. Is that a competitive force?
Speaker 3: Do you see crypto still evolving in the same way
Speaker 3: if we suddenly do have more and quick access to
Speaker 3: our money.
Speaker 6: You know, it's an interesting point that you bring up,
Speaker 6: because when we heard the promise of crypto, or the
Speaker 6: promise of DeFi, or many of these new protocols or tools,
Speaker 6: a lot of it was centered around this concept of
Speaker 6: enabled consumers to have that to their money at all times.
Speaker 6: As you say, in some sense, fed now is completing
Speaker 6: that journey.
Speaker 2: You know, if this and when.
Speaker 6: This gets to scale, it will allow consumers to yes,
Speaker 6: move money in the time that they want to, in
Speaker 6: the instant that they want to. That's not to say though,
Speaker 6: that crypto is dead in any sense. In fact, many
Speaker 6: cryptocurrency companies are likely to use fed now as a
Speaker 6: funding mechanism or a funding rail to move money into,
Speaker 6: for example, a cryptocurrency exchange, So you still have to
Speaker 6: fund that account. So the reality is, I expect these
Speaker 6: two to interplay well. I expect these two to end
Speaker 6: up living harmoniously together. However, it is it is funny
Speaker 6: to hear that message of twenty four seven three sixty
Speaker 6: five coming from the Federal Reserve, which historically when you
Speaker 6: know a five day a week, you know, nine to
Speaker 6: five type of system.
Speaker 3: Talking about living harmoniously. You've been trying to live more
Speaker 3: harmoniously with banks, but it was what year or so
Speaker 3: ago that Visa was trying to buy you. And now
Speaker 3: basically you're becoming more and more of a competitive threat.
Speaker 3: When can you use erp Visa? When do you think
Speaker 3: you will be a dominant force within payments?
Speaker 6: You know, broadly, we think about Visa as a very
Speaker 6: interesting corollary, a partner, and we know many people there personally,
Speaker 6: so I think of them as friends. The way that
Speaker 6: we think about our business is slightly different. It's a
Speaker 6: different vector than Visa itself. We focus on enabling a
Speaker 6: consumer to connect their financial account to an application that
Speaker 6: they want to use to get real time value from
Speaker 6: their data, and yes, to enable bankings payments. That's not
Speaker 6: to say though, that debit cards or credit cards or
Speaker 6: any of the existing payment rails are going to go away.
Speaker 6: We think about adding another option coming through FED now
Speaker 6: as another choice for a consumer. It's another choice for
Speaker 6: a merchant, it's another choice for an application that might
Speaker 6: need to execute a funds transfer. And as we enter
Speaker 6: this new world of increasing competition, increasing choice, increasing optionality
Speaker 6: for consumer, we actually see the two living alongside each
Speaker 6: other for quite a long time.
Speaker 2: Zich. You mentioned competition.
Speaker 4: One domain where this is really playing out is in
Speaker 4: artificial intelligence, right, taking a large language model, use the
Speaker 4: underlying technology to improve your service. Can you just talk
Speaker 4: a little bit of how you're investing in that space,
Speaker 4: what types of engineers you're onboarding to help you be competitive.
Speaker 6: That's a great question and an area that we think
Speaker 6: quite a lot about. The reality is AI has two
Speaker 6: major ways that we'll probably see it play out in
Speaker 6: financial services. The first is very simple and straightforward, So
Speaker 6: it's helping all businesses be more efficient. So that's making
Speaker 6: our support team more efficient, that's making the way that
Speaker 6: we write code more efficient. That's generally implementing AI tools
Speaker 6: to improve employee efficiency, and it's no different in financial
Speaker 6: services versus any other tech enabled industry. The second is
Speaker 6: thinking about fundamentally new products that can only exist with
Speaker 6: the help of AI. So one of the areas that
Speaker 6: at Plaid we've been investing a lot in is building
Speaker 6: better tools for credit analytics and credit scoring. If you
Speaker 6: think back to the way that credit is scored today,
Speaker 6: or even the way that it was scored ten years ago,
Speaker 6: those two aren't all that different. We have a FICO score,
Speaker 6: there's perhaps a bit more data that's being added in.
Speaker 6: At Plaid, we focus on building tooling to enable better
Speaker 6: data go into your loan package. So if you're applying
Speaker 6: for a loan, you're perhaps someone that lived internationally is
Speaker 6: just moving back to the US. You don't have a
Speaker 6: lot of employment history in the US, but you do
Speaker 6: have fairly good income and fairly good assets. How can
Speaker 6: you get all that data into your loan package. Well,
Speaker 6: PLoud builds a lot of that. The next phase that
Speaker 6: I'm eager to dive into is thinking about how can
Speaker 6: AI help inform those models make better predictions about what
Speaker 6: a consumer is likely to be able to borrow, what
Speaker 6: they're likely going to be able to pay back, and
Speaker 6: how that's going to work. Now, we have a long
Speaker 6: way to go in terms of working with the regulators
Speaker 6: to figure out how exactly we can and when we
Speaker 6: should implement AI models for lending import lending decisions. But
Speaker 6: I'm excited to go on that journey and I think
Speaker 6: that there's a very big opportunity for us all ahead.
Speaker 4: Zach Ai and the context of lending is a conversation
Speaker 4: we're keen to dive into as well.
Speaker 2: We're just out of time for today.
Speaker 4: Thanks to Zach Perry, the Plaid CEO out there in
Speaker 4: New York.
Speaker 2: Time for talking tech.
Speaker 4: First up, China vuying to boost investments in its technology sector.
Speaker 4: Central Bank officials are asking lenders to help fund research
Speaker 4: and tech related acquisitions in order to revive a private
Speaker 4: sector that's frankly been hit with regulatory curbs. Also, Commerce
Speaker 4: Secretary Gina Romondo says that actions needed from the US
Speaker 4: and its allies in order to fight a surplus in semiconductors.
Speaker 2: Raimondo pointed the finger.
Speaker 4: At China's aggressive subsidies and called for more export controls
Speaker 4: and domestic incentives in order to alleviate the glup plus
Speaker 4: the Pentagon planning to issue a first time contract to
Speaker 4: US or Canadian companies for gallium. This comes after China
Speaker 4: curbed exports on gallium and germanium minerals, which are crucial
Speaker 4: to semiconductors and military radar systems.
Speaker 2: Caroline.
Speaker 3: Meanwhile, let's just talk Tesla from an end because five
Speaker 3: years it is now since Tesla's Model three electric car
Speaker 3: actually hit the market, and in an effort to kind
Speaker 3: of assess the mood of consumers, Bluemeg's serving more than
Speaker 3: seven thousand me fined owners about their experience five years on. Look,
Speaker 3: we're doing it again. We're following up with those thousands
Speaker 3: of original responders. And there's one key theme that starting
Speaker 3: out owners may love their cars, but they've soured on
Speaker 3: the big boss behind Tesla. Of course, that's seen a musk.
Speaker 3: Today's big take showing us now for more is Bloomberg's
Speaker 3: Tom at Randall and Tom, I mean, perhaps we're not surprised,
Speaker 3: but isn't in any way starting to put off people
Speaker 3: buying another car or investing further in the Tesla ecosystem.
Speaker 7: Well, that was definitely one of the questions that we
Speaker 7: wanted to kind of get at through the survey, and
Speaker 7: we are actually seeing some of that. You know, my
Speaker 7: initial theory was that it wasn't flowing through because you see,
Speaker 7: you know, Tesla is still experiencing huge sales of all
Speaker 7: of its cars, tons of demand, but we really do
Speaker 7: see it was a very strong reaction that we received
Speaker 7: and you can you can feel it in the comments.
Speaker 7: People feel kind of betrayed in a way, and we
Speaker 7: did start to tie it to their buying behavior. So
Speaker 7: people who are looking at a future vehicle right now
Speaker 7: and then for in the next two years, we asked
Speaker 7: them what kind of cars that they were looking for,
Speaker 7: and the demand for Tesla is still incredibly strong from
Speaker 7: those people. It's eighty seven percent of the people were
Speaker 7: looking at a Tesla, so that seems really high.
Speaker 2: But if you look at the people.
Speaker 7: Who are not looking at a Tesla, it's all because
Speaker 7: of Elan. He was the number one reason for them
Speaker 7: not looking at another Tesla. And you never see that
Speaker 7: kind of correlation between a CEO and the products in
Speaker 7: the product making decisions. And so what we saw was
Speaker 7: even among these people who were turning away like they
Speaker 7: still love their cars, and a lot of their comments
Speaker 7: voiced that.
Speaker 4: It was tad the questions, The questions were the beatum
Speaker 4: the same post this year is when you first started.
Speaker 4: How else have the responses shifted very quickly?
Speaker 7: I'm sorry, I'm sorry I missed the first part of
Speaker 7: your question. But the shifting responses since twenty nineteen, the
Speaker 7: number one question, the number one shift was in Elon's sentiment.
Speaker 7: There was nothing even kind of close to it. And
Speaker 7: in fact, out of one hundred and fifty questions that
Speaker 7: we asked, the questions about Twitter and Elon's tweets kind
Speaker 7: of after the acquisition were the worst scoring among all
Speaker 7: of them.
Speaker 4: All Right, Bloomberg's Tom Randa with the big take on Tesla.
Speaker 4: Check it out on Bloomberg dot com.
Speaker 3: Welcome back to Bluemok Technology. I'm Caroen hide in.
Speaker 4: New York and ed lolow out here in San Francisco.
Speaker 3: We now want to welcome on Bloomberg radio and TV
Speaker 3: audiences worldwide. We want to deep even deeper into Meta's
Speaker 3: earnings reports, CEO Mark Zuckerberg saying, look quote, we continue
Speaker 3: to see strong engagement across our apps, with the most
Speaker 3: exciting roadmap I've seen in a while. Our investments in
Speaker 3: AI will continue. We remain fully committed to the metaverse
Speaker 3: vision as well. Let's again further with Meta chief financial
Speaker 3: offer Susan Lee joining us. And it's not just Mark
Speaker 3: finding things, exciting investors, analysts, upgrading exciting economy for the
Speaker 3: world at large. Today it feels here in the United States.
Speaker 3: How excited, Susan, are your clients right now? How resilient
Speaker 3: is this digital ad spending well?
Speaker 8: First of all, thank you Ed and Caroline for having me.
Speaker 8: It's a pleasure to be with you guys and with
Speaker 8: your viewers this morning. You know you noted that we
Speaker 8: reported really strong Q two results. We're really happy with
Speaker 8: all of our execution efforts across our core user and
Speaker 8: engagement metrics. Obviously, the reacceleration in our AD revenue, which
Speaker 8: we've been talking about and you know which we think
Speaker 8: is the is the reflection both of an improvement in
Speaker 8: the macroeconomic landscape which the digital ads market is so
Speaker 8: closely tied to, along with our own efforts continuing to
Speaker 8: invest in and execute on quarters and years of work
Speaker 8: in making sure that our AD systems are performing well,
Speaker 8: that we're delivering measurable results for our advertisers and we
Speaker 8: really have seen those results bear fruit, so that's something
Speaker 8: we're really excited about. In Q two, we also talked
Speaker 8: about how our year of efficiency work is really setting
Speaker 8: us up for success going forward. I think it's put
Speaker 8: us into a place where we have a leaner cost structure,
Speaker 8: which will serve us well as we plan for the future.
Speaker 8: And it's also enabling us to move faster, to build
Speaker 8: more and ship more quickly new products and experiences in
Speaker 8: service of what of our customers. And so Mark talked
Speaker 8: about this yesterday on the call. Threads is a really
Speaker 8: good example of that. It's something that we built with
Speaker 8: a relatively smaller team on a tighter timeline, and I
Speaker 8: think is a good reflection of the year of efficiency
Speaker 8: paying off for us. Finally, the last theme I'd highlight
Speaker 8: from our earnings call is around twenty twenty four, we
Speaker 8: have I think a lot of compelling opportunities to invest in.
Speaker 8: We talked about our AI investments and how that will
Speaker 8: flow through and to infrastructure costs. We talked about hiring
Speaker 8: top tier technical talent as we evolve our workforce towards
Speaker 8: a more technical mix, and then of course our longer
Speaker 8: term ambitions and vision for reality labs and for the metaverse.
Speaker 4: You know, AI also seen Susan two AI recommendations on
Speaker 4: the timeline to have a real impact on engagement, particularly
Speaker 4: on the core Facebook platform.
Speaker 2: How much is that a.
Speaker 4: Driver behind the forecast for the current period of thirty
Speaker 4: four point five billion dollars in sales.
Speaker 8: It's a great question. First, I want to say we
Speaker 8: have been investing in AI for a really long time.
Speaker 8: We often use the phrase core AI to talk about
Speaker 8: the work that's been powering our ranking and recommendations engines,
Speaker 8: which are really the foundation of both our organic recommendations
Speaker 8: for the content that you see along with the ADS work.
Speaker 8: And in particular, one of the big drivers of growth
Speaker 8: that's been both strong on our platforms and increasingly incremental
Speaker 8: is around recommending content from it accounts that you don't
Speaker 8: already follow. We often call this unconnected content, and that's
Speaker 8: been really good for core engagement trends. And then of
Speaker 8: course the AI investments, as we've put GPU capacity towards
Speaker 8: our ADS, ranking and recommendation systems have really paid off.
Speaker 8: So I think that's really translating both into the results
Speaker 8: that you've seen. It's part of what factors into our guidance,
Speaker 8: along with of course a big range of possible macroeconomic outcomes.
Speaker 8: At the same time, we're really excited about a newer
Speaker 8: opportunity ahead of us in the gen AI space, and
Speaker 8: that's really around building compelling new consumer experiences. Mark talked
Speaker 8: about some of the things we're working on on the
Speaker 8: call yesterday, making it easier for people to create better,
Speaker 8: more individualized content, and then of course also making it
Speaker 8: easier for businesses to communicate with the consumers that they
Speaker 8: want to reach.
Speaker 5: That is newer for us.
Speaker 8: That's not factored into our revenue guidance or our revenue
Speaker 8: outlook in any meaningful way, but it's something that we're
Speaker 8: really excited about the opportunity to build new and compelling experiences,
Speaker 8: and we think it'll be an important part of our future.
Speaker 4: Susan, why did Meta change its mind about charging cloud
Speaker 4: providers for access to Lama too.
Speaker 5: I'm not sure what you mean by change.
Speaker 8: By changing our mind, we've made Lama to free and
Speaker 8: widely accessible. They're a small handful of really large cloud
Speaker 8: providers that we're working on specific arrangements with, but broadly speaking,
Speaker 8: we expect this to be free and we want it
Speaker 8: to be accessible to a really to a really wide
Speaker 8: range of possible use cases.
Speaker 3: Cloud providers, will they be charged anything.
Speaker 8: Yeah, this is a place where again with very specific
Speaker 8: cloud providers who have very large user bases. Again we're
Speaker 8: working on specific arrangements with them, but it's not something
Speaker 8: that we broadly anticipate charging for.
Speaker 3: And of course we're all ways to see when you
Speaker 3: turn on the money funnel from Threads, I'm interested as
Speaker 3: to how much inbound you're getting from clients, how many
Speaker 3: the capacity to start advertising alongside Threads.
Speaker 8: At the moment, you know, we're really very pleased with Threads.
Speaker 8: It's a new standalone app that we released earlier this month,
Speaker 8: and we're where it is in both user growth terms
Speaker 8: as well as engagement and retention trends. Is certainly ahead
Speaker 8: of where we would have expected for a brand new
Speaker 8: standalone app, but it's incredibly early in its life cycle.
Speaker 8: This is not something that we expect that we're going
Speaker 8: to monetize in the near term. We know when we
Speaker 8: launch new consumer experiences that there is a playbook around
Speaker 8: all of the product foundation work that needs to be
Speaker 8: done around core features that users will ask for, being
Speaker 8: responsive to things that futures users are looking for in
Speaker 8: the product, scaling it over time to a much larger
Speaker 8: user base, focusing on driving increased engagement and retention. Those
Speaker 8: are all things that we're going to need to do,
Speaker 8: you know, in advance of thinking about monetization. But it's
Speaker 8: a playbook that we've executed multiple times and we're excited
Speaker 8: for the opportunity to do that again.
Speaker 4: Here, Susan, I think I'm right in saying you a
Speaker 4: Facebook employee number four hundred and something, four hundred and eight,
Speaker 4: how has the launch of Threads compared internally to bringing
Speaker 4: in Instagram, WhatsApp, the launch of the hardware business and quest.
Speaker 2: Yeah.
Speaker 8: So I joined then Facebook back in two thousand and
Speaker 8: eight when they're around four hundred people here, and so
Speaker 8: I've seen us launch a lot of things over the
Speaker 8: course of that period. Now, some of those examples that
Speaker 8: you mentioned, like Instagram obviously were already popular apps when
Speaker 8: we acquired them. But I think that over the course
Speaker 8: of that time, we've learned a lot of things about
Speaker 8: how to bring products to market, thinking about the trade
Speaker 8: offs between standalone apps or features within existing apps. We've
Speaker 8: learned a lot in our growth playbook and how to
Speaker 8: drive engagement and retention, and I think we're going to
Speaker 8: bring a lot of those lessons to the way that
Speaker 8: we execute against our vision for Threads.
Speaker 4: Caroline asked you about the inbound interest your existing advertisers, saying, Hey, Susan,
Speaker 4: when can I put something on the Threads platform. I
Speaker 4: know you're being conservative and careful about the development and
Speaker 4: that Mark emphasize a lot of product work needs to
Speaker 4: be done as well, but how do you see the
Speaker 4: roadmaps for Threads going? You know, how do you change
Speaker 4: the product so it is monetizable.
Speaker 8: Well, we're excited obviously that there is interest both in Threads,
Speaker 8: the consumer product and of course the eventual prospect of
Speaker 8: advertising on it. But it's really just too early, I think,
Speaker 8: to be very specific about what the ads business on
Speaker 8: thread will look like in detail. We're really focused on
Speaker 8: executing on the consumer experience first, making it a great
Speaker 8: and productive and friendly place for people to have public conversations,
Speaker 8: growing it to scale, investing in the features that people want,
Speaker 8: and we'll get to monetization at the right time.
Speaker 3: Of course, us in the media had a field day
Speaker 3: thinking about the competitive force that Threads is Visa VX
Speaker 3: and then we think about the competition more broadly, you
Speaker 3: versus TikTok. When I'm thinking of the success of Reels
Speaker 3: of late, when we're actually more broadly thinking about how
Speaker 3: Meta makes it self not just the money spinner, but
Speaker 3: a culture spinner here where people start trends, not just
Speaker 3: perhaps copy them from TikTok and bring them on to reels.
Speaker 3: Do you feel you've got that now at Meta?
Speaker 8: I think that we've been, over the course of the
Speaker 8: time that I've been here, you know, constantly focused on innovation,
Speaker 8: and I think that we've brought that to bear with
Speaker 8: a lot of the experiences in our family of apps.
Speaker 8: And at the same time, when there are clear secular
Speaker 8: trends in the industry in terms of formats or experiences
Speaker 8: that consumers are looking for, we look to integrate those
Speaker 8: two and I think we've done a really good job
Speaker 8: at executing on both of those fronts. And then of course,
Speaker 8: looking forward, I think we're really excited about the innovation
Speaker 8: opportunities ahead of us with Genai. We think we're industry
Speaker 8: leading here. And then of course over the very long
Speaker 8: term with our vision for reality labs and the metaverse.
Speaker 3: We are of course with the Meta Chief financial Officer
Speaker 3: Susan Lee. We're welcome across TV and radio with our
Speaker 3: audiences and Susan, I've all started talking about everything apps now.
Speaker 3: I know you're about the money, not always developing the product,
Speaker 3: but you think about everything app as meta as there
Speaker 3: are race on to ensure that we can build that
Speaker 3: here in the US, and you'll be part of it.
Speaker 8: It's a great question. I know that there are other
Speaker 8: regions around the world, in particular Asia, where there are
Speaker 8: apps that have gone down this model. That's not a
Speaker 8: model that we have right now. We haven't seen that
Speaker 8: use case to the same extent in North America. But
Speaker 8: you know, I would say that we're really invested in
Speaker 8: the opportunities that we have ahead of us across our
Speaker 8: family of apps right now, including Threads, which is the
Speaker 8: newest standalone app in our portfolio. And then there's just
Speaker 8: a lot that we can do to make the experiences
Speaker 8: across our family of apps richer and more engaging with
Speaker 8: the investments that we've made already in AI and especially
Speaker 8: recommending content that you don't already follow, and we know
Speaker 8: that that's brought richer content experiences to people, is growing
Speaker 8: engagement across the apps, and we'll release you know, we'll
Speaker 8: be releasing features over the course of the next years.
Speaker 8: But we're really excited about what we think that this
Speaker 8: is going to bring to bear for the consumer experience
Speaker 8: and of course also eventually for businesses to connect with
Speaker 8: consumers across the family of apps too.
Speaker 4: Susan investors were sanguine about the idea that expenses could
Speaker 4: creep up. I want if you just tell us what
Speaker 4: your priorities are, where you'll invest in talent in the metaverse,
Speaker 4: whether your investments will be on the content side or
Speaker 4: the hardware side.
Speaker 8: Great question. We talked about this a little bit on
Speaker 8: the call yesterday when we gave some coller into the
Speaker 8: twenty twenty four out look. The three themes that I
Speaker 8: really want to talk about there are. First, we expect
Speaker 8: that our infrastructure costs are going to grow because of
Speaker 8: the investments we've made in AI building GPU capacity. You know,
Speaker 8: that will go towards both the core AI work and
Speaker 8: the ranking and recommendation engines that I talked about, along
Speaker 8: with the new GENAI investments. So that's a place where
Speaker 8: we're investing, certainly in a lot of hardware along with
Speaker 8: the infrastructure such as data centers and network equipment that
Speaker 8: you need to support that. The second area that we
Speaker 8: talked about is we are evolving our workforce toward a
Speaker 8: more technical mix, you know, and we want to hire
Speaker 8: top tier technical talent where we can towards some of
Speaker 8: our most compelling opportunities, including AI and machine learning engineers
Speaker 8: to work on the AI efforts we talked about. And
Speaker 8: so that's a place where we are going to be investing,
Speaker 8: but we're going to be doing it in a very
Speaker 8: thoughtful way, making sure that we're really focusing on the
Speaker 8: core priorities and making trade offs where appropriate. The third
Speaker 8: thing that we talked about is on the reality lab side.
Speaker 8: That's certainly a very long time horizon and ambitious vision,
Speaker 8: and we're going to be investing in deploying capital toward it.
Speaker 3: The capital coming from that you already have. Are you
Speaker 3: looking at the bond market, are you looking at raising
Speaker 3: more funds?
Speaker 8: You know, we certainly generate enough enough free cash flow
Speaker 8: right now for us to invest across the organic opportunities
Speaker 8: ahead of us that we see that are compelling. We
Speaker 8: have been raising debt, we did earlier this year, just
Speaker 8: as we're evolving our capital structure going forward, and that's
Speaker 8: something that we'll continue to look at and I think
Speaker 8: do on a measured pace going forward. But in terms
Speaker 8: of thinking about the capital available to us now, you know,
Speaker 8: we generate a lot of capital that we're always looking
Speaker 8: to allocate across the organic opportunities that we have, and
Speaker 8: we've talked about some of those, and then of course
Speaker 8: shareholder returns.
Speaker 4: Susan really quickly before we lose you. How do you
Speaker 4: and Mark split up responsibilities at the company.
Speaker 2: What's it like working with Monk?
Speaker 8: You know, I've had the privilege of working with and
Speaker 8: learning from Mark for fifteen years here, obviously as CEO,
Speaker 8: you know, and as a product visionary. He really shepherds
Speaker 8: the product roadmap and has defined the long term vision
Speaker 8: for a lot of the things that we're investing in
Speaker 8: with incredibly ambitious goals, and I think that's a tremendous
Speaker 8: and powerful motivator for us, and I try to make
Speaker 8: sure that we have the financial frameworks and targets that
Speaker 8: are going to enable us to invest against those things.
Speaker 8: Innovation isn't free, and that's something that we're very mindful
Speaker 8: of and we recognize that, especially against some of our
Speaker 8: longest time horizon ambitions. We have to earn the right
Speaker 8: to put capital towards those things in the way that
Speaker 8: we do. What I will say, having worked with Mark
Speaker 8: for such a long time is he's tremendous at adapting
Speaker 8: to the time that we're in. And so whether that
Speaker 8: was leading a four hundred person startup when I joined,
Speaker 8: whether that was overseeing our transition to the public markets
Speaker 8: during the shift to mobile, or whether that was this
Speaker 8: past year helping us really retool our cost structure and
Speaker 8: the way we operate and leading on the year of Efficiency.
Speaker 8: I think Mark is tremendously good at making hard decisions,
Speaker 8: at acting on them with conviction and looking forward.
Speaker 4: META Chief financial Officer Susan Lee, thank you so much
Speaker 4: for your time.
Speaker 2: This is Bloombot technology all right. Time for VC Spotlight.
Speaker 4: Energized Capital formally Energized Ventures raised three hundred million dollars
Speaker 4: for a new growth equity fund, bringing its total assets
Speaker 4: under management to one point two billion. Comes at a
Speaker 4: time when the startup industry's reeling venture capital funding for
Speaker 4: climate tech has dipped. Energized Capital managing partner John Touff
Speaker 4: joins us.
Speaker 9: Now.
Speaker 4: John, we always ask this How quickly did you raise
Speaker 4: that three hundred million?
Speaker 1: Personally?
Speaker 9: Thanks for having me you guys really excited to be
Speaker 9: on here today. I would say that the funding environment
Speaker 9: in the last twelve months has been different than the
Speaker 9: previous cycle. Fortunately, the limited partner interests in climate and
Speaker 9: sustainability has sustained. I would say it's been both domestic but
Speaker 9: also international. Limited partners have really booed the capital base,
Speaker 9: so it took just about as long as we expected.
Speaker 3: Interesting you say international. Many feel that perhaps well, climate
Speaker 3: focus has got a little bit too politicized here in
Speaker 3: the US, but over in Europe we're still very focused.
Speaker 3: Is that where you're seeing Indeed, some of the startups
Speaker 3: you want to be looking to put money to work
Speaker 3: in being born as well.
Speaker 9: Yeah, you know, the climate opportunity is global, which is
Speaker 9: really exciting for US energize capital. We invest at the
Speaker 9: intersection of software and climate.
Speaker 1: Both of those are international mega.
Speaker 9: Trends, and as we see it, certain countries, certain regions
Speaker 9: are ahead of others. Europe, for example, as we think
Speaker 9: about it, is a few years ahead of the US
Speaker 9: in many of the sustainable trends, and that has resulted
Speaker 9: in about a third of our portfolio coming from Europe
Speaker 9: as opposed to North America.
Speaker 4: Is there anything you're seeing specifically in climate related software
Speaker 4: about valuations.
Speaker 2: Have they come down or gone up?
Speaker 1: Yeah?
Speaker 9: Yeah, So I say the climate theme overall has remained elevated,
Speaker 9: and we're seeing a number of new capital partners attempt
Speaker 9: to enter the.
Speaker 1: Space climate software.
Speaker 9: We've seen some new entrants, but it's primarily from the
Speaker 9: fringe of the generalists and energize.
Speaker 1: We believe that this is a theme.
Speaker 9: You have to have domain expertise within a lot of
Speaker 9: our team, our people who come from a solar wind
Speaker 9: battery landscape, and so as we've thought about valuations, we
Speaker 9: know the industries, we know the potential, so we're investing
Speaker 9: for that great return. And while some firms have come
Speaker 9: in with extremely lofty valuations, those that have been around
Speaker 9: a cycle or two, like us, we've maintained a steadi cadence.
Speaker 4: You know, Caroline, John comes on the show. He's raised
Speaker 4: three hundred million for a new fund. He wants to
Speaker 4: talk about climate software, but really there's one thematic space
Speaker 4: we want to ask him about. It is and we.
Speaker 2: Keep on talking about it.
Speaker 3: John, artificial intelligence. How much is that driving the companies
Speaker 3: that are already in your portfolio, or driving the companies
Speaker 3: you want to invest in, or becoming a real key
Speaker 3: theme of what you have to be inside at the moment.
Speaker 1: You know, you guys, it is the topic of the year.
Speaker 9: Every company in our portfolio, we are asking them how
Speaker 9: they're adopting these tools to make those solutions better. What's
Speaker 9: probably exciting to most is that about half of our
Speaker 9: portfolio was already using artificial intelligence tools prior to this year.
Speaker 9: They were using them, and the funny part is the
Speaker 9: customer didn't even know. When you're selling to industrial operations, agriculture,
Speaker 9: energy transition.
Speaker 1: They just want the product to work, and.
Speaker 9: So did they care that a solar software tool, a
Speaker 9: drone automation tool was using AI.
Speaker 1: Probably not, but they wanted it to work.
Speaker 9: Luckily, for us, a lot of our talent comes from
Speaker 9: incredible institutions. Are that we're teaching this years ago and
Speaker 9: so it is here today. It is in far more
Speaker 9: hands than most expect, and it is creating tremendous value,
Speaker 9: and we're excited to fund companies both domestically and internationally
Speaker 9: that use those tools to drive the climate innovation theme.
Speaker 3: Yeah, just dwell on a moment the startup scene right now,
Speaker 3: because the menu scene has been under stressed.
Speaker 2: We know that.
Speaker 3: And interestingly that you're raising this fund right now. What
Speaker 3: about the amount of companies being born? There was this
Speaker 3: talk that you know, talent getting let go, they're going
Speaker 3: to be out there building businesses. Is that happening?
Speaker 9: There is a generation of new employees who want to
Speaker 9: work on something that matters. And when you're waking up
Speaker 9: in the temperatures twenty degrees above normal like it is
Speaker 9: today across America, it's right in your face. And so
Speaker 9: the climate opportunity is attracting talent in our portfolio while
Speaker 9: there's layoffs happening across tech. We have hundreds of roles
Speaker 9: open in our portfolio and I expect that only to grow.
Speaker 4: John a lot of climate tech investors. I speak to
Speaker 4: assess a potential portfolio company by its ability to tap
Speaker 4: into public sector funds.
Speaker 2: Is that a criteria for you?
Speaker 9: The IRA, specifically here in the US and the Europe
Speaker 9: has their alternative Listen. We love it, we love that
Speaker 9: it's here, but our investment criterion does not rely on
Speaker 9: that capital to make a successful business. I energize we
Speaker 9: believe that a lot of the tools that we need
Speaker 9: to fight the climate crisis are here today. You know,
Speaker 9: the cost of wind, of solar, of batteries, the deployment
Speaker 9: of EV charging. It's at scales that even five years
Speaker 9: ago people couldn't imagine, and so we look at software
Speaker 9: companies that can help those scales. Those companies scale at
Speaker 9: price points that are already effective.
Speaker 1: It's nice to have for.
Speaker 9: Some of the new emerging technologies like nuclear and hydrogen,
Speaker 9: but we really focus on software that can help drive
Speaker 9: impact and returns today.
Speaker 4: Really quick, John, why the rename changing a single word
Speaker 4: in the name?
Speaker 9: Yeah, it's it's a small change, but it's got a
Speaker 9: big impact for us. We really felt I've been in
Speaker 9: a cycle in this industry for fifteen years. The last
Speaker 9: time there was a dip in funding, the whole market left.
Speaker 9: We wanted to send a signal to our key stakeholds.
Speaker 9: Stakeholders which are our limited partners, are entrepreneurs.
Speaker 1: And our team we're going to be here.
Speaker 9: We're going to be here from venture to growth and beyond,
Speaker 9: and we think the space is big enough to support
Speaker 9: you know, tens to hundreds of billion dollar.
Speaker 4: Companies energize Capital managing part and the John Tough.
Speaker 2: Thank you so much for your.
Speaker 1: Time, Thanks for having me.
Speaker 2: Wow, that does it.
Speaker 3: From what was a reunited team on Bloomberg Technology.
Speaker 4: A bit too short, just too short. It's been a
Speaker 4: fantastic time with b Tech.
Speaker 1: Cara.
Speaker 4: We will be back together in the coming weeks. Fear not,
Speaker 4: but don't forget. You can recap everything from today's show
Speaker 4: on the podcast wherever you get your podcasts on the
Speaker 4: Bloomberg platforms but also Apple, Spotify and iHeart. Really just
Speaker 4: insightful conversation with the METACFO Susan Lee, the CFO kind
Speaker 4: of sometimes the unsung hero, more involved in the strategy
Speaker 4: than you realize. So please go and check out that
Speaker 4: interview in the podcast. From here in San Francisco and
Speaker 4: out in New York with Caroline High, This is Bloomberg Technology.