Speaker 1: From Bahard.
Speaker 2: We're Innovation, Money and Power Collie in Silicon Valley, NBN.
Speaker 2: This is Bloomberg Technology with Caroline Hyde and Ed Love Love.
Speaker 3: I'm Caroline Heindet Bloomberg's World headquarters in New York and.
Speaker 4: I made Love Low in San Francisco. This is Bloomberg
Speaker 4: Technology coming up.
Speaker 3: Tesla gets some tentative approval for its driving system in China.
Speaker 4: Details ahead plus paramount expected to oustit CEO ahead of
Speaker 4: earning tonight, we'll bring you.
Speaker 3: The latest and so far shares they drop after Q
Speaker 3: two guidance disappoints. We're going to discuss all of it
Speaker 3: with the CEO, Anthony Noto. Well, first, let's checking on
Speaker 3: these markets, because we're cautiously up on the nawstack at
Speaker 3: the moment, up three tenths of a percent. We've got
Speaker 3: a big week. You've got the FED, you've got the
Speaker 3: all important claims, we've.
Speaker 5: Got jobs data.
Speaker 3: Friday, we're seeing the NASDAK still managing to be up
Speaker 3: about forty eight points. Now we're seeing a ten year
Speaker 3: yield actually diving back some four or five basis points.
Speaker 5: Let's call it ahead of the all important Federal Reserve.
Speaker 3: And indeed just where we see this economy, this interest
Speaker 3: rate environment going notably a lot capturing the attention on
Speaker 3: the macro perspective. What's happening in Japan at the moment. Look,
Speaker 3: we've got a holiday period that means some of the
Speaker 3: trading is going to be more muted in Japan, but
Speaker 3: the yen some big volatility over the course of the
Speaker 3: weekend Monday trading, We're down a percentage point on the
Speaker 3: dollar of US as the end the yen goes higher.
Speaker 3: Was it Japanese boj intervention? So far they remain mum
Speaker 3: on the subject. We look forward to what's happening in
Speaker 3: terms of another dollar related asset, this one Bitcoin down
Speaker 3: versus the US dollar by about one and a quarter percent.
Speaker 3: Now we're still seeing perhaps a little bit of a
Speaker 3: risk off feel to bitcoin more generally and atf flows
Speaker 3: for sixty eight hundred and fifty nine, and what are
Speaker 3: you looking at on the micro the ed.
Speaker 4: Well Tesla and Tesla is a big, almost surprise story
Speaker 4: this Monday, the stock up twelve point four percent. It's
Speaker 4: just a few tens percent away from its biggest jump
Speaker 4: since January of twenty twenty two. Very similar gains to
Speaker 4: what we saw April twenty fourth, the day after earnings,
Speaker 4: the story prelim or tentative approval for full self driving
Speaker 4: in China. That's according to a Bloomberg source. Two subsets
Speaker 4: of that a partnership with Baidu on the InCAR mapping
Speaker 4: specifically for the China market, and then also an agreement
Speaker 4: over data and privacy or terms on data and privacy
Speaker 4: that will allow it to move forward with FSD. Big
Speaker 4: reaction in the market. Elon Musk himself went to China
Speaker 4: over the weekend met with Premier Lee Chung, which was
Speaker 4: itself a surprise seven days after he bailed on India.
Speaker 4: And there's a lot to unpick in this one, but
Speaker 4: it's a big move higher on the Tesla stock carract.
Speaker 3: Yeah, we got to digame with none other than Craig
Speaker 3: Shrudelle Bloomberg of course all over this story throughout the
Speaker 3: day and indeed well previous night. It was a surprise,
Speaker 3: and it looks as though the meeting bore fruit.
Speaker 5: What exactly does this mean for.
Speaker 3: The overall robotaxi autonomous vehicle kind of future that elm.
Speaker 6: Pains, Yeah, we have to really separate out robotaxi and
Speaker 6: what Tesla calls full self driving because that nomenclature has
Speaker 6: been a misnomer. It is a driver assistance system. When
Speaker 6: you activate it, you're in control of the vehicle, You're
Speaker 6: responsible for supervising it.
Speaker 7: And if you do get into.
Speaker 6: A crash, Tesla has has shown a tendency to turn
Speaker 6: around and blame you the driver. And so there's a
Speaker 6: big difference between this system Tesla calls FSD and this
Speaker 6: robotaxi that Musk has managed to get Wall Street excited about,
Speaker 6: despite the fact that he's been talking about it as
Speaker 6: a concept now, you know, since twenty sixteen at least.
Speaker 6: But this is a big development in the sense that FSD,
Speaker 6: for all its shortcomings and the progress that still needs
Speaker 6: to be made for it to be you know, you know,
Speaker 6: more widely used and accept it is bringing in incremental revenue,
Speaker 6: but only in certain markets in the US. This is
Speaker 6: something that Tesla charges eight thousand dollars for or ninety
Speaker 6: nine dollars a month subscription. If it can you know,
Speaker 6: make arrangements to get incremental revenue out of its customers
Speaker 6: in China, it could boost its business there at a
Speaker 6: time it could sorely use.
Speaker 4: A lift Craig is best. I can tell you've been
Speaker 4: logged on your Blue Mog terminal for like twenty seven
Speaker 4: hours straight, coordinating our teams in China, the US, in Europe.
Speaker 4: Just to explain the chronology of what happened, there were
Speaker 4: multiple stages to arrive at what is a tentative approval
Speaker 4: for FSD.
Speaker 6: Yeah, I mean we heard rumblings that Musk was maybe
Speaker 6: going to make this trip and you know, lo and behold,
Speaker 6: you know, Sunday, my time here in London. You know,
Speaker 6: we wake up to this idea that, yes, Musk has landed.
Speaker 6: This was a surprise in the sense that Tesla you know,
Speaker 6: doesn't even have a presence at this week's Beijing on show.
Speaker 6: It's a show that got underway last week, but it
Speaker 6: certainly was you know, a timely visit in the sense
Speaker 6: that there are a lot of you know, government officials
Speaker 6: in town for the show. You know, the auto industry
Speaker 6: has absolutely been a bright spot for the Chinese economy,
Speaker 6: and you know, China's relationship with Tesla has has been
Speaker 6: really positive. This is you know, a success story, even
Speaker 6: with the challenges that this company has had lately with
Speaker 6: sort of continuing its momentum in.
Speaker 3: China marketshare being eroded to none of them byd the
Speaker 3: local competitor. Remind us of the deals that have had
Speaker 3: to be done with Chinese players though ultimately to be
Speaker 3: able to get the granting.
Speaker 7: Yeah, the key one that that ED flagged is with Baidu.
Speaker 6: And I think this is really interesting because you know,
Speaker 6: Elon Musk has been on the record for many years
Speaker 6: now saying that Tesla doesn't need maps, that maps are
Speaker 6: crutch and you know, so this this is you know,
Speaker 6: a U turn if you will, if you and forgive
Speaker 6: a car pun uh. You know from this stance that
Speaker 6: this is not necessary in China. However, in order for
Speaker 6: you to offer these sorts of systems, you need to
Speaker 6: have a partnership with a mapping and navigation company. And
Speaker 6: it just so happens that the companies that are able
Speaker 6: to offer those service services are all Chinese.
Speaker 7: It's very reminiscent of how China sort of.
Speaker 6: Controlled the battery uh, you know, electric vehicle battery market
Speaker 6: in you know, the more infant years of of the
Speaker 6: EV industry for China, and it really was successful and
Speaker 6: helping sort of build up, you know, world dominating companies
Speaker 6: like c at l UH. They're looking to try and
Speaker 6: replicate that sort of uh, you know pattern with you know,
Speaker 6: companies that play a critical role in these driver assistance
Speaker 6: systems that may one day be able to support, you know,
Speaker 6: fully taking the human driver out of the equation.
Speaker 4: And what's so interesting is by do is itself quite
Speaker 4: competent in the domain of at least developing autonomous technology. Look,
Speaker 4: the stock's up twelve percent or more, on track for
Speaker 4: his biggest jump since Janney twenty twenty two.
Speaker 7: Perceived good news.
Speaker 4: There is some more nuanced view in the markets about
Speaker 4: what Musk's actually doing here, Craig, listen to this elon.
Speaker 8: Musk's on an opportunity to go in there and say, look,
Speaker 8: I want to do this because you've seen the clashes
Speaker 8: that have been going on between the US and China.
Speaker 8: He's trying to put a foot on both sides and say, look,
Speaker 8: I've got this technology. And he had the premium brand
Speaker 8: in China, and then all of a sudden, the evs
Speaker 8: in China started to get less expensive and Tesla started
Speaker 8: to lose Sharon.
Speaker 7: He had to drop prices.
Speaker 8: So to me, this is a way to say I'm
Speaker 8: going to change up this math for myself, but also
Speaker 8: if I can be successful in this, then maybe I
Speaker 8: get to be the outlier.
Speaker 4: That was Sarah Hunt, whose chief market strategies at Alpine
Speaker 4: Saxon Woods earlier on Bloomberg Surveillance. We've got a very
Speaker 4: strong piece on the terminal out now talking about how
Speaker 4: we'll hold on. A week ago, Musk was supposed to
Speaker 4: go to India and he bailed and he's gone straight
Speaker 4: to China. That it shows us the power dynamics and
Speaker 4: must skill in all of this, right, Craig in navigating geopolitics.
Speaker 6: Yeah, I mean there's been mutual backscratching here between Elon
Speaker 6: Musk and the CCP for for years now. Let's not
Speaker 6: forget that Tesla was the first you know, international car
Speaker 6: company or foreign car company to you know, be allowed
Speaker 6: to operate in China without having to agree to a
Speaker 6: joint venture with a local manufacturer. There was a huge
Speaker 6: you know wind for Musk and something that he fought
Speaker 6: for for years. And you know, the the construction of
Speaker 6: the plant for Tesla and Shanghai was you know, record time.
Speaker 6: It was extremely time lee in the sense that you know,
Speaker 6: Musk was really ramping up the model three trying to
Speaker 6: bring the model why out and they were able to
Speaker 6: keep that plant running even during you know, the pandemic,
Speaker 6: when you know other plants in China had a really
Speaker 6: difficult time, you know, opening back up from the initial shutdowns.
Speaker 6: And so you know, China has very much supported Tesla
Speaker 6: when Tesla needed it most. And you know, we're seeing
Speaker 6: US companies pull back a little bit from China, maybe
Speaker 6: at least de risk a little. You know, Apple's a
Speaker 6: good example of doing so. You know, by the way,
Speaker 6: in India, I think people were looking at at a
Speaker 6: potential investment by Tesla in India as a similar move.
Speaker 6: And it's clear that Musk doesn't see you know, urgency
Speaker 6: to do that.
Speaker 4: Bloomber's cry too l thank you so much, terrific reporting.
Speaker 4: There's another story very close to this one, Sticking with
Speaker 4: autonomous driving, US auto safety regulators are investigating Ford's Blue
Speaker 4: Cruise driver resistance feature after a pair of fatal crashes
Speaker 4: involving the technology. The US National Highway Traffic Safety Administration's
Speaker 4: Office of Defect Investigation opened the preliminary evaluation after it
Speaker 4: received notice of two battery electric Mustang Maki SUVs that
Speaker 4: collided with stationary vehicles. Will continue to track that one
Speaker 4: stock down one point six percent car notable.
Speaker 3: Meanwhile, coming up ed, Look, I've got to turn our
Speaker 3: attention to another key stock on the move and paramount
Speaker 3: is we understand the company weighing outstaying.
Speaker 5: Its own CEO.
Speaker 3: At least the board is ahead of earning tonight, but
Speaker 3: also a notable potential purchase of this business.
Speaker 5: We'll bring you more this boombow technology.
Speaker 7: It's time for talking tech and first up.
Speaker 4: The Supreme Court has rejected an appeal by Alon Musk
Speaker 4: over his so called Twitter sitter, who oversees social media
Speaker 4: posts about Tesla. The Justices, without comment, refused to hear
Speaker 4: contentions from the Tesla CEO on the accord that he
Speaker 4: assigned in twenty eighteen that he says now violates his
Speaker 4: constitutional free speech rights. We'll track that one plus. Apple's
Speaker 4: iPad has been hit by the EU's digital dominance crackdown.
Speaker 4: The product's been added to a list of big tech
Speaker 4: products and services hit by the new rules. The move
Speaker 4: means Apple has six months to make sure its tablet
Speaker 4: ecosystem complies with a raft of preemptive measures under the
Speaker 4: EU's flagship Digital Markets Acts. And the Redstone family and
Speaker 4: independent film producer David Ellison have both offered concessions to
Speaker 4: make a possible change in control at Paramount Global more
Speaker 4: appealing to the company's other investors. The Skydance bid was
Speaker 4: described by multiple parties as a best and final offer
Speaker 4: on Sunday. Paramount's board is still undecided about entering a
Speaker 4: deal with Ellison, given the opposition from other investors.
Speaker 3: Cara, Well, the board has got a lot to be
Speaker 3: considering right now, we understand ed, and we want to
Speaker 3: dig into all of it with the most Chris Peal
Speaker 3: Mary who has been busy throughout the weekend, reporting in
Speaker 3: this out, editing it out. And the board, we understand,
Speaker 3: is also wondering whether it OSTs Bob Backish, the actual
Speaker 3: current CEO of Paramount. Ahead of Well, we know earnings
Speaker 3: are already coming out after the bell today amid this
Speaker 3: sales process.
Speaker 9: Yeah, the situation was described to me yesterday is being
Speaker 9: very fluid, which I think is an understatement. We're recently
Speaker 9: certain the company will announced earnings this afternoon, but beyond that, yes,
Speaker 9: they're expected to say goodbye to their CEO, Bob Beckish,
Speaker 9: replacing him on an interim basis with a management committee.
Speaker 9: They're still negotiating to deal with Skydance. It would be
Speaker 9: a change of control of a company and that was
Speaker 9: the best and final offer yesterday, with David Ellison, the
Speaker 9: owner of Guidance, helping his sort of contribution in terms
Speaker 9: of buying Paramount stock at a premium to what it's
Speaker 9: trading out today, sort of apes of shareholders. Redstones also
Speaker 9: are apparently making concessions that would allow the non voting
Speaker 9: shareholders to weigh in on a deal, which is something
Speaker 9: that you know they don't have to do, but is
Speaker 9: sort of best practice in securities law these days.
Speaker 7: A whole lot going on.
Speaker 4: You've outlined the sort of mechanics of the deal. I
Speaker 4: think just like reminder audience the rationale on the why
Speaker 4: why are we still spooking about Paramount and somebody buying
Speaker 4: it or changing it?
Speaker 7: What's going on?
Speaker 9: Well, the traditional TV business is in trouble. People are
Speaker 9: leaving for streaming services. Advertising has been in decline, although
Speaker 9: they'll see a pickup at Paramount this quarter because of
Speaker 9: the super Bowl, and the streaming business, which is the future,
Speaker 9: is still losing money. The Paramount still although the losses
Speaker 9: are coming down a bit are still going to be
Speaker 9: in the one hundreds of millions of dollars.
Speaker 7: And it's a question whether they'll ever stop.
Speaker 9: And so when your two main businesses like that, the
Speaker 9: movie business has been unprofitable last year, it's a challenge
Speaker 9: to get people back to theaters. So pretty much every
Speaker 9: leg of their business is in some sort of peril
Speaker 9: and that's why this sock is down and why they're
Speaker 9: considering options.
Speaker 4: All right, Bluebots, Chris Pam Mary terrific, really appreciate having
Speaker 4: you out down from La.
Speaker 3: So fine out with earnings that well look strong today,
Speaker 3: but the forecast is what people are worrying about. The
Speaker 3: shares falling after the fintech company provided second quarter nuance
Speaker 3: here with adjusted net revenue and adjusted ebit DA that
Speaker 3: perhaps fell short of some consensussessments out there. Want to
Speaker 3: dig into that nuance with SOFI CEO Anthony Noto.
Speaker 5: Thank you for joining us, Anthony, And.
Speaker 3: Look, we've got to focus on the fact that your
Speaker 3: full year guidance was raised.
Speaker 5: You're feeling positive.
Speaker 3: About the way in which are steering the company. You
Speaker 3: say you're in an inflection point, But why the second
Speaker 3: quarter being below expectations?
Speaker 5: What can you add to what you're seeing here right here,
Speaker 5: right now.
Speaker 10: We had a great first quarter, as we reported twenty
Speaker 10: six percent year of year at growth, and it's in
Speaker 10: line with the transformation that we talked about, which is
Speaker 10: our combined tech platform business and our financial service business
Speaker 10: would grow fifty percent or more. It grew fifty four
Speaker 10: percent year of year, and that combined with flat revenue
Speaker 10: for lending, and that was part of the plan, and
Speaker 10: we had our second consecutive quarter of gap positive EPs.
Speaker 10: In addition to growing our book value on a tangible
Speaker 10: basis per share by about sixteen percent sequentially, we also
Speaker 10: guided the full year, as you mentioned above, not just
Speaker 10: our beat, but also above our prior guidance, so that's
Speaker 10: a positive overall outlook.
Speaker 1: We had not given Q two guidance before.
Speaker 10: We typically give the full year and then the current
Speaker 10: quarter that we're in, so at the end of twenty
Speaker 10: four we gave guidance for the full year and Q one,
Speaker 10: not Q two. The analysts are using their own estimates
Speaker 10: for that, and because we're taking a conservative view on lending,
Speaker 10: lending will be down sequentially in Q two, while our
Speaker 10: tech platform revenue and our financial services revenue will continue
Speaker 10: to have strong year year growth, but also strong sequential
Speaker 10: growth and continue profitability as well. So we feel really
Speaker 10: great about the business transformation we've made over the last
Speaker 10: six years. The fact that we can grow revenue twenty
Speaker 10: six percent on flat lending revenue is a real testament
Speaker 10: to the diversity of our business.
Speaker 5: Hey, Darison, you can't feel great about the share reaction.
Speaker 10: You know, any given day, it's hard to predict what's
Speaker 10: going to happen with the shriff. But what I can
Speaker 10: say is the business is doing incredibly well. The strategy
Speaker 10: is working. We're really happy about the trend we do.
Speaker 10: We are taking a conservative you on lending, but that's
Speaker 10: given how uncertain the environment is. If the environment becomes
Speaker 10: more stable, we'll be more aggressive on lending, but right
Speaker 10: now there's no need to and the environment remains as
Speaker 10: uncertain as it has for the last six months.
Speaker 4: On rates, mister Noto, good morning, it's ed in San Francisco.
Speaker 4: A lot of the questions I got from our audience
Speaker 4: for you were about the capital you raise and your
Speaker 4: strategy going forward. There was convertible in one queue, a
Speaker 4: lot of interest in that. I actually am not clear why,
Speaker 4: but the people want to know, So that's the question.
Speaker 10: Yeah, I think people misunder stand the share count. First,
Speaker 10: we did two things in Q one. First, we issued
Speaker 10: a convertible note at one point two five percent interest
Speaker 10: that allowed us to redeem a preferred security that we're
Speaker 10: paying twelve and a half percent interest on. So that
Speaker 10: is going to provide an interest savings for us, and
Speaker 10: we've already noticed all of the holders of that preferred
Speaker 10: instrument and so that's being redeemed sooner than expected. We
Speaker 10: also bought back an existing convert that was trading well
Speaker 10: below its face value, and that was a creative to
Speaker 10: book value and it was basically neutral on tangible book
Speaker 10: value per share. So there's some perception that it was diluted.
Speaker 10: It's not dilutied on a tangible book value per share.
Speaker 10: And I think there's just a misunderstanding on what the
Speaker 10: total ending share count will be in the future.
Speaker 4: My colleague, a Bloomberg intelligence Herman Chan has a very
Speaker 4: clear thesis for you guys. You have a brilliant app,
Speaker 4: strong user interface, one stop shop, and you're targeting young professionals.
Speaker 7: That's what they think.
Speaker 4: But the story really is this higher interest rates for
Speaker 4: longer environment narrative. How does that thesis work in that
Speaker 4: rate environment?
Speaker 10: Anthony, Yeah, well, first of all, your colleagues said it
Speaker 10: very well, and so we should consider having them being
Speaker 10: one of our spokespeople. But I'd say is higher for
Speaker 10: longer is going to create challenges for financial institutions.
Speaker 1: We are very well capitalized.
Speaker 10: We have a seventeen point one percent risk based capital ratio,
Speaker 10: so we have ample cushion or capital ratio relative to
Speaker 10: where we have to operate from a regulatory standpoint, and
Speaker 10: we have plenty of liquidity. That said, as we saw
Speaker 10: today another regional bank was very challenged. We're also benefiting
Speaker 10: from really strong deposit growth. We had our record growth
Speaker 10: and deposits three billion dollars of new deposits, and ninety
Speaker 10: percent of our deposits are from direct deposit customers, which
Speaker 10: means we're their primary account and it's very very sticky.
Speaker 10: But higher for longer we'll put stress on other people's
Speaker 10: balance sheets if they're not hedging appropriately the way we do.
Speaker 10: We hedge our loans once we grant them, we're we
Speaker 10: don't have that interest rate exposure. We can also match
Speaker 10: what we're giving in as an apy to our SOFI
Speaker 10: money members against the loans that we're offering in the
Speaker 10: rates that they have to maintain a very high NIM
Speaker 10: and we've been able to do that consistently. In addition
Speaker 10: to that, with also the tech platform business, which is
Speaker 10: not tied to interest rates. And then in the financial
Speaker 10: services business, we have the invest platform that's growing very nicely,
Speaker 10: good AUM growth, good member growth, and another source of
Speaker 10: verisfied revenue for.
Speaker 5: US where technology show.
Speaker 3: We want to go into the specifics of your technology, Anthony,
Speaker 3: but I want to bring our audience that matcro flavor
Speaker 3: that you so brilliantly give, because why are you more
Speaker 3: cautious on the US economy? Why are you seeing five
Speaker 3: percent excess of unemployment? Why are you seeing these interest
Speaker 3: rate cuts that you've now basically halved in your expectations
Speaker 3: for twenty twenty four.
Speaker 10: Yeah, our balance sheet has grown quite meaningfully. It's about
Speaker 10: a thirty billion dollar bounce sheet now. So as we
Speaker 10: came into twenty twenty four, we had a choice. Could
Speaker 10: we come up with our own expectations for twenty twenty
Speaker 10: could we use consensus expectation. Let's just take up planning
Speaker 10: stance that's really conservative, and the planning stance that we
Speaker 10: took then was that there would only be four rate cuts.
Speaker 10: The market was factoring in six rate cuts at the time.
Speaker 10: We also took up planning stance on unemployment that would
Speaker 10: be more than five percent, the market was well below that,
Speaker 10: and we also took a stance on GDP contraction.
Speaker 1: That was modest.
Speaker 10: Well, here we sit today three months later, and the
Speaker 10: market's only factoring in one to two rate cuts. So
Speaker 10: I'm really thankful we took a conservative stance going into
Speaker 10: the air, and I'm really thankful we still have a
Speaker 10: conservative stance. I couldn't feel better about the underlying trends
Speaker 10: of our strategy and execution of our business. But I
Speaker 10: don't think we're an environment where anyone has a really strong,
Speaker 10: high conviction level on where rates will be. There's still
Speaker 10: a debate whether it be any rate cuts whatsoever. So
Speaker 10: we just can't put the business at risk hoping that
Speaker 10: we can figure it out.
Speaker 1: So we're going to a conservative point of view.
Speaker 4: With short time, Anthony, you're moving away from this kind
Speaker 4: of trademark student loans and refi business.
Speaker 10: Why, Well, the strategy when I came in twenty eighteen
Speaker 10: was to create a one stop shop for all your
Speaker 10: financial services needs. There was no one providing all the
Speaker 10: products that you need for the big moments in your
Speaker 10: life and all the days in between. So we offer
Speaker 10: home loans, student loans, personal loans, in school loans, checking
Speaker 10: and savings called SOFI Money Investing, Insurance, small meat, and
Speaker 10: business loan lead generation in addition to the tech platform business.
Speaker 10: So the strategy was always about building a one stop
Speaker 10: shop for all your financial services needs, and that's actually
Speaker 10: resulted in diversified business that allows us to make choices
Speaker 10: on what we grow versus what we take.
Speaker 1: A conservative view.
Speaker 4: On SOFI CEO Anthony Notto, Great catch up, greats heavy
Speaker 4: back on the program. Thank you, Welcome back to Bloomberg Technology.
Speaker 4: I love Low in San Francisco.
Speaker 5: I'm Caroline hid in New York.
Speaker 3: A bit of breaking news that was just occurring regarding
Speaker 3: we work.
Speaker 5: We understand it has managed to kind.
Speaker 3: Of bankruptcy exit deal that actually leaves.
Speaker 5: Out the founder, Adam Newman. Now we understand we work.
Speaker 3: Of course, they've gotten all important meeting today in Pril
Speaker 3: twenty ninth.
Speaker 5: They're cutting an exit deal leaves out Adam Newman.
Speaker 3: Newman himself is objecting saying the deal wrongly hands Hides
Speaker 3: a sale plan and Newman has offered to buy we Work,
Speaker 3: but it was rejected in favor of a creditor deal.
Speaker 5: Now, remember there's plenty.
Speaker 3: Of analysis that has gone into the bankruptcy of we
Speaker 3: Work more broadly, and indeed the fact.
Speaker 5: That they've basically got a four billion dollar in secure.
Speaker 3: Debt that is a key issue limiting issue here more broadly.
Speaker 3: But it looks as though a deal has been cut,
Speaker 3: but Adam Newman is not involved.
Speaker 5: Let's just get a broader market check for you at
Speaker 5: the moment, because.
Speaker 3: Well, markets have been tentatively higher and aw's that one
Speaker 3: hundred is still clinging on to gain some twenty seven
Speaker 3: points all important.
Speaker 5: Week the fared we got job Stata.
Speaker 3: At the end of the week, the dollar is still
Speaker 3: lower US as Japanese and that was a big market move.
Speaker 5: From a macro perspective, is maybe we see some boj
Speaker 5: intervention that has.
Speaker 3: So far remained silent from Japan, and it is indeed
Speaker 3: some muted amid holiday trading session.
Speaker 5: But I'm looking at bitcoin.
Speaker 3: Just off by a percentage point as a US dollar
Speaker 3: remains higher versus bitcoin.
Speaker 5: That's how to look at.
Speaker 3: What's happening on individual names. I want to shine like
Speaker 3: what happened in Europe because we've just finished up trading
Speaker 3: in Europe and at US up eighteen percent. And this
Speaker 3: is another kind of beleagued company, but this one is
Speaker 3: a French government potentially stepping in with a bid for
Speaker 3: the IT company's most strategically important businesses. That's after it's
Speaker 3: been forced to raise the amount of cash it needs
Speaker 3: to avoid insolvency itself. It's up more than eighteen percent. Sees,
Speaker 3: I shine a light on what's happening with this particular
Speaker 3: well overall company, the two firms we could see when
Speaker 3: it comes to all important views on the coming together
Speaker 3: of SES and intelsat this is we once again think
Speaker 3: about a mergering these satellite businesses. The deal failed in
Speaker 3: previous attempts to combine, but now we see that potentially
Speaker 3: they could be seeing an SES and INTEL revival of
Speaker 3: discussions with Dan some ten percent in that publicly traded
Speaker 3: part of the business. Remember Intersect is private micro Strategy
Speaker 3: up more than a percentage point. Well, he's doing all right,
Speaker 3: Old Michael Saylor on the fact that he's been selling
Speaker 3: some shares in the business after it's done particularly well
Speaker 3: amid being sort of a proxy for bitcoin two hundred
Speaker 3: and ninety six. The earnings come after the bell. But
Speaker 3: we want to talk more about crypto, and we want
Speaker 3: to talk more about what's happening in Hong Kong. But
Speaker 3: it's set to list a batch of cryptocurrency ETFs, and
Speaker 3: some China's top asset managers are in final lego preparations
Speaker 3: for Spot bitcoin and EETF to begin trading tomorrow. Loomberg's
Speaker 3: Katie Greifeld joins US for more. You're probably pretty bored
Speaker 3: about Spot ETF and what's interesting with Hong Kong is
Speaker 3: it looks as though we're also seeing Australia analyze the options.
Speaker 5: This is a theme since the US gone on board.
Speaker 11: It's definitely a theme, this sort of expanding access to
Speaker 11: spark bitcoin ETFs. And it's interesting you take a look
Speaker 11: at Hong Kong sort of following the US blueprint in
Speaker 11: that we have a few war breaking out even before
Speaker 11: the funds have actually launched. Their due to launch on
Speaker 11: April thirtieth tomorrow, but we're talking about trio of issuers here.
Speaker 11: We have China AMC, then we have Harvest and Bossera.
Speaker 11: So you had China AMC and Harvest announced their fees,
Speaker 11: and just in the past few days Bossara actually came
Speaker 11: out and waved their fee. They were going their eventual
Speaker 11: fee is going to be sixty basis points. They're waiving
Speaker 11: that for the first four months or so.
Speaker 5: You compare that to Harvest.
Speaker 11: They're also going ahead with a fee waiver, which is
Speaker 11: also very popular in the US. After six months, they're
Speaker 11: going to charge point three percent. So that's your low
Speaker 11: water mark there. And then China AMC it's on the
Speaker 11: high side. It's charging ninety nine basis points, so a
Speaker 11: bit expensive compared to its trio.
Speaker 7: It sort of peers there, but.
Speaker 11: We'll have to see what we saw in the US
Speaker 11: market was even though you had those fees cut into
Speaker 11: the launch. After the launch too, you had a lot
Speaker 11: of reductions as well.
Speaker 4: On this program with Metenology, we love covering cities around
Speaker 4: the world. Hong Kong is clearly considering this important. But
Speaker 4: in actuality, it's a small market. You know, give us
Speaker 4: the numbers.
Speaker 11: It is a that is a important perspective to get
Speaker 11: in there. When you take a look at Hong Kong's
Speaker 11: total ETF market, the total AUM is about forty seven
Speaker 11: billion dollars. Just for some context, you take a look
Speaker 11: at the suite of US spot bitcoin ETFs, they're already
Speaker 11: above that.
Speaker 5: When you put together those.
Speaker 11: Dozen are so fun So on the world scale, we're
Speaker 11: talking about a very small market here. When you think
Speaker 11: about the impact to bitcoin, of course, probably not too
Speaker 11: meaningful from an influence perspective, but when it comes to sentiment,
Speaker 11: which is what powers bitcoin, it could be meaningful the most.
Speaker 4: Katie Grofel, we love having you on the show with
Speaker 4: your knowledge of spot bitcoin ETF around the world.
Speaker 7: Thank you very much.
Speaker 4: Let's go from crypto back to entertainment with paramounts board
Speaker 4: considering removing CEO Bob Backish, I want to get the
Speaker 4: take in the analysis of Bloomberg Intelligences Geeta Ang and
Speaker 4: Athan and I'm looking at stock right we're up almost
Speaker 4: five percent. I don't know if that's because of the
Speaker 4: news or reports that Backish might be going or that
Speaker 4: the deal as it is is moving along. What do
Speaker 4: you think the catalyst is, Gita.
Speaker 2: I think ed the catalyst for the movement this morning
Speaker 2: is really just based on the sweetening of the Ellison deals.
Speaker 2: So two things happening here. One is that David Ellison,
Speaker 2: who owns sky Dance Media, is now proposing to buy
Speaker 2: a block of shares at a premium. Is kind of
Speaker 2: making it more palatable for investors. And I think finally
Speaker 2: Sharry Redstone, Sharry Redstone is the one who kind of
Speaker 2: calls all the shots at paramount. She's finally open for
Speaker 2: what is this majority of minority votes, So she is
Speaker 2: letting the non voting shareholders have a say in whether
Speaker 2: this transaction should go through. And that is really critical
Speaker 2: because there has been so much backlash against the sky
Speaker 2: Dance deal because most of these shareholders, the non voting shareholders,
Speaker 2: have basically said that it's going to dilute them and
Speaker 2: it really only benefits, you know, the sky Dance And
Speaker 2: of course Cherry Redstone, one.
Speaker 3: Of those key investors from a non vote perspective, have
Speaker 3: been Arial Investments and John Rodgers and Melodie Hobson had
Speaker 3: been putting out letters saying, look, we are worried about
Speaker 3: the way in which this is being executed, the premium
Speaker 3: and then the merge of what's happening with skydowns, but
Speaker 3: also they were troubled by the looming departures of four
Speaker 3: paramount board members. Is all of this looking a little
Speaker 3: bit murky from a governance perspective if you're also seeing
Speaker 3: a board and potentially getting rid of the CEO and
Speaker 3: putting executives in charge while this transition sort of occurs.
Speaker 2: Yeah, I mean it's highly, highly unusual, Caroline. We've never
Speaker 2: seen something quite like this before in the media landscape.
Speaker 2: So you have those four, you know, board members who
Speaker 2: kind of suddenly left, and then now you have Bob Bakish,
Speaker 2: who has been the CEO of this company for quite
Speaker 2: a while, I mean ever since Viacom and CBS were emerged.
Speaker 2: He's kind of taken a charge and he's kind of,
Speaker 2: I think, done a fairly good job, although some people
Speaker 2: would would say that, you know, getting into the streaming
Speaker 2: business was not good idea to begin with. And you
Speaker 2: know that's because, yes, they have seventy million subscribers, they've
Speaker 2: had some successes, but they've also lost a ton of money.
Speaker 2: They've lost about five billion dollars and a lot of
Speaker 2: people seem to think that, you know, that's because of
Speaker 2: kind of this misstep or was a misstep by Bob
Speaker 2: backersh So, yes, there's a lot of confusion right now. Basically,
Speaker 2: definitely getting rid of Bob Backers definitely challenges the status quo.
Speaker 2: But I think what Cherry Redstone is hoping to achieve
Speaker 2: is then get you know, Bob Backers has been very
Speaker 2: vocal against the deal with sky Dance, so I think
Speaker 2: she's really kind of trying to hasten the process towards
Speaker 2: a deal with sky Dance.
Speaker 12: Here.
Speaker 3: Wow, it looks as though it is evolving very quickly
Speaker 3: on the day, and I'm sure we'll be looking for
Speaker 3: your expertise again doing by intelligence analyst Katha Rang and
Speaker 3: Ath and me, thank you so much and all things paramount.
Speaker 5: Mean while coming up, and we're going to take a
Speaker 5: look at a new kind.
Speaker 3: Of college call the eye a Founder's Fund. We're on
Speaker 3: that and now a venture spotlight. This is really my technology.
Speaker 7: Campus.
Speaker 4: Dot edu is an online alternative to traditional community colleges
Speaker 4: that's trying to tackle all kinds of problems, one of
Speaker 4: them being student loan debt in the United States, and
Speaker 4: it caught the attention of Founder's Fund, which just led
Speaker 4: a new twenty three million dollar extension round in the platform.
Speaker 7: Disclaimer.
Speaker 4: Bloomberg Beta, the venture capital arm of Bloomberg LP is
Speaker 4: also an investor in campus dot Edu. Here to discuss
Speaker 4: is founder's fund partner Tray Stevens, who led the round,
Speaker 4: and campus dot edu founder and chancellor. Today or Youurinda today,
Speaker 4: I'm going to start with you. I actually have been
Speaker 4: through the mechanics of how this works. You know, you
Speaker 4: sign up, you may be eligible for federal funding grants,
Speaker 4: but you basically pay seven to seven a half thousand
Speaker 4: dollars for the course, and you're also bringing an employment
Speaker 4: opportunity for very talented professors, which raises the question, why
Speaker 4: do you need twenty three million more dollars?
Speaker 12: Yeah, thanks for having me. Look, I think if you
Speaker 12: look at the faculty at these elite universities Princeton, UCLA,
Speaker 12: and Stanford, a lot of them are looking for gigwork.
Speaker 12: That's what we do at Campus is we allow them
Speaker 12: to teach. We bring access to people who had never
Speaker 12: had access to this quality of education before. And then, yes,
Speaker 12: as you pointed out, the federal government does actually pay
Speaker 12: for a lot of the tuition with the grants.
Speaker 4: One of the learnings from researching and reading into this
Speaker 4: is that some of our brightest academics and teachers are
Speaker 4: pretty poorly paid in this country. Trey, I know you,
Speaker 4: I know where you invest thematically specific founders that you back.
Speaker 4: This one's really interesting why you focused on education, but
Speaker 4: this is a very specific case study in education.
Speaker 13: Yeah, well, I wouldn't say that we are focused on education.
Speaker 7: We don't do a whole lot at all and tech.
Speaker 1: That's what I founders figned.
Speaker 13: Yeah, Peter is kind of known as having this anti
Speaker 13: higher education perspective in which led to the tor Fellowship,
Speaker 13: which is the fellowship that he offers to students to
Speaker 13: drop out of college and pursue something entrepreneurial. And so
Speaker 13: I think what this really kind of hit that I
Speaker 13: haven't seen a lot in ED tech is.
Speaker 7: This idea that we don't need to have.
Speaker 13: A bunch of students going into massive debt. The average
Speaker 13: student in the United States that's going into higher ED
Speaker 13: has debt over twenty thousand. I had debt over one
Speaker 13: hundred thousand dollars coming out of college, and there's just
Speaker 13: no reason for this. And so I think what today
Speaker 13: and the team at campus is doing is really exciting
Speaker 13: because it's a way of bridging that out to make
Speaker 13: it possible for kids that want to go to school
Speaker 13: after they finish high school and do that at much
Speaker 13: lower costs and in exit their college experience without any
Speaker 13: debt Tadai.
Speaker 3: Therefore, we go back to the why the need of funds.
Speaker 3: You've got clear demand coming from students, You've got clear
Speaker 3: supply coming.
Speaker 5: From the professors.
Speaker 3: Perhaps a bit of a bottleneck when it comes to
Speaker 3: the coaches that you want to there be to be
Speaker 3: mentoring and stimulating and advising.
Speaker 5: But where will the funds be put to work? Is
Speaker 5: this about mark share capture right now?
Speaker 12: Yeah? Look, Caroline, the opportunity is just so big. If
Speaker 12: you look at student loans in this country, it's perhaps
Speaker 12: past two trillion dollars. So to actually solve this and
Speaker 12: create a world class quality education and scale that up
Speaker 12: to lots of people, it's going to require lots of investment.
Speaker 12: And we give students a lot of wrap around support
Speaker 12: that most community colleges just can't afford to offer. So
Speaker 12: every student forgets a laptop. You know, about a third
Speaker 12: of our students we do an internet speed test. If
Speaker 12: your internet's too slow, will actually get you internet at home?
Speaker 12: We pare them with success coaches who play the role
Speaker 12: like my mother played for me. When I was in college,
Speaker 12: like making sure I'm showing up for class on time
Speaker 12: and getting my assignments in and that's a key part
Speaker 12: of like what a lot of young people are going
Speaker 12: to need to be successful today. So I'm very grateful
Speaker 12: for Trey and you know, the team at Founders Fund,
Speaker 12: because this is a big mission, but it's going to
Speaker 12: require funding.
Speaker 3: Yeah, Tree, why did you take the call or the
Speaker 3: email or the introduction in whatever way if you had
Speaker 3: not that focused on education, as you've clearly articulated, Why
Speaker 3: this one when there are some other online competitors out there?
Speaker 7: Yeah?
Speaker 13: The important thing for us, as it is with all companies,
Speaker 13: is that we are founder base first and foremost, so
Speaker 13: less than investing in categories or you know, specific types
Speaker 13: of companies, We're really interested in investing in the top
Speaker 13: founders that are doing the most interesting things, the most
Speaker 13: novel concepts. And so when I originally met today, you know,
Speaker 13: not generally being interested in ed tech, I was blown
Speaker 13: away by his vision for what the company was going
Speaker 13: to be doing, and ultimately just decided to bring other
Speaker 13: people from the Fund in front of him, saying like
Speaker 13: this guy is different than the other founders that we've
Speaker 13: seen in the ed tech space. We should really be
Speaker 13: open to learning from him and getting excited about the
Speaker 13: thing that he has so much passion for.
Speaker 4: Okay, so today you dropped a reference to the sort
Speaker 4: of gig economy earlier in the conversation. So I'm thinking
Speaker 4: uber or you know there are other gig economy platforms
Speaker 4: out there to do food delivery, et cetera. How's that
Speaker 4: business going to play out in practice? You know, Trey
Speaker 4: investing founders, he backs those founders. He's also an investor
Speaker 4: who needs to see a return in the future.
Speaker 12: Yeah, So look the way it works with campus. If
Speaker 12: you're a professor at Princeton UCLA Moorhouse, you have your
Speaker 12: your on campus job, has an office. You love it.
Speaker 12: You get to meet with students. But oftentimes you're an
Speaker 12: adjunct professor. I used to think adjuncts meant like Michelle
Speaker 12: Obama teaches that Georgetown for fun to give.
Speaker 7: Back saying a guest or whatever.
Speaker 1: That's that's really rare.
Speaker 12: The most adjuncts are actually recent grad school graduates to
Speaker 12: earning forty to forty five grand a year. That's what
Speaker 12: we do is you can actually teach in addition to
Speaker 12: your on campus job on campus campus dot edu and
Speaker 12: we pay about double the national average wage, so it's
Speaker 12: about eight thousand dollars per class. So just simplicity of math.
Speaker 12: You know, four academic quarters a year. If you teach
Speaker 12: three classes a quarter with us, you're making an additional
Speaker 12: ninety six thousand dollars an annual income. And you're doing
Speaker 12: it doing what you're great at and what you love doing,
Speaker 12: teaching these students who are super ambitious, like super talented.
Speaker 3: I want to focus on another found you back when
Speaker 3: it comes to neurallink eil mask today he we led
Speaker 3: the show with the fact that in his other company, Tesla,
Speaker 3: he's deepening thaie with China. He's bringing his driver assistance
Speaker 3: program over there to of course one of the key
Speaker 3: markets for him. How do you sit at the moment
Speaker 3: with founders, with just us more broadly seeing still some
Speaker 3: relationship with China at the time that also you're seeing
Speaker 3: some distancing.
Speaker 13: Yeah, I mean, there's definitely always a good reason to
Speaker 13: have nuance. There's a lot of different stakes are that
Speaker 13: need to be taken into consideration when you look at
Speaker 13: interacting with the Chinese market versus interacting with the Chinese
Speaker 13: government versus interacting with government control over things that are
Speaker 13: impacting US consumers, And so I think obviously diplomacy is
Speaker 13: critical in all these scenarios. Elon is doing what Elon
Speaker 13: needs to do for the companies that he has operating
Speaker 13: in country there.
Speaker 3: What about, well, TikTok being the other key piece of
Speaker 3: news when it comes to how that affects the consumer,
Speaker 3: a relationship of using what is a Chinese held business
Speaker 3: here in the United States, a ban or diverst What did.
Speaker 5: You make of that? How worried are you.
Speaker 3: About the use of TikTok for at least another nine months?
Speaker 1: I mean, I'm very concerned.
Speaker 13: I've been very public and expressing my concerns around the
Speaker 13: use of TikTok domestically. You know, during the Cold War,
Speaker 13: we never would have allowed for a Russian company to
Speaker 13: buy The New York Times. I think having some sense
Speaker 13: for adversary control of key pathways for information into our
Speaker 13: into our populace is super critical. And TikTok has demonstrated
Speaker 13: time and time again that they are not willing to
Speaker 13: be transparent. They're not willing to share with us the
Speaker 13: important information that we would need to know to have
Speaker 13: a level of confidence and their ability to support those
Speaker 13: technologies being deployed in the United States.
Speaker 3: We've got to think about the AI cut well, all
Speaker 3: encompassing narrative here ed a little bit when we were
Speaker 3: talking about Elon and Tesla, you referenced by do of
Speaker 3: course big stakes and AI there we've also got TikTok
Speaker 3: owned by byte Dance.
Speaker 5: That China's got its own interest in all of this
Speaker 5: at the moment.
Speaker 4: Ed for me, that's the story, right, that all the
Speaker 4: stories we talk about, be it Tesla in China, TikTok,
Speaker 4: China is working on these technologies itself, you know, particularly
Speaker 4: in the context of generative AI or building large language models.
Speaker 4: We spent twelve months saying, well, China is also doing this.
Speaker 4: The question of someone like you and your industry is
Speaker 4: how do you get the balance right between being collaborative
Speaker 4: and also putting us interest first. That's basically what I
Speaker 4: think it comes down to for you.
Speaker 7: Yeah, I think that's right.
Speaker 13: You know that the CCP is very different than the
Speaker 13: Chinese people or the Chinese market. These things are not
Speaker 13: always intrinsically connected. I think that the thing that we're
Speaker 13: constantly trying to balance not only inside of our portfolio,
Speaker 13: but also with what we're doing at ANDROL, which is
Speaker 13: a portfolio company of founders fund that I started back
Speaker 13: in twenty seventeen, you know, is to really figure out
Speaker 13: where we need to not only develop but also sustained
Speaker 13: strategic advantage so that we are able to set the
Speaker 13: rules of engagement for how those technologies are like actually
Speaker 13: in the field and the moment we no longer have
Speaker 13: control of the technology, that's when we lose control of
Speaker 13: the ability to regulate and you know, keep those technologies
Speaker 13: inside the bounds of law.
Speaker 4: I'm glad you took us to andre and Defense Tech.
Speaker 4: There have been several columnentches written about you and your
Speaker 4: place and leadership in investing in defense technology. What I
Speaker 4: want to ask you is, if you're seeing science that
Speaker 4: the US government, the top level of government is now
Speaker 4: sort of hand in hand with silicon value, that you
Speaker 4: guys do it really well, So go and do it.
Speaker 7: I guess the.
Speaker 1: Working with the government's really hard. I don't know how
Speaker 1: else to say that. You know, before I.
Speaker 13: Joined found respond ten years ago, I was, you know,
Speaker 13: doing sales at Palenteer, where I spent the prior six
Speaker 13: years of my career. And you know, no matter what
Speaker 13: we tried, it was like every single iteration of our
Speaker 13: sales strategy was just you know, not working, going too slow,
Speaker 13: running into roadblocks. Eventually we figured out a model that worked.
Speaker 13: The same could be said for Space. It took them
Speaker 13: years and years and years to figure out how to
Speaker 13: do this. And the reality is like going into this
Speaker 13: industry blind, like you know, two nineteen year olds working
Speaker 13: in a garage. Very different than starting a software as
Speaker 13: a service company.
Speaker 4: As doctor Carr put it to me, a few weeks
Speaker 4: to go, end the PowerPoint No more Powerpoints founder fun
Speaker 4: Trey Stevens. Great to have you back on the show, Caroc.
Speaker 5: It really was a great discussion.
Speaker 3: And that does it for this well wind edition of
Speaker 3: Bloomberg Technology.
Speaker 4: Yeah, there is so much in the newsflow. It's a
Speaker 4: huge earnings week. Great guests on the show, recap on
Speaker 4: the podcast, Apple, Spotify, iHeart, and the Bloomberg platforms from
Speaker 4: San Francisco and New York.
Speaker 7: This is Bloomberg Technology.