Speaker 1: I'm Caroline Hyde in New York from Bloomberg's world headquarters,
Speaker 1: and I'med Ludlow in San Francisco. This is Bloomberg Technology
Speaker 1: in video. It surges, shares climb as much as fifteen
Speaker 1: percent after the AI computing push, Trouvietz strong outlook. We'll
Speaker 1: chip away and the details and we'll have the latest
Speaker 1: in the world of crypto is sam Bank. Then Freed
Speaker 1: faces new charges and coin Base launches a blockchain. We'll
Speaker 1: discuss with Chris Lahane of Horn Ventures. Class Gorman Sacks
Speaker 1: offering its wealthiest clients access to a fundraising round for Stripe.
Speaker 1: That's as the payment's giant seeks to raise four billion
Speaker 1: dollars from a wide range of investors. The best performer
Speaker 1: in the SMP five hundred and as that one hundred
Speaker 1: in video shares surging essentially because they give a strong
Speaker 1: outlook for revenue. That kind of indicated to investors that
Speaker 1: they're foura into artificial intelligence is helping boost them at
Speaker 1: a time where PC demand is slowing and data center
Speaker 1: demand slowing as well. Shares up forwarding percent, the biggest
Speaker 1: jump since November. At one point up by even more
Speaker 1: than that in the biggest jump since March of twenty twenty,
Speaker 1: and I want to stick with this story and get
Speaker 1: the investor perspective. Joining us now for more over is
Speaker 1: Jonathan Curtis, Franklin Equity Group, Director of Portfolio Management, Franklin
Speaker 1: Equity Group. Nearly one hundred and twenty billion dollars of
Speaker 1: assets under management of Jonathan. You hold in video stock
Speaker 1: in your funds? Is this chart on my screen? Is
Speaker 1: this equity response justified? Is the height justified around this name? Well,
Speaker 1: certainly Nvidios had a strong movie or to date here,
Speaker 1: but certainly we think that the opportunity for artificial intelligence
Speaker 1: is really just beginning in Nvidia said it's in a
Speaker 1: very very strong position to capitalize on some of the
Speaker 1: recent break views we've had with computers being able to
Speaker 1: actually understand and generate both speech and an image content
Speaker 1: now an Nvidia's right in the center of that. We
Speaker 1: think that today's move was certainly exciting, but when you
Speaker 1: look over the long term, Nvidia offers really solid return
Speaker 1: potential floor investors. Jonathan talk us through how they are
Speaker 1: so best placed to leverage artificial intelligence. Sure, so, Nvidia
Speaker 1: makes graphics processors which have at their core the ability
Speaker 1: to do vector math, which is right at the center
Speaker 1: of how a lot of these artificial intelligence models operate.
Speaker 1: The chat GPT three and a half has more than
Speaker 1: one hundred and seventy billion parameters in that model, and
Speaker 1: NVIDIAs processors are great at building up the models that
Speaker 1: understand language and then ultimately allow it to be reproduced.
Speaker 1: Similar technologies or techniques are used in generating images, and
Speaker 1: NVIDIAs in the pole position for that. Not only were
Speaker 1: the semiconductors they build, but then the software that they
Speaker 1: build that really helps to augment and accelerate the usage
Speaker 1: of their processors. But Invidios the only player in this category,
Speaker 1: there are a lot of other players in this category
Speaker 1: that we also own and are also very exciting in
Speaker 1: that case, Jonathan, is in Vidia the best position name
Speaker 1: that you're tracking or is there another in particular that
Speaker 1: you're excited about that you think actually can grow a
Speaker 1: business around the momentum and AI? Yeah, well so, certainly
Speaker 1: in Vidia is the one that is best position. About
Speaker 1: a third of their revenue, it's gonna be fifty percent
Speaker 1: of their revenue, Almost sixty percent of their revenue comes
Speaker 1: out of the data center and a large portion of
Speaker 1: that comes out of cloud service providers, and a lot
Speaker 1: of the growth that we think is going to come
Speaker 1: in the years ahead is going to come on AI
Speaker 1: in the building of these large language models. That said,
Speaker 1: there are other players in the semiconductor ecosystem that are
Speaker 1: also well positioned. AMD with its zilings acquisition a latt
Speaker 1: of semiconductor certainly a TSMC where a lot of these
Speaker 1: advantage chips are manufactured. Then in electronic design automation the
Speaker 1: building of new chips, companies like Synopsis and Cadence are
Speaker 1: very well positioned. The cloud providers are also extremely well
Speaker 1: positioned because that's where a lot of the building and
Speaker 1: the running of these models is going to occur. So
Speaker 1: there's a many ways to play this. In video is
Speaker 1: probably the best position in the semi space, though, Jonathan
Speaker 1: across Franklin's different funds and portfolios, I think you hold
Speaker 1: zero point five percent of Nvidia, so a serious stakeholder,
Speaker 1: and there's always hype around this company. I remember they
Speaker 1: were going to be big in crypto because of all
Speaker 1: the compute that was needed for mining. They've going to
Speaker 1: be big in previous cycles and trends. Why are you
Speaker 1: so convinced that this time around, with what we're seeing
Speaker 1: in AI, it is in Nvidia that's right to take
Speaker 1: on what's available in the market. Well, I think investors
Speaker 1: were right to bed own and Video over a long term.
Speaker 1: They've done very very well. With the rise of gaming,
Speaker 1: they've done very very well, and the rise of the
Speaker 1: cloud and now AI is a big opportunity. I think
Speaker 1: they're very well positioned because of the combination of their
Speaker 1: capabilities in semiconductors and a software they wrap around it.
Speaker 1: But there are many other companies that are going to
Speaker 1: do well here. But I think the bigger idea is this,
Speaker 1: if you, as a knowledge worker had the ability to
Speaker 1: have a partner sitting alongside of you, helping you in
Speaker 1: your day to day work and being creative, of course
Speaker 1: you would take that. And that is precisely what companies
Speaker 1: like Nvidia and these large language models and generative AI
Speaker 1: businesses are going to be enabling. They're going to allow
Speaker 1: knowledge workers to be dramatically more productive. We've just met
Speaker 1: last week with Sachi Adella Microsoft and he indicated that
Speaker 1: the product that he was most proud of was the
Speaker 1: GitHub Copilot offering that allows software developers to generate nearly
Speaker 1: half of the code they are writing now with a
Speaker 1: copilot model, we think that same type of power is
Speaker 1: coming to the general knowledge worker that has to work
Speaker 1: across hundreds of emails every day, many many documents every day,
Speaker 1: ultimately empowering knowledge workers to be dramatically more productive. I
Speaker 1: think enterprises are going to pay for that, and if
Speaker 1: they don't, they're going to fall behind. And then all
Speaker 1: leads back to the infrastructure vendors like an video there
Speaker 1: are going to enable that they're painting a vision and
Speaker 1: total addressable market that's enormous, I'm sure, Jonathan Franklin Equity Groups.
Speaker 1: So great to have some time with you really to
Speaker 1: discuss all of this. And we do have some breaking
Speaker 1: news at the moment regarding one is once again some
Speaker 1: news around the DOJ preparing a suit to block Adobe's
Speaker 1: twenty billion dollar deal for Figma, now notable acquisition one
Speaker 1: that many an investor was questioning the absolute valuation that
Speaker 1: this company was parting with four Figma. We understand that
Speaker 1: the antitrust lawsuit could be filed as soon as next month,
Speaker 1: and we know it's one of the biggest takeovers of
Speaker 1: a software startup out there. Really, this comes at a
Speaker 1: time that we see more and more discussion of M
Speaker 1: and A within technology. Of course, the focus on Microsoft's
Speaker 1: deal of acquisition of Activision Blizzard at sixty nine billion
Speaker 1: dollar deal really the US administration ramping up oversight. Yeah,
Speaker 1: and every time we see a big piece of M
Speaker 1: and A and it does happen, this is the first
Speaker 1: question we ask. We're surprised to see it. In Adobe's case,
Speaker 1: there's questions about why they would do this deal based
Speaker 1: on their business fundamentals, but you know clearly the regulators
Speaker 1: coming in and we thought that might happen. There's a
Speaker 1: lot of exciting things going on, but there's a lot
Speaker 1: of reason for us to be concerned. People want regulation
Speaker 1: for AI. They want to feel safe. We think about
Speaker 1: artificial intelligence as this kind of separate consciousness that is
Speaker 1: going to emerge as this thing of science fiction. The
Speaker 1: fact that they have this machine speaking with the first
Speaker 1: person is problematic because that really encourages people to see
Speaker 1: it as an entity, as a mind, when it's not
Speaker 1: like any technology. It definitely has its limitation. So we
Speaker 1: actually liked anything that you implement, we know its limitations.
Speaker 1: We've seen the move fast and break things attitude before.
Speaker 1: We have to get governments to think about how best
Speaker 1: to regulate this new, very fast emerging industry. I think
Speaker 1: that that chatbuts are not what we need for search.
Speaker 1: It could be helpful, it could help human flourishing. These
Speaker 1: were just some of our recent guests expressing their concerns
Speaker 1: around the rapid rise of generative AI, from ethical concerns
Speaker 1: to regulatory ones. There's another one cybersecurity concerns. And in fact,
Speaker 1: of course JP Morgan just restricted its staff use of
Speaker 1: chat chypt. They say it's part of normal controls around
Speaker 1: third party software. So just what are the vulnerabilities that
Speaker 1: perhaps artificial intelligence injects? Got the perfect guest, francois Local Donu,
Speaker 1: his president, CEO and member of the board of directors
Speaker 1: over at cybersecurity company F five, with a pretty fantastic
Speaker 1: backdrop as well. Francois, welcome to the show. And just
Speaker 1: when it comes to your expertise of cybersecurity, does artificial intelligence,
Speaker 1: particularly generative AI, what sort of risks does it induce? Well,
Speaker 1: thank you for having me. There are a number of
Speaker 1: no risks that happened with generative AIM. But if we
Speaker 1: step back a little bit, what we've seen over the
Speaker 1: last you know, several years, is the number of cyber
Speaker 1: attacks on companies and applications have increased dramatically, to the
Speaker 1: point where cyber attacks are costing you know, roughly six
Speaker 1: trillion dollars a year around the globe. Part of the
Speaker 1: reason for that is that as we move from the
Speaker 1: early stages of web experience to more digital, advanced digital,
Speaker 1: and dynamic experiences that we're all enjoying today, security in
Speaker 1: all of that movement was an afterthought, and so the
Speaker 1: attack surface for attackers increased and they were able to
Speaker 1: increasingly attack applications and monetize those attacks. Well, now we
Speaker 1: are at another inflection point where you know, generative AI
Speaker 1: is going to be an accelerator for humans, both for
Speaker 1: bad humans and for good humans, and we really have
Speaker 1: to make sure that security is not an afterthought and
Speaker 1: that organizations prepare themselves upfront for the new risks that
Speaker 1: come with that acceleration. Those new risks include, of course,
Speaker 1: you know, attackers being able to impersonate chat bots to
Speaker 1: take your personal information, or you know, being able to
Speaker 1: write scripts much faster that attack vulnerabilities in existing applications,
Speaker 1: and today most organizations are not prepared for that. Okay,
Speaker 1: so let's talk about hardness. We can all update our
Speaker 1: the way in which we train ourselves to avoid phishing emails.
Speaker 1: We can all understand them, phaps, the spelling mistakes aren't
Speaker 1: going to be there anymore. But front, well, what are
Speaker 1: you now training companies to look out for? We're training
Speaker 1: so first of all, we're asking companies to take the
Speaker 1: threats seriously. What I think we've seen in the past
Speaker 1: is that oftentimes which we underestimate the sophistication of attackers.
Speaker 1: And because of that, you know, we use half hazard
Speaker 1: tools or try to just put a team of engineers
Speaker 1: in a room to try and deal with the attackers.
Speaker 1: But they are now organized, they have access to a
Speaker 1: lot of tools, and this generality I is doing to
Speaker 1: make very sophisticate and fine tuned attacks available to frankly
Speaker 1: the least sophisticated attackers. So we're asking companies to get
Speaker 1: prepared to enhance their monitoring of their applications and the
Speaker 1: scanning of their codes and vulnerabilities. We're asking companies to
Speaker 1: train their users constantly. You just mentioned phishing emails. Phishing
Speaker 1: emails are getting are going to get way more sophisticated
Speaker 1: and harder to detect, and it requires training of users
Speaker 1: on a very regular basis. Frans Far, a month ago
Speaker 1: when you reported earnings, he talked about your customers slowing
Speaker 1: down in terms of renewals. There was a little bit
Speaker 1: worry about the outlook. You think about the hype cycle
Speaker 1: around AI. Has your situation changed in the last four
Speaker 1: weeks in other words, are your customers actually becoming more
Speaker 1: alive to these AI related risks and therefore engaging with
Speaker 1: you about doing more work with your platforms in the
Speaker 1: area of security. And we're we're seeing our customers are
Speaker 1: engaging with us on that. Just to give you a
Speaker 1: sense and around it. You know, today we protect over
Speaker 1: two billion fraudulent logins into applications every single day, and
Speaker 1: we protect over four and a half billion transactions web
Speaker 1: transactions every single day with our large enterprise customers. And
Speaker 1: the way we do that is by leveraging AI to
Speaker 1: stop sophisticated and automated attacks. And we're seeing our customers,
Speaker 1: of course have a strong interest in these solutions. And
Speaker 1: over the last four weeks we have continued to see
Speaker 1: that happened. Friends, how we just have thirty seconds, but
Speaker 1: what is your technological assessment of what the likes of
Speaker 1: open ai are doing. Do you see them as a
Speaker 1: long term threat to your business? No, Actually, I think
Speaker 1: open ai is going to be enabler for my business
Speaker 1: and the businesses because there's a lot of fantastic things
Speaker 1: that it can do and allow us to move our
Speaker 1: people to other tasks that perhaps are repetitive today. So
Speaker 1: I see it pm mearly as an enabler of our business,
Speaker 1: but I also see it as a threat to all
Speaker 1: companies around the world around securing their digital experiences, and
Speaker 1: that's why we're going to continue to invest in AI
Speaker 1: to help our customers. Francois local Do New five President
Speaker 1: and CEO. Thank you very much, Caroline. Great conversation. I mean,
Speaker 1: actually ed if you take a look a little bit
Speaker 1: more at Generative AI over in China, the rally in
Speaker 1: Chinese AI stocks, they're actually kind of cooling off of late.
Speaker 1: That's after some media started reporting that local apps and
Speaker 1: local websites have been ordered to terminate services that allow
Speaker 1: you so chat GBT now. Open ais chatbot isn't officially
Speaker 1: available in China, but has been accessible via virtual private networks.
Speaker 1: Coming up. Goalman it's offering clients a special way to
Speaker 1: invest in Unicorn Stripe or bringing the details. Next, this
Speaker 1: is Blomberg. Oh, everyone was reading about it today. Goldman
Speaker 1: Sachs offering its wealthiest customers access to a fundraising round
Speaker 1: for the payment's Giant Stripe and the bank will set
Speaker 1: up a special purpose vehicle for private wealth clients to
Speaker 1: invest in the company as it seeks to raise four
Speaker 1: billion dollars for more. Let's bringing Blomberg straight out, Nadarajan,
Speaker 1: and you're one of the key components of breaking this story.
Speaker 1: Remind us why they need the money. It's kind of
Speaker 1: rather arduous around tax. Yeah, I mean, there are a
Speaker 1: lot of longstanding employees at the film. They want to
Speaker 1: cash out their restricted stock units, and part of that
Speaker 1: move will involve a looming tax bill, and that is,
Speaker 1: in effect one of the reasons why they are raising
Speaker 1: this much. They are trying to raise about four billion dollars,
Speaker 1: which is a pretty high sum. But again, we're talking
Speaker 1: about a company that went from a valuation one hundred
Speaker 1: million just to decade ago to almost one hundred billion
Speaker 1: dollars in twenty twenty one. It has come down significantly.
Speaker 1: We're talking about around where they could be valued at
Speaker 1: fifty five billion dollars. But if you think about that,
Speaker 1: I think about the fact that we're talking about a
Speaker 1: fintech firm that is in the position to report positive
Speaker 1: free cash flow. That makes it an exciting name. And
Speaker 1: when the valuation has come down this much, you can
Speaker 1: be guaranteed the lot of wealthy clients, a lot of
Speaker 1: big institutional investors would want to poke around and see
Speaker 1: if this is the right time to jump in, particularly
Speaker 1: as everyone's still talking about certain list of names that
Speaker 1: could co public as and when the markets reopen, valuations
Speaker 1: become boy in a little bit more. Just just talk
Speaker 1: to us a little bit about how it could be structured.
Speaker 1: What It's not just Goldman in on the deal, right, No,
Speaker 1: So Goldman and JP Morgan are the two banks of
Speaker 1: being mandated. Were trying to raise this money, and they're
Speaker 1: going to a wide swath of investors that includes you know,
Speaker 1: big names and finance and the tech world VC firms.
Speaker 1: There is a quite a big spectrum that they've gone
Speaker 1: now too. But equally important and what we found interesting
Speaker 1: was Goldman Sacks, for instance, opening it up to their
Speaker 1: high net worth clients Previously The biggest draw if you're
Speaker 1: a client in one of these banks was we can
Speaker 1: bring you in closer to the IPO. Now with private
Speaker 1: companies wanting to say private for longer, this is a
Speaker 1: way to augment your offerings. Goldman can go out there
Speaker 1: and say, let's create a special vehicle where all of
Speaker 1: you can pull in your cash and we will write
Speaker 1: one big check and hand it over to Stripe. Why
Speaker 1: would you not want to take that opportunity? Remind us
Speaker 1: when this has been done before, because it's sort of
Speaker 1: got echoes of what happened with the right. The Uber
Speaker 1: is one example that comes to mind that was a
Speaker 1: big deal. It was in twenty fifteen Goldman Sacks to
Speaker 1: the one point six one point seven billion dollars convertible
Speaker 1: note deal. At that time, that was driven by their
Speaker 1: high networth clients. But equally important, even if you look
Speaker 1: at recent examples, when a big venture capital firm like
Speaker 1: Tiger Global wants to raise a new fund, banks see
Speaker 1: an opportunity to create vehicles and go to their rich clients,
Speaker 1: you know, people who are worth more than twenty five
Speaker 1: million dollars perhaps and telling them that this is a
Speaker 1: way for you to get in on a big name,
Speaker 1: which in the bus was only available to institutional investors.
Speaker 1: Interesting the way in which people still want diversification. Street up,
Speaker 1: great reporting me. Thank you Sharjan there, and you got
Speaker 1: some time for talking to tech. Yeah, thank you time
Speaker 1: now indeed for talking tech. Let's go over to Europe,
Speaker 1: where the European Commission suspended staff from using TikTok over
Speaker 1: security concerns related to the social media apps data collection practices.
Speaker 1: Staff were ordered to delete the app from mobile phones
Speaker 1: and corporate devices, which includes personal devices that use Commission apps.
Speaker 1: That's according to a spokesperson. The move comes among growing
Speaker 1: scrucity both here in the US but also in Europe
Speaker 1: over the apps potential national security risks. In China, Ant
Speaker 1: Group's profit fell eighty three percent after China's regulatory crackdown
Speaker 1: and a drop in valuation for overseas equity investments. Still
Speaker 1: A contributed a billion one or one hundred and forty
Speaker 1: five million dollars to its pair in Ali Barber, whose
Speaker 1: own profit jumped sixty nine percent after the e commerce
Speaker 1: giant reigned in its spending and narrowed losses abroad to
Speaker 1: make up for, of course, anemic growth because of COVID
Speaker 1: nineteen and benefiting also from reduced spending is Grab, which
Speaker 1: brought its profitability target forward after posting a narrower quarterly loss.
Speaker 1: The food delivery provider among money losing Southeast Asian internet
Speaker 1: giants to have shifted strategies to focus on achieving profitability
Speaker 1: instead of spending on growth. Caroline great global round up there,
Speaker 1: and now let's get you back to the US. Let's
Speaker 1: get you to a stop to watch after hours because
Speaker 1: it's Block of course, the artists formerly known as Square,
Speaker 1: they've currently been for some fluctuation, but we're now decidedly higher,
Speaker 1: up six and a half percent. After hours look grows.
Speaker 1: Payment volumes did climb fifteen percent year on year. It
Speaker 1: was slightly blow expectations, but net revenue looks solid up
Speaker 1: fourteen percent, and particularly are seeing sort of record setting
Speaker 1: revenue for the fourth quarter and the full year when
Speaker 1: it comes to subscriptions and services. They're also posting towards
Speaker 1: twenty twenty three guidance that were slightly ahead of expectations,
Speaker 1: so they're in the payment side of things ed, it
Speaker 1: looks as though we got a bit of a solid beat.
Speaker 1: It was interesting also the bitcoin side of the equation
Speaker 1: also looking relatively solid. It's interesting the pledge from block
Speaker 1: is efficiency. Right in other ways, they're reigning and spending,
Speaker 1: and after what we saw from a firm PayPal, other
Speaker 1: thin tech players, that's kind of been the theme of
Speaker 1: this earning season. As volumes drop, then you need to
Speaker 1: tighten the belt a little. I think that's the play. Yeah,
Speaker 1: it was notable that they're really trying to get costs
Speaker 1: under control. We note how wasn't that much an illustrative
Speaker 1: of how they're going to be doing that, but people
Speaker 1: sort of noted that the number was below where they
Speaker 1: had thought. And yeah, as you say, tightening your belt particularly,
Speaker 1: keep on selling out there and continuing to try and
Speaker 1: find some expansion bitcoin revenue. As I said, we're down
Speaker 1: six and a half percent year on year, but overall
Speaker 1: it was ahead of expectations. Welcome back to blobog Technology.
Speaker 1: I can and heard in New York and Almed Ludlow
Speaker 1: in San Francisco. We're going to get back to that
Speaker 1: breaking Adobe news. Caroline shares down around four and a
Speaker 1: half percent in after hours after Bloomberg broke the story
Speaker 1: that the DOJ is preparing a suit to block Adobe's
Speaker 1: twenty billion dollar deal to buy Figma that according to sources,
Speaker 1: and one source saying carrow could come as soon as
Speaker 1: next month. I mean, really, Adobe such a dominant force
Speaker 1: in terms of software, Photoshoppy, Destrator, you know it. But
Speaker 1: when they announced that deal to acquire Figment, many you know,
Speaker 1: were kind of amazed by the price point that they
Speaker 1: were willing to spend really where they thought this would
Speaker 1: be a creative. They're trying to introduce less expensive products
Speaker 1: at the moment, but notably, just time and time again,
Speaker 1: this is an administration that is willing to go there
Speaker 1: to tackle M and A, to worry about competition and
Speaker 1: in this space, and really does feel as though, well
Speaker 1: the Bloomberg reporting getting ahead of that antitrust news and
Speaker 1: the filing. Of course, I think it's all because Adobe
Speaker 1: was actually in front and a meeting with ADJ which
Speaker 1: is often the case before we get this in announcement,
Speaker 1: consistent with what we've seen right from the DJA. Our
Speaker 1: Bloomberg intelligence analysts do point out though that in this
Speaker 1: case it probably came sooner than expected, although it was
Speaker 1: kind of expected based on the actions DJ's taken in
Speaker 1: M and A. So far, we'll pivot Caroline, but we'll
Speaker 1: stick across the story as more headlines break. Coin Base,
Speaker 1: the largest US crypto exchange, is now launching a blockchain,
Speaker 1: expanding its reach deeper into the worlds of DeFi and NFTs.
Speaker 1: Let's talk about this all with who else Bloomberg Scenali
Speaker 1: Basset out in New York, Shenali blockchain. Why this is
Speaker 1: very interesting. Remember, this is a centralized exchange if you will,
Speaker 1: looking at decentralization. When we spoke to a coin based executive,
Speaker 1: our colleague Moyo Shan reports that this is really a
Speaker 1: bet on the community. This is a layer two network
Speaker 1: here where decentralized apps can be built and it will
Speaker 1: be a home for the chain products that will be
Speaker 1: built in conjunction with this network that is being shepherded
Speaker 1: by coin Base. Now let's use some of Brian Armstrong's
Speaker 1: all words, because he said this is to improve the
Speaker 1: scaleability and usability of crypto, plus he wanted to get
Speaker 1: in on the builder energy ed. That is what he said.
Speaker 1: I also want to point out here that if you
Speaker 1: look at the initial tweets from build on base here,
Speaker 1: which is kind of the Twitter handle of base, which
Speaker 1: is project is known as Hello world is how it starts,
Speaker 1: which of course is a very intimate term and for
Speaker 1: the developer community here. So let's see how much this
Speaker 1: starts to take off. I think it's a very interesting concept,
Speaker 1: of course, to see in exchange like this get closer
Speaker 1: to the decentralized world. The other headline is what coin
Speaker 1: base does not plan to do, which is to not
Speaker 1: issue a native token. Another point of discussion, Shali, stay
Speaker 1: with us, Caroline. We're tracking a lot of stories today,
Speaker 1: we are, and it all debtails nicely into a conversation
Speaker 1: around the future regulation around crypto, the future of innovation
Speaker 1: and around crypto. And well, we've got one person who's
Speaker 1: kind of at the heart of that conversation, Chris Lahane's
Speaker 1: chief strategy officer, han Vinchas, of course, still with us
Speaker 1: a Shinali bassecond, Chris, I'm going to Austin only to
Speaker 1: take it away with the first sort of questions because
Speaker 1: we want to dig in a little bit more to
Speaker 1: coin based us. Yeah, Chris, I'm really curious about your
Speaker 1: thoughts here about coin bass efforts to get into the
Speaker 1: decentralized world when they're facing so many questions really about
Speaker 1: the centralized world when it comes to US regulators, what
Speaker 1: is and what ISN'TO security? What kind of questions does
Speaker 1: this open up now that they're embracing decentralization so much
Speaker 1: as well? Yeah, well, first, thanks for having me. I
Speaker 1: think really two points on the coin based announcement. The
Speaker 1: first is, I do think it reflects what's really going
Speaker 1: on in the crypto space right now, which is enormous
Speaker 1: progress in development what you call the infrastructure level where
Speaker 1: those developers are working at. And then more broadly, when
Speaker 1: you ask about the policy question, I think there's a
Speaker 1: really interesting I called tale of two companies. Right you
Speaker 1: had an FTX company that was based offshore, in my view,
Speaker 1: really more of a centralized financed financial entity that committed,
Speaker 1: at least based on what we've seen them been reported,
Speaker 1: all kinds of fraud, but the type of fraud that
Speaker 1: you've historically seen in centralized finance over human history. And
Speaker 1: then you have a company like coin base. Brian Armstrong,
Speaker 1: who you referenced earlier, made a really interesting decision seven
Speaker 1: eight nine years ago to base his company here in
Speaker 1: the United States, to push the frontiers of innovation, to
Speaker 1: create more economic freedom, more economic opportunity, but to do
Speaker 1: it within an existing legal system, and particularly a set
Speaker 1: of laws that were actually created before computers even existed.
Speaker 1: So I think coin Base is actually a really interesting
Speaker 1: example of how you can actually push innovation in this
Speaker 1: space while operating within the paradigm there a stale, very
Speaker 1: much old school Chris. Of course, the company you work
Speaker 1: at now is one of the hottest venture launches in
Speaker 1: the crypto space recently. When you're thinking about centralization versus decentralization,
Speaker 1: within the parameters of the existing laws that exist around
Speaker 1: the crypto community, what are you more comfortable when it
Speaker 1: comes to putting money to work with Well, first of all,
Speaker 1: you know, we raise one point five billion almost a
Speaker 1: year ago to the date, and for us, we're really
Speaker 1: focused on investments that will play out over multiple years.
Speaker 1: This goes back to something I was just touching on.
Speaker 1: We see enormous opportunity what I would call it infrastructure area,
Speaker 1: where you're getting technology that deals with scaling, deals with interoperability,
Speaker 1: basically in layman's terms or lay person's terms, the type
Speaker 1: of technology that you're ultimately going to need for this
Speaker 1: to be consumer facing, in for everyday consumers to be
Speaker 1: able to use. Now to this specific question, about the
Speaker 1: decentralization versus the centralization. I mean, by definition, within crypto,
Speaker 1: it is a decentralized space. That's ultimately how you democratize
Speaker 1: aspects of capitalism, particularly online. Within that, there can be
Speaker 1: a spectrum of issues and ideas. But we spend a
Speaker 1: lot of time with with our portfolio companies, and even
Speaker 1: the potential projects that we may or ultimately may not
Speaker 1: invest in is a is the what's the quality of
Speaker 1: the team, what's the quality of the technology? Do they
Speaker 1: understand that there's going to be a complex regulatory map
Speaker 1: out there. They don't necessarily have to have all the
Speaker 1: answers from day one, but they have to reflect an
Speaker 1: understanding that they're going to need to navigate this and
Speaker 1: navigate it in a responsible way. So that's amongst the
Speaker 1: things that we think about when we pursue our investments.
Speaker 1: I can I have to tell you, like, we're incredibly
Speaker 1: excited about the types of founders we're seeing, particularly in
Speaker 1: those early stages where they're really beginning to think about, Okay,
Speaker 1: here's where the world is, Here's some of the regulatory
Speaker 1: stuff we need to navigate. But we have incredibly powerful
Speaker 1: ideas about how we can scale and make this technology
Speaker 1: really consumer facing. Chris, You're so powerful with hard ventures
Speaker 1: because of the expertise you can lend the portfolio companies,
Speaker 1: some of them that we're just seeing there. Your passion
Speaker 1: around Web three I've had firsthand from you, but I
Speaker 1: mean before we're helping advise companies such as Airbnb as
Speaker 1: they were scaling. You're someone who knows Washington the way
Speaker 1: it works so intimately from your background, what do you
Speaker 1: make on the way in which the SEC is by
Speaker 1: some terms of phrase our guests have said, look basically
Speaker 1: regulating by enforcement rather than setting rules of the road. Yeah,
Speaker 1: I've called it an enforcement only approach. I mean, if
Speaker 1: you take a step back a year ago, almost to
Speaker 1: the day, I maybe off for a week or two,
Speaker 1: the Biden and White House put out an executive order.
Speaker 1: It was sort of a high water mark up to
Speaker 1: this point in time in Web three crypto regulations because
Speaker 1: it really expressed a desire and interest to foster and
Speaker 1: facilitate responsible innovation. You fast forward to where we are
Speaker 1: today and there really has not been any coherent strategy
Speaker 1: coming at the federal level in terms of actually, how
Speaker 1: do you support and advance that type of a holistic approach,
Speaker 1: and what you've basically defaulted to is policy through enforcement.
Speaker 1: It's a little bit like if we had just invented
Speaker 1: cars and there were roads out there, and you basically
Speaker 1: had to figure out the speed limit based on who
Speaker 1: was arresting you at what speed, and then how the
Speaker 1: courts ultimately would interpret that. That's no way to create
Speaker 1: a coherent policy. I'm old enough to have gone back
Speaker 1: to the nineties. I was working in the Clinton administration.
Speaker 1: We passed the nineteen ninety Telco Act, worked with a
Speaker 1: divided Congress Democrats and Republicans, that put the US on
Speaker 1: the path to being the digital center of the world.
Speaker 1: That translated into enormous economic power, enormous national security power.
Speaker 1: At one point in time, I think the five largest
Speaker 1: companies by market cap in the world were somewhere between
Speaker 1: San Francisco and Seattle, right, and then you look at
Speaker 1: what's going on today. But the history of the US
Speaker 1: has always been a country since its founding that embraces innovation,
Speaker 1: with government, public and private sector working together. Interestingly, with
Speaker 1: this enforcement only approach, it is actually seeding its leadership role.
Speaker 1: I mean, as we speak in your native UK, we
Speaker 1: have activity, right now to potentially pass legislation by the
Speaker 1: end of this year, which could be amongst the most
Speaker 1: farthest reaching in terms of defining a regulatory framework for
Speaker 1: crypto to make the UK a crypto hub. Chris Will
Speaker 1: companies leave. I think that I look, I literally just
Speaker 1: had a meeting a couple days ago. These weren't Han
Speaker 1: venture companies, these were some others and they had reached
Speaker 1: out to actually really try to understand where could we
Speaker 1: potentially be looking at the world, And each and every
Speaker 1: one of them was looking at places like the UK,
Speaker 1: even looking at Europe. And you know, as someone that
Speaker 1: get who came up in the US, the idea that
Speaker 1: Europe is actually ahead of the US and thinking about
Speaker 1: regulatory frameworks is just something that I had never really
Speaker 1: seen before. And so I do think you're going to
Speaker 1: get to a place where companies, projects, protocols, initiatives, founders,
Speaker 1: entrepreneurs are going to begin to look around the world
Speaker 1: about where they want to base themselves. Some may do
Speaker 1: the US and something else, some may only do something else,
Speaker 1: Some may spread their developers into these different places. But
Speaker 1: ultimately this technology is happening, right this is the next
Speaker 1: wave of the Internet. You see it with other private
Speaker 1: sector entities wanting to engage with this technology. You see
Speaker 1: other governments. And the question for the US is do
Speaker 1: we want to maintain our historic leadership role or are
Speaker 1: we going to give up on that fat Chris la
Speaker 1: Hang comebacks saying we have chief strategy officer at home benches. Meanwhile,
Speaker 1: shan Ali Bassett, we thank you so much for having
Speaker 1: us bring that interview. Now let's get onto some other
Speaker 1: key crypto news, because look, there's from fresh charges that've
Speaker 1: been brought against FTX co founder Sam ban Winfried, including
Speaker 1: references to a pair of co conspirators. The US says
Speaker 1: we're involved in illegally seeking to influence the regulation of
Speaker 1: digital assets. The campaign cash from him and other top
Speaker 1: FDx executives has a potential to be the biggest infusion
Speaker 1: of illegal money into the US politics in decades. And
Speaker 1: what else we've got coming up? Yeah, a big exclusive
Speaker 1: interview with job CEO on earnings and how soon we
Speaker 1: can expect them, Sorry for this one car to take
Speaker 1: off everything ev told next jokes. I love in fact
Speaker 1: from our point of view, when it comes to Tesla Autonomous,
Speaker 1: are their autonomous strategy autonomous taxi platforms is much more
Speaker 1: important than their electric vehicle strategy. In our view, our
Speaker 1: fifteen hundred dollars price target for Tesla, it's roughlo it's
Speaker 1: a little over two hundred dollars now, but our fifteen
Speaker 1: hundred dollar price target in five years is two thirds
Speaker 1: because of autonomous And when we listen to BYD, we
Speaker 1: do not hear autonomous as a strategy. That was Kafe
Speaker 1: would of course, founder and CEO of our investments Carrow,
Speaker 1: showing how optimistic she is about Tesla's robotaxi strategy. It's
Speaker 1: a big part of their price target long term. We
Speaker 1: asked our audience do you think Tesla wins the robotaxi race?
Speaker 1: The answers kind of speak for themselves, but the idea
Speaker 1: is Tesla's got more data than anyone. Do you think
Speaker 1: they'll win? Carrow? It's a hard one to call because
Speaker 1: everything seems so nascent still at the moment. What you
Speaker 1: see cruise on the roads, I'm seeing weymo now and
Speaker 1: then powering down where you are in San Francisco. How
Speaker 1: many are you seeing that are of Tesla? How real
Speaker 1: can that be in five years? The difference, I think
Speaker 1: is that Tesla has all these vehicles that drivers are
Speaker 1: using in all kinds of markets jurisdictions, whereas Cruz WAYMO,
Speaker 1: they're just here in the Bay Area, right And I
Speaker 1: think that's the problem going forward that analysts are struggling
Speaker 1: to see when they prefer Tesla as the lead candidate.
Speaker 1: We'll continue to track it. We do on a daily basis. Now.
Speaker 1: Shares of ev toll maker job jumped on Thursday after
Speaker 1: the company gave updates on its key milestones during earnings.
Speaker 1: The company's first aircraft is expected to roll off a
Speaker 1: pilot manufacturing line and fly within the next few months,
Speaker 1: and the electric aircraft maker says it's getting closer on
Speaker 1: those FA certifications, opening the door to commercialization. Joining us
Speaker 1: now JOEB CEO joe Ben Bevertt is making progress, Joe Ben.
Speaker 1: Analysts are still concerned about how far away commercialization is.
Speaker 1: Answer their concerns. So we have been making remarkable progress.
Speaker 1: Twenty twenty two is a fantastic year and we are
Speaker 1: are really leaning in and the progress in twenty twenty
Speaker 1: three is really accelerating. We're now two we've completed two
Speaker 1: of the five stages of our certification process, and we're
Speaker 1: making remarkable progress on third stage. As you mentioned, our
Speaker 1: first company, conforming Aircraft is has the parts have rolled
Speaker 1: off the pilot production line and we're beginning final assembly
Speaker 1: and we'll be flying that in the months to come.
Speaker 1: FAA certification is kind of the key bit, right because
Speaker 1: to get those vehicles electric aircraft in the skies that
Speaker 1: needs to be done. Are we talking months, years, decades
Speaker 1: before the FAA does that because it's a slow moving organization. Yeah.
Speaker 1: As I said, we've got really unprecedented momentum, both on
Speaker 1: the joby side and on the FA side, with huge
Speaker 1: progress that's been made over the past few months, and
Speaker 1: we're just knocking down a milestone after milestone, and so
Speaker 1: the momentum is really there, and we're very grateful for
Speaker 1: the FA and the resources that they're putting into this
Speaker 1: exciting new industry. Job And I was reading some of
Speaker 1: the analyst reaction to what you had to say twenty
Speaker 1: four hours ago, and the sort of more bullish name
Speaker 1: see you as the kind of proof point for an
Speaker 1: entire industry. You're leading the way. But the big concern
Speaker 1: they have is that the FAA has to come up
Speaker 1: with rules for a whole new category of aircraft. How
Speaker 1: much evidence do you see that the FAA has the
Speaker 1: competence and energy to do that. Well, the exciting thing
Speaker 1: for us is that that process is now behind us,
Speaker 1: as we've completed those first two stages and the stage
Speaker 1: that we're rendering is completing our the last of area
Speaker 1: specific certification plans. So we've had the FA approved five
Speaker 1: of the thirteen, we've submitted an additional three, and we're
Speaker 1: expecting to submit all thirteen of those in the first
Speaker 1: half of the year. So and again the means of
Speaker 1: compliance are now behind us and we're really focused on
Speaker 1: the future. This year is going to be a lot
Speaker 1: about testing, and that's what makes aviation our safest mode
Speaker 1: of transportation is the rigor with which we build every
Speaker 1: single component and then test every single component on the aircraft. Jovann,
Speaker 1: You also have this relationship with the Department of Defense.
Speaker 1: In long term, I want to understand what proportion of
Speaker 1: your business, your commercial business will be based on government
Speaker 1: and military contracts and what will be a consumer facing business. Well,
Speaker 1: that's something that we're going to learn over the overcoming years.
Speaker 1: But what's really exciting today is the momentum we have
Speaker 1: with the Department. Department of Defense. We have now have
Speaker 1: a seventy five million dollar contract with the DoD to
Speaker 1: mature the development of our aircraft, and we're in discussions
Speaker 1: with them on being able to bring our aircraft on
Speaker 1: base and provide really useful operations here in the US
Speaker 1: for our government partners, and we're excited to be beginning
Speaker 1: that on base operations will which will give us both
Speaker 1: revenue and even more importantly, allow us to streamline and
Speaker 1: optimize our optimization our operations prior to commercial launch to
Speaker 1: be Aviation found at Joe Benbevett. Thank you so much
Speaker 1: for you the time on the show. It's great to
Speaker 1: have you. Um. Netflix is trying to grow internationally and
Speaker 1: so it is slash the cost of some subscriptions in
Speaker 1: more than one hundred different countries. But I'm afraid if
Speaker 1: you're like me in the US, it's not gonna be
Speaker 1: helping me here. And in developed world they're trying to
Speaker 1: well make us pay our ways stop on that password
Speaker 1: sharing we've all been doing. But it's all about the
Speaker 1: focus on the developing markets. So think Asia, the America's
Speaker 1: Middle East, in countries that they haven't managed to build
Speaker 1: up so many subscribers, so countries like Vietnam, Thailand, and
Speaker 1: Adonesia could be seen subscriptions and the cost cut by
Speaker 1: almost fifty percent. According to some analysis, this should help
Speaker 1: boost perhaps the overall global user passed that two hundred
Speaker 1: and thirty one million number they're already at. Today's going viral.
Speaker 1: Let's get back to some of that news that crossed
Speaker 1: this hour. The Justice Department preparing an antitrust lawsuits seeking
Speaker 1: to block Adova's twenty billion dollar acquisition of the startup Figma. Now,
Speaker 1: according to people familiar, no matter, our cases expect to
Speaker 1: be found as soon as next month. We're very pleased
Speaker 1: to say immediately with us as Anna A. Grana Is
Speaker 1: of Bloomberg Intelligence, why is it stop four when everyone
Speaker 1: hated this deal to begin with. I'm as confused as
Speaker 1: you are on this one. You know, we'll find out
Speaker 1: tomorrow morning what happens. But you know, frankly speaking, we
Speaker 1: had expected that. Our anti trust stannel is generally basically said,
Speaker 1: it's going to be difficult to get this thing done
Speaker 1: because of so much scrutiny on large tech firms trying
Speaker 1: to buy smaller incumbents that are threatening their business. So
Speaker 1: we'll see what that happens. But you know, I'm also
Speaker 1: surprised that the starts down right now. And I the
Speaker 1: other surprising you've outlining your Bloomberg Intelligence reacts dead is
Speaker 1: how soon this came about. I think the market expected
Speaker 1: regulatory bodies around the world to look at it, but
Speaker 1: you're saying, actually, action is happening sooner than we thought. Yeah,
Speaker 1: And I'm to be honest with you, with Jendre's work,
Speaker 1: that is, I'm quoting very basically, I depend on her
Speaker 1: for all of these expert opinions, and you know, she
Speaker 1: thinks it is much sooner than what she was expecting.
Speaker 1: And the reason is that I think there is so
Speaker 1: much I mean, every major tech deal is looked under
Speaker 1: a microscope right now, and they want to make a
Speaker 1: point that they are not going to, let you know,
Speaker 1: something like a Facebook buying Instagram again, um, you know
Speaker 1: out there. So let's see how this turns out. But
Speaker 1: you know, I think in the long run, if they
Speaker 1: are forced not to buy it, it maybe not. It
Speaker 1: may not be that bad of a thing for Adobe.
Speaker 1: They can deploy that cast somewhere else and try to
Speaker 1: do this organically. Okay, interesting, it would probably be pretty
Speaker 1: awful for Figma. In some ways one might imagine just
Speaker 1: how much would this be coordinated elsewhere as well. I
Speaker 1: think one of the things that we have seen that
Speaker 1: once they've got a whip, that US organized authorities are
Speaker 1: really strict about some of this stuff. We have seen
Speaker 1: Europe already, you know, trying to break up you know,
Speaker 1: Microsoft Activision with basically saying you know, you've got to
Speaker 1: get rid of a game. I mean that it's it's
Speaker 1: it's kind of like, you know, I would say this
Speaker 1: is very common across the globe right now, where most
Speaker 1: of the authorities are pretty pretty against large tech companies
Speaker 1: buying anything right now. It's the same Anaragrana. We thank
Speaker 1: you for jumping in from Bloomberg Intelligence bringing us the expertise. Yeah,
Speaker 1: that does it for this edition, Carroc of Bloomberg Technology.
Speaker 1: What a week has been so far, just one day
Speaker 1: to go and so much to digest tomorrow on our
Speaker 1: Twitter spaces we do it every Friday. Thanks to you,
Speaker 1: we're driving the force of what we're going to be
Speaker 1: discussing at twelve pm New York Times nine am San Francisco.
Speaker 1: Tune in on the Twitter spaces to see if we've
Speaker 1: got some news breaking across it like we have done
Speaker 1: in previous weeks. Hey yeah, and there's also that huge
Speaker 1: story from German on Apple glucose and the Apple Watch.
Speaker 1: We've got a recam. It's the biggest one of the week.
Speaker 1: From New York. From San Francisco, this is Bloomberg.