Speaker 1: This is Bloomberg Business Wait inside from the reporters and
Speaker 1: editors who bring you America's most trusted business magazine, plus
Speaker 1: global business, finance and tech news. The Bloomberg Business Week
Speaker 1: Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 2: We want to get to one of the stories that
Speaker 2: kind of had U shaking our heads again. It's among
Speaker 2: our most read on the Bloomberg. It's not about the
Speaker 2: big venture capital and tech firms that tapped into a
Speaker 2: backstop and ended up with at least some of them
Speaker 2: getting a billion dollars or more following the collapse of
Speaker 2: Silicon Valley Bank.
Speaker 3: Yeah, some truly unbelievable facts that we had previously kind
Speaker 3: of known. I mean, we knew that there were, for example,
Speaker 3: account holders with more than three billion dollars at SVB,
Speaker 3: and they were made whole.
Speaker 4: I think at the time, the idea was.
Speaker 3: You've got to make everybody whole, or else we'll see
Speaker 3: more bank runs all around the country. But in hindsight,
Speaker 3: you might be you might be attempted to criticize regulators
Speaker 3: for just giving away money to so many people who
Speaker 3: already have so much right.
Speaker 2: That weren't in any problem so or seemingly so.
Speaker 3: I mean, if I A policy lost a billion dollars,
Speaker 3: it would probably hurt, but not much.
Speaker 4: I mean, they'd still be on yachts drinking champagne.
Speaker 2: It's a lot, you know, I don't know about that,
Speaker 2: but it is a legendary and very successful VC firm.
Speaker 2: So let's get to it. This story is written by
Speaker 2: our lazette Chapman and Jason Leopold.
Speaker 5: Uh.
Speaker 2: Let's get to it with Bloomberg News Financial regulations reporter
Speaker 2: Ben Bain, who edited the story. He's on the phone
Speaker 2: in DC, so Ben, come on in on. First of all,
Speaker 2: what's the information that you guys, thanks to a freedom
Speaker 2: of information request, what you.
Speaker 4: Found and thanks to a mistake and a mistake.
Speaker 6: There's that too, so so yeah, we what we saw
Speaker 6: here was really kind of the most detailed information yet
Speaker 6: of what were the top ten biggest depositors. That's Plicon
Speaker 6: Valley Bank as it was collapsing back in March. And
Speaker 6: what we saw was, you know, there there's some interesting
Speaker 6: names you mentioned, you know, Sequoia Capital on there. They're
Speaker 6: kind of right near the top of the list. They
Speaker 6: had a billion dollars in deposits. Now It's not in
Speaker 6: and of itself, you know, surprising or or even necessarily
Speaker 6: news worded that Sequoya, which has about eighty five billion
Speaker 6: dollars in assets under management, would have a billion dollars
Speaker 6: in a bank account. But what is interesting about this
Speaker 6: is that, if you recall, one of the big shickouts
Speaker 6: from this March banking crisis was that the US government
Speaker 6: took the extraordinary step came in and said, look that
Speaker 6: two hundred and fifty thousand dollars limit that we have
Speaker 6: as kind of a bedrock in this country for deposit insurance,
Speaker 6: that's going to go away in the case of Silicon
Speaker 6: Valley Bank depositors and also Signature Bank depositors, the other
Speaker 6: bank that failed in March, because there's an economic necessity,
Speaker 6: there's a need for businesses to keep running. Basically, the
Speaker 6: thought is is that all these businesses had money in
Speaker 6: these banks, and if they lost the money in those
Speaker 6: deposit accounts, they couldn't turn the lights on Monday morning,
Speaker 6: March twelfth, March thirteenth, Pardon me, So what's interesting about
Speaker 6: seeing names like Sequoya, some of these big VC firms,
Speaker 6: big technology firms with substantial deposit accounts in Silicon Valley
Speaker 6: Bank that were effectively made whole or at least backstopped
Speaker 6: by the US government. Is that Yes, Sure, there were
Speaker 6: many many companies, many many tech startups that were backstopped
Speaker 6: by the government stepping in. But there are also some
Speaker 6: pretty big players. As you're mentioning, right, you know, a
Speaker 6: billion dollars wasn't going to make Sequoia Capitals a lot
Speaker 6: of business. They have eighty five billion. So you know,
Speaker 6: it's just kind of a glimpse into some of the
Speaker 6: tough choices of the government had to make when really
Speaker 6: taking an extraordinary step here.
Speaker 3: I wonder, ben if any of it was pre negotiated.
Speaker 3: I mean, there were worries about a run for a
Speaker 3: few hours at least right on the twelfth. And if
Speaker 3: you had a billion dollars in the bank, you might
Speaker 3: pick up the phone and call the fd I see
Speaker 3: and say, listen, we're gonna pull it or are you
Speaker 3: going to cover us?
Speaker 6: Well, I don't, I don't, we don't. We don't have that,
Speaker 6: you know, we don't have that reporting what we what
Speaker 6: we you know, what we do what we do know
Speaker 6: basically you know from this list, and you know it
Speaker 6: was it was you know, we we did get it
Speaker 6: through for the freedom of through Freedom Information Act requests,
Speaker 6: and it wasn't you know, made public previously. Was that
Speaker 6: you know, there were these large firms who certainly did
Speaker 6: have you know, significant theft in technology and also in
Speaker 6: other industries. So just that the story wasn't necessarily as
Speaker 6: you know, two dimensional if you will, of many many
Speaker 6: startups and many many small businesses needing to be able
Speaker 6: to take their to posits right. They're also some very
Speaker 6: very very big players. They relied in this bank, you know,
Speaker 6: for many years.
Speaker 3: By the way, the fd I SEE apparently mistakenly sent
Speaker 3: you an unred acted document. They then asked you to
Speaker 3: please like delete it and not publish it. Why what
Speaker 3: did they want to redact?
Speaker 4: Do you think?
Speaker 7: Well, you know.
Speaker 6: What the what the fd I SEE said was that
Speaker 6: they you know, they had intended to partially withhold some
Speaker 6: of the details and uh because it included you know,
Speaker 6: confidential commercial or financial information. You know, this the details
Speaker 6: of who had money you know in Silicon Valley Bank
Speaker 6: as it was going down. I mean, this is a
Speaker 6: sensitive information in the sense that you know, this is
Speaker 6: basically who had the biggest deposits at this institution that
Speaker 6: we've all been talking about for the last three or
Speaker 6: four months. You know that said, uh, certainly that this
Speaker 6: is part of the story of really one of the
Speaker 6: financial stories of the year. So you know, it does
Speaker 6: kind of fill in some details that the public didn't have.
Speaker 2: What kills me is that the amount of money that
Speaker 2: they had at these banks, right, you know that there's
Speaker 2: only a certain amount in short, So I'm always kind
Speaker 2: of like, why would you do this? I don't know,
Speaker 2: I find that well.
Speaker 3: Imagine how many banks they would have to put it
Speaker 3: in if they only put two hundred and fifty grand in.
Speaker 2: But I get it, but I just think it's kind
Speaker 2: of you are potentially putting yourself in a votel. I know,
Speaker 2: you assume that nothing's going to go wrong, but you
Speaker 2: know what happens. Having said that, Ben go through some
Speaker 2: of the other players. We talk abot about Sequoya, So
Speaker 2: they got a billion dollars.
Speaker 3: Shoes a billion they would by the way, if they
Speaker 3: wanted to keep only two hundred and fifty grand in
Speaker 3: each bank, they would have to find four thousand banks
Speaker 3: in America.
Speaker 2: I get it, actually I get it, but I mean,
Speaker 2: so there's other investments you can do that are short
Speaker 2: term that are also considered safe. Right, there's other things
Speaker 2: that they can do. I don't know, is that what
Speaker 2: everybody does?
Speaker 1: Yeah?
Speaker 3: I think that's that's what you have to do unless
Speaker 3: you want to. I mean, there are only like five
Speaker 3: or six thousand banks in the US, so Sequoia would
Speaker 3: have to use every single one of them, like.
Speaker 2: Pretty much, what does Apple and Amazon like, what do
Speaker 2: they do with all their money?
Speaker 4: That's Ben?
Speaker 5: What do you think?
Speaker 4: I mean, it's a good question, Ben, What do you think?
Speaker 6: I mean? I think I think we also just we
Speaker 6: have to keep in mind that this was an extraordinary event.
Speaker 6: You know, there have been three bank failures in you know,
Speaker 6: this year. I mean it doesn't mean that there won't
Speaker 6: be others, and there haven't bailed theirs since the financial crisis,
Speaker 6: but the amount of money that was held in these banks,
Speaker 6: the amount of assets that these banks had, the sides
Speaker 6: of the bank failures this year, I mean, this is
Speaker 6: not a not a standard situation. So yes, there there
Speaker 6: You know, there is definitely strategies where you don't keep
Speaker 6: large amounts of money in one account. However, you know,
Speaker 6: businesses need to run their businesses, they need to have
Speaker 6: certain types of accounts to be able to make payroll,
Speaker 6: to have accounts to be able right, yeah, to function.
Speaker 6: So there, I mean, there is a distinction between interest
Speaker 6: bearing accounts and non interest bearing accounts. And you know,
Speaker 6: after the financial crisis, there was you know a now
Speaker 6: sunseted exemption where you know, there was coverage for businesses
Speaker 6: using non interest bearing accounts that could be well about
Speaker 6: the two hundred and fifty thousand dollars and would it
Speaker 6: would be covered. So now there's a push to actually,
Speaker 6: you know, maybe rethink that list.
Speaker 2: This sounds like a great Business Week story, like a
Speaker 2: little white chart like like where all the money goes
Speaker 2: and stuff like, but hey, Ben, before you go, because
Speaker 2: we only have about forty forty five seconds. Who else
Speaker 2: so got some money just quickly.
Speaker 6: So so there's you know, there are some interesting uh
Speaker 6: you know kind of kind of names on there. As
Speaker 6: you make you with this list. One thing that kind
Speaker 6: of jumped out to me that was interesting too is
Speaker 6: that you know, on this list of and if you
Speaker 6: if you added together ten ten depositors, is about thirteen
Speaker 6: billion or a little bit less in total. Uh, more
Speaker 6: than four billion was actually from Silicon Valley Bank. And
Speaker 6: also Silicon SVB Financial Ink. So so you know, there
Speaker 6: there is kind of this now and there is kind
Speaker 6: of a you know, an ongoing piece of the the
Speaker 6: bankruptcy proceedings relates to svb's financial the parent company for
Speaker 6: who should actually get that money. So that's that's a
Speaker 6: little bit of a side story. But you know, those
Speaker 6: are a couple of other names that that jumped out.
Speaker 6: But there's also you know, several tech firms. You know,
Speaker 6: Bill dot Com was on there, you know, and and
Speaker 6: just you know, and others as well. But certainly Sekoia
Speaker 6: you know, is probably the best known bank for capital
Speaker 6: firm in the world.
Speaker 2: All right, well, good stuff, hey Ben, Thank you so much,
Speaker 2: Ben Bay and he's Financial Regulations for report at Bloomberg News.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 2: It's been an interesting week, I think the last couple
Speaker 2: of weeks geopolitically, you had Prime Minister Modi in the
Speaker 2: US uh CEOs and the US leaders lining up. He
Speaker 2: was at the White House. You had Anthony Blincoln working
Speaker 2: and seemingly having success at mending the relationship with China,
Speaker 2: only to have the President possibly trip it up again.
Speaker 2: And then, of course all of this is the Russian
Speaker 2: War rages on in Ukraine. So we thought it was
Speaker 2: time to do a geopolitical gut check, and so we've
Speaker 2: got a great voice to do just that.
Speaker 4: Yes we do.
Speaker 3: I'm pleased to welcome a guy who's become a friend
Speaker 3: of mine over the years on our programs on radio
Speaker 3: and television, Ed Price. He's a principal at a Ergo.
Speaker 3: He's also a former British trade official, and he's an
Speaker 3: expert in German issues and a fluent speaker of German,
Speaker 3: which I appreciate as well. But he's recently been in
Speaker 3: Ukraine and spending some time on the ground there and
Speaker 3: made some really important contacts. So Ed, let me start
Speaker 3: by asking you about the situation in Ukraine, especially as
Speaker 3: we get you know, headlines right now that are really confusing.
Speaker 3: Reports that Moscow, that Russia has bombed camps of the
Speaker 3: Wagner Group, which should be you know, this mercenary group
Speaker 3: that we assume works for Russia.
Speaker 4: Most of the time.
Speaker 3: We're not sure if those reports we haven't verified them,
Speaker 3: I should say, independently. But it's very messy on the
Speaker 3: ground over there, isn't it, and difficult to kind of
Speaker 3: figure out exactly what's going on and who's winning.
Speaker 7: Right I mean, I'll start by saying, I think your
Speaker 7: German's a bit better than mine. It is messi over
Speaker 7: in Russia right now. I think probably what's happening is
Speaker 7: that Progrosion has crossed the line and I wouldn't be
Speaker 7: surprised at all if he comes to a sticky end
Speaker 7: quite quickly, and we'll probably we'll probably hear reports of that,
Speaker 7: or he'll be confined or something other will happen.
Speaker 4: To He's the head of the Mercenary group, the Wagner group.
Speaker 7: Right, Yes, the head of the Wagner Group. I mean
Speaker 7: that some of his on camera addresses are completely bonkers.
Speaker 7: And he's now he's now engaging, as you saw today
Speaker 7: in conspiracy theories that essentially call out the entire Russian
Speaker 7: apparatus and describe Russia as something of a circus? Is
Speaker 7: he defending putin kind of? I feel like he's begging
Speaker 7: for his life.
Speaker 2: Honestly, Well, yeah, I mean, what did you see when
Speaker 2: you were on your trip to Ukraine? And hello, hello,
Speaker 2: how are you well?
Speaker 7: Well? For for twenty four hours I saw the inside
Speaker 7: of a night train from Poland because of course there
Speaker 7: are no flights. But after that I met with the
Speaker 7: finance minister and others, and really what I discovered is
Speaker 7: that the Ukrainians are mobilized in a way that's quite spectacular.
Speaker 7: They have high morale, they are definitely trying to conform
Speaker 7: to NATO requirements, EU membership requirements. They're trying to root
Speaker 7: out corruption, and they're trying to do that at the
Speaker 7: same time as fighting this brutal war. Now, you know,
Speaker 7: we probably should talk about the progress or otherwise of
Speaker 7: the offensive, and my current understanding is that the Ukrainians
Speaker 7: have only actually put three of their twelve mechanized brigades
Speaker 7: into the fight because they're on an interior line. They're
Speaker 7: trying still to probe and push the Russians and get
Speaker 7: the Russians to misallocate their forces before punching through.
Speaker 3: Why do you think the Ukrainians are so focused domestically?
Speaker 3: And I understand that they want to retake the land
Speaker 3: that Russia has annexed. But why don't they hit Russia
Speaker 3: on its own soil?
Speaker 7: Well, I mean, this is it. It's hard to tell.
Speaker 7: On the surface of things. You might say that the
Speaker 7: West we have been very clear that if they do that,
Speaker 7: they're in a lot of trouble. But then that's a
Speaker 7: bit odd because we gave them the means to do it,
Speaker 7: not least the storm shadow system, which is some pretty
Speaker 7: spectacular kit. I think that they are masters of the
Speaker 7: pr game. I think that they're very very good at
Speaker 7: understanding that this war is being fought in an information space,
Speaker 7: and I think that the one thing they don't want
Speaker 7: to do is to commit a mistake Heaven forbid, some
Speaker 7: sort of atrocity that changes their wild card, which is
Speaker 7: public opinion out here in the West. I mean, Zelenski's
Speaker 7: been clear already that he's worried that at some point
Speaker 7: the American presidency or the American people could lose interest.
Speaker 7: So I think they're being cautious. That said, if they
Speaker 7: want to do it, they will.
Speaker 2: So you know, I mean year anniversary and I hate
Speaker 2: to say anniversary, but they you know, year marking the
Speaker 2: invasion of Russia into Ukraine. You know, we've talked to
Speaker 2: about this. Where are you anticipating this war goes from
Speaker 2: here based on what you're seeing and what you're hearing.
Speaker 7: Well, Carol, it's as I said before, it's a brutal
Speaker 7: ground war in and I think that I was thinking
Speaker 7: about this this morning at a time.
Speaker 2: When we thought ground wars didn't exist anymore. It's like
Speaker 2: kind of mind blowing. Please continue.
Speaker 7: Well, it's like it's like inflation, right, it's like efficient
Speaker 7: market hypothesis. It's all these things that we think can't
Speaker 7: happen and do. And I was thinking about it this morning,
Speaker 7: saying to myself, well, look, if this wasn't twenty twenty three,
Speaker 7: but if this was nineteen eighty three, then the headlines
Speaker 7: would be that NATO weapons, NATO munitions were killing Soviet
Speaker 7: soldiers in Europe, And that sort of jolted me while
Speaker 7: I was cleaning my teeth. But the point is that
Speaker 7: this is this is a terrifying war. It doesn't seem
Speaker 7: that there's a military solution, and so the really difficult
Speaker 7: thing is how and when do you get the Ukrainians
Speaker 7: to sit down and even think about agreeing that they've
Speaker 7: lost some sort of territory in order that the Russians
Speaker 7: are given a negotiated peace. I don't know what you
Speaker 7: guys think about this, but I can't really figure out
Speaker 7: whether Zelenski is popular because he's refused to do that,
Speaker 7: or popular enough to turn on a dime and actually
Speaker 7: do it.
Speaker 3: But at this point, it looks like they're not going
Speaker 3: to do that, right. I mean, they've proven over the
Speaker 3: last year that they're willing to die to hold their country.
Speaker 3: How strong is Vladimir Putin? You know? Does he lose
Speaker 3: some of his support as now I think more than
Speaker 3: two hundred thousand Russian soldiers have lost their lives in
Speaker 3: his war. Does he lose some of his support at home?
Speaker 7: Well, if you remember, Matt, when we first spoke about this,
Speaker 7: I suggested to you that I thought Russian might fall apart,
Speaker 7: and that might have been the fever dream of a
Speaker 7: hawkish Westerner. He does seem okay now. It seems that
Speaker 7: he's managed to protect himself from assassination. It seems that
Speaker 7: he has some sort of command structure that's still working.
Speaker 7: I mean, they're still at war. And if you ask
Speaker 7: the Ukrainians, look what would happen if Peuden wasn't there?
Speaker 7: They say it doesn't matter because the rest of Russia
Speaker 7: thinks and acts in the same way. But again, this
Speaker 7: we're entering the phase of this war now, particularly with
Speaker 7: the Damn incident, that anything could happen. And on the
Speaker 7: other side, I mean, you know, it's not impossible that
Speaker 7: he's assassinated, it's not impossible that he's placed under house arrest.
Speaker 7: So he seems okay now, but I think he is
Speaker 7: probably starting to wonder about how this thing ends too.
Speaker 3: How much power does the Wagner group actually have? You know,
Speaker 3: we read so much about them in the media because
Speaker 3: they're a colorful bunch, But could they could they turn
Speaker 3: the tide if they turn somehow against the Russians.
Speaker 7: Well, that's super interesting. I mean, I think I think
Speaker 7: that most of the Wagner group are dead, so they're
Speaker 7: not doing anything. They're very Unwell, if there was a
Speaker 7: scenario in which Russia descended into some kind of civil
Speaker 7: descent or civil war, then anyone with the private army
Speaker 7: is going to be having a good time of it.
Speaker 7: And that goes for Wagner too. But I don't think
Speaker 7: that Wagner itself is anything more than a symptom of
Speaker 7: that potential. I don't see that Wagner's got enough agency
Speaker 7: or or enough power to turn back into Russia and
Speaker 7: challenge putin fully, like I say, I think progosion is
Speaker 7: probably going to come to a sticky end.
Speaker 2: We're all the allies in this, and I guess I
Speaker 2: bring it up, and we've just got about a couple
Speaker 2: of minutes here. I'm thinking of the Indian Prime Minister Modi,
Speaker 2: you know, in white in Washington, meeting with President Biden
Speaker 2: and other leaders here and other US leaders, and then
Speaker 2: of course the corporate community in a big way and
Speaker 2: really trying to attract a lot of investment to his country.
Speaker 2: Having said that, he also India is a big buyer
Speaker 2: Russian oil. So it's a tricky, you know, relationship. Do
Speaker 2: these tricky relationships continue with the backdrop of the war.
Speaker 7: They continue until they don't. And I would suggest that India,
Speaker 7: if anything, has the deciding vote in World War three,
Speaker 7: whether it happens who lines up against who and who wins.
Speaker 7: If India swings over to a serious neutrality like it
Speaker 7: used to, or if it, you know, heaven forbid, allies
Speaker 7: itself with China and or Russia economically or otherwise, then
Speaker 7: the West is in for a very difficult twenty first century. If,
Speaker 7: as it seems right now, we can keep the Indians
Speaker 7: on board, we may have a different story. So fingers crossed.
Speaker 7: The Indians are going to lean into their democratic instincts
Speaker 7: rather than their national.
Speaker 3: But we're I think we're happy that they're buying Russia
Speaker 3: crugh though twenties.
Speaker 2: Otherwise, wait, wait twenty seconds. So is that what this
Speaker 2: was all about in terms of DC. This big ament
Speaker 2: was just to make sure we've got India on our side,
Speaker 2: just very quickly, of course, I.
Speaker 7: Mean what else is what else is Modi going to
Speaker 7: get on an airplane for? And how else are we
Speaker 7: going to welcome him?
Speaker 2: Pretty well, because we talked about with our right artist
Speaker 2: every first place us listen, I wish we had always
Speaker 2: I always feel like ed. We always want more and
Speaker 2: more and more time. So come back soon, have a
Speaker 2: good weekend. Always good to get a check with Ed Price,
Speaker 2: principal at Ergo, former British Trade official, vice members of
Speaker 2: the European and British Parliament's worked in the City of London.
Speaker 3: Has two master's degrees, one in finance and economics and
Speaker 3: one in German history.
Speaker 2: Sorry to hear he's such an underachiever. Yeah, all right, folks,
Speaker 2: you're listening to Bloomberg Business Week, and this is Bloomberg Radio.
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Speaker 1: Just say Alexa, play Bloomberg eleven thirty.
Speaker 2: I gotta say this next guest. His company. It's been
Speaker 2: described by some as Formula one on the water. It
Speaker 2: involves fast paced and high tech fifty foot hydrofoiling race boats.
Speaker 2: They're catamarans from different nations and they're all racing against
Speaker 2: one another. We're both pretty.
Speaker 3: We're both pretty site. I mean, I grew up sailing
Speaker 3: and haven't been lately. You go sailing all the time,
Speaker 3: and I think we both like racing.
Speaker 4: So let's get to it.
Speaker 2: He's a five time America's Cup win. Let's laid out there.
Speaker 2: He was three times a skipper in those winnings of
Speaker 2: the Cup. He's an Olympic champion as well. We welcome sir,
Speaker 2: Sir Russell Coots excuse me, ce have sl GP with
Speaker 2: us on Zoom and New Zealand. Sir Russell, it is
Speaker 2: so nice to have you here with us.
Speaker 4: Tell us a little bit about SALGP SALESGP.
Speaker 2: I keep wanting to say GBT because we're so talking
Speaker 2: about AI all the time.
Speaker 5: Well, thanks Carol, and thanks man. It's great to be here.
Speaker 5: Can you hear me? Okay, yes, yes, yes.
Speaker 8: Okay, well yeah salve GP. Yes, it's it's it's certainly
Speaker 8: exciting Grand Prix racing on water. It's I think we're
Speaker 8: one of the fastest growing new sports and entertainment properties.
Speaker 8: As you've described, Carol, we feature high speed racing between
Speaker 8: rival nations, close to shore racing, with an expanded calendar
Speaker 8: or expanding calendar of events as we as we develop,
Speaker 8: so our events span the globe, and we have the
Speaker 8: top athletes in the sport racing and as you said,
Speaker 8: identical very fast hydrofoiling fifty catamarans. In fact that at
Speaker 8: top speed last year was set by the French team
Speaker 8: just under one hundred kilometers.
Speaker 5: Prayer, I think they were that.
Speaker 2: Is crazy and like I was kidding with that, I sail.
Speaker 2: I've sailed for thirty years and a top speed might
Speaker 2: be eight nuts.
Speaker 5: That is yeah, well.
Speaker 8: In the US terms, I guess it's sixty two. It's
Speaker 8: the equivalent of roughly sixty two miles perer. So you know,
Speaker 8: we did driving along the freeway the speeds on water
Speaker 8: of course, powered by nature.
Speaker 4: That's the coolest thing.
Speaker 3: So Russell I grew up as a Formula one fan
Speaker 3: and since then have gotten smart and started watching Moto
Speaker 3: GP because it's so much better. But both of those
Speaker 3: sports are dirty, loud and dirty, right, just powered by
Speaker 3: fossil fuels. And the cool thing about Sale GP is
Speaker 3: that obviously you're powered by the wind, and in fact
Speaker 3: you're in a way an impact organization, right, you're pushing
Speaker 3: to fight climate change.
Speaker 8: Absolutely well, well we'll certainly, you know, in terms of
Speaker 8: our purpose, were I think fortunate to be a sport
Speaker 8: powered by nature, and we are really champiing a world
Speaker 8: powered by nature in other words, the wind, the sun
Speaker 8: and the water, and our I guess our focus is
Speaker 8: accelerating or showcasing the accelerating the transition to clean energy
Speaker 8: as the number one global energy source.
Speaker 5: So we're very passionate about that.
Speaker 8: I think everyone in our organization is extremely passionate about it.
Speaker 5: We have what we call an Impact League.
Speaker 8: Athletes compete not only on the water, but they also
Speaker 8: we also track the the carbon footprint and they look
Speaker 8: to reduce that and they compete for points and then
Speaker 8: and prize money is awarded to their impact partner. So
Speaker 8: each of the teams has an impact partner and we
Speaker 8: think that's pretty cool.
Speaker 5: Actually, how do.
Speaker 3: The teams get How do the teams make money? How
Speaker 3: do the skippers get paid?
Speaker 5: You know, because we're oh, they get they get paid.
Speaker 8: They get paid fees like any other professional sport to compete,
Speaker 8: but they also compete for prize money. So our prize
Speaker 8: money is growing. So it's it's it's set at five
Speaker 8: million dollars at this stage for season four and with
Speaker 8: the final event being a million dollars. So, but they
Speaker 8: also receive either a salary or fees to race on
Speaker 8: the boat.
Speaker 4: So how do we watch it? You know what with
Speaker 4: I guess with Formula one.
Speaker 3: Now in this country you can see it on on
Speaker 3: TV depending what your cable provider is Moto GP. You
Speaker 3: still have to have a subscription. Dorna sells those for
Speaker 3: one hundred and sixty pounds a year. How do we
Speaker 3: watch sale GP.
Speaker 8: Well Salgp's distributed well now in season four to two
Speaker 8: hundred and twelve different territories, so in the US you
Speaker 8: can watch it on CBS or on YouTube, and we're
Speaker 8: expanding that portfolio each year. So we've just announced new
Speaker 8: deals with ITV in the UK and a five year
Speaker 8: or five season extension with Kennel Polus in France. But
Speaker 8: we are with many of the broadcasters Fox Australia, Discovery
Speaker 8: in New Zealand, so each of our in each of
Speaker 8: our key territories, we have key broadcasters. Our audience is
Speaker 8: growing pretty rapidly, so we had a three times increase
Speaker 8: over season two and season three. So our dedicated viewership
Speaker 8: is around one hundred and seventeen just over one hundred
Speaker 8: and seventeen million viewers, so that's just over if you
Speaker 8: look at it, it's just over what is it ten
Speaker 8: forards six million per event of dedicated viewership. And then
Speaker 8: in terms of secondary viewership, which is obviously news and magazines,
Speaker 8: we also had just under a billion views, so we're
Speaker 8: growing pretty rapidly. Of that dedicated audience, about sixty percent
Speaker 8: is linear TV and about forty in the forty percent digital.
Speaker 2: So I'm curious about you, sir Russell. Are you do
Speaker 2: you ever go out in a monohle and just a regular.
Speaker 3: Sound because it's such a Carol's a traditional saler, it does.
Speaker 2: I do feel like, you know, America's Cup kind of
Speaker 2: got ruined years ago because.
Speaker 4: It's I am such a harsh statement.
Speaker 2: I'm sorry. I think it's not just about need, it's
Speaker 2: about technique, and it's harder when you're going slower, it
Speaker 2: really is. So I'm just curious how you see it.
Speaker 8: Yeah, I mean, I like all forms of sailing, and
Speaker 8: obviously I grew up racing traditional sail boats, but these
Speaker 8: new classes are so fast and it still requires all
Speaker 8: of the same skills, but it's just happening at a
Speaker 8: much higher.
Speaker 2: Speed, all right, So where do you go? I would
Speaker 2: also go back to how you started this and why
Speaker 2: you started it.
Speaker 8: Well before selve GP, sailing didn't really have a global
Speaker 8: platform to market the sport on an annual basis. So
Speaker 8: when you look at what we're doing with seve GP,
Speaker 8: it's not that different to what is considered normal in
Speaker 8: most sports. So we.
Speaker 5: Put together an annual calendar of events.
Speaker 8: We obviously televised that live and promote it, you know, regularly.
Speaker 8: So really, in many ways, it's intriguing to think that
Speaker 8: sailing didn't have a platform like this before SALESGP. You know,
Speaker 8: that we didn't have a regular professional calendar of events
Speaker 8: where the top athletes in the sport race against each
Speaker 8: other on a regular basis, and so that that's that's
Speaker 8: really enabled us to market the sport more professionally and
Speaker 8: more frequently, and the growth is really a result of that,
Speaker 8: and I think in truth, we didn't really have a
Speaker 8: platform that really delivered exciting racing before these new high
Speaker 8: speed boats came along. So that's really been a transition,
Speaker 8: as has the the sort of the I guess, the
Speaker 8: way that we televise it these days, with our our
Speaker 8: you know, broadcast graphics and so forth that are superimposed
Speaker 8: over the video images. That really makes the sport more
Speaker 8: understandable for the general sports fan and in particular the
Speaker 8: racing fan. So we're not you know, with our audience growth,
Speaker 8: we're not really seeing that growth in sailing fans per se.
Speaker 8: We're seeing it in racing fans primarily and also in
Speaker 8: general sports fans, So you know, that's exciting.
Speaker 2: We're talking with Sir Russell Coots. He is the founder
Speaker 2: and CEO of sal GP, still with us on Zoom
Speaker 2: in New Zealand. So what's the plan going forward and
Speaker 2: in terms of your growth expectations on how you want
Speaker 2: to build this out.
Speaker 8: Well, we started with six teams in season one and
Speaker 8: we've grown that to ten teams at the beginning of
Speaker 8: season four. And we started with five venues in season
Speaker 8: one and now we're up to twelve venues in season four,
Speaker 8: and ultimately we want to build to about.
Speaker 5: Like Formula One.
Speaker 8: They have roughly a race every two weeks if you
Speaker 8: look at them of races that they do in a season,
Speaker 8: and we want to achieve the same sort of consistency
Speaker 8: of events. So we're looking to build the number of
Speaker 8: events and probably build the number of teams to around
Speaker 8: twelve teams obviously linked with the nationalities of their countries.
Speaker 4: So the thing that.
Speaker 3: Gets people watching Formula One is of course the drama
Speaker 3: and the personalities kind of the soap opera more than
Speaker 3: the races. Right, the same is true. You know, Motor
Speaker 3: GP has been so interesting in the last couple weeks.
Speaker 3: Will Mark Marquez go somewhere else and leave Honda? How
Speaker 3: come the ducats are always winning. Do you have the
Speaker 3: same kind of storylines you think in sailing?
Speaker 5: Yeah? Absolutely.
Speaker 8: I mean we actually produce a behind the scenes documentary
Speaker 8: series called Racing on the Edge, which we distribute on
Speaker 8: YouTube and also our key broadcasters also distribute that as well.
Speaker 8: But we're looking to to do a similar thing to
Speaker 8: what Formula One led with and other sports, which obviously
Speaker 8: their drive to survive programming was extremely successful in terms
Speaker 8: of promoting the sort of behind the scenes view of
Speaker 8: athletes and building those personalities, and so we're looking to
Speaker 8: do a similar thing in the future. And you know
Speaker 8: that's I think that's pretty exciting for our sport, but
Speaker 8: any sport these days, I think people really tune into
Speaker 8: that sort of content and really engage with it.
Speaker 5: So yeah, exciting times.
Speaker 3: I think I'm looking at, by the way, video from
Speaker 3: Racing on the Edge right now and I honestly have goosebumps.
Speaker 3: I mean, the sailing is so sick is it dangerous?
Speaker 3: I mean, at these speeds russe all with you know,
Speaker 3: with the crew on one of these boats, if they
Speaker 3: run into another one, I can imagine injuries.
Speaker 8: Yeah, there's a there's certainly an element of danger, and
Speaker 8: we obviously take the safety of the league. You know,
Speaker 8: really it's obviously a priority for us. But it's you
Speaker 8: know when people come along to our events and that
Speaker 8: or they witness sol GP for the first time, that's surprise.
Speaker 8: You know, they've got an image of sailing. I think
Speaker 8: white triangles on a blue background would be a pretty
Speaker 8: accurate image.
Speaker 5: Of what most people cling. And this is so different,
Speaker 5: you know to what that image.
Speaker 8: Traditional image a.
Speaker 2: Lot of money to go basically nowhere. But what's interesting
Speaker 2: is you guys, with what you can do, you're close
Speaker 2: to the shore, people can really see it and feel it.
Speaker 2: And I do wonder about the speed in terms of
Speaker 2: these boats, Sir Russell, in that it attracting kind of
Speaker 2: a younger audience, right, I mean, you guys have to
Speaker 2: be thinking about that.
Speaker 5: Sure.
Speaker 8: Well, we're also the way we format our programs, so
Speaker 8: races over two days and ninety minutes, and we have
Speaker 8: three races or fifteen minute races, three to fifteen minute
Speaker 8: races per program. So that really is tailored to the
Speaker 8: modern viewership sort of trends where audiences don't watch long
Speaker 8: form content as much as what they used to. So
Speaker 8: you know, quite often our viewers you tune into, they
Speaker 8: might only tune into the final race, the final fifteen
Speaker 8: minute race, and as a result of that, we are
Speaker 8: seeing a younger demographic following this our racing.
Speaker 2: Can I just say, I look at season three, episode nine,
Speaker 2: and I think somebody fell in the fell in the.
Speaker 4: Water, but it's still tied to the boat. So he's
Speaker 4: like skimming across on the surface.
Speaker 8: That was that was That was not Matt Gottrell from
Speaker 8: from the UK team, and he actually he cracks some
Speaker 8: ribs as a result of that, because you know, at
Speaker 8: those speeds, hitting the water is like getting concrete. So
Speaker 8: actually we made we reviewed that footage and obviously made
Speaker 8: some adjustments to the to the safety equipment on board,
Speaker 8: so so that can't happen again.
Speaker 5: But yeah, it's there is an element of danger for sure, but.
Speaker 8: There's you know, it's obviously hy adrenaline racing and I
Speaker 8: think the top athletes, top sailing athletes in the world
Speaker 8: really love this form of racing.
Speaker 3: How have the sponsors reacted You can see some of
Speaker 3: the sponsorship Oracle of course and other big companies, Emirates,
Speaker 3: I see, how have the sponsors reacted after you know,
Speaker 3: four seasons.
Speaker 8: Well, the thing is that you know, we've we've we've
Speaker 8: obviously grown pretty quickly commercially as well. And we've just
Speaker 8: announced some new partnerships with Barla and Apex and they
Speaker 8: join Rollick's, Oracle and near As as A as a
Speaker 8: big sponsors and and and what the thing that we're
Speaker 8: seeing is that these sponsorships are now or these partners
Speaker 8: are now extending their partner ships to long term partnerships.
Speaker 8: So we have a new tenure agreement with Rollicks, which
Speaker 8: of course is fantastic to have such a premium brand,
Speaker 8: you know, associated with our sport, and really our format,
Speaker 8: just like other sports, is allowing these long term partnerships,
Speaker 8: both with venues and you know, the commercial sponsors.
Speaker 2: So just from a financial basis, and I'm just we've
Speaker 2: just got about a minute or so or just under
Speaker 2: a minute left here, So Russell, is this, I mean,
Speaker 2: the goal to be profitable. Are you profitable? Like, how
Speaker 2: do you think about it on a financial basis?
Speaker 8: Yeah, we had a plan to be profitable by the
Speaker 8: end of season five and we're tracking ahead of that
Speaker 8: plan now. So we expect to see to be profitable
Speaker 8: as a league by the end of this season season four.
Speaker 8: And you know, our revenue sources are made up of
Speaker 8: pretty similar to mo traditional sports, so we have obviously eventually.
Speaker 5: Media will will be a big part of that.
Speaker 8: But you know, right now our focus is on increasing
Speaker 8: our audience rather than revenue in terms of in terms
Speaker 8: of broadcast and media, but sponsorship and obviously ticketing, uh
Speaker 8: you know, merchandising and so forth that the traditional revenue
Speaker 8: that both sports have.
Speaker 2: Well, so appreciate you finding some time for us. This
Speaker 2: was really fun for us and look forward to hearing
Speaker 2: from you in the future, hopefully about updates and how
Speaker 2: things are going. Thank you so much. Have a great weekend.
Speaker 2: So Russell Kutzi's chief executive officers also the founder of
Speaker 2: sale GP, joining us via zoom from New Zealand. And
Speaker 2: I mean check out some of the videos and.
Speaker 4: Some of the races.
Speaker 3: I mean, they just had an event in Chicago and
Speaker 3: Los Angeles. Looks like finishes today and coming up Central Pay.
Speaker 2: Very cool, Very cool, All right, folks, Bloomberg Business Week,
Speaker 2: Carol Masser along with Matt Miller. We're so into this
Speaker 2: and you are listening to Bloomberg Radio.
Speaker 1: Brom a journal.
Speaker 8: Now about you.
Speaker 3: Let me drive.
Speaker 6: Oh no, no, no, no, who's gone to drive?
Speaker 3: Alright?
Speaker 5: Please, I'll gravels.
Speaker 4: Let's wait, I want to drive.
Speaker 6: It's a good question.
Speaker 1: This is the drive to the clothes.
Speaker 5: Domk me effect well brind on Bloomberg Radio.
Speaker 2: All right, everybody, we've got just about seventeen and a
Speaker 2: half minutes left in today's trading session, getting ready to
Speaker 2: wrap up the short and trading week. Four days and
Speaker 2: all felt like not.
Speaker 4: Four It true, it did feel you know what. I
Speaker 4: I still like a four day work week.
Speaker 3: A lot of people have been saying this week, we
Speaker 3: have five days of work in four and it seems
Speaker 3: so long and it feels harder.
Speaker 4: I don't care a day, yes, exactly, yeah.
Speaker 2: Yeah, totally all right, So let's get to it, and uh,
Speaker 2: let's see what Sylvia Jablonski makes of the trade that
Speaker 2: we got in this holiday shortened trading week. She's CEO
Speaker 2: and chief investment officer. It defines ETFs. Back with us
Speaker 2: on zoom in New York City, Sylvia, Happy Friday, Good
Speaker 2: to have you here and back with us. So, I
Speaker 2: don't know, how do you make sense? We're seeing a
Speaker 2: little bit of a pullback. But as Matt reminds us.
Speaker 2: You know, we've still had some pretty decent games here
Speaker 2: and quite a bounce back.
Speaker 9: Hi Carol, great to be with you today. For me,
Speaker 9: this week has felt like ten days as well, so
Speaker 9: I'd rather have the regular work week. I think the
Speaker 9: market's been a little bit tough, and you know, I
Speaker 9: come from a seat of you know, a big investor
Speaker 9: in AI stocks and high growth and things like this.
Speaker 10: So yeah, I mean, I think the FED is sort
Speaker 10: of the hurricane that came into the market this week, and.
Speaker 2: They can't just go higher and hire and hire these
Speaker 2: day I stocks.
Speaker 10: You know, I think that they have a ways to
Speaker 10: go though, right.
Speaker 9: You know, I'll take the argument that you know, there's
Speaker 9: been a lot of growth over one hundred percent or
Speaker 9: so in some of the semiconductor names and things like that,
Speaker 9: but it is one of the hottest innovations that is
Speaker 9: actually going to play out and will actually generate revenue
Speaker 9: in coming years. But I think what happened in the
Speaker 9: market this week, though, came to a little bit of
Speaker 9: a halt because of j. Powell's testimony. Right, so he's
Speaker 9: talking about potentially two more rates. He's definitely saying that,
Speaker 9: you know, inflation remains.
Speaker 10: The key issue.
Speaker 9: We're not at two percent, and I think it put
Speaker 9: a damper on the rally that we've seen for the
Speaker 9: last couple of weeks. So you know, I think until
Speaker 9: we get it goes back to that, that's the that's
Speaker 9: the uncertainty in the market, and until that shakes out,
Speaker 9: we're going to have these kind of range round weeks
Speaker 9: and maybe some some you know, lazy rallies or pullbacks
Speaker 9: in between.
Speaker 3: What do you see from the flows because last week,
Speaker 3: you know, Eric Alcunas has been tracking for for weeks
Speaker 3: and weeks and weeks no flows into equity ETFs, even
Speaker 3: as the market, you know, runs higher and higher, and
Speaker 3: finally we got last week a shift and flows out
Speaker 3: of you know, the short end fixed income ETFs into equities,
Speaker 3: So like ETF investors were finally getting into this rally.
Speaker 4: Has that continued?
Speaker 9: Yeah, you know, I think there was a lot of
Speaker 9: fomo out there, and you know, it looked like the
Speaker 9: market was stabilizing, inflation was coming down. We kind of
Speaker 9: got past that last FED meeting, and you know, up
Speaker 9: until the comments and sach it looked like we were
Speaker 9: kind of in the clear, at least for some stability
Speaker 9: in the market.
Speaker 10: So I think a lot of it was fomo. There's
Speaker 10: a lot of liquidity on the sidelines.
Speaker 9: As you said, investors had been in those short term
Speaker 9: fixed income products or cash or you know, the Goldman
Speaker 9: Sachs Apple account, whatever it might be, and they finally said, oh, okay,
Speaker 9: I think I can make more than four percent and equity,
Speaker 9: so let me get back in. And then when you
Speaker 9: look at you know, kind of where the flows go,
Speaker 9: places like AI, machine learning, quantum computing, you know, innovation.
Speaker 9: This is where people get into ETFs. Right, it's hard
Speaker 9: to pick the winners, so it kind of makes sense
Speaker 9: that you would have seen the flows that you'd have seen.
Speaker 10: I think it's going to continue. I actually, you know, as.
Speaker 9: Much as I hate seeing kind of stock prices fall
Speaker 9: and things like that on some of the top AI
Speaker 9: names that we invest in too, I think that these
Speaker 9: are great pull back by on the dip opportunities.
Speaker 10: And then you've also seen.
Speaker 9: Some great you know moves in areas like cruises and
Speaker 9: hotels and you know kind of casinos and you know airlines. Right,
Speaker 9: that's where the spending has gone from goods to services.
Speaker 9: And for the next couple of months. You might see
Speaker 9: performance there.
Speaker 2: Sylvia though, and we did see some some nervousness among
Speaker 2: some of the leisure stocks though, because certainly after those
Speaker 2: PMI numbers out of Europe, I think there is concerns that,
Speaker 2: you know, recession, no recession, maybe it looks more like recession,
Speaker 2: So there's there's nervousness. I want to go back to
Speaker 2: the tech names, because BFA came out and said tech
Speaker 2: sector saw two billion dollars worth of outflows in five
Speaker 2: trading days through June twenty first, it's the largest amount
Speaker 2: in ten weeks. Some like you might say, okay, that's
Speaker 2: a buying opportunity, but how do you fairly value some
Speaker 2: of these names that are linked to AI? How do
Speaker 2: you fundamentally kind of figure that out?
Speaker 10: Yeah, and that's a great point.
Speaker 9: I mean, I think everyone is kind of attaching the
Speaker 9: word AI to what they do now because it sounds
Speaker 9: really good. But you know, the way that we think
Speaker 9: about it is we look at the different sectors and
Speaker 9: companies that actually make up AI and generate revenue from AI.
Speaker 9: So I think for investors it's important to look at
Speaker 9: things like, you know, what is AI powered by?
Speaker 2: Right?
Speaker 10: And part of that is semiconductor, so you might have
Speaker 10: names like Navidia and A M D and there.
Speaker 9: And why I like those names is because they're quality companies.
Speaker 9: They have strong balance sheets. You know, they're very much
Speaker 9: kind of like drinking water for AI. You also need
Speaker 9: machine learning, and you know, in order for machine learning
Speaker 9: and AI to work, you need the process data quickly,
Speaker 9: and for that you need supercomputer's quantum computers. So you
Speaker 9: have companies like IBM looking you know in that space.
Speaker 9: You have companies like Microsoft and Google who are already
Speaker 9: we know in the AI race. So basically, at this point,
Speaker 9: I think kind of the more short plays are in
Speaker 9: the large cap space and maybe the you know, take
Speaker 9: a kind of gander on it would be the small
Speaker 9: cap and mid cap tech and semi conductor types of names.
Speaker 9: But you still want to make sure that you know
Speaker 9: they have balance sheet because if the FED does continue
Speaker 9: to various rates, those are the names that get hit.
Speaker 9: So again I'm kind of circling back to broad based
Speaker 9: diversification in that looking at ETFs, but the big.
Speaker 4: Uh, well, Nvidia is one that you still like.
Speaker 3: Barclay's also says buy AI stocks on any pullback in
Speaker 3: the rally and the big megacap tech stocks.
Speaker 4: I heard yesterday Margie Patel, who is at.
Speaker 3: All Spring Global Investments, say she thinks there's still momentum
Speaker 3: there and as much as you hate seeing winners continue
Speaker 3: to win, she's sticking with it.
Speaker 9: Do you agree, Yeah, you know, I do agree, And
Speaker 9: I think momentum has been you know, partially the name
Speaker 9: of the game when it comes to a few sectors,
Speaker 9: AI being one of them, in particular semiconductors, you know,
Speaker 9: kind of the generals and the tech space that lead
Speaker 9: the market, and also e B Right, I mean, there's
Speaker 9: there's a lot of general momentum in the idea of
Speaker 9: artificial intelligence in the future of technology and innovation. And
Speaker 9: what's great about this is that a couple of years
Speaker 9: ago we were kind of talking about, you know, there
Speaker 9: was interesting kind of like far out ideas that might
Speaker 9: not come to fruition for a decade or two.
Speaker 10: And with the AI, I mean, it's already taking place.
Speaker 2: Right.
Speaker 9: You have robots replacing the people that fact you know,
Speaker 9: put places like Amazon camp higher in their factories. You know,
Speaker 9: defense systems are using AI, banks are using AI to
Speaker 9: better kind of their their credit risk analysis and things
Speaker 9: like this. So these are actually tangible things that we
Speaker 9: can understand and see the revenue generation from.
Speaker 10: And it played out in this earning season.
Speaker 9: I think it's going to continue, meaning companies you know,
Speaker 9: have called costs, so they did okay, and that'll continue
Speaker 9: going forward.
Speaker 2: So that you say earnings, I just checked JP Morgan
Speaker 2: for its earnings in July fourteenth. Is that the steel day?
Speaker 4: The still Yeah, that is best steel day.
Speaker 2: Yeah. So we're just kind of around the corner. Sylvia,
Speaker 2: have a great weekend. Sylvia Jablonski, CEO and CIO over
Speaker 2: Defiance ETFs on zoom in New York City. This is
Speaker 2: Bloomberg Radio.
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