Speaker 1: From the heart of where innovation, money and power Colli
Speaker 1: in Silicon Vallet and beyond. This is Bloomberg Technology with
Speaker 1: Emily Jay. I'm Emily checking San Francisco and this is
Speaker 1: Bloomberg Technology. Coming up in the next hour. Twitter has
Speaker 1: a big week ahead, not just earnings, but the first
Speaker 1: hearing in Twitter v. Musk is now scheduled for Tuesday
Speaker 1: in a Delaware court. We will tell you what to expect. Plus,
Speaker 1: Amazon and Meta are getting creative to save cash with
Speaker 1: plans to cut back on office expansion in New York.
Speaker 1: Will bring you the Bloomberg exclusive. And we're chatting with
Speaker 1: bitcoin bull Anthony Popliano about the crypto downturn and his
Speaker 1: new startup designed to train workers for a new generation
Speaker 1: of crypto comy. Looking ahead, a judge set a hearing
Speaker 1: for Tuesday, granting Twitter's request to fast track its case
Speaker 1: against Elon Musk. Twitter lawyers claim Musk wrongfully canceled his
Speaker 1: forty four billion dollar buyout and say they only need
Speaker 1: four days to prove it in Delaware court and the
Speaker 1: Court of Public Opinion. Joining me now Jasmine Emberg, principal
Speaker 1: analyst at Insider Intelligence, So look, Jasmine, Twitter has been
Speaker 1: in a state of limbo now for months. How significant
Speaker 1: is it that they got the judge to hear this
Speaker 1: case right away. It's significant, um, but it is of
Speaker 1: course only the first hearing in what I expect will
Speaker 1: be a pretty long and drawn out court battle. Either way, though,
Speaker 1: there really is no great outcome for Twitter at this point.
Speaker 1: It is either going to end up in the hands
Speaker 1: of someone who is unhappy and uninterested in the product,
Speaker 1: or then it's going to go back to the same
Speaker 1: position it was before this whole ordeal began, which of
Speaker 1: course is a position of under performance relative to its peers,
Speaker 1: or perhaps even weaker than it was lost April. Right
Speaker 1: Twitter earnings are coming out towards the end of next week.
Speaker 1: What are you expecting there in the middle of all
Speaker 1: of this. Yeah, I'm expecting that we will see that
Speaker 1: Twitter had a pretty turbulent quarter, and I'm not expecting
Speaker 1: the termoil to end right now. Musk is the noisiest
Speaker 1: challenge that Twitter is dealing with at the moment, but
Speaker 1: of course it's also susceptible to many of the challenges
Speaker 1: within the digital advertising landscape, which include these macro Economic
Speaker 1: headwinds include iOS changes include shifting consumer behaviors which are
Speaker 1: impacting you know, social media platforms across the board. Twitter
Speaker 1: is a relatively small player in the social media advertising landscape.
Speaker 1: At Insider Intelligence, we expect Twitter to rank in just
Speaker 1: one percent of worldwide digital ad revenues this year. Compare
Speaker 1: that with Facebook, which we're expecting we'll bring in around
Speaker 1: Instagram nine percent and TikTok is even double. Um what
Speaker 1: where Twitter is expected to be by the end of
Speaker 1: this year at around two per set. So for especially
Speaker 1: for a small tier player, this was probably a very
Speaker 1: tough quarridor meantime, you've got Twitter still making product announcements
Speaker 1: in the middle of all this, trying to portray this
Speaker 1: sort of business as usual environment when all of this
Speaker 1: is completely unprecedented. I'm curious how you think of courtroom battle.
Speaker 1: You've also got the U S midterm elections coming up.
Speaker 1: How do you think this is all going to impact engagement? Yeah,
Speaker 1: I mean Twitter has been rolling out new ada and
Speaker 1: commerce related tools in order to you know, prove to
Speaker 1: advertisers at it's business as normal, as you said, but
Speaker 1: it certainly isn't. Twitter is a platform that thrives on
Speaker 1: news and controversies. So there is a possibility that people
Speaker 1: logged in a more signed up for the platform to
Speaker 1: watch the drama unfold. But we also heard that some
Speaker 1: people may have left the platform because they didn't want
Speaker 1: it to be controlled by Musk. I am still expecting
Speaker 1: to see perhaps some growth in monetize able daily active
Speaker 1: users at Insider Intelligence. So for the full year to
Speaker 1: we're actually expecting just very minimal growth worldwide and a
Speaker 1: decline in Twitter users. Now we UM forecast monthly users,
Speaker 1: so they're not comparable to Twitter's m d a US.
Speaker 1: So look, if you're a Twitter investor right now, what
Speaker 1: do you do? You know, that's a great question. I
Speaker 1: think we'll have to wait and see the state of
Speaker 1: the financials next sport next week. Um well, and we'll
Speaker 1: get a better picture of what Twitter is um really
Speaker 1: dealing with at the moment. Alright, Jasmine Emberg, Insider Intelligence
Speaker 1: principal analysts. Always good to have your perspective here on
Speaker 1: the show. Jasmine, thank you. So what are Musque's chances
Speaker 1: of getting out of this deal? And how good is
Speaker 1: Twitter's case? For more on that, I want to bring
Speaker 1: in Lawrence Hammermash, Executive director of the University of Pennsylvania
Speaker 1: Carry Law School. Uh, Larry, I'm so excited to have
Speaker 1: you so curious to hear what you think. Whose argument
Speaker 1: is better here? Looking at what you've seen so far,
Speaker 1: a very um raucous complaint from Twitter, as well as
Speaker 1: what we've heard from Elon Musk to this point. Of course,
Speaker 1: he's been very prolific on Twitter itself. Who's got a
Speaker 1: better case? Based on what I've seen so far, I'll
Speaker 1: side with Twitter, but you know that it's early in
Speaker 1: the day. I've seen from Musk's lawyers their principal contentions
Speaker 1: about why Musk is entitled to walk away. I've now
Speaker 1: read Twitter's complaint and it's it's pretty clear that there's
Speaker 1: there's more to the story at once Twitter tells it.
Speaker 1: That suggests to me that Musk's arguments are gonna be tough.
Speaker 1: I mean, I can go into detail, but that's the
Speaker 1: overall of you I've got. How significant is the judge
Speaker 1: fast tracking this suit? I wouldn't well, First of all, Uh,
Speaker 1: it's absolutely standard when someone asks for a trial in
Speaker 1: a couple of months for the judge to hear the
Speaker 1: that question of scheduling pretty much right away, and sometimes
Speaker 1: the same day. So Tuesday. It's kind of leisurely for
Speaker 1: something like this. The real question is what's going to
Speaker 1: happen on Tuesday? And is the judge going to schedule
Speaker 1: a trial in September, as Twitter as asked, or is
Speaker 1: Musk gonna come in with guns blazing with a filing
Speaker 1: that says, you know you shouldn't try this case in
Speaker 1: any kind of with any kind of speed or unusual speed. Uh,
Speaker 1: this is You're never gonna make me have to go
Speaker 1: through with a deal, so there's no rush. Uh, you know,
Speaker 1: I haven't seen we haven't seen Musk's filing in opposition
Speaker 1: to Twitter's request for speed, But it'll be in I
Speaker 1: would guess by Monday, and we'll know more than I
Speaker 1: still would think. The judge would set the case down
Speaker 1: for trial sometime in the fall, maybe even early even
Speaker 1: late summer. Right when does Musk not come in guns blazing?
Speaker 1: Well he's he's got a big arsenal, I'll tell you that. Well,
Speaker 1: so are you saying there that you think this could
Speaker 1: be wrapped up in the fall. I mean, we just
Speaker 1: heard Jasmine Edinburgh predict this is gonna be a long
Speaker 1: and drawn out court battle. But maybe it won't be
Speaker 1: as long as we think, well, it will be drawn
Speaker 1: out and it's gonna seem long, but it's possible that
Speaker 1: could be over by the fall late fall. Certainly. Um,
Speaker 1: that's not an unusual kind of a pace for the
Speaker 1: Delaware Court of Chancery in handling disputes involving busted deals.
Speaker 1: So how likely is it that a court will force
Speaker 1: Elon Musk to do this deal? I know it is
Speaker 1: fairly unprecedented, but there is some precedent there. There certainly
Speaker 1: is some precedent, and in fact, the chancellor who's going
Speaker 1: to be hearing the case did it herself within the
Speaker 1: last couple of years. Uh, for a much smaller and
Speaker 1: less notorious company. But but it's a remedy that has
Speaker 1: has been used forcing the other, the buyer, to go forward.
Speaker 1: But um, and I can also say that the merger
Speaker 1: agreement between Musk and Twitter is pretty strong in suggesting
Speaker 1: that that's what the court would need to do. But uh,
Speaker 1: it's a judge, it's a chancellor. They I think they
Speaker 1: value their flexibility and discretion in deciding what remedy is appropriate.
Speaker 1: And I could see the Chancellor saying, you know, forcing
Speaker 1: must to go through this deal. Is not necessarily a
Speaker 1: good idea for the world. Uh, And people will be
Speaker 1: better off if I find some other way to enforce
Speaker 1: or apply sanctions for non compliance with the agreement. If
Speaker 1: that's what she finds, how could the court force Musk
Speaker 1: to buy Twitter? Do you see a daily fine, for example?
Speaker 1: Do you see going after his assets, going after his
Speaker 1: tesla shares? Yeah? I mean those are that those would
Speaker 1: be the natural go tows. Uh. People have asked me
Speaker 1: in the course of the week, but what about imprisonment?
Speaker 1: And I kind of don't think in the cards, but
Speaker 1: daily finds. I suppose you could call it the usual
Speaker 1: stuff if someone is contempt or of course a long
Speaker 1: way away from that. There's got to be a judgment
Speaker 1: and Musk would have to find an appropriate response. And
Speaker 1: if a if a court orders you to go forward
Speaker 1: with a deal, I could see even Elon Musk settling it.
Speaker 1: And if he is forced to buy it, could he
Speaker 1: then turn right around and sell it? What are the
Speaker 1: legal issues there? I think once he's a buyer and
Speaker 1: and finishes the acquisition, it's his company, I will say
Speaker 1: to do with what he wishes. But you know, whatever
Speaker 1: governance powers he's got over the company he can use
Speaker 1: to seek new investors, sell off a significant steak, or
Speaker 1: just continue to run it as a buyer. Interesting. Now,
Speaker 1: I want to talk about who wins in any of
Speaker 1: these scenarios. We were speaking with Jason Goldman, one of
Speaker 1: the early early members of the Twitter founding team, who said,
Speaker 1: nobody wins except the lawyers. Take a listen to what
Speaker 1: he has to say. Definitely the lawyer years. When you
Speaker 1: know the lawyers are excited when they describe a case
Speaker 1: as being unprecedented and complicated, that's definitely code for there's
Speaker 1: going to be unprecedented legal fees. So they're they're said,
Speaker 1: everyone else is a loser in this for sure. So look, Larry,
Speaker 1: no matter the outcome, is this gonna be any good
Speaker 1: for Twitter or Elon Musk in the end? Well, Jasmine
Speaker 1: Edburgh said something before that I thought was right on
Speaker 1: the money. Um Uh, No matter what happens, the longer
Speaker 1: this drags out, the worst it is for Twitter. Uh.
Speaker 1: Elon Musk is sitting on the sidelines right now looking
Speaker 1: at Twitter, and he doesn't have to do anything at
Speaker 1: the moment except litigate. Uh. And certainly he's got the
Speaker 1: resources to pay the lawyers to do that. Uh, Twitter's
Speaker 1: the party here that's got to deal with running a
Speaker 1: business while all these fireworks are going off all around.
Speaker 1: And as I've told people from time to time this week,
Speaker 1: that's that's not an enviable negotiating position. So, uh, you know,
Speaker 1: there there is a victory scenario I suppose for Twitter,
Speaker 1: but uh, there are a lot of things can go
Speaker 1: wrong for everybody. For sure. How much will Musk's own
Speaker 1: record be used against him? He's got a history with
Speaker 1: the SEC. He didn't disclose his initial Twitter shares the
Speaker 1: way he should have. He's had problems with other regulatory
Speaker 1: agencies over the course of just the last few months.
Speaker 1: Will that come into play? Um? I think at best
Speaker 1: asthmic atmospherically, the the court in a case like this
Speaker 1: is going to focus like a laser on the terms
Speaker 1: of the merger agreement. If this case is going to
Speaker 1: get decided after a trial of four days or six
Speaker 1: days or whatever. Uh, it's still going to have to
Speaker 1: be pre focused. And I I would think you're not
Speaker 1: going to hear a whole lot about uh these peripheral
Speaker 1: things what Musk has done. It's not as if the
Speaker 1: Chancellor is unaware of some of the color here, but
Speaker 1: I wouldn't expect the parties to focus on it all right,
Speaker 1: Larry hammer Mesh, University of Pennsylvania Carry Law School Executive Director,
Speaker 1: really appreciate your thoughts and insights here. Today, TikTok just
Speaker 1: named a new head of security as the app deals
Speaker 1: with increasing scrutiny from US policymakers over concerns that user
Speaker 1: data could wind up in the hands of the Chinese government.
Speaker 1: Blue Bricks Alex Brinka is covering the story. So, Alex,
Speaker 1: who did they tap to run security? And of course
Speaker 1: we're talking about the parent company, Byte Dance of course,
Speaker 1: of course, And and they've tapped somebody from Internal UM
Speaker 1: called kim Alberella. She will run UM Global Security for
Speaker 1: Byte Dance UM and is replacing the chap Ronald Courtier
Speaker 1: who was there before. And I want to point out
Speaker 1: something really interesting here, because we're in this moment for
Speaker 1: TikTok where they are sparring with the US government, A
Speaker 1: lot of focuses on what they are doing security wise,
Speaker 1: and in making this move and and this change this
Speaker 1: morning to bring him in as the interim um TikTok
Speaker 1: CEO and Bye Dances VP of tax said that this
Speaker 1: is part of their evolving approach to minimize concerns about
Speaker 1: security in the U S So, UM, what I'm reading
Speaker 1: between the lines here, Emily, and what I what I'm
Speaker 1: hearing from a source who is close to the decision
Speaker 1: making behind this move is that um Clotier was a
Speaker 1: really great keep the bad guys out guy. Uh. Now
Speaker 1: they are kind of evolving their approach to think about
Speaker 1: how to UM best set up a data management department
Speaker 1: and security department that allays some of these concerns that
Speaker 1: we've seen coming out of Congress, coming out of the
Speaker 1: SEC about what TikTok is doing with US users data
Speaker 1: and if any of that data gets into nefarious hands
Speaker 1: through his parent company, Bye Dance. We do have a
Speaker 1: statement from the CEO show to to part of our
Speaker 1: evolving approach has been to minimize concerns about the security
Speaker 1: of user data in the US, including the creation of
Speaker 1: a new department to manage user data US user data
Speaker 1: for TikTok. Can you remind us what the company has
Speaker 1: said about how they handle user data, who can see it,
Speaker 1: and whether the Chinese government can see it or not. Yeah,
Speaker 1: and they've said a lot. Emily, just in the past
Speaker 1: couple of weeks UM. Basically in a letter to U
Speaker 1: S senators, the company said that they're working on coordining
Speaker 1: off US users data and working with Scipius and National
Speaker 1: Security Arm of the US government to decide which protected
Speaker 1: data is geeped by the US government should actually stay
Speaker 1: in U S servers. Those service will be run of
Speaker 1: course by Oracle. So they have said, uh, we're trying
Speaker 1: to keep stuff here. But what has raised concern is
Speaker 1: a couple of weeks ago they did admit that some
Speaker 1: US users data does get into the hands of Chinese
Speaker 1: employees who are doing work. They say that there are
Speaker 1: there are rigorous security um kind of constraints and who
Speaker 1: can see that. But so far what that information is
Speaker 1: it is things like public videos, public comments, and things
Speaker 1: needed to run the app writ large. UM. So that's
Speaker 1: kind of the split that they're talking about right now.
Speaker 1: But it does seem like Emily, this will be an
Speaker 1: evolving landscape and evolving infrastructure for them going forward, UM
Speaker 1: with this kind of shake up and the Security Arm
Speaker 1: with their operations. So what's next? What do we expect? Yeah,
Speaker 1: there should be um some meetings with Brendan Cars team
Speaker 1: is something we learned about this week Brendon Cars an
Speaker 1: FCC member or Republican member who has been very loud,
Speaker 1: very vocal, saying that just this week that TikTok's a
Speaker 1: security threat to our military who's using it overseas um.
Speaker 1: The company has said this week that they're meeting with
Speaker 1: that team. They will also continue this process working with Syphius,
Speaker 1: that national security arm of US government, to try to
Speaker 1: wall off this information in a way that they feel
Speaker 1: comfortable with. I would guess what they're trying to do
Speaker 1: is head off any large buzz like we saw a
Speaker 1: couple of years ago, with folks like President Trump at
Speaker 1: the time saying we need to get rid of TikTok
Speaker 1: because it is a national security threat. Um. But I
Speaker 1: would expect that kind of volleying to continue between lawmakers,
Speaker 1: folks like the SEC, and TikTok. All right, Bloomberg's Alex Barnka,
Speaker 1: thank you for breaking all that down. Coming up New
Speaker 1: York's prospects as a tech hub, just take a bit
Speaker 1: of a we will explain next. This is Bloomberg Now
Speaker 1: to an exclusive. Sources tell Bloomberg that Meta and Amazon
Speaker 1: are cutting back on plans to boost their office presence.
Speaker 1: In order to cut costs, both companies are backing out
Speaker 1: of expansions in New York that could have brought hundreds
Speaker 1: of millions of dollars to the city's economy. Bloombergs Natalie
Speaker 1: Wong broke this story. Natalie, what do we know? Thanks
Speaker 1: for having me. So we reported today that Meta and
Speaker 1: Amazon have pulled back on their expansion plans for offices
Speaker 1: in New York City. Meta had planned to take over
Speaker 1: roughly three hundred thousand square feet of new offices in
Speaker 1: a building near Astor Place, and that would have been
Speaker 1: a big expansion. It's no longer doing that, according to
Speaker 1: our sources. Amazon was also in talks to expand in
Speaker 1: a JP Morgan subly space, taking over a roughly four
Speaker 1: hundred thousand square feet, and they're also cutting back on
Speaker 1: the amount of script they're looking to take. So it
Speaker 1: really shows a sort of ca caution on these tech
Speaker 1: firms parts in terms of looking at how much office
Speaker 1: space they really need in this current market condition. So
Speaker 1: how big a blow is this to New York's ambitions
Speaker 1: to become a bigger tech hub. It's a pretty big
Speaker 1: blow just because New York has already been struggling with
Speaker 1: a major office split. UM, and it's just slowly started
Speaker 1: to come back in terms of office leasing in the
Speaker 1: past two years. The firms that were really driving us
Speaker 1: for the big tech firms that seem to have instatiable
Speaker 1: appetite force bace like Facebook, like Amazon. So the fact
Speaker 1: that even these firms are pressing pause on growth, you know,
Speaker 1: that's likely going to trickle out across smaller tech firms,
Speaker 1: their crypto firms, and other financial industry firms as well.
Speaker 1: Is this happening elsewhere across the country. This is happening
Speaker 1: elsewhere across the country. You know, we've reported that Amazon
Speaker 1: has cut back on other real estate needs in terms
Speaker 1: of planned warehouses for sites that they just built for
Speaker 1: just purchased several months ago. You know, they've pressed pause
Speaker 1: on those sides. They've expanded too quickly. UM construction as
Speaker 1: halting on other sides across the country, and office markets
Speaker 1: in many places like San Francisco, Seattle, Los Angeles have
Speaker 1: already been struggling to come back because tech firms especially
Speaker 1: have been slower to bring back their workers. So now
Speaker 1: you have a double whammy of a companies see that
Speaker 1: remote work is here to stay and they have to
Speaker 1: juggle how much space they need versus how many workers
Speaker 1: are actually gonna return, and then they also have to
Speaker 1: figure out, you know, how much costs they have to
Speaker 1: cut in terms of this slow down with their growth,
Speaker 1: with the economy and fears about it central recession. All right,
Speaker 1: Natalie Long, thank you for your reporting on this. We
Speaker 1: will keep following. Welcome back to Bloomberg Technology. We've got
Speaker 1: some breaking news. Elon Musk has responded to Twitter's request
Speaker 1: to expedite the trial, which of course had judged today granted,
Speaker 1: setting a date to start for Tuesday. Musk now saying
Speaker 1: he wants that move to February or later. Of course,
Speaker 1: Twitter wants the trial to start in September, Musk saying
Speaker 1: that Twitter dragged its feet on the deal is and
Speaker 1: is now rushing this trial for a little bit more
Speaker 1: of a breakdown. I want to bring back a leadlow
Speaker 1: and not surprising that Elon Musk wouldn't want to rush
Speaker 1: to court on Tuesday. Yeah, yeah, not surprising at all.
Speaker 1: I mean, and most of the lawyers the Bloomberg spoken
Speaker 1: to you felt that Twitter had a good case too
Speaker 1: hold Moss to account to the original terms of the
Speaker 1: deal cents a share. The hearing is set for next Tuesday,
Speaker 1: the initial hearing. The expectation is that this will be
Speaker 1: a protracted legal proceeding anyway. But as you say, Musk
Speaker 1: is accusing Twitter of having dragged its feet over the
Speaker 1: negotiation of the deal and now rushing to court. Remember,
Speaker 1: the sticking point for him is and what he will
Speaker 1: argue is that Twitter was not forthcoming in the timing
Speaker 1: frequency or what they shared on the issue of bots
Speaker 1: on the platform. And he's going to argue that that
Speaker 1: was equal to material adverse effect, thus changing the value
Speaker 1: of the deal, thus voiding it. Well, and we were
Speaker 1: speaking with the professor from the University of Pennsylvania Law
Speaker 1: School earlier who said, not surprising that the judge granted
Speaker 1: this request for a Tuesday hearing. What's going to happen
Speaker 1: on Tuesday will be more surprising. He suggested this trial
Speaker 1: could be wrapped up by the fall exactly. And the
Speaker 1: thing is that, you know, it's hard to judge judge
Speaker 1: pun the pun how this will oh because there's very
Speaker 1: little past precedent in holding an offer maker an acquirer
Speaker 1: to account. But also there's not a lot of past
Speaker 1: precedent around the material adverse effects. What's fascinating, of course,
Speaker 1: is that Twitter has earnings next Friday before market, you know,
Speaker 1: while this is all going on, and earnings is happening,
Speaker 1: so you know, hard pivot. Let's talk about what's happening
Speaker 1: in a while, because because it's just so much right
Speaker 1: to take on board that Twitter reports Fridays, they said,
Speaker 1: we start Monday or Tuesday rather with with Netflix, Tesla Snap.
Speaker 1: What these many of them have in common is that
Speaker 1: they have actually revised guidance the year right. Tester had
Speaker 1: a very difficult quarter where the Shanghai plant was shut down.
Speaker 1: You see how tired I am. This Friday will bring
Speaker 1: up the next poor business director, and look at the
Speaker 1: following week, because we're bracing not just for next week
Speaker 1: but the week after that. Look at the number of
Speaker 1: companies reporting in the space of just a few days,
Speaker 1: the mega cap that's around them very quickly, and we
Speaker 1: make a really interesting point as we look at what
Speaker 1: the kind of expectation is for this earnings period. The
Speaker 1: expectation is sales growth, right, top line growth. Part of
Speaker 1: that is boosted by inflation. Part of that is that
Speaker 1: the consumer is kind of held up strongly and that's
Speaker 1: kind of where we're looking. Sales growth is looking pretty
Speaker 1: good other than for the alphabet parent company of Google.
Speaker 1: But if you look at the earnings estimates, the profit
Speaker 1: that's expected, those earnings expectations have come down. Why you
Speaker 1: have inflation, you have things eating into margins, higher input costs,
Speaker 1: labor costs. So this is it. Now we're super focused
Speaker 1: on what the world looks like, and hopefully in the
Speaker 1: next two weeks some companies and some of their CEOs
Speaker 1: are going to give us a good explanation of what
Speaker 1: it's look at those beautiful graphics. Add thank you very much,
Speaker 1: appreciate you walking through all of that for us. I
Speaker 1: want to get a little more in depth now on
Speaker 1: the earnings and what we can expect with Bambahara and
Speaker 1: principal analyst and CEO at Creative Strategies, Ben Gosh, what
Speaker 1: are you expecting? Where are you expecting to see the
Speaker 1: most pain? Let's start there. Yeah, so I am a
Speaker 1: bit more cautious on consumer central companies. I think there's
Speaker 1: a lot of worry UM and that consumers are Companies
Speaker 1: who are a bit more adverse and UM and more
Speaker 1: consumer focused are going to bear a bit more of
Speaker 1: the pain here. I'm not quite sure how much we're
Speaker 1: gonna see in this particular cording corders earnings of absolute pain.
Speaker 1: I think as we see where they might be guiding
Speaker 1: and seeing some cutbacks, I think some of the companies
Speaker 1: like Snapchat, Um, Facebook, Twitter, et cetera, that have advertising
Speaker 1: focused businesses and really companies that are trying to go
Speaker 1: to consumers through those channels, if we see them start
Speaker 1: to cut back, that that I get, I think will
Speaker 1: be very telling about how much pain we might expect.
Speaker 1: But yeah, I think those that are over index or
Speaker 1: or most subject to a weakening consumer market are the
Speaker 1: ones that I'm a bit more a bit more worried about.
Speaker 1: I think on the enterprise side and the infrastructure side,
Speaker 1: we're not seeing that that business is cut back to
Speaker 1: the same degree or spending go down and infrastructure. But
Speaker 1: that consumer segment, I think is really where there's both questions,
Speaker 1: and if we do see a little bit more of
Speaker 1: a recession, I think it's going to be more on
Speaker 1: the consumer facing side than the industry at large. Well,
Speaker 1: let's start on social media. Since you went there, you've
Speaker 1: been tweeting about the value of the interest graph, which
Speaker 1: is something that TikTok seems to do very well versus
Speaker 1: the social graph. At the same time, you've got all
Speaker 1: of this background noise happening with Twitter, and I wonder
Speaker 1: if that's, you know, continues to be a story contained
Speaker 1: in itself, or if that story can be contagious or
Speaker 1: contaminate some of the other social media stories we're following. Yeah,
Speaker 1: I mean, the thing that's interesting about the engagement side,
Speaker 1: So consumer engagement with social media is going to continue
Speaker 1: to go up and remain strong, right whether or not
Speaker 1: brands feel like consumer appetite is there for some of
Speaker 1: their products. If consumers have to cut back on disposable income,
Speaker 1: I'm not sure it really hits things like maybe PCs
Speaker 1: or smartphones, although I think that gets hit, but not
Speaker 1: as much as things that are more luxury type products
Speaker 1: or things that they can cut out of their life
Speaker 1: if they need that disposable income back again because of
Speaker 1: inflation or perhaps because we have issues with the job
Speaker 1: market that that I think we're still is uncertain around.
Speaker 1: So I think the engagement stays, but again not say
Speaker 1: metric in terms of consumer engaging with these media platforms.
Speaker 1: If ad spends cut back and not affects their revenues,
Speaker 1: so the consumers will still be there. How they dispose
Speaker 1: of that income to spend on things that they either
Speaker 1: really need or want coming into this holiday season, which
Speaker 1: is really where you'll see these advertisers use those channels,
Speaker 1: is going to be the big question. So I think,
Speaker 1: as I pointed out in the segment prior, where they
Speaker 1: guide what they start to think about the next few
Speaker 1: quarters from these CEOs I think will be very, very
Speaker 1: telling because I I don't think we'll see the full
Speaker 1: pain right now, but I think we're aching toward a
Speaker 1: bit more pain in the consumer side, and that's at
Speaker 1: least where I think more of the thesis needs to
Speaker 1: get built out. I want to ask you about chips.
Speaker 1: I recently had the CEO of IBM on Arvin Krishna.
Speaker 1: He said he was feeling opt to stick about the
Speaker 1: economy and corporate spending, but what he feels pessimistic about
Speaker 1: is supply and chip semi issues. Too quick, listen to
Speaker 1: what you have to say. I actually maybe a bit
Speaker 1: more pessimistic on that than optimistic. I think supply chain
Speaker 1: resilience is a real fundamental issue that's going to go
Speaker 1: on for a couple of more years, we're going to
Speaker 1: see a raft of semi results. What are you expecting there? Yeah,
Speaker 1: this is something we could talk along try. This is
Speaker 1: a deep web of of complex problems. But I think
Speaker 1: absolutely and even if you look at some of the
Speaker 1: commentary that's come out of t SNC over the last
Speaker 1: few days, noting that they feel a lot of their
Speaker 1: customers have a glut of inventory is going to cause
Speaker 1: them to cut back a little bit on on manufacturing
Speaker 1: and even in some of their investments going forward, because
Speaker 1: most of their customers are sitting on inventory that they
Speaker 1: need to go and make and make products. So the
Speaker 1: hard part with that is it's going to look like
Speaker 1: manufacturing companies like D s MC and even the likes
Speaker 1: of you know, Intel and Qualit, common A and D
Speaker 1: might have less than stellar corders, but that's not really
Speaker 1: indicative of demand. It's more indicative of their customers cutting
Speaker 1: back orders because they're sitting on so much inventory. So
Speaker 1: it's kind of is this really an issue or how
Speaker 1: much is this disguised on the fact that they over
Speaker 1: ordered because of that the supply chain issues, Knowing that
Speaker 1: they were going to have a hard time getting chips
Speaker 1: and so by sitting on all that inventory, we're going
Speaker 1: to need that to ease into the market before orders
Speaker 1: can get placed up again. So there's a balancing act
Speaker 1: that I think most of the particularly the semi conductor companies,
Speaker 1: are going to have to navigate while they either try
Speaker 1: to fill orders and help their customers, then get through
Speaker 1: that the inventory that they're sitting on so that their
Speaker 1: orders can come back again, hoping that demands stays high
Speaker 1: for their products across the board. All right, well, thanks
Speaker 1: for digging into that very deep and complex web. Ben Maharan,
Speaker 1: principal analysts and CEO at Creative Strategy, is always going
Speaker 1: to have you time out for our crypto report bitcoined
Speaker 1: up over the last few sessions, but all eyes on
Speaker 1: the bankruptcy of major crypto lender Celsius, sparking calls for
Speaker 1: more regulation, especially bankruptcy legislation, as the crypto market continues
Speaker 1: to tumble more broadly, our crypto contributor Sali Bossick here
Speaker 1: with more shale. What's the latest that we know here?
Speaker 1: This is a problem here, Emily. At the end of
Speaker 1: the day, the question is how are consumers protected, not
Speaker 1: only in the event of a bankruptcy. But in the
Speaker 1: event of larger market stress. You've seen several instances now
Speaker 1: in which customer withdrawals were paused, and now you're seeing
Speaker 1: in the bankruptcy filing here for Celsius. Is there a
Speaker 1: clear roadmap here on what happens to customer coldings as
Speaker 1: certain creditors want to get paid back. You're seeing this
Speaker 1: issue come up, even as Celsius has has started to
Speaker 1: pay back some DeFi counterparties in other ways. But where
Speaker 1: do the customers fall at the end of the day
Speaker 1: when you're thinking about who gets owed what when and
Speaker 1: in what order. Now, this Celsius bankruptcy just has so
Speaker 1: many knock on effects, including now that it could potentially
Speaker 1: impact bitcoin mining. Yeah, this was an interesting question too.
Speaker 1: I've spoken about it with Sam Bankman. Freed also would
Speaker 1: he buy bitcoin miners? And part of the answer he
Speaker 1: had was to the extent that it was, you know,
Speaker 1: tied to the defy activity that we're seeing in the lending.
Speaker 1: Maybe we'll think about it, but probably not more immediately.
Speaker 1: So what's happening here? A lot of worries about the
Speaker 1: bitcoin mining subsidiary about Celsius. If Celsius were to sell
Speaker 1: the business or sell rigs or offload rigs in anyway,
Speaker 1: does that put more downward pressure two prices across the industry.
Speaker 1: We're going to shift a little bit over now and
Speaker 1: talk about this more with Anthony Pompliano of the crypto
Speaker 1: firm POMP Investment Venture Capitalist for a while now. Pump,
Speaker 1: thank you so much for joining us. You've shifted gears
Speaker 1: UH to kind of focus on some optimism here at
Speaker 1: a tough time for the industry, focusing on not just
Speaker 1: you know, the trouble and the pricing here, but as
Speaker 1: prices go down, jobs start to dry up. So you
Speaker 1: launched a new company here that really focuses on those jobs.
Speaker 1: And I'm curious as to how many you're actually seeing. Yeah,
Speaker 1: thanks for having me. Um. If you think of the
Speaker 1: job market, you know, one of the biggest problems in
Speaker 1: the world right now is that the global debt to
Speaker 1: GDP and also in the US debt to GDP UH
Speaker 1: is skyrocketing. And everyone always focuses on the debt side
Speaker 1: of the equation, Hey, how can we stop taking on
Speaker 1: more debt? But there was another side of the equation,
Speaker 1: which is how do we grow GDP faster? And obviously
Speaker 1: job creation is a key piece of that, and so
Speaker 1: our idea eighteen months ago was basically just how do
Speaker 1: we get the best people in the world working on
Speaker 1: the fastest economic UH sector from a speed and growth standpoint,
Speaker 1: and that tends to be the bitcoin and crypto industry. Now.
Speaker 1: Of course, as market prices go down, becoins drawn down
Speaker 1: since about November of last year, there are plenty of
Speaker 1: companies that are doing hiring freezes or layoffs, but there's
Speaker 1: still tons and tons of companies that are hiring. And
Speaker 1: so just in the last eighteen months, we've helped over
Speaker 1: a thousand people get a job in the industry UH
Speaker 1: and we've been doing a lot of kind of corporate
Speaker 1: training both for crypto native firms but also non crypto
Speaker 1: native firms as well. And I think what you're seeing
Speaker 1: is there is some short term pressure because of price,
Speaker 1: but over the long term, most people in the industry,
Speaker 1: both the entrepreneurs and the incumbent companies, they're very long
Speaker 1: term bullish and they continue to invest in the space.
Speaker 1: Eighteen months that included what was still a bowl market
Speaker 1: in crypto and now we're in a very very different environment.
Speaker 1: So to what extent are those jobs really drying up,
Speaker 1: and are the jobs that are out there changing to
Speaker 1: enter a new environment. It's a great question. Um. If
Speaker 1: you think about that thousand people that we've helped get
Speaker 1: a job, four hundred of them or so was last year.
Speaker 1: Uh So in some way, actually we've seen it pick up. UH.
Speaker 1: And what you're seeing is there's a lot of venture
Speaker 1: capital it's being invested in the space. There's a lot
Speaker 1: of companies that our hitting kind of scaling. Uh. They
Speaker 1: were started over the last two years. Now they've kind
Speaker 1: of found product market fit and they begin to actually
Speaker 1: higher and kind of stuff on the gas. And then
Speaker 1: the other thing you have to remember as well, UH,
Speaker 1: is that there's just so many companies that are getting started.
Speaker 1: There's almost a kind of overwhelming of the market. And really,
Speaker 1: I think one of the most interesting parts of this
Speaker 1: story is not just the pure aggregate job creation, but
Speaker 1: also it's a brain drain from Silicon Valley and Wall Street.
Speaker 1: You know, almost on a daily basis myself for someone
Speaker 1: on our team, we'll talk to very high level uh
Speaker 1: folks at large corporations, at large financial organizations. UH, and
Speaker 1: they say, look, you know, now is the time they've
Speaker 1: been thinking about it for a while. They're ready to
Speaker 1: make the jump and they want help navigating finding a
Speaker 1: job somewhere in the bitcoin and crypto industry. And so
Speaker 1: I don't think that necessarily job creation slowing down. I
Speaker 1: think it's just kind of shifting between different types of companies.
Speaker 1: You know, n f T s were really really hot
Speaker 1: and Q three last year. Uh, maybe not so much now.
Speaker 1: You just saw Open see layoff of their staff as
Speaker 1: an example, And so there are some subsectors where there's transitioning.
Speaker 1: But still the job growth is is pretty incredible and
Speaker 1: still accelerating. I'm curious about your own investors. How did
Speaker 1: you go through the process of raising money for inflection points?
Speaker 1: Why is Peter TiO interested in the future here of
Speaker 1: more jobs in crypto and is he invested anywhere else
Speaker 1: that you know of it to promote the industry. Yeah.
Speaker 1: You know, look, the mission of our company we started
Speaker 1: eighteen months ago, and it wasn't really ever an idea
Speaker 1: of hey, let's go raise money and doingy this. We
Speaker 1: started a business, uh, and the mission is to just
Speaker 1: accelerate economic growth globally. UH. And we were profitable almost
Speaker 1: immediately out of the gate. Uh. And for eighteen months.
Speaker 1: We kind of just kept our head down and we worked,
Speaker 1: and we only really took the money because we wanted
Speaker 1: the right investors around the table. We didn't need the money.
Speaker 1: We're still profitable today. UM. But it was an idea
Speaker 1: of how do we get people who have tons more
Speaker 1: experience And so when you look through the entire cap table,
Speaker 1: what you find is these are investors who are highly sophisticated.
Speaker 1: They've got tons of experience. They built our companies before,
Speaker 1: They've invested in plenty of others that have scaled aggressively. UH.
Speaker 1: And many of them are very big proponents of the
Speaker 1: bitcoin and crypto industry. You mentioned Peter Teal, you know,
Speaker 1: he obviously spoke at the Bitcoin conference. He's been a
Speaker 1: bitcoin investor for a long time. There's folks like former
Speaker 1: Alegant CEO Brent Saunders. Uh. And then there's folks that
Speaker 1: are you know, large family opposites, fit down capital or
Speaker 1: you look at somebody like an x y Z fund,
Speaker 1: you know, top ten on the Forbes Midas list for
Speaker 1: seed investors. Like these are real investors who understand, Uh,
Speaker 1: infrastructure is a key piece to investing in a new sector. UH.
Speaker 1: And while most companies focus on building software infrastructure like exchanges,
Speaker 1: while its data providers. UH. People is a very key
Speaker 1: piece to it, and we think that we can build
Speaker 1: out a niche there and really scale. I know you
Speaker 1: tend to take the positive view on things, but there's
Speaker 1: a lot of talk out there about projects that just
Speaker 1: might not make it through the crypto winter. What types
Speaker 1: of projects are you most concerned about? Are their tokens
Speaker 1: that are worth shying away from? Uh? Yeah, pretty much
Speaker 1: all of them for the most part. Um. I think
Speaker 1: that even if you talk to people who are big
Speaker 1: proponents of the industry, they'd say the same thing. Uh.
Speaker 1: Anytime that you get innovation happening, it requires experimentation first.
Speaker 1: And so what you're seeing as a ton of experimentation,
Speaker 1: a lot of bad ideas, a lot of bad execution,
Speaker 1: but also a lot of bad market timing. You know,
Speaker 1: if you go back to the late nineties and you
Speaker 1: look at most of those ideas, UH, they were the
Speaker 1: right ideas, they just didn't end up actually working. Uh.
Speaker 1: In that current iteration, it took about ten years or
Speaker 1: so before consumer behavior has changed. Before more people had
Speaker 1: internet that wasn't dial up, mobile phones were in their hands,
Speaker 1: their kind of familiarity, uh, their willingness to put their
Speaker 1: credit card online. All these different things had to change,
Speaker 1: and so I think some of that is what we're
Speaker 1: seeing right now. But one thing is very clear. Over
Speaker 1: a hundred fifty million people around the world that hold bitcoin,
Speaker 1: and I think that bitcoin has crossed over from something
Speaker 1: that people look as an experiment or could possibly be valuable.
Speaker 1: And I think now what you're seeing, especially given the
Speaker 1: backdrop of the undisciplined monetary and fiscal policy, is that
Speaker 1: bitcoin has now broken out its separated itself. It is
Speaker 1: different than most of the experimentation of other things. UH.
Speaker 1: And there's a lot of folks on Wall Street and
Speaker 1: in Silicon Valley, uh, and then across the world that
Speaker 1: say bitcoin is here to day, and I tend to
Speaker 1: agree with them. That's pomp Investment Sounder Anthony pomp Lano.
Speaker 1: Thank you so much for your time, Emily, back to you, Janali,
Speaker 1: Thank you. And The Bloomberg Crypto Summit returns Tuesday July
Speaker 1: in New York. The summit gathers some of the biggest
Speaker 1: names in the industry to talk about the market turmoil,
Speaker 1: regulatory scrutiny, and so much more. That is all starting
Speaker 1: a m Eastern time coming up. Can this struggling startup
Speaker 1: end up taking on ribbing. We'll talk about that and
Speaker 1: the EV world next. This is Bloomberg time now for
Speaker 1: our technomics segment, and I want to take a look
Speaker 1: at the world of mobility. There is one EV maker
Speaker 1: rising through the ranks, and it's called Canoe, and it
Speaker 1: just won an order for forty five bands from Walmart,
Speaker 1: sending its share soaring this week. Could have taken Rivan.
Speaker 1: Let's talk about all that and more with who else
Speaker 1: but are at Ludlow could it? That's an amazing chart,
Speaker 1: a hundred percent gain in seven days. I mean this
Speaker 1: really surprised us because people were writing it off. Let's
Speaker 1: speak exactly. This is for context. You know, a startup
Speaker 1: that has struggled, you know, literally do anything. You know,
Speaker 1: it's missed its own goals, it's changed strategy a number
Speaker 1: of times, has this kind of futuristic camper van looking
Speaker 1: kind of e v but it's never really made any progress.
Speaker 1: The stock you know, was obliterated basically since it when
Speaker 1: public virus back in. But getting a big order like
Speaker 1: this from Walmart, not just on the share reaction, but
Speaker 1: the company's outlook has completely changed, and you actually got
Speaker 1: kind of inside look at what they have going on
Speaker 1: when you were in Bentonville, which is of course from
Speaker 1: the home Walmart right quarters. So I was at UP
Speaker 1: Summit a few weeks ago. UP Summit is a kind
Speaker 1: of annual conference from mobility nerds and vcs that is
Speaker 1: co hosted by the Walton family and Sam Walton is
Speaker 1: a Remember at Walmart and I was walking around and
Speaker 1: I was like, hold on, isn't that a canoe over there?
Speaker 1: And it was. It was a prototype and at the time,
Speaker 1: you know, I didn't really think much of it. And
Speaker 1: low and behold, a few weeks later, they have this agreement.
Speaker 1: Although there's a lot of caveats to this agreement. I
Speaker 1: have to say, what are the caveats? So Walmart can
Speaker 1: walk away at anytime thirty days notice for no reason.
Speaker 1: That's worry if your canoe. And you know, the other
Speaker 1: thing is that canoe hasn't demonstrated it can do anything.
Speaker 1: It hasn't really built anything. It doesn't have a clear
Speaker 1: manufacturing strategy. It has various plans to do stuff, some
Speaker 1: in Bentonville, some in other states. So you know, this
Speaker 1: is a hypothetical right now, And aren't they boxing Amazon
Speaker 1: out of buying any of these? Well, here's what's interesting,
Speaker 1: right you think about Walmart and Amazon. These are great
Speaker 1: logistics giants. Amazon already uses multiple brands for gas powered
Speaker 1: or diesel powered trucks. Walmart has made this bet, but
Speaker 1: Walmart also has agreements with GM forward, you know, and
Speaker 1: no one is making any of these any volume, right exactly?
Speaker 1: That isn't that really the biggest challenge just to actually
Speaker 1: how are they going to make exactly? So, you know,
Speaker 1: Rivian is kind of the poster child because they have
Speaker 1: this order for one hundred thousand units from Amazon to
Speaker 1: build these kind of bug e ad vans. You just
Speaker 1: showed them on the screen. My sources tell me they've
Speaker 1: built about six hundred of them so far, maybe a thousand,
Speaker 1: and they're supposed to deliver ten thousand by the end
Speaker 1: of the year. And you know, the pace just has
Speaker 1: been disrupted by supply chain problems, etcetera. But there's competition there,
Speaker 1: and it's it's an interesting market because we're super obsessed
Speaker 1: with the consumer e v but we forget that in
Speaker 1: the world of moving things from A to B. All
Speaker 1: these commercial giants need other stuff. They need vans and
Speaker 1: trucks and and things that you and I won't get
Speaker 1: behind the wheelock. Well, it is not a zero sum game.
Speaker 1: But as far as we'll be watching ruins at Ludlow,
Speaker 1: thank you and enjoy the weekend to all right. That
Speaker 1: does it for this edition of Bloombrick Technology. We've got
Speaker 1: great shows coming up next week. We will be across
Speaker 1: earnings all week long. Of course, we'll be following that
Speaker 1: big hearing in court in Delaware. Twitter Versus Musk and
Speaker 1: Matthew Ball will be joining us on Monday to talk
Speaker 1: about all things metaverse and more. I'm Emily Chang in
Speaker 1: San Francisco. Have a wonderful weekend everyone. This is Bloomer