Speaker 1: From Marhart. We're Innovation of Money and Power Collie in
Speaker 1: Silicon Vallet NBN. This is Bloomberg Technology with Caroline Hyde
Speaker 1: and Ed Ludlow.
Speaker 2: I'm Ed Lovelow here in San Francisco. Caroline hides off today.
Speaker 2: This is Blueberg Technology coming up on the program and
Speaker 2: Elon must bid to make X and Everything app. The
Speaker 2: company's changing its policies to expand data collection while offering
Speaker 2: an array of new features. Will break down exactly what's
Speaker 2: changed overnight for the social media company. Plus full earnings
Speaker 2: coverage Ahead will break down results from Salesforce, CrowdStrike, and Octa,
Speaker 2: where CEO Tom McKinnon will join us for an exclusive conversation,
Speaker 2: and the race for the first Bitcoin etf Who's going
Speaker 2: to win? We're going to discuss with one firm buying
Speaker 2: for that title. Bit Wise CEO Hougan joins us to
Speaker 2: weigh in. Right to our top story and back to
Speaker 2: X planning to collect biometric data from users.
Speaker 3: So how are they getting it and just how or
Speaker 3: they use it?
Speaker 2: Let's break it all down with Bloomberg's ashe accounts who
Speaker 2: reported on the story over night.
Speaker 3: Let's start with the new policy.
Speaker 2: What is it that you noticed X is doing differently
Speaker 2: in terms of which data is being collected.
Speaker 4: Well, if you look at their postily added in this
Speaker 4: section about biometric data. Now, in actual policily, they don't
Speaker 4: go into what that means. But from what we've seen
Speaker 4: other companies do, we know that it means things like
Speaker 4: fingerprints or iris scans or facial images. And so they,
Speaker 4: based on your consent, will start collecting that data if
Speaker 4: you allow them to.
Speaker 2: There's also i think jobs data, right, jobs data and
Speaker 2: education as well. So you and I had the same
Speaker 2: question straight away, which was how do they collect this
Speaker 2: biometric data? So I asked X and this is what
Speaker 2: they told us, mister director, if we can bring up
Speaker 2: their statement to us on the screen, basically two ways
Speaker 2: you have the option to issue them a government issued
Speaker 2: ID and take a self as sort of a two
Speaker 2: stage verification. What do you make of the process that
Speaker 2: they outlined.
Speaker 4: You know, it sort of fits in line with what
Speaker 4: Musk has said, right. One of the things he talked
Speaker 4: about when he changed the whole verification process was like,
Speaker 4: there's too many bots and spam and fake accounts, and
Speaker 4: so if you think about it being able to upload
Speaker 4: your government ID and then a picture is a much
Speaker 4: more robust verification process because up until now all they
Speaker 4: really did was ask people to have a verified phone
Speaker 4: number and then a display photo, which you know, you can.
Speaker 1: Sort of game that system a bit. So it falls
Speaker 1: in line.
Speaker 2: With that, and what they're saying to us in this
Speaker 2: statement is that, you know, impersonation is still an issue
Speaker 2: on the platform. There are a couple of Ed Ludlow's
Speaker 2: floating around that are not me. They've since been taken down,
Speaker 2: but they think that it will deal with that.
Speaker 3: Wasn't the only piece of news.
Speaker 2: Musk kind of followed up afterwards to say there will
Speaker 2: be an offer of video and audio calling, but without
Speaker 2: having to submit a cell phone number.
Speaker 3: What was the new stuff there?
Speaker 4: It's part of this whole idea of the everything app right.
Speaker 4: He's been very vocal about we want more video, more audio,
Speaker 4: like we want people to come to X and do everything,
Speaker 4: and so this seems like a play on that and
Speaker 4: not having to use a phone number. You just get
Speaker 4: on it and you can sort of chat with people.
Speaker 4: We'll see what it looks like, but it falls in
Speaker 4: line with sort of his broader vision to make that
Speaker 4: everything up all right.
Speaker 2: Bloomberg's Asha counts dealing with what was some pretty late
Speaker 2: news last night, but it's had a big response. So
Speaker 2: let's keep the conversation going with Jennifer greig Or, Syracuse
Speaker 2: University Associate Professor of Communications. Jennifer in the first instance,
Speaker 2: the specific data sets, X is asking for your reaction.
Speaker 5: To that, well special thanks to Asia and everybody, you know,
Speaker 5: reading the fine print and highlighting the things that are
Speaker 5: coming and being added, because that tells you something, right.
Speaker 5: And so sure there's the biometrics piece. I'm sure he's
Speaker 5: clarified now that it's for you know, validating that they
Speaker 5: are who they say they are for these authenticated accounts, right.
Speaker 5: But you know, I think the fact that it's jobs,
Speaker 5: that it's education, your job and your education tell you something, right,
Speaker 5: They tell you maybe your income, how they can influence you.
Speaker 5: But it's a demographic that provides you know, targeted marketing,
Speaker 5: I would say, and that's one reason they're capturing that
Speaker 5: maybe why that's a new thing.
Speaker 2: X talks about the impact this will have encountering impersonators
Speaker 2: on the platform. I myself have had impersonation accounts of
Speaker 2: me pop up on the platform several times. In recent months,
Speaker 2: do you give them the benefit of the doubt that
Speaker 2: that will be an effective way of countering that.
Speaker 5: I think that's what they're hoping for. But again, you know,
Speaker 5: bad actors can always get around things, right. But the
Speaker 5: more trust we then put into this authenticated identity, the
Speaker 5: more risk there might be introduced too. So I'm remembering back,
Speaker 5: you know, to like when the ap account was had
Speaker 5: and had said that you know, something happened at the
Speaker 5: White House and then the stock market crashed, right, you know,
Speaker 5: So I think once you put more trust in it
Speaker 5: too is problematic. I think what we've learned over the
Speaker 5: past year since Musk is that centralization is inherently risky
Speaker 5: and that maybe it's not a good idea to have,
Speaker 5: you know, so many professionals and jarlists and everyone tied
Speaker 5: into the space which is controlled essentially by you know,
Speaker 5: an individual. Now, it was a corporation before, but there
Speaker 5: were issues under Dorsey and what it was corporate too.
Speaker 6: So I don't know.
Speaker 5: I think that you know, he's trying to solve or something,
Speaker 5: but the risks aren't necessarily new and they're not going away.
Speaker 5: But he is trying to get more people to stick around,
Speaker 5: and again, Twitter X platform whatever you want to call
Speaker 5: it now hasn't totally failed, right, so, but it has evolved.
Speaker 5: So I think we need to keep an eye on,
Speaker 5: you know, how it's changing, how he's trying to retain
Speaker 5: people and to maybe generate some revenue.
Speaker 2: X the platform formerly known as Twitter is the line
Speaker 2: that we repeat daily on this show, Bloomberg Technology, Jennifer.
Speaker 2: There are certainly some jurisdictional and legal questions that arise
Speaker 2: from this policy move. I note that if you go
Speaker 2: to the policy page, the biometric data in particular is
Speaker 2: quote based on your consent as a user, but it
Speaker 2: is personally identifying information. And therefore I ask about GDPR
Speaker 2: in Europe and what you think will happen in that region.
Speaker 5: Yeah, and so I like how Musk is clarifying that
Speaker 5: this is for the premium users. But there are class
Speaker 5: actions here even in the United States about the capture
Speaker 5: of biometrics data in like the state of Illinois. That's
Speaker 5: where that's most relevant because they have some unique kind
Speaker 5: of legislation there. But it wasn't really transparent that this
Speaker 5: is what they were doing as a company. But you know,
Speaker 5: photo scans are pretty standard. We saw issues with meta
Speaker 5: Facebook as well in the past. And when it comes
Speaker 5: to Europe, you know, they have definitely more privacy initiatives
Speaker 5: over there. We're way behind here in the United States.
Speaker 5: But gdpr essentially is about consent, you know, so it's
Speaker 5: nice to know when something you know really personal is
Speaker 5: being collected, but also the ability to like opt out
Speaker 5: of things. I don't know, I feel like this free
Speaker 5: Twitter app, if you're a free user, you're just you're
Speaker 5: paying more and more with things like not being able
Speaker 5: to consent to certain things being collected about you. And
Speaker 5: maybe some people are like whatever, I don't care scan
Speaker 5: my face, or I don't care a track, or I
Speaker 5: go on the internet. But it's what happens to that
Speaker 5: data in aggregate, right? And then who does Musk and
Speaker 5: other corporate actors share this data with? And I particularly
Speaker 5: am interested in, like how do they share data with governments?
Speaker 5: So not just the you know, you know, the United States,
Speaker 5: but also like Saudi Arabia, right that is also an
Speaker 5: investor in Musk's enterprise. So you know, once that data
Speaker 5: is collected, these tools are created, you know, the risks
Speaker 5: essentially grow sometimes without the public knowing.
Speaker 1: So I just want to raise some awareness around that.
Speaker 2: Too, Jennifer, you raise the idea of the data being
Speaker 2: used in aggregate and the other piece of news overnight
Speaker 2: is X offering video and audio call function without having
Speaker 2: to submit a cell phone number, you know, moving away
Speaker 2: from social media. Your view on and everything app and
Speaker 2: the data relationship there.
Speaker 5: It really is proving to be an everything app. He
Speaker 5: wants to collect everything. That's really, so.
Speaker 1: The more data the better.
Speaker 5: If they're making something like more squishy and loose, is
Speaker 5: because they want you to contribute more. They're essentially lowering
Speaker 5: the barrier to entry, right, So I would say, if
Speaker 5: you don't have to include a phone number, which again
Speaker 5: can be considered personal information, a lot more things are
Speaker 5: tied and validated through our cell phone numbers. So I
Speaker 5: would say that wants to you know, maybe generate some
Speaker 5: more views and use of live streaming, the video apps,
Speaker 5: the voice you know, audio and that can be collected too.
Speaker 5: So that's another biometric piece.
Speaker 1: Two is your your.
Speaker 5: Voice as as a print to it as well. So
Speaker 5: and I think we have to really just continue to
Speaker 5: keep an eye on AI and how all of this
Speaker 5: data is being captured to train future models. So you know,
Speaker 5: again the more voice that submitted, the more that can
Speaker 5: be analyzed and used in the future, potentially even without
Speaker 5: our consent. So we just have to be careful, you know,
Speaker 5: what we're contributing, and hopefully at some point we can
Speaker 5: get away from such centralized, you know, spaces that are
Speaker 5: governed by you know, wealthy folks like Musk or corporations,
Speaker 5: because it becomes really a target of intervention of governments
Speaker 5: and stay actors, and that that's just going to get
Speaker 5: oppressive for the people.
Speaker 1: Down the road.
Speaker 2: Jennifer Greigel, Syracuse University, Associate Professor of Communications. Always great
Speaker 2: to have this discussion on Bloomberg technology, the journey to
Speaker 2: a potential Bitcoin ETF. There's been a bumpy one, but
Speaker 2: some key decisions in the race are trickling in this week.
Speaker 2: And first start with bitwise. The SEC expected to respond
Speaker 2: to its own filings, followed by black Rock, Invesco and
Speaker 2: others over the next forty eight hours or so. Delighted
Speaker 2: to say we're joined by bitwise, So Matt Hogan, so
Speaker 2: let's start there. Have you heard anything from the SEC,
Speaker 2: any updated communications or questions, because my understanding is the
Speaker 2: deadline to respond to your ETF application is Friday.
Speaker 7: That's exactly right, thanks for having me on. The SEC
Speaker 7: has forty five days to initially respond to applications for
Speaker 7: novel ETFs like a spot bitcoin ETF, and that window
Speaker 7: ends Friday for us. Historically, the SEC has extended their review.
Speaker 7: They can move those deadlines out by another forty five days,
Speaker 7: and that may happen. If I were an investor looking ahead,
Speaker 7: I'd circle October sixteenth as the next big deadline to watch.
Speaker 7: That's forty five more days after this weekend, and also
Speaker 7: forty five days after the Grayscale ruling, which is the
Speaker 7: last day the SEC could appeal. So this week is momentous.
Speaker 7: October sixteenth may be a very good day to keep
Speaker 7: an eye on.
Speaker 2: There's a question on how the SEC acts. Do they
Speaker 2: approve each application one by one, to your mind, or
Speaker 2: do they go by a common clock whereby they let
Speaker 2: everyone launch it once?
Speaker 3: What do you think?
Speaker 1: Yeah, you know, it's a great question. We don't know.
Speaker 7: If you look back at the history of the SEC's
Speaker 7: treatment of ETFs, you can see examples of each and
Speaker 7: so we have no idea what their plans are. I
Speaker 7: will say, on half of investors, the best outcome is
Speaker 7: likely to line up multiple ETFs and allow them to
Speaker 7: launch it once. That'll create the most competition, the lowest prices,
Speaker 7: the best products, and be the fairest probably to be
Speaker 7: asset managers who have worked so hard over ten years
Speaker 7: to get a spot Bitcoin ETF approved.
Speaker 1: So if we do get approval, that's what.
Speaker 7: I'm hoping to see, But of course anything could happen.
Speaker 1: We could see it in any which way.
Speaker 2: We're showing Bitcoin's performance in the session off by one
Speaker 2: and a half cent, but at around twenty seven thousand
Speaker 2: US dollars per token. The point being that the sort
Speaker 2: of euphoria of the US Appeals decision.
Speaker 3: Was short lived.
Speaker 2: I thought that that was supposed to be a starting
Speaker 2: gun or signal that this is great news for crypto.
Speaker 1: Yeah, I think it is great news for crypto.
Speaker 7: Right Crypto is going from a niche asset to a
Speaker 7: mainstream asset. This was an important step along this journey.
Speaker 7: But my expectation is about what we're seeing today. I
Speaker 7: think people likely to overestimate the short term impact of
Speaker 7: an ETAF and underestimate the long term impact of an ETF.
Speaker 7: That's what we saw when gold ETFs were approved in
Speaker 7: two thousand and three that really transformed gold as an
Speaker 7: asset class, moved.
Speaker 1: It into the mainstream.
Speaker 7: But it's not as if gold took off on the
Speaker 7: day it was approved, and I'd expect the same thing
Speaker 7: about bitcoin. People want this to be a one day story.
Speaker 7: It's fun to follow the race, but this is actually
Speaker 7: a ten year story. This is about bitcoin moving from
Speaker 7: the edge of the investment community to the center of
Speaker 7: the mainstream allocation space.
Speaker 1: That's really exciting.
Speaker 7: But if you're investing in that, you should be thinking
Speaker 7: about ten years and not a few days.
Speaker 2: When you say if you're investing, I wonder who you're
Speaker 2: referring to there, because the kind of two mainstay concerns
Speaker 2: of the SEC is the participation of retail investors also
Speaker 2: the idea of market manipulation. Have you been active in it?
Speaker 2: In sort of addressing those concerns with the I get itsa.
Speaker 1: Yeah, absolutely.
Speaker 7: You know, we've submitted over four hundred pages of academic
Speaker 7: research demonstrating that the bitcoin market of today is not
Speaker 7: the bitcoin market of five or ten years ago.
Speaker 1: This market has matured.
Speaker 7: I think it's matured to the space that we can
Speaker 7: have a bitcoin etf available. And the big point is
Speaker 7: investors are allocating to bitcoin already, they're using consumer apps,
Speaker 7: they're using other tools. All an ETF would do is
Speaker 7: make it safer, cheaper, and provide more regulatory protections to
Speaker 7: help investors get better exposure to something that they're finding
Speaker 7: their way to get exposure to as well. I will
Speaker 7: say we started this journey on spot bitcoin ETFs ten
Speaker 7: years ago, and the SEC was right to deny bitcoin ETFs.
Speaker 1: At that point.
Speaker 7: The industry wasn't ready, the institutions weren't ready, the infrastructure
Speaker 7: wasn't ready. But I think today it is and it's
Speaker 7: time for us to move forward.
Speaker 3: How do you move forward?
Speaker 2: And when you know, we just showed the calendar of
Speaker 2: everyone that could potentially have an ETF approved, it's quite
Speaker 2: a few of you. So how are you competitive against
Speaker 2: the large pack?
Speaker 7: Yeah? Bit wise, crypto is all that we do. We've
Speaker 7: been doing this for six years. We work with thousands
Speaker 7: of financial advisors and tens of thousands of investors. We've
Speaker 7: helped them navigate the great parts of crypto and the challenges.
Speaker 7: I think some investors will want to turn towards large,
Speaker 7: familiar asset managers like Blackrock, and others will want to
Speaker 7: turn to a crypto expert that they can call up
Speaker 7: and get answers from that are informed about what's going
Speaker 7: on in crypto. If you look at ETF's historically, specialist
Speaker 7: asset managers that focus on something twenty four to seven
Speaker 7: three sixty five win more than their fair share of assets.
Speaker 1: And that's what Bitwise is provided.
Speaker 7: You know, we're the largest crypto index fund provider in
Speaker 7: America and we want to take that expertise into this
Speaker 7: spot bitcoin ETF market and serve investors that way.
Speaker 2: Bit Wise CIO Matt Hayugen just such a timely conversation
Speaker 2: as it develops. Come back and join us on bloombog
Speaker 2: Technology blow by blow. Thank you very much. They're coming
Speaker 2: up here on the show. Activist investors called on salesforce
Speaker 2: to boost profits and the company's making good on that bet.
Speaker 2: We'll recap the numbers from Mark Benioffs Software Empire.
Speaker 3: Coming up next.
Speaker 2: We're also looking at shares by the way of CrowdStrike.
Speaker 2: Another earning story, biggest indusday rise since May. The security
Speaker 2: software company issued forecast feeding second quarter earnings and a
Speaker 2: guidance upgrade, prompting Frankly, several analysts to raise their price
Speaker 2: targets on the stock up nine percent in the session.
Speaker 2: This is Bloomberg Technology time for talking tech. First up,
Speaker 2: we spoke a little bit yesterday about the release of
Speaker 2: Huawei's surprise smartphone. Now Chinese state media is ailing the
Speaker 2: launch of the Mate sixty pro as a victory in
Speaker 2: the ever so tense tech war against the United States.
Speaker 2: A number of Beijing back columns have run overnight praising
Speaker 2: Huawei since the device's released, which happened to coincide with
Speaker 2: Common Secretary Gina Romando's visit to China. Sigma Smartphones Apple
Speaker 2: taking a greener approach to producing some of its upcoming
Speaker 2: smart watches, Bloomberg reporting the companies trying out three D
Speaker 2: printers to make the gadgets in order to use less
Speaker 2: slabs of metal. The new approach has the potential to
Speaker 2: streamline Apple supply chain and be more eco friendly.
Speaker 3: Apple declined to comment on the story.
Speaker 2: Plus, in an effort to fend off further antitrust scrutiny
Speaker 2: by the European Union, Microsoft is offering to unbundle its
Speaker 2: Teams video conferencing unit from its business software package.
Speaker 1: In Europe.
Speaker 2: EU investigators are examining whether Microsoft breached competition rules by
Speaker 2: offering teams with Office and Microsoft three sixty five in
Speaker 2: a package. This follows a complaint from Salesforce and its
Speaker 2: messaging platform Slack, which they may three years ago. Sticking
Speaker 2: with Salesforce, the company boosting investor confidence after posting strong
Speaker 2: second quarter earnings beat lest I set the numbers with
Speaker 2: Bloomberg Intelligence senior tech analysts An A.
Speaker 1: Rag Rana.
Speaker 2: There was a lot that Salesforce did to their credit right,
Speaker 2: raised prices for the first time in seven years July.
Speaker 2: They've cut headcount. What jumped out to you from that
Speaker 2: earnings print.
Speaker 6: I think the bookings number or what we look at
Speaker 6: called CRPO grew about eleven percent in constant currency, and
Speaker 6: I think that was a surprise to a number of them,
Speaker 6: number of people, I would say, which is partially the
Speaker 6: reason why the star is up.
Speaker 1: You know.
Speaker 6: I think we were expecting that going in because we
Speaker 6: already heard from the likes of Microsoft and Amazon that
Speaker 6: there is some stabilization in the decline in take spending,
Speaker 6: so we weren't looking for a bad print, but I
Speaker 6: think the expectations were very negative going into the quarter.
Speaker 3: AI we just got to talk about it.
Speaker 2: You know, we lean in on this idea that on
Speaker 2: a per user basis, Salesforce can shock seventy five hundred
Speaker 2: dollars per user. Right, top line growth was eleven percent
Speaker 2: in the court of gone. But this is a company
Speaker 2: that used to grow twenty to thirty percent top line.
Speaker 2: Does AI return them to that level of growth?
Speaker 5: Oh?
Speaker 6: No, No, twenty to thirty is very I mean, it's
Speaker 6: out of the question in my view. When you look
Speaker 6: at a company like Salesforce, given its size, given the
Speaker 6: end markets, you know, this is a company that, in
Speaker 6: our view should grow revenue somewhere between ten and fifteen percent.
Speaker 6: You know, if you're really in good times, it will
Speaker 6: be closer to the thirteen to fifteen percent mark. In
Speaker 6: bad times it will be around the ten percent mark.
Speaker 6: The end markets are the software products that they're selling.
Speaker 6: I mean they are close to I would say, you know,
Speaker 6: in line with the software industry. Not not so much
Speaker 6: in that twenty percent range anymore.
Speaker 3: And Rag, I know you.
Speaker 2: Zero it in on the fundamentals. You have better command
Speaker 2: of the numbers than anyone I know. But I want
Speaker 2: to ask about Mark Bennioff. You know, investors made it
Speaker 2: clear what they wanted and Mark Benioff did it focused
Speaker 2: on profit.
Speaker 3: You see, it's a lot.
Speaker 6: More to goal when it comes to profit, and Mark's
Speaker 6: done a good job about it. But I think you know,
Speaker 6: it's going to be a lot more than where we
Speaker 6: are right now. And the only reason is because they
Speaker 6: spends still a lot of money on sales and marketing
Speaker 6: compared to their rivals like Microsoft or Article, so we
Speaker 6: expect margins to go even hired over the next few years.
Speaker 2: Yeah, they raised their operating margin guidance for the fiscal
Speaker 2: year by two percentage points. Anarag Rana, senior tech analyst
Speaker 2: for Bloomberg Intelligence Goods catch up.
Speaker 3: Thank you very much.
Speaker 2: Welcome back to Bloomberg Technology ed Lovelow here in San Francisco.
Speaker 2: This is what the technology sector looks like in e
Speaker 2: equity markets andw's that one hundred slightly higher. The story
Speaker 2: of the week's kind of in economic data and earnings.
Speaker 2: But remember we get jobs data Friday that will inform
Speaker 2: what the Fed does and therefore the rates narrative and
Speaker 2: how we value many of these tech stocks, particularly on
Speaker 2: the NATS. That one hundred elsewhere slight outperformance for chip stocks.
Speaker 2: We're going to talk a bit later about Broadcon reporting
Speaker 2: after the bell that dragging it higher. Ev Names pushing
Speaker 2: it a little higher as well for General Motors up
Speaker 2: nine tens one percent.
Speaker 3: Tesla flat.
Speaker 2: Why news that the United States is going to offer
Speaker 2: twelve billion dollars of public money to retrofit plants that
Speaker 2: currently make combustion engine vehicles and transition them to plants
Speaker 2: that make electric vehicle offerings and platforms. Tesla not going
Speaker 2: to benefit from that because, of course it's pure play.
Speaker 2: It doesn't need to convert any of its existing US facilities,
Speaker 2: but it is a story that will continue to track
Speaker 2: those funds coming from the US Department of Energy. Finally,
Speaker 2: in terms of what's driving US higher modestly on the
Speaker 2: nazet one hundred, it's the megacaps really that are doing well.
Speaker 2: Amazon is pushing higher Broadcom, as we talked about, reports
Speaker 2: earnings after the bell up two point three percent, pushing
Speaker 2: the Philadelphia Semiconductor.
Speaker 3: Index higher to the upside.
Speaker 2: Apple actually lost some of its earlier gains in the session,
Speaker 2: and Meta is actually one of the big points drivers
Speaker 2: to the upside on the social media side, up eight
Speaker 2: ten of one percent. Right, our other top story, let's
Speaker 2: turn back to the data policy change is at X,
Speaker 2: the platform formerly known as Twitter, planning to collect biometric data.
Speaker 3: Job and school history.
Speaker 2: I do want to point out very quickly, though, that
Speaker 2: the company told me this morning this only applies to
Speaker 2: premium users who pay for an ex subscription. Joining us
Speaker 2: now with reaction Adam Kovekovich, Chamber of Progress founder and CEO,
Speaker 2: and let's start there. Your reaction to this policy change.
Speaker 8: Well, I think sometimes when you see companies roll out
Speaker 8: these terms of service, they're a little bit of a
Speaker 8: roadmap of their plans.
Speaker 1: They may or may not come to fruition.
Speaker 8: They write them to give them sort of maximum flexibility.
Speaker 8: But I do think these are probably a bit of
Speaker 8: an X ray into the product plans inside ELI and
Speaker 8: Musk's head. And on the one hand, it shows that Mask,
Speaker 8: like a lot of leaders of the big companies, are
Speaker 8: sort of racing to compete and invad each other's product
Speaker 8: spaces and kind everybody kind of wants to become the
Speaker 8: everything app. That's probably great for consumers and it creates
Speaker 8: more competition. On the other hand, Musk has frankly done
Speaker 8: allowed to destroy user trust and X over the last
Speaker 8: few months, So it's kind of far from clear that
Speaker 8: consumers are prepared to follow him on this expansion agenda.
Speaker 2: I'd note that on my X timeline at least lots
Speaker 2: of users have responded to me saying, you know that
Speaker 2: they're not comfortable with this move or they cannot believe
Speaker 2: that you have to pay for the privilege of handing
Speaker 2: over a wider set of data to X and elon Musk.
Speaker 2: The company's position is that by having dual verification a
Speaker 2: government issued ID and then a selfie or picture as
Speaker 2: part of biometrics, and those biometrics come from your government
Speaker 2: issued ID, that will help them crack down on impersonators.
Speaker 2: This is what the company told me this morning in
Speaker 2: a statement. What do you make of that, Adam, the
Speaker 2: ability through this data to tackle impersonation?
Speaker 1: Well, I think it really on why they're doing it.
Speaker 8: Do they need biometrics to become the next Venmo or
Speaker 8: do they need it to solve a trust in verification
Speaker 8: problem that must himself create it? Right, look for payment
Speaker 8: services like Venmo, like Apple Pay, biometric data is very
Speaker 8: valuable for securing phones and transactions. And if that's why
Speaker 8: they're doing it, that's a level of security most people
Speaker 8: would welcome. But if they're doing this because they have
Speaker 8: a bot problem and a false impersonation problem, no one
Speaker 8: did more to create that problem than Elon Musk himself.
Speaker 1: Right. He completely misunderstood the.
Speaker 8: Value of Twitter's old Blue check value verification system and
Speaker 8: sort of auctioned it off as a source of revenue.
Speaker 8: That in turn meant that a lot of bots controls
Speaker 8: have bought blue checks now and sort of diminished user
Speaker 8: trust in the platform. So after taking all those steps,
Speaker 8: is a bit rich to say that they need biometrics
Speaker 8: to solve the problem. It's a little like saying, you know,
Speaker 8: we need to install a top of the line alarm
Speaker 8: system because oops, we got rid of all of our
Speaker 8: doors and locks.
Speaker 1: A few months back. It's maybe best to just focus
Speaker 1: on the basics first.
Speaker 2: What's interesting with that position, Adam, is that the Chamber
Speaker 2: of Progress represents the industry, right, the technology companies, And
Speaker 2: I understand that your work is so that they could
Speaker 2: contribute it in a better way to society. But give
Speaker 2: me your personal your specific thoughts on a platform like
Speaker 2: X including biometric data, jobs data, education data, albeit at
Speaker 2: will and only to pay subscribers.
Speaker 8: Well, I think the reality is that Again, if they're
Speaker 8: doing this to inject more competition into the marketplace, for example,
Speaker 8: to compete with LinkedIn in job search, or to compete
Speaker 8: with Venmo and payments, or.
Speaker 1: WhatsApp and messaging, all that is great.
Speaker 8: You know, I think that it's a healthy dynamic that
Speaker 8: we have companies and if I almost having a degree
Speaker 8: of paranoia that leads them to compete with each other,
Speaker 8: particularly the big companies, well resource companies.
Speaker 1: That creates more options for consumers. All of that is
Speaker 1: really great.
Speaker 8: But on the other hand, the ability to do that
Speaker 8: does depend on trust. And you know, so I think,
Speaker 8: for example, a lot of people tried out threads because
Speaker 8: they were dissatisfied with Twitter and all the changes going
Speaker 8: on there. But frankly, Meta had done a lot too
Speaker 8: over the last you know, several years to establish trust
Speaker 8: with its users, you know, billion Instagram users, right, They
Speaker 8: had invest in things like content moderation and so, you know,
Speaker 8: I think it's great to see companies.
Speaker 1: Expand and compete with their rivals.
Speaker 8: That's beneficial for consumers, but it's only possible if you
Speaker 8: sort of have a baseline of trust you've established with
Speaker 8: your core users to begin with.
Speaker 2: This all comes down to the idea of an everything app,
Speaker 2: you know, moving towards what we see in Southeast Asia
Speaker 2: and other parts of Asia where it's multifunction platform. The
Speaker 2: other piece of news of Night was the addition or
Speaker 2: the upcoming edition of video and audio calls without having
Speaker 2: to register a cell phone number. What do you make
Speaker 2: of that move towards the everything app?
Speaker 8: Well, again, I think in some ways a number of
Speaker 8: companies are trying to create the everything app.
Speaker 1: They'd all like to create the everything app, right.
Speaker 8: You see, you know, TikTok getting into e commerce to
Speaker 8: compete with Amazon. You see again both TikTok and Meta
Speaker 8: competing against Twitter in this sort of text only posts,
Speaker 8: this audio video calling, you know, in some ways could
Speaker 8: be competing with WhatsApp and Facebook Messenger and an I message,
Speaker 8: and that could be beneficial as well. So I think
Speaker 8: the quest for the everything app is a great one.
Speaker 8: It has to be done in a way that solves
Speaker 8: a problem for consumers, you know, I think I could
Speaker 8: you know, I think a lot of times, for example,
Speaker 8: when I'm doing a DM conversation with people in Twitter
Speaker 8: or used to be knows Twitter, I could see times
Speaker 8: with that be beneficial to turn that into a call.
Speaker 1: On the other hand, if.
Speaker 8: If any one follower of another person on X is
Speaker 8: able to bring them out of the blue, that could
Speaker 8: be a recipe for stam call.
Speaker 1: So it depends on how it's done right.
Speaker 8: And you know, he talked about X becoming a global
Speaker 8: address book, but Twitter is not a global address book
Speaker 8: for most people. Most people aren't even on Twitter. And
Speaker 8: there's a little bit of a guest here. But I
Speaker 8: think between how he uses it and how most people.
Speaker 2: Use it, Adam does X, the platform formerly known as Twitter,
Speaker 2: have an outsized side to impact relative to its size.
Speaker 8: Still, oh, absolutely always has. I mean, and he and
Speaker 8: trust me, I think that he you know, he's done
Speaker 8: a lot to eroad that, but you know, there's there's
Speaker 8: still a lot of real.
Speaker 1: Time conversation happening there.
Speaker 8: Of course, metas trying to challenge that with threads, and
Speaker 8: I think, you know, has has drawn a share of
Speaker 8: that conversation.
Speaker 1: But there's no question that there's still a lot happening
Speaker 1: on X.
Speaker 8: I still enjoy using it a lot of the time,
Speaker 8: and and and so I think that, you know, I
Speaker 8: hope that it actually becomes a healthier place for a
Speaker 8: conversation because that kind of trust and verification aspective is
Speaker 8: kind of essential to being a place that people want
Speaker 8: to hang out.
Speaker 2: Yes, Kobaco, its Chamber of Progress founder and CEO.
Speaker 3: Great catch up, Thank you.
Speaker 2: Coming up here on Bloomberg Technology, We're going to talk
Speaker 2: AI funding and defense tech with Blauserbiri, partner at Lux Capital.
Speaker 2: Our VC Spotlight segment is coming up next. I have
Speaker 2: to say that's a pretty old photo of Blau.
Speaker 3: Check it out.
Speaker 2: He see what he looks like when he's on set. Next,
Speaker 2: this is Bloomberg Technology. AI's startup co here is working
Speaker 2: with banks to raise a fresh round of financing, just
Speaker 2: a few months after its last one. That according to
Speaker 2: Bloomberg sources, the Toronto based company backed by investors like
Speaker 2: Oracle and Nvidia's being advised by JP Morgan and Goldman Sachs.
Speaker 2: On the potential round, the open AI competitor just raised
Speaker 2: two hundred and seventy million dollars in all right, let's
Speaker 2: stick with AI startups and venture money and get the
Speaker 2: VC perspective on today's VC Spotlight and bring in Blau Zabiri,
Speaker 2: general partner at Lux Capital, a five billion dollar firm.
Speaker 2: The founds and funds emerging science and tech ventures pretty much.
Speaker 3: All over the world.
Speaker 2: And that's why I'm happy to see you, because since
Speaker 2: last we spoke, you seem to have spent a lot
Speaker 2: of time on an airplane and visited a lot of countries.
Speaker 9: What have you been up to, Oh, it's been a
Speaker 9: busy time in Ventory Capital. I've been traveling around the
Speaker 9: world visiting portfolio companies in Europe, in Asia, Who've been
Speaker 9: to several countries in Europe, went to Pakistan, went to Jordan,
Speaker 9: and then obviously all over the US with companies coast
Speaker 9: to coast.
Speaker 2: Is there any sort of thematic divide of what you
Speaker 2: invest in in Europe visa b what you've invested in here.
Speaker 3: In the United States?
Speaker 2: Is there sort of a distinct pool of talent there?
Speaker 9: You know? Generally no, So as you said, we invest
Speaker 9: in the intercision of technology and sciences, solving hard problems
Speaker 9: and frankly matter that matters. You know. While a lot
Speaker 9: of people in Slicon Valley might like to be thought
Speaker 9: leaders and think of vision themselves as visionities, the reality
Speaker 9: is capital follows talent, and talent follows interests, and the
Speaker 9: interest right now is in solving important, interesting problems, and
Speaker 9: that's where we're spending our time. So you know, a
Speaker 9: couple of areas that emerge frankly globally for us to
Speaker 9: invest in. It is securing life and environment, So it
Speaker 9: is companies like sale Drome that are working on climate
Speaker 9: change and you know, hurricane intensity and understanding whether patterns
Speaker 9: that affect globally, and defense and national security. It is
Speaker 9: advancing and promoting you know, our profitability and productivity. So
Speaker 9: companies like Applied Intuition building autonomous cars and enabling transition
Speaker 9: to electric vehicles. Globally, we're working on enabling free expression.
Speaker 9: Democracy is very important. So companies like hugging Face that
Speaker 9: are like sort of a global leader in the largest
Speaker 9: community machine learning developers around the world frankly, and the
Speaker 9: companies based in Europe as you know, headquartered in Paris.
Speaker 2: And then we had Clemmed the CEO on the shoah.
Speaker 2: Was it this week or last week?
Speaker 3: Guys?
Speaker 2: I think it was last week, But they've just raised
Speaker 2: money as well. And what was interesting there is that
Speaker 2: they're going to use it for the talent because it's
Speaker 2: creving expensive. Just talk a little bit specifically about the
Speaker 2: hugging Face investment.
Speaker 9: I think, you know, machine learning AI revolution is happening globally,
Speaker 9: and I think it's happening with people. So this is
Speaker 9: not something that requires significant amounts of capital and deployment
Speaker 9: into capex, into hardware systems.
Speaker 1: But what's really.
Speaker 9: Happening is people around the world are developing solutions using
Speaker 9: AI that previously was simply not available or just too
Speaker 9: expensive to develop. And that is happening everything from you know,
Speaker 9: fintech and traditional enterprise software all the way to solving
Speaker 9: healthcare problems and productivity and industrial solutions. So that's what
Speaker 9: Hugging Face is doing is the largest community of machine
Speaker 9: learning developers and models literally all around the world, and
Speaker 9: the capital that they raise is to make sure that
Speaker 9: they invest in it.
Speaker 3: Yeah, cleansed along on the show last week.
Speaker 2: The story for the firm this year has been that
Speaker 2: latest one point one five billion dollar funds for science
Speaker 2: deep tech. In the time that that was announced back
Speaker 2: in April, I think, have you literally just been writing checks?
Speaker 2: How does it work mechanically when a firm raises new funds,
Speaker 2: Can you just go out there and start deploying technically.
Speaker 9: Yes, we start deploying capital when we raised it from
Speaker 9: the LPs. We have obviously, this is our fund aids.
Speaker 9: We've been you know, we five billion dollars under management.
Speaker 9: We've been deploying capital from previous funds as well. Our
Speaker 9: focus is going to continue to be the investor the
Speaker 9: intersectionion of technology and sciences, and this could there could
Speaker 9: be physical sciences, everything from semiconductor chips to autonomy, automation,
Speaker 9: industrial automation. You saw the news about Apple using three
Speaker 9: D printers, et cetera. It could be life sciences, you know,
Speaker 9: reducing human suffering, developing new drugs and therapies. And it
Speaker 9: could be computer sciences, you know, machine learning, AI, cybersecurity,
Speaker 9: and preparing for defense.
Speaker 2: Frankly, and an umbrella area of interest to myself, my
Speaker 2: colleague Zett Chapman, who's been writing about it, but also
Speaker 2: LP's is defense. What do you say, why is this
Speaker 2: now in vogue? For want of a better expression, I
Speaker 2: don't know if it's in vogue.
Speaker 9: I think it's more importantly a realization that, whether we
Speaker 9: like it or not, we are at some sort of
Speaker 9: a war. There is a war going on in Europe
Speaker 9: between Ukraine and Russia and US technologies from the pub
Speaker 9: private sector and the public sector have.
Speaker 1: Been very influential there.
Speaker 9: We are at odds with the CCP that have aggressive
Speaker 9: designs that is increasingly hostile towards the US, and the
Speaker 9: realization that the last twenty years of warfare were a
Speaker 9: gorilla warfare in the Middle East, going downtown house to house,
Speaker 9: and now we're facing an extremely sophisticated enemy with digital tools,
Speaker 9: autonomous systems AI based solutions that are frankly pervasive in
Speaker 9: our lives and offensive from the CCP. They see that
Speaker 9: as Zyzego some games. So we have to prepare for that,
Speaker 9: we have to work for that, and I think the
Speaker 9: change that has happened is a realization that the old
Speaker 9: school way of working through five six large primes and
Speaker 9: developing technologies just doesn't work. You have to work with
Speaker 9: the private sector to bring new technologies in, whether it's
Speaker 9: drone systems or detection systems. You know, Sale drone has
Speaker 9: hundreds of drones around the globe, connecting data and analyzing data.
Speaker 9: This is what's needed for where the water is going,
Speaker 9: and hopefully we can actually reduce human suffering and reduce
Speaker 9: casualties in doing that, not putting humans in harms.
Speaker 2: With Lawsaberry General partner Locks Capital. Great to have you
Speaker 2: on set in San Francisco. You've been around the world
Speaker 2: this year.
Speaker 10: I mean you have to just engineer things to operate
Speaker 10: within certain guardrails and boundaries. You have to seer things
Speaker 10: in the right direction. So is the world suggesting that
Speaker 10: the whole world replaces human connection with the chatbot? If
Speaker 10: that is truly the case, I promise you've been bigger
Speaker 10: issues than moble. I don't think you will ever replace
Speaker 10: the need for real love and human connection.
Speaker 2: That was Bumbles, CEO and founder talking with Bloomberg's Emily
Speaker 2: Chang about how chatbots are no substitute for a real date.
Speaker 2: To take that from me now, tune into that conversation
Speaker 2: tonight at ten pm Easteron on Bloomberg Television and at
Speaker 2: eight pm Easton.
Speaker 3: On Bloomberg Originals.
Speaker 2: Now, Identity management company Octa out with earnings that beat
Speaker 2: expectations and announcing it's raised it's full year forecast. Joining
Speaker 2: us now for an exclusive conversation Todd McKinnon, octor CEO.
Speaker 3: Tod it's so interesting to me some.
Speaker 2: Of the size of the deals in the quarter gone
Speaker 2: and the impact that the size of those deals have
Speaker 2: had just explain that the psychology and behavior of some
Speaker 2: of your customers and what they're willing to commit to.
Speaker 11: Thanks for having me on Bloomberg Technology ED. It's great
Speaker 11: to be here. Large organizations particularly are really seeing the
Speaker 11: value of identity. Whether it's a big company like NTT
Speaker 11: Data globally is using Octa to secure their workforce and
Speaker 11: allowing them to adopt different technologies and work from anywhere,
Speaker 11: or it's one of the biggest consumer packaged goods companies
Speaker 11: in the world that has disparate brands. They're trying to
Speaker 11: bring a single unified login experience to Identity is at
Speaker 11: the key to that. And these companies, despite macroeconomic uncertainty,
Speaker 11: are pushing forward with these strategic projects, and we're lucky
Speaker 11: enough to be able to work with them, and the
Speaker 11: results are reflected in our business.
Speaker 3: CRPO.
Speaker 2: There are some analysts that kind of we're a little
Speaker 2: disappointed your reaction to the Bears.
Speaker 11: Well, I think that we're being cautious about the economic outlook.
Speaker 11: There's still an economic headwind in the technology sector, and
Speaker 11: we're being proven about our forward guidance to make sure
Speaker 11: that we manage through that appropriately.
Speaker 1: But at the same time, our growth.
Speaker 11: Was very strong in the quarter, twenty three percent revenue
Speaker 11: growth in this environment, and most importantly, we generated almost
Speaker 11: fifty million dollars of free ash flow in the quarter.
Speaker 11: So we've proven that the market for identity is so
Speaker 11: attractive that in any economic environment, we can grow the
Speaker 11: business with profitability.
Speaker 2: Net retention rate, I know, it's something that our Bloomberg
Speaker 2: intelligence and lists looked in. What's driving that in its
Speaker 2: kind of downward trajectory.
Speaker 11: Well, it did tick down from last quarter, but remember
Speaker 11: we have one hundred and fifteen percent net retention, So
Speaker 11: customers bought a dollar a year ago, that same customer
Speaker 11: on average is now paying us a dollar.
Speaker 1: Than fifteen cents.
Speaker 11: So that's incredibly an incredible testament to our customer success
Speaker 11: and also the product innovation we've delivered. Just in the
Speaker 11: last few weeks, we've announced Octa for the Global two thousand,
Speaker 11: which lets the largest organization in the world flexibly adjust
Speaker 11: their business strategy on a solid identity foundation. Is they
Speaker 11: adjust their strategy in these macro economic times. And another
Speaker 11: one is Octa Device Access, which secures the actual log
Speaker 11: in at the end computer all the way through to
Speaker 11: the company's entire infrastructure. So the business is strong and
Speaker 11: customers are having success, and we're excited to work with them.
Speaker 2: Tod, I think I heard you say AI on the
Speaker 2: call eight times and chat GPT four times.
Speaker 3: What's the AI story for Octa?
Speaker 11: Well, first of all, in the big picture, Ed, I
Speaker 11: mean our industry in the world hypes a lot of things.
Speaker 11: I think AI may be under hyped, and that's the potential.
Speaker 11: I mean, you have all the right ingredients of a
Speaker 11: true technology revolution. You have a breakthrough hardware with what's
Speaker 11: happened with GPUs, you have computer science breakthroughs, which with
Speaker 11: what happened a few years ago with the Transformers paper
Speaker 11: and that pouring into large language models, and you have
Speaker 11: a killer app. You had Chat GPT come out and
Speaker 11: just take over the world. And that's the Netscape moment
Speaker 11: of this AI revolution. And talk about the economy, I
Speaker 11: think what really could get the economy in terms of
Speaker 11: tech spending and tech investment really down is this focus
Speaker 11: on AI. Every company I talked to is thinking about
Speaker 11: how they can become an AI company. And it's just
Speaker 11: similar like in the late nineties when every company had
Speaker 11: an Internet strategy.
Speaker 1: That's what we're on.
Speaker 11: The precipice of and we benefit from that. Actor is
Speaker 11: the login for chat gbut they use our customer Identity
Speaker 11: cloud to connect their customers to Chatgbut and so it's
Speaker 11: every whether it's open AI, whether it's scale AI or
Speaker 11: recurrency SAI. We're the identity company for all these AI
Speaker 11: startups and innovators.
Speaker 2: And doctor shares off session high as was still up
Speaker 2: twelve percent, on track for the best days since March
Speaker 2: on an ch day basis. Tom mckinn and opt to CEO,
Speaker 2: thank you so much. Sadly, that does it for this
Speaker 2: edition of Bloomberg Technology. But don't forget recap on our podcast.
Speaker 2: You can find it on the terminal as well as
Speaker 2: online Apple, Spotify, an iHeart from here in San Francisco.
Speaker 3: This is Bloomberg Technology.