WEBVTT - Netflix Earnings Preview and Ye Buys Parler 0:00:02.240 --> 0:00:05.600 From the heart of where innovation, money and power callive 0:00:06.360 --> 0:00:10.879 in Silicon Valley and beyond. This is Bloomberg Technology with 0:00:10.960 --> 0:00:26.840 Emily Jay. I'm Caroline Hyde in New York. I'm in 0:00:26.880 --> 0:00:29.560 Firmili Chang. This is Bloomberg Technology coming up in the 0:00:29.600 --> 0:00:32.520 next hour. Netflix kicks off big tech earnings Tuesday, followed 0:00:32.520 --> 0:00:35.680 by Tesla and of course Snap. How low is the 0:00:35.680 --> 0:00:38.839 bar already set this quarter? And will stocks continue to 0:00:38.960 --> 0:00:41.800 fall even after earnings beats the turnaround today? Of course, 0:00:42.080 --> 0:00:45.040 plus Kanye West or years is now known by the 0:00:45.120 --> 0:00:48.839 social media platform that is embraced by conservatives who departed 0:00:48.840 --> 0:00:51.960 Twitter over allegations of political censorship. We're talking with the 0:00:52.080 --> 0:00:56.040 CEO of Parlor about the deal and Texas needs more 0:00:56.080 --> 0:00:59.280 details from ft X and Sam mcmun Freed's deal to 0:00:59.360 --> 0:01:02.680 buy Voyages assets will have more on the investigation into 0:01:02.720 --> 0:01:06.480 the cryptomogil First and foremost, let's have a talk a 0:01:06.520 --> 0:01:09.160 little bit more about well the on again, off again, 0:01:09.280 --> 0:01:12.119 risk on, risk off sort of violent moves we see 0:01:12.120 --> 0:01:14.720 in the market and whether any of the valuations are 0:01:14.720 --> 0:01:17.319 currently at a buying opportunity. Dan morganam piece to say 0:01:17.440 --> 0:01:21.080 is with us Sonova's trust portfolio manager Dan, before we 0:01:21.080 --> 0:01:22.959 get into the integrity of the earnings and what you 0:01:23.000 --> 0:01:26.160 expect just at these levels the whipsawing we do see 0:01:26.280 --> 0:01:29.200 day in day out. Are you ultimately thinking that the 0:01:29.280 --> 0:01:32.080 erosion in value does mean that we're some sort of 0:01:32.120 --> 0:01:35.640 buying point in growth stocks, Well, Caroly, I don't know 0:01:35.640 --> 0:01:37.880 if we can put the flag in the sand and 0:01:37.920 --> 0:01:39.839 saying we're a buying point, but just kind of reiterate 0:01:39.880 --> 0:01:42.160 where you're talking about earlier. I mean, going into this 0:01:42.840 --> 0:01:46.959 upcoming third quarter, the consensus right now is calling for 0:01:47.400 --> 0:01:50.600 the overall technology sector to drop and earnings by about 0:01:50.600 --> 0:01:54.360 seven percent. The semiconductors, which we've talked about before with 0:01:54.960 --> 0:01:58.120 and Video and Micron last couple of weeks, that's expect 0:01:58.160 --> 0:02:01.200 to drop fourteen percent. So I think the expectations are 0:02:01.240 --> 0:02:04.200 so low that if they get any growth out of 0:02:04.240 --> 0:02:07.760 any of the fang stocks, including Netflix, even as top 0:02:07.800 --> 0:02:09.760 line growth, I think people would be pretty happy. So 0:02:10.080 --> 0:02:12.280 but I still think we've got to work through these 0:02:12.360 --> 0:02:14.920 FED increases before we can draw the line the sand 0:02:14.960 --> 0:02:17.639 and say Okay, here's the inflection point we can move 0:02:17.680 --> 0:02:21.040 on and start feeling really positive about tech. Interesting, So 0:02:21.120 --> 0:02:23.760 sort of the macro dictates the micro at the moment, 0:02:23.800 --> 0:02:25.640 but talk to us about the micro took to us 0:02:25.639 --> 0:02:28.560 that's informast about Netflix and kicks off. What are you 0:02:28.600 --> 0:02:32.120 expecting any sort of steer on on resilience from the 0:02:32.160 --> 0:02:35.600 consumer right now? We have to bear in mind, Caroline, 0:02:35.600 --> 0:02:39.320 the Netflix has reported two consecutive quarters of negative subscriber growth. 0:02:39.639 --> 0:02:41.720 Coming into this quarter, we're looking for a little over 0:02:41.760 --> 0:02:45.160 a million new subscribers. We know they're talking about going 0:02:45.200 --> 0:02:49.120 to a new platform in terms of advertising revenue. How's 0:02:49.160 --> 0:02:50.960 that going to affect them? They've been working on their 0:02:50.960 --> 0:02:54.799 password sharing issues. I think the big bogey Caroline, will 0:02:54.800 --> 0:02:56.840 be honest with the going this quarter on Netflix is 0:02:57.040 --> 0:02:59.080 do you know what consensus is for the fourth quarter? 0:02:59.320 --> 0:03:02.640 Looking for war million new subscribers? To me, that seems 0:03:02.639 --> 0:03:05.520 a little bit high. Yeah, yeah, notable that we're still 0:03:05.520 --> 0:03:08.120 being very British perhaps so there's news advertising models and 0:03:08.120 --> 0:03:11.520 they're like, I'm interested in what you think of of Tesla, 0:03:11.560 --> 0:03:14.239 which of course in many ways is so retail dictated 0:03:14.400 --> 0:03:17.000 and has been very prone to just being moved as 0:03:17.000 --> 0:03:19.480 a stock on sentiment. But what do you like to 0:03:19.520 --> 0:03:21.320 see in terms of a steer on growth on a 0:03:21.480 --> 0:03:23.920 particularly as we see the more competition come in Mercedes 0:03:23.919 --> 0:03:28.040 for example, the news there today, Caroline, we don't follow 0:03:28.040 --> 0:03:31.120 Tesla unfortunately because it is an auto stock, it doesn't 0:03:31.120 --> 0:03:33.840 fit in our bracket in terms of technology. So I 0:03:34.120 --> 0:03:37.080 really unfortunately, I don't want have much to add. Apologies 0:03:37.120 --> 0:03:39.920 for that been a bit of a misfi fire and steer. 0:03:40.040 --> 0:03:41.720 Thank you for bearing with me. Let's talk a little 0:03:41.720 --> 0:03:43.880 bit though about where you are go and me guiding 0:03:43.880 --> 0:03:46.600 a like IBM, for example, this is a company that 0:03:46.880 --> 0:03:49.600 has been relatively equisitive, relatively in growth mode. But are 0:03:49.600 --> 0:03:54.960 you likely to see the corporate side of demands stay resolute, yeah, Caroline. 0:03:54.960 --> 0:03:57.080 So it's interesting because they had a pretty good number 0:03:57.160 --> 0:04:00.000 on the last quarter of their second quarter. Coming into 0:04:00.160 --> 0:04:03.600 this third quarter, there are concerns about how wage growth 0:04:03.640 --> 0:04:06.360 is going to impact their consulting business. They're expected to 0:04:06.400 --> 0:04:10.640 take on about an eight percentage point uh negative impact 0:04:10.680 --> 0:04:14.520 from from currency um But if you look at their model, 0:04:14.560 --> 0:04:17.960 it's kind of interesting because they generate about seventy their 0:04:18.000 --> 0:04:21.280 business from software and consulting, and about fifty of their 0:04:21.279 --> 0:04:24.400 revenues are reoccurring, so they are very high cash flow. 0:04:24.440 --> 0:04:27.480 Stock would be something your listeners could look at. The 0:04:27.520 --> 0:04:30.480 dividend is over five pent um and it's only down 0:04:30.520 --> 0:04:32.760 thirteen percent year to date, where the SMP is down 0:04:32.800 --> 0:04:35.240 twenty five. So look at IBM. A is a value 0:04:35.279 --> 0:04:37.760 stock with very good cash flow. What has been so 0:04:37.839 --> 0:04:41.560 interesting is over the last couple of earning seasons, Snap 0:04:41.720 --> 0:04:47.200 has almost dictated sentiment, leading them into the matters, into 0:04:47.279 --> 0:04:49.520 the other Googles and the likes that are focused on 0:04:49.600 --> 0:04:52.279 advertising as a model. We've seen them become a sort 0:04:52.279 --> 0:04:54.080 of bell weather. Are you expecting them to be that 0:04:54.160 --> 0:04:56.200 this week? And to the upside of the town side 0:04:57.200 --> 0:04:59.680 where you're right, Caroline. Last quarter they came out and 0:04:59.760 --> 0:05:04.159 a acted trading with Twitter, with Google, with Amazon. Everybody 0:05:04.200 --> 0:05:06.520 followed them Meta. We have to remember in the second 0:05:06.560 --> 0:05:09.960 quarter revenues room only up thirty percent, and they guided 0:05:10.040 --> 0:05:12.920 for third quarter revenues to be flat. But since then 0:05:12.960 --> 0:05:14.880 things have improved a little bit. They're actually looking for 0:05:14.920 --> 0:05:19.000 revenues to grow six percent. They've had challenges, as you know, Caroline, 0:05:19.000 --> 0:05:23.080 in terms of the change in privacy with Apple. Uh. 0:05:23.120 --> 0:05:27.000 They've also had competitive issues with TikTok. But you're right, Caroline, 0:05:27.000 --> 0:05:30.320 their company that's going to dictate what happens with Alphabet 0:05:30.480 --> 0:05:35.640 Twitter and Meta in terms of advertising revenue online and 0:05:35.640 --> 0:05:38.520 how that health of that business is going. And of 0:05:38.560 --> 0:05:42.320 course you have Twitter exposure as well. Is Twitter going 0:05:42.360 --> 0:05:44.719 to be anything about the story of M and A 0:05:44.960 --> 0:05:49.040 or are you're actually going to be really focused on fundamentals, Caroline. 0:05:49.040 --> 0:05:51.440 Twitter is a tough company because they don't seem to 0:05:51.480 --> 0:05:55.080 ever grow their subscriber base. It's been very flat. You've 0:05:55.080 --> 0:05:58.039 got all the hype about Elon Musk wanting to buy 0:05:58.040 --> 0:06:00.440 the company and change it around, but if you look 0:06:00.480 --> 0:06:04.000 at their core growth trajectory, it's been very benign compared 0:06:04.040 --> 0:06:06.440 to let's say a Snap or a Meta or an 0:06:06.480 --> 0:06:09.320 Alphabet over let's say the last five years. So they 0:06:09.360 --> 0:06:12.080 still have a lot of challenges, not only in the 0:06:12.120 --> 0:06:14.920 overall ad spend market, which is expected slow this year, 0:06:15.320 --> 0:06:18.280 only at about six from thirty six percent last year, 0:06:18.520 --> 0:06:20.839 but they have issues in terms of how they're structured. 0:06:21.080 --> 0:06:23.680 Their average user of time is only about forty five 0:06:23.839 --> 0:06:27.840 seconds or about two minutes, compared to Facebook or Meta 0:06:27.920 --> 0:06:30.000 that was thirty minutes. To give you an idea of 0:06:30.080 --> 0:06:33.480 how long people stay on it and actually look at it, 0:06:33.480 --> 0:06:36.160 it's usually a quick interchange. So that's another challenge. For 0:06:36.400 --> 0:06:38.360 Twitter going forward. So it's gonna be a tough quarter 0:06:38.360 --> 0:06:40.880 I would expect for them. Um, we want to thank 0:06:40.880 --> 0:06:43.239 you so much for giving us your expertise, your years 0:06:43.440 --> 0:06:46.320 of experience and managing money and getting into the right 0:06:46.320 --> 0:06:48.520 stocks and nervous trust a force Port Phonio manager there, 0:06:48.760 --> 0:06:59.680 We thank him. Yeah, formerly known as Kanye West has 0:06:59.680 --> 0:07:01.960 a green need to buy Parlor. Of course, that's a 0:07:02.000 --> 0:07:04.839 social media platform that it's been embraced by conservatives who 0:07:04.960 --> 0:07:08.960 perhaps have left Twitter over allegations of political censorship. Parliament 0:07:09.000 --> 0:07:12.280 Technology CEO that's a parent company, Odd Parlor is George Farmer. 0:07:12.680 --> 0:07:16.880 He oversees currently the happenings joining us now for the 0:07:17.000 --> 0:07:21.440 future under Yeah, first and foremost, what does he bring 0:07:21.480 --> 0:07:23.680 you because you're still gonna be doing the underlying technology 0:07:23.720 --> 0:07:26.240 if I'm right, So what does he bring in leadership? 0:07:26.240 --> 0:07:31.600 In ownership? Yeah? Well thanks Caroline voving me on. I 0:07:31.640 --> 0:07:34.400 think it brings a vision to the platform that as 0:07:34.480 --> 0:07:39.440 much needed. You've seen the rise of personalities surrounding social 0:07:39.440 --> 0:07:42.080 media apps, whether it be Elon Musk and Twitter or 0:07:42.160 --> 0:07:45.760 Donald Trump and truth Social I think that Parlor very 0:07:45.840 --> 0:07:48.880 much looks to a charismatic leader, and I think that 0:07:48.920 --> 0:07:51.320 we're in year, we have one who is going to 0:07:51.360 --> 0:07:53.640 take the platform forward in terms of vision and direction, 0:07:54.120 --> 0:07:58.160 both creatively from a marketing perspective, from an outreach perspective. 0:07:58.200 --> 0:07:59.800 I think he's going to bring a lot of necessary 0:08:00.280 --> 0:08:03.800 talent to the platform. We're excited to work with him. 0:08:03.920 --> 0:08:06.480 Um and of course it puts us back on the map, 0:08:06.640 --> 0:08:09.000 which is, you know, something that we've long aspired to 0:08:09.440 --> 0:08:12.080 be back on. Were you worried about not being on 0:08:12.120 --> 0:08:16.520 the map, had you been losing members or users? Well, 0:08:16.560 --> 0:08:18.600 I think it's fair to say that the competitive landscape 0:08:18.600 --> 0:08:21.880 has become a lot more competitive. When Parlia was founded 0:08:21.920 --> 0:08:25.040 in it really was the only kind of what I 0:08:25.120 --> 0:08:29.120 quote sort of free speeches of business social media app 0:08:29.160 --> 0:08:32.480 around And of course in the intervening forward to five years, 0:08:33.040 --> 0:08:35.280 that landscape has become that much a bit more competitive. 0:08:35.320 --> 0:08:38.240 It needs the leadership of a charismatic personality, you know, 0:08:38.559 --> 0:08:40.480 much as I like to complement myself as sort of 0:08:40.679 --> 0:08:43.360 being a charismatic leader, it's it's just a different game 0:08:43.440 --> 0:08:47.640 when it comes to outreach and presence in existing in 0:08:47.720 --> 0:08:50.319 existing social media app So you know, kran Years obviously 0:08:50.920 --> 0:08:55.520 is presence on Instagram and Twitter is enormous. His outreaches 0:08:55.880 --> 0:08:58.439 is global and as a result, this puts us into 0:08:58.440 --> 0:09:00.480 a position where he can help acceller at the brand 0:09:00.480 --> 0:09:02.560 growth and he can grow the platform into something that 0:09:02.600 --> 0:09:04.600 he wants it to be as well as as well 0:09:04.600 --> 0:09:07.680 as compliment our existing technology infrastructure. What does he think 0:09:08.080 --> 0:09:10.480 the platform and the brand currently is? How long has 0:09:10.520 --> 0:09:14.320 he been a user? How old did this all unfold? Well, 0:09:14.360 --> 0:09:17.200 it came about quite quickly. I would say the deal 0:09:17.280 --> 0:09:19.920 really took shape in the last couple of weeks, um. 0:09:20.360 --> 0:09:23.240 And the reason being is because obviously he himself has 0:09:23.400 --> 0:09:26.720 fallen victim to the cancel culture narrative which deep platformed 0:09:26.760 --> 0:09:32.000 him from Twitter and Instagram. Um. He he has been 0:09:32.040 --> 0:09:34.200 a he has been a proponent of free speech for 0:09:34.200 --> 0:09:37.600 a very long time. But I think that the scales 0:09:37.679 --> 0:09:39.800 kind of fell from his eyes in regards to big 0:09:39.840 --> 0:09:42.400 tech censorship in the last in the last couple of weeks, 0:09:42.800 --> 0:09:45.240 And that was really when the conversation began in earnest 0:09:45.640 --> 0:09:48.600 And really the deal took shape in about the last week. 0:09:48.679 --> 0:09:51.120 And you know, we're putting together obviously the final touches. 0:09:51.160 --> 0:09:53.160 We haven't yet concluded the deal. As I mentioned in 0:09:53.200 --> 0:09:55.800 the press release, it should be concluded in Q. Four. 0:09:56.240 --> 0:09:58.080 But we were queen keen to get this statement out 0:09:58.120 --> 0:10:00.000 to give a statement of intent of whether the plat 0:10:00.040 --> 0:10:03.439 forms going. I'm interested. Of course he has been de 0:10:03.600 --> 0:10:09.240 platformed because of accusations of anti Semitic posts. How do 0:10:09.280 --> 0:10:11.400 you ensure that you have the right line of what's 0:10:11.840 --> 0:10:15.840 free speech and what's hate speech? Sure so, I I 0:10:15.840 --> 0:10:18.720 think philosophically, I take that back to a slightly higher question, 0:10:18.760 --> 0:10:22.600 which is who is in the position to make that decision? Um? 0:10:22.679 --> 0:10:27.319 And my question always in response to that is if 0:10:27.360 --> 0:10:29.440 I'm making the decision, then what right do I have 0:10:29.520 --> 0:10:33.640 to make the decision. Parlor has community guidelines which outlie 0:10:33.720 --> 0:10:38.120 which outlaws on the platform pornography, financial dogs, seeing gore, 0:10:38.240 --> 0:10:41.880 and violence, and of course those are stripped from the 0:10:41.880 --> 0:10:43.960 platform when they're put up, and we also have a 0:10:44.040 --> 0:10:48.640 very rigorous spot determinant which removes thoughts from the platform 0:10:48.679 --> 0:10:51.920 as well. Beyond that, of course, Parlor is a free 0:10:51.960 --> 0:10:54.680 speech side, and we believe in maximum allowable free speech. 0:10:54.720 --> 0:10:59.080 We believe in various studies which have proven that more 0:10:59.200 --> 0:11:02.720 speech actually he cures bad speech in some ways. So 0:11:03.160 --> 0:11:05.480 to show to show a bad idea a good idea 0:11:05.559 --> 0:11:07.719 is the best way to cure the bad idea in terms, 0:11:07.880 --> 0:11:10.520 and that's kind of what we believe in terms of 0:11:10.559 --> 0:11:14.240 ideas of this deal. It's been noted by many that 0:11:14.679 --> 0:11:18.080 your wife, Candace Owens is in some way, you know, 0:11:18.280 --> 0:11:22.640 than someone who has been helping see well. Certainly Kanye 0:11:22.679 --> 0:11:25.400 West himself came to her movie, has been talking about 0:11:25.400 --> 0:11:26.880 some of the things she's shown a light on my 0:11:26.960 --> 0:11:30.280 I'm interested as to how much she had played a 0:11:30.320 --> 0:11:32.640 part and role in the in the deal in some way. 0:11:33.320 --> 0:11:35.280 I mean, my wife is an integral part of my life. 0:11:36.200 --> 0:11:40.480 Be difficult to divorce everything that we do from each other. Um. Look, 0:11:40.520 --> 0:11:43.320 I mean we we're a team. And for sure, she 0:11:43.400 --> 0:11:46.240 obviously has a relationship with Kanye. They talked very extensively 0:11:46.240 --> 0:11:49.120 about culture. You know, she's deep in the trenches on 0:11:49.320 --> 0:11:52.280 various cultural aspects, including of course fine to his fashion 0:11:52.280 --> 0:11:55.480 show Harris a couple of weeks ago. Um. And so 0:11:56.080 --> 0:11:58.040 you know, I wouldn't have had my introduction to to 0:11:58.200 --> 0:12:01.200 year if it wasn't for her. Um. You know, the 0:12:01.240 --> 0:12:04.040 negotiation of the deal itself, of course, is completely left 0:12:04.040 --> 0:12:06.120 to me, and you know, I'm I'm more of that 0:12:06.240 --> 0:12:09.240 aspect of our life. The technology aspect, the business aspect. 0:12:09.280 --> 0:12:11.800 She has her own business ventures which are highly successful. 0:12:12.600 --> 0:12:14.880 She's a very successful businesswoman in her own rights, and 0:12:14.960 --> 0:12:18.319 so she brought him into the into the conversation. But 0:12:18.400 --> 0:12:21.600 you know, the deal itself was negotiated by me. What 0:12:21.679 --> 0:12:24.200 about deals of the future. We've just seen a tweet 0:12:24.200 --> 0:12:27.880 put out by in a mask, an amusing one, an 0:12:27.920 --> 0:12:31.560 interesting one, I thought, provoking one, but him and Yeah 0:12:31.760 --> 0:12:34.240 becoming some sort of team in some way with him 0:12:34.240 --> 0:12:37.160 as Twitter and Yeah with Parla. What do you make 0:12:37.200 --> 0:12:39.160 of that? Is that a future you'd want for the 0:12:39.200 --> 0:12:44.400 company you built? Yeah? I mean I think that I 0:12:44.480 --> 0:12:49.360 was highly entertained to see that that tweet. Obviously, um, look, 0:12:49.400 --> 0:12:53.959 strategic partnerships on the table absolutely. Um. I said this morning, 0:12:54.000 --> 0:12:55.439 I think in a in a in a comment that 0:12:55.480 --> 0:12:57.720 I gave that we are at the the end of 0:12:57.720 --> 0:13:02.000 the beginning of the start of the patriot economy. Right 0:13:02.040 --> 0:13:03.640 at the end of the beginning of the patriot economy. 0:13:03.760 --> 0:13:06.319 This is I think. I think in the last five 0:13:06.400 --> 0:13:09.160 years you've seen a massive land grab in terms of 0:13:09.200 --> 0:13:13.200 companies launching and trying to take positioning in this space. 0:13:13.760 --> 0:13:15.600 You know, you're now seeing it in banking You're seeing 0:13:15.600 --> 0:13:18.239 it in social media, You're seeing it in payment processing, 0:13:18.280 --> 0:13:22.640 You're seeing it in everything from insurance to coffee, I 0:13:22.640 --> 0:13:25.040 mean to everything in the world. And I think what's 0:13:25.080 --> 0:13:27.800 happening now is that the space has become quite crowded 0:13:27.840 --> 0:13:30.160 and you're going to see consolidation. I think you're potentially 0:13:30.200 --> 0:13:33.000 going to see more M and A in this space, um, 0:13:33.040 --> 0:13:36.959 And I think that's very exciting. Look, the decision is 0:13:37.000 --> 0:13:40.080 now yes, um, you know, and we are excited to 0:13:40.080 --> 0:13:42.840 work with him on that possibility. There's absolutely a possibility 0:13:42.840 --> 0:13:44.720 that he could want to turn the company around and 0:13:44.720 --> 0:13:46.880 and and sell it and make it something part of 0:13:46.960 --> 0:13:48.760 much bigger or in turn he could be looking for 0:13:48.800 --> 0:13:51.880 acquisitions himself. That's a discussion that I have yet to 0:13:51.920 --> 0:13:55.199 have with him. So I think this is very exciting. George, 0:13:55.520 --> 0:14:00.800 appreciate the time. Thank you. George Farmer, Parliament Technologies CEO. Meanwhile, 0:14:00.800 --> 0:14:04.440 of course, women talking about social media the landscape, Peter 0:14:04.480 --> 0:14:06.839 tells we're backing some of those new entrants to the 0:14:06.920 --> 0:14:10.760 conservative social media platform area. And meanwhile, and German startup 0:14:10.760 --> 0:14:12.920 delivering drones to Ukraine just got a big boost from 0:14:12.960 --> 0:14:15.600 one of the Musque's close partners Quantum Systems has received 0:14:15.640 --> 0:14:19.800 sevve million dollars in new funding from investors, including billionaire 0:14:19.840 --> 0:14:23.320 Peter tell. Tel says Quantum Systems is leaps ahead of 0:14:23.320 --> 0:14:26.360 the competition. It's applied at least for two drones to 0:14:26.400 --> 0:14:30.120 support the Ukraine Army coming up. Instacott has last yets 0:14:30.160 --> 0:14:34.200 valuation multiple times this year. Is they coverted unicorn status 0:14:34.200 --> 0:14:39.320 on being wow deemed across at the moment killed in 0:14:39.360 --> 0:14:41.440 the world of big tech. We'll have to work out 0:14:41.440 --> 0:14:44.280 whether Unicorn should really be a name anymore. My next 0:14:44.280 --> 0:14:55.840 guest thinks, so this is Bloomberg. Our next guest says 0:14:55.880 --> 0:15:00.360 that by four we'll have redefined the term you Nicorn 0:15:00.560 --> 0:15:03.840 entering have stalled Winnian era for the tech sector. Greg 0:15:03.840 --> 0:15:07.200 Martin's venture capitalists behind companies including GoPro, hub Spot and 0:15:07.240 --> 0:15:09.880 co founder of Rainmaker Securities, one of the largest platforms 0:15:09.880 --> 0:15:13.720 of trading shares of private tech companies now first and foremost. 0:15:13.840 --> 0:15:17.280 Walk us through before we get to Darwinism. Talk to 0:15:17.360 --> 0:15:22.520 us about why Unicorn maybe the time doesn't make sense. Well, Caroline, 0:15:22.560 --> 0:15:24.200 thank you for having me. You know, if you look 0:15:24.200 --> 0:15:27.080 at the end of one we had over a thousand 0:15:27.080 --> 0:15:30.640 what we call uniform private technology companies that are market 0:15:30.680 --> 0:15:33.280 caps in excess of a billion, which represented about four 0:15:33.320 --> 0:15:37.280 point three trillion of market cap, just unprecedented levels the 0:15:37.360 --> 0:15:40.280 size of companies. Now, certainly there's a lot of great 0:15:40.320 --> 0:15:44.480 companies in that thousand that do deserve to have the 0:15:44.560 --> 0:15:47.600 billion plus market cap and and and those companies will 0:15:47.640 --> 0:15:51.120 go public and be large companies in the public markets someday. 0:15:51.160 --> 0:15:54.000 But a good percentage of them got way out over 0:15:54.040 --> 0:15:58.120 their skis on valuation. And you know, partially because investors 0:15:58.160 --> 0:16:00.720 were chasing yield, they were looking for growth, and they 0:16:00.760 --> 0:16:03.760 were looking for the next snowflake, if you will. Um. 0:16:03.840 --> 0:16:06.240 And the problem is, there are very few companies that 0:16:06.280 --> 0:16:09.520 really can aspire to those kinds of heights. And I 0:16:09.560 --> 0:16:11.760 think that's why we're going to see a lot of 0:16:11.760 --> 0:16:15.160 these companies not not sustained unicorn status in the future. 0:16:16.360 --> 0:16:21.480 Will we see the fading, Do we see more m 0:16:21.560 --> 0:16:24.720 and aid we see what does dolwinisn't look like? For you? 0:16:24.800 --> 0:16:29.040 A Dewinian era in that respect, Well, listen, I think 0:16:29.160 --> 0:16:31.960 I think you will see there are truly companies that 0:16:32.240 --> 0:16:35.720 are of the size and scale and market leadership that 0:16:35.760 --> 0:16:38.080 will go public and they will they will they will 0:16:38.120 --> 0:16:40.080 grow their valuations. I think there are a lot of 0:16:40.080 --> 0:16:43.880 these companies that unfortunately, uh you know, their valuations were 0:16:43.880 --> 0:16:47.680 set very high. Their businesses are still subscale. They were 0:16:47.720 --> 0:16:50.200 they were given a lot of cash to grow, grow, grow, 0:16:50.880 --> 0:16:53.440 and the reality is the growth just isn't there for 0:16:53.560 --> 0:16:55.880 some of these businesses, and I think those businesses will 0:16:56.080 --> 0:17:00.200 struggle um to ever become profitable. And so I think 0:17:00.240 --> 0:17:02.600 for those people, and I think there's a good number 0:17:02.600 --> 0:17:05.760 of companies that are good in that category, they will 0:17:05.800 --> 0:17:08.920 be looking for a home. I think the private private 0:17:09.320 --> 0:17:12.000 financing markets are drying up for some of these companies, 0:17:12.240 --> 0:17:13.719 and so they will be looking for a home. Now. 0:17:13.760 --> 0:17:16.320 The good news is many of them have great products 0:17:16.400 --> 0:17:19.000 and there will there is going to be a very 0:17:19.119 --> 0:17:21.040 vibrant MP and A market I believe in the next 0:17:21.080 --> 0:17:24.480 two years. Okay, M and A. Maybe it'd rather better 0:17:24.560 --> 0:17:28.320 valuations and previously for the buyer at least. I'm interested therefore, 0:17:28.480 --> 0:17:32.120 as the seller and as a talent member in these 0:17:32.119 --> 0:17:35.800 companies that are suddenly eroding their market value. Suddenly, people 0:17:35.880 --> 0:17:39.600 who have been promised certain exits or certain inquidity moments, 0:17:39.680 --> 0:17:42.640 or indeed being paid in chares, How does that look 0:17:42.680 --> 0:17:44.280 like for them. What does this mean for the talent 0:17:44.280 --> 0:17:48.240 going forward? It's a big problem, and you can see 0:17:48.320 --> 0:17:50.720 some companies are being very proactive about that. You know 0:17:50.760 --> 0:17:53.359 INSTATCRT for example, that they just you know, lowered their 0:17:53.400 --> 0:17:57.560 internal valuation yet again UM, which which means the bar 0:17:57.760 --> 0:18:00.480 for an new employee or executive coming in as much 0:18:00.520 --> 0:18:03.480 lower UM. If the bar is too high than the 0:18:03.480 --> 0:18:05.600 your options or shares or whatever you get when you 0:18:05.680 --> 0:18:07.760 join the company are always going to be out of 0:18:07.760 --> 0:18:09.719 the money. So I think we're going to see a 0:18:09.760 --> 0:18:13.520 lot of repricing of internal options in order to keep 0:18:13.800 --> 0:18:15.879 employee morale up, because the last thing you want to 0:18:15.920 --> 0:18:18.600 be doing is working for a company that's worth ten 0:18:18.680 --> 0:18:21.360 billion in the in the with your options it's only 0:18:21.400 --> 0:18:23.680 worth a billion, because when you're there for equity, you 0:18:23.720 --> 0:18:25.359 want to make sure your equity has values. So I 0:18:25.400 --> 0:18:27.080 think that's something we're going to see a lot more 0:18:27.119 --> 0:18:32.400 of what instacart did today. Uh, do you see future 0:18:32.480 --> 0:18:35.199 unicorns being born in this era? Many people feel that 0:18:35.320 --> 0:18:38.760 sort of in the toughest of times, great stars are 0:18:38.760 --> 0:18:41.280 born out of them. Do you see that this could 0:18:41.320 --> 0:18:44.480 be an era of ingenuity of innovation or is this 0:18:44.560 --> 0:18:48.000 going to be one of stealth and and lower growth. 0:18:48.040 --> 0:18:51.360 For the timing. I absolutely think that we will have 0:18:51.560 --> 0:18:54.360 many new unicorns that are born during this period. I mean, 0:18:54.359 --> 0:18:57.800 one of the things that covid you really accelerated was 0:18:57.920 --> 0:19:00.960 the adoption of new technology, and a lot of the 0:19:01.000 --> 0:19:04.520 incommon players were left behind. A lot of the legacy 0:19:04.880 --> 0:19:08.399 technology is behind the times, and so it's really created 0:19:08.440 --> 0:19:12.159 an opening for innovative entrepreneurial businesses to sort of seize 0:19:12.160 --> 0:19:15.000 the day and seize the moment and start businesses that 0:19:15.400 --> 0:19:17.800 that sort of are the path of progress, the next 0:19:17.840 --> 0:19:20.120 generation of where technology is going. So I actually think 0:19:20.119 --> 0:19:22.159 now is a good time to start a company. I 0:19:22.240 --> 0:19:24.960 just think we won't see as many unicorns as we 0:19:25.000 --> 0:19:28.119 did in one and let's he even get started on 0:19:28.200 --> 0:19:31.120 Decacorn's Greg Martin. We want to thank you so much, 0:19:31.200 --> 0:19:35.600 co founder of Rainmaker Securities, talking us through his hypothesis 0:19:35.640 --> 0:19:39.120 of where we go for the big company valuations going forward. 0:19:47.040 --> 0:19:49.440 This is Blomberg Technology. I'm Caroline Hyde in New York. 0:19:49.560 --> 0:19:51.399 Let's get back to the markets. Let's get back to 0:19:51.440 --> 0:19:54.640 the chip sector. In particular, Bloemberg were the latest numbers 0:19:54.680 --> 0:19:58.400 in terms of semiconductor delivery times it was interesting, h interesting. 0:19:58.480 --> 0:20:01.040 Lead times for the semi conductor in industry average twenty 0:20:01.080 --> 0:20:03.520 six point three weeks in the month of September. That 0:20:03.640 --> 0:20:07.680 data coming from Susquehanna Financial Group, twenty six point three weeks, 0:20:07.720 --> 0:20:11.240 down four days from the previous month. Four days doesn't 0:20:11.240 --> 0:20:12.960 sound like a lot, but this is actually the biggest 0:20:13.000 --> 0:20:16.400 month or month drop in lead times since the firm 0:20:16.520 --> 0:20:19.200 started recording the data. The lead time, of course, being 0:20:19.240 --> 0:20:21.920 the gap between when an order for a chip is 0:20:21.960 --> 0:20:24.679 placed and when it's delivered. There are still pockets of 0:20:24.720 --> 0:20:27.760 tightness in supply, according to the firm, particularly in micro 0:20:27.880 --> 0:20:31.920 controllers and in automotive specialized chips. But you see that chart, 0:20:32.240 --> 0:20:34.960 we're in very elevated levels. Still, this is still a 0:20:35.000 --> 0:20:37.600 market where supplier is an issue, but at least we're 0:20:37.600 --> 0:20:40.639 now heading in the right direction. At the same time, 0:20:40.880 --> 0:20:44.200 we also hear all these worrying signals Caroline about demand. 0:20:44.240 --> 0:20:46.400 I think, of course, about a m D whose third 0:20:46.480 --> 0:20:50.480 quarter sales estimates missed projections by a billion dollars. We reported, 0:20:50.480 --> 0:20:53.280 according to sources, that Intel is going to be laying 0:20:53.280 --> 0:20:56.879 off thousands of workers because demand for PC chips in 0:20:56.880 --> 0:20:59.840 particular has dropped off so it's gonna be really interesting. 0:21:00.000 --> 0:21:02.800 Has been so much pain in the semi conductor sector, 0:21:02.840 --> 0:21:05.680 at least in the equity market perspective so far in 0:21:05.760 --> 0:21:08.760 two this is a really key earnings period where we 0:21:08.800 --> 0:21:11.320 try and work out what that balance is where the 0:21:11.400 --> 0:21:14.440 demand is disappearing and the supplier is improving, and where 0:21:14.480 --> 0:21:16.560 we net out for an industry that you and I 0:21:16.560 --> 0:21:19.720 have been glued too for good two years now suddenly 0:21:19.760 --> 0:21:21.679 have been Thanks for keeping us up to speed with 0:21:21.680 --> 0:21:24.040 the moves on the day and indeed some of the 0:21:24.160 --> 0:21:26.960 lead times going forward. Let's get back to some of 0:21:26.960 --> 0:21:29.359