Speaker 1: From the heart where innovation, money and power Collie in
Speaker 1: Silicon Valley, NBN. This is Bloomberg Technology with Caroline Hyde
Speaker 1: and Ed Ludlove.
Speaker 2: And Caroline Hein and Bloomberg's multi quarters in New York
Speaker 2: and Ludlow He's off. This is Bloombog technology coming up
Speaker 2: as Apple's smart watch ban it looms. The White House
Speaker 2: is tracking the case for the potential to overall the
Speaker 2: import Holt decision. Will break down the latest from Washington
Speaker 2: plus Byte Dance sales reportedly surged this year to more
Speaker 2: than one hundred and ten billion dollars, potentially overtaking competitor
Speaker 2: ten Cent. Will break down what it says about the
Speaker 2: state of TikTok's e commerce business. And we'll discuss how
Speaker 2: hot or not the private secretary market is while start
Speaker 2: up employees and investors they seek to sell shares of
Speaker 2: their red hot companies. The first let's check on these markets,
Speaker 2: because still relatively hot. When you're looking at the NASDAK,
Speaker 2: we're still managing to push up about a quarter of
Speaker 2: a percentage point. In fact, that's that one hundred and
Speaker 2: another record high mom markets. They're also manage at rally
Speaker 2: that everything rallies back upon us. We're still feeling that
Speaker 2: some of the economic data is coming in strong, that
Speaker 2: consumer confidence building, and indeed maybe the macro picture means
Speaker 2: that we'll be able to tame some of that interest
Speaker 2: rate hikes and indeed some interest rate cuts coming some
Speaker 2: twenty twenty four, just think about what's happening over in
Speaker 2: the UK, great British pound actually sinking as that inflation
Speaker 2: data shows two there we're seeing caoling in inflation.
Speaker 3: Look at what's.
Speaker 2: Happening on the individual movers and case by case basis.
Speaker 2: I'm looking at number one, China didn't see the moon
Speaker 2: music of buying that we've seen currently here in the
Speaker 2: United States. And then as that Golden Dragon just on
Speaker 2: the downside by one point two percent. This is that
Speaker 2: we see maybe some of the big e commerce players
Speaker 2: feel the pain coming from one particular bike dance.
Speaker 3: We'll dig into that in a little bit later. I'm
Speaker 3: also look at what's.
Speaker 2: Happening with alphabet though of course Google, we're going to
Speaker 2: be digging into what really the changes at Google play
Speaker 2: Store are going to be you would see in terms
Speaker 2: of a business model impact. So the investor base likes that,
Speaker 2: and I'm also looking at what's happening with Apple, because
Speaker 2: this is the key story upon us. Will they indeed
Speaker 2: see a ban being enacted on the import of their watches?
Speaker 3: What does that mean? And how much of the moment
Speaker 3: is the Biden.
Speaker 2: Administration currently tracking the impending US band We understand they
Speaker 2: are of nearly all Apple watch sales.
Speaker 3: They're due to, of course, all surrounding.
Speaker 2: A pattern dispute with the power to veto the decision
Speaker 2: wrestling in the US trade representative.
Speaker 3: Now, we discussed this with the CEO of Massimo.
Speaker 2: Of course, this is the company that is currently feeling
Speaker 2: that its patterns are being infringed, and the CEO there
Speaker 2: told us that look, thus far, the administration has been
Speaker 2: in touch.
Speaker 3: Take a listen.
Speaker 4: So I don't expect the administration to step in here.
Speaker 4: And every time Apple contacts them, I guess by a
Speaker 4: law they have to call us to get our response. So, yes,
Speaker 4: we've been in contact with them, and we don't think
Speaker 4: they will intervene. I think there are a recent stunt
Speaker 4: to pull the products off the market. A few days
Speaker 4: earlier than that, itc decided it should be pulled off
Speaker 4: the market. They're trying to get the public to force
Speaker 4: the Biden administration to do something they don't think they
Speaker 4: should do. But I don't think it's going to work.
Speaker 3: And pleased to save New Megs.
Speaker 2: Linda and who really helps drive the coverage for the
Speaker 2: team here in New York Technology joins us remind us
Speaker 2: go back to basics. We're thinking that some sort of
Speaker 2: import ban will be enacted because Almasimo thinks this pattern's
Speaker 2: being infringed here.
Speaker 5: Well, first, Caroline, thank you for having me.
Speaker 3: It's nice to be with you.
Speaker 5: So this all stems from this big International Trade Commission
Speaker 5: case in which the agency ruled that Apple had violated
Speaker 5: two very important health technology patterns in developing some of
Speaker 5: its most recent Apple Watch series. And as a part
Speaker 5: of that ruling, they impose not only a US ban
Speaker 5: on the equipment that Apple needs to assemble its watches
Speaker 5: here in the US, but also an injunction that will
Speaker 5: essentially block Apple from directly selling those series of Apple
Speaker 5: Watches here in the US. And as you noted, we're
Speaker 5: counting down the days to that actual band. I mean
Speaker 5: we're talking about like right after Christmas that that band
Speaker 5: takes effect. And you know, as the CEO of Masimo
Speaker 5: just characterized as a stunt. Apple is deciding to sort
Speaker 5: of wind down the sales ahead of that end of
Speaker 5: Christmas Day injunction and.
Speaker 2: Of course a key selling time, a key issue when
Speaker 2: you think about what's over in the UK, A Boxing
Speaker 2: day sale, the idea everyone goes out and starts purchasing
Speaker 2: like they do after Thanksgiving here in the US. What therefore,
Speaker 2: here in the US does it mean when a fix
Speaker 2: could or could not be enacted, Because most CEO was
Speaker 2: saying that he didn't think this could be some sort
Speaker 2: of software update.
Speaker 5: Ultimately, yeah, I mean he was saying that it would
Speaker 5: have to be a hardware change, right.
Speaker 3: He was telling us that for days, and.
Speaker 5: If a fix cannot be enacted, if there is no
Speaker 5: deal that has reached between Apple and Massimo, if the
Speaker 5: White House doesn't step in because it has had almost
Speaker 5: few months to decide on a veto, then you do
Speaker 5: see the sales directly from Apple affected. Now, one thing
Speaker 5: that I wanted to clarify. You said all Apple watches
Speaker 5: will stop in sales.
Speaker 3: That's not necessarily the case.
Speaker 5: That is Apple's direct sales from its own retail stores.
Speaker 5: So I just want to point out that you can
Speaker 5: still go get your Apple watches at Best Buys at Walmarts,
Speaker 5: not to give them any you know, uh, free marketing,
Speaker 5: but they have said, these other third party retailers have said,
Speaker 5: we will continue selling these watches. What remains a question
Speaker 5: is what happens if the inventories at these third party
Speaker 5: box retail shops end up drawing down.
Speaker 3: Where did they get the rest of it?
Speaker 5: Can they still bring in those devices from Asia or
Speaker 5: other manufacturing centers by Apple and keep those sales going
Speaker 5: for Apple?
Speaker 3: Like, we don't know, and I wonder whether it cake
Speaker 3: stops some sort of rush.
Speaker 5: Yeah, well, I'm just I was saying the other day
Speaker 5: that I'm glad that I got my Apple watching. Before that,
Speaker 5: we have been checking said reporters that to Apple stores
Speaker 5: to see if there has been a rush. No rush yet,
Speaker 5: but you never know.
Speaker 2: Okay, see not that on the ground reporting. And they're
Speaker 2: also no marketing for Apple here, but just the odd
Speaker 2: perspective on where on indeed if you can still purchase it.
Speaker 3: Let's just continue the anti trust.
Speaker 2: Side of all of this and ultimately what it means
Speaker 2: for patterns in the longer term. Let's bring in Nicholas
Speaker 2: Matter's principal at McCaul Smith's intellectual property practice, and how
Speaker 2: often have you seen this sort of tactic being used?
Speaker 2: Nicholas really with Apple sort of getting ahead of an
Speaker 2: ultimate potential ban and trying to force consumers perhaps hand here.
Speaker 6: They've actually have been very rare in recent years, primarily
Speaker 6: because injunctions or exclusionary relief like a ban on importation,
Speaker 6: have been pretty rare in patent litigation since a Supreme
Speaker 6: Court decision in about two thousand and six, So they
Speaker 6: just haven't been occasions where a major player like Apple
Speaker 6: would frequently face this kind of situation.
Speaker 2: We were just debating as to whether the US Trade
Speaker 2: Representative or indeed the administration would in any way step
Speaker 2: in here. Overall, just give us your perspective on what
Speaker 2: the pros are doing that and what the cons are
Speaker 2: of ultimately a government weighed in here.
Speaker 6: Well, I mean, the pros are obviously people like Apple watches,
Speaker 6: and it would be a politically popular decision. The cons
Speaker 6: are that it doesn't, you know, it doesn't promote innovation
Speaker 6: in the US because that's why patent rights are important,
Speaker 6: and a company like Massimo is entitled to either license
Speaker 6: its patents to Apple on you know, the terms that
Speaker 6: they think are appropriate or to you know, use their
Speaker 6: exclusivity from the technology they developed to you know, gain
Speaker 6: market share. And if Apple, you know, the if Apple
Speaker 6: doesn't want to do a deal with them or come
Speaker 6: up with its own solution to the technical problems Massimo solved,
Speaker 6: then you know, then the Apple is going to face
Speaker 6: a bandal like this, or at least have to offer
Speaker 6: products that don't have this feature.
Speaker 2: We were speaking with the CEO of Massimo you this
Speaker 2: time yesterday, and his points were clear. He felt that
Speaker 2: his chief technology officer, his chief medical officer had been
Speaker 2: lured over to Apple. There was nothing he could have
Speaker 2: done in terms of paying it. Even further, they just
Speaker 2: had the resources that couldn't be matched by a smaller
Speaker 2: companies such as Masimo. And I'm interested as to the
Speaker 2: other clients that you serve, the conversations you have, how
Speaker 2: much is this sort of behavior happening if indeed it
Speaker 2: is exactly what occurred.
Speaker 6: So I hear that that kind of story all the
Speaker 6: time from clients. The large technology company taking you know,
Speaker 6: their intellectual property via trade secrets or patents and then
Speaker 6: you know, using their other market advantages to beat the
Speaker 6: smaller guy. Patents are fundamentally a tool of small companies,
Speaker 6: and that's and we need them to incentivize small companies
Speaker 6: to invent the next technology because small companies are where
Speaker 6: the groundbreaking innovation tends to occur. And if the bigger guys,
Speaker 6: they're always going to win if they're allowed to copy,
Speaker 6: because they have you know, the pre existing you know,
Speaker 6: market advantages, they've got a well known brand, the consumer
Speaker 6: based distribution channels, and what the small guys have is
Speaker 6: their innovative technology. And so that's that's why it's so
Speaker 6: important for uh, you know, to be able to enforce
Speaker 6: intellectual property rights the way Masimon is.
Speaker 2: To that end, do you anticipate that I mean a
Speaker 2: fewer to put probabilities on it, some sort of deal
Speaker 2: will ultimately be reached here. Massive has been spending millions, yes,
Speaker 2: to ultimately potentially prove a point here and to fight
Speaker 2: for the smaller companies, but also because it thinks it
Speaker 2: could win a lucrative deal ultimately.
Speaker 6: Well, no, I mean I don't know what Mass and
Speaker 6: those business objectives are. They have said they're willing to
Speaker 6: do a license. You know, the question is always at
Speaker 6: what price? And isn't a price that they're willing to
Speaker 6: take in Apple's willing to pay, you know, And it
Speaker 6: also probably turns a lot on what happens on the
Speaker 6: twenty fifth or the twenty sixth, when the President has
Speaker 6: to issue its decision. We see vetos are extremely rare.
Speaker 6: In fact, I think there's only been one in history.
Speaker 6: Now Apple was the beneficiary of that one veto, So
Speaker 6: it may be feeling a little bit of invincibility here
Speaker 6: because it has such a well known brand and such
Speaker 6: political cloud. But we'll have to see what happens, and
Speaker 6: if the President doesn't veto it, that may bring Apple
Speaker 6: to the table.
Speaker 2: Nicholas, it's great to get your expertise. Thank you for
Speaker 2: spending some time with us. Nicholas Massage of McCool smith.
Speaker 2: TikTok owner byte Dance saw sales surge in twenty twenty
Speaker 2: three to over one hundred and ten billion dollars, and
Speaker 2: that's all according to people familiar with the matter, that
Speaker 2: would put the company ahead of rivals like Tencent. And
Speaker 2: of course it says byte Dance is seeking to expand,
Speaker 2: particularly in the area of e commerce. For more, let's
Speaker 2: bring in Bloomberg's Henry Wren joining us from London and Henry.
Speaker 2: When you're looking at what the driving force of this
Speaker 2: sales pick up, I mean it is phenomenal percentage point
Speaker 2: growth here is it at the expense of market competition.
Speaker 7: So as we our Asian colleagues broke this story. So
Speaker 7: as you said, so by done, its revenue is on
Speaker 7: track to exceed one hundred and ten billion US dollars
Speaker 7: and its growth driver really comes from e commerce. As
Speaker 7: you mentioned, it's not just overseas but also at home.
Speaker 7: So at home it's expanding rapidly into areas such as
Speaker 7: helping people to book restaurant tables, helping people to book
Speaker 7: restaurant takeouts, but also selling clothes online, but also overseas.
Speaker 7: For example, just earlier this month, it bought Indonesia's Toclopedia,
Speaker 7: which is one of the major e commerce platforms in Indonesia.
Speaker 7: And remember Indonesia is one of the biggest e commerce
Speaker 7: markets in Southeast Asia. So as you said, it's expanding
Speaker 7: rapidly overseas in e commerce offering, but also at home
Speaker 7: as well, but it can be at the cost of
Speaker 7: some other competitors. For example, mayitwe another food delivery platform
Speaker 7: in China, but also Ali BABA, which is which is
Speaker 7: under pressure by not only a PDD but also by
Speaker 7: dance in e commerce offerings front.
Speaker 2: Talking about pressure, we're seeing it managing to scale at
Speaker 2: home despite a weakening economy. We're seeing it particularly showing
Speaker 2: strength in e commerce now having done that one and
Speaker 2: a half billion dollar deal in Indonesia. But here in
Speaker 2: the US there is still some political anxiety. Are we
Speaker 2: likely to see that continue into twenty twenty.
Speaker 7: Four exactly, especially when you think of twenty twenty four
Speaker 7: it's an election year and the climax was really in
Speaker 7: March this year, right, So when you remember the TikTok
Speaker 7: ceo show to appeared in Congress, has testified before Congress
Speaker 7: when some lawmakers threaten to ban this app completely in
Speaker 7: the US. And I would want to point out that
Speaker 7: the regulatory pressure is not just in the US, because
Speaker 7: when you look at India, which is another big country,
Speaker 7: and remember this year India surpass China is the most
Speaker 7: part this country in the world. The TikTok app is
Speaker 7: actually banned in India, and there's no promise said to
Speaker 7: those regulatory pressure want for us in China as well,
Speaker 7: because what we've been seeing Chinese governments has been cracking
Speaker 7: down severely on platform companies domestically as well, so as
Speaker 7: you said, regulatory pressures could be coming, but also on
Speaker 7: multiple fronts.
Speaker 2: For now, it seems as though the growth is still
Speaker 2: about thirty percent year over year, so revenue really managing
Speaker 2: to rise up amid some of that pushback here in
Speaker 2: the US, Henry w Ren. Great to catch up with
Speaker 2: you as always, Thank you so much. Meanwhile, let's stick
Speaker 2: with byte Dance and ultimately, how we're seeing brands companies,
Speaker 2: Will you launch themselves in popularity using the power of influence?
Speaker 2: Jacob Cooks with us WPIC Marketing Technologies co founder and CEO.
Speaker 3: You are staying up late over there in China, and
Speaker 3: I'm interested, Jacob.
Speaker 2: Ultimately, the sort of sales growth that you hear reporting
Speaker 2: of thirty percent year on year, is that what you
Speaker 2: are seeing bear out with your own data.
Speaker 8: Domestically, we're seeing it in line or actually even a
Speaker 8: little bit higher with what we were not surprised by
Speaker 8: that number at all. We would have actually seen it
Speaker 8: coming in mid thirties, maybe thirty six, thirty seven. It
Speaker 8: really is, you know, the platform of the younger generation.
Speaker 8: As we're seeing these consumers. You know, really the gen
Speaker 8: z really come into their own right now. This is
Speaker 8: what they're using to shop and it's you know, it's
Speaker 8: an interesting transition. It's happened very quickly, and we're pretty
Speaker 8: excited about it. You know, everything that was in the
Speaker 8: Bloomberg article and has been released day is right in line,
Speaker 8: if not low quite frankly, from what we've seen on
Speaker 8: the ground over here.
Speaker 2: And talking of what you see on the ground and
Speaker 2: do on the ground, you're basically helping perhaps Western companies
Speaker 2: brands access Asian buyers, whether or not it's in China, Japan.
Speaker 3: South Korea.
Speaker 2: How much are they leading with being on doing being
Speaker 2: on these sorts of e commerce and meets content platforms
Speaker 2: at the moment.
Speaker 8: Yeah, the what is that we're dealing with in China? Certainly,
Speaker 8: you know, this isn't new, This has been going on
Speaker 8: for a couple of years now. They're definitely better fitting
Speaker 8: a lot from these growth numbers. And you know, when
Speaker 8: we talk about you know, you mentioned before about you know,
Speaker 8: a week in consumer over here, we really look at
Speaker 8: different categories, right so that you know, large durables and
Speaker 8: things like that that have shown weakness Dullion's really not
Speaker 8: exposed to. So what they're seeing you know, fashion, health
Speaker 8: and wellness and these other categories that you know, the
Speaker 8: younger consumers are really engaging with. You know, Byte Dances
Speaker 8: is really well positioned for that. So these growth numbers
Speaker 8: that we're seeing coming out today again right in line
Speaker 8: with what we're expecting. And you know, next year, I
Speaker 8: think we're going to see this again, if not better.
Speaker 2: Well, sort of ROI is a brand getting when they
Speaker 2: invest in putting content on the platform but also selling
Speaker 2: via it because well they must have to pay in
Speaker 2: up front fee to certain influences they work with for example.
Speaker 8: Yeah, it's definitely a different model for Bye Dance. Bite
Speaker 8: Dance has a really easy platform and a back end
Speaker 8: to engage with influencers. Now you know there's a lot
Speaker 8: of them out there, but they can be charging you know,
Speaker 8: thirty forty fifty percent commissions, which isn't unheard of.
Speaker 5: We go back to.
Speaker 8: Sort of what you know, the big influencers were doing
Speaker 8: on Team Mall a couple of years ago as well,
Speaker 8: or Tabel Live. It was about the same rates. Now
Speaker 8: Byte Dance is getting a much larger percentage of that,
Speaker 8: which you know leads us to believe they're in a
Speaker 8: much better financial shape. But you know, brands are willing
Speaker 8: to pay that because again you can put your product
Speaker 8: or service and again restaurants, dental cleaning, you name it,
Speaker 8: in front of millions of people, very very quickly, and
Speaker 8: you've got to have a little bit of faith in
Speaker 8: your product too that you know that second or third
Speaker 8: purchase they're going to come back to the brand directly.
Speaker 8: We're not going to have to pay that fee. So
Speaker 8: again it doesn't work for large durables which are one off,
Speaker 8: but it does work for cosmetics, nutraceuticals, ath leisure and
Speaker 8: things that can be repeated again and again and again.
Speaker 8: So we're seeing, you know, brands do very very well
Speaker 8: that are engaging in that model. Here.
Speaker 2: Always great, Jacob, to stay up with you, for you
Speaker 2: to give us your time when it's late. I'm ready
Speaker 2: to get your on the ground expertise as well. Jacob
Speaker 2: Cook of WPIC stay well. Meanwhile, coming up, we've got
Speaker 2: some breaking news for you.
Speaker 3: This is as the FTC.
Speaker 2: We understand, of course, the Federal Trade Commission. It's proposing
Speaker 2: changes to children's online privacy protection rules. They're saying that
Speaker 2: they're going to place new restrictions on the use and
Speaker 2: disclosure thereof of children's personal information. This according to a
Speaker 2: statement coming from the FTC. Of course, this is as
Speaker 2: we see ongoing concern about well the access of data
Speaker 2: and children's interpretation and use of some of these social
Speaker 2: media companies and will use more broadly the Internet. Let's
Speaker 2: talk a little bit about well where else we're seeing
Speaker 2: some changes. Alphabet's agreement, for example, to end abuse of
Speaker 2: market power on its Google Play store.
Speaker 3: May come with a catch.
Speaker 2: We're going to delve more into that in a moment. Meanwhile,
Speaker 2: let's just check in on the shares of Zoom today.
Speaker 2: That Wells Fargo's securities analyst, Michael Truran. He's out with
Speaker 2: a recommendation to cut ultimately the price target on Zoo
Speaker 2: is also saying go underweight from equal weight. We're seeing
Speaker 2: a price target now with seventy dollars currently training at
Speaker 2: seventy one forty eight. We're off by one point three percent.
Speaker 2: This is BLOEMBG technology time now for talking tech first up.
Speaker 2: While the FTC has been busy through Federal Trade Commission
Speaker 2: on this part, is also saying that right Aid must
Speaker 2: stop using facial recognition for surveillance. According to the FTC,
Speaker 2: right Aid system generated thousands of false matches off an
Speaker 2: involving race and without notifying customers. Right Aid can't use
Speaker 2: the system for the next five years, which was to
Speaker 2: be allegedly spotting shoplifters. Meanwhile, Chinese internet company Alibibura is
Speaker 2: in the midst of an executive shake up, replacing commerce
Speaker 2: chief Truly Die after a roughly twenty year stint.
Speaker 3: Now I will instead help set up a.
Speaker 2: Holding firm for managing some of Vali Baba's global assets.
Speaker 2: Claims on bankrupt crypto exchange FTX are soaring training at
Speaker 2: fifty sevent to seventy three cents on the dollar depending
Speaker 2: on the size, and this is according to data from
Speaker 2: Cheroki acquisition. Still unclear whethern distributions will actually be made
Speaker 2: or how much customers and creditors will ultimately received. Meanwhile,
Speaker 2: let's talk about well, rather a little amount the customers
Speaker 2: are going to be receiving from the Alphabet case with
Speaker 2: seven hundred million deal, of course, was agreed to alter
Speaker 2: it's Google Play app store, and many are now pointing
Speaker 2: out some of the loopholes around developers' service fees. Let's
Speaker 2: get more context Fremeline News reporter Multi Nayaks here and
Speaker 2: before we get into the fact that a consumer in
Speaker 2: this case would get about two dollars potentially back from
Speaker 2: Google from the seven hundred million dollars settlement. But ultimately
Speaker 2: what people are nippicking here is the fact that they're
Speaker 2: probably not going to have to change their business model
Speaker 2: or that much the amount that they charge a developer.
Speaker 9: That's right. So Google has made a concession here with
Speaker 9: this deal where they are going to allow developers to
Speaker 9: give users access to alternate payment options, like they could
Speaker 9: use paper or anything else, have their own billing system
Speaker 9: instead of going through the Google Pay billing Google Play
Speaker 9: billing system. But you know, they should previously charge thirty percent.
Speaker 9: Now they're offering a discount a four percent to you know,
Speaker 9: twenty six percent. A developer is still paying a hefty
Speaker 9: service fee, and I'm not sure whether you know the
Speaker 9: four percent discount will actually sort of go down to
Speaker 9: a consumer where they'll actually benefit a consumer. So there
Speaker 9: have been some folks who have been sort of watching
Speaker 9: what Google has been doing over the years with its
Speaker 9: Google Plate policies, and it seems like they are concerned
Speaker 9: that this settlement doesn't go far enough to benefit developers
Speaker 9: and consumers.
Speaker 2: For example, Epic, which actually just won against Alphabet last
Speaker 2: week in court. In particular, Corey Wright, the VP of
Speaker 2: Public Policy, is saying, ultimately this doesn't in any way
Speaker 2: help consumers in terms of overpaying. So will we see
Speaker 2: any change to the business model if it's not forced
Speaker 2: by the courts.
Speaker 9: So I think it'll be interesting to see what will
Speaker 9: happened in court because Epic won a case against Google
Speaker 9: Place policies, which they challenged on anaturst grounds, and next
Speaker 9: year the judge is going to actually think about how
Speaker 9: Google Play policy should be revamped. You know, should there
Speaker 9: be this standard you know, thirty percent commission fee or
Speaker 9: you know at a even at a four percent discount,
Speaker 9: you know, should developers have.
Speaker 1: To pay Google this service fee?
Speaker 9: And Google in its defense is, you know, we have
Speaker 9: to keep our Android system going. We've got best in it,
Speaker 9: so we've got to change the fee. So we'd love
Speaker 9: to see what happens in court next year.
Speaker 3: Thank you so much.
Speaker 2: Maltinak has been all over these court rulings. Coming up,
Speaker 2: we'll get a read on liquidity in the private markets
Speaker 2: with oceanic stick with us. It's a bally Boy technology.
Speaker 2: Welcome back to Bluemotechnology. I'm Karen Hide in New York.
Speaker 2: Let's get a quick check on these markets because we're
Speaker 2: managing to power on higher. Maybe it's still this optimism
Speaker 2: that we'll start to see rate cuts as soon as March.
Speaker 3: Of next year.
Speaker 2: Federal Reserve Bank, Philadelphia president, that's Patrick Harker actually making
Speaker 2: some headlines, says we currently speak this all on the
Speaker 2: back of whether or not we will indeed see a
Speaker 2: need to pull back in terms.
Speaker 3: Of the rate hiking cycle.
Speaker 2: Arkas saying, you don't need to raise rates anymore, you
Speaker 2: should hold steady. We're currently up three tens percent on
Speaker 2: the NASDA. We're seeing bonds managing to rally on the
Speaker 2: back of hopes that we'll see consumer optimism as it
Speaker 2: currently hits a high today also be fed into the
Speaker 2: fact that we can get some sort of soft landing
Speaker 2: here in the US. Remember there's a twenty year auction.
Speaker 2: A little bit later, Bitcoin actually getting a bit of
Speaker 2: a bid as well. We're up three point three percent,
Speaker 2: having been sold off a little bit of late. It's
Speaker 2: getting crazy out there, and of course it's not just
Speaker 2: Bitcoin doing well.
Speaker 3: The old coins are back.
Speaker 2: Doc who with hat as it's called yet a dog
Speaker 2: pictured we're wearing a hat seems to be doing particularly
Speaker 2: well at the moment, But so too is the NASDAD
Speaker 2: more broadly, at fifty four percent. Let's call it here
Speaker 2: today in a rally and today we'll once again and
Speaker 2: a new record high for the big tech benchmark. But
Speaker 2: what does the public market feed into the private market
Speaker 2: at the moment?
Speaker 3: How much are we.
Speaker 2: Seeing valuations still under pressure or indeed rallying on higher.
Speaker 2: Let's focus in on that secondary market now and whether
Speaker 2: it's a good time to buy into some of the
Speaker 2: hottest startups such as open Ai, SpaceX mid those tender
Speaker 2: offers from employees joining us now is an expert Tim Sullivan,
Speaker 2: Oceanic Partner's ceo Oceanic, your venture capital company, your levisory firm,
Speaker 2: and you really focus on ensuring liquidity is there within
Speaker 2: the investments that you make in the private markets. And ultimately, Tim,
Speaker 2: are we seeing decent liquidity for some of these hottest names.
Speaker 10: We definitely are seeing liquidity coming back, I would say
Speaker 10: in some of the names like open ai and Ai
Speaker 10: in general, those cap tables are pretty small, and so
Speaker 10: there is not a lot of liquidity. But in most
Speaker 10: of the other big names that are transferable, we are
Speaker 10: seeing liquidity coming back, and we are seeing pricing at
Speaker 10: much lower levels, and we've seen it over the past
Speaker 10: two years.
Speaker 2: And so is that why there's now this anticipation of
Speaker 2: rates coming down, risk tolerance coming back and wanting to
Speaker 2: buy in at these cheaper prices. Who are the sort
Speaker 2: of people putting in those bets at the moment, tim.
Speaker 10: Yeah, I think to some degree, you know, risk is
Speaker 10: coming back on. And at the same time, a lot
Speaker 10: of the shareholders that have been waiting for liquity for
Speaker 10: the past two years, waiting for the markets to rebound,
Speaker 10: are somewhat running out of air. You know, they need
Speaker 10: liquidity without companies going public, individuals literally you know, they
Speaker 10: need capitals to survive for renovations, for taxes, for mortgage
Speaker 10: rates going up, for emergencies, et cetera. And so at
Speaker 10: some point they are going to start looking for liquidity.
Speaker 10: And the reality is that the buyers who have been
Speaker 10: primarily institutional for the past couple of years, they have
Speaker 10: not moved their bids. They have remained low based on
Speaker 10: fundamentals and sellers are now coming down to bridge that gap.
Speaker 2: Those sellers primarily being employee. Are we seeing any early
Speaker 2: investors wanting to liquid data as well, needing to perhaps
Speaker 2: satisfy some LP demands.
Speaker 10: Absolutely, there are plenty of early investors that are looking
Speaker 10: for liquidity. You know, no one knows how long this
Speaker 10: current situation is going to last. You know, is it
Speaker 10: a rational exuberance that we're experiencing right now. Will we
Speaker 10: see the rate cuts next year and will that have
Speaker 10: a material difference in the markets. It's hard to say,
Speaker 10: and some people can wait for another two to five
Speaker 10: years and other people can't.
Speaker 2: I don't want to ask you to pick a favorite child,
Speaker 2: but are their names you're seeing time and time again
Speaker 2: being analyzed being brought up, and are they the ones
Speaker 2: that we're still talking about ipoing in the near future?
Speaker 6: Oh?
Speaker 10: Absolutely, I think you know, there's there's rumors movement around
Speaker 10: right now that open dot ai may do a raise
Speaker 10: or an IPO in first quarter next year just to
Speaker 10: beat out XAI. You know, there's companies like Data Bricks
Speaker 10: and SpaceX that have been pretty resilient throughout this meltdown,
Speaker 10: and they you know, who knows. I think you know,
Speaker 10: if the market conditions are appropriate, we'll move their IPOs up.
Speaker 10: Not sure about SpaceX, They're probably a few years out,
Speaker 10: but companies like Data, Bricks and Stripe and some others
Speaker 10: may maybe sooner than you think.
Speaker 2: And there's always been this hope for democratization, Tim the
Speaker 2: idea we saw Kathy Wood with Arc offering up a
Speaker 2: sort of vc ETF allowing normal people be able to
Speaker 2: have access to some of these pre IPO names. Are
Speaker 2: we seeing syndicates come in? Are you seeing sort of
Speaker 2: angel teams coming in to buy in on this stock
Speaker 2: and allow still allowed investors, but perhaps not people with
Speaker 2: billions under management?
Speaker 10: We are, and I have mixed feelings about that. I
Speaker 10: think without legitimate information, without ques and k's being filed,
Speaker 10: regular normal people as you call them, are not equipped
Speaker 10: to do the diligence necessarily to necessarily to invest in
Speaker 10: in these names. There is a lot of risk and
Speaker 10: a lot of downside, so it's not for the faint
Speaker 10: of heart. If you have access to information, either directly
Speaker 10: or indirectly, I think, do your work and make the
Speaker 10: most educated decision that you can. But if you don't
Speaker 10: have access, it may be best to stay away.
Speaker 2: Tim can I ask, therefore, some of the institutions that
Speaker 2: you say have stood firm still standing wanting to take
Speaker 2: a bid but wanting it to be a lower valuation.
Speaker 3: Are they all US institutions? Largely? Are we getting foreign
Speaker 3: buyers coming in?
Speaker 10: We are definitely getting more and more foreign buyers in,
Speaker 10: but by and large it's still a US market.
Speaker 2: And I'm interested is to ultimately whether you do think
Speaker 2: the IPO market's going to pick up. You were just
Speaker 2: talking about whether there's rumors, indeed swirling of an early
Speaker 2: initial public offering even from an open AI. But there
Speaker 2: has been this drum beat that will start to see
Speaker 2: more names come in twenty twenty four.
Speaker 3: Is that likely to happen with the exits be there?
Speaker 10: I look at it from two different perspectives. Number one,
Speaker 10: think if the market does come back and irrational exuberance
Speaker 10: wins the day, then absolutely we'll see IPOs in twenty
Speaker 10: twenty four, you know, maybe as soon as late key one. However,
Speaker 10: I see things like inflation and unemployment CPI and real
Speaker 10: macro factors that have not changed as much as maybe
Speaker 10: they need to to support that ongoing next phase of
Speaker 10: the market. And if you know, the irrational exuberance phades.
Speaker 10: I think we're out into late twenty twenty four orarly
Speaker 10: twenty twenty five.
Speaker 2: We have, of course had open AI SpaceX tender offers
Speaker 2: and boosting their valuations.
Speaker 3: How rare has that been?
Speaker 10: That has been extremely rare, And I think I hate
Speaker 10: to say it, but a lot of the valuation talk
Speaker 10: around those specific companies is driven in the media. You know,
Speaker 10: I don't know that the numbers still support those valuations.
Speaker 10: Those are a couple of companies where the valuations are
Speaker 10: now based on fundamentals, and at some point I'm sure
Speaker 10: they can grow into those valuations. But most of the
Speaker 10: companies out there today are trading more along the lines
Speaker 10: of fundamentals. And when I say that, they're trading at
Speaker 10: discounts of fifty to seventy plus percent of where they
Speaker 10: were trading in late twenty twenty one.
Speaker 2: Wow. And is there any sort of well great themes
Speaker 2: we can see as to whether it's the fintech space
Speaker 2: that's taken the most hit, whether it's the companies exposed
Speaker 2: to a consumer, or really isn't Just across the board,
Speaker 2: you've generally seen a clip or lower of fifty to
Speaker 2: seventy percent.
Speaker 10: It's absolutely across the board, with as I mentioned, a
Speaker 10: couple exceptions.
Speaker 3: Tim, it's great to catch up with you. Thank you
Speaker 3: so much.
Speaker 10: Thank you, Caroline.
Speaker 2: My Navanceanic partner CEO is going to be busy in
Speaker 2: twenty twenty four.
Speaker 3: While coming up.
Speaker 2: Look, Telephonica shares over in Spain surging after the government
Speaker 2: announced plans to take ten percent steak. We'll have the
Speaker 2: details next. Meanwhile, let's just take a look at Tesla.
Speaker 2: We're seeing actually well of maybe managers being told that
Speaker 2: some salaried employees aren't going to be being offered merit
Speaker 2: based equity awards this year. The company didn't give a
Speaker 2: reason for the change, but four employees from different departments
Speaker 2: told Bloomberg that they believe the mover is pretty widespread.
Speaker 2: Workers that they still get a modest cost of living increase,
Speaker 2: they get adjustments to their base salaries, but perhaps some
Speaker 2: of those stock options just being dialed back a little bit.
Speaker 2: We're off by six tens of percent. This is BLUEBG Technology,
Speaker 2: Sony's Insomniac Games division. It's just seen a massive leak
Speaker 2: as hackers released from one point three million files detailing
Speaker 2: footage road maps for upcoming games tied particularly with Marvel.
Speaker 2: For more, let's bring in Bloomerg's Margie Murphy who joins
Speaker 2: US now and for many go go back to twenty
Speaker 2: fourteen and Sony Pictures. This is a games division of
Speaker 2: Sony And what sort of details are being leaked here, Margie?
Speaker 11: Yeah, so as you say, one went three million files,
Speaker 11: it was a really big leak.
Speaker 1: We can see employees' personal details, which is pretty bad.
Speaker 1: So lots of passports, social security numbers, addresses, and lots
Speaker 1: of HR documents, financial documents about budgets, banking details, wire transfers,
Speaker 1: and then kind of the more sensational stuff, which is
Speaker 1: the footage from games that are slated to be released
Speaker 1: in the coming years.
Speaker 11: So Wolverine you had, you can see.
Speaker 1: All the.
Speaker 12: Material for all the Marvel scenes.
Speaker 11: That are coming up, upcoming missions, trainings. So really a
Speaker 11: huge leak for this development studio.
Speaker 2: And actually the video game industry has been pretty prevalent
Speaker 2: since twenty twenty two, some of the big hacks occurring.
Speaker 2: I just think what's happened with Grand Theft Auto six
Speaker 2: as well, getting leaked ahead of its official launch. I'm
Speaker 2: interested in who's behind this particular attack. And what we
Speaker 2: know about them.
Speaker 11: Yeah, so this group is called Rysia and we've known
Speaker 11: about them since about May of this year.
Speaker 12: They are a ransomware as a furthest group, So they
Speaker 12: will people will come to them, they will give them
Speaker 12: a target and they provide the malware that is used
Speaker 12: to attack their target, and.
Speaker 11: Then they share out the ransom demandands with their affiliates.
Speaker 11: So we understand that probably around twenty fifth of November,
Speaker 11: the group was able to infiltrate Insomniac and then Risiter
Speaker 11: would have basically be told them, we've stolen all your files,
Speaker 11: we've encrypted them all, and if you don't give us
Speaker 11: two million worth of bitcoin, we're going to release them.
Speaker 11: And we know that subsequently they sold some of the
Speaker 11: files on the criminal market and leaked to the rest
Speaker 11: this week.
Speaker 2: Predominantly, who does right sort of tend to give malware
Speaker 2: to hack? I mean, is it the gaming industry more
Speaker 2: broadly or is it a cross industry.
Speaker 3: So they seem to be targeting.
Speaker 11: I'll call it lower hanging fruits. So they've been going
Speaker 11: after smaller companies and organizations that maybe their security isn't
Speaker 11: as tight, so they went for they've hacked Sony essentially,
Speaker 11: but through a kind of subdivision of Sony.
Speaker 3: The last.
Speaker 11: Their most recent by profile hack was the British Library,
Speaker 11: and they target manufacturing and they've been targeting healthcare and
Speaker 11: schools as well. So these smaller organizations are normally forgotten
Speaker 11: by the big time hacking ransomware groups, but they've been
Speaker 11: They've been going after these smaller groups and having some
Speaker 11: success with them, but it means that their extortion demands
Speaker 11: are normally lower, and it normally hates that the hackers
Speaker 11: themselves aren't that sophisticated. So the malware is it can
Speaker 11: infiltrate lesser secured systems as well.
Speaker 2: Still, the need for cybersecurity ever present. Margi Murphy, thank
Speaker 2: you so much for bringing us that news on Sony. Meanwhile,
Speaker 2: let's just shift gears a little bit and go to Europe.
Speaker 2: With the Spanish government planning to buy a stake in
Speaker 2: Telefonica worth as much as two point two billion dollars. Look,
Speaker 2: this isn't a bit to safeguard one of the nation's
Speaker 2: most strategic assets.
Speaker 3: Massa, Saudi Arabia builds up its own.
Speaker 2: Position in the company who most commas Seal joins US
Speaker 2: now from London, and it is interesting that this has
Speaker 2: been a company that for years is trying to distance
Speaker 2: itself from the government and now well it has to
Speaker 2: go to them a little bit closer.
Speaker 13: Yeah, it's fascinating. As the government moved out, Middle Eastern
Speaker 13: governments have moved in on European telecoms and this isn't
Speaker 13: the first example. Vodaphone, one of the biggest telecom groups
Speaker 13: in Europe, had a UAE backed company buy up almost
Speaker 13: fifteen percent of its shares in the last couple of years.
Speaker 13: So this is somewhat of a trend.
Speaker 3: It's a trend.
Speaker 2: Ultimately, how much are they concerned about foreign ownership? More broadly,
Speaker 2: is it particular Middle Eastern names that they seem to
Speaker 2: be pushing back against and ultimately what's their vindication, what's
Speaker 2: their reasoning for it?
Speaker 13: Well, certainly on the second question, telecom firms, you know,
Speaker 13: they're a bit dry but dull sometimes, but they underpin
Speaker 13: everything we do, and COVID showed that. Obviously we were
Speaker 13: all dependent on them to do everything. But beyond that, defense,
Speaker 13: government cables, big business, banking, transactions, these are all reliant
Speaker 13: on a handful of often in the case of Telefonica
Speaker 13: in the case of in the UK BT these formerly
Speaker 13: state backed companies and now you know the state is
Speaker 13: stepping in once again. It's also interesting, I mean other
Speaker 13: rivals Telephonica still have government stakes, so it is sort
Speaker 13: of a return to that status quo. Deutsche Telecom has
Speaker 13: a big government stake, and or in France formerly France
Speaker 13: Telecom has a government stake as well.
Speaker 2: What's interesting though, of course, is that Telephonica isn't just
Speaker 2: all about Spain. It's also about Latin America part of
Speaker 2: its business there.
Speaker 3: So what does it mean for well building businesses abroad.
Speaker 13: Well, I don't know if the Saudi Telecom company backed
Speaker 13: by the Saudi government has explicitly gone through its plans
Speaker 13: if they have them for for Telefonica, but there's a
Speaker 13: lot of pressure on the telecom's industry generally to maximize
Speaker 13: the value of assets. It's been a terrible sector for
Speaker 13: share prices, one of the worst globally, and so there's
Speaker 13: been lots of carve outs of infrastructure and lots of
Speaker 13: sales of local units. So possibly the Spanish government is
Speaker 13: stepping in to make sure it has a voice in
Speaker 13: those discussions.
Speaker 2: Telephonica big player with market capitalization twenty one billion. Over
Speaker 2: there in Spain, we thank you for bring us the
Speaker 2: latest common seal on all things Telephonica. UK based tech
Speaker 2: firm Revolute let's on track to generate more than one
Speaker 2: point nine billion dollars in revenue for the year. It's
Speaker 2: actually Europe's most valuable startup and it's benefiting from rising
Speaker 2: interest rates across the continent. Of course, Revolute is now
Speaker 2: adding as many as three hundred thousand users a week,
Speaker 2: qulling to people familiar with the matter. However, the startup,
Speaker 2: which was most recently valued at thirty three billion dollars
Speaker 2: back in twenty twenty one funding round, still has yet
Speaker 2: to receive its banking license from UK regulators. Meanwhile, we're
Speaker 2: sticking with fintech. We're talking about perhaps the holiday season.
Speaker 2: Within it, we're in full swing. While many of you
Speaker 2: and clearing me shop online, you're also going to be
Speaker 2: seeing bricks and more to come into their own and
Speaker 2: a New York based fintech startup is focused on that
Speaker 2: traditional part of retail.
Speaker 3: Bondside is a company that's looking to.
Speaker 2: Offer passive income to investors willing to bet on traditional
Speaker 2: bricks and water and pleased to say that Nehar Govindrad
Speaker 2: is with us one side founder CEO, and the passive
Speaker 2: income play here is come on board, help lend to
Speaker 2: a company that's growing, and you will get a nice return.
Speaker 2: Mean while the company what doesn't have to sell equity
Speaker 2: is that's kind of the win for them.
Speaker 3: That's exactly right.
Speaker 14: So our intention is to provide a passive income opportunity
Speaker 14: to investors and they provide their capital in exchange for
Speaker 14: a percentage of sales rather than a percentage of the business,
Speaker 14: and so as a result, they start seeing their repayments
Speaker 14: from the business in month one versus waiting for a
Speaker 14: year seven to ten outcome before they see the returns
Speaker 14: from their investment.
Speaker 2: And all of this, I'm sure, is to give more
Speaker 2: options and optionality to a retail investor who's looking for yield.
Speaker 2: How much have you had to focus in on ultimately
Speaker 2: education here? There is a lot of concern about the
Speaker 2: democratization of finance. Meaning basically, we got showered with confetti
Speaker 2: every time we brought a stock.
Speaker 3: How have you thought about educating a consumer on this?
Speaker 14: Education has been incredibly important in what we do. So
Speaker 14: we actually we went to market coining our agreement as
Speaker 14: the repeatable revenue agreement, and the intention behind that was
Speaker 14: we wanted to shape the investor's perspective of what we
Speaker 14: do versus relying on their existing understanding, and so it
Speaker 14: gave us a new opportunity to actually educate the investor
Speaker 14: base and say, hey, this is how we do things,
Speaker 14: and here's every piece of the fundamental that you need
Speaker 14: to understand about our agreement before you get involved. As
Speaker 14: a result, we've kept the product just for accredited investors,
Speaker 14: but we think about that as we expand how we
Speaker 14: can broaden the base.
Speaker 2: And it's coming an expansion at a time when maybe
Speaker 2: the moon music around the consumer and the economy gets
Speaker 2: a little bit better. How have you managed to see
Speaker 2: companies perform and show resilience? I mean you're lending to
Speaker 2: really well known restaurant groups, but then some individual names
Speaker 2: that might be a yoga studio for example, than a
Speaker 2: store which have done well. Has anyone had problems servicing?
Speaker 14: So we exclusively focus on brick and mortar services businesses,
Speaker 14: and we define that as food and beverage as you referenced.
Speaker 14: Then the second category is wellness, So think medical spas, gyms, salons,
Speaker 14: and then the third category is more traditional care, either
Speaker 14: provided in clinics or something like.
Speaker 3: A car wash.
Speaker 14: And our belie especially coming out of the pandemic, is
Speaker 14: that brick and mortar services is very much here to stay,
Speaker 14: and if anything, is on the rise, because we all
Speaker 14: lived in a world where we weren't experiencing services and
Speaker 14: we all decided that's not the world that we want
Speaker 14: to live in. And so we've seen consistently across our
Speaker 14: portfolio really strong performance, and of course that's aided by
Speaker 14: the rise in consumer spending that we're seeing as well.
Speaker 2: I'm looking at sort of JS Andres Group, Why did
Speaker 2: they need to access money from you? Why not go
Speaker 2: to a normal bank compartner when you're that big a name,
Speaker 2: that bigger player.
Speaker 3: It's a great question.
Speaker 14: So we really think about our source of financing, not
Speaker 14: necessarily for those that are in need of financing. When
Speaker 14: we look at the brick and mortar services sector, we
Speaker 14: believe that the capital stack and the options in their
Speaker 14: capital stack haven't actually innovated in the way that multi
Speaker 14: unit retail has really innovated in the last decade. And
Speaker 14: so when we look at that, we think about what
Speaker 14: we're providing here at Bondside with our repeatable revenue agreement
Speaker 14: as expanding their capital stack. And so it's not necessary
Speaker 14: really meant to replace the equity on your cap table
Speaker 14: or replace traditional debt that you have in place, but
Speaker 14: to just give you one more tool in your belt
Speaker 14: that you can leverage as you think about growth and scale.
Speaker 14: And so we see businesses as large as Hose andres
Speaker 14: Group adopting us, as well as the younger players that
Speaker 14: are being a lot more sensitive to dilution than they
Speaker 14: were maybe three to five years ago.
Speaker 3: What about your cap table?
Speaker 2: You're going out pitching yourself as a fintech business with
Speaker 2: a technology evaluation.
Speaker 3: How have you raised funds? Has been hard? Easy to
Speaker 3: tell your story?
Speaker 14: Yeah, So, you know, I really came at building bond
Speaker 14: Side out of a personal need. I prior to building Bondside,
Speaker 14: built a brick and mortar business and felt that we
Speaker 14: were really underserved in the capital options that existed. Nothing
Speaker 14: quite fit what I was looking for. And so it
Speaker 14: was very easy to then translate that into a story
Speaker 14: and really sort of paint the picture for the need there.
Speaker 14: And so as we think about our cap table at Bondside,
Speaker 14: when we think about our roadmap ahead. Our first product
Speaker 14: is the repeatable revenue agreement, which you're right, is a
Speaker 14: financial vehicle. But when we think about the future, there's
Speaker 14: a lot of opportunity to start of brick and orders
Speaker 14: beyond that.
Speaker 2: Nah, it's great to have you in the show. Thank you,
Speaker 2: Thanks Carol, Nea Govrindaje. There once I founder CEO talking fintech.
Speaker 2: To end what is of course this edition of bloombag Technology.
Speaker 2: Do not forget to check out our podcast though, get
Speaker 2: up to speed wherever you listen of course on Apple, Spotify.
Speaker 3: iHeart Bloomberg dot com too. This is Blombo Technology.