Speaker 1: From the heart of where innovation, money and power live,
Speaker 1: in Silicon Valley and beyond. This is Bloomberg technology with
Speaker 1: Emily Jay. I'm at Ludlow in New York in Emily Chang.
Speaker 1: This is Bloomberg Technology. Coming up in the next hour.
Speaker 1: A major sell off hits tech and the markets at large,
Speaker 1: nearing two lows. Will have the latest in a moment. Plus,
Speaker 1: apple is jumping into the sports industry, from the Super
Speaker 1: Bowl halftime show and NFL Sunday ticket to tonight's potentially
Speaker 1: historic Major League baseball broadcast. We're talking about how the
Speaker 1: company is eating away at traditional TV's most coveted assets.
Speaker 1: and NASA hopes to launch the Artemis Mission to the
Speaker 1: moon next week. We'll get the latest from our space reporter,
Speaker 1: Laura Grush. We'll get to that in a moment, but
Speaker 1: first let's talk markets. Friday was rough a sell off,
Speaker 1: and risk your assets deepened as spheres of a global
Speaker 1: recession intensified. Tech was not spared, with the NASDAC on
Speaker 1: falling to its lowest level since June, the SMP touching
Speaker 1: two year lows and wall streets fear gauge soaring toward
Speaker 1: a three month high, joining me to go over this
Speaker 1: less than happy and to the week. Who else but
Speaker 1: bloom bows, Casey Gray felt? I'll ask you again, how
Speaker 1: are you? I'm all tired. It was an intense day
Speaker 1: to an intense week. I remember there was a fed
Speaker 1: meeting all the way back on Wednesday. It feels like
Speaker 1: a year ago. Let's go back to basics. There was
Speaker 1: a fed meeting on Wednesday. The Fed raised rates by
Speaker 1: seventy five basis points and the dot plot, the four
Speaker 1: court cast, showed four point four percent rates by the
Speaker 1: end of the year, four point six rates further out,
Speaker 1: the terminal rate. Exactly? Why have markets reacted like this? Well,
Speaker 1: Jeron power is pretty clear on Wednesday that this wouldn't
Speaker 1: be a painless process. That big, aggressive vision up in
Speaker 1: the dark plot. That's going to cause pain for the economy.
Speaker 1: That's causing pain for the market. But today was especially
Speaker 1: dramatic because it actually started over in England, and you
Speaker 1: would liz trust's government unvel, I believe, the biggest tax
Speaker 1: const since two this is into a economy that's already
Speaker 1: dealing with ultra hot inflation. You have a very aggressive
Speaker 1: Bank of England and again, if you think about the
Speaker 1: global tightening that's going on. This is just another crank
Speaker 1: tighter and that fear was definitely present across global assets.
Speaker 1: So there was just another thing to add anxiety to
Speaker 1: the market. So I'M gonna look at this chart on
Speaker 1: the Bloomberg terminal, which shows the kind of decline we've
Speaker 1: seen in tech stocks in particular, but also the push
Speaker 1: higher in real yields. And we keep talking about the Fed.
Speaker 1: Every week I'm here with Emily Chang, I'm talking about
Speaker 1: the Fed. We talk about it because higher rates discount
Speaker 1: the present value of future profits for tech stocks. But
Speaker 1: it seems like a one to punch for the audience.
Speaker 1: I just did a one too and it looks great
Speaker 1: and you're exactly right. So you're using some C F
Speaker 1: A terms here, but they're really important, and that real yield,
Speaker 1: the fact that real yields have screened high again, the
Speaker 1: yield that you get on bonds after accounting for inflation.
Speaker 1: That is sort of the basis for valuing other assets,
Speaker 1: and the fact that you are seeing those really yield
Speaker 1: scream higher. That has a lot of implications for duration
Speaker 1: heavy stocks such as tech stocks, those growth stocks, where
Speaker 1: a lot of those cash flows are expected in the future.
Speaker 1: They're worth less when you have that discount raycle and
Speaker 1: speaking about growth, the fear is about slow down in
Speaker 1: global growth. That's almost the other punch right that the
Speaker 1: other consequences of the Fed is that actually, even if
Speaker 1: you're a megacap tech stock like an apple and Amazon,
Speaker 1: we've seen declines in those that the world's a different
Speaker 1: place now, the economy slowing down and they might suffer
Speaker 1: the other fear, so to speak, the fear games fear
Speaker 1: here vix. Talk to me about the Vicks. We don't
Speaker 1: cover it as much on the tech show, but briefly
Speaker 1: explain what it is and what that is. So the VIX.
Speaker 1: It's looking at expectations for volatility for the next thirty
Speaker 1: days and it's been a bit of a frusting, frustrating
Speaker 1: indicator to watch because if you look at the Vix,
Speaker 1: it's been relattively low. I mean it was getting back
Speaker 1: to thirties today, but it's been very low relative to
Speaker 1: some of the levels that we saw during the pandemic
Speaker 1: during the past two years. And you compare that to
Speaker 1: what we've actually seen in the equity market, it doesn't
Speaker 1: feel like it's matched the reality on the ground. But
Speaker 1: you are starting to see some movement in the vix.
Speaker 1: Today it got to a three month high, so some
Speaker 1: of that fear is starting to show up in the
Speaker 1: vix and what's been a very orderly sell off thus far.
Speaker 1: It's the weekend. You can take a rest. The Fed
Speaker 1: speak to come. Fed speak to come. My sources tell me,
Speaker 1: Romaine postic specifically, that there's thirteen unique fed speakers next week.
Speaker 1: This is going to be important to watch. Even if
Speaker 1: you're a tech investor, you should keep an eye on
Speaker 1: the Fed speak because it's going to be interesting to
Speaker 1: see what any sort of message, any sort of crumbs,
Speaker 1: they leave about how they feel about this market reaction.
Speaker 1: If you go back to after Jackson Hole, this speech
Speaker 1: that Jeron Powell gave, markets puked in the aftermath of
Speaker 1: that and then you actually had minneapolis fed President Neil
Speaker 1: Kash cary say that he was happy to see that
Speaker 1: market reaction. I don't know if we're going to get
Speaker 1: anything as explicit as that, but any sort of hints
Speaker 1: along that line, that line would be very interesting. Puke,
Speaker 1: what a happy way to end the week. Bloomberg's Katie Greifeld,
Speaker 1: thank you very much. Apple has become a serious threat
Speaker 1: to traditional cable providers propped up by live sports. Three
Speaker 1: major storylines are playing out that could make apple a
Speaker 1: real player in sports broadcasting. Apple TV has only aired
Speaker 1: MLB Games for a few months, but tonight it could
Speaker 1: have record viewership, with Aaron Judge One home run away
Speaker 1: from MLB history. Apple Music will become the title sponsor
Speaker 1: of the Super Bowl halftime show, taking over from Pepsi,
Speaker 1: and Apple is in talks with the NFL to take
Speaker 1: the AAL assets Sunday ticket package from direct TV and
Speaker 1: a deal that could top two point five billion dollars.
Speaker 1: Here's how crucial this could be for apple. A recent
Speaker 1: survey of NFL fans found that forty percent of them
Speaker 1: definitely will or are likely to subscribe to Sunday ticket
Speaker 1: went offered by a major streaming provider. Here to discuss
Speaker 1: is Bloomberg's apple reporter, Mark German, and Bloomberg business of
Speaker 1: sports reporter Brandon Sapienza. Brandon, I'm gonna Start with you.
Speaker 1: Big Game Friday night and it matters for a guy
Speaker 1: called Aaron judge and it matters for Apple TV. Set
Speaker 1: the stage for us. Why do we care? Well, I
Speaker 1: mean Aaron Judge Could Tai Roger Marris with the sixty
Speaker 1: one time run. Obviously that's really big news. Yankee fans
Speaker 1: have been waiting a long season to see that happen,
Speaker 1: but they might not get I'll get the chance to
Speaker 1: do that tonight. So a lot of them are really upset.
Speaker 1: They've personally attest to that they might not get the
Speaker 1: chance to do the mock. Give us the specifics. Hey,
Speaker 1: what is the deal that apple has with Major League Baseball?
Speaker 1: So for the past few weeks, as you said, or
Speaker 1: a few months I should say, through the Apple TV
Speaker 1: APP on all of the supported devices, apple has aired
Speaker 1: two MLB Games every Friday night. They put the schedules
Speaker 1: out a few weeks in advance. It just so happens
Speaker 1: that this agreed upon game featuring the Yankees and Aaron
Speaker 1: judge tonight. That's the game that everyone in New York
Speaker 1: wants to see and because of that agreement it won't
Speaker 1: be aired on the Y S network. That's the local
Speaker 1: network in New York. So if Brandon wants to watch that,
Speaker 1: he won't be able to unless he signs up for
Speaker 1: Apple TV. Now the positive year is that this goes
Speaker 1: against some speculation I've seen, you don't actually have to
Speaker 1: pay for it right. Some people thought you had to
Speaker 1: pay the four day nine per month for Apple TV
Speaker 1: plus to actually view it. That's not the case. Still,
Speaker 1: the MLB deal is free. At some point, though, I
Speaker 1: think they'll charge for it. But for tonight you really
Speaker 1: just need an apple TV APP or access to the
Speaker 1: APP in order to watch the game. Jens, I wanted
Speaker 1: to get the mood music out there across New York.
Speaker 1: So what did I do? I took to twitter and
Speaker 1: I did a twitter poll and I asked Yankees Fans,
Speaker 1: Major League baseball fans, WHO's watching the game tonight on
Speaker 1: Apple TV plus? That's the results. Now, okay, Pinch your
Speaker 1: salt here. It's not exactly scientific. Around six votes, but no,
Speaker 1: forty three point five PC. I guess a lot of
Speaker 1: people are going to go and see it themselves in person.
Speaker 1: But if you are a Yankees fan or you're a
Speaker 1: baseball fan, brandon, it's a complicated season. Yeah, what do
Speaker 1: you need to do across the season if you live
Speaker 1: in the state, in New York to Actually Watch a game?
Speaker 1: So if you live in the city of New York,
Speaker 1: you're actually for services to get you a Yankee game.
Speaker 1: So either you need one of to view one of
Speaker 1: the PEACR Games. Need Peacock, then you need Amazon TV,
Speaker 1: Amazon prime. They needed a cable network or something that
Speaker 1: has access to the yes network, which I think is
Speaker 1: only direct TV stream in the case of if you
Speaker 1: want to stream if you're unplugged from cable. And then
Speaker 1: obviously you need apple TV, which I know, as Mark said,
Speaker 1: it is free, but for a lot of fans it's
Speaker 1: a lot of services and a lot of money that
Speaker 1: may need to be laid out and it's it's obviously
Speaker 1: not ideal in this inflationary environment. Mark, what is Apple's
Speaker 1: play here? What is their strategy with sports more broadly,
Speaker 1: because it's not just baseball. So you heard that problem,
Speaker 1: the brandon outline where you need four different services to
Speaker 1: catch all your Nikee Games? Right, that's not alone for MLB. Right,
Speaker 1: I'm an NBA Fan. Sometimes you need lead pass. Sometimes
Speaker 1: for the Lakers you need spectrum sports net, sometimes you
Speaker 1: need ESPN. Right. And so apple's ideal world is you
Speaker 1: throw all that away, right, you subscribe for one price
Speaker 1: every month and you get every game you want across
Speaker 1: every different sports league and they're gradually heading there. Right
Speaker 1: this MLB partnership just the beginning. You mentioned the talks
Speaker 1: to the NFL for Sunday ticket, just the beginning. The
Speaker 1: MLS deal. It's a ten year deal. That's a component
Speaker 1: of it. I think they'll eventually go after the NBA, college,
Speaker 1: Maybe High School Sports, who knows? They want everything. They
Speaker 1: want one single monthly price. Build your own all the
Speaker 1: card system them where you can pay, you know, x
Speaker 1: amount for M MLB, NBA, NFL. Pay a different price
Speaker 1: for this. Build your own packages as standalone apple originals,
Speaker 1: non sports package. They want to own everything right and
Speaker 1: this has been a big week for them. Those talks
Speaker 1: are ongoing. You mentioned that deal for about fifty million
Speaker 1: where they're going to be replacing Pepsi right as a
Speaker 1: sponsor for the, you know, halftime game right at the
Speaker 1: Super Bowl. That's a big way to get apple's brand
Speaker 1: out there, make more sports fans familiar with the apple brand,
Speaker 1: apple music, apple TV, etcetera. And of course the situation
Speaker 1: that brandon outline tonight. That's going to get the apple
Speaker 1: name out there for a lot more people. And obviously
Speaker 1: this Aeron Joe Situation is perfect marketing for apple and
Speaker 1: apples are going to give in and let yes, Co
Speaker 1: stream the game, that chart you see on your screen.
Speaker 1: So a global audience seems so important, right. Apple's budget
Speaker 1: six billion for streaming in prime video, fifteen billion brandon.
Speaker 1: Isn't just inevitable the Apple Amazon streaming giants come to
Speaker 1: dominate sports television? Absolutely. I mean, when you think about
Speaker 1: who owns all these products, who owns an apple product?
Speaker 1: Who owns a subscription to Amazon prime, you're talking about
Speaker 1: a lot of people, with tens of millions of people,
Speaker 1: and all of these people are also motivated by more
Speaker 1: and more quality content, turning to streaming, turning off from
Speaker 1: cable and just focusing all their attention and their money there.
Speaker 1: So it is inevitable. Let's talk about apple mark and
Speaker 1: its efforts around the NFL and halftime show for the
Speaker 1: Super Bowl. Right. This is not a play for the broadcasting,
Speaker 1: this is a play for advertising. This is a pure
Speaker 1: advertising way, pure way to get their brand out there.
Speaker 1: This is a five year deal. Obviously, anyone who watches
Speaker 1: the Super Bowl knows that Pepsi has sponsored them for
Speaker 1: many years now. Apple is going to be the forefront
Speaker 1: of that and you can just probably imagine that Tim Cook,
Speaker 1: Eddie Que, their head of services, you know, a lot
Speaker 1: of their team will probably be there. You'll see them
Speaker 1: on camera there. They'll see their brand plasted everywhere. They'll
Speaker 1: make a whole big deal about it. I'm interested to
Speaker 1: see if they're going to get back in the game
Speaker 1: of making commercials right for the Super Bowl, something they
Speaker 1: did many, many years ago, obviously with the original MC
Speaker 1: but they haven't really done much of that since then.
Speaker 1: So I think this is a big branding opportunity for apple.
Speaker 1: And despite all the cash they have on hand right
Speaker 1: a hundred billion plus. You know, fifty million dollars still
Speaker 1: fifty million dollars. So I think they see this as
Speaker 1: a significant way to put their foot down and say hey,
Speaker 1: we're here too for sports. Uh. And I think Brandon's
Speaker 1: point about all these other services is also pretty interesting.
Speaker 1: And what's really cool about Apple TV is they have
Speaker 1: a feature called Apple TV channels. Right, so, let's say
Speaker 1: Amazon or another provider, Peacock Brandon mentioned, they get some
Speaker 1: really cool deal with one of the major sports leagues. Potentially,
Speaker 1: maybe that could be tapped through in Apple TV. So
Speaker 1: the Apple TV APP you can access to apple services,
Speaker 1: apple partnerships, but maybe those from NBC and Amazon and
Speaker 1: the likes of those as well. Mark, you've got your
Speaker 1: finger on the Pulic of Apple, not just in the
Speaker 1: product perspective, but it kind of brewed a strategy. So
Speaker 1: talk to me about Sunday ticket in NFL. Is Tim
Speaker 1: Cook and Co really willing to just keep spending that
Speaker 1: cash because they got cash to burn? They have a
Speaker 1: lot of cash and they want to use that cash
Speaker 1: to make even more cash, right and so right now
Speaker 1: they're making about twenty billion dollars a quarter right on services,
Speaker 1: about eighty billion dollars per year. Imagine that investment, that
Speaker 1: two and a half billion dollar investment, what that will
Speaker 1: do for apple's bottom line. Right. Maybe one day we'll
Speaker 1: be talking about nine billion or hundred billion dollar annual
Speaker 1: income from services, with NFL just the beginning of that.
Speaker 1: That's a big deal. And, as we all know, NFL
Speaker 1: Sunday games. That's the Holy Grail, not only of the
Speaker 1: NFL for football, but the holy grail of all of sports.
Speaker 1: Right even the NBA doesn't want to broadcast their games
Speaker 1: to go up against Sunday games from the NFL. So
Speaker 1: I think that would be pretty, pretty big for the company. Hey,
Speaker 1: how often does it come down to cash on cash,
Speaker 1: on cash? Boom bugs, malt gum and and Brandon Sapienza.
Speaker 1: Thanks to you both, and be sure order to catch
Speaker 1: the lineup tonight at seven pm New York time. It's
Speaker 1: our new show focused on the sports betting industry. Tonight,
Speaker 1: former Dallas Cowboys Dez Bryant joins the program coming up,
Speaker 1: we'll take a look at the resurgence in climate focused
Speaker 1: investing as companies and governments doubled down on lightening their
Speaker 1: carbon footprints. Our discussion with climate focus firm voyage a ventures. Next,
Speaker 1: this is Bloomberg. This Week is climate week in New York,
Speaker 1: with the summit bringing together international leaders from business, government
Speaker 1: and civil society to showcase global climate action. So let's
Speaker 1: wrap the week up with voyage adventures, a new firm
Speaker 1: that's raised a hundred million dollars for its first fund,
Speaker 1: backing tech startups working on things like decarbonizing transportation, energy
Speaker 1: systems and foods and materials production, to own name a few.
Speaker 1: Let's say all about this with the CO founders and
Speaker 1: managing partners, Sierra Peterson and Sarah's classic, joining me now.
Speaker 1: Sarah I'll start with you. Climate Week. A whole week
Speaker 1: the world is watching to events like this really induced change. Yeah,
Speaker 1: I mean climate week is, I think, a good illustration
Speaker 1: of the unparalleled momentum we've seen in this past year
Speaker 1: in recognizing the opportunity in addressing climate change and climate
Speaker 1: stabilization through investment and the policy that has shown up
Speaker 1: in a major way in the United States to do so.
Speaker 1: So every week it's climate week in some way. Sarah,
Speaker 1: I think what I find so fascinating, especially in private markets,
Speaker 1: venture capital, you're putting money in a portfolio of companies.
Speaker 1: Some of them will make it, some of them won't,
Speaker 1: and a lot of these ideas they always seem a
Speaker 1: bit nascent, right. They always seem like things with great promise.
Speaker 1: How do you decide to where you deploy capital? Yeah,
Speaker 1: so we invest in companies building product and services that
Speaker 1: are positioned to decarbonize some aspect of the global economy.
Speaker 1: And these are the world's biggest markets for talking about energy,
Speaker 1: food and materials, production, transportation. And what we recognized, and
Speaker 1: part of the reason that we started voyager now when
Speaker 1: we did, is that many of these foundational technologies are
Speaker 1: reaching the point where they are cheaper and better performing
Speaker 1: than their fossil field incumbents. Sore, of course, seeing this
Speaker 1: in the area of electric vehicles, where the total cost
Speaker 1: of ownership of light duty vehicle is less than that
Speaker 1: of a combustion engine vehicle and the performance is better.
Speaker 1: And so we look for opportunities in these expanding markets
Speaker 1: where foundational technologies are positioned to Outcompete, in the near term,
Speaker 1: in the next few years or even today, their fossil
Speaker 1: field incumbents. And I think it's important to recognize these
Speaker 1: technologies will continue to get better over time and the
Speaker 1: fossil fuel based incumbents will continue to be ever more
Speaker 1: or less competitive. Sarah, let me as see that question
Speaker 1: in reverse. Where are you not investing? Where do you
Speaker 1: not put your money within climate carbon reduction? And why? Yeah,
Speaker 1: certainly so. We are an early stage venture capital firm.
Speaker 1: So as a venture capital firm, we seek investments that
Speaker 1: have a venture scale return profile. There are plenty of
Speaker 1: opportunities for investing in the overall transition away from an
Speaker 1: unsustainable and carbon intensive economy around the world. There are
Speaker 1: infrastructure investments to be made. There are certainly interesting opportunities
Speaker 1: to invest in the carbon markets themselves. We are investing
Speaker 1: in early stage technology companies that hold, as I said,
Speaker 1: an interesting and venture scale return profile. Out of fund one,
Speaker 1: for example, we look for companies that we believe, through
Speaker 1: a single investment, can return the entire hundred million dollar
Speaker 1: fund through that investment. So you both raise around hundred
Speaker 1: million in April, I believe. I want just take a
Speaker 1: look on the screen at some of those backing you guys,
Speaker 1: some of your lps, really interesting names from industry, for example.
Speaker 1: You know one being Jeff M Ol of GE, Long
Speaker 1: Time at G, one of these great big American companies,
Speaker 1: and we talked in the intro about how climate week
Speaker 1: brings together policymakers business. When you look across corporate America
Speaker 1: at a General Electric for example, do you think that
Speaker 1: they are a doing enough, Sarah, but be doing the
Speaker 1: right things with their investment? Yeah, many companies are recognizing
Speaker 1: the opportunity in the transition and they're seizing the opportunity.
Speaker 1: I think certainly not every company is and all companies
Speaker 1: could be doing more. What it's difficult to recognize is
Speaker 1: that once technology is hit in flection points where they
Speaker 1: are better performing and less expensive than the technology paradigm
Speaker 1: they're replacing, they continue to get better and they can
Speaker 1: continue to get are at a faster rate, and so
Speaker 1: we think these transitions will happen linearly. In reality, they
Speaker 1: actually can happen much, much faster than that, and so
Speaker 1: timelines and inflection points that feel like they might be
Speaker 1: twenty years out in decarbonization, in the transition from combustion
Speaker 1: to clean electricity, might actually be happening in ten years
Speaker 1: or five years. And corporations that don't prepare for that
Speaker 1: UH and then, are not ready for what is potentially
Speaker 1: the most rapid transition of economic activity the world has
Speaker 1: ever seen, are not only going to be at risk
Speaker 1: for their business, but they're also going to miss out
Speaker 1: on a fifty trillion dollar opportunity. Sarah, it's been a
Speaker 1: really interestingly digging into the actual technologies, the things that
Speaker 1: the founders are trying to improve. Talk to me about
Speaker 1: some of your portfolio companies, the areas and the technologies
Speaker 1: that you're most excited about. Yeah, so we invest in
Speaker 1: foundational decarbonization, that is, the technologies that are poised to
Speaker 1: de carbonized big swaws to the global economy. These are mobility,
Speaker 1: energy itself, food materials production, the built environment. We are
Speaker 1: backing companies that are poised to, should they succeed in
Speaker 1: these markets, really address emissions at scale across the global economy,
Speaker 1: and I put fully reflects that. We invest in software companies,
Speaker 1: we invest in deep technology companies, we invest in biotechnology
Speaker 1: companies and all our positioned to compete with the fast
Speaker 1: field paradigms of prior technology based on price and performance,
Speaker 1: belong right. Voyager Co founders and managing partners, Sierra Peterson
Speaker 1: and Sarah's classic. Thank you very much. Now Nicola, founded
Speaker 1: Trevor Milton, had an odd reaction when shares plummeted on
Speaker 1: their NASDAC debut. Back in Milton was, quote, hyper focused
Speaker 1: on the company's stock price, so much so that when
Speaker 1: the shares fell five on their first trading day of June,
Speaker 1: he thought something was wrong with the NASDAK. Durors his
Speaker 1: criminal fraud trial were told CFO can brady testified that
Speaker 1: he explained to Milton the decline was simply supply and demand,
Speaker 1: but Milton insisted brady contact the exchange. Brady told jurors
Speaker 1: that it was a constant battle to get Milton, the
Speaker 1: company's biggest shareholder, to focus on building long term value
Speaker 1: rather than obsess over retail investors and stock price fluctuations.
Speaker 1: And Ford has begun the largest factory project in its
Speaker 1: one hundred and nineteen year history. The automaker has started
Speaker 1: construction of its five point six billion dollar electric vehicle
Speaker 1: manufacturing complex in western Tennessee. It's known as Blue Oval City.
Speaker 1: By six thousand workers were expected to be building electric
Speaker 1: pickup trucks and the batteries that power them in a
Speaker 1: joint venture with South Korea's SK innovation. Now market loads
Speaker 1: for the year are in sight after this week's sell off.
Speaker 1: All three major indices dropped this week after the Fed
Speaker 1: seventy five basis point hike and signaled higher rates will remain.
Speaker 1: Tech was not spared. Our next guest says there could
Speaker 1: be some bright spots along with challenges for everyone from
Speaker 1: startup founders to chief executives. David Crawford is partner at
Speaker 1: Bain and company as well as its global head of technology.
Speaker 1: David the week that was what do you make of
Speaker 1: what's going on in the world? Well, good question, I think. Um,
Speaker 1: thanks for the question. I think we we see long term.
Speaker 1: You know, Innovation and growth in the tech sector. That said,
Speaker 1: we've already seen our clients swallow kind of equity and
Speaker 1: reduction this year. That's mostly been multiple adjustment. The second
Speaker 1: half of the year, we think, is actually about sorting
Speaker 1: out how much demand pulls back. We we believe there
Speaker 1: are major disruptions from supply chain as well as war
Speaker 1: and now the recessionary effects of a demand pullback which,
Speaker 1: as we look into our client base, we think that's
Speaker 1: actually going to be revealed to be more substantial than
Speaker 1: people think and surprise the markets more so. Volatility is
Speaker 1: a US word again. The world is volatile, the markets
Speaker 1: of volatile, but you see an opportunity to do what
Speaker 1: you call kickstarting the rebuild. What do you mean by that?
Speaker 1: What we talk about is that in a downturn there
Speaker 1: is opportunity and particularly if you can be an incumbent
Speaker 1: or someone who is strong in your sector, there's a
Speaker 1: flight to quality. It creates more opportunities for you to grow.
Speaker 1: It creates more opportunities for you to do m and a,
Speaker 1: it creates more opportunities to do do deals. But there's
Speaker 1: a process of managing through the downturn such that you
Speaker 1: can gain share and gain market position. It's kind of
Speaker 1: a double edged sword right were, especially when we talk
Speaker 1: about growth equity, because a lot of these innovators they
Speaker 1: need cash, they need money to to grow, to expand
Speaker 1: what they're doing. But if you're an investor, that carries
Speaker 1: risk in this environment. So how do you pass that? Yeah,
Speaker 1: great question. We see growth equity as a direct result
Speaker 1: of the unique innovative conditions in the tech sector today.
Speaker 1: It turns out that the markets have put down, over
Speaker 1: the last decade, enormous amounts of cloud computing, pervasive connectivity,
Speaker 1: GPS infrastructure at center and it's created an environment in
Speaker 1: which new companies can be built and scaled extremely rapidly.
Speaker 1: And if you understand that playbook, you can invest behind
Speaker 1: it with a growth equity formula that is extraordinarily high,
Speaker 1: high payback Um. So I think that formula has not
Speaker 1: gone away, those conditions have not gone away. We're going
Speaker 1: to have to work through these uh, these uh difficult environment,
Speaker 1: you know, in the next six to twelve months, but
Speaker 1: after that I think we'll have a return of the
Speaker 1: same extraordinary innovation conditions. David was showing a lot of
Speaker 1: red on the screen on a year to date basis
Speaker 1: and equity markets on a weekly basis. But it's Friday.
Speaker 1: Let's let's think about the positive, the opportunity, and I
Speaker 1: enjoyed your latest research right because you're talking about specific areas,
Speaker 1: the role of web three in rewriting the rules of
Speaker 1: digital user identity, you're excited about ai in customer success.
Speaker 1: How do you convince invested that now is the time
Speaker 1: to deploy capital to those areas? Yeah, I think it's
Speaker 1: been interesting to watch equity multiple adjustments. The hardest hit
Speaker 1: by far have been the smaller companies with the extraordinarily
Speaker 1: high growth rates. There's been a flight to quality and
Speaker 1: that just makes a number of extraordinarily innovative and important, frankly,
Speaker 1: assets available at much cheaper prices than it would have
Speaker 1: been otherwise. So I guess we would say innovation is
Speaker 1: very much alive. We're looking down the barrel of a
Speaker 1: massive growth in the metaverse, web three dot o being
Speaker 1: one piece of that Um, and we just think that
Speaker 1: this transitional effect creates opportunities for smart players to make
Speaker 1: good bets. David, I'm going to bring up a chart
Speaker 1: which I saw in your research which shows the growth
Speaker 1: of growth equity relative to public markets, equity venture capital,
Speaker 1: and what we see in terms of buyouts in the market.
Speaker 1: What is this story that this chart is telling on
Speaker 1: our screens? Yeah, great question. The basic story there is
Speaker 1: the extraordinary growth of the growth equity investor trunch, you know,
Speaker 1: and growth equity is not a new concept, but it's
Speaker 1: it's meant to be targeted at a life stage that
Speaker 1: you know, is going from, uh, you know, stability to
Speaker 1: scale and, as I mentioned before, we just think it
Speaker 1: reflects the growth here. Has Grown to of total capital deployed.
Speaker 1: That's extraordinary. It's doubled since the last two years. So
Speaker 1: we just think it reflects the conditions of innovation that
Speaker 1: are ever present in tech right now. The pervasive availability
Speaker 1: of cloud computing, of Um connectivity, of Ai, of technologies,
Speaker 1: payment systems, you name it, just allows a good concept
Speaker 1: to be created and scaled extremely rapidly and investors have
Speaker 1: sort of bad out. They've actually that into a great business.
Speaker 1: If you're an investor anywhere in the world in the
Speaker 1: last two years you've done a bit of reading about
Speaker 1: semiconductors and the global chip industry. Everyone is trying to
Speaker 1: become an expert on the chip industry. Where do you
Speaker 1: see the health of the chip industry in terms of supply,
Speaker 1: bottle Max, but but also the story has turned so
Speaker 1: quickly to demand. Yeah, the chips story is is a
Speaker 1: multifaceted one. It's started out two and a half years
Speaker 1: ago with the auto industry canceling is, its its orders
Speaker 1: and those orders being reallocated to keep factories full. Um,
Speaker 1: when the economy recovered more quickly than people thought, there
Speaker 1: was just no availability because the factories protect themselves by backfilling.
Speaker 1: Since then it's become, you know, an extraordinary story of
Speaker 1: global disruption that occurs as, uh, individual players lose their orders, underproduced, overproduced, etcetera,
Speaker 1: and it shows us that how dependent we really are
Speaker 1: on hips. And it's not just leading edge chips, it's
Speaker 1: chips at all Um at all places within in the
Speaker 1: node progression of the fabrication and that is also, of course,
Speaker 1: shone a light on the relationship between the United States
Speaker 1: and China, and I know that your research is touched
Speaker 1: on that as well. Yeah, there's a whole another layer
Speaker 1: to this story, which is that, you know, the world
Speaker 1: has found itself extremely dependent on a small number of
Speaker 1: companies to produce these some of which, one of which
Speaker 1: is very important, is Taiwan. Semiconductor in Taiwan and to
Speaker 1: the extent Um there's a single point of failure in
Speaker 1: your supply chain. Uh. This chip shortage has really highlighted
Speaker 1: for folks how how dependent they really are on that
Speaker 1: single company, and many companies are looking to diverse five.
Speaker 1: With all that in mind, give me the David Crawford
Speaker 1: projection for three in the world of tech. Yeah, simple,
Speaker 1: in any of the back end of three will be
Speaker 1: about innovation and Growth and and sorting out how to
Speaker 1: win here. I think the next six to eight months
Speaker 1: will be working through the disruptions that we're experiencing now, Um,
Speaker 1: and those include everything from the Geo political environment too,
Speaker 1: as you describe the supply chain shortages, one of which
Speaker 1: is the chip shortage, Um, as well as the recessionary
Speaker 1: effect of demand pulled back. All Right, David Crawford, partner
Speaker 1: at Bain and company and head of its global technology practice.
Speaker 1: Thank you. Time for our crypts I report, and today
Speaker 1: we take a look at what we call oracles so
Speaker 1: around crypto contribute to Shinali Bashak is here with our
Speaker 1: guest Shal take it away. Thank you, ed. We're going
Speaker 1: to talk to Mike K Hill. He's the Pith Data
Speaker 1: Association director, and we're going to talk about oracles here,
Speaker 1: because data is hard to combine the traditional financial system.
Speaker 1: It's hard to combine in crypto because it's such a
Speaker 1: vast landscape. So when we're talking about Oracles, what do
Speaker 1: you really mean and what does it mean for the
Speaker 1: universe of smart contracts that need that external data from
Speaker 1: the real world services that really provide that gateway Um,
Speaker 1: to each other? Sure, first out, thanks so much for
Speaker 1: having me. On block chains, as you mentioned, we've got
Speaker 1: smart contracts and the smart contracts will execute rules based
Speaker 1: decision criteria that can move something of value. So it
Speaker 1: could be bitcoins, it could be ethereum Um, and when
Speaker 1: they are doing this, there's no third party intermediary that's
Speaker 1: going to make any judgment calls. So they're dependent upon
Speaker 1: the inputs and that inputs come from data Um, and
Speaker 1: so that data is that the quality of that data
Speaker 1: is paramount, and so oracle networks provide a way to
Speaker 1: get high quality data. It's very trustworthy, and the way
Speaker 1: that they do that is by having multiple contributors distribute
Speaker 1: that data directly on chain and it becomes very robust
Speaker 1: and resilient. Now how does this really help big institution
Speaker 1: and high frequency traders really engage with the crypto universe
Speaker 1: with a lot more rigor? Yeah, so what's really cool
Speaker 1: about the pith network is it has attracted some of
Speaker 1: the largest trading firms and exchanges to contribute their data
Speaker 1: directly onto blockchain. We think about the pith network as
Speaker 1: being really high quality infrastructure that can power the next
Speaker 1: generation of decentralized applications empower the growth of web three.
Speaker 1: So it's really the tooling that large trading firms and
Speaker 1: exchanges come to expect to make this institutional grade so
Speaker 1: that they can participate in future. You know, it's interesting
Speaker 1: because when you think about how it used to work,
Speaker 1: data is proprietary. Data is something that not a lot
Speaker 1: of people like to traditionally share. So what do these
Speaker 1: firms get out of it by starting to share data
Speaker 1: and starting to amass more data altogether? That's a great question.
Speaker 1: So there's a reward mechanism within the pith network where
Speaker 1: the data providers are incentivized to provide that data on
Speaker 1: chain Um. And what has been very exciting is, in
Speaker 1: a similar capacity to how AIRBNB has enabled an entire
Speaker 1: new inventory of places to stay. The Pith Network has
Speaker 1: opened up and unlocked reserves of data that came from
Speaker 1: trading firms that never ever distributed it for external use before. Um.
Speaker 1: Some of the participants include jump trading, Jane Street Susquehanna,
Speaker 1: and they're contributing their data directly on Shane and this
Speaker 1: is something they've never once have used externally before. So
Speaker 1: it's very cool. Mike, you used to work at Morgan
Speaker 1: Stanley and you know, when you look at this kind
Speaker 1: of high frequency trading world, all those companies that you
Speaker 1: said that you work with, like Jane Street Susquehannah, why
Speaker 1: is it that high frequency trading firms are more likely
Speaker 1: to engage with this universe then a large firm like
Speaker 1: Morgan Stanley? You see some of those big houses starting
Speaker 1: to trade in Crypto, but it's really at the margins. Yeah,
Speaker 1: I agree. I think that the first movers tend to
Speaker 1: be ones that have um smaller committees around where they
Speaker 1: can enter into markets. Um. So these are really the
Speaker 1: nimble firms, Um, the ones that get in early. They're
Speaker 1: comfortable with both the cryptography risk as well as potentially
Speaker 1: some regulatory risks. Um, and then navigating that landscape is
Speaker 1: never easy, but it's a calculated risk that they have
Speaker 1: to take. For the banks, I think that they need
Speaker 1: to get a little bit more comfortable with the caliber
Speaker 1: and the scale of risks that they're going to get
Speaker 1: into and I think they're making a lot of progress,
Speaker 1: as you mentioned Um, and we will expect to see
Speaker 1: them come in over time. And what would it take,
Speaker 1: do you think, for decentralized finance to do everything that
Speaker 1: you would see in the traditional financial system? Yeah, I
Speaker 1: think it's going to take a lot of development Um.
Speaker 1: There's some things that crypto does really well, which is like,
Speaker 1: you know, sending things around the world of value Um,
Speaker 1: with low friction Um and low fees Um. And then
Speaker 1: there's some things that in centralized finance it does really well,
Speaker 1: for instance, privacy. Everything is fully public on on blockchains
Speaker 1: and that's not necessarily the best thing for um like
Speaker 1: a trading engine, or for Um to send like your
Speaker 1: Benmo account and have everything to be public Um. So
Speaker 1: I think that we're going to see better technology emerge
Speaker 1: Um and this infrastructure tooling is really designed to allow
Speaker 1: people to build stuff and build stuff that can compete
Speaker 1: with the real world of centralized follow ups I'd love
Speaker 1: for you to talk about your work also with certain blockchains,
Speaker 1: particularly Salana. Of course we've come off the merge. We're
Speaker 1: talking a little earlier this week down totally, Yakovenko, you know,
Speaker 1: what is it? What kind of data do you have?
Speaker 1: What kind of decisions are you making as this ecosystem
Speaker 1: evolves to know what's going to be more dominant moving forward? Yeah,
Speaker 1: so pith started its life about a year ago on
Speaker 1: the Salanta blockchain and it became very quickly the canonical
Speaker 1: oracle to be used on chain over the applications or
Speaker 1: securing their data with that network. Um, and it is
Speaker 1: now going multi chain and it's really just if you
Speaker 1: think about these chains being similar to operating systems, you
Speaker 1: want to have the best possible toolings to attract users
Speaker 1: to build applications on these operating systems, Um, and so
Speaker 1: having pith available on chain is a very important component
Speaker 1: um for these these layer ones to compete with one another.
Speaker 1: So it goes to all the E v M chains
Speaker 1: now and will extend to the new ones, some with
Speaker 1: competitive aspects, to Salona, using different languages as well. I
Speaker 1: have to admit, Mike, a data oracle sounds a bit
Speaker 1: like a mythical creature. So what exactly what is the
Speaker 1: function that you serve in this community? What kind of
Speaker 1: data are we talking about here? You know what is
Speaker 1: the ultimate goal? Yeah, it does sound like a mythical creature.
Speaker 1: The name does come from Greek pathology and pith comes
Speaker 1: from Pythia, so there are ties in there. But today
Speaker 1: the fifth data Um Spans the sector of Crypto, US equities,
Speaker 1: F X, metals Um. So you've got a bit of everything.
Speaker 1: You can see the price of apple updating on chain
Speaker 1: every four in the middle seconds and being used by
Speaker 1: anybody Um. But you can go on on the website
Speaker 1: and see this information. We expected to have that scale
Speaker 1: out other categories that people are interested in using them
Speaker 1: in smart contracts. I'm with you. If you can make
Speaker 1: mythical creatures to make foreign exchange sound all the more exciting,
Speaker 1: I am in for that. Mike Cahill, that's the CEO
Speaker 1: of Pith Data Association. Thank you so much. Ed Back
Speaker 1: to you. Thanks, Tony Mythical let's talk about space. NASA
Speaker 1: said earlier today the long awaited launch of its space
Speaker 1: launch system is still possible next week after a successful
Speaker 1: fueling test on Wednesday. But bad weather is on the horizon. Meantime,
Speaker 1: we might also be closer to SPACEX, is starship conducting
Speaker 1: in orbit or test launch, just not as close as
Speaker 1: you might think. To wrap the week in space, Bloomberg's
Speaker 1: Lauren grush joins me on set in New York. Yes,
Speaker 1: let's start with sls. What is going on? That's a
Speaker 1: great question, something I'm kind of trying to wrap my
Speaker 1: head around as well. So yes, NASA is trying for
Speaker 1: their third launch attempt of the space launch system, the
Speaker 1: first who had been scrubbed for various technical reasons, and
Speaker 1: they gave an update today. They're still targeting Tuesday septem however,
Speaker 1: as you mentioned, a tropical storm or tropical tropical depression
Speaker 1: is brewing off the coast of South America. The latest
Speaker 1: forecast shows it heading straight towards Florida. All sorts of
Speaker 1: emergencies are being declared over there, so it's not looking
Speaker 1: good weatherwise. NASA says they are they're keeping an eye
Speaker 1: on it. They're still tracking towards a launch, but they'll
Speaker 1: make a decision, hopefully by tomorrow morning or early afternoon,
Speaker 1: if they need to roll the rocket back from its
Speaker 1: launchpad into the hangar. So Wednesday was kind of key.
Speaker 1: I think we have some video of it, this fueling test. Yes,
Speaker 1: what is that? So Um, during their second launch attempt
Speaker 1: they had a hydrogen leak and they found they needed
Speaker 1: to replace a component on the rocket, and then what
Speaker 1: they wanted to do was to test if that that
Speaker 1: worth that they had done had actually worked, and so
Speaker 1: what they did on Wednesday was basically simulate what they
Speaker 1: do on launch day by filling the rocket with propellant
Speaker 1: and making sure that there weren't any leaks. Unfortunately, there
Speaker 1: were some leaks that propped up during that test, but
Speaker 1: they were able to push past them after some troubleshooting
Speaker 1: and they were able to successfully fuel the rocket just
Speaker 1: as they would on a launch day. So they said
Speaker 1: that they met all of their objectives despite those issues,
Speaker 1: and so they're still they're ready to go. They want
Speaker 1: to launch this thing, but there seems to be all
Speaker 1: these different varia questions. Are you ready to go? I've
Speaker 1: gone to Florida twice now. I'm ready to book my
Speaker 1: ticket for the third time, but I would prefer not
Speaker 1: to go in the in the path that there is
Speaker 1: a serious reason why we're paying attention to this launch, right,
Speaker 1: which is there a bigger goals ultimately? What are those
Speaker 1: bigger goals? I think we have a map which shows
Speaker 1: if and when this mission launches, it's for a reason, right.
Speaker 1: So sls is part of NASA's plan called Artemis, which
Speaker 1: is this big, ambitious program to send the first woman,
Speaker 1: in the first person of color to the moon, and
Speaker 1: this is just the first step. So what they want
Speaker 1: to do with Artemis one this mission is show that
Speaker 1: the S L S, and it's in NASA's Deep Space
Speaker 1: Ryan crew capsule, can actually work. There won't be any
Speaker 1: people on board, but they want to send it around
Speaker 1: the moon to just kind of have this demonstration so
Speaker 1: that when they do put people on board they're confident
Speaker 1: that they'll be safe. Lauren, this week Elon Musk has
Speaker 1: been tweetingcker and one of the things that he tweeted
Speaker 1: was in response to a question on starship and when
Speaker 1: starship will do its first orbital test flight. He says
Speaker 1: November seems highly likely. We will have two boosters and
Speaker 1: ships ready for orbital flight by then with full stack production.
Speaker 1: What does that mean? Well, I if you've been following
Speaker 1: Elon's tweets, which I'm sure you have. He does like
Speaker 1: to make very aspirational goals for his flights. So you know,
Speaker 1: I think he said earlier when March it was ready,
Speaker 1: maybe April. I think back in even he said it
Speaker 1: would be launching in six months. So every time he
Speaker 1: gives us a launch date I take it with, you know,
Speaker 1: a boulder sized grain of salt. However, that said, SPACEX
Speaker 1: has been been making great progress on starship development. They
Speaker 1: had recently had a seven engine raptor static fire next
Speaker 1: the back. Next big goal would be to static fire
Speaker 1: thirty three of those engines and that's that's a lot
Speaker 1: of engines at once. So there'll be a lot of flames.
Speaker 1: They've also been prone to set the Boca Chica area
Speaker 1: around them on fire sometimes when that happens. So we'll
Speaker 1: we'll be keeping an eye on that and once that happens,
Speaker 1: then I think will be realistically getting closer. And to
Speaker 1: end Friday on a positive note, I understand that there's
Speaker 1: a meteor headling, headling, hurtling towards earth, but that we're
Speaker 1: not in danger. Even so, NASA, we're going to try
Speaker 1: and crash land something into it so it's not hurtling
Speaker 1: towards earth. It's it's completely fine, completely benign. It's the
Speaker 1: dark mission. NASA is testing out a method for potentially
Speaker 1: nudging asteroids out of the way if we ever were
Speaker 1: to find one coming towards earth in the future. So
Speaker 1: this is just a test. Nobody needs to worry, no
Speaker 1: one needs to, you know, pack up and head for
Speaker 1: the hills, though I don't know if you'd be safe there. Um. No,
Speaker 1: this is just a test, and what they're doing is
Speaker 1: they're intentionally sending a spacecraft into an asteroid to nudge
Speaker 1: it off of its course and then that way, if
Speaker 1: we were to ever have an asteroid headed our way
Speaker 1: that we knew about, that could just, you know, make
Speaker 1: it veer away from Earth safely. This is just a test.
Speaker 1: Blunt Bergs, Lauren Grush, thank you.