Speaker 1: From the heart of where innovation, money and power collive
Speaker 1: in Silicon Valley and beyond. This is Bloomberg Technology with
Speaker 1: Emily jay I met Ludlow in New York in for
Speaker 1: Emily Chang. This is Bloomberg Technology coming up in the
Speaker 1: next hour. A lack of trust from US lawmakers could
Speaker 1: completely alter TikTok's operations in its biggest market. The worry
Speaker 1: is parent company Bite Dances relationship to the Chinese government.
Speaker 1: Now we've learned the White Houses working with TikTok on
Speaker 1: a security deal, but negotiations have all but stalled. Plus,
Speaker 1: Kathy Wood's new venture fund targets liquid assets. It's arks
Speaker 1: first for eight into private investments and essentially gives retail
Speaker 1: traders venture capital market access. Will ask arcs chief futurist
Speaker 1: about the strategy, and Bitcoin maximalist Jack Mallars joins me
Speaker 1: to discuss Strike's latest funding round and his push to
Speaker 1: make bitcoin the currency for cross border transactions. The Biden
Speaker 1: administration and TikTok are working on an agreement that would
Speaker 1: let the video sharing site keep operating in the US,
Speaker 1: but Bloomberg's learned that talks have stalled over concerns the
Speaker 1: company's Chinese ownership poses a national security threat, according to sources.
Speaker 1: If an agreement is reached, it could impose more restrictions
Speaker 1: on how TikTok stores data from US users. Meanwhile, TikTok
Speaker 1: has stepped up it's lobbying efforts in d C, but
Speaker 1: has had little engagement with Republican naysays Bloomberg BusinessWeek reports.
Speaker 1: Joining me now, Bloomberg's Alex Brinker Adam Adam Kovakovitz, Chamber
Speaker 1: of Progress CEO, Alex, I'm going to start with you.
Speaker 1: What is your latest reporting about talks between the US
Speaker 1: government and TikTok. That's right. This is to allay concerns
Speaker 1: around US users data, particularly in regards to Chinese government,
Speaker 1: which owns which China is where TikTok's parent company is based.
Speaker 1: So far, in these negotiations, TikTok has said that they're
Speaker 1: going to partner with Oracle throughout all US users data
Speaker 1: through their servers. They're also going to allow Oracle to
Speaker 1: audit its algorithms and its content moderation policies. Now the
Speaker 1: hiccup ed has come in because the deal still needs
Speaker 1: to kind of get over the line. Scythians is the
Speaker 1: governmental body that's investigating it um it is an inter
Speaker 1: agency body, and the Justice Department in particular, the individual
Speaker 1: who is on that panel for the Justice Department is
Speaker 1: still concerned that this deal does not go far enough
Speaker 1: to keep data out of the hands of the Chinese
Speaker 1: government ed So that seems to be the sticking point
Speaker 1: according to our reporting, that is dragging this process on
Speaker 1: perhaps a little bit longer than TikTok would like. Adam,
Speaker 1: you're the CEO of the Chamber of Progress, and one
Speaker 1: of the goals of the Chamber of progresses to make
Speaker 1: the tech industry acts fairly and responsibly, particularly towards consumers.
Speaker 1: So when you hear Alex go through the latest reporting,
Speaker 1: is this good news or bad news. I'm not sure
Speaker 1: we've ever seen a service like TikTok before that it's
Speaker 1: become so popular with Americans and yet is owned by
Speaker 1: the Chinese, and that's a unique problem and challenge for
Speaker 1: government policymakers. Alex talked about the concessions that are on
Speaker 1: the table in terms of the company's negotiations with the
Speaker 1: Biden administration. I'm not sure any of those conditions really
Speaker 1: solve this question of Chinese government access problem. Of access.
Speaker 1: So long as TikTok is owned by a Chinese company,
Speaker 1: the Chinese are are almost certainly going to have access
Speaker 1: to American user data no matter where it's stored. They
Speaker 1: don't come in through the front door, they come in
Speaker 1: through the back door. That's just the reality of how
Speaker 1: China operates. And as far as the Oracle you know,
Speaker 1: suppose is an audit look Oracles on the verge of
Speaker 1: having a massive cloud hosting deal with TikTok, right, they're
Speaker 1: going to have a financial incentive to look the other
Speaker 1: way regarding China's control, and Oracle is not a branch
Speaker 1: of the US government. It's obligated to do what's best
Speaker 1: for its business. So I think there's a I think
Speaker 1: that one of the big questions surrounding this, As you said,
Speaker 1: some of the buy Administrations figure figures involved, I think
Speaker 1: are doubting whether this is tough enough. And frankly, I
Speaker 1: think there's a concern that if they do a partial
Speaker 1: compromise on certain aspects of their business that doesn't really
Speaker 1: get the fundamental national security and even propaganda concerns that
Speaker 1: that that could be seen as avoiding the deep, bigger,
Speaker 1: deeper issues that TikTok uh opposes Alex. The talks between
Speaker 1: TikTok and US government a kind of the hair and now.
Speaker 1: But you've got a fantastic piece in Bloomberg Business Week
Speaker 1: magazine about the kind of bigger picture efforts of TikTok
Speaker 1: and I gotta bring up a child on the screen
Speaker 1: now that kind of shows how TikTok is kind of
Speaker 1: stepping up and bites onto its parents company, its parent company,
Speaker 1: and it's low being efforts. But then we're near what Meta,
Speaker 1: the parent company of Facebook's doing tolkd us through what
Speaker 1: you've learned, Yeah, they are nowhere near. But TikTok did
Speaker 1: clock it's biggest quarter in terms of lobbying spend. And
Speaker 1: my colleague and I wanted to take you guys behind
Speaker 1: the scenes a little bit to see what's going on
Speaker 1: in d C with TikTok's efforts to charm the belt Way.
Speaker 1: What we learned from a mix of sources in DC
Speaker 1: around the company is that they've taken hundred and thirty
Speaker 1: meetings with congressional offices. Uh, it's TikTok ceo. We heard
Speaker 1: last week was even at a football game of lawmakers
Speaker 1: versus the Capitol Police, but there's a really important group
Speaker 1: of folks that they are not meeting with. We heard
Speaker 1: that Um McCarthy and thieves, the leads in the House,
Speaker 1: the key Republicans in the House, Josh Holly and Mark A.
Speaker 1: Rubio in the Senate, these senators that all Republicans who
Speaker 1: have been really large detractors and have approached the company
Speaker 1: with a lot of skepticism have been notably left off
Speaker 1: the formal meeting lists for the company. Now, the company
Speaker 1: told us that they are having productive conversations with lawmakers.
Speaker 1: They said they are not meeting with folks who seemed
Speaker 1: to be unswayed by facts. So ed read into that
Speaker 1: what you may, but it does seem that TikTok's charm
Speaker 1: offensive has missed some of the biggest detractors in the
Speaker 1: belt Way. And I'll tell you, if this Synthius deal
Speaker 1: doesn't go through, or if it drags on and these
Speaker 1: voices continue to get louder, it could cause some problems
Speaker 1: for them as they're trying to kind of resolve some
Speaker 1: of these really big concerns and get this deal over
Speaker 1: the line out of what's your reactions what you've just
Speaker 1: said about so s well, being efforts. Look, I there's
Speaker 1: no doubt I live here in Washington. I see what
Speaker 1: they're trying to do. They're trying to highlight the ways
Speaker 1: people are using TikTok. They're trying to portray themselves as
Speaker 1: good citizens, and probably do the same affaire with them.
Speaker 1: I'm sympathetic to the U S employees of TikTok who currently,
Speaker 1: frankly have to spend a lot of time dancing on
Speaker 1: the head of a pin about the Chinese government's role
Speaker 1: in the app and in their Chinese ownership. I don't
Speaker 1: think there's any doubt that their jobs as lobbyists and
Speaker 1: as as a company would be much easier, and frankly,
Speaker 1: that our national security concerns would be a lot less
Speaker 1: if TikTok were sold um to an American owner. But
Speaker 1: of course that's a big you know, that's a big challenge.
Speaker 1: I mean, I think Beijing officials in Beijing know what
Speaker 1: a powerful platform this is. You've got at one point
Speaker 1: four billion people on TikTok. I think the reason that
Speaker 1: you know, they don't let Chinese citizens use TikTok, I
Speaker 1: think that's a recognition of how powerful it is. But
Speaker 1: we know the Chinese government isn't the business of spreading
Speaker 1: propaganda online, but they did this during the Olympics. They've
Speaker 1: done this with influencers, and so I think there's a
Speaker 1: beyond even the question of data access. There is a
Speaker 1: big question about is TikTok like the next version of
Speaker 1: urt you know, which we kicked out of this country
Speaker 1: after Russia invaded Ukraine. Right much to discuss still. Bloomberg's
Speaker 1: Alex Brinka and Chamber Progress founder and CEO Adam Kobakovitch,
Speaker 1: thank you both. Twitter is complaining that Elon must legal
Speaker 1: team hasn't turned over this text with Morgan Stanley CEO
Speaker 1: James Gorman ahead of next month's trial. Twitter lawyers want
Speaker 1: to sanction Musk and his lawyers for not producing text
Speaker 1: with Gorman, as well as Oracle chairman Larry Ellison. According
Speaker 1: to Twitter, Muskers we've held four text with Gorman, including
Speaker 1: some from April, the day the company announced it was
Speaker 1: accepting masks offer. Our Investment Management has launched is long
Speaker 1: awaited our venture fund. They will target in liquid assets,
Speaker 1: investing in both private and public companies. Along with other
Speaker 1: VC funds. The fund limits how and when investors can
Speaker 1: cash out, but a minimum investment of five dollars means
Speaker 1: potentially any individual US investor can buy in. Here to
Speaker 1: explain the funds goals is ARC chief futurist Brett Winton Brett,
Speaker 1: what are the goals? Well, we aimed a democratized venture
Speaker 1: capital and think you just described exactly what we're trying
Speaker 1: to do. Anybody can right now. You can go into
Speaker 1: your browser and you can type an ARC dot VC
Speaker 1: and you can download the tight NAP and you can
Speaker 1: invest five dollars today into venture capital. I think it's
Speaker 1: if you think about venture as an asset class, it's
Speaker 1: really been held apart from a lot of individual investors.
Speaker 1: These are not assets that should require you to be
Speaker 1: rich in order to invest in them, nor should you
Speaker 1: have to, you know, fill out a lot of PDFs
Speaker 1: and um only be able to get into the top
Speaker 1: funds if you're the Yale Endowment. We think that every
Speaker 1: individual should have access to venture capital, uh if if
Speaker 1: within their risk tolerance limits, and we think this vehicle
Speaker 1: provides a mechanism by which they can do so. So
Speaker 1: we've been waiting on this mechanism, as you called it,
Speaker 1: for a little bit of time. All bloom Bag Intelligence
Speaker 1: et F analyst Eric Baucina, So you guys know Well
Speaker 1: has a note out in response to your launch titled
Speaker 1: Cathy Woods Venture Fund Burdened by tough timing High Phase.
Speaker 1: Let's start with the timing. It's it's been brutal for
Speaker 1: both public and private markets of late. How do you
Speaker 1: get around that this is the perfect timing? This isn't
Speaker 1: tough timing, this is there's never Bill Gurley said it
Speaker 1: the other day there's never been a better moment to
Speaker 1: start a business. And I think there's never been a
Speaker 1: better moment to put your risk capital into a venture
Speaker 1: product like this one, and into innovation companies generally. So UM,
Speaker 1: we think that there's roughly eight trillion dollars in market
Speaker 1: cap attributable to the innovation platforms that we focus on,
Speaker 1: and that's going to more than two trillion. So there's
Speaker 1: incredible technological tail winds in play. And so UM, when
Speaker 1: everybody's running for the exits, is exactly the time to
Speaker 1: be putting your capital to work. It's so about phase then.
Speaker 1: I think typically existing ETFs carry a fee of seventy
Speaker 1: five basis point zero point right, and and in this
Speaker 1: case it's a fee of two point seven and it's
Speaker 1: expense ratio there for full point that seems high. What
Speaker 1: why is it set at that level? Well, think about
Speaker 1: the comparable products you could get if you're investing adventure
Speaker 1: where you're paying two percent management fee plus carry. So
Speaker 1: this is a much more efficient exposure then you would
Speaker 1: get if you were in a top quartile venture fund UM,
Speaker 1: which I've done quite well. Uh. And so the UM
Speaker 1: investment vehicle itself restricts our ability to UM charge carry.
Speaker 1: That's how we could democratize this, and so we believe
Speaker 1: we're charging an extremely efficient rate for getting access to
Speaker 1: top tier companies. This is the likes of Epic Games UM,
Speaker 1: the likes of Mosaic mL, which is really UM delivering
Speaker 1: UM machine learning and advanced AI software to mid market businesses.
Speaker 1: These are companies that UM a typical investor couldn't get
Speaker 1: access to. And so by just going to art dot
Speaker 1: VC right now, you can invest in this fund and
Speaker 1: get access to these kinds of great innovation companies. Redemptions
Speaker 1: capped right at five percent of net asset value on
Speaker 1: a quarterly basis. And what's so interesting here is that
Speaker 1: it the split is seventy percent private public, but Traditionally,
Speaker 1: capital is locked up in VC funds for a very
Speaker 1: extended period of time. You guys are also looking at
Speaker 1: investing in other VC funds. How do you manage that?
Speaker 1: You know, some redemptions with the need to lock up
Speaker 1: capital in the private sector, So redemptions are capped at
Speaker 1: five across the entire fund. But if an individual investor
Speaker 1: UM wants to UM sell their position and the overall
Speaker 1: request for redemptions or below five percent, they'll get their
Speaker 1: entire position UM sold out a net asset value. It's
Speaker 1: only if UM if request to redeem exceed five percent
Speaker 1: in a given quarter, then redemptions happen on a pro
Speaker 1: rata basis. UM. Another difference between UM our fund and
Speaker 1: typical adventure is that UM the money that inflows into
Speaker 1: the fund can get allocated to innovation assets immediately. In
Speaker 1: the public markets, UM as we're negotiating private market deals
Speaker 1: and so you know, at equilibrium, we're seeking to be
Speaker 1: UM like you said, targeting seventy private exposures. But on
Speaker 1: an individual technology basis, we will play arbitrages between the
Speaker 1: public and the private markets. And in some technologies, it's
Speaker 1: very clear to us that the private markets are undervalued
Speaker 1: relative to the public markets and vice versa, and so
Speaker 1: UM we think this is a really interesting way to
Speaker 1: get exposure to innovation tail winds UM that will allow
Speaker 1: us to invest in these companies early and carry them
Speaker 1: all the way through I p O into the public market.
Speaker 1: Book of the portanfol we just showed a shot there
Speaker 1: if the SMP five hundreds out performance relative to our
Speaker 1: innovation e t F Right, this is a different strategy.
Speaker 1: But how do you convince investors that this is right
Speaker 1: to use this new mechanic in this new way of
Speaker 1: getting access to private markets and private companies. I think
Speaker 1: that any innovation exposure should be measured over a business
Speaker 1: cycle length um performance basis. So when we underwrite our
Speaker 1: positions in the private market and in the public market,
Speaker 1: we look forward five years and say, you know what
Speaker 1: is an in market investor going to pay five years forward?
Speaker 1: Who's not even a technological optimists like us, but just
Speaker 1: playing paying a market multiple for the cash flow generation
Speaker 1: capabilities of those businesses? Right? I think that given particularly
Speaker 1: given what's happened with rates and with innovation assets across
Speaker 1: the board, UH investors are are short innovation today, maybe
Speaker 1: unintentionally so the disruptive technologies that we think are going
Speaker 1: to penetrate the marketplace are going to totally turn over
Speaker 1: the business models of incumbents that people have in their
Speaker 1: pore portfolios. All of the problems that we're seeing in
Speaker 1: the world today. Innovation solves those problems, and so owning
Speaker 1: a share of the businesses that are going to solve
Speaker 1: those problems is a way to generate our performance, our invests.
Speaker 1: Chief futurist Brett Winton has been a pleasure to have
Speaker 1: you on. Thank you. Coming up, Netflix has a game plan.
Speaker 1: The tech giant is creating its first in house video
Speaker 1: game studio, but when will the company be seen as
Speaker 1: a gaming competitor? We discussed next This is Bloomberg. Netflix
Speaker 1: is creating its first in house video games studio in
Speaker 1: a push to be less reliant on third party creators
Speaker 1: and expand is gaming offerings. The streaming service platform is
Speaker 1: seeking to increase engagement and differentiate itself with games, but
Speaker 1: Bloomberg Intelligence believes there won't be a significant impact, at
Speaker 1: least in the near term. BI media and list geter
Speaker 1: anger Nathan joins us now to discuss a gee you
Speaker 1: actually put research out before the news of his own
Speaker 1: in house studio, Hit the Bloomberg does change anything to you, Well, unfortunately,
Speaker 1: not really, ad and thanks for having me. So, you know,
Speaker 1: Netflix has kind of been taking baby steps really in
Speaker 1: this space of gaming. They now have about thirty games
Speaker 1: or so. It's been on their platform for about ten months,
Speaker 1: but so far we've seen that, you know, the uptake
Speaker 1: has really been fairly lackluster. We just recently saw a
Speaker 1: report from Autopia which said that less than one percent
Speaker 1: of their subscriber base has actually engaged with the games
Speaker 1: um and so, you know, I think it's going to
Speaker 1: be a case of, you know, too little, too late. Uh.
Speaker 1: This whole news about them developing their their own studio
Speaker 1: is pretty much taking a page out of the same
Speaker 1: playbook that they followed for their original video content. Right,
Speaker 1: they created, They've created their own studios. They have their
Speaker 1: own originals, whether it's you know, A Stranger Things or
Speaker 1: a Witcher. But I think with the video game market,
Speaker 1: it's the dynamics are totally different. It takes years and
Speaker 1: years to create a viable slate of good games, and
Speaker 1: I think Netflix is going to find that out or
Speaker 1: getter to illustrate that point. We've got this chart which
Speaker 1: shows that in the third quarter based on app downloads.
Speaker 1: You could just take Candy Crush. We all know, Candy
Speaker 1: Crush more than thirty nine million downloads every single Netflix
Speaker 1: game that's available, josh a five point five million. And
Speaker 1: I think in your research you point out there are
Speaker 1: some technological restrictions in so far as you can only
Speaker 1: get Netflix games through the mobile app, right, what's the
Speaker 1: problem there? Yeah, absolutely, I think there's you know, so
Speaker 1: much of the problem with why the uptake has been
Speaker 1: so slow, it's because of discovery, right, or or the
Speaker 1: lack of discovery so to speak. So, first of all,
Speaker 1: it's only available on mobile. Remember of Netflix viewing happens
Speaker 1: on connected TV, and there's really no option there to
Speaker 1: even play a game, so you have to be on
Speaker 1: your mobile device. And then once you're on your mobile
Speaker 1: device and you do wish to, you know, kind of
Speaker 1: engage with the Netflix game, you actually have to leave
Speaker 1: the app and go and download the the mobile gaming
Speaker 1: app separately. So there's kind of quite a bit of
Speaker 1: friction there. So it's not exactly the most user friendly
Speaker 1: right now, and I think that's been one of the
Speaker 1: other reasons that has inhibited kind of that uptick, All right,
Speaker 1: get regn a from of Bloomberg Intelligence. Good to catch up.
Speaker 1: Thank you for joining us. This is Bloomberg Technology. I'm
Speaker 1: Ed Ludlow in New York. Meta says it has blocked
Speaker 1: thousands of inauthentic accounts, pages, and groups from Facebook and
Speaker 1: Instagram that originated in Russia and China. Meta says the
Speaker 1: Russia accounts spread propaganda about the war with Ukraine, and
Speaker 1: China based accounts were targeting US users in regards to
Speaker 1: mid term elections. Sarah Fryer leads our big tech coverage
Speaker 1: here at Bloomberg News. So, Sarah, what do we know
Speaker 1: about the accounts that were frozen by Meta? Well, the
Speaker 1: thing that was the most interesting to me about this
Speaker 1: report is that UM Meta made a rare disclosure of
Speaker 1: the amount of advertising that these accounts spent around a
Speaker 1: hundred and five thousand dollars from Russia to spread propaganda
Speaker 1: about the war in Ukraine. And that's significant because this
Speaker 1: company has of course come under criticism for receiving advertising
Speaker 1: dollars from Russia around the US election back in They
Speaker 1: still don't have a way to to block this from happening.
Speaker 1: Um even though it's against their rules. Even though they've
Speaker 1: built up this security team, they have said that that
Speaker 1: they will continue to have problems like this, they will
Speaker 1: try to catch them early. But the fact that there
Speaker 1: was that level of advertising campaign shows that they're still
Speaker 1: work to do right. Sarah, over the last four years,
Speaker 1: I remember, you know, sitting with you looking at these
Speaker 1: kind of blog posts from what was then Facebook now
Speaker 1: met her about the work they were doing and this
Speaker 1: idea that they're trying to be more transparent. Are they
Speaker 1: being more transparent with what they're doing. I do think
Speaker 1: that they are being more more open out what they're
Speaker 1: finding and taking down. UM, But I think that that
Speaker 1: is still, you know, not the major issue here. The
Speaker 1: issue is not that you know, this stuff exists. The
Speaker 1: fact is that they still have a platform where this
Speaker 1: stuff can go viral, that it can be easily gained. UM.
Speaker 1: They have groups where they can um, where these kinds
Speaker 1: of foreign governments can build followings around top. But that
Speaker 1: the fundamentals of how Facebook works has not changed, UM,
Speaker 1: and so they're going to continue to play whackable until
Speaker 1: until that changes. And I think that um, you know,
Speaker 1: the disclosure is is a good thing, but it's only
Speaker 1: one part of the problem that's pivot to TikTok. Your
Speaker 1: team has been writing about what TikTok and in its
Speaker 1: parent company Bye Dance, have been doing in Washington, d C.
Speaker 1: What is the strategy there, what is the latest Well,
Speaker 1: speaking of transparent, they mean people into in DC have
Speaker 1: a lot of questions about TikTok. There. They are under
Speaker 1: fire from from publicans, democrats, everyone around, UM around their
Speaker 1: their issues with their algorithm, UM, whether there's a national
Speaker 1: security risk in the fact that they are owned by
Speaker 1: the Chinese, by a Chinese based a China based company. UM.
Speaker 1: The problem is TikTok has not been willing to to
Speaker 1: speak with some of its loudest critics UM and what
Speaker 1: it has spoken with them and hasn't gone over well.
Speaker 1: So reporters Alex Brink and Emily Burnbaum spoke with multiple
Speaker 1: sources to give the behind the scenes look of of
Speaker 1: how this is working in d C. They know TikTok
Speaker 1: knows that they have some trust issues there UM and
Speaker 1: that they're going to have to work on their credibility.
Speaker 1: That it's going to be difficult UM. There. There's also
Speaker 1: a decision on Scythius blooming UM. So so it's a
Speaker 1: little difficult for them to really come out with a
Speaker 1: strong plan before knowing what that action might be from
Speaker 1: the federal government. Um and in the meantime, their critics
Speaker 1: are only growing louder. All right, Bloomberg, Sarah Fryar, thank
Speaker 1: you very much. Some other Meta news. Cheryl Samberg got
Speaker 1: an applause as she exited the Meta headquarters in Menlo Park, California,
Speaker 1: on Tuesday. This was her last week as CEO, after
Speaker 1: announcing she'd stepped down back in June. Samberg joined the
Speaker 1: company then known as Facebook in two thousand and eight.
Speaker 1: She will remain on the board of directors now. Sam
Speaker 1: Bankman Freed says his m and A spree, including many
Speaker 1: deals with traditional financial firms, will not hinder f t
Speaker 1: x is profitability this year. He's also said he's got
Speaker 1: more cash to burn. Here's some of Bankman Fried's conversation
Speaker 1: earlier on Bloomberg Crypto. We've tried to be somewhat judicious frankly,
Speaker 1: with you know, the deals that we've been doing, and
Speaker 1: you know, obviously that's not going to be perfect, and
Speaker 1: you know, there we have obviously needs an expenditure through that,
Speaker 1: like you know, we have not you know, we have
Speaker 1: not used the majority of the cash that we have
Speaker 1: on our own balance she you know, that's not necessarily
Speaker 1: to say that there are other things imminently here. Um.
Speaker 1: You know, so much is that we want to be flexible,
Speaker 1: and you know, we want to be in a position
Speaker 1: where we are you know, looking forward at uh you know,
Speaker 1: what we can be doing, where we can be most helpful, um,
Speaker 1: and where we grow the most. So you know, I
Speaker 1: think how we describe us right now is as exploring.
Speaker 1: And you know, I don't know if that's going to
Speaker 1: necessarily read anywhere. It might it might not, um, but
Speaker 1: you know we're going to continue poking around, you know. UM.
Speaker 1: It reminds me of one of the other cool things
Speaker 1: that Bravo said in the ft. He thinks that a
Speaker 1: lot of people in the industry are disturbing in terms
Speaker 1: of their lack of transparency. You're not one of those people. Obviously,
Speaker 1: he is willing to invest in you. Again. How much
Speaker 1: cash is on your balance sheet? What kind of free
Speaker 1: cash flower you're generating? How much are you burning through? Yeah,
Speaker 1: it's a good it's a good question. And you know
Speaker 1: we were you know, we were profitable last night. You
Speaker 1: know expect that you know, we'll like to be profitable
Speaker 1: this year as well. UM. And you know, I mean
Speaker 1: you can look, we raised, you know, all things considered
Speaker 1: a couple of billion dollars last year. UM. You know,
Speaker 1: we have done a number of acquisitions, We've generated some
Speaker 1: you know pre cash flow GISTs with you with revenue. UM.
Speaker 1: You know, when you kind of try and combine all
Speaker 1: of those things together, at the end of the day,
Speaker 1: I think you're left with UM, you know, upwards of
Speaker 1: a billion dollars UM and UM. You know, there's some
Speaker 1: definitionalsues here which are worth noting around regulatory capital and
Speaker 1: other things which make it not tricky able to define
Speaker 1: exactly what the right number to talk about is. UM.
Speaker 1: But uh, you know we still have some uh fairpet
Speaker 1: of drawing power. Well, Sam, you said regulatory. So I
Speaker 1: do want to talk about regulation now, especially as we've
Speaker 1: had a number of stories just circulating in the last
Speaker 1: forty eight hours or so, including New York Attorney General.
Speaker 1: Here in New York, Latitia is accusing NEXTO of falsely
Speaker 1: claiming that it was a licensed broker dealer. Then in
Speaker 1: South Korea you have prosecutors freezing sixty seven million dollars
Speaker 1: worth of assets tied to do quon who they are
Speaker 1: seeking to arrest. You also have Etherean's latest upgrade, known
Speaker 1: as the Merge, that could be triggering widespread tax confusion
Speaker 1: in the UK. And on top of all of that,
Speaker 1: we hear from the Chairman of the Federal Reserve earlier
Speaker 1: today talking about the need for more crypto oversight. Just
Speaker 1: take a listen to what he said. There's a real
Speaker 1: need for more appropriate regulation so that as as a
Speaker 1: DeFi expands and starts to touch more and more retail
Speaker 1: customers and that sort of thing. Uh, so that appropriate
Speaker 1: regulation is in place. So more regulation is needed. But
Speaker 1: of course you already know that, and that's something you've
Speaker 1: been working on for some time. Now. Do you feel
Speaker 1: like we're getting closer to some kind of real framework
Speaker 1: or at least having organized jurisdiction what the CFTC and
Speaker 1: SEC each control separately too. I do think that there's
Speaker 1: been a lot of progress made, and I, you know,
Speaker 1: I'm really excited for that that that's a keeping you know,
Speaker 1: for the industry going forward. And I do think that
Speaker 1: we've made, you know, a lot of progress. You look
Speaker 1: at where we were a year ago with very little
Speaker 1: going on on the regulatory side. You know, you look
Speaker 1: today where there are you know, proposals in Congress to
Speaker 1: provide clarity for a spot cryptocurrency assets UM, where the
Speaker 1: SEC and CFTC are both working on regimes where you
Speaker 1: have stable point bills going through UM. You know, we
Speaker 1: obviously have been applying for licensure you know, UM with
Speaker 1: with the CFTC, and and you're an active discussions with
Speaker 1: the SEC as well. It's it is really a world
Speaker 1: of difference, and I think that's pretty exciting UM. And
Speaker 1: you know, I agree that that, you know, there needs
Speaker 1: to be clear federal overtight here UM to really protect
Speaker 1: consumers and at the same time to be able to
Speaker 1: provide clarity for the industry to operate. That was f
Speaker 1: t X CEO Sam Bankman, Freed and Celsius and f
Speaker 1: t X the growing list of crypto executives that have resigned.
Speaker 1: Alex Maschinsky stepped down as Celsius CEO two months after
Speaker 1: the crypto lender fault for bankruptcy. Maschinsky lawned Celsius launched
Speaker 1: Celsius in twenty seventeen, pitching it as a safer and
Speaker 1: better alternative than traditional bank and f t x U
Speaker 1: s S President Brett Harrison has also stepped down to
Speaker 1: transition to an advisory role. We've seen a ton of
Speaker 1: turnover in cryptos since the Downtown. Just last week, Cracking
Speaker 1: CEO Jesse Powell announced his resignation. Coming up, Strike CEO
Speaker 1: Jack Mallers on his fresh funding for the mobile payments platform.
Speaker 1: This is Bloomberg now. Strike has just struck eighty million
Speaker 1: dollars in new funding. The mobile payments platform, which uses
Speaker 1: the Bitcoin Lightning Network, played a big role in El
Speaker 1: Salvador's bitcoin push. Now it wants to use the new
Speaker 1: cash to grow its partnerships and launch new ones. So
Speaker 1: let's bring in Strike CEO Jack Mallers to discuss. Jack,
Speaker 1: congrats on the round. What does it mean for you?
Speaker 1: What are you gonna use that parlor cash for? Thank
Speaker 1: you my find Sarah. I appreciate Bloomberg having me back.
Speaker 1: What am I going to use the money for? To
Speaker 1: continue to improve payments? We think Lightning network and Bitcoin
Speaker 1: is some of the biggest and most broadstroke innovation in
Speaker 1: the history of payments, and there's a lot to do
Speaker 1: because it's one of the biggest industries in the world.
Speaker 1: So it's a cool moment. We're very proud of it,
Speaker 1: but we have our work cut out for us, and
Speaker 1: there's a lot, a lot, a lot to do to
Speaker 1: solve payments globally. Jack, take me back to basics. What
Speaker 1: is the pitcoin Lightning Network. I think it's like helpful
Speaker 1: for the audience to know what it is that it
Speaker 1: kind of underlines what your company does. Yeah, so we're
Speaker 1: gonna kiss keep it simple, stupid. Uh. The Lightning network
Speaker 1: allows bitcoin to move instantaneously and it relatively no cost.
Speaker 1: And to the novice on the couch, you'd probably go like, Wow,
Speaker 1: who's this kid in a hat? Why is that important?
Speaker 1: I don't care, Yeah, but you might care because bitcoin
Speaker 1: is a digital instrument, it's actually value, it's globally recognized
Speaker 1: as value. And then the fact that it could move
Speaker 1: in real time and settle instantly is something that no
Speaker 1: payment network has ever been able to do in the
Speaker 1: history of payments. You have payments that actually take weeks
Speaker 1: to settle, they're very expensive to settle, they involved two
Speaker 1: to ten parties. And the fact that bitcoin could be digital,
Speaker 1: global recognizable value and move at the speed of light
Speaker 1: and at relatively no cost. You have to put your
Speaker 1: thinking cap on and be like, huh, I bet we
Speaker 1: can do a lot of cool stuff with that. And
Speaker 1: from a very high level, that's why the technology is
Speaker 1: fascinating and that's why I founded the company, is because
Speaker 1: we've got to use that technology and make it commercially
Speaker 1: viable for people in the real world to realize those benefits. Jack,
Speaker 1: we focus a lot on the volatility in bitcoin in
Speaker 1: recent months. I'm just thinking at a one year chart
Speaker 1: on my Bloomberg But if you go from sort of
Speaker 1: June to where we are now, we've traded in a
Speaker 1: more narrow range of around twenty thousand U S dollars.
Speaker 1: We've called you a bitcoin maximalist, you know, give us
Speaker 1: your take on what's happening with with bitcoin specifically. Yeah, So,
Speaker 1: I think what's interesting when we think of bitcoin and payments,
Speaker 1: we actually use it to ask a value and we
Speaker 1: don't care about the volatility. So the services that my
Speaker 1: company offers, we allow you to move dollars over it,
Speaker 1: or euros over it, or any fiat currency over it.
Speaker 1: So volatility doesn't matter to our customers because our customers
Speaker 1: are never subjected to holding the actual asset now as
Speaker 1: a bitcoin holder is someone who holds bitcoin in my portfolio.
Speaker 1: I mean, what you want to talk about bitcoin, You
Speaker 1: want to talk about Netflix stock, if you want to
Speaker 1: talk about the British pound. I mean, the macro environment
Speaker 1: is a little bit of a mess, and I'm happy
Speaker 1: to talk about it. But the real main point, this
Speaker 1: is the one I want to stick. Uh. The reason
Speaker 1: that bitcoin is an attractive asset, and it's an attractive
Speaker 1: money to hold, and it carries the properties that are
Speaker 1: enticing to someone that wants to store wealth in it
Speaker 1: have not changed and that's by design. No one can
Speaker 1: change them. And so the theory and the thesis on
Speaker 1: why bitcoin is important to the world, and increasingly so
Speaker 1: so is as profound and as sound as it's ever
Speaker 1: been and it will always remain that way. Uh. And
Speaker 1: so I think Bitcoin's got nothing but time on its side.
Speaker 1: And as the macro environment kind of continues to play
Speaker 1: a game of twist and figure itself out, Bitcoin is
Speaker 1: going to do its thing. It's very simple, supply demand metrics.
Speaker 1: When when you know that the supply is fixed and
Speaker 1: demands the only thing that sets the price. So Jack,
Speaker 1: bitcoin is going to do its thing. I think you
Speaker 1: know the other consideration. We're always focused on the regulators,
Speaker 1: and thankfully fed Chared your own power has been speaking
Speaker 1: about crypto. Let's have a listen. We think that the
Speaker 1: central bank is and and will always be the main
Speaker 1: source of trust behind money. Stable Coins essentially borrow that
Speaker 1: trust from the underlying issuer, and in many cases these
Speaker 1: are dollar stable coins, so they're really borrowing that trust. Jack.
Speaker 1: I appreciate he was talking about stable coins and that example,
Speaker 1: but he's essentially saying that trust has to come from
Speaker 1: central banks. Your system and your thesis is kind of
Speaker 1: the opposite of that, right, Yeah, trust has to come
Speaker 1: from central banks. The guy that runs a central bank
Speaker 1: and happened to say that, did he? I mean, come on,
Speaker 1: let me tell you some I'm an individual, I'm an American.
Speaker 1: Trust and money comes from whatever I want my money
Speaker 1: to be held in and who I want to trust.
Speaker 1: That's not defined for anyone other than myself. UM's democracy. Uh.
Speaker 1: I appreciate the comment, Mr Powell, but I'm going to
Speaker 1: decide like who I trust in what assets I want
Speaker 1: to hold, unless that's all of a sudden illegal or
Speaker 1: not it is frowned upon. So oh, that's my take. Listen,
Speaker 1: I I like a system that's bounded to the physical
Speaker 1: realities of the world. Money cannot just be created out
Speaker 1: of thin air. Creating money cannot be free. What do
Speaker 1: I want the cost to create money? I really like
Speaker 1: a natural resources that's bound to the physical world, like energy.
Speaker 1: I think that that's an awesome way to understand who
Speaker 1: gets to create money, the expense to which, and create
Speaker 1: it in a programmatic adjustment in a distributed network to
Speaker 1: see how hard it is. So I don't know, I mean,
Speaker 1: call me crazy. I prefer something like that. All right, Well,
Speaker 1: we're grateful to have you on strike. Founder and CEO
Speaker 1: Jack Malice, thank you, but you're welcome Southeast Asia. Right
Speaker 1: sharing and delivery. Giant Grab expects revenue to slow sharply
Speaker 1: as it targets profitability. In speeding up efforts to reverse
Speaker 1: years of losses, the company will focus on expanding into
Speaker 1: new areas such as groceries, banking, and advertising. I caught up.
Speaker 1: We see Etho peter O e to discuss. We have
Speaker 1: this marketplace that we can continue to create efficiency and
Speaker 1: monetization at the same time, and part of this is
Speaker 1: serving our merchants. We have over four million registered merchants
Speaker 1: on our platform, whether they're the small businesses, medium sized businesses,
Speaker 1: or even franchise restaurants, buick service conglomerates. That's on our
Speaker 1: platform today. But how do we serve them better? And
Speaker 1: advertising is one of those elements that we can serve
Speaker 1: them better. We have a lot of data on our merchants,
Speaker 1: we have a lot of data on our consumers, so
Speaker 1: how do you put those two together? And we've seen
Speaker 1: very early wins in advertising, will be continuing to expand
Speaker 1: on that. We continue to develop the technology behind that.
Speaker 1: So we feel very strongly that actually advertising as part
Speaker 1: of our future growth will benefit the ecosystem, especially our merchants.
Speaker 1: Today's Southeast Asia, Hey Peter. On the right hailing and
Speaker 1: delivery front, it looks like the competition is coming for you.
Speaker 1: You know in key markets like Singapore, a lot of
Speaker 1: names entering the market. How do you pull off this
Speaker 1: profitability goal and defend market share at the same time.
Speaker 1: Our competition has always been intense in Southeast Asia. Were
Speaker 1: acknowledge that, but we're very focused in making sure that
Speaker 1: our super app, our product and our services continues to
Speaker 1: be one that our consumer will continue to use and
Speaker 1: we've seen engagement, We've seen continuing interaction with our super
Speaker 1: app our drivers also at the same time as well
Speaker 1: as our merchants. So we're going to continue to be
Speaker 1: very heads down and continuing to create this ecosystem because
Speaker 1: it creates stickiness. Also, despite what we see around us,
Speaker 1: whether it's new competitors or sisting competitors that we have,
Speaker 1: we also have one of the strongest balance sheet that
Speaker 1: we have here in something is there run for all
Speaker 1: these players? Do you see some consolidation happening in Southeast Asia?
Speaker 1: Hey what about M and A. Again, your growth is
Speaker 1: very key for us. We're going to continue to focus
Speaker 1: on growing the ecosystem. We've got all those new initiatives
Speaker 1: that we talked about, and we're going to continue to
Speaker 1: develop new products and services, and we're going to continue
Speaker 1: to the broaden our tom our TAM is also broadening
Speaker 1: as we have these new services that we're creating, things
Speaker 1: like digital banks that we've never had before, advertising that
Speaker 1: we've never had before. So we'll continue to focus and
Speaker 1: just execute on organic growth and again part of that
Speaker 1: is making sure we're up strategy it continues to flourish.
Speaker 1: You in Southeast Asia, you mentioned the balance sheet. There
Speaker 1: was a time where six billion dollars seemed like a
Speaker 1: lot of money. It doesn't seem like a lot of
Speaker 1: money anymore. You're gonna need to raise more capital. Capital
Speaker 1: l castion framework was one of the topics actually that
Speaker 1: we were discussing during our invest today today, and one
Speaker 1: of the first pillar that I alluded was cash preservation.
Speaker 1: And we're very disciplined in making sure that every penny
Speaker 1: counts and every cost in our business also is being optimized,
Speaker 1: and we will continue to be very discipline in making
Speaker 1: sure that cash is preserved. It's at the debt markets.
Speaker 1: We actually have a term loan b that we have
Speaker 1: currently in existence. We have at one point eight term
Speaker 1: loan bit facility and we've that's we've it's been in
Speaker 1: place now for the last for the last two years,
Speaker 1: and it's part of our capital allocation framework and different
Speaker 1: capital structure works. And we're in a very good spot
Speaker 1: right now in terms of where we are with our
Speaker 1: balance sheet and as with the future growth and also
Speaker 1: with the future free cash flow that we can generate
Speaker 1: as we get to break even in the future, we
Speaker 1: feel that our balance sheet actually will continue to be
Speaker 1: strengthened in the future years. That was Peter Oe grab CFO. Meanwhile,
Speaker 1: the arcade game Asteroid has come to life, and NASA
Speaker 1: spacecraft has successfully crashed into an asternoid asteroid about six
Speaker 1: point eight million miles from Earth. It was a test
Speaker 1: to determine if the impact can nudge the space rocks
Speaker 1: slightly off course. The U s. Space Agency is in
Speaker 1: the early stages of a plan to protect the Earth
Speaker 1: from asteroids. If measurements show the asteroid course was even
Speaker 1: slightly altered, NASA will consider the mission a success. That
Speaker 1: does it. For this edition of Bloomberg Technology Wednesday, we'll
Speaker 1: hear from Circle CEO Jeremy Allier about USDC and the
Speaker 1: future of fintech. Don't forget to check out our podcast.
Speaker 1: You can find it on the terminal as well as
Speaker 1: online on Apple, Spotify, and as always iHeart Radio. This
Speaker 1: is Bloomberg