Speaker 1: From the heart of where innovation, money and power COLLI
Speaker 1: in Silicon Valley and beyond. This is Bloomberg Technology with
Speaker 1: Emily Jay. I'memoly Jang in San Francisco, and this is
Speaker 1: Bloomberg Technology. Coming up in the next hour, Elon Musk
Speaker 1: teases his plans for Twitter. The billionaire wants to take
Speaker 1: the social platform beyond the town square and create what
Speaker 1: he's calling X, the everything app. What does he need?
Speaker 1: We'll discuss. Plus, Facebook whistle blower Francis Halgan joins me
Speaker 1: one year after her fiery testimony on Capitol Hill. We'll
Speaker 1: talk about what's changed, what hasn't, and what stayed the same,
Speaker 1: and is the blockchain the answer to get everyday people
Speaker 1: to invest in private markets. One funds ends to tokenize
Speaker 1: its investments could open the door to the masses. I
Speaker 1: want to get back to our top story. Musk's about
Speaker 1: face agreed to buy Twitter at the original price, but
Speaker 1: the judge in the Twitter trial saying show will go
Speaker 1: on for now. Let's break it all down with Bloomberg.
Speaker 1: Sarah fryar So from a legal perspective, Sarah, Twitter hasn't
Speaker 1: dropped its lawsuits. They're still going to court as of
Speaker 1: now on October sevente Right, Well, we know that the
Speaker 1: parties are meeting today. We know that Twitter is talking
Speaker 1: with Elon Musk. But yeah, I mean they have not
Speaker 1: said sure, we we trust that this offer that you've
Speaker 1: made is is legitimate and we will do this. Um.
Speaker 1: We haven't seen any joint statement. We haven't seen any
Speaker 1: end to the saga yet. I think we're still staying
Speaker 1: tuned for for what they might decide. And and hey,
Speaker 1: if they don't come to an agreement, um, then we
Speaker 1: might see must opposed in the next couple of days
Speaker 1: and we might see, um, this go to court as
Speaker 1: scheduled on October seventeen. Our understanding is that Twitter to
Speaker 1: ask the court to provide a consent judgment if you will,
Speaker 1: and you know, create an agreement between the court and
Speaker 1: Twitter and Musk, not just between Twitter and Musk, uh,
Speaker 1: that would be enforceable in a court of law. We
Speaker 1: are getting a glimpse into his vision for the social
Speaker 1: media platform. What do you make of this x the
Speaker 1: everything app thing? What does he mean by that? You know,
Speaker 1: you've talked a few times about the idea of having
Speaker 1: an app in the US that would compete with the
Speaker 1: likes of we chat in China. Um, I think we've
Speaker 1: we've seen this ambition before. We've seen this from Mark Zuckerberg,
Speaker 1: We've seen this from Evans speakl. Nobody had quite pulled
Speaker 1: it off, though he's talcumented everything. App Um. I think
Speaker 1: that that is is a big ambition of a lot
Speaker 1: of folks that just the Internet. Um may not work
Speaker 1: the same way here. We'll have to see meantime. You've
Speaker 1: been doing some maths, and I believe the calculation is
Speaker 1: if Elon must gets rid of all the boxs and
Speaker 1: spam on Twitter, he might lose their teena and a
Speaker 1: half million followers on his own. Yeah, I think I
Speaker 1: think a lot of people will lose followers. Listen, And
Speaker 1: it really depends on what you think of as a bought.
Speaker 1: There are a lot of automated account on Twitter that
Speaker 1: that people love, like such as once I tell you
Speaker 1: when an earthquake has happened. Um, I don't think that
Speaker 1: that's what Elon Musk is talking about. Um. His account
Speaker 1: in particular tends to be disportionately affected by folks who
Speaker 1: want to to take his identity to try to to
Speaker 1: do crypto scams, for instance, So I think that um
Speaker 1: that those celebrity accounts um do tend to be more
Speaker 1: overrun by bots, and if he were to get rid
Speaker 1: of that kind of of account on Twitter, would it
Speaker 1: would affect the biggest names like Elon Musk, like Justin Bieber,
Speaker 1: especially the longest standing accounts on Twitter. All right, well,
Speaker 1: interesting that we're starting to see his vision and take
Speaker 1: more shape. Of course, if the steal does indeed go
Speaker 1: through Bloombergs frya thank you as always. One year ago,
Speaker 1: former Facebook employee Francis Hogan shook Silicon Valley and the
Speaker 1: world when she blew the whistle on Facebook. She turned
Speaker 1: over tens of thousands of internal documents from the social
Speaker 1: networking giant to the media and the SEC. The Facebook Papers,
Speaker 1: as they've come to be known, contained disturbing facts about
Speaker 1: the effects that social media platforms, including Instagram, we're having
Speaker 1: on teens and kids. After testifying before US Congress, she
Speaker 1: went on to speak around the world. The question is
Speaker 1: what is Facebook doing to amplify or or expand hate?
Speaker 1: What is it doing to amplify or expand eathing violence?
Speaker 1: I mean, Faceboo didn't invent hate, but you think it's
Speaker 1: making hate worse. Unquestionably, it's making hate worse. So in
Speaker 1: the last year, what has changed, what's improved, and what's
Speaker 1: left to do? Former Facebook employee turned whistleblower Francis Hogan
Speaker 1: joins me. Now, Francis, thank you so much for joining us.
Speaker 1: It is one year to the day since you testified
Speaker 1: before US Congress, and I'm so curious what you feel
Speaker 1: has changed for the better since then and how much
Speaker 1: work is they're still left to do, you know. And
Speaker 1: it's some really basic ways, Um, Facebook has changed substantially, right. So,
Speaker 1: Facebook had ten years to release parental controls for Instagram
Speaker 1: and it never got around to it until after my
Speaker 1: disclosures came out. Uh. There are other things like Facebook
Speaker 1: has never had any public programs around trying to be
Speaker 1: more inclusive on its languages, and they launched something called
Speaker 1: No Language Left Behind UM, which is still only a
Speaker 1: you know, a drop in the bucket, but at least
Speaker 1: they're trying UM. Internationally, we've seen some amazing progress legislatively,
Speaker 1: so there's a law called the Digital Services Act, which
Speaker 1: is the first law that has ever required the major
Speaker 1: platforms to disclose what risks they have, Like actually, they
Speaker 1: would have had to disclose the risks to kids. For example,
Speaker 1: had this law they passed before that finally got across
Speaker 1: the finish line in Europe after a four or five
Speaker 1: year year push. The information my disclosure is was credited
Speaker 1: with giving the last gas and the tank to get
Speaker 1: across the finish line. So some things have changed, but
Speaker 1: we still have a lot more work to do. Facebook
Speaker 1: has also changed its name to meta made this big
Speaker 1: pivot to the metaverse. What are your biggest concerns about
Speaker 1: the new meta today. The way they got here with
Speaker 1: Facebook was because of a set of incentives and and
Speaker 1: a lack of oversight. Those incentives have not meaningfully changed.
Speaker 1: Facebook is still a private company. It's still driven to
Speaker 1: have to increase usage, increased profits quarter after quarter. We
Speaker 1: Facebook set its initial launch of the metaverse, we're going
Speaker 1: to do safety by a design up front. But from
Speaker 1: what we're seeing over the last you know, last year,
Speaker 1: um is that they're repeating the same problems that they
Speaker 1: had with Facebook that the first time they let journalists
Speaker 1: into the metaverse, immediately women started gang grouped. Why didn't
Speaker 1: they talk to some women beforehand on like what might
Speaker 1: be dangerous that that that they could face in a
Speaker 1: space like this, So we need to see meta actively
Speaker 1: engaging with the pulp engagement experts and saying, let's design
Speaker 1: for safety from the certain So they just said today
Speaker 1: they're going to ask users for more direct feedback on
Speaker 1: what they'd like to see in their feed their algorithm
Speaker 1: is that a good? Is that a positive step? In
Speaker 1: your view that it might have been? And there's a
Speaker 1: lot of ways to do this that would have huge
Speaker 1: opportunities for change. Many people know of kids who struggle
Speaker 1: with mental health issues, eating disorders. Um. Part of what
Speaker 1: happens is Facebook's algorithms have a tendency to push people
Speaker 1: towards more extreme content. You know, you might start something
Speaker 1: like healthy eating and get pushed to pro interacts the content.
Speaker 1: Imagine a world where kid who's trying to fight against
Speaker 1: these things, who knows this is a negative venture uh
Speaker 1: influence on them. Imagine if Facebook actually said, hey, we
Speaker 1: noticed you're looking at a lot of content that other
Speaker 1: users have said makes them feel blue. Do you want
Speaker 1: to keep looking at it? Imagine if we have that
Speaker 1: ability to influence our feeds, probably a lot of kids
Speaker 1: would be a lot healthier today. Interestingly, he told Joe
Speaker 1: Rogan this story about how he rejected the idea of
Speaker 1: an angry emoji and then said he wasn't here to
Speaker 1: design a service that makes people more angry. Do you
Speaker 1: think that's a little bit of rebusionist and history. It's interesting.
Speaker 1: So when you look at the documents around emojis, the
Speaker 1: reason why they added them was they wanted people to um.
Speaker 1: People felt bad putting like a thumbs up on something
Speaker 1: that made them really angry. They don't want to be
Speaker 1: sewn is endorsing that idea. It's one of these things
Speaker 1: where Facebook didn't think about the uninterested, unanticipated consequences of
Speaker 1: some of these design decisions. When you make an avenue
Speaker 1: where you could do it actively solicit more anger, you're
Speaker 1: going to get more angry content. So I haven't seen
Speaker 1: anything that documents saying that Mark said say no to
Speaker 1: the angry face um and, but I can imagine that
Speaker 1: he wishes as he had. Now now you testify that
Speaker 1: only Mark Zuckerberg was holding Mark Zuckerberg accountable. And I'm
Speaker 1: curious what you think of Cyril Sandberg's departure after fourteen years.
Speaker 1: Do you think her leaving will change the internal culture?
Speaker 1: And if so, so, I have a so so the
Speaker 1: fact that Mark remains, I think is a much more
Speaker 1: significant issue than Cheryl leaving. You know, Marcus surrounded himself
Speaker 1: with people who tell him the same kinds of stories
Speaker 1: over and over again. You know, Facebook is just a mirror.
Speaker 1: It doesn't have responsibility. All these things that we're complaining
Speaker 1: about have always been present. We're just showing them to
Speaker 1: people who don't. We don't play any role in this.
Speaker 1: We have no power. And Cheryl was a voice inside
Speaker 1: the company who said, Hey, we have to get in
Speaker 1: front of issues. We can't just be reactive. We can't
Speaker 1: wait for another story to leak. You can't wait for
Speaker 1: you know, another UN report saying we caused an ethnic
Speaker 1: violence incident, um, like what happened with men more um.
Speaker 1: I worry that because we don't have Cheryl's voice inside
Speaker 1: of the company, that the number of senior leaders who
Speaker 1: raised these issues has has gone down in a meaningful way.
Speaker 1: Elections are coming up. What are you watching? What's your
Speaker 1: take on how Meta is handling uh this new election
Speaker 1: so far? I'm deeply concerned about the upcoming election. UH.
Speaker 1: Other news sources, I believe in air Times have reported
Speaker 1: on how Facebook shrunk their election team from around three
Speaker 1: hundred people to sixty people UH later earlier this year.
Speaker 1: That's a huge deal. When I was at Facebook, I
Speaker 1: watched I worked in threat intelligence for the last eight
Speaker 1: months I was in the company, and I watched some
Speaker 1: catch over and over again, things like Russian influence operations.
Speaker 1: There are a number of foreign nations, Russia, China ran
Speaker 1: even smaller countries than know that as an open society,
Speaker 1: as these unregulated, underinvested in platforms show like there's ways
Speaker 1: that they can go in there and manipulate our elections.
Speaker 1: And before Facebook was really trying, they were giving. They
Speaker 1: were giving, perhaps not the best they could do, but
Speaker 1: they were truly really trying to blunt those edges. And
Speaker 1: I can't imagine that they can do an effective job
Speaker 1: with fewer people protecting our elections. I know you've been
Speaker 1: talking to lawmakers. We've got the American Innovation and Choice
Speaker 1: Online at from UH Senators Club Buchar and Grass. We've
Speaker 1: got Lena Cohn being more aggressive at the FTC. You
Speaker 1: have the Supreme Court looking at Section two thirty. What
Speaker 1: is one way the law could change to have the
Speaker 1: most dramatic, potentially positive impact on big tech? In your view,
Speaker 1: I am a strong advocate for the platform account of
Speaker 1: the Platform Accountability and Transparency act UM because right now
Speaker 1: we can't see behind the curtain of social media. We
Speaker 1: were able to push for safety features and cars or
Speaker 1: found in the partner of transportation, you know, reducing the
Speaker 1: fatality from automobile automobile accents by effectively three and a
Speaker 1: half times, because we could actually control cars, you know,
Speaker 1: we could crash test them, we could take them apart,
Speaker 1: we could understand how they were built and what what
Speaker 1: shortcuts have been made. Right now, we can't do any
Speaker 1: of those things for social media. We can't crash test it,
Speaker 1: we can't confirm how it could be safer, so we
Speaker 1: don't know what to demand. So I hope they passed
Speaker 1: pat in addition to an equabahar. All right, we're to
Speaker 1: continue this conversation after a quick break. Former Facebook employee
Speaker 1: Turn whistle blower Francis Howgan to stay with us. I
Speaker 1: want to hear so much more, and especially I want
Speaker 1: to hear your thoughts on Elon Must potentially taking over Twitter.
Speaker 1: Will be right back in a moment. This is Bloomberg
Speaker 1: continuing our conversation now with former Facebook employee Turn whistleblower
Speaker 1: Francis Howgan Francis, I want to get your thoughts on,
Speaker 1: of course, the biggest news rocking social media that is
Speaker 1: Elon Musk saying he'll take over Twitter. After all, what
Speaker 1: are the risks in your view of the world's richest
Speaker 1: man owning such an influential communications platform. The fact that
Speaker 1: Elon Musk can make a decision to buy one of
Speaker 1: our public spaces, um and be able to unilaterally make
Speaker 1: that decision really shows us how vulnerable we are right
Speaker 1: now and listing critical pieces of civic infrastructure to private
Speaker 1: corporations now they're not even though they functionally work as
Speaker 1: large parts of our information ecosystem, we have no ability
Speaker 1: to influence them. They can be bought and sold by
Speaker 1: anyone who has the money. Um So, I think they're
Speaker 1: a great illustration of how we've really put a lot
Speaker 1: of trust and a lot of um responsibility into the
Speaker 1: hands of a private company. He could own Twitter in
Speaker 1: a matter of days. Right before its from election. He
Speaker 1: has said he wants to reinstate former President Trump. What
Speaker 1: are the biggest concerns about that and and his approach
Speaker 1: to quote unquote free speech in general. M hm so,
Speaker 1: I think it was some big opportunities with regard to
Speaker 1: how Elon Musk is approaching safety. So the fact that
Speaker 1: he came out across like straight off the bat and
Speaker 1: said we need to be worried about bots means he's
Speaker 1: talking to someone who's at least talking to some people
Speaker 1: who know what they're talking about. Because the number one
Speaker 1: threat to our elections are bots. You know, there are
Speaker 1: large influence operations that act as amplifiers for them for
Speaker 1: whoever owns those networks, and often in the case that's
Speaker 1: foreign foreign organizations like Russia, China, um Iran. The fact
Speaker 1: that he's stepping in before the election is a big opportunity.
Speaker 1: At the same time, I hope he takes time to
Speaker 1: listen to the security and trust, trust and safety professionals
Speaker 1: inside of Twitter, because every single social networks different and
Speaker 1: they all have their own quirks and their own struggles,
Speaker 1: and so I hope he takes the time to really
Speaker 1: understand what those teems have done over time so that
Speaker 1: we don't disrupt things before the election. Now, according to
Speaker 1: the SEC, UH and the Information also did a big
Speaker 1: piece on this, and you there's been a huge spike
Speaker 1: in the number of whistleblowers that have come forward since
Speaker 1: you came forward. One of them is Peter Zachco, a
Speaker 1: former Twitter employee who talked about the egregious um egregious
Speaker 1: flaws in Twitter's own security. What do you make of
Speaker 1: the rise in these whistleblowers and the role that they
Speaker 1: can play in providing transparency where Congress has failed to regulate.
Speaker 1: There's if if if viewers take away only one thing
Speaker 1: today from the time that we spent together, it's the
Speaker 1: idea that more and more of our economy is driven
Speaker 1: by opaque systems now. So you know, back when we
Speaker 1: had a more industrial oriented economy, you know, you could
Speaker 1: buy the products of those factories, you can interview workers
Speaker 1: who worked in those factors and understand what was happening.
Speaker 1: But now we have more and more systems where the
Speaker 1: important details all live on data centers. You know, all
Speaker 1: we get to see is our own strings were limited
Speaker 1: in understanding how these systems work, or like, what choices
Speaker 1: were made? What are the consequences. Whistleblowers are only going
Speaker 1: to become more and more important because in the case
Speaker 1: of things like trust and safety online, you know, there
Speaker 1: are no academic classes you've been taken this today. You know,
Speaker 1: there's like a feel on content moderation of places like Stamford,
Speaker 1: but that's that's about it. We're reliant on professionals like
Speaker 1: like Peter Um to understand what the limitations are in
Speaker 1: these things. There are first lineup to us, and we
Speaker 1: need to be protecting them. What do you think of TikTok?
Speaker 1: Is there a unique threat posed by TikTok? In particular?
Speaker 1: I'm particularly concerned about TikTok because TikTok is intentionally designed
Speaker 1: to be manipulated. You know, it's a system that originally
Speaker 1: originated in China. Um with the end. It's a system
Speaker 1: that's it's architected from the beginning with controlling what messages
Speaker 1: are distributed. There are it's they're famous um um. When
Speaker 1: you get there are control rooms you can go into.
Speaker 1: We can see the most important, most popular content TikTok.
Speaker 1: And there have been scandals where things like if you're
Speaker 1: visibly gay or visibly disabled, your video has got taken down.
Speaker 1: We should be deeply concerned that, uh, this is a
Speaker 1: Chinese company. You know, let's say China invaded Taiwan. I
Speaker 1: guarantee you we would not see any pro Thailanese messages
Speaker 1: going across TikTok, and because it's designed to be incredibly sticky,
Speaker 1: being incredibly addictive, Like you can't passively watch TikTok, like
Speaker 1: it polls you and you have to engage in order
Speaker 1: to get the next video. There's like a little hit
Speaker 1: of dopamine over and over again. You know, it draws
Speaker 1: his kids, And so I strongly encourage us to look
Speaker 1: at do we want to have China having so much
Speaker 1: influence over our information environment, particularly for our children. Now,
Speaker 1: I know you've been on a year of public speaking engagements,
Speaker 1: testifying before other governments. You also moved to Puerto Rico.
Speaker 1: You got married, I moved. I moved two years ago.
Speaker 1: In profit booked two years ago, Yeah, two years ago. Okay,
Speaker 1: so you were in Puerto Rico. Um, you launched this
Speaker 1: new nonprofit Beyond the Screen. Talk to us a little
Speaker 1: bit about how how has your life changed since becoming
Speaker 1: a whistleblower quote unquote, and do you have any regrets? Interesting?
Speaker 1: I think the biggest way in which my life has
Speaker 1: changed is you know, I can I can sleep at night,
Speaker 1: you know, like before I came out. Um, I think
Speaker 1: anyone who's ever had hold of secret where you thought
Speaker 1: other people's lives were on the line. Knows how hard
Speaker 1: that is. And you know I had I had to
Speaker 1: get a new passport right about the time I left Facebook,
Speaker 1: and I had to get a new driver's license this
Speaker 1: year because I had lost my driver's license. And I
Speaker 1: looked at those two photos and I was like, oh,
Speaker 1: my goodness, I aged backwards ten years. Like that's not
Speaker 1: how it's supposed to work. UM. And so I have
Speaker 1: been so grateful for the experience over the last year
Speaker 1: because I know how few public figures that are women. UM,
Speaker 1: I have easy life online and like I have opened
Speaker 1: d ms on Twitter, Instagram and no one harasses me.
Speaker 1: You know, I've I've I've only felt supported and I'm
Speaker 1: I'm so grateful UM to be able to give people
Speaker 1: hope about the idea that we can change social media.
Speaker 1: You know, we were going to figure out how to
Speaker 1: do this and we can do it together, all right. Well,
Speaker 1: thank you so much for obviously sharing your story with us.
Speaker 1: Everybody check out Beyond the Screen, Francis Halgan's new nonprofit,
Speaker 1: UM Francis, thank you for taking the time. We appreciate it.
Speaker 1: Welcome back to Bow technology and Emily changing San Francisco
Speaker 1: Elon Musk wants to turn Twitter into the everything app.
Speaker 1: Here to explain what that might mean, are Ed Ludlow So, Ed,
Speaker 1: what kind of clues do we have about what he's
Speaker 1: really talking about here? Yeah, you know we have clues
Speaker 1: and shameless plug I kind of put a piece out
Speaker 1: on Twitter this morning about some of the things Muskas
Speaker 1: talked about changing. We're certainly at a stage where there's
Speaker 1: more questions and answers, right. You see that reflected in
Speaker 1: equity markets. You know, Twitter is down after a ginormous
Speaker 1: game twenty four hours ago. Tesla down on concern Musk
Speaker 1: will have to sell down Tesla stock to fund this
Speaker 1: deal that he's distracted. But this is this idea of
Speaker 1: X the everything app. And you know what Muscar has
Speaker 1: talked about in the past on stage and tweets is
Speaker 1: growing Twitter from a user base of around two dred
Speaker 1: forty million currently to one billion, And I think a
Speaker 1: lot of the street are looking for signs of what
Speaker 1: that means. If we bring up this chart and look
Speaker 1: at sort of Twitter's revenue growth relative to Tesla, Twitter's
Speaker 1: growth has been underwhelming, right, and there is hope that
Speaker 1: Musk can inject some new ideas for Twitter itself. That's
Speaker 1: about opening up the algorithm, open sourcing it about dealing
Speaker 1: with the box issues, having a time limited edit button.
Speaker 1: But he's also talked about this idea that Twitter can
Speaker 1: be a one stop shop for other things, more video functionality,
Speaker 1: making it more akin, perhaps too a we Chat in Asia.
Speaker 1: You know, there's many more users in China alone using
Speaker 1: we Chat and various functionality on it than are using
Speaker 1: Twitter globally. So I think there's a lot of optimism
Speaker 1: they can do that. But I go back to the
Speaker 1: discussion we discovered between Dorsey and Musk in those court
Speaker 1: filings and the text that were released as part of discovery.
Speaker 1: They want to enact changes and they felt that the
Speaker 1: only way to do that was to take the company private.
Speaker 1: There's optimism on the street that will happen, and there's
Speaker 1: also optimism from the cell side that Musk will unlock
Speaker 1: the new functionality that will help Twitter's user based grow
Speaker 1: but also help its top line growth as well. The
Speaker 1: kind of wild card. Musk isn't interested in ad based model.
Speaker 1: He wants to kind of move away from that and
Speaker 1: monetizes in other ways. So it's gonna be really interesting.
Speaker 1: But again, let's take a reality check. M I think
Speaker 1: we're a long way away from knowing what's going on.
Speaker 1: Am I going to Delaware? Are you going to Delaware?
Speaker 1: Nobody knows, We do not know, And boy, what I
Speaker 1: love to know if you and I are going to
Speaker 1: be in Delaware in two weeks? Okay, thank you? And
Speaker 1: I want to dig into this a little further with
Speaker 1: Lead Edge Capital founding partner Mitchell Green. Mitch, you know,
Speaker 1: I know you're an investor in Uber, which has aspired
Speaker 1: to this sort of super app idea. We've seen ten
Speaker 1: Cent really succeed at it. What do you make of
Speaker 1: Elon Musk's idea to try to turn Twitter into an
Speaker 1: everything app? Look, Um, it's hard. There hasn't look we're
Speaker 1: not We don't only lub anymore. But we do own
Speaker 1: byte Dance, which obviously on the very popular TikTok app um.
Speaker 1: We do all. We were early investors in Ali Baba Group,
Speaker 1: which is obviously uh and then as well as Aunt Financial,
Speaker 1: which is building super ap Um. I think he's got
Speaker 1: his work caught out to him, but we're sure going
Speaker 1: to talk about it. And then three to five years,
Speaker 1: we're gonna know, Um, you know, did it work? Look Ellen?
Speaker 1: Is that I totally agree that he can't accomplish this.
Speaker 1: What he wants to try to do is in a
Speaker 1: public company. Um, surely, I'm sure it's not. Having not
Speaker 1: spent a ton of time looking at Twitter, I'm sure
Speaker 1: it's not the most efficiently running business. I'm sure there's
Speaker 1: tons of ways he can fix it. It will take
Speaker 1: a lot of time. He's amazing at sending rockets into
Speaker 1: space and he proved the world wrong. Um, you know
Speaker 1: with his car business. He obviously started his career in payments. Um,
Speaker 1: time will tell if it. Uh, if he's successful and
Speaker 1: turning around Twitter, I think he's It's it's it's a
Speaker 1: very um tall order. Uh. And it's not like Facebook
Speaker 1: and Bite Dance are gonna sit around and doing nothing
Speaker 1: while the well, you know, while he tries to do it.
Speaker 1: So from a bigger picture, you know, I find it
Speaker 1: interesting that we could potentially see this massive deal, you know,
Speaker 1: him buying Twitter for forty billion dollars happened in the
Speaker 1: middle of you know, potentially you know, drop into a
Speaker 1: recession where we also saw Adobe agree to by Figma
Speaker 1: for twenty billion dollars and we're waiting for this big
Speaker 1: Microsoft Activision deal. What do you think about how the
Speaker 1: M and A landscape is keeping up pace despite the
Speaker 1: fact that the economy is so bad. Well, it's a
Speaker 1: great question UM corporates around the world to have You know,
Speaker 1: these tech corporates Google, Microsoft, Facebook, Cammazon, keV, you know, Ali, Baba,
Speaker 1: ten Cent have ginormous sums of cash UM by Oracle
Speaker 1: you can add in their step. You get in there
Speaker 1: at some point. I think we're gonna wake up over
Speaker 1: the next twelve to fift eighteen months and there's gonna
Speaker 1: be a heck of a lot more M and A
Speaker 1: than we've seen in a long time. I don't know
Speaker 1: when it's gonna happen. Maybe I don't think it's starting yet.
Speaker 1: I also think you're gonna see a way of a
Speaker 1: biout activity to UM the problem. I think where the
Speaker 1: buyout by the by where the body WI Bio fund activity,
Speaker 1: propequity fund activity right now is pretty slow, and you've
Speaker 1: seen busted deals UM just because the credit markets are
Speaker 1: not in good shape. UM just related you know, like
Speaker 1: there's a huge back, there's a huge we're not credit
Speaker 1: investors but there is a huge like log jam right
Speaker 1: now with the citric steal within these banks are going
Speaker 1: to take ginormous losses on them um and so like
Speaker 1: the credit markets for a lot of this activity is
Speaker 1: super slow. So I don't know how much leverage that
Speaker 1: Twitter is going to take in this buyout and things
Speaker 1: like that, but like anything that requires lots and I
Speaker 1: think that's why you're seeing spreads lots of the potential
Speaker 1: deals like trade pretty wide because the credit markets are
Speaker 1: so uncertain right now now that it isn't impact strategic Okay,
Speaker 1: let's talk in a little bit about venture and the
Speaker 1: private markets. Venture firms seem to have a lot of
Speaker 1: dry powder that is piling up and not a lot
Speaker 1: of places to put it. Some folks have told us
Speaker 1: they're waiting for evaluations to go down before they deploy anything.
Speaker 1: Of course, there are a lot of companies UM struggling
Speaker 1: and suddenly their balance sheets don't look so attractive to investors.
Speaker 1: What are you seeing? How are you evolving your strategy?
Speaker 1: As macro economic concerns remain good economy bad ecoun. I
Speaker 1: think nobody knows where the economy is going. I read
Speaker 1: an I S I survey that said, like investors think
Speaker 1: that there's gonna be a recession in the crowd is
Speaker 1: usually wrong. It's not like we're all sitting around in
Speaker 1: February of three, you know, sorry, in February of twenty thinking,
Speaker 1: you know, COVID was gonna happen a month later in
Speaker 1: August of oh eight, like all the world's about ten
Speaker 1: because lemon Butter is about to blow up? Who knows.
Speaker 1: Like the crowd is usually wrong. By the way, I'm
Speaker 1: probably myself in the crowd um in terms of like
Speaker 1: the venture landscape where growth equity landscape right now, and
Speaker 1: I think you could you can expand it to private
Speaker 1: equity lands escape or real estate asset landscape, just specifically
Speaker 1: in like the venture and like if you're thinking, like, hey,
Speaker 1: companies with fifteen million revenue to a hundred million revenue
Speaker 1: that are software and internet or fintech businesses, there's just
Speaker 1: too big a spread between what the buyer wants and
Speaker 1: what like a private aquor venture funds gonna pay because
Speaker 1: it's driven by public markets and in companies right now
Speaker 1: for the most part. And I think the spread is
Speaker 1: already started to come down, Like it's definitely tightened up
Speaker 1: from today where it was six months ago. You just
Speaker 1: have to make the assumption that public private markets lead
Speaker 1: public markets, are public markets lead private markets. And as
Speaker 1: a result, like tons of companies raise money in the
Speaker 1: back half of twenty one and early in twenty two,
Speaker 1: and like there raised like two years of money, and
Speaker 1: so like your company right now that raised still has
Speaker 1: a hundred million plus in the balance sheet. Your last
Speaker 1: route was probably done at too high a price. But like,
Speaker 1: you don't have to raise money right now. Fast forward
Speaker 1: a year, you might be intercession. At that point, you've
Speaker 1: probably burned a bunch of money. We think it's going
Speaker 1: to take another six to twelve months for a lot
Speaker 1: of this stuff to work through, and that you know,
Speaker 1: the back half of next year in the twenty four
Speaker 1: will be super busy because then a bunch of these
Speaker 1: companies are going to raise and those companies that hit
Speaker 1: or beat their numbers might raise up grounds um, but
Speaker 1: those companies that miss their numbers will probably be raising
Speaker 1: death rounds. But again, who knows, maybe not maybe pull
Speaker 1: the markets go back up, but if cops stay where
Speaker 1: they are today, which is kind of near historical averages.
Speaker 1: So what advice are you giving your portfolio companies right now.
Speaker 1: Great question. Don't panic. Um is one thing. Run your
Speaker 1: business like, you know, keep your best employees, keep your
Speaker 1: best employees happy. Um. You know, layoffs are not always bad.
Speaker 1: You know, some of the greatest companies on Earth over
Speaker 1: year over time, and like laid off percent other people
Speaker 1: every year, like g was like, well long for doing
Speaker 1: it thirty years ago. Is trimming Like all these companies
Speaker 1: are run with too much fat, every company on every
Speaker 1: software company that's been funded with venture funding. So what
Speaker 1: are we telling them? That's a great question. I think
Speaker 1: we're telling them. Look, make sure you're you've got capital
Speaker 1: for the next like eighteen months. Make sure unit your
Speaker 1: unit economics work so like you know, you don't need
Speaker 1: three or four year customer paybacks. You pay back and
Speaker 1: you know eighteen months are under um. But make sure
Speaker 1: you're invested in the future, like don't freak out like
Speaker 1: the great We're gonna look back in five or ten
Speaker 1: years from now and like great companies will have been
Speaker 1: created during this time period and you need to be bold.
Speaker 1: You just won't want to be smart about it. And
Speaker 1: make sure you're not standing on the cliff, you know,
Speaker 1: with your pants down. If the tag goes out. Okay,
Speaker 1: don't panic, don't freak out, and don't stay on a
Speaker 1: cliff with your pants down. Those are all tensible pieces
Speaker 1: of advice. Mitch. All right, Mitch Green, thanks for giving
Speaker 1: it to us straight as always. Appreciate your thoughts on
Speaker 1: all of this, Thank you. Okay, Coming up, how the
Speaker 1: blockchain could help everyday people invest in some of the
Speaker 1: world's most popular private companies in the world. This is
Speaker 1: Bloomberg time now for our crypto reporting. Today we're covering
Speaker 1: the so called tokenization of funds, which could potentially expand
Speaker 1: access to private markets to a broader set of investors.
Speaker 1: For that, I want to bring in Bloomberg Shanali, Bossi,
Speaker 1: Shanali take it away. Thank you, Emily. You know, whenever
Speaker 1: I go around to investment conferences more and more, this
Speaker 1: gentleman named Carlos Domingo, the CEO of Securities, is often
Speaker 1: there and he is joining us now to talk about
Speaker 1: this because recently today really they announced the deal with
Speaker 1: Hamilton Lane, recently another deal with KKR. Carlos, when you're
Speaker 1: talking to these large fund managers, Hamilton Lane alone has
Speaker 1: more than eight hundred billion dollars under supervision. How quickly
Speaker 1: are they starting to look at blockchain as a way
Speaker 1: to expand their investor base and bring more people into
Speaker 1: their funds. Any thanks for hiring me. I think it's
Speaker 1: been a journey for these asset managers. We started talking
Speaker 1: to them, you know, back into thousand eight into some
Speaker 1: of them like they care, and you know, they've been
Speaker 1: basically building out the internal capabilities and the knowledge. And
Speaker 1: at the same time, the industry has evolved as well
Speaker 1: in terms of, you know, making locking easier to use,
Speaker 1: in terms of like you know, wal It's performance of
Speaker 1: the underlying blockchains, et cetera. And also more importantly the
Speaker 1: regulatory quality of what does it mean to actually recognize
Speaker 1: a fund on the blockchain and the COO can manage
Speaker 1: those securities and who has license to do that, et cetera.
Speaker 1: So it's been kind of a journey. But I think
Speaker 1: at this point in time, and I think that the
Speaker 1: fact that Kker and Hamilton language are too massive privativity
Speaker 1: firms have decided to do that, I think it signals
Speaker 1: an inflection point in the industry where we're gonna start
Speaker 1: seeing massive adoption going forward. So let's say KKR as
Speaker 1: an example, because an everyday person can't really say, hey,
Speaker 1: let me put ten thou dollars into a KKR fund.
Speaker 1: But now they're making a private acquity fund available through tokenization.
Speaker 1: What does that mean? How is it different from a
Speaker 1: traditional private equity fund? Is there a key separation between
Speaker 1: that and the normal fund that you would invest in
Speaker 1: as a large institution. Well so as managers, as you said,
Speaker 1: I think they've recognized that, you know, they've been extremely
Speaker 1: successful building UM primarily going after institutional investors and drag
Speaker 1: networks individuals, and that they are you know, there is
Speaker 1: a new breath of investors that are individual investors. They
Speaker 1: are much younger, they're digital, et cetera. That they don't
Speaker 1: have access to those products at all because of the
Speaker 1: structure of the products is the sign for institutions, etcetera.
Speaker 1: So they all recognize that they have to figure out
Speaker 1: how to reach out to them. And I think they see,
Speaker 1: you know, blockin and organization as the most if you
Speaker 1: want modern and advanced way of providing this, you know,
Speaker 1: fractional ownership in a very efficient way, being able to
Speaker 1: track the beneficial ownership of the of the securities provide
Speaker 1: you know, our compliance as a servicing, etcetera. So they
Speaker 1: all that conversation usually is very easy, and I think
Speaker 1: what balls down later is about how do we do it, etcetera.
Speaker 1: The fund itself is based similarities, slightly different in the
Speaker 1: sense that this is a feeder that hasn't slightly different structure,
Speaker 1: which we're trying to make it actually more individual investor friendly.
Speaker 1: So but overall you should expect that the performance of
Speaker 1: the organized version you know, very closely tracks the performance
Speaker 1: of the original privadiquity that was only available for institutions. Now,
Speaker 1: how much of this was even possible even five or
Speaker 1: six or seven years ago. How much was this made
Speaker 1: possible because SEC rules have made it more possible for
Speaker 1: credited investors to invest in a wider array of funds. Well,
Speaker 1: the assisty rules to allow for more accessibility to create
Speaker 1: the investors haven't really changed significantly. They did some improvements,
Speaker 1: uh two years ago in terms of who qualifies and
Speaker 1: a created investor. I think what also has happened is
Speaker 1: that more and more people are create investors, right because
Speaker 1: you you know, the wealth is growing in the in
Speaker 1: the United States and today is around thirteen point six
Speaker 1: million people that qualify as the created investors. That's more
Speaker 1: than ten percent of the households that collectively managed seventy
Speaker 1: five tillion dollars. I think the issue was that the
Speaker 1: products that those susset management companies had, they were not
Speaker 1: accessible to these investors because they're not being served by
Speaker 1: the current however wealth management or reach the investor advice.
Speaker 1: So that's what it begs the question, when you're looking
Speaker 1: at the opportunity to invest in a broader array of alternatives,
Speaker 1: do you think that crypto blockchain technology in particular can
Speaker 1: be used for more of these types of purposes, more
Speaker 1: than they will be used in the in the longer
Speaker 1: term future for actual tokens. Actually, you know, if you
Speaker 1: if you look at the size of the of the
Speaker 1: space that we're looking at, this is we're talking about
Speaker 1: two lunch and twillions of dollars of real world assets
Speaker 1: and funds and you know, credit and real estate exec
Speaker 1: that can be organized and put into the into the blockchains.
Speaker 1: So that works anything else that you've seen in more
Speaker 1: like native digital assets if you want, like bacon or
Speaker 1: a theory. So I think that the potential of this
Speaker 1: becoming the biggest thing in crypto is definitely there. Carlos Amingo,
Speaker 1: that's the CEO of Securities. Looking forward to your next day.
Speaker 1: I'll hope you come back to talk to us about it.
Speaker 1: I'm only definitely thanks for having me. All right, Actionality,
Speaker 1: thank you. Welcome back to Bloomberg Technology. SpaceX launching a
Speaker 1: manned crew of four on an assa mission to the
Speaker 1: International Space Station, including a Russian cosmo and the first
Speaker 1: Native American woman to travel to space. Are at Ludlow
Speaker 1: back with all the details and what exactly happened today. Yeah,
Speaker 1: so we're deep into a twenty nine hour journey to
Speaker 1: the International Space Station. As you said, Nicoleman one of
Speaker 1: the crew members. In fact, the crew commander becomes the
Speaker 1: first Native American woman to go to space. So it's
Speaker 1: a landmark in that respect. She is a member of
Speaker 1: one of the Round Valley Indian tribes here in California.
Speaker 1: But there was also a Russian cosmonaut on board. It's
Speaker 1: the first time SpaceX is carrying a Russian citizen, a
Speaker 1: Russian cosmonaut from US soil to the I S S.
Speaker 1: And as you know, and we talked about this week,
Speaker 1: some of the controversial tweets Elon Mosk, who is the
Speaker 1: CEO of SpaceX, made about the war in Ukraine and
Speaker 1: about his belief about it a negotiated settlement with Russia.
Speaker 1: But it's going to take them twenty nine hours to
Speaker 1: get there. Talk to me in the next show and
Speaker 1: we'll see if they made it safely. But this is
Speaker 1: a kind of routine operation for SpaceX rights their fifth
Speaker 1: crew mission, the eighth or ninth human flight mission, and
Speaker 1: you know it takes the crew two miles above the Earth.
Speaker 1: So how does this fit into them the broader mission
Speaker 1: and the other things that SpaceX is working on. Yeah,
Speaker 1: I think you know what SpaceX is really doing in
Speaker 1: conjuncture in NASA is ramping up to go beyond the
Speaker 1: International Space Station, right. You know, they're involved in the
Speaker 1: project more broadly to go to the Moon, which that
Speaker 1: relies on a different company's rocket Artemis, and as we know,
Speaker 1: that is behind schedule. We don't expect SLS an Artemis
Speaker 1: to launch until about mid November. You know, the next
Speaker 1: kind of big mission for SpaceX in kind of advancing
Speaker 1: humansplace fright is Polaris Dawn. And you know, through the
Speaker 1: Polaris program that they basically are going to push the
Speaker 1: boundaries of what they're capable of doing in terms of
Speaker 1: how long and how often humans can go into space.
Speaker 1: But part of that is contingent on the development of Starship.
Speaker 1: And what we're really waiting on from SpaceX is news
Speaker 1: of when we'll get that orbital test flight of Starship,
Speaker 1: because we don't know when that will be. And we've
Speaker 1: talked so much about Tesla and the impact on Tesla
Speaker 1: with e Musk taking over Twitter, unless so about SpaceX
Speaker 1: since as a private company, But what do we know
Speaker 1: about how folks SpaceX feel about Elon Musk taking on
Speaker 1: another big company? Yeah, I mean, generally speaking, Elon Musk
Speaker 1: has also been divisive within the ranks at SpaceX, right.
Speaker 1: There are many employees that do not believe in some
Speaker 1: of the things he said and disagree with some of
Speaker 1: his actions. There is also an element of key man risk.
Speaker 1: You know, Elon Musk is a hands on manager and
Speaker 1: executive at SpaceX in much the same way that he
Speaker 1: is Tesla. You know, he often attends some of the
Speaker 1: key launches. He's often present in Hawthorne where space Sex
Speaker 1: is kind of headquarters and R and D Center is.
Speaker 1: So there is a question, you know, if he takes
Speaker 1: on Twitter what does that mean with respect to how
Speaker 1: he splits his time between those three companies. But as
Speaker 1: we know, he is a man that spends a lot
Speaker 1: of time on a private jet, a lot of time
Speaker 1: on his phone, and doesn't sleep as much as the
Speaker 1: average human. All Right, Indeed, at love Low, thank you.
Speaker 1: As always, we'll be watching for the results of this
Speaker 1: latest mission. Um, and that does that for this edition
Speaker 1: of Bloomberg Technology. Uh. Coming up Thursday, we've got Google
Speaker 1: Senior vice president of Devices and Services, Rick Ostrolo at
Speaker 1: the company's Made by Google hardware launch event. I'm Emily
Speaker 1: Chang in San Francisco. This is Bloomberg