Speaker 1: From hard where Innovation, money and power Collie in Silicon Valley, NBR.
Speaker 1: This is Bloomberg Technology with Caroline Hide and Ed Ludlove.
Speaker 1: Ed Love o here in San Francisco. Caroline Hide is
Speaker 1: off this week. This is Bloomberg Technology coming up Open
Speaker 1: AI targeted in a complaint to the FTC demanding a
Speaker 1: halt to further deployment of generative AI technology. Will Speaks,
Speaker 1: one of the signatories who called for the original pause
Speaker 1: of further jack GPT rollouts. In just a few moments
Speaker 1: time and the bulls are back full market coverage ahead.
Speaker 1: Is the tech sector leads the way? Then? Has that
Speaker 1: one hundred heading for its second best quarter of the decade.
Speaker 1: How does that translate to private markets? Plus conversations spanning cybersecurity, venture, cabital,
Speaker 1: the metaverse and beyond. We'll bring you the inside from
Speaker 1: the c suite for all the latest and all corners
Speaker 1: for the technology sector. Let's get your markets. We're moving
Speaker 1: away from jitters around the banking sector, the FED firmly
Speaker 1: and focus. There's this kind of growing feeling that the
Speaker 1: rate heights cycle is coming to an end. You look
Speaker 1: at them as that one hundred up eight tenths of
Speaker 1: one percent, but outperforming the broader market. Continued out performance
Speaker 1: as semiconductors, but also the US listed chairs of Chinese technology.
Speaker 1: Little action in the bond market, kind of muted trading,
Speaker 1: but you look at the short end of the curve,
Speaker 1: the US two year at four point one percent. We're
Speaker 1: talking a lot about yield curve inversion of what that
Speaker 1: signals for a potential recession, but that is where the
Speaker 1: muted actions at at that short end of the curve.
Speaker 1: This is where we are the last few days of March,
Speaker 1: the last few days of the quarter, and then as
Speaker 1: that one hundred is kind of heading for its best quarter,
Speaker 1: second best quarter in the last decade, we're looking for
Speaker 1: signals in the trajectory of rates still, but also thinking
Speaker 1: about the Fed's balance sheet and what they're doing in
Speaker 1: terms of easing and how it's impacted the technology sector evaluations.
Speaker 1: That's the Matt grow picture. Hey with the micro out
Speaker 1: in New York Bloombos. Katy Gryfeld, Hey, Katie, Hey, ed Well,
Speaker 1: I want to start with bitcoin just for fun, because
Speaker 1: that's been one of the big stories this year, is
Speaker 1: this big bounce back that we've seen in the crypto
Speaker 1: space as a whole, led by Bitcoin, as you can
Speaker 1: see up year to date by more than seventy percent,
Speaker 1: and it's a real choose your own narrative. The true
Speaker 1: believers would tell you what we're seeing in the banking
Speaker 1: sector that just proves the promise of crypto and why
Speaker 1: you want to be in it. Maybe a more salable
Speaker 1: narrative would be what you're just talking about, what we're
Speaker 1: seeing with tech shares and a potential pivot coming from
Speaker 1: the FED. But in any case, Bitcoin up by seventy
Speaker 1: one percent year to day. Let's go back to reality, though,
Speaker 1: and talk about some of those single stock names, bed
Speaker 1: Bath and beyond. One of the stories today, the company
Speaker 1: filed to sell as much as three hundred million dollars
Speaker 1: worth of shares, has also came out with some preliminary
Speaker 1: sales figures that disappointed in a big way. You can
Speaker 1: see shares off by more than nineteen person. Moving on
Speaker 1: Ali Bob, of course, the news from earlier this week
Speaker 1: is that it's going to split the Empire into six units.
Speaker 1: The news today, according to people familiar with the matter,
Speaker 1: is that its logistics arm is exploring a Hong Kong
Speaker 1: ipo that could come as soon as the end of
Speaker 1: this year, and JD dot Com maybe following suit. Two
Speaker 1: of its subsidiaries also potentially exploring a Hong Kong listed ipis.
Speaker 1: You can see JD dot Com up about nine and
Speaker 1: a half percent or so and C three AI at
Speaker 1: This is interesting. Even with all the headlines around AI
Speaker 1: that I know you've been following very closely, AI stocks
Speaker 1: not really feeling the heat yet. This stock in particular
Speaker 1: up about three points seven percent. Yeah, I think you know.
Speaker 1: The availability of capital, the energy from investors in this
Speaker 1: space is ongoing despite what's happening behind the scenes. Speaking
Speaker 1: of a prominent tech ethics group filed a complaint on
Speaker 1: Thursday with the US Federal Trade Commission urging the regulator
Speaker 1: to halt further commercial deployments of the next generations of
Speaker 1: AI technology that power popular tools like chat GPT. The
Speaker 1: Center for Artificial Intelligence and Digital Policy ask the FTTC
Speaker 1: to open an investigation into open AI to determine if
Speaker 1: the commercial release of the fourth generation of the tool
Speaker 1: violates US or global regulations. For more, let's bring a
Speaker 1: Nindo Managing editor covering tech and cybersecurity, Adam new York Lin.
Speaker 1: What do we know, Hied. It's nice to be here,
Speaker 1: thanks for having me. So, as you said, this very
Speaker 1: prominent tech ethics group has filed this complaint with the FTC,
Speaker 1: and very specifically, it's asking the US government to make
Speaker 1: a very rare intervention here and hit the puzz button
Speaker 1: on this huge boom and rush into building smarter and
Speaker 1: smarter generations of AI. Like you said, the complaint right
Speaker 1: now is focused on this GPT four language model, the
Speaker 1: latest one that is behind chat GPT, and as we
Speaker 1: all know by now, it's a very convincing simulation of
Speaker 1: human conversation, and that is the fear here. The group
Speaker 1: is specifically, as you said, asking for this investigation into
Speaker 1: open AI to see if GPT four's release actually violates
Speaker 1: existing regulations not just in the US but worldwide. And
Speaker 1: of course this comes just a day after more than
Speaker 1: a thousand people, some of them very prominent people in
Speaker 1: the AI and tech space, signed a letter urging the
Speaker 1: same Lynn, I think there's an important point of clarification
Speaker 1: that we've got to mate to our audience, which is
Speaker 1: this is not a complaint from the FTC. It's a
Speaker 1: complaint to the FTC by basically an interested party. Right,
Speaker 1: That is right. The complaint is being led by this
Speaker 1: center that is a tech ethics group that is very
Speaker 1: well known. Behind it is this long time privacy advocate
Speaker 1: Mark Rottenberg, who is trying to press the FTC to
Speaker 1: take action here. All right, Lyndon, managing editor covering tech
Speaker 1: cybersecurity out of New York, Thank you so much. Let's
Speaker 1: stick with this conversation. Bring in Stuart Russell Berkeley, director
Speaker 1: of the Center for Intelligent Systems for More's the second
Speaker 1: name on the list and that petition calling for a
Speaker 1: halt to AI development. He's also, of course the co
Speaker 1: author of the standard textbook Artificial Intelligence A Modern Approach.
Speaker 1: Let's start the basics, professor, why did you sign that petition?
Speaker 1: So the petition expresses the concern that these kinds of
Speaker 1: systems are extremely unpredictable. In essence, we have really no
Speaker 1: idea how they work inside, and so they simply don't
Speaker 1: comply with principles that have already been established. For example,
Speaker 1: the OECD has a set of principles that have been
Speaker 1: signed up to by the United States and all the
Speaker 1: other advanced economies saying that AI systems need to be
Speaker 1: shown that they will not present undue risk two users.
Speaker 1: And at the moment, there's no way that we can
Speaker 1: show that these large language models don't present undue risks
Speaker 1: because we don't know how they work. And there are
Speaker 1: already many many stories of apparently psychotic conversations the one
Speaker 1: reported in the New York Times, for example, a one
Speaker 1: reported in the Belgian press just the other day of
Speaker 1: chat GPT working with someone as they prepared to commit
Speaker 1: suicide and in some ways encouraging them to continue with
Speaker 1: that student. Those are the broad risks that the petition identifies.
Speaker 1: There are lots of questions about the petition itself. For example,
Speaker 1: when it was first published online, Sam Autman, the CEO
Speaker 1: of open AI's name was listed open Ai, told us
Speaker 1: at Bloomberg that he never signed it. Have any of
Speaker 1: the organizers or you as signatories among yourself of discussed
Speaker 1: that that's some of the names on that petition may
Speaker 1: not actually never have signed it. So I think what
Speaker 1: happens when you open one of these petitions for people
Speaker 1: to sign up online and add their names. A lot
Speaker 1: of jokers come along and put somebody else's name for fun,
Speaker 1: and probably someone thought it would be cool to pretend
Speaker 1: to be sample. When I think Shijinping, that name also appeared,
Speaker 1: and so very quickly the organizers realized that they were
Speaker 1: being subjected to a campaign of disinformation, so to speak,
Speaker 1: and so they put in steps to slow that down.
Speaker 1: Elon Musk is a signatory to this petition. I've written
Speaker 1: to Elon Musk multiple times in the last four d
Speaker 1: eight hours to try and confirm that he actually signed it.
Speaker 1: Are you confident that it was actually him that signed it?
Speaker 1: So I have to say I had no role in
Speaker 1: the preparation of the petition or in the vetting of
Speaker 1: the signatures. But Max Tegmark, who is the president of
Speaker 1: the Future of Life Institute, which organized the petition, is
Speaker 1: in direct contact with Elon Musk, and so I'm pretty
Speaker 1: confident that that's a real signature. What you're asking for
Speaker 1: is a halt of six months, a specific period where
Speaker 1: next generations of large language models or the underlying technology
Speaker 1: that powers the generative AI tools we're talking about, are
Speaker 1: not released. How realistic do you think that is? To
Speaker 1: coordinate that everyone agrees to just stop. I think there
Speaker 1: are different ways of viewing what we're asking for. I
Speaker 1: think the idea that you know the CEOs of Microsoft
Speaker 1: and Google and deep Mind are going to read this
Speaker 1: and say, oh, sorry, yeah, you're right, we completely messed up,
Speaker 1: and we'll definitely stop right now. I don't think that's
Speaker 1: going to happen, but I hope that it at least
Speaker 1: begins a serious conversation about what would be necessary to
Speaker 1: develop systems that we can have confidence in. And there's
Speaker 1: two parts to that, right, Could we develop ways of
Speaker 1: testing the systems that we already have so that we
Speaker 1: can show that they do not present risks that they
Speaker 1: will not help people to commit suicide and go on,
Speaker 1: or we change the way we design the system so
Speaker 1: that we can do that, And I actually think the
Speaker 1: latter is probably more likely. I would also say that
Speaker 1: legislators the European Union, for example, are close to passing
Speaker 1: the AI Act, which would require these kinds of steps
Speaker 1: as a matter of law, so that you could not
Speaker 1: put systems on the market unless you could satisfy the
Speaker 1: regulators that they were safe. Professor twenty four hours go,
Speaker 1: we had Sarah Gao, who's a founder of a VC
Speaker 1: firm called Conviction on the show. She's been investing in
Speaker 1: AI for a long time. She was not a signatory
Speaker 1: to the petition have listened to what she had to
Speaker 1: say about this. I really care about access and also
Speaker 1: a reinforcement of bias. But the thing to do is
Speaker 1: to address these concerns in like a open and transparent way,
Speaker 1: not to call for a halt to development. In the
Speaker 1: context of a halt or a six month period of
Speaker 1: non new releases, Sarah's point is that she thinks the
Speaker 1: technology should be made increasingly available. More broadly, what is
Speaker 1: the risk with that? Well, as she pointed out, the
Speaker 1: systems already exhibit bias and various other kinds of problems.
Speaker 1: So by making further generations of this technology available, which
Speaker 1: might be much more capable of causing serious disruption in
Speaker 1: our society, that would only make things worse, not or
Speaker 1: I think what we're asking for is that the developers
Speaker 1: of the technologies take their responsibilities seriously. A professor, We're
Speaker 1: grateful for your time. You're staying up late for us
Speaker 1: out of Singapore. You come at this from the academic perspective,
Speaker 1: the research and policy perspective. But when I went to
Speaker 1: our audience and asked about questions for you, they basically ask,
Speaker 1: is this just sour grapes? Is this those in the
Speaker 1: field that look at open AI and say you're the
Speaker 1: leader here, we are trying to catch up, and that's
Speaker 1: why we want to halt. No, not at all. I mean,
Speaker 1: we're not in the business of competing in the commercial market.
Speaker 1: Some of the underlying technologies of large language models emerged
Speaker 1: from academia, and pretty much all of the deep blening
Speaker 1: technologies emerge from academic and basic research lamps. So this
Speaker 1: is really a question of asking that the systems that
Speaker 1: are deployed by that affect the lives of billions of
Speaker 1: people are actually systems that we understand and that we
Speaker 1: can show our safe whose capabilities we get predict I
Speaker 1: don't think that's too much to ask. Stuart Russell Berkeley,
Speaker 1: Director of the Center for Intelligent Systems, Thank you again
Speaker 1: for your time and staying up late for us out
Speaker 1: of Singapore time. Now for talking tech today. Honey in
Speaker 1: On China, a new Hong Kong based fund, pans to
Speaker 1: raise one hundred million dollars this year to invest in
Speaker 1: digital assets startups. Prodigital Future has raised thirty million dollars
Speaker 1: so far, and we'll turge it early stage and developing ventures,
Speaker 1: particularly companies with ties to Web three. The fundraising comes
Speaker 1: as Hong Kong aggressively caughts crypto companies and talent to
Speaker 1: revive the financial center after the slowdown spurred by COVID lockdowns.
Speaker 1: The city sees digital assets is key to financial revival.
Speaker 1: Chinese regulators held a meeting with banks to gauge interest
Speaker 1: in taking over Silicon Valley banks stake in a local
Speaker 1: joint venture in a bid to safeguard the banking system
Speaker 1: from the lenders collapse here in the United States. The
Speaker 1: China Banking and Insurance Regulatory Commission convener meeting this week
Speaker 1: to discuss the disposal of svob's fifty percent holding in
Speaker 1: SPD Silicon Valley Banks. Some Chinese banks have already indicated interest,
Speaker 1: although discussions that are a very early stage. It's also
Speaker 1: unclear if regulators prefer a foreign buyer. An Ali Barber
Speaker 1: will consider gradually giving up controls some of its main
Speaker 1: businesses over time, after completing a major overhaul to create
Speaker 1: six new companies that may debut on public markets. The
Speaker 1: company's gain more than thirty billion US dollars of market
Speaker 1: value since Tuesday's announcement, which also fired up a rally
Speaker 1: in other Chinese technology shares. The new divisions will begin
Speaker 1: separate strategy planning. And now, according to Bloomberg's reporting, let's
Speaker 1: get to that reporting for more on Ali Baba. Bring
Speaker 1: in Bloomberg, says Bill Lee out in New York. Where
Speaker 1: are we right now with Ali Baba? Hi, Yeah, that's
Speaker 1: definitely the big news of today. Ali Baba said it
Speaker 1: will see control over its unit two of the six units,
Speaker 1: although when and where and by how much we still
Speaker 1: have to find out. Yesterday overnight there was a press
Speaker 1: conference or a press briefing blue the CEO, Daniel Zang,
Speaker 1: and there were three takeaways. So first is that it
Speaker 1: will be a case to case basis, as you've mentioned.
Speaker 1: The second is that the restructuring is already underway. We
Speaker 1: just don't know when or when it will be finalized,
Speaker 1: but it is underway. We've talked about this extensively this week.
Speaker 1: And the third is the CEO admitted that this is
Speaker 1: so that they will become more nimble and they will
Speaker 1: respond to the markets, market regulatory environment more positively. They
Speaker 1: said that they want to be more of an asset
Speaker 1: and capital operator rather than a business operator. But the
Speaker 1: CEO did stress that he wants to have more synergy
Speaker 1: still and it's also interesting because Ali Baba Holding that's
Speaker 1: its company names that will literally be the whole day company.
Speaker 1: And another news that also came across the bloombergwire today
Speaker 1: is the logistics arm of Ali Baba, that's Tinieo. It's
Speaker 1: already preparing for its first share sales, so it's targeting
Speaker 1: a listing as soon as the end of this year.
Speaker 1: And we've talked about this also that the two things
Speaker 1: that will come out of this is that it will
Speaker 1: revive a lackluster IPO market, most of which are I
Speaker 1: am Hong Kong. And the second is that it will
Speaker 1: just be more nimble in a piece of regulators after
Speaker 1: a crackdown that we've seen when Ali Baba tried to
Speaker 1: list its financial group for an IPO in twenty twenty.
Speaker 1: Right bloombos Isabella, we're sharing that chart of how long
Speaker 1: or how far the shares have to catch up before
Speaker 1: they hit the average twelve month price target. All right,
Speaker 1: Coming up, we're going to discuss cybersecurity risks and the
Speaker 1: threat posed by North Korean hackers. That's with MANNYANS Director
Speaker 1: of Intelligence John holt Quist also taking a look at
Speaker 1: crips a bit quite interesting. We've seen some undulations i'd
Speaker 1: put it in the last twenty four hours or so.
Speaker 1: We're at a twenty eight thousand level right now in
Speaker 1: terms of dollars per token, but there's a lot of
Speaker 1: momentum right now in discussion about bitcoin pushing higher to
Speaker 1: thirty thousand US dollars per token. In this session, we're
Speaker 1: kind of moving to the downside softer by a round
Speaker 1: a percentage point. We'll keep our sites set on bitcoin.
Speaker 1: This is Bloomberg North Korean hackers from a group known
Speaker 1: as APT forty three opposing as journalists, trying to gather
Speaker 1: intelligence about international officials approach to nuclear security policy and
Speaker 1: Kim Johnson's government. That's according to new research. For more
Speaker 1: on the nation's espionage capabilities, let's bringing John Holtquist, head
Speaker 1: of Mandian Threat Intelligence and Google Cloud. John, these are
Speaker 1: really interesting findings in the research that you've been driving.
Speaker 1: What are they trying to find out at specifically posing
Speaker 1: as journalists? Why that tactic? Well, people answer questions from journalists,
Speaker 1: So they're reaching out to people and think tanks and
Speaker 1: the defense industry, and you know, ultimately they want to
Speaker 1: compromise their systems. But what's so fascinating about this is
Speaker 1: they could just ask questions to these people and get responses.
Speaker 1: And really what North Korea is trying to do is
Speaker 1: gain decision advantage. They want to know if they'd launch
Speaker 1: a missile, how people are going to react, and these
Speaker 1: are the experts on those questions. So what do your
Speaker 1: findings tell us about their capabilities? How serious is what
Speaker 1: they're able to achieve. Well, you know what's so interesting
Speaker 1: about North Korean actors is a few years ago they
Speaker 1: started doing this espionage activity and it's clearly supporting their
Speaker 1: nuclear ambitions. But the other half of this is all
Speaker 1: the crypto to activity that they're involved in. They started
Speaker 1: using their spies to steal a money globally a few
Speaker 1: years ago, and even this team that has this espionage
Speaker 1: operation is stealing crypto on the side that there's a
Speaker 1: digital cyber component to this. But as part of your research,
Speaker 1: you point out in person interviews between those posing as
Speaker 1: journalists and experts are also taking place. So what is
Speaker 1: the Mandian strategy? How do you protect against both of
Speaker 1: those issues? Well, you know, we see them coming and
Speaker 1: pretending to be these people, and what we're lacking or
Speaker 1: the people who are getting hit are lacking is really
Speaker 1: a strategy of identifying who they're talking to, right I
Speaker 1: don't think, you know, if you are in a position
Speaker 1: where you're likely to be targeted by spies, you really
Speaker 1: need to up your game as far as who you're
Speaker 1: responding to, how you authenticate them, and what you know
Speaker 1: countermess you're taking. Is this unique to North career or
Speaker 1: did you see evidence that it's a tactic used elsewhere?
Speaker 1: Not at all. You know, we see Iranian actor carry
Speaker 1: out targeting pretinning to be journalists. The Russians are doing
Speaker 1: the exact same thing. They've got obviously a huge need
Speaker 1: for decision advantage right now, given that the war that
Speaker 1: they're in. If you are in a business that is
Speaker 1: likely to be targeted by spies, you really got to
Speaker 1: take care of who you're responding to. Will use the
Speaker 1: word spies, you know, we identify that according to the research,
Speaker 1: North Korean intelligence services are the ones directing this activity.
Speaker 1: Why is it that significant that the intelligence services of
Speaker 1: that country are kind of putting the strings. Well, you know,
Speaker 1: a long time ago, it took so much money and
Speaker 1: time to do human operations, and those still happen. People
Speaker 1: get We catch this human spies all the time, but
Speaker 1: it's so much cheaper and more efficient to use hackers
Speaker 1: or so many of these problems. And these guys can
Speaker 1: get answers in hours. They can literally go and ask
Speaker 1: somebody for a question and get the kind of answers
Speaker 1: intelligence services used to spend, you know, years trying to answer.
Speaker 1: What do you think happens next? I understand you don't
Speaker 1: have a crystal ball, but what are you bracing for? Well,
Speaker 1: you know what I'm really bracing for is them to
Speaker 1: up their game on the crypto side. We're right now
Speaker 1: in the midst of a major incident that is involving
Speaker 1: potentially thousands of organizations, and we think that, you know,
Speaker 1: one of the reasons that they're doing, that they're behind
Speaker 1: this incident is to gain access to crypto users. So
Speaker 1: that's going to affect organizations involved in crypto, that's going
Speaker 1: to affect everyday users. And that's one of the most
Speaker 1: interesting parts of this. You you, an average crypto investor
Speaker 1: could affect it all, right, John hold Quist and Mandy
Speaker 1: and bringing us the data. Thank you. Welcome back to
Speaker 1: bloom Big Technology. Ed Ludlow here in San Francisco now
Speaker 1: Twili out with its fourth annual State of Customer Engagement
Speaker 1: Report this year. The report states that data driven customer
Speaker 1: engagement does drive revenue growth and resilience for the brands
Speaker 1: they lean into. Its relio CEO Jeff Lawson back with
Speaker 1: us on Bloomberg Technology. Jeff, it's good to see you
Speaker 1: break that down into Layman's of course, break that down
Speaker 1: for me into Layman's terms. What are we talking about there?
Speaker 1: What does any of that actually mean? Companies that bother
Speaker 1: to pay attention to their customers and to build a
Speaker 1: relevant relationship and maintain relevance with that customer make more money.
Speaker 1: I mean, that's the basic Layman's term for it. And
Speaker 1: if you think about it, it makes sense. Right in
Speaker 1: a period of time where people had a lot of
Speaker 1: money burning a hole in their pocket, right, you didn't
Speaker 1: have to be very good to go build customer basis
Speaker 1: audiences get them to spend that money. But in our
Speaker 1: current environment, when there's more of a fixed wallet world
Speaker 1: that we're in, it's the companies that actually pay more
Speaker 1: attention to their customers and create a relationship with those customers, right,
Speaker 1: they're tending to win the hearts, minds, and all of
Speaker 1: those customers. And we had a you know, in the report,
Speaker 1: there was a survey of many, many, many companies, and
Speaker 1: what we found is that the companies that invested most
Speaker 1: in building those digital relationships engaging with those customers in
Speaker 1: targeted and relevant ways. So a ninety percent increase in revenue. Now,
Speaker 1: think about that. In an environment like this, it makes
Speaker 1: sense that the companies that do a really good job
Speaker 1: of using all this very efficient digital technology will understand
Speaker 1: their customers and build a relationship would actually be doing
Speaker 1: better than those that don't. So, Jeff, I'm assuming there
Speaker 1: as a reason that Tuilio carries out this this research, right,
Speaker 1: how do you put into practice your findings, put into
Speaker 1: practice what you preach at Well, what it does is, yeah,
Speaker 1: what it does is it helps companies to understand the
Speaker 1: nature of the ROI of these investments. So I love
Speaker 1: the story of Domino's Pizza. Actually, they have many touches
Speaker 1: with their customers, online, offline, et cetera. As you can imagine,
Speaker 1: they put in a Tuilio segment, the customer data platform,
Speaker 1: the leading customer data platform the market to go understand
Speaker 1: who are these customers? And because of that, they were
Speaker 1: able to better target their messages and their advertisements to
Speaker 1: get more customers, and they saw a seven hundred percent
Speaker 1: increase in the return on ad spend seven right, And
Speaker 1: so it's those types of things that in this market environment,
Speaker 1: free company is looking for waves to get more while
Speaker 1: spending less, and those are the kind of results that
Speaker 1: we can return. Jeff, you've just stow the debate that
Speaker 1: Jackie Lopez, our senior producer on the show, has been
Speaker 1: having for some time that Domino's is a technology company.
Speaker 1: I think it's a company. Let's go to AI. Let's
Speaker 1: go to AI, because right now, how companies are doing that.
Speaker 1: Think about chatbots, how they engage and I'm talking about
Speaker 1: enterprise companies of all shapes and sizes. They are launching
Speaker 1: GPT or other AI related services. What's Twilio doing in
Speaker 1: that space, Well, you know, at the leading customer data platform,
Speaker 1: we have the free party customer data for so many
Speaker 1: tens of thousands of our customers and that allows us
Speaker 1: to help them build relevance and personalization into these generative
Speaker 1: large language model tools that everyone is building. And so
Speaker 1: if you think about it, like imagine a website, if
Speaker 1: the website doesn't know anything about you. Went to Amazon
Speaker 1: and it didn't know anything about who you are, being
Speaker 1: a not a very good website. But the fact that
Speaker 1: Amazon or Google know who you are, impersonalized to who
Speaker 1: you are makes them great products. Well, I think of
Speaker 1: you know, you've got the web on one side, you've
Speaker 1: got mobile over here, and the new world is going
Speaker 1: to be the results of what these large language models
Speaker 1: are able to do. It's a new interface into companies,
Speaker 1: and those interfaces need to understand who they're talking to customer,
Speaker 1: and that's what Tulio can provide. Hey, Jeff, let's talk
Speaker 1: a little bit about the company and you. I think
Speaker 1: I'm right in saying that you're a founda CEO, right
Speaker 1: co found a CEO? Your founder shares convert to common
Speaker 1: stock later in the year, I think in the summer.
Speaker 1: Mark Benioff's spin on this program Active Vision is a
Speaker 1: big topic right now. Talk to me about how you
Speaker 1: where your head's at with that. Well, look, you know,
Speaker 1: the conversion of our shares later this year, it doesn't
Speaker 1: really change anything. I mean, since we went public, we
Speaker 1: have been very responsive in listening to our investors, understanding,
Speaker 1: you know, their needs, their motivations, their ideas for the
Speaker 1: company and having those be reflected in our actions as
Speaker 1: a management team. And I think you see that in
Speaker 1: just last month, we took a number of substantive actions
Speaker 1: to get the company fit for the current market environment
Speaker 1: that we're in, to focus on profitability, including gap profitability,
Speaker 1: and that is all based on feedback that we get
Speaker 1: from our investors about what kind of company they want
Speaker 1: to be invested in. And so this doesn't change are
Speaker 1: the fact that we listen to our investors and they
Speaker 1: are an important stakeholder, and how we are running the company.
Speaker 1: There's also discussions we had around the technology sector right now,
Speaker 1: the health of it, and San Francisco. I don't want
Speaker 1: you to roll your eyes at May you've gone there
Speaker 1: with the debate on remote working. Coming back to the office.
Speaker 1: Just taught me through the logic behind the system that
Speaker 1: Twilio has. Why you think that makes for a better company. Well,
Speaker 1: first of all, let me start up saying I'm a
Speaker 1: big believer in San Francisco. I'm in San Francisco right now.
Speaker 1: This is where I live, this is where our headquarters is,
Speaker 1: and so I think San Francisco is the greatest town
Speaker 1: on earth. As far as Twilio goes, we have moved
Speaker 1: to a distributed work mode and that is both the
Speaker 1: reality of our works right. We are hiring great people
Speaker 1: wherever they are in the world. Before the pandemic, about
Speaker 1: ten to fifteen percent of our employees lived in a
Speaker 1: place that was not attached to a physical office of Twilio's.
Speaker 1: Now that number is it's getting close to sixty percent
Speaker 1: of our population. So what that means is we are
Speaker 1: able to tap into the global talent, which a lot
Speaker 1: of companies did during the pandemic. But now when you say, oh,
Speaker 1: but you got to come back to the office, well,
Speaker 1: there's a lot of people who won't be able to
Speaker 1: go back to the office, and you'll get a first class,
Speaker 1: second class world that are people in offices and the
Speaker 1: people who are remote. Well, Twilio we've said, look, we're
Speaker 1: gonna just continue leaning into this world of hiring great
Speaker 1: talent where it is and make them super productive and
Speaker 1: successful in this distributed world. And you know, someone said
Speaker 1: something smart to me once that I've always thought about,
Speaker 1: which is hybrid is the worst of both worlds. You know,
Speaker 1: hybrid cars, hybrid work, hybrid whatever hybrid's applied to and
Speaker 1: I think there's actually some truth to that. Yes, I'd
Speaker 1: rather have a full gas car or an electric car,
Speaker 1: but hybrid work, I think it is a similar thing.
Speaker 1: So we are leaning into this idea that we are
Speaker 1: a fully distributed company and that our job is to
Speaker 1: get teams together periodically to build that yes, free decor
Speaker 1: just build those relationships to get a lot done. But
Speaker 1: then ultimately where people live is not the most important
Speaker 1: factor in how we build a successful company. Wherever the
Speaker 1: work is happening, you're trying to make your product competitive.
Speaker 1: You know, there are people I speak to out in
Speaker 1: the market that look at what some of the telcos
Speaker 1: are doing around API based messaging platforms, in other words,
Speaker 1: competitions coming, and I wonder how you respond onto that. Well, look,
Speaker 1: we're just for injured a competition. There's been APIs for
Speaker 1: things that we do communications. We didn't invent phone calls
Speaker 1: or text messages. We've just had our finger on the
Speaker 1: pulse of customers better than anyone else. And that's why
Speaker 1: we're a leader and a creator of this communications platform
Speaker 1: as a service market. And there have been many other
Speaker 1: offerings in the market throughout the years, and I think
Speaker 1: We've always had a really good sense of what customers want,
Speaker 1: and that's why we've been the winner. All right, Tuilio,
Speaker 1: CEO Jeff Lawson. Good to catch up, goods talk San
Speaker 1: Francisco and tech. Turning now to a note out from
Speaker 1: Goldman Sack Strategists saying investors should buy US growth stocks
Speaker 1: with high margins while avoiding low margin growth stocks, even
Speaker 1: as equity and rates markets are at odds over the
Speaker 1: likelihood of a recession. If the economy enters a recession,
Speaker 1: equity market expectations for growth will likely deteriorate. In history
Speaker 1: suggests investors will be rewards so called quality attributes, including
Speaker 1: high margin growth stocks. Now coming up, how spob's collapse
Speaker 1: might be a symptom of a broader breakdown in the
Speaker 1: financial machine powering the startup industry. We'll discuss how that's
Speaker 1: also impacting the European ecosystem and the opportunities in that market. Next,
Speaker 1: checking back in on those markets. And as that one
Speaker 1: hundred we talked about it so much, heading for its
Speaker 1: second best quarter of the decade, A lot of the
Speaker 1: narrative around the federal was this is Bloomberg. There's still
Speaker 1: plenty of opportunity out there. There's growing biotech sector in
Speaker 1: the United States and Boston, San Francisco, there's still technology
Speaker 1: companies that are doing well. Many of these tech cuts
Speaker 1: are because the tech companies overspend or with cheap money,
Speaker 1: just went into areas they should have never gone into.
Speaker 1: So I don't believe those are fun the middle cutting
Speaker 1: to the core of the two companies. That's just a
Speaker 1: restructuring to get back to the basics and get back
Speaker 1: to where they're really ending value and making money rather
Speaker 1: than trying to send a man. Look. That was Boston
Speaker 1: Celtics co owner and Bank Capital Senior revised as Steve
Speaker 1: Poweruka there saying he still sees a lot of opportunity
Speaker 1: in tech and that's the conversation that I want to
Speaker 1: continue with Beyonna Lee, managing partner and chief investment officer
Speaker 1: over a Verdane, a specialist growth investment firm that partners
Speaker 1: with tech enabled but sustainable European business four billion dollars
Speaker 1: in committed capital. Beyonda welcome to the program, you kind
Speaker 1: of heard what Steve had to say. They're the opportunities
Speaker 1: he sees, but those were in US cities. You sit
Speaker 1: in Oslo looking closely at European tech given macro conditions
Speaker 1: right now, how healthy is the technology sector from a
Speaker 1: private markets perspective, Well, it depends on what perspective you're
Speaker 1: looking at from, of course. I mean we are looking
Speaker 1: at from sort of fundamental, fundamental perspective, which is, you know,
Speaker 1: the digitalization and decobanization is eating up an ever larger
Speaker 1: share of GMP. And if you want to invest in
Speaker 1: growth as where you want to be, and for us,
Speaker 1: they've been doing this for twenty years. Having some of
Speaker 1: these sort of what we call digital tourists or private
Speaker 1: market tourists to retract from the market I think creates
Speaker 1: a healthier and more exciting balance as an investor. So
Speaker 1: we see fantastic opportunity sets around us, our average, our
Speaker 1: PORTFOLI we're in the growth segment, right We're not on
Speaker 1: a sort of VC ecosystem. We're not reading the leveraged
Speaker 1: buyout world. We're in the growth ecosystem. And our companies
Speaker 1: grew have on average grown about twenty percent per year
Speaker 1: for the last twenty years, returned three point eight times
Speaker 1: and sixty one percent are and last year it actually
Speaker 1: grew twenty six percent, So it's healthy underlying growth, structural
Speaker 1: thematics keep going, and a more sort of healthy, unstable
Speaker 1: valuation environment. I think here in the United States we're
Speaker 1: talking a lot about how than as that one hundred
Speaker 1: heavy index lots of higher multiple software names is heading
Speaker 1: for its second best quarter of the decade. There's a
Speaker 1: lot of discussion in the public markets about tech shares
Speaker 1: performance in Europe. How are you benchmarking portfolio companies in Europe,
Speaker 1: European startups against that public sector performance we've seen recently.
Speaker 1: We've always tried to be quite cautious in our in
Speaker 1: our valuations. We've had statistically about eighty percent uplifts from
Speaker 1: three quarters before exit at Rodin, we've had the same statistics.
Speaker 1: We actually are old enough that we've sort of seen
Speaker 1: this record play a couple of times before, you know,
Speaker 1: we sort of conquest of the financrist in this sort
Speaker 1: of period where our benchmarks actually where our valuations actually
Speaker 1: shaken out, and and it's really that feel that that
Speaker 1: that sort of very schizophrenic or inconsistent behaviors where you're
Speaker 1: seeing both I think in European tech stock world and
Speaker 1: in the private markets. That is still this period of
Speaker 1: trying to figure out where the world is really headed.
Speaker 1: We're not that affected shortcurring in our valuation parameters because
Speaker 1: we have such such sort of deep discounts to public
Speaker 1: markets in our sort of holding values. But but clearly
Speaker 1: when you're discussing with the founders or they're kind of
Speaker 1: bootstrapped companies we typically talk to, of course they're looking
Speaker 1: at those kind of indexes, right, And clearly it was
Speaker 1: a lot more tricky conversations to do proprietary investments when
Speaker 1: when the BESI mere intercoed index or the growth was
Speaker 1: at sixteen times and is now. But I still think
Speaker 1: those sort of massive durations are still just adding to
Speaker 1: the confusion. I think we're going to see another six
Speaker 1: or twelve months before things things sort of flesh flesh out.
Speaker 1: But mind you, you know, we have more developers in
Speaker 1: Europe than the US where we play sort of northwestern
Speaker 1: Europe is much more digitized economies than the US one
Speaker 1: and so and much less capital available, so we don't
Speaker 1: we haven't had the same massive run up in valuations
Speaker 1: and therefore there's not quite the same pressure downwards. I
Speaker 1: would say, well, you know, you think you reflect on
Speaker 1: how many Northern European and even Eastern European tech talents
Speaker 1: make their way over San Francisco, where I am. You know,
Speaker 1: the debate across the Atlantic has been about the impact
Speaker 1: of the SVB collapse in a tightening of financial conditions.
Speaker 1: How did that play out for you in Europe? Was
Speaker 1: there a material impact to operating cash flow for your
Speaker 1: portfolio companies and and how has that impacted their kind
Speaker 1: of outlook for the rest of the year. It was
Speaker 1: really quite interesting because in in you know, in the
Speaker 1: US as we be, and being on the West coast,
Speaker 1: it's such a sort of pillar of the community. We
Speaker 1: have seven officers across northwestern Europe's UK, and it's really
Speaker 1: only the UK that was effected in the meaningful way
Speaker 1: when we ran a sort of over eighty portfolio companies.
Speaker 1: Are really the three of them that banked the with
Speaker 1: this bib SO and none of the none of the
Speaker 1: regional firms here did So it's in the Europe. It's
Speaker 1: largely sort of isolated in the UK, where it was
Speaker 1: it was important. Um, but I think it's interesting that
Speaker 1: there's been an explosion adventure that part clear last year
Speaker 1: more less double look only some sort of into about
Speaker 1: thirty billion and about a third of all venture money
Speaker 1: race last year we ventured it. I think that story
Speaker 1: is going to draw up for many reasons, not the
Speaker 1: sort of beer learnings, but also the general interest rates
Speaker 1: and everything else going on. So I think that sort
Speaker 1: of reckoning that libits that are reckoning the new reality
Speaker 1: of new valuations in the private markets has been delayed
Speaker 1: by the availables of ectual death and that will go
Speaker 1: down now. Well, I kind of crystallized that for me.
Speaker 1: You have offices across basically euro denominated markets Mainland Europe,
Speaker 1: Sterling denominated in the UK, Corona denominated. Where are the opportunities?
Speaker 1: How do you play that environment when it comes to
Speaker 1: investing in private technology companies now? So we basically tried
Speaker 1: to identify Nichous or Subnichus, you know it could be,
Speaker 1: but typically areas whether the Nortyes and northwest beer drinking
Speaker 1: Europe is what we call our results. And basically it's
Speaker 1: really interesting that, you know, when I remember I moved
Speaker 1: to the US in ninety seven to do my MBA
Speaker 1: and I was shocked that it was still cash in news,
Speaker 1: so check books and news. Sorry, move back from my
Speaker 1: reunion in ten years lad news to these in cash.
Speaker 1: These these very sort of digital environments, which is really interesting.
Speaker 1: We can use that as a laboratory to build global
Speaker 1: winners from. And interestingly, you know when you have something
Speaker 1: a flatter salary structure. Our big companies, for example, easy
Speaker 1: Park has one and a half million parking transactions to
Speaker 1: day through the system. We have ten million customers in
Speaker 1: the US now we know them on the name park.
Speaker 1: Now when we want to hire a developer, that actually
Speaker 1: costomers double in Atlanta compared to Stockholm. So you have
Speaker 1: this perception that these are high cost economies, but it's
Speaker 1: actually quite cheap to build technology. But because blue color
Speaker 1: is quite expensive, the return on deploying technologies very high.
Speaker 1: So that's often what we see be to being driven
Speaker 1: sas lative Yes, healthcare, those kind of bond al managing partner,
Speaker 1: chief investment officer of good catch up, good to see
Speaker 1: from US life. Netflix to expand its budding video game
Speaker 1: service beyond smartphones and tablets and bring it to your TV.
Speaker 1: App developer Steve Mosa is the one who discovered it,
Speaker 1: finding some code hidden within Netflix's app that includes references
Speaker 1: to games played on TV. Netflix launched its gaming effort
Speaker 1: on iPhones iPads and Android devices back in twenty twenty one,
Speaker 1: releasing titles like Into the Dead two, Unleashed or Stranger
Speaker 1: Things three, The Game, and Card Blast. The idea here
Speaker 1: is to expand the experience to TV, supplement Netflix's shows
Speaker 1: and movies, and help retain customers as the company raises
Speaker 1: subscription prices. Now, the findings in Netflix's app code don't
Speaker 1: guarantee that the company will follow through with the TV idea,
Speaker 1: but it does indicate that's what the company has been
Speaker 1: turning testing internally. All right, let's go from gaming to
Speaker 1: the metaverse, because the metaverse dream is not dead, at
Speaker 1: least that's according to Meta's Nick Clegg, the social media's
Speaker 1: head of global affairs, took to the metaverse yesterday to
Speaker 1: cyst that the future of computing will take place on
Speaker 1: that still not quite yet defined virtual world. That's sorts
Speaker 1: Bloomberg's Match Taffkin BusinessWeek columnists are they are? They know?
Speaker 1: I've done a lot of reporting about and cutting back.
Speaker 1: Nick Clegg puts a headset on and comes out what
Speaker 1: they are? What's the latest? Well, I mean it sounds like,
Speaker 1: first of all, Meta Facebook has put so much money
Speaker 1: into this thing and it's and as we know, it's
Speaker 1: it's very important to Mark Zuckerberg. And for all the
Speaker 1: talk of you know, the Year of Efficiency and all that,
Speaker 1: this is still Mark Zuckerberg's company. He thinks it's the future,
Speaker 1: and he thinks it's a way for Facebook meta to
Speaker 1: own the next big platform. Um, I think, you know,
Speaker 1: the jury really very much is still out here. We're
Speaker 1: seeing all these other big companies pull back on their
Speaker 1: metaverse ambitions. And when you look at the investment that
Speaker 1: this company has put in to this new technology in
Speaker 1: terms of advertising, in terms of research, they are not
Speaker 1: seeing much of a return. Here. We're talking about, you know,
Speaker 1: tens of billions of dollars Super Bowl ads and relatively
Speaker 1: few users at least when we're talking about the sort
Speaker 1: of horizon product, which is the product that you know,
Speaker 1: Zuckerberg thinks is the future. Yeah, all right, Bloomberg's match
Speaker 1: Chaffkin keeping us up to date with the metaverse, Well,
Speaker 1: little won't it. We're not going to decide today now.
Speaker 1: The weeks after Elon Musk acquired Twitter, hundreds of advertisers
Speaker 1: pause spending on the platform, where the changes the billionaire
Speaker 1: might bring. Months later, many of those advertisers still haven't returned,
Speaker 1: despite efforts by Twitter sales team to woo them back
Speaker 1: with steep discounts and new safety tools. With the reporting
Speaker 1: Bloomberg's Iish accounts interesting story. You know, Elon's been kind
Speaker 1: of public about some of the changes to the platform.
Speaker 1: What's less public is how it's been received. What have
Speaker 1: you learned in your reporting? Yeah, so what we heard.
Speaker 1: We talked to some of the major advertising agencies, and
Speaker 1: really the discounts and all that are great, but that's
Speaker 1: not moving they needed for them. It really is Musk.
Speaker 1: It's some of his erratic decison making, right. It's the
Speaker 1: lack of content moderation on the platform. Right, there's been
Speaker 1: a resurgence of hate speech, and so it's really those things, Right,
Speaker 1: what kind of content is their ad going to be
Speaker 1: next to? That's keeping them off of the platform Twitter structurally,
Speaker 1: his Mason changes, the platform looks different basically to how
Speaker 1: it did a year ago. Which parts of that are
Speaker 1: advertising is worried about. I mean, did they just not
Speaker 1: see the value of advertising on it? Yeah, it's part
Speaker 1: of that, right, Like in although Twitter has had actually
Speaker 1: more daily active users right from us, right, it's but
Speaker 1: even still like there's been so much internal change in
Speaker 1: chaos that it's made it really difficult. So the head
Speaker 1: of sales they thought was gone, but then he actually
Speaker 1: wasn't gone. And there's been so many internal changes within
Speaker 1: the sales organization that advertisers are losing their points of contact.
Speaker 1: They don't even know who to contact or talk to
Speaker 1: anymore about their ads, and so that makes it difficult.
Speaker 1: So it's really a lot of the internal chaos and
Speaker 1: organizational changes that make it confusing for them to even
Speaker 1: know who to talk to. All right, Bloomberg's actually counts
Speaker 1: terrific reporting. Thank you. That does it for this edition
Speaker 1: of Bloomberg Technology, don't forget so much to recap across AI,
Speaker 1: across social. You can check out the podcast wherever you
Speaker 1: find your podcast Apple, Spotify, iHeart, or on our Bloomberg channels.
Speaker 1: One more day to go in this week. The tech
Speaker 1: sector ending the first quarter on a high and has
Speaker 1: that one hundred second best quarter of the decade. More
Speaker 1: to come. This is Bloomberg