Speaker 1: From the heart of where innovation, money and power collive
Speaker 1: in Silicon Valley and beyond. This is Bloomberg Technology with
Speaker 1: Emily Jay. I'm Emily Chinese, San Francisco, and this is
Speaker 1: Bloomberg Technology. Coming up in the next hour. What's old
Speaker 1: is new And that goes for Netflix, which is starting
Speaker 1: to look a lot more like traditional cable as it
Speaker 1: announces its ad supported plan to launch in November. Details
Speaker 1: this hour plus Now you can turn any credit or
Speaker 1: debit card into a Bitcoin rewards car thanks to the
Speaker 1: rewards up slowly. We'll talk about the company's mission to
Speaker 1: make Bitcoin more accessible to all with CEO Alex Adelman
Speaker 1: and investor Alexis Ohanian and of Apple, card users can
Speaker 1: see rewards automatically deposited into new accounts thanks to its
Speaker 1: extended partnership with Goldman Sachs. We'll talk about Apple's continued
Speaker 1: fin tech push. All that in a moment, but first,
Speaker 1: stock surging roaring back from that sell off sparked by
Speaker 1: heart inflation numbers. How to tech fair well, Our Ed
Speaker 1: Ludlow has been watching it all day, Ed, what did
Speaker 1: you see? Yeah, I mean it was a wild ride.
Speaker 1: The hot CPI or inflation print from September really reinforce
Speaker 1: this idea that the FED is going to be aggressive
Speaker 1: or remain aggressive with its rate hike path. But the
Speaker 1: market kind of stayed sanguine. When we look at volatility
Speaker 1: data like the cbo E VIX or VIX index, you know,
Speaker 1: the market didn't seem to panic, and it kinds surging
Speaker 1: back on the NAZA one hundred and the SMP five
Speaker 1: under we saw swings of more than five percent, five
Speaker 1: to six percent at one point. Yet the NASA one
Speaker 1: hundred was down by three percent. And if you allow me,
Speaker 1: glets get technical. Let's get technical together and look at
Speaker 1: this Bloomberg terminal chart because it was interesting. Technical levels
Speaker 1: did seem to play a key role here. At one point,
Speaker 1: the benchmark SMP five hundred was was down back below
Speaker 1: below its post pandemic rally, you know, at their thirty
Speaker 1: five mark, and that seems to trigger some program buy.
Speaker 1: And what I'm saying, in other words, is the algoes
Speaker 1: kicked in to rebalance the market, and that was a
Speaker 1: key factor this Thursday. So let's dig into tech and
Speaker 1: and and how tech fairty here because there it's been
Speaker 1: an absolutely dreadful a few days yeah, a few days
Speaker 1: and a few weeks. Right while rates have been pushing higher,
Speaker 1: you know, the NASA one hundred, NYC Fang Plus Index,
Speaker 1: the Philadelphia Semiconductor INEXT, you name it, they've all kind
Speaker 1: of underperformed the broader market. In this case, we're looking
Speaker 1: at the SMP five hundred is the benchmark for US equities,
Speaker 1: and we know the story, right, Higher rates discount the
Speaker 1: present value of future profits, particularly for corners of the
Speaker 1: tech market that a preprofit or trade has stretched multiples.
Speaker 1: But there is debate out there about how tech fairs
Speaker 1: because when you think about the megacaps, for example, you
Speaker 1: look at the names like Microsoft and Google, they're down
Speaker 1: more than thirty percent year to date, really trailing the
Speaker 1: SMP five. But there's also confidence that in a recession
Speaker 1: re environment, and if the FED goes too far with
Speaker 1: with rate heights, we do have a recession. In that
Speaker 1: recession we environment megacap tech fares better because it has
Speaker 1: an entrenched market position, strong balance sheet. We're not seeing
Speaker 1: that play out in the market right now, but there
Speaker 1: is a feeling that if we do move towards the
Speaker 1: word recession in substantive terms, that you might see tech
Speaker 1: as a strong play, and we can't talk about markets
Speaker 1: without talking chips. Obviously, a huge week in the semiconductor
Speaker 1: industry so far, on one that maybe they'd rather forget.
Speaker 1: But but how are we trending? Yes, so the Philadelphia
Speaker 1: semi coonductor in nex or SOCKS was higher on Thursday
Speaker 1: after five straight days of declines. It's been really downtrodden, right.
Speaker 1: We've been talking all week about how there's a real
Speaker 1: slow down in consumer electronics and the PC market, in
Speaker 1: other words, the end markets where those chips go into.
Speaker 1: The latest news overnight was from TSMC, one of the
Speaker 1: leading fabs in the world, that cut capital spending plans,
Speaker 1: and that's a real signal to the world of tech
Speaker 1: that it's expecting a slowdown in demand for chip manufacturing.
Speaker 1: The other big story, of course, playing out is this
Speaker 1: ramp up intentions between the US and China. But we're
Speaker 1: on an upward trajectory at least for Thursday, and as
Speaker 1: we've shown in the last couple of minutes on the screen,
Speaker 1: the SOCKS has really underperformed the broader market to date.
Speaker 1: The question is when do we bottom out and how
Speaker 1: much further does that slow down in demand for the
Speaker 1: end markets for chips. How much further does that have
Speaker 1: to run? All right, I'm low, thank you. Meantime, Netflix
Speaker 1: will reduce introduce an advertising supported plan on November three,
Speaker 1: charging a seven dollars a month for subscriptions. The streaming
Speaker 1: service hopes to attract price sensitive customers at a time
Speaker 1: when growth has plateau. Joining us now Chris Paul Mary
Speaker 1: of course who covers helps us cover Netflix in the
Speaker 1: entertainment industry. So how competitive? Chris? Would you say? This
Speaker 1: price tag is very competitive? You know, this was a
Speaker 1: lot lower than people anticipated. Seven dollars a month is
Speaker 1: a dollar below what Disney plus his new ad supported
Speaker 1: service is going to be dollar below Hulu, three dollars
Speaker 1: below the HBO Max adds supported service. This is really Netflix,
Speaker 1: you know, putting a stake in the ground and say
Speaker 1: we are here to get more customers out of this
Speaker 1: new plan. Talk to us about the bigger picture and
Speaker 1: you know how this will play out. And you know
Speaker 1: what we've talked about is a sea of streaming services.
Speaker 1: You know, so many options out there in terms of
Speaker 1: where to get your content. You know, is it is
Speaker 1: it really this price that gives Netflix that much more
Speaker 1: of an edge well, this, this is a big moment
Speaker 1: in the evolution of streaming because you know, Netflix founder
Speaker 1: Rein Hastings at Lauden, you know, fought having ads on
Speaker 1: his service. He thought that, you know, and not having
Speaker 1: ads was a big differentiator from traditional TV. Of course
Speaker 1: it was, but we've now seen the whole industry evolved
Speaker 1: towards having various options. You know, Hulu, for examples, has
Speaker 1: built a multibillion dollar business with advertising, and potentially that
Speaker 1: will be the same at Netflix. And so everyone now
Speaker 1: has these different tiers of plans giving consumers the options.
Speaker 1: The irony is that the streaming business now looks a
Speaker 1: lot like traditional TV, and unlike traditional TV, you can't
Speaker 1: even record the shows and then skip the ads. You're
Speaker 1: kind of going to force to watch the ads if
Speaker 1: if that's the plan you choose. Our colleague Lucas Shaw
Speaker 1: has a new piece out in Bloomberg business Week and
Speaker 1: the headline is Netflix is Makeover is Everything. Ted Surrandos
Speaker 1: once hated, you know, you mentioned the word evolution, but
Speaker 1: you know, talk to us about just how how different
Speaker 1: this is and and sort of Ted Surrandos and and
Speaker 1: read hastings new vision here. There's so many ways the
Speaker 1: company is changing, change because basically everybody copied it, you know,
Speaker 1: from Disney to Time Warner and that everyone came out
Speaker 1: with streaming services. And so we're seeing you know, not
Speaker 1: just the ad supported things that that that Red didn't want,
Speaker 1: but you know, they're cracking down on passwords sharing, which
Speaker 1: was for a long time they let anybody you know
Speaker 1: share passwords. We're now seeing experimentation with the new Knives
Speaker 1: Out film is going to be in theaters for a
Speaker 1: week before a month before it comes to the streaming service.
Speaker 1: So we're seeing a lot of experimentation and changing in
Speaker 1: the old ways Netflix works. And they have to change
Speaker 1: because you know, there are subscribers were down in the
Speaker 1: first half of this year. Do you think competitors will
Speaker 1: make some moves as a result of what Netflix has
Speaker 1: announced here? And if so, what, well, to some degree,
Speaker 1: you know, Netflix is playing catch up because a lot
Speaker 1: of the other folks have ad supported services and and
Speaker 1: so we're just you know, we're seeing a real evolution
Speaker 1: of the streaming business. We're seeing a lot more price competitions,
Speaker 1: a lot more offers, and you know, and and and
Speaker 1: all of these big media come but these are using
Speaker 1: their traditional TV arms to promote their streaming services. They're
Speaker 1: putting some of their best shows on streaming first. So
Speaker 1: you know, this is that this is a major, major
Speaker 1: fight in the streaming wars for sure. So Chris, what's
Speaker 1: your outlook in terms of, you know, let's say, where
Speaker 1: is the streaming industry a year from now. We've been
Speaker 1: talking about you know, ESPN and potential m and A
Speaker 1: with sports betting. There's all of these, you know, potentially
Speaker 1: interesting and unique moves coming in the midst of a
Speaker 1: major market downturn, you know. And and the streamers aren't
Speaker 1: going to be immune to that, no, And you know
Speaker 1: we've seen cutbacks and spending at Netflix and all and
Speaker 1: a lot of the big companies. But there it's very
Speaker 1: clear this is the way the industry is going. And
Speaker 1: it's almost like shocking. Every week we see now evolution.
Speaker 1: You know, NBC for example, considering taking away an hour
Speaker 1: of prime time you know, big shows Dancing with the
Speaker 1: Stars a big hit on ABC forever you know, now
Speaker 1: exclusively on disne Plus or Kardashians or only on Hulu.
Speaker 1: You know. So we're seeing this massive migration you know,
Speaker 1: before our eyes, and that's not going to change. There
Speaker 1: is certainly going to be continued subscriber growth and streaming,
Speaker 1: and hopefully as the industry grows and rationalizes, is spending
Speaker 1: some profits as well. All right, Bloomberg's Chris Palmry will
Speaker 1: keep following your reporting on this great migration. Thank you
Speaker 1: for your insights. There another story that we continue to watch,
Speaker 1: Meta has urged a judge to reject the FTC's attempt
Speaker 1: to block the company's acquisition of the virtual reality app
Speaker 1: within Unlimited Medicine. The agency's claims about competition in the
Speaker 1: area are based on pure speculation. The FTC alleges Meta
Speaker 1: would kill future competition in a new market. The last
Speaker 1: time they FTC brought such a case back in involving
Speaker 1: sterilization technology, the agency lost. Can a bitcoin become a
Speaker 1: global alternative currency? Well, at least that's the bed of
Speaker 1: the bitcoin shopping rewards app Lolly, which just launched a
Speaker 1: new instore earnings experience giving shoppers the ability to turn
Speaker 1: any credit or debit card into a bitcoin rewards card.
Speaker 1: For more and how it all works and what it
Speaker 1: means to launch this in the middle of major market uncertainty,
Speaker 1: I want to bring in Lolly CEO Alex Ailman and
Speaker 1: Alexis Ohanian, founder of the venture capital firm seven seven six,
Speaker 1: which of course is backing Lolly. So Alexis, of course,
Speaker 1: you know, you're an investor in so many things, but
Speaker 1: I know that Lolly is really important to you. What
Speaker 1: do you think is so unique about this in store
Speaker 1: earnings experience? You know, one of the things that I've
Speaker 1: been obsessed with from my very first investment in crypto,
Speaker 1: which was seating coin based back in is the user experience.
Speaker 1: And something that Lolly has pioneered is bringing this successibility
Speaker 1: in the form of cash back through online shopping to
Speaker 1: so many people, delighting them And so we just made sense,
Speaker 1: especially as the world is you know now moved out
Speaker 1: of lockdowns, um, to make it even easier for people
Speaker 1: to earn bitcoin just simply going through their normal purchasing habits,
Speaker 1: and card boost is a great way to do that. Alex,
Speaker 1: tell us how it all works and how popular, uh
Speaker 1: you expected to be given that we're in a downturn.
Speaker 1: Bitcoins now back below twenty and you know, we just
Speaker 1: got a lot of questions about the future of the economy. Yeah,
Speaker 1: that's a great question. Uh, I mean, we're on a
Speaker 1: mission to save people money, and that money happens to
Speaker 1: be Bitcoin, which we believe is the best money in
Speaker 1: the world. Um, we save people on average about seven
Speaker 1: on every transaction and upwards of so as we most
Speaker 1: likely go into a recession, it's more important now than
Speaker 1: ever to be saving money at all your favorite places.
Speaker 1: And with the launch of this new card Boost Boost Future,
Speaker 1: we went from a thousand merchants to over ten thousand
Speaker 1: merchants that you can earn from Alexis. What is your
Speaker 1: outlook on the markets right now, given you know what
Speaker 1: we're seeing across tech shares, what we're seeing in crypto,
Speaker 1: you know, than the the high inflation numbers. You know,
Speaker 1: Jamie Diamond just said he thinks the markets are going
Speaker 1: to fall another another. How are you thinking about where
Speaker 1: this is going and how is that impacting your investment strategy? Well,
Speaker 1: I think in the on the head, there's a lot
Speaker 1: of uncertainty right now and in a way, uh, you know,
Speaker 1: products that are countercyclical because they're offering opportunities for consumers
Speaker 1: to save money tend to do better in times of
Speaker 1: this kind of economic uncertainty, and so that that's certainly
Speaker 1: factored into why we were so excited about Wally, and
Speaker 1: I think broadly, look, the big advantage to being an
Speaker 1: early stage investor working with CEOs from the very start
Speaker 1: is no matter what the macro picture looks like, uh,
Speaker 1: it is almost is it is always a great time
Speaker 1: and to be starting a company and almost more opportunistic
Speaker 1: during times of this kind of you know, volatility and uncertainty,
Speaker 1: because it really it sobers up a CEO to have
Speaker 1: to focus on making something that people genuinely need, genuinely want,
Speaker 1: that have viable business models and so in away, I
Speaker 1: you know, it's not that I look forward to these times,
Speaker 1: but I do think they bring out the best in
Speaker 1: new entrepreneurs who are solving real problems. And we have
Speaker 1: a lot of real problems that need solving. So we're
Speaker 1: still active, We're still busy investing, and obviously I want
Speaker 1: to see this economy, you know, get its legs back
Speaker 1: on earth. But I agree it's going to take time.
Speaker 1: What are you telling founders right now? You know, how
Speaker 1: are you telling them to navigate choppy conditions? I have
Speaker 1: a lot of keep keep cash on hand, you know,
Speaker 1: focus on reducing burn and really isolate your focus of
Speaker 1: the company around not just growth at all costs, but
Speaker 1: but real scalable growth. Focus on things like revenue, focus
Speaker 1: on it's not going to be about the story of
Speaker 1: how quickly or how much you grew in the next
Speaker 1: six months a year. It's about how much you were
Speaker 1: able to accomplish with the money you had, and ideally
Speaker 1: to get yourself in a casual, positive situation as soon
Speaker 1: as you can, because then you're ultimately controlling your own
Speaker 1: destiny and it's not up to you or it's up
Speaker 1: to other investors whether or not you get to the
Speaker 1: next round. And what's exciting is the companies that ironically,
Speaker 1: you know, don't need those outside sources of capital are
Speaker 1: often the ones that have the most luck fundraising during
Speaker 1: times like this. And you know, we've we've really enjoyed
Speaker 1: seeing the trajectory of Lolly and have have doubled down
Speaker 1: and excited to see it keep growing. Alex talk to
Speaker 1: us about how many people are using Lolly, the demographics
Speaker 1: and how they're actually using their rewards or are they
Speaker 1: holding there are rewards. It's a great question. So we
Speaker 1: launched four years ago and we've already brought on over
Speaker 1: fi thousand users that are earning bitcoin. Uh. These are
Speaker 1: across web with our Chrome extension and mobile with our
Speaker 1: new mobile app. So a lot of users where we
Speaker 1: are their first experience into crypto, and that's what we
Speaker 1: want to do. We want people to we want to
Speaker 1: teach people about bitcoin. We want to teach people about
Speaker 1: the importance of this this new world that we're entering
Speaker 1: into and you know, save people a lot of money
Speaker 1: in the process. Um right now. You know, some of
Speaker 1: the most interesting statistics is that over our users are female.
Speaker 1: When I first um un tell us an eight team,
Speaker 1: when I sort of starting ally with my co founder Map,
Speaker 1: what we found was that less than four percent of
Speaker 1: crypto users were female. And so we're very proud to
Speaker 1: share that we're seeing a dramatic increase given the nature
Speaker 1: of of our business. That's great to hear. Thank you
Speaker 1: for sharing that, Alexis. I'm curious for your outlook on
Speaker 1: crypto in particular as the market downturn continues. Bitcoin, for
Speaker 1: an example, we're seeing slightly lower volume, yes, less volatility,
Speaker 1: but the lower volume is kind of a red flag.
Speaker 1: What's your outlook for bitcoin and and for the broader
Speaker 1: crypto market, you know, beyond the startups and other places
Speaker 1: where you're investing. Well, look, I've I have now been
Speaker 1: investing in building through multiple crypto winters. Uh, this is
Speaker 1: the time when the very best products are getting built,
Speaker 1: when a lot of the Charlotteans and the hype have
Speaker 1: have exited the building and and the folks who are
Speaker 1: left are the folks who are genuinely building and solving
Speaker 1: real problems. And so the next test for this next cycle,
Speaker 1: for us to get to the next crypto spring, which
Speaker 1: I do think will come, is really going to hinge
Speaker 1: on user experience. We you know, we have an opportunity
Speaker 1: now to really expand the base of folks who are
Speaker 1: finding value in this technology. Uh. You know, Bitcoin rewards
Speaker 1: are one way, and I think what's so interesting about
Speaker 1: it is we're also talking about that in the process
Speaker 1: of just having a lot account, basically being given your
Speaker 1: first crypto wallet and through a really elegant user experience
Speaker 1: and e commerce or even now breaking mortar commerce is
Speaker 1: something we all do. Here's some cash back. It just
Speaker 1: happens to be in the form of a cryptocurrency, Bitcoin,
Speaker 1: And I really believe five ten years out, you know,
Speaker 1: we're going to continue to see more cycles. This is
Speaker 1: gonna play itself out all over again. But every single
Speaker 1: time we hit a new level of of folks who
Speaker 1: are bought in, who have found utility, who have found value.
Speaker 1: And I'm I'm like I said, I'm I'm long term,
Speaker 1: still very very excited. There will continue to be volatility,
Speaker 1: but this is the exact time to be building if
Speaker 1: you're a long term believer in the tech. Everything's everything's
Speaker 1: on sale right now, and I think some great user
Speaker 1: experiences are going to get billed in the next few years.
Speaker 1: So last quick question to you, Alex Then, if Lawley
Speaker 1: is a gateway to this first wallet for UM so
Speaker 1: many new users, more women users, hopefully, how are you
Speaker 1: playing out a market downturn, a potential you know, you know,
Speaker 1: a lengthened crypto winter into Lolly's business. How long does
Speaker 1: this last? In your view? Yeah? So, you know, as
Speaker 1: Alexis was saying, you know, businesses that save people money
Speaker 1: do very well in recessionary times. Our last company, UM
Speaker 1: my co founder and I was last company was acquired
Speaker 1: by racket in formally ebates, which had its biggest growth
Speaker 1: years during the last recession. So if we think, you know,
Speaker 1: if we can follow that that same path, uh, save
Speaker 1: people more money and bring on more incredible merchants. UH,
Speaker 1: continue to build new technology. We're going to do very
Speaker 1: well through this recessionary time in the spare market. Um,
Speaker 1: because people are coming into bitcoin with Wally and getting
Speaker 1: it for free. They don't have to risk, you know,
Speaker 1: investing in it. They're just shopping as they normally would
Speaker 1: at their favorite merchants and getting it back. So it
Speaker 1: really is a risk free way of getting into crypto
Speaker 1: and continuing to dollar cost average in into bitcoin. All right, Well,
Speaker 1: will continue to track your product progress, Lolly, CEO Alex
Speaker 1: Adelman and seven seven six founder Alexis Ohanian, thank you both.
Speaker 1: From crypto winter to spring. Potentially, we'll see how long
Speaker 1: it takes. Okay, coming up, Apple card users get ready
Speaker 1: to start saving. Details on the company's expanded partnership with
Speaker 1: Goldman Sacks. Next, this is Bloomberg. Apple is taming up
Speaker 1: with Goldman Sacks to create a new high yield savings
Speaker 1: account for Apple credit card customers. The move building on
Speaker 1: the existing credit card partnership between these two companies. Joining
Speaker 1: us now with more Who else but Bloomberg's Mark German.
Speaker 1: So what exactly have Apple and Goldman announced? What's new here.
Speaker 1: So if you have the wallet up on your phone,
Speaker 1: which all iPhone users do, and you have the Apple Card,
Speaker 1: which is a collaboration on the credit card between an
Speaker 1: Apple and Golden Sacks, you will now be able to
Speaker 1: take your cash back rewards and put it into a
Speaker 1: new savings account built by Goldman in the wall of
Speaker 1: app so you can create or generate interest on those
Speaker 1: cash back rewards. Is Apple Card? Is this something that
Speaker 1: you think is going to be popular? I do. I
Speaker 1: think that this is going to be a entry level
Speaker 1: free savings account built into your phone for many people.
Speaker 1: I don't think people are gonna want to store a
Speaker 1: lot of money in this account, but the ability to
Speaker 1: generate interest based on your cash back savings that's between
Speaker 1: one and three percent. Sometimes they have six percent deals
Speaker 1: on some Apple products. I think it's going to be interesting.
Speaker 1: Apple hasn't said with the interest rate is going to
Speaker 1: be on this account yet. For comparison, Marcus, which is
Speaker 1: the consumer savings account HI Yield Savings account from Golden
Speaker 1: right now, is two point one a p y. I
Speaker 1: would imagine that Apples will be around there as well,
Speaker 1: So yes, I do think this is a major push
Speaker 1: from Apple, and it just shows how far they're willing
Speaker 1: to go in financial services so quickly. How does this
Speaker 1: fit into Apple's larger fintech strategy. Yes, so they have
Speaker 1: been rebuilding their entire technical infrastructure and this is a
Speaker 1: new piece of that. They have an Apple pay Leader
Speaker 1: service coming, They're working on another one with Golden Sacks
Speaker 1: for longer term, higher priced installments. So it all fits together.
Speaker 1: Apple wants to own payments and basically create the IE bank,
Speaker 1: and this is a key part of that. The I
Speaker 1: bank is coming, all right, Mark German, as always, thank
Speaker 1: you for bringing us your reporting. Appreciate it. Welcome back
Speaker 1: to Bloomberg Technology. I'm Emily Chang in San Francisco. While
Speaker 1: Tech made a roaring comeback on the latest CPI prey,
Speaker 1: one pocket of the market did get left behind. Bloomberg's
Speaker 1: id Ludlow here to tell us all about it. Yeah,
Speaker 1: e commerce and online retailers is really interesting. Amazon was
Speaker 1: one of only seventeen stocks that closed lower on Thursday.
Speaker 1: The rest with pretty much those high multiple preprofit software
Speaker 1: companies that we were talking about earlier in the show.
Speaker 1: And I guess it's this one to punch right. We're
Speaker 1: worried about inflation and how that's going to impact the consumer.
Speaker 1: At one point, looking at Etsy closed down nine percent.
Speaker 1: At one point was down twelve percent following the CPI print,
Speaker 1: It's biggest drop since June of this year. And also
Speaker 1: looking at i Buy Amplify e t F ticker I Buy,
Speaker 1: which is kind of a basket of not just e
Speaker 1: commerce stocks, but also gig economy stocks, at one point
Speaker 1: had a really deep three drop, but he actually clawed
Speaker 1: a lot of that back to close three tenths of
Speaker 1: percent lower. There's also the question about Prime Day two
Speaker 1: we've been talking about this week. You see Amazon on
Speaker 1: the right hand side of that chart, the big drop
Speaker 1: following the cp I print. It clawed its way back.
Speaker 1: But we're starting to hear noises from Amazon about how
Speaker 1: that October Prime early sales event when they said one
Speaker 1: million plus items were ordered from partners in primarily access,
Speaker 1: what does that even mean, Emily. They're not giving us
Speaker 1: a dollar value. We're not getting any sets of size
Speaker 1: and scope of how this October window did relative to
Speaker 1: the last window. We had that third party data which
Speaker 1: basically showed consumers were cautious, they spent less money on
Speaker 1: much cheaper items than perhaps they did in previous windows.
Speaker 1: I know that's not the picture that Amazon painted in
Speaker 1: our show this week, but the signs are that it
Speaker 1: wasn't as strong as perhaps we thought it would be,
Speaker 1: and it wasn't that much greater than any other day
Speaker 1: for prime. So real focus right now on the consumer,
Speaker 1: especially in the context of inflation. Okay, thank you. I
Speaker 1: want to stick to the markets. But from a private perspective,
Speaker 1: we've been talking a lot about the VC slowdown over
Speaker 1: the last few weeks and there's no new data to
Speaker 1: support that. Pitchbook is just out with the new report
Speaker 1: on VC deal making, fundraising, and exit numbers, and the
Speaker 1: picture is mixed. Let's bring in Kyle Stanford, now the
Speaker 1: lead VC analyst at Pitchbook, for a deeper dive on
Speaker 1: this report. Kyle, thank you so much. So what is
Speaker 1: the data telling you about how the VC ecosystem is
Speaker 1: being hit by this? Yeah? I think the data is
Speaker 1: really showing a very complex picture of what's happening in
Speaker 1: the venture market. UM. At one end, you have seed
Speaker 1: deals in early stage deals that have been very strong, UM,
Speaker 1: you know, lower than one but much higher than we've
Speaker 1: seen historically. And at the opposite side of the spectrum,
Speaker 1: late stage has seen deal value plummet. Deals are very
Speaker 1: difficult to get done there because of the proximity to
Speaker 1: the public markets. UM. So as we move forward, you know,
Speaker 1: we're really looking to see, you know, how that lace
Speaker 1: stage is able to respond. Obviously, with the lack of
Speaker 1: I P O s UM, it's going to continue to
Speaker 1: be a difficult market UM. But overall, the core of
Speaker 1: VC has shown to be able to still get deals done. Now,
Speaker 1: let's talk about the total money invested falling to a
Speaker 1: nine quarter low. Where do we go from here? I
Speaker 1: think again, we really need to look at where that
Speaker 1: that deal value fall came from. UM. You know, crossover
Speaker 1: investors and in public market investors especially had pumped so
Speaker 1: much capital into the venture market. The expectation of what
Speaker 1: VC was really got inflated. Now as those investors have
Speaker 1: kind of pulled back, at least especially from a dollar
Speaker 1: value standpoint, that deal value has dropped really significantly very fast.
Speaker 1: Last year. In mega deal so one million and larger,
Speaker 1: there's two hundred billion dollars invested in and eight seven
Speaker 1: percent of those deals included investment from those private equity
Speaker 1: funds or public market investors that had not traditionally been
Speaker 1: part of the market. So I think when we look
Speaker 1: at a deal value perspective, that is where the decline
Speaker 1: has come from. There's still a lot of dry powder
Speaker 1: out there, and there's a lot of fun of high
Speaker 1: number of funds ready to make investments, you know, while
Speaker 1: those investors are you know, probably taking a step back
Speaker 1: from the market and slowing the pace from what we
Speaker 1: saw one. That deal value decline is really right now
Speaker 1: coming from the very top of the market. Billion dollars
Speaker 1: in dry powder to be specific, How long do you
Speaker 1: think they're going to hold onto it? I mean, when
Speaker 1: are we going to see this money more meaningfully being invested. Well,
Speaker 1: I think first of all, there needs to be some
Speaker 1: sort of certainty in the market, right or at least
Speaker 1: less uncertainty. Interest rates are still rising, inflation is still
Speaker 1: extremely high. The kind of area where the market is
Speaker 1: as far as were the expectation of valuations from founders
Speaker 1: and the um needs of evaluations from investors is still
Speaker 1: a little bit dissiocated um. So we won't really see
Speaker 1: a meaningful amount of capital come back until that that
Speaker 1: you know kind of deficit closes from a deal dry
Speaker 1: powder perspective, I think we should look at that as
Speaker 1: as capital for a seed in early stage that is
Speaker 1: not meant to support unicorns or support the ultra late
Speaker 1: stage that has come about in the last few years.
Speaker 1: So two billion UM is a huge amount of money.
Speaker 1: But you know, more importantly, the high number of small
Speaker 1: investors that are in the market that have closed funds
Speaker 1: since the beginnings be really important for deal I do
Speaker 1: count especially moving forward. But again, and you know, we'll
Speaker 1: be looking towards the public markets to help release some
Speaker 1: of the pressure that's being created at the top of
Speaker 1: the market before we really expect any sort of growth
Speaker 1: to come back to venture. I spoke with Andrew Yang
Speaker 1: earlier this week. You know, obviously he goes way back,
Speaker 1: founded Venture for America, ran for president, has you know,
Speaker 1: a lot of thoughts about the economy, and he thinks
Speaker 1: there's a long way, a long way down to go.
Speaker 1: Take a listen to what he had to say. We
Speaker 1: have a ways to go on the down slope. I
Speaker 1: certainly think that uh, folks should try and keep some
Speaker 1: powder dry, you know, make sure that you have enough
Speaker 1: cash to make it through for a little bit longer
Speaker 1: than you might hope. So he's saying to keep powder
Speaker 1: dry for a longer period of time. You know, how
Speaker 1: much farther how much farther down do you think this
Speaker 1: slope goes, And how do you think vcs are going
Speaker 1: to negotiate, you know, not knowing how long this is
Speaker 1: going to last. Yeah, I mean as far as uh,
Speaker 1: you know, we do see a leg in data from
Speaker 1: what we see what we're expecting in the narrative, and
Speaker 1: so even from right now, I would expect deal counts
Speaker 1: to continue to slide and deal value slide a little
Speaker 1: bit more for a few more quarters before it catches
Speaker 1: up to what we're talking about right now in the
Speaker 1: beginning of Q four. UM as far as keeping dry powder,
Speaker 1: I think again a lot of the that unlocking or
Speaker 1: or getting that dry powder back into the market, it's
Speaker 1: gonna have a lot to do with what goes on
Speaker 1: in the public markets. UM LPs are very over balanced
Speaker 1: right now. UM they're they're they've been putting a lot
Speaker 1: more money to private equity and venture capital for the
Speaker 1: past few years now, with their public portfolios very much
Speaker 1: slower than they were last year, I think they're looking
Speaker 1: at their their VC allocation is a little overweight, and
Speaker 1: so you know, having those investors continue to hold on
Speaker 1: to dry powder, not call it down from LPs AT
Speaker 1: is gonna be very important until we again see a
Speaker 1: little bit more certainty in the market. Um see interest rates,
Speaker 1: interest rates you know stop rising um and inflation kind
Speaker 1: of start to lower and kind of get to a
Speaker 1: sense of balance throughout the entire market. All right, Kyle Stanford,
Speaker 1: lead VC analysts at pitch Book, Thanks so much for
Speaker 1: sharing your thoughts here, appreciate it. Time now for our
Speaker 1: crypto rapport, taking a look at the recent agreement between
Speaker 1: the government of the Commonwealth of Dominica and the decentralized
Speaker 1: open source blockchain based operating system TRON. The Caribbean country
Speaker 1: has appointed the TRON protocol as it's designated national blockchain infrastructure.
Speaker 1: Let's talk about that and more now with Justin Sun,
Speaker 1: Ambassador and Permanent Representative of Granadada, the World Trade Organization
Speaker 1: and and the founder of TRON. Justin thank you so
Speaker 1: much for joining us. So talk to us about this
Speaker 1: new agreement with Domerica. How did it come together and
Speaker 1: what is the vision? Sure, I believe this is a
Speaker 1: historical moment for both strong and Dominica since this is
Speaker 1: the first time a blockchain protocol has collaborate with a
Speaker 1: Caribbean government UM developing the new digital currency infrastructure for
Speaker 1: the nation. Tron has been a widely used blockchain infrastructure
Speaker 1: for almost four years now. Today we have a one
Speaker 1: hundred and the fifteen meeting users with a very big
Speaker 1: use case on stable point transac among five q ten
Speaker 1: billion US dollars every day. But this is the first
Speaker 1: time we collaborate with the government and to build there
Speaker 1: that's a NATES blog chain infrastructure. And also at the
Speaker 1: same time, all the trunk cryptocurrency including trs, BTT and
Speaker 1: Lefty JSC and all the stable coin us d U
Speaker 1: s d T and the us d D on Trunk
Speaker 1: has granted a status of UM Median of Exchange and
Speaker 1: authorized digital currency on Dominica. What lessons are you taking
Speaker 1: from Al Salvador and you know the bitcoin legal tender
Speaker 1: situation there which has had mixed results. Yes, I think
Speaker 1: Dominica move is definitely the next level compared to the
Speaker 1: move of Al sa Vador UM because in the Al
Speaker 1: sa Vador bitcoin tender bill is only focused on Bitcoin.
Speaker 1: I will see take bigoine as a very good um
Speaker 1: tours for value storage UM. But in terms of payment,
Speaker 1: stable coin, webs three and the older new concept comes out.
Speaker 1: We need a small contract platform. We need a new
Speaker 1: blockchain which with a much much like faster speeds, cheaper
Speaker 1: fees and the easy to devolve on it. So that's
Speaker 1: why I believe we can definitely benefit Dominica people with
Speaker 1: some more powerful blockchain and the webs free technology. Given
Speaker 1: the state of the markets, I'm so curious for your outlook.
Speaker 1: Are you interested in or trying at all to invest
Speaker 1: in some of these distressed crypto assets, for example the
Speaker 1: Celsius assets that are coming up for sale, Yes, definitely.
Speaker 1: I think today it's a bare market, so bare markets
Speaker 1: for buy right so um. So instead of like buying
Speaker 1: all the cryptal assets and assets in the bull markets
Speaker 1: with a formal emotion, I think right now is a
Speaker 1: good time to buy cryptal assets when like everybody wants out.
Speaker 1: So that's why I definitely believe there is some good
Speaker 1: opportunity in the markets now. But of course with thorough
Speaker 1: new diligence UH, which is very important and UH the
Speaker 1: understand thing of good understanding of the business in the
Speaker 1: first place. But for Trong and myself definitely. Right now,
Speaker 1: we are ready for lots of the opportunity. Now, are
Speaker 1: you interested in the Celsius assets in particular? Um? Yes,
Speaker 1: I think we have done some due diligence UM selves
Speaker 1: is before UM. But the whether we're gonna move forward
Speaker 1: on this opportunity, I think he's still pending. UM. Curious
Speaker 1: about your role in Huabi, obviously another huge crypto exchange.
Speaker 1: I know you're an investor UM in Poloniacs. Um. You
Speaker 1: know what can you tell us about Wabi? How competitive
Speaker 1: you think it'll be, what the new owner plans to
Speaker 1: do with it, especially given China has basically banned crypto Yes, UM,
Speaker 1: so first off all, UM, I'm the advisor to what
Speaker 1: be UH and I have joined the company for almost
Speaker 1: five days now, so I start to get familiar with
Speaker 1: the team and the policy we're gonna adopt in the future.
Speaker 1: I think right now what Be has two major focus.
Speaker 1: One is focused on the actual token, which is the
Speaker 1: platform token, which I believe is the core value of
Speaker 1: the platform. We need to UM push hard on the
Speaker 1: platform token. Horby a sorry platform as she if we
Speaker 1: want to build Horby as one of the most important
Speaker 1: exchange in the world. And also the second strategy is
Speaker 1: globalization since as everyone knows who Bey is very famous
Speaker 1: in China before, I think the real success story of
Speaker 1: Hoby in the next stage is definitely a globalization. And
Speaker 1: also we are planned to go back to China once
Speaker 1: China has a what has a better policy on cryptocurrency,
Speaker 1: and I think who a Be will be one of
Speaker 1: the most um important to come um compared to the bowl.
Speaker 1: Sorry competitive um um exchange out there when the time comes,
Speaker 1: interesting that you think China's crypto policies will become more friendly.
Speaker 1: You're not an owner or investor in QUABI, as I
Speaker 1: understand it, just an advisor. Um is that correct? And
Speaker 1: do you own any ht tokens? Yes? I own a
Speaker 1: lot of ht tolkens for sure, and uh how many
Speaker 1: I will say pencil minutes? So when even at those
Speaker 1: HT I will say some of it I already own
Speaker 1: before I become the advisor, since I use like h
Speaker 1: t since on day one, Um when will be first
Speaker 1: like funded in two thousand and thirteen, I start to
Speaker 1: accumulate h t uh on my own. But no, I
Speaker 1: will definitely see myself as a one of the biggest
Speaker 1: at cheholder UM and also UM for WOBI. I think
Speaker 1: definitely for the cryptal policy in China, I'm optimistic since
Speaker 1: you know UM China is UH is facing a big change.
Speaker 1: I think in the next month or two. I think
Speaker 1: after the new leadership, we would definitely see a lot
Speaker 1: of change in the economic policies and even for lots
Speaker 1: of industry policy. And I believe Cryptal and the blockchain
Speaker 1: is definitely one of the on the table. All right,
Speaker 1: Justin Son, thank you for joining us, for sharing all
Speaker 1: of that. Ambassador and permanent representative of Granada to the
Speaker 1: w t O and the founder of course of tron.
Speaker 1: Coming up, met A doubling down on its VR and
Speaker 1: ations with its new headset, the Quest Pro, or what
Speaker 1: the move could mean for adoption across the enterprise with
Speaker 1: a mixed reality pioneer magically the CEO Peggy Johnson with
Speaker 1: me Next. This is Bloomberg Meta doubling down on the metaverse,
Speaker 1: unveiling its newest virtual reality headset, the Meta quest Pro,
Speaker 1: this week, seeking to transcend the notion that VR is
Speaker 1: primarily for gamers, but broadened the audience, joining us to
Speaker 1: discuss what that could mean for adoption as a pioneer
Speaker 1: in the space, Peggy Johnson's CEO of Magic Leap and
Speaker 1: a R venture which was founded back in two thousand
Speaker 1: ten before any of us thought this was really possible. Peggy,
Speaker 1: what were your big takeaways from Meta's announcements aside from
Speaker 1: Mark Zuckerberg's avatar legs. Well, basically, it's real validation of
Speaker 1: the decision magically made a couple of years ago to
Speaker 1: focus initially on the enterprise. The technologies in its current
Speaker 1: state will allow for an r o I in areas
Speaker 1: like healthcare, public sector, and manufacturing, so it really is
Speaker 1: the right entry point for these sorts of technologies. Sat
Speaker 1: An Adela. Of course, the CEO of Microsoft, where you
Speaker 1: spent a very long portion of your career, appeared with
Speaker 1: Mark Zuckerberg talking about bringing Windows three, six, five to
Speaker 1: the quest and Microsoft is forming this industrial metaverse team.
Speaker 1: But do people really want to be working on Excel
Speaker 1: spreadsheets in the metaverse? Well, I do think that is
Speaker 1: some of the challenge. If if the goal is just
Speaker 1: to take what we're doing on our two D screens
Speaker 1: and put it up in front of us in our
Speaker 1: physical world, I think you've missed the real opportunity augmented reality. Actually,
Speaker 1: you know you you continue to view your physical world
Speaker 1: and then you intelligently place digital content in front of it.
Speaker 1: So if you're on a factory floor, you can put
Speaker 1: the digital twin of a machine that's gone offline on
Speaker 1: top of the physical machine and bring it back online
Speaker 1: much more quickly. So talk to us about the real
Speaker 1: enterprise opportunities that you see and what sectors you think
Speaker 1: won't get the most traction. We've got a whole list
Speaker 1: of interesting applications. One from a company called Centi a R.
Speaker 1: And what they do is heart capacterization. They used to
Speaker 1: do it where surgeons watch the heart on a two
Speaker 1: D screen. Now real time they've imaged the heart in
Speaker 1: three D. The surgeon can put it in front of
Speaker 1: their eyes and as they're threading the catheter through the heart,
Speaker 1: just do it with more care, more accuracy, better navigation,
Speaker 1: and better outcomes for the patient. Another is a manufacturing
Speaker 1: company in the Midwest, PBC Linear. They are having a
Speaker 1: hard time keeping employees because of the acceleration of retiring
Speaker 1: factory workers. They've been able to reduce their training time
Speaker 1: of new factory workers by about eight percent using magically,
Speaker 1: also reducing the rework and scrap by about twenty so
Speaker 1: really two benefits. And the new workers like the innovation.
Speaker 1: This is a PC on their eyes, so for the
Speaker 1: first time they get to also enjoy some of these
Speaker 1: digital tools that we've all had as knowledge workers for years.
Speaker 1: So last quick question, how far out is the industrial metaverse,
Speaker 1: whether it's virtual reality or augmented reality. How many years
Speaker 1: is it going to take pay for? You know, a
Speaker 1: significant um number of people businesses are using this technology.
Speaker 1: That's an easy one, Emily. It's here right now. You
Speaker 1: can realize r o I right now on these training
Speaker 1: news cases in three D visualization use cases, and that's
Speaker 1: what we're focused on. It Magically. Thanky Johnson, CEO Magically.
Speaker 1: Good to have you back with us. Thanks for sharing
Speaker 1: your perspective here today. And that doesn't for the sedition
Speaker 1: of Bloomberg Technology, don't forget to check out our podcast
Speaker 1: wherever you get your podcasts. I'm Emily Chang in San Francisco.
Speaker 1: This is Bloomberg