Speaker 1: From the heart of where innovation, money and power Colli
Speaker 1: in Silicon Valley and beyond. This is Bloomberg Technology with
Speaker 1: Emily Jay. I'm Emily Check in San Francisco and this
Speaker 1: is Bloomberg Technology. Coming up in the next hour, a
Speaker 1: concierge startup that is shaking up city living. We'll talk
Speaker 1: to the women behind the company, Alfred about why they
Speaker 1: see big opportunity and what they think about their early
Speaker 1: investor Adam Newman starting a different company that maybe trying
Speaker 1: to get in on that too. Plus Peloton on Amazon,
Speaker 1: the struggling bike maker puts its bikes on the world's
Speaker 1: largest e commerce site for the first time ever. Could
Speaker 1: it be the key to ending the slump? Will discuss
Speaker 1: and how did one of the biggest deals of the
Speaker 1: year come together. We will go inside the seventy billion
Speaker 1: dollar Microsoft Activision deal with Microsoft Gaming CEO Bill Spencer
Speaker 1: here to talk more about Peloton's partnership with Amazon. Is
Speaker 1: what wish Managing director Dan I s Dan, what do
Speaker 1: you make of this? I mean until now you could
Speaker 1: only get these bikes directly from Peloton. Now you can
Speaker 1: get them on Amazon. Is it going to open the floodgates? OK.
Speaker 1: I think it's a starter in the right direction. I mean,
Speaker 1: the director consumer model. Clearly, it's been an upbuild battle
Speaker 1: for Peloton, especially coming out of the pandemic. They had
Speaker 1: to do something, and if you're gonna bet on someone,
Speaker 1: I think Amazon was the right move. But now it's
Speaker 1: an execution story going forward. I think the street really
Speaker 1: needs to see that. So, you know, obviously Peloton has
Speaker 1: to work through you know, multiple other issues there, you
Speaker 1: know working on this. You know, send the bike, you
Speaker 1: put it together yourself, someone maybe can help you put
Speaker 1: that bike together. Does that make it all a little complicated?
Speaker 1: I think it does, And that's part of the problem.
Speaker 1: They're a typical Peloton buyer. They don't want complexity, they
Speaker 1: want simplicity. And obviously they've had some significant misses from
Speaker 1: product perspective on treadmill and some mothers. Strategically, now they're
Speaker 1: cutting costs. Look, and I think that's part of the
Speaker 1: issue too, is that you're in growth mode cut and
Speaker 1: costs especial the competition come from all angles, gyms and
Speaker 1: other sort of fitness. I mean, this is clearly going
Speaker 1: to be a very very bumpy path. I think this
Speaker 1: is a step, but Obviously it's really baby steps in
Speaker 1: terms of what they need to do. How many people
Speaker 1: are going to buy a Peloton on Amazon that didn't
Speaker 1: go to Peloton directly, Well, I think it's probably low
Speaker 1: single digits. And I think it's really more about accessories
Speaker 1: or maybe part of the ultimate flywheel or ecosystem they're
Speaker 1: trying to build. It just comes down to that director
Speaker 1: consumer model. I think writing was in the wall they
Speaker 1: need to change. Look, I think it's the first step.
Speaker 1: I could definitely see some more partnerships down the road,
Speaker 1: but right now, I mean they're on the white were
Speaker 1: trying to figure out what could ultimately move growth, and
Speaker 1: I think when it comes to Amazon, especially, they had
Speaker 1: their ears open. It made a ton of sent strategically
Speaker 1: thing for both. What do you make of a speculation
Speaker 1: about Amazon as a potential buyer here? I think that's
Speaker 1: just more speculum. I mean, I would be just flabber
Speaker 1: gas that if they went after they wouldn't strategically just
Speaker 1: does not make sense in terms of them going down
Speaker 1: that route, you know. I think that's why this is
Speaker 1: more of a partnership. And I think the problem with
Speaker 1: Peloton now is that the M and A chatter is obviously,
Speaker 1: you know, falling, and I think it really comes down
Speaker 1: to strategically what they're gonna do. I I continue to
Speaker 1: think when it comes to Amazon, it's more partnership and
Speaker 1: it really stops there. All right, let's talk a little
Speaker 1: bit about Tesla shares rising ahead of that three for
Speaker 1: one stock split. You know, how much of a difference
Speaker 1: is this really going to make. Obviously to the retail community,
Speaker 1: they're going to look back August two thousand twenty five
Speaker 1: for one with the stock since then, you know, but
Speaker 1: clearly a different market. But but no doubt. I mean
Speaker 1: they're doing it at a time that you're really starting
Speaker 1: to see demand continue to be firm despite oversee in
Speaker 1: terms of storm clouds, it's really production production story in China.
Speaker 1: That's the key of the test of story. They do
Speaker 1: not have never had demand issue. They have a supply issue,
Speaker 1: and I think that's starting to get rectified. But I
Speaker 1: do believe the stock split, you know, it really feeds
Speaker 1: the appetite or red town. It was a smart move. Meantime,
Speaker 1: you know, another little Twitter kerfossil between Elon Musk and
Speaker 1: a customer replying to a customer that was critical of
Speaker 1: this beta driver assistance feature, Musk basically saying I don't
Speaker 1: want to hear about it. In so many words, what
Speaker 1: do you make of this? That's not what you want
Speaker 1: to see? I mean, I think Twitter, as we know
Speaker 1: there has been positive but obviously on degas when there
Speaker 1: comes to Musk, and especially with more and more scrutiny,
Speaker 1: you know, from FSD to some of the other areas
Speaker 1: that we're seeing on test, So you don't want to
Speaker 1: see this type back and forth. The street just wants
Speaker 1: the execution production ramp and obviously much more of the
Speaker 1: software model take hold. And I think that's why things
Speaker 1: like this becomes sad shaws. But again it's you know,
Speaker 1: must goes to be a different drum. That's not going
Speaker 1: to change, allright, Webbish managing director Dan ives Dan, thank you.
Speaker 1: The venture capital scene is still in the midst of
Speaker 1: a big debate about funding and second chances. This after
Speaker 1: Andreas and Horowitz wrote its biggest check ever to We
Speaker 1: Were co founder Adam Newman for his new real estate
Speaker 1: venture Flow, a company portrayed in a recent Forbes article
Speaker 1: as being awfully close to another company he invested in
Speaker 1: two years ago. It's called Alfred, and it's a residential
Speaker 1: services company that aims to build community by fostering experiences
Speaker 1: within residential properties. Alfred's co founders join us now, Marcella's
Speaker 1: Pony and Jessica Beeck Ladies, thank you so much for
Speaker 1: joining us, as well as Bloomberg's own at Hammond. So
Speaker 1: let's start here. Marcella, tell us why you founded, Hello Alfred,
Speaker 1: Why you founded Alfred and the mission of the company today.
Speaker 1: That's an easy one. So when jess and I were
Speaker 1: working long hours and building our careers, one thing we
Speaker 1: thought about was how do we make the places that
Speaker 1: we live in anticipate and support us and that ultimately
Speaker 1: that was a way to keep more women in the workforce.
Speaker 1: And that vision has evolved a lot to really think
Speaker 1: about housing as a whole, and for us, Alfred is
Speaker 1: really about making housing focus on the consumer, putting the
Speaker 1: resident at the center of the value chain. And today
Speaker 1: housing is the largest asset class in the world and
Speaker 1: therefore should be the largest consumer product, but it's really
Speaker 1: lacking in terms of the branded experience, real technology, and
Speaker 1: a focus on the consumer as the end user. So
Speaker 1: we're excited to disrupt and evolve the industry with industry
Speaker 1: players and to give renters more for their renting. Now,
Speaker 1: the idea of tech enabled property management is getting a
Speaker 1: lot of attention because, of course Adam Newman just got
Speaker 1: this big check before we go there. Why do you
Speaker 1: think this is such a big opportunity, Jessica, So, I
Speaker 1: think that housing is one of the largest opportunities we have,
Speaker 1: both because of the lives that it hits. Right, all
Speaker 1: of us consume housing, and no one's ever looked at
Speaker 1: it as a consumer product. And at the same time,
Speaker 1: I think housing is in crisis. If we look at
Speaker 1: the asking rents in most markets right now, there's seventy
Speaker 1: pc higher than they were for what's being paid. And
Speaker 1: we also have a housing supply problem. We need to
Speaker 1: build five million more apartments to meet the demand for housing. So,
Speaker 1: given the impact that it can have on people's lives
Speaker 1: and the challenges facing it, I think it is right
Speaker 1: for a lot of attention and a lot of investment
Speaker 1: and a vision for what it can be, Jessica. Emily
Speaker 1: just alluded to the was or rather a sorry, a
Speaker 1: lot of noise around this space that partly because of
Speaker 1: what Mr Newman has just announced with his new venture Flow.
Speaker 1: He had a relationship that previously existed or maybe still
Speaker 1: exists with al Freedom with you guys. Has founders talked
Speaker 1: to us a little bit about that, how you got
Speaker 1: to know him in his family office, and how that
Speaker 1: relationship really came to be in the first place. So
Speaker 1: at Alfred, we've always taken a very collaborative approach for
Speaker 1: building our business and that started, you know, eight years
Speaker 1: ago when we started working with our initial landlords and partners.
Speaker 1: And among our partners, you know, we don't only count Adam,
Speaker 1: but we count Grace Star and invest Go, and you
Speaker 1: know our venture capital partners any A and and Spark
Speaker 1: And I think the key from our perspective has been
Speaker 1: to build a business by working with the best in
Speaker 1: the industry and doing that bottoms up, and that means
Speaker 1: being part of a broad ecosystem and seeking out people
Speaker 1: on that ecosystem that sees something that is similar to
Speaker 1: you and want to have a hand in building that future.
Speaker 1: So that's the approach we've taken for the history of
Speaker 1: how we've built the company, and you know, it's very
Speaker 1: much for how we met Adam, and obviously Alfred has
Speaker 1: its own product, unique product. We've just talked about the
Speaker 1: sort of this idea of owning the future of living.
Speaker 1: What is it that Alfred does. It is sort of
Speaker 1: unique and gives it some protection against new competitors potentially
Speaker 1: coming into the space and looking to disrupt residential real
Speaker 1: estate in a similar way. So ed if you look
Speaker 1: at the apartment space in particular, which is where most
Speaker 1: of us are actually living, and renters in fact are
Speaker 1: going to be the majority of home dwellers and future
Speaker 1: instead of homeowners. So multi family really hasn't evolved since
Speaker 1: the invention of the elevator. That is like the biggest
Speaker 1: innovation that's had the opportunity to disrupt the space. And
Speaker 1: the reason why we believe that real estate, specificly residential
Speaker 1: has been so resistant to disruption today it takes only
Speaker 1: one percent of its budget and applies that towards technology,
Speaker 1: is because it's incredibly fractured. So to make a change,
Speaker 1: you can't just attack one part of the problem. You
Speaker 1: have to look at the entire value chain and you
Speaker 1: have the aligned stakeholders in new ways that create value
Speaker 1: for everyone. So for us, what Alphred does that's so unique.
Speaker 1: We are the only prop tech company that's ever first
Speaker 1: really focused on the resident. We started with home management.
Speaker 1: We earned the right and the trust of consumers to
Speaker 1: provide services into the home. We then acquired a company
Speaker 1: that allowed us to build technology and automate the management
Speaker 1: of a full building. We then acquired a property manager
Speaker 1: that gives us full understanding what it takes to drive
Speaker 1: an asset and so what we're able to do when
Speaker 1: we put those three things together, which are very different businesses,
Speaker 1: but we create a fly will and we treat the
Speaker 1: consumer like they're the king. We add efficiencies with technology.
Speaker 1: We automate the entire resident experience from signing your least,
Speaker 1: paying your rent, booking an amenity, booking a peloton um
Speaker 1: and it doesn't hurt that we make the owner more money,
Speaker 1: but we also make the neighborhood around the building more vibrant.
Speaker 1: We bring services into buildings, and we really think about
Speaker 1: real estate as it's not just about the rent check.
Speaker 1: It's about looking at retail and looking at the building
Speaker 1: itself as a retail center for lifestyle and gaining access
Speaker 1: to the consumer wallet. So we're expanding the pie for everyone.
Speaker 1: We're changing the value chain, and we're doing that because
Speaker 1: we have these different core competencies that have taken us
Speaker 1: eight years of really hard work and evolution, building by building,
Speaker 1: shareholder by Sharyld's holds are building like we have a
Speaker 1: hundred and fifty thousand units on our platform in fifty
Speaker 1: two cities across North America and US and Canada, and
Speaker 1: we're really proud of the resilience we've had to be
Speaker 1: able to build well. We believe will be a generation
Speaker 1: defining company. So Forbes has done some reporting on your
Speaker 1: experience with Adam Newman and how you know his relationship
Speaker 1: with the company changed over the last couple of years.
Speaker 1: His representatives say he believes that the article is inaccurate
Speaker 1: and that in his family office still support the company.
Speaker 1: What's your response to that and your assessment of this reporting.
Speaker 1: So it's a great question, and I think a lot
Speaker 1: of people are asking probably similar questions. But the thing
Speaker 1: that I think is important is not necessarily what's accurate
Speaker 1: from a reporting perspective, it's what are we really focused
Speaker 1: on building and what have we done already to get
Speaker 1: us to this place. I think that this is a
Speaker 1: huge market and a lot of people see the opportunity
Speaker 1: here and that is something worth investing behind and investing
Speaker 1: in and as Marcella said, the thing that we're really
Speaker 1: focused on and alphad just what we've built today and
Speaker 1: where we want to take this in the future. We've
Speaker 1: only scratched the surface of what's possible in this market.
Speaker 1: We have a hundred and fifty thou units, but that
Speaker 1: is small compared to the overall market size, not just
Speaker 1: in the US but globally. And I think that's really
Speaker 1: where we should focus the conversation and bring the res versus,
Speaker 1: whether they are part of our company, are part of
Speaker 1: other companies, to bear in solving what housing can be
Speaker 1: in the future. That said, Mark Andreason wrote in a
Speaker 1: blog post that Flow aims to build quote the future
Speaker 1: of living. And if you look at your website on
Speaker 1: the home page, it says welcome to the future of living.
Speaker 1: I know that that can mean a lot of things.
Speaker 1: But how do you feel about that? And and and
Speaker 1: do you believe there's a conflict of interest here? Well,
Speaker 1: we know for sure. I think the future. Go ahead? No,
Speaker 1: go ahead, day, Marcella, Why don't you take I think
Speaker 1: the future? Yeah, go ahead. Um, what I was gonna
Speaker 1: say is that Andreason is a storied firm and fantastic
Speaker 1: investor and we're excited about the attention that they're bringing
Speaker 1: to the space. Obviously with the largest check they've ever written,
Speaker 1: we have raised ourselves a hundred million dollars over eight
Speaker 1: years UM, and there is a prints between those two
Speaker 1: numbers UM and we UH do see the opportunity to
Speaker 1: continue to expand UM to our investor set. But I
Speaker 1: don't want to comment on our on other businesses as
Speaker 1: much as I really want to focus a conversation on ours, Marcella,
Speaker 1: just on the on the question of funding. And look,
Speaker 1: obviously and Reeson has put in a very large amount
Speaker 1: of money now into this space, which should just say
Speaker 1: have serious appetite here have you guys as Outfred had
Speaker 1: a conversation with them about getting backing. Is it something
Speaker 1: you would now look to do? Clearly, as I say,
Speaker 1: they are very interested in this space. Yeah, so um,
Speaker 1: you know, we have lots of investors, We're talking to
Speaker 1: lots of investors. But one thing I would note is
Speaker 1: that the company is on a path of profitability and
Speaker 1: we are a self sustaining company that's been doing we're
Speaker 1: CRE eight years. This is not an idea that is
Speaker 1: on a whiteboard. We really feel like we have the
Speaker 1: horse by the main and there's something really big here. UM.
Speaker 1: In terms of talking to other investors, especially E s
Speaker 1: G investors, we have a ton of appetite. UM. I
Speaker 1: would say that one thing that I hope UM a
Speaker 1: positive silver lining that comes out of this is the
Speaker 1: way we think about venture, especially for female lead companies.
Speaker 1: Only two percent of venture dollars in the past year
Speaker 1: have gone to female lead companies, and that's strunk year
Speaker 1: over year. And I really want to put um some
Speaker 1: emphasis here and saying that female lead companies are no
Speaker 1: less um, the ideas are no smaller, and our ability
Speaker 1: to execute is no less And I think that there's
Speaker 1: a huge arbitrage opportunity for backing female founders and especially
Speaker 1: in the space. And I believe that the future of
Speaker 1: living will require lots of collaboration across many different companies,
Speaker 1: and that that's the new form of disruption, especially where
Speaker 1: we require so much change across so many stakeholders in
Speaker 1: a very complicated value chain. Jess, I'd love to give
Speaker 1: you a chance to weigh in on this question as well.
Speaker 1: Obviously we know that you know women are historically underfunded,
Speaker 1: UH in Silicon Valley have a much harder time raising money,
Speaker 1: and here we have idea aside, you know, a controversial
Speaker 1: mail founder getting a very big check. Uh. You know
Speaker 1: what sort of feelings? Uh what was your reaction to
Speaker 1: that number? Yeah, I think that. I mean, it's a
Speaker 1: great point and it's certainly not lost on us. I
Speaker 1: think the positive space sort of view of it is
Speaker 1: it's time for a lot of investment to go into
Speaker 1: this space, and this is raising the awareness and the
Speaker 1: visibility of housing and the rented rental residential real estate
Speaker 1: market as an opportunity. And I think that size of check,
Speaker 1: particularly from and Resent hardwhich which is a terrific company,
Speaker 1: really validates that market and puts a spotlight on what
Speaker 1: UM you know, I think hasn't been as visible previously.
Speaker 1: So you know, I think Marcella spoke to some of
Speaker 1: the um other elements of it. But if we kind
Speaker 1: of look into the future, we we and take that
Speaker 1: as a benefit for sure. Obviously both of you have
Speaker 1: worked very closely with miss Newman in this company and
Speaker 1: sort of over that period of time and the relationship
Speaker 1: now looking at him starting his own business in this space,
Speaker 1: whether or not it competes directly with what you guys do.
Speaker 1: What is it going to take for Flow to be
Speaker 1: successful in this market as it comes in as a
Speaker 1: sort of as a new entrant. Yeah, I think as
Speaker 1: with any business entering a market, it really comes down
Speaker 1: to understanding the customer. And when we started OFFRED, we
Speaker 1: started by focusing on the resident and focusing on the
Speaker 1: way that we could impact their life and give back
Speaker 1: time past the front door of their home. And that's
Speaker 1: how we really built the company by listening to what
Speaker 1: does a resident need, what does a consumer need in
Speaker 1: the housing market, and how can we begin to deliver that?
Speaker 1: And I think that is going to be true of
Speaker 1: all businesses entering this space UM, and probably not only
Speaker 1: just for the resident, but how can we make the
Speaker 1: UM operators, the folks that work in these buildings lives easier?
Speaker 1: How can we elevate all of the attention in this
Speaker 1: space just for the benefit of everyone. And listening and
Speaker 1: really thinking from the consumer perspective and the customer perspective
Speaker 1: I think is critical for that. So bigger picture, obviously,
Speaker 1: we are battling inflation. You've got consumers under pressure. We
Speaker 1: are potentially going into a recession. You know, how do
Speaker 1: uss how many people are going to want to pay
Speaker 1: more for the kind of services you provide. Do you
Speaker 1: see this as a luxury or necessity? Marcelo I let ye,
Speaker 1: So I think the really important thing that we are
Speaker 1: doing is it's not about increasing rent prices. It's about
Speaker 1: how do we do things more efficiently, how do we
Speaker 1: use technology to automate processes, to anticipate needs, to deliver
Speaker 1: services that allow revenue to come into the building and
Speaker 1: effectively increasing the size of the pie, not just by
Speaker 1: asking a resident to pay more. And we really think
Speaker 1: that as you see in the rental prices and increases
Speaker 1: to the rental housing market have been so extreme and
Speaker 1: there has not been a subsequent increase in the value proposition,
Speaker 1: you're still getting those four walls. And what we believe
Speaker 1: is fundamentally people want to rent a lifestyle and rent
Speaker 1: a home, and that we can provide that with putting
Speaker 1: our technology and staffing these buildings a little bit differently,
Speaker 1: training people to hotel standards, moving property management from a
Speaker 1: focus on maintenance and rent collection and trash collection to
Speaker 1: really how do we make a residence life fantastic? How
Speaker 1: do we build a community, how do we make people
Speaker 1: feel a sense of place and a sense of home.
Speaker 1: So it's not just about how do we jack up
Speaker 1: the rent prices, it's how do we serve with consumer
Speaker 1: in a in a better way? All right? The co
Speaker 1: founders of Alfred Marcellas Opone and Jessica Beck, thank you
Speaker 1: both so a lot much for joining us. Along with
Speaker 1: our very own at Hammond. Regulators are taking a cool
Speaker 1: us look at how Twitter calculates the number of spam
Speaker 1: and bought accounts on its platform. In June, the SEC
Speaker 1: wrote a letter to Twitter CEO asking to disclose the
Speaker 1: methodology used in calculating the bot situation. In response, Twitter's
Speaker 1: laws told the SEC that it already adequately discloses the
Speaker 1: methodology that it uses towards estimate. Has become a central
Speaker 1: sticking point between the company and Elon Musk, who's looking
Speaker 1: to walk away from a forty four billion dollar buyout
Speaker 1: of the platform. Here discuss s Bloomberg's Kurt Wagner. So
Speaker 1: Kirt brings us up to speed. Obviously, you know there
Speaker 1: was another hearing today the whistleblower allegations we learned about yesterday.
Speaker 1: Now potentially the SEC is involved. How so, yeah, Well,
Speaker 1: the allegations from the whistle blower kind of hit on
Speaker 1: two important things. One, as you pointed out what the
Speaker 1: sec is that, you know, he claims that Twitter has
Speaker 1: been lining to shareholders. Right. If the company is indeed
Speaker 1: hiding the number of bots that make up you know,
Speaker 1: part of its user base or something like that, that
Speaker 1: be a securities violation and that could be a huge
Speaker 1: reason for the SEC to investigate. Now, on the privacy side,
Speaker 1: a lot of these allegations were also that the company
Speaker 1: wasn't doing enough around privacy. Twitter and the FTC gone
Speaker 1: into a consent to Caree back in two thousand eleven
Speaker 1: that the company would make all kinds of changes to
Speaker 1: its privacy practices, and uh, you know, this whistle blower
Speaker 1: says the company hasn't done that. So now both regulatory
Speaker 1: agencies essentially have a good reason to it the very
Speaker 1: least ask Twitter what's going on and see clarification about
Speaker 1: what this whistle blower claims, what happened at the latest hearing,
Speaker 1: and how does it potentially move the ball forward? Well,
Speaker 1: the two sides have been fighting for a while as
Speaker 1: to you know, who should be bringing the information about
Speaker 1: bots forward? Right. Elon Musk and his camp basically say
Speaker 1: that Twitter has not been forthcoming. Not only have they
Speaker 1: not shared the information with him directly, but they're not
Speaker 1: being willing to put forward employees who do have access
Speaker 1: to that information or expertise, right, And Twitter, of course
Speaker 1: is arguing the opposite, Hey, we put everyone forward that
Speaker 1: needs to be so right now, they're trying to settle
Speaker 1: that in court. One of the issues is that Musk's lawyers,
Speaker 1: you know, they want access to this whistleblower, right They
Speaker 1: think he certainly qualifies as someone who would be an
Speaker 1: expert on this kind of stuff. So they're working with
Speaker 1: the judge right now to basically figure out who does
Speaker 1: Twitter need to put forward and make available as part
Speaker 1: of this trial to answer some of those bought questions. Now,
Speaker 1: obviously we're still learning more about these whistleblower allegations. I'm
Speaker 1: curious what you're hearing from your your sources. I'm hearing
Speaker 1: that you know, Twitter is looking at the same redacted
Speaker 1: document that you know appears in the Washington Post. There's
Speaker 1: a lot of information that is you know, not there
Speaker 1: or that they can't see. Um, what more have we
Speaker 1: learned about this complaint and the intentions of the person
Speaker 1: making the complaint? Yeah, I mean, I can tell you
Speaker 1: there's a lot of people who work at Twitter now
Speaker 1: or recently who are not happy with with this, right,
Speaker 1: and that sounds obvious, but they see this as either
Speaker 1: unfair or or certainly not reflective of what they truly
Speaker 1: believe to be happening at the company. And the timing
Speaker 1: is very suspect, right, because a lot of these claims,
Speaker 1: uh seemed to echo at least some of the stuff
Speaker 1: that Elon Musk and his lawyers are saying. And so
Speaker 1: there wasn't all hands meeting today with employees. I think management,
Speaker 1: my understanding, has reiterated a lot of the things that
Speaker 1: we read in the email from CEO prog Roll yesterday
Speaker 1: Emily when we were on the show, right that he
Speaker 1: was basically saying, hey, uh, you know this is false.
Speaker 1: These allegations don't have any merit to them. But you know,
Speaker 1: at this point, if you work at Twitter, you're you're
Speaker 1: just for ust, You're annoyed, right, You're going through this
Speaker 1: whole process already. Then this allegation comes on top of it.
Speaker 1: It just kind of is snowballing right now. I feel
Speaker 1: like for the company, and I start to sense that
Speaker 1: when I talk to people who are who are there,
Speaker 1: who were recently there. Right, It's been going on now
Speaker 1: quite a while, many months. Okay, Kurt Wagner, thank you
Speaker 1: for that update. Appreciate it turning two earnings into its
Speaker 1: fourth quarter report better than expected, led by the company's
Speaker 1: small business unit, which year over year, but some of
Speaker 1: into it's businesses facing headwinds from government changes to the
Speaker 1: tax system, including part of President Biden's Inflation Reduction Act,
Speaker 1: which allocated money to study the creation of a government
Speaker 1: run tax filing system. Here to talk about all of that,
Speaker 1: Intuits CEO Sassan, Good Darzi Sasan. Let's start with the numbers. Uh,
Speaker 1: you know, obviously they looked good. Interesting to see the
Speaker 1: number of small businesses increase coming out of a pandemic.
Speaker 1: How is this informing your outlook? Hi, Emily, thank you
Speaker 1: for having me. You know, we're excited about our outlook.
Speaker 1: You know, when we look at the macro environment, there's
Speaker 1: two things I would say. One, small businesses do worry
Speaker 1: about the economy. Um. However, at the same time, consumer
Speaker 1: spending is strong, the small business performance is strong, but
Speaker 1: they're trying to to manage you know, the rising inflation. UM.
Speaker 1: The costs going up with their supply chain costs going
Speaker 1: up with workers, so they're they're working through managing all
Speaker 1: of that, but they're very resilient if I then shift
Speaker 1: to our platform. It's really why our platform is probably
Speaker 1: more mission critical now than ever before. You know, we
Speaker 1: are not a line item on a small business budget.
Speaker 1: We are the platform that they use to be able
Speaker 1: to power their prosperity and and run their business, which
Speaker 1: is hence reflected in our results, but also reflected in
Speaker 1: the overall company guidance that we provided and specifically the
Speaker 1: segment guidance around small business. So we are excited about
Speaker 1: the future. I'm curious what demand trends you're seeing. You've
Speaker 1: got other software venture seeing lengthening sales cycles. I'm wondering
Speaker 1: if that's something that you're finding as well. We're not
Speaker 1: seeing that because the small businesses Emily that we serve
Speaker 1: or either you know, one person shop or all the
Speaker 1: way up to about a hundred employees, uh and and
Speaker 1: these small businesses really use our platform to be able
Speaker 1: to manage their customers, grow their customers, to be able
Speaker 1: to manage their their cash flow. So these are not
Speaker 1: really enterprise sales. So we don't see, um, the cell
Speaker 1: cycle extending. In fact, what we are seeing is just
Speaker 1: more reliance on our platform, especially in this environment, to
Speaker 1: be able to feel their success. I do want to
Speaker 1: ask about this Inflation Reduction Acts situation. Part of UH.
Speaker 1: This involves money to study the creation of a government
Speaker 1: run tax filing program, which could completely disrupt turbo tax,
Speaker 1: one of your key products. How much does that concern you? Yeah, Well,
Speaker 1: first of all, to set context exactly as is your
Speaker 1: question states, Um, the I R S got about fifteen
Speaker 1: million dollars to do just a study of what it
Speaker 1: would take for the I R S to create a
Speaker 1: tax platform. With that as context, you know, the first
Speaker 1: thing I would say is free taxes is available to
Speaker 1: all Americans through private industry, whether it's our US or
Speaker 1: our competitors. And so from an availability of free tax
Speaker 1: free software, it's already available. I think. Secondly, we're big
Speaker 1: advocates for the consumer. You know, they know the story
Speaker 1: of their life better than anybody else when it comes
Speaker 1: to deductions for their their taxes. They really know their
Speaker 1: story better than anybody else. And and I think we'll
Speaker 1: have to let the consumer decide, you know, what is
Speaker 1: most important in terms of where they want the I
Speaker 1: R S to focus. Is that about the refund experience
Speaker 1: or is about creating tax software for us? It's really
Speaker 1: an immaterial event. It's a non event because free tax
Speaker 1: software is already available to all Americans and this could
Speaker 1: yet be another free tax software. So that's the way
Speaker 1: we see it. That's it. I mean, you have to
Speaker 1: be planning ahead. Are you thinking about strategy contingency plans
Speaker 1: if something like this could come to fruition? Well, really not,
Speaker 1: because we already have free software that you know, if
Speaker 1: you look at the last nine years, we've served over
Speaker 1: a hundred and thirteen million consumers that have filed their
Speaker 1: taxes for completely free. This past year was about thirteen
Speaker 1: million customers. So it really doesn't change anything that we
Speaker 1: are doing. We have a platform that you can do
Speaker 1: it yourself, and for certain customers it's free. We also
Speaker 1: have now a live platform that gives us the ability
Speaker 1: to serve the assistant market, those that need expertise, which
Speaker 1: is really our biggest growth driver. So it really doesn't
Speaker 1: change our strategy at all. And frankly, I think the
Speaker 1: government has been back and forth for the last twenty
Speaker 1: five years thinking about exactly this uh, this study and
Speaker 1: for us, it really doesn't change anything. You also recently
Speaker 1: appointed a new leader of the mail Chimp division. Talk
Speaker 1: to us about the strategy there and how you see
Speaker 1: this continuing to fit into the business longer term. Yeah, Emily,
Speaker 1: we're very excited about mail Chimp. You know, the whole
Speaker 1: reason why we acquired mail Chimp is it plays a
Speaker 1: role in helping small businesses grow customer base. So it
Speaker 1: helps them market to new customers on different channels, it
Speaker 1: helps them manage their existing customers. And one of the
Speaker 1: things that you know, we see as a huge opportunity
Speaker 1: is to how to marry a platform capability that not
Speaker 1: only helps a small business growth customer base, but manage
Speaker 1: their cash flow, which is where QuickBooks comes in. And
Speaker 1: so bringing those two platforms together allows us to have
Speaker 1: a one stop shop to really fuel the prosperity of
Speaker 1: small businesses, and mail Chimp has incredible capabilities. We just
Speaker 1: appointed a new leader to work hand in hand with
Speaker 1: the team there, um Ronnie. She has been actually leading
Speaker 1: our payments group very successfully and now she's going to
Speaker 1: be leading both mail Chimp and Payments and it's an
Speaker 1: opportunity to really marry, growing customers, and managing your cash
Speaker 1: flow in one place. So we're really excited about the
Speaker 1: opportunities ahead alright. The CEO of into It, Sasana Darzi,
Speaker 1: thank you, Sissan for joining us and to have you
Speaker 1: back time down for our crypto report. As both Wall
Speaker 1: Street and the crypto world are waiting to hear from
Speaker 1: FED chair j Palal at Jackson Hole this Friday, Bitcoin meantime,
Speaker 1: could be headed for another downward slope, with the largest
Speaker 1: cryptocurrency down more than fifty percent this year already and
Speaker 1: sitting in a range of about nineteen to twenty five
Speaker 1: thousand dollars, Let's bring in Valkri chief investment officer Stephen
Speaker 1: McClurg for his read on this, along with our own
Speaker 1: crypto contributor Shinnali Boss. Thank you both so much for
Speaker 1: joining us. So, Stephen, do you think bitcoin has further
Speaker 1: to fall and how far? Like below twenty or not? Absolutely?
Speaker 1: Thanks for having me well. I do believe that bitcoin
Speaker 1: has a little bit further that fall. From where it
Speaker 1: is today, we are pretty close to the bottom, and
Speaker 1: from here I think in the long run we're gonna
Speaker 1: be doing just fine. But really everything depends on macro
Speaker 1: at the moment, inflation as well as what risk I
Speaker 1: sets to in a hawk ish FED hawks FED. I
Speaker 1: think about the letter that Dan moorehead of Pantera, wrote
Speaker 1: to investors. I got it in my inbox today, and
Speaker 1: this idea that rates are going much higher than is expected.
Speaker 1: How is that going to play into where bitcoin goes next? Yeah,
Speaker 1: so is anytime that liquidity is being taken out of
Speaker 1: the system, which is what's happening right now, all risk
Speaker 1: assets will continue to fall. So Bitcoin, luckily and also unfortunately,
Speaker 1: earlier this year did fall quite a bit due to
Speaker 1: some local contagion risks. But Bitcoin is with the first
Speaker 1: asset to go. We're waiting for the rest of the
Speaker 1: financial markets to catch up. And by the way, I
Speaker 1: agree with Dan that we do have a lot further
Speaker 1: to go as far as rate hikes. We think rate hikes.
Speaker 1: We think we'll see the FED target rates somewhere between
Speaker 1: three seventy five and four hundred by the end of
Speaker 1: the year. So what does this mean for non bitcoin
Speaker 1: crypto assets? So what does it mean for etherorium which
Speaker 1: is about to hit a really pivotal moment in its
Speaker 1: life cycle? People fall on two sides of the merge.
Speaker 1: Here you have some that are selling into the merge,
Speaker 1: some that are kind of Bitcoin maxis here that are
Speaker 1: really more focused on the benefits that mining provides. How
Speaker 1: do you feel about this move to proof of stake? Well,
Speaker 1: I don't necessarily think move to proof of steak is
Speaker 1: a great thing for Ethereum in the short run. In
Speaker 1: the long run it might actually work out, but the
Speaker 1: Ethereum network is actually more secures the as proof of work,
Speaker 1: and that's what really makes Bitcoin the most secure network
Speaker 1: is a long period of time through proof of work
Speaker 1: where essentially you have computers or validators that are validating
Speaker 1: transactions all over the world in a decentralized manner. When
Speaker 1: you move to proof of steak, that that really falls
Speaker 1: into the hands of a few and those are the
Speaker 1: ones that stake their tokens to master nose or validators. Uh.
Speaker 1: This is how some other more enterprise related block chains work,
Speaker 1: such as Avalanche or Zilica, where where there's a more
Speaker 1: enterprise application, but in terms of Ethereum goes the security
Speaker 1: will you know need to be seen how that's going
Speaker 1: to work out, because you know, we we think that
Speaker 1: if you're holding say you know, a million dollar plus
Speaker 1: n f T and you're relying on the ethereum network
Speaker 1: and it's changing right now, that may not be a
Speaker 1: great place to be right now. Okay, So where are
Speaker 1: you placing your bets? Obviously, Valkyrie has exposure to you know,
Speaker 1: the largest cryptocurrencies by market cap. You know, you know
Speaker 1: which ones are you leaning into and leaning out of? Yeah?
Speaker 1: Right now, Bitcoin is really the flight to safety for
Speaker 1: a lot of our funds, and we're we're we're really
Speaker 1: looking at some of the more established proop of stake
Speaker 1: protocols are also a great place to be, places like
Speaker 1: Avalanche and and Zilica. So these are these are the
Speaker 1: ones that we're really looking at to uh to move into.
Speaker 1: We also have active accounts where we can take risk
Speaker 1: off the table in times of uncertainty like we did
Speaker 1: at the beginning of this year through through most of
Speaker 1: the year. So we're really moving out of anything that
Speaker 1: has too much exposure to eat right now until we
Speaker 1: see this merge goes through sometime in middle September and
Speaker 1: into some of some of the safer uh you know,
Speaker 1: larger crypto protocols. What about Salana, how do you feel
Speaker 1: about that? Given more of the n f T ecosystem
Speaker 1: is also going towards Salana. You think about Magic Eden
Speaker 1: and the success that they've had there, do you, but
Speaker 1: also very polarizing in terms of an asset. Do you
Speaker 1: think that that has any room to benefit as if
Speaker 1: some of the things you're saying about Ethereum plays out. Yeah,
Speaker 1: Salanta is really one of those block chains that sacrifice
Speaker 1: security for speed. Uh, it's still a work in progress.
Speaker 1: I don't think it's necessarily a flight to safety, especially
Speaker 1: if you care about safe security right now. And that's
Speaker 1: really our biggest fear on Ethereum is will it turn
Speaker 1: out to be in this in this new entity as
Speaker 1: a proof of state protocol more like Salano and a
Speaker 1: lot less like Bigcoin. So so we're cautious on Salano,
Speaker 1: though we're not selling it. Where does it ari Um
Speaker 1: and the year are you selling ethereum? We we we
Speaker 1: think that Ethereum very well could get back to a
Speaker 1: thousand or even lower if the merge doesn't go well.
Speaker 1: If the merge does go is expected and by the way,
Speaker 1: there's not a whole lot of doubts out there that
Speaker 1: it won't, but there is a big risk that it
Speaker 1: will then we can see Atherorum really rally. So we're
Speaker 1: kind of holding off until September before we make any
Speaker 1: big bets on Ethereum. All right, Valkyrie, Chief Investment Officer,
Speaker 1: thanks for helping us navigate all all the different things
Speaker 1: you're working through. Stephen mcclerg appreciated along with Bloomberg Hinale
Speaker 1: bask Microsoft's head of Gaming Phil Spencer says he is
Speaker 1: optimistic the company's seventy billion dollar deal to buy Activision
Speaker 1: Blizzard will be approved. If that happens, Spencer will inherit
Speaker 1: a video game hit maker with a controversial leader. I
Speaker 1: spoke with Spencer for a wide ranging inner view in
Speaker 1: the latest edition of Bloomberg Studio. One point out here
Speaker 1: some of our conversation. You know, I kind of come
Speaker 1: at this that big deals should be scrutinized, right. I
Speaker 1: think that's the role of regulators, why they're in place.
Speaker 1: I feel good about the progress that we've been making,
Speaker 1: asking good, hard questions about Okay, what is our intent?
Speaker 1: What does this mean if you play it out over
Speaker 1: five years? Is this constricting a market? I feel good
Speaker 1: about it. So you're confident the deal is going to happen.
Speaker 1: I've never done a seventy billion dollar deal, so I
Speaker 1: don't know what my confidence means. I will say the
Speaker 1: discussions that we've been had that we've been having seemed
Speaker 1: positive UM, and we're actively engaged in the conversations trying
Speaker 1: to be transparent about what our motivations are. Well. Activision
Speaker 1: specifically is facing a lot of challenges here. There have
Speaker 1: been lawsuits, there have been employee walkouts, there have been
Speaker 1: accusations of sexual harassment, sexual assault. How much did that
Speaker 1: concern you when you're thinking about this deal. We had
Speaker 1: access to data for the company before we we announced
Speaker 1: the acquisition to see what the actual numbers were in
Speaker 1: terms of reports. UM, we definitely as a team signed
Speaker 1: up to say, just like we're on our own journey
Speaker 1: with Xbox, that we're going to expand that journey if
Speaker 1: this deal closes. It's a lot of people and a
Speaker 1: lot of people that will feel very dedicated to and
Speaker 1: committed to to building a great workplace environment for them.
Speaker 1: That's true of any of our studios, right. But it's
Speaker 1: obviously a conversation that you're going to have. You think
Speaker 1: about the board of Microsoft and when they're thinking about
Speaker 1: the deal and they're typing into their search engine activision,
Speaker 1: what are the headlines that they're coming back and there
Speaker 1: were questions that we had. We've learned from this, we
Speaker 1: will continue to learn um and we're committed to that
Speaker 1: that journey not only for the betterment of our teams,
Speaker 1: but our customers, the creators on our platform. We think
Speaker 1: it's critical to our business success that we make progress here.
Speaker 1: Is Bobby going to stay on? Yeah, I'm not in
Speaker 1: a position to make comments about their leadership team. Were
Speaker 1: in the regulatory phase and and how that will close,
Speaker 1: Like when the deal closes, then we have say and
Speaker 1: how they're managed and how it goes. But until that point,
Speaker 1: I'm not really in position to say. There have been
Speaker 1: very specific allegations of Bobby being aware of things uh
Speaker 1: that happened and not reporting it to the board. What
Speaker 1: is he communicated to you about what he knew, what
Speaker 1: he didn't know. The discussions we've had were about the
Speaker 1: teams where they're at. Can they make the progress they
Speaker 1: need to make because the closing is a long process.
Speaker 1: Are they putting in the work that they need to
Speaker 1: put in two move along their journey? And I believe
Speaker 1: they're committed to that. When I look at the work
Speaker 1: that they're doing now, there's always more that can be done.
Speaker 1: Activision has divisions that are unionizing. I don't know. Microsoft
Speaker 1: has said they'll recognize those unions. What does that look like.
Speaker 1: I've never run an organization that has unions in it, so,
Speaker 1: but what I can say and working through this, is
Speaker 1: we recognize workers needs to feel safe and heard and
Speaker 1: and compensated fairly in order to do great work. So
Speaker 1: we thought it was important to make a public statement
Speaker 1: on that front for workers that are there, that are
Speaker 1: making decisions about their employment and how they want to
Speaker 1: you know what that relationship looks like to understand what
Speaker 1: it would mean if Microsoft was able to close the deal.
Speaker 1: You can watch my full interview with the Microsoft Gaming CEO,
Speaker 1: Phil Spencer, coming up nine pm Eastern Time right here
Speaker 1: on Bloomberg Television. And that does it for this edition
Speaker 1: of Bloomberg Technology Thursday. John wou of All the Labs
Speaker 1: joins us to talk about the latest with Avalanche and
Speaker 1: the crypto downturn. And don't forget to check out our
Speaker 1: podcast find it wherever you get your podcasts. I'm Emily
Speaker 1: Changing in San Francisco. This is Bloomberg