Speaker 1: I'm Caroline Hyde in New York and this is Rumberg
Speaker 1: Technology coming up in the next hour, the ft X fallout.
Speaker 1: It continues, sam Anguin Freed steps down as CEO, laying
Speaker 1: out as well the timeline for his company's bankruptcy. We're
Speaker 1: going to dive into the implications for cryptocurrencies at large
Speaker 1: and the future of the underlying technology. Plus, Twitter suspended
Speaker 1: it's eight dollar subscription program to combat and growing problem
Speaker 1: of user impersonating major brands. More on the revenue strategy
Speaker 1: in a moment, And the text space is under a
Speaker 1: major restructuring, but you never know it looking at the markets,
Speaker 1: and that's like One just notched its biggest two day
Speaker 1: record run in nine up nine, the best since two
Speaker 1: thousand and eight. Even though we see the meta layoffs,
Speaker 1: even though we see Amazon looking at trimming its workforce.
Speaker 1: Not to mention Dizzy me just now, we'll get to
Speaker 1: all of that in by a moment. At first, Let's
Speaker 1: stick with you, our audience, because we asked you to
Speaker 1: admit the myriad of news that we're just hearing from Emily,
Speaker 1: the fact that we have these layoffs, the fact that
Speaker 1: we have f t X imploding, the fact that of
Speaker 1: course we still have this run up in stocks. What
Speaker 1: was the most important thing that caught your eye? You
Speaker 1: took to Twitter. You told us knew it wasn't Twitter. No,
Speaker 1: it wasn't Meta. It was f t X bankruptcy. That
Speaker 1: is what rocked your world the most. Didn't rock our own,
Speaker 1: Katie Greifeld's world the most. Is it the biggest shocker
Speaker 1: for you? Katie? It was the biggest shocker? I would say.
Speaker 1: I think back to who I was a week ago
Speaker 1: last for a different post. I was so young, I
Speaker 1: was so naive. I didn't know that f t X
Speaker 1: was on sale. You had told me that we would
Speaker 1: see f t X, the crypto exchange, one of the
Speaker 1: biggest players in this space file for bankruptcy. I would
Speaker 1: not have believed you if you would have told me
Speaker 1: to that bitcoin would be trading around seventeen thousand dollars
Speaker 1: a coin after that too, I want to believed that
Speaker 1: either it's you obviously have seen a really rocky crypto
Speaker 1: a market this week, a little bit of resilience, though
Speaker 1: I don't know's We're not talking about ten thousand, we're
Speaker 1: talking about seventeen. And then therefore, let's talk about the
Speaker 1: ripple effects, the contagion concerns, the issue that therefore we
Speaker 1: see across the rest of the markets, because that's sort
Speaker 1: of where we're going with this, the fact that for
Speaker 1: once the correlations broke down, yes you still have the
Speaker 1: shock and all when it comes to ft X and
Speaker 1: the rest of the crypto space, But actually that didn't
Speaker 1: hold bout the NASTAC and was that something people were
Speaker 1: talking about, not at all. It's really this is playing
Speaker 1: out in the most dramatic way possible in markets in
Speaker 1: that on the upside, you have the NASZAC one hundred,
Speaker 1: what looking at one of its best weeks and years,
Speaker 1: Like you said that headline at the top, it's best
Speaker 1: two day run since two thousand and eight. It's interesting
Speaker 1: because previously, until really this week, stocks and crypto were
Speaker 1: tied at the hip. It was the same exact trade.
Speaker 1: To really the detriment of the bitcoin bulls, the crypto
Speaker 1: bulls that I would talk to, they would say, this decoupling,
Speaker 1: when it happens from the equity market, it will be
Speaker 1: such a relief for the crypto market. The decoupling happened,
Speaker 1: it was not bolish for crypto at all, and man
Speaker 1: tech stocks just really ripping after that CPI report. And
Speaker 1: what's interesting though, of course, amid all of this is
Speaker 1: the concerns about the tech layoffs, is the issue of
Speaker 1: the fact that suddenly we're in a different, different paradigm
Speaker 1: right now where companies that we thought were no matter what,
Speaker 1: unstoppable and now having to trim themselves. We're just getting
Speaker 1: the latest headline as the CNBC headline. We know from
Speaker 1: Disney that they're looking at freezes, maybe even job cuts.
Speaker 1: We saw it from Meta, the biggest layoffs that we've
Speaker 1: ever seen in its history. Is that something that we
Speaker 1: should prepare ourselves more for what we've got yet further
Speaker 1: earnings next week for example. I mean, these are the
Speaker 1: type of headlines that are unfortunately pretty common when you
Speaker 1: have the FED hiking so aggressively. This is the impact
Speaker 1: of tightening financial conditions. These are the sort of news
Speaker 1: events that we unfortunately have to get used to. And
Speaker 1: when you contrast that with what we're seeing in the markets,
Speaker 1: this really goes to show sort of the cold blooded
Speaker 1: nature of markets, that forward looking sort of stance of
Speaker 1: markets that okay, when you start to see these type
Speaker 1: of headlines, when you start to see the impact of
Speaker 1: these fed rate hikes. Maybe that closer gets us closer
Speaker 1: to the end destination. And you pair that again with
Speaker 1: the CPI print that we've got a seven handle, nothing
Speaker 1: to celebrate, but cooler than expected. That maybe gets us
Speaker 1: closer to the end destination, maybe closer to that pivot.
Speaker 1: As I read for many though, this market is kind
Speaker 1: of dangerous now, and the fact that Jonathan God himself
Speaker 1: a real bull saying that was an overreaction one to
Speaker 1: bear in mind as we digest the data that's still
Speaker 1: to come over the next week or so. Kitty Greifeld
Speaker 1: a different person from one week ago. We thank hers
Speaker 1: so much. Meanwhile, sticking on the crypto fallout, let's talk
Speaker 1: about f t X. Let's talk about the rippling across
Speaker 1: the entire ecosystem here, but in by his utually Yang
Speaker 1: is with us on the story. I've seen your byline
Speaker 1: on every single piece of update that we've been having.
Speaker 1: You must be exhausted, but probably not as exhausted as
Speaker 1: man whose wealth went from sixteen billion to zero this week?
Speaker 1: What are you? What is the next knock on effect?
Speaker 1: What are we hearing and waiting for? In terms of
Speaker 1: the news about the bankruptcy for example. Of course, the
Speaker 1: bankruptcy news itself is a huge shocker for the industry.
Speaker 1: No one has seen this coming me neither. When I
Speaker 1: started the week, I did not know this is how
Speaker 1: it's going to all pan out. We're starting to see
Speaker 1: some contagion effect coming out. We know that for example, Voyager,
Speaker 1: which is a bankrupt lender earlier on that was supposed
Speaker 1: to be bailed out by f t X, they now
Speaker 1: had to restart their biding process essentially because of this
Speaker 1: bankruptcy procedure for for f t X. And then at
Speaker 1: the same time, even for a big crypto market makers
Speaker 1: such as Genesis, they have money that's being trapped in
Speaker 1: their training account on ft X, and then they had
Speaker 1: to get capital infusion for from their parent group DCG.
Speaker 1: So we're expecting to see more companies coming out to
Speaker 1: this close UH the impact, and we know from the
Speaker 1: bankruptcy foulding itself, at least for Alameda, there's a hundred
Speaker 1: thousand creditors listed and their library is UH is at
Speaker 1: least to be over ten billion dollars. So the size
Speaker 1: and scope should not be understated. It is the biggest
Speaker 1: bankruptcy we're seeing this year. Extraordinary really and therefore the
Speaker 1: full from grace of Sam Batman freed himself, there will
Speaker 1: be movies written, that will be books. Of course, the
Speaker 1: investigations that now continue into him and into what indeed
Speaker 1: has occurred. Is that going to be happening in the
Speaker 1: same time frame as we do understand who the creditors are,
Speaker 1: where do you think the sort of the books are
Speaker 1: going to stop dropping? So for investigations usually they're lagging behind.
Speaker 1: But we do know that US regulators are investigating them.
Speaker 1: Whether the conclusion will come out soon, that's uncertain. And
Speaker 1: from UM and then a same bankman free himself is
Speaker 1: also being investigated by the SEC as we reported yesterday. UM,
Speaker 1: so we're going to see UM a lot of angry
Speaker 1: customers and as a result of out of angry regulators
Speaker 1: all over the world as well. Just looking at the
Speaker 1: implications for this event. As many say, the lawyers are
Speaker 1: really the only people that win in these scenarios. When
Speaker 1: you've had more than five million customers, that's going to
Speaker 1: be torturous process of unfolding this. How many people are
Speaker 1: telling you at the moment that there are further counterparties
Speaker 1: to go, that there is further We've already heard from
Speaker 1: the sequoias of this world, for example, marking down there
Speaker 1: their value the overall holding to zero. We've already seen
Speaker 1: what SoftBank's implication was. Who we worried about? Are we were?
Speaker 1: You mentioned Genesis for example. UM. So it is still
Speaker 1: too early to say who's going to be, which company
Speaker 1: is going to be the next one tool far completely um,
Speaker 1: but I think there's one point that we should be
Speaker 1: hopefully um more hopeful about for the industry, which is
Speaker 1: um comparing to the event in April when the industry
Speaker 1: has a huge leverage event are from the terror collapse.
Speaker 1: The cryptal industry today is um much smaller than back then,
Speaker 1: and then a lot of the lenders have already delivered. UM.
Speaker 1: So this is not not a good news. It is
Speaker 1: a one to a punch. But at the same time,
Speaker 1: the industry is already downside significantly from the beginning of
Speaker 1: the year. Lunar Voyagers, Celsius ft X. I'm sure for
Speaker 1: many they hope that there's some calming after that. Ang me,
Speaker 1: thank hers so much. Let's talk about Twitter suspending. It
Speaker 1: is a dollar subscription program that was launched just earlier
Speaker 1: this week that in an effort to combat a growing
Speaker 1: problem of users, of course impersonating major brands, maybe major
Speaker 1: people as well. It's all according to people familiar with
Speaker 1: the move at the moment, and I'm pleased to stay
Speaker 1: across it all and rather exhausted. Is Alex Barrinka. Thank
Speaker 1: you so much for joining us for a few moments, Alex,
Speaker 1: and just talk to us at the moment about what
Speaker 1: seems to be the u turns that are going on.
Speaker 1: Is this sort of a startup culture once again with
Speaker 1: the CEO just throwing things against the world is single sticks.
Speaker 1: I think my neck and maybe a lot of others
Speaker 1: are hurting with all the whip blash we've seen already
Speaker 1: this week, in the first week that Elon Musk has
Speaker 1: been at the helm of this business. This subscription move
Speaker 1: is one of those things they rolled out, this idea,
Speaker 1: this eight dollar subscription to get more users. Having this
Speaker 1: an infamous blue check um that used to signify veracity
Speaker 1: of an account and now has been impersonated by the
Speaker 1: likes of folks pretending to be drug maker Eli Lily
Speaker 1: saying insulin is now free. It's not um to government
Speaker 1: accounts of governments and politicians, so kind of a big
Speaker 1: uproar here because um, it all plays into the kind
Speaker 1: of proliferation of misinformation that we've seen on the platform
Speaker 1: before that in a free Elon Musk world, Twitter really
Speaker 1: tried to lock down on but in just five business
Speaker 1: days time, it seems like, um, the misinformation, whether it's
Speaker 1: ingest or more serious, has started to really play a
Speaker 1: bigger role on that platform. And then let's took us
Speaker 1: through Actually the irony of this per aferation of businesses
Speaker 1: that aren't actually those businesses getting these tacks is because
Speaker 1: Elon Musk himself wanted to move away from an advertising
Speaker 1: model because he was less. He was more concerned about
Speaker 1: those businesses not advertising because they're worried about the fake
Speaker 1: news factor and turning to a subscription model. But he's
Speaker 1: also been talking about other things within the business model,
Speaker 1: maybe becoming a checking account provider. I mean, what are
Speaker 1: we hearing from this man in the leadership levels right
Speaker 1: now about the direction of travel for the business. Yeah, sources,
Speaker 1: I've told um Bloomberg that they're looking for these fifty
Speaker 1: revenue to come from subscriptions. Elon Musk, remember came from PayPal. Um.
Speaker 1: He has talked about payments could you send money to people.
Speaker 1: Could we give everyone ten dollars to start having people
Speaker 1: send money to other people via the platform. So it
Speaker 1: seems like they're pushing some of these ideas really quickly. Um,
Speaker 1: it seems like they're potentially pushing some of these ideas
Speaker 1: before they thought through all of the implications, with the
Speaker 1: with the blue check verification, the subscription issue being the
Speaker 1: lead one. Now I want to underpin just how important
Speaker 1: this is for Elon Musk to figure out how to
Speaker 1: bring in more money and get this right, he told
Speaker 1: employees in the past twenty four hours. He threw out
Speaker 1: the word bankruptcy. If we don't figure out how to
Speaker 1: make subscriptions work, the company could be in dire straits
Speaker 1: from a revenue perspective. So lots of pressure to figure
Speaker 1: out what is the thing. But it seems like kind
Speaker 1: of the darts they're throwing at the board really quickly
Speaker 1: this past week are not landing in a way that's
Speaker 1: keeping Twitter a place that people and brands and governments
Speaker 1: want to spend their time. Alex, it's in a motive
Speaker 1: and a difficult question. But when I'm looking at Pommy Elson,
Speaker 1: our opinion writer over in London, who's saying that basically
Speaker 1: we might be watching two to implode in real time,
Speaker 1: and that some are kind of debating as to whether
Speaker 1: he's purposely running this business into the ground. How many
Speaker 1: people are sort of echoing those concerns. If you spend
Speaker 1: time on Twitter, you've seen that question posed in the
Speaker 1: context of Okay, he remember he is very confidently talking
Speaker 1: about how he's going to change the platform and reignite
Speaker 1: freef speech at the HELM. But it was only weeks
Speaker 1: ago that he was saying he did not want to
Speaker 1: own this asset at So when you think about the
Speaker 1: thirteen billion in debt that this company now has from
Speaker 1: being taken private, the thirty seven hundred employees were fired
Speaker 1: who are now getting severance paid out, UM, throwing around
Speaker 1: that idea of bankruptcy is something that, you know, uh,
Speaker 1: could be a knock on of of what could he do.
Speaker 1: I will remind you that Elon Musk with Tesla and SpaceX.
Speaker 1: In the context of those companies, he's also thrown out
Speaker 1: that b word of bankruptcy. Ellen has proven himself not
Speaker 1: to be the typical CEO who maybe would avoid that
Speaker 1: um for for fear of stoking kind of UM bad
Speaker 1: bad fears within a company, but he has used this
Speaker 1: language before, so with him, perhaps there is a little
Speaker 1: bit of more of a wait and see if this
Speaker 1: is something that he truly believes, um that the company
Speaker 1: has head in that direction quickly, or if it is,
Speaker 1: maybe it's motivation tactic or something of that sort of
Speaker 1: internally to get folks to figure out an ex place
Speaker 1: to make some more money and make them do that
Speaker 1: from the office with no free food, which is just
Speaker 1: a minor detail in what is a very complex story.
Speaker 1: Alex Sperenca, we thank you so much for their latest
Speaker 1: and let's now continue this conversation from an e commerce
Speaker 1: perspective as well from a trust perspective. We've got a
Speaker 1: real expert for you, Rachel Typograph, CEO and founder of
Speaker 1: make map. It's a global ecommerce enabling and analytics platform
Speaker 1: for multi channel brands, huge brands that depend on you
Speaker 1: to understand where should I be putting my money to
Speaker 1: work when it comes to spending to advertising to social media?
Speaker 1: What are you seeing in terms of media traffic at
Speaker 1: the moment. What are your numbers telling you about how
Speaker 1: fearful they are of Twitter or how much it's useful
Speaker 1: for them at the moment. Yeah, absolutely. I mean right now,
Speaker 1: I feel like we're living a movie about social media,
Speaker 1: and except this time it's a different platform. In the
Speaker 1: last thirty days, we've seen a seventy five decline in
Speaker 1: Twitter traffic, seventy five of which of that decline happened
Speaker 1: since October, which is when Ellen took ownership over Twitter.
Speaker 1: And just talk through that traffic drop, what is that meaning?
Speaker 1: That is meaning that you know, the companies that you're
Speaker 1: talking to, you just don't want to be anywhere near
Speaker 1: affiliated they they're not posting on it, they're not putting
Speaker 1: out their products center or it's more people on interacting
Speaker 1: with them because they're so distracted by other things that
Speaker 1: are on the platform right now. Yeah, So at Nickmack,
Speaker 1: we get trafficked through national digital media across all major
Speaker 1: social platforms, and so when we see the client in traffic,
Speaker 1: it means that ad spend is being paused. The thing
Speaker 1: about advertising is that it's very easy to turn on
Speaker 1: and off, and so while things are so volatile right now,
Speaker 1: it's better for advertisers to take a back seat then
Speaker 1: expose their brand reputation. I was just speaking with the
Speaker 1: m X CEO Steve Square yesterday and he was talking
Speaker 1: about how where they put their money to work on
Speaker 1: a marketing perspective has to reflect their values. And this
Speaker 1: is what a lot of companies are doing. Why General
Speaker 1: Mills are pulling back on Twitter. Why we've heard gm
Speaker 1: and do the same. Some thought about competition there too,
Speaker 1: But I'm interested is this is also an environment, a
Speaker 1: recessionary environment and slowing down economically environment where people might
Speaker 1: be pressing pause everywhere? Is that the case or is
Speaker 1: this really idiosyncratic? It's actually not the case. Right now,
Speaker 1: it's November and December Q four, this is when six
Speaker 1: of media spend normally happens. So we're seeing spend happened
Speaker 1: on Meta, on snap, on Pinterest, on TikTok, on Google.
Speaker 1: People are spending, but spend is now being reallocated outside
Speaker 1: of Twitter into these other channels. And why it's benefiting
Speaker 1: the most. I have a feeling I can guess and
Speaker 1: you could probably guess. But in the last seven days
Speaker 1: we've seen a increase in TikTok traffic. And is that
Speaker 1: I mean today just me, I was on TikTok and
Speaker 1: suddenly I found myself basically perusing some at leisure brand
Speaker 1: because it's Singles Day and then just I didn't even
Speaker 1: realize I was doing it native within that overall app
Speaker 1: until I clicked out of it, and the naturally by
Speaker 1: what is going to buy? But I'm interested is to
Speaker 1: is it because we're in that particular months and or
Speaker 1: is it actually a different reason. No, TikTok is inherently personalized.
Speaker 1: It's probably scares you how well the appnos you, and
Speaker 1: so when you open TikTok right there and then they
Speaker 1: have a high consideration knowing what you want to buy.
Speaker 1: We actually see amazing conversion on that platform, and unlike
Speaker 1: other social platforms, you can get huge bang for your
Speaker 1: buck organically or being influencers. Most of the other social
Speaker 1: platforms you have to pay to play. And a lot
Speaker 1: of people have been sort of wringing their hands about
Speaker 1: the noise that has been built into the system. Many
Speaker 1: lay blame a lot of CEOs would like to lay
Speaker 1: blame Apple's feed as to how perhaps some of the
Speaker 1: direct targeting has become less direct, less efficient in that respect,
Speaker 1: and probably harder some of your clients. I'm interested in general,
Speaker 1: like are you seeing at this moment, what are your
Speaker 1: clients wanting to do. Are they wanting to have more effective,
Speaker 1: efficient use of social media? Are they backing away entirely? What?
Speaker 1: What are they saying to you? Yeah? I mean changes
Speaker 1: in iOS fourteen have really undone brand media as we
Speaker 1: know it. Platforms like Meta used to be an amazing
Speaker 1: conversion channel, but ever since the changes that Apple made
Speaker 1: all of a sudden, you're seeing spend shift out of
Speaker 1: national brand channels into environments like retail media. If you
Speaker 1: look at Amazon's most recent earnings advertising through quarter over quarter,
Speaker 1: there's really strong R o I within those environments as
Speaker 1: well as brand safety. You don't have to worry about
Speaker 1: issues like you're experiencing in Twitter in an environment like Amazon. Okay,
Speaker 1: and I love you, I love that. You bring us
Speaker 1: back to the brand safety element. Is there anything in
Speaker 1: the hair and the now that will change the centrol?
Speaker 1: Do you thing full Twitter traffic? Yeah? This is not
Speaker 1: the first time of moment like this happened. In two
Speaker 1: thousand seventeen, brands paused on YouTube because of hate speech.
Speaker 1: In summer, brands pause on Facebook because of hate speech.
Speaker 1: Both of those platforms inevitably regain the trust of average tisers.
Speaker 1: But what it took was the corporate executive team going
Speaker 1: from conference room to conference room and showing that they
Speaker 1: can stabilize their platform and deliver on their words. So
Speaker 1: I don't think this has to be a forever thing
Speaker 1: for Twitter, but what the industry needs to see is stability,
Speaker 1: and they need to see action not words. Well, we
Speaker 1: thank you for your words. We thank you for coming
Speaker 1: in the studio as well. Such a great voice for
Speaker 1: Rachel topographic course, founder and CEO of make Mac. Meanwhile,
Speaker 1: we're going to be right back with more on bloom
Speaker 1: Bag technology after the spring. We're going to be talking
Speaker 1: so much more about the layoffs in particular across the sector.
Speaker 1: Stay with us as a Bloomberg. Soft Bank founder, Mass
Speaker 1: Yoshi's son says he will no longer speak at earnings presentations.
Speaker 1: He's not for decades. That's after the company's Vision Fund.
Speaker 1: Of course, the arm that is doing a lot of
Speaker 1: investing had a seven point two billion dollar quarterly loss
Speaker 1: due to the right downs on its tech investments. Now,
Speaker 1: soft Bank, which for years was the world's most aggressive
Speaker 1: tech investor, has virtually halted new investments and focused instead
Speaker 1: on his balancie. Meanwhile, Ali Baba decided not to disclose
Speaker 1: full sales results for its signature Singles Day shopping festival,
Speaker 1: and that's for the first time ever. Alabama said in
Speaker 1: a statement that the gross merchandise value was in line
Speaker 1: with the last year's g m V performance, despite macro
Speaker 1: challenges and COVID related impact. But some forecasts say, look,
Speaker 1: the figure could suffer a decline that's unprecedented in the
Speaker 1: events fourteen year history. I think this is the first
Speaker 1: of many cuts that we're going to see, not only
Speaker 1: for these companies. Okay, but the company is written large.
Speaker 1: We've seen over hiring, over inventorying, over ordering, and then
Speaker 1: I'll has to get wrong out of the system. These
Speaker 1: companies are starting to take action right Finally the natal party.
Speaker 1: This is Bloomberg Technology and Caroline Hide in New York.
Speaker 1: You were just hearing from Mike Wilson Morganestani's chief U
Speaker 1: security strategist about the current landscape of tech layoffs and
Speaker 1: stick into that a little bit more, plus much other
Speaker 1: conversation topics to be having with the Activate founder and CEO.
Speaker 1: Michael Wolfe, management consultant, previously CEO of President of MTV.
Speaker 1: He was also on the boards of companies such as
Speaker 1: Yahoo for example, you're a man who understands what it's
Speaker 1: like to run businesses have to slim down businesses to
Speaker 1: see a restructuring. What do you make of not only
Speaker 1: Disney now saying that they're going to be cutting their jobs, freezing,
Speaker 1: hiring only essential travel. We had from Meta the Artists
Speaker 1: formerly known as Facebook, but Meta eleven thousand jobs to go.
Speaker 1: These are significant cuts. There are a lot of other
Speaker 1: companies Striped Lived. That's so many of these companies are
Speaker 1: using this moment. But if you look at the numbers,
Speaker 1: it's in a lot of ways they overshot. They expected
Speaker 1: that the growth that they experienced during the pandemic would
Speaker 1: be sustained. So if you look at but happened with Meta,
Speaker 1: Meta two thousand seventeen had twenty five thousand employees. Two
Speaker 1: thousand nineteen, they had fifty thousand after the cuts, After
Speaker 1: the eleven thousand cuts, they're still gonna be at seventy
Speaker 1: five thousand employees. So this is this is just going
Speaker 1: back to yesterday a little bit, and and and it's
Speaker 1: also a moment in which they need to say to
Speaker 1: their investors, we're going to focus on profitability and recognize
Speaker 1: the realities of the web. I think what's interesting is
Speaker 1: also the manner in which these are being announced. To
Speaker 1: his credit, Mark Zuckerberg had a mere colper moment. He
Speaker 1: said he his personal responsibility. You've seen that echoed by
Speaker 1: other leaders as well, and whether or not it's more Previously,
Speaker 1: Shopify was almost the first company to really announce that
Speaker 1: really they'd they'd got the trajectory wrong. They've got the
Speaker 1: COVID lift and they thought they could bring it into
Speaker 1: perpetuity and actually know the ark was going to fall
Speaker 1: back down a little bit. And then on the other side,
Speaker 1: you haven't eno mask who is doing it without much emotion.
Speaker 1: How do it as a business leader, as a management consultant,
Speaker 1: think about the way in which these messages are delivered.
Speaker 1: Um well, overall in the tech business, we're losing about
Speaker 1: a hundred thousand jobs but from those companies, but also
Speaker 1: if you look at it from the perspective of the
Speaker 1: overall market, all those people are going to find other jobs.
Speaker 1: There's a tremendous amount of demand for technology talent in
Speaker 1: everything from finance to government, to healthcare and it even startups.
Speaker 1: There's about two fifty billion dollars and venture capital out
Speaker 1: there waiting to be deployed. But when you look at
Speaker 1: these companies and you think about about where their cuts
Speaker 1: are going to come from, what they need to do.
Speaker 1: The bigger issue is they've got to find new sources
Speaker 1: of growth. In every one of these cases, from Apple
Speaker 1: to Amazon to Meta, they're all dependent on the old
Speaker 1: sources of growth. And by that's why they're coming to
Speaker 1: our company activate, because they're looking for new places for growth.
Speaker 1: Cost has a human, huge human toll, but it's actually
Speaker 1: much more difficult than growth. Okay, so let's talk about
Speaker 1: the growth that hopefully some of these people who are
Speaker 1: now getting we hope decent severance packages and able to
Speaker 1: go and set up their own startups or indeed a
Speaker 1: meta that now doubling down on the continued trajectory of
Speaker 1: a different kind of growth of focus on a web
Speaker 1: three let's call it. You'll, of course a man in
Speaker 1: puts together the future analysis you're putting together. What is
Speaker 1: gonna look like for us? Is meta the right bet
Speaker 1: um the challenges metas metaverse bet is all about virtual reality.
Speaker 1: And what's happened overall with metaverse is we're already past
Speaker 1: the hype cycle. I mean, we've already hit the peak
Speaker 1: of of hype, and now we are going to see
Speaker 1: sustained investment, but the sustained investment may not be in
Speaker 1: the places that metas focused. So, for example, the metaverse
Speaker 1: doesn't necessarily mean virtual reality, not necessarily virtual reality headset.
Speaker 1: In fact, our research shows that most people don't spend
Speaker 1: more than thirty minutes at any one time in virtual reality,
Speaker 1: So a lot of it's going to be too deep,
Speaker 1: and of a lot of it's going to art in
Speaker 1: video games. And in fact, when you look at the metaverse,
Speaker 1: you have between four video games, between Roadblocks, Fortnite, Minecraft, Um,
Speaker 1: you end up having three hundred million people who are
Speaker 1: spending a great deal of their lives on average eleven
Speaker 1: hours a month, and some of them are spending forty
Speaker 1: hours a week in these games and so, and they're
Speaker 1: all metaverse platforms. So the idea that this is way
Speaker 1: off in the future and none of it is spending
Speaker 1: time with an Occulus headset. So it depends every company
Speaker 1: is going to take a different bet. It just may
Speaker 1: not necessarily be the right bet. What you mentioned roadblocks
Speaker 1: and what roadblocks sort of for many helped with this
Speaker 1: whole idea of a metaverse we could then see, oh,
Speaker 1: that's maybe where crypto comes in. That's maybe where the
Speaker 1: payment of you know, when you're buying skins and they're like,
Speaker 1: suddenly you have a native currency. You have a digital
Speaker 1: currency for one of a better expression. When we're starting
Speaker 1: to see the fallout that we've just done with FTX
Speaker 1: for crypto in general, is that going to impact the metaverse,
Speaker 1: Web three, the direction of traveling anyway. Well, actually, the
Speaker 1: payments that are taking place inside of those large metaverse platforms,
Speaker 1: they're not crypto. And when people look at metaverse they
Speaker 1: think Web three and metaverse are the same thing. In
Speaker 1: a lot of ways, they're not. Web three depends on
Speaker 1: really decentralized protocols. Crypto a metaverse is really the consumer layer.
Speaker 1: So in the same way that we saw the browser
Speaker 1: was necessary for the Internet, metaverse is going to be
Speaker 1: necessary for Web three. But we're way far off and
Speaker 1: seeing the applications of these technologies in Web three and
Speaker 1: what's happened even today with f t X shows that,
Speaker 1: uh that the tools may be valuable, but their application
Speaker 1: is going to take a while to be applied. Activate
Speaker 1: founder and CEO Michael Wolf come back when you are
Speaker 1: talking to all these businesses looking for that steer. We
Speaker 1: thank them for it. We have, you know, a few
Speaker 1: billion on our balance sheet right now. We are profitable.
Speaker 1: We're in a relatively strong place from a financial perspective.
Speaker 1: I want to be doing something that positive, like with
Speaker 1: the making money per like, like I want to be
Speaker 1: good actor there. We'd raised a few billion dollars over
Speaker 1: the course of the last last couple of years, and
Speaker 1: we're profitable business with Voyager. I think, you know, there's
Speaker 1: seventy million dollars there that that that we put in
Speaker 1: that I'm not sure ever seeing that seventy million. Again,
Speaker 1: we have not used the majority of the cash that
Speaker 1: we have on our balance sheet. We want to be flexible.
Speaker 1: We want to be in a position where we are
Speaker 1: you know, looking forward at uh you know what we
Speaker 1: could be doing, where we could be most helpful um
Speaker 1: and where we can grow the most. I'm excited about
Speaker 1: a pathway forward. I'm really excited about our leadership. Wow,
Speaker 1: the ft X co found a former CEO, Sam batmanfree
Speaker 1: talking to Bloomberg again and again about profitability, about growth
Speaker 1: in a series of interviews in fact from July to
Speaker 1: set Timber of this very year, and then the downfall
Speaker 1: that we've just seen, the unraveling in one week, and
Speaker 1: one that perhaps was slightly more prophesized by our next guest,
Speaker 1: Mike Alfred Eagle Book Advisors founding board member. Of course,
Speaker 1: a man who's deeply working within the world of crypto
Speaker 1: also happened to be a value investor. So a man
Speaker 1: who can give us take some whether you should be
Speaker 1: an a b in bev at the same time as
Speaker 1: whether you should be into certain cryptocurrencies. And Mike, first
Speaker 1: and foremost, why were you concerned? Were you concerned about
Speaker 1: the closeness, shall we say, of a maid and indeed
Speaker 1: of what was happening at f t X. So I
Speaker 1: was concerned about a lot of things over the last
Speaker 1: two years in this space. Right So, I think there's
Speaker 1: a couple of really big fundamental issues here. One is
Speaker 1: just a lack of corporate governance. Right so, ft X
Speaker 1: basically had no outside investors on their board. Many of
Speaker 1: these other companies that blow up blew up this year
Speaker 1: had similar setups where because they had so much leverage
Speaker 1: when they were raising money, there was nobody you could
Speaker 1: tell them what to do. Right then, there's a lot
Speaker 1: of leverage. Right, you don't see blow ups like this
Speaker 1: without a tremendous amount of ridge, right, that's going to
Speaker 1: typically be there in every situation. And then the last
Speaker 1: piece is just this overreach for yield in a low
Speaker 1: interest rate environment. Right, So all of these firms are
Speaker 1: essentially doing these sort of poorly structured arbitrage trades. And
Speaker 1: so if you look back to the spring of one,
Speaker 1: the gray scale arbitrage trade, who was in that trade
Speaker 1: three A c celsius Block five? Right, when you look
Speaker 1: at Tera Luna, that was also an arbitrage trade, borrow
Speaker 1: money from a trading desk at ten to get anchor?
Speaker 1: Who was in that trade again three a c celsius
Speaker 1: And of course f t X and so ft X
Speaker 1: blows up, uh and uh. Indirectly, it's because of the
Speaker 1: relationship with Alameda, right, because Alameda essentially lost so much
Speaker 1: money in that anchor trade that they needed paper over it.
Speaker 1: And that's where Sam crossed that bright line, right, because
Speaker 1: up until that point it was just gambling with the
Speaker 1: principle's money in a sense. But once he started gambling
Speaker 1: with the actual users money at ft X, I think
Speaker 1: that's when things really went down. Help five million uses,
Speaker 1: but also a proliferation of high profiles, celebrities of well
Speaker 1: thought of and deep pocketing venture capitalists and now been burned.
Speaker 1: And I'm sure incredibly angry at Mike. I'm what next
Speaker 1: in terms of credibility, because as you've just been mentioning
Speaker 1: the names, you've had lunar voyages, Celsius and then have
Speaker 1: f t X. Is there another shoe to drop here?
Speaker 1: Is there a contagion risk? Is there are the people
Speaker 1: that will be but so badly burned that there has
Speaker 1: to be further to full so eventually there won't be
Speaker 1: any contagient risk. But obviously those of us who felt
Speaker 1: the contagion was mostly contained in June after Celsius were
Speaker 1: We're wrong. Um, you know remember at that time SPF
Speaker 1: went on your program and a number of others and said,
Speaker 1: look this is over right, there's not going to be
Speaker 1: any more downside. And in retrospect, he was clearly doing
Speaker 1: that to protect his own firms liquidation levels. He wasn't
Speaker 1: doing it because he actually believed it. He wasn't doing
Speaker 1: it to be JP Morgan. He wasn't trying to save everybody.
Speaker 1: He literally was just protecting his own ass and I
Speaker 1: get why he was doing that now, but I should
Speaker 1: have read kind of deeper into it and realized, Okay,
Speaker 1: he probably has the same problems in his balance sheet.
Speaker 1: So roll forward today. Who could actually have more risk
Speaker 1: in their balance sheet than we know of? The one
Speaker 1: firm I can think of as Binance. That's not a
Speaker 1: popular opinion. There are a lot of people who want
Speaker 1: to believe that Finance is a good actor. But the
Speaker 1: reality is there an offshore exchange that's thinly regulated, just
Speaker 1: like ft X. They don't even have a domicile, so
Speaker 1: it's hard to hold them accountable for anything. And I'm
Speaker 1: sure and I'm certain that in some ways they're engaging
Speaker 1: in similar activities on the back end, so that that
Speaker 1: would be the ultimate that would be the ultimate blow
Speaker 1: up if something would happen to Finance. Well, of course
Speaker 1: we'll go to Finance to try and get their take
Speaker 1: and have them be able to defend themselves CZ in particular.
Speaker 1: But there is an interesting interesting take them that this
Speaker 1: is the centralization of Ultimately what is wanting to be decentralized.
Speaker 1: Is there a way that you can have centralization other
Speaker 1: than perhaps a company that is public that is regulated,
Speaker 1: How do you regulate non public, non u s domassailed companies.
Speaker 1: Is there a way we can bring transparency the promise
Speaker 1: of real transparency that's so excited many about the space.
Speaker 1: Can we ensure that is happening when you do have
Speaker 1: these deep pockets and indeed a level of hiding behind
Speaker 1: set in alvatrages. I mean, I think there's sort of
Speaker 1: two ways. One is to just stick with a very safe,
Speaker 1: regulated onshore exchange that holds all the assets one to one,
Speaker 1: doesn't lend them out, doesn't run a hedge fund in
Speaker 1: the background like ftx or or celsius um or go
Speaker 1: all the way the other side into true decentralization and
Speaker 1: leverage defied protocols that are using code to offer these services,
Speaker 1: right so unit swap and maker and compound. You know,
Speaker 1: I think it needs to be noted that when you
Speaker 1: look back at what happened during the period where Celsius
Speaker 1: was being liquidated, um, you know, those protocols did a
Speaker 1: good job, right They liquidated the counterparties immediately, no questions asked.
Speaker 1: They didn't care who you were, they didn't do any
Speaker 1: credit check, they didn't call you and say please serve
Speaker 1: deposit more collateral. They just did the job that was
Speaker 1: written into the protocol, And so I think true truly
Speaker 1: decentralized DeFi could work at scale and may actually be
Speaker 1: better in most cases to a centralized option. But if
Speaker 1: in the in the meantime, while we're waiting for that
Speaker 1: to happen, using a company like coin base in the
Speaker 1: US is one of the safest sweats to approach it.
Speaker 1: Let's talk a little bit about what regulation happens from
Speaker 1: now might because I'm pretty sure there's a lot of
Speaker 1: sharpening of pencils going on at the moment because in
Speaker 1: many ways he some Maguan freed himself, was seen as
Speaker 1: the main lobbyist out there and talking and maybe have
Speaker 1: been his undoing in many ways when it comes to
Speaker 1: the relationship that disintegrated between himself and Ceasy because of
Speaker 1: that lobbying. But I'm interested when actually, in the clear
Speaker 1: light of day, in real trad fire traditional finance, you
Speaker 1: still get these blow ups. You still have archagos who
Speaker 1: still have Bill whim and you still have goodness a
Speaker 1: liquidity issue that it happened just a month or so
Speaker 1: ago in the UK with its pension funds because of
Speaker 1: issues within the holdings of bonds and the movement. You know,
Speaker 1: even in deeply regulated markets, we can sometimes have these
Speaker 1: desperate affairs. How do we make regulation fit for purpose
Speaker 1: within crypto at the moment? So it's a it's again,
Speaker 1: it's a it's a tough question. But if you look
Speaker 1: at like MF Global, right, Um, you know, they went
Speaker 1: into bankruptcy and it took a little bit of time,
Speaker 1: but none of the sort of users of that platform
Speaker 1: lost any money. Um. Same thing with other brokerage platforms,
Speaker 1: other banks. The regulation is so stringent and there's so
Speaker 1: many protections that it's really hard for an end customer
Speaker 1: to lose all their money. And so look, I mean
Speaker 1: that that that sort of regulation may stifle some innovation,
Speaker 1: but it also stops casual retail users from losing everything.
Speaker 1: And so I would err on the side of being
Speaker 1: more conservative generally. I don't think it makes sense to
Speaker 1: allow people to lever up ten x, twenty x, thirty X.
Speaker 1: I don't think it makes sense for these platforms to
Speaker 1: take the money on the back end essentially gamble with it.
Speaker 1: And so if that means less innovation, I'm sort of
Speaker 1: okay with that, and interesting me of course, the innovation,
Speaker 1: the froth, the money that poured in has sort of
Speaker 1: been pulled out, and then it's almost a year exactly
Speaker 1: since bitcoin is a sixty and then since to today
Speaker 1: when ft X is unraveling, Can you cool a bottom
Speaker 1: in this market? Do? What do we need to instill
Speaker 1: some sort of trust back to in the relative space
Speaker 1: of of other cryptocurrencies on there. I think the most
Speaker 1: important thing once again is that there's not going to
Speaker 1: be any tax payer funded government bailouts here, and I
Speaker 1: think that will give people confidence once it's clear that
Speaker 1: there's no more dominoes left to fall. And I think
Speaker 1: in the coming days and weeks, as we look at
Speaker 1: the creditors to ft x, which they're just going to
Speaker 1: be numerous companies like Block five, etcetera, that Block five
Speaker 1: is probably gonna file for bankruptcy eminently here. I've heard
Speaker 1: they've already hired counsel today, which makes sense. I sort
Speaker 1: of said that on Twitter two days ago that you
Speaker 1: should pull your money off Block five because that was
Speaker 1: sort of an inevitable consequence of this um so. I look,
Speaker 1: it's going to take a little bit of time, but
Speaker 1: sometime in Q one Q two of this coming year,
Speaker 1: there's gonna be a wonderful, potentially generational opportunity to buy bitcoin.
Speaker 1: I want to say, just buy a bitcoin. I mean
Speaker 1: bitcoin in cold storage, where there's no counterparty, where there's
Speaker 1: no risk that you lose all your bit because bitcoin
Speaker 1: is a wonderful thing on its own. It's what we're
Speaker 1: talking about is all the adjacent centralized businesses that took
Speaker 1: on too much leverage that we're often unregulated, and they're
Speaker 1: offshore and they messed up um. And that happens in
Speaker 1: these sort of wild West environments. But bitcoin itself is
Speaker 1: still going to make a new block every ten minutes
Speaker 1: for the next hundred two five hundred years. That's what
Speaker 1: we're betting on in the bitcoin space, and that comes true.
Speaker 1: It doesn't matter what happens to any of these companies.
Speaker 1: Oh well, here from the bitcoin maximalists and more, but
Speaker 1: I'm not calling you one of those. But it's interesting
Speaker 1: that we once again go back to perhaps where people
Speaker 1: feel that they can trust for the time being. Mike Alford,
Speaker 1: really great to have some time with you. Thank you.
Speaker 1: Eagle Brook Advisors founding board member. Of course, all about
Speaker 1: institutional access to some of these defied protocols, well, I
Speaker 1: actually got to speak with a key CEO in the
Speaker 1: traditional finance space, American Express CEO C Squary, just yesterday,
Speaker 1: and talked about the fallout of crypto at the moment
Speaker 1: and whether or not it could still be an innovative
Speaker 1: space to be investing in, whether traditional payment methods could
Speaker 1: be disrupted through it. I spoke exclusively with him at
Speaker 1: the Economic Club of New York yesterday. Take listen. We've
Speaker 1: looked at cryptocurrencies from when they first, you know, started
Speaker 1: to gain traction. We've experimented with blockchain, We've got investments
Speaker 1: in blockchain um companies. We have a partnership with Abra
Speaker 1: where people earned cryptocurrency rewards. And you know, I've been
Speaker 1: pretty public that I believe that cryptocurrency is an asset class,
Speaker 1: and I think people like to invest in different asset classes,
Speaker 1: and and and off you go. But I don't see
Speaker 1: it um replacing the payment rails UM and and you know,
Speaker 1: and when I think about cryptocurrencies, I put that under
Speaker 1: the umbrella of digital currencies, and so I have you know,
Speaker 1: you have digital currencies, you have the cryptocurrencies, your bitcoins,
Speaker 1: your theoryum and so forth. And then you've got your
Speaker 1: stable coins UM. And then you've got you know, governmental
Speaker 1: digital currencies as well. And and I think there there
Speaker 1: certainly is a play um for digital currency in you know,
Speaker 1: in the economy. UM. But it's it's hard for me
Speaker 1: to see right now, UM cryptocurrencies with the volatility, UM,
Speaker 1: with the limited supply of some of them as well,
Speaker 1: how it really um, you know, replaces the traditional payment methods.
Speaker 1: The one thing with the traditional payments methods, they're not broken.
Speaker 1: They work. UM. And uh so we'll see. Having said that,
Speaker 1: you never say never, and and that's why you stay engaged.
Speaker 1: You listen to people. UM. You know, there's a lot
Speaker 1: of people that have a very different perspective than I have,
Speaker 1: and they've made a lot of money. They may be
Speaker 1: a lot smarter. But I think when I think about
Speaker 1: sort of the business that that American expresses in which
Speaker 1: is we're really a lifestyle brand that brings people experiences,
Speaker 1: provides access, and combines a payment facility with that, the
Speaker 1: horses that we have right now are are working for us.
Speaker 1: So maybe just maybe we get a bit of calm
Speaker 1: in the week ahead, let's have a quick look at
Speaker 1: what we're actually covering, what's already on the agenda. We
Speaker 1: know that there might be some headlines we're not expecting,
Speaker 1: but there could be some fireworks when it comes to
Speaker 1: the epic versus Apple trial Monday, of course a key
Speaker 1: focus there. We're gonna be digging into key earnings of
Speaker 1: large mega brands such as Walmart. Of course, we're going
Speaker 1: to get a real sense check and where the retail
Speaker 1: where the consumer is at, but also whether shopping online,
Speaker 1: how digital spenders going at the moment, of course, in
Speaker 1: video front and center, when we're thinking of US China relations,
Speaker 1: when we're thinking of chips, when we're thinking of the
Speaker 1: semiconductor space at the moment, and well whether we are
Speaker 1: in some sort of megacycle once again. And Abco Branchesky
Speaker 1: is going to be joining Bloomberg on Thursday. You want
Speaker 1: to be tuning into that exclusive conversation. And then of
Speaker 1: course back to the courts come Friday, Elizabeth Holmes, the
Speaker 1: sentencing the Themist trial. You do not want to be
Speaker 1: missing that as we deep dive so much more of
Speaker 1: course coming to Bloomberg, and please say, of course on Monday,
Speaker 1: when we're having Sunny Sing one of FDx IS investors
Speaker 1: from their funding round back in just how painful has
Speaker 1: that trade been, What does he think of the future.
Speaker 1: Check out our podcast as well. You can get on
Speaker 1: an Apple, Spotify, and i Heeart. Have a good weekend.
Speaker 1: This is Blomberg