Speaker 1: From Marhard. We're Innovation, Money and Power Collie in Silicon Valley, NBN.
Speaker 1: This is Bloomberg Technology with Caroline Hyde and Ed loved Love.
Speaker 2: I'm Caroline Heide of Bloomberg's Weld headquarters in New York
Speaker 2: and Omed Lovelow in San Francisco.
Speaker 3: This is Bloomberg Technology coming up.
Speaker 4: Chip makers.
Speaker 2: They worn on the impact of the US curbs on
Speaker 2: China and the stocks they drop.
Speaker 4: Will break down everything you need to know.
Speaker 5: Past we push ahead to earnings. Is Netflix and Tesla
Speaker 5: prepared to report results after the bell and.
Speaker 4: We returned to our New York Tech Week conversations.
Speaker 2: We're going to be discussing the state of fintech and
Speaker 2: search for talent here.
Speaker 5: I think China is the key story, particularly in the
Speaker 5: context of US technology export curbs to China.
Speaker 3: I want to first go to Europe ASML company.
Speaker 5: A maker of chip making equipment, and basically short story,
Speaker 5: they had earnings not good, but the proportion of what
Speaker 5: the orders they're getting is increasingly from China. Ironically, so
Speaker 5: they've had to come out and address the latest expansion
Speaker 5: of curbs. In twenty twenty three, around ten to fifteen
Speaker 5: percent of their shipments are going to be impacted by
Speaker 5: these new restrictions. We're going to talk to our analysts
Speaker 5: about what is going on here in just a moment's time.
Speaker 5: The more direct impact as well is on video dropping
Speaker 5: for a second straight day on a two day basis.
Speaker 5: We're heading for our biggest two day drop since December
Speaker 5: twenty twenty two. And they issued an EIGHTK after market.
Speaker 5: They reiterated what they told us on Bloomberg Technology Caroline,
Speaker 5: which is, Yeah, no near term impact of financials, but
Speaker 5: basically this is going to impact our ability to service
Speaker 5: our existing customers and develop new products. That is a concern, particularly.
Speaker 6: For in video.
Speaker 5: Let's get more detail and analysis on this and bring
Speaker 5: in at man deep scene of Bloomberg intelligen and so, Mandy,
Speaker 5: what we're talking about here is specifically a eight hundred
Speaker 5: and h eight hundred China specific chips being caught by
Speaker 5: increased curves. How do you analyze that sort of tangible
Speaker 5: impact on the industry in twenty twenty three.
Speaker 7: Yeah, Look, I mean we know China revenue is about
Speaker 7: twenty percent of in videos overall revenue, and there is
Speaker 7: likely some pull forward of that revenue. Given this wasn't
Speaker 7: a complete surprise, you know, we're talking about these curves,
Speaker 7: and then I definitely think there was a pull forward element,
Speaker 7: which is why the company is probably saying there won't
Speaker 7: be any near term impact. But down the line, you
Speaker 7: have to ask yourself. You know about the customer base
Speaker 7: of n VIDEOS chips, and it's mostly the hyperscalers. Hyperscalers
Speaker 7: are about fifty percent of all the buyers of these
Speaker 7: GPUs right now, and there are two or three big
Speaker 7: hyperscalers in China. So if they're not able to get
Speaker 7: their chips for AI training, which is the primary use
Speaker 7: case here, I think that will have an impact, but
Speaker 7: near term impact probably is muted because of that pull
Speaker 7: forward aspect.
Speaker 4: Interesting muted.
Speaker 2: We're down by some ten percent over the last thirty days,
Speaker 2: and indeed, more broadly, we saw more than seventy billion
Speaker 2: dollars shed from the overall well chip stocks. When you're
Speaker 2: looking at the semiconductor indices, how are you anticipating China
Speaker 2: US two tug back or some of the valuation run
Speaker 2: up that we've had because it's such a mixed picture
Speaker 2: for chip makers out there. More broadly, we're just talking
Speaker 2: about a SML and woful numbers coming from them.
Speaker 6: Yeah.
Speaker 7: I mean in the case of Nvidia, you had a
Speaker 7: streak of upward revisions and to the extent, the bogie
Speaker 7: for twenty twenty five is eighty billion in data center revenue.
Speaker 7: Now when you look at, you know, the incremental data
Speaker 7: center spend right now, every dollar is going towards AI
Speaker 7: chips and networking, and clearly that will lot change. So
Speaker 7: some of that, you know, chips that in Vidia can't
Speaker 7: sell to China will be taken by somebody else.
Speaker 1: And I've no.
Speaker 7: Doubt that the company's undershipping demand right now.
Speaker 6: But that eight billion number.
Speaker 7: It's a very high bogie because the overall data spend
Speaker 7: center spend right now is close to fifty to sixty
Speaker 7: billion dollars when you add all the capex amounts. So
Speaker 7: clearly for in Video to reach that target in twenty
Speaker 7: twenty five, they need demand from everywhere, including China, and
Speaker 7: I think that's what is at stake here in terms
Speaker 7: of what kind of impact it will have two years
Speaker 7: down the line.
Speaker 5: Mandy, this is a story if there is one. ASML
Speaker 5: is the company which makes the machines that make the chips,
Speaker 5: and its bookings plunged forty two percent in the courter
Speaker 5: gone because there isn't demand broadly out there, but demand
Speaker 5: from China doubled. In other words, proportion of orders for
Speaker 5: chip making equipment from China doubled. And yet in that
Speaker 5: same twenty four hour period this company learned about expanded
Speaker 5: export curbs on chip making equipment. How complexes that explain
Speaker 5: it to us?
Speaker 7: I mean, look at the supply chains right now, So
Speaker 7: the fabs are all based in Taiwan. The assembly is
Speaker 7: being done in China, So clearly, you know, it's not
Speaker 7: a surprise that your latest end equipment is being needed
Speaker 7: in China because they want to, you know, keep doubling
Speaker 7: down on their ability to assemble and manufacture a lot
Speaker 7: of these chips. But at the same time, I feel
Speaker 7: the big driver for a company like a SML, or
Speaker 7: for that matter, the semicap equipment complex is the diversification
Speaker 7: aspect geographically, and every government right now is trying to
Speaker 7: make sure that they have local semi fab manufacturing and
Speaker 7: they want to get those equipments in the region where
Speaker 7: they these companies are operating. So long term, I do
Speaker 7: think the drivers are there for equipment companies, especially eue s.
Speaker 7: In the case of ASML, but near term dynamics, obviously
Speaker 7: you can't take China out of the equation given all
Speaker 7: the manufacturing is being done over there.
Speaker 2: Fascinating to SMLC actually said our Chinese customers say, we
Speaker 2: are happy to take the machines that others don't want
Speaker 2: at the moment. It's just questions how long they can
Speaker 2: actually be shipping them there, manly saying always great to
Speaker 2: have them on of course from Bloomberg Intelligence and look,
Speaker 2: this picture is a difficult one we have from the
Speaker 2: CFO of ASML really talking about a very dynamic macro
Speaker 2: picture coming from China. So let's get into that picture
Speaker 2: a little bit more with Amy Selco, a partner at
Speaker 2: all bright Stonebridge Group, which is a part of Denton's
Speaker 2: Global Advisors. And your expertise is needed here because there
Speaker 2: are so many clouds, whether it be due political making,
Speaker 2: whether it's a US pushing against shipments to China, and
Speaker 2: then there's of course the Chinese economy, which can't really
Speaker 2: get a clear read on. Start with the economy, how
Speaker 2: much do you think demand is there for technology from
Speaker 2: international imports right now?
Speaker 8: Oh, demand is huge because that international technology is so
Speaker 8: important for China to continue to push its economic recovery.
Speaker 8: Good news coming out from China, as you saw with
Speaker 8: the Q three three numbers beating expectations four point nine
Speaker 8: percent growth in Q three, but it is a slowing
Speaker 8: economy and the recovery is far from certain if China
Speaker 8: doesn't have access to that technology. Clearly investment is going
Speaker 8: to continue to be in technology to try to have
Speaker 8: indigenous technologies replace this uncertainty around access to global technology.
Speaker 8: But in the very short term, of course, Chinese demand
Speaker 8: is going to continue to be significant for these technology imports.
Speaker 3: Amy, let's head over to China.
Speaker 5: The Belton Road Forum of President G kind of made
Speaker 5: this thinly veiled comment directed at the US. I'm sure
Speaker 5: that downplaying basically how much emphasis you should look at
Speaker 5: the progress and development of others and the risk of
Speaker 5: economic interdependence. I'm assuming that President G was talking in
Speaker 5: the context of technology and technology exports. Are you worried
Speaker 5: about about the sort of posturing on both sides here?
Speaker 8: Well, certainly, absolutely, for all the clients that we serve,
Speaker 8: it is a significant worry about where are those geopolitical
Speaker 8: risks going In the wake, of course of what's happening
Speaker 8: in Gaza, right now, the fact that Russia and China,
Speaker 8: China's leaders are together in Beijing right now, as the
Speaker 8: President of course is in Israel, and then we'll come
Speaker 8: back to the United States to welcome the leadership of
Speaker 8: the European Union here. And so there are these discussions
Speaker 8: about how geopolitics are impacting interdependence, and I think that
Speaker 8: is what President She was getting at in that reference.
Speaker 8: He of course is celebrating a ten year anniversary of
Speaker 8: the Belton Road Initiative, welcoming foreign leaders from a number
Speaker 8: of countries, representatives from more than one hundred and thirty countries,
Speaker 8: and so trying to tout the relevance of China on
Speaker 8: the geopolitical stage. At the same time that obviously the
Speaker 8: US and China disagree on some fundamental issues. And while
Speaker 8: communicating again and that's a very positive thing, we're all
Speaker 8: waiting to see what that communication does. Will it stabilize
Speaker 8: the relationship or is it only a temporary law as
Speaker 8: the relationship continues to get more challenging because of these
Speaker 8: export controls, because of the US and China disagreeing on
Speaker 8: issues around Ukraine, around the war that Israel is waging
Speaker 8: against Hamas right now, and other issues around economic interdependence,
Speaker 8: something that she Jinping is worried about too. But again
Speaker 8: in the short term, he needs that technology input from
Speaker 8: American companies and others into China.
Speaker 2: I don't think geopolitical risks could be more complex, Amy,
Speaker 2: and you've put that very clearly to us. In that
Speaker 2: global picture right now, talk to us about the clients
Speaker 2: and companies that I just think of m CEO, for example,
Speaker 2: a company recently listed here in the United States. It's
Speaker 2: UK based, it's international in terms of its focus, and
Speaker 2: the CEO reading has was at a conference yesterday just saying, look,
Speaker 2: this is so difficult to be able to just cut
Speaker 2: off the technology from flowing into the China, and it
Speaker 2: says it's a very hard problem to solve just coming
Speaker 2: up with a list of components that are deemed critical
Speaker 2: and applying some sort of kind of guidance against it.
Speaker 2: How difficult is it for your clients to navigate this
Speaker 2: right now?
Speaker 8: It is harder than ever, that's right, Caroline, because companies
Speaker 8: are trying to gauge where are there truly national security
Speaker 8: based restrictions that are impacting them because of policies engaging
Speaker 8: as well as policies here in Washington, DC, and they
Speaker 8: have to navigate both of those issues you're talking about
Speaker 8: ASML video other companies that are worried about policy developments
Speaker 8: that are going to in some ways constrain and otherwise
Speaker 8: open up different opportunities for them to continue to grow.
Speaker 8: And so in Beijing, the policy restrictions are are we
Speaker 8: just in the short term able to continue to sell
Speaker 8: our products until China indigenously innovates its own competition to
Speaker 8: our products, and so you can't have confidence in the
Speaker 8: long term outlook for continued growth in the China market.
Speaker 8: And then of course in Washington, the impact of yesterday's announcements,
Speaker 8: how will that impact these companies' abilities to continue to
Speaker 8: gain global profits that they put into global innovation that
Speaker 8: are derived out of the China market. And so, yes,
Speaker 8: companies are trying to balance these issues of significant national
Speaker 8: security concerns that are coming not just out of one country,
Speaker 8: out of multiple capitals. I'm mentioning Beijing and of course Washington,
Speaker 8: but we're hearing these same concerns coming out.
Speaker 1: Of Brussels, Tokyo, elsewhere.
Speaker 8: And so companies just have to balance these issues and
Speaker 8: try to advocate for the need to continue to promote
Speaker 8: sales that aren't impacting national security in global markets so
Speaker 8: that they continue to innovate and remain global leaders like Nvidia,
Speaker 8: ASML others really are.
Speaker 6: Amy.
Speaker 3: Let's end on the data.
Speaker 5: You know, it's a critical consumer electronics market.
Speaker 3: There are hyperscalers there.
Speaker 5: GDP came in four point nine percent, just below Beijing's
Speaker 5: five percent target. Give us your Chinese economy scorecard based
Speaker 5: on that data.
Speaker 8: Well, China is, I think, in some ways relieved that
Speaker 8: they're seeing consumption resuming on the ground in China. Now
Speaker 8: this is short term and nobody is finished being worried,
Speaker 8: least of all Chinese policy makers who are going to
Speaker 8: continue with stimulus in order to get this economy restart
Speaker 8: again meet this around five growth target for this year,
Speaker 8: looking at next year being even more challenging. But maybe
Speaker 8: we're looking at December ed for what the Chinese government
Speaker 8: says about continued stimulus in twenty twenty four. But just
Speaker 8: a reminder, putting more investment into the economy just adds
Speaker 8: that adds to that debt to GDP ratio, and so
Speaker 8: it is not a long term solution. Chinese economists are
Speaker 8: saying that so are international economists that China really needs
Speaker 8: to empower its consumers to continue to spend by investing
Speaker 8: in programs that will help consumers be less worried about
Speaker 8: that outlook for the Chinese economy. That's going to be
Speaker 8: a difficult equation for China to manage.
Speaker 5: Amy Seliko Principleward Dentin's Global Advisors, thank you, of course.
Speaker 5: Denton's an Albright Stonebridge Group property, thank you very much.
Speaker 5: Coming up, we're going to have the latest now on
Speaker 5: the Israel hamass war and the deadly blast of a
Speaker 5: hospital in Gaza City last night.
Speaker 2: Karen, such complexity, such concerns, and meanwhile, here in the
Speaker 2: United States there is a second vote upon us for
Speaker 2: Republican Jim Jordan, who is looking to be the next speaker.
Speaker 2: Will keep you up to date with how that second
Speaker 2: vote doesn't EGO, it's underway.
Speaker 9: This is Blombo technology.
Speaker 10: I was deeply said in an outraged by the explosion
Speaker 10: at the hospital in Gaza yesterday, and based on what
Speaker 10: I've seen in appears as though it was done by
Speaker 10: the other team, not you. But there's a lot of
Speaker 10: people out there not sure. So we've got a lot
Speaker 10: of We're going to overcome a lot of things.
Speaker 2: US President Joe Biden there expressing his outrage at the
Speaker 2: explosion of a Gaza city hospital and Tuesday.
Speaker 4: Night they killed hundreds.
Speaker 2: Now, he was speaking during a bilateral meeting with Israedi
Speaker 2: Prime Minister Benjamin Natanyahu in Tel Aviv. We want to
Speaker 2: bring in now, Joe Matthew, of just how difficult diplomacy
Speaker 2: always is, and it's just got an.
Speaker 4: Awful lot tougher.
Speaker 2: Can you just bring us up to speed with where
Speaker 2: we are with his trip at the moment to the
Speaker 2: Middle East.
Speaker 1: Well, you just framed it perfectly.
Speaker 11: This is an incredible test for President Biden. It just
Speaker 11: got a lot harder in the last twenty four hours
Speaker 11: the news of this blast. He's really taking a decided
Speaker 11: posture on this to say that data from the US
Speaker 11: Defense Department shows that this in fact was not the
Speaker 11: responsibility of Israel, but was a missile sent from a
Speaker 11: terror group in Gaza. He said that in a couple
Speaker 11: of different occasions today. But let's remind ourselves this was
Speaker 11: supposed to be a multi day trip throughout the region.
Speaker 11: And following that blast at the hospital, a summit of
Speaker 11: Arab leaders was canceled in Jordan. The President's going to
Speaker 11: be heading back to Washington tonight, So the stakes here
Speaker 11: are very high for Joe Biden.
Speaker 2: The stakes are It was also announced one hundred million
Speaker 2: dollars in aid to both Gaza and.
Speaker 9: The West Bank.
Speaker 2: Just tell us how ultimately we're able to see aid flow.
Speaker 2: At the moment, when we're looking at a house that's
Speaker 2: going through a second vote, try and find a speaker.
Speaker 11: Well, it can't, is the fact, and that's why there's
Speaker 11: a great sense of urgency behind this vote.
Speaker 1: It just started a short time ago.
Speaker 11: Jim Jordan again is up for a second round and
Speaker 11: is not expected to win this round, and there are
Speaker 11: questions about what happens after that. The White House is
Speaker 11: putting together a massive supplemental budget request one hundred billion
Speaker 11: dollars for not only Israel, but also Ukraine, Taiwan, and
Speaker 11: border security to try to give lawmakers no opportunity to
Speaker 11: vote no, because one of these things will be, of course,
Speaker 11: if not more of them, an important element to any
Speaker 11: Democrat or Republican.
Speaker 1: But there's got to be a speaker.
Speaker 11: And at this point right now, it's unclear who will
Speaker 11: hold the gavel and when.
Speaker 1: And I'll remind you.
Speaker 11: One month from today is when the government is set
Speaker 11: to shut down. That also can not be managed unless
Speaker 11: this speaker fight is resolved.
Speaker 2: Joe Matthew, we thank you so much of Bloomberg time
Speaker 2: now for work shifting Look. It's where we take a
Speaker 2: look at the changing landscape of the labor market amid
Speaker 2: advancers and technology first up. Regulators in the European Union
Speaker 2: are moling over stricter rules to monitor generator of AI.
Speaker 2: It's a proposal seen by Bloomberg outlined a three tiered
Speaker 2: approach classifying AI models and systems and the rules that
Speaker 2: would apply Now, the EU is poised to become the
Speaker 2: first Western government to place mandatory rules on artificial intelligence. Meanwhile,
Speaker 2: AI startup Inflection AI wants to limit the role of
Speaker 2: chatbots in voting in elections. PI to the company's chatpot
Speaker 2: won't be allowed to advocate for any political candidate. The
Speaker 2: company is hoping other firms will make their chatbots to
Speaker 2: the same. Plus this, a whopping seventeen point nine billion
Speaker 2: dollars has been poured into AI startups so far this year,
Speaker 2: and according to Pitchbook data half A Bloomberg, the value
Speaker 2: of funding for AI companies clim twenty seven percent globally
Speaker 2: compared to thirty one percent dip in overall deals for startups.
Speaker 5: Set all right, this is a newsletter that the world
Speaker 5: pays attention to, celebrity bench, capitalist mark and Dreesen is
Speaker 5: issuing a new manifesto to highlight how technology can advance humanities,
Speaker 5: achievements and flaws. In a blog post that you published
Speaker 5: earlier this week, and Dreesen says, quote, the only perpetual
Speaker 5: source of growth is technology. Give us a real world
Speaker 5: problem and we can in technology that will solve it.
Speaker 5: Let's go deep on this and bring in Bloomberg News
Speaker 5: VC reporter Katie Ruth. What I just said. It's just
Speaker 5: true when in Dreason puts out one of these blog posts,
Speaker 5: it shared endlessly on social media platforms and debated. Just
Speaker 5: outline and Dresen's argument in this latest academic exercise.
Speaker 6: Sure, yeah, you're right.
Speaker 12: He's definitely good at getting attention. And he's done this
Speaker 12: several times over the years. He's done one that was
Speaker 12: called software is eating the World, he did one it's
Speaker 12: called It's time to Build, and now he's done this one.
Speaker 12: And you know, it's always a super bullish case for technology,
Speaker 12: which makes sense. He is a technology investor in it
Speaker 12: is his job to see the future and make these bets.
Speaker 12: He always includes zingers and some very controversial statements in there,
Speaker 12: which I think, of course help it get more attention.
Speaker 12: I think at the end of the day, what you
Speaker 12: should look at this is marketing. He's trying to get
Speaker 12: attention for his firm and dres and Horowitz, and you
Speaker 12: get an edge on some of these startup deals that
Speaker 12: he's trying to get access to.
Speaker 2: It's also the pushback against regulation, right, he's trying to
Speaker 2: speak to policymakers with fifty two hundred words where he
Speaker 2: says a deceleration in AI will cost lives. Do you
Speaker 2: think it will in any way stoke policymakers to pull
Speaker 2: back on the regulatory endeavors.
Speaker 12: Well, he's certainly a leading voice in the venture capital industry,
Speaker 12: and so if they're interested in hearing from the industry,
Speaker 12: he's probably one of.
Speaker 4: The people talk to.
Speaker 12: But I'm sure they would talk to an array of perspectives.
Speaker 12: I mean, he's always taken a more libertarian point of view.
Speaker 12: Not everyone in the tech industry has the same political
Speaker 12: philosophies as he does, but he's you know, he's on
Speaker 12: the board of Facebook. He's always been kind of vocal
Speaker 12: about being anti regulation, anti anyone interfering with anything that
Speaker 12: the technologist want to do. Yeah, exactly, and so you know,
Speaker 12: this is just.
Speaker 4: Part of the course from Mark and drecent Okatie.
Speaker 2: We've great to have such VC expertise in the house
Speaker 2: today we thank him.
Speaker 4: Welcome back to BlueBag Technology.
Speaker 2: I'm Caroline had in New York and right here in
Speaker 2: the Big Apple Well, all week long we're covering the
Speaker 2: technology industry because it's Tech Week. Upon us, I'm pleased
Speaker 2: to say we're now joined by one of the key
Speaker 2: founders in the area who chooses to live and operate
Speaker 2: have fintech business here in the city. Joining us is
Speaker 2: Stephanie Kirkpatrick or I'm CEO, which is all about making
Speaker 2: payments that much with the faster.
Speaker 4: It's basically building upon fed.
Speaker 2: Now, before we get into what you're building, why build
Speaker 2: it here in New York? It feels like fintech is
Speaker 2: an obvious choice when you think about the financial institutions here.
Speaker 13: I mean, I had a huge opportunity to pick up
Speaker 13: and move to New York a number of years ago
Speaker 13: to Chase my passion about the intersection of financial services
Speaker 13: in tech, and here we are as I set out
Speaker 13: to found ORM. There's no better place in the world
Speaker 13: to recruit diverse talent and to live in an ecosystem
Speaker 13: where there's grit and tenacity and frankly opportunity in particular
Speaker 13: in fintech with what we're building, and I admit every
Speaker 13: time I see that New York skyline, I think, Wow.
Speaker 2: Okay, so you talked about the opportunity in terms of
Speaker 2: who wants your products and what sort of products they
Speaker 2: want to be, because you've been at plenty of other startups.
Speaker 2: I mean I think of Lenvest, that was a great
Speaker 2: exit sold to another financial institution.
Speaker 4: What did you see that needed to be fixed and
Speaker 4: why was New York.
Speaker 9: The place to do it?
Speaker 1: Well, there's a really unique insight.
Speaker 13: So let me tell you what ORM does, and then
Speaker 13: let me tell you about the problem. We are this
Speaker 13: simplest API for fast, reliable payments and now instant bank
Speaker 13: account faircification, which we actually just launched right before Tech Week,
Speaker 13: so it's exciting times. And when I was inside of
Speaker 13: big financial services, I saw this huge problem, which is
Speaker 13: time to money. More than half of Americans don't have
Speaker 13: enough money in the case of emergency, and if they
Speaker 13: do and it's a high yealed savings account or it's
Speaker 13: a brokerage account on a Saturday when they have the emergency,
Speaker 13: they can't get access to it.
Speaker 4: I feel that's what Krypto was full.
Speaker 1: Well, it turns out.
Speaker 13: The most recent innovation is actually the ATM, which isn't
Speaker 13: good enough. So with the advent of instant payments, we
Speaker 13: think that it's important to rebuild the infrastructure, but all
Speaker 13: of our financial services and banking products sit on top.
Speaker 2: Of and so now you've got this new rail which
Speaker 2: has been put forward by the Federal Reserve.
Speaker 4: How does this compare How.
Speaker 2: Does a financial technological ecosystem here in the US compared
Speaker 2: to a broad at the moment.
Speaker 13: Well, you know, we are behind, let's say, relative to
Speaker 13: Europe and other areas where instant payments has been sort
Speaker 13: of a normal or has recently been introduced, But we're
Speaker 13: catching up.
Speaker 6: What I love about what.
Speaker 13: The FED has done is FED now and the instant
Speaker 13: payments product, and what we've had now for a couple
Speaker 13: of years with OURTP real time payments is the beginnings
Speaker 13: of an opportunity for consumers and businesses alike to see
Speaker 13: the advantages of something happening instantly. Right in our everyday lives,
Speaker 13: most things are faster and instant. In our financial lives.
Speaker 13: Everything is slow five days a week. Maybe if it
Speaker 13: comes in before the cutoff on Friday, the transaction can happen.
Speaker 13: That's just no longer possible to sustain. And so now
Speaker 13: with FED, now you not only get the large top
Speaker 13: two three four hundred banks through the fed's new instant
Speaker 13: Payments product, you also get all of the coverage for smaller,
Speaker 13: critically important, systemically important banks as well as community focus banks.
Speaker 13: So now we're getting distribution of instant payments, and the
Speaker 13: dynamic has changed around what you can do for the
Speaker 13: American wallet when an insurance claim wages, any sort of
Speaker 13: financial transaction can happen twenty four to seven, three sixty
Speaker 13: five nights, holidays, weekends, as opposed to nine to five
Speaker 13: banking hours.
Speaker 2: And I just think about that crux point that we
Speaker 2: saw back March thirteenth when we were concerned about the
Speaker 2: Silicon Valley Bank and the rush to try and get
Speaker 2: payments through then and there to that point, I mean,
Speaker 2: what tumultuous twenty twenty three actually has been. I mean,
Speaker 2: I can't believe it's only about six months since that
Speaker 2: debarcle in the banking area for you, because you're launching
Speaker 2: these new products, because you're seeing the sort of level
Speaker 2: of innovation.
Speaker 4: Do you have vcs knocking?
Speaker 2: Do you have the new vcs that putting boots on
Speaker 2: the ground here in New York City knocking?
Speaker 13: Well, let me start by saying our first investors were
Speaker 13: boots on the ground in New York before it was
Speaker 13: popular to be in New York City. So I'm obviously
Speaker 13: steadfast about believing in the ecosystem here. And yeah, there
Speaker 13: are people knocking at the door, I think because the
Speaker 13: importance of the problem and the job to be done
Speaker 13: is huge. That said, I think fundraising is a very
Speaker 13: specific thing and it shouldn't be just done casually. And
Speaker 13: what I love about the current environment as there's time
Speaker 13: now built in unlike twenty twenty twenty twenty one, where
Speaker 13: you're deciding in a weekend between you and your investors,
Speaker 13: you can make a decision about what this is going
Speaker 13: to look like because you are signing up for a
Speaker 13: very long term, lifelong relationship with people are going to
Speaker 13: sit on your board, and we've endeavored to have our
Speaker 13: board be at least fifty percent female. We've endeavored to
Speaker 13: have our rounds focused on having representation for female and
Speaker 13: underrepresented investors. And so I can't rush that process despite
Speaker 13: interest in.
Speaker 1: The current environment.
Speaker 13: I think it's really important to establish incredibly good relationships
Speaker 13: so that when you say, let's handshake and put capital
Speaker 13: into a business that's growing, you know that you're doing
Speaker 13: it in a way that's designed to fuel the next
Speaker 13: chapter and not just because that's what the environment is
Speaker 13: promoting today.
Speaker 2: Okay, interesting, so you've got a real focus on a
Speaker 2: diverse board. I'm sure you're therefore also got a real
Speaker 2: focus on diverse talent. Is the talent from a tech
Speaker 2: perspective more diverse here in New York?
Speaker 4: Do you look to hire in New York?
Speaker 2: Do you look to just be sort of agnolstick as
Speaker 2: to where.
Speaker 13: You people sit well ORAM is actually a COVID baby,
Speaker 13: which means during all of our growth and fundraising, we
Speaker 13: were doing that during pandemic time. So we do have
Speaker 13: the advantage of having both a footprint here in New
Speaker 13: York and the opportunity to think about our core value
Speaker 13: of diversity of thought through diversity of people broadly across
Speaker 13: the US. I think the diversity of talent here is
Speaker 13: exceptional because people come to New York for some of
Speaker 13: the world class engineering programs and design programs that are
Speaker 13: based right here in Manhattan. And as a result of that,
Speaker 13: you have not only talent that's rolled out of other successful,
Speaker 13: well built companies that want to go back into earlier
Speaker 13: stage companies, you also have an influx of folks with
Speaker 13: engineering talent coming out of the education system. And because
Speaker 13: New York is already such a diverse place, that naturally
Speaker 13: creates a population of opportunity. But we wouldn't I think
Speaker 13: we would be remiss in not looking broadly where we
Speaker 13: can find the most diverse talent to build frankly, the
Speaker 13: best team, and that doesn't always have to be from
Speaker 13: Stanford or Harvard. Diversity and obviously incredible talent comes from everywhere.
Speaker 2: Well said Stephanie, it is great to have you here
Speaker 2: in the building. She's got a whole load of other
Speaker 2: events to run off to. We thank you for it,
Speaker 2: Stephanie Kirkpatrick of AORAM great to get some fintech perspective
Speaker 2: there and talent perspective, and we want to dig into
Speaker 2: that angle a little bit more now because Spaniel Goodell
Speaker 2: is with US Chief Economist and indeed's hiring lab leading
Speaker 2: hiring platform, and I want to really get your assessment
Speaker 2: of what the talent pool looks like here in New York,
Speaker 2: in particular, how big an ecosystem, a bigger pool of
Speaker 2: tech jobs is it compared to the industries.
Speaker 14: You know, overall. I think New York is unique in
Speaker 14: that has a larger sheriff tech jobs than we're seeing
Speaker 14: for the nation as a whole, roughly double. But keep
Speaker 14: in mind tech jobs still make up a relatively small
Speaker 14: percentage of overall jobs, and New York roughly five percent
Speaker 14: of all jobs.
Speaker 5: Spaniel AI has had a pretty dramatic impact on cities
Speaker 5: around the world, frankly, you know, from a sort of
Speaker 5: wealth creation standpoint, job at creator standpoint, Caroline and I
Speaker 5: sit there and look at some of the job postings
Speaker 5: and the salaries on offer here in the Bay Area
Speaker 5: as an example, do you see that happening in New
Speaker 5: York as well, where there is a fight for talent and.
Speaker 3: They're paying over the noise for it.
Speaker 14: Yes, and no, you know, it's a good economists, I'll
Speaker 14: tell you the one end. On the other hand, I
Speaker 14: think taking a step back and looking at tech as
Speaker 14: a you know, as a category as a whole. There, we,
Speaker 14: particularly in New York, saw this extreme boom bust development happening.
Speaker 14: Right So, we saw during the pandemic a lot of
Speaker 14: tech companies hiring fiercely and demand for tech jobs was
Speaker 14: very high. We saw that in R and D job
Speaker 14: postings and right around you know, early twenty twenty two,
Speaker 14: we saw that demand really start to scale back, and
Speaker 14: now tech companies have right scaled. We've seen a lot
Speaker 14: of action on the front, a lot of headlines where
Speaker 14: tech companies are going through layoffs and that particularly hits
Speaker 14: you know, software developers, engineers out there. And with that,
Speaker 14: we've seen actually job postings, particularly in the New York
Speaker 14: metro area, really take a step back. Demand has really
Speaker 14: come down quite a bit, and now we're back to
Speaker 14: below pre pandemic levels. We're actually thirty percent below in
Speaker 14: terms of job postings in the New York metro area
Speaker 14: to where we were early twenty twenty. So we've taken
Speaker 14: a distinct tech step back on tech in New York, however,
Speaker 14: and this is a big however, you know what you're
Speaker 14: talking about in terms of GENAI jobs, they're really booming
Speaker 14: what we've seen there, and we've just came out with
Speaker 14: a bunch of research. We have a GENAI tracker that
Speaker 14: we published and we look at jobs that's you know,
Speaker 14: really demand GENAI skills. So think about machine learning engineers,
Speaker 14: data scientists that can work with these algorithms for large
Speaker 14: language models and so forth. And there you see, off
Speaker 14: of a very small base, tremendous growth that you're really
Speaker 14: starting to see. There's a lot of demand there. And yes,
Speaker 14: you're absolutely right. Those jobs are getting paid very well,
Speaker 14: and there's a small pool of people that have these
Speaker 14: skills to be able to work with these models, and
Speaker 14: they're in very high demand right now.
Speaker 5: Spendier, our last guest, brought the thin tech perspective and
Speaker 5: that that's an industry that we do associate with New
Speaker 5: York given the sort of legacy finance industry there, But
Speaker 5: in which corner of the technology sector is the highest
Speaker 5: concentration of New York or East Coast jobs.
Speaker 14: You know, we're seeing, particularly in New York, we're seeing
Speaker 14: a high concentration just overall in software development and full
Speaker 14: stack engineers, and we're starting to see that pick up
Speaker 14: in GENAI type type jobs. And of course New York
Speaker 14: has a lot of the fintech in there as well,
Speaker 14: given that it's New York, so we do see that
Speaker 14: concentration there. But it's worth noting that remote work has
Speaker 14: really played a role here as well, because we have
Speaker 14: seen some dilution on that front, right because now the
Speaker 14: companies particular that are you know, have multiple you know,
Speaker 14: bases around the country, are able to diversify their workforce
Speaker 14: and also hire people in other locations and have them
Speaker 14: work from home and have their nearest office speak relatively
Speaker 14: close and dial into important things are happening in New York.
Speaker 14: So partically on the tech front, we see that the
Speaker 14: share of remote jobs is very high and that has
Speaker 14: that dilution effect happening with that as well.
Speaker 2: Espania, I know you have an economist hat, but I'm
Speaker 2: interested in your regulatory take, if you're read in on
Speaker 2: the idea that New York has in many ways sort
Speaker 2: of try to lead the charge on regulating around the
Speaker 2: youth of AI in hiring and ensuring that there isn't
Speaker 2: bias built into the system and that was I think
Speaker 2: brought in in April. How is that changing the landscape
Speaker 2: do you think for hiring here in New York?
Speaker 14: You know, I think it's too early to tell exactly what,
Speaker 14: you know, how we integrate these new technologies, these new tools,
Speaker 14: because they're constantly evolving. How companies are using them as
Speaker 14: constantly evolving. And I do think that it's incredibly important
Speaker 14: to think about bias and how we.
Speaker 3: Use these tools.
Speaker 14: And you know, it's we often think about of AI
Speaker 14: is this own entity that it's being imposed on us
Speaker 14: and we don't know what to do with it. The
Speaker 14: good news is that we have all the control here.
Speaker 14: We're able to figure out how we want to apply it,
Speaker 14: where we want to apply it, and make sure it's
Speaker 14: applied in a fair and equal way across different industries,
Speaker 14: across different people, across different jobs. And you know, from
Speaker 14: a policy perspective, that's really important, and now is the
Speaker 14: time to start thinking about these issues so that we
Speaker 14: can properly, you know, really use these tools to their
Speaker 14: greatest advantage without causing additional issues.
Speaker 2: It'spania really great to get your take, and we look
Speaker 2: into that data that you provided on jen AI and
Speaker 2: jobs with thank you Spenn and Goodell to indeed chief
Speaker 2: economist and what for got coming up?
Speaker 5: Yeah, well, technology jobs has been one of the stories
Speaker 5: of the year. Another has been Tesla's shares doubling in
Speaker 5: twenty twenty three. We're going to break down what's watching
Speaker 5: Tesla's upcoming earnings with former board member Steve Wesley from
Speaker 5: the Wesley Group. That's coming up next. This has been
Speaker 5: Burg Technology.
Speaker 4: Let's get into tech earnings land.
Speaker 2: Now we've got Netflix reporting today after the market closed.
Speaker 2: So much to monitor here from the company's push into
Speaker 2: video games, the writers strike that's impacted all the Hollywood
Speaker 2: of course, and still look, the co CEO, Ted Surroundos
Speaker 2: thinks Netflix has some good days ahead.
Speaker 9: Just take a listen.
Speaker 15: We've a ton of room to grow revenue from here,
Speaker 15: and I would say that we're pretty underpriced based on
Speaker 15: those kind of statistics of ten percent of screen time
Speaker 15: and five percent of revenue.
Speaker 2: That was, of course at last weeks Bloomberg screen Time
Speaker 2: event in La where Ted Surrandos sat down with our
Speaker 2: very own.
Speaker 4: Luca Shore Companies to say, joins us now, and so
Speaker 4: that room to run that revenue push. Are we going
Speaker 4: to see at this quarter?
Speaker 6: Well, we'll find out in a few hours.
Speaker 16: Obviously, they have spent much of this year instituting a
Speaker 16: roleing out two of their big news strategies. That's their
Speaker 16: advertising tier, which creates a lower priced option for some
Speaker 16: cost sensitive consumers, and the crackdown on password sharing, which
Speaker 16: amounts to a price increase for a lot of people.
Speaker 16: You know, One question on a lot of investors' minds
Speaker 16: and frank with a lot of customers minds, is whether
Speaker 16: Netflix is going to raise prices for its basic tier.
Speaker 6: Again, there's been some reporting to suggest they will.
Speaker 16: The executives have suggested as much as well. That's sort
Speaker 16: of what Ted surround Us I think was getting at
Speaker 16: there when he said that the company or they are underpriced.
Speaker 16: Whether they'll announce that after earnings today remains to be seen.
Speaker 5: And Lucas that posted a perspective the ad supporting tier
Speaker 5: right because it will inform that decision on raising prices,
Speaker 5: And there seems to be a micro focus on Netflix's
Speaker 5: ability right now to sell commercials and feed its ads
Speaker 5: supported tier.
Speaker 16: Yeah, well, we've just gone through or I think we're
Speaker 16: in the middle of advertising week in New York.
Speaker 6: One of their senior advertising executives.
Speaker 16: Peter Naylor, who came from Snap and was pre at Hulu,
Speaker 16: spoke and unveiled some new features, And I think the
Speaker 16: challenge for them in advertising right now is they just
Speaker 16: don't have a lot of scale. They've taken a different
Speaker 16: approach from from Disney and others.
Speaker 6: You know, they have made it an opt in.
Speaker 16: Kind of tier, which means you can choose to sign
Speaker 16: up for it, but existing customers see no change in
Speaker 16: their pricing. And Netflix hasn't been growing fast enough to
Speaker 16: add a ton of new customers to it.
Speaker 6: But their approach is I.
Speaker 16: Would say more customer or consumer friendly than most of
Speaker 16: their peers.
Speaker 2: What about the gaming landscape, because this was an interesting
Speaker 2: area a focus for investors too.
Speaker 6: You know, it's it still feels very early.
Speaker 16: There was a pretty good piece in the Wall Street
Speaker 16: Journal earlier this week looking at the kind of the
Speaker 16: state of things with they're gaming. They've commissioned a ton
Speaker 16: of games, They've released a lot of games. We have
Speaker 16: yet to hear of any Netflix game that's been a
Speaker 16: big breakout. They've been very cautious in their language around it,
Speaker 16: you know, talking a lot about this sort of walk,
Speaker 16: crawl run language that they like to use guesses that
Speaker 16: we're still a few years away from seeing anything meaningful
Speaker 16: from them in games.
Speaker 5: All right, bloom Beerswig for sure, thank you very much.
Speaker 5: The other big name after market is Tesla. The stockdown
Speaker 5: four percent in the session, but remember it's up more
Speaker 5: than one hundred percent year today. Tesla's margins rapidly eroding,
Speaker 5: raising doubts about the viability of maintaining its sales growth
Speaker 5: after the TV makers started waging that price for I
Speaker 5: want to bring in Steve Wesley, Wesley Group managing partner,
Speaker 5: but also of course a former Tesla board member. Steve
Speaker 5: the equation for Tesla has been really simple. They're happy
Speaker 5: to sacrifice the bottom line, cut prices, impact margins, but
Speaker 5: maintain fifty percent.
Speaker 3: Annual growth growth.
Speaker 5: The question for investors is how much profit erosion they're
Speaker 5: willing to take?
Speaker 3: What do you think The answer is?
Speaker 17: All right, now, they're just grabbing market share, so it's
Speaker 17: a slow corner. They delivered four hundred and thirty five
Speaker 17: thousand vehicles, down from a record for sixty six and
Speaker 17: Q two twenty four point three billion in rev new
Speaker 17: on track thirty five percent year over year growth and
Speaker 17: one hundred million dollar a year. That's not bad, but
Speaker 17: expect Tesla to come roaring back in Q four. Most
Speaker 17: people don't realize the IF cut price is twenty five
Speaker 17: percent in twenty twenty three and they're still profitable, so
Speaker 17: our margin is compressed. Yeah, but you can now buy
Speaker 17: a Model three or a Model Y for roughly thirty
Speaker 17: two to thirty four k after rebates. That's less than
Speaker 17: the average gas powered card America. So Tesla's currently is
Speaker 17: like fifty percent of all evs in America. That's more
Speaker 17: than everybody else in the market combined.
Speaker 1: I think they're going to have a record to Q.
Speaker 17: Four deliveries, probably close to five hundred and fifty thousand.
Speaker 17: It will be big, at least one point eight one
Speaker 17: point nine million units for the year. But the big
Speaker 17: question is can they hold off byd and the Chinese makers.
Speaker 17: That's going to be the big SmackDown.
Speaker 5: I hear your big question. I raise you one other
Speaker 5: big question. Is Tesla a car company or is Tesla
Speaker 5: a technology company? And what we're writing about in Bloomberg
Speaker 5: today is automotive gross margin forecast to fall from around
Speaker 5: twenty eight percent, which is like tech margins, to nineteen
Speaker 5: percent more in line with traditional car makers.
Speaker 17: So here's the answer you may not have expected. Tesla
Speaker 17: is a car company. It's absolutely a tech company. The
Speaker 17: leader is selling over the air of software new features
Speaker 17: like autonomous driving. But they're also an energy company. And
Speaker 17: it is no should be no secret or surprise to
Speaker 17: anyone that the two dominant leaders in the EV vehicle
Speaker 17: world and every auto company is going electric. Make no mistake,
Speaker 17: the two leaders, Tesla and BYD, are also energy companies.
Speaker 17: So the big SmackDown here, the big battle is can
Speaker 17: Tesla pulled off BYD. BYD is the clear leader in China,
Speaker 17: in South America and Mexico. In places where you're selling
Speaker 17: cars in the fifteen to twenty five thousand dollars range,
Speaker 17: Tesla obviously has a big ef advantage thirty thousand dollars
Speaker 17: in uprange, but Tesla has thirteen percent net margins. BYD
Speaker 17: at four to five percent, those margins may come down
Speaker 17: a little bit, but as long as Tesla continues to
Speaker 17: grow at this rate thirty five percent year over year,
Speaker 17: I think Tesla's going to be in the driver's seed
Speaker 17: for a little longer than people think.
Speaker 5: China is such an incredibly important story for so many
Speaker 5: across tech an ev thanks to see Wesley Westy, Greek
Speaker 5: managing partner and of course former board member at the
Speaker 5: EV Maker character.
Speaker 4: Talking in the importance of China.
Speaker 2: Apple CEO Tim Cook one backing from Chinese Commerce Minister
Speaker 2: today who told Cook that China welcomes Apple to benefit
Speaker 2: from the country's market and engage in quote win win development.
Speaker 2: Now this is all according to a sagment from the
Speaker 2: Chinese ministry. It all comes at a time when Apple's
Speaker 2: sales outlook in the world's number two economy look has
Speaker 2: been under scrutiny. Meanwhile, as the US, of course, is
Speaker 2: tightening rules on AI chip sales to China, iPhone Maker
Speaker 2: and Fox Gone and Nvidia said they would build AI
Speaker 2: factories together. It's all according to the financi Times spots.
Speaker 2: Corn has been trying to diversify its revenue based from
Speaker 2: manufacturing electronics to building the computing infrastructure powering autonomous technology.
Speaker 2: See how we just tied that all in one beautiful bow.
Speaker 2: Taie fu China and the impact on US tech. This
Speaker 2: is reely make Technology.
Speaker 4: X, the social network formerly known as Twitter.
Speaker 2: It's just begun testing a one dollar per year subscription
Speaker 2: fee for new accounts on the web that want to
Speaker 2: post or interact.
Speaker 4: With other users.
Speaker 2: Now, the company says the measure, which is called not
Speaker 2: a bot, has a potential to reduce spam, automated bot accounts,
Speaker 2: and manipulation of its service.
Speaker 17: Ed.
Speaker 2: This is all, of course happening overseas New Zealand. One
Speaker 2: of the test beds the Philippines as well, and Elon
Speaker 2: Musk called it, you know, one dollar a year to write,
Speaker 2: but you.
Speaker 4: Read for free.
Speaker 3: Yeah.
Speaker 5: So when x first introduced subscriptions, the idea was that
Speaker 5: it disincentivizes people that want to be spam or bot
Speaker 5: account operators. Right, who pays nine dollars to have an
Speaker 5: account that has the sole purpose of being spam or
Speaker 5: a bo They're just doing it a much lower bar,
Speaker 5: one dollar. I don't know if that will work, but
Speaker 5: now they have a case study, and.
Speaker 2: This is all about monetization. Of course, they got one
Speaker 2: point two billion to pay in interest payments. Bloomberg understands
Speaker 2: and in the Acarina already been articulating there might be
Speaker 2: a three tier subscription level that we're going to see.
Speaker 5: Yeah, squeezing out dollars, but you know how pervasive a
Speaker 5: box on the platform. We still don't have a good
Speaker 5: handle on that. Must says they're down, but many of
Speaker 5: us experience them day to day.
Speaker 9: Well said, that does it.
Speaker 4: From this edition of Bloomberg Technology.
Speaker 6: Though ed.
Speaker 5: Yeah, recap the podcast and thank you for listening.
Speaker 3: Wherever you get your podcasts.
Speaker 5: From New York City and SF, this is Bloomberg Technology.