Speaker 1: From Mark Hard. We're Innovation, Money and Power Colne in
Speaker 1: Silicon Valley, NBR. This is Bloomberg Technology with Caroline Hide
Speaker 1: and Ed loved Love. I'm Caroline Hide of Bloomberg's World
Speaker 1: headquarters in New York and am Lovelow in San Francisco.
Speaker 1: This is Bloomberg Technology and a banking crisis to layoffs
Speaker 1: keeps the tech sector in focus. Caroline, Yeah, from crisis
Speaker 1: to fundamentals. We talk jobs, we talk inflation. Coming up,
Speaker 1: let's talk exactly that more job cuts at Metro in
Speaker 1: particular the company planning to slash ten thousand rolls head
Speaker 1: and five thousand vacant positions. Or on the company's restructuring ahead,
Speaker 1: and we'll have the latest on the collapse of Silicon
Speaker 1: Valley Bank and the big three private equity firms looking
Speaker 1: to snap up the bank's assets. And sticking with SVB,
Speaker 1: we'll talk take a deeper die into the state of
Speaker 1: venture capital and talk executive leadership. The tray Stevens are
Speaker 1: founders Fund and former IBM CEO Jinny Rametti. But again
Speaker 1: day two of our new time of the show, and
Speaker 1: we look at the market repercussions. What a difference a
Speaker 1: day makes as we drive higher on the NASTAP, but
Speaker 1: this time we see bonnials actually rising. After we saw
Speaker 1: yesterday the collapse in borrowing costs, we anticipated the Federal
Speaker 1: Reserve that just had to pull back in the face
Speaker 1: of a banking crisis. Today we look at inflation data
Speaker 1: and we note that CPI is still running hot. It
Speaker 1: means the Federal Reserve is likely still to have to
Speaker 1: hike thirty five basis points and moves higher on the
Speaker 1: two year. We also see the KBW Bank index really
Speaker 1: take a sigh of relief. We're just starting to digest
Speaker 1: the repercussions of SVB the crisis, and now we're dialing
Speaker 1: back our anxiety. We're up almost five percent on this
Speaker 1: particular bank index. Flip it on tell me where we're
Speaker 1: also up for a second straight day. Bitcoin the reprieve
Speaker 1: is relentless. We are up another seven percent. We are
Speaker 1: now trading the highest on Bitcoin. The og of crypto
Speaker 1: ed well since June twenty twenty two. Look at the CPI,
Speaker 1: a real driver in the market. Most of the tech
Speaker 1: names in the NASA one hundred a really policy sensitive
Speaker 1: index higher Nvidia and Apple the biggest points. Moves to
Speaker 1: the upside interesting to track the ride share is Uber
Speaker 1: and Lyft, both higher after the California Appeals Court reaffirms
Speaker 1: that a gig worker is an independent contractor, not an employee.
Speaker 1: Flip up the board's meta. Ten thousand more staff to
Speaker 1: be cut, Mark Zuckerberg, citing the economy shares up six
Speaker 1: and a half percent. We knew this was coming, but
Speaker 1: let's bring in Sarah Fryer from Bloomberg News to talk
Speaker 1: about this, because Sarah, ten thousand a big number. What
Speaker 1: else have we learned about the specifics of this latest
Speaker 1: round of layoffs. Well, this is the second big round
Speaker 1: for MATA in the last six months. So I think
Speaker 1: what we're really hearing from most of our sources is
Speaker 1: just that the morale is hitting a low point at
Speaker 1: the company and workers have had a lot of anxiety
Speaker 1: about what might come next. And of course MATTA is
Speaker 1: saying that it is still working to continue to restructure
Speaker 1: the company, including by flattening the organization. They want to
Speaker 1: make sure that managers aren't you having just a couple
Speaker 1: direct reports. They want to make sure that that engineers
Speaker 1: to managers ratio is a little healthier. In Zuckerberg's eyes,
Speaker 1: in giving them more ability to release products faster, to
Speaker 1: be more efficient. They think that reducing the number of
Speaker 1: middle managers will really help them get there. But this
Speaker 1: is really about the Zuckerberg's Year of efficiency. He's all
Speaker 1: about efficiency. That is what is driving the stock, and
Speaker 1: whilst you seem to like it, they do still seem
Speaker 1: to like it, even though many those working at the
Speaker 1: company still don't know whether they'll be keeping their jobs
Speaker 1: by a proliff. You're on the tech groups, it's going
Speaker 1: to be if you're more on the business line, not
Speaker 1: finding out till may. From a morale perspective. Therefore, moving
Speaker 1: more to I thought the buzzwords were interesting the fact
Speaker 1: that he's still saying we're going to be investing in
Speaker 1: artificial intelligence. It didn't feel like he was really doubling
Speaker 1: down on metavers even though that is still their big focus. Yeah,
Speaker 1: that's that's been interesting for us too. We've really heard
Speaker 1: that Zuckerberg's focus on AI has been prominent in these
Speaker 1: last few weeks and months, which which has some employees
Speaker 1: wondering whether that metaverse mission is as all encompassing as
Speaker 1: he previously made it sound. Of course, Oculus sales are
Speaker 1: they are he says they're strong, but certainly they had
Speaker 1: to reduce the price recently. There are some indications that
Speaker 1: it just really isn't catching on among consumers at the
Speaker 1: rate that they expected. So I think that going all
Speaker 1: in on AI is his next move here and and
Speaker 1: really relates also to the business. I mean, they have
Speaker 1: to use AI to improve their algorithm, they have to
Speaker 1: use AI to make up for the deficiencies and their
Speaker 1: advertising work. Because of the changes that Apple made to tracking,
Speaker 1: shares up more than six percent, biggest jump in around
Speaker 1: six weeks, Sarah, As you and I have reported, By contrast,
Speaker 1: morale is pretty much rock bottom with inside Meta. Remind
Speaker 1: us why this is happening now. We had some reporting
Speaker 1: about the urgency to get these job cuts done about
Speaker 1: Mark Zuckerberg in particularly and what he's about to do well.
Speaker 1: He wants to make sure that they could meet some
Speaker 1: lower expense schools. They really want to make sure that
Speaker 1: they can be a more efficient organization as revenue growth slows. Now,
Speaker 1: the context here is that these platforms that they've created, Facebook, Instagram,
Speaker 1: these giants are really not growing as fast as they
Speaker 1: used to. They're trying to grow the attention, but the
Speaker 1: user base is already very saturated around the world, so
Speaker 1: they have to come up with other ways to get
Speaker 1: their profits in line with what walshrit expects to keep
Speaker 1: that growth going. And this is how they're doing it.
Speaker 1: And I think that that Meta really saw an opportunity.
Speaker 1: It's not that they have to or else will there
Speaker 1: will be some dire hostel pusiness for their business, but
Speaker 1: they saw an opportunity in this moment where a lot
Speaker 1: of companies are doing this, to say listen, we can
Speaker 1: do it and it won't reflect badly on us, and
Speaker 1: in fact, it will make us look smart. And a
Speaker 1: time of course emergency when there's an addition to his
Speaker 1: own family as well as his Meta family with the
Speaker 1: Zuckerberg household at the moment about to go and parental
Speaker 1: leaf serify, We thank you so much for digging in
Speaker 1: on the Meta news now. Of course, Meta job cuts
Speaker 1: makes us think about fundamentals inflation, in particularly the CPI
Speaker 1: print keeping pressure. It would seem on the Federal Reserve
Speaker 1: the most critic up to you got more on it, Yeah, Caroline,
Speaker 1: it does feel like the focus has kind of shifted,
Speaker 1: maybe just a little bit away from the banking fall
Speaker 1: back into the idea of CPI. This highly awaited report
Speaker 1: from the Federal feeds me from the Bureau of Economics,
Speaker 1: and this is really important because you are seeing a
Speaker 1: deceleration inflation. This is good news for the Federal Reserve
Speaker 1: for the first time in about a year. Economists we're
Speaker 1: banging on estimates zero four point four percent rise month
Speaker 1: over month, on a yearly basis, a six percent rise.
Speaker 1: But if the components that matter here, because services inflation
Speaker 1: is still rising, goods inflation is coming down. You're seeing
Speaker 1: those shelter costs in particular decelerating. The housing market has
Speaker 1: been in focus for a while, but commodity pressures are
Speaker 1: kind of coming back up. You're seeing that in gas prices,
Speaker 1: in food prices, and that's what the Federal Reserve is
Speaker 1: going to see as the danger. And that really factors
Speaker 1: into the repricing that you're seeing into the markets. Because
Speaker 1: after the SVB fallout, Caroline and ed who did see
Speaker 1: the market reprice from a five point eight percent terminal
Speaker 1: rate over the summer all the way down to five
Speaker 1: five point one percent again over the summer, essentially saying
Speaker 1: that look, this tightening cycle is over. In the just
Speaker 1: really the last twenty four hours. Especially with the CPI report,
Speaker 1: you are now seeing that terminal rate come back higher
Speaker 1: and higher. Wall Street now split. You have calls from
Speaker 1: likes of City, for example, a fifty basis point hight
Speaker 1: to really keep the pressure on inflation all the way
Speaker 1: to the other side of the spectrum, Nomura perhaps talking
Speaker 1: about a rate cut and even at the end of
Speaker 1: quantitative tightening, something that would bode well for a lot
Speaker 1: of the technology names. And that's why I was saying
Speaker 1: that now's not having its best day since February twenty
Speaker 1: trying three of the CIA pretty great revoting. Thank you.
Speaker 1: Let stick on valuations at stick on fundamentals with CPI
Speaker 1: with jobs as talk to the Wee family officers CEO
Speaker 1: Lago Messino and Advice refirm everything. Get this, more than
Speaker 1: fourteen billion dollars in assets and I just melt reassert
Speaker 1: your focus here when we're trying to work out the
Speaker 1: direction of interest rates. What does it mean from your
Speaker 1: perspective on tech valuations, Well, I think that obviously tech
Speaker 1: valuations are likely to increase, particularly over a longer period
Speaker 1: of time, So you know, I'm a tech ball over
Speaker 1: the next five to ten years, I think a lot
Speaker 1: of the issues we're dealing with, like involation, are going
Speaker 1: to be solved through increased productivity. And the answer the
Speaker 1: productivity are all these tech companies and tech processes that
Speaker 1: are really going to help us become a lot more productive.
Speaker 1: So I think when interest rates were zero, people were
Speaker 1: willing to pay everything for growth. As interest rates have
Speaker 1: come up, the valuations came down. But now you're actually saying,
Speaker 1: I think we're getting towards the end of a cycle,
Speaker 1: so I expect that the valuations will increase, particularly because
Speaker 1: you have so many tail wins with a lot of
Speaker 1: these tech strategies. So you know, whether we're talking about AI,
Speaker 1: or we're talking about electric vehicles or we're talking about
Speaker 1: a farm mine, you start to see the activity that's
Speaker 1: going on in the space. I continue to be a
Speaker 1: tech bull, but I'm a tech bull over time. So
Speaker 1: I think if you think about the next three five years,
Speaker 1: we're going to have much higher valuations for these companies. Okay,
Speaker 1: so you're liking perhaps an Nvidia that has exposure both
Speaker 1: to the autosector but also the AI focus. Who where
Speaker 1: are the companies? Where are the opportunities that you think
Speaker 1: if you're going to allocate money now you should be fine, Well,
Speaker 1: I think there's a lot more opportunity actually in the
Speaker 1: private space than in the public space. And I think
Speaker 1: when you think about the public space, we have five
Speaker 1: thousand companies, right when you think about the private space,
Speaker 1: you have a million companies. And I think the opportunity
Speaker 1: in the public space is going to be because the
Speaker 1: public companies are buying these private companies to actually be
Speaker 1: able to have access to these technologies. And so when
Speaker 1: you look at Adviser buying Siegen, or you think about
Speaker 1: Google's investments or Microsoft's investments in AIM, I think that
Speaker 1: that's where you're going to see the growth. But obviously
Speaker 1: I think the opportunity is much greater in the private space.
Speaker 1: Mel we think about inflation, we think about the FED,
Speaker 1: but I'm looking at some of the movers in the market.
Speaker 1: In earnings is still such a big driver of individual
Speaker 1: share moves, particularly in the technology sector. There's a discussion
Speaker 1: to be had around how the rest of the year
Speaker 1: looks to tech and whether they're recalibrating the strength of
Speaker 1: the economy. You saw Mark Zuckerberg's site the sort of
Speaker 1: longevity of headwinds that his company faces in the economy.
Speaker 1: Do you think we need to again when it comes
Speaker 1: to earnings expectations? Yes, because and I think that's why
Speaker 1: you're seeing the layoffs and the tech companies, because a
Speaker 1: lot of the growth had to do with number of
Speaker 1: subscribers for new customers, new markets that were opening up,
Speaker 1: and because I think a lot of these companies actually
Speaker 1: have huge market share. The name of the game is
Speaker 1: not going to be how many new subscribers or how
Speaker 1: many new clients. It's going to be how can you
Speaker 1: actually change your business model to create more profitability. So,
Speaker 1: whether you're looking at a Facebook or you're looking at
Speaker 1: any of the media companies, I think the name of
Speaker 1: the game has changed. I think what people are really
Speaker 1: looking for is profits and higher margins. Now you're the
Speaker 1: former CEO of JP Morgan's private bank. What have you
Speaker 1: made the last five days in the banking sector particularly
Speaker 1: and how it's hit tech. Well, I mean, obviously, I
Speaker 1: think from the perspective of JP Morgan, it's been like
Speaker 1: a birthday party because everybody has tried to take their
Speaker 1: money out of the banks, out of the other banks
Speaker 1: and put them primarily in JP Morgan. So I think
Speaker 1: that's good news for JP Morgan. In terms of the
Speaker 1: tech sector, I think when it comes, for example, to
Speaker 1: the venture space, I think we're going to I think
Speaker 1: we're going to see maybe lower evaluations, which is actually
Speaker 1: a great opportunity for venture investors. I think what's so
Speaker 1: interesting in particularly Caroline, is how we're threading what's happening
Speaker 1: with SVB to what's happening in the global economy. The
Speaker 1: commonality appears to be that tech companies all sizes are
Speaker 1: under duress. Yeah, largely because interest rates are having to
Speaker 1: go up. They're having to think about costs, and that
Speaker 1: means people and mel it also means people who are
Speaker 1: managing these businesses. You're someone who not only was a
Speaker 1: very senior at JP Morgan and now running around money
Speaker 1: in this respect for family offices, but also someone who's
Speaker 1: on the border Cocacola and Disney. What do you make
Speaker 1: of executive oversight here and board oversight? I think I
Speaker 1: think board oversight has never has never been more important.
Speaker 1: And I think that especially usuals like cybersecurity, for example,
Speaker 1: are more important than ever. And I think that the
Speaker 1: kind of credentials that you need to be able to
Speaker 1: have and the kind of work that you need to
Speaker 1: be able to do to serve on these boards has
Speaker 1: increased dramatically. We family officers, CEO mel la A Messino,
Speaker 1: thank you so much. Which can breaking headlines on the
Speaker 1: Bloomberg terminal. Caroline AMC Entertainment shareholders have approved a common
Speaker 1: share increase, issuing new equity the shares responding inevitably to
Speaker 1: those headlines. A crossing the Bloomberg will bring you more
Speaker 1: as we have it. Of course, we'll continue to watch
Speaker 1: the fallout of Silicon Valley banks sudden collapse and that
Speaker 1: as we understand that Apollo Kko Blackstone showing interest in
Speaker 1: spb's loan book for example here to cover all of
Speaker 1: it origin Nati Bassak and we now sought to understand
Speaker 1: where many feel value actually lies. We are and when
Speaker 1: you look at it, we have the loan book that
Speaker 1: is worth more than seven billion, seventy billion dollars, so
Speaker 1: it's quite large. The question is will Apollo Kker blacksone
Speaker 1: will they start to bid on parts of it or
Speaker 1: all of it? More likely you'll see them bid on
Speaker 1: parts of it. Because the idea here and this is
Speaker 1: great analysis by Bloomberg Intelligence as well. Here this is
Speaker 1: a loan book that has not lost a lot of money.
Speaker 1: There's a lot of questions and concerns about the quality
Speaker 1: of the loans underpinning given that Silicon Valley Bank was
Speaker 1: so aggressive encoding Silicon Valley and the tech entrepreneurs and
Speaker 1: sometimes unprofitable companies. But the idea here is Apollo Kiker
Speaker 1: blacks on their credit their experts here their credit experts.
Speaker 1: So the idea is that if they take on these
Speaker 1: loan books, they take on these clients and they feel
Speaker 1: that they could do a better job at managing these loans.
Speaker 1: But with that said, there are other assets as well,
Speaker 1: including the venture on the asset manager, if you will,
Speaker 1: and the investment bank that worked on about ninety nine
Speaker 1: billion dollars with deals last year. And what's so interesting
Speaker 1: is we still to try and think about where the
Speaker 1: value is A Shinali outlines. Sali, we were just talking
Speaker 1: to mel over at we Family Offices and she was
Speaker 1: talking about board oversight and the need for that at
Speaker 1: the moment. There's real due diligence going in what executives
Speaker 1: were and we're not doing at this time. Yeah, Look,
Speaker 1: the FDIC came in an appointed new leadership at Silicon
Speaker 1: Valley Bank, but inevitably, Shinali, there is a post mortem
Speaker 1: going on and what happened and the action that executives took.
Speaker 1: What have we reported in the last hour. There are
Speaker 1: a few things to keep an eyron here ed, and
Speaker 1: that is both the investigation that is happening when it
Speaker 1: comes to Silicon Valley Bank, it's executives actions taken before.
Speaker 1: There are so many critics in the market that say, listen,
Speaker 1: some of these issues we have known about when it
Speaker 1: comes to their balance sheet management. But even beyond that,
Speaker 1: the stock sales from the manager is particularly the CEO,
Speaker 1: Greg Becker, leading into a lot of the disclosures of
Speaker 1: the information that we had seen before the collapse of
Speaker 1: Silicon Valley Bank. In addition to that, I would also remember,
Speaker 1: while you have the DJ and the SEC forming investigations
Speaker 1: around the collapse of Silicon Valley Bank and the management
Speaker 1: of it, you also have the Federal Reserve doing its
Speaker 1: own investigation of how itself has handled the situation. So
Speaker 1: really questions all around the board here. The reason we're
Speaker 1: tracking both threads of the story is even twenty four
Speaker 1: hours ago, we had a key bench catalyst on this
Speaker 1: program saying we want Silicon Valley Bank to survive in
Speaker 1: some form because we've always done business with them and
Speaker 1: we want to continue carrow. Yeah. And I think also
Speaker 1: people juxtaposing the decisions that were made in the US
Speaker 1: for the regulators versus the UK UK very swiftly getting
Speaker 1: a buyer, I mean at a very rock bottom price
Speaker 1: that has to be said, I mean one pound for
Speaker 1: svb ucastionally. But what have you made of the difference?
Speaker 1: Is that a huge differences And remember it is a
Speaker 1: smaller arm when you're looking at the UK arm. There's
Speaker 1: been a lot of questions on Friday morning when we
Speaker 1: all woke up. There's a question about half of Wall
Speaker 1: Streets circling these assets. If you take a look to
Speaker 1: the point that ED had made, there has been drips
Speaker 1: and drabs of plans announced on restructuring, but there has
Speaker 1: been no bank ruptcy filing. That's an important differentiation here
Speaker 1: because had there been one, then it would be up
Speaker 1: to kind of the jurisdiction of a judge in that
Speaker 1: sort of a situation. But now that you have these
Speaker 1: assets slowly coming up for sale, it makes it a
Speaker 1: little easier for different parts of Wall Street to absorb
Speaker 1: these things, particularly in a way that's compliant with regulations
Speaker 1: and could help them avoid a lot of the two
Speaker 1: thousand and eight era liabilities that cost firms like JP
Speaker 1: Morgan a lot of money coming out of the post
Speaker 1: two thousand and eight investigations. Wool Street is debating moral hazard,
Speaker 1: as we've been discussing on air all day. Just very quickly, Shannali,
Speaker 1: how do the banks look this Tuesday? I mean, there's
Speaker 1: still concerned about the sector, right there's certainly self concerned
Speaker 1: about the sector. But there was a lot of acknowledgment
Speaker 1: that silk On Valley Bank was an outlier in terms
Speaker 1: of the way that it's deposit based looked and the
Speaker 1: way they manage their assets ed. We have to look
Speaker 1: at other sectors now also as we weigh the lagged
Speaker 1: impact of interest rates commercial real estate that is maybe
Speaker 1: not as front and center and emotional Silicon Valley Bank is,
Speaker 1: but certainly it's a slower leading problem, and so we
Speaker 1: are certainly not out of the woods. Though it is
Speaker 1: a big relief to the market to see the regional
Speaker 1: bank stops hop back up, particularly with the likes of
Speaker 1: a First Republic and some of the banks on the
Speaker 1: West coast like Western Alliance and Pac West that some
Speaker 1: of the market was concerned about yesterday. Shnani, how many
Speaker 1: cups of coffee on today? I won't disclose that on air.
Speaker 1: A lot, folks, It's a lot Shani Bassak always there
Speaker 1: with their caffeinated hies. We thank us so much. Ed Yeah,
Speaker 1: coming up, we'll continue the conversation. The UK's Communications Regulators
Speaker 1: says the BBC has to change. We'll tell you why
Speaker 1: next in Talking Tech and as we look at some
Speaker 1: other movers out there in the market, Arc Innovation ets
Speaker 1: OR it's biggest inflows since twenty twenty one, that ETF
Speaker 1: around up around two and a half percent. In this session,
Speaker 1: we'll dig into the specifics. That's next. This is bloomberg
Speaker 1: time for Talking Tech. The BBC has got to change,
Speaker 1: says Melanie Dawes, the head of the UK's Communications Regulators,
Speaker 1: saying that the public broadcaster should let freelancers who are
Speaker 1: not involved in news reporting have more freedom of expression
Speaker 1: on social media. This comes after a high profile row
Speaker 1: between BBC management and popular football show host Gary Lineker
Speaker 1: over his tweet commenting on the UK government's new immigration
Speaker 1: bill and whether that tweet breached the broadcasters commitment to impartiality. Meanwhile,
Speaker 1: Blackstone agreed to buy c Then for eight dollars fifty
Speaker 1: cents per share and the enterprise value of about four
Speaker 1: point six billion dollars for the event management software company.
Speaker 1: Blackstone has received a fully committed one billion dollar credit
Speaker 1: facility as part of the financing of this transaction, which
Speaker 1: expects to close mid year. And finally, Kathy Wood's Ark
Speaker 1: Innovation ETF is getting a strong vote of investor confidence.
Speaker 1: The ETF attracted close to four hundred million dollars of
Speaker 1: inflows on Friday, according to overnight data compiled by Bloomberg,
Speaker 1: the largest influx since April twenty twenty one, a time
Speaker 1: when the fun hit it's all time high during the
Speaker 1: cheap money era. Caroline money is still going somewhere and
Speaker 1: this current volatility. Welcome back to Blue Meg Technology and
Speaker 1: Caroline Hyde in New York. And let's keep ourselves up
Speaker 1: to date with US authorities currently examining the collapse of
Speaker 1: Silicon Valley Bank for misconduct by officers, including whether stock
Speaker 1: sales for examples, by executives actually violated trading rules. It's
Speaker 1: all according to a source. We want to bring in
Speaker 1: a big name from Silicon Valley for her take on
Speaker 1: all of this, Jania Metti. She's a former CEO and
Speaker 1: chairman of IBM, board member of JP Morgan, and she's
Speaker 1: out with a new book on leadership called Good Power,
Speaker 1: Needing Positive Change in our lives, work and world. Boy, Jenny,
Speaker 1: do we need some positive change? What do you make
Speaker 1: of the focus in particular of oversight of board membership
Speaker 1: of executive management at this moment. Well, look, I think
Speaker 1: something I've learned over a long time and working with boards,
Speaker 1: it's never been more important and the importance to have
Speaker 1: on your board people with all different disciplines. So you
Speaker 1: just had Melon earlier talking about the importance of cybersecurity
Speaker 1: or those that have regulatory experience, etc. So it just
Speaker 1: goes to show it is a job that everyone really
Speaker 1: does need to take seriously. You sit on the board
Speaker 1: of JP Morgan, of course, one of the only big
Speaker 1: bank with still the same CEO from the crisis era
Speaker 1: with still that management oversight, And I'm interested is what
Speaker 1: you'll take is from a banking perspective of these three
Speaker 1: almost overnight collapses and what this means for the sector
Speaker 1: in general. Well, you guys have been reporting on it,
Speaker 1: and I think there'll be you know, there'll be many
Speaker 1: quarterbacking events taking place after that, and certainly from a
Speaker 1: regulatory side, obviously two hundred billion and what changes as
Speaker 1: a result of that bank that's size versus the systemically
Speaker 1: important banks management decisions you just alluded to that, And
Speaker 1: then I think it'll be interesting the discussion about the
Speaker 1: role technology played and whether it was in the quick
Speaker 1: dispersion of facts and things that were not true some
Speaker 1: of the same technology that really Silicon Value Bank brought
Speaker 1: to life. And then I think at the end of
Speaker 1: the day, it says a lot about really what we
Speaker 1: all have to do now with the venture cap community.
Speaker 1: And I think it's going to make difficult for some
Speaker 1: parts of VC world that it was already difficult for,
Speaker 1: like women backed vcs right, which was it's only maybe
Speaker 1: two to three percent of the whole community. Now it's
Speaker 1: even less. And what this will mean is more conservative
Speaker 1: and people then tend to do business with who they know,
Speaker 1: and so networks typically then have less women in them.
Speaker 1: So I think there'll be unintended consequences like that to
Speaker 1: come to. It's interesting to bring that up. Twenty four
Speaker 1: hours ago, we had someone on saying that, but also
Speaker 1: pointing out that for many founders, diverse founders from minority groups, women,
Speaker 1: it was Lincoln Valley Bank. They would often write the
Speaker 1: first check you had a story career, IBM, you know
Speaker 1: the world of technology. Do you have any experience of
Speaker 1: working with SVB and what their role was in the Valley? Well,
Speaker 1: certainly worked with many in botmany companies right that they
Speaker 1: had certainly helped launch. And by the way, there are
Speaker 1: other VC firms. I mean another one, a great one, rethink,
Speaker 1: is one that invests in just women, the largest woman
Speaker 1: owned VC firm in this country and women only investments.
Speaker 1: So I think you know, my experience has been positive
Speaker 1: and that there have been many, many good companies that
Speaker 1: we acquired. It appears the world of technologies under duress
Speaker 1: at the moment. There aren't many positive headlines. Do you
Speaker 1: share that assessment? Well, look, I just I think when
Speaker 1: you say it's under duress, I think to paint it
Speaker 1: all in one brush is probably not exactly right, okay.
Speaker 1: And I talk a lot about it in the book
Speaker 1: and that everybody eventually has to have a chapter two.
Speaker 1: And I think that's what you see happening with a
Speaker 1: lot of companies we've had chapter two, three, four or
Speaker 1: five six. Yes, so I certainly learned that point of
Speaker 1: reinvention and learned out that balance of growth and efficiency
Speaker 1: that has to happen. And so to me, this is
Speaker 1: just this chapter two. And you know, it can be
Speaker 1: very dangerous when somebody attacks your profit pool as an example,
Speaker 1: but this is a bit of growing pain, and I
Speaker 1: think that's what you see happening in parts of the market. Jenny.
Speaker 1: There was one opinion piece that I saw that caught
Speaker 1: my attention for more reasons than one, and I wanted
Speaker 1: to get your perspective on some of the criticism that
Speaker 1: has been leveled at so called diversity well destruction on
Speaker 1: the board of SVB. What do you make of that
Speaker 1: as someone who basically thinks a lot about diversity on
Speaker 1: boards and inexecutive management teams. Yeah. Look, you know in
Speaker 1: the book Good Powers you saw with its name was,
Speaker 1: which I actually named in retrospect, actually have a whole
Speaker 1: chapter I dedicated to something called good Tech, which on
Speaker 1: one hand talks about assuring new technologies in safely like
Speaker 1: AI like you've had a lot of discussion about chat GPT,
Speaker 1: and on the other side of it is this point
Speaker 1: about I don't even use the word diversity, as to me,
Speaker 1: diversities a number. Inclusion is a choice. And I always
Speaker 1: said I lived exactly at the intersection of society and business.
Speaker 1: I need a good workforce. I authentically believe a diverse
Speaker 1: workforce is the best workforce that gives you the best products.
Speaker 1: And so I don't view this as anything other than
Speaker 1: doing what is you know, yes, right for society, right
Speaker 1: for a community, but right for my company and for
Speaker 1: the products and the customers. So I think it's a
Speaker 1: shame to misplace that focus on it. To me, it
Speaker 1: is all about having a better company, and it's about culture.
Speaker 1: And at the moment we look at the headlines coming
Speaker 1: from Meta having to lay off another ten thousand, talk
Speaker 1: to us a little bit about your experience and having
Speaker 1: to pivot business models having to lay off people. What
Speaker 1: do you think can be done by mocksluck about Look, first,
Speaker 1: I would say whenever you have to lay off people,
Speaker 1: it is a very hard thing. So put that point aside,
Speaker 1: because these are real people, real families that you impact.
Speaker 1: No one likes to do it. But I think the
Speaker 1: other thing, when you know I just mentioned about this
Speaker 1: is act two. For many companies. People often think about
Speaker 1: what they do. The how they do their work. I
Speaker 1: read a lot about this in the book is just
Speaker 1: as important how they do it. So in other words,
Speaker 1: you have to be more efficient, you have to do
Speaker 1: things faster or consumerism, But then also how you do
Speaker 1: it with the workforce, I think is probably the most
Speaker 1: important thing. So how tough things are done. And again
Speaker 1: I almost think that's a subtitle of the book, which
Speaker 1: is about doing hard things, but doing them in a
Speaker 1: good way doesn't mean you don't do it. I mean, Caroline,
Speaker 1: what jumps out at me is how quickly conversations change.
Speaker 1: Ten days ago we're fixated on artificial intelligence SVB happens
Speaker 1: no one utters those words and the health of the
Speaker 1: tech sects to get it's called into question what do you,
Speaker 1: I mean, where do we go with this? Carrot? I
Speaker 1: know the focus has to return on ultimately business models.
Speaker 1: On a time where interest rates go higher, you have
Speaker 1: to do more with less. Do you pivoted IBM to
Speaker 1: focus in on artificial intelligence? On the rebirth of cloud?
Speaker 1: What do you make of this fascination with chat and
Speaker 1: the hype cycle that was around it. Yeah, look, I
Speaker 1: think what it calls this is not going to be
Speaker 1: a technology issue. This is going to be a trust issue.
Speaker 1: So I feel like I've learned so much over the
Speaker 1: last fifteen years. They're trying to bring AI into the world,
Speaker 1: and there's all different kinds of AI, and I'm a
Speaker 1: little bit afraid this gets all brushed with one brush
Speaker 1: of chat GPT, because while it can do some wonderful things,
Speaker 1: as I think we all already know, you can get
Speaker 1: things that are faction correct, but they sound authoritatively correct.
Speaker 1: So to me, what I'd love to see now, it's
Speaker 1: wonderful that everyone's thinking about AI, because I think it
Speaker 1: can do so many good things. I just don't want
Speaker 1: the downside now to push it aside, which tells me
Speaker 1: that anybody both using it, anybody or building it to
Speaker 1: think about the up and the down at the same time,
Speaker 1: versus let's look at all the good things and a
Speaker 1: bad things to take care of. This would be different
Speaker 1: now bring it in thinking about both at once. And
Speaker 1: so you know, there was such an uproar on education
Speaker 1: around chat GPT. As an example, kids can cheat on
Speaker 1: their tests. I would have loved even a small thing
Speaker 1: at the same time to have come out, which was
Speaker 1: an app. I said, you know this might have been
Speaker 1: created by chet CHPT. Now people are building those now
Speaker 1: and there's discussion of watermarking. But the point is that
Speaker 1: people understand what it's good for, what it's not, how
Speaker 1: it's trained. I mean, look, it's trained by the good
Speaker 1: and bad of humanity. Now there's other kinds of AI
Speaker 1: that you can train very carefully, so they're such good
Speaker 1: and so this is now about my view building trust
Speaker 1: in that technology so we really get its benefit. We
Speaker 1: brought the discussion back Caroline our special intelligence just for
Speaker 1: a minute. Jinni remedi former CEO and chairman of IBM,
Speaker 1: thank you so much for your time and coming in
Speaker 1: and make sure check out Jenny's new book on leadership
Speaker 1: called Good Power, Leading Positive Change in our lives, work
Speaker 1: and world. Now coming up more on Silicon Valley Bank,
Speaker 1: the fallout from a major player in the tech startup world,
Speaker 1: and how vcs are dealing with what to do next.
Speaker 1: Tray Stevens from the Founders Fund joins us here in
Speaker 1: SF this is bloom book. Over the weekend, all the firms,
Speaker 1: including US, we had put together plans to lend capital
Speaker 1: from our balance sheets to help these companies make pierol.
Speaker 1: You know, I think that would have at least over
Speaker 1: the crisis for a couple of weeks, while the right
Speaker 1: you know, solutions were in place. That was General Catalyst
Speaker 1: CEO hem On teenager. They're talking about his firm's plans
Speaker 1: to provide funding to portfolio companies over the weekend and beyond,
Speaker 1: and as the Silicon Valley Bank meltdown was unraveling, other
Speaker 1: VC firms were also quick to react to protect themselves
Speaker 1: and protect their portfolio companies. For example, Founders Fund and
Speaker 1: I'm delighted to say Founders Fund that partner traced EVENS
Speaker 1: is here with me on set. Let's go back to
Speaker 1: base six S. When did you realize something was wrong
Speaker 1: potentially with Silicon Valley Bank and take action. Well, I
Speaker 1: think it goes back for you know, over a month
Speaker 1: where some of the news started coming out about a
Speaker 1: potential issue with the balance sheet at SPB. Wednesday night,
Speaker 1: obviously there was the announcement about additional funding, and coming
Speaker 1: into Thursday morning, I think there was this recognition that,
Speaker 1: you know, things were going to move very quickly, and
Speaker 1: it's it's really hard to overstate just how quickly things
Speaker 1: moved in those first few hours of Thursday morning. So
Speaker 1: Bloomberg had reported that found his fund had pulled its
Speaker 1: own operational cash I suppose from Silicon Valley Bank, and
Speaker 1: then days the consideration around what port photo companies should do.
Speaker 1: What was the decision there the course of action that
Speaker 1: found his fun fault best. Well, the first consideration is
Speaker 1: the fiduciary duty to our LPs. You know, we wanted
Speaker 1: to be in a good position with our with our cash,
Speaker 1: so we were doing the right thing for those those investors,
Speaker 1: and then also doing as much as we could on
Speaker 1: the portfolio side of things to shore that up and
Speaker 1: communicate that we thought there was some risk that they
Speaker 1: should be looking into the communication trade. It's such a
Speaker 1: difficult balancing act when Silicon Valley is ultimately a very
Speaker 1: small space. What do you make of the criticism and
Speaker 1: the warry around social media and the amplification of the
Speaker 1: fear come Wednesday Thursday? Sure, I mean, I think obviously
Speaker 1: there's a lot of as you say, communication risk that
Speaker 1: you take in, you know, making sure that your portfolio
Speaker 1: companies are aware of what's going on, that they have
Speaker 1: the information they need to make the best decision possible.
Speaker 1: You know, certainly, even on our end, it was about
Speaker 1: prioritizing the stack of our portfolio, like how do we
Speaker 1: communicate with as many of them as possible to give
Speaker 1: them a fighting chance. And I think our biggest regret
Speaker 1: in the whole situation is that we weren't able to
Speaker 1: talk to all of them before the situation and kind
Speaker 1: of already unraveled by the time the SBB CEO gave
Speaker 1: his pressference at twelve thirty on that day. Any regret
Speaker 1: around just how SVB was seen in that moment, you know,
Speaker 1: I don't. I don't think any of this was about
Speaker 1: like a judgment of SVB. Obviously, they've been a great
Speaker 1: partner in Silicon Valley for a long time, and we
Speaker 1: have close relationships with many people at the bank, and
Speaker 1: you know, I think for us it was about being
Speaker 1: intellectually honest and having a conversation about, you know, what
Speaker 1: we needed to do to do the right thing, as
Speaker 1: I said, for our LPs and for our portfolio companies
Speaker 1: kind of by the amount of exposure that they had
Speaker 1: to this as well. And you know, these people aren't
Speaker 1: responsible for, uh, you know, what happened at SVB and
Speaker 1: they just had to do the right thing to make
Speaker 1: sure that they can make payroll. As Hayman said in
Speaker 1: the video that you guys played at the outset, Yeah,
Speaker 1: interesting him on he's one of the collective event castlests
Speaker 1: that hope they can continue to do business specific and
Speaker 1: Valdy Bank and its reincarnated form to just found a
Speaker 1: share that hope. I think we're certainly open to continuing
Speaker 1: a relationship with whoever ends up being the right player
Speaker 1: and partner in Silicon Valley moving forward. Obviously, the biggest
Speaker 1: concern at this point is that it seems like there's
Speaker 1: been a sort of a bifurcation that's happened as a
Speaker 1: result of the response of the federal government, where you know,
Speaker 1: there's like regional banks on one side and you have
Speaker 1: the you know, the big banks on the other side.
Speaker 1: And making sure that our companies are diversified to the
Speaker 1: extent that they're going to have a good treasury plan
Speaker 1: that protects the deposits. Let's go back to what you're
Speaker 1: focused on. In some sense, defense and defense related technology.
Speaker 1: Is all of the energy in that subset to just
Speaker 1: stop now? Or do you continue writing checks? Do you
Speaker 1: continue to see rounds in that space and to take
Speaker 1: it up. I don't really perceive that there's going to
Speaker 1: be any shift in the way that we as the
Speaker 1: fund to think about making investments. Certainly there's macroeconomic headwinds
Speaker 1: that we've been facing for the last eighteen months or so,
Speaker 1: but the government continues to be a customer the you know,
Speaker 1: the world must go on. And I think for the
Speaker 1: sectors that I'm personally most interested in, kind of these,
Speaker 1: the intersection of technology and strategic industry, these things are
Speaker 1: going to continue largely as they as they have been
Speaker 1: for a long time. Of course, your execution chairman co
Speaker 1: founded and Jewel Industries. You're also on the board of Flexport,
Speaker 1: these critical infrastructure plays as well. I'm just interested in
Speaker 1: your experience with government. I mean, your career was started
Speaker 1: with a congressman. How do you think government has reacted.
Speaker 1: Are you specifically asking about SVB or to the changes
Speaker 1: in the tech ecosystem a better both ultimately to come
Speaker 1: in and support the situation, whether it be from the
Speaker 1: positives perspective and indeed just ultimately the view of government
Speaker 1: and technology at large. Yeah, well, I think the most
Speaker 1: inconvenient thing about the situation last week was actually the
Speaker 1: name of the bank. You know, it got instantly politicized.
Speaker 1: I don't think this was political at all. I think
Speaker 1: the government did what they need to do to protect
Speaker 1: and shore up these smaller regional banks and to ensure
Speaker 1: that there weren't any further runs. And so it seems
Speaker 1: like they acted quickly, they did the right thing, and
Speaker 1: hopefully that stability is going to play itself out in
Speaker 1: the coming weeks. Because it's your your area of focus.
Speaker 1: What is stopping the public sector the military from adopting
Speaker 1: the best in technology, the best in class technology from
Speaker 1: Silicon Valley in the other areas you look at. Sure,
Speaker 1: I mean I don't necessarily think it's about geography. I
Speaker 1: would say most of the best technology companies working with
Speaker 1: the government are not based in San Francisco. But you know,
Speaker 1: the primary thing that's been problematic is not policy. It's
Speaker 1: not the authorities and the procurement system. It's just culture.
Speaker 1: The government hasn't been as forward leaning and understanding that
Speaker 1: they need access to the best talent possible to build
Speaker 1: things that are relevant to the fight in the future.
Speaker 1: And these are largely software problems, and I think most
Speaker 1: top talent software engineers are likely to be optimizing ads
Speaker 1: um and not sitting in concrete basements building you know
Speaker 1: the future of the DoD well. Here's to building the future,
Speaker 1: even in this current scenario. We want to thank you
Speaker 1: so much spending time with us. Found as fun partner,
Speaker 1: Tray Stevens. Uber left, another gig economy company scored a
Speaker 1: victory after a California appeals court upheld the current law
Speaker 1: classifying gig workers as independent contractors instead of employees. Bloom
Speaker 1: They Joel's Rolls and Black covered the case. Joel explained
Speaker 1: the appeals court decision. Yeah, the appeals court decision is
Speaker 1: actually it's complicated, but it's the upshot is that the
Speaker 1: voter approved initiative, that the Right Healing Company's bank roll
Speaker 1: in twenty and twenty is voter approved, and there's there's nothing,
Speaker 1: there's nothing to do about that. That's that's that's the
Speaker 1: ruling in the nutshell. Okay, Ultimately, is there any further
Speaker 1: argument to be had, any further changes that need to
Speaker 1: be made by Uber and Lift or is business model
Speaker 1: free to run? The business model is they're arguing, and
Speaker 1: the ruling says that that's free to run. There will
Speaker 1: be other challenges there have been in other states and worldwide,
Speaker 1: including in London. So it's not it's not just over
Speaker 1: but in the state this is a this is a
Speaker 1: significant ruling. I haven't heard back from the AG yet,
Speaker 1: the Attorney General who has sued Uber over this and lift.
Speaker 1: It's not unclear if they're going to appeal to the
Speaker 1: State Supreme Court yet. They may be to God. But
Speaker 1: to clarify job, that is an avenue open to them. Technically,
Speaker 1: that is that's opening to them. I think it's a
Speaker 1: voter approved initiative. Just to step back for one very
Speaker 1: brief moment, the Ryan hailing companies paid two hundred million
Speaker 1: dollars in the ad campaign to initiate this proposition to
Speaker 1: do an end run around state lot and they got.
Speaker 1: With all that money, they got the initiative passed. Right,
Speaker 1: I vote the initiative and there's not much to do
Speaker 1: about that. I thinkally goal you jure great to have
Speaker 1: your analysis. We thank you. Joe Rosenblatt, is he waits
Speaker 1: for that call from the AG meanwhile, that does it
Speaker 1: From this day two edition of Bloemberg Technology at twelve
Speaker 1: ET nine AMPT. Yeah, and you can recap day two
Speaker 1: on the podcast iHeart Apple, Spotify, Bloomberg, wherever you get
Speaker 1: your podcast Carrot, and let's just check in on these markets,
Speaker 1: because once again we are ripping higher. This is a
Speaker 1: story of even though inflation runs hot head, the SMP,
Speaker 1: the NASDAC on the highest side too to nes track it. Inflation,
Speaker 1: the Fed all impacting the technology sector. This is Bloomberg