1 00:00:01,400 --> 00:00:04,120 Speaker 1: From the heart of We're Innovation of Money and Power 2 00:00:04,280 --> 00:00:09,080 Speaker 1: cal in Silicon Valley, NBR. This is Bloomberg Technology with 3 00:00:09,160 --> 00:00:26,040 Speaker 1: Caroline Hyde and Ed Ludlow. I'm Caroline Hyde of Bloomberg's 4 00:00:26,040 --> 00:00:29,240 Speaker 1: world headquarters in New York, and I'med Ludlow in San Francisco. 5 00:00:29,360 --> 00:00:32,880 Speaker 1: This is Bloomberg Technology coming up a conversation with Art 6 00:00:32,880 --> 00:00:36,360 Speaker 1: Invests CEO Kathy Wood from the banking crisis to crypto 7 00:00:36,400 --> 00:00:39,280 Speaker 1: and beyond. Will discuss it all, and we'll take a 8 00:00:39,280 --> 00:00:41,839 Speaker 1: look at the health of startups amid the crisis. We're 9 00:00:41,920 --> 00:00:45,040 Speaker 1: joined by the CEO of Pilots, the tech startup accountant 10 00:00:45,200 --> 00:00:47,720 Speaker 1: doing the books of Silicon Valley, and we'll get the 11 00:00:47,720 --> 00:00:51,000 Speaker 1: outlook for the gaming industry this year. Unity CEO John 12 00:00:51,159 --> 00:00:54,520 Speaker 1: Ricatello joining us for an exclusive conversation on his findings. 13 00:00:54,920 --> 00:00:57,240 Speaker 1: We of course are going getting now to a key 14 00:00:57,280 --> 00:01:00,600 Speaker 1: conversation with Kathy Wood, and at that note, we do 15 00:01:00,720 --> 00:01:03,560 Speaker 1: welcome in our TV as well as our radio audiences 16 00:01:03,600 --> 00:01:06,399 Speaker 1: worldwide for the conversation with the Arc Invests CEO and 17 00:01:06,560 --> 00:01:10,520 Speaker 1: CIO Cathy Wood. We've been discussing, of course, bank failures. Kathy, 18 00:01:10,520 --> 00:01:13,120 Speaker 1: We've been talking about a confidence crisis and you have 19 00:01:13,280 --> 00:01:16,920 Speaker 1: said that FED policy J. Powell was a primary culpit 20 00:01:17,040 --> 00:01:20,520 Speaker 1: the pace really of rate hikes from such a low base. 21 00:01:20,600 --> 00:01:23,279 Speaker 1: But for you, is the risk of a systemic credit 22 00:01:23,280 --> 00:01:28,199 Speaker 1: event still key? Has that been avoided? Well, I think 23 00:01:28,560 --> 00:01:32,679 Speaker 1: they're addressing the liquidity issue, but not really the stallvency 24 00:01:32,760 --> 00:01:36,760 Speaker 1: issue from our point of view. A couple of things 25 00:01:36,800 --> 00:01:39,920 Speaker 1: have happened here that have never happened really in history, 26 00:01:40,000 --> 00:01:43,560 Speaker 1: and so the banks didn't expect it. The first was 27 00:01:43,959 --> 00:01:47,400 Speaker 1: interest rates up nineteenfold in less than a year. Never 28 00:01:47,480 --> 00:01:51,800 Speaker 1: happened under Vulker, which it was twofold ten to twenty percent. 29 00:01:52,400 --> 00:01:55,720 Speaker 1: And the low base does matter. Many people dismissed it, saying, oh, 30 00:01:55,800 --> 00:01:59,120 Speaker 1: just such a low base. No expectations were low base. 31 00:01:59,520 --> 00:02:03,919 Speaker 1: So that the first we've never seen that magnitude of 32 00:02:04,440 --> 00:02:08,919 Speaker 1: an earthquake, I would say. Then the second thing that 33 00:02:09,120 --> 00:02:12,960 Speaker 1: no one expected, again because it hasn't happened in such 34 00:02:12,960 --> 00:02:18,799 Speaker 1: a long time, was deposits leaving the system. For Silicon 35 00:02:18,880 --> 00:02:23,079 Speaker 1: Valley Bank, it was venture capital facing a funding drought, 36 00:02:23,160 --> 00:02:26,520 Speaker 1: and so they had to draw down their deposits. But 37 00:02:26,680 --> 00:02:30,120 Speaker 1: then for others, we've got money market funds attracting paying 38 00:02:30,200 --> 00:02:37,480 Speaker 1: much higher than deposits attracting flows, so that combination was lethal. 39 00:02:38,480 --> 00:02:42,760 Speaker 1: And so now they have the backstop in now what 40 00:02:42,800 --> 00:02:47,280 Speaker 1: do we have. We have them they're going to be 41 00:02:47,360 --> 00:02:50,040 Speaker 1: paying up if they if they're depending on the facility, 42 00:02:50,520 --> 00:02:54,040 Speaker 1: they'll pay roughly four point three seven percent right now? 43 00:02:54,160 --> 00:03:00,639 Speaker 1: Is that rate ois plus ten And that's much higher 44 00:03:00,680 --> 00:03:03,799 Speaker 1: than many of them have been paying for deposits number one, 45 00:03:04,360 --> 00:03:07,679 Speaker 1: while in the case of Silicon Valley Bank, their average 46 00:03:08,040 --> 00:03:11,120 Speaker 1: held to maturity security on the asset side of their 47 00:03:11,120 --> 00:03:14,120 Speaker 1: balance sheet was only one point six. So they're going 48 00:03:14,120 --> 00:03:19,639 Speaker 1: to see net interest losses now. Instead of having marked 49 00:03:19,760 --> 00:03:27,160 Speaker 1: market hit equity, these losses are going to hit earnings. Kathy, 50 00:03:27,240 --> 00:03:29,760 Speaker 1: that's the cause. Let's go to the effect. Since the 51 00:03:29,800 --> 00:03:33,200 Speaker 1: collapse of Silicon Valley Bank, the market has changed its 52 00:03:33,200 --> 00:03:37,440 Speaker 1: FED expectations for a less hawkish or a more dubbish FED. 53 00:03:37,960 --> 00:03:41,600 Speaker 1: You cite the FED as the cause. How nimble arc being, 54 00:03:42,080 --> 00:03:48,520 Speaker 1: how much are you recalculating your view going forward? Well, 55 00:03:48,920 --> 00:03:53,640 Speaker 1: as we said before COVID, as we were descending into that, 56 00:03:53,760 --> 00:03:58,560 Speaker 1: and we are saying, now, innovation solves problems. And you 57 00:03:58,640 --> 00:04:02,360 Speaker 1: showed a few charts at the beginning that suggests that 58 00:04:02,800 --> 00:04:06,240 Speaker 1: some of the innovators out there are solving problems. I mean, 59 00:04:06,280 --> 00:04:10,200 Speaker 1: I think the most dramatic example of it to us 60 00:04:10,960 --> 00:04:15,920 Speaker 1: was the behavior of bitcoin last week. It absolutely took off. 61 00:04:15,960 --> 00:04:22,040 Speaker 1: It was a flight to safety vehicle, and so it 62 00:04:22,200 --> 00:04:25,880 Speaker 1: is really proof of concept that innovation solves problems. There 63 00:04:25,920 --> 00:04:33,839 Speaker 1: are in bitcoin fully decentralized, fully transparent, auditable which is 64 00:04:34,720 --> 00:04:38,039 Speaker 1: addressing all of the banking's problems right now, and so 65 00:04:38,240 --> 00:04:41,280 Speaker 1: a flight to safety a little bit of an insurance policy. 66 00:04:41,760 --> 00:04:48,279 Speaker 1: There's no central point of failure in bitcoin. Caroline Arc 67 00:04:48,360 --> 00:04:51,520 Speaker 1: has twenty thirty calls on bitcoin. The most bullish case 68 00:04:51,560 --> 00:04:54,480 Speaker 1: around one point five million on bitcoin, the most bearish 69 00:04:54,520 --> 00:04:58,000 Speaker 1: around two hundred and fifty thousand on bitcoin. Somewhere in 70 00:04:58,000 --> 00:05:01,000 Speaker 1: the middle we have around six hundred and eighty two thousand, 71 00:05:01,040 --> 00:05:05,160 Speaker 1: two hundred. That is this sort of base case there 72 00:05:05,200 --> 00:05:07,280 Speaker 1: interesting at a time when no one is making that 73 00:05:07,360 --> 00:05:10,200 Speaker 1: kind of long term projection. Yeah, and Kathy, we know 74 00:05:10,279 --> 00:05:14,359 Speaker 1: you're a long term investor with long term calls, But 75 00:05:14,520 --> 00:05:17,719 Speaker 1: what on earth gets us to that bull case of 76 00:05:17,720 --> 00:05:20,720 Speaker 1: almost one and a half million dollars per bitcoin? If 77 00:05:20,720 --> 00:05:27,480 Speaker 1: a bank crisis doesn't oh well, one of the things 78 00:05:27,520 --> 00:05:30,480 Speaker 1: that happens in a crisis is a liquidity drives up, 79 00:05:30,600 --> 00:05:34,359 Speaker 1: so that tends to hurt assets, and the fact that 80 00:05:34,480 --> 00:05:39,800 Speaker 1: bitcoin moved in a very different way from the equity 81 00:05:39,880 --> 00:05:45,760 Speaker 1: markets in particular was quite instructive. You'll find the building 82 00:05:45,760 --> 00:05:50,280 Speaker 1: blocks of those price targets in our Big Ideas twenty 83 00:05:50,320 --> 00:05:52,880 Speaker 1: twenty three. So our Big Ideas twenty twenty three and 84 00:05:52,920 --> 00:05:57,680 Speaker 1: there for the base case, I would suggest quite conservative. 85 00:05:58,600 --> 00:06:02,000 Speaker 1: We've dialed some of them down since last year. I 86 00:06:02,120 --> 00:06:06,279 Speaker 1: know that corporate treasuries pulled away from bitcoin because because 87 00:06:06,320 --> 00:06:11,120 Speaker 1: the regulators were pulling them away from from bitcoin on 88 00:06:11,160 --> 00:06:14,440 Speaker 1: their balance sheet, so we've pulled back there. But we 89 00:06:14,520 --> 00:06:17,720 Speaker 1: do believe that the behavior of the price through this 90 00:06:17,800 --> 00:06:24,240 Speaker 1: crisis is going to attract more institutions. For example, we've 91 00:06:24,279 --> 00:06:30,520 Speaker 1: done a report targeting institutional investors and an the allocation 92 00:06:31,040 --> 00:06:34,760 Speaker 1: that they should make if they if they care about 93 00:06:34,800 --> 00:06:39,640 Speaker 1: this new asset class diversifying their portfolios, and I believe 94 00:06:39,640 --> 00:06:42,279 Speaker 1: it's somewhere between two and a half and six and 95 00:06:42,279 --> 00:06:46,040 Speaker 1: a half percent, so not crazy. These are the sorts 96 00:06:46,040 --> 00:06:50,320 Speaker 1: of allocations they would have made to emerging new categories 97 00:06:50,360 --> 00:06:54,160 Speaker 1: of assets like real estate in the seventies, emerging markets 98 00:06:55,440 --> 00:06:58,880 Speaker 1: and small cap in the eighties and nineties, and Kathy, 99 00:06:59,120 --> 00:07:01,560 Speaker 1: I mean, let's discussed some of the ways that Kathy 100 00:07:01,600 --> 00:07:04,720 Speaker 1: and Ark have invested and got exposure to crypto. Of course, 101 00:07:04,760 --> 00:07:08,320 Speaker 1: there's the companies such as coin Basto. There's also GBTC. 102 00:07:08,720 --> 00:07:12,680 Speaker 1: The gray scale bitcoin trust and regulation is in the 103 00:07:12,680 --> 00:07:14,520 Speaker 1: eye of the storm there as well. Ed. I mean 104 00:07:14,680 --> 00:07:16,600 Speaker 1: to talk us through what the SEC seems from pushing 105 00:07:16,680 --> 00:07:19,120 Speaker 1: us towards. Yeah, and it calculated an interesting point. They're 106 00:07:19,240 --> 00:07:22,160 Speaker 1: right about institution investors, Kathy, if I remember correctly, back 107 00:07:22,160 --> 00:07:24,400 Speaker 1: in twenty twenty one, a big part of your thesis 108 00:07:24,440 --> 00:07:27,040 Speaker 1: on the run up in bitcoin was that more US 109 00:07:27,120 --> 00:07:29,760 Speaker 1: corporates would add it to their balance sheet in place 110 00:07:29,800 --> 00:07:32,360 Speaker 1: of cash. That doesn't appear to have happened to the 111 00:07:32,440 --> 00:07:35,640 Speaker 1: level that you'd hope. Is that because the US is 112 00:07:35,680 --> 00:07:42,120 Speaker 1: just not a regulatory friendly environment for this to happen. Yes, 113 00:07:43,280 --> 00:07:45,760 Speaker 1: you know, in the beginning of the crisis, it seemed 114 00:07:45,800 --> 00:07:51,880 Speaker 1: like regulators wanted to blame crypto instead of the significant 115 00:07:51,920 --> 00:07:56,800 Speaker 1: rise in interest rates and the deposit outflosed. Now we're 116 00:07:56,880 --> 00:07:59,400 Speaker 1: seeing it as a solution to the problem, but the 117 00:07:59,440 --> 00:08:05,160 Speaker 1: regulator are still are still reticent. Something interesting happened today, 118 00:08:05,760 --> 00:08:12,400 Speaker 1: or maybe it was yesterday. Governor DeSantis basically said that 119 00:08:13,160 --> 00:08:19,360 Speaker 1: he was going too. I don't know if you said 120 00:08:19,360 --> 00:08:23,160 Speaker 1: this exactly, but the conclusion of his saying we're going 121 00:08:23,200 --> 00:08:26,040 Speaker 1: to set Florida apart from the rest of the nation 122 00:08:27,640 --> 00:08:32,800 Speaker 1: was this ability to touch companies that touch crypto. After all, 123 00:08:32,800 --> 00:08:36,360 Speaker 1: these are cash deposits there FIA deposits, they're not crypto, 124 00:08:36,840 --> 00:08:39,720 Speaker 1: and this can be done on a state by state basis. 125 00:08:39,720 --> 00:08:43,400 Speaker 1: So I think you'll see Florida, like it has done 126 00:08:43,400 --> 00:08:46,000 Speaker 1: in many other ways, distinguish itself from the rest of 127 00:08:46,040 --> 00:08:51,599 Speaker 1: the pack. Kathy Katie Greifeld, my good friend and a 128 00:08:51,679 --> 00:08:54,080 Speaker 1: just terrific reporter on the ECF beats, has been talking 129 00:08:54,080 --> 00:08:56,720 Speaker 1: about gray scale and the opening arguments in the case 130 00:08:56,720 --> 00:09:01,800 Speaker 1: with the SEC. In that discussion in how much are 131 00:09:01,800 --> 00:09:05,000 Speaker 1: you considering adding to your position around trust? How are 132 00:09:05,000 --> 00:09:10,439 Speaker 1: you reading how that grayscale situation is playing out? So 133 00:09:10,640 --> 00:09:15,559 Speaker 1: it seems as though the judge is having some trouble 134 00:09:16,160 --> 00:09:22,480 Speaker 1: understanding how the SEC could prove a bitcoin futures ETF, 135 00:09:23,080 --> 00:09:28,400 Speaker 1: which is swaps based and therefore has counterparty risk, but 136 00:09:28,559 --> 00:09:33,160 Speaker 1: will not allow a spot bitcoin ETF. It really makes 137 00:09:33,280 --> 00:09:38,120 Speaker 1: no sense so they'll either have to basically shut down 138 00:09:38,480 --> 00:09:42,280 Speaker 1: the Bitcoin futures ETF, it seems to me, or allow 139 00:09:43,080 --> 00:09:47,080 Speaker 1: a bitcoin ETF. So I think Grayscale is doing Bitcoin 140 00:09:47,240 --> 00:09:50,960 Speaker 1: a great service and its arguments have been very sound. 141 00:09:52,600 --> 00:09:55,599 Speaker 1: We all saw our audience, Kathy, what they make of 142 00:09:55,679 --> 00:09:58,120 Speaker 1: the behavior in bitcoin. This was what they had to 143 00:09:58,200 --> 00:10:01,800 Speaker 1: say in the terms of how the set class behaves. 144 00:10:04,000 --> 00:10:06,080 Speaker 1: Is it a must have in a banking crisis? Few 145 00:10:06,400 --> 00:10:10,040 Speaker 1: respondents said yes, No, it's too volatile. As the main response, Caroline, 146 00:10:10,080 --> 00:10:12,000 Speaker 1: interest in your take on that. What this all comes 147 00:10:12,040 --> 00:10:15,319 Speaker 1: down to is how we're playing the interest rate environment, right, 148 00:10:15,360 --> 00:10:17,800 Speaker 1: how we're reading the FED, how we're reading across different 149 00:10:17,840 --> 00:10:21,400 Speaker 1: asset classes. Yeah, and to that point, Kathy, you have said, 150 00:10:21,440 --> 00:10:23,839 Speaker 1: just earlier in the conversation, the rate of change of 151 00:10:23,880 --> 00:10:28,160 Speaker 1: the FED, the nineteenfold increase in interest rates that have 152 00:10:28,320 --> 00:10:30,760 Speaker 1: so upended you say, in many ways what's happening in 153 00:10:30,760 --> 00:10:34,000 Speaker 1: the financial markets and financial conditions. But we did see 154 00:10:34,040 --> 00:10:36,480 Speaker 1: signaling from the Fed. They did tell us they were 155 00:10:36,520 --> 00:10:39,560 Speaker 1: going to be hiking rates and hiking rate fast. Why 156 00:10:39,640 --> 00:10:45,679 Speaker 1: then didn't you move your portfolio around more? Well, the 157 00:10:46,040 --> 00:10:49,800 Speaker 1: premise of the question is that we're an asset allocator. 158 00:10:49,840 --> 00:10:56,080 Speaker 1: We are not. We invest exclusively in disruptive innovation, nothing else. 159 00:10:56,559 --> 00:11:00,960 Speaker 1: What we did do was we concentrated our ship strategy 160 00:11:01,080 --> 00:11:05,160 Speaker 1: so AARKK and and our other strategies AARKQ, a ARK 161 00:11:05,480 --> 00:11:11,640 Speaker 1: WARKF and we moved in the flagships case, from fifty 162 00:11:11,679 --> 00:11:14,920 Speaker 1: eight names in February of twenty one when we peaked 163 00:11:16,360 --> 00:11:19,920 Speaker 1: down to twenty seven twenty eight names. We have a 164 00:11:19,960 --> 00:11:24,400 Speaker 1: scoring system, and the scoring system is based on variables 165 00:11:24,400 --> 00:11:28,240 Speaker 1: we believe are very important to innovation, and so we 166 00:11:28,480 --> 00:11:35,160 Speaker 1: concentrated the portfolio. Many people in the traditional asset management world, 167 00:11:35,640 --> 00:11:37,880 Speaker 1: when they go through a risk off period, they will 168 00:11:37,920 --> 00:11:42,960 Speaker 1: diversify their portfolios by moving closer to their benchmarks. What 169 00:11:43,040 --> 00:11:48,240 Speaker 1: they're doing is typically selling our kinds of names, and 170 00:11:48,400 --> 00:11:51,800 Speaker 1: so that is why they're putting extreme pressure on them. 171 00:11:52,440 --> 00:11:56,040 Speaker 1: Will create losses by selling stocks, and that gives us 172 00:11:56,040 --> 00:11:59,520 Speaker 1: a tax loss asset which we have it's over two 173 00:11:59,559 --> 00:12:03,080 Speaker 1: billion dollars right now against which we can take future 174 00:12:03,160 --> 00:12:06,880 Speaker 1: gains and then concentrate towards our highest conviction names. We 175 00:12:06,920 --> 00:12:10,160 Speaker 1: have a paper on our site which shows the benefits 176 00:12:10,160 --> 00:12:14,880 Speaker 1: of this concentration strategy during risk off and diversification strategy 177 00:12:15,000 --> 00:12:19,080 Speaker 1: during risk one, but of course when it's risk off, 178 00:12:19,640 --> 00:12:22,400 Speaker 1: you've underperformed. And actually even on a five year basis, 179 00:12:22,400 --> 00:12:25,480 Speaker 1: I know people will say, look, you're always looking in 180 00:12:25,520 --> 00:12:28,400 Speaker 1: a long period, five year outlook kind of perspective. But 181 00:12:28,520 --> 00:12:31,319 Speaker 1: look back from here over the last five years, and yes, 182 00:12:31,360 --> 00:12:33,400 Speaker 1: it's been a turbulent time, it's been an interest rate 183 00:12:33,480 --> 00:12:36,440 Speaker 1: hike time, but you've underperformed the S and P five hundred. 184 00:12:36,840 --> 00:12:39,320 Speaker 1: What do you say to those that have a shorter 185 00:12:39,400 --> 00:12:41,680 Speaker 1: time frame in terms of investing, those that are looking 186 00:12:41,720 --> 00:12:44,400 Speaker 1: to retire in the next five to ten years, should 187 00:12:44,440 --> 00:12:46,120 Speaker 1: they be with you or do we have to be 188 00:12:46,640 --> 00:12:49,240 Speaker 1: long term? Equity investors that have a much longer runway 189 00:12:49,320 --> 00:12:54,080 Speaker 1: to get have exposure to our investments. So we're the 190 00:12:54,120 --> 00:12:57,800 Speaker 1: closest thing to a venture a strategy, to a venture 191 00:12:58,000 --> 00:13:04,040 Speaker 1: capital fund in the public equity markets, and a venture 192 00:13:04,080 --> 00:13:09,040 Speaker 1: fund has a long term investment horizon. If an investor 193 00:13:09,360 --> 00:13:14,360 Speaker 1: cannot have that long term an investment horizon, then they 194 00:13:14,440 --> 00:13:20,320 Speaker 1: should allocate perhaps a small amount to our strategy, say 195 00:13:20,440 --> 00:13:24,920 Speaker 1: one or two percent, which, by the way, from what 196 00:13:24,960 --> 00:13:30,040 Speaker 1: we can tell, most advisors have us at that one 197 00:13:30,160 --> 00:13:34,600 Speaker 1: to three percent range. Now, why would you put any 198 00:13:34,840 --> 00:13:37,560 Speaker 1: if the risk was the volatility that you see on 199 00:13:37,600 --> 00:13:43,319 Speaker 1: this chart. It is because our companies are going to 200 00:13:43,520 --> 00:13:47,760 Speaker 1: disrupt the traditional world order. And if we're right, then 201 00:13:48,080 --> 00:13:52,120 Speaker 1: the large cap benchmarks and even some of the mid 202 00:13:52,400 --> 00:13:57,320 Speaker 1: caps MidCap funds are going to be disrupted. We will 203 00:13:57,400 --> 00:14:01,360 Speaker 1: be a hedge. Now, you'll, I will say it submit 204 00:14:01,440 --> 00:14:05,160 Speaker 1: to you that last year was the most unusual year 205 00:14:05,200 --> 00:14:09,239 Speaker 1: of my investment career, and not only mine, but bond investors. 206 00:14:09,720 --> 00:14:16,040 Speaker 1: So bond investors had the worst year in two hundred 207 00:14:16,080 --> 00:14:20,800 Speaker 1: and some odd years. When interest rates go up nineteenfold 208 00:14:20,880 --> 00:14:24,640 Speaker 1: in less than a year, it's going to kill long 209 00:14:24,720 --> 00:14:29,080 Speaker 1: duration assets. Bonds are long duration assets. They've never seen 210 00:14:29,120 --> 00:14:32,440 Speaker 1: a year like that. Arc is a long duration asset. 211 00:14:33,200 --> 00:14:36,440 Speaker 1: But if we're right and these companies are going to 212 00:14:36,480 --> 00:14:41,480 Speaker 1: disrupt the traditional world order, then we want to be 213 00:14:41,520 --> 00:14:43,880 Speaker 1: on the right side of change and the market will 214 00:14:43,920 --> 00:14:47,080 Speaker 1: come our way away from those benchmarks which represent the 215 00:14:47,120 --> 00:14:52,320 Speaker 1: traditional world order, to our strategies for a global TV 216 00:14:52,480 --> 00:14:55,080 Speaker 1: and radio audience was speaking with Kathy Wood, CEO of 217 00:14:55,680 --> 00:15:00,840 Speaker 1: Investment Management. Kathy in June on Stage up summit cited 218 00:15:01,320 --> 00:15:04,400 Speaker 1: retail inventory levels and you told me to if you 219 00:15:04,480 --> 00:15:11,960 Speaker 1: remember that inflation would unravel. Did you get that one wrong? No, 220 00:15:12,120 --> 00:15:14,920 Speaker 1: if you look at if you look at upstream, what's 221 00:15:14,960 --> 00:15:19,240 Speaker 1: going on. Commodity prices are coming down quite dramatically, some 222 00:15:19,360 --> 00:15:24,400 Speaker 1: by seventy eighty percent. And I will also say the 223 00:15:24,720 --> 00:15:27,480 Speaker 1: retail call was very right. I think I think you'll 224 00:15:27,520 --> 00:15:32,600 Speaker 1: agree on that. The discounting, we think is going to 225 00:15:32,640 --> 00:15:35,520 Speaker 1: continue to work its way through the system from the 226 00:15:35,520 --> 00:15:39,920 Speaker 1: commodity price level to downstream nearer the consumer. And you 227 00:15:39,960 --> 00:15:43,880 Speaker 1: can see this Tesla's cutting prices. Many people say, oh, 228 00:15:43,960 --> 00:15:47,680 Speaker 1: it's because of competition. No, it's because their commodity prices 229 00:15:47,720 --> 00:15:53,160 Speaker 1: are coming down. And Elon's even talking about deflation. And 230 00:15:53,440 --> 00:15:58,840 Speaker 1: the cost associated with innovation is coming down because it 231 00:15:58,880 --> 00:16:01,960 Speaker 1: follows a learning curve. So I think the innovation that 232 00:16:02,120 --> 00:16:08,240 Speaker 1: our companies are delivering are going to be one part 233 00:16:08,240 --> 00:16:12,320 Speaker 1: of the deflation commodity prices another. And I will also 234 00:16:12,440 --> 00:16:16,600 Speaker 1: tell you the yield curve it last the week before 235 00:16:16,680 --> 00:16:20,960 Speaker 1: last was down inverted by as much more than one 236 00:16:21,040 --> 00:16:25,680 Speaker 1: hundred basis points. That also is a deflationary signal, as 237 00:16:25,960 --> 00:16:29,040 Speaker 1: is what's now going on in the banking system. I 238 00:16:29,200 --> 00:16:34,800 Speaker 1: think the banking system is fearing deflation. Well, Kathy to 239 00:16:34,840 --> 00:16:36,560 Speaker 1: that note we've been talking about sort of a de 240 00:16:36,640 --> 00:16:40,240 Speaker 1: facto tightening of financial conditions in the wake of Silicon 241 00:16:40,320 --> 00:16:44,280 Speaker 1: Valley Bank. You move last year to give investors exposure 242 00:16:44,360 --> 00:16:48,520 Speaker 1: to venture funds private firms in that partnership with Titan. 243 00:16:49,040 --> 00:16:52,040 Speaker 1: Has that proved to be bad timing? How impacted has 244 00:16:52,040 --> 00:16:53,840 Speaker 1: that been from SVB? And we've only got a couple 245 00:16:53,840 --> 00:16:59,520 Speaker 1: of minutes left. Sure, well we're fledgedling. Still, it takes 246 00:16:59,520 --> 00:17:03,000 Speaker 1: a long time. We have, as you say, with Titan, 247 00:17:03,080 --> 00:17:06,960 Speaker 1: a social distribution strategy. We have other rappers as well. 248 00:17:07,200 --> 00:17:11,400 Speaker 1: I'm much preferred to start a strategy during tough times. 249 00:17:11,880 --> 00:17:16,240 Speaker 1: And actually now we can be a solution if we 250 00:17:16,320 --> 00:17:20,560 Speaker 1: get inflows people looking for venture for they can get 251 00:17:20,600 --> 00:17:23,760 Speaker 1: into our venture fund for only five hundred dollars. So 252 00:17:24,440 --> 00:17:31,440 Speaker 1: again the democratization of investing and this idea public closest 253 00:17:31,480 --> 00:17:34,679 Speaker 1: to a venture capital fund in the public markets to 254 00:17:34,720 --> 00:17:37,560 Speaker 1: be able to actually do a venture fund at a 255 00:17:37,600 --> 00:17:41,000 Speaker 1: time that the venture community needs us. If you look 256 00:17:41,000 --> 00:17:45,640 Speaker 1: at Silicon Valley Bank, that situation has robbed a lot 257 00:17:45,680 --> 00:17:49,440 Speaker 1: of venture capitalists funding. Has it involved in the US 258 00:17:49,480 --> 00:17:54,719 Speaker 1: of innovation, Kathy, which you think I would say that 259 00:17:54,840 --> 00:17:59,119 Speaker 1: regulations threatened to do that and certainly in the crypto space. Absolutely, 260 00:17:59,480 --> 00:18:02,560 Speaker 1: But I also think that seizing up is not just 261 00:18:02,600 --> 00:18:05,960 Speaker 1: a US phenomenon. It looks like it's more of a 262 00:18:06,000 --> 00:18:10,600 Speaker 1: global phenomenon judging what has just happened in Europe. So 263 00:18:10,640 --> 00:18:14,920 Speaker 1: it's not as much that it is regulation the likes 264 00:18:14,920 --> 00:18:19,680 Speaker 1: of which we're seeing our blockchain technology. Okay, retain US's 265 00:18:19,760 --> 00:18:24,080 Speaker 1: position innovation. Kathy very quickly. Did you have any exposures SVB, 266 00:18:27,160 --> 00:18:33,399 Speaker 1: none whatsoever. Well as our business know and our company's 267 00:18:33,840 --> 00:18:37,119 Speaker 1: very limited exposure, I was so surprised. I just wanted 268 00:18:37,119 --> 00:18:41,080 Speaker 1: to see our little although I just wanted to clarify 269 00:18:41,119 --> 00:18:43,320 Speaker 1: that for our audience. Kathy. I'm sorry to jump in, 270 00:18:43,359 --> 00:18:45,560 Speaker 1: but we got to go. Kathy Wood, CEO of our 271 00:18:45,640 --> 00:18:48,160 Speaker 1: invest We're really grateful for your time here across Bloomberg 272 00:18:48,200 --> 00:18:52,280 Speaker 1: Television and Radio. Thank you. Now, coming up, we stick 273 00:18:52,359 --> 00:18:55,200 Speaker 1: with the crypto discussion as Circle picks France for its 274 00:18:55,200 --> 00:18:58,119 Speaker 1: new European headquarters. All of that. Next, this is Bloomberg 275 00:19:07,720 --> 00:19:09,719 Speaker 1: time for a quick Wall Street Beat, where we take 276 00:19:09,760 --> 00:19:11,399 Speaker 1: a deep dive into the world of Wall Street in 277 00:19:11,400 --> 00:19:15,680 Speaker 1: Global Wall Street. In today Caroline Circle choosing France as 278 00:19:15,720 --> 00:19:18,480 Speaker 1: its new European headquarters. Is interesting in that conversation with 279 00:19:18,560 --> 00:19:21,679 Speaker 1: Caffee Wood, the same ideas that the US might not 280 00:19:21,760 --> 00:19:25,199 Speaker 1: be the most friendly regulatory environment if you're trying to 281 00:19:25,240 --> 00:19:28,760 Speaker 1: foster innovation or a change in the system. Yeah, really interesting, 282 00:19:28,800 --> 00:19:31,880 Speaker 1: almost like a competition to Wall Street, shall we say, 283 00:19:31,920 --> 00:19:34,920 Speaker 1: in this particular beat. But what's interesting the circle was 284 00:19:34,960 --> 00:19:37,639 Speaker 1: as exposure to Silicon Valley Bank was the fact that 285 00:19:37,680 --> 00:19:41,480 Speaker 1: we've got a deepeg of its key stable coin USDC 286 00:19:41,720 --> 00:19:44,199 Speaker 1: for a moment because of that sort of connection of 287 00:19:44,320 --> 00:19:48,320 Speaker 1: decentralized finance to centralized finance in that moment, but notable 288 00:19:48,440 --> 00:19:50,880 Speaker 1: that really London's trying to be the place, UK trying 289 00:19:50,880 --> 00:19:54,040 Speaker 1: to be the place for European regulatory space for crypto, 290 00:19:54,200 --> 00:19:56,080 Speaker 1: but France seems to be winning out. They already wooed 291 00:19:56,080 --> 00:19:59,560 Speaker 1: the likes of Binance previously. I remember five years ago 292 00:19:59,600 --> 00:20:02,640 Speaker 1: when cause main function was to move money between borders 293 00:20:02,640 --> 00:20:13,560 Speaker 1: before the crypto pivot. Welcome back to Bloomberg Technology. I 294 00:20:13,600 --> 00:20:16,200 Speaker 1: made lovelow in San Francisco where it is nine thirty am, 295 00:20:16,240 --> 00:20:19,320 Speaker 1: but over in London four thirty pm where European markets 296 00:20:19,359 --> 00:20:22,080 Speaker 1: are closing. Continue momentum in the equity space to six 297 00:20:22,160 --> 00:20:25,159 Speaker 1: hundred Europe at one point four percent, and continuing to 298 00:20:25,160 --> 00:20:27,359 Speaker 1: see the Euro strengthen against the dollar at one o 299 00:20:27,560 --> 00:20:30,560 Speaker 1: eight ish, the highest level for the Euro against the 300 00:20:30,600 --> 00:20:33,320 Speaker 1: dollar since the first week of February. Like in the 301 00:20:33,400 --> 00:20:36,000 Speaker 1: United States, as Caroline was talking about earlier, the action 302 00:20:36,080 --> 00:20:37,800 Speaker 1: is at the short end of the curve when it 303 00:20:37,840 --> 00:20:41,399 Speaker 1: comes to the bond markets, specifically in eurosenominated bonds. You 304 00:20:41,440 --> 00:20:44,040 Speaker 1: look at the German two year up by around twenty 305 00:20:44,080 --> 00:20:46,879 Speaker 1: three basis points as we kind of pull out of 306 00:20:46,920 --> 00:20:48,879 Speaker 1: the more kind of haven assets, or at least at 307 00:20:48,880 --> 00:20:51,360 Speaker 1: the short end of the curve, the more policy sensitive end. 308 00:20:51,520 --> 00:20:54,439 Speaker 1: That's where the actions at more muted in guilt. You 309 00:20:54,440 --> 00:20:56,760 Speaker 1: look at the UK two year yield, Okay, a little higher, 310 00:20:56,800 --> 00:20:59,320 Speaker 1: but three point two seven percent. We're still kind of 311 00:20:59,359 --> 00:21:02,520 Speaker 1: passing over the fallout from not necessarily what's happening with 312 00:21:02,600 --> 00:21:05,960 Speaker 1: credit SUITEE and ubs, but the backstop being provided by 313 00:21:06,000 --> 00:21:09,560 Speaker 1: central banks and liquidity situation, but also what the ECB 314 00:21:09,720 --> 00:21:12,080 Speaker 1: is going to do going forward. To Caroline, all of 315 00:21:12,119 --> 00:21:15,600 Speaker 1: that of course having repercussions for a sentiment across technology. 316 00:21:15,640 --> 00:21:18,560 Speaker 1: But let's get back to some innovation in and of itself. 317 00:21:18,600 --> 00:21:21,600 Speaker 1: Let's talk open AI of course. Well, actually it temporarily 318 00:21:21,600 --> 00:21:24,440 Speaker 1: shut down it's popular chat GPT service just yesterday and 319 00:21:24,840 --> 00:21:26,879 Speaker 1: it was in the morning after receiving reports of a 320 00:21:26,960 --> 00:21:29,359 Speaker 1: bund then allowed some users to see the titles of 321 00:21:29,400 --> 00:21:32,680 Speaker 1: other users chat histories. A spokesperson told Blingberg actually that 322 00:21:32,720 --> 00:21:36,960 Speaker 1: the bug is an unnamed open source software caused that problem. 323 00:21:37,200 --> 00:21:40,359 Speaker 1: An open AI is still investigating the precise cause. But 324 00:21:40,520 --> 00:21:43,960 Speaker 1: right notable when something like this happens. You go to 325 00:21:44,040 --> 00:21:46,840 Speaker 1: Reddit and you go to Twitter, and there's so many 326 00:21:46,880 --> 00:21:50,200 Speaker 1: people that screen grabs and we're like, I've never asked 327 00:21:50,960 --> 00:21:53,320 Speaker 1: chat GBT that you know, some of the images out 328 00:21:53,320 --> 00:21:56,440 Speaker 1: there astonishing. But it shows like with all the euphoria 329 00:21:56,520 --> 00:21:59,320 Speaker 1: comes risk that if the system breaks down, the user 330 00:21:59,359 --> 00:22:01,840 Speaker 1: base is so big now and in many ways we've 331 00:22:01,880 --> 00:22:05,359 Speaker 1: seen big companies, regulated companies, banks in particular, not wanting 332 00:22:05,400 --> 00:22:07,679 Speaker 1: this sort of third party software, not letting people use 333 00:22:07,720 --> 00:22:10,240 Speaker 1: chatsubt when they're in the workplace because of they're worried 334 00:22:10,280 --> 00:22:13,760 Speaker 1: about vulnerabilities. Let's dig into that in this world of 335 00:22:13,800 --> 00:22:15,920 Speaker 1: innovation or what it means in terms of cyber risks. 336 00:22:15,920 --> 00:22:18,840 Speaker 1: Wendy Whittmoss with US Senior vice president for Unit forty 337 00:22:18,840 --> 00:22:22,040 Speaker 1: two over at Palo Alto Networks. Of course, your bread 338 00:22:22,040 --> 00:22:25,200 Speaker 1: and mutter is thinking about security, but particularly you're looking 339 00:22:25,240 --> 00:22:28,760 Speaker 1: at vulnerabilities when it comes to outsources of your workflow, 340 00:22:28,800 --> 00:22:31,440 Speaker 1: the supply chain into your company. You've just been putting 341 00:22:31,440 --> 00:22:33,680 Speaker 1: out some key reports whenning what are the key findings 342 00:22:33,680 --> 00:22:37,320 Speaker 1: at the moment, Yeah, Banks, Caroline, I think it really 343 00:22:37,359 --> 00:22:39,679 Speaker 1: ties into the story that you're talking about here right 344 00:22:39,720 --> 00:22:42,800 Speaker 1: in terms of technology being disruptive and that can be 345 00:22:42,880 --> 00:22:45,080 Speaker 1: used for good, it can also be used for bad, 346 00:22:45,840 --> 00:22:48,200 Speaker 1: and so I think our report really tells a story 347 00:22:48,960 --> 00:22:54,400 Speaker 1: that we live every day, which is that banks, financial institutions, organizations, schools, 348 00:22:54,480 --> 00:22:58,240 Speaker 1: cities throughout the world, they're all being targeted in particular 349 00:22:58,280 --> 00:23:02,199 Speaker 1: by ransomware actors. And we show is that these cybercriminals 350 00:23:02,240 --> 00:23:05,520 Speaker 1: are becoming even more effective at doing their job. They 351 00:23:05,600 --> 00:23:09,000 Speaker 1: do a great job of understanding what's in an environment 352 00:23:09,080 --> 00:23:12,480 Speaker 1: and which data that they can steal. And stealing is 353 00:23:12,840 --> 00:23:15,760 Speaker 1: a very important concept here because what we're not seeing 354 00:23:15,920 --> 00:23:19,520 Speaker 1: is just a traditional ransomware attack where an organization's data 355 00:23:19,560 --> 00:23:22,560 Speaker 1: is encrypted, but we're seeing much like nation state actors 356 00:23:22,560 --> 00:23:25,560 Speaker 1: have done for years, we're seeing data being stolen and 357 00:23:25,640 --> 00:23:29,720 Speaker 1: ex filtrated from environment and used for extortion, and attackers 358 00:23:29,720 --> 00:23:32,040 Speaker 1: are doing that on a daily basis. They're not just 359 00:23:32,240 --> 00:23:36,680 Speaker 1: threatening it. We're actually seeing up four times every four hours. 360 00:23:36,760 --> 00:23:41,760 Speaker 1: We're seeing more organizations data being posted ed with regularity, 361 00:23:41,880 --> 00:23:46,000 Speaker 1: and the stakes well becoming evidently well high. Yeah, and 362 00:23:46,119 --> 00:23:47,680 Speaker 1: there's a point that I wanted to make on chat 363 00:23:47,680 --> 00:23:51,600 Speaker 1: GPT Wendy, which is that it impacted chat GPT and 364 00:23:51,600 --> 00:23:56,080 Speaker 1: also the premium to GPT plus. While you could see 365 00:23:56,119 --> 00:23:59,000 Speaker 1: the such titles of other uses, you could not actually 366 00:23:59,000 --> 00:24:01,760 Speaker 1: get into the conversation. So I want to be clear 367 00:24:01,800 --> 00:24:05,520 Speaker 1: you couldn't actually kind of access data relevant to other users, 368 00:24:05,880 --> 00:24:09,199 Speaker 1: but it was basically deemed as a bug in the 369 00:24:09,240 --> 00:24:12,440 Speaker 1: open source software. My question to you in the context 370 00:24:12,440 --> 00:24:15,840 Speaker 1: of cybersecurity is are they is this kind of issue 371 00:24:15,840 --> 00:24:18,480 Speaker 1: and after thought as people try to rush these products out, 372 00:24:18,520 --> 00:24:21,760 Speaker 1: they don't think about kind of the base security of 373 00:24:21,760 --> 00:24:26,160 Speaker 1: the software that they're writing, you know. So I think 374 00:24:26,200 --> 00:24:29,720 Speaker 1: that software vulnerabilities across the board are challenging for every 375 00:24:29,840 --> 00:24:33,000 Speaker 1: organization to deal with, and they're only going to become 376 00:24:33,040 --> 00:24:36,080 Speaker 1: more of a problem just due to this scale that 377 00:24:36,240 --> 00:24:38,560 Speaker 1: AI brings to the table. Right, So we're going to 378 00:24:38,680 --> 00:24:42,000 Speaker 1: continue to see these type of vulnerabilities. You know, I 379 00:24:42,040 --> 00:24:45,200 Speaker 1: think one thing that's exciting is that, you know, last 380 00:24:45,200 --> 00:24:49,400 Speaker 1: week was released a national Cybersecurity Strategy, and in that 381 00:24:49,480 --> 00:24:52,760 Speaker 1: we talk about in particular the need to protect expand 382 00:24:52,760 --> 00:24:55,879 Speaker 1: the definition of critical infrastructure, so and the role that 383 00:24:55,960 --> 00:24:59,000 Speaker 1: technology vendors and providers play in that. Right. So we 384 00:24:59,080 --> 00:25:02,119 Speaker 1: see that with these my chain attacks becomes a major issue, 385 00:25:02,280 --> 00:25:05,240 Speaker 1: but we're also seeing a lot more rapid information sharing 386 00:25:05,320 --> 00:25:10,440 Speaker 1: that is becoming incredibly positive. I'm reading over the results 387 00:25:10,520 --> 00:25:13,080 Speaker 1: or your findings in this research, and Caroline, what's so 388 00:25:13,200 --> 00:25:17,120 Speaker 1: interesting to me is the types of businesses found most 389 00:25:17,200 --> 00:25:21,280 Speaker 1: vulnerable are those businesses we entrust with our data on 390 00:25:21,320 --> 00:25:24,280 Speaker 1: a daily basis, and I suppose also when we're thinking 391 00:25:24,320 --> 00:25:27,400 Speaker 1: of keeping our own company protected. I don't know about 392 00:25:27,440 --> 00:25:31,200 Speaker 1: you done countless training exercises about knowing fishing, but smishing 393 00:25:31,280 --> 00:25:33,200 Speaker 1: is a new one. One day that you've been talking 394 00:25:33,240 --> 00:25:35,120 Speaker 1: a lot about what are the ways in which companies 395 00:25:35,520 --> 00:25:39,280 Speaker 1: can protect themselves. Yeah, so, you know, we've talked so 396 00:25:39,359 --> 00:25:42,080 Speaker 1: much about AI write now the technology investments. But I 397 00:25:42,119 --> 00:25:44,520 Speaker 1: think Carolyne, what you're getting at are the human side 398 00:25:44,520 --> 00:25:46,880 Speaker 1: of that. I think one of the most compelling findings 399 00:25:46,880 --> 00:25:50,399 Speaker 1: for us is that we've seen these attacks increased in 400 00:25:50,480 --> 00:25:53,760 Speaker 1: now twenty percent of attacks that we deal with include 401 00:25:53,800 --> 00:25:56,119 Speaker 1: a harassment element, and I would imagine that if we 402 00:25:56,200 --> 00:25:58,080 Speaker 1: talk again in two months, we're going to see that 403 00:25:58,160 --> 00:26:01,280 Speaker 1: number probably double. What I mean by that is attackers 404 00:26:01,280 --> 00:26:07,159 Speaker 1: are specifically going after security, so executives, their families, reaching 405 00:26:07,200 --> 00:26:10,840 Speaker 1: out to them, personally, their staffs, finding any way that 406 00:26:10,920 --> 00:26:14,280 Speaker 1: they can to socially engineered data out of them, and 407 00:26:14,480 --> 00:26:18,640 Speaker 1: that's going to become a continued, incredibly compelling And they're 408 00:26:18,720 --> 00:26:23,880 Speaker 1: also getting super savvy about understanding how businesses work, right, 409 00:26:23,960 --> 00:26:27,480 Speaker 1: So understanding that if I target not only your organization 410 00:26:27,800 --> 00:26:30,800 Speaker 1: maybe has a great security barrier and perimeter, but you 411 00:26:30,880 --> 00:26:35,159 Speaker 1: have business process outsoorders and outsourcers that also have access 412 00:26:35,160 --> 00:26:38,119 Speaker 1: to your most sensitive data. And there are employees in 413 00:26:38,160 --> 00:26:41,240 Speaker 1: those environments that I can target equally effectively that have 414 00:26:41,359 --> 00:26:44,440 Speaker 1: access to your environment. So we're going to continue to 415 00:26:44,760 --> 00:26:48,600 Speaker 1: see that type of activity directed towards employees across the board. 416 00:26:48,840 --> 00:26:52,760 Speaker 1: And so how a company is protecting and assessing the 417 00:26:52,880 --> 00:26:56,919 Speaker 1: vulnerabilities of that right supply chain. Yeah, you know, I 418 00:26:56,960 --> 00:26:59,760 Speaker 1: think one of the biggest keys is the mindset shift. 419 00:27:00,040 --> 00:27:03,200 Speaker 1: You're seeing so many organizations do that and actually win. 420 00:27:03,359 --> 00:27:06,720 Speaker 1: So I think there's really a positive outlook here and 421 00:27:06,760 --> 00:27:09,120 Speaker 1: our report tells that story too, which is that so 422 00:27:09,160 --> 00:27:12,840 Speaker 1: many organizations are effectively defending against these attacks because they 423 00:27:12,880 --> 00:27:17,000 Speaker 1: identify them early, they practice their response, they understand that 424 00:27:17,359 --> 00:27:19,520 Speaker 1: these attacks are going to come. It's simply part of 425 00:27:19,560 --> 00:27:22,640 Speaker 1: hosting a business on the Internet today, and they've got 426 00:27:22,680 --> 00:27:25,679 Speaker 1: great relationships across the board, not only with experts but 427 00:27:25,800 --> 00:27:29,760 Speaker 1: also law enforcement who can really rapidly provide them answers, 428 00:27:29,760 --> 00:27:33,480 Speaker 1: often in the form of decryptors that can render these 429 00:27:33,520 --> 00:27:38,520 Speaker 1: attacks ineffective. It is fascinating, and when you're reading these 430 00:27:38,520 --> 00:27:42,560 Speaker 1: sorts of data reports is basically what the people the 431 00:27:42,600 --> 00:27:45,080 Speaker 1: attackers are trying to set out to do here, right, 432 00:27:45,119 --> 00:27:47,680 Speaker 1: And that's why our audience in particular should care because 433 00:27:47,680 --> 00:27:49,760 Speaker 1: they're going off to finance, yes, they're going off to 434 00:27:49,880 --> 00:27:52,760 Speaker 1: data and telecommunications. And the last one which we have 435 00:27:52,800 --> 00:27:56,720 Speaker 1: to discuss weendy is cryptocurrency. Why are they targeting these 436 00:27:56,720 --> 00:28:01,120 Speaker 1: specific areas? Is it just for financial gain? Well, any 437 00:28:01,160 --> 00:28:03,560 Speaker 1: avenue they have that makes it easier to move money 438 00:28:03,720 --> 00:28:05,640 Speaker 1: is certainly going to be a target. Right. So the 439 00:28:05,680 --> 00:28:09,480 Speaker 1: more that we can work related to sharing information between 440 00:28:09,520 --> 00:28:13,720 Speaker 1: public and private partnerships and stopping the ability of movement 441 00:28:13,760 --> 00:28:17,560 Speaker 1: of cryptocurrency, for example, of disrupting attack or infrastructure. The 442 00:28:17,560 --> 00:28:19,520 Speaker 1: more that we can do that, the more effective we 443 00:28:19,560 --> 00:28:21,960 Speaker 1: are going to be against these attacks. And I think 444 00:28:22,000 --> 00:28:24,600 Speaker 1: we are in a better place now in terms of 445 00:28:24,640 --> 00:28:27,199 Speaker 1: that information sharing and being able to do it in 446 00:28:27,240 --> 00:28:31,280 Speaker 1: a way that starts disrupting attack or infrastructure in really 447 00:28:31,320 --> 00:28:37,159 Speaker 1: starting to stop some of these attacks. All right, Wendy Witmore, 448 00:28:37,240 --> 00:28:41,640 Speaker 1: Senior vice president for Unit forty two palawlto Networks, thank 449 00:28:41,680 --> 00:28:44,440 Speaker 1: you so much. Just a headline crossing the bloomberg on 450 00:28:44,560 --> 00:28:49,720 Speaker 1: credit suites. They've decided to suspend some bonuses for credit 451 00:28:49,720 --> 00:28:52,560 Speaker 1: suite staff that coming from the Swiss themselves. Will continue 452 00:28:52,760 --> 00:28:54,920 Speaker 1: to track that story as a number of I'm sure 453 00:28:55,280 --> 00:28:58,960 Speaker 1: technology industry, bankers and others impacted by that decision will 454 00:28:58,960 --> 00:29:02,200 Speaker 1: bring you the latest report. Now, another story, a rare move. 455 00:29:02,400 --> 00:29:06,960 Speaker 1: Google has suspended pdd's main Chinese shopping app pin Dodo 456 00:29:07,160 --> 00:29:11,479 Speaker 1: from its play store after discovering malware in unsanctioned versions 457 00:29:11,480 --> 00:29:14,040 Speaker 1: of the software. The action could cast a cloud over 458 00:29:14,120 --> 00:29:16,800 Speaker 1: the company at a time when US lawmakers have accused 459 00:29:16,880 --> 00:29:21,240 Speaker 1: Chinese owned apps like TikTok of potentially threatening national security, 460 00:29:22,000 --> 00:29:25,880 Speaker 1: not really impacting ADRs. Shares of PDD up around half 461 00:29:25,880 --> 00:29:28,239 Speaker 1: of a centage point. Yeah, coming up, we're also going 462 00:29:28,280 --> 00:29:31,959 Speaker 1: to talk about the impact of the SVB fallout on startups. 463 00:29:31,960 --> 00:29:35,719 Speaker 1: We're seen to hear CEO of the startup focus accounting 464 00:29:35,760 --> 00:29:38,760 Speaker 1: firm Pilot. That's next, Caroline, And I mean you were 465 00:29:38,760 --> 00:29:41,600 Speaker 1: just talking about Pindodo. Let's just stick on China for 466 00:29:41,640 --> 00:29:43,600 Speaker 1: a moment because we're watching shows of ten Cents, the 467 00:29:43,720 --> 00:29:47,040 Speaker 1: gaming and social media giant seeing Well, remember one hundred 468 00:29:47,040 --> 00:29:50,760 Speaker 1: and sixty billion dollar rallies since October. The next leg, well, 469 00:29:50,800 --> 00:29:53,080 Speaker 1: it's going to hinge on the crucial earnings release that's 470 00:29:53,120 --> 00:29:55,200 Speaker 1: coming this week. Much of ten cents rally has been 471 00:29:55,280 --> 00:29:58,440 Speaker 1: driven by anticipation features, sales streams, and of course I 472 00:29:58,480 --> 00:30:01,800 Speaker 1: believe that Beijing It's promise of supporting the private sector 473 00:30:02,120 --> 00:30:04,320 Speaker 1: and more on the company's earnings when they report tomorrow. 474 00:30:04,640 --> 00:30:16,960 Speaker 1: This is Bloomberg. We continue to track the fallout from 475 00:30:17,000 --> 00:30:19,520 Speaker 1: svb's collapse. What does it mean for the future of 476 00:30:19,600 --> 00:30:22,600 Speaker 1: early and growth stage companies which relied on the bank 477 00:30:22,640 --> 00:30:25,720 Speaker 1: to fill the gap left by bigger players. Less inclined 478 00:30:25,960 --> 00:30:29,760 Speaker 1: to take on that kind of risk. In a not 479 00:30:29,880 --> 00:30:34,640 Speaker 1: out today, our Bloomberg Intelligence team says liquidity contagion from 480 00:30:34,720 --> 00:30:37,360 Speaker 1: lack of access to credit for startups and VC bank 481 00:30:37,400 --> 00:30:41,720 Speaker 1: companies is quote undeniable and the SVB spot will be 482 00:30:41,760 --> 00:30:45,480 Speaker 1: hard to fill. That research from dishagera at BI now 483 00:30:45,480 --> 00:30:48,800 Speaker 1: what seemed is the founder and CEO of Pilots, an 484 00:30:48,800 --> 00:30:52,640 Speaker 1: accounting firm for startups and small businesses which specializes in 485 00:30:52,680 --> 00:30:56,800 Speaker 1: CFO services, bookkeeping, tax prep, etc. Joins me on set 486 00:30:56,800 --> 00:31:00,200 Speaker 1: in San Francisco. A lot of people didn't understand and 487 00:31:00,440 --> 00:31:04,880 Speaker 1: come Monday morning of this week, how SVB played out 488 00:31:04,880 --> 00:31:07,720 Speaker 1: in real terms for running a business. What was the 489 00:31:07,760 --> 00:31:11,080 Speaker 1: experience of your customer base. Well, it was very panicked, 490 00:31:11,120 --> 00:31:12,960 Speaker 1: I can tell you that, and it was panicked on 491 00:31:13,000 --> 00:31:15,240 Speaker 1: two fronts. One was, of course, for our customers that 492 00:31:15,320 --> 00:31:18,200 Speaker 1: banked with SVB, which was about half of our customers. 493 00:31:18,440 --> 00:31:21,160 Speaker 1: They were concerned about the safety of their deposits. But 494 00:31:21,280 --> 00:31:23,000 Speaker 1: the second order thing I think many people have not 495 00:31:23,080 --> 00:31:26,760 Speaker 1: anticipated is the impact this had on our clients being 496 00:31:26,760 --> 00:31:29,880 Speaker 1: able to make payroll. Because if you didn't bank with SVB, 497 00:31:30,400 --> 00:31:33,959 Speaker 1: but your payroll processor did, you had a problem Sunday 498 00:31:34,040 --> 00:31:38,200 Speaker 1: night Monday morning, probably more importantly, I had so many 499 00:31:38,200 --> 00:31:42,240 Speaker 1: phone calls and text messages from VC saying the ADPY 500 00:31:42,400 --> 00:31:45,440 Speaker 1: went through, the ADPI went through, they had accessed SVB, 501 00:31:45,560 --> 00:31:47,680 Speaker 1: but it didn't really mean anything. They were trying to 502 00:31:47,680 --> 00:31:50,320 Speaker 1: make payroll. Where do you come in in that process? 503 00:31:50,480 --> 00:31:53,400 Speaker 1: And it's basically an accountant? Sure, So our phone and 504 00:31:53,480 --> 00:31:56,240 Speaker 1: email inboxes were ringing up the hook the entirety of 505 00:31:56,240 --> 00:31:58,920 Speaker 1: the weekend, Thursday, Friday, all the way through Sunday night. 506 00:31:59,320 --> 00:32:01,480 Speaker 1: Say Hey, what do I need to do here? What 507 00:32:01,600 --> 00:32:03,680 Speaker 1: funds am I actually to be able to access? Which 508 00:32:03,720 --> 00:32:05,400 Speaker 1: ones am I not going to be able to access? 509 00:32:05,520 --> 00:32:07,840 Speaker 1: Do I have to file a claim with the FDIC? 510 00:32:08,400 --> 00:32:10,880 Speaker 1: How do I actually make pyrol? Can I transfer funds? 511 00:32:10,880 --> 00:32:13,000 Speaker 1: Have a personal account so I can pay my employees? 512 00:32:13,040 --> 00:32:14,640 Speaker 1: There are just a lot of panic, a lot of 513 00:32:14,720 --> 00:32:17,640 Speaker 1: uncertainty about tactically how do I make sure my employees 514 00:32:17,680 --> 00:32:20,400 Speaker 1: get paid? You know, Caroline. In the last week or so, 515 00:32:20,480 --> 00:32:22,800 Speaker 1: what's been put in perspective for me at least is 516 00:32:22,800 --> 00:32:26,480 Speaker 1: we talk about startups tech in kind of abstract terms. 517 00:32:26,840 --> 00:32:30,960 Speaker 1: They're businesses run by people with responsibilities. You know, That's 518 00:32:31,000 --> 00:32:33,600 Speaker 1: really come out in the conversations we've had they are 519 00:32:33,720 --> 00:32:35,840 Speaker 1: and that was going to be the collateral damage if 520 00:32:35,880 --> 00:32:39,000 Speaker 1: a rescue of SVB didn't come in for the depositors 521 00:32:39,080 --> 00:32:43,360 Speaker 1: were seen after effects of SVB are that the counterparty 522 00:32:43,400 --> 00:32:45,960 Speaker 1: risks were so large because they banked the same types 523 00:32:46,040 --> 00:32:49,680 Speaker 1: of clients. You are a founder dependent on the same 524 00:32:49,880 --> 00:32:53,880 Speaker 1: types of clients Pilot is servicing tech startups. Did you 525 00:32:53,920 --> 00:32:56,760 Speaker 1: something think, old goodness, I need to diversify my own business. 526 00:32:58,400 --> 00:33:00,000 Speaker 1: I mean, one of the things we always think about 527 00:33:00,160 --> 00:33:02,520 Speaker 1: the mission of Pilot has always been not to do 528 00:33:02,600 --> 00:33:05,360 Speaker 1: accounting for technology companies, as though it's where we specialize. 529 00:33:05,400 --> 00:33:08,520 Speaker 1: It's to help every small business owner out with this problem. 530 00:33:08,640 --> 00:33:10,880 Speaker 1: So we're always thinking about how do we make sure 531 00:33:10,880 --> 00:33:15,280 Speaker 1: our own customer base is robust against these types of shocks. Okay, 532 00:33:15,440 --> 00:33:18,760 Speaker 1: so you haven't suddenly thought I need to broadened to 533 00:33:19,320 --> 00:33:23,640 Speaker 1: make my marketing perhaps more of a just early small 534 00:33:23,680 --> 00:33:28,600 Speaker 1: company SME rather than a VC focused backed sort of 535 00:33:28,600 --> 00:33:31,479 Speaker 1: a company. I would say not urgently. I mean, this 536 00:33:31,520 --> 00:33:33,400 Speaker 1: is always something we're talking about. But we have a 537 00:33:33,440 --> 00:33:35,880 Speaker 1: number of startup customers who continue to grow and thrive, 538 00:33:35,920 --> 00:33:39,080 Speaker 1: and we're excited to continue to serve them. Have you 539 00:33:39,160 --> 00:33:42,520 Speaker 1: won business because of what's happened. Are there any founders 540 00:33:42,520 --> 00:33:45,600 Speaker 1: that basically said, I can't do this, I need your help. 541 00:33:46,160 --> 00:33:48,360 Speaker 1: I think probably what we did do is do a 542 00:33:48,360 --> 00:33:51,880 Speaker 1: good job of helping people navigate the crisis. Now, I'd say, 543 00:33:52,040 --> 00:33:54,640 Speaker 1: unlike another provider, if you have another bank, for example, 544 00:33:55,040 --> 00:33:57,280 Speaker 1: probably lots of new bank accounts were opened as a 545 00:33:57,280 --> 00:34:00,160 Speaker 1: consequence of all the sub excitement. It is not the 546 00:34:00,160 --> 00:34:02,320 Speaker 1: case that lots of new pilot customers showed up at 547 00:34:02,360 --> 00:34:04,960 Speaker 1: the door, though. I think folks appreciated that we kind 548 00:34:04,960 --> 00:34:08,360 Speaker 1: of were a nice hand holding guide throughout the process. 549 00:34:08,960 --> 00:34:11,040 Speaker 1: I was saying, a lot of people have said, Look, 550 00:34:11,040 --> 00:34:14,200 Speaker 1: it isn't actually that easy to go around diversifying who 551 00:34:14,239 --> 00:34:17,920 Speaker 1: you bank with. People want minimums, People want an ability 552 00:34:17,960 --> 00:34:21,360 Speaker 1: to show the lack of risk in your business model. 553 00:34:21,480 --> 00:34:24,720 Speaker 1: And that's WHYSBB was so important to the tech system. 554 00:34:25,239 --> 00:34:27,880 Speaker 1: What are you now seeing. Are people still with ease 555 00:34:28,040 --> 00:34:31,840 Speaker 1: changing banks? Are they able to diversify to ensure that 556 00:34:31,920 --> 00:34:35,239 Speaker 1: treasury management is where they want it to be. Well, 557 00:34:35,280 --> 00:34:37,040 Speaker 1: I think a lot of people are now willing to 558 00:34:37,040 --> 00:34:40,000 Speaker 1: incur a lot more pain here than they were previously, 559 00:34:40,120 --> 00:34:42,520 Speaker 1: which is before all of the SB and B excitement. 560 00:34:42,560 --> 00:34:45,160 Speaker 1: I think no one thought too hard about is my 561 00:34:45,239 --> 00:34:48,279 Speaker 1: bank safe? Is my bank secure? And now I think 562 00:34:48,280 --> 00:34:50,799 Speaker 1: the prevailing sentiment is that folks who were might have 563 00:34:50,840 --> 00:34:53,560 Speaker 1: otherwise taken a more laid back approach here have become 564 00:34:54,160 --> 00:34:58,799 Speaker 1: effectively financial preppers, like they care deeply about making sure. Oh, 565 00:34:58,840 --> 00:35:00,520 Speaker 1: I was shocked by the fact that this was not 566 00:35:00,600 --> 00:35:02,759 Speaker 1: available for a few days. I now need to make 567 00:35:02,760 --> 00:35:05,600 Speaker 1: sure this never happens again. I'll seem great to have 568 00:35:05,640 --> 00:35:08,560 Speaker 1: your insights. Thank you, or seemed to her founder ZEO 569 00:35:08,840 --> 00:35:20,920 Speaker 1: of Pilot. Microsoft tentatively defeated a bid by video gamers 570 00:35:20,960 --> 00:35:24,080 Speaker 1: to block it's planned sixty nine billion dollar acquisition of 571 00:35:24,160 --> 00:35:27,520 Speaker 1: Active Vision Blizzard. A judge tossed the case without prejudice 572 00:35:27,640 --> 00:35:31,399 Speaker 1: last night, calling it wopefully short on detail. To talk 573 00:35:31,400 --> 00:35:33,400 Speaker 1: about what that means and also the future of this 574 00:35:33,480 --> 00:35:37,560 Speaker 1: acquisition as it sits in the gaming industry with John Riccatello, 575 00:35:37,719 --> 00:35:41,360 Speaker 1: CEO of Unity Software, a software solutions provider for games 576 00:35:41,440 --> 00:35:46,160 Speaker 1: running on mobile phones, tablets, PCs, consoles and of course 577 00:35:46,680 --> 00:35:50,880 Speaker 1: AAR and VR. In the first instance, your reaction to 578 00:35:51,400 --> 00:35:53,960 Speaker 1: this Microsoft act Vision deal for you, how does it 579 00:35:54,040 --> 00:35:57,400 Speaker 1: change the landscape? Well, for us who probably doesn't change anything. 580 00:35:57,480 --> 00:35:59,680 Speaker 1: I mean, Microsoft obviously is the maker up one of 581 00:35:59,680 --> 00:36:03,040 Speaker 1: the lead console, the Xbox an Active Vision is one 582 00:36:03,040 --> 00:36:06,400 Speaker 1: of the largest producers of game content. You know, this 583 00:36:06,560 --> 00:36:08,440 Speaker 1: is the game industry who had been an industry of 584 00:36:08,520 --> 00:36:12,359 Speaker 1: pac Man forever. Companies like Active Vision and Electronic Arts 585 00:36:12,360 --> 00:36:14,880 Speaker 1: and take To have been acquiring. Sony and Microsoft have 586 00:36:14,960 --> 00:36:17,279 Speaker 1: been acquiring, and then on the heels of all that, 587 00:36:17,520 --> 00:36:19,759 Speaker 1: what we always see is new startups coming out of 588 00:36:19,800 --> 00:36:24,000 Speaker 1: nowhere creating amazing things. So you know, this has been 589 00:36:24,040 --> 00:36:27,239 Speaker 1: an industry of serial acquisition for decades and are unexpected 590 00:36:27,280 --> 00:36:31,920 Speaker 1: to stop. Microsoft in Xbox is one console platform. Some 591 00:36:32,000 --> 00:36:34,040 Speaker 1: news over the weekend. I hope we can bring it 592 00:36:34,120 --> 00:36:37,359 Speaker 1: up on the screen, Caroline. I've made the jump and 593 00:36:37,480 --> 00:36:41,680 Speaker 1: I've bought a PlayStation five having played on Google's Stardier 594 00:36:41,760 --> 00:36:44,400 Speaker 1: for the last eighteen months. And of course, Caroline, Google 595 00:36:44,480 --> 00:36:47,120 Speaker 1: shut down that platform. So there you go, that's the 596 00:36:47,120 --> 00:36:49,520 Speaker 1: big news in the industry. Sho we make it that. 597 00:36:51,040 --> 00:36:54,400 Speaker 1: I mean, you're meant to be agnostic, and but I 598 00:36:54,440 --> 00:36:56,719 Speaker 1: mean it does seem that I know you're a key 599 00:36:56,800 --> 00:36:59,759 Speaker 1: gamer and John to that point, at the moment, you 600 00:37:00,080 --> 00:37:02,160 Speaker 1: have been thinking about the ways in which you can 601 00:37:02,200 --> 00:37:04,560 Speaker 1: continue to develop. I'm sure you're agnostic. You're going across 602 00:37:04,560 --> 00:37:06,880 Speaker 1: every single platform. Just talk to us about whether the 603 00:37:06,960 --> 00:37:10,000 Speaker 1: hype around AARVR, the worry about people in this economic 604 00:37:10,080 --> 00:37:13,960 Speaker 1: environment perhaps not making a big splurge like Head, particularly 605 00:37:13,960 --> 00:37:17,040 Speaker 1: on a quest for example, is that making we think 606 00:37:17,080 --> 00:37:21,760 Speaker 1: about your platform building. Well, I mean that's very realistic 607 00:37:21,800 --> 00:37:23,880 Speaker 1: that the largest platform in the world today for gaming 608 00:37:23,960 --> 00:37:28,000 Speaker 1: is mobile. That would be Android and iOS. There's north 609 00:37:28,000 --> 00:37:31,720 Speaker 1: of four billion players there. Consoles are also super important, 610 00:37:31,719 --> 00:37:33,600 Speaker 1: and some of the world's best content is made for 611 00:37:33,640 --> 00:37:36,399 Speaker 1: consoles and also for the PC. And these are while 612 00:37:36,400 --> 00:37:39,000 Speaker 1: they're much smaller in terms of users and aggregate, probably 613 00:37:39,000 --> 00:37:41,920 Speaker 1: a couple hundred million users, they're also super important. And 614 00:37:42,160 --> 00:37:43,960 Speaker 1: for someone like me, it's spending the game industry for 615 00:37:44,000 --> 00:37:47,120 Speaker 1: a couple of decades. You know, I love them all, 616 00:37:47,200 --> 00:37:50,400 Speaker 1: so you have to support them all Onlike ed I 617 00:37:50,400 --> 00:37:52,759 Speaker 1: don't pick winners or favorites. Well, I don't pick winners 618 00:37:52,840 --> 00:37:55,360 Speaker 1: or favorites either. I was playing Studia that was shut 619 00:37:55,400 --> 00:37:58,680 Speaker 1: down by by Google in my past. Right now, mobile 620 00:37:58,760 --> 00:38:01,960 Speaker 1: right is where everyone's playing. What I find so interesting 621 00:38:02,640 --> 00:38:04,960 Speaker 1: is you have Netflix trying to move into mobile games. 622 00:38:05,400 --> 00:38:07,560 Speaker 1: You have Apple in the App Store, you have the 623 00:38:07,600 --> 00:38:10,200 Speaker 1: Google Play Store. All of them are also trying to 624 00:38:10,400 --> 00:38:15,040 Speaker 1: track privacy policy changes. Advertising. What's that doing in the 625 00:38:15,040 --> 00:38:18,560 Speaker 1: gaming space right now? Well, if the advertising market, it 626 00:38:18,640 --> 00:38:21,920 Speaker 1: was definitely affected by the privacy changes that Apple implemented 627 00:38:21,960 --> 00:38:24,000 Speaker 1: a couple of years ago, and then it also got 628 00:38:24,080 --> 00:38:26,960 Speaker 1: hit to a degree by the economy. So starting last summer, 629 00:38:27,800 --> 00:38:31,080 Speaker 1: buyers on the advertising side, the demand side, brought their 630 00:38:31,120 --> 00:38:35,960 Speaker 1: spend down and anticipation of the recession like environment we're 631 00:38:35,960 --> 00:38:38,560 Speaker 1: in right now, and that continues to today. It's a 632 00:38:38,560 --> 00:38:41,839 Speaker 1: little depressed, but it's been stable now, I would say 633 00:38:41,920 --> 00:38:44,719 Speaker 1: since the middle of last summer, so continues it be 634 00:38:44,719 --> 00:38:47,280 Speaker 1: a robust market. It's a little depressed from the peaks 635 00:38:47,320 --> 00:38:50,960 Speaker 1: of COVID or immediately post COVID. You have a large 636 00:38:51,000 --> 00:38:53,799 Speaker 1: advertising arm You yourself had to make some tough decisions 637 00:38:54,120 --> 00:38:57,120 Speaker 1: for unity, for the amount of employees you have amid 638 00:38:57,160 --> 00:39:00,520 Speaker 1: these economic environment that we currently see just push us 639 00:39:00,560 --> 00:39:03,680 Speaker 1: towards the hype cycle that we find ourselves. When it 640 00:39:03,680 --> 00:39:06,520 Speaker 1: comes to generative AI, does that end up meaning that 641 00:39:06,880 --> 00:39:09,279 Speaker 1: people look to still invest in your area in that 642 00:39:09,320 --> 00:39:12,399 Speaker 1: way of producing content generative AI? Is that a help 643 00:39:12,480 --> 00:39:16,120 Speaker 1: or hindrance in this environment. Well, so first off, let 644 00:39:16,160 --> 00:39:18,840 Speaker 1: me just sort of bound this a little bit with 645 00:39:18,920 --> 00:39:23,440 Speaker 1: some data. So we're an all time high today for 646 00:39:23,600 --> 00:39:25,920 Speaker 1: the engagement that players have on a global scale, so 647 00:39:26,239 --> 00:39:28,879 Speaker 1: north of four billion, as I mentioned a moment ago, 648 00:39:29,360 --> 00:39:32,359 Speaker 1: and it's even higher than it was in covid era 649 00:39:32,440 --> 00:39:36,000 Speaker 1: when people were living and working and studying at home. 650 00:39:36,280 --> 00:39:39,880 Speaker 1: So the industry is very, very resilient. Yeah, it's actually 651 00:39:39,960 --> 00:39:42,440 Speaker 1: kind of shocking, but it's done that. Well. Now, of 652 00:39:42,480 --> 00:39:47,640 Speaker 1: course everyone's got this notion of a sort of a 653 00:39:47,640 --> 00:39:50,640 Speaker 1: processionary environment. But the point they would make right now 654 00:39:50,719 --> 00:39:53,080 Speaker 1: is the industry really moves on innovation and one of 655 00:39:53,120 --> 00:39:56,560 Speaker 1: the most important innovations of gaming is AI Wow ending 656 00:39:56,600 --> 00:39:58,920 Speaker 1: on Gaming Cara. What a show it's been from Kathy 657 00:39:59,000 --> 00:40:03,239 Speaker 1: Wood to cybersecurity to gaming. An incredible start of the week, 658 00:40:03,560 --> 00:40:06,480 Speaker 1: wonderful conversation. We need to see CEO there, John Ricatello. 659 00:40:07,040 --> 00:40:09,759 Speaker 1: That does it. From this edition of Bloomberg Technology. That's 660 00:40:09,800 --> 00:40:10,440 Speaker 1: to Bloomberg