1
00:00:05,800 --> 00:00:08,720
Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim Fox.

2
00:00:08,760 --> 00:00:11,520
Speaker 1: Along with my co host Lisa Bramowitz. Each day we

3
00:00:11,640 --> 00:00:15,120
Speaker 1: bring you the most important, noteworthy, and useful interviews for

4
00:00:15,200 --> 00:00:17,840
Speaker 1: you and your money, whether you're at the grocery store

5
00:00:17,960 --> 00:00:20,720
Speaker 1: or the trading floor. Find the Bloomberg p m L

6
00:00:20,840 --> 00:00:35,240
Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Him.

7
00:00:35,240 --> 00:00:39,080
Speaker 1: I am so excited about our upcoming guest, Ralph Schlastein,

8
00:00:39,159 --> 00:00:43,320
Speaker 1: President and chief executive officer of ever Core, because he

9
00:00:43,360 --> 00:00:47,400
Speaker 1: has such broad perspective on everything that's going on right

10
00:00:47,400 --> 00:00:50,080
Speaker 1: now with respect to tax changes and how it affects

11
00:00:50,440 --> 00:00:54,840
Speaker 1: CEOs and their companies. He joins us now. Ever Court

12
00:00:55,040 --> 00:00:58,400
Speaker 1: was the number one boutique investment bank in mergers and

13
00:00:58,440 --> 00:01:02,160
Speaker 1: acquisitions last year. Ralph also Mr schlast and it was

14
00:01:02,200 --> 00:01:07,080
Speaker 1: also the co founder of black Rock. Thank you so

15
00:01:07,200 --> 00:01:10,800
Speaker 1: much for joining us. I wanted to start with getting

16
00:01:11,000 --> 00:01:14,040
Speaker 1: your sense of what the tax bill that is about

17
00:01:14,080 --> 00:01:17,840
Speaker 1: to be passed by the Congress, what effect it will

18
00:01:17,880 --> 00:01:22,480
Speaker 1: have on mergers and acquisitions activity. Well, I think as

19
00:01:22,520 --> 00:01:25,559
Speaker 1: a general matter, there are a number of effects. First

20
00:01:25,600 --> 00:01:30,800
Speaker 1: of all, the passage of the bill itself h takes

21
00:01:30,800 --> 00:01:38,759
Speaker 1: away a major uncertainty about UH taxation and organizations of businesses,

22
00:01:38,959 --> 00:01:45,600
Speaker 1: so things, you know, transactions that made strategic sense, but

23
00:01:45,760 --> 00:01:51,160
Speaker 1: we're held up by uh, you know, deep uncertainty about

24
00:01:51,200 --> 00:01:56,120
Speaker 1: how the world in eighteen would look versus UH. That

25
00:01:56,240 --> 00:02:00,800
Speaker 1: issue has been resolved, and uncertainty as always the enemy

26
00:02:00,880 --> 00:02:05,560
Speaker 1: of M and A activity. UH. The second thing that

27
00:02:05,600 --> 00:02:11,520
Speaker 1: will happen is UH, with the repatriation of you know,

28
00:02:11,560 --> 00:02:15,160
Speaker 1: two plus trillion dollars of cash that's held off shore

29
00:02:15,280 --> 00:02:19,280
Speaker 1: right now by US companies. UH, some amount of that

30
00:02:19,440 --> 00:02:25,400
Speaker 1: unquestionably will go into uh you know, strategic investments UH,

31
00:02:25,560 --> 00:02:28,679
Speaker 1: you know, which you know will be done through M

32
00:02:28,760 --> 00:02:35,280
Speaker 1: and A activity. The third thing that also I believe

33
00:02:35,320 --> 00:02:41,440
Speaker 1: will happen is uh, you know, the strategic repositioning of

34
00:02:41,600 --> 00:02:47,520
Speaker 1: business portfolios at large and particularly diversified companies. So in

35
00:02:47,639 --> 00:02:52,320
Speaker 1: the seventeen world, UH, if a company wanted to sell

36
00:02:52,320 --> 00:02:55,720
Speaker 1: a division that they had a very low tax basis in,

37
00:02:56,400 --> 00:03:00,560
Speaker 1: they had, you know, uh to pay thirty five percent

38
00:03:01,440 --> 00:03:04,960
Speaker 1: of the proceeds plus whatever the state tax was. UH.

39
00:03:05,000 --> 00:03:09,840
Speaker 1: And you know, the hurdle for disposing of businesses, particularly

40
00:03:09,880 --> 00:03:14,680
Speaker 1: low basis businesses, UH is you know a lot lower

41
00:03:14,720 --> 00:03:17,920
Speaker 1: today and then finally the effect on uh you know,

42
00:03:17,960 --> 00:03:20,560
Speaker 1: the general M and A environment. M and A thrives

43
00:03:21,160 --> 00:03:27,200
Speaker 1: when we have uh strong equity evaluations, readily available credit,

44
00:03:28,080 --> 00:03:30,920
Speaker 1: uh you know, good visibility as to the direction of

45
00:03:30,960 --> 00:03:36,280
Speaker 1: the economy. UH and CEO confidence and uh you know,

46
00:03:36,400 --> 00:03:41,720
Speaker 1: the first uh three have been present, and I think

47
00:03:41,720 --> 00:03:48,720
Speaker 1: this bill reinforces CEO confidence and makes you know, it's

48
00:03:49,160 --> 00:03:53,800
Speaker 1: somewhat more probable that M and A activity will continue.

49
00:03:54,080 --> 00:03:56,560
Speaker 1: Mr Slawson, could next year be a record year for

50
00:03:56,680 --> 00:04:00,760
Speaker 1: M and A. Uh you know, it's it's possible to

51
00:04:00,880 --> 00:04:05,000
Speaker 1: predict uh, you know, the level of activity you know,

52
00:04:05,160 --> 00:04:09,440
Speaker 1: in the next quarter, much less the next year. Uh.

53
00:04:09,440 --> 00:04:13,640
Speaker 1: He's certainly true that all of the conditions are in place,

54
00:04:14,480 --> 00:04:18,279
Speaker 1: uh for a very strong year in M and A activity,

55
00:04:18,800 --> 00:04:25,040
Speaker 1: but was an extremely strong year four point two trillion

56
00:04:25,080 --> 00:04:29,000
Speaker 1: dollars of announced transactions last year was about three point

57
00:04:29,040 --> 00:04:33,320
Speaker 1: five This year. It looks to be tracking around that. Uh. So,

58
00:04:34,200 --> 00:04:37,760
Speaker 1: you know, do I think it could possibly uh be

59
00:04:37,920 --> 00:04:41,920
Speaker 1: positive versus the last two years? I would say yes, Uh,

60
00:04:42,040 --> 00:04:43,640
Speaker 1: you know, is it going to go back to the

61
00:04:43,760 --> 00:04:47,880
Speaker 1: level of uh you know, I'm not smart enough to

62
00:04:47,920 --> 00:04:52,159
Speaker 1: really know that. Dan Donovan, who is a Republican congressman

63
00:04:52,520 --> 00:04:56,479
Speaker 1: serving uh Staten Island and Brooklyn some areas of Brooklyn,

64
00:04:56,560 --> 00:04:59,760
Speaker 1: said that he's worried about quote mobility of taxpayers in

65
00:04:59,800 --> 00:05:03,119
Speaker 1: the hop income brackets. He says losing even a small

66
00:05:03,160 --> 00:05:06,839
Speaker 1: percentage of those households will decimate the state and city

67
00:05:06,920 --> 00:05:11,600
Speaker 1: tax base. Do you agree with him? I think the

68
00:05:11,800 --> 00:05:16,159
Speaker 1: biggest risk to New York City and New York State

69
00:05:17,400 --> 00:05:21,359
Speaker 1: is precisely that, uh, you know, I honestly don't believe

70
00:05:22,240 --> 00:05:26,320
Speaker 1: uh that you know, this bill will have that much

71
00:05:26,360 --> 00:05:30,480
Speaker 1: of an effect on uh New York being the financial

72
00:05:31,640 --> 00:05:35,240
Speaker 1: capital of the world. Uh. The only competitor to us,

73
00:05:35,560 --> 00:05:40,200
Speaker 1: you know, of real concentration is London, and they have

74
00:05:40,560 --> 00:05:43,720
Speaker 1: a heck of a lot more uncertainty than we do.

75
00:05:44,000 --> 00:05:50,359
Speaker 1: And you know, financial businesses will aggregate and agglomerate in

76
00:05:51,080 --> 00:05:54,560
Speaker 1: places where there are other financial businesses and where they

77
00:05:54,560 --> 00:05:59,719
Speaker 1: can attract uh, you know, super talented young people, and

78
00:06:00,200 --> 00:06:04,200
Speaker 1: the most talented young people are you know, opting with

79
00:06:04,320 --> 00:06:07,839
Speaker 1: their feet to be in the places like New York

80
00:06:07,880 --> 00:06:12,359
Speaker 1: City and this bill because they tend to be you know,

81
00:06:12,560 --> 00:06:16,560
Speaker 1: entry level workers who aren't affected by the size of

82
00:06:16,600 --> 00:06:19,480
Speaker 1: the state and local deduction or the mortgage interest deduction.

83
00:06:20,320 --> 00:06:23,039
Speaker 1: Uh you know, they you know, they will continue to

84
00:06:23,120 --> 00:06:26,640
Speaker 1: come in in in droves, I believe to New York City.

85
00:06:26,680 --> 00:06:29,800
Speaker 1: What I do worry about, uh is people who are

86
00:06:29,839 --> 00:06:36,200
Speaker 1: not uh attached by employment, uh you know, to the city.

87
00:06:36,279 --> 00:06:40,880
Speaker 1: So those who are well off uh and you know,

88
00:06:41,000 --> 00:06:47,039
Speaker 1: have significant net worths and incomes, but are uh you

89
00:06:47,080 --> 00:06:52,200
Speaker 1: know long no longer working full time or retired. And

90
00:06:52,480 --> 00:06:56,359
Speaker 1: you know, for those people, uh, this is a quite

91
00:06:56,400 --> 00:07:02,479
Speaker 1: substantial tax increase and uh you know, they have complete

92
00:07:02,480 --> 00:07:06,360
Speaker 1: discretion as to where they live. And you know, I

93
00:07:06,760 --> 00:07:10,760
Speaker 1: think somewhere on the order of the tax receipts of

94
00:07:11,840 --> 00:07:14,040
Speaker 1: New York State and New York City come from one

95
00:07:15,080 --> 00:07:20,360
Speaker 1: of the population, which is overwhelmingly concentrated in New York

96
00:07:20,400 --> 00:07:25,160
Speaker 1: and the surrounding uh suburbs. So uh, you know, it

97
00:07:25,280 --> 00:07:29,160
Speaker 1: remains to be seen the effect that this will have

98
00:07:29,480 --> 00:07:33,360
Speaker 1: on you know, what is already a you know, somewhat

99
00:07:33,360 --> 00:07:38,320
Speaker 1: of a movement of you know, people who have you know,

100
00:07:38,480 --> 00:07:42,120
Speaker 1: real discretion as to where they live, uh, you know,

101
00:07:42,240 --> 00:07:46,480
Speaker 1: away from high tech states to lower no tech states.

102
00:07:47,600 --> 00:07:51,119
Speaker 1: Thank you very much for being with us. Ralph slow Stein,

103
00:08:07,720 --> 00:08:09,400
Speaker 1: all right, I want to bring in Shira every Day,

104
00:08:09,680 --> 00:08:13,559
Speaker 1: Bloomberg Gadfly columnist. When it comes to technology and the

105
00:08:13,600 --> 00:08:17,240
Speaker 1: topic today happens to be Uber, and they lost, didn't they?

106
00:08:17,240 --> 00:08:20,320
Speaker 1: They lost their fight in the European Union. Tell us

107
00:08:20,360 --> 00:08:23,119
Speaker 1: what this loss means for Uber and what it means

108
00:08:23,120 --> 00:08:26,280
Speaker 1: for the taxi and transport companies that have been fighting

109
00:08:26,440 --> 00:08:29,520
Speaker 1: this up start. So there's a there was a case

110
00:08:29,720 --> 00:08:33,200
Speaker 1: pending before the European Court of Justice and the legal

111
00:08:33,280 --> 00:08:37,440
Speaker 1: question was basically is Uber a digital company, a tech

112
00:08:37,440 --> 00:08:41,800
Speaker 1: company or is it a transportation company? And the court

113
00:08:41,880 --> 00:08:45,480
Speaker 1: ruled that that Uber is basically a transportation company and

114
00:08:45,800 --> 00:08:49,959
Speaker 1: it's a matter of law. Practically speaking, not much is

115
00:08:50,000 --> 00:08:52,480
Speaker 1: going to change for Uber. So the way that Uber

116
00:08:52,600 --> 00:08:57,400
Speaker 1: operates in most countries in Europe already complies with the

117
00:08:57,440 --> 00:09:00,079
Speaker 1: idea that they are a transportation company, which means that

118
00:09:00,120 --> 00:09:03,840
Speaker 1: their drivers need to be licensed UM in a way

119
00:09:03,880 --> 00:09:07,800
Speaker 1: that similar to how taxi drivers are licensed. So practically speaking,

120
00:09:08,120 --> 00:09:11,000
Speaker 1: not much changes. The interesting thing for me is kind

121
00:09:11,000 --> 00:09:15,600
Speaker 1: of thinking beyond today's court ruling, UH two broader questions

122
00:09:15,640 --> 00:09:20,120
Speaker 1: about Uber, which is one um will this have implications

123
00:09:20,160 --> 00:09:25,560
Speaker 1: for the idea that Uber drivers are not employees, which

124
00:09:25,640 --> 00:09:29,000
Speaker 1: is another legal matter that's pending in a separate court

125
00:09:29,040 --> 00:09:32,760
Speaker 1: case in Europe. And two, does this mean that local

126
00:09:32,800 --> 00:09:36,480
Speaker 1: transportation regulators will feel more empowered to kind of metal

127
00:09:36,920 --> 00:09:41,760
Speaker 1: in Uber Uber's business in every conceivable country, which, to

128
00:09:41,800 --> 00:09:43,960
Speaker 1: be honest, they've been doing everything they can to do

129
00:09:44,000 --> 00:09:46,520
Speaker 1: that because the Uber drivers are paid a lot less

130
00:09:46,520 --> 00:09:49,600
Speaker 1: than they make, they charge much lower rates, and they

131
00:09:49,640 --> 00:09:53,240
Speaker 1: have gained a lot of market share very quickly. I'm

132
00:09:53,280 --> 00:09:56,480
Speaker 1: just wondering how much cross border influence does this have.

133
00:09:56,520 --> 00:09:58,880
Speaker 1: In other words, are US regulators looking at to what

134
00:09:59,120 --> 00:10:02,040
Speaker 1: the European Union is doing and thinking of doing something similar.

135
00:10:02,760 --> 00:10:05,760
Speaker 1: That's a good question. I I doubt it, at least

136
00:10:05,800 --> 00:10:08,840
Speaker 1: in the US, because you know, the US does not

137
00:10:09,000 --> 00:10:13,520
Speaker 1: really have this kind of the national transportation regulator regulation

138
00:10:13,559 --> 00:10:16,840
Speaker 1: that's much more on a city by city basis. So

139
00:10:17,559 --> 00:10:20,360
Speaker 1: while this ruling in Europe maybe it will empower some

140
00:10:20,920 --> 00:10:24,360
Speaker 1: local transportation regulators in you know, New York or Seattle,

141
00:10:24,520 --> 00:10:27,040
Speaker 1: I don't know that it will have kind of broad

142
00:10:27,160 --> 00:10:30,560
Speaker 1: national implications in the US. So we'll see. I mean,

143
00:10:30,679 --> 00:10:33,560
Speaker 1: it's it's fair to say that in every market in

144
00:10:33,600 --> 00:10:39,679
Speaker 1: which Uber operates, it is already under intense um regulatory scrutiny.

145
00:10:39,880 --> 00:10:43,280
Speaker 1: So it's hard to imagine that it will get any worse.

146
00:10:44,559 --> 00:10:48,280
Speaker 1: They've got a new chief operating officer, Barty Hartford. Right

147
00:10:48,320 --> 00:10:53,000
Speaker 1: here is the former chief executive officer of Orbits, that's right.

148
00:10:53,040 --> 00:10:57,040
Speaker 1: And notably, the new number two at Uber used to

149
00:10:57,080 --> 00:11:03,400
Speaker 1: work with Uber's new CEO who came from Expedia. So um,

150
00:11:03,920 --> 00:11:06,120
Speaker 1: the two presumably know each other and like each other,

151
00:11:06,120 --> 00:11:08,600
Speaker 1: otherwise they wouldn't agree to work together. And look, this

152
00:11:08,640 --> 00:11:12,559
Speaker 1: is an important higher because Uper Uber's leadership bench has

153
00:11:12,600 --> 00:11:15,760
Speaker 1: been decimated over the last year. So they lost their

154
00:11:15,840 --> 00:11:19,320
Speaker 1: previous number two chief executive in March who left under

155
00:11:20,000 --> 00:11:26,439
Speaker 1: unamicable conditions. Um, they lost chief legal officers now been replaced.

156
00:11:26,480 --> 00:11:29,520
Speaker 1: They're looking for a new board chairman. They lost the

157
00:11:29,520 --> 00:11:31,760
Speaker 1: one and a half billion dollars in the third quarter

158
00:11:31,800 --> 00:11:34,839
Speaker 1: of the year. Yes, they have financial losses as well

159
00:11:34,880 --> 00:11:37,600
Speaker 1: as leadership losses. So it's it's clearly been important to

160
00:11:37,640 --> 00:11:41,679
Speaker 1: the new CEO at Uber to restock the leadership bench

161
00:11:41,880 --> 00:11:45,080
Speaker 1: and preferably restock the leadership bench with people he knows

162
00:11:45,160 --> 00:11:49,000
Speaker 1: or trusts well. Talking about trust, Uber has had some

163
00:11:49,120 --> 00:11:54,360
Speaker 1: issues on that front as certainly with regulators and lawmakers,

164
00:11:54,679 --> 00:11:58,520
Speaker 1: and part of Uber's reputation has been that they do

165
00:11:58,640 --> 00:12:01,000
Speaker 1: kind of, I don't know, test the edges a little bit.

166
00:12:01,280 --> 00:12:04,800
Speaker 1: And how much does the new leadership try to demonstrate

167
00:12:04,840 --> 00:12:08,120
Speaker 1: that it's turning a page with a cultural shift. Look,

168
00:12:08,120 --> 00:12:11,240
Speaker 1: I think that has been Job one for Uber's new

169
00:12:11,280 --> 00:12:15,320
Speaker 1: CEO is basically to change Uber's reputation. He said something,

170
00:12:15,880 --> 00:12:19,960
Speaker 1: Uber got this unfavorable ruling in London that may, at

171
00:12:20,040 --> 00:12:24,640
Speaker 1: least in the future, prohibit Uber from operating in London,

172
00:12:24,679 --> 00:12:28,160
Speaker 1: which is one of the company's largest markets. And the

173
00:12:28,320 --> 00:12:30,880
Speaker 1: Uber CEO basically said, look, this is a sign that

174
00:12:30,960 --> 00:12:34,760
Speaker 1: there is a high cost to a bad reputation. And

175
00:12:34,840 --> 00:12:38,000
Speaker 1: that's what Uber has in almost every market in which

176
00:12:38,000 --> 00:12:42,160
Speaker 1: it operates, at least with regulators and and including with

177
00:12:42,280 --> 00:12:46,640
Speaker 1: drivers too in many cases. And the new CEO's job

178
00:12:46,760 --> 00:12:51,280
Speaker 1: is to basically repair those relationships with regulators, with drivers,

179
00:12:51,520 --> 00:12:54,920
Speaker 1: with customers in some cases, with with you know, writers.

180
00:12:55,160 --> 00:12:58,559
Speaker 1: Sure just quickly Harvard coming in, He's going to oversee

181
00:12:58,600 --> 00:13:03,720
Speaker 1: the regional general managers along with the gentleman who heads

182
00:13:03,760 --> 00:13:06,640
Speaker 1: the food delivery business at Uber. Are they going to

183
00:13:06,800 --> 00:13:09,440
Speaker 1: change the way the companies actually run? Are they going

184
00:13:09,440 --> 00:13:12,160
Speaker 1: to keep the stream structure? I mean, I think it

185
00:13:12,200 --> 00:13:14,480
Speaker 1: remains to be seen that it was interesting that when

186
00:13:14,559 --> 00:13:17,400
Speaker 1: Uber's CEO came in, initially didn't think he needed a

187
00:13:17,480 --> 00:13:19,840
Speaker 1: number two, and then once probably he saw how much

188
00:13:20,040 --> 00:13:22,160
Speaker 1: repair work he was going to have to do with regulators,

189
00:13:22,240 --> 00:13:26,160
Speaker 1: changed his mind and lift. Meanwhile, I was gaining share,

190
00:13:26,240 --> 00:13:29,079
Speaker 1: so let me still see with that right. Shara Ovid,

191
00:13:29,320 --> 00:13:32,920
Speaker 1: technology columnist with Bloomberg gad Fly, thank you so much

192
00:13:33,400 --> 00:13:36,559
Speaker 1: for joining us. She joins us here in our eleven

193
00:13:36,640 --> 00:13:57,400
Speaker 1: three oh studios. It's important to get some perspective on

194
00:13:57,640 --> 00:14:00,600
Speaker 1: bitcoin and get a sense of just how many accounts

195
00:14:00,600 --> 00:14:03,400
Speaker 1: are involved, just how much real money, and just how

196
00:14:03,480 --> 00:14:08,240
Speaker 1: much more institutional interest we have seen as the futures

197
00:14:08,360 --> 00:14:11,400
Speaker 1: contracts start trading. Here to join us and give us

198
00:14:11,400 --> 00:14:13,560
Speaker 1: that insight is Bobby Show, who is head of trading

199
00:14:13,840 --> 00:14:19,160
Speaker 1: at Cumberland in Chicago. Cumberland is DRW Holdings Digital Currency

200
00:14:19,280 --> 00:14:22,560
Speaker 1: unit is one of the world's largest bitcoin trading desks

201
00:14:22,640 --> 00:14:26,920
Speaker 1: and liquidity providers in cryptocurrencies. Bobby, thank you so much

202
00:14:26,960 --> 00:14:30,680
Speaker 1: for joining us. I want to start with just how

203
00:14:30,760 --> 00:14:33,960
Speaker 1: much more money are you seeing come into this market?

204
00:14:34,000 --> 00:14:36,760
Speaker 1: Are you seeing a lot of new accounts being created,

205
00:14:37,040 --> 00:14:41,840
Speaker 1: an institution starting to come in thanks for having me um. So, yeah,

206
00:14:41,880 --> 00:14:44,120
Speaker 1: I mean, well, we've kind of experienced over the last

207
00:14:44,200 --> 00:14:47,240
Speaker 1: let's call it twelve to sixteen months, really a shift

208
00:14:47,320 --> 00:14:50,040
Speaker 1: of the profile of the counterparty that we face here

209
00:14:50,040 --> 00:14:52,360
Speaker 1: at Cumberland. So, as you mentioned, Cumberland is one of

210
00:14:52,400 --> 00:14:55,640
Speaker 1: the largest institutional size liquidity providers in the space. So

211
00:14:55,960 --> 00:14:59,080
Speaker 1: we make markets for uh an array of different folks

212
00:14:59,120 --> 00:15:02,400
Speaker 1: in the industry. We're looking to get exposure to different cryptocurrencies.

213
00:15:02,800 --> 00:15:08,160
Speaker 1: Um you know, heavily dominated in bitcoin and ethereum. So

214
00:15:08,240 --> 00:15:11,400
Speaker 1: what we've seen when we started the business in was

215
00:15:12,080 --> 00:15:14,960
Speaker 1: we were catering to many folks who were very specific

216
00:15:15,000 --> 00:15:18,480
Speaker 1: to the crypto space, payment processors, minors and and other

217
00:15:18,520 --> 00:15:22,440
Speaker 1: individuals that were early adopters. Well, that shifted dramatically again

218
00:15:22,440 --> 00:15:24,480
Speaker 1: in the last year or a year and a half,

219
00:15:24,760 --> 00:15:28,240
Speaker 1: where you saw a number of cryptocurrency funds starting to

220
00:15:28,280 --> 00:15:31,920
Speaker 1: pop up, a number of other institutional investors coming into

221
00:15:32,000 --> 00:15:34,520
Speaker 1: the market. And really what that signals to me is

222
00:15:34,560 --> 00:15:36,000
Speaker 1: that there was a lot of money and still is

223
00:15:36,040 --> 00:15:38,520
Speaker 1: a lot of money sitting on the sidelines waiting to

224
00:15:38,720 --> 00:15:41,840
Speaker 1: get exposure to this asset class. Right, So this class

225
00:15:41,880 --> 00:15:45,640
Speaker 1: currently is sits around six billion dollars and that's obviously

226
00:15:45,800 --> 00:15:49,080
Speaker 1: grown tremendously over the last few years. Bubby, when you

227
00:15:49,080 --> 00:15:53,200
Speaker 1: talk about the hedge funds or funds that are specifically

228
00:15:53,240 --> 00:15:56,800
Speaker 1: focused on cryptocurrencies, that triggered my interest because I saw

229
00:15:56,840 --> 00:16:00,280
Speaker 1: that hedge Hedge Fund Research put out an end X

230
00:16:00,480 --> 00:16:03,120
Speaker 1: of cryptocurrency hedge fund returns, and I'm trying to get

231
00:16:03,120 --> 00:16:04,800
Speaker 1: a sense. Do you have a sense of the a

232
00:16:04,960 --> 00:16:10,200
Speaker 1: U M under cryptocurrency specific funds? You know, Uh, what

233
00:16:10,240 --> 00:16:14,040
Speaker 1: we've seen is the number of cryptocurrency funds has continued

234
00:16:14,080 --> 00:16:17,200
Speaker 1: to increase month over month. So to give you some perspective,

235
00:16:17,320 --> 00:16:21,000
Speaker 1: right in August that number was right around eighty cryptocurrency funds.

236
00:16:21,000 --> 00:16:23,640
Speaker 1: This is globally um that number probably sits somewhere around

237
00:16:23,640 --> 00:16:25,840
Speaker 1: a hundred and fifty. And we don't see that number

238
00:16:25,880 --> 00:16:30,239
Speaker 1: stopping um or slowing down anytime soon. Mainly because of this,

239
00:16:30,240 --> 00:16:33,760
Speaker 1: this ability to access the market continues to be limited,

240
00:16:34,120 --> 00:16:36,200
Speaker 1: and so what people are doing if if they are

241
00:16:36,240 --> 00:16:38,800
Speaker 1: looking to get access into these market is they're looking

242
00:16:38,840 --> 00:16:41,840
Speaker 1: to actually invest in kind of traditional um fund structures

243
00:16:41,880 --> 00:16:44,960
Speaker 1: or vehicles like those that that we mentioned, crypto funds

244
00:16:45,040 --> 00:16:47,360
Speaker 1: or hedge funds. Bobby, can you just tell us a

245
00:16:47,400 --> 00:16:50,440
Speaker 1: little bit about Cumberland, how many people are working on this,

246
00:16:50,720 --> 00:16:53,000
Speaker 1: and maybe just tell us where you got the original

247
00:16:53,040 --> 00:16:57,160
Speaker 1: inventory of bitcoin. Sure so, so Cumberland, as you mentioned,

248
00:16:57,160 --> 00:16:59,720
Speaker 1: we're one of the largest liquidity providers in the world,

249
00:17:00,160 --> 00:17:02,640
Speaker 1: um in terms of just our team and our desk,

250
00:17:02,680 --> 00:17:06,240
Speaker 1: so we are global. Um. So, Cumberland's headquarters is here

251
00:17:06,240 --> 00:17:08,480
Speaker 1: in Chicago, we have an office in London and we

252
00:17:08,480 --> 00:17:11,399
Speaker 1: actually just opened up Singapore a few weeks ago, and

253
00:17:11,440 --> 00:17:13,760
Speaker 1: so that allows us to kind of service our counterparties

254
00:17:13,760 --> 00:17:17,840
Speaker 1: on the basis we are looking to open up in

255
00:17:17,840 --> 00:17:23,399
Speaker 1: the near term um. And so basically, uh, we're we're

256
00:17:23,440 --> 00:17:26,160
Speaker 1: great in the fifteen now, mainly just because the expansion

257
00:17:26,320 --> 00:17:28,200
Speaker 1: and we see that number only growing over the next

258
00:17:28,240 --> 00:17:31,760
Speaker 1: few months. UM. And so in terms of I guess

259
00:17:31,760 --> 00:17:35,840
Speaker 1: inventory and things like that, when we had gotten started

260
00:17:35,880 --> 00:17:39,880
Speaker 1: in the idea really came about in twenty twelve, give

261
00:17:39,960 --> 00:17:42,399
Speaker 1: or take, when obviously through the walls of d r

262
00:17:42,560 --> 00:17:44,840
Speaker 1: W and some of the folks here just trying to

263
00:17:44,880 --> 00:17:48,920
Speaker 1: conceptualize what bitcoin is, how bitcoin is going to change

264
00:17:48,920 --> 00:17:50,959
Speaker 1: the world, and and fundamentally, how we're gonna look at

265
00:17:50,960 --> 00:17:53,240
Speaker 1: this thing in the future. But hang on, I understand

266
00:17:53,280 --> 00:17:57,040
Speaker 1: that you actually, or at least Cumberland bought a lot

267
00:17:57,080 --> 00:18:00,679
Speaker 1: of the bitcoins from ross Albrick. That's the founder of

268
00:18:00,840 --> 00:18:03,720
Speaker 1: Silk Road who's now serving a life sentence right for

269
00:18:03,840 --> 00:18:08,520
Speaker 1: narcotics trafficking. You bought seventy thousand bitcoins that were auctioned

270
00:18:08,560 --> 00:18:11,959
Speaker 1: by US and overseas authorities. Is that correct? So we

271
00:18:12,040 --> 00:18:15,040
Speaker 1: had bought seventy thousand bitcoins from the U. S. Marshal's

272
00:18:15,080 --> 00:18:19,399
Speaker 1: office at auction. Okay, that's correct, yes, And do you

273
00:18:19,440 --> 00:18:23,400
Speaker 1: still have those seventy thousand bitcoins or what what form

274
00:18:23,440 --> 00:18:26,800
Speaker 1: did they currently take? So we still manage a large

275
00:18:27,160 --> 00:18:30,360
Speaker 1: portfolio of cryptocurrencies, and that really allows us to do

276
00:18:30,480 --> 00:18:33,879
Speaker 1: what one of our main kind of responsibility here is

277
00:18:33,960 --> 00:18:36,960
Speaker 1: and and services that we provide is providing over the

278
00:18:37,000 --> 00:18:39,960
Speaker 1: counter trading for large institutional sized positions. So when someone

279
00:18:40,000 --> 00:18:42,240
Speaker 1: comes in and says, hey, I'd like to buy fifty

280
00:18:42,280 --> 00:18:45,000
Speaker 1: million dollars a bitcoin, well, we have a portfolio that

281
00:18:45,040 --> 00:18:47,080
Speaker 1: we managed to be able to supply that from our

282
00:18:47,080 --> 00:18:50,440
Speaker 1: own inventory and so, um, we still manage a large

283
00:18:50,480 --> 00:18:54,280
Speaker 1: portfolio of cryptocurrencies and and that obviously helps to support

284
00:18:54,359 --> 00:18:57,520
Speaker 1: our business in making markets over the counter. Bobby how

285
00:18:57,520 --> 00:19:01,280
Speaker 1: do you hedge against any downs it swings in your portfolio.

286
00:19:02,320 --> 00:19:05,480
Speaker 1: So that's obviously something that is UM super important to

287
00:19:05,520 --> 00:19:08,280
Speaker 1: us because as much as trading UH that we do

288
00:19:08,400 --> 00:19:11,320
Speaker 1: during the day, from my perspective, we really take a

289
00:19:11,400 --> 00:19:13,560
Speaker 1: lens of risk management. That's kind of the first thing

290
00:19:13,600 --> 00:19:16,000
Speaker 1: that we look at um and so if we try

291
00:19:16,040 --> 00:19:17,800
Speaker 1: to be aware of everything that's kind of happening in

292
00:19:17,840 --> 00:19:21,440
Speaker 1: the market, Obviously it's very difficult to do so, mainly

293
00:19:21,520 --> 00:19:24,720
Speaker 1: because this is a product that's traded seven around the

294
00:19:24,720 --> 00:19:28,000
Speaker 1: world and can be accessed by a number of different

295
00:19:28,000 --> 00:19:31,479
Speaker 1: types of folks in the market. And so with the

296
00:19:31,520 --> 00:19:34,240
Speaker 1: advent of futures out there in the market, that kind

297
00:19:34,240 --> 00:19:36,320
Speaker 1: of helps in terms of being able to hedge exposure.

298
00:19:36,600 --> 00:19:39,399
Speaker 1: Although we'll kind of see what how much traction games

299
00:19:39,680 --> 00:19:41,560
Speaker 1: in the futures market, but we are just trying to

300
00:19:41,600 --> 00:19:44,000
Speaker 1: prepare and be aware of kind of everything that's out there.

301
00:19:44,440 --> 00:19:46,920
Speaker 1: Thanks very much for joining us. Bobby Chow is head

302
00:19:46,920 --> 00:19:50,159
Speaker 1: of trading for Cumberland and that's d r W holding

303
00:19:50,480 --> 00:19:54,719
Speaker 1: digital currency unit. He's a joining us from Chicago and

304
00:19:55,040 --> 00:19:56,920
Speaker 1: much appreciated for giving us a little bit of a

305
00:19:56,960 --> 00:20:02,399
Speaker 1: window into the world of trading bitcoin. And other cryptocurrencies.

306
00:20:16,680 --> 00:20:19,520
Speaker 1: It almost sounds like a joke or a story. The

307
00:20:19,640 --> 00:20:23,760
Speaker 1: couple that went on a vacation, stayed in a particular location,

308
00:20:23,920 --> 00:20:26,760
Speaker 1: liked it so much they decided to stay there permanently.

309
00:20:27,200 --> 00:20:31,560
Speaker 1: Man Deep Singers are technology industry analyst for Bloomberg Intelligence

310
00:20:31,600 --> 00:20:34,440
Speaker 1: and he's here to tell us about Airbnb launching their

311
00:20:34,480 --> 00:20:38,760
Speaker 1: own apartment complexes. Man Deep tell us the story of Airbnb,

312
00:20:39,359 --> 00:20:42,760
Speaker 1: I guess leveraging their brand and their expertise into a

313
00:20:42,760 --> 00:20:46,480
Speaker 1: new market. Sure, so when you think about you know,

314
00:20:46,600 --> 00:20:50,840
Speaker 1: online travel or online logistics, it's really about scale and

315
00:20:50,920 --> 00:20:54,119
Speaker 1: network effects. These are the two most important things that

316
00:20:54,359 --> 00:20:57,000
Speaker 1: any company that operates in this space has to have,

317
00:20:57,800 --> 00:21:02,119
Speaker 1: and airbnbi had the first more vantage in vacation rentals.

318
00:21:02,160 --> 00:21:05,040
Speaker 1: That space is getting crowded now with price sign and

319
00:21:05,160 --> 00:21:09,520
Speaker 1: Expedia also expanding inventory. So what Airbnb is trying to

320
00:21:09,560 --> 00:21:13,840
Speaker 1: do is essentially kind of grow their scale by getting

321
00:21:13,840 --> 00:21:16,720
Speaker 1: into this new segment of you know, owning their apartments

322
00:21:16,760 --> 00:21:21,480
Speaker 1: and really they're trying to offer you know, uh accommodations

323
00:21:21,520 --> 00:21:24,320
Speaker 1: for business travelers. So that's a new segment they want

324
00:21:24,320 --> 00:21:27,680
Speaker 1: to cater to. So we're talking about this in part

325
00:21:27,920 --> 00:21:31,280
Speaker 1: because Brookfields, the big developer, just agreed to invest as

326
00:21:31,359 --> 00:21:34,280
Speaker 1: much as two hundred million dollars in a joint venture

327
00:21:34,480 --> 00:21:39,320
Speaker 1: with Needo. It's a multi family development partner of airbnbs,

328
00:21:39,840 --> 00:21:43,400
Speaker 1: and this would go toward building a few apartment complexes

329
00:21:43,440 --> 00:21:47,440
Speaker 1: I believe in Florida. Right. Uh, that would allow residents

330
00:21:47,440 --> 00:21:51,840
Speaker 1: and owners to rent out their properties through the Airbnb

331
00:21:52,160 --> 00:21:56,200
Speaker 1: website for up to half the year. Is that correct?

332
00:21:56,280 --> 00:21:58,080
Speaker 1: Is this a first time type of thing or is

333
00:21:58,080 --> 00:22:01,439
Speaker 1: there a model for this? So Airbnb is really the

334
00:22:01,480 --> 00:22:04,159
Speaker 1: disruptor in this space, and they have helped, you know,

335
00:22:04,359 --> 00:22:07,280
Speaker 1: for people to share their homes and you know kind

336
00:22:07,280 --> 00:22:13,359
Speaker 1: of uh basically draw like inventory where it wasn't available before,

337
00:22:13,480 --> 00:22:16,040
Speaker 1: especially in urban cities or even for that matter, you

338
00:22:16,080 --> 00:22:19,359
Speaker 1: know in holiday locations. And and the way they're able

339
00:22:19,440 --> 00:22:24,560
Speaker 1: to do it is provided technology platform that's Airbnb strength. Well,

340
00:22:24,560 --> 00:22:28,240
Speaker 1: but what's the advantage to somebody who's buying one of

341
00:22:28,320 --> 00:22:31,200
Speaker 1: these homes? I mean, what what would what would it takes?

342
00:22:31,240 --> 00:22:33,280
Speaker 1: It's up to a half a year, so it's not

343
00:22:33,400 --> 00:22:36,800
Speaker 1: more than that. So is this for basically snowbirds that

344
00:22:37,200 --> 00:22:39,240
Speaker 1: want to make some income on the property while they're

345
00:22:39,280 --> 00:22:42,120
Speaker 1: not there? Exactly? Yeah, and and a lot of these

346
00:22:42,160 --> 00:22:47,440
Speaker 1: times these properties were vekend. So by allowing these owners

347
00:22:47,520 --> 00:22:50,960
Speaker 1: to actually you know, put their properties on Airbnb's platform,

348
00:22:51,080 --> 00:22:55,240
Speaker 1: it's free income and Airbnb knows how to manage these properties,

349
00:22:55,280 --> 00:22:58,880
Speaker 1: so it's a win win for both of them, you know, man, Deep,

350
00:22:58,920 --> 00:23:00,639
Speaker 1: I want to go back to something you said earlier,

351
00:23:00,640 --> 00:23:03,040
Speaker 1: which is the business traveler and how this might be

352
00:23:03,200 --> 00:23:06,000
Speaker 1: a real game changer when it comes to business travel.

353
00:23:06,160 --> 00:23:08,840
Speaker 1: Rather than checking into a hotel where you're overcharged for

354
00:23:08,880 --> 00:23:13,160
Speaker 1: everything from the coffee to the use of the business

355
00:23:13,160 --> 00:23:15,800
Speaker 1: center if there is one, and paying for WiFi if

356
00:23:15,840 --> 00:23:19,800
Speaker 1: you have to. They're going to architecturally design these new

357
00:23:19,880 --> 00:23:24,280
Speaker 1: properties in order to cater specifically to these kinds of

358
00:23:24,600 --> 00:23:27,800
Speaker 1: potential customers, isn't that right? Correct? And and they want

359
00:23:27,800 --> 00:23:31,560
Speaker 1: to move up markets so till now their core customer

360
00:23:31,600 --> 00:23:35,639
Speaker 1: base airbnbs core customer base for price conscious customers who

361
00:23:35,680 --> 00:23:38,760
Speaker 1: are looking for the cheapest price on you know, urban

362
00:23:38,840 --> 00:23:41,960
Speaker 1: dwellings and and really looking for a price that was

363
00:23:42,040 --> 00:23:45,359
Speaker 1: cheaper than a hotel. Now, I think the fact that

364
00:23:45,400 --> 00:23:47,880
Speaker 1: they have scaled, they the fact that they have created

365
00:23:47,920 --> 00:23:50,919
Speaker 1: a brand name, they want to cater to all the

366
00:23:51,000 --> 00:23:54,119
Speaker 1: segments and they want to have you know, separate uh,

367
00:23:54,160 --> 00:23:58,479
Speaker 1: you know entities which serve these segments. So business travel

368
00:23:58,680 --> 00:24:01,119
Speaker 1: is a big market it in itself, and are just

369
00:24:01,119 --> 00:24:03,760
Speaker 1: going to add that they don't necessarily then have all

370
00:24:03,800 --> 00:24:07,320
Speaker 1: of that inventory that they have to rent out all

371
00:24:07,400 --> 00:24:10,800
Speaker 1: the time, just as a hotel group would, because that's

372
00:24:11,119 --> 00:24:14,760
Speaker 1: stagnant inventory unless you know, you occupy it. Yeah, So

373
00:24:14,800 --> 00:24:18,040
Speaker 1: the benefit of Airbnb is they are so good with

374
00:24:18,160 --> 00:24:21,359
Speaker 1: crunching data that's available on their platform, and that's really

375
00:24:21,400 --> 00:24:24,480
Speaker 1: their advantage that they're able to, you know, assess the

376
00:24:24,520 --> 00:24:28,399
Speaker 1: supply demand equation much better than a hotel or you know,

377
00:24:29,320 --> 00:24:32,480
Speaker 1: some of the smaller hotels will be able to do themselves,

378
00:24:32,480 --> 00:24:35,320
Speaker 1: so they really have a good stock of what the

379
00:24:35,359 --> 00:24:38,920
Speaker 1: current supply demand dynamics are. You know. I'm struck by

380
00:24:38,960 --> 00:24:41,280
Speaker 1: the fact that Uber right now, which will talk about

381
00:24:41,400 --> 00:24:45,840
Speaker 1: later in the show, is facing some increased regulatory pressure

382
00:24:46,280 --> 00:24:49,840
Speaker 1: in Europe in part because they are designating them a

383
00:24:49,960 --> 00:24:54,639
Speaker 1: taxi company, not necessarily a gig company. The way they

384
00:24:54,640 --> 00:24:56,800
Speaker 1: attach company, the way that they sort of build themselves

385
00:24:56,800 --> 00:24:59,520
Speaker 1: to investors. I wonder at what point this type of

386
00:24:59,560 --> 00:25:02,800
Speaker 1: thing it's Airbnb and they start getting treated more like

387
00:25:02,800 --> 00:25:07,760
Speaker 1: a hotel company than a tech upstart. I mean, that's

388
00:25:08,440 --> 00:25:10,280
Speaker 1: very much of a risk. And when I look at

389
00:25:10,320 --> 00:25:14,119
Speaker 1: all the new sharing economy companies like Uber, like Airbnb,

390
00:25:14,920 --> 00:25:18,680
Speaker 1: they started off as a technology platform, they picked an

391
00:25:18,720 --> 00:25:22,119
Speaker 1: area to focus on, and they really you know, leverage

392
00:25:22,200 --> 00:25:25,639
Speaker 1: technology to mass scale. There is a risk that there's

393
00:25:25,680 --> 00:25:28,560
Speaker 1: a cost side of the equation that obviously could get

394
00:25:28,560 --> 00:25:32,880
Speaker 1: affected once you become regulated. So once you know, Uber

395
00:25:32,960 --> 00:25:37,000
Speaker 1: gets regulated or n B Airbnb gets regulated, it's gonna

396
00:25:37,400 --> 00:25:40,399
Speaker 1: have an impact on the cost side, and that's always

397
00:25:40,400 --> 00:25:43,600
Speaker 1: a risk. But having this investment from Brookfield, that's got

398
00:25:43,640 --> 00:25:46,399
Speaker 1: to be a stamp of approval, or at least that

399
00:25:47,080 --> 00:25:51,200
Speaker 1: conditional stamp of approval. Absolutely, and no one is doubting

400
00:25:51,240 --> 00:25:54,199
Speaker 1: that Airbnb is a viable business. It's there for the

401
00:25:54,280 --> 00:25:57,119
Speaker 1: long term just because they have the scale, they have

402
00:25:57,240 --> 00:26:00,159
Speaker 1: the network effects, and in this business that's what matter.

403
00:26:00,359 --> 00:26:03,119
Speaker 1: So it's not going over anytime soon. It's just that

404
00:26:03,200 --> 00:26:06,000
Speaker 1: the margin dynamics may change depending on whether they are

405
00:26:06,080 --> 00:26:09,080
Speaker 1: regulated entity or not. Thank you so much for joining us.

406
00:26:09,160 --> 00:26:12,320
Speaker 1: Definitely something that we will watch to see who wants

407
00:26:12,359 --> 00:26:14,600
Speaker 1: to buy these, how often they rent them out, and

408
00:26:14,760 --> 00:26:18,520
Speaker 1: what is airpnths regulatory fate Man Deep saying thank you

409
00:26:18,560 --> 00:26:22,479
Speaker 1: so much, tech industry analyst for Bloomberg Intelligence, joining us

410
00:26:22,480 --> 00:26:28,439
Speaker 1: here in our eleven three studios. Thanks for listening to

411
00:26:28,440 --> 00:26:31,320
Speaker 1: the Bloomberg P and L podcast. You can subscribe and

412
00:26:31,400 --> 00:26:35,400
Speaker 1: listen to interviews at Apple Podcasts, SoundCloud, or whatever podcast

413
00:26:35,400 --> 00:26:38,880
Speaker 1: platform you prefer. I'm pim Fox. I'm on Twitter at

414
00:26:39,040 --> 00:26:42,440
Speaker 1: pim Fox. I'm on Twitter at Lisa Abramo. It's one

415
00:26:42,640 --> 00:26:45,320
Speaker 1: before the podcast. You can always catch us worldwide on

416
00:26:45,400 --> 00:26:46,240
Speaker 1: Bloomberg Radio