Speaker 1: From the heart of where innovation, money and power Colli
Speaker 1: in Silicon Vallet and beyond. This is Bloomberg Technology with
Speaker 1: Emily jay I remember like Jeck in San Francisco, and
Speaker 1: this is Bloomberg Technology. Coming up in the next hour,
Speaker 1: Finance is walking away from buying f t X after
Speaker 1: looking at its balance sheet. This after Bloomberg broke the
Speaker 1: news on the US investigation into the ft X liquidity crisis.
Speaker 1: We're gonna have coverage of the crypto blow up throughout
Speaker 1: this show. Plus eleven thousand employees at Meta laid off
Speaker 1: as Mark Zuckerberg admits his Metaverse vision was a mistake.
Speaker 1: We're going to dig in and Reid Hoffman joins us
Speaker 1: to talk about the next decade of tech innovation and
Speaker 1: how big the future is for AI. Plus Gary tan
Speaker 1: is with us to talk about how he thinks tech
Speaker 1: and Silicon Valley survive a looming recession. But first, before
Speaker 1: we get a check of the markets. You may have
Speaker 1: read that this is my last week coasting bloom Brick
Speaker 1: Technology after twelve years sitting right here. I'm going to
Speaker 1: be expanding our coverage with new shows focused on the
Speaker 1: most important people and issues at the heart of Tech,
Speaker 1: Business and Culture. I'm not gonna cry. I'm gonna try
Speaker 1: not to cry yet. Um, but I might tomorrow, which
Speaker 1: is going to be my last day officially in this chair.
Speaker 1: So I don't want to linger now, but I do
Speaker 1: want you to know that every day has been special
Speaker 1: and there's so much more to come. Meantime, US financial
Speaker 1: regulators are investigating whether f t X properly handled customer
Speaker 1: funds as Finance walks away from a deal to save
Speaker 1: Sam Bankman Freed's exchange bloom Brigs. Katie Greifeld covers the
Speaker 1: markets with us. Katie, what has happened in the last
Speaker 1: twenty four hours. You know, almost as quickly as Finance
Speaker 1: said it was going to come to the rest you,
Speaker 1: it's already backing away from this deal. And it seems
Speaker 1: that there's two big concerns here. There's that big financial
Speaker 1: hole that Finance was looking into when it actually looked
Speaker 1: at ft X is financing. There's great reporting on the
Speaker 1: Bloomberg terminal breaking just in the last few minutes that
Speaker 1: Sam Bateman Freed told investors that f t X was
Speaker 1: going to need a cash injection or it's going to
Speaker 1: file for bankruptcy. They SPF told investors that the company
Speaker 1: faced a shortfall of up to eight billion dollars. That
Speaker 1: is quite the hole that we're talking about. The other
Speaker 1: side is what is going on with the customer funds.
Speaker 1: Another Bloomberg News exclusive today breaking the news that US
Speaker 1: regulators are looking at that issue, whether f t X
Speaker 1: improperly handled customer funds. You look at the statement that
Speaker 1: Finance put out, it seems that both of those issues
Speaker 1: were top of mind when they were considering whether to
Speaker 1: actually go through with this takeover. Katie. Brian Armstrong, the
Speaker 1: CEO coin Base, called into the show yesterday to talk
Speaker 1: about his take on the deal, and we asked whether
Speaker 1: coin based had thought about acquiring f t X. Take
Speaker 1: a listen to what he said. I had a number
Speaker 1: of conversations with people over the last twenty four hours,
Speaker 1: and um, there's reasons why that would not make sense,
Speaker 1: and I're not quite at liberty to share the details
Speaker 1: right now. I think I'm gonna let other people share
Speaker 1: that if and when they're ready, or probably all come
Speaker 1: out eventually. Some foreshadowing there maybe what should we be
Speaker 1: looking out for going forward? I think the big question,
Speaker 1: among many big questions is what actually happens to f
Speaker 1: t X users right now. And also in that interview
Speaker 1: which I was tuned into, that was a great get.
Speaker 1: I mean, Brian Armstrong also made the point that if
Speaker 1: the deal does fall through, then f t X customers
Speaker 1: would face losses. And that's what's at stake here, because
Speaker 1: if you think back all the way to yesterday, we
Speaker 1: got a tweet from SPF saying that all asserts will
Speaker 1: be covered one to one. This is one of the
Speaker 1: main reasons why we've asked finance to come. And so
Speaker 1: without finance there to provide liquidity for those massive withdrawals
Speaker 1: that FTX is facing, it's unclear what happens here to
Speaker 1: those actual customers. All right, Bloomberg's Katie Greifeld another one.
Speaker 1: We're going to continue to watch every twist in turn.
Speaker 1: Thank you for that update. Meantime, Meta CEO Mark Zuckerberg
Speaker 1: saying the company will cut more than eleven thousand jobs.
Speaker 1: This is the first major round of layoffs in the
Speaker 1: social media giants history. From where I want to bring
Speaker 1: in Bloomberg's Alex Brinka, Alex, eleven thousand is a lot
Speaker 1: of people. Where are the what departments are these people
Speaker 1: coming from? And how were these decisions made? Emily, No
Speaker 1: team was spared here. Mark Zuckerberg told the organization this
Speaker 1: morning that every single app, Facebook, Instagram, WhatsApp would be affected,
Speaker 1: as well as their metaverse efforts which sit in reality labs.
Speaker 1: But there are two that I want to point out
Speaker 1: that seemed to have been hit the hardest. That is
Speaker 1: recruiting as they also have a hiring free still in effect,
Speaker 1: and some of their business teams that will be restructured now.
Speaker 1: In a memo that went out to employees that was
Speaker 1: reviewed by us here at Bloomberg existing employees who are staying,
Speaker 1: it was said that the highest levels of leadership actually
Speaker 1: made these decisions and most managers didn't actually find out
Speaker 1: about it until this morning, of who would be staying
Speaker 1: on their team and who would actually be departing amongst
Speaker 1: those eleven thousand employees. Let's talk about Mark Zuckerberg's words
Speaker 1: here and what he took accountability for. I believed to
Speaker 1: even used the word sorry. He said, I want to
Speaker 1: take accountability for these decisions and how we got here.
Speaker 1: I know this is tough for everyone, and I'm especially
Speaker 1: sorry to those impacted. How much further did he go
Speaker 1: in terms of talking about the big metaverse pivot. Yeah,
Speaker 1: he said frankly. Um, he got it wrong. Not so
Speaker 1: much about the metaverse pivot, but the bet they're making
Speaker 1: right now that this big shift to online shopping and
Speaker 1: spending more time online that we saw during COVID would continue.
Speaker 1: They staffed up to be ready for that. And not
Speaker 1: only is that bet, um kind of flailing here, Emily.
Speaker 1: To your point, they have this massive bet on the
Speaker 1: metaverse they're now spending too, so a really tough time
Speaker 1: for them. The shares are down this year, even with
Speaker 1: that little pop that we saw today. Um, and maybe
Speaker 1: some questions for where Mark Zuckerberg is guiding both the
Speaker 1: social media part of the business and this new bet,
Speaker 1: this decade long bet that will all spend more time
Speaker 1: potentially in virtual reality in the metaverse. What's the mood
Speaker 1: like inside Facebook right now? My sources are telling me
Speaker 1: that seemed a little random in terms of how the
Speaker 1: decisions were made. Uh, folks weren't necessarily consulted. They found
Speaker 1: out early this morning. Um, you know, power folks feeling. Yeah,
Speaker 1: it's pretty gloomy, Emily. If you can imagine, you know,
Speaker 1: it's hit or miss in terms of who is staying
Speaker 1: on teams. Also, you know, we're hearing that this restructuring
Speaker 1: could take some time, so what the company would look
Speaker 1: like that's not you know, written in stone as of today,
Speaker 1: on the back of the Twitter news on their big
Speaker 1: layoff a week ago and tacking on um these additional
Speaker 1: eleven thousand jobs, that's about fifteen thousand people in social
Speaker 1: media that are out of a job in the last week.
Speaker 1: So not only is it gloomy on the inside, but
Speaker 1: if you spend any time on LinkedIn today, you see
Speaker 1: folks looking for new prospects, and you've got to think
Speaker 1: it's a tough world if you're a social media expert
Speaker 1: in terms of who might hire you once you're out
Speaker 1: the out the door meta. All right, bloombergs Alex Barnka,
Speaker 1: thank you so much for that update. We'll continue to
Speaker 1: watch your reporting on this meantime. Earlier today, President Biden
Speaker 1: said Elon Musk's ties to other countries are worth looking at,
Speaker 1: though he declined to say if he felt Elon Musk
Speaker 1: has been doing anything inappropriate. Uh, We're gonna talk a
Speaker 1: little bit more about Twitter later in the show. Reid
Speaker 1: Hoffman will be joining us to talk about that and
Speaker 1: much more with a wave of tech layoffs, including now
Speaker 1: met up. What does this all mean for the Silicon
Speaker 1: Valley ecosystems, from startups to the world of venture capital.
Speaker 1: I want to bring in Gary Tan now for more
Speaker 1: on this. He is the founder of Initialized Capital and
Speaker 1: the incoming chief of the very popular startup accelerator y Combinator. Gary,
Speaker 1: thank you so much for joining us. As you know,
Speaker 1: it's a special week for me and for this show,
Speaker 1: and you know, so much has changed since I started
Speaker 1: covering Silicon valid I'm just wondering where you were twelve
Speaker 1: years ago when Bloomberg Tech launched, Oh gus, I was
Speaker 1: a software engineer working on my startup, Posterous, which was
Speaker 1: a y C company. I hadn't even become a partner
Speaker 1: at y C yet, and two thousand and eight we
Speaker 1: actually closed our seven hundred thousand dollars seed round the
Speaker 1: day Lehman died. So, you know, for people who are
Speaker 1: watching right now who might be affected, you know, I
Speaker 1: really do feel for you because you know, this type
Speaker 1: of day, it's such a shock. Um. But you know,
Speaker 1: also two eight two tho nine was such an incredible
Speaker 1: time to start companies, and you know that you have
Speaker 1: to take the good with the bad. Eleven thousand people
Speaker 1: laid off at Meta alone today. How bad does this
Speaker 1: get in your view? You know, I really feel for
Speaker 1: those families. I feel for every single person who is
Speaker 1: going through you know, that type, that magnitude of layoff. UM.
Speaker 1: But one of the things that I'm sort of excited
Speaker 1: about that, you know, there there is a silver lining
Speaker 1: in that these are really smart, really dedicated people. You know,
Speaker 1: Facebook has an incredible hiring bar, and I think about
Speaker 1: a lot of human capital, a lot of human heart
Speaker 1: and minds that now can be applied to Frankly, all
Speaker 1: of these other problems that you know are sort of
Speaker 1: facing societ idea and humanity UM. And I'm excited about
Speaker 1: what gets unlocked here because you know, for the for practically,
Speaker 1: I don't know, three five years, the number one thing
Speaker 1: that frankly startups really faced was how do we find
Speaker 1: people who are as smart as you know, a Facebook
Speaker 1: engineer or almost any of those roles. And so, you know,
Speaker 1: on the one hand, this is a sad day. On
Speaker 1: the other hand, you know, I'm kind of excited to
Speaker 1: see where all of these people are going to go.
Speaker 1: And some of those people are going to start new
Speaker 1: companies that actually become the next Facebook, the next Meta,
Speaker 1: and uh, you know, I think that that is something
Speaker 1: that I'm excited to see. There are some people saying
Speaker 1: Silicon Valley is turning into a waste land at San
Speaker 1: Francisco is over, and they were saying this, you know,
Speaker 1: before these layoffs even started to happen as a result
Speaker 1: of the changes from the pandemic alone. I know you're
Speaker 1: very steeped in the culture of San Francisco, and I'm
Speaker 1: guessing you disagree, But what do you think? Yeah, I
Speaker 1: think San Francisco from time immemorial was a place for
Speaker 1: dreamers and doers to come and try to you know,
Speaker 1: try their hand at their own future. But you know,
Speaker 1: there's something very special about technology in San Francisco, which
Speaker 1: is we've you know, brought together some of the smartest
Speaker 1: minds and then they go on to create products and
Speaker 1: services for a billion people. And um, you know, we
Speaker 1: might have gone through are a big wave over the
Speaker 1: last decade, but there's a new wave. You know, I
Speaker 1: keep meeting new you know, twenty five year olds, thirty
Speaker 1: year olds like you know, people who are sort of
Speaker 1: just starting their career um and some of them might
Speaker 1: be sort of leaving some of these tech giants. And
Speaker 1: there we're realizing that, hey, we can start a company,
Speaker 1: we can create a product or service, and it comes
Speaker 1: from actually solving real problems for customers. Right and so,
Speaker 1: you know, whether it's crypto or you know, sass software,
Speaker 1: sort of across the board. You know, even though this
Speaker 1: is a time of sort of destruction, there is creation
Speaker 1: and that is growing out of you know, sort of
Speaker 1: the ground from you know, the wreckage of some of
Speaker 1: these uh, you know, quite regrettable situations. Right now, you know,
Speaker 1: the seed uh is in there and it's growing. And
Speaker 1: we were we were going to hear about the next
Speaker 1: you know, meta, the next billion dollar or decacorn company
Speaker 1: that is sort of starting exactly like you know, a
Speaker 1: startup like my startup started, uh the day Lehman died.
Speaker 1: So what does this actually mean for early companies right
Speaker 1: now and for investors like yourself at the earliest stages.
Speaker 1: How do you make decisions about where to put your
Speaker 1: money and whether to put money in anything at all,
Speaker 1: given the way the economy is going. Yeah, I think
Speaker 1: the very special thing about early stage is that you know,
Speaker 1: you are starting from small numbers. You know, a startup.
Speaker 1: As Paul Graham wrote in his famous essay, a startup
Speaker 1: equals growth. And when you're small, you can outrun any
Speaker 1: macro situation. You know, the macro situation might be the
Speaker 1: heights of one when we were starting to tell people, hey,
Speaker 1: you know, be where there might be, you know, recession ahead.
Speaker 1: And you know that was something that we started saying
Speaker 1: towards the end of last year, you know. Or we
Speaker 1: might be all the way down on a day like
Speaker 1: this where I think all of us are sort of
Speaker 1: trying to figure out, like what does this mean and
Speaker 1: how much lower does it go? But in that in
Speaker 1: that time or this time, there is the ability for
Speaker 1: a small team to build a product or service and
Speaker 1: grow to x four x ten x per year. And
Speaker 1: so if the mac even if the macro situation goes
Speaker 1: down from here, like if an individual company can show
Speaker 1: that it can grow three x, five x ten x,
Speaker 1: you know, a hundred x over a hundred x over
Speaker 1: several years like that, that will outrun you know, the worst,
Speaker 1: even a great depression if you can do it. And
Speaker 1: the thing is this is impelled by technology. You know,
Speaker 1: their new problem MS and you know, things like Generative
Speaker 1: AI right now are just blowing people's minds, and you know,
Speaker 1: I think that they're the fruit of the next great companies.
Speaker 1: It really comes from that technology and from the builders
Speaker 1: who are being unlocked right now. Well, speaking of building
Speaker 1: and disrupting, Elon Musk taking over Twitter, you're a Twitter
Speaker 1: power user. I'm curious what you think of what he's
Speaker 1: done so far and what the plan seems to be,
Speaker 1: and maybe if as a power user, you have any
Speaker 1: advice for Elon Musk. That's a great question. I mean,
Speaker 1: I love Twitter, and you know, I think the number
Speaker 1: one thing is I'm also feeling for my friends over there,
Speaker 1: who are you know, sort of sleeping under their desks,
Speaker 1: you know, working through it. So all I can say is,
Speaker 1: you know, take care of your people, and you know,
Speaker 1: take care of us as users. And you know, I
Speaker 1: know that he's uh much maligned by certain people right now,
Speaker 1: but you know, I'm rooting for them. I'm rooting for
Speaker 1: Twitter as a come company and as a user. I've
Speaker 1: spoke with Representative Rocanna earlier. You're going to hear part
Speaker 1: of that conversation in a moment, but he called for
Speaker 1: more regulation of big tech, which may be more unlikely
Speaker 1: depending on how the votes shake out. I know you're
Speaker 1: heading to the White House next week with one of
Speaker 1: your portfolio companies. What do you think the role of
Speaker 1: Washington should be in the next generation of tech innovation
Speaker 1: and perhaps not repeating some of the mistakes or lack
Speaker 1: of action that we've seen in the past. Yeah, so
Speaker 1: I'm headed to d C with Beeper. It's one of
Speaker 1: our initialized companies that's creating a universal chat app, and
Speaker 1: one of the things they really want to do is
Speaker 1: sort of take away the green bubble blue bubble problem
Speaker 1: and that you know, that's just kind of a silly
Speaker 1: example in one sense, in one sense, but it is
Speaker 1: actually uh emblematic of a much bigger problem. And those
Speaker 1: are things that we hope to solve with the Innovation
Speaker 1: and Choice Act Online and the Open App Markets Act,
Speaker 1: which frankly, we really hope Senators Humor will actually bring
Speaker 1: to the floor. You know, he's claimed that the votes
Speaker 1: aren't there, but we're pretty sure there are more than
Speaker 1: enough votes. And you know, for me, when I look
Speaker 1: at early stage, it's really about making sure there's a
Speaker 1: fair and level playing field, and it's really clear to
Speaker 1: me that we don't have that right now. Apple and
Speaker 1: Google certainly mean well, but they're still looking out for
Speaker 1: their main interests, and we want choice and freedom and
Speaker 1: we need to protect the ability of founders, you know,
Speaker 1: perhaps in the garage in San Francisco and Mountain View,
Speaker 1: wherever they are in the world. Even we want them
Speaker 1: to be able to create something that touches a billion people.
Speaker 1: And you know, that's really what we want with these
Speaker 1: two bills. We want a fair and open dialogue and
Speaker 1: a way for consumers to actually win. I have a
Speaker 1: minute left, Gary, and I'd love to get your advice now.
Speaker 1: For the folks who are let go today, what would
Speaker 1: you say to them? I mean, go home and hug
Speaker 1: your kids, you know, if you got them. Um. But
Speaker 1: at the same time, you know, maybe if you've been
Speaker 1: playing it safe like this whole time in your career, um,
Speaker 1: it might be time to go out and find you know,
Speaker 1: some frontier tech, something that you're interested in, and um,
Speaker 1: you know, research the startups, research what you think might
Speaker 1: change the world. And you know you don't have to,
Speaker 1: you know, take a job offer, but interviewed a bunch
Speaker 1: of them and figure out, you know, is there a
Speaker 1: fit is this place right for me? And um, you know,
Speaker 1: building equity and helping build new things that have never
Speaker 1: existed before. It is the most exhilarating experience that I've
Speaker 1: ever had professionally. UM, and I just really hope you know,
Speaker 1: I think that it's just a hard moment right now. Um,
Speaker 1: and you know, the future is a little bit uncertain
Speaker 1: in terms of you know, what might whether there's a
Speaker 1: recession or not. You know, the macro picture doesn't look
Speaker 1: that great. But I just want people to remember that
Speaker 1: that there new technology is still being built and are
Speaker 1: companies big and small that are still you know, fighting
Speaker 1: that fight, and uh, you know they need your help.
Speaker 1: So you know, dust yourself off, and you know we're
Speaker 1: going to go build the future. Build indeed, Gary Tan,
Speaker 1: thank you so much for joining us and sharing all
Speaker 1: of that on a on a hard day. And of
Speaker 1: course we're also excited about your next chapter two, founder
Speaker 1: and partner at Initialized Capital, and of course incoming head
Speaker 1: of y Combinator, thanks for having me coming up. Thank
Speaker 1: you my discussion with California Representative Rocana about the outcome
Speaker 1: of the mid terms and Elon Musk his thoughts next
Speaker 1: this is Bloomberg back to the mid terms and what
Speaker 1: impact it will have on the future of big tech
Speaker 1: regulation in Congress. Representative Rocana was with us earlier. Take
Speaker 1: a listen. First, it's just on a human level. I'm
Speaker 1: sad and concerned about the layoffs. I as you know,
Speaker 1: represent the district of the Bay Area and so many
Speaker 1: of those people and their families are in my district.
Speaker 1: But more broadly, we're gonna need more investment in uh,
Speaker 1: content moderation that respects the First Amendment, but that is
Speaker 1: not allowing speech that incites violence or that is spreading
Speaker 1: blatant conspiracies and lies just to get more attention. And
Speaker 1: that's something that Congress needs to regulate. We haven't uh,
Speaker 1: and we need to regulate on privacy. But otherwise those
Speaker 1: uh social media platforms are spewing often uh, real poison
Speaker 1: into our democratic discourse. You've got a new label on
Speaker 1: your Twitter profile identifying you as a US representative. Some
Speaker 1: accounts are already be being labeled official. What's your opinion
Speaker 1: on the approach Elon Musk is taking a Twitter so
Speaker 1: far and the difference between the right to free speech
Speaker 1: and the right to amplification of free speech. Well, look,
Speaker 1: I know Elon Musk, and I will give him the
Speaker 1: same advice privately as I do publicly, which is he
Speaker 1: shouldn't be running Twitter, just like Jeff Bezos doesn't run
Speaker 1: the Washington Post, and people who own CNN don't run CNN. Uh,
Speaker 1: and Michael Bloomberg doesn't sit there running Bloomberg Television. I
Speaker 1: think he should appoint an independent board of people who
Speaker 1: will make the day to day decisions. Some of the
Speaker 1: ideas of getting rid of bots, those are good ideas.
Speaker 1: I mean, the bots are responsible for some of the
Speaker 1: worst algorithmic amplification. But I don't think Ellen wants to
Speaker 1: be sitting there making a decision about which tweet should
Speaker 1: be on and which tweet should be off. Full interview
Speaker 1: with representative Kanna at Bloomberg dot com and of course
Speaker 1: we'd like to know. Mike Bloomberg is the founder and
Speaker 1: majority owner of Bloomberg LP and the parent company of
Speaker 1: Bloomberg News. Welcome back to Bloomberg Technology. I'm Emily Chang
Speaker 1: in San Francisco. Computers are now creating never before seen
Speaker 1: the images in seconds, think apps like Dolly or Crayon.
Speaker 1: It's called generative artificial intelligence and Silicon Valley investors are
Speaker 1: betting big on the future of this emerging technology. Reid
Speaker 1: Hoffman is one of them. The Lincoln co founder and
Speaker 1: partner at Greylock Partners recently sold a collection of his
Speaker 1: own AI art for charity, and he joins me now
Speaker 1: and read, thank you so much for joining us. You've
Speaker 1: been such a huge part of this show for the
Speaker 1: last twelve years, and for that I am very grateful, Um.
Speaker 1: And I'm just so curious to hear your thoughts on
Speaker 1: what is going to find to define the next decade
Speaker 1: of innovation and technology. If it was networks for the
Speaker 1: last decade, is it AI for the next it is
Speaker 1: I think actually is as hot as it seems this year,
Speaker 1: even next year it's even gonna be hotter. Um. I
Speaker 1: think the question about having essentially the equivalent of professional
Speaker 1: aid like Microsoft product called Copilot for engineers, I think
Speaker 1: that will be within five years present for every profession.
Speaker 1: It'll be for journalists, for dcs, you know, for uh,
Speaker 1: you know, journals like you know, just doctors, lawyers, the
Speaker 1: whole thing and those tools will start and they will
Speaker 1: be central to how we we've been doing. In Senate,
Speaker 1: Greylock We've been investing this for years because we've seen
Speaker 1: this coming, um you know. So we have adept in
Speaker 1: Crest and Snorkel, and of course I co founded Inflection
Speaker 1: with Mustafa. But I think this will be a trend
Speaker 1: of human amplification through these artificial intelligence technologies which we've
Speaker 1: never seen its like before in human history. The question
Speaker 1: is how do we maintain the human So, for example,
Speaker 1: how do our everyday lives are, everyday working lives intersect
Speaker 1: with a future of work and AI. Well, this is
Speaker 1: one of the reasons when open ai launched. Dolly I
Speaker 1: wrote this essay that was on LinkedIn because the natural
Speaker 1: thing to worry is that, oh, it will take the
Speaker 1: jobs from graphic designers and like graphic designers will be
Speaker 1: out of work. And actually, what I realized by having
Speaker 1: the time to play with it is that whether whatever
Speaker 1: your graphic skills were between none, a little, a lot,
Speaker 1: it's an amplifier. Now what you'll have to do is
Speaker 1: you'll have to learn it. It'll be like learning Adobe
Speaker 1: Photoshop or Figma. It's it's I need to have now
Speaker 1: have this as part of my professional tool for how
Speaker 1: I'm operating. And that's what's going to be true for
Speaker 1: all of it. So there will be changes and it
Speaker 1: will be you know, like transitions, you have to learn
Speaker 1: a new tool, and one of the things that you know,
Speaker 1: when you're an older professional like me, learning a new
Speaker 1: tool can be a little stressful and challenging, but but
Speaker 1: it's doable. And you know, currently it goes by the
Speaker 1: geek name prompt engineering. Um, hopefully we'll have a better
Speaker 1: term than that. I mean, we're not so good at
Speaker 1: marketing and you know that guy to communication generally speaking
Speaker 1: within the tech industry. But I think those tools will
Speaker 1: then amplify all of us. And I think that's actually
Speaker 1: what's coming across everything. You know, doctors and lawyers and
Speaker 1: and and graphic designers and coders and writers and journalists
Speaker 1: and research channel lists and dcs. Generator of it AI
Speaker 1: specifically is getting so much attention, and you've been talking
Speaker 1: about it for a long time. Just how big is
Speaker 1: this going to be and how much money is there
Speaker 1: to be made? Is this where the next Facebook or
Speaker 1: Google is going to come from? Well, we certainly hope.
Speaker 1: So that's part of the reason why, you know, grey
Speaker 1: luck we made all these investments and you know, it's
Speaker 1: you know, everything from a dept to inflection and others.
Speaker 1: And um, you know what I think it is is
Speaker 1: it'll be it'll it's kind of like this, it'll be
Speaker 1: even more of an amplifier. I think in terms of
Speaker 1: what you've seen from everything from Microsoft Office and the Internet. Um,
Speaker 1: I think that because is when you think about you
Speaker 1: take a LinkedIn definition of what the breadth of professional is,
Speaker 1: which is you can get better at your job and
Speaker 1: you kind of output some thinking and decisions and information.
Speaker 1: AI will be helpful across all events. Now, there's a
Speaker 1: lot of work to go on to make it happen.
Speaker 1: It will take years for adoption. It'll take you know,
Speaker 1: kind of crafting it to make sure that it's the
Speaker 1: right kind of human application versus you know, potentially you know,
Speaker 1: destructive effects. Um, but I'm fully optimistic on the human
Speaker 1: amplification part of it. Let's talk about amplification. We've just
Speaker 1: gone through a midterm elections. You yourself have said that
Speaker 1: mid terms often signify major turning points in American politics,
Speaker 1: And I'm curious what the turning point you think is
Speaker 1: that's happening now. We saw candidates who amplified the big
Speaker 1: lie get more engagement we saw social media platforms then
Speaker 1: profit from that engagement. How dangerous could this get? Well,
Speaker 1: it's super dangerous, which is one of the reasons why
Speaker 1: the protection of democracy is I think the most important thing.
Speaker 1: It's part of the reason why I've been engaging in
Speaker 1: a little bit of a you know, kind of saying
Speaker 1: this is an important issue for business people on LinkedIn
Speaker 1: because LinkedIn is kind of about business and kind of
Speaker 1: amplifying that. I do think the results of the midterms
Speaker 1: have been good. They've been generally bad for the election deniers,
Speaker 1: for the proponents of the Big Lie, it's generally been bad.
Speaker 1: Like it's it's generally a pro to Santist, anti Trump, uh,
Speaker 1: you know, kind of spread within the Republican Party. I
Speaker 1: think it's maybe the best uh you know kind of
Speaker 1: result for a midterm result for a president in the
Speaker 1: last twenty years, so, you know, as normally it's really
Speaker 1: bad for the sitting president of their party, and the
Speaker 1: fact that it's actually the best in the last twenty years,
Speaker 1: I think is a positive endorsement of Biden. Uh. And
Speaker 1: I think the general view is to be uh, like,
Speaker 1: democracy matters, piece whole transition of power matters, rule of
Speaker 1: law matters. Uh, And in the fact that we have
Speaker 1: a democracy by which we vote for who our election
Speaker 1: representatives are, and we should not encourage insurrections or acts
Speaker 1: of violence like January six. That's bad, and all of
Speaker 1: us as Americans, all of us as leaders, all of
Speaker 1: us as business people, need to firmly get behind it.
Speaker 1: I think we're seeing that, you know, broadly through the elections.
Speaker 1: Obviously there's this this in that election, which I still
Speaker 1: have problems, but I think it's been a general good
Speaker 1: referendum in these bed terms. You and Elon Musk go
Speaker 1: way back, and I know you haven't commented publicly yet
Speaker 1: on his takeover of Twitter, so I have to ask,
Speaker 1: what do you think? What do you think of what
Speaker 1: he's done so far? Well, Ellen, which is no surprise,
Speaker 1: is one of the amazing entrepreneurs of our generation. I mean,
Speaker 1: revolutionizing multiple industries and doing so against people like me
Speaker 1: saying I don't think you know, I don't think it
Speaker 1: wouta work like Space X. I think I was second
Speaker 1: or third birthity pitched too, and I was like, ah,
Speaker 1: that's like a deep difficult Adam Space governed subsidy industry,
Speaker 1: and he revolutionized and create a new one with satellites,
Speaker 1: revolutionizes electric vehicles so amazing entrepreneur strong vision, you know,
Speaker 1: drives through brick walls or through multiple brick walls, and
Speaker 1: all of these industries. Now, I wouldn't have handled Twitter
Speaker 1: at all the way he's doing it. I think the
Speaker 1: the chaos of it, I think the suddenness of the
Speaker 1: layoffs and a bunch of other things. Obviously have a
Speaker 1: different kind of view on the politics of it. I
Speaker 1: disagree with his vote Republican. I would say, vote anti
Speaker 1: MAGA or anti election de nine. That would be the
Speaker 1: thing and the thing I would say, And it's whether
Speaker 1: it's democratic republican, is you know, relative to your specific race? Um?
Speaker 1: And so I think, you know, I think he's got
Speaker 1: a hard challenge in front of him. Um we I
Speaker 1: think we all want him to succeed. Uh. And I
Speaker 1: think that even though I wouldn't do Twitter the way
Speaker 1: he's doing it. Uh, you know, he's he's proven me
Speaker 1: wrong before by the kind of the the sheer, you know,
Speaker 1: and determination and vision. Uh. And I always respect that
Speaker 1: about him. And I think we want a public square
Speaker 1: that's healthy, that has you know, an emphasis on the
Speaker 1: human and anti bots. And everything else Where do you
Speaker 1: draw the line between the right to free speech and
Speaker 1: the right to the amplification of free speech. And I'm
Speaker 1: so curious if you've talked to him at all about
Speaker 1: this or or any part of it and how he's responded.
Speaker 1: So I haven't, so I don't have any inside uh information.
Speaker 1: I'm obviously Elon's a friend. I'm always uh delighted to
Speaker 1: help with you were to call um. But the I
Speaker 1: think the key thing is is, look, there is a
Speaker 1: right to freedom of speech within the political arena, which
Speaker 1: is the government cannot quell you, and we do that
Speaker 1: so that we have an ability to not have our
Speaker 1: best ideas and emms quelled by the government or by
Speaker 1: political institutions and power. It's slightly different for business, ecosystems
Speaker 1: and all the rest of this, and so the whole
Speaker 1: like or all freedom of speech is a little bit
Speaker 1: different between the business side, which is part of the
Speaker 1: reason why we have a clean, well wiped place and
Speaker 1: LinkedIn with a clear design for it and all the
Speaker 1: rest um. And you know, if you look at LinkedIn,
Speaker 1: you get part of how I think that these things
Speaker 1: should be designed, which is like, yes, you should maximize
Speaker 1: a bunch of of of kind of expression from individuals,
Speaker 1: but you should also think about the health of the
Speaker 1: group and the health of the ecosystem. And like, for example,
Speaker 1: let's take something less charged than you know, partisan issues
Speaker 1: like vaccine deniers, you know, enormously bad for for the
Speaker 1: health of a society, for the health of of of
Speaker 1: of of not just the country, but the world. And
Speaker 1: you go, okay, then, and there's clear medical expertise against that, Well,
Speaker 1: that should not be given reach. Someone should be able
Speaker 1: to come out and say, well, I think vaccines were
Speaker 1: invented by Martians and they're here to try to control us. Fine,
Speaker 1: beyond your little soapbox say that, but actually, in fact,
Speaker 1: the medical side of it is part of what allows
Speaker 1: our society reorder functions successfully. It's part of flu vaccines
Speaker 1: and a bunch of other things proven through you know,
Speaker 1: centuries of work, and so that kind of thing. You
Speaker 1: have to distinguish between freedom of speech and freedom of reach,
Speaker 1: and you do so with a very broad view of
Speaker 1: also the health of society, the health of the network
Speaker 1: in it. And I think that's you have to do both.
Speaker 1: It's not just individuals, it's not just network and society
Speaker 1: it's both and you have to you have to be
Speaker 1: good stewards of that. So let's talk about the health
Speaker 1: of Silicon Valley. Eleven thousand people just laid off at
Speaker 1: met Up, thousands of people laid off at Twitter, Hiring
Speaker 1: freezes at Apple and Alphabet, layoffs happening in a lot
Speaker 1: of places. You have seen so much, uh of Silicon
Speaker 1: Valley history. How does how does the valley survive this?
Speaker 1: What does it look like on the other side, and
Speaker 1: how bad does it get before we get there? Well,
Speaker 1: I think it'll certainly continue bad for at least six months,
Speaker 1: you know, could go you know, a year plus. Um.
Speaker 1: The value has gone through multiple recessions actually, in fact,
Speaker 1: some contractions, just like what makes business efficient is good
Speaker 1: for refocusing, you know, for kind of saying, look this,
Speaker 1: this is what our business is fundamentally about. This is
Speaker 1: how we do it. I think it's a good thing.
Speaker 1: Obviously painful for families and and and and and this
Speaker 1: kind of changes. On the other hand, I think Silicon
Speaker 1: value will continue to thrive. There's a lot of capital
Speaker 1: investing in the future. I think a lot of these
Speaker 1: folks will be able to find other jobs reasonably soon
Speaker 1: because I think there's still lots of companies being created Greylock.
Speaker 1: We've been investing in them, not just AI companies, but
Speaker 1: also enterprise companies, security companies, a whole range of approaches,
Speaker 1: and other venture firms are also doing the same. And
Speaker 1: so I think it's it's the ability to to go
Speaker 1: and still create the future is still there, and it's
Speaker 1: one of the things that I think silicon value has
Speaker 1: gone through multiple, multiple recessions, and it's it's a crucible,
Speaker 1: it's a it's like a it's a temp bring function
Speaker 1: because you need to also be efficient and effective and
Speaker 1: not just oh, everything always works. It's like no, no,
Speaker 1: you have to be like, how is this good for
Speaker 1: your customers, how is this good for employees? How is
Speaker 1: this good for society? And be focused on doing a
Speaker 1: few things and doing a few things well. And I
Speaker 1: think that's that's the period we're going through. But I
Speaker 1: think that's while as painful as it is, a downturn
Speaker 1: is just another phases business as usual. So it sounds
Speaker 1: like you are long San Francisco, a long silicon valley um,
Speaker 1: which is what I expected. Read always appreciate you joining
Speaker 1: us and your optimism read Hoffman Greylock partner, founder of LinkedIn.
Speaker 1: Thank you all right, coming up Cracking, Jesse Powell talks
Speaker 1: about the importance of having reserves in the wake of
Speaker 1: the latest crypto blow up. He joins us next, this
Speaker 1: is Bloomberg. We're seeing this in real time. How this
Speaker 1: is unfolding is in real time, but we saw it
Speaker 1: in the spring as well, in real time that UM
Speaker 1: investors are getting hurt, lack of disclosure, opacity. We've seen
Speaker 1: the use of other people's money and trading ahead and
Speaker 1: and and using other people's money, but we've also seen
Speaker 1: the use of leverage. A SEC chair Gary Ginsler there
Speaker 1: in the wake of crypto turmoil, cryptocurrencies tumbling after Finance
Speaker 1: backed out of the f t X acquisition, CEO Chung
Speaker 1: Pung Joo saying Finance will start sharing proof of reserves
Speaker 1: to garner trust within the crypto community. Now the US
Speaker 1: is investigating f t X. Jesse Pal is the co
Speaker 1: founder and outgoing CEO of the crypto exchange Kracking, which
Speaker 1: has been transparent about proof of reserves. Jesse, what just happened?
Speaker 1: It was happening and suddenly now it's not. Yeah, So
Speaker 1: it seems like there was a deal between two of
Speaker 1: the largest exchanges finance to acquire what might remain of
Speaker 1: of f t X, which from the outside looks like
Speaker 1: mostly a pretty big crater, uh, you know, and I
Speaker 1: think they took a look at it and just decided
Speaker 1: this was a whole too big to fill, uh, you know,
Speaker 1: with too much kind of radioactive regulatory scrutiny around it, um,
Speaker 1: which looks like it might have been a pretty big
Speaker 1: headache to deal with. So unfortunately, right now it looks
Speaker 1: like ft X might be heading into a bankruptcy process
Speaker 1: the likes of which you know, we've we've seen frequently recently, unfortunately. Um.
Speaker 1: And you know, for some like the clients of Voyager,
Speaker 1: you know, you might be aware that f t X
Speaker 1: was just appointed the sort of trustee to manage the
Speaker 1: voyage or payout process who acquired those accounts, um, you know.
Speaker 1: So it's history repeating itself here with crypto. I mean,
Speaker 1: we saw a similar situation with mount Gox back in
Speaker 1: when another trustee had deposited funds from Big Coin into
Speaker 1: mountain Ox, which subsequently got hacked and clients got a
Speaker 1: double penalty there still waiting ten years later to be
Speaker 1: paid out. So hopefully it doesn't take that long here. Um.
Speaker 1: But yet, unfortunately, another black eye on the industry, and
Speaker 1: it's gonna be really tough times for for the consumers
Speaker 1: and the clients of that exchange. I asked coin by
Speaker 1: c O'Brien Armstrong the same thing I'm gonna ask you,
Speaker 1: would crack and be interested in buying f t X.
Speaker 1: I'm sure they have some assets that that are interesting,
Speaker 1: that that have some value. Um. You know, we we've
Speaker 1: already got quite a bit of the same infrastructure. You know,
Speaker 1: there's a lot of redundancy between exchanges, so you know,
Speaker 1: maybe we're talking about user accounts, maybe they have some
Speaker 1: subsidiaries to do specific things we'd be interested in, or
Speaker 1: possibly some licenses. Um. But you know, I don't think
Speaker 1: there's going to be value there anything close to what
Speaker 1: the whole seems to be. So, you know, I think
Speaker 1: the process is likely going to go into to bankruptcy.
Speaker 1: You know, there's going to be an organized maybe auction
Speaker 1: for these assets. At this point, you know, I'm not
Speaker 1: sure whether they even would be allowed to sell these assets,
Speaker 1: you know, which which might belong to the creditors. At
Speaker 1: this point, has f t X approached cracking at all. Um.
Speaker 1: We yea, sir, we we have. We have spoken to
Speaker 1: them about this and you know we're we're in the
Speaker 1: loop and um, you know we're looking to get more
Speaker 1: information at this point. Okay, does cracking do you have
Speaker 1: any exposure to f t X or Alameda and if so,
Speaker 1: how much? No, we don't. You know, we steered clear
Speaker 1: of the f t T token. Um. You know, we
Speaker 1: haven't lent them any money. We don't trade f t
Speaker 1: T on on the spot exchange or the futures exchange. So, um,
Speaker 1: we we're in the clear on this one fortunately. Um.
Speaker 1: You know, we're very conservative business in terms of our operations.
Speaker 1: You know, we don't operate hedge fund on the side.
Speaker 1: There are no uh you know, strange relationships like that.
Speaker 1: We're not trading with clients funds. We're not lending outcience
Speaker 1: funds you know, and they don't know about it. Um.
Speaker 1: So we're a relatively conservative business. You know, we've we've
Speaker 1: been around for eleven plus years. So you know, I think, um,
Speaker 1: people should really look at this space, you know, when
Speaker 1: they're looking at a new venue to trade at, you know,
Speaker 1: look at that history, look at whether they've done something
Speaker 1: like proof of reserves, you know, which cracking is done
Speaker 1: twice in the last year. Look at their longevity in
Speaker 1: the space. You know. I think the bear market is
Speaker 1: really the tide going out, and you see who's swimming
Speaker 1: naked when that happens. And some of these newer venues
Speaker 1: they're seeing their first bear market for the first time,
Speaker 1: and they're getting called out and it's become very apparent.
Speaker 1: You know, who's swimming naked. So who is swimming naked?
Speaker 1: Are crypto funds next hedge funds for example? You know,
Speaker 1: there's a lot of leverage out there. I don't think
Speaker 1: we've seen the end of it. I think there could
Speaker 1: still be some some other quote unquote liquidity crises to come.
Speaker 1: You know, I think there's are I think that's a
Speaker 1: euphemism for, you know, sort of an insolvency. I think
Speaker 1: that um. You know, people are marking some of these
Speaker 1: really liquid assets like FTT for example, which are highly centraled,
Speaker 1: centrally owned and controlled. Um, they're marking at them value,
Speaker 1: you know, when when the reality is maybe they should
Speaker 1: be marked at the value because the market is so
Speaker 1: thin you couldn't sell all that if you had to,
Speaker 1: you know, it's heavily centralized in the control um, so
Speaker 1: there's an extreme risk here, you know. And what we
Speaker 1: saw in this case with Binance and ft X was
Speaker 1: that Binance, a competitor of f t X, owned a
Speaker 1: huge supply of this token that m f t X
Speaker 1: was using as collateral to borrow against and U. When
Speaker 1: that when that asset started declining in value, you know,
Speaker 1: I'm sure they started getting margin calls, and you know,
Speaker 1: it turns out that they just didn't have the money,
Speaker 1: you know, I think to to make good on those loans.
Speaker 1: Al Right, Well, the situation continuing to unfold. Really appreciate
Speaker 1: you joining us to share your perspective on it. Crack
Speaker 1: and co founder outgoing CEO Jesse Powell, thank you. Some
Speaker 1: other stories were following. In China, the world's largest iPhone
Speaker 1: factory will still face some tough COVID restrictions. The city
Speaker 1: of Jung Joe ended a lockdown in the district where
Speaker 1: the plant is located, but some areas are still considered
Speaker 1: high risk, including one where the Fox con factory is.
Speaker 1: The restrictions have led Apple to warn Little Ship fewer
Speaker 1: iPhones than anticipated in the US, the likelihood of a
Speaker 1: prolonged housing slowdown is rippling through the industry. Redfin is
Speaker 1: shutting down its home flipping business and laying off more
Speaker 1: than six workers. That's about of the staff. Since the
Speaker 1: end of April, the company has reduced his workforce by
Speaker 1: Here's what CEO Glenn Kellman told me back in August
Speaker 1: about that first wave of layoff. Back then, we laid
Speaker 1: off six percent of our workforce and I'm the one
Speaker 1: accountable for that. I feel so ashamed about it. I
Speaker 1: was so blue. I still am, but it's what we
Speaker 1: had to do to run a profitable business. And now
Speaker 1: I think we feel more optimistic about the future, but
Speaker 1: we're still running on an ice edge. And Tesla CEO
Speaker 1: Elon Musk sold more than three point nine billion dollars
Speaker 1: worth of shares in the electric car maker just days
Speaker 1: after closing his buyout of Twitter. He's now unloaded about
Speaker 1: thirty six billion dollars worth of shares in the company
Speaker 1: in the last year. According to Gen Munster of Luke
Speaker 1: Venture's quote, he's preparing for Twitter to be a money
Speaker 1: hold and that does it. For this edition of bloom
Speaker 1: Brick Technology Thursday, we've got a very special lineup AMD
Speaker 1: CEO Lisa Sue will be joining us A Lee Lee
Speaker 1: and Jenny left Court, some of the most prolific venture
Speaker 1: capitalist It's going to be a very special special show
Speaker 1: for me, and I'm gonna try my best to get
Speaker 1: through it um and I hope you all will watch.
Speaker 1: Thank you so much for tuning into this edition of
Speaker 1: Bloomberg Technology. I'm Emily Changing in San Francisco. This is
Speaker 1: Bloomberg