Speaker 1: From the heart of where innovation, money and power collive
Speaker 1: in Silicon Valley and beyond. This is Bloomberg Technology with
Speaker 1: Emily Jay. I'm Emily Chang in San Francisco, and this
Speaker 1: is Bloomberg Technology. Coming up in the next hour to court,
Speaker 1: Musk goes. Twitter's lawyers say his termination of the deal
Speaker 1: was wrongful. We will talk to a former Twitter insider
Speaker 1: about where the legal saga goes from here. Claus Peloton's
Speaker 1: uphill battle continues. The Connected fitness company will now stop
Speaker 1: making bikes in house shares jumping on the news. We're
Speaker 1: gonna have all the details and funding for crypto startups
Speaker 1: plummeted last quarter. We'll ask Light Speed Venture partners why
Speaker 1: they are planning to double down on the blockchain and
Speaker 1: so coy is Jess Lee will join us to talk
Speaker 1: about their new plan to hunt for what they call
Speaker 1: outliers and put one million dollars behind these new ideas.
Speaker 1: I want to bring in Jason Goldman, now one of
Speaker 1: the founding members of Twitter and former White House Chief
Speaker 1: Digital Officer under President Obama for some insider outsider perspective. Jason,
Speaker 1: your timing is impeccable. Um look officially this is headed
Speaker 1: to Delaware court. Does anybody win in the scenario? No
Speaker 1: matter what happens. Definitely the lawyers win. Uh. You know,
Speaker 1: the lawyers are excited when they describe a case as
Speaker 1: being unprecedented and complicated. That's definitely code for there's going
Speaker 1: to be unprecedented legal fees. So they're they're said, everyone
Speaker 1: else is a loser in this. For sure. Elana shown
Speaker 1: he can't be trusted to execute a signed deal. Uh.
Speaker 1: The board is shown that they have no confidence along
Speaker 1: term future of the company and are now going to
Speaker 1: Delaware to consummate a transaction with a bad faith actor,
Speaker 1: and the employees are left in limbo wondering what the
Speaker 1: future of the company will hold. So look last week
Speaker 1: when this happened, Att Taylor, the chairman of Twitter Boars,
Speaker 1: said that you know they're committed to closing the transaction. Uh,
Speaker 1: they plan to pursue legal action. Now here we are
Speaker 1: seeing them pursue this legal action. Then that Ev Williams
Speaker 1: getting into the frame. Obviously, I know you and have
Speaker 1: worked very closely together in those early days. Responding to
Speaker 1: Brett saying, I'm sure there are legal and fiduciary reasons
Speaker 1: you have to say that, But if I was still
Speaker 1: on the board, I'd be asking if we can just
Speaker 1: let this whole ugly episode blow over. Hopefully that's the
Speaker 1: plan and this is ceremony. What do you think the
Speaker 1: plan actually is? And is this ceremony? No? I mean
Speaker 1: at this point that the board has to sue and
Speaker 1: try to get the agreement agreed to enforce, like they
Speaker 1: they have no choice as the fiduciary is to do
Speaker 1: anything but that. Um. I think whatever is I think
Speaker 1: what I is expressing was I what was? What I
Speaker 1: agree as well is that I wish the board had
Speaker 1: had more insight at the beginning of this to realize
Speaker 1: that they were dealing with someone who just wasn't serious
Speaker 1: and didn't have a real plan for what to do
Speaker 1: with the company. Uh and staid led by Jack, they
Speaker 1: kind of became besotted with this idea of of Ellen
Speaker 1: on the company. Uh And you know, the first step
Speaker 1: of avoiding a trap is knowing that it's there, and
Speaker 1: the board just simply didn't realize that they were walking
Speaker 1: into one and striking and deal with Ellen in the
Speaker 1: first place. So why do you think Ellen actually did
Speaker 1: this in the first place. You know, there's one venture
Speaker 1: capitalists who pointed to the idea that he just wanted
Speaker 1: to sell some Tesla stock. What do you think the
Speaker 1: real motivation was. I think he enjoys using Twitter and
Speaker 1: is addicted to the service and thought for a while
Speaker 1: it would be it would be fun to own it.
Speaker 1: I also think if you look at the proxies filing
Speaker 1: statement that Twitter filed on the deal, that they were
Speaker 1: they had assigned agreement to just get Ellen on the
Speaker 1: board and have a standstill agreement where you would own
Speaker 1: more no more than fiftent of the company. Uh. And
Speaker 1: then he had a conversation with Jack on the same
Speaker 1: day that that agreement was announced, and it quickly pivoted
Speaker 1: to I should just own the company as a whole.
Speaker 1: I think that's one of the reasons why this deal
Speaker 1: is also likely to settle, is that there's probably a
Speaker 1: lot of conversations between Ellen and the company in the
Speaker 1: pre agree meant phase that they don't want to come
Speaker 1: out in discovery, and so this is something that ultimately
Speaker 1: I don't think will be decided by the courts, but
Speaker 1: will be decided in a settlement between lawyers. Okay, but
Speaker 1: I wonder how this plays out, you know, if Elon
Speaker 1: Musk still ends up having to hold up his end
Speaker 1: of the deal in Twitter quote unquote wins. Is that
Speaker 1: good for anyone? No, it's not good for anyone the price,
Speaker 1: it's not good for Twitter. If Elon ends up owning
Speaker 1: the company because he doesn't have a real plan for
Speaker 1: what he wants to do with it, he's revealed that
Speaker 1: over time. It's also worth noting that there were any
Speaker 1: number of Silicon Valley luminaries that lined up behind Elon
Speaker 1: owning the company uh and pledged to be equity partners. Uh.
Speaker 1: You know, whether that's Andrews and Horowitz or Sekoya or
Speaker 1: DFJ or Free Speech Advocate, the Guitar Sovereign Wealth Fund,
Speaker 1: all of those folks have gone remarkably silent in terms
Speaker 1: of their belief in Elon as the ultimate owner of
Speaker 1: this company, because in his conversations he showed he wasn't
Speaker 1: serious about what he would do with it. So Elon
Speaker 1: owning it is good. A settlement is unlikely to equal
Speaker 1: any amount of value that equals the damage done and
Speaker 1: the real the real problem is that there's actual employees
Speaker 1: who want to make a better product and want to
Speaker 1: make the company better for the future, but they just
Speaker 1: don't have the leadership that will enable them to do that.
Speaker 1: Let's be clear. I mean, there are so many users,
Speaker 1: including Elon Musk, who love Twitter, love using Twitter, but
Speaker 1: you know, Twitter over so many years, just hasn't been
Speaker 1: able to parlay that into a significantly bigger business. What
Speaker 1: would your plan be to increase engagement, to drive more revenue,
Speaker 1: to increase the number of users. Well, let's be clear,
Speaker 1: I'm not here auditioning for any any job at Twitter.
Speaker 1: I think what I think what the board needs to
Speaker 1: do at at this at the end of this juncture
Speaker 1: is find new leadership. That's not a job I'm auditioning for.
Speaker 1: What they I think they need to do is look
Speaker 1: at what users that have found tremendous value from it
Speaker 1: and build engagement around it. I don't think that the
Speaker 1: company is one silver bullet away or one feature away,
Speaker 1: UM from fixing that. You're three that it's on um,
Speaker 1: but it's it's it's obviously something that's always had cultural
Speaker 1: value and cultural residence, and it's something that I think
Speaker 1: UH continues to play a role in global politics, in
Speaker 1: the global conversation. You know, one one point on that
Speaker 1: is we've spent months arguing what Ellen has meant about
Speaker 1: free speech online, and he's slowly evolved that viewpoint from
Speaker 1: just being mean anything to comply with legal requirements and
Speaker 1: local regimes. In the meantime, while we've been debating trying
Speaker 1: to tease out any meaning from what Elon's position on
Speaker 1: free speech is, Twitter is actually in court in India
Speaker 1: trying to push back on an authoritarian an authoritarian creep
Speaker 1: into free speech laws in that country. And so there's actual,
Speaker 1: real stakes at play here, and the company is fighting
Speaker 1: good fights around the world. It's just that they're having
Speaker 1: to do so now under this cloud of Elon's acquisition.
Speaker 1: Real stakes. Indeed, Jason Goldman, one of the founding members
Speaker 1: of Twitter, Former White House Chief Digital Officer Jason as
Speaker 1: always thank you for your insights. Meantime, bargain hunters might
Speaker 1: be will underwhelmed by Amazon's two day Prime Day sale.
Speaker 1: The annual event began today, but many sellers are minimizing
Speaker 1: their discounts to cover their own soaring costs. Prime Day
Speaker 1: helps Amazon lock in shoppers before the holidays and deepen
Speaker 1: its relationships with existing customers with deals on Amazon gadgets
Speaker 1: like Echo Now, Peloton making a major strategic shift to
Speaker 1: cut costs and streamline its strategy. The company will stop
Speaker 1: building exercise bikes and treadmills at its own factories, a
Speaker 1: big bet of the former leadership team. Peloton making this
Speaker 1: change after several months of turmoil. Shares of the company
Speaker 1: are down so far this year. Bloomberg Smart German, who
Speaker 1: of course covers Peloton with us now for more so
Speaker 1: talk to us about the significance of a pretty dramatic
Speaker 1: shift here. Mark. This is an end to end overhaul
Speaker 1: of their all operation. So just to set the scene,
Speaker 1: let's look at Apple for a second. So Apple obviously
Speaker 1: designs the iPhone and their other products, but what most
Speaker 1: people don't know is that they have a third party
Speaker 1: called fox Con that manufactures it. Right, so Apple works
Speaker 1: hand in hand with Fox want to actually build those devices,
Speaker 1: They don't do it in house. Peloton, however, did both.
Speaker 1: They built a big portion of their bikes in house
Speaker 1: using their own facilities, and also contracted out another portion
Speaker 1: of their devices to different technology manufacturers in Asia, one
Speaker 1: called Rexon, one called Quanta, one called Pegatron. So what
Speaker 1: Peloton is now going to do is they're seizing their
Speaker 1: in house production operations and they're moving entirely to contract manufacturers.
Speaker 1: That's going to simplify their entire business model because instead
Speaker 1: of having two distinct supply chains, they're not gonna have
Speaker 1: one supply chain. They're also unfortunately laying off about five
Speaker 1: seventy workers at their in house facilities, and they also
Speaker 1: believe this is going to up product quality as there's
Speaker 1: been some issues there because all of the in house
Speaker 1: quality control role is going to be in one place.
Speaker 1: You're not going to be split between two different production
Speaker 1: development styles. So WILLNUS solve Peloton's problems? That's the question. Well,
Speaker 1: Peloton has many many problems. This will solve one of them,
Speaker 1: I think, right. One of their problems was the ability
Speaker 1: to gauge supply and demand and tie that to production. Right, So,
Speaker 1: as we know, Peloton's downfall really happened after they overestimated
Speaker 1: that demand would continue to occur even as the pandemic
Speaker 1: slowed down. That left them with an over abundance of
Speaker 1: inventory and nearly created the company into the ground. We
Speaker 1: see what's happened to their stock price. If they had
Speaker 1: had only contract manufacturers, that probably would have been easier
Speaker 1: to resolve because now they're not owning all that inventory
Speaker 1: in house. They're working with a third party and it
Speaker 1: will give them better supply and demand balance and allow
Speaker 1: them to better optimize their supply chain. But Peloton's problems
Speaker 1: go far beyond their supply chain. There's issues with pricing.
Speaker 1: There's issues with how much their subscription costs. There's issues
Speaker 1: of people not wanting to even just buy their equipment.
Speaker 1: And right there is competition, obviously, Apple Fitness Plus, there's
Speaker 1: Nordic Track, There's so many other companies. There's Tonal, there's
Speaker 1: the question if they're even hitting the market with the
Speaker 1: correct products. Their product development is taking a long time.
Speaker 1: They've been developing this rowing machine now for almost three
Speaker 1: or four years. The Peloton Guide their new TV connected
Speaker 1: device that has not gone off to a hot start.
Speaker 1: So to answer your question, this solves one of their problems,
Speaker 1: but there's many more to go. It's sort of like
Speaker 1: whack a mole, all right, Bloomberg, Smart German, thank you
Speaker 1: for sharing your insights there with us. Whack a mole. Indeed, Okay,
Speaker 1: Shares of Canoe starring at one point doubling in value
Speaker 1: in Tuesday's session. This after the struggling Electric Vehicles startup
Speaker 1: one an order for vans from Walmart. Canoe recently moved
Speaker 1: its headquarters to Walmart's hometown of Bentonville, Arkansas. In May,
Speaker 1: the company warned that there was substantial doubt about its
Speaker 1: long term future, but now at least some investors seem
Speaker 1: a little more optimistic coming up. There's been a major
Speaker 1: slowdown in crypto funding this year. We're gonna chat about that,
Speaker 1: with one venture capitalist doubling down with a new team
Speaker 1: focused solely on investing in the blockchain, a story we
Speaker 1: continue to watch. Delivery company go Puff is cutting ten
Speaker 1: percent of its workforce and closing dozens of warehouses. This
Speaker 1: an effort to conserve cash as the economy slows down.
Speaker 1: The job cuts will effect about people in corporate and
Speaker 1: warehouse jobs in the United States. Go Puff will shut
Speaker 1: seventy six warehouses, or about twelve percent of its network. Meantime,
Speaker 1: Lightspeed Venture Partners just raised seven billion dollars four and
Speaker 1: early and grow stage entrepreneurs. The firm also just announced
Speaker 1: light Speed Faction, a new team fully dedicated to blockchain investments.
Speaker 1: Venture capitalists have cooled on crypto recently, with Pitchbook reporting
Speaker 1: a thirty one quarterly decline in crypto investments through June.
Speaker 1: Bajel so Maya is a partner at light Speed Venture
Speaker 1: Partners and joins us now from New Delhi. So, obviously
Speaker 1: you just raised seven billion new dollars in fresh venture capital.
Speaker 1: You know, talk to us about the process of raising
Speaker 1: this funding, especially in a very very difficult macro environment. Yeah, thanks, Emily. Well,
Speaker 1: you know, I think getting getting this done is really
Speaker 1: a reflection of the strength of the franchise and and
Speaker 1: really the quality of founders that we've been fortunate to
Speaker 1: work with, and an LP base that sophisticated and has
Speaker 1: seen through multiple cycles, is very committed to the asset class.
Speaker 1: And so we're really fortunate to have raised this capital
Speaker 1: at a time that I think we'll hopefully prove to
Speaker 1: be a really good vintage for for venture and for
Speaker 1: founders at a building for the next seven to ten years.
Speaker 1: So where are you plan to deploy this and how
Speaker 1: fast given these tumultuous market conditions. Yeah, we typically target
Speaker 1: a three year new investment period for our funds, Emily,
Speaker 1: And you know, one of the reasons for the scale
Speaker 1: of this capital bases over the last twenty years really
Speaker 1: in two thousand. Light Speed believed that innovation and technology
Speaker 1: entrepreneurship would be a global phenomenon, and it was a
Speaker 1: little bit contrary at that time, but as a result,
Speaker 1: the firm has built a presence. Today we have seventy
Speaker 1: investors across twelve offices in six countries, and so there's
Speaker 1: a lot of opportunity globally. UM. The scope of the
Speaker 1: sectors that we invest in has also increased now with
Speaker 1: with pharma and biotech in addition to enterprise, consumer, fintech, crypto,
Speaker 1: UM and the growth practice, and so I think we're
Speaker 1: seeing a lot of opportunity in these areas. Undoubtedly, the
Speaker 1: market for growth is going to be is already slow
Speaker 1: and we think will remain that way, but but we'll
Speaker 1: be patient. So talk to us about the global trends
Speaker 1: you're seeing. For example, how are you seeing the you know,
Speaker 1: slow down impact to startups in India? Is it similar
Speaker 1: to what we're seeing here in the United States, or
Speaker 1: you know, are these macro conditions playing out differently around
Speaker 1: the globe. Yeah, it's a really interesting question. I think
Speaker 1: what we see is the macro conditions actually play out
Speaker 1: differently across sectors and differently across countries. So, for example,
Speaker 1: even within the US consumer has seen some impact really
Speaker 1: early on enterprise, not just yet. Obviously, sectors like pharmland
Speaker 1: biotech will have very different dynamics somewhat similar with countries.
Speaker 1: You know, in India, for example, I don't think we're
Speaker 1: going to see a recession. The country is growing at
Speaker 1: about seven a half percent UM. But what we are seeing,
Speaker 1: and and we've been used to inflation again in the
Speaker 1: high single digit UM figures, and and the central bank
Speaker 1: is somewhat used to managing that level of inflation. But
Speaker 1: what we are seeing is is an outflow of foreign investment,
Speaker 1: as capital moves out of what have perceived as risk
Speaker 1: your countries and emerging markets, and that has an impact
Speaker 1: on the financing environment. Four startups more so right now
Speaker 1: than the macro's light speeds, invested in thirty some companies
Speaker 1: that are now public companies. How long do you think
Speaker 1: this downturn lasts? When does the I p O window reopen?
Speaker 1: We have thirty seconds. I wish we had a crystal ball.
Speaker 1: Feels like it's gonna be longer than the previous downturns
Speaker 1: given the multitude of factors that play emily, So you
Speaker 1: know we're thinking certainly well into interesting. All right, Bajel Somya,
Speaker 1: thank you for joining us. I know it's a very
Speaker 1: early morning for you there in New Delhi. Appreciate you
Speaker 1: wake up. Light Speed Venture Partners will keep watching. Welcome
Speaker 1: back to Bark Technology, Emily Changing in San Francisco. I
Speaker 1: want to get back to the latest on Twitter and
Speaker 1: Elon Musk. In the last hour, Twitter has sued Musk
Speaker 1: and moved to force the world, which is man to
Speaker 1: consummate is proposed forty four billion dollar buyout of the
Speaker 1: social media platform. Are at Ludlow back here with the headline.
Speaker 1: So we've read some of the fine print. Now what
Speaker 1: is Twitter arguing in this fine Yeah, they're basically saying
Speaker 1: Musk does not have a right to walk away to
Speaker 1: an agreement that had very few conditions. They're saying he
Speaker 1: agreed to fifty four dollars twenty cents to share forty
Speaker 1: four billion dollar takeover and that he can't walk away.
Speaker 1: We have this quote from the court fighting we can
Speaker 1: bring up on screen. Musk apparently believes that he, unlike
Speaker 1: every other party subject of Delaware contract law, is free
Speaker 1: to change his mind trash the company disrupt its operations,
Speaker 1: destroy stockholder value, and walk away in twitters basically pointing
Speaker 1: out words fighting words and just because the stocks generally
Speaker 1: have fallen down in the sector, including social media socks,
Speaker 1: he can't just have buyer's remorse is their basic arguments.
Speaker 1: So does Twitter have a case or who is better? Right?
Speaker 1: So most lawyers that were spoken to a Boomberg think
Speaker 1: that Twitter do. It comes down to material adverse effect.
Speaker 1: Must's argument is that there wasn't enough information handed over
Speaker 1: on bots, and this is where the court case is
Speaker 1: going to be fought. Did they or did they not
Speaker 1: share enough data? Material adverse effect? Meaning did them withholding
Speaker 1: data on bots or not sharing enough or what they
Speaker 1: did share actually alter the value of the deal, and
Speaker 1: if it did, the musque could win. But I think
Speaker 1: most lawyers would see Twitter has a good chance here.
Speaker 1: All right, thank you for meantime. Sequoia Capital may have
Speaker 1: a million dollars for your idea the story. Adventure capital
Speaker 1: firm is now accepting applications for its deed stage catalysts
Speaker 1: called ARC. They say they're looking to fund outlier founders
Speaker 1: and teach them how to make their ideas a reality.
Speaker 1: Justly as a partner at Sequoia Capital and joins us
Speaker 1: now to tell us more. Just great to have you
Speaker 1: with us. So walk us through the vision for ARC
Speaker 1: and how you think this sets apart what Sequoia is
Speaker 1: trying to do here. Thanks for having the Emily. ARC
Speaker 1: is Sequoia's new seed stage catalyst for outlier founders. We
Speaker 1: offer three things. A million dollar investment from Sequoia as
Speaker 1: well as seven weeks of programming on foundational company building topics.
Speaker 1: And you're working alongside a cohort, a community of really
Speaker 1: exceptional people around at the same stage as you. Um.
Speaker 1: The reason we're doing this is we know it takes
Speaker 1: a lot more than just money to create a category
Speaker 1: defining company, and we know founders want company building help
Speaker 1: and Sequoia has had the privilege of working for over
Speaker 1: fifty years with some of the best founders. We've tried
Speaker 1: to do is take all those lessons, all those mistakes,
Speaker 1: the journey of all the other founders that we've worked with,
Speaker 1: and boiled them down into foundational company building concepts, everything
Speaker 1: from product to customer obsession to culture to how to hire.
Speaker 1: And so that's the seven weeks of of Jampack programming
Speaker 1: for arc what you can outlier founder and right abbligations
Speaker 1: are open now until July. That's right, all right, so
Speaker 1: you've got a few more days. So when you say
Speaker 1: outlier founders, what exactly do you mean? Sekoia has done
Speaker 1: a lot of really innovative things in the past, for example,
Speaker 1: your Scout program to try to find you know, unearthed
Speaker 1: new entrepreneurs and new ideas. You know, why do you
Speaker 1: think you need to do this as well to find
Speaker 1: those outliers? Hm? You know, the venture market has been
Speaker 1: continuously evolving over the years, and I think there are
Speaker 1: a lot more founders coming into the space as investors
Speaker 1: and a lot more product thinking and innovation. What can
Speaker 1: affirm offer beyond money which is actually a commodity and
Speaker 1: a board member? And so we often think about what
Speaker 1: do founders need? There are customers, how we work backwards
Speaker 1: from that and figure out what they need help with
Speaker 1: and the number one request we get and the number
Speaker 1: one thing I think Sequoia delivers is help with actual
Speaker 1: company building. And so we really tried to boil down
Speaker 1: everything that we've learned over the years through working with
Speaker 1: some of the best into the core things that you
Speaker 1: kind of for example, when I was a founder. There
Speaker 1: are things I wish I could have one back in
Speaker 1: time and told my younger self about how to run
Speaker 1: a company. That is a lot of what ARC teaches. Now,
Speaker 1: every company gets a million dollars, what is Sequoia's stake
Speaker 1: and what is the chance for follow on funding? Uh?
Speaker 1: So the it varies from a company to company where work.
Speaker 1: Some are precede to people with an idea uh and
Speaker 1: then some are actually a little bit further along and
Speaker 1: we put one million dollars into their existing seed round
Speaker 1: that maybe they've already rang a race. So it's it's
Speaker 1: a little bit of a range, um. But the focus
Speaker 1: is really on the how to build an enduring company,
Speaker 1: a company that lasts for decades, not just you know,
Speaker 1: how to get to the next quarter or the next
Speaker 1: fundraising milestone. Um. So there's a little bit of of
Speaker 1: a range. So, given this very tumultuous macro environment that
Speaker 1: we now find ourselves in, how is that changing what
Speaker 1: you're looking for, what you're looking to fund at the
Speaker 1: stage stage or the early stage or the growth stage.
Speaker 1: I mean, Sequoia really runs the gamut. Yeah, I would
Speaker 1: say that we've seen um multiple compression and valuations come down.
Speaker 1: I don't think we've seen earnings compression yet, and really
Speaker 1: I think consumers are feeling poorer and that's going to
Speaker 1: trickle down into the way people spend, in the behavior
Speaker 1: of UM buyers, both on the consumer side and the
Speaker 1: enterprise side. That said, Sequoia has been designed to outlast
Speaker 1: the cycles in the tech industry. The purposes of our
Speaker 1: firm is to look beyond those short term fluctuations, and
Speaker 1: so we're looking for the same thing we were looking
Speaker 1: for before, which is founders that have a unique insight,
Speaker 1: who have a lot of grit to endure these ups
Speaker 1: and downs, as well as just the difficult journey of
Speaker 1: of starting a company. And we're looking for large markets
Speaker 1: where you think you can build almost like define a
Speaker 1: category from scratch, create a new one. What does Sequoias
Speaker 1: read on the macro environment right now and how bad
Speaker 1: this will be for tech? I don't have a crystal ball.
Speaker 1: That said, I do think that, like I said, we've
Speaker 1: just started to see multiple compression and not yet earnings compression.
Speaker 1: I really think people are um. You know, we basically
Speaker 1: the public market has returned to historical valuations, the revenue multiples,
Speaker 1: but earnings have not. I don't think we've seen the
Speaker 1: full impact of consumers feeling while gas is really expensive,
Speaker 1: my company had layoffs. I can't buy as much enterprise software,
Speaker 1: so I think that may still becoming. That's what we've
Speaker 1: been forecasting for our founders. We called in all hands
Speaker 1: recently where we we gathered all of our founders and
Speaker 1: we walked them through what we were seeing in the market,
Speaker 1: as well as how to think about forecasting, financial planning,
Speaker 1: and how to lead in uncertain times. So that's that's
Speaker 1: what we expect. As for how founders should react, that
Speaker 1: really depends. It's on a case by case basis. Some
Speaker 1: founders are in a great cash position and should be
Speaker 1: leaning in very aggressively. What we see in these down
Speaker 1: cycles tends to be that hiring freezes everyone sort of
Speaker 1: pauses and reflects, and it actually becomes easier to get
Speaker 1: higher concentration of talent versus before you were competing with
Speaker 1: the fang companies with every single startup seed stage, everyone
Speaker 1: was hiring and and now I think for the mission
Speaker 1: driven for the people who are venturing out of jobs, now, uh,
Speaker 1: it's actually possible to to get a greater concentration of talent,
Speaker 1: and then some folks are in a not so great
Speaker 1: cash position and may need to take more drastic action.
Speaker 1: But it's really case by case, and so we walk
Speaker 1: our founders through all of that. Sequoia is famous for
Speaker 1: its R I P. Good Times message, which you gave
Speaker 1: to entrepreneurs in two thousand and eight, the height of
Speaker 1: the financial crisis. What's the headline of the presentation today
Speaker 1: or what would it be today? It was called adapting
Speaker 1: to Endure. It was about how to build those long term,
Speaker 1: enduring companies, how to outlive the cycle. The founder of Sequoia,
Speaker 1: Don Valentine, he he had a license plate that said
Speaker 1: varoked on it, which is the German word for crazy
Speaker 1: or insane, and he, you know, some of the wisdom
Speaker 1: that gets passed down from him as well as to
Speaker 1: regeneral throughout the partnership has been that tech moves in
Speaker 1: these cycles, um their four phases. The first, well, the
Speaker 1: one we were just in, was called varoked. It is
Speaker 1: the hype, the excess, the the high multiples like parties,
Speaker 1: you know when lambeau and then there's a correction, quite
Speaker 1: sharp correction where people tend tend to freeze and then uh,
Speaker 1: you know, of course correction and then it slowly comes back,
Speaker 1: and then it happens all over again. That's sort of
Speaker 1: what we've been seeing play out over over decades. It
Speaker 1: is compressed in certain industries like crypto. I would say
Speaker 1: the twelve year bull market becomes a four year bull market.
Speaker 1: But the best companies are often formed in that correction phase.
Speaker 1: It's the founders who really our mission driven. They want
Speaker 1: to start their company no matter what they're they're they're courageous,
Speaker 1: they're brave, they have the grit to alice that they
Speaker 1: can get that concentration of great talent uh and they
Speaker 1: have fewer competitors. So we believe at Tekoia that now
Speaker 1: is a great time to start a company, and that's
Speaker 1: why we launched an mark now last year. Sekoia made
Speaker 1: a big break with tradition to do away with traditional
Speaker 1: venture capital timelines and in some cases keep money invested
Speaker 1: longer in companies your portfolio companies going public. Some of
Speaker 1: these companies have had a tough time in the public markets. Airbnb, Door, Dash,
Speaker 1: robin Hood. Is that strategy evolving at all given these
Speaker 1: tumultuous chimes and our LPs reacting at all are asking
Speaker 1: for their money back or out sooner. So the purpose
Speaker 1: of the Sequoia Capital Fund was actually to look beyond
Speaker 1: those short term fluctuations. It allows us to be the
Speaker 1: long term partner, the the shareholder, the long term partner,
Speaker 1: the you know, we don't have to immediately distribute after
Speaker 1: the I p O to lock in some return for
Speaker 1: our LPs. It also actually lets this generate superior returns
Speaker 1: for our LPs. We get to capture the compounding values.
Speaker 1: Some of the best companies Google, Cisco, Airbnb, the companies
Speaker 1: we had the privilege of working with for for a
Speaker 1: long time. We have a lot of information about how
Speaker 1: well they're doing and the real like what those founders
Speaker 1: are truly like, and so we think we're in a
Speaker 1: better position to manage some of the distributions for LPs.
Speaker 1: And the founders really love that that we are that
Speaker 1: long term partner. So the strategy has not changed. Okay, um,
Speaker 1: now I have to ask you. You're on the board
Speaker 1: of all Rays. You mentioned your a founder yourself. There's
Speaker 1: been a lot of concerns about women backsliding in the pandemic,
Speaker 1: and I wonder if those concerns continue. Uh, if there's
Speaker 1: concerned about women backsliding in a downturn. Yeah, this is
Speaker 1: a deeply personal issue for me. I was a female
Speaker 1: founder I UM was working on a product targeted at women,
Speaker 1: and it was very hard to fundraise. I never pitched
Speaker 1: a single woman investor, and I made the connection. I
Speaker 1: realized that the complexion of who makes funding decisions affects
Speaker 1: what problems and what customers get served in the world
Speaker 1: by the tech industry. That's part of what motivated me
Speaker 1: to move to venture and to co found All Rays
Speaker 1: alongside thirty other amazing women inventure and female founders. Certainly,
Speaker 1: the percentage of women writers at VC firms has gone up.
Speaker 1: I think it's moved from nine to in the last
Speaker 1: four years. There are some steps forward, However, there are
Speaker 1: also some steps back overall for women in this country.
Speaker 1: I think, you know, the overturning of Roe v. Wade
Speaker 1: is a tragic step backwards. I think a lot is
Speaker 1: going to fall on the tech industry, on innovative founders,
Speaker 1: on employers to help move the ball forward for women.
Speaker 1: All right, Well, appreciate you sharing your thoughts on all
Speaker 1: of that with us. Obviously, you have a very long
Speaker 1: history in this industry. Um Sequoia Capitals. J Lee Chess.
Speaker 1: Great to have you with us. All right, coming up,
Speaker 1: bitcoin miners feeling that heat with a Texas power grid
Speaker 1: near the brink. We're going to talk about the impact
Speaker 1: of the heat wave in the Lone Star state that
Speaker 1: has become a hub for digital assets. That's next. This
Speaker 1: is Bloomberg time now for our crypto report. Joining me now,
Speaker 1: Blue or Shannali Bostic in the middle of crypto winter, Shanale.
Speaker 1: Of course, we've been talking about startup funding for crypto
Speaker 1: falling off. You know, talk to us about the where
Speaker 1: the tide is going here? Yeah, I think about the
Speaker 1: massive disconnector seeing here. Emily, it's you. You have billions
Speaker 1: of dollars, ten billions of dollars in the first quarter
Speaker 1: a loan raised for venture capital in the crypto space.
Speaker 1: But the funding of the startups themselves has really fallen off,
Speaker 1: and you really started to see that in the second
Speaker 1: quarter of this year, where funding dropped by thirty one
Speaker 1: percent according to pitchbook data. There were some venture capitalists
Speaker 1: that spoke to Bloomberg that gave more specifics on what
Speaker 1: that looks like at the seed stage. It's not as
Speaker 1: dramatic of a drop, but as you're starting to get
Speaker 1: into Series A and later rounds, you could see a
Speaker 1: fifty or seventy percent drop in valuations, which is what
Speaker 1: is making venture capitalists so nervous here. You don't want
Speaker 1: to catch a falling knife. So until you see a
Speaker 1: little bit more stabilization in the industry in terms of
Speaker 1: or prices will go as well as a shakeout here
Speaker 1: in terms of the tens of projects that will make
Speaker 1: it through the cycle, it's going to be hard to
Speaker 1: see tons of money being put to work that we
Speaker 1: are seeing some high profile names still being funded. I
Speaker 1: know you and I, for example, spoke to Magic Eden
Speaker 1: an n f T marketplace just weeks ago. But again
Speaker 1: these are one off situations and not the norm in
Speaker 1: this environment. How easy is it gonna be to spend
Speaker 1: this money that that these venture capital funds have raised,
Speaker 1: Andrews and Narrow, it's Katie Han. We're just talking to
Speaker 1: Jess Leave from so Koya. Are they gonna be able
Speaker 1: to put all the money they raised it's a fund
Speaker 1: crypto to work. Yeah, it's a great question because you
Speaker 1: have to see if the definitional definition of crypto will
Speaker 1: change by any means, are you going to start to
Speaker 1: put money towards projects that are so Lana based or
Speaker 1: are you going to put money towards projects that are
Speaker 1: more Web three based. You see gaming and crypto become
Speaker 1: a very popular popular environment here, so you can maybe
Speaker 1: see things start to change in terms of definitions of crypto.
Speaker 1: But again we're looking at the price the bitcoin. Bitcoin
Speaker 1: is of course still king here Emily. When do prices stabilize?
Speaker 1: Until that happens, it's hard to see massive amounts but
Speaker 1: to work all right, Shannali Bask, thank you for that update.
Speaker 1: Over five hundred of the top CEOs in the United
Speaker 1: States have joined an effort by code dot org urging
Speaker 1: governors and state education officials to ensure that all US
Speaker 1: and elementary and high school students have the chance to
Speaker 1: study computer science. This comes as demand for talent to
Speaker 1: fill jobs in cybersecurity, data science, computer programming has skyrocketed.
Speaker 1: Many of those jobs are unfilled. Joining us for this
Speaker 1: week's Teconomic segment, Hotti part Toby, founder of code dot org,
Speaker 1: also a long time investor, tech entrepreneur yourself, You've been
Speaker 1: doing this now for nine years, nine years trying to
Speaker 1: get computer science taught in schools. How much progress has
Speaker 1: there actually been? One we started ten percent of US
Speaker 1: schools taught computer science. Now it's at fifty one. So
Speaker 1: we've now tipped it. So if you're a parent whose
Speaker 1: school doesn't your child school doesn't teach computer science, you're
Speaker 1: now in the minority. But we still want to get
Speaker 1: to the point where a hundred percent of schools teach
Speaker 1: computer science. And we're also at the point where even
Speaker 1: with all these schools teaching, and only five percent of
Speaker 1: high school students study computer science. And we want to
Speaker 1: reach every kid. So that's the next decade of work,
Speaker 1: is to get to every single student in every school.
Speaker 1: So you've got Mark Zuckerberg, Chryl Sandberg, Jeff Bezos, Sundar Pachai,
Speaker 1: and you know hundreds more who have signed this letter.
Speaker 1: What will this letter actually accomplish? Well, the first thing
Speaker 1: I wanted to say is it's it's not surprising to
Speaker 1: see folks like Tim Cook or Bill Gates or Mark
Speaker 1: Zuckerberg saying that schools should teach computer science. What's truly
Speaker 1: unique is the company's outside of the tech sector. The
Speaker 1: leading companies in retail, transportation, finance, even in coffee or
Speaker 1: toys or you know, Starbucks, Nike, has Bro, these companies, Nordstrom's, Ups,
Speaker 1: Walgreens are all getting behind computer science to show that
Speaker 1: computer science is no longer about just jobs of tech
Speaker 1: companies because every company is becoming a tech company. Every
Speaker 1: company has data science needs or cybersecurity needs. So have
Speaker 1: you gotten a response from lawmakers from the people who
Speaker 1: have the you know, capability of changing this, of adding
Speaker 1: this to a school curriculum. We've we have early signs
Speaker 1: the National Governors Association, all fifty governors are actually getting
Speaker 1: together tomorrow and we expect by Thursday that they're going
Speaker 1: to make an announcement on this topic. We don't know
Speaker 1: exactly what it's going to say, but the early signs
Speaker 1: are it's going to be tremendous. I'm hoping to see
Speaker 1: all fifty governors united behind something about computer science because
Speaker 1: this is an issue really that everybody can get behind.
Speaker 1: You've shared your story with us here over the years,
Speaker 1: but I want to remind our viewers. You know, you
Speaker 1: grew up in Iran. Your school didn't offer computer science,
Speaker 1: but you were still able to get access to a computer.
Speaker 1: It changed your life. If your school had offered computer science.
Speaker 1: Do you think your life would have been different. Well,
Speaker 1: for me, I had a father who was a physicist
Speaker 1: and a mother who was a computer scientist. So even
Speaker 1: growing up in post revolutionary Iran during the war, I
Speaker 1: was learning to code on my own. But if you
Speaker 1: think about the most underprivileged kids in today's world, the
Speaker 1: kids who are getting left behind, what's the one thing
Speaker 1: we can teach them in school that gives them a
Speaker 1: pathway ahead, or that even just gives them the confidence
Speaker 1: that I can build something, I can make something, I
Speaker 1: can I can change the world. I can be a creator.
Speaker 1: Kids wants to create, and right now they're becoming creators
Speaker 1: on TikTok or Instagram because that's easy. If they knew
Speaker 1: that they could create apps and create software, there's a
Speaker 1: whole world of opportunity that we would open up for
Speaker 1: them as well. There's also the how you know, what
Speaker 1: are schools getting right when they are trying to deliver
Speaker 1: this correct kill them and what are they getting wrong?
Speaker 1: I mean, I've got multiple children in school, and you
Speaker 1: know there there's there's this thirst for more computer science,
Speaker 1: and I even wonder if they're doing it the right way. Yeah,
Speaker 1: one of the challenges to make sure computer science is
Speaker 1: taught creatively, so it's not just about like learned, learning
Speaker 1: these things and memorizing and passing the task for more
Speaker 1: like what do you want to create? What app do
Speaker 1: you want to create? What game? What? Website? To basically
Speaker 1: draw out the natural creativity, and when it's topped that way,
Speaker 1: it also brings in diversity into the field because more
Speaker 1: students are interested in creating stuff than they are just
Speaker 1: sort of doing wrote work. So how long do you
Speaker 1: think before we get I'm pretty confident that by the
Speaker 1: end of the decade we will because there's now multiple
Speaker 1: states saying that it's going to be required for graduation.
Speaker 1: There's now five states that require computer science for graduation
Speaker 1: from high school. And when you do that, you get
Speaker 1: to you also fix the gender gap, you fix the
Speaker 1: racial equity gap. Every student learned. So this is the
Speaker 1: secret to everything pretty much. Yeah, I mean in South Carolina,
Speaker 1: for example, it's the first state that required computer science
Speaker 1: for graduation. There's now more young women in South Carolina
Speaker 1: learning computer science than the five states surrounding it. Right, Um, well,
Speaker 1: it's been wonderful to see your progress over these nine years. Um,
Speaker 1: and We'll be watching for more. Code dot org founder,
Speaker 1: how do you parto be? Thank you for joining us
Speaker 1: here in the studio that doesn't for the sedition of
Speaker 1: Bloomberg Technology. We've got a big interview coming up Tomorrow.
Speaker 1: The CEO of IBM, Arvin Krishna, will be with us.
Speaker 1: We're to talk to him about everything from the downturn
Speaker 1: to the supply chain and more. You don't want to
Speaker 1: miss it. I'm Emily Changing in San Francisco. This is
Speaker 1: Bloomberg