WEBVTT - Coinbase Earnings and Micron on Chips (Podcast) 0:00:02.240 --> 0:00:05.560 From the heart of where innovation, money and power collive 0:00:06.360 --> 0:00:10.879 in Silicon Valley and beyond. This is Bloomberg Technology with 0:00:10.960 --> 0:00:27.200 Emily Jay. I'm Emily taking San Francisco and this is 0:00:27.200 --> 0:00:29.639 Bloomberg Technology coming up in the next hour. A big 0:00:29.680 --> 0:00:33.120 miss for coin based on revenue and earnings, total assets 0:00:33.200 --> 0:00:37.360 plunging by sixty three percent. My conversation with coin based 0:00:37.360 --> 0:00:40.920 president and CEO Emily Joy right after the numbers crossed. 0:00:41.240 --> 0:00:45.080 This hour plus timing is everything. Just as the US 0:00:45.159 --> 0:00:48.240 signs the Chips Act into law to make more chips, 0:00:48.560 --> 0:00:50.400 there are signs chip demand is on the brink of 0:00:50.400 --> 0:00:54.960 a major slowdown. We'll discuss and would you rather subscribe 0:00:55.000 --> 0:00:57.480 to an electric car than own one. We're going to 0:00:57.520 --> 0:01:00.200 talk to the founder of Autonomy and Evie too, a 0:01:00.240 --> 0:01:03.320 company that allows customers to reserve their own tesla in 0:01:03.440 --> 0:01:05.640 just minutes. We will get to all of that in 0:01:05.640 --> 0:01:07.040 a moment, but first I want to stick with coin 0:01:07.040 --> 0:01:10.480 base and bringing Bloomberg Shannalibos, Sticctionnale. Let's walk through the 0:01:10.520 --> 0:01:13.560 top line numbers, miss on revenue, miss on earnings. They 0:01:13.640 --> 0:01:16.160 narrowed their user forecast, and what I thought was really 0:01:16.200 --> 0:01:20.800 interesting is the assets on the platform plunge by more 0:01:20.840 --> 0:01:24.920 than sixty three percent. I mean that seems pretty significant. Yeah, 0:01:24.959 --> 0:01:27.760 that drop off an assets, that drop off you saw 0:01:27.800 --> 0:01:31.040 in monthly transacting users, and that drop off you saw 0:01:31.040 --> 0:01:34.440 on transaction revenue. Really that's a reflection of what you're 0:01:34.440 --> 0:01:37.560 seeing at the retail business mostly there, Emily. You heard 0:01:37.600 --> 0:01:39.640 it from Emily Joy and her conversation with you, is 0:01:39.680 --> 0:01:41.680 that a lot of retail traders are on the sidelines 0:01:41.720 --> 0:01:44.640 and this is still such a pivotal business for coin base. 0:01:44.680 --> 0:01:47.119 You're seeing the stock reacting down more than five percent 0:01:47.200 --> 0:01:49.600 after hours already. Remember this is after a steep drop 0:01:49.600 --> 0:01:52.080 off this year. It has had quite a run up 0:01:52.120 --> 0:01:53.960 in the last couple of days, so it's giving a 0:01:54.000 --> 0:01:56.800 little bit of that back. You were also seeing, you know, 0:01:57.320 --> 0:02:00.760 a lot of its uh investors really reacting here. You're 0:02:00.760 --> 0:02:03.200 seeing bonds also drop, which is really interesting. You're seeing 0:02:03.200 --> 0:02:07.120 coin basis then cost of borrowing rise because bond holders 0:02:07.120 --> 0:02:09.520 are also losing a little bit of confidence there. Uh. 0:02:09.560 --> 0:02:12.120 The question is what is the forward outlook. The question 0:02:12.360 --> 0:02:16.240 is that the outlook for the third quarter also does 0:02:16.280 --> 0:02:20.200 not look so rosy. Those monthly transacting users and trading 0:02:20.280 --> 0:02:23.680 volumes are expected to be down again. So a little 0:02:23.680 --> 0:02:25.720 bit of that run up we've seen in crypto prices 0:02:25.720 --> 0:02:29.280 more recently is not enough yet to offset some of 0:02:29.280 --> 0:02:32.000 the pains we're seeing in those trading businesses over at 0:02:32.040 --> 0:02:35.280 coin base. Now here's a quick listen to part of 0:02:35.320 --> 0:02:39.520 what Emily Joy had to say. She didn't necessarily sugarcoat anything. 0:02:39.600 --> 0:02:43.360 She used the word russ herself. Take a listen. I 0:02:43.400 --> 0:02:46.400 think it was a rough quarter for most companies in 0:02:46.440 --> 0:02:50.000 the crypto space. We we obviously had some big episodic 0:02:50.000 --> 0:02:53.160 events that happened during the quarter, and so some of 0:02:53.160 --> 0:02:55.639 those asset prices shrunk, which then impacts things like the 0:02:55.680 --> 0:02:58.359 assets on platform and other numbers. Now, when I tried 0:02:58.400 --> 0:03:01.160 to ask for her her sort of forecast on you know, 0:03:01.240 --> 0:03:04.480 when this winter thaws, she said, you know, I shouldn't 0:03:04.520 --> 0:03:07.240 be prognosticating, but said that she thinks, you know, some 0:03:07.320 --> 0:03:10.000 of these are crypto industry specific factors that are driving 0:03:10.040 --> 0:03:12.040 these trends. Some of it has to do with the 0:03:12.040 --> 0:03:15.040 broader economy. When it came to hiring, yes, they did 0:03:15.120 --> 0:03:17.520 get a little over exuberant. What did you make of 0:03:17.560 --> 0:03:19.480 what she had to say. I think it's interesting, it's 0:03:19.480 --> 0:03:21.840 certainly true that a lot of other companies did feel 0:03:21.880 --> 0:03:24.440 some pain when it came to impairment charges. For example, 0:03:24.520 --> 0:03:27.720 you're getting pretty close there to a half a billion 0:03:27.760 --> 0:03:30.880 dollars in terms of impairment charges. We've seen similar things 0:03:31.160 --> 0:03:34.560 in terms of charges at micro Strategy and the Block. 0:03:35.040 --> 0:03:37.880 But what about or Block rather the black is the 0:03:37.880 --> 0:03:41.000 crypto publication, But what about um what you're seeing over 0:03:41.040 --> 0:03:42.800 there in terms of their cash burn as well? That's 0:03:42.800 --> 0:03:45.600 another half a billion dollars pretty much right there nearly, 0:03:46.000 --> 0:03:50.680 And so our own Bloomberg Intelligence analysts are saying that 0:03:50.720 --> 0:03:53.120 they're going to have to probably tighten the belt a 0:03:53.200 --> 0:03:55.920 little bit more when it comes to their cash burn 0:03:56.320 --> 0:03:58.880 given some of the top line pressures you're seeing, uh, 0:03:58.880 --> 0:04:01.720 when it comes to transaction revenues. All right, well, we're 0:04:01.720 --> 0:04:03.960 going to catch that full interview with Emily Joy later 0:04:03.960 --> 0:04:07.240 this hour. Shanali Bloomberg Shinney boss as always, thank you 0:04:08.000 --> 0:04:12.520 for your additional context there, Emily Choi coming up. Meantime, 0:04:12.520 --> 0:04:15.760 the US Justice Department is preparing to sue Google as 0:04:15.760 --> 0:04:18.200 soon as next month, capping years of work to build 0:04:18.200 --> 0:04:21.599 a case that it illegally dominates the digital ad market. 0:04:21.680 --> 0:04:23.760 This according to people familiar with the matter. I want 0:04:23.760 --> 0:04:26.200 to bring in Julia Love who just started covering Google 0:04:26.560 --> 0:04:29.359 for Bloomberg. So first of all, welcome. UM. You know, 0:04:29.400 --> 0:04:31.039 this is a case that the DJ has been working 0:04:31.080 --> 0:04:34.960 on for years. What's been the big breakthrough? Um, so 0:04:35.040 --> 0:04:37.360 thank you so much for having me Emily. And yes, 0:04:37.360 --> 0:04:39.760 as you mentioned, you know, this case is a long 0:04:39.920 --> 0:04:42.760 time in the making. UM. D o J first started 0:04:42.800 --> 0:04:46.599 looking into these questions in twenty nineteen. Um, they brought it. 0:04:47.040 --> 0:04:50.520 They brought their first taste related to search. But now 0:04:50.520 --> 0:04:53.080 we're hearing that they're getting very close to finally bring 0:04:53.320 --> 0:04:56.280 Bernina case in the ad tech market. So what could 0:04:56.279 --> 0:04:59.000 come of this lawsuit? What are we expecting? Yeah, there's 0:04:59.000 --> 0:05:00.760 a lot at stake for you know, there was a 0:05:00.839 --> 0:05:05.160 very similar taste brought by the Texas Attorney General in 0:05:05.200 --> 0:05:08.120 which they are actually seeking to force Goodle to sell 0:05:08.160 --> 0:05:12.120 off parts of its ad business. Doodle currently plays various 0:05:12.200 --> 0:05:15.400 roles in this market. It orchestrates the market. It also 0:05:16.279 --> 0:05:20.159 does business with publishers and advertisers and so so the 0:05:20.160 --> 0:05:22.680 state of Texas is arguing that Goodle simply must sell 0:05:22.680 --> 0:05:24.960 off part of its business. It can't see it can't 0:05:24.960 --> 0:05:27.120 play all those roles, and it's possible that d o 0:05:27.240 --> 0:05:29.280 J could seek to do something similar. You know, we've 0:05:29.279 --> 0:05:31.880 spoken with Google executives. You know, I speak to Ruth 0:05:31.920 --> 0:05:34.120 poor Ad on the call every quarter. You know, they 0:05:34.160 --> 0:05:38.839 always talk about how their construction constructively engaging with regulators. 0:05:39.000 --> 0:05:42.719 What's been their comment on this particular report so far, 0:05:43.920 --> 0:05:46.960 they haven't said much. They argue that there that their 0:05:47.040 --> 0:05:50.560 role in the advertising market brings um efficiencies to both 0:05:50.800 --> 0:05:54.880 publishers and advertisers um. But behind the scenes, my colleagues 0:05:54.880 --> 0:05:58.240 have reported that that they have made settlement offers to 0:05:58.520 --> 0:06:01.359 the Justice Department. That's so fire have not done the 0:06:01.400 --> 0:06:05.000 trick and a loss. It seems slightly all right, Julia Love, 0:06:05.160 --> 0:06:08.040 who covers alphabet for us, thank you so much. We're 0:06:08.080 --> 0:06:19.360 going and we'll keep following. President Biden signed a broad 0:06:19.400 --> 0:06:22.760 competition bill into law, including fifty two billion dollars for 0:06:22.880 --> 0:06:25.520 domestic chip R and D. The bill is at the 0:06:25.600 --> 0:06:28.719 center of the administration's effort to reduce dependence on countries 0:06:28.720 --> 0:06:32.640 like Taiwan and South Korea, whose homegrown companies are leading 0:06:32.680 --> 0:06:36.839 the market. Meantime, Micron Technology plans to invest forty billion 0:06:36.880 --> 0:06:39.840 dollars chip manufacturing in the US is part of a 0:06:39.880 --> 0:06:45.359 broader billion dollar investment strategy. But Micron CEO San Jamie 0:06:45.440 --> 0:06:48.839 Rota told Bloomberg earlier there could be trouble ahead for 0:06:48.880 --> 0:06:51.880 the chip sector, especially on the demand side, due to 0:06:51.920 --> 0:06:55.920 the macroeconomic uncertainties, as well as due to high levels 0:06:55.920 --> 0:06:59.920 of inventories that customers have built across various end mark 0:07:00.040 --> 0:07:03.799 gets segments. For US, those in mentalities are being adjusted 0:07:03.800 --> 0:07:06.520 down and that is what is resulting in the duo's 0:07:06.600 --> 0:07:12.000 demand flawed US. Here's Gus Burnstein researched senior Analystacy Rascon, 0:07:12.040 --> 0:07:15.320 as well as our Bloomberg executive editor Free Technology Tom Giles. So, 0:07:15.360 --> 0:07:16.840 first of all, Tom walk us through more of what 0:07:16.880 --> 0:07:19.160 the Micron CEO had to say. This on top of 0:07:19.200 --> 0:07:21.880 what we saw from in video this week and Intel 0:07:21.920 --> 0:07:25.120 and a m D last week, right the picture from 0:07:25.120 --> 0:07:30.600 the chip makers is becoming increasingly dour. Um this morning, basically, 0:07:30.720 --> 0:07:35.240 Micron said already are lowered. Forecast for how revenue is 0:07:35.240 --> 0:07:37.440 going to shake out in the fiscal fourth quarter is 0:07:37.440 --> 0:07:40.080 going to be worse than we expected. It's going to 0:07:40.120 --> 0:07:43.680 be at the low end or possibly below the low end. 0:07:43.920 --> 0:07:48.240 That sent shivers across the chip chip Chip making industry. Um. 0:07:48.280 --> 0:07:51.320 You know, he talked about demand, Uh, talked about build 0:07:51.400 --> 0:07:54.760 up of inventories. There's this question about all these PCs 0:07:54.800 --> 0:07:58.800 that we were snapping up during the pandemic that's starting 0:07:58.800 --> 0:08:03.200 to level out. So, Stacy, what's your read on this? 0:08:03.600 --> 0:08:06.360 Is this just you know, periodic correction or is there 0:08:06.400 --> 0:08:08.680 something more fundamental going on here? Could we be at 0:08:08.680 --> 0:08:13.640 the beginning of a recession level collapse and chips Well, 0:08:13.680 --> 0:08:16.560 I mean collapse is a harsh word, but there's been 0:08:16.600 --> 0:08:19.760 a lot of worries that the very strong demand that 0:08:19.760 --> 0:08:21.200 we've been seeing over the last couple of years in 0:08:21.200 --> 0:08:24.040 the wake of COVID was not sustainable. Um, that some 0:08:24.120 --> 0:08:26.720 of it was was pulled forward as as work happits 0:08:26.800 --> 0:08:29.440 change anything, work from home, study from home, play from home. 0:08:29.720 --> 0:08:32.720 So I elevated demand and that can't last forever. There's 0:08:32.760 --> 0:08:34.400 also been worries that, you know, in the wake of 0:08:34.440 --> 0:08:37.280 all the shortages and everything that we've been seeing, that 0:08:38.040 --> 0:08:40.480 the demand that we saw because of that was actually 0:08:40.480 --> 0:08:42.920 stronger than it looked like. There's a phenomenon that happens 0:08:42.920 --> 0:08:46.320 when customers can't get the parts that they want in 0:08:46.360 --> 0:08:48.160 the time when that they need them, and they tend 0:08:48.160 --> 0:08:50.840 to order more. It's called double ordering. It's a very 0:08:50.880 --> 0:08:54.400 sort of normal behavior. But the problem is to the industry, 0:08:53.920 --> 0:08:56.600 they never know that it's double ordering. They just they 0:08:56.640 --> 0:08:59.480 just see demand going through to the moon. And as 0:08:59.679 --> 0:09:01.920 as actual end demand starts to lag off, and it 0:09:02.040 --> 0:09:04.960 is in some of these especially these consumer areas, supplying 0:09:04.960 --> 0:09:06.880 demand starts to get back into balance, and then you 0:09:06.960 --> 0:09:10.240 discover how much of the actual demand profile that the 0:09:10.240 --> 0:09:12.160 customers are seeing as real and how much of it 0:09:12.240 --> 0:09:14.760 is phantom. The the one thing that Micron said that 0:09:14.760 --> 0:09:16.600 it was a little different was they started pointing out 0:09:16.640 --> 0:09:19.680 inventory corrections things like auto and industrial. These are end 0:09:19.720 --> 0:09:22.200 markets that have been holding up very well. I personally 0:09:22.200 --> 0:09:24.840 have been concerned about these kind of double ordering phenomenons 0:09:24.840 --> 0:09:26.960 in these kind of end markets. And if it turns 0:09:27.000 --> 0:09:29.360 out that they were holding a ton of like memory inventory, 0:09:29.400 --> 0:09:31.240 like I don't know why they wouldn't be holding inventory 0:09:31.240 --> 0:09:34.080 of other parts as well. So people will potentially look 0:09:34.120 --> 0:09:36.400 at that statement as low sort of like the next 0:09:36.520 --> 0:09:39.160 like potential leg down, especially in some of these end 0:09:39.160 --> 0:09:41.719 markets there was right now the demanding them still looks 0:09:41.720 --> 0:09:44.880 pretty strong. The timing tom is just so ironic because 0:09:44.880 --> 0:09:47.760 you've got the US poise to spend billions of dollars 0:09:47.800 --> 0:09:51.080 on chip manufacturing in the United States. But two, we 0:09:51.120 --> 0:09:54.760 really need it. This was supposed to this was supposed 0:09:54.760 --> 0:09:57.600 to be a big day of celebration for the chip industry. 0:09:58.000 --> 0:10:00.400 I listened to the Di Biden and his press conference 0:10:00.440 --> 0:10:02.800 earlier today, and there was hooping and holler and an 0:10:02.840 --> 0:10:07.200 applause and the audience that's talking about innovation and creating jobs. 0:10:08.160 --> 0:10:10.600 And at the same time, you have these companies like 0:10:10.679 --> 0:10:14.920 Intel talking about like slowing down hiring, talking about cutting 0:10:14.920 --> 0:10:17.439 back on spending. And at the same and then and 0:10:17.480 --> 0:10:20.840 this is the industry that has been lobbying for months 0:10:20.880 --> 0:10:23.280 to get the Chips Act through. When's it gonna pass? 0:10:23.320 --> 0:10:25.400 When's it gonna pass? And finally they got what they wanted, 0:10:25.600 --> 0:10:28.400 and it lands with a thud on the worst day 0:10:28.400 --> 0:10:31.959 possible when Micron makes this announcement a day after in 0:10:32.040 --> 0:10:34.880 video makes the announcement. But remember, what they're trying to 0:10:34.880 --> 0:10:37.680 do with the Chips Act is a very long term investment. 0:10:37.720 --> 0:10:41.839 It takes years and billions of dollars to build these factories. 0:10:42.160 --> 0:10:45.720 And clearly we saw during the supply chain crisis, during 0:10:45.720 --> 0:10:50.000 the pandemic that the US has fallen behind in production 0:10:50.320 --> 0:10:53.960 of key chips to countries that you mentioned already, Taiwan 0:10:54.040 --> 0:10:56.360 and South Korea. Stacy, what are your thoughts on this 0:10:56.440 --> 0:10:58.840 and if there you know, are are are any chip 0:10:58.840 --> 0:11:02.120 makers poised to what of this better than others or not? 0:11:02.280 --> 0:11:05.280 You know, I'm thinking Intel, which as Tom mentioned, is 0:11:05.360 --> 0:11:10.000 investing a lot of money in America's heartland. They are, 0:11:10.040 --> 0:11:12.280 and we can argue whether or not Intel has actually 0:11:12.320 --> 0:11:14.920 been able to productively deploy all of the money that 0:11:14.960 --> 0:11:16.720 they that they're gonna They're gonna get a lot of money, 0:11:16.720 --> 0:11:18.600 but you know, it doesn't like go on their balance 0:11:18.600 --> 0:11:19.840 sheet and then they can do whatever they want. They 0:11:19.840 --> 0:11:22.320 actually have to sink it into the ground and make 0:11:22.360 --> 0:11:26.600 productive investments. And given their their near term issues again, 0:11:26.600 --> 0:11:28.280 they've been over earning for a long time and they 0:11:28.640 --> 0:11:32.000 they're ex biting them now. And frankly, I mean even 0:11:32.280 --> 0:11:35.680 the forecast that they were giving like to justify these investments. 0:11:35.679 --> 0:11:38.000 My own personal opinion is that that long term forecast 0:11:38.040 --> 0:11:40.640 at Intel had was outlandish. So I don't actually know 0:11:40.679 --> 0:11:42.480 that Intel is gonna be able to deploy this stuff 0:11:42.480 --> 0:11:45.480 in a value add manner for the industry. We don't 0:11:45.480 --> 0:11:47.320 we won't know for years. The stuff takes years. As 0:11:47.320 --> 0:11:52.600 you said to um uh to add now this go ahead. 0:11:52.880 --> 0:11:54.560 I'm just gonna say the general idea of like the 0:11:54.559 --> 0:11:57.240 whole long term versus the short term. The industry goes 0:11:57.240 --> 0:12:00.720 through down terms. It's happening now probably and we'll see 0:12:00.720 --> 0:12:03.600 where it's now that things said, like over time, we 0:12:03.640 --> 0:12:05.480 will probably need this stuff, and you sort of think 0:12:05.480 --> 0:12:08.080 about this. The industry is big. We five and fifty 0:12:08.160 --> 0:12:11.400 six billion dollars in revenues last year. Maybe we go 0:12:11.440 --> 0:12:13.840 into a DOWNTRENI but like if even at mid single 0:12:13.920 --> 0:12:17.360 digit growth over the cycle some years up here, when 0:12:17.360 --> 0:12:19.600 you're done, it's a trillion dollar industry, and you know, 0:12:19.679 --> 0:12:21.640 ten years plus or minus. So I think in ten 0:12:21.760 --> 0:12:24.800 years will probably be glad like like on a broad 0:12:24.840 --> 0:12:27.640 basis that some of these investments are being made, does 0:12:27.640 --> 0:12:29.679 that mean that they were that we're gonna need him now? No, 0:12:30.600 --> 0:12:32.520 So you're saying we're not going to need this stuff 0:12:32.559 --> 0:12:35.079 for ten years, it's gonna be a decade before supply 0:12:35.440 --> 0:12:39.440 meets demand. It's well, I think supplies already meeting demand, right, 0:12:39.480 --> 0:12:41.760 I mean, supplied near term is coming up and demand 0:12:41.840 --> 0:12:44.480 is coming down. But you have to remember, even if 0:12:44.480 --> 0:12:46.880 we go hole whole hog into this, you're not gonna 0:12:46.880 --> 0:12:50.160 see any material amounts of capacity for years. Even Mike 0:12:50.240 --> 0:12:52.280 run talked about they said, we're gonna do like forty 0:12:52.280 --> 0:12:54.880 billion dollars. They're even planning on bringing any of that 0:12:54.920 --> 0:12:57.320 stuff online for production until the second half of the decade. 0:12:57.360 --> 0:13:01.080 This this stuff takes years and many, many billions of diligion. 0:13:01.160 --> 0:13:03.440 And by the way, you could argue in that context, 0:13:03.440 --> 0:13:05.480 and I've been saying this, the fifty two billion dollars 0:13:05.520 --> 0:13:08.040 or whatever the numbers is a rounding error in the 0:13:08.120 --> 0:13:10.880 grand scheme of things. This is not really, in my opinion, 0:13:10.960 --> 0:13:14.760 going to structurally improve the amount of the percentage of 0:13:14.800 --> 0:13:17.199 capacity that is installed in the US relative to the world. 0:13:17.240 --> 0:13:20.360 It's not big enough, but it isn't get some of 0:13:20.360 --> 0:13:22.200 these projects started in the US, and so you have 0:13:22.240 --> 0:13:25.800 to start somewhere, and don't forget that. In the meantime, 0:13:26.600 --> 0:13:29.800 South Korea, Taiwan, these chip makers, they're not going to 0:13:29.920 --> 0:13:33.560 slow down. They're gonna keep barreling ahead with their innovation 0:13:33.679 --> 0:13:36.400 and they're spending and the US is going to have 0:13:36.440 --> 0:13:38.960 to work all the harder to catch up. Very good point. 0:13:39.120 --> 0:13:43.400 Tom Giles are Bloomberg Executive editor and Stacy rascon Bernstein. Stacy, 0:13:43.440 --> 0:13:45.920 great to have you back here on the show. Thanks 0:13:46.280 --> 0:13:49.800 for stopping by. Alright, coming up, Lemonade shares popping on 0:13:49.800 --> 0:13:52.320 the back of the next gen insurance companies earnies. We're 0:13:52.320 --> 0:14:07.360 gonna talk to the CEO next, Mrs Bloomberg. The insurance 0:14:07.360 --> 0:14:10.200 startup Lemonade says it's on its way to profitability. Shares 0:14:10.280 --> 0:14:13.640 popped after reporting smaller than expected losses in the third quarter. 0:14:14.000 --> 0:14:18.320 Lemonade saying can reach profitability without quote any further infusion 0:14:18.840 --> 0:14:23.200 of capital. Here's Guss Lemonade chair and co CEO Daniel Schreiber. So, Daniel, 0:14:23.200 --> 0:14:27.480 when do you get to that coveted profitability? Well, we're 0:14:27.480 --> 0:14:29.920 turning a corner right now. We've let it be known 0:14:29.920 --> 0:14:32.760 that within amount of weeks we will see peak losses, 0:14:32.800 --> 0:14:35.600 so our losses are going to begin to edge downwards. 0:14:35.760 --> 0:14:38.760 Already in Q four we're going to see shrinking losses 0:14:38.840 --> 0:14:41.320 even as a business continues to grow. We reported sevent 0:14:42.560 --> 0:14:45.320 revenue growth year on year, so we're seeing strong growth 0:14:45.800 --> 0:14:48.000 and drinking losses. So we're very much on the path 0:14:48.400 --> 0:14:51.240 and this is really a reflection of the business doing 0:14:51.240 --> 0:14:53.280 what it was designed to do. This is the output 0:14:53.440 --> 0:14:58.240 of many product launches, many market launches, well thousands pushes 0:14:58.280 --> 0:15:00.440 of production software just during the core to the last 0:15:00.520 --> 0:15:03.000 year alone, and all of these investments are beginning to 0:15:03.040 --> 0:15:06.920 pay off. It's very gratifying. Now you said you've moderated 0:15:06.960 --> 0:15:09.360 spending and the pace of hiring and that you basically 0:15:09.400 --> 0:15:11.280 have enough gas in the tank, you know, not to 0:15:11.320 --> 0:15:14.080 need any additional capital and to subsist on you know, 0:15:14.200 --> 0:15:17.880 the capital that you have until you get to that point. Um, 0:15:17.920 --> 0:15:22.000 what's your outlook if the macro environment continues to be 0:15:22.720 --> 0:15:28.360 very challenged, if we go into a recession. Now, we're 0:15:28.400 --> 0:15:31.880 fortunate to be working in an industry that is pretty 0:15:31.960 --> 0:15:35.080 resilient when it comes to recessions. So we are seeing 0:15:35.800 --> 0:15:39.880 green indicators flashing on our screens really across the business, 0:15:39.880 --> 0:15:46.720 strong demand, strong unit economics, strong marketing efficiencies, strong operational efficiencies. 0:15:47.120 --> 0:15:49.840 There are a couple of areas where we're impacted by 0:15:49.840 --> 0:15:52.920 the macro. For example, loss of capital has definitely shut up, 0:15:52.960 --> 0:15:56.400 which is why we'll be spending it much more cautiously. 0:15:57.040 --> 0:15:59.320 But actually, in terms of the fundamentals of our business, 0:15:59.360 --> 0:16:03.440 insurance as a space, as an industry is reasonably resilient. 0:16:04.120 --> 0:16:08.160 Inflation impacts us somewhat. Cross of capital would impact us 0:16:08.520 --> 0:16:11.160 if it weren't for the fact that we're already well funded. 0:16:11.640 --> 0:16:15.160 But other than that, we're reasonably impervious to what's happening 0:16:15.160 --> 0:16:17.480 out there, which is a fortunate position to be in 0:16:18.160 --> 0:16:21.200 now since the acquisition of Metro mile a third of 0:16:21.200 --> 0:16:24.520 the business, as I understand it, is renters. The business 0:16:24.680 --> 0:16:28.320 is cars. What's what are trends are you seeing? Uh 0:16:28.400 --> 0:16:33.400 in the insurance industry given rising inflation, given consumers under pressure, 0:16:33.600 --> 0:16:36.760 you know when it comes to basic gas and groceries. 0:16:37.960 --> 0:16:41.320 So inflation does affect our industry, and it affects the 0:16:41.600 --> 0:16:44.440 insurance space perhaps more than others, just because the supply 0:16:44.560 --> 0:16:48.200 chain impact on the car industry has been pretty profound. 0:16:48.280 --> 0:16:50.360 You take a kind to a shop today to get repaired, 0:16:50.680 --> 0:16:53.400 you'll pay a lot more than you would otherwise. And 0:16:53.480 --> 0:16:55.680 we're not talking about the nine percent inflation. You're talking 0:16:55.720 --> 0:16:59.560 here about twenty or thirty percent inflation specifically within that 0:16:59.640 --> 0:17:02.240 industy street. So definitely an impact there in in an 0:17:02.240 --> 0:17:05.959 industry where you can't raise prices willing Nearly everything has 0:17:06.000 --> 0:17:08.960 to be approved by regulators and fifty regulators at that 0:17:09.400 --> 0:17:12.600 you can often get timing mismatches between the time that 0:17:12.680 --> 0:17:14.800 you apply to change rates and when you can actually 0:17:15.280 --> 0:17:18.480 change those rates, and inflation does impact you that way. 0:17:18.680 --> 0:17:21.680 We do have the advantage now having acquired Metromile, though, 0:17:21.720 --> 0:17:25.800 of being in a unique position of having a far richer, 0:17:25.880 --> 0:17:29.359 more textured, more precise data set on which to price. 0:17:29.440 --> 0:17:34.359 So the industry at large uses broad stroke proxies, gender 0:17:34.560 --> 0:17:39.160 credit scores, marital status. Metromile has really been spending last 0:17:39.280 --> 0:17:43.040 ten years with precision senses driving billions of miles so 0:17:43.080 --> 0:17:46.280 that they can price and really estimate the risk of 0:17:46.400 --> 0:17:50.719 every mile driven for every individual ensured. And having inherited 0:17:50.760 --> 0:17:53.320 all of that data and now ingesting it into the 0:17:53.800 --> 0:17:56.600 Lemonade Text Act, we should be in a position to 0:17:56.640 --> 0:17:59.320 have an advantage play even in the cast space, even 0:17:59.440 --> 0:18:04.920 under these relatively duress condition that the industry is experiencing. Now, 0:18:04.920 --> 0:18:09.439 I understand you're also exploring blockchain technology for climate change 0:18:09.440 --> 0:18:13.560 related insurance for farmers. You know, what's the status of 0:18:13.560 --> 0:18:17.320 that and the potential of that. Yeah, it's a fabulous initiative. 0:18:17.400 --> 0:18:19.879 This is part of the Lemonade Foundation, which is a 0:18:20.040 --> 0:18:24.320 nonprofit arm So this is entirely nonprofit and we've launched 0:18:24.560 --> 0:18:28.480 the Lemonade Climate Coalition, So this is the crypto climate 0:18:28.520 --> 0:18:32.679 Coalition where we're using an avalanche based smart contract to 0:18:32.840 --> 0:18:36.280 enable subsistent farmers in Africa to ensure their crops. And 0:18:36.359 --> 0:18:39.000 you're talking about something like five dollars worth of creams 0:18:39.960 --> 0:18:42.800 over the course of a season, something like sixty dollars 0:18:42.840 --> 0:18:47.040 of claims. At those levels, traditional insurance just cannot operate 0:18:47.160 --> 0:18:50.600 the cost of just selling a policy, of supporting it, 0:18:50.680 --> 0:18:53.960 of them handling a claim. All of those dwarfs dwarf 0:18:54.080 --> 0:18:56.879 the kind of fees that I just mentioned, But a 0:18:56.960 --> 0:19:01.399 smart contract can execute those kind of insurance policies instantaneously 0:19:01.440 --> 0:19:05.520 and zero overhead. So we're really shifting the higher policy 0:19:05.560 --> 0:19:08.720 into a smart contract where a farmer in Africa will 0:19:08.760 --> 0:19:13.240 be able to use their feature phone to buy coverage instantaneously. 0:19:13.560 --> 0:19:17.080 That will be translated into a wallet on chain which 0:19:17.080 --> 0:19:20.040 will execute against a smart contract which will then be 0:19:20.040 --> 0:19:23.360 parametrically driven so that if there's a climate event, they'll 0:19:23.400 --> 0:19:26.040 get paid instantaneously with no overheads. It's part of a 0:19:26.160 --> 0:19:30.239 non profit initiative we're very pout of fascinating, all right, 0:19:30.359 --> 0:19:41.320 Lemonade co CEO Daniel Trevor, Thank you. Welcome back to 0:19:41.320 --> 0:19:43.920 Bloomberg Technology, Emily Chang in San Francisco. Let's get back 0:19:43.960 --> 0:19:46.080 to the markets now and chairs of Tesla, one of 0:19:46.119 --> 0:19:49.840 the biggest drags on the Nasdaq. One just after a 0:19:49.880 --> 0:19:52.760 slew of new single stock e t s that will 0:19:52.840 --> 0:19:56.639 amplify bets on the notoriously volatile shares hit the market. 0:19:56.640 --> 0:19:59.600 Bloomberg's at Ludlow here with the details at ticket This 0:19:59.640 --> 0:20:01.560 is one that caught my eye. We're looking at single 0:20:01.680 --> 0:20:05.639 name or single stock ETFs, but leveraged and inverse e 0:20:05.760 --> 0:20:08.280 t S and test is really interesting example some new 0:20:08.320 --> 0:20:10.880 products on the market launched Tuesday on a day where 0:20:10.880 --> 0:20:13.359 the stock is down almost two and a half percent. 0:20:13.400 --> 0:20:15.760 The whole point of a leverage and inverse e t 0:20:15.920 --> 0:20:17.680 F is that you want to look for those outsize 0:20:17.800 --> 0:20:20.439 gains when there's movement in the stock, but there are 0:20:20.440 --> 0:20:22.879 also the risk, of course of outside the clients. So 0:20:23.000 --> 0:20:26.000 Direction is one of those providers launching this EATF this 0:20:26.119 --> 0:20:29.120 Tuesday to take the daily testla ble one point five 0:20:29.320 --> 0:20:31.800 x one point five times shares e t F ticker 0:20:31.880 --> 0:20:34.160 t s l L. Now the stock was down two 0:20:34.200 --> 0:20:36.760 and a half percent. That's the risk with the leverage 0:20:36.760 --> 0:20:39.400 ETF because at one and a half times, that meant 0:20:39.400 --> 0:20:41.560 that that e t F actually fell nearer to five 0:20:41.640 --> 0:20:45.199 percent or four point six percent during Tuesday's session. Now, 0:20:45.240 --> 0:20:46.720 if you're a bear and you think the stock is 0:20:46.760 --> 0:20:49.400 going to go down, direction offers you a bear one 0:20:49.480 --> 0:20:51.800 x shares E t F t S l S is 0:20:51.840 --> 0:20:53.640 the ticker. On a day where the stock was two 0:20:53.640 --> 0:20:57.400 and a half percent lower, this inverse ETF was up 0:20:57.600 --> 0:20:59.760 two and a half percent on a one to one ratio. 0:21:00.119 --> 0:21:02.080 So regulators have been talking about this for about a 0:21:02.119 --> 0:21:04.680 month because it's not a new product. A XSS came 0:21:04.720 --> 0:21:07.879 on to the market thirty days ago with a single 0:21:07.960 --> 0:21:12.240 name Tesla inverse et F, and this is the demand 0:21:12.320 --> 0:21:14.680 that they've seen. They're offering a number of products across 0:21:14.680 --> 0:21:17.359 a number of names, but testers where they're seeing trading 0:21:17.440 --> 0:21:21.240 volume and influence. So market regulators are getting a little 0:21:21.280 --> 0:21:24.160 bit worried about this because you're making an outsized bet 0:21:24.480 --> 0:21:26.919 on a stock that can move in other direction depending 0:21:26.920 --> 0:21:29.159 on your conviction. And given what we've seen in the 0:21:29.160 --> 0:21:31.760 markets of late with volatility, this is an area we 0:21:31.800 --> 0:21:34.520 should keep an eye on him. And thank you meantime, 0:21:34.560 --> 0:21:38.320 would you rather subscribe to a Tesla than own one? 0:21:38.640 --> 0:21:41.480