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Speaker 1: From the heart of where innovation, money and power collide

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Speaker 1: in Silicon Valley and beyond. This is Bloomberg Technology with

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Speaker 1: Emily Jay. I'm Emily Chang in San Francisco, and this

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Speaker 1: is Bloomberg Technology. Coming up in the next hour. The

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Speaker 1: FED raises interest rates by seventy basis points, the biggest

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Speaker 1: increase since stocks rally. What this could signal about a

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Speaker 1: possible recession plus new funds still launching even in a downturn.

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Speaker 1: We'll talk to the heavy hitters behind the four fifty

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Speaker 1: million dollar fund, including a top Morgan Stanley alone and

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Speaker 1: Elon Musk getting even more political as he reveals who

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Speaker 1: he's backing from president in this as he prepares to

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Speaker 1: address Twitter and boys at an all hands meeting, divided

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Speaker 1: on whether he'll save the company or destroy it. We'll

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Speaker 1: get to all of that in a moment, but first

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Speaker 1: this day, we'll go down in history. The FED raising

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Speaker 1: interest rates by seventy five basis points, the most in

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Speaker 1: almost thirty years. Stocks jumped after a FED chair j

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Speaker 1: Pal gave his view on the path four and in

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Speaker 1: the fight against stubbornly high inflation are at ludlow. Here

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Speaker 1: with more on the market moves and tech especially at Yeah,

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Speaker 1: the FED really intensifying its efforts to cool prices. Let's

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Speaker 1: look at the main takeaways from this historic day. Is

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Speaker 1: seventy five basis points hike, taking the federal funds rate

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Speaker 1: to one point five percent to one point seven five percent.

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Speaker 1: The FED forecasting of the interest rates could rise to

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Speaker 1: three point four percent by December of this year three

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Speaker 1: point eight percent by the end of next year. They

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Speaker 1: the committee saying it's strongly committed to return the inflation

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Speaker 1: to its two percent objective. Inflation of two percent seems

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Speaker 1: a long way from where we are the inflation developments

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Speaker 1: of recent weeks. That hot print last week warranted the

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Speaker 1: bigger height today wanting to power and there's no sign

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Speaker 1: though in the economy of a broader slowdown in terms

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Speaker 1: of how the markets reacted. Green on the screen, interesting

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Speaker 1: because there's no one main takeaway. You look at the

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Speaker 1: SMP five one and a half percent, and as that

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Speaker 1: one hundred tech heavy index up two and a half percent,

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Speaker 1: a pull back in yield, a drop in the dollar

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Speaker 1: really interesting. Moving the dollar, the Bloomberg Dollar Index down

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Speaker 1: nine tenths of one percent, biggest drop since May. At

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Speaker 1: one point down one percent is biggest drop since the

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Speaker 1: November election. No one takeaway the market looking at Pal's words,

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Speaker 1: listening thinking what the path ahead is, and you get

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Speaker 1: to listen as well. Here's j P Now, do not

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Speaker 1: expect moves of this size to be common from the

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Speaker 1: perspective of today. Either a fifty basis point or a

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Speaker 1: seventy five basis point increase seems most likely at our

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Speaker 1: next meeting. Look, you don't want to put too much

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Speaker 1: stock in an intra day move. This is the nas

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Speaker 1: That one hundred though, and after j power uttered those

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Speaker 1: words around the size of potential increases at an extra

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Speaker 1: ly meeting going forward, you see what that has That

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Speaker 1: one hundred does the market giving relief rally, almost saying okay,

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Speaker 1: we understand where we stand. Now. This is very interesting,

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Speaker 1: but there's a lot going on. It's all in the data,

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Speaker 1: and it's always in the data. The federals are going

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Speaker 1: to keep an all on inflation and make decisions meeting

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Speaker 1: by meeting. All right, well, thanks for showing us that data, ed,

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Speaker 1: Thank you. I want to get a look now at

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Speaker 1: crypto bitcoin following at one point to just above twenty dollars,

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Speaker 1: then pairing its losses, Blue Merctionale Bossi breaks it all down,

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Speaker 1: and the bad news for crypto seems to keep coming

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Speaker 1: shinale from all directions. Well, what's interesting, Emily is that

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Speaker 1: even though you saw risk assets rise today in markets,

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Speaker 1: you did not see Bitcoin rise. You did see a

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Speaker 1: parents gains in relation to some of the movies you

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Speaker 1: saw by the said, but when we're talking about digital

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Speaker 1: money here, we are still seeing a decline, although it's slowing. Remember,

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Speaker 1: market watchers are watching for the levels that they saw

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Speaker 1: at the peak of the last cycle. So if it

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Speaker 1: drops the low not just twenty k, but we're looking

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Speaker 1: at nineteen five hundred eleven. Is that worry area that

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Speaker 1: you started dipping into a bitcoin and we're not quite

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Speaker 1: there yet. Let's flip up the board and got atherorium

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Speaker 1: as well, and how it's doing. Interestingly, you saw that

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Speaker 1: nearly one percent decline bitcoin over twenty four hours. Ethereum

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Speaker 1: dropped less in that time frame. You only saw a

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Speaker 1: drop about seven tenths of one percent, a little less

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Speaker 1: than that. Actually interesting land Now, if you look at

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Speaker 1: c r yp go, if you have a terminal, you

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Speaker 1: see a lot of all coins rising. What else you

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Speaker 1: see rising was coin based. Today you saw coin based

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Speaker 1: rise more than six percent, about six point six percent

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Speaker 1: or so. Interestingly, that comes as we've reported about the

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Speaker 1: shock that so many coin based employees have been feeling

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Speaker 1: with the discipline they're taking, the job cuts that are

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Speaker 1: happening now across the industry and a coin base. Coin

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Speaker 1: Base employees describe this to Bloomberg as impersonal and surprising.

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Speaker 1: So I want to pull up a tweet. Actually, what

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Speaker 1: a strange week it's been. You pull up a tweet

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Speaker 1: here from Brian Armstrong just a couple of days ago.

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Speaker 1: Remember this was responding to the idea on a y

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Speaker 1: Combinator post saying that coin based employees had elected to

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Speaker 1: out the executives here, and he had responded saying that

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Speaker 1: if you have no confidence in executive company, why are

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Speaker 1: you working there? Quit and find a company to work

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Speaker 1: out that you believe in. And remember this post was

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Speaker 1: on June tenth, just days before a lot of these

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Speaker 1: job cut plans were put in place. All right, indeed,

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Speaker 1: pretty interesting, sweet storm, they're from Brian Armstrong, But also

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Speaker 1: you think about the human faces behind these layoffs. Shanali,

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Speaker 1: thank you. We'll get to you later for a deeper

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Speaker 1: dive in our crypto report. I do want to get

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Speaker 1: back to the market's response to the Fed's decision to

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Speaker 1: raise rates by seventy five basis points. Victoria Green, chief

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Speaker 1: investment officer for G Squared, joins us. Now, So, Victoria,

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Speaker 1: what do you make of the fact of the market

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Speaker 1: rally today after this historic rate hike and all of

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Speaker 1: the turmoil we've seen over the last couple of days.

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Speaker 1: I think they were happy it wasn't a hundred basis points,

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Speaker 1: and there's a relief that Powell's doing something. But I

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Speaker 1: think we're all gonna wake up tomorrow and realize nothing changed.

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Speaker 1: The feeder stillhawkers. Rates are coming up, and the only

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Speaker 1: way they tame inflation is by nipping unemploy him it.

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Speaker 1: And so they're really to sacrifice the very low unemployment.

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Speaker 1: They feel like they have wiggle room in the employement

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Speaker 1: market and they've got its human inflation. And we look

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Speaker 1: at this and say, the economy is still going to

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Speaker 1: slow down. And I know we're talking about what kind

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Speaker 1: of landing will have if it's crash and burn or

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Speaker 1: a soft landing, and I think it's in a new

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Speaker 1: or impossible situation. There's a lot of factors he doesn't control.

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Speaker 1: But I have to take heart with what the CEOs

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Speaker 1: are saying and what J. Powell himself said, which is

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Speaker 1: we can basically have unemployment come up. We have wiggle

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Speaker 1: room and still historically low. We can see that come

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Speaker 1: up because we have the tame inflation. So when you

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Speaker 1: say it's out of our control, what what do you

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Speaker 1: think the scenario we're gonna be looking at over the

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Speaker 1: next six months to a year is gonna be? Is

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Speaker 1: this a recession? Is this a recession with a capital

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Speaker 1: R or a small R? I think we like to

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Speaker 1: call it bagel. Right, let's go go back to the

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Speaker 1: old West Wing day since we're reliving the nineties right now. Um,

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Speaker 1: but yeah, I think it's gonna be a recession. I

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Speaker 1: don't think it's gonna be a two thousand and eight redo.

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Speaker 1: But I think you're gonna have a lot of people

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Speaker 1: looking around and seeing pressures unemployment. There's already seeing pressures

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Speaker 1: on the consumer, the consumers changing their buying pattern. The

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Speaker 1: U S economy lives and breeze and and will die

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Speaker 1: if the consumer slows down because you need the spending.

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Speaker 1: And look at what tal Walmart and Target and all

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Speaker 1: the retailers are saying there is already a change in

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Speaker 1: consumption patterns. We're not seeing the electronics in the home

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Speaker 1: goods move. They're focused on buying food and gas and

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Speaker 1: paying rent. And when that happens and we still see

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Speaker 1: upward inflationary pressure, I mean, I don't think June's number

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Speaker 1: is gonna look a whole lot better than than Maze

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Speaker 1: because if you look at gas prices and rent prices,

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Speaker 1: you really haven't seen the roll over. So as we

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Speaker 1: keep climbing this mountain and we have these pressures build

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Speaker 1: and build and build, I think you know, kind of

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Speaker 1: seeing you guys at the San Francisco people, you know,

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Speaker 1: if you don't have an earthquake in a while, you

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Speaker 1: kind of get a little worried when the next one

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Speaker 1: comes is gonna be the big one. And so we

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Speaker 1: want to see some of these pressures come off the economy,

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Speaker 1: but it's near impossible when you have the rent prices,

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Speaker 1: housing prices, food prices, and gas prices where they are.

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Speaker 1: What does this mean for big tech companies that have

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Speaker 1: been riding high now for years, If they're not gonna die,

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Speaker 1: they did need to read price a little bit lower.

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Speaker 1: Um the problem is earnings growth looks a little susceptible, right,

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Speaker 1: So that's the one question we have with the market

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Speaker 1: right now. I see this more as a very short

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Speaker 1: relief rally and a further leg down because where is

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Speaker 1: our earnings growth going to come from? You're willing to

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Speaker 1: pay a thirty forty plus multiple if you have confidence

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Speaker 1: that they're gonna grow their earnings and you have a

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Speaker 1: future trajectory. And I think right now everybody's putting pause.

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Speaker 1: You're even seeing layoffs come from these tech companies, and

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Speaker 1: you know, Microsoft coming out warning about their earnings growth

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Speaker 1: and kind of doing walking that back a little bit. Um.

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Speaker 1: You have to wonder how much should I really be

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Speaker 1: paying for the stock right now? If they're not growing

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Speaker 1: their earnings at the trajectory originally thought they were, how

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Speaker 1: much should I pay for them? So I think big

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Speaker 1: tech still gonna be under pressure, and the pressures are different.

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Speaker 1: The pressure that Netflix is facing is increased competition, and

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Speaker 1: you're seeing that bifurcation across streaming. That's a little bit

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Speaker 1: different than say the pressure that the Amazon's facing, which

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Speaker 1: they're facing issues with that now they've got too much

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Speaker 1: uh labor and they have too much storage space, and

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Speaker 1: they're working on all these price pressures with fuel and

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Speaker 1: delivery costs, so it's not uniform across the board. UM.

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Speaker 1: And also what these tech companies deliver, how essential are they?

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Speaker 1: Uh and are they discretionary or are they something that

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Speaker 1: people are willing to have to continue to use if

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Speaker 1: the world slows down. Netflix is one that may still

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Speaker 1: be at risk, even though it's priced more like a

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Speaker 1: value stuff now, because if your pocketbooks hurting, you may

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Speaker 1: start looking at cutting streaming and they're one of those

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Speaker 1: right now that is facing the wrath of cord cutters.

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Speaker 1: But these big tech companies aren't falling just a bit.

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Speaker 1: They're not just under a little bit of pressure. I

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Speaker 1: mean they've already dropped significantly. We spoke to Cisco CEO

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Speaker 1: Chuck Robbins yesterday UM, which reminded us that Cisco shares

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Speaker 1: peaked in the dot com boom, then plunged and still

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Speaker 1: still have not recovered. There. You're looking at a at

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Speaker 1: a twenty plus year chart. Which of the big tech

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Speaker 1: giants do you think could end up being the Ciscos

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Speaker 1: of today? I mean, I hate, I hate to be

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Speaker 1: a negative l A and root against me used against them.

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Speaker 1: But again I'll point to Netflix. I think Netflix is

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Speaker 1: facing such a changed landscape from where it was five

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Speaker 1: years ago, ten years ago, even two years ago. If

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Speaker 1: you think about the number of streaming services that have

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Speaker 1: popped up in the competition now that they face uh,

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Speaker 1: and they may have more backlash as well. They're trying

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Speaker 1: to cut down on the password sharing, and they're facing

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Speaker 1: the wrath of people that that don't like that this

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Speaker 1: is now less friendly company. Uh, We're seen as a

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Speaker 1: less friendly company to deal with. I think they could

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Speaker 1: be at risk for for one that's lost. And then

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Speaker 1: you can look at some of the pandemic darlings, you know,

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Speaker 1: your zooms of the world, which did fantastic, But at

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Speaker 1: the same point, you've got teams and everybody else has

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Speaker 1: figured out how to tele conference a little bit better.

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Speaker 1: So when I look at who's gonna be kind of

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Speaker 1: a potential tech bubble dud, I think it's those that

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Speaker 1: face competition and can't innovate. Interesting, how do you do

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Speaker 1: the crypto meltdown? You know, what is? What is? How

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Speaker 1: does crypto survive this? Uh? Krypto needs to figure out

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Speaker 1: what it is? You know, we were told it was

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Speaker 1: the heads against central bank spending and inflation, and I'm

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Speaker 1: pretty sure we can decide it's not that um. It's

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Speaker 1: certainly got to get through this regulation hurdle. I think

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Speaker 1: as it discovers what it really is because right now

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Speaker 1: it's trading and correlated like a growth or a tech stock,

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Speaker 1: right uh. And because it's it's not really providing any

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Speaker 1: diversification benefits or buffer, and it's definitely not providing an

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Speaker 1: inflation offset. I think the blockchain and technology itself is

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Speaker 1: very very important. I think this will turn out to

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Speaker 1: be the start of a fintech revolution. I think you're

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Speaker 1: still in the very very early innings of it, and

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Speaker 1: people need to figure out how they're actually gonna use it,

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Speaker 1: how they're gonna integrate it in their lives, and how

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Speaker 1: it's regulated in tax. And I think the regulated in

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Speaker 1: tax question, we might see some of that come out

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Speaker 1: this year. But that's actually gonna also make it where

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Speaker 1: where you may see some bigger players come into the

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Speaker 1: market because they feel a little bit more comfortable they're

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Speaker 1: not gonna have a blow up. You know, you look

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Speaker 1: at some of the recent crypto blow ups and it

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Speaker 1: has put a little bit of a check on people

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Speaker 1: that this is not a safe, secure investment. There is

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Speaker 1: a risk of a hunt to percent loss. And while

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Speaker 1: the technology is a fantastic technology, and I think blockchain

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Speaker 1: is a very innovative, we have to figure out how

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Speaker 1: to use it. I'm you know, I'm not going around

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Speaker 1: buying my Starbucks with bitcoint on my app. It's too volatile.

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Speaker 1: You know, it's really not necessarily cash substitute. So what

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Speaker 1: will it be? I think this year we're going to

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Speaker 1: really figure out what is bitcoint as an investment. Is

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Speaker 1: a digital gold We'll see. Victoria Green, chief investment officer

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Speaker 1: for g Squared love the metaphors. Thank you for joining

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Speaker 1: us on this week's Bloomberg Studio. At one point on

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Speaker 1: my exclusive conversation with Amazon CEO Andy Jassy about how

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Speaker 1: the company is handling inflation, global supply chain shortages and

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Speaker 1: customers that are getting squeezed by higher prices of everything

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Speaker 1: from gas to groceries. We spoke at our Bloomberg Technology Summit.

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Speaker 1: Take a listen for investors of financially, I'd say it's mixed. You.

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Speaker 1: I think we have some businesses are growing really strongly.

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Speaker 1: If you look at aws, you know in grew thirty

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Speaker 1: seven year every year. You know, it's not a seventy

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Speaker 1: four billion dollar revenue run right business, which pretty unusual growth.

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Speaker 1: And we grew with fifty percent year every year in

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Speaker 1: our advertising business. You know, it's the thirty two billion

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Speaker 1: dollar revenue run right business. So some business has grown

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Speaker 1: really strongly, and you know, we've continued to grow in

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Speaker 1: our retail business despite pretty crazy comparables during But I

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Speaker 1: think the real challenge for us there is on the

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Speaker 1: cost side. And there have been several things that have

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Speaker 1: happened um, some of which are more controllable than others,

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Speaker 1: you know. I think the part that's less controllable is

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Speaker 1: really around inflation. And I think we thought that inflation

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Speaker 1: would start to attenuate in two and with war in Ukraine,

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Speaker 1: it just went the other way and has significantly accelerated.

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Speaker 1: So the cost of trucking and line hall and ocean

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Speaker 1: and air and fuel has just substantially gone up, and

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Speaker 1: I think that will attenuate at some point. No one

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Speaker 1: knows how long that will take. I think the more

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Speaker 1: controllable areas for US are really around fulfillment center capacity

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Speaker 1: and productivity. It was taking about twenty four months to

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Speaker 1: build new filment centers during the pandemic, and so we

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Speaker 1: had to make decisions, you know, in mid two thousand

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Speaker 1: twenty in early one, on how much demand we're going

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Speaker 1: to plan for, and so you know, we we end

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Speaker 1: up with more capacity and we need right now. And

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Speaker 1: there's a number of things that we're working on. We

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Speaker 1: when we've stopped building on properties where we don't need

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Speaker 1: it yet, and we've let a number of leases laps

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Speaker 1: and not a small number, you know, of both those things.

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Speaker 1: We've had a lot of occasions in our history where

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Speaker 1: we've worked on productivity and made improvements, and we have

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Speaker 1: a lot of clearly defined niches and I'm confident we'renna

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Speaker 1: get back to the right level of profitability. You are

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Speaker 1: going to sub lease thirty million square feet of space?

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Speaker 1: Is there a mistake in the execution there because of

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Speaker 1: the OVERBA Again, because you have to make these decisions

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Speaker 1: two years in advance, and again, if you put yourself

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Speaker 1: back in twenty where we were growing thirty nine percent

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Speaker 1: year over year on a two billion dollar revenue run rate,

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Speaker 1: it's very hard to know what's the right amount to

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Speaker 1: build and you have to make a decision. And we

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Speaker 1: made the decision to air on the side of our

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Speaker 1: consumers and sellers. Ela Must just came out saying he

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Speaker 1: has a super bad feeling about the economy, Tesla laying

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Speaker 1: off ten percent of his staff. Jamie Diamond says he's

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Speaker 1: preparing for an economic hurricane. The World Bank just slashed

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Speaker 1: its forecast for global growth. How do you feel about

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Speaker 1: the economic climate? Well, I wasn't planning on giving any

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Speaker 1: guidance to please, but super bad or super super bad,

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Speaker 1: I think, uh, there's some things that relates to Amazon

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Speaker 1: that are useful to remember, you know. I think the

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Speaker 1: first pieces Remember the five of the of the worldwide

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Speaker 1: retail market segment share is offline. And if you believe

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Speaker 1: that that equation is going to flip at some point,

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Speaker 1: which we do, I think it will. Who will flip

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Speaker 1: over a long period of time. If you look at

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Speaker 1: different town turns, um you know, should we have one

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Speaker 1: at some point? We've been through a few obviously in

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Speaker 1: the twenty five years that I've been at Amazon. Customers

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Speaker 1: change their habits, and so, you know, I also think

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Speaker 1: there's those two reasons. Those two factors give me some

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Speaker 1: optimism that even if we have a downturn, that we

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Speaker 1: have the potential to still grow. We have a roadmap

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Speaker 1: that's you know, probably three to five years long, and

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Speaker 1: we're going to continue to invent. We're going to continue

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Speaker 1: to be insurgent, and we have a lot of work

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Speaker 1: to do to get to where we think we ultimately

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Speaker 1: can get for customers. You can catch my entire exclusive

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Speaker 1: interview with Andy Jase Wednesday, nine d pm Eastern on

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Speaker 1: Bloomberg Studio one point. Well, it is the end of

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Speaker 1: the Internet Explore. Microsoft has officially retired it's once dominant browser,

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Speaker 1: and while Internet Explorer has less than one percent of

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Speaker 1: worldwide market share according to stat Counter, it is still

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Speaker 1: causing some panic among businesses and governments. Japan in particular

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Speaker 1: might be the hardest it. A survey earlier this year

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Speaker 1: found that of companies still use Internet Explorer coming up

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Speaker 1: as the market scrapple with intensifying inflation, employees are facing

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Speaker 1: the brunt of it as more and more companies look

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Speaker 1: to layoffs to help save some cash. We'll have more

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Speaker 1: on that next well. As they watched the FED issue

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Speaker 1: it's biggest rate increase for all in an effort to

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Speaker 1: restrain rampant inflation, it might be too late for the

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Speaker 1: tens of thousands of employees facing layoffs in a slowing economy.

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Speaker 1: In the last month, we've watched companies across different sectors

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Speaker 1: announced layoffs crypto, fintech, even real estate. Tuesday, both Compass

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Speaker 1: and Redfinn announced they were cutting more than nine jobs

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Speaker 1: combine for more not only these layoffs, but the broader

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Speaker 1: real estate market during this downturn. I'm joined by bloom

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Speaker 1: Brigs Patrick Clark, who covers all of this for us.

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Speaker 1: Was it surprising to see these kind of layoffs in

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Speaker 1: the real estate tech business given just how um much

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Speaker 1: the real estate market was booming. I don't really well.

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Speaker 1: I think in January it might have been surprising. By

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Speaker 1: you know, March or April, as maury trade started going

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Speaker 1: higher and sales started slowing, less surprising. And by the

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Speaker 1: time these companies reported earnings I think in May, you

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Speaker 1: know it, it almost felt inevitable that, um that they

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Speaker 1: were going to need to downsize. I mean, Compass in

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Speaker 1: Redfin somewhat different businesses, but um you know, one one

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Speaker 1: employees agents as independent contractors. That's Compass, and all their

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Speaker 1: employees are either you know, developers making software for the

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Speaker 1: agents or you know, various types of support staff readfin

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Speaker 1: actually employees UM its own agents, and there's a different

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Speaker 1: compensation structure and so forth. But um, the at a

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Speaker 1: point when there are a lot fewer home sales and

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Speaker 1: this um a lot less commission revenue coming into the brokerage,

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Speaker 1: it feels inevitable that they're going to have to cut staff.

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Speaker 1: So we're seeing a number of companies, tech companies announcing layoffs.

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Speaker 1: Robin Hood, coin Base, UM, you know read it just

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Speaker 1: announced more layoffs today. But what are these real estate

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Speaker 1: technology companies in particular them announcing layoffs. What does it

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Speaker 1: have to say about the housing market. Yeah, there's just um,

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Speaker 1: it's the housing market is slow and and and and

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Speaker 1: we don't know exactly how long it's going to take.

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Speaker 1: Red Fan CEO Glenn Coleman said in the memo announcing

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Speaker 1: the layoffs on Tuesday that sales were volume was sevent

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Speaker 1: lower in May first company and that it would be

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Speaker 1: year likely be years and not months um before you know,

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Speaker 1: before the situation resolved itself. So you know, given um,

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Speaker 1: given that it's it's it's these companies have a long

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Speaker 1: road ahead. You know, they enjoyed during COVID. Uh probably

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Speaker 1: the best possible conditions for themselves. And that's not just

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Speaker 1: red vanden Compass, but also Zelo or open Door, you know,

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Speaker 1: any number of others. Many of these companies couldn't make

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Speaker 1: money in the best housing market pretty much ever, so um,

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Speaker 1: they're going to be in for you know, a pretty

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Speaker 1: new scenario now interesting, And I wonder about commercial real

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Speaker 1: estate as well. We just heard from Amazon CEO Andy

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Speaker 1: Jazzy talking about letting leases run out, Amazon subleasing thirty

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Speaker 1: million square feet of its own space. Is this something

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Speaker 1: We're going to see a lot of companies grapple with

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Speaker 1: what to do with real estate that they picked up

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Speaker 1: or perhaps not because in the pandemics some folks pulled

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Speaker 1: back on real estate. So far, it seems like there's

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Speaker 1: demand for the industrial real estate that you know that

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Speaker 1: that at Amazon either owns or leases the you know. Um.

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Speaker 1: Just recently there was a big merger announced in the

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Speaker 1: industrial warehouse in the industrial real estate space. UM company

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Speaker 1: called Prologists, which is a big landlord to Amazon bought

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Speaker 1: a company called Duke Realty, which is I think even

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Speaker 1: more exposed to Amazon leases. So, you know, the if

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Speaker 1: Amazon pulls back a little, I think there's the assumption

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Speaker 1: in the commercial real estate world that there's still a bigger,

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Speaker 1: broader shift to e commerce and there's other places to

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Speaker 1: fill warehouse demand. All right, bloombergs Patrick Clark, who covers

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Speaker 1: the real estate market for US. Patrick, thank you for

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Speaker 1: your insights. Welcome back to Bloomberg Technology. I Emily Chang

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Speaker 1: in San Francisco. Fifty million dollars just defying the gloomy

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Speaker 1: morale among private tech investors. How much was raised in

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Speaker 1: venture capital for FPV the debut fund from Felice's Ventures

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Speaker 1: and Morgan Stanley alums Wesley Chan and Pegg at Ibraheimni,

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Speaker 1: which will emphasize early stage deals where they say they

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Speaker 1: have experience. They're both joining me now for more. But

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Speaker 1: first I want to ask you both about the markets

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Speaker 1: and the tumult that we are seeing today. Um Pega,

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Speaker 1: you rose to the top of the ranks at Morgan

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Speaker 1: Stanley and Cisco UM in earlier days. What do you

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Speaker 1: make of what's happening right now? What kind of macro

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Speaker 1: environment are we headed for? I mean, it's um no

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Speaker 1: surprise we've you know, interest rates are like gravity, and

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Speaker 1: when they're really low, we have a lot of high valuation.

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Speaker 1: When it rises, gravity goes up at things fall, and

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Speaker 1: UM we're seeing that now. Look, the FED announced seventy

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Speaker 1: five basis points somewhat expected UM in the last twenty

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Speaker 1: four hours. And what it means is cost of capital

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Speaker 1: is expensive and it just got more expensive faster. So

431
00:22:58,520 --> 00:23:01,400
Speaker 1: it does mean to move away from alternative assets classes

432
00:23:01,720 --> 00:23:04,720
Speaker 1: like VC. So for for us, look, Wesley and I

433
00:23:04,760 --> 00:23:07,800
Speaker 1: are so excited to have UM closed the fund during

434
00:23:07,800 --> 00:23:10,240
Speaker 1: this environment to make sure we have dry powder for

435
00:23:10,359 --> 00:23:13,280
Speaker 1: really mission driven founders who are going to continue to

436
00:23:13,400 --> 00:23:17,160
Speaker 1: be born in these environments. And regardless of capital getting

437
00:23:17,160 --> 00:23:20,480
Speaker 1: more expensive. UM. You know, it's not lost on us.

438
00:23:20,480 --> 00:23:23,320
Speaker 1: Both Westie and I have gone through two downturns UM,

439
00:23:23,400 --> 00:23:26,840
Speaker 1: and it's companies. In these downturns, some of the best

440
00:23:26,920 --> 00:23:29,320
Speaker 1: enduring companies have been born. You look at Google, you

441
00:23:29,320 --> 00:23:32,119
Speaker 1: look at Airbnb, you look at Uber, you look at

442
00:23:32,119 --> 00:23:35,000
Speaker 1: a Lassie, and these were all companies born and you know,

443
00:23:35,800 --> 00:23:39,320
Speaker 1: more expensive capital environments, and those founders, those mission driven

444
00:23:39,320 --> 00:23:42,199
Speaker 1: founders are going to continue to be coming around, and

445
00:23:42,240 --> 00:23:44,959
Speaker 1: we're making sure we're going to have capital to support

446
00:23:45,040 --> 00:23:47,400
Speaker 1: those in back the truck up when we find them.

447
00:23:47,560 --> 00:23:49,800
Speaker 1: Wesley as someone who's gone through a couple of these.

448
00:23:49,880 --> 00:23:51,720
Speaker 1: How bad do you think this recession is gonna be?

449
00:23:51,880 --> 00:23:54,480
Speaker 1: Is it gonna look more like two thousand eight or

450
00:23:54,640 --> 00:23:59,240
Speaker 1: two thousand or something else? You probably look probably looked

451
00:23:59,240 --> 00:24:01,320
Speaker 1: more like two And you know you're gonna see a

452
00:24:01,320 --> 00:24:04,320
Speaker 1: lot of companies who can't raise capital sort of close shop.

453
00:24:04,480 --> 00:24:06,919
Speaker 1: You're gonna see some layoffs because of that, which is unfortunate.

454
00:24:06,960 --> 00:24:09,640
Speaker 1: But you know, people keep forgetting about the upside, which

455
00:24:09,680 --> 00:24:12,600
Speaker 1: is that companies like Google, Nuber, and Airbnb got formed

456
00:24:13,080 --> 00:24:15,240
Speaker 1: in these crucible moments. You know, I started my career

457
00:24:15,240 --> 00:24:18,280
Speaker 1: at Google uh in early two thousand one, and back

458
00:24:18,280 --> 00:24:20,800
Speaker 1: then there was no other company really hiring. You know,

459
00:24:20,800 --> 00:24:22,600
Speaker 1: Google came out of that moment where they were able

460
00:24:22,640 --> 00:24:25,640
Speaker 1: to hire employees for relatively low costs. There were moments

461
00:24:25,680 --> 00:24:27,720
Speaker 1: where we were buying our office furniture off of these

462
00:24:27,720 --> 00:24:31,080
Speaker 1: auctions where we were getting discounts of up to eight

463
00:24:31,200 --> 00:24:34,360
Speaker 1: percent off stuff. Um. You know, every engineer from top

464
00:24:34,359 --> 00:24:36,080
Speaker 1: schools wanted to come and work for Google. So in

465
00:24:36,119 --> 00:24:39,600
Speaker 1: these moments of what seems like crisis, there's massive upside

466
00:24:39,640 --> 00:24:41,720
Speaker 1: for the companies that are run by these mission driven

467
00:24:41,760 --> 00:24:44,080
Speaker 1: founders that we back. You know, I firsthand witnessed it

468
00:24:44,160 --> 00:24:47,040
Speaker 1: at at Google from the fourteen years I was there

469
00:24:47,080 --> 00:24:48,800
Speaker 1: and got the c Google build what is one of

470
00:24:48,800 --> 00:24:51,240
Speaker 1: the world's most world changing companies from those early days.

471
00:24:51,720 --> 00:24:55,160
Speaker 1: It's interesting that you mentioned Google because peg I used

472
00:24:55,160 --> 00:24:59,120
Speaker 1: to work at Cisco, where the stock still isn't back

473
00:24:59,160 --> 00:25:01,639
Speaker 1: to what it was in the dot com bust. So

474
00:25:01,680 --> 00:25:04,920
Speaker 1: which companies in tech are going to be the Cisco's

475
00:25:04,920 --> 00:25:08,959
Speaker 1: of today and which startups you know, in what areas

476
00:25:08,960 --> 00:25:11,240
Speaker 1: do you think you're gonna see that kind of disruption

477
00:25:11,359 --> 00:25:15,560
Speaker 1: to find you know, who's gonna be the Google? Yeah? Um, look,

478
00:25:15,600 --> 00:25:18,800
Speaker 1: I think when we were early stage funds, so we're

479
00:25:18,840 --> 00:25:21,679
Speaker 1: really focused on you know, mission driven founders who are

480
00:25:21,720 --> 00:25:25,000
Speaker 1: building long have hundred year plans and long lasting businesses.

481
00:25:25,000 --> 00:25:27,679
Speaker 1: So those founders think about the cost of capital not

482
00:25:27,760 --> 00:25:30,960
Speaker 1: being cheap, which means they care about, you know, unit economics.

483
00:25:30,960 --> 00:25:34,399
Speaker 1: They care about being able to grow um even given

484
00:25:34,400 --> 00:25:37,600
Speaker 1: more expensive capital. And you look at companies like a Cisco,

485
00:25:37,680 --> 00:25:40,160
Speaker 1: I mean they've been because they weren't growing as fast.

486
00:25:40,200 --> 00:25:43,399
Speaker 1: They've they've you know, they've been focused on growth margin

487
00:25:43,480 --> 00:25:45,840
Speaker 1: and you're gonna have to have a shift when capital

488
00:25:45,960 --> 00:25:48,080
Speaker 1: is not as cheap. You know, it's not growth at

489
00:25:48,080 --> 00:25:50,920
Speaker 1: all costs, and you have to shift more towards making

490
00:25:50,920 --> 00:25:54,680
Speaker 1: sure you you can survive um these higher costs environments

491
00:25:54,680 --> 00:25:57,440
Speaker 1: and you have well capitalized to do that. And there's

492
00:25:57,560 --> 00:26:00,160
Speaker 1: amazing growth companies that are doing that. Now. You look

493
00:26:00,160 --> 00:26:02,520
Speaker 1: at Canada, you look at Guild, you look at those

494
00:26:02,560 --> 00:26:05,600
Speaker 1: They well capitalized, They're going to be able to endure this,

495
00:26:05,720 --> 00:26:08,240
Speaker 1: and they have great, you know, hundred year missions ahead

496
00:26:08,280 --> 00:26:11,480
Speaker 1: of them. So I think it's really about time horizons

497
00:26:11,480 --> 00:26:13,840
Speaker 1: and knowing that there's going to be some bumps in

498
00:26:13,880 --> 00:26:16,440
Speaker 1: the you know, short term, and making sure you're set

499
00:26:16,520 --> 00:26:20,200
Speaker 1: up for really passing this in a time and actually

500
00:26:20,400 --> 00:26:24,200
Speaker 1: taking off during these times. You mentioned Canava and Guild,

501
00:26:24,320 --> 00:26:29,639
Speaker 1: other companies you're in, flex Sport, plaid Um Wesley, What

502
00:26:29,720 --> 00:26:32,119
Speaker 1: do you tell What advice are you giving to founders

503
00:26:32,160 --> 00:26:35,320
Speaker 1: in this downturn? My former colleague Eric Newcomer in his

504
00:26:35,400 --> 00:26:38,040
Speaker 1: blog said that some founders are complaining that a lot

505
00:26:38,119 --> 00:26:40,800
Speaker 1: of the advice they're getting from VC sound a lot

506
00:26:40,880 --> 00:26:44,880
Speaker 1: more like marketing speak, you know, cut to the chase. Yeah,

507
00:26:44,920 --> 00:26:47,720
Speaker 1: I saw that too. I agree. I completely agree with Eric.

508
00:26:47,800 --> 00:26:50,200
Speaker 1: You know, the advice advice I give this simple take

509
00:26:50,200 --> 00:26:52,679
Speaker 1: advantage of it. Never let a great disaster go to waste.

510
00:26:52,800 --> 00:26:55,119
Speaker 1: This is this is a you know, Bill Campbell was

511
00:26:55,160 --> 00:26:56,680
Speaker 1: a person I had the privilege of working with when

512
00:26:56,680 --> 00:26:59,520
Speaker 1: I was at Google. He was a trollneller, coach, chronical

513
00:26:59,560 --> 00:27:01,359
Speaker 1: netbook and he would come up to Larry and study

514
00:27:01,400 --> 00:27:04,120
Speaker 1: all the time. It's like, look, this economy is crashing,

515
00:27:04,160 --> 00:27:05,959
Speaker 1: things are not going well. Don't let a good disaster

516
00:27:06,040 --> 00:27:08,520
Speaker 1: go to waste. Take advantage of it. Sees the moment.

517
00:27:08,760 --> 00:27:10,560
Speaker 1: And so that's the advice that we give to these founders.

518
00:27:10,680 --> 00:27:13,360
Speaker 1: You know, they they've been behaved. We back mission driven founders.

519
00:27:13,680 --> 00:27:15,720
Speaker 1: They behave as if every dollars or last either the

520
00:27:15,720 --> 00:27:18,240
Speaker 1: folks that fund the company on their credit card before

521
00:27:18,240 --> 00:27:20,240
Speaker 1: a single investor believes in them early on, and they'll

522
00:27:20,240 --> 00:27:22,159
Speaker 1: continue funding on the credit card if nobody believes in

523
00:27:22,200 --> 00:27:25,640
Speaker 1: them later on. And so when when when you're doing well,

524
00:27:25,640 --> 00:27:28,640
Speaker 1: when you're when you're very careful capital, when you are

525
00:27:28,680 --> 00:27:30,720
Speaker 1: sitting on a large horde of cash and you're profitable,

526
00:27:31,080 --> 00:27:34,000
Speaker 1: it is a fantastic opportunity for you to seize the moment,

527
00:27:34,119 --> 00:27:36,760
Speaker 1: hire all the top talent for half the prices they

528
00:27:36,760 --> 00:27:39,560
Speaker 1: would uh in a in a in an economy where

529
00:27:39,560 --> 00:27:43,080
Speaker 1: it's booming, and then go and like build product in

530
00:27:43,080 --> 00:27:45,600
Speaker 1: businesses that people want and that do well in the recession.

531
00:27:45,600 --> 00:27:47,080
Speaker 1: And I mean, like having witnessed at First and at

532
00:27:47,080 --> 00:27:49,080
Speaker 1: Google is nothing short of incredible the outcome of what

533
00:27:49,160 --> 00:27:51,679
Speaker 1: happens when you see the moment. So this isn't about

534
00:27:51,760 --> 00:27:54,080
Speaker 1: let's lay off a bunch of people, let's preserve cash.

535
00:27:54,119 --> 00:27:56,040
Speaker 1: This is about leaning in. And you know we're partners

536
00:27:56,080 --> 00:27:57,840
Speaker 1: to help fund these mission driven founders do it when

537
00:27:57,840 --> 00:27:59,080
Speaker 1: the moment is right. That's why we have four h

538
00:27:59,320 --> 00:28:01,800
Speaker 1: fifty million dollars help them out today. Are you guys

539
00:28:01,800 --> 00:28:04,680
Speaker 1: gonna be leaning into crypto or not? Pega. Eric also

540
00:28:04,760 --> 00:28:08,280
Speaker 1: wrote that some vcs are quietly telling him they never

541
00:28:08,320 --> 00:28:11,280
Speaker 1: believed in crypto anyway. Well, I mean this is a

542
00:28:11,320 --> 00:28:14,520
Speaker 1: good one. Look I'll say it. Wesley was I think

543
00:28:14,520 --> 00:28:17,399
Speaker 1: in November when he was on stage where um he

544
00:28:18,240 --> 00:28:20,080
Speaker 1: um it was crypto was that as high and he

545
00:28:20,160 --> 00:28:23,520
Speaker 1: actually called it? So, Look, we haven't been involved in UM.

546
00:28:23,720 --> 00:28:26,840
Speaker 1: We're not investing in this fund out for those types

547
00:28:26,840 --> 00:28:30,800
Speaker 1: of businesses we um. We pick really resalient, long term businesses,

548
00:28:30,800 --> 00:28:33,399
Speaker 1: and we have to understand the underlying value and so

549
00:28:33,800 --> 00:28:36,359
Speaker 1: um leslie, you want to take it? You called it

550
00:28:36,400 --> 00:28:38,840
Speaker 1: on stage. I think you called the key and you

551
00:28:38,920 --> 00:28:46,080
Speaker 1: called the leslie. Okay, I pique Wesley. Where's the d Yes, yes,

552
00:28:46,160 --> 00:28:48,600
Speaker 1: although there still to come. I mean, you know, at

553
00:28:48,600 --> 00:28:49,920
Speaker 1: the end of the day, Bill Gates called it the

554
00:28:49,920 --> 00:28:51,920
Speaker 1: greater fulls theory, right, you know, there's got to be.

555
00:28:52,160 --> 00:28:54,720
Speaker 1: It's a business models that's sometimes predicated and finding a

556
00:28:54,720 --> 00:28:57,200
Speaker 1: greater full to pay up for your for your for

557
00:28:57,280 --> 00:28:59,440
Speaker 1: your for your investment in crypto. And so when all

558
00:28:59,440 --> 00:29:01,720
Speaker 1: the fulls are out, you know, there's somebody left to

559
00:29:01,720 --> 00:29:03,840
Speaker 1: buy up your investment, it goes to zero. So we've

560
00:29:03,840 --> 00:29:07,160
Speaker 1: avoided it. We've never done any crypto investments. It's something

561
00:29:07,200 --> 00:29:09,440
Speaker 1: that we we people made fun of us for avoiding

562
00:29:09,440 --> 00:29:10,920
Speaker 1: it and saying that we were, you know, when we

563
00:29:10,920 --> 00:29:12,880
Speaker 1: were the guys not getting rich off of it. And

564
00:29:12,920 --> 00:29:15,200
Speaker 1: you know, today it's crashing like crazy. It's not lost

565
00:29:15,240 --> 00:29:17,400
Speaker 1: on me that today's headline was that bitcoin almost dropped

566
00:29:17,400 --> 00:29:19,920
Speaker 1: below twenty uh and was back, you know, and it's

567
00:29:19,960 --> 00:29:21,840
Speaker 1: all time low, and you know, we're announcing a four

568
00:29:22,080 --> 00:29:24,600
Speaker 1: fifty million dollar fund to investment resilient founders that don't

569
00:29:24,600 --> 00:29:27,000
Speaker 1: do crypto businesses. So it's one of those things where

570
00:29:27,120 --> 00:29:29,200
Speaker 1: you know, a lot of our LPs are sophisticated, blue

571
00:29:29,240 --> 00:29:32,160
Speaker 1: chip charities and foundations. They run children's hospitals. One of

572
00:29:32,160 --> 00:29:35,600
Speaker 1: our LPs is a foundation that you know, provides underprivileged

573
00:29:35,640 --> 00:29:37,560
Speaker 1: kids access to the performing arts. And last one want

574
00:29:37,600 --> 00:29:38,840
Speaker 1: to do is take their money and put it in

575
00:29:38,840 --> 00:29:41,560
Speaker 1: the business where you know, it's funded by greater fools.

576
00:29:41,600 --> 00:29:43,600
Speaker 1: So you know, we we want to preserve their capital

577
00:29:43,640 --> 00:29:45,680
Speaker 1: and find great businesses like Canava and Fox Sports that

578
00:29:45,760 --> 00:29:47,720
Speaker 1: do things that add value to the world and add

579
00:29:47,800 --> 00:29:49,800
Speaker 1: value to their customers. And you know, over the long

580
00:29:49,840 --> 00:29:53,600
Speaker 1: time Horizon, as Pega mentioned, they tend to do really well. Peg.

581
00:29:53,680 --> 00:29:55,440
Speaker 1: I know you closed this fun just in the last

582
00:29:55,480 --> 00:29:58,600
Speaker 1: few weeks. What was it like closing in a downturn?

583
00:29:58,640 --> 00:30:01,320
Speaker 1: Did you have any moments of pan where you thought, oh, gosh,

584
00:30:01,680 --> 00:30:03,200
Speaker 1: I don't know, you know, we're able to do this.

585
00:30:04,040 --> 00:30:07,160
Speaker 1: I'd love to say, um, yes, in the last few weeks,

586
00:30:07,200 --> 00:30:09,440
Speaker 1: but it was really early on we started this fund,

587
00:30:09,520 --> 00:30:13,000
Speaker 1: you know, in in February. We were fortunate and humbled

588
00:30:13,040 --> 00:30:15,480
Speaker 1: by the reception we got, but there was a moment

589
00:30:15,560 --> 00:30:18,920
Speaker 1: Wesley and I decided to launch it, and um, Russia

590
00:30:19,080 --> 00:30:22,240
Speaker 1: decided to start the war against Ukraine and we're like,

591
00:30:22,320 --> 00:30:25,360
Speaker 1: what's happening and is this the right time? And and

592
00:30:25,400 --> 00:30:27,680
Speaker 1: we were really lucky raised this in a short amount

593
00:30:27,680 --> 00:30:29,640
Speaker 1: of time, so really we closed it a few weeks ago,

594
00:30:29,680 --> 00:30:32,920
Speaker 1: but um, most of the commitments happened very early on.

595
00:30:33,040 --> 00:30:35,880
Speaker 1: And UM, we're excited to have this dry powder to

596
00:30:35,960 --> 00:30:39,040
Speaker 1: really be able to fund these mission driven founders because

597
00:30:39,040 --> 00:30:42,160
Speaker 1: they're gonna need capital and we're gonna be here for them.

598
00:30:42,160 --> 00:30:44,360
Speaker 1: All right, Well, we're excited to watch where and how

599
00:30:44,400 --> 00:30:47,840
Speaker 1: you put your cash to work. SPV Ventures co founders

600
00:30:47,840 --> 00:30:52,400
Speaker 1: and managing partners Pegga Abrahemi and Wesley Champ, thank you both.

601
00:31:04,720 --> 00:31:06,600
Speaker 1: And it's time now for our crypto report. With the

602
00:31:06,600 --> 00:31:10,959
Speaker 1: bear market for bitcoin entering its deepest, darkest phase, according

603
00:31:11,000 --> 00:31:13,920
Speaker 1: to some observers, was even long term holders who toughed

604
00:31:13,920 --> 00:31:19,000
Speaker 1: it out until now coming under extreme pressure. Galaxy Digital

605
00:31:19,040 --> 00:31:22,160
Speaker 1: chief like nov Grats, has two thirds of crypto hedge funds,

606
00:31:22,200 --> 00:31:26,000
Speaker 1: could fail if the market keeps tumbling. Our crypto Contributionally

607
00:31:26,040 --> 00:31:29,560
Speaker 1: Bossa here to talk more about those concerns. Shanali take

608
00:31:29,600 --> 00:31:32,320
Speaker 1: it away, Emily, Seriously, we had talked about tokens and

609
00:31:32,360 --> 00:31:35,000
Speaker 1: projects facing pressure in the last couple of weeks, but

610
00:31:35,040 --> 00:31:38,720
Speaker 1: now we're talking about the investors themselves. One company that

611
00:31:38,760 --> 00:31:41,840
Speaker 1: people are very worried about is Three Arrows Capital, after

612
00:31:41,920 --> 00:31:44,880
Speaker 1: a very vague tweet went out from a founder saying

613
00:31:44,920 --> 00:31:47,720
Speaker 1: that they are in the process of communicating with relevant

614
00:31:47,720 --> 00:31:50,959
Speaker 1: parties and fully committed to working this out. What does

615
00:31:51,000 --> 00:31:52,240
Speaker 1: that mean at the end of the day, and what

616
00:31:52,440 --> 00:31:54,400
Speaker 1: is the future for a company like Three Arrows and

617
00:31:54,440 --> 00:31:57,400
Speaker 1: are they the only ones? Remember Three Arrows was very

618
00:31:57,440 --> 00:32:01,440
Speaker 1: exposed to Luna, which had apsed earlier this year. They

619
00:32:01,440 --> 00:32:05,560
Speaker 1: had invested a prior to that collapse. But remember it's

620
00:32:05,600 --> 00:32:08,640
Speaker 1: not just the collapse of Luna. There's a broader decline

621
00:32:08,640 --> 00:32:11,280
Speaker 1: and crypto assets that have been very severe, a lot

622
00:32:11,320 --> 00:32:14,200
Speaker 1: of deleveraging, and the question is how far will that

623
00:32:14,240 --> 00:32:16,560
Speaker 1: wash out go, especially if some of these funds start

624
00:32:16,600 --> 00:32:19,800
Speaker 1: to liquidate many of the assets that they hold. A

625
00:32:19,960 --> 00:32:23,680
Speaker 1: very cryptic tweet indeed, Tonaleo, Okay, stick with us. I

626
00:32:23,680 --> 00:32:25,120
Speaker 1: want to talk about all this and more with our

627
00:32:25,160 --> 00:32:29,400
Speaker 1: next guest. Coin Shares Chief strategy officer, Melton demiraz Meldon.

628
00:32:29,520 --> 00:32:31,000
Speaker 1: Great to have you with us, so I know you

629
00:32:31,040 --> 00:32:34,479
Speaker 1: were listening into our segment earlier where our guest Wesley

630
00:32:34,560 --> 00:32:36,480
Speaker 1: Chance and he called the top and that the bottom

631
00:32:36,640 --> 00:32:40,240
Speaker 1: is even farther down from where we are. Now, what's

632
00:32:40,240 --> 00:32:44,680
Speaker 1: your reaction to that? Look, hey, Emily has snolly great

633
00:32:44,720 --> 00:32:47,440
Speaker 1: to see you both. Wish it was under better circumstances.

634
00:32:47,720 --> 00:32:51,400
Speaker 1: Everyone's been calling bitcoin tops since the beginning of of bitcoin.

635
00:32:51,520 --> 00:32:54,520
Speaker 1: I've been in this industry professionally for seven years. One

636
00:32:54,560 --> 00:32:57,120
Speaker 1: trend that's not going away as we continue to see

637
00:32:57,280 --> 00:33:01,120
Speaker 1: higher highs as well as higher lows. Even at current

638
00:33:01,160 --> 00:33:05,040
Speaker 1: prices around twenty thousand, we are still above previous all

639
00:33:05,120 --> 00:33:07,600
Speaker 1: time highs. In the last cycle, we tend to see

640
00:33:07,640 --> 00:33:11,960
Speaker 1: eighty nine draw douns. This is a volatile, highly cyclical asset,

641
00:33:12,400 --> 00:33:15,000
Speaker 1: but the secular trend is here to stay. At coin shares,

642
00:33:15,080 --> 00:33:18,280
Speaker 1: we continue to invest in great technology businesses that are

643
00:33:18,400 --> 00:33:21,160
Speaker 1: changing the world for the better, that are generating fantastic

644
00:33:21,200 --> 00:33:23,880
Speaker 1: returns for investors. So look, I think it's a matter

645
00:33:23,920 --> 00:33:26,840
Speaker 1: of time. Last year crypto commanded five percent of all

646
00:33:26,960 --> 00:33:29,960
Speaker 1: venture dollars. This year we're looking at around the same,

647
00:33:30,040 --> 00:33:32,800
Speaker 1: if not slightly higher. So I think crypto is here

648
00:33:32,840 --> 00:33:34,640
Speaker 1: to stay. But you know what, the proof is in

649
00:33:34,760 --> 00:33:37,840
Speaker 1: the return, So we'll see what the future brings. You know,

650
00:33:37,880 --> 00:33:40,680
Speaker 1: a lot of people are looking at that dollar number,

651
00:33:40,720 --> 00:33:43,520
Speaker 1: but you know others are saying the right number to

652
00:33:43,640 --> 00:33:47,560
Speaker 1: look at is nineteen eleven dollars, the high that bitcoin

653
00:33:47,640 --> 00:33:51,680
Speaker 1: hit during the last bull cycle. Is that the right

654
00:33:51,760 --> 00:33:53,640
Speaker 1: number to watch for? And if we get below that,

655
00:33:53,680 --> 00:33:56,720
Speaker 1: which we're very very close to, how bad a sign

656
00:33:56,880 --> 00:34:01,600
Speaker 1: is it. So look, I'm not tether to specific number,

657
00:34:01,960 --> 00:34:04,720
Speaker 1: not to use the phrase tether which might raise some

658
00:34:04,840 --> 00:34:07,440
Speaker 1: alarm bells. Today I had to work in a little

659
00:34:07,480 --> 00:34:11,160
Speaker 1: cryptopun um. I'm not so concerned about that previous all

660
00:34:11,200 --> 00:34:14,359
Speaker 1: time high number. What we're looking for is we're looking

661
00:34:14,400 --> 00:34:17,560
Speaker 1: at key liquidation levels. So we're seeing a lot of

662
00:34:17,600 --> 00:34:20,760
Speaker 1: people just given the structure of debt in the crypto market,

663
00:34:20,840 --> 00:34:25,080
Speaker 1: you have to overclateralize, and given these markets trade seven

664
00:34:25,160 --> 00:34:28,680
Speaker 1: three sixty five, you can get liquidated in an instant.

665
00:34:28,680 --> 00:34:31,400
Speaker 1: There is no grace period, there's no two week margin

666
00:34:31,480 --> 00:34:34,799
Speaker 1: call like Archegos had when when they were insolvent. And

667
00:34:34,880 --> 00:34:37,880
Speaker 1: so what we're looking at is key liquidation levels. And

668
00:34:37,880 --> 00:34:40,680
Speaker 1: then the other key numbers to look at is again

669
00:34:40,719 --> 00:34:43,720
Speaker 1: that drawed down from peak to trough. So the last

670
00:34:44,280 --> 00:34:47,319
Speaker 1: cycle we saw an eighty five percent draw down from

671
00:34:47,320 --> 00:34:50,400
Speaker 1: peak to trough. This cycle, the high was around sixty

672
00:34:50,480 --> 00:34:53,600
Speaker 1: nine thousand, so an eighty to nine draw down would

673
00:34:53,600 --> 00:34:56,680
Speaker 1: put us between seven and fourteen thousand. So right now

674
00:34:56,719 --> 00:34:58,879
Speaker 1: we're at about a seventy percent draw down. We could

675
00:34:58,880 --> 00:35:00,960
Speaker 1: go a bit lower, but we're seeing strong support around

676
00:35:00,960 --> 00:35:04,440
Speaker 1: this twenty k number, and we're seeing liquidations slowed and

677
00:35:04,520 --> 00:35:07,120
Speaker 1: for spots selling has slowed as well. You know, speaking

678
00:35:07,160 --> 00:35:10,280
Speaker 1: of for selling this idea of three arrows and worries

679
00:35:10,320 --> 00:35:13,160
Speaker 1: about other funds in the industry, the problem about funds

680
00:35:13,480 --> 00:35:17,040
Speaker 1: facing trouble is more liquidation. So the question I have

681
00:35:17,120 --> 00:35:20,279
Speaker 1: for you too is how systemic can this get? How

682
00:35:20,360 --> 00:35:24,319
Speaker 1: can some issues be get more issues here to kind

683
00:35:24,320 --> 00:35:27,600
Speaker 1: of create some of those drawdowns that you're talking about. Yeah,

684
00:35:27,640 --> 00:35:31,040
Speaker 1: and I think Sonale that's exactly the challenge here. Um.

685
00:35:31,120 --> 00:35:34,120
Speaker 1: One of the great issues in in crypto is there

686
00:35:34,160 --> 00:35:38,160
Speaker 1: tends to be an asset liability mismatch that happens whatever

687
00:35:38,239 --> 00:35:41,560
Speaker 1: there is a drop in price, Um, there's more collateral

688
00:35:41,560 --> 00:35:43,960
Speaker 1: that needs to be posted to keep some of the

689
00:35:44,080 --> 00:35:46,520
Speaker 1: leverage in the system. And again, positions tend to be

690
00:35:46,560 --> 00:35:49,560
Speaker 1: over clatteralized and can be called and even forced liquidated

691
00:35:49,600 --> 00:35:52,280
Speaker 1: at any point in time. So we kind of sees

692
00:35:52,360 --> 00:35:56,359
Speaker 1: this vicious cycle where your liabilities decrease in duration, so

693
00:35:56,520 --> 00:35:59,240
Speaker 1: you may have received as a long term liability becomes

694
00:35:59,239 --> 00:36:01,840
Speaker 1: a short term one. You need cash. And then what

695
00:36:01,960 --> 00:36:04,239
Speaker 1: we have on the flip side, if you're investing in

696
00:36:04,400 --> 00:36:07,200
Speaker 1: venture and some of these long term locked up investments,

697
00:36:07,520 --> 00:36:10,319
Speaker 1: your assets are more long term assets. You don't have

698
00:36:10,360 --> 00:36:13,520
Speaker 1: as much short term cash, or those short term salable

699
00:36:13,560 --> 00:36:17,040
Speaker 1: assets you have have declined forty fifty in some cases

700
00:36:18,360 --> 00:36:20,720
Speaker 1: or in the case of Luna a d percent in value,

701
00:36:21,200 --> 00:36:24,120
Speaker 1: So you have this mismatch that gets exacerbated by the

702
00:36:24,160 --> 00:36:27,080
Speaker 1: fact that there is no duration on debt in crypto yet.

703
00:36:27,440 --> 00:36:29,880
Speaker 1: And so again this tends to lead to this recursive

704
00:36:29,920 --> 00:36:33,520
Speaker 1: pattern where margin calls lead to people's spots selling, which

705
00:36:33,600 --> 00:36:36,880
Speaker 1: leads to falling prices more margin calls. So what we

706
00:36:36,960 --> 00:36:39,200
Speaker 1: need to see is for this forced spots selling to

707
00:36:39,280 --> 00:36:42,920
Speaker 1: stop before we find some stability here. This is a

708
00:36:42,960 --> 00:36:46,040
Speaker 1: pretty pivotal moment. It's been a very steep draw down.

709
00:36:46,080 --> 00:36:49,600
Speaker 1: As you had mentioned, what's the wake up call here?

710
00:36:50,040 --> 00:36:52,759
Speaker 1: What are the things that people are flocking to that

711
00:36:52,840 --> 00:36:55,640
Speaker 1: are that are longer term projects in nature that are

712
00:36:55,680 --> 00:36:59,520
Speaker 1: maybe safer to make it through this crash. Look for

713
00:36:59,600 --> 00:37:02,480
Speaker 1: us a coin shares, we manage billions of dollars in

714
00:37:02,600 --> 00:37:06,520
Speaker 1: assets we trade in markets. Risk management is the number

715
00:37:06,520 --> 00:37:10,400
Speaker 1: one principle. The fundamentals of finance don't go away just

716
00:37:10,480 --> 00:37:14,400
Speaker 1: because we're in a new asset class. So managing your liabilities,

717
00:37:14,480 --> 00:37:19,560
Speaker 1: managing your assets, managing duration really important. Risk management is

718
00:37:19,600 --> 00:37:22,120
Speaker 1: something we tend to forget about because you don't need

719
00:37:22,160 --> 00:37:24,440
Speaker 1: it as much when number go up. But now that

720
00:37:24,520 --> 00:37:27,440
Speaker 1: the numbers going down, I think we're seeing who hasn't

721
00:37:27,440 --> 00:37:30,960
Speaker 1: been managing risk. And so number one will always be

722
00:37:31,160 --> 00:37:33,640
Speaker 1: for trading of of any type, markets of any type,

723
00:37:33,680 --> 00:37:37,040
Speaker 1: just being really cognizant of the inherent risk you're taking

724
00:37:37,040 --> 00:37:39,840
Speaker 1: in your business model with your positions, making sure you

725
00:37:39,880 --> 00:37:43,480
Speaker 1: manage that risk. The added wrinkle of crypto is there

726
00:37:43,640 --> 00:37:47,240
Speaker 1: is this really interesting structural change in the market because

727
00:37:47,280 --> 00:37:51,200
Speaker 1: all these assets are on chain trading three sixty five

728
00:37:51,239 --> 00:37:54,440
Speaker 1: with instant settlement. It adds a lot of pressure to

729
00:37:54,719 --> 00:37:58,480
Speaker 1: markets and times of volatility. And then the second component

730
00:37:58,600 --> 00:38:01,680
Speaker 1: that's sort of a new ring goal is there's obviously

731
00:38:01,760 --> 00:38:04,759
Speaker 1: technical risk in a lot of these defy our entream

732
00:38:04,840 --> 00:38:07,680
Speaker 1: protocols where all of a sudden, instead of interacting with

733
00:38:07,760 --> 00:38:12,200
Speaker 1: lawyers and bankers, you're interacting with smart contracts. New Frontier

734
00:38:12,200 --> 00:38:15,440
Speaker 1: allow to figure out a lot of folks building solutions

735
00:38:15,440 --> 00:38:18,240
Speaker 1: in the space that don't require token. At coin Shares,

736
00:38:18,280 --> 00:38:21,520
Speaker 1: we're continuing to invest. We're continuing to collaborate with great

737
00:38:21,560 --> 00:38:25,320
Speaker 1: partners for building excellent solutions to manage risk, to manage margin,

738
00:38:25,400 --> 00:38:28,279
Speaker 1: and to manage some of these new technical risks in

739
00:38:28,360 --> 00:38:31,400
Speaker 1: new and innovative ways. So excited to continue doing that?

740
00:38:31,520 --> 00:38:35,280
Speaker 1: Bowl or Bear Market? Are you continuing to hire because

741
00:38:35,440 --> 00:38:39,920
Speaker 1: we're obviously looking at these eight percent layoffs. At coin Base,

742
00:38:40,480 --> 00:38:43,920
Speaker 1: Chong Pung Jao, the CEO of finance, had tongue in

743
00:38:43,960 --> 00:38:46,680
Speaker 1: cheek tweet saying it wasn't easy saying no to Super

744
00:38:46,719 --> 00:38:49,839
Speaker 1: Bowl ad stadium naming rights, large sponsored deals, but we

745
00:38:49,920 --> 00:38:53,560
Speaker 1: did and today we're hiring for two thousand open positions.

746
00:38:55,120 --> 00:38:57,600
Speaker 1: So a quen share. If we are not firing, we

747
00:38:57,680 --> 00:39:00,440
Speaker 1: have slowed down our pace of hiring. Think one of

748
00:39:00,440 --> 00:39:02,520
Speaker 1: the important things to keep in mind. I think coin

749
00:39:02,560 --> 00:39:05,560
Speaker 1: Base actually from a risk management perspective and a balance

750
00:39:05,600 --> 00:39:09,480
Speaker 1: sheet management perspectives being very prudent. On average coin bases

751
00:39:09,520 --> 00:39:12,759
Speaker 1: generating about one point six million dollars of revenue per

752
00:39:12,800 --> 00:39:16,080
Speaker 1: employee prior to these cuts. With revenues going down, they

753
00:39:16,080 --> 00:39:18,680
Speaker 1: obviously want to preserve profitability. That's in metric. We look

754
00:39:18,719 --> 00:39:21,160
Speaker 1: at it at coin shares as well. I don't think

755
00:39:21,160 --> 00:39:24,640
Speaker 1: we've seen anywhere close to the bottom of cuts. We're

756
00:39:24,680 --> 00:39:27,720
Speaker 1: going to continue to see more cuts in the publicly

757
00:39:27,760 --> 00:39:31,200
Speaker 1: listed companies as well as the privately listed companies. And

758
00:39:31,239 --> 00:39:33,279
Speaker 1: I think the other thing we will see is a

759
00:39:33,320 --> 00:39:36,600
Speaker 1: lot of companies are relying on unspacs and pipes and

760
00:39:36,640 --> 00:39:38,560
Speaker 1: all of these deals to try to go public and

761
00:39:38,560 --> 00:39:40,759
Speaker 1: get some liquidity. I think we're going to see a

762
00:39:40,800 --> 00:39:42,800
Speaker 1: lot of pressure on that going into Q three and

763
00:39:42,880 --> 00:39:44,400
Speaker 1: Q four as well, which is going to change the

764
00:39:44,480 --> 00:39:50,160
Speaker 1: hiring environment significantly. All right, Corn Shairs Chief strategy Officer

765
00:39:50,320 --> 00:39:53,719
Speaker 1: Melton Demerez appreciated taking the time to join us. Shonale

766
00:39:53,760 --> 00:39:58,320
Speaker 1: as always thank you. Coming up. Will Elon Musk still

767
00:39:58,360 --> 00:40:02,160
Speaker 1: need his Twitter center. His deal with Twitter actually goes

768
00:40:02,239 --> 00:40:06,560
Speaker 1: through plus who. Musk says he's leaning towards supporting for

769
00:40:07,920 --> 00:40:26,480
Speaker 1: presidential election. That's next. This is Bloomberg and it's that

770
00:40:26,600 --> 00:40:29,720
Speaker 1: time for more news from the world of Elon Musk,

771
00:40:29,800 --> 00:40:32,640
Speaker 1: the world's richest man, appealed the federal court ruling that

772
00:40:32,800 --> 00:40:36,840
Speaker 1: upheld the SEC's requirement for him to have a Twitter sitter,

773
00:40:36,960 --> 00:40:39,880
Speaker 1: which is ironic given he is about to buy Twitter.

774
00:40:40,080 --> 00:40:43,040
Speaker 1: At what happened. So in April US your judge said

775
00:40:43,520 --> 00:40:45,080
Speaker 1: you have to have your Twitter sitter. This was a

776
00:40:45,120 --> 00:40:46,840
Speaker 1: deal you made with the SEC, and just because you

777
00:40:46,840 --> 00:40:49,800
Speaker 1: didn't like it when you made it in two thousand eighteen,

778
00:40:50,000 --> 00:40:51,720
Speaker 1: you have to stick to it. You can't have remorse

779
00:40:51,760 --> 00:40:54,440
Speaker 1: about it. And just because you are going to own Twitter,

780
00:40:54,600 --> 00:40:57,640
Speaker 1: you still have to And so now legal team is

781
00:40:57,640 --> 00:41:01,440
Speaker 1: appealing this and they're saying that agreeming itself breaches his

782
00:41:01,480 --> 00:41:04,440
Speaker 1: freedom of speech, but also the SEC is harassing him.

783
00:41:04,520 --> 00:41:06,880
Speaker 1: So we'll see where it goes. It's more litigation from US.

784
00:41:07,000 --> 00:41:11,120
Speaker 1: Interesting and he is also using Twitter to share where

785
00:41:11,120 --> 00:41:14,160
Speaker 1: he's leaning right, So he said, it's a series of

786
00:41:14,160 --> 00:41:16,520
Speaker 1: tweets about three am in the morning New York time,

787
00:41:16,600 --> 00:41:19,719
Speaker 1: midnight San Francisco time. He did support Andrew Yang in

788
00:41:20,680 --> 00:41:24,160
Speaker 1: presidential election. He's now leaning to Rhonda Santists, and he

789
00:41:24,160 --> 00:41:27,839
Speaker 1: thinks Rhonda Santists who's the governor of Florida you see

790
00:41:27,880 --> 00:41:30,480
Speaker 1: on your screen. Can win. That's kind of the inference

791
00:41:30,480 --> 00:41:33,239
Speaker 1: we're getting his words. He thinks he can win. That's

792
00:41:33,280 --> 00:41:35,280
Speaker 1: where he's being his support. And de Santis is actually

793
00:41:35,320 --> 00:41:39,160
Speaker 1: speaking today, had some thoughts about Musque's support. Yes, so

794
00:41:39,480 --> 00:41:41,799
Speaker 1: matter of factly, they asked him what do you think

795
00:41:41,800 --> 00:41:45,640
Speaker 1: of this? And Rhonda Santist, the governor of Florida, said

796
00:41:45,680 --> 00:41:49,680
Speaker 1: that he welcomes the support quote support from African Americans.

797
00:41:49,760 --> 00:41:53,320
Speaker 1: Of course, Elon Musk is a white South African man,

798
00:41:53,840 --> 00:41:56,400
Speaker 1: and in two thousand eighteen, when Rhonda Santis was elected

799
00:41:56,480 --> 00:42:01,759
Speaker 1: governor of Florida, he did receive voting support from black Americans.

800
00:42:02,400 --> 00:42:05,880
Speaker 1: So those were his words today. It is what it is,

801
00:42:05,920 --> 00:42:08,120
Speaker 1: all right, This is just the way he's leaning. Though,

802
00:42:08,840 --> 00:42:10,600
Speaker 1: what do you make of the fact that he in

803
00:42:10,680 --> 00:42:15,840
Speaker 1: President Biden, who who should be natural allies just continue

804
00:42:15,880 --> 00:42:18,360
Speaker 1: to spark. Yes, Elon Must has been changing his politics

805
00:42:18,360 --> 00:42:20,440
Speaker 1: over a number of weeks, right, he says the Democrats

806
00:42:20,440 --> 00:42:23,320
Speaker 1: of the Party of division and hate and basically pulled

807
00:42:23,360 --> 00:42:25,160
Speaker 1: the support. The friction at the White House and the

808
00:42:25,200 --> 00:42:28,239
Speaker 1: administration Biden is Elon Must has called him out for

809
00:42:28,280 --> 00:42:31,800
Speaker 1: not supporting Tesla specifically, you know he's called Joe Biden

810
00:42:32,120 --> 00:42:34,799
Speaker 1: or accuse him of leading the Russian Revolution in EVS,

811
00:42:34,840 --> 00:42:37,480
Speaker 1: but not talking about Tesla. All right, we will see

812
00:42:37,480 --> 00:42:40,719
Speaker 1: how that plays out on Twitter. I assume yes, thank you.

813
00:42:40,800 --> 00:42:42,480
Speaker 1: And by the way, we're watching that all hands meeting.

814
00:42:42,520 --> 00:42:45,480
Speaker 1: Elon must gonna be speaking to um all of the

815
00:42:45,480 --> 00:42:48,560
Speaker 1: employees at Twitter Thursday morning. We'll have full coverage of that.

816
00:42:48,719 --> 00:42:51,239
Speaker 1: And that does it for this edition of Bloomberg Technology.

817
00:42:51,280 --> 00:42:53,600
Speaker 1: We're back here tomorrow with a number of great guests,

818
00:42:53,680 --> 00:42:58,000
Speaker 1: including T Mobile CEO Mike Seaver, Coin Bases, Mark Lamb,

819
00:42:58,040 --> 00:43:01,200
Speaker 1: and Jen hyman A Rent the Runway. I'm Emily Chang.

820
00:43:01,360 --> 00:43:02,120
Speaker 1: This is Blowberg