Speaker 1: From Bahard where Innovation, Money and power Collie in Silicon Valley, NBN.
Speaker 1: This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 2: I'm Caroline Heide at Bloomberg's World headquarters in New York,
Speaker 2: and I.
Speaker 3: Med Lovelow in San Francisco. This is Bloomberg Technology.
Speaker 2: Coming up from Teszla to Netflix. We're going to wrap
Speaker 2: up the week of tech earnings and of course push
Speaker 2: ahead to the big names reporting ahead much more to come.
Speaker 3: Plus, we'll sit down with the head of KKR's Tech
Speaker 3: Growth Fund to discuss where his firms these opportunities in
Speaker 3: technology after they just raised three billion dollars.
Speaker 2: And we're going to wrap up our coverage from New
Speaker 2: York Tech Week and hear from two venture capitalists where
Speaker 2: they're choosing to invest. Let's dig into what President Biden
Speaker 2: himself was saying last and a direct appeal to the
Speaker 2: American people just work funding for Israel and indeed Ukraine's
Speaker 2: war efforts.
Speaker 4: Take a listen, am awesome food and represent different threats,
Speaker 4: but they share this in common. They both want to
Speaker 4: completely annihilate in neighboring democracy, completely annihilated tonight.
Speaker 5: They're innocent people.
Speaker 4: All over the world, who hope because of us, who
Speaker 4: believe in a better life because of us, who are
Speaker 4: desperate not to be forgotten by.
Speaker 5: Us, and are waiting for us.
Speaker 6: But time is over.
Speaker 2: The essence, we want to discuss this further with Nick
Speaker 2: Waddams and over in Washington. Nick, it is a moment where,
Speaker 2: of course President Biden is appealing for more funds to
Speaker 2: be allocated at a time where.
Speaker 7: There is no Speaker of the House.
Speaker 2: But bring us up to speed with really the concerns
Speaker 2: we have about an escalating conflict across the Middle East.
Speaker 8: Right So that's the big question on everybody's mind right now.
Speaker 8: We're expecting that Israel could launch a ground invasion into
Speaker 8: the Gaza Strip really at any time time, and the
Speaker 8: US is saying they want to show their.
Speaker 5: Full support for Israel.
Speaker 8: While also wanting to avert a humanitarian crisis or a
Speaker 8: further humanitarian crisis that could further exacerbate tensions in the
Speaker 8: Arab world and potentially draw in Hesblah fighters and maybe
Speaker 8: even Iran.
Speaker 5: So you saw the President ask for another.
Speaker 8: About well more than one hundred billion dollars in funding
Speaker 8: last night. That money would go primarily to Ukraine, but
Speaker 8: there would be about fourteen billion dollars for Israel to
Speaker 8: supply it with munitions and other weaponry.
Speaker 5: Aim mostly at missile defense.
Speaker 8: So the concern there is that Israel, Israel's iron done
Speaker 8: system would be overwhelmed in the event that Hezbollah really
Speaker 8: launches a full scale missile attack. So a complicated and
Speaker 8: tricky tightrope for the president to walk to both pledge
Speaker 8: his support for Israel but hope to avoid that urgeoning
Speaker 8: humanitarian crisis.
Speaker 3: Nick lead our national security coverage here at Bloomberg and
Speaker 3: this show is Bloomberg Technology.
Speaker 9: He talks about.
Speaker 3: Iron Dome in real time broadly across the Middle East region.
Speaker 3: Now there is literally conflict. The United States has bases
Speaker 3: in several countries where they are dealing with missile attacks
Speaker 3: and thinking about the response. They are engaged in sort
Speaker 3: of active military operation. Could you just explain to our
Speaker 3: audience what is happening across the region on Friday as
Speaker 3: we speak, but also heading into the weekend.
Speaker 8: Well, you know, the primary issue obviously is that impending
Speaker 8: Israeli ground invasion, but you did have this situation yesterday
Speaker 8: where the US reported three incidents where drones they noticed
Speaker 8: what They called it an uptick in hostile drone activity,
Speaker 8: so drone attacks on US forces stationed in Iraq and
Speaker 8: also in Syria. There were minor injuries reported. But while
Speaker 8: the Pentagon was trying to say, you know, these are
Speaker 8: isolated incidents, what you see there is just a more
Speaker 8: hostility toward US forces in the region, and the concern
Speaker 8: there would be that the US itself would be pulled
Speaker 8: into this war. The administration has been flowing military assets
Speaker 8: to the region. They knocked down three cruise missiles from
Speaker 8: Houthy rebels in Yemen. But you are seeing this greater
Speaker 8: US involvement, and that has raised concerns that the US
Speaker 8: could possibly be pulled into this. The administration is saying, no,
Speaker 8: we would not put boots on the ground, but they
Speaker 8: have been sending more fighter jets, obviously aircraft carriers. So
Speaker 8: there really is that the concern that is the US
Speaker 8: looks to deter Iran and other actors.
Speaker 5: That itself itself could be drawn into the conflict.
Speaker 3: Be nice, Nate Wadhams, who leads our national security coverage
Speaker 3: out of DC, Thank you very much. I want to
Speaker 3: stay in the world of gey politics. Karen, talk about
Speaker 3: those new US rules which have aimed at restricting cutting
Speaker 3: edge technology going to China, and they've really hit She
Speaker 3: is one name this week which is in Nvidia. You
Speaker 3: see it there on a five day basis down nine percent,
Speaker 3: the worst two day decline in the last two sessions
Speaker 3: in more than a year.
Speaker 9: The US curbs.
Speaker 3: Threaten a fifth of Nvidia's revenue, which comes from China,
Speaker 3: particularly in the data center context Like this is a
Speaker 3: stock trading at its lowest level in a round a month,
Speaker 3: on track for its worst weekly decline since the weekending
Speaker 3: September second, it's a timing issue, right, because it's also
Speaker 3: stock goes up more than one hundred and eighty percent
Speaker 3: year to date.
Speaker 9: Yeah, and been the name in.
Speaker 2: AI And that's the context, right, how far this stock
Speaker 2: has run and times before we've seen pullbacks, worries about
Speaker 2: the fact that the euphori are around this name Particulian
Speaker 2: relationship to artificial intelligence has just gone too far too fast?
Speaker 2: Is it really a one trillion dollar opportunity here in
Speaker 2: terms of its own market capitalization?
Speaker 7: Each time we've seen.
Speaker 2: The pullbacks end up with a rally further and you
Speaker 2: have ended up being burned if you sold off and
Speaker 2: gonnas nose. We can ask Kathy Wood about that one
Speaker 2: when she has dan played this name since the start
Speaker 2: of the year. But it does feel like this has
Speaker 2: been a turning point in the last five days. Ed,
Speaker 2: what's so interesting? As you pointed out time and time.
Speaker 7: Again, this was not new news to a large extent.
Speaker 2: In fact, our own in had been reporting well month
Speaker 2: or so ago that it is likely that these particular
Speaker 2: chips designed for China would end up being swamped by
Speaker 2: what is a geopolitical context.
Speaker 3: This week's trading has been a surprise because in June
Speaker 3: Ian did report that the US would expand curbs to
Speaker 3: include a eight hundred and h eight hundred the China
Speaker 3: to chips specifically, and it happened, and video is supply constrained, right,
Speaker 3: they can just ship the GPUs elsewhere for the market's concerned,
Speaker 3: all right?
Speaker 9: Coming up.
Speaker 3: Shares of Tesla could be facing one of its worst
Speaker 3: weeks after posting disappointed their.
Speaker 9: Kind of results.
Speaker 3: More in that next carry that stock down fifteen percent
Speaker 3: on the week.
Speaker 9: This has been bow Technology.
Speaker 5: Okay.
Speaker 3: Shares of Tesla falling again today after missing three q
Speaker 3: sales and profit estimates. While CEO E got mass dialed
Speaker 3: back on growth expectations, the stockdown as much as fifteen percent,
Speaker 3: more than fifteen percent so far this week, and as
Speaker 3: we've said on this program already today, that puts Test
Speaker 3: on track for its worst week of the year on
Speaker 3: a weekly performance basis. Let's bring Boomberg Sean Okaine out
Speaker 3: of Texas, who was all over these earnings, and let's
Speaker 3: just start with the basics. Margins, worse than expected, missed
Speaker 3: on EPs, missed on sales.
Speaker 9: Give us the numbers. Well, I mean, we see.
Speaker 10: An adjusted automotive gross margin when I'm removing all the
Speaker 10: regulatory credits of sixteen point three percent, and that is
Speaker 10: a figure that everybody's going to focus on all year
Speaker 10: ever since these cuts begin. You know how much of
Speaker 10: that profit was Tesla going to eat into to keep
Speaker 10: demand where they wanted it to be.
Speaker 5: Now, we knew that they.
Speaker 10: Shut down the factories for some upgrades this quarter, We
Speaker 10: knew that there was going to be some pullback in
Speaker 10: some of those numbers, but you know, it all lined
Speaker 10: up a little bit worse than we were expecting. And honestly,
Speaker 10: for me, the thing that I keep coming back to
Speaker 10: is their operating margin is now down to just over
Speaker 10: seven percent, and in January of this year, Zach Kirkhorn,
Speaker 10: who was at the time still CFO, said that that's
Speaker 10: actually the number they focus on the most internally as
Speaker 10: a management team, and they wanted to push in front
Speaker 10: of the street and say, hey, you should focus on
Speaker 10: this too. Less about the gross margins, which are going
Speaker 10: to be a little bit volatile, and that operating margin
Speaker 10: is now lower than it has been in the last
Speaker 10: two years and way off it's high of about twenty
Speaker 10: nine percent, So we definitely some harsh numbers. The real
Speaker 10: question now is like, sort of how much can they
Speaker 10: pick that up in the following quarter where they need
Speaker 10: to push about four hundred and seventy five thousand cars
Speaker 10: out to hit their one point eight million target for
Speaker 10: the year, And that's definitely something they can do. It's
Speaker 10: not an enormous jump or compared to the last couple quarters,
Speaker 10: but we'll see where it goes.
Speaker 2: It's interesting that Adam jonas Cole is one of the
Speaker 2: most bullish analysts out there in terms of price target.
Speaker 2: He's been saying, look, this is the read a cross
Speaker 2: for the rest of the ev market, and boy, if
Speaker 2: Tesla's hurting, then looking everyone else. He does think this
Speaker 2: is just short term pain.
Speaker 7: Longer term, the focus is still there. They will be
Speaker 7: able to boost the overall volumes.
Speaker 2: But are people thinking this is more of a car
Speaker 2: company than a tech company at the moment?
Speaker 11: Sure?
Speaker 10: I mean, I think it's evaluation still shows that people
Speaker 10: are expecting a little bit more, you know, car company plus, I.
Speaker 5: Guess is a way you could look at it.
Speaker 10: And one of the big questions I think moving forward
Speaker 10: in this quarter in twenty twenty four is we heard
Speaker 10: a lot of talk the other night about cost cutting.
Speaker 10: It really sounds like Tesla is doing a little bit
Speaker 10: less sort of boasting about cost cutting as they have
Speaker 10: in the past and coming up with innovative ways to
Speaker 10: lower the costs on their side. Now it sounds like
Speaker 10: they're really kind of like racing the price cuts on
Speaker 10: the consumer side with these cost cuts internally. So can
Speaker 10: they cut more cost out of the car as fast
Speaker 10: or at least, you know, nearly as fast as they're
Speaker 10: cutting the price on the front men? And you know,
Speaker 10: I think it seems like they're probably getting to a
Speaker 10: point where there's no return. They've cut so much cost
Speaker 10: out of these cars until this next generation platform comes
Speaker 10: out that has to be a lot cheaper to produce.
Speaker 10: So I think we're really ending or coming coming to
Speaker 10: a head there with this generation of cars built on
Speaker 10: this platform that's been around for many years.
Speaker 7: Seana Kain, great breakdown.
Speaker 2: We thank you, and indeed looking at the tumult when
Speaker 2: it comes to share prices of Tesla.
Speaker 7: Let's look at another Eno Musk venture for a moment.
Speaker 2: X social media platform known as Twitter previously is launching
Speaker 2: two subscription plans, with the most expensive tier eliminating ads entirely.
Speaker 9: Now.
Speaker 2: This comes as the platform begins it's testing of a
Speaker 2: one dollar per year subscription fee for new accounts in
Speaker 2: an effort to cut out spam and those body accounts
Speaker 2: that Elon Musk was always so frustrated about ed.
Speaker 9: So many options.
Speaker 3: Let's get some other earnings out there. This week, Netflix,
Speaker 3: the streaming service posting, is best quarter to subscriber growth
Speaker 3: in years. When it reported earnings the other night, the
Speaker 3: company credited the strong programming slate, but also it's crackdown
Speaker 3: on password sharing joining us now. Alicia Reese of Webbush,
Speaker 3: this was one of those things where we talk about
Speaker 3: all the other stuff, right, advertising content, strategy, and then
Speaker 3: the subscribing numbers hit and we go back to the
Speaker 3: only thing we care about subscribing numbers.
Speaker 9: What was the main takeaway for you?
Speaker 12: Yeah, the subscriber number is really benefited strongly from the
Speaker 12: password sharing crackdown. You have the families who chose to
Speaker 12: add their extra members. That's eight dollars a month in
Speaker 12: the US and similar elsewhere, you know, and that's in
Speaker 12: grandma kids going away to college, Auntie's boyfriend's girlfriends, everyone
Speaker 12: who they want to add onto that account and didn't
Speaker 12: want to kick off.
Speaker 13: That's a nice boost for our poo.
Speaker 12: And then all those people who got kicked off are
Speaker 12: joining for their own accounts and often on the ad
Speaker 12: tire but you know, and that's pulling our pood down
Speaker 12: a little bit.
Speaker 13: But that's really boosted subscriber numbers.
Speaker 12: And I think the most important part of the ad
Speaker 12: tier by itself is that it's reducing churn. It's giving
Speaker 12: people who would otherwise churn out for a period of
Speaker 12: time because there's no content that they really want to
Speaker 12: see and pay for, they can just lower their monthly
Speaker 12: fees and go on the ad.
Speaker 13: Tier for a period of time or end up staying there.
Speaker 2: Meanwhile, like we're just talking with Tesla and they're trying
Speaker 2: to calibrate the costs of the business and the fact
Speaker 2: that they have pulled back on content and they're releasing
Speaker 2: things more specifically, Is that the right tactic to be
Speaker 2: going for at the moment?
Speaker 13: Alicia, Yeah, I think so. Well, there are two things
Speaker 13: that are really benefiting Netflix right now.
Speaker 12: Before the Hollywood labor strikes, they had already reduced content costs,
Speaker 12: all of the streamers had. They're just reducing volume, and
Speaker 12: Netflix was guilty of, you know, basically buying everything they
Speaker 12: possibly could and just seeing what's stuck on the wall.
Speaker 13: So now they're a lot more focused.
Speaker 12: On quality of content instead of volume of content, because
Speaker 12: the volume really just it makes the user it just
Speaker 12: takes too long to find something that they really want
Speaker 12: to see.
Speaker 13: And having those quality shows there, that's what really is.
Speaker 13: It's good for retention.
Speaker 12: So they're focused on quality, and they're also focused far
Speaker 12: more on efficiency of content, using that global content that
Speaker 12: can cross regions.
Speaker 13: Squid Game was the first major.
Speaker 12: One that they saw the how well that worked, and
Speaker 12: now with the strikes, they're looking at more licensed content
Speaker 12: that they haven't They haven't used this strategy in a while.
Speaker 12: They've been doing exclusive content and original content and now
Speaker 12: recently they licensed suits and.
Speaker 13: This is an old show and it just you know,
Speaker 13: it did really well.
Speaker 12: And they're working with Warner Brothers Discovery on licensing content
Speaker 12: that was that is on Max and this is no
Speaker 12: longer exclusive, but it's doing well on their program. Warner
Speaker 12: Brothers needs the money. Netflix has the viewership. It benefits everyone.
Speaker 12: It's a win win situation and I think that's really
Speaker 12: going to help Netflix to continually expand and it's pretty
Speaker 12: cash flow.
Speaker 6: Yeah.
Speaker 2: Well, Netflix remains on your best ideas list as they
Speaker 2: seem to be pushing into the future as you'd like
Speaker 2: to see. Alicia Reise of Webbush, great to have you
Speaker 2: on the show.
Speaker 7: We really appreciate it.
Speaker 2: Let's speak about crypto for a moment, and some of
Speaker 2: the optimism around bitcoin once again being shown. Is it
Speaker 2: managed to just crack through that thirty.
Speaker 7: Thousand dollars level once more.
Speaker 2: This again is about the hopes that it might be
Speaker 2: able to see a spot bitcoin ETF come to the market,
Speaker 2: if not one too, but the plethora that have currently
Speaker 2: been put forward now we understand at the moment that
Speaker 2: we are seeing this broader rally. We're looking towards GPDC
Speaker 2: in particular Grayscales own trust. Remember, they could be a
Speaker 2: DC court walling on that ETF application as soon as today.
Speaker 2: The SEC of course, had asked a federal jodge to
Speaker 2: dismiss its case also against some Ripple executives at the moment,
Speaker 2: and there seems to be this moon music shift that
Speaker 2: we will see Grayscale prevail in the end versus the SEC.
Speaker 2: See backing down versus Ripple, and ultimately there's all kind
Speaker 2: of hinting that we will see ETS being adopted at
Speaker 2: sometime soon, at least before January.
Speaker 3: Let's have some more bitcoin chat, Caroline, because our next
Speaker 3: guest is so confident about the growth of crypto. He's
Speaker 3: predicting that bitcoin will not only breach it's sixty nine
Speaker 3: thousand dollars high at some point next year, but go
Speaker 3: to or beyond one hundred thousand dollars per token. Here
Speaker 3: in the studio, Sonny saying, co founder and CEO of
Speaker 3: a new company, Beluga, which has just raised four million dollars,
Speaker 3: which we will get to.
Speaker 9: Why so confident? What are you basing this call on? Yeah?
Speaker 5: No great to have. You know, we have you on again.
Speaker 14: Bitcoin's become very resilient, right and you're everything seeing it
Speaker 14: today go up.
Speaker 5: Well, the markets are going down.
Speaker 14: And next year we have what we're I would say
Speaker 14: is a perfect storm happening. You have three things happening.
Speaker 14: The bitcoin ETF, which we're all talking about. The SEC's
Speaker 14: is going to have to went on this one. They'll
Speaker 14: delay as much as passed well by.
Speaker 5: Q one Q two.
Speaker 9: Next year you'll have an ETF live.
Speaker 14: Then you're gonna have interest rates hopefully coming down next
Speaker 14: year too. And then third, which I think is the
Speaker 14: most important one to hear, the bitcoin having happening in April,
Speaker 14: and normally after that four to six months after you
Speaker 14: see the bitcoin price really run. So the last all
Speaker 14: time high was sixty nine thousand dollars, which happened after
Speaker 14: the bitcoin having four years ago. I think we take
Speaker 14: that out and actually reach one hundred thousand.
Speaker 9: Next year and of next year.
Speaker 3: Larry Fink, who is the CEO of black Rock you
Speaker 3: probably know, outlined this idea based specifically on the events
Speaker 3: of the last week, that bitcoin is behaving as a
Speaker 3: haven asset, based on everything that's happening in the world
Speaker 3: right now, you believe.
Speaker 9: That that's yes and no. So that's happened.
Speaker 14: It's working out this way for the last couple of weeks.
Speaker 14: But again like a year ago and during the pandemic,
Speaker 14: it didn't work out that way.
Speaker 9: It treated just like a risk stock, and so.
Speaker 14: That narrative has proven true sometimes and not the other times.
Speaker 5: I think the other three events that.
Speaker 14: I laid out for next year are more importantly as
Speaker 14: what's going to drive the price up next year.
Speaker 2: I mean still, I think the entire market looks at
Speaker 2: Larry Fink Hope and Mouth, but.
Speaker 7: They about shift he seems.
Speaker 2: To have had around bitcoin, and ultimately it seems to
Speaker 2: be he's saying customer driven. I'm interested in what you're
Speaker 2: doing about customer driven to your new enterprise, Beluga. You've
Speaker 2: been raising funds I think four million seat capital coming
Speaker 2: in because ultimately we talk about institutional adoption, we talk
Speaker 2: about retail though having pulled back, how are people using
Speaker 2: crypto other than a risk us it.
Speaker 9: Yeah, that's the main thing.
Speaker 14: So we raise a four million dollar round, which we
Speaker 14: raised in March during the doldrums of the crypto winter,
Speaker 14: but we really start a Bologa to help people not
Speaker 14: only onboard the crypto, but do more with their crypto.
Speaker 14: And you know, it's estimated that there's four hundred million
Speaker 14: people around the world that own crypto, which is amazing,
Speaker 14: but only like ten to twenty million them.
Speaker 5: Are actually doing it with their crypto.
Speaker 14: We want to help people not just buy and hold anymore,
Speaker 14: but actually stake when play, earn, pay and use crypto.
Speaker 14: There's all these new crypto launching every day, whether it
Speaker 14: be web three games, crypto, credit cards and use staking products, lending.
Speaker 5: Products, and no one knows how to use them.
Speaker 14: They're not feeling confident to want to try to understand
Speaker 14: these PROCs at all. And that's where the job Belugas
Speaker 14: helped get these people that already own crypto to start
Speaker 14: doing more with their crypto.
Speaker 3: Okay, why you doing that and not sort of legacy
Speaker 3: traditional finance.
Speaker 9: And also the name Beluga yes.
Speaker 14: Great, so first to name Beluga. Everyone in crypto wants
Speaker 14: to be a whale. Belugas are some of the smartest
Speaker 14: whales out there, so we want you to help.
Speaker 5: Become a smart crypto whale.
Speaker 14: Why I'm doing this, I've been at bit pay for
Speaker 14: nine almost nine years since twenty fourteen, and I was
Speaker 14: always on a mission to help people do more with
Speaker 14: their crypto. And I even though I was in crypto
Speaker 14: for nine years when state when DeFi came out a
Speaker 14: couple years ago, I can understand how DeFi worked. I
Speaker 14: had to google how do I defy? I end up
Speaker 14: in Reddit and then got scared away. And there's a
Speaker 14: lot of people that are in crypto that you know,
Speaker 14: are afraid to admit they don't actually understand how it
Speaker 14: has worked, and we're trying to help them do more
Speaker 14: with their crypto.
Speaker 2: Sunny thing the name. We thank you for explaining and
Speaker 2: indeed what you're all about. Co founder and Seeo Beluga,
Speaker 2: Welcome back to Bluemok Technology.
Speaker 7: I'm Caroline had in New York and I.
Speaker 2: Met Lovelow in San Francisco, and we're all still here
Speaker 2: in New York picking ourselves up after a pretty.
Speaker 7: Social week of engagements.
Speaker 2: Because it's been officially tech week here in the city,
Speaker 2: it's coming.
Speaker 7: To a close.
Speaker 2: Over the last few days, we've spoken with a range
Speaker 2: of founders of investors to break down what makes NYC
Speaker 2: a unique and thriving technology hub. One of those entrepreneurs
Speaker 2: and venture capitalist is. Ben Leahir spoke to us just
Speaker 2: about his experience operating and investing in New York City.
Speaker 7: Take a Lissen.
Speaker 15: I feel like every week is New York Tech Week.
Speaker 15: We are in really an explosive period of growth. And
Speaker 15: you know, when we started the firm, New York was
Speaker 15: this sort of very tight little tech ecosystem there. I
Speaker 15: felt like I knew every founder building something. And it's
Speaker 15: been this steady drumbeat for over a decade now and
Speaker 15: it does not feel like it's stopping.
Speaker 5: And every day there's another sort.
Speaker 15: Of West Coast VC or you know VC from other
Speaker 15: market that's setting up shop and trying to hire.
Speaker 5: In the market.
Speaker 15: And I think that this is an amazing place to
Speaker 15: build a company, and I don't think anyone really questions
Speaker 15: that anymore.
Speaker 2: It's interesting that that's happening in a time in the
Speaker 2: current economic environment where people are worried about, well, the
Speaker 2: growth capabilities of certain companies and the access to capital.
Speaker 2: Why do you think it's been able to grow bring
Speaker 2: over the sequoia Xandresen's.
Speaker 7: In a moment where we're in kind of in a downturn.
Speaker 15: Yeah, I think that part of it is personal decisions
Speaker 15: that founders make. This is a great place to live.
Speaker 15: It's an incredibly high quality of life. There's amazing diversity,
Speaker 15: There's so many interesting people. Every industry has some foothold here,
Speaker 15: and so you know, it starts with talent. And I
Speaker 15: also think New York has generally had a pretty aggressive
Speaker 15: posture in trying to make this hospitable place for companies
Speaker 15: to come in.
Speaker 5: Bild.
Speaker 15: This is also the home of so many large industries,
Speaker 15: whether it's healthcare or financial services. You know, this is
Speaker 15: a place where media, commerce, sort of the powers that
Speaker 15: be are here, and so it makes sense to build
Speaker 15: in this market. And now with more access to capital here,
Speaker 15: I think it makes it an even better place for
Speaker 15: people to come and build.
Speaker 2: Ben It's interesting because you mentioned all those areas of well,
Speaker 2: big institutions, big companies that already and ultimately industries that
Speaker 2: have grown here, and I'm the thriving ecosystem around them.
Speaker 7: I mean, I think of some of the companies you've backed,
Speaker 7: Oscar Health of course, aligning itself.
Speaker 2: With the healthcare industry that's here in New York. We
Speaker 2: think of Rezi, a consumer company that you've backed, and
Speaker 2: we think of some of the other areas of the
Speaker 2: consumer will we Parker and they're like, what is thriving
Speaker 2: here at the moment? Is it the time to be
Speaker 2: putting money behind consumer companies? Given the consumers in a
Speaker 2: wirring place? Is it more of a time for fintech
Speaker 2: to grow? Do you think it's all of the above.
Speaker 15: I don't think that there is a sort of industry
Speaker 15: or area that is specifically I mean, certainly, for US
Speaker 15: an area of focus that were very early stage investors
Speaker 15: were focused on talent primarily. There is certainly some softness
Speaker 15: with the consumer, although I think that the reason that
Speaker 15: consumer companies are more challenging to build these days is
Speaker 15: less macroeconomic consumer issues and actually more just the fact
Speaker 15: that so many consumer companies got built with a sort
Speaker 15: of similar playbook, a lot of the same sort of
Speaker 15: advertising strategy. Is a huge over reliance on a few
Speaker 15: large social media platforms that have been flooded with brands.
Speaker 5: That were flooded with VC dollars.
Speaker 15: It just grew too quickly, and so I think that
Speaker 15: there's some there's been a big cleanup and sort of
Speaker 15: adjustment in what's happened in the sort of direct consumer
Speaker 15: commerce space.
Speaker 9: These things go in cycles.
Speaker 15: I'm a you know, in my heart, I love consumer.
Speaker 15: We've done very well with consumer over the years. And
Speaker 15: while we're doing less these days than we have in
Speaker 15: some past cycles, I don't feel like that's a permanent change.
Speaker 15: I feel like that's a cyclical one, and you know,
Speaker 15: we continue to want to find great consumer companies.
Speaker 7: Dual companies have to be AI companies at the moment.
Speaker 15: At the moment, if you're an AI company, it's certainly
Speaker 15: helpful in terms of how a bunch of the mid
Speaker 15: and late stage vcs and frankly a lot of early
Speaker 15: stage vcs will view you. AI is both the most exciting,
Speaker 15: you know, change in technology that we've seen in the
Speaker 15: last decade and also a HiPE cycle. You know, deals
Speaker 15: are overvalued, there's going to be a bunch of value destruction.
Speaker 15: There's also going to be some extremely important companies that
Speaker 15: get built right now. And I think, like with anything,
Speaker 15: it's a place to play, but it's also a place
Speaker 15: to show restraint, and you need to make sure that
Speaker 15: whatever your business model is as a fund you don't
Speaker 15: via late the principles of what your model is. When
Speaker 15: there's a space that people get excited about, depending on the.
Speaker 2: Hype cycle, the Hippo managing partner, been there there, let's
Speaker 2: continue the technic conversation. I mean, please to welcome and Doug,
Speaker 2: founding partner at Female Founders.
Speaker 7: Fund, which was born almost a decade ago.
Speaker 2: And now finally we see all the celebration of the
Speaker 2: tech ecosystem at a time that is sort of uncomfortable
Speaker 2: because we are seeing companies having to think far more
Speaker 2: about profitability than revenue growth. How are you seeing that
Speaker 2: outcome juxtaposed with the zuberants around VC's coming here.
Speaker 16: Sure, So, first of all, thanks so much for having me.
Speaker 16: I would say, you know, we see this both within
Speaker 16: our own portfolio, but also in the broader ecosystem. You know,
Speaker 16: I think there was a recent step that came out
Speaker 16: that there are over a thousand privately held unicorns that
Speaker 16: you know, I think in the next year will run
Speaker 16: out of cash, and so across the board, I think
Speaker 16: there's this push and need to really rethink your business
Speaker 16: model because there's not a lot of growth capital out there. Unfortunately,
Speaker 16: the IPO markets you know, have not opened up I
Speaker 16: think the way that everyone thought they would. And so
Speaker 16: whether you're a late stage company or you know, seed
Speaker 16: early stage company. I think the way that investors are
Speaker 16: looking at businesses has shifted fundamentally.
Speaker 2: And so therefore you're giving an awful lot of advice
Speaker 2: to your founders. I'm sure in this moment, what are
Speaker 2: the areas that do manage to meet from this so
Speaker 2: called zombie moment? Is it the time that fintech canotform?
Speaker 2: Is it a moment that if you've got AI adjacent,
Speaker 2: you have to suddenly really integrate.
Speaker 7: That within your business model.
Speaker 16: So I think it's imperative, you know, for all founders
Speaker 16: to really think about AI and how they can really
Speaker 16: use it to create efficiency within their companies. I think
Speaker 16: for us, you know areas that we have been excited
Speaker 16: about and invested in in the past year. So one
Speaker 16: would be healthcare. We were early investors in Naven and
Speaker 16: that company has gone on to perform incredibly well, particularly
Speaker 16: in the last two years, and as a result of that,
Speaker 16: have really doubled down, you know, whether it's in fertility, maternity, serviacy, menopause.
Speaker 16: I think there's a lot of opportunity across the board.
Speaker 16: And then the other sector is climate tech. So seventy
Speaker 16: percent of the deals we've done this year have actually
Speaker 16: been in climate tech, ranging from a waste management software
Speaker 16: solution to you know, the first hydrogen powered private plane.
Speaker 2: What's interesting is both those things where you reference women's health,
Speaker 2: you're also of course born of in the idea that
Speaker 2: there is so much underserved talent within female founders that
Speaker 2: you can allocate to over and above others. There's also
Speaker 2: these two things are sort of becoming politicized in some way,
Speaker 2: at least allocation of funds two minority founders has And
Speaker 2: in d climate tech, how have you found that New
Speaker 2: York has been able to sort of isolate itself from
Speaker 2: that a little bit?
Speaker 7: Have you ever had to waive it from your overall thesis?
Speaker 16: No, I mean I think what's been incredible to see,
Speaker 16: you know, you mentioned in nextureill be ten years when
Speaker 16: you think about the quality and quantity of deal flow
Speaker 16: and how that's expanded, it's been incredible to see, you know,
Speaker 16: that not only are there more companies, but the founders
Speaker 16: you know are now some of them are second time founders,
Speaker 16: some of them have already had exits. And so I
Speaker 16: think that that truly speaks to a broader opportunity that
Speaker 16: I think others have have recognized, which is really exciting.
Speaker 3: I know it's ed in San Francisco. It's so good
Speaker 3: to have you on this show. And I just want
Speaker 3: to say, you know, fantastic coverage by Caroline this week
Speaker 3: for New York Tech Week. We've kind of had the
Speaker 3: founder the VC perspective and also the academic perspective. And
Speaker 3: the bit that there's kind of left to talk about
Speaker 3: is what it's like to run a VC firm in
Speaker 3: New York City. You know, vcs make money from the
Speaker 3: carried interest on the fund and the management fees. There's
Speaker 3: all these great names that have moved to New York
Speaker 3: to do that. What's it been like trying to hire
Speaker 3: these people the associate to get more partners in.
Speaker 16: Yeah, I mean, I think there's definitely been an appreciation
Speaker 16: for vcs, you know, for example that work in the valley.
Speaker 16: And I think Ben mentioned this earlier. The quality of
Speaker 16: life in New York, the diverse city of industries, diversity
Speaker 16: of people, I think has really attracted some great talent.
Speaker 2: When it comes to talent, ultimately, of the founders that
Speaker 2: you find and the institutions that are backing them at
Speaker 2: the moment, what are you thinking about m and A
Speaker 2: as route to exit when you're thinking about helping these
Speaker 2: talented individuals who are potentially looking at a runway that's
Speaker 2: about to run out. Do you think there will be
Speaker 2: a lot more consolidation within some of the companies that
Speaker 2: you have rather than having to I an IPO exit
Speaker 2: that at the moment keeps and be on again and
Speaker 2: off again.
Speaker 9: Yeah.
Speaker 16: No, I mean, I think in reality, most exits do
Speaker 16: tend to be M and A. And I think that
Speaker 16: twenty twenty four will be a big year for M
Speaker 16: and A because I think a lot of companies will
Speaker 16: have to seriously consider the fact that, you know, if
Speaker 16: the IPO markets don't open, that's a real kind of
Speaker 16: outcome for them to consider. I think for us, you know,
Speaker 16: as we look at these new newer areas, for example,
Speaker 16: within climate and healthcare, where we've been investing for some time,
Speaker 16: there are a lot of acquirers and it's a fairly
Speaker 16: inquisitive industry as well, and so that's definitely part of
Speaker 16: our consideration set.
Speaker 7: And remind me the founders you find they mean a
Speaker 7: New York.
Speaker 2: Based do you like to look agnostically across the US?
Speaker 16: Yeah, so we are about sixty five percent New York based,
Speaker 16: So we are betting big on New York. We think that,
Speaker 16: you know, there'll be a lot of really exciting momentum
Speaker 16: in the years to come. And you know, majority of
Speaker 16: our exits have actually all been New York based companies want.
Speaker 2: To watch and adogl and of course with those exit
Speaker 2: comes funds to reinvest within those ecosystems. And as they say,
Speaker 2: second time founders, we thank her for joining us from
Speaker 2: the female Founder's fund.
Speaker 3: Ed ovch Yeah, terrific conversation alert for everyone watching the program.
Speaker 3: Right now, the final domino has fallen. Clavo is the
Speaker 3: last of the recent IPOs to now fall below its
Speaker 3: IPO price. We're trading right now at twenty eight dollars
Speaker 3: and ninety two cents a share. The IPO price was thirty.
Speaker 3: Think about think about Birke and Stock. The last holdout's gone.
Speaker 9: Caroline, I'm sorry to end Friday.
Speaker 7: I want to down want it down ed.
Speaker 3: You talk talked to Anna about the short lived IPO window,
Speaker 3: and in that moment this really happened.
Speaker 9: Coming up on the.
Speaker 3: Show, KKR has just closed its third tech fund at
Speaker 3: nearly three billion dollars. We're going to talk about how
Speaker 3: the firm plans to invest that big money globally.
Speaker 9: This is Bloomberg Technology.
Speaker 3: KKR announcing it's closed its third tech growth fund that
Speaker 3: nearly three billion dollars is going to focus on investing
Speaker 3: in leading growth technology companies across North America, Europe and Israel.
Speaker 3: KKR's head of Tech Growth Dave Walsh, joins us now
Speaker 3: to discuss Dave, welcome to Bloomberg Technology. I guess give
Speaker 3: us then the description of the companies that you're looking
Speaker 3: to target, maybe more mature companies which indus trees you're
Speaker 3: going to go off to sure Ed.
Speaker 11: Yeah, and thank you again for having me on.
Speaker 13: Really appreciate it.
Speaker 11: Right. We think it's a really exciting time to continue
Speaker 11: our growth strategy, which we started almost a decade ago now.
Speaker 11: And the types of businesses that we're looking for, as
Speaker 11: you mentioned, you know, are ones that are a little
Speaker 11: bit later, we like to say, businesses that have actually
Speaker 11: established their product market fit.
Speaker 9: And ones that are really scaling.
Speaker 11: We're an organization like KKR that has a really broad
Speaker 11: set of global resources can help bring those to there
Speaker 11: and work collaboratively with the company to really take them
Speaker 11: off and from good global enterprises to really strong global enterprises,
Speaker 11: and it's across various areas, Internet, software, fintech.
Speaker 5: We probably have done the most in software.
Speaker 9: We continue to have that be a major focus of
Speaker 9: what we do. And then we have some very specific.
Speaker 11: Areas underneath those those broad those broad categories where we
Speaker 11: spend our time.
Speaker 3: We're talking in billions of dollars. Right, you've third fund,
Speaker 3: You've done growth, you've done tech. I really trust me
Speaker 3: who the LPs are because how KKW does is you
Speaker 3: take some money off the balance sheet KKR, but you
Speaker 3: also take outside money. And so who are those LPs
Speaker 3: who kind of wanted to do long term business with
Speaker 3: you and get into tech.
Speaker 5: Yeah, no, you're absolutely right.
Speaker 11: We've had a long history of supporting our funds with
Speaker 11: our own capital, and we did it here too with
Speaker 11: over ten percent of the fund. But we do obviously
Speaker 11: have a number of outside LPs, and and they're really
Speaker 11: they range from you know, large pensions and endowments through
Speaker 11: to high network platforms and individuals as well as you know,
Speaker 11: directly into the high network individuals themselves. And and the
Speaker 11: nice thing for us, it's a very broad mix, and
Speaker 11: it's a set of LPs that have been with us
Speaker 11: over the course of the three funds. So we have
Speaker 11: a lot of re up in the funds, you know,
Speaker 11: given our performance to day, and I think people buy,
Speaker 11: you know, really believing in the philosophy of how we're
Speaker 11: looking to do growth equity.
Speaker 5: So it's been a nice a nice mix of LP.
Speaker 11: I think people that really see this opportunity that's ahead
Speaker 11: of us. You know, it's obviously been a bit of
Speaker 11: a challenge time and technology and growth equity the last
Speaker 11: couple of years. But I think a bit maybe you know,
Speaker 11: equing with a new said and Ben right before me,
Speaker 11: feels like it's a very big, long runway of new,
Speaker 11: great companies that have been funded over the last few
Speaker 11: years that will be maturing into our sort of strike zone.
Speaker 5: And I think a lot of our industries you saw that, Dave.
Speaker 2: I ask a sensitive question because it's a sensitive time
Speaker 2: and of course there is exposure when you're looking at,
Speaker 2: particularly investing in security companies, cyber companies that may well
Speaker 2: be based in Israel at the moment. How have you
Speaker 2: been navigating that with founders, How have you been thinking
Speaker 2: about future investment opportunities and the worry about the ecosystem.
Speaker 11: Yeah, no, thank you, Caroline, definitely sensitive question, and let
Speaker 11: me just first and foremost you know, hearts go out
Speaker 11: to the you know, just you know, the humanitarian trategy
Speaker 11: that's going on there, for.
Speaker 9: Sure, it's just heartbreaking of us.
Speaker 11: We've had right now two businesses, one that it's actually
Speaker 11: headquartered in Israel, business called art List and now that
Speaker 11: has a substantial presence there at CEMPRIS and just you know,
Speaker 11: as we sit today, we're just in constant contact with
Speaker 11: the business to understand really what the implications are of
Speaker 11: what is going on over there, how it's impacting them
Speaker 11: as a business and their employees, and cannibly just trying
Speaker 11: to support them the best way we possibly can to
Speaker 11: continue to navigate as.
Speaker 9: Things continue to unfold in the area.
Speaker 11: More broadly, we have seen and believed that Israel has
Speaker 11: been a great place for technology innovation for a very
Speaker 11: long time, and I don't think there's any reason to
Speaker 11: believe that it won't be for a long time in
Speaker 11: the future. And so for us, you know, we will
Speaker 11: just continue to spend time there when we can, as
Speaker 11: things get back to a place when we can travel
Speaker 11: there and continue to build relationships because we do think
Speaker 11: in the long run technology will continue to be innovated
Speaker 11: in Israel and be.
Speaker 5: A place that we want to spend time.
Speaker 7: Thanks so much for answering that, Dave. I'm interested in
Speaker 7: the follow up.
Speaker 2: We just had a great conversation with Arnauld Jougal, who
Speaker 2: runs Females Founder's.
Speaker 7: Fund here in New York, and she.
Speaker 2: Was referencing a statistic that basically a thousand unicorns are
Speaker 2: out there, so worth more than a billion.
Speaker 7: And about to run out of money.
Speaker 2: You come with this really eye opening amount of money
Speaker 2: to be invested in growth opportunities while everyone else is
Speaker 2: kind of worried about the growth trajectory. How do you
Speaker 2: see this current environment that we're in.
Speaker 11: Yeah, no, it's a great call out. And beyond the
Speaker 11: thousand uniforms, there are a lot of other startups that
Speaker 11: were funded from twenty seventeen to twenty one who are
Speaker 11: growing up in a very nice way and maybe you
Speaker 11: haven't reached quote unicorn status or are still great businesses.
Speaker 11: So this is why we think it's a tremendous opportunity
Speaker 11: to have this capital.
Speaker 9: Now.
Speaker 11: We think the next couple of years there are going
Speaker 11: to be you know, many companies that start getting built
Speaker 11: into the next generation of big technology leaders. And so
Speaker 11: the way that we're thinking about it is just trying
Speaker 11: to be just and around the key attributes that we're
Speaker 11: looking for in business. I already mentioned things like product
Speaker 11: market fit, but really strong management teams and great alignment
Speaker 11: with the management teams and boards as to their aspirations
Speaker 11: of growing the business usually globally where KKR can help.
Speaker 11: And so for us, it's going to be a lot
Speaker 11: about focusing our energy on piecing through those businesses that
Speaker 11: frankly probably didn't quite cut the grade that were funded
Speaker 11: either Unicorn status or otherwise, and honing in on those
Speaker 11: businesses that really need all those attributes that I talked
Speaker 11: about that we can partner with for five, six, seven
Speaker 11: years in the future to turn them into really large enterprises.
Speaker 2: They welsh great to have some time with you.
Speaker 3: A new campaign to reverse the negative narrative surrounding San
Speaker 3: Francisco and a more companies has started.
Speaker 9: It starts right here. Campaign has launched by.
Speaker 3: A group of local business leaders and billionaires Blue Best California,
Speaker 3: Bererier Chief and Breslau joins us now to break it down,
Speaker 3: not you, the idea that tech billionaire CEOs try to
Speaker 3: boost the imagicicity.
Speaker 9: What is striking to you about this campaign?
Speaker 6: I think first of all, that it's deemed necessary that
Speaker 6: for the first time, perhaps in recent history, San Francisco
Speaker 6: has to convince itself and the world that it's actually
Speaker 6: a cool place to live and do business.
Speaker 2: I mean, we know that there are peaks and troughs,
Speaker 2: particularly when it comes to tech.
Speaker 7: But look, E Seth was born in the gold Rush.
Speaker 7: Why is this time different?
Speaker 2: Why are they having to lure in and remind people
Speaker 2: of ultimately what's always sold itself.
Speaker 5: Well, a few reasons.
Speaker 6: One is the city has the highest commercial vacancy rate
Speaker 6: in the United States, so about thirty percent of downtown
Speaker 6: buildings are currently vacant, a very slow return to office,
Speaker 6: a sentanyl epidemic in the streets, record numbers of unhoused people,
Speaker 6: and I think also the social media effect. In previous
Speaker 6: boons and busts, San Francisco really did not have to
Speaker 6: contend with the amplification of its woes. And I think
Speaker 6: the city, you know, it's basically become a.
Speaker 9: Character and a political drama.
Speaker 6: It's a shorthand for democratic rule, and everybody loves to
Speaker 6: pound on San Francisco and its problems.
Speaker 9: Very very quick. Who are the names the individuals behind this.
Speaker 6: Well, Chris Chris Larsen from Ripple Labs, Don Fisher, Larry
Speaker 6: Bear of the Giants, and several other funders.
Speaker 9: So they put together about.
Speaker 5: Four million dollars.
Speaker 6: And this is a campaign that's going to run for years,
Speaker 6: and it's starting now in part because the world will
Speaker 6: be coming to San Francisco in November for APEX.
Speaker 9: Well in a few weeks.
Speaker 2: We'll see how the world responds. Comen Wrestling great to
Speaker 2: have some time in the Bluemg's California burero chief all.
Speaker 7: Over that at campaign.
Speaker 2: Meanwhile, that does it for this edition of Bluemg Technology.
Speaker 3: And yeah, just a reminder and a thank you to
Speaker 3: those that listen to the podcast Apple, Spotify, Iheartmloomberg and
Speaker 3: of course we're on YouTube from SF in New York.
Speaker 9: This is Bloomberg.