Speaker 1: From the heart of where innovation, money and power collive
Speaker 1: in Silicon Valley and beyond. This is Bloomberg Technology with
Speaker 1: Emily Jay I'm Taylor Rigs in New York and Family Chain.
Speaker 1: This is Bloomberg Technology coming up in the next hour.
Speaker 1: It is a choppy day of trading, full of ups
Speaker 1: and downs. Yes, and p FID now having the worst
Speaker 1: two days since June. Plus of course the deal is
Speaker 1: on well, at least according to Twitter. We'll get the
Speaker 1: latest inside from inside Twitter, as the company says it
Speaker 1: is not backing down from that forty four billion dollar
Speaker 1: takeover from Elon Musk and its retail stocks slide over
Speaker 1: ongoing inflation fears. What does that mean for the second
Speaker 1: hand market. I'll be speaking about that with thread Up
Speaker 1: CEO g Speinehart, including why he expects the secondhand market
Speaker 1: to double in the coming years. We'll get to all
Speaker 1: of that in a moment, but first let's get a
Speaker 1: look at the markets with our very own lead Ludlow.
Speaker 1: In this place, I missed most. I left my heart
Speaker 1: in San Francisco. Wad I mean it's sunny, calm here
Speaker 1: in San Francisco. The market for some time during Thursday
Speaker 1: session looks sunny and calm as well. We call it
Speaker 1: a choppy day right of trading, or a see saw day,
Speaker 1: ultimately with down six tents of percent on the SMP
Speaker 1: half a percentage point four tents of percent on the
Speaker 1: Nasdaq one. But you contrast that with the declines we
Speaker 1: saw on Wednesday. Perhaps the market more sanguine but struggling
Speaker 1: for direction, and ultimately in the last hour or so
Speaker 1: of the session we fell away into negative territory. Also
Speaker 1: interesting to see yield softerter You see the US tenure
Speaker 1: at two point eight three percent, Bitcoin holding around thirty
Speaker 1: thousand dollars for token it had fallen, of course, in
Speaker 1: the set off we saw on Wednesday. This general risk
Speaker 1: off sentiment staying in place is that the FED is
Speaker 1: that inflation, Asian concerns will We also look at Cisco,
Speaker 1: because corporate earning season continue Cisco pretty steadily holding it
Speaker 1: declines of thirteen fourteen percent all throughout the session on Thursday,
Speaker 1: cutting its annual sales forecast, supply chain problems, impact from China,
Speaker 1: And we're so focused on Cisco because it's really a
Speaker 1: proxy or a barometer for corporate spending. When corporate America
Speaker 1: wants to invest in itself. Cisco tends to do well,
Speaker 1: so cutting its sales forecast. It's an interesting forward looking
Speaker 1: one after ours. We're also looking to apply materials Key
Speaker 1: chip maker of course lower a little lower, actually by
Speaker 1: around two and a half percent. It have been down
Speaker 1: as much as five and a half percent. A very
Speaker 1: similar story. It gave a tepid forecast for the current
Speaker 1: quarter and says the supply chain issues around semi conductors
Speaker 1: are still there. In some cases suppliers are running at
Speaker 1: fifty percent of capacity. Those are not the things we
Speaker 1: want to be hearing when we were also worrying about
Speaker 1: global growth and a recession. Very quickly tailored two big
Speaker 1: Bloomberg scoops on Thursday that I want to talk about
Speaker 1: and we will talk about later in the show for
Speaker 1: us of all Twitter higher you mentioned it. According to
Speaker 1: sources inside a meeting and all hands on Thursday, Twitter
Speaker 1: executives said he the deal with Elon Musque is not
Speaker 1: on hold. Be there's no such thing as a deal
Speaker 1: being on hold. Another big scoop, Apple actually one of
Speaker 1: the big laggards during Thursday session, down two and a
Speaker 1: half percent, but according to sources at a recent board meeting,
Speaker 1: Apple presented its latest virtual reality headset. You know what
Speaker 1: they look like, you know what I'm holding up, and
Speaker 1: that's a sign that it might be a new products
Speaker 1: on the horizon. We need more of those hand gestures
Speaker 1: from you add way to make it interactive. Really appreciate
Speaker 1: it very own at Lulow when is say, of course,
Speaker 1: on these volatile markets, and welcome in Jason Telber, portfolio
Speaker 1: manager for New Burger Berman and of course the disruptors
Speaker 1: E T F. Jason, what do you make quickly just
Speaker 1: sort of these volatile markets, particularly within your world of
Speaker 1: technology as well. Well. You know, it's interesting if if
Speaker 1: you look at tech overall, it's actually outperformed on a
Speaker 1: one year basis. We have to remember that tech was
Speaker 1: really really strong and back half last year, and particularly
Speaker 1: you know, Microsoft and Apple, which make up a large
Speaker 1: percentage of the Tech index. The first half of the
Speaker 1: year has been tougher. There's been some high profile disappointments,
Speaker 1: you know, Facebook, Meta, Amazon, Netflix, um. But I do
Speaker 1: think within our universe, within our universe of disruptive companies.
Speaker 1: It's been interesting because in the last two days of
Speaker 1: pretty significant down drafts in the market, we've seen significant
Speaker 1: outperformance UM, and we have to remember that smid cap
Speaker 1: Tech and smith Cap Growth specifically has been under a
Speaker 1: tremendous amount of pressure for the last twelve months, and
Speaker 1: we may be close to finding a bottom at least
Speaker 1: on a relative basis. Interesting, So when you talk about
Speaker 1: some of the smidcap technology companies, I think of a
Speaker 1: few headwinds. Rising rates, of course, sort of the classic
Speaker 1: headwind that we know with some of these long duration assets,
Speaker 1: and then smaller down the scale, maybe the less healthy
Speaker 1: the balance sheet. When you're thinking about the fundamentals and
Speaker 1: growth at any cost does didn't work anymore? How does
Speaker 1: that sort of impact the way you're looking at these companies. Absolutely,
Speaker 1: it's a great question, Taylor. You know, we've always been very,
Speaker 1: very focused on free cash flow. So even though we're
Speaker 1: interested in innovative, disruptive companies and you know a lot
Speaker 1: of their earnings could be out in the future, we
Speaker 1: also want to see free cash flow as soon as possible,
Speaker 1: and we want to own businesses there are in really
Speaker 1: strong strategic positions. So this isn't a fear of missing
Speaker 1: out portfolio UM. Within smitcap Growth, there's actually a lot
Speaker 1: of interesting names that have free cash flow support, So
Speaker 1: we're talking about two to four percent free cash flow
Speaker 1: yields companies like zoom Info and Zendesk. Within medical technologies,
Speaker 1: companies like dex Com, uh Intuitive Surgical, and I think
Speaker 1: that investors are starting to realize, hey, I've been paying
Speaker 1: you know, higher and higher multiples for consumer staples companies
Speaker 1: for safety, They're only really giving me a four percent
Speaker 1: free cash flow yield. And the reality is these costs
Speaker 1: are going to hit them disproportionately. So I think that's
Speaker 1: what we've been seeing the last two days, is that
Speaker 1: the real economy stocks are really going to be hurt
Speaker 1: by inflation. So there's too many investors hiding out there,
Speaker 1: and we may start to see a rotation to some
Speaker 1: of these you know, skinny balance sheets, high pricing power,
Speaker 1: high intellectual property businesses that exist in them in our
Speaker 1: disruptor's portfolio. Within that portfolio, how sort of defensive do
Speaker 1: you feel like you need to be and making sure
Speaker 1: that you're also cash on the sidelines for better opportunities.
Speaker 1: But cash, of course, after inflation, is a money loser.
Speaker 1: Yeah that, I mean, great question. I wouldn't say that. Um,
Speaker 1: you know, I don't want to make a call on
Speaker 1: the market. Do have concerns of how is this inflation
Speaker 1: going to kind of filter through our economy and particularly
Speaker 1: hit consumer spending over time. We're obviously already beginning to
Speaker 1: see that um show up pretty brightly in in you know,
Speaker 1: raw Store, some Walmart and Target, etcetera. UM So, I
Speaker 1: would say our portfolio is definitely tilted in the in
Speaker 1: the in the health care sector, so we do want
Speaker 1: to be a little defensive from that standpoint. But even
Speaker 1: those names, if they're high growth, they are down a
Speaker 1: lot from where they were, you know, nine twelve months ago,
Speaker 1: And as I was saying earlier, they're starting to kind
Speaker 1: of bump up against pretty interesting valuations where you can
Speaker 1: get you know, to three percent free cashual yields for
Speaker 1: a company that's growing the top line A And if,
Speaker 1: if you know, we enter into a kind of stagflationary
Speaker 1: environment and and real growth becomes elusive, I do think
Speaker 1: investors are going to come back to companies like this.
Speaker 1: Interesting though, I was speaking with Annestesia amorros So earlier
Speaker 1: by Capital and she said, maybe not always looking at
Speaker 1: valuations is the best way when you're thinking about investing.
Speaker 1: How much. Are you really keen valuations versus then just
Speaker 1: some of the other big technicals and just sort of
Speaker 1: the mass selloffs and indiscriminate selling where valuations look good
Speaker 1: but the market frankly doesn't seem to care. Yeah. I
Speaker 1: think ultimately, you know, as they say that, you know,
Speaker 1: the short term markets canting machine machine, long term waing machine,
Speaker 1: and ultimately valuation is going to matter. You know, one
Speaker 1: of our companies in the portfolio that I mentioned, zendesk Um,
Speaker 1: you know, has private equity interests that's been kind of
Speaker 1: broadly reported. I think you could start to see start
Speaker 1: start to see more of that in the kind of
Speaker 1: disrupted in innovation uh space. So I think we have
Speaker 1: to stay focused on valuation and owning good businesses that
Speaker 1: are disruptive. Sounding like a good see a fach hardholder
Speaker 1: that he is focused on those valuations. I remember as well,
Speaker 1: and I'm understanding of course what that means. I think
Speaker 1: when we talk about the bubbles and some of the
Speaker 1: hysteria in this market, it really was SPACs as well.
Speaker 1: You know, we understand the disclosures. When you think about
Speaker 1: an I p O wanting to raise capital, was the
Speaker 1: snack spack market. One of the first indications of a
Speaker 1: little frothy, a little bit over our skis here when
Speaker 1: we were taking a look at that peak market bubbles. Oh,
Speaker 1: I mean, I mean, if we look back on this,
Speaker 1: I think that what happened is during the pandemic UM,
Speaker 1: it was really these innovative growth companies that had massive
Speaker 1: estimate revisions because they were kind of leading us through
Speaker 1: the pandemic. You know, think companies like Zoom, Moderna, bioin Tech, etcetera.
Speaker 1: And this just generated a halo on all things innovative
Speaker 1: and growth. And there's going to be a massive acceleration
Speaker 1: even once the pandemic is over. UM and and and
Speaker 1: I think that there there's a lot of herds you know,
Speaker 1: heard following that goes on in the market. And I
Speaker 1: think the equity markets are friendly investment banks UH responded
Speaker 1: by by taking anything public UM that was remotely innovative.
Speaker 1: A lot of these companies went public way too early.
Speaker 1: UM And Frankly, when we look at the fact that
Speaker 1: you know, small cap growth underperformed large cap growth by
Speaker 1: twenty five percentage points last year the most. And I
Speaker 1: think a big part of that is just all the
Speaker 1: supply that was pushed into the market. Um and and interestingly,
Speaker 1: if we look at where investors, so households have been
Speaker 1: putting money, they've generally been putting it into large cap funds. Right,
Speaker 1: So you had this mismatch of supply and demand, and
Speaker 1: that's one of the reasons why I think, you know,
Speaker 1: kind of the megacps kind of lead in the back
Speaker 1: half of one while some of these you know, this
Speaker 1: MidCap space was being decimated quickly. Yeah, no, quickly here,
Speaker 1: we only have about a minute left, Chase and Curs
Speaker 1: gets your thoughts on if this is a U S story.
Speaker 1: We've heard a lot of calls that China tech, for example, uninvestable.
Speaker 1: Are you us only focus here within these volatile markets,
Speaker 1: within the our Disruptors E t F, we only focus
Speaker 1: or we only owned US listed companies we own like
Speaker 1: one A d R. I think we own no Chinese stocks.
Speaker 1: Really appreciate it, Jason Topper Newberger Berman Disruptors E t
Speaker 1: F portfolio manager, really keeping us up to date on
Speaker 1: all things big tech and these volatile markets. Investors are
Speaker 1: finding shelter from the deepending bear market sell off in
Speaker 1: the cheapest corners of the U S tech sector and
Speaker 1: really pulling back significantly significantly from some of the software
Speaker 1: stocks joining us now Rishie Jewelry f software analysts at
Speaker 1: RBC Capital Markets. And it's another sort of big day
Speaker 1: when we think about valuations and re rating of some
Speaker 1: of the big high flyers, a lot of the high
Speaker 1: flyers during the pandemic as well. To kick us off
Speaker 1: broadly speaking, how are you looking at valuations at this moment? Yeah,
Speaker 1: and thank you so much for having me. Look, I
Speaker 1: think we increasingly have to you know, get away from
Speaker 1: the fraud that we were experienced, uh experiencing for the
Speaker 1: past two years during the pandemic and and drill more
Speaker 1: on on free cash flow and profitability and to that extent,
Speaker 1: I mean, we're seeing some really attractive opportunities out there.
Speaker 1: You know, we see some really high quality companies like
Speaker 1: Zoom infol trading at thirty times cash flow, and and
Speaker 1: even some of the pandemic darlings that you know, they're
Speaker 1: going through some struggles, but we see you know, Zoom
Speaker 1: trading at fifteen times free cash flow. Uh. You know,
Speaker 1: we see Viva, very high quality company trading at twenty
Speaker 1: five times free cash flow. Um. We really like these
Speaker 1: sort of names and and and think the fact that
Speaker 1: there's actual valuation support on a profitability basis, uh and
Speaker 1: and these are names that we think can can do
Speaker 1: well in any sort of environment and still have a
Speaker 1: long run way of growth. Um. We are increasingly, though,
Speaker 1: looking at profitability way more than we used to do
Speaker 1: a year ago. And you're spot on. And I'm chuckling
Speaker 1: a little bit because the previous guests and you are
Speaker 1: mentioning on a instead of forward pe we're looking at
Speaker 1: multiples that include cash flow. And I'm wondering because when
Speaker 1: the E is negative, the math doesn't really work. Is
Speaker 1: you need a positive number in the denominator? How much
Speaker 1: of a focus is that e positive earnings instead of
Speaker 1: negative earnings? Yeah. Look with with SaaS companies, I think
Speaker 1: free cash flow matters a lot because it's just the
Speaker 1: dynamics of how revenue recognition works. Right, there's subscription businesses,
Speaker 1: and so you have to look at free cash flow
Speaker 1: rather than earnings. I mean you obviously still have you know,
Speaker 1: high quality businesses that you can value on earnings. Microsoft,
Speaker 1: for example, trading at twenty times forward earnings and that's
Speaker 1: gap earnings at that um. You know, so so you
Speaker 1: you would definitely have businesses where you can look at earnings.
Speaker 1: But the reason we always look at cash flow is
Speaker 1: number one, it's a it's a metric that is really
Speaker 1: hard to manipulate like earnings. And number two because of
Speaker 1: that whole subscription dynamic I just mentioned. What do you
Speaker 1: make of the big sell off looking at your coverage
Speaker 1: list Salesforce Microsoft? You know you think Microsoft massive, strong
Speaker 1: balance sheet, huge free cash flow, as you mentioned, strong
Speaker 1: debt rating. The indiscriminate selling that's been going on in
Speaker 1: the market, what is that telling you about the future
Speaker 1: path forward for even these super strong, healthy companies. Yeah,
Speaker 1: I look at I think you hit it on the head.
Speaker 1: It'sn't It is indiscriminated selling. And I think what is
Speaker 1: happening is investors are just fearful, right and and and
Speaker 1: and it's more the uncertainty that's killing everything. Um. You know,
Speaker 1: if we were actually in a recession right now, I
Speaker 1: think there's been a lot lesson certainty, But it's the unknown,
Speaker 1: as you know, are are we heading into recession? Are
Speaker 1: we not? Is it going to be like oh eight? Um?
Speaker 1: And I think that's what's making investors just sell off
Speaker 1: everything software, along with the fact that you know, all
Speaker 1: these stocks benefited during the pandemic um and I think
Speaker 1: it's time for investors to take a look and say, look,
Speaker 1: let's separate. You know, really, what are quality businesses from
Speaker 1: those that that aren't. And you know, where have investors
Speaker 1: been throwing out the baby with the bathwater? Um? So
Speaker 1: that's what I really think is happening here. But I
Speaker 1: think it is creating some opportunity. What are those opportunities then?
Speaker 1: For you? Within your coverage list? How are you thinking
Speaker 1: about the strong companies going forward? Uh? Yeah, Look, we're
Speaker 1: we're we're bullish on you know Microsoft, right for example,
Speaker 1: you know, it's pulled back off the highs and trades
Speaker 1: of a very reasonable valuation. Uh and and it's one
Speaker 1: of those names that should do well in a even
Speaker 1: in a downturn. Right. Viva is another name we like,
Speaker 1: you know, and in fact, they sell to healthcare, which
Speaker 1: is itself a very defensive sector. Um HubSpot is another
Speaker 1: name that we're taking advantage of on the pullback. Right.
Speaker 1: These are all companies that that have profitability that you
Speaker 1: can value on cash flow, have multiple growth drivers to
Speaker 1: to to continue growing, and and you know names again,
Speaker 1: especially Microsoft and Viva should hold up really well even
Speaker 1: in the event of a recession. What about some of
Speaker 1: the big pandemic winners that you mentioned, Palanteer, Zoom, the
Speaker 1: video conference company that we know, docu Side, we no
Speaker 1: longer were able to sign in persons were doing docu sign.
Speaker 1: Was that just a pull forward revenue that we saw.
Speaker 1: How consistent do you see that revenue and of course
Speaker 1: cash flow going forward? Yeah? Absolutely, And and you know,
Speaker 1: i'll put Palanteer side because we're actually a negative on
Speaker 1: that name. But but on on Zoom and docu Sign,
Speaker 1: I think you're you're absol right. They did pull forward
Speaker 1: a lot of business and and they're both very focused
Speaker 1: on their second act. Right. For for Zoom it's Zoom
Speaker 1: Phone and some of the other adjacencies like rooms and
Speaker 1: events UM. For for docu sign, it's it's CLM, Contract
Speaker 1: Lifecycle Management UM. Their focused on their second act. And
Speaker 1: I think the again, the uncertainty is what's holding these
Speaker 1: names back, right, It's why Zoom trades at fifteen times
Speaker 1: cash flow for what I think is a very quality
Speaker 1: business that that has you know, good unit economics and
Speaker 1: and really great technology. I think it's the best video
Speaker 1: conferencing technology that exists out there, but all the uncertainty
Speaker 1: is okay, well, how many other people are left in
Speaker 1: the world to do video conferencing Once you displace WebEx Uh,
Speaker 1: then where is there to go? And so as as
Speaker 1: they can prove that these second and third acts of
Speaker 1: their business are are for real, uh, then I think
Speaker 1: we can start to see a rerating on those docks.
Speaker 1: The argument has always been companies, even in a recession,
Speaker 1: even in a pullback, will continue to invest in technology.
Speaker 1: You've mentioned some of the companies that you really see
Speaker 1: as a recession proof effectively what companies don't do well
Speaker 1: in some of those slow down environments. Yeah. Look, I
Speaker 1: think there's a couple of categories. Number one is going
Speaker 1: to be any piece of software that is a a
Speaker 1: nice to have, not a need to have, right. Um
Speaker 1: you know, look, I think you can find plenty of
Speaker 1: categories of software that there's are more discretionary nature that
Speaker 1: if you know, push comes to shove and you have
Speaker 1: to unplug them. Um, it's okay, but you can't unplug
Speaker 1: your e RP, you cannot unplug your CRM, you can't
Speaker 1: move your workloads off as youre um so so you know,
Speaker 1: it's the discretionary items that we think are gonna do poorly.
Speaker 1: And then it's it's companies that are really levered to
Speaker 1: you know, the VC back businesses, right. I mean, it's
Speaker 1: no secret out there. We're seeing a lot of VC
Speaker 1: you know, funding dry up. We're seeing you know, those
Speaker 1: companies have to focus on profitability or even seeing layoffs right.
Speaker 1: And in consumer tech and even some VC backed enterprise
Speaker 1: software companies uh and and and any software company that
Speaker 1: is is proportionately exposed to the low end of the
Speaker 1: market um and to this kind of froth the VC
Speaker 1: back businesses, we think those ones are definitely at risk
Speaker 1: in the downturn. Really appreciate it so smart for cash flow,
Speaker 1: That's my takeaway. Bristi Gelirias, software analyst at OURBC Capital Markets,
Speaker 1: coming up, Twitter executives toning down some of the tweets
Speaker 1: and reassuring employees that the deal with Musk is on
Speaker 1: and not on hold. We're going to discuss the latest
Speaker 1: this Bloomberg time now for a Bloomberg scoop. The Twitter
Speaker 1: takeover drama continues as executives telling employees that the deal
Speaker 1: with Elon Musk it is not on hold, and it
Speaker 1: is moving forward as planned with the agreed upon price.
Speaker 1: Joining us once again is a very own Bloomberg's at
Speaker 1: Ludlow ned I wanted to say her just discuss our
Speaker 1: twins is wedding planning, and the producer said, no, we
Speaker 1: have to do Twitter. We have to do the story
Speaker 1: of the day. Right. Well, there's a lot to talk about.
Speaker 1: So we're hearing from sources that are in this big meeting,
Speaker 1: this big old hands that Vigor Gadda, who's the head lawyer,
Speaker 1: head of policy at Twitter, basically stood up and said,
Speaker 1: you know, not only is the deal with Elon Musk
Speaker 1: not on hold, but there's no such thing as a
Speaker 1: deal being put on hold, literally a quote from within
Speaker 1: that meeting. And you know this has been an area
Speaker 1: of intent interests not just for investors or US in
Speaker 1: the media, but Twitter users, fans of Elon Musk. And
Speaker 1: you know this was a move by company executive to
Speaker 1: reassure Twitter employees that you know, this is going to
Speaker 1: go ahead and this is what they're working toward. Why
Speaker 1: they need to even address this, right, Let's go back
Speaker 1: to basics. Great question. You'll remember that Elon Musk tweeted
Speaker 1: several days ago that the deal was quote temporarily on
Speaker 1: hold because he felt that data Twitter had provided in
Speaker 1: a regulatory fire ng saying less than five percent of
Speaker 1: users on the platform were bots was not accurate. He
Speaker 1: felt that he didn't believe the data and evidence that
Speaker 1: Twitter had provided, and he wanted to know more, and
Speaker 1: he stated on Twitter, in classic Elon Musk fashion, that
Speaker 1: until he had more evidence, the deal was temporarily on hold. Quote.
Speaker 1: But remember Bloomberg reporting as well that according to sources
Speaker 1: in the background, whatever Elon Musk is saying, his advisers,
Speaker 1: his bankers were getting on with it, you know, working
Speaker 1: with the other side, working with Twitter to get this
Speaker 1: deal to happen at the original price, which will remind
Speaker 1: our audience twenty cents per share to take Twitter private
Speaker 1: and evaluation forty four billion dollars. A lot of drama
Speaker 1: continuing to play out, and know that you continue to
Speaker 1: keep us up to date here on Twitter. I want
Speaker 1: to go to potentially a little bit more of a
Speaker 1: stable growth company here, and that's Apple. We had a great,
Speaker 1: of course story out here from our very and Mark
Speaker 1: Roman talking about the headset. I know that you love
Speaker 1: to do that hand motion and really described that headset
Speaker 1: for as visually here, but showing it to the board
Speaker 1: a significant sign of progress. Right, we're talking about a
Speaker 1: virtual augmented reality headset. You know, I don't have a prop,
Speaker 1: but basically sources saying that the latest version of this
Speaker 1: device was presented to the board recently. The board meets
Speaker 1: four times a year, but that's a pretty good sign
Speaker 1: that it's at a stage where it could be real.
Speaker 1: It could be the next big thing. You look there
Speaker 1: at that pie chart. Hardware so important for Apple revenue,
Speaker 1: but the iPhone dominates. What's the next generation of products?
Speaker 1: How can they boost services revenue? Were augmented virtual reality
Speaker 1: is one way of doing that. And so you know,
Speaker 1: we're hearing that this headset has amazing processing power, the
Speaker 1: same kind of chip power semiconductor power that it's latest
Speaker 1: generation of Max has and in previous years they've tested
Speaker 1: their software on competitor headsets. This is a market dominated
Speaker 1: by Meta, right, the Facebook parent and it's quest two device.
Speaker 1: So can Apple catch up? It's very exciting how to
Speaker 1: get your hands on the chips first, very appreciate, did
Speaker 1: very own Bloomberg's at ludlow. It is the single most
Speaker 1: efficient competitive market in the world. Hands down, we should
Speaker 1: think about how do we have far more companies be
Speaker 1: public companies where their success is enjoyed by American investors
Speaker 1: saving for the retirement or otherwise. And everything that we
Speaker 1: keep piling onto the list of obligations and responsibilities for
Speaker 1: public company discourages that from happy. We've seen thousands of
Speaker 1: fewer companies in our public markets today than twenty five
Speaker 1: years ago. And that's really I I hate to say it,
Speaker 1: but but shame on Washington for for really forcing so
Speaker 1: many investment opportunities outside of the line of sight of
Speaker 1: the American investment public. Welcome back to Bloomberg Technology. I'm
Speaker 1: Taylor Riggs. That was, of course that l CEO Ken
Speaker 1: Griffin speaking earlier at the bloom Intelligence Market Structure Conference,
Speaker 1: talking really here about the dearth of deals that he's
Speaker 1: seen in the US right now. He also warned how
Speaker 1: the chaotic markets are also making it harder to look
Speaker 1: at new deal, new deals and ideas. For more on
Speaker 1: how this is affecting startups, especially as they try to fundraise.
Speaker 1: I'm joined by Lisa Blow She is of course founding
Speaker 1: partner at Able. Great to have you here talk to
Speaker 1: us about sort of the volatility that we're seeing in
Speaker 1: the in the markets and sort of the impact that
Speaker 1: you're seeing, if at all, on some of the fundraising
Speaker 1: as well. Absolutely thanks for having me, Taylor. You know,
Speaker 1: we're really seeing that some of the later stage v
Speaker 1: C market, you know, shift, some of that turbulence is
Speaker 1: really um shifting down a bit um many investors, especially
Speaker 1: the crossover funds with public and private exposure, they pulled
Speaker 1: back or they've simply gone pencils down, and we're hearing
Speaker 1: about flat or down rounds as multiple start to normalize.
Speaker 1: We're also seeing significant interest in selling secondary shares in
Speaker 1: unicorns and a fair number of extension or bridge rounds.
Speaker 1: You know, right now the very early stage, the precede
Speaker 1: two seeds still remains somewhat insulated, but it's really just
Speaker 1: a matter of time before we see that instability seem
Speaker 1: into the super early stage, and many of those precede
Speaker 1: and seed rounds they're upsizing the size of their current reads,
Speaker 1: you know, for a little more cushion so that they
Speaker 1: have runway given you know, the macro and certainty that
Speaker 1: we're seeing in the later stage market, and are you
Speaker 1: telling your companies to prepare for a little bit of
Speaker 1: a slow down, to think about conserving cash, just tightening
Speaker 1: up your belt and being able to And I was
Speaker 1: in Boston, I believe it was two days ago when
Speaker 1: I think one of the vcs that I was speaking
Speaker 1: to told his companies be prepared to not be able
Speaker 1: to fundraise for eight teen months. Yeah. Absolutely, I think
Speaker 1: that's good advice. It's certainly a good um framework in
Speaker 1: a way of thinking. You know, our best advice to
Speaker 1: any founder at as time is to remain incredibly disciplined
Speaker 1: on your cash furn and to utilize, you know, an
Speaker 1: R o I driven decision making framework to prioritize and
Speaker 1: and really, irrespective of the macro environment, we enable have
Speaker 1: always set you know, the best companies with outstanding metrics,
Speaker 1: fundamentals and a unique competitive advantage will continue to get funded.
Speaker 1: There's still venture funding out there with dollars that will
Speaker 1: have to be deployed, and they'll go, you know, out
Speaker 1: to the best the best founders and the best businesses.
Speaker 1: You know, and we've also said to our founders, you know,
Speaker 1: many of them try to optimize for lower dilution and
Speaker 1: higher valuation, but there may be advantages now to remaining
Speaker 1: disciplined on valuation to avoid being in a situation where
Speaker 1: it's hard to clear that valuation at the next round,
Speaker 1: you know, giving given the continued challenges in the macro environment.
Speaker 1: So the shift is no longer a unicorn at any cost. Right.
Speaker 1: Has it been a focus on looking at more or
Speaker 1: sooner profitability? Absolutely? Um, you know, I think it's it's
Speaker 1: no longer. The message is no longer you know, grows
Speaker 1: at any cost. It is really trying to UM to
Speaker 1: focus on the fundamentals and to build you know, a
Speaker 1: strategically competitive business. UM. That's still sort of grounded in
Speaker 1: in good economics. You know, you talked about it in
Speaker 1: the slowdown. You'll still get funding for the companies with
Speaker 1: really strong ideas. Where do you what sectors? Where are
Speaker 1: those good ideas? You know? And able we're focused on
Speaker 1: what we call kind of narrowing the wellness gap, right,
Speaker 1: that's the delta that's grown over the past two decades
Speaker 1: as economic indicators such as GDP per capita you know,
Speaker 1: have gone up into the right UM, while our measures
Speaker 1: of overall well being, including physical and mental health, have
Speaker 1: stagnated or decreased. So we're most focused on overlooked or
Speaker 1: underserved demographics where there has been historical sigma stigma. So
Speaker 1: one area that's been very active for US is mental health.
Speaker 1: You know, we've been invested in spring Health and Alma
Speaker 1: and Little Otter. One in five US adults and kids
Speaker 1: suffer from a mental health or substance abuse issue in
Speaker 1: any given year, but over half have never received treatment. Um,
Speaker 1: the stats really speak for themselves. But it's also an
Speaker 1: opportunity that's right for technological innovation given the significant supply
Speaker 1: and demand and balance that we see in this sector specifically.
Speaker 1: So I think it's six counties in the US, including
Speaker 1: of rural counties, don't have a single psychiatrist, and the
Speaker 1: number of psychiatrists interesting entering the profession has been trending down,
Speaker 1: you know. So our thesis is that technology can really
Speaker 1: help unlock a lot of value and opportunity there. And
Speaker 1: I hear you, but also coming out of the pandemic,
Speaker 1: this also felt like, says a competitive space. I mean,
Speaker 1: you get up advertisements all the time of all of
Speaker 1: these different mental health apps here on your phone, so
Speaker 1: how do you also then differentiate if there is the need.
Speaker 1: But it also kind of feels competitive as well, yeah, absolutely.
Speaker 1: You know, I think kind of going back, as I said,
Speaker 1: we've really focused where we think technology UM can make
Speaker 1: a big difference, particularly in the mental health sector. So
Speaker 1: we've looked at tools that make the mental health providers
Speaker 1: more efficient in managing their care. You know, we've looked
Speaker 1: at services and technology that allows personalization for an employee
Speaker 1: to determine, you know, exactly what care, what mental health
Speaker 1: modality is most effective for their needs. We've also looked
Speaker 1: at a digital services that allow those in world geographies,
Speaker 1: as I mentioned before, you know, to access quality care virtually.
Speaker 1: And now that's right, Yeah, no, wonderful. And I think
Speaker 1: another great thing here I'm ringing in your notes is
Speaker 1: course backing female entrepreneurs, and they're sort of a big
Speaker 1: takeaway from the pandemic. It all forced us to stop,
Speaker 1: slow down and look around at a quality around us.
Speaker 1: And certainly in your world you're doing that as well.
Speaker 1: How are you looking at investing and supporting female entrepreneurs. Absolutely,
Speaker 1: that's been central to our thesis and our work since
Speaker 1: Stables inception UM. You know, we have about seventy companies
Speaker 1: and our current portfolio and six have a female on
Speaker 1: the founding team. But we've always said that that we
Speaker 1: really invest in the most talented founders and they just
Speaker 1: happened to be women. Right, are our sectors that we
Speaker 1: focus on, our consumer, their health, their care. Women make
Speaker 1: the vast majority of purchase decisions, and we as investors,
Speaker 1: you know, we're really looking and talking a lot about
Speaker 1: founder product that and we're looking for entrepreneurs that have
Speaker 1: lived experiences that uniquely qualify them to solve the problem. So,
Speaker 1: you know, from our perspective, understanding the female point of
Speaker 1: view is really critical to success and to scale. And
Speaker 1: and there has been progress last year, and women raised
Speaker 1: more venture dollars and executed more exits, greater evaluations than
Speaker 1: at any point in the past decade, but the percentage
Speaker 1: share of funding to all female founding teams declined for
Speaker 1: the second year in the row. So you know, the
Speaker 1: reality is we need more diverse perspectives, more women in
Speaker 1: decision making roles at investment firms, because you know, it's
Speaker 1: not just it's not just good work, good business. Women
Speaker 1: on founding teams. You know, those teams perform sixty three
Speaker 1: percent better than all male founding teams, and women lead
Speaker 1: teams generate you know, like thirty five percent higher return
Speaker 1: on investment than all male teams. So this is you know,
Speaker 1: this is not charity, this is good investment work. Really
Speaker 1: appreciate it. Good investment work is from Lisa Blow, founding
Speaker 1: partner over an Able Ventures. Really appreciative coming up closing
Speaker 1: the gender gap, something that we were just discussing and
Speaker 1: now doing that in the digital art world by conversation
Speaker 1: with well one of the biggest artists in that space.
Speaker 1: That's next. This is Bloomberg time now for our Crypto Report.
Speaker 1: I'm so pleased to welcome in while our of course
Speaker 1: crypto contributor Snali bask along with Nadia to Lakonikova. She
Speaker 1: is of course one of the co founders of the
Speaker 1: feminist protest art collective Pussy Right and an outspoken social activists.
Speaker 1: Nadia is so great to um have you here with
Speaker 1: us today. First talk about sort of this new initiative
Speaker 1: that you have underway and and sort of the more
Speaker 1: equalizing within the l g B t Q community that
Speaker 1: that you're looking for within the crypto world. UM, it's
Speaker 1: called again Learned Out and they bring together one of
Speaker 1: the biggest minds and flancers, artists, collectors in the digital
Speaker 1: arts space to close the gender gap. Artists thinking is
Speaker 1: that UM crypto digital space promised to build a new world,
Speaker 1: and a lot of people in this space belief that
Speaker 1: UM the world has to be more UM open, excessive,
Speaker 1: accessible for everyone, UM equitable and UM. We believe that
Speaker 1: if we bring together in the room one of the
Speaker 1: most inefntional people in space, people like people see a
Speaker 1: borde yacht club, grinds, UM, pussy right, a lot of
Speaker 1: other prominent artists in space UM, than we are going
Speaker 1: to be able to establish NUMER them and everyone else
Speaker 1: who's going to come to webs three later going to
Speaker 1: be following this model of the world that they're going
Speaker 1: to be able to build where women are equal men.
Speaker 1: I'm really curious about diving into that a little more.
Speaker 1: Your website also for Unicorn, Dow points out some of
Speaker 1: the issue here and idea that there is not a
Speaker 1: lot of diversity in the space yet. So when you're
Speaker 1: getting together with all the members of this taw, how
Speaker 1: do you defeat this problem and are there challenges to
Speaker 1: doing so? M We get together on weekly calls, sometimes
Speaker 1: we do parties UM. When it comes to UM membership,
Speaker 1: we try to make sure that we have UM and
Speaker 1: this equal amount of members, and we have systems in
Speaker 1: place that help to maintain that, like, for example, we
Speaker 1: have sponsorship program UM that is sponsored by movie a UM,
Speaker 1: so there are a number of female artists who are
Speaker 1: not able to contribute to fifty ease for a seat,
Speaker 1: so instead movie based for them. When it comes to
Speaker 1: in real life mons, UM you know obviously prefer to
Speaker 1: party with UM girls and all people people, so we
Speaker 1: also as always maintain UM people who we've watched, people
Speaker 1: who we invite, so it's like it's never a cryptive
Speaker 1: broad party UM. I think this is one of the
Speaker 1: biggest problems in web scree in crypto that they are
Speaker 1: called SURE that is created by crypto bros, which is
Speaker 1: so repulsive for a lot of people from the outside,
Speaker 1: and then it doesn't allow UM an if season really
Speaker 1: skill and reach massive option. And what a story. I
Speaker 1: mean this was launched in the tenure anniversary. Since you're
Speaker 1: arrest in Moscow for an anti Putin protest and I'm
Speaker 1: wondering if you'll talk a little more about the power
Speaker 1: you found in crypto to bring people together, especially because
Speaker 1: you were such a big part of what had raised
Speaker 1: money for Ukraine through the Tao world. UM. I'm always
Speaker 1: been connected with the world of technology. Creci believes that
Speaker 1: not just to be a good effective activists have to
Speaker 1: be also smart abode what's going on in the tech world.
Speaker 1: UM so I mm hmm, I'll love to I love
Speaker 1: to use whatever this world gives us in order to
Speaker 1: which you've better results. Is an actness. So with the
Speaker 1: same mindset I came into crypto UM. I started to
Speaker 1: actually work in the game of last year UM. And
Speaker 1: but you know, my core UM ethos didn't change really
Speaker 1: over the last fifteen years. It started to be feminist
Speaker 1: and interpreting in the interstature. And actually fifteen years ago
Speaker 1: so UM doing the same thing, tried to cheat the
Speaker 1: same goals, but with new tools and UM for example,
Speaker 1: when they were grain started in the end of February,
Speaker 1: were put together ukrained out and I'm one of the
Speaker 1: co founders of the brained out and we were able
Speaker 1: to raise seven million dollars just a few days and
Speaker 1: dispersed those wine in the next twenty four hours and
Speaker 1: creat allows for UM transparency, speed, UH and efficiency that's
Speaker 1: not really seen before. The sort of argument against that though,
Speaker 1: it's been sort of the high flying n f t
Speaker 1: S high flying crypto. Oh, it's come down a lot
Speaker 1: in terms of price. Are you worried about entering and
Speaker 1: continuing in this market when prices weren't what they were
Speaker 1: a few months ago. I'm not worried because I'm here
Speaker 1: for different reasons. I'm looking at scripture as as a
Speaker 1: tool for activism, and uh, nothing really changed, and that Simpsons.
Speaker 1: I also, I also think that there are a lot
Speaker 1: of UM use cases of Considium applications UM for building
Speaker 1: better governance models, and the founder of Isyrianthetic Garnity, talks
Speaker 1: a lot about that. So I'm usually looking forward for deco,
Speaker 1: playing UM lust for money and crypto and looking at
Speaker 1: scripted and I think this, this current market allows us
Speaker 1: to actually take a look at crypt and try to
Speaker 1: find something better and more interesting, deeper than just UM
Speaker 1: you know, means to get rich. You know, speaking of
Speaker 1: deeper reasons for cryptocurrency, one of the things that you're
Speaker 1: Dallas talked about is reproductive rights and what you've called
Speaker 1: the summer rage and in the release out here, so
Speaker 1: how do you see that playing out for members of
Speaker 1: the community to really talk about reproductive rights in the
Speaker 1: United States. We're working currently on the auctions is UM
Speaker 1: Christie's and the auction is going to be revolving around
Speaker 1: the topic of reproductive justice UM and big proportion of
Speaker 1: what we're going to be able to raise what we're
Speaker 1: going to be donating to various reproductive justice organizations in
Speaker 1: the US UM and also we are in conversations with
Speaker 1: various UM and so various recoundations like Blind Friendhood and
Speaker 1: When's March to see how we can actually help them
Speaker 1: to onboard their members two bops three to hopefully provide
Speaker 1: them better governance tools and also found aging tools for
Speaker 1: their goals. Really appreciate it, Nadia to look Nikova of course,
Speaker 1: and our very own Bloomberg generally Bostic. Really appreciate both
Speaker 1: of you joining this program. Retail Stock's got a big
Speaker 1: hit this week as investors worry about consumers paying higher
Speaker 1: prices in the wake of higher inflation. Join is now
Speaker 1: is James Riinhardt's CEO of thread Up, the world's largest
Speaker 1: online market place for secondhand clothing. And before we get
Speaker 1: to the inflation conversations, I think the bigger issue underway
Speaker 1: is well the lack of supply chain issues that at
Speaker 1: least maybe you're starting to see. Is that one area
Speaker 1: of at least reprieve for you Yeah, definitely. And we
Speaker 1: don't have exposure to China, so we don't have to
Speaker 1: put you to international production. Um. You know, of course
Speaker 1: we still are dealing with freight and labor costs here
Speaker 1: in the US. But certainly it's nice to be in
Speaker 1: a market where, you know, everything that we're selling back
Speaker 1: to the American consumer is being sourced domestically from from
Speaker 1: the American consumer. So that does give us some insulation.
Speaker 1: Tower talk to us then about inflation, huge concern and
Speaker 1: you know one of my bigger concerns is if Walmart
Speaker 1: and Target aren't figuring out how to manage it, how
Speaker 1: does everyone else do it? How are you doing it? Yeah?
Speaker 1: I mean I don't think the targeting Walmart and it
Speaker 1: told sort of different stories about about the results. I think, Um,
Speaker 1: you know, for us, ultimately, what we see is a
Speaker 1: consumer that seems like they're getting a little pinched right
Speaker 1: and pinched at the palm, pinched on groceries. Um. You know,
Speaker 1: you can see this across sort of consumer discretionary spend
Speaker 1: and so you know, I think what we're seeing is
Speaker 1: that this is now a time where discount apparel, you know,
Speaker 1: secondhand apparel can really shine, and so I think, you know,
Speaker 1: our job is to make sure consumers are aware of
Speaker 1: the great value that you can get in second hand
Speaker 1: and you're really seeing that. I'm looking at your two
Speaker 1: resell report talking about how the market is expected to
Speaker 1: grow by a hundred and twenty seven by six How
Speaker 1: do you sort of make sure that you're meeting your audience,
Speaker 1: that you have the right inventory that consumers are looking
Speaker 1: for at the moment. Yeah, that's the tricky part, right
Speaker 1: is it is that it requires some investment right now
Speaker 1: to make sure that we have the products that consumers
Speaker 1: want to buy and that we're really investing for the
Speaker 1: consumer of the future, you know, which is young people.
Speaker 1: Where you're really seeing the growth in Gen Z millennial
Speaker 1: shoppers is their pursuit of second hand. And I think
Speaker 1: second hand is now moved from hey, I'm gonna occasionally
Speaker 1: think about shopping second hand to really being one of
Speaker 1: the first places the young people are going. And I
Speaker 1: think that's a really exciting change for the resale industry.
Speaker 1: And so we're trying to make sure that that we're there. Uh,
Speaker 1: you know, as consumers are looking to you know, go
Speaker 1: back out in the world and return to work. And
Speaker 1: that's where second and can shine. We were showing a
Speaker 1: chart here about how the consumers are really looking at
Speaker 1: North America. That area is leading the growth, but how
Speaker 1: much of this is also a global story for future opportunity, Yeah,
Speaker 1: the global resail industry. This is the first time that
Speaker 1: we've ever done that as far as are you know,
Speaker 1: in our resale report was a look at the global trends,
Speaker 1: and you know, the global trends are really positive. Whether
Speaker 1: it's whether it's in South America or it's in Europe
Speaker 1: or or Australia. Right across the globe, resale is growing
Speaker 1: and so, you know, I think it suggests that this
Speaker 1: movement to shop more sustainably is not a US phenomenon.
Speaker 1: I've said for a long time that the problem we're
Speaker 1: solving for consumers is a global one, and so I
Speaker 1: think it's exciting, uh, you know, for us to see
Speaker 1: that type of global growth. I think the global markets
Speaker 1: supposed to triple over the next five years, and and
Speaker 1: obviously that's waited more towards North America the near term. Finally,
Speaker 1: here you mentioned sustainability. I'm curious during times when the
Speaker 1: economics pull back a little bit and consumers are feeling pinched,
Speaker 1: is it a necessity or is it a desire to
Speaker 1: actually be sustainable. Yeah, I think what we've been trying
Speaker 1: to keep top of mind for consumers is that the
Speaker 1: threat of value proposition is always great brands at great prices.
Speaker 1: You know, we certainly believe price and value is the
Speaker 1: number one consideration at a time like this, but we
Speaker 1: always add the caveat of like its great brands of
Speaker 1: great prices in a sustainable way. And I think young
Speaker 1: people increasingly are saying, hey, I want to change the
Speaker 1: way on shopping and I do want to be more sustainable,
Speaker 1: and so I think, you know, now is our time
Speaker 1: to improve that we can deliver value in a sustainable
Speaker 1: way to our consumer. Really appreciate it. Thanks for spending
Speaker 1: some time with us through it up, CEO James Reinhardt.
Speaker 1: And of course that does it for this edition of
Speaker 1: Bloomberg Technology. We're going to be right back here tomorrow.
Speaker 1: I hear Emily Chang may grace the building and return.
Speaker 1: We'll have to see if that indeed doesn't work out. Also, though,
Speaker 1: don't make sure to check out our new podcast. You
Speaker 1: can find it on the terminal. You can find it
Speaker 1: online on Apple, Spotify, and I Heart This is Bloomberg.
Speaker 1: Sat Lady