WEBVTT - Twitter Fallout and Rivian Job Cuts (Podcast) 0:00:01.560 --> 0:00:04.840 From the heart of where innovation, money and power. CALLI 0:00:05.680 --> 0:00:10.200 in Silicon Valley and Beyon this is Bloomberg Technology with 0:00:10.280 --> 0:00:26.880 Emily Jay. I'm Caroline Hyde in New York for Emily 0:00:26.960 --> 0:00:29.159 Chang and this has been big technology coming up. In 0:00:29.160 --> 0:00:32.120 the next hour, Musk Walks and Twitter at Tanks will 0:00:32.159 --> 0:00:34.240 bringing the latest on the legal battle ahead and what 0:00:34.320 --> 0:00:36.160 the future of the fully four billion dollar Twitter deal 0:00:36.200 --> 0:00:38.879 actually looks like. Plus a slash in valuation for one 0:00:38.920 --> 0:00:41.960 of the Europe's most high profile startups, Klarner, being valued 0:00:42.000 --> 0:00:44.519 now at just six seven billion dollars, down from forty 0:00:44.600 --> 0:00:47.680 five point six billion just one year ago. We talked 0:00:47.680 --> 0:00:50.400 to an investor in the company and a primetime shopping 0:00:50.400 --> 0:00:53.800 event Amazon kicking off It's Today Shopping Extravaganza on Tuesday. 0:00:53.960 --> 0:00:57.840 How Prime Day could help Amazon's third quarter online sales game. Meanwhile, 0:00:58.160 --> 0:00:59.800 let's get back to the scene being set for a 0:00:59.840 --> 0:01:03.080 just suseruptive legal battle over the future of Twitter, shares 0:01:03.120 --> 0:01:06.080 of the social media platform falling after Elon Musk walked 0:01:06.080 --> 0:01:08.560 away from his forty four billion dollar deal to buy 0:01:08.680 --> 0:01:12.640 the company. Muscoweges look at Twitter misrepresented user data. Twitter 0:01:12.720 --> 0:01:15.640 plans to assume us too close transaction, but most cut, 0:01:15.640 --> 0:01:18.280 Wagner joins us, and just ahead of our conversation. Cut, 0:01:18.360 --> 0:01:20.840 of course, we understand from a lawyer for Twitter, and 0:01:20.880 --> 0:01:22.400 it is always the lawyers that went in this. It 0:01:22.400 --> 0:01:25.360 wouldn't be said Twitter's lawyers saying that Musk's termination is 0:01:25.400 --> 0:01:28.640 invalid and wrongful, and he says that Twitter has breached 0:01:28.800 --> 0:01:32.240 no obligations. Where are you at with this? Yeah, we're 0:01:32.280 --> 0:01:35.240 getting to the fun part of the uh, you know 0:01:35.400 --> 0:01:37.480 deal where all the lawyers are just going to start 0:01:37.520 --> 0:01:39.880 sending each other letters back and forth and we're going 0:01:39.920 --> 0:01:41.720 to have to pass through all this legally is but 0:01:41.840 --> 0:01:46.000 you're right now Twitter's turn. Right. On Friday, we were talking, Caroline, 0:01:46.040 --> 0:01:48.080 you and I were live on air and when we 0:01:48.080 --> 0:01:51.320 were reading, you know, this letter from Elon Musk's lawyers 0:01:51.360 --> 0:01:55.320 basically saying, Hey, Twitter, you violated this agreement. Now Twitter 0:01:55.480 --> 0:01:58.600 has filed its response and is basically saying the opposite. 0:01:58.640 --> 0:02:01.840 You know, we have a held our version of the agreement, 0:02:01.920 --> 0:02:03.560 or are part of the agreement, and it's you who 0:02:03.560 --> 0:02:06.920 has been misleading or who has you know, violated, right, 0:02:06.960 --> 0:02:09.360 And so we're clearly headed to a court here, and 0:02:09.400 --> 0:02:11.480 both sides are going to get to argue their case. 0:02:11.480 --> 0:02:13.520 But at least for right now, the lawyers are starting to, 0:02:13.919 --> 0:02:17.440 you know, put their their respective arguments out into the universe. 0:02:17.720 --> 0:02:19.800 And what is some of the theories being held as 0:02:19.840 --> 0:02:23.679 to how could how it could turn out, who could 0:02:23.720 --> 0:02:25.480 win out. It's not just going to be a one 0:02:25.520 --> 0:02:30.400 billion dollar termination feel it feels no. I I would 0:02:30.400 --> 0:02:34.079 be shocked if that's the ultimate result. I would imagine 0:02:34.080 --> 0:02:36.000 that we're going to end up somewhere in the middle. Right. 0:02:36.040 --> 0:02:39.119 I think there's two kind of dramatic outcomes that could 0:02:39.120 --> 0:02:40.840 come from this legal battle. The one is actually what 0:02:40.919 --> 0:02:43.760 you just said, that you know, a court rules in 0:02:43.800 --> 0:02:46.239 favor of Elon Musk and that he pays termination fee 0:02:46.240 --> 0:02:48.519 and walks away. The other is that they rule in 0:02:48.600 --> 0:02:51.080 favor of Twitter and they forced Elon Musk to spend 0:02:51.080 --> 0:02:53.400 forty four billion dollars to buy a company he doesn't 0:02:53.400 --> 0:02:56.600 want to buy. Now, Alternatively, I think these two sides 0:02:56.639 --> 0:02:58.840 could settle somewhere in the middle. That to me seems 0:02:58.880 --> 0:03:02.240 like the most likely scenario, right. But in that in 0:03:02.280 --> 0:03:05.040 that case, there's infinite number of outcomes here, so we 0:03:05.080 --> 0:03:08.800 don't know exactly where they're going to end up. I 0:03:08.840 --> 0:03:12.919 think like infinite amount of outcomes to pass. Kurt Wagner again, 0:03:13.000 --> 0:03:15.200 thank you so much for audio expertise on that Friday, 0:03:15.200 --> 0:03:17.600 and for expertise again today as we continue to follow 0:03:17.800 --> 0:03:20.640 it's pretty toward story. Let's get more analysis for you. 0:03:20.680 --> 0:03:24.240 Let's bringing Mahenya Avico, who covers the company and well, 0:03:24.280 --> 0:03:26.680 as we're saying an infinite amount of outcomes here mark 0:03:26.720 --> 0:03:30.799 but from a fundamental basis, without the forty four billion 0:03:30.800 --> 0:03:33.919 dollar offer, what is Twitter worth? It's probably not too 0:03:33.960 --> 0:03:36.360 far off from where we trade. If the deal was 0:03:36.400 --> 0:03:39.280 decided tomorrow was off, probably come off a couple of percent. 0:03:39.360 --> 0:03:41.040 But there's some markers in the market. You can look 0:03:41.040 --> 0:03:45.320 at the multiples that pinterest, UH and Snapchat trade at 0:03:45.440 --> 0:03:47.320 and uh, you know, maybe there's a little bit of 0:03:47.400 --> 0:03:50.200 downside to the kind of high twenties and thirty dollar 0:03:50.360 --> 0:03:53.000 range something like that, but it's not it's not much 0:03:53.000 --> 0:03:56.000 more dramatic than that. The difference here is, by the way, 0:03:56.080 --> 0:03:57.960 you know, we've kind of forgotten this and all this. 0:03:58.280 --> 0:04:01.119 The noise is that Twitter is a good asset generated 0:04:01.160 --> 0:04:05.120 five billion and advertising dollars last year. Advertisers are obviously 0:04:05.240 --> 0:04:08.640 cognizant of and willing to tolerate the body issue UH, 0:04:08.680 --> 0:04:12.080 and the company generated positive free cash flow margins for 0:04:12.200 --> 0:04:15.280 several years, you know, prior to the COVID crisis. So 0:04:15.360 --> 0:04:19.760 it's a business that's had you reasonable scale, decent growth. UM. 0:04:19.800 --> 0:04:23.640 It's underperformed major peers like Google and UH and Facebook, 0:04:23.640 --> 0:04:29.080 but those were always unfair comparisons. It's a decent asset. UH. Recently, 0:04:29.120 --> 0:04:32.040 it's probably been somewhat impaired by all the uncertainty over 0:04:32.080 --> 0:04:35.360 this deal, and then going forward, it's probably somewhat impaired 0:04:35.360 --> 0:04:38.360 by the recession that's taking out growth from almost all 0:04:38.440 --> 0:04:43.839 Internet ad assets. Does it become impaired by advertisers walking 0:04:43.839 --> 0:04:48.560 away because of boats as it seems that Karnelo Musk 0:04:48.680 --> 0:04:52.080 is trying to argue, I don't know it, Carolina, It's possible. 0:04:52.200 --> 0:04:55.880 I've run surveys on Twitter for ten years, advertiser surveys 0:04:55.920 --> 0:04:59.080 on Twitter for almost ten years. It's never come up 0:04:59.120 --> 0:05:01.200 as an issue. I've never we actually had a channel 0:05:01.279 --> 0:05:04.160 check or a discussion with an advertiser that said I 0:05:04.200 --> 0:05:07.039 can buy ads on Facebook, but I can't do it 0:05:07.320 --> 0:05:10.159 on Twitter because of the bots issue. I've never heard 0:05:10.200 --> 0:05:13.960 that UH, that there are bots, that there are clip 0:05:14.000 --> 0:05:16.720 farms in social media. I think that's well understood. It's 0:05:16.800 --> 0:05:19.400 part of the you know, it's part of the peril 0:05:19.440 --> 0:05:23.040 of these these industries and these companies and Twitter and 0:05:23.080 --> 0:05:27.679 Pinterest and Google and Facebook. I've always had to fight 0:05:27.720 --> 0:05:30.839 back against these box farms. It's just part of the 0:05:31.000 --> 0:05:33.880 part of doing business. People run bots for political reasons, 0:05:33.880 --> 0:05:35.880 they run them for commercial reasons, but it's always been 0:05:35.920 --> 0:05:38.080 a factor. I don't think it's been an issue for 0:05:38.160 --> 0:05:40.840 advertisers over the last couple of years. I think that 0:05:40.960 --> 0:05:43.680 five billion and ad revenue that Twitter got last year 0:05:43.720 --> 0:05:46.000 they got they they earned it, and I think uh 0:05:46.080 --> 0:05:49.280 and advertisers weren't put off by the fact that there 0:05:49.320 --> 0:05:53.359 were bots on the platform. Has been any upside to 0:05:53.440 --> 0:05:57.159 this whole fiasco for Twitter? I'm struggling, Caroline. I think 0:05:57.160 --> 0:06:00.360 there's been no upside. So all you've done is um 0:06:00.480 --> 0:06:03.240 created a lot of dysfunction within the company. They've lost 0:06:03.240 --> 0:06:06.159 some of their top employees. Uh, there's probably been some 0:06:06.240 --> 0:06:09.760 demoralization of employees because you know, Musk has come out 0:06:09.800 --> 0:06:11.880 and said that there were too many people working there. 0:06:12.120 --> 0:06:13.920 How would you feel if somebody was going to buy 0:06:13.920 --> 0:06:16.920 your company started off by saying there are too many 0:06:16.920 --> 0:06:19.719 employees at the company. So I just think that what's 0:06:19.760 --> 0:06:23.279 happened is very unfortunate. And um I thought Musk had 0:06:23.279 --> 0:06:26.520 a lot of interesting ideas of ways to improve Twitter 0:06:26.560 --> 0:06:28.880 and maybe this law come out and maybe maybe we 0:06:28.960 --> 0:06:32.279 will get some sort of resolution that a reduced deal size. 0:06:32.800 --> 0:06:35.040 But I my guess is that the worst case scenario 0:06:35.040 --> 0:06:36.440 is going to come through, which is that this is 0:06:36.440 --> 0:06:38.120 going to go through the courts for some time, There'll 0:06:38.120 --> 0:06:40.520 be some sort of breakup fee, and then Twitter is 0:06:40.560 --> 0:06:43.040 going to have to rebuild a little bit, and that's 0:06:43.040 --> 0:06:45.440 probably gonna be a year from now. Uh, And it's 0:06:45.680 --> 0:06:47.960 very unfortunate. I think what's transpired here of the last 0:06:48.000 --> 0:06:51.080 couple of months for investors, as all well said, we 0:06:51.160 --> 0:06:53.560 thank you Mark Mahaney, and maybe trying to find the 0:06:53.560 --> 0:06:57.240 fundamentals and what is in general and a non fundamental 0:06:57.279 --> 0:07:07.359 story at the moment a bit of a dramatic reversal 0:07:07.400 --> 0:07:10.440 for one of Europe's most high profile startups, Klana Bank, 0:07:10.600 --> 0:07:13.280 valuation being slashed to just six point seven billion dollars 0:07:13.280 --> 0:07:15.400 in its latest funding round. We understand that's down from 0:07:15.640 --> 0:07:18.680 from one point one fully five billion in June one. 0:07:18.880 --> 0:07:21.920 The Swedish by now pay later. Giant has been burning 0:07:21.920 --> 0:07:24.480 through hundreds of millions of dollars of course as a startup, 0:07:24.480 --> 0:07:27.680 and joining us to discuss when next and how we 0:07:27.720 --> 0:07:30.880 continue to see talent sort of recompense in this market. Andrew, 0:07:30.880 --> 0:07:34.520 one of Manhattan Venture Partners, Andrew, it's really great to 0:07:34.560 --> 0:07:36.360 have you on, and of course Klarner one of your 0:07:37.160 --> 0:07:39.800 numerous members of your portfolio. And I'm interested is to 0:07:40.440 --> 0:07:43.360 what happens in these environments, how much how painful it 0:07:43.440 --> 0:07:45.560 is for the executives leading the business and the people 0:07:45.640 --> 0:07:49.520 have invested. Yeah, so thanks so much for having me, Caroline. 0:07:49.600 --> 0:07:52.200 So I will say that at Manhattan's Partners, where we 0:07:52.280 --> 0:07:55.600 invest in growth and leak siege companies, much like Clarner 0:07:55.680 --> 0:07:58.840 while they're really hitting the peak trajectory of their business, 0:07:59.160 --> 0:08:02.640 is that we still believe that extraordinary companies backed by 0:08:02.640 --> 0:08:05.600 the investor the best investors, will deliver these types of 0:08:05.640 --> 0:08:08.320 outside returns. And so even though Clarina has seen the 0:08:08.440 --> 0:08:11.960 valuation compressed, we believe in their long term prospects very 0:08:12.040 --> 0:08:14.160 much so. And I think that they're deploying a number 0:08:14.200 --> 0:08:17.920 of strategies to keep the existing employee base and executive 0:08:17.920 --> 0:08:20.400 base retained. Yeah, because talk to us, I mean you're 0:08:20.440 --> 0:08:23.760 you're someone who thinks a lot about well, liquidity in 0:08:23.800 --> 0:08:26.440 the secondary market, and a lot of that. Often these 0:08:26.840 --> 0:08:29.840 big valuations and moments of exit, which are currently the 0:08:29.920 --> 0:08:32.839 rules of shot to a certain extent, all because it's 0:08:32.840 --> 0:08:35.720 about talent management. It's about ensuring that they're able to 0:08:36.240 --> 0:08:38.600 take some money out have a liquidity event. How hard 0:08:38.640 --> 0:08:42.160 has that become at the moment? Well, for the best 0:08:42.160 --> 0:08:45.520 companies in this world, there's always going to be demand, right, 0:08:45.559 --> 0:08:47.560 So I think that that's something that we always measure 0:08:47.559 --> 0:08:50.600 when we evaluate companies, whether it's on a primary basis 0:08:50.679 --> 0:08:52.960 or on a secondary basis. And when it comes to Clarina, 0:08:53.280 --> 0:08:56.200 there's always been a really healthy volume of activity in 0:08:56.200 --> 0:08:59.920 the business, and investors are really excited about the prospect 0:09:00.240 --> 0:09:02.760 of where they're growing because that's the right now. They 0:09:02.800 --> 0:09:06.200 are the market leader across all geographies in the buy now, 0:09:06.240 --> 0:09:10.240 pay later space and growing much further than just that 0:09:10.400 --> 0:09:12.600 nature of its business. And so I would say the 0:09:12.640 --> 0:09:16.080 prospects of the secondary market continue to get rather exciting 0:09:16.120 --> 0:09:19.440 and have created some really unique opportunities to buy into 0:09:19.480 --> 0:09:22.720 the business or dollar cost average across both businesses like 0:09:22.840 --> 0:09:26.520 Varna and others, what do you wanted to see from 0:09:26.600 --> 0:09:30.160 the leadership Etcana But the leadership of audio companies that 0:09:30.200 --> 0:09:32.320 you can't have been backing and some that of couls 0:09:32.360 --> 0:09:35.600 have seen exus themselves, but some that continue to grow 0:09:35.720 --> 0:09:37.880 in this environment, how do you want them to be 0:09:37.920 --> 0:09:41.760 focused more and all profit in this environment? Absolutely so, 0:09:41.800 --> 0:09:44.520 I do say across the board that we're really focusing 0:09:44.520 --> 0:09:48.000 on seeing our companies invest in that profitability and increase 0:09:48.080 --> 0:09:50.720 their margins so that they can get above the line, 0:09:50.840 --> 0:09:53.160 right and at least be in the single digit profitability 0:09:53.200 --> 0:09:56.480 margins where Clarina has sit for the last fourteen years 0:09:56.480 --> 0:09:58.719 of its business, if not longer. Right. So, Clarina is 0:09:58.760 --> 0:10:01.400 an exceptional example of a company who knows how to 0:10:01.760 --> 0:10:05.000 increase its profitability and control it overall. Though for other 0:10:05.080 --> 0:10:08.880 businesses across our portfolio and others in the venture landscape, 0:10:09.040 --> 0:10:10.600 it's that we might want to turn down the not 0:10:10.800 --> 0:10:14.240 the dial bit on sales and marketing spend and really 0:10:14.360 --> 0:10:17.280 increase that profit margin, which is really a level of 0:10:17.640 --> 0:10:20.240 just baking in those levers, right, saying hey, maybe we 0:10:20.280 --> 0:10:22.439 don't need to spend so much on Facebook ads or 0:10:22.520 --> 0:10:25.480 LinkedIn ads this quarter, or maybe hey we don't need 0:10:25.520 --> 0:10:28.640 to put as much money into creating a new layer 0:10:28.760 --> 0:10:32.440 of product roadmap and instead just focus on the products 0:10:32.480 --> 0:10:35.480 that deliver, right and focus on the customers who are 0:10:35.520 --> 0:10:39.280 there versus creating new innovative products just as a way 0:10:39.320 --> 0:10:42.440 to be uh unique in their product market fit direction. 0:10:42.760 --> 0:10:45.200 How about products that had seem a real winner in 0:10:45.280 --> 0:10:49.440 terms of acquisition of new customers? Certainly I think of 0:10:49.440 --> 0:10:52.760 Revolute another European pin up in terms of little success 0:10:52.760 --> 0:10:55.320 story in the fintech world, and they really had doubled 0:10:55.360 --> 0:10:58.280 down on offering crypto for example, to bring in new uses. 0:10:58.360 --> 0:11:00.920 But with the fallout and value and there as well 0:11:01.080 --> 0:11:03.120 are you'd like me to see products moved away from 0:11:03.240 --> 0:11:06.240 once you think they'll remain committed to them. I think 0:11:06.320 --> 0:11:09.920 that what they'll stop doing is just delivering on new products, right. 0:11:09.960 --> 0:11:13.200 I think as we look at companies like Clarna and 0:11:13.280 --> 0:11:16.720 like Revolute, is that they want to shift away from 0:11:16.960 --> 0:11:19.640 the core focus that they've been you know, honed in on. 0:11:19.760 --> 0:11:22.240 For Clarina, it's by now pay later, for example, and 0:11:22.240 --> 0:11:25.800 instead focus on creating volume from their existing user base, 0:11:25.840 --> 0:11:28.520 which is something we are really excited about. Right. I 0:11:28.559 --> 0:11:32.640 think generally companies like Clara realize where their public comps sit, 0:11:33.000 --> 0:11:35.400 and they want to ensure that they're creating their own 0:11:35.440 --> 0:11:38.800 market position away from those public comps and seeing that 0:11:38.840 --> 0:11:41.600 their growth can continue while just honing in on the 0:11:41.600 --> 0:11:44.640 products that have always been proven to be successful for 0:11:44.679 --> 0:11:47.880 these companies, right, And so I really love how Sebastian 0:11:48.240 --> 0:11:50.840 the CEO of Larna today said on Twitter that what 0:11:50.920 --> 0:11:53.160 doesn't kill you make you stronger, because it's a it's 0:11:53.160 --> 0:11:56.400 a business that I think generally understands exactly where their 0:11:56.440 --> 0:11:58.760 mindset could be to keep honing in on the products 0:11:58.760 --> 0:12:01.520 that win. And with this new capital and fusion for Karna, 0:12:01.840 --> 0:12:04.240 it's really going to allow them to keep that expansion 0:12:04.240 --> 0:12:07.120 growing across the United States, which is something where their 0:12:07.160 --> 0:12:11.080 public compa firm has predominantly had a dominant force. But Klarna, 0:12:11.760 --> 0:12:13.920 as we know, is just growing so much more faster 0:12:13.960 --> 0:12:17.320 at a three you know, annual growth rate relative to 0:12:17.480 --> 0:12:19.200 them as a calm. So we have a lot of 0:12:19.400 --> 0:12:23.160 hope there from real perspective, how long does this sort 0:12:23.160 --> 0:12:27.320 of quattening down and the private markets evaluations last four 0:12:27.520 --> 0:12:29.400 And I'm not saying every business is affected by I 0:12:29.400 --> 0:12:31.480 think your INFLEXI port of course, which is a company 0:12:31.520 --> 0:12:34.080 that's well really ramping up because this is supply chain 0:12:34.440 --> 0:12:36.640 disaster out there and they're a company that can help. 0:12:36.679 --> 0:12:38.920 But there are areas like Instacom, which this is an 0:12:38.960 --> 0:12:42.839 inflationary environment. How old does that persisty think? Andrea, Yeah, 0:12:42.880 --> 0:12:45.080 so I would say right now, we really need to 0:12:45.120 --> 0:12:47.120 see what the results of the first half of the 0:12:47.160 --> 0:12:49.719 year look like across all businesses. Right I think we're 0:12:49.760 --> 0:12:52.400 just closing the books on Q two UM and going 0:12:52.440 --> 0:12:56.120 into Q three, and generally where the reflection of the 0:12:56.120 --> 0:12:58.920 market is going to sit is what companies will be 0:12:58.960 --> 0:13:03.240 ready to go out go public going into Q three 0:13:03.280 --> 0:13:06.720 and ideally the months of September, October and anything before 0:13:06.760 --> 0:13:10.280 the Thanksgiving holiday for the US companies, That's where I 0:13:10.360 --> 0:13:13.160 would see there might be a shifting sentiment. But what's 0:13:13.160 --> 0:13:17.280 happening is companies like instacart Up for example, are following 0:13:17.320 --> 0:13:21.680 the registration statement. They're using really broad based language just 0:13:22.120 --> 0:13:25.440 to describe what kind of statement UM and company they're 0:13:25.440 --> 0:13:27.880 going to be as a public company and determine whether 0:13:27.920 --> 0:13:30.000 that's right to go out. So these companies are choosing 0:13:30.200 --> 0:13:32.640 when to go out based on where the market will be, 0:13:32.640 --> 0:13:34.200 but at least they're ready to do so if it 0:13:34.280 --> 0:13:36.920 opens up. Andrew Wong, thank you so much for your time. 0:13:36.920 --> 0:13:40.320 Manhattan Ventures Partners, Stay well their Nashville Mimi coming up 0:13:40.320 --> 0:13:42.120 an exclusive interview with the u S Comma Sex Straight 0:13:42.160 --> 0:13:55.160 Gena Romando. Stay for the springbak U S Secretary of Commerce, 0:13:55.280 --> 0:13:58.960 Gina Romando. But he's legislation that would appropriate fifty billion 0:13:59.000 --> 0:14:02.559 dollars for domestic semi conductor manufacturing will pause. Congress should 0:14:02.559 --> 0:14:06.240 make exclusively I'm blame that. Take a listen. Yes it 0:14:06.320 --> 0:14:10.800 will happen. It's taking much too long, and what's at 0:14:10.800 --> 0:14:14.760 stake is our national security, even beyond the economy. You know, 0:14:14.840 --> 0:14:18.480 every piece of military equipment requires chips. If you talk 0:14:18.559 --> 0:14:22.080 to the heads of national defense contractors as I have done, 0:14:23.120 --> 0:14:25.840 or senior ranking officials in the Department of Defense, they're 0:14:25.880 --> 0:14:30.440 all very worried about the delay. But yes, it will 0:14:30.480 --> 0:14:34.400 get done. This is at this point in the negotiation. Unfortunately, 0:14:35.280 --> 0:14:39.440 politicians look for leverage, and while it isn't right to 0:14:39.480 --> 0:14:43.040 play politics with national security, that's what I think is happening. 0:14:43.840 --> 0:14:46.680 In the past two weeks, we we made huge progress. 0:14:47.480 --> 0:14:50.960 We were closing out issues, finding compromise. So I think 0:14:51.000 --> 0:14:55.600 everyone just needs to come back today, get back to work, 0:14:55.760 --> 0:14:58.080 and commit themselves to getting it done in the next 0:14:58.080 --> 0:14:59.920 few weeks. Let me ask you what difference it makes 0:15:00.000 --> 0:15:02.160 whether it gets done today or six months to day. 0:15:02.200 --> 0:15:05.360 What decisions are being made perhaps by companies such as, 0:15:05.400 --> 0:15:08.080 for example, the groundbreaking out in Columbus, What decisions make 0:15:08.160 --> 0:15:11.480 that may not be reversible down the road. Well, what 0:15:11.560 --> 0:15:16.320 you say is exactly right. Chip companies are making decisions now, 0:15:16.560 --> 0:15:21.120 literally right now, because they need to meet demand of 0:15:21.160 --> 0:15:27.880 their biggest customers, in which means they have to start 0:15:27.920 --> 0:15:31.640 getting cement in the ground on new facilities this summer, 0:15:31.640 --> 0:15:35.200 in this fall, you know, earlier today. So Global Foundaries 0:15:35.800 --> 0:15:39.040 has made a choice to expand in France not the 0:15:39.120 --> 0:15:44.520 United States. You know, that's a loss. You just mentioned Intel, 0:15:45.040 --> 0:15:48.920 who is saying perhaps they'll slow down their Ohio expansion 0:15:48.920 --> 0:15:52.720 in favor of Germany. And the reason is because these 0:15:52.760 --> 0:15:57.560 big companies are hearing from their customers that they need 0:15:57.800 --> 0:15:59.960 confidence that the you know, the companies will be able 0:16:00.000 --> 0:16:06.800 to hit them, you know, supply to them. Seven chip 0:16:06.840 --> 0:16:09.720 demand is projected to be through the roof, and so 0:16:09.800 --> 0:16:15.080 these suppliers, whether it's Intel, Microme, Texas instruments, they need 0:16:15.120 --> 0:16:17.760 to fulfill for their customers. They want to be in 0:16:17.800 --> 0:16:20.680 the US. But if the choices are not you know, 0:16:20.760 --> 0:16:25.320 not fulfilling their customer demand or doing this in France, Germany, Singapore, 0:16:25.400 --> 0:16:29.760 Japan who who are already providing subsidies today, they're gonna 0:16:29.840 --> 0:16:32.280 leave America and do that. And so that is the risk. 0:16:32.400 --> 0:16:35.920 And that's why today, Members of Congress, get back into 0:16:36.000 --> 0:16:39.000 d C, get back, do your job. Don't let America 0:16:39.040 --> 0:16:42.080 lose out. Should we be expecting an announcement from the 0:16:42.080 --> 0:16:44.760 President before he departs for the Middle East this week 0:16:45.240 --> 0:16:49.040 on tariffs, on easing the tariffs that are currently applied 0:16:49.080 --> 0:16:51.400 to a number of Chinese goods, because that ahead of 0:16:51.400 --> 0:16:53.880 the CPI number Wednesday, will be something I think a 0:16:53.880 --> 0:16:57.760 lot of people would look for. I'm not sure. I 0:16:57.800 --> 0:17:00.760 don't I don't know guy the precise timing. I can 0:17:00.800 --> 0:17:05.080 tell you that we his team are an active you know, 0:17:05.240 --> 0:17:09.480 discussions with him, uh something we're talking about every day, 0:17:09.560 --> 0:17:11.880 and he is doing you know, he's doing his job, 0:17:12.000 --> 0:17:14.200 which is to say, looking at all the different factors. 0:17:14.760 --> 0:17:17.600 You will see a decision I think very soon. Whether 0:17:17.640 --> 0:17:20.000 it's whether it's before he takes off this week, I'm 0:17:20.040 --> 0:17:24.119 not sure. Just to pursue the China issue for a 0:17:24.119 --> 0:17:26.920 moment of Secretary, the tariffs are one thing, that's one 0:17:26.960 --> 0:17:29.800 part of a much more complex mosaic here. We talked 0:17:29.800 --> 0:17:32.000 about tariffs in terms of inflation. You've already said that's 0:17:32.040 --> 0:17:33.679 not going to have that big effect on that. But 0:17:33.720 --> 0:17:35.960 what about the larger term relationship with China? And let 0:17:36.040 --> 0:17:38.680 me be specific about this in terms of specifics and 0:17:38.760 --> 0:17:40.960 tariffs being taken off or not. Is it possible it 0:17:40.960 --> 0:17:43.720 could be bilateral? Is it possible China could actually give 0:17:43.760 --> 0:17:46.600 some of the United States to try to reformulate our 0:17:46.640 --> 0:17:51.280 trade relations. Uh, certainly that is possible. And you raise 0:17:51.320 --> 0:17:53.560 an excellent point, which is, you know, part of the 0:17:53.600 --> 0:17:56.679 discussion that one of the things the President is thinking about, 0:17:57.119 --> 0:17:59.200 which is to say, if we're going to do this, 0:18:00.040 --> 0:18:02.920 know what can they do on their side of the equations. 0:18:03.000 --> 0:18:08.040 So while I can't say for sure, certainly that is possible, 0:18:08.040 --> 0:18:10.680 and by the way, if it doesn't happen immediately, it's 0:18:10.720 --> 0:18:13.280 something that we will continue to pursue just in the 0:18:13.359 --> 0:18:16.400 interest of you know, as you say, fairness, if we're 0:18:16.480 --> 0:18:19.800 lifting care offs, what are they going to do? US 0:18:19.840 --> 0:18:22.840 Commerce Secretary Gina Romando, there with our own David Weston 0:18:22.880 --> 0:18:33.400 and Guy Johnson. This is Bloomberg Technology. I'm Caroline Hyde 0:18:33.400 --> 0:18:35.960 in Family Chang. Let's get to a Bloomberg scoop EV 0:18:36.080 --> 0:18:39.280 maker Ribvian. It's cutting its workforce by five after a 0:18:39.320 --> 0:18:42.239 hot growth streak, according to sources and Rivian shares they 0:18:42.280 --> 0:18:44.600 closed down six and our percent on Monday, and that's, 0:18:44.600 --> 0:18:47.200 of course, was following the report from our one Ed Ludlow. 0:18:47.560 --> 0:18:49.879 You help break the story, tell us a bit about 0:18:50.040 --> 0:18:52.520 where the job cuts are gonna be coming from. Ed. Yes. 0:18:52.640 --> 0:18:55.400 So it's important to note that sources say these are 0:18:55.440 --> 0:18:58.840 non manufacturing roles, right. These are not the men and 0:18:58.880 --> 0:19:01.720 women on the assembly minds actually building the evs. They're 0:19:01.760 --> 0:19:04.719 kind of back office roles, supportive roles. And Rivian's one 0:19:04.720 --> 0:19:06.880 of these startups that raised a lot of money before 0:19:06.920 --> 0:19:09.320 going public, raised a lot of money when it went public, 0:19:09.600 --> 0:19:11.680 and they were just able to grow so quickly. They've 0:19:11.760 --> 0:19:14.520 kind of doubled head counter fourteen thousand employees in the 0:19:14.600 --> 0:19:17.320 last year alone. And in some of those areas kind 0:19:17.320 --> 0:19:21.000 of support and sillery areas, they just grew too fast 0:19:21.080 --> 0:19:23.359 to to too big size. They have duplicates in a 0:19:23.359 --> 0:19:26.040 lot of Roles. So with the macro pictures such as 0:19:26.040 --> 0:19:28.840 it is, they're kind of trimming the fat, embracing for 0:19:29.119 --> 0:19:34.040 a sort of less solid global economy overall. Do you 0:19:34.080 --> 0:19:36.399 think that this is a case of having overheard, This 0:19:36.400 --> 0:19:38.840 is a case of just reorientation. This is a case 0:19:38.880 --> 0:19:41.359 of just trying to meet the economy where it is. 0:19:42.320 --> 0:19:46.160 Rivian's interesting because it's supply con strain. In other words, 0:19:46.280 --> 0:19:48.880 the demand their evs is so great that they can't 0:19:48.920 --> 0:19:51.159 possibly keep up with it. They can't build the evs 0:19:51.240 --> 0:19:53.960 fast enough. They do have a lot of cash, seventeen 0:19:53.960 --> 0:19:55.760 billion dollars on a balance sheet, but I get the 0:19:55.880 --> 0:20:00.879 sense from insiders also investors that that seven team billion dollars, 0:20:00.880 --> 0:20:02.800 a lot of it's already accounted for. Right They're going 0:20:02.880 --> 0:20:05.879 to build this second factory in Georgia to the tune 0:20:05.880 --> 0:20:07.760 of five billion. There's also all the R and D 0:20:07.880 --> 0:20:11.120 costs for the next generation of cars. And even though 0:20:11.160 --> 0:20:14.040 the CFO, Clim mcdonna is really inexperience, she's a formal 0:20:14.040 --> 0:20:17.040 Wall Street banker, she's very disciplined, and I get the 0:20:17.080 --> 0:20:19.280 sense that they're looking to preserve cash as best they 0:20:19.320 --> 0:20:21.080 can and kind of make it go a long way, 0:20:21.119 --> 0:20:23.200 So it's kind of all of the aforementioned things that 0:20:23.320 --> 0:20:27.359 you put very briefly. Of course, you were looking just 0:20:27.480 --> 0:20:31.080 last week and how Rivian was well getting snapped up 0:20:31.119 --> 0:20:33.880 at some valley at least in the photos. Yeah, yes, 0:20:33.960 --> 0:20:36.000 so r J. Scaring the CEO, was kind of the 0:20:36.000 --> 0:20:38.480 hot ticket. Every everywhere I looked, A J. Scaringer was 0:20:38.520 --> 0:20:40.480 there and somebody wanted to talk to him. They brought 0:20:40.560 --> 0:20:42.680 some evs with them in R N, S, S U, 0:20:42.760 --> 0:20:44.280 V and and R Once he pick up to some 0:20:44.520 --> 0:20:46.840 valley and you had all these attendees kind of crowding 0:20:46.880 --> 0:20:49.080 around the car look at it. But I'm told that 0:20:49.160 --> 0:20:52.880 on the Thursday night, Tim Cook, the CEO Apple, actually 0:20:52.880 --> 0:20:55.639 borrowed one of the pickup trucks with a gang of 0:20:55.680 --> 0:20:58.760 people and went into town for dinner. Which is interesting because, 0:20:58.800 --> 0:21:02.000 as we've reported at Bloomberg, Apples looking at its own 0:21:02.119 --> 0:21:05.120 EV potentially, and you know, in the world of tech, 0:21:05.160 --> 0:21:07.480 it's interesting to see who's looking at who, and who's 0:21:07.480 --> 0:21:12.239 spending time with who. Indeed, on a small world it 0:21:12.320 --> 0:21:15.400 is over there and Ludlowe looking at everyone and when 0:21:15.400 --> 0:21:17.639