Speaker 1: Welcome to the Bloomberg Penel Podcast. I'm Paul Sweene. You,
Speaker 1: along with my co host Lisa Brahma Waits, each day
Speaker 1: we bring you the most noteworthy and useful interviews for
Speaker 1: you and your money. Whether at the grocery store or
Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple
Speaker 1: podcast or wherever you listen to podcasts, as well as
Speaker 1: at Bloomberg dot com. Reporting earnings today better than expected,
Speaker 1: shares up nearly two per cent, But interestingly, it said
Speaker 1: it's showing strength everywhere in providing oil field services except
Speaker 1: for in the United States. Joining us on a discuss
Speaker 1: Simon Casey covering all things energy for us as a
Speaker 1: team leader for energy team in America. UH, broadly North
Speaker 1: and South and Middle UM. So I want to get
Speaker 1: your sense, Simon, of how significant this is that Schlumberge,
Speaker 1: the biggest business of its kind, said that it's seeing
Speaker 1: less demand in North America. What it's the sign of
Speaker 1: the times. Uh. The US is the world's largest old producer.
Speaker 1: It wasn't the world's largest oil producer if you go
Speaker 1: back a few years. It's had tremendous growth, but the
Speaker 1: shale patch is it's under tremendous strain producers, they're are
Speaker 1: failing to come through with returns for investors. Capital markets
Speaker 1: are dried up for shells, for shell producers, for frackers,
Speaker 1: so they've had to go on a real campaign of
Speaker 1: cutting costs. They've been cutting jobs. The pace of drilling
Speaker 1: in places like the Permian Basin down in the West
Speaker 1: Texas has slow dramatically. That hurts companies like Slumberge. Now
Speaker 1: this is not entirely new slum slumber said last year
Speaker 1: it booked huge right downs for the third quarter thirteen billion.
Speaker 1: A lot a lot of that was to do with
Speaker 1: what's going on in North America. They are scrapping equipment.
Speaker 1: They're not just idling it, mothballing it, they're sending it
Speaker 1: to the scrapyard because they say they're never going to
Speaker 1: use all of this stuff. Again, we've kind of hit
Speaker 1: a sort of a peak in shale activity, and it's yeah,
Speaker 1: when when we're not likely to see that the extent
Speaker 1: of drilling we were seeing in recent years ever again,
Speaker 1: ever again. So it seems like where the shell business
Speaker 1: in the US, given work, global demand is this is it.
Speaker 1: So if you're a Slumberge, you cannot look to the
Speaker 1: US as a growth market anymore. That's pretty clear from
Speaker 1: the from what they've been saying this morning. Yes. And
Speaker 1: the flip side of this, of course, is the international
Speaker 1: business is continuing to rebound. You're seeing a lot of
Speaker 1: activities in places like, for example, off the coast of Guyana,
Speaker 1: Sur and m South America, Brazil as well, that's a
Speaker 1: real hot spot at the moment. There's a lot of
Speaker 1: activity there. It's coming back in Asia, in in in
Speaker 1: parts of Africa as well. So there's a lot of
Speaker 1: their international businesses looking really positive. But they they are
Speaker 1: Slumberge as well. It's it's based in the US, along
Speaker 1: with Halibursa and Baker Hughes. It's one of the big
Speaker 1: three names in this space. It's much more exposed to
Speaker 1: markets outside of the US, unlike Haliburton, which is reporting
Speaker 1: next week in fact, so it's going to be interesting
Speaker 1: to see how what Haliburton says, because lumberj has kind
Speaker 1: of managed to turn the corner a lot quicker. If
Speaker 1: you like, it's still cutting jobs, it's saying it's still rationalizing.
Speaker 1: I think the phrase these this morning was shrink to
Speaker 1: fit what is going on in shale, but it's it's
Speaker 1: still tough out there, and for for some of the
Speaker 1: smaller names in this space, UM, it's very bad. Indeed,
Speaker 1: it's very very difficult because their business is fundamentally shrinking
Speaker 1: and it will continue to this year. So there's this
Speaker 1: theme of peak shale. We've seen peak shale in a
Speaker 1: reary window. Correct, Well, let's let's just sort of try
Speaker 1: and define what I mean by it's peak acts drilling activity.
Speaker 1: Production is still on an upward curve. We've seen very
Speaker 1: literally one or two people have come out and said
Speaker 1: production is going to peak this year. It's more likely
Speaker 1: it's going to peak beyond. It's definitely the growth is
Speaker 1: definitely slowing. There's a huge debate within the your market
Speaker 1: and now the pace that that growth will will continue
Speaker 1: out this year, and that will ultimately determine the balance
Speaker 1: of global supply because most global supply growth this year
Speaker 1: is coming from the US, which is a dramatic turnaround
Speaker 1: considering where we were several years ago when US wasn't
Speaker 1: the biggest producer, it was still a net importer. The
Speaker 1: US is now a net exporter. So this is this
Speaker 1: whole thing, this whole what we're talking about here schlumber
Speaker 1: It goes beyond the company, it goes beyond the old services.
Speaker 1: It's about the balance of supply and demand in the
Speaker 1: global market. So, Simon, you mentioned some of the smaller
Speaker 1: players in the oil patch suffering, which we've certainly heard
Speaker 1: and read about. Does that suggest more consolidation is likely
Speaker 1: to occur there and we might see slumbers in Haliburton
Speaker 1: as net buyers. Maybe well, then maybe some consolidation among
Speaker 1: some of the smaller, smaller names domestic players. Companies are
Speaker 1: based almost wholly down in Texas, Texas, New Mexico. They
Speaker 1: would not expect Haliburton or Slumberge to be picking up assets.
Speaker 1: I mean they might pick up some sort of small
Speaker 1: assets as Bolton acquisitions. These companies that are looking fundamentally
Speaker 1: to upgrade their technology to knowledge as a mantra in
Speaker 1: so many industries these days, and oil is no different,
Speaker 1: or services is no difference. These guys are looking to
Speaker 1: keep headcount under control, but where they can upgrade the
Speaker 1: application of particularly of data management and and use cloud
Speaker 1: computing to crunch vast amounts of data and figure out
Speaker 1: what's going on underground and ultimately do the drilling and
Speaker 1: the production much cheaper and much more efficiently. Is the
Speaker 1: theory that we're going to see peak shale in a
Speaker 1: couple of years at least? Is the theory behind that
Speaker 1: driven by a lack of shale supply underground, or is
Speaker 1: it driven by just the sort of math behind how
Speaker 1: much it costs to drill versus what what some of
Speaker 1: these companies are getting. It's the math. There's plenty of oil.
Speaker 1: There is no longer any kind of idea of a
Speaker 1: shortage out there. The shale revolution funding fundamentally means that
Speaker 1: there's almost a limitless amount to intents and purposes. But
Speaker 1: it's it's the economics that are in focus here. American
Speaker 1: shail producers have been fantastic and getting huge amounts of
Speaker 1: sail out of the ground and getting them on the
Speaker 1: markets and indeed getting to the export markets as well.
Speaker 1: They've generally been with some exceptions, they've been terrible at
Speaker 1: turning it into a sustainable, profitable business that generates free
Speaker 1: cash flow and returns that cash flow to investors. If
Speaker 1: you look last year, it was one of the laggards
Speaker 1: of the stock market. There was barely any sort of
Speaker 1: price appreciation for the sector. Over all. The returns to
Speaker 1: investors were allousy essentially burning. They're burning cash, they're burning
Speaker 1: through cash, and basically, as what I said earlier, than
Speaker 1: the equity markets shut to them, debt equit markets are
Speaker 1: largely shut to these companies as well, and that's forcingments
Speaker 1: of turning woods and realized they've got a real problem
Speaker 1: in many cases, and that's why they're furiously cutting back
Speaker 1: on capex. They're doing a lot of meditation and looking
Speaker 1: into their navors and whither of my should we keep
Speaker 1: burning it? Simon Casey, thank you so much for being
Speaker 1: with us. Simon Casey is the team leader for Energy
Speaker 1: America's for Bloomberg News. At stock market setting new highs
Speaker 1: every day, it seems we've got the consumer remaining quite
Speaker 1: confident in the economy. For questions, how's that being felt
Speaker 1: within the c suite? Charlie Weinstein, chief executive officer of
Speaker 1: Eisener Emperor based in New York City, joining us here
Speaker 1: in our Bloomberg Interactive Broker Studio, has some thoughts in
Speaker 1: the Charlie, thanks so much for joining us. I know
Speaker 1: you guys do a survey of C suite business leaders.
Speaker 1: What did that survey tell you? Morning Paul, good morning, listen.
Speaker 1: Great to be here. Uh, this was very interesting survey.
Speaker 1: And so we we host the summit series across all
Speaker 1: our offices across the country, and as part of that
Speaker 1: summit series we host, UH, we host the survey. And
Speaker 1: that survey said to US seventies six percent of the
Speaker 1: C suite and significant investors think that their companies will
Speaker 1: be more profitable or at least as profitable as they
Speaker 1: were in two thousand nineteen. So they see two thousand
Speaker 1: twenty as a great year. But so the other side
Speaker 1: of the survey very interesting, showed that our business is
Speaker 1: going to be great. That was the common refrain. There
Speaker 1: are problems out there won't affect us, but there might
Speaker 1: be an economic downturn. Okay, So how much is this
Speaker 1: just CFO is being prudent and how much is this
Speaker 1: genuine concern about a global recession or a localized recession.
Speaker 1: There is a there is a concern. So we have Brexit,
Speaker 1: we have uncertainty over trade and tariffs, we have the
Speaker 1: elections coming up this year. But this this is all
Speaker 1: like small print that's been there for a while, right,
Speaker 1: I mean, yes, it has so, I mean, but is
Speaker 1: it's still really like dominant, and they're thinking not for
Speaker 1: their own business, and so for their own business, they
Speaker 1: are really bullish. Um I met the other day with
Speaker 1: U an executive who runs a construction company, and they're
Speaker 1: building out. They're branching out into managing real estate for hospitals,
Speaker 1: and so business business leaders are looking for opportunities. They're
Speaker 1: looking to uh deploy the profits that they've had, and
Speaker 1: they're highly optimistic. One of the economic underpinnings of this
Speaker 1: economy has been the strong consumer and that has driven
Speaker 1: in large part by the fact that most Americans have
Speaker 1: a job. Most Americans are seeing wage increases me been
Speaker 1: as much as they like. But on the flip side,
Speaker 1: C suite executives say one of the biggest challenges is
Speaker 1: finding people and keeping them. Is that what did your
Speaker 1: survey work kind of show you. Their survey had two
Speaker 1: results and they go right along with what you're suggesting.
Speaker 1: One is that they see fifty eight percent of the
Speaker 1: executives see an increase a significant increase in wages for
Speaker 1: next year for their businesses, and so getting talent is
Speaker 1: very difficult, and they see the need to increase compensation.
Speaker 1: Quite frankly, the nice thing about that is, the consumer
Speaker 1: drives our economy, and if that comes to pass and
Speaker 1: wages really do start to see an increase, that's going
Speaker 1: to fuel our economy even more. This is really important.
Speaker 1: Fifty percent see materially higher salaries, materially higher wages next year. Exactly. Okay,
Speaker 1: this is actually really important because right now, if you
Speaker 1: look at inflation expectations built into the market, they're more abound.
Speaker 1: There's this idea that it will never take off. But
Speaker 1: are you saying that there is a ce change in
Speaker 1: the sentiment that is different from what we've seen over
Speaker 1: the past decade that is going to lead to a
Speaker 1: potentially very different dynamic come next year. I see that
Speaker 1: there's a possible that you will see wages really increase,
Speaker 1: and but companies are not increasing prices, and so there's
Speaker 1: that dichonomy that inflation may be driven by increase in
Speaker 1: prices the margin pressure. Okay, but bottom But but this
Speaker 1: sort of goes to the key debate, right that the
Speaker 1: stock market is not the underlying economy, right, and the
Speaker 1: underlying economy lags the stock market. And so if the
Speaker 1: stock market starts to see a little bit of weakness
Speaker 1: because of margin pressure, but you have the actual consumer
Speaker 1: continuing to do better and better because they're actually getting
Speaker 1: paid more. You know, where does that leave the FED?
Speaker 1: Where does that leave markets? You know, it could mean
Speaker 1: a stock sell off, but it could mean continued strength
Speaker 1: for the U S. I'm just saying, I'm just I'm
Speaker 1: just extrapolating out what this could actually mean. You've gotta
Speaker 1: pay attention in this studio pretty quick. How at tech
Speaker 1: technology and Lisa and I we talked to executives across
Speaker 1: the whole swath of industries. They're all investing in technology,
Speaker 1: and I'm wondering if your respondents feel like technologies a
Speaker 1: real opportunity for them or is it a risk to
Speaker 1: their business. We always say invest in human intelligence before
Speaker 1: you invest in UH technology. And so you need the
Speaker 1: people to make value to create value out of the technology,
Speaker 1: and so technology will only take you so far. UM,
Speaker 1: you also need to be investing in people. Which sectors
Speaker 1: were the most optimistic and on the on the reverse
Speaker 1: side pessimistic. So our clients and professional services UM delivering
Speaker 1: services are technology clients by far the most optimistic. Manufacturing
Speaker 1: and distribution. It's interesting, even though we've had some trade
Speaker 1: uncertainty over the last six months, year, two years um
Speaker 1: our clients are are not finding difficulty in sourcing products,
Speaker 1: and so they're optimistic. They're really optimistic about the potential
Speaker 1: for who is pessimistic? Who's pessimistic? So real estate might
Speaker 1: be a little pessimists like that. He's like whispering. While
Speaker 1: we have so many clients in the real estate business.
Speaker 1: It's a secret, but they're they're feeling a little more pessimistic.
Speaker 1: They are feeling a little more pessimistic. And though, uh,
Speaker 1: the way people use space now and the way remote
Speaker 1: working and all the trends in real estate is just
Speaker 1: something for real estate clients to keep an eye on.
Speaker 1: Charlie Weinste, thank you so much for being here. This
Speaker 1: is really terrific. Jelie West is chief executive officer of
Speaker 1: Eisener Emper in New York and really paying close attention
Speaker 1: to earnings this quarter because we think about the performance
Speaker 1: in the market last year, you know, a thirty rise
Speaker 1: in S and P really pretty much all multiple expansion,
Speaker 1: not much earnings growth last year. So we have to have, arguably,
Speaker 1: if you think this market is going to go higher
Speaker 1: in twenty twenty, earnings growth coming this year To get
Speaker 1: a sense of kind of what's driving the market here
Speaker 1: as we get into Michael team in chief executive officer,
Speaker 1: team and advisers think about twenty one billion dollars under management.
Speaker 1: Michael joins us in our Bloomberg Interactor Brooker studio. So
Speaker 1: again Michael, the SMP earnings people and also looking for
Speaker 1: about ten percent growth that would suggest this market maybe
Speaker 1: can go higher. How comfortable or confident are you in
Speaker 1: that earnings number. A lot of what's driving the ten
Speaker 1: percent projection are the cyclicals, So you will have to
Speaker 1: see or general growth pick up in the US, and
Speaker 1: we we don't think there's a lot of room for
Speaker 1: error in these projections. That's that's our primary concern, in
Speaker 1: addition to the fact that that's largely being priced in
Speaker 1: or has been priced in over these past few months.
Speaker 1: So right now, when you talk to clients, are they optimistic?
Speaker 1: They feel like this rally has has legs and they
Speaker 1: should just shift some of their allocation to bonds into
Speaker 1: equities and take their cash out aloud into real estate
Speaker 1: not bonds. So the framework of this market has been
Speaker 1: set by the central bank for a decade, in really
Speaker 1: global central banks for a decade. So they've set the
Speaker 1: interest rate environment, the corporate credit rate environment, and then
Speaker 1: it enables the pe to expand like last year, so
Speaker 1: you saw the ten year ago from a three yield
Speaker 1: to one point eight yield, and that enabled p s
Speaker 1: to expand as they did. Um are clients comfortable? They
Speaker 1: are discomfited by what they're seeing politically globally, They're they're
Speaker 1: discomforted by a lot of the headline news that comes
Speaker 1: across their desk. But I think everyone understands that the
Speaker 1: economy in the US is on solid footing. So basically,
Speaker 1: we make them unhappy, Paul. Basically, that's the bottom line,
Speaker 1: is that we're driving any sense of discovers. Otherwise people
Speaker 1: are people are feeling great exactly So, Michael, I mean,
Speaker 1: as we think about asset allocation, given what we saw
Speaker 1: in twenty nineteen, how are your suggesting your clients allocate
Speaker 1: their capital. I mean, you know, we're hearing more and
Speaker 1: more about maybe emerging markets, maybe a little bit more
Speaker 1: out on the risk to maybe even think about some
Speaker 1: alternative investments. How are you kind of thinking about it?
Speaker 1: We are at the midpoint in our risk So if
Speaker 1: you had spoken to us in December of eighteen when
Speaker 1: everyone's concerned about a recession. We didn't see one coming
Speaker 1: and we were actually building our equity risk at that point.
Speaker 1: We've paired some of that back in these recent months,
Speaker 1: and currently at the end of the month, we're going
Speaker 1: to begin to buy some equity protection. So we have
Speaker 1: huge embedded gains. Anyone who's owned the equity markets for
Speaker 1: the last five ten years is enormous embedded gains. And
Speaker 1: rather than take them, we own quality risk assis quality corporations.
Speaker 1: We'd much rather buy hedges too, sort of diminish any
Speaker 1: of them if there are any sense is a growing
Speaker 1: sense of caution, valuation, evaluation. Okay, so what's your sense
Speaker 1: of what's going to cause some sort of sell off,
Speaker 1: some sort of decline that would encourage you to start
Speaker 1: buying protection. Well, we try to do it in the
Speaker 1: contrarian So if you think about the direction of markets,
Speaker 1: we generally will spend money when markets have done very well,
Speaker 1: we will monetize those in periods of weakness. So we
Speaker 1: do it sort of as a contrarian way to build
Speaker 1: in protection, embedded protection. In this there's not actually a
Speaker 1: call in markets. It's we're not trying to time markets now,
Speaker 1: are there sectors here, given given where we are in
Speaker 1: the economic cycle, given what performance we saw in twenty nine,
Speaker 1: are there some sectors that you're more bullish on versus
Speaker 1: less bullish on. We in terms of value, if you
Speaker 1: were looking at an industry, the energy infrastructure industry is
Speaker 1: still quite cheap, and I think that's garnering some focus
Speaker 1: among strategies mid cap in general, and so as you
Speaker 1: go down market cap you see some inefficiencies and so,
Speaker 1: and that's actually a place where active managers and great
Speaker 1: stock selectors can add a lot of value. Large camp
Speaker 1: of excuse me, large crab growth maintains itself as an
Speaker 1: expensive sector. We would have said that three years ago,
Speaker 1: two years ago, way, so it just has had a
Speaker 1: momentum that is unending. But so those are the those
Speaker 1: are the extremes within the u s of its So
Speaker 1: when you came in here, Michael, you said that a
Speaker 1: lot of the evaluation and the equity markets is predicated
Speaker 1: on the idea of that interest rates are going to
Speaker 1: remain low for a very long time, right, And I
Speaker 1: was thinking, well, what if inflation expectations are too low?
Speaker 1: What if the economy does solidify and we do start
Speaker 1: to see wage pressure, and we actually see bond yields
Speaker 1: rise even just you know, twenty five basis points, fifty
Speaker 1: basis points. How much does that affect equity valuations? Well,
Speaker 1: the only metric that the SMP does not look in
Speaker 1: the ninety plus percentile expensive in is relative to the
Speaker 1: tenure treasury. So that's the one, you know, are of
Speaker 1: justification for the current multiples. The we see that as
Speaker 1: a plausible outcome that rates As the global economy recovers,
Speaker 1: there is pressure un rates and they begin to slowly normalize,
Speaker 1: and that will just not enable anyone to justify multiple expansion.
Speaker 1: So then it will really come down to earnings growth.
Speaker 1: If earnings growth don't, doesn't you know, reach ten percent,
Speaker 1: and we think there's a chance it couldn't. That's five
Speaker 1: percent I think of it. There's a leverage of five
Speaker 1: percent revenue growth broadly across every corporation. In's you know,
Speaker 1: sort of a two to one general rule of thumb
Speaker 1: that they're just the combination of those two's. Really we
Speaker 1: see as a not overly exciting equity forward looking equity market.
Speaker 1: I know you did spend some time with emerging markets
Speaker 1: early in your career, it did any opportunities there that
Speaker 1: jump out at you. Yeah, so emerging, So the consumer
Speaker 1: and emerging markets has been and remains a great story.
Speaker 1: And I'll highlight country that I lived in, which was Brazil.
Speaker 1: The base rates have been falling in Brazil for several
Speaker 1: years as inflation fell, and what that enables is the
Speaker 1: knock on effect for the consumer, someone buying a TV,
Speaker 1: a car, just the financing abilities that just was never
Speaker 1: really was never there in the twenty five years since
Speaker 1: I lived there. So there are valuations combined with structural
Speaker 1: changes that are very meaningful. There's a huge amount of
Speaker 1: money in Brazil that has been reinvested in overnight rates
Speaker 1: for years. Portfolios were just there. Was it compounded at
Speaker 1: that is now three two and a half three In
Speaker 1: real terms it's even less so um when you look
Speaker 1: at those markets. There are big structural changes, but you
Speaker 1: also have political issues in many of these countries. In
Speaker 1: regions as well as countries. Valuations are attractive, but we
Speaker 1: create a threshold above SMP five hundred that a country
Speaker 1: has to be at a discount of substantial discount in
Speaker 1: order for us to really allocate CAPPITL there. We do
Speaker 1: have exposure there, so we we are we think that
Speaker 1: it's at that point, but it's not screaming is inexpensive currently.
Speaker 1: Michael Tetaman, thank you so much for being with us.
Speaker 1: Always great to get your thoughts on the market. Here,
Speaker 1: chief executive officer of TITAM and Advisors, overseeing where the
Speaker 1: twenty billion dollars, Joining us here in our interactive broker studios. Well,
Speaker 1: technology continues to lead, this market, continues to be a
Speaker 1: topic of M and A activity, I p O activity,
Speaker 1: lots of big themes driving technology. For to get a
Speaker 1: taste of kind of what we can think about for beyond.
Speaker 1: We welcome our good friend Ted Smith, co founder and
Speaker 1: president of Union Square Advisors based in New York City,
Speaker 1: joining us here in our Bloomberg Interactive broker studio. So, Ted,
Speaker 1: I know you guys came out with outlook report. What
Speaker 1: are some of the key takeaways that you guys are
Speaker 1: out talking about. Well, first of all, thanks for having me,
Speaker 1: Paul and Lisa. Great to be here again. Um, we're
Speaker 1: talking a lot right now just about the incredible amount
Speaker 1: of capital that's still available in the market for technology
Speaker 1: companies today, whether it be private equity firms who continue
Speaker 1: to raise capital and deploy significant amounts of capital, as
Speaker 1: well as strategic buyers who are out there with large
Speaker 1: balance sheets looking to do really interesting transactions. From an
Speaker 1: M and A perspective, So despite the fact that the
Speaker 1: markets continue to reward technology companies with valuations that are
Speaker 1: um perhaps unsustainable, but certainly are stratospheric and have been
Speaker 1: for some time, we think that deal making is going
Speaker 1: to continue. Deal making on the M and A front, right,
Speaker 1: And I'm wondering whether you think it's going to be
Speaker 1: specifically within the tech space or whether it's going to
Speaker 1: be broad based. Is there a place where you're seeing
Speaker 1: a growing amount of interest. We certainly we focus as
Speaker 1: a firm on the technology arena. So that's where where
Speaker 1: we're coming at this, uh, this set of opportunities. More broadly, yes,
Speaker 1: we still see deals happening in related spaces healthcare, energy,
Speaker 1: other places where technology is leveraged to the benefit of
Speaker 1: sort of the core investors or the core buyers. And
Speaker 1: how much is this being paid for by debt versus
Speaker 1: equity buyouts? And how is it how is it being financed? Uh,
Speaker 1: there's first of all, the again these large private equity
Speaker 1: firms obviously primarily right equity checks themselves, but they use
Speaker 1: leverage as part of the overall buyout scheme. In tech,
Speaker 1: we've seen a significant uptick in the use of debt
Speaker 1: by these buyout firms and by the companies themselves that
Speaker 1: operate in technology. They're simply more debt available for these companies,
Speaker 1: and explosion in the private credit markets and the availability
Speaker 1: of debt capital to companies and to UH into private
Speaker 1: equity firms. So a significant amount of debt being used today.
Speaker 1: So said, you know, private companies, the historic exit for
Speaker 1: private equity is an I p O or sale UM
Speaker 1: I p O s. In twenty nineteen, we think about
Speaker 1: the Ubers, the Lives and some others weren't that successful
Speaker 1: at all. Understatement, do you think we'll see more M
Speaker 1: and A as an exit vehicle versus I p O.
Speaker 1: I think we've moved into an environment where, at least
Speaker 1: within the technology space, it's going to be fairly muted
Speaker 1: from an I p O perspective. One of the interesting
Speaker 1: stats about nineteen and the I p O class versusen
Speaker 1: in tech is we had exactly the same number of
Speaker 1: Tech I p O s that were thirty eight UM
Speaker 1: and yet the amount of capital that was raised by
Speaker 1: the I pos greater than what was raised in So
Speaker 1: what we're seeing is we're seeing narrowing of the I
Speaker 1: p O window for larger and larger deals. And then
Speaker 1: to your point, Paul, what we're seeing on our side
Speaker 1: is a greater and greater focus on the likely exit
Speaker 1: for these companies being an M, an M and A event.
Speaker 1: Although we talk about last year's activities, it was also
Speaker 1: marked by some serious potholes here. In particular, we work stands.
Speaker 1: I'm not calling that a tech company, so you can
Speaker 1: hold hate now, um, but I am curious how much
Speaker 1: that incident and some others that just didn't perform that
Speaker 1: well has sort of colored the valuations or at least
Speaker 1: uh provide a little bit more skeptical, injected a little
Speaker 1: more skepticism into markets about how high to value companies
Speaker 1: that they're buying. I mean, is that is that something
Speaker 1: you're seeing? I think there's a there's an element of that,
Speaker 1: but I think it's important. It's probably a slightly oversimplified
Speaker 1: view if you look at the class of I p
Speaker 1: O s, but if you separate them into more enterprise
Speaker 1: oriented technology companies versus more consumer oriented technology companies. The
Speaker 1: enterprise tech companies did actually quite well. When you think
Speaker 1: about companies like Zoom Communications and others that that had
Speaker 1: great they made money, they make money, they didn't actually
Speaker 1: burn cash. They these companies do make money or or
Speaker 1: have a path to being able to make money in
Speaker 1: the fairly short term. I think the challenges around we
Speaker 1: Work and some of the other I p os that
Speaker 1: actually did happen last year were in part around these
Speaker 1: business models where it feels like you you could just
Speaker 1: continue to light a pile of cash on fire with
Speaker 1: respect to your lack of profitability, but also a repudiation
Speaker 1: of these founder dominated government structures where the market finally
Speaker 1: came out and said, enough is enough. We're not going
Speaker 1: to allow you to have both of those things. You
Speaker 1: can't have a business model that appears to be not
Speaker 1: profitable for the foreseeable future and invest so much power
Speaker 1: and it's ingle founder or single team. We have to
Speaker 1: have some ability to control the direction of this company
Speaker 1: as public market investors, because that's what the government structure
Speaker 1: are supposed to be there for, which is to protect us,
Speaker 1: not the founders. Is Airbnb going to go public in
Speaker 1: I believe they will and that's going to be a
Speaker 1: big deal, right, should be a very big deal. We'll perform.
Speaker 1: I think it'll perform better than some of the worst
Speaker 1: performers last year, and I'm not trying to damn them
Speaker 1: with fame praise. I think it's a different company with
Speaker 1: a different long term business model. They've obviously got some
Speaker 1: challenges they need to sort out with respect to protecting
Speaker 1: both the folks who put their properties for listing on
Speaker 1: there as well as folks who rent through Airbnb. But
Speaker 1: I think long term, that's a much better business model
Speaker 1: than some of those who suffered in twenty nine. Really interesting.
Speaker 1: Thank you for being here. Thanks for having me Ted Smith,
Speaker 1: co founder and president of Union Square Advisors, joining us
Speaker 1: here in our interactive broker studios. Thanks for listening to
Speaker 1: the Bloomberg P and L podcast. You can subscribe and
Speaker 1: listen to interviews at Apple Podcasts or whatever podcast platform
Speaker 1: you prefer. Paul Sweeney, I'm on Twitter at pt Sweeney,
Speaker 1: I'm Lisa bram Woyd's I'm on twee at Lisa Abramo.
Speaker 1: It's one before the podcast. You can always catch us
Speaker 1: worldwide on Bloomberg Radio.