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tv   Bloomberg Technology  Bloomberg  May 17, 2022 5:00pm-6:00pm EDT

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>> from the heart of where innovation, money and power collide. in silicon valley and beyond, this is bloomberg technology with emily chang. >> i am taylor riggs. i am here in boston, massachusetts for a special edition of bloomberg technology. we are broadcasting from the greater boston chamber of commerce at the boston convention and the exhibit center. the annual meeting is underway. coming up, the federal reserve chairman, jerome powell seeing tiny financial conditions. -- tightening financial conditions.
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we have all the details. the covid pandemic reaches dire milestones. the death toll reaching one million in the u.s.. what does a post-pandemic look like from fire tech, -- biotech, innovation and beyond? we have a great conversation coming up with jason robbins of draftkings. how the inflation worries effects of them -- affects them. >> it is all fed focused. look at the green on the screen. we are up two point 6%. that index trading edits highest level in two weeks and we will talk about the fed in just a moment. we are also tracking u.s. listed shares. the nasdaq golden dragon index is up more than 5%.
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they did this to ease the regulatory clampdown but then you go to the yields. they are up by 10 basis points. risk on, nearing 3%. a coin holding about $30,000. the federal reserve will not hesitate and face of this inflation we are seeing. financial conditions are appearing tighter. that is no bad thing. after a prolonged period of selling we go to this. apple is one of the biggies. trading at a price projected earnings above pre-pandemic levels. the question going forward with the feds -- the fed, where is the floor on valuations for tech stocks? we have to discuss walmart.
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dropping by the most since 1987. i would not around in 1987 but that is a big number. down 11.4%. downgrading it forecast for the year. china tech stocks are doing very well on the day. twitter is up 2.5% after a scoop that there are more departures at the company ahead of the elon musk to cover. -- take over. >> that kicks this off nicely with the next conversation. natasha lam, this is just outside of boston. it is so fun to see you here in person. what we are showing on the screen is this big tech selloff and the volatility we have had in the markets. what are you hearing about the jitters in the tech market right now?
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>> i think that the tech sector is facing two headwinds. one is an economic slowdown along with inflation and if you looked hysterically during those times, it is the tech sectors that get hit the hardest. the other part is interest rates. when you think about technology stocks, we think of them as long-duration stocks. when interest rates go up, you discount those cash flows at higher rates. that means to lower valuation. >> there has been a big conversation in the market about valuation. is it just rethinking higher rates and the lower net present value? may be growth at any cost does not work. what is the real issue? >> that is right, companies need
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a business model and i am a big fan of profitability. i think that is right and if you look at what happened to valuations, the tech sector was trading near 30 times versus the 10 year average of about 20 times. i think we can all agree that is a reasonable valuation. we had a lot of growth over the last three years so companies have been in a good position. now companies are trading a little under the five-year average. there has always -- there has already been a big correction. i think it is about positioning yourself for quality. >> talk to me about quality. i hesitate to use the word panic but we can use that. you get sort of a massive selloff. apple and microsoft, they have stable balance sheets. when you think about quality, are you thinking about big tech?
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>> absolutely. it is not hard to determine which company's have that stable growth, that higher-quality balance sheet. even if you go back three years, the market has risen dramatically despite the most recent correction. apple, microsoft and google, they have either doubled or tripled during that time. if you pave it to the social media company, facebook, twitter, they have gone nowhere. >> you brought up twitter. i did not. i will go there and take the bait. how do you think about twitter and investing in a company with some of the private conversations playing out in public? the volatility that creates and a refocus on the business models. how do you think about that
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company? >> twitter has had so many challenges. that is why you have seen ceos come around. unfortunately, i feel like elon musk is a cat playing with a ball of string and all of these public tweets, it is -- it is so uncertain what is going to happen. they have already given back the gains from when the takeover was announced. it just feels a little manipulative. >> that is a strong word. >> what is happening with twitter right now? i think it is white unfortunate for the company. >> i think we would be remiss if we did not think about this. we are coming out of a pandemic
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and in the middle of the pandemic, we all thought long and hard about esg. i have been thinking about the s . within esg, how do you paint that with a broad brush? >> i think it is really important that you look at all of the issues as their own issues. esg investing has gone from niche to mainstream. it is really interesting to see what happened in this space. when it comes to those different pieces, we are looking at some areas that we really engaged in. we are thinking about the pay gap and sexual harassment. we are seeing so much support now for institutional investors.
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last november we had a shareholder proposal go to a vote at microsoft. we look at microsoft and said they really need to address this issue head on. it got a 70% vote for investors. disney, a 60% vote. you're starting to see mainstream investors really show up because they understand these issues are material. social issues. how you attract and retain and promote talent are really important issues. >> if there is any criticism, this is about investing in the solar power and wind mills and the returns were not keeping up. how do you make sure that we want to invest in esg but the returns also have to be there. can you have both together? >> absolutely. you can look through all sectors
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and industries of the economy and you can choose the companies that are in that top four tile. if you are going to just put in a cleantech basket or things that are more volatile and transformative, there can be ups and downs. it is a lens that you want to apply much more broadly depending on what asset class, what sector and we really think about it through three lenses. we don't want to invest in things that are fundamentally bad. we are not investing in fossil fuels. we look to invest in solutions where we can. we are also going to invest in companies like google that are
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investing in their operations and treating their employees well. companies like that. then we look to engage the company because it just makes them better companies. it is a win win. >> so much fun to have you here kicking off a big show. we really appreciate your time and your insight here. stay with us because coming up, i will be joined by the ceo and cofounder, jason kelly. that conversation coming up next. this is bloomberg. ♪
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>> welcome back to this very big special edition of bloomberg technology. we are live from the boston convention center for the annual chamber of commerce meeting for the boston chamber of commerce. i am so pleased to say that jason kelly is sitting right next to me. he is the cofounder and ceo of ginkgo bioworks. everyone here is an m.i.t. or harvard grad. you did m.i.t. talk to us about your decade of excellence that happened with the company and how you are thinking about all of this big biotech innovation that you are a part of? jason: that is the great thing
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about the area. you are in close proximity to this. the idea was to take the learnings from software. this idea that you can program code and put it in your phone and app and make you do something new and put that in technology. dna is code. you can read it and read it and make something new. that is what happened at m.i.t.. >> i think you recovered we all learn what mrna was. how has the success of that technology brought light to a lot of the innovation going on? jason: covid has been a general public education on biotechnology. people know what pcr's are. that means something. mrna, what we did is we put a
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bit of mrna code into your body. your cells read that, execute it and put up a little piece of the virus to get your immune system going. that is the beginning of genomic medicine. there are many drugs to come that will be code delivered to your body to make it do something new. the reason it works is because that is how your body already works. they exchange in the language of mrna and dna. that is how information is passed along generations and biology. we are just finally able to talk their language. >> i think a lot of us felt caught off guard during this pandemic. how are you thinking about this technology? the minor tweaks we can make. if there is another one, what does the treatment look like? >> we got sucker punched frankly
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by covid so we had to go out with what we had available. this was a heroic effort. kind of like the moon landing. that is one of the things. if things get out of control, the mrna vaccines are a way to rapidly respond. they won't work for everything but they will work for a lot of things. the trick is -- you need weather maps. where are viruses spreading? how can you contain them? i grew up in florida. we knew when hurricane was coming. as a result, several weeks later, the economy comes back faster. you prepare if you have the information and you can prepare locally. we don't have that visibility into where viruses are and that is what needs to get billed. one of the largest providers of
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schools in the country. we have thousands of organizations that we are testing. >> i want to broaden this out a little bit. we were speaking with natasha lam. there has been a big re-think about valuations at this moment. particularly within the biotech space. i don't need you to comment on whether you think your company is over undervalued. but how are you thinking about valuations and the fundraising environment in this moment? >> one of the things i think you are seeing our interest rates going up and people getting out of long-term growth. i think that is very rational. that does not mean long-term growth companies can't be valued. but they need to have the capital to get to that long-term growth they are planning for. if they do i think you will see a certain valuation around those winners.
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that is sort of a calling. that is when amazon made a lot of the fundamental principles. if you got all of the right ones, i think you could do well. >> jason kelly, thank you so much. we appreciate your time and insight. stay with us. coming up, we will keep this covidien. all of the lessons learned from the pandemic. we will speak about the challenge of steering students through a once-in-a-lifetime pandemic and the path forward. this is bloomberg. ♪
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>> we are here in boston.
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welcome back. this is the boston chamber of commerce annual meeting and i want to bring in our next guest. we can talk about how colleges are coming out of this big pandemic era. what are some of the biggest key takeaways? >> it has been fascinating. i would say that in massachusetts we have done such an amazing job of working together to create the protocols to allow us to bring students back to school. that has been so important for our students not only in terms of learning but for their mental health. >> it is interesting that you talked about mental health because we are thinking about new ways to support students, invest in students, there was a lot of concern that investment
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-- it is hard to get that engagement and discussion. how important is it? >> before the pandemic we had an epidemic of crushing anxiety in people starting before college but a celebrating during those years. the pandemic has just added insult on top of that. it is an epidemic. we need a public health approach to understand what is driving this. it is not just the pandemic. how do we prevent that and how do we best treat it? some of those interventions will be the online intervention but some may not be. there is a need for better connectedness. there is a real opportunity here for a very robust search agenda and it is in-service for the future.
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>> some of the investment and a future has been women. i think stem is something we have not been thrown around a lot in the last decade. what can we do to make sure that women can indeed be included in the stem world? >> at berkeley we have been making sure that stem education is part of a liberal arts education and that all students have the opportunity to climb and stem. over 50% of our stem faculty across the board are women. so they see it. that is phenomenal. >> it is bringing in students of all backgrounds. they have not been giving them opportunities for deeper search experiences and it is really paying off. 45% of our students are majoring in stem. we produced the largest number of women, phd's and science.
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we just learned that we got the largest numbers. it can be done but there needs to be a focus. that focus starts in college but it has to continue into the workplace. >> i want to talk about some of your peers. we are in boston. everyone here is a harvard or m.i.t. alum. how do you ensure that you are still the place that people want to be? >> i think you have to be an authentic school and every school is not for every student. understand what it is, you cultivate what your personality is and the other thing is how you can partner with schools to be stronger. we have a strong partnership
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with m.i.t. and that is wonderful for our engineering students but i think understanding deeply your areas of expertise. it is not about the competitiveness, it is keeping that excellence, keeping in touch with the next generation and moving forward. >> you are inspiring this generation and you are inspiring all of us here tonight. you are inspiring the next generation of women as well. that was dr. paula johnson. and of course, as we kickoff the annual awards dinner, stick with us. we are going to get a view from the bc landscape. we will do that next. this is bloomberg. ♪
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>> welcome back to bloomberg technology. we are at the boston convention center at the greater boston chamber of commerce event. let's get back to the markets. elon musk is raising more money. this is all according to sources. ed ludlow is here. you have to break the story. you're always on top of the stuff. what do you have for me? >> this is the crack squad of disappointed. spacex is going through a funding round. that is eye watering for a private u.s. company, for any
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private company. at the same time, you have employees selling their private shares. it is important to have that big round and for shares to be sold on the secondary market. we don't know the volume of shares on offer. we do the lunch to spacex. talk about it for a very long time. i think this fed, the outlook for inflation, let's bring up the next chart. this is the valuation that i am looking at. we are talking about this.
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i know you have a really fantastic bp gas. >> you are spot on. you are always welcome on my show. i want to get back to the markets. we will talk a little bit about the downturn we have been seeing. this is for the big city of boston. we don't necessarily follow the markets on a day-to-day basis but to the extent that that volatility impacts your investing, how do you feel that playing out right now? >> this is not a new place for us. a lot more focus is on cloud stocks. for the last 20 years for the
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most part, they have been here. they have been trading 6, 10, 15 times revenue. if smart people were not debating yesterday, this feels like a new normal but it is a place that is familiar for us. >> the subscription services, that has been a standout. people like the business model and more importantly, there is some profitability. >> i think the valuation affected every single company for sure. if you look at the top 10 companies we track, they are all cash flow positive. these businesses have proven their ability to generate cash.
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>> i think when we are speaking at the greater boston chamber of commerce, a lot of the conversations have been about the health of the economy and a lot of the inflationary impact. what you have on the -- what do have on the macroeconomics? >> they don't have huge input costs with the exception of labor. what is happening right now is they realize they can raise capital. that means they have to save money somehow. that means they will be layoffs and hiring freezes. that means that pretty soon, talent will be on sale.
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>> what are you advising about the companies in your portfolio? how do you set yourself up for success in the next 12 months? >> it is almost a certainty that we are going into some version of a downturn. that means they should prepare to not raise money as long as they can possibly avoid to not raise money. there is some kind of capital available for this startup. it will be very hard to come by. they are all prepared to go that distance, think about their runways. >> do you use some of the capital? talent on sale? how do you use that capital? >> the next year will be pretty
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slow. the best startups will be raising any unless they are absolutely forced to. hopefully, for many of them, they will be much more valuable. that is my guess. venture capital will be pretty slow. we will pick up at the market slowly comes back to life. >> does that mean more mna? more consolidation? >> absolutely. i think we will see some very big names, liquidations and bankruptcies. they don't have enough cash to make it through this. they will all be talking about mna. the buyers are already licking their lips and thinking this may be a time to do this.
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>> we are about some of the big tech startups. when i was in san francisco in 2019, it was the we work kerfuffle. there was a lot of talk about unicorn status. then there is a conversation about how you go public. how do you see it as the unicorn status. >> we are not talking about spac's much anymore or unicorns. we are talking about centaurs. 100 million of recovering revenue. we think this is the year of the center, not the year of the unicorn. there were something like 500 new unicorns every single day. clearly we went through unicorn bubble.
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>> is ipo one of the best exit strategies? >> absolutely. for companies that can control their own destinies, going public will always have the best return on their capital. it is not easy. it can be a real pain to be a public company but for companies that have massive runway ahead of them, that may be a good option. >> we really appreciate it. that is a lot of good advice and wisdom. kent bennett, we really appreciate your insight and you can read more about startups on bloomberg. be sure to check that out. coming up, we will be facing environmental problems. we will see how the blockchain algorithm is working out. this is bloomberg.
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♪ (drum roll) ♪ ♪ (energetic music) ♪ ♪ ♪ ♪ ♪
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(camera shutters) the all-new lx 600. ready for any arena. ♪ ♪ >> we are here in boston at the greater boston chamber of commerce annual meeting. it is time for our crypto report. we want to take a look at another issue that has been plaguing bitcoin. it has been a lot of that high energy consumption. this is a self-sustaining carbon negative blockchain. this is the ceo and she joins me
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now. it is so fun to have you in person at this great event and i think if there has been a criticism of bitcoin, it has been the consumption of the energy and the energy it takes to mind the bitcoin. how do you see that as a problem and are there steps to fix it? >> absolutely. we were founded by an award-winning photographer. he is a tenured professor here at m.i.t. and he invented a couple of things that cryptocurrency uses. he watched the ecosystem develop and he realized some of these earlier protocols like bitcoin were not exactly fast enough and they have a large carbon footprint. he came up with another contentious mechanism.
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if you want to have a letter environmental footprint, you have to have a different mechanism. he came up with a proof of steak investment mechanism -- stake investment mechanism. >> how do you need this to catch on? >> it gets so technical so quick. things that are new, you don't tend to differentiate among them in the beginning. we think the truth will shake out over time. it is because of the nuances. also, we believe that in this world, we need all kinds of different blockchain protocols. we don't think it is a winner take all world at all. we are very scalable. we do 10,000 transactions in
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july. we have a very low carbon footprint. it is an essential last blockchain. we think we are generation three of blockchain. >> we talk about generation one and that has been all of the volatility around crypto and around ethereum and don't even get me started on tara luna. do you watch all of the volatility in the secondary crypto market? does it impact your role? what do you make of that? >> this is not my first bear market by any means. i was there during the.com crash -- the .com crash. in 2015 we had about a half $1 billion. we had the ico. almost a billion dollars went up.
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the crypto industry continues to recover and make itself better because of what it goes through. my heart goes out to those investors. i have seen a lot in my day. 56 billion, a lot of money for one asset alone. it is unique. >> it brings up the idea of regulation. you want regulation to help protect but you don't want regulation to stifle all of the innovation. it was the experiment. where do you stand on regulation? >> i think it is a very nuanced subject. what the industry really does need is regulatory clarity. we don't make promises to investors of any kind ever but
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when you say something and you call it a stable coin, you are saying that you are making a statement. i think that is what regulators have been focusing on and will continue to focus. they will define stable coin in a very clear way. if you don't meet those specifications, you will probably not be able to call yourself one. >> on that note, what you think about stable coin, with the bigger issue, was it backed by a dollar peg or even to a blockchain or a real asset? for a stable coin to work, you need the collateral to be actual stable? >> it was kind of a perpetual motion machine and perpetual
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motion machines, we have been trying to create that for centuries and they do not work. it had a baked in mechanism that if that starts to fail, you can have a bit of a death spiral. there are more clever financial minds than i that may come up with some way that there is a future brother with stable coin but i don't know. that kind of perpetual motion machine type i is not what i am going to -- is not what it will look like. >> stacy, we really appreciate your time here anger inside. coming up, we have your big interview with the draftkings ceo. that is next, this is bloomberg. ♪
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>> >> we are here in boston. this is the greater boston chamber of commerce. it is underway. i hear the boston celtics are about to go head-to-head with the miami heat for the eastern conference finals. jason ravens is joining me now. so many conversations about this reopening. how we still think about all of this in the midst of getting out of the house. how are you thinking about all of this for your business? >> it is exciting to see. it feels like things are getting
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slowly but surely back to normal. it is just good to see for everybody. i think it helps. more people are engaging in sports. it does not really matter to us. i think just having more ways people can engage. >> it is that circle of life. i think what is interesting is we talk about the health of the consumer. we heard from walmart that they are not looking to pass the cost onto the consumer. consumers are cutting back on the discretionary items and shopping for the necessities. >> we have really strong cohort
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data year-over-year. gaming holds up very well during economic downturn. that is very consistent with what we are seeing. we have a lot of people that love watching the game and betting a few bugs on that. that is just what they do for fun. we are seeing great year-over-year retention and revenue numbers. >> i am going to bring you a quote from the morgan stanley analyst. really positive. they are really positive about achieving that near-term target. that has been the big focus. we have been thinking a lot about the volatility in the sector, revaluation of the valuations. >> i think they are getting
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their information through sound analysis based on the information we are putting out there. we said the same thing. in the fourth quarter, assuming there is wildcard around legalization trends. but if they are consistent with what we have seen in the past few years, we think we can get to profitability in the fourth quarter of next year. >> talk to me about that. we have had you on the program a lot and talked about state-by-state legalization environments. how is that environment for you right now? does the path indicate success? >> absolutely. ontario, louisiana -- we lost in the ways you -- we launched in louisiana. ontario will be soon. we have been getting licenses
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and getting up and running. we will be pretty close to 50% of the u.s. population. those are collectively almost a quarter of the u.s.. we are running a referendum in california next year. if we get that done, that is another 12 or 13% of the population. >> you talked about the three states. should we interpret those comments to say that the biggest opportunities remain in the u.s.? >> we think that canada is a great opportunity as well. the u.s. has a bigger population so there are bigger opportunities but ontario will be the fifth largest state -- would be the fifth largest state by population in the u.s..
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getting an illinois or pennsylvania sized state to come online will be great. >> we really appreciate it. that doesn't for this edition of bloomberg technology. we will be back in san francisco tomorrow. we had a great time at the boston convention center. and the greater boston -- boston convention center for the greater boston chamber of commerce meeting. this was fun. ♪.
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