tv Bloomberg Technology Bloomberg May 17, 2022 11:00pm-12:00am EDT
taylor: i am taylor riggs here in boston massachusetts. oh right here for a special edition of bloomberg technology. we are broadcasting from the greater boston chamber of commerce at the boston convention and exhibit center. a really wonderful event here. the meeting is underway. coming up next hour, jerome powell saying tightening financial conditions is just what we need and they are resolved to curb the highest inflation in decades including moving forward aggressively if
need be. we have all the details. plus the covid pandemic reaches dire milestones. the debt stone one that death toll, one million people. what does the post-pandemic world look like from biotech to education and beyond? we will discuss it all and we will be taking a look at the future of sports betting critic we have a great conversation coming up with the draftkings ceo jason robbins about his next bet and how they are managing some of those inflation worries. so much more coming up later this hour and we will get to all of that in the moment adverse who want to take a look at the markets with ed. and you're still holding it down with the markets? ed: it's a little fed focused, taylor. you know that. a risk on a more broadly. nasdaq one hundred technology really the outperforming sector. the around 2.6%. it trading its highest level in weeks good will talk about the fed and a moment but we are tracking the listed shares of chinese tech companies. the golden dragon china index out more than 5% as policymakers through state media signal
support to kind of ease the regulatory clampdown we've seen that, but you go to the yields and you look at u.s. 10 year up by 10 basis points, risk on, nearing 3%, bitcoin holding above $30,000 per token. fed powell talking about the fact that the federal reserve will not hesitate in the face of this level of inflation that we are seeing today. as you mentioned, financial conditions are appearing tighter, which is no bad thing. bloomberg terminal, it's got me thinking a lot. a green bag, an update for that nasdaq 500, s&p 500. a prolonged time of settling, we go straight to valuations. clear the posts, think about the basket and then you have apple, one of the biggies, trading at a price projected at earnings above pre-pandemic levels per to the rest of tech looks cheap, so the question going forward now that the withdrawing stimulus in outlook, what are the four -- where is the floor of the valuations for tech stocks. very quickly, some movers for utility grid what we have to
discuss good walmart, dropping the most since 1987. i was not around 1987, but that is a big number, down 11.4%. of course downgrading its forecast for the year in the face of rising inflation. as i say, u.s. listed chinese tech stocks doing well on the day and twitter up to a half percent after a scoop reported by myself and kurt wagner that there are more departures of the company ahead of an elon musk takeover. taylor: love it. thank you so much. for keeping us up-to-date on the markets news that we wanted to hear about. and that really actually kicks us off nicely with our next conversation. i am so pleased that natosha lam, you know her as the managing partner at energy net capital base just outside of boston here with me on the set. it is so fun to see you in person. what we were just showing is big tech selloff. a huge volatility we've had markets. what are you hearing about some of the jitters going on within the tech markets right now? natasha: thank you, it's nice to be here, nice to be in person.
well, i think the tech sector is facing two big headwinds. one is just an upcoming slowdown in economic growth, along with inflation. if you look historically during those times, but as the tech sector that gets hit the hardest. so that is a big piece. and the other part is interest rates. so, you know, when you the about technology, stocks, you think of them as long-duration stocks. when you're valuing them come you're going out years and years. cash flows, interest rates go up, you discount those cash flows at higher rates, which leads to lower valuations. taylor: i wanted to talk about that because there has been a big conversation in the market about valuations. is it just me thinking higher rates and the lower net present value? or is there something else going on at that may be growth at any cost does not work? maybe that is not the model anymore. what is the real issue? natasha: i think companies need a business model and i am a big fan of profitability.
so i think that that is right. and if you look at what has happened to valuations this year, you know, the beginning of the year, the tech sector was trading near 30 times, versus a 10 year average of about 20 times, which i think we can all agree is a more reasonable valuation. but when you do have -- we have 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. so there has already been a big correction. i think now, it is about positioning yourself for quality profitability, more stable earnings growth in this environment. taylor: talk about quality because i think what is interesting is these broader based -- i'm hesitant to use the word panic, but we can use that. you get sort of a massive selloff. and yet, posing $9 million of free cash flow year. microsoft, stable company's with strong balance sheet when he the about quality, are you thinking about big tech within that. natasha: absolutely good it is
important to be able to discern which companies have that growth, that stable growth, that higher quality balance sheet return on equity. if you look, even if you go back three years, the market has risen dramatically despite the most recent correction. those companies, apple, microsoft, google, they have either doubled or tripled over that time. they've been good investment spirit they're going to continue to be good investments but if you pivot to the social media companies, facebook, twitter, they've gone nowhere in the last three years. taylor: you brought up twitter, i did not. i'm going to take the bait. how do you think about twitter and valuing and investing in a company with some of the maybe take private conversations playing out in public. the volatility that that creates and a refocus on the business model. how -- what percentage of the users or bots? what you think about them on the metals? natasha: i think twitter has had
so many challenges over the years, which is why you are seeing eos come and go, move around. you see what's happening with elon musk right now. unfortunately right now, i feel like elon musk was like a cat's playing with string and all of these public tweets. it is really -- it is just so uncertain. stocks giving back the gains that it had when takeover was announced. it just feels a little manipulative. taylor: that's a strong word. natasha: what is happening with twitter is quite unfortunate for the company, whether or not elon musk buys it. taylor: we would be remiss if we did not think about that we are here in person for the first time in two years. coming out of a pandemic and in
the middle of the pandemic, we all thought long and hard about esg. i'm doing a panel in a few weeks about the s in esg, because you cannot just blended together. within esg, how do you paint that with a broad brush or really focus on what is the come a what is the s, what is the g? natasha: it's important that you look at all these issues as they are their own issues. esg investing has gone from niche to mainstream. i have been in this space my whole career and when i started it was completely niche. so it is interesting to see what is happening in this space. but when it comes to, you know, those different pieces, when you are talking about s, some areas we have engaged with on the social side are racial and gender pay equity. or sexual harassment and we are seeing it has changed so dramatically we are seeing so much support now from institutional investors. so for instance, you know, last
november, we had a shareholder proposal go to a vote at microsoft, which was a long-term investment of ours. and we looked at microsoft and said they need to address this issue head on. and it got a 78% vote in investors, remarkable. disney on pay equity. you know, a month or two ago, 60% vote. so you are starting to see mainstream investors, institutional investors, really show up because they understand these issues or material social issues, they are human capital, how you attract and retain and promote talent are really important issues. taylor: i think maybe if there is any criticism of esg, it has been at the beginning, when you think about the e it was investing in solar power and wind mills and the returns frankly were not necessarily keeping up. how do you make sure that yes, we want to invest in esg, but the returns also have to be there. can you have both together? natasha: absolutely. so, you cannot look through es
and g lens across all sectors and industries of the economy. and you can choose the companies that are in that top. there's been studies that have shown the companies that manage their environmental, social and governance risks and opportunities better have had a tailwind to performance. and have outperformed. so, yeah, if you are just going to put in a clean tech basket or things that are more volatile and transformative, there can be ups and downs. we know that in any market. but it is a lens that you want to apply much more broadly, the petting on what asset class, what sector. and we really think about it through three lenses. one, we do not invest in things that are fundamental he bad for people on the planet. so we are not investing in fossil fuels or private prisons or tobacco. we look to invest in solutions where we can -- things that you're talking about. renewable energy. over going to invest in companies like google that are investing in renewable energy in their operations. that are more efficient or are
treating their employees well. companies like that. and we look to engage with companies to -- so that they are managing those risks and opportunities better. it makes a better company so it's a win-win. taylor: it so much fun to have you here to help kick off a big show. my pleasure. that was natasha lam, capital. really appreciate your time and insights here. and stay with us because coming up, i'm going to be joined by jason kelly. that conversation coming up next. this is bloomberg.
♪ taylor: welcome back to this very big special edition of bloomberg technology. we are live here from the boston convention center for the annual chamber of commerce meeting. of course for the greater 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 bio works. based start here in boston. we were talking off camera, everyone here is an or harvard grad. you are an m.i.t., one of the smart ones. jason: i got an undergrad and phd. my dad called it a decade of
excellence. taylor: talk about your decade of excellence at your company and how your think about biotech innovation going on of which you are a part of jason: i think that's one of the great things about the area frankly is close proximity to these. an m.i.t. professor and the idea was take the learnings from software, this idea that you can program code and put it in your phone, put a new app and there, give yourself something new. apply that in biology and the idea was dna has code, you can read it and write it and install the code in a cell purity can make it do something new. so that was the foundation and it came from our experience at m.i.t.. taylor: i think in covid, we all learn what mrna was in a lot of us had not heard that before. how was the success of that technology helped bring light to a lot of the work that you guys are doing, he a lot of the innovation going on? jason: it's a huge deal actually. covid has been basically a general public education on
biotechnology. people know what pcr tests are all of a sudden. that means something to them. pcr is complete lab nerve town right now. now is a common flurries. when, what we did was we put a piece of mrna code into your body, your cells read that, execute it, and put up a little piece of the virus and get your immune system going. that is the beginning of genomic medicine, right? there are many, many drugs that are going to be code delivered to your body to make it do something new. and by the way, the reason this works is that's how your body already works. your cells talk to each other, they exchange in a language of mrna and dna. that is how information is passed along in generations. where just finally able to talk their language. taylor: i think we came into this pandemic and maybe a lot of us felt caught off guard. how are you think about preparing for the next pandemic?
the innovation, technology, the small tweaks that you can make if there is another one, what does that look like, what does the treatment look like? jason: so i think we got sucker punched by covid. so we had to go out with what we had available to us. and so you saw a crash program to see if we can make mrna vaccines work. really, it is like the moon landing. and so that is now one of the base. if things get out of control, we have mrna vaccines as a way to respond. they will work for everything but they will work for a lot of things. the trick is how do you stop them from getting out of control? what you need for that is a weather map. where are viruses spreading? how can you contain them? you can make targeted interventions. i grew up in florida, we know when a hurricane is coming. we board up the windows, we prepare. as a result, several weeks later, life is back to normal, the economy comes back faster, less people lose their lives. you prepare if you have the
information and you can prepare locally. we do not have anything like that visibly into where viruses are and that is what needs to get built. and that is starting to happen. one of the largest providers of testing in schools in the country for example. thousands of organizations where we are testing. taylor: i want to broaden this out a little bit. you for your segment we were speaking with natosha lam, who was taking more than markets perspective and there has been a big re-think about valuations at this moment. within the biotech space. i don't need you to comment on if you think your company is over or undervalued. we know the answer to that. but how are you thinking about valuations and the fundraising environment in this moment? jason: yeah, is one of the things you are seeing is interest rates go up and people get out of long-term growth. and i think that is very rational. and so, it does not mean it long-term growth companies cannot be valued, but i thicket means investors need to ask if they have the capital to get to
that? to get to that long-term growth that they're planning for. and if they do, you will see consolidation around certain companies that have that. the winners in this phase. they will have an easier time raising capital and a lot of other folks will not. it reminds me of 99, 2000 internet. kind of a calling. and amazon got built then. if that is when they made a lot of the big fundamental principles that amazon got a 99 to take off. taylor: we should do this more often. jason kelly, thank you so much. fireworks ceo, really appreciate your time and your insights. stay with us, because coming up, still keeping on the covid theme, all the lessons are in for the pan-democrat were going to be speaking with colleges president about the challenge of steering students through a want lifetime pandemic and the path forward. this is bloomberg. ♪
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taylor: we are here in boston, welcome back, this is the boston chamber of commerce annual meeting. i'm really pleased to some -- to say will be bringing in dr. johnson, the boston chamber honoree today, talking about how were coming out of the pandemic era. what for you have been the biggest key takeaways? trying to bring some students back? >> it's been fascinating and i would say in massachusetts, we've done such an amazing job of working together to create the protocols that have been critical to allow us to bring students back to school, which is been so important. for our students. paula: not only in terms of
learning, but for mental health. taylor: it's interesting that you talk about mental health, because we think about ways that we can support students. invest in students. there were a lot of concerns that investments in the world, it's hard to get that engagement. how important is it to be able to invest in mental health? paula: it's critical. before the pandemic, we had an epidemic of depression and anxiety in young people. starting before college, but really exhilarating during those years. as of the pandemic, it has added to the insult on top of that. so what we really need -- it is an epidemic could what we really need is an approach that is a public health approach. for us to understand what is driving this, it is not just pandemic. what is driving it, how do we prevent it and how do we best treat it. and some of those interventions are in fact going to be online interventions, but some may not
be. and there is a feed for better connectedness. how do we do that? so there is a real opportunity here for a very robust research agenda and it is really in-service to the future. taylor: some of the investments in the future have been women in stem courses. stem is something that we have been flowing around a lot in the last decade. but we have not really seen the progress that we needed. what are you going to make sure that women can be included in some of the stuff? paula: at wellesley we have been focused on making sure stem education is part of a liberal arts education. and that all students have the opportunity to thrive in stem. part of that is affected over 50% of our stem faculty across the board are women, so they see it. which is phenomenal. it is also really bringing in students of all backgrounds. students who are underrepresented. students who may not be from backgrounds where -- giving them opportunities for deep research
experiences. and it is really paying off. 45% of our students are majoring in stem. we produce the largest number of women, phd's in science, second largest in math compared to our liberal arts beers. and we just learned that we've gotten the largest number of graduate fellowships. so it can be done but there really needs to be a focus and not focused arts in college, it starts before college. but it has to continue into the workforce. taylor: want to talk about some of your tears. we are in boston. previous cast is an m.i.t. grad. how do you maintain that competitive edge? cultivate that talent and make sure that you are still the place where people want to be? paula: it is a really good question. i think you have to be your authentic school. and really, 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 other schools to be stronger. so for example, we have a very strong partnership with m.i.t.. and that is wonderful for our engineering students. but i think that really understanding deeply your areas of expertise and it really is not about the competitiveness. it is about keeping that excellence, keeping in touch with the next generation. up and moving forward. taylor: you are inspiring this generation. spying us all here tonight. certainly inspiring the next in ration of women as well. that was the wellesley president, dr. paula johnson. really appreciated. of course, our honorees tonight as we kick off the annual dinner, stick with us here because we are going to get the view from the pc landscape. were going to do that with kent, professor of the ventures. that's next. this is bloomberg.
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♪ taylor: welcome back to bloomberg technology. i am taylor riggs and we are here at the boston convention center it at the greater boston chamber of commerce. let's get back to the markets. we talked a lot about a big bloomberg escape underway. spacex of course, we know that is on mosques big startup, raising more money. new eye watering valuations according to sources. ed ludlow here. you helped write the story. you're always on top of this stuff. what you have for me? ed: sources telling myself, katie ruth and jillian, a
cracked squad of deals reporters that space is going through a funding round, raising funds but at a $150 billion valuation according to sources. that is eye watering for a private u.s. company for any private company. two things having the same time, really interesting kriti gupta funding around, raising funds for investors. at the same time, you have employees selling their private shares. this is quite common for those two things to happen at the same time. a big round and then for shares to be sold on the secondary market. employee tender offer, those employees selling their shares at $70 a share. we do not know the volume of shares, but you know, this is a company to let know, because when you met me, i had come on you. -- i had come on with you. we talked about it for a very long time. sometimes, you let me. as you know i get carried away. and the cutting edge of space technology, i think the story here as well with this rates environment, the fed, the outlook for inflation, let's bring up the next chart, because it is the jump in valuation that
i am really looking at. what spacex raising funds last october and they all said that secondary sale, or talk about $100 billion valuation. we're not talking about a hundred when he $5 million valuation. i know you got a really fantastic guest coming up, but we need to talk about the broader landscape of what is going on here. taylor: you are spot on could really appreciate it. you are always welcome on my show, so there is mike is going to pretty really appreciate it. our very own ed ludlow. i want to get back to the markets and talk about that. we been monitoring the tech startup scene could i pleased to say that kent bennett, you know him as -- not far from here in cambridge. joe got here to the big city of boston. and what ed was talk about is sort of the valuation, sort of reit size and, if you will. and i know that we do not necessarily follow the markets on a day-to-day basis, but to the extent that that volatility impacts your investing, how do you see all that playing out right now? kent: this is not a new place
for us. so that is what a lover focuses on. -- that is what a lot of our focus is on. for the past 20 years for the most part come they have been here. been trading at six to 10 to 15 times revenue. smart people can debate should they be higher, should he be lower question mark smart people were not debating last year, should they be at 40 or 50 or 60 times what they were. so this feels like a new normal, but it is a place that is familiar for us the last two decades. taylor: i think it is interesting though, particularly the big cloud of businesses. the suspicion services, the sas businesses. that is been sort of a standout where people like the business model and more portly, there's is a path to profitability. is a lot of this about companies that have not grown and not willing or able to turn a profit? kent: i think the valuations reset has affected every company in the index for sure, but absolutely, if you look at the top 10 sas company's we check in
the index by market cap, they are all cash flow positive with one exception. they run a 20% free cash flow, so these are businesses that approve proven ability to generate cash. and clearly, businesses that can generate cash are the ones that are being pivotally but more and this resell. taylor: i think when we are speaking at the greater boston chamber of commerce, and a lot of the conversations have been about the health of the economy. and a lot of the inflationary impacts. what extent if any do you have on seeing some of the macroeconomics on sort of broad investment in companies? kent: not many of our companies face big inflationary dynamic because they are software, so did not have huge input costs. with the exception of labor, the talent, engineer and cost of an insane over the years. so what is happening right now, these comey's reset. they all realized they cannot raise company at the chief prices they used to and that means they got to save money somehow appeared with that will bring will be layoffs, hiring freezes, and we are seeing it in more copies right now. that means a presume, talent, i
believe will be on sale. cost of engineers, salaries for engineers will absolutely go down. taylor: a rightsizing in the market to some extent. what are you advising ceos, onto powers, some of the companies within your portfolio about what to do to save that cash, to repair for a down term if there is one. and set yourself up for success in the next 12 month? kent: were not saying is, we're telling them it is almost a certainty that we are going to some form of a downturn, specially for them. what that means is they should repair to not raise money, as long as they can possibly avoid raising money. so there is some kind of capital so though before the start ups, but it is going to be very scary, very nervous, but hard to come by. so the startups in the world will be smart enough to cannot go out into the market for the next at least 18 months if not to any four and further. so they are all compared that's prepared to go the distance. think about the runway and how far they can get without raising capital.
taylor quantity way to deploy capital if you think valuations or i guess talent on sale 12 months from now? how do to play capital? kent: 2008, 2000 nine is any guide, the best year -- that your will be slow, even though in theory, the valuations have started to be lower. the best startups will not be raising unless they are forced to. so it will be a year from now, a year and a half from now when he sings of filtered through the market at founders and onto menorahs will be ready to go back out into the markets. hopefully they will be much more valuable, but that is my guest that guess is that venture capital be slow for the next year and they will begin to pick up as a market slowly comes back to life. taylor: does that mean more consolidation? kent: absolutely. so there is a set of businesses in the world that were never viable and probably should not have been able to raise money. it will go out of business and we will see some big liquidations and bankruptcies. there's another set of businesses that are pretty good businesses, but not incredible. and they do not have enough cash
to make it through this timing and they will all be talking. they will be seeking buyers and the buyers are already living their lives thinking this might be a time to talk in a few other companies. taylor: we are here in boston on the east coast and we are talking about some of the big tech startups and animation. when i was in san francisco in 2019, it was during the big rework debacle. and there was a lot of conversations about unicorns and unicorn status and ipo. and then we had a conversation of how to go public. what do you see as unicorn status right now and is that still a good option? kent: were not talking about specs much anymore. and were not talk about unicorns. were talking about what we call santarus. so focusing on companies that can get to real revenue. 100 million of the current revenue for going that a centaur. were congo centaurs not unicorns. laster, there were something
like 500 unicorns minted. that was when i have every single day. they say 10 years ago it was about for a year were minted. so clearly we went through a unicorn bubble and the meaning of the term is absolutely beguiling. taylor: ipo one of the best exit strategies. kent: absolutely for companies that can control their own destiny, can get to the free cash for a positive point. going public is always going to have the best return for their capital. it is not easy, it is not for everyone. it can be a pain to be a public company, but for the companies that have huge markets and a massive runway out of them, going public be a good option. it may not be open for another year in a way for many company's print taylor: early appreciate it. lots of good advice and wisdom. kent bennett, partner in adventures. appreciate your insight. you can read more about startups in today's big take a course on bloomberg, so make sure to check that out. coming up, were going to be
taylor: we are here of course in boston at the greater boston chamber of commerce annual meeting. it is time now for our crypto report and beyond current crypto market volatility we want to take a look at an issue that has been plaguing bitcoin. it has been a lot about high energy consumption which environmental activist seven calling out.
this is a self-sustaining blockchain that the use for economic models. a sustainable alternative to bitcoin. stacy is the ceo of and she joins me now. it is so fun to have you here in person at this great event. i believe there has been a criticism of bitcoin. it has been at the presumption about the energy it takes to mind bitcoin could how do you see that as a problem and are there problems to fix it? stacey: we were founded by a dutch award-winning photographer. face to m.i.t., so here in boston. a professor at m.i.t.. staci: he invented a couple of things that cryptocurrency more broadly as an ecosystem uses. the verified random function in that kind of thing. so he watched the ecosystem develop and he realized some of these earlier protocols like bitcoin, they were not exactly
fast enough exactly and they have a large carbon footprint. they do not scale. so he came up with another consensus mechanism. he blockchain session blockchain the whole juice is in the consensus mechanism. he came up with a proof of consensus mechanism, which is like seven houses or something. taylor: how do you need to take off, to be adopted in order for this sort of narrative to really catch on? pun intended, to become sustainable going forward. staci: it gets so technical so quickly. and like things are new, they do not tend to differentiate among them in the beginning. we think that the choice will shake out over time as people get a little bit more aware of differences and nuances between different kinds of machines. and also, we believe that in this world, we need all kinds of different blockchain protocols proved so we don't think it's a
winner take all world at all. we are very proud of a couple of things about us. we are very scalable blockchain. we do 10,000 transactions per second in july. we have a very low carbon footprint in a decentralized blockchain. so we think we are sort of generation three of blockchain. taylor: we have to talk about generation one and that is with the volatility around crypto and the volunteer ready -- volatility. do you watch volatility in second markets? what you make of that? staci: this is not my first bear market by any means i was a jp morgan during the crisis. and number of events into any 14 .
we had the dow attack in 2016 trade with the ico bus. almost a billion dollars. the crypto industry continues to recover and it continues to make itself better because of what goes through. my heart goes out to those investors. and i have seen a lot in my day, but 56 billion in -- it's a lot of money for one asset, to losing one asset. so it is unique. taylor: and that sort of brings up the idea of regulation. and you want regulation to help protect, but you do not want regulation to stifle all of the innovation. and the great experiment that was -- maybe it failed for now, but it was the experiment and a chance at it. where you stand on regulation? staci: yeah, i think it is a very nuanced subject, obviously.
with the industry really does need is regulatory clarity. and i think that bitcoin for example or a theory him, we do not make promises ever, but when you say something and you call it a stable coin, you're kind of saying that you're going to be able to get a dollar if you turn in that coin. you are making a statement. i think that is where regulators have been focused and are going to continue to focus. they're going to define i think stable coins in a very clear way. if you do not meet those kind of specifications, you're not going to be able to call yourself that. the most port thing i want to say though is that the blockchain has nothing to do with algorithmic stable coins. taylor: good to make it clear on that tree on that note though when you think about stable coins, i think that you are right here and we think stable. was the bigger issue that it was not backed by a dollar peg or even to a blockchain or even to a real asset? for a stable coin to work, do
you need the collateral, if you will, to be an actual stable? staci: what i will tell you is that it was kind of a perpetual motion machine. and perpetual motion machines, we've been trying to create perpetual motion machines for centuries and they do not work. so, it had a baked in mechanism that if that mechanism starts to fail, you can have a death spiral. and so, you know, there are more clever financial minds than i that may come up with some way that there is some kind of a future for stable coins, but i don't know about that. kind of a perpetual motion machine and how it plays out, is not going to be how it looks like. taylor: in the meantime were happy to have you here. in the boston area as well. stacy, ceo of the algorithm foundation. really appreciate your time and insights. coming up, the future of sports betting grid we have our big interview with jeff king see eo of tech and gaming.
taylor: we are here in boston. the 2020 two boston greater chamber of commerce annual meeting is underway and while i hear the boston celtics are about to go head-to-head with the miami heat for the eastern conference finals, i'm with my producer. he made me do that. take a look at this, draftkings ceo and cofounder here jason robbins of course joining me here now. so many conversations about the reopening, how we still think about sports betting in the midst of still getting out of
the house. the return of sports. how are you think about all of this for your business? jason: it is exciting to see. i mean it, look at how may people are here. it feels like things are getting slowly but surely back to normal and it's just good to see it for everybody. i think for us, it helped. more people are engaging with sports in more ways is helpful. people given the mobile devices that can go anywhere with you, it does not really matter to us if you are in a stadium or at home but i think just having more ways people can engage with sports is good for sports fans. i think more engagement -- this is always been the case whether it is fantasy or banker to be more engagement drives more sports content pretty more sports consumption drives more engagement proved taylor: it is that circle of life if you will. i think what is interesting is you talked a lot about the health of the consumer. we heard from walmart today that they are not quite able to pass on higher costs to the consumer.
consumers are pulling back and cutting back on discretionary items and shopping for the necessities. are you seeing a shift in consumer behavior if they are starting to pull back on some of the fund habits question mark jason: not at all. we have a strong data year-over-year. it is known to be very agnostic to market cycles. gaming holds up well during economic downturns, so that is very consistent with what we are seeing. we have a lot of people watching tonight's celtics game, throwing five bucks on that. and that is part of what they do for fun, and that is not changing from anything that we are seeing. anything that were seeing. we are seeing great year-over-year retention numbers. taylor: i want to talk about the income statement and balance sheet. i want to bring you a quote from the morgan stanley analyst, really positive, saying that they thing that draftkings is confident in achieving near-term targets. talk about this transition, profit ability in the fourth quarter of 23.
that is been the big focused is they think a lot about the volatility in the tech sector, reevaluation of the valuations. past profitably, is that achievable? jason: i think absolutely. a lot of where thomas is getting his information is through sound analysis, based on information we are putting out there. we said the same thing that we think we're going to be in the fourth quarter, assuming obviously there is a wildcard around legalization trends. we are assuming a normal legalization trends will remain consistent with what we've been seeing for it with the quick get profitably in fourth quarter next year. taylor: talk to me about that, because we have had you on the program a lot pretty talked about the regulatory environment, talked a lot about the general state-by-state legalization environment. how is that environment for you right now? does the path indicate future success? jason: absolutely. we have seen a ton of momentum the past few years. this year, we launched new york, louisiana, ontario will be very soon. we also have three states going
against two states and puerto rico. so isla, maryland, puerto rico are in the process. they have legalized the process of issuing licenses, getting up and running good at that point, we will be close to 50% and the u.s. population. we still have the top three states by population, california, texas and florida that have not yet. those are a quarter of the u.s.. still a ton of upside. we are running a ballot referendum in california next year. or this year i should say, sorry, in november. if we get that done, that's another 12, 13% of the population, so it really seems like the momentum is stronger taylor: you talked about the three big states. should we learn from those comments of the biggest opportunity still remains here in the u.s.? i know you mentioned offered -- ontario a little bit. jason: i think canada is a great opportunity. certainly, the u.s. is where we feel because is more opportunity , but from our terrio -- ontario
will be the fifth-largest a by population, so it is equivalent to getting illinois sized state, pennsylvania sized state to come online. so it is really a big deal for us. taylor: really appreciate it. draftkings ceo jason robbins. betting on that game, really appreciate it. that does it here for this edition of bloomberg technology. we will be back in san francisco tomorrow. we had a great time here of course at the boston convention center. and at the greater boston chamber of commerce annual meeting. stay put with us. this is fun. we should do this more often. this is bloomberg. ♪
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