tv Bloomberg Technology Bloomberg June 17, 2022 5:00pm-6:00pm EDT
innovation, money, and power collide from silicon valley and beyond this is bloomberg technology with emily chang. emily: i emily chang in san francisco and this is bloomberg technology. multiple spacex employees fired after an open letter criticizing elon musk. what this says about his leadership and what it means for twitter. plus, does ai have feelings? google just suspended an engineer who claims the answer to the question is yes. we will have a conversation with googles former ai ethicist. crypto traders go from the fear of missing out to straight up fear. we talked to microstrategy
strategist michael sailor. first, i look at the markets. another day for bitcoin in the red. broader stocks are rallying. the tech heavy nasdaq is surging. the s&p is closing at its lowest point since september 2020. taylor riggs is here to break down the day and week. taylor: the biggest weekly decline on the s&p 500 since march of 2020. that really puts it into perspective. you can see all the major indices in the red for the week and lower for 10 of the last 11 weeks. this has been another wild a loss for the week or so. that negative sentiment continues with equity markets. i want to look at big tech. the outperformer friday. if you look at where we have been the week, it's been the big tech names, the chipmakers,
expedia, micron. down in correction territory on the week alone. how much was the federal reserve chair jay powell hiking rates faster than we thought and putting pressure on long-duration assets that have traditionally been technology? finally, you mentioned bitcoin. i find myself talking about bitcoin maybe more than i want to. your to date, bitcoin is off 55%. it is having one of the worst weeks we have had i think on record. you are really seeing wild swings here here today. you can see we are holding onto 20,000. this does not close on weekends, emily. emily: it doesn't. taylor is such a team player. thank you for sticking around.
spacex has fired several employees involved in an open letter criticizing the behavior of the -- of elon musk. the letter, seen by bloomberg called elon musk's behavior and tweets a frequent source of distraction and embarrassment and called on spacex leadership to distance itself from his "personal brand." ed ludlow is here to discuss. bloomberg obtained a copy of the letter. what did it say? ed: this is a small select group of employees that called on spacex management to publicly distance itself from elon musk. what he says, believes, what he is doing. they believed it was an embarrassment. this was the view of a small number employees. it was shared as something you
could sign via qr code through internal messaging channels and it picked up some momentum. it did get some signatures until management acted. emily: what did management then do? ed: it send an internal memo sent by gwen short well. they basically said this was not helpful. they conducted an investigation into the open letter from staff. as you said, and i think we have the quote from gwen shortwell, they ended up firing they said "a number of employees." we don't have a firm number. she called this overreaching activism. a group of employees in the business that have strong opinions. she says elsewhere in the memo that is too long to share on the screen, this select group of employees was putting pressure
on their peers to sign something they did not believe in, paraphrasing gwynne shotwell's words. spacex has 12,000 employees around the world. it gained traction. but, ultimately, what shotwell goes on to say in the memo is this is a distraction from the end goal, getting to mars. emily: this is not the last story -- first story in the last few weeks about elon musk's behavior at spacex. there was also an accusation of sexual harassment and shotwell defended him as well. ed: the company spacex settled with a former contract employee in 2018 for 200,000 u.s. dollars. that employee was a contract air steward aboard a spacex jet that
must would used to trap -- elon musk would used to travel. elon musk not only denies the claims made, he says in a series of tweets earlier this month that he saw this as a political attack on him, a calculated initiative to impart his reputation -- impact his reputation. he questioned the source of the story. spacex does have a pr team. i message them regularly. they are real people. but they have not responded to multiple requests for comment on this story or the open letter story. what we have to go on are these internal messages bloomberg is seeing. in money: spacex -- emily: spacex had another success. emily: another bog standard starting launch deployed to orbit. it was a milestone for reusability.
it was a 100 launch using a flight proven rocket or booster. this is 100 times spacex has sent up a rocket that has previously flown and landed it successfully. that changes the game. this is the whole point of the spacex story. reusability allows them to go with the regularity that comes with routine and makes access to space more affordable for satellite providers building out starting -- starlink networks. emily: ed ludlow, thank you. coming up, we talk to an activist who sounded the alarm about the power of google ai technology. do computers have feelings? can we really trust google to develop this technology responsibly? this is bloomberg. >> done correctly, in many ways it will be helpful to you.
debate about the possibilities and limits of the cutting edge technology. dr. margaret mitchell, chief ethics scientist and researcher and former google ai employee who worked on that ai development team joins us now to discuss. margaret, thank you for joining us. or should i say, dr. mitchell. given your expertise, do you think the engineer is right? does the ai have feelings? margaret: no, i don't think it does. i don't think it has feelings. definitely not consciousness. which is what the claims have been. emily: what does this tell us about the potential for ai bots to fall human beings -- fool
human beings into thinking they are real? margaret: on the one hand we have the psychological effects of interacting with things that are humanlike. we tend to anthropomorphize. we tend to put intentionality into things that we are interacting with that seem humanlike. people are used to doing this with pets and things, creating dialogues and conversations. also with stuff animals and, got cheese and things. --tamagotchis and things. we have a propensity to imbue consciousness into nonconscious beings when they show properties like speaking, vulnerability, or movements aligned with humanlike movements. on the other hand, we also have
a lot of companies working in ai using the language of human cognition. so, saying things like chain of thought, reasoning. essentially, comparing the models they are working with to the brain. that makes some sense, but you really have to temper this with the details being a bunch of calculations. we have a few things going on, the psychological illusions and the language around the technology they are building. emily: given the complexity of this, what are your biggest concerns about, for example, these transcripts published where the computer is saying, i am scared of dying, i am scared of being turned off. margaret: yeah. i think i echo a lot of researchers in the space where i think we all feel like cindy and
said is not the point here. -- sentience is not the point here. we will not get an agreement on sentience or consciousness anytime soon. that will probably go on indefinitely where we just have a disagreement. when you do have people starting to see sentience and consciousness, it brings up things like robot rights, all of the work that has been done on what the personhood of the models might be. while at the same time you have technology that essentially discriminates against black and brown people, poorly represents women and reflects misogynistic viewpoints. there is something to be said for the personhood of ai systems
and thinking about the rights they might have -- have while not doing good work on the rights of actual people. emily: of course, the history behind this is you were fired for your work in sounding the alarm about sexism and racism in ai at google. it sounds to me like you are saying this is not the problem. we should not be asking if robots have feelings. we should be asking is ai is gender blind and color blind and making sure we are for kissing -- focusing on things that are more important. margaret: it's not gender blind, it is targeting gender in negative ways. a lot of systems are trained on text data from websites that have misogynistic tendencies. websites that are predominantly
white and male and u.s.-based. all of these kinds of things are being propagated by the systems that are really problematic. they become even more problematic when people start to be affected by the systems they interact with. in the case of consciousness, you have this concern that people might be persuaded to do horrible things. you also have concerns around bullying and hate bots. these things can really hurt people. then, you know, you also have subtle effects of search ranking results. what will appear at the top of the ranking? if it is a function of the language model, as google has said they are, you will have biased effects influencing search results in such a way that you tend to see the viewpoints of the white man --
men at the top of the third result -- search results as opposed to black women. that is an echo chamber where the privileged gets more privileged. marvel light -- marginalized become more marginalized. emily: google has said that when it comes to this particular case, hundreds of researchers have interacted with the same technology and not expressed these concerns. i sat down with alphabet and google ceo last year and asked him about concerns around ai in google itself, from people like yourself. take a listen to what he had to say. sindar: anytime you are developing technology there is a dual side to it. the journey of humanity is harnessing the benefits while minified thing -- minimizing the downside. ai will take time. i have seen more focus on the
downsides earlier on the other technology we have developed. in some ways i am encouraged by how much concern there is. google, people think about it deeply. emily: margaret, do you think he and google are leading on the issues in the right way? margaret: clearly not. everyone at least in tech is familiar with the notion of tech solution is on. there is no lack of pr and communication around the benefit of ai and trying to push it as beneficial for humanity and all of these things. a very small minority speaks up about the downside. i would say that sundar characterization's is false and frustrating. one reason i think there is a desire to steer away from the downside, in addition to concerns around profit, is it
also opens up liability. if you have systems you show work worse on black women it brings up questions of discrimination in the system. it behooves companies to say downsides are being over examined and try to show that conversation down. but i think that what is actually happening is the small set of people who have been speaking about ethical concerns are starting to be listened to because people are seeing the negative effects. i think that is really what is happening. the desire on the corporate side to shut the conversation down. then, people actually seeing the downside and that having an effect on what gets reported. emily: do you think that employee should've been suspended? margaret: i don't. i should say that blake and i are really good friends. we worked together at google.
we wrote a paper together on how to mitigate problematic biases in machine learning systems. he is a very bright guy. i'm a little worried that there is a reductive narrative that there is something fundamentally wrong with him or something. there are a lot of dimensions and google could have done a better job of engaging with him rather than this very alienating experience they gave him an said. i think it shows a weakness on google's part to be able to be open to different experiences and perspectives. emily: what are your biggest fears? if google continues to develop the technology at the pace it is developing the technology, continues to potentially not listen to this, as you say,
minority of voices that are speaking up, paint the picture of what you fear the world could look like if google continues on this path? emily: that's a very big question. and i'm not a good painter. i'm a consumer scientist. so i might not be eloquent at this. but, we are already seeing a lot of what we can expect to happen in the future but even worse. just recently, someone released a hate bot and make the model available to the public. we will likely see an increase of hateful intelligent seeming systems across interactions online and central media. this includes bullying and really problematic persuasion into more extremist areas. i think we will see further
marginalization and worsening power differentials. as a company like google amasses more ability to affect people's sense of what is true in the world through search ranking, through the products they are making, this means that the voices are people that have less access to the internet, for example, are going to disappear more and more while google amasses more and more power. so i'm very concerned about how the technology moving forward powers google and lacks respect for very serious ethical concerns, you know, misinformation is one. alongside some of the models that have come out recently. we will not know what is real. there will be textbased misinformation, news that is wrong.
there will be image-based misinformation, images that look real but are not real. and video-based as well and also audio based. essentially, all of the main ways we consume information online will now no longer be very easy to trace back to reality. that means mass misunderstanding. so, yeah. scary. emily: dr. mitchell, we could have this conversation for hours. i know we will be having it for years. i would love to have you back to talk about your work. i know you are taking a different approach to these issues. because of commercials we will have to leave it there. thank you for joining us today and helping us work through some very complex issues. we will have much more head. stay with us. this is bloomberg.
emily: tiktok reached an agreement with oracle to store data from u.s. users on oracle, the same day buzzfeed shared that leaked audio from dozens of internal tiktok meetings revealed u.s. user data has been repeatedly accessed from china. coming up, how the fed rate hike is impacting tech valuations and investing in what is next in the world of tech m&a. this is bloomberg. this is bloomberg. -hi, i'm smokey bear and i made an assistant to help you out.
because only you can prevent wildfires. -hey assistant smokey bear, call me papa bear because i'm "grrr-illing" up dinner. haha, do you get it? -yes. good job. -so, what should i do with all of these coals? -don't just toss them out. put them in a metal container because those embers can start a wildfire. -i understand, the stakes are high. assistant smokey vo: ha-ha, ha-ha.
technology. i'm emily chang in san francisco. it was a very volatile week. take it away. >> the centerpiece is the federal reserve raising interest rates by 75 basis points wednesday. we move very quickly from confidence to recession fears. look at the red. the nasdaq down 4.8% on the week , the worst week since last week. we have seen volatility on an ongoing basis. the philadelphia semiconductor index feeling outsized pain. bitcoin down 29% on the week. it was interesting to listen to scott minerd of guggenheim speaking with jon ferro saying that when we see the bottom in bitcoin, he expects we will see the bottom in equity markets. that is why we are paying such close attention. it's friday. the warriors are nba champions
and i am feeling good going into the long weekend. let's talk about valuations. if there is a silver lining, it is that valuations have come down a little. there is this argument from the tech boards that if you look at yields on treasuries, higher rates are already factored in. if valuations are coming down, we could be at a point where it is time to buy again. that is what the bulls are looking at. our next guest will talk about valuations in the context of private markets and startups. i'm not sure if he's a warriors fan. i doubt it. but i'm bringing the mood down. that's what i like to do. this is where we are over the last quarter or so, headed for our worst quarter on the nasdaq since 2002. so, my question from this point on is, what is the difference between what we are seeing now and what we saw in the dot-com bubble? i was not doing this then and i didn't really do it in the
financial crisis either. but i keep hearing that there are similarities between now and then but also things are very different. emily: let's dig into how the fed rate hike is impacting the word -- world of vc. mike, it's been an incredibly volatile week. there is a lot of uncertainty about the future. people are saying that the r word is inevitable. what do you think? mike: i will start by saying i am a lakers fan. emily: thank you for clarifying. mike: it's definitely a very tricky time right now. when we look at the portfolio companies we look after, there are certainly ones more on the consumer side seeing softness.
seeing that consumers in general have read enough news, seen enough tweets about inflation that they are moderating their behavior. you can see that even in the decisions larger companies are making whether it is amazon, target, or walmart thing they don't have the right inventory or they may not be expanding as quickly as they thought. clearly there is something happening out there. we don't know if it is a little are recession, a quarter or two, or big are recession, but there is definitely signal going on out there. sooner than may be people expected. there was this notion that maybe next year. is the economy has to slow down with some significance, it is probably not next year. it's probably the next quarter or the quarter after that.
emily: how bad do you think the wreckage will be? how many more companies will have layoffs? how many more people will get laid off? how long did this last? mike: i don't think it will be that bad. there will be high-profile situations where companies are letting people go and that will be painful, undoubtedly. but generally speaking over the last couple years in 2020 and 2021, private companies have been able to raise amounts of money we have never seen in the past. that puts balance sheets in a good condition. they may have over hired. so, they may trim a little here or there. but by and large, i think the majority of companies have the strongest balance sheets they have had in a while and in many cases have had enough to get through a difficult time and come through it. i think we will surely see some
challenges. perhaps, the most challenging will be public companies. they obviously have to respond to a stock price. the fact that right now investors want shorter-term earnings or less losses short-term. i think that we will see more of those. but by and large, we don't see the kind of "wreckage" we saw in 2000. if anything, i expect this to happen more quickly, both the down third -- aside and the upturn. emily: i want to focus on cisco. cisco ceo chuck robbins was on the show earlier this week. i asked for his perspective. take a listen. chuck: we are always planning for different scenarios but we have been through enough downturns that we have playbooks and know how to deal with those appropriately. emily: now, cisco is one of the companies that hit its peak in the dock dom --.com boom.
the stocks never recovered. you were to their for over a decade -- worked there for over a decade during the.com boom. i wonder how you reflect on the fact that cisco has never from a stock perspective going back to what it was? mike: there are a couple things that contribute to that. it's true. it was incredibly unpleasant to $80 a share to nine dollars a share in six months when i used to work there. but i think a couple factors are happening. in cisco's case, you look at where cisco is today. they are a single-digit grower, 5%, 3%. fundamentally what happened there was, yes, there was a downturn. but in parallel with that the technologies they were purveying became more broadly available to monetize competitively, etc., etc.. the company never re-achieved the growth rate that it earned
during the pre-.com scenario. think of another exam like amazon, au contraire, they did much better afterwards because they were able to strategically expand the product line, the capabilities, the offerings, the sectors of the company was in. really what comes out of this is companies go in to a difficult downturn like this and when they come out of it, do they have the correct strategy for coming out of it? most people will say exactly what chuck said. that is, we have a playbook. we know how to deal with crises. we will cut this. we will cut that. so forth. it is more about, how do you strategically align your business to come out of it that it is how to survive that time? look at today's technology companies. the very large majority of them will survive it. question is, do they have a strategy to thrive afterwards? that strategy has to be aligned with the fact that things that
may have been hot before are no longer hot later. i don't have a crystal ball. i could not say exactly what the differences will be, but, i am pretty sure that the themes that mattered pre-2020 will not be exactly mirrored in the post 2020 era. companies that are more responsible and strategic about how to be aggressive and expensive in the recovery cycle will benefit and look more like amazon. the ones that do the same thing they were doing before will probably end up looking a little bit more like cisco in terms of their stock profiles. emily: interesting having your historical perspective there. i know you have been sharing that advice with founders as well. mike volpi of index ventures, good to have you back with us. coming up, microstrategy's bitcoin strategy has crypto crashes. does chairman and ceo michael saylor have any regrets? he joins me next. this is bloomberg.
emily: bitcoin is down more than 24% over the last five days. that's its worst week in a year. let's bring in micro -- michael saylor of microstrategy for more on his take. i know this is probably a rhetorical question, but do you have any regrets? michael: you know, we did a lot of back testing. i have gone back and looked at
the numbers. on august 10, 2020 when we announced our $250 million bitcoin by, since then, bitcoin is up 72% and the money supply is up 17%. the nasdaq is down 2%. gold is down 9%. the s&p is up 9%. the only thing that looks better than the money supply expansion is single-family homes up 26%. i could not have bought the ends of dollars of single-family homes. that's impractical. the bottom line is the coin strategy is 10 times better than any other alternative. so i don't regret it. we have 2.8 billion dollars worth of bitcoin on our balance sheet now. when the markets turn. our other choice is to give all the capital back to the shareholders, in which case we would have nothing and be struggling to get by without any
assets. emily: is cash still trash? michael: yeah. the money supply expanded by 41% since january 4 2021 we went into the covid crisis. everybody wants to buy rolex watches, luxury real estate, anything they can get their hands on, trading shortages. we are an institution. we have to take a in your view. the only thing is for sure that if we hold cash over a decade we will have a negative real yield. the question is, how much. we have to invest in something. so, we have chosen to focus on what we believe is the most exciting investment idea, a digital commodity that is absolutely scarce and only getting technically better every year. emily: are you considering
buying more bitcoin? is bitcoin on sale? michael: yes. it is. the number i would look at to figure out the surrogate for the value of bitcoin is the for your simple holding advantage. -- average. it trades billions of dollars a day. after 14 days, that number is 21,700. bitcoin touched that in march 2020. it touched it around 2017. it's touching it now. generally it trades above their. we are dollar cost averaging into bitcoin and will hold bitcoin long-term. so, it would not really matter whether the price was 10% more or 20% more or 50% more.
we will progressively acquire more bitcoin because that is our strategy. it's not about price and we will keep buying more. emily: ok. what if it gets below the $19,511 number, the top of the 2017 bull run? is that a time-dependent? michael: we don't panic. we have a strategy. we are not traders. if your time horizon is less than four years you are a traitor. if it is in months you are definitely a trader. i'm not an expert trader and i don't have a crystal ball. if your time horizon is more than four years you are an investor. if your time horizon is more than 10 years you are a saver. we have a 10 year time horizon. our view is over the 10 years, bitcoin will be a good idea. it will just keep the creaking in value -- accreting in value.
it will go down a bit here and there. in the near term, emily, it trades like a high beta risk asset and there is no denying that. long-term, we believe it is a low risk store of value asset. there are about 10 things that have to happen over the next decade to make it a better asset. we know what those 10 things are. so we are waiting. we are biding our time. we think it will improve as an asset class over time. we are not in a hurry. emily: what do you see on the 10 year horizon, for example. we have seen what the fed is doing with rate hikes. there is concern you are heading into recession. what do you see on the road ahead? how is that impacting your strategy to buy more and hold?
taylor: -- michael: there is no wash trading rule. people can sell their bitcoin and buybacks and harvest the tax gain. that's not the same with apple. if that gets fixed by the house ways and means committee that's a big plus for the asset. as they get regulated, as the 20 x leverage disappears, that will be positive. there are 19,000 unregistered securities in the crypto industry cross collateralized against bitcoin. as those things get eliminated or converted into publicly traded instruments, that will decrease the volatility. there will be a big shakeout. the wildcat banks like the terras, lunas, and celsius
those have massive volatility and as they become institutionalized the asset class will mature. there was a lot of ignorance and fear. people think crypto is the same as bitcoin. if they think that, they don't understand either of those things. we don't have a stablecoin. ust is not a stablecoin. tester is an -- tether is an opaque security. if we ever have an fbi issued stablecoin or something from a public entity endorsed by the fcc that will be very bullish for the industry. there is no spot etf. i think it is only a matter of time before there is one approved and that will be very bullish for the industry. the lack of fdic guidance makes it difficult if not impossible for banks to hold this stuff. we are waiting for clear cftc guidance. those things will get cured over the next decade, just not over the next 10 weeks. emily: how are you looking more
broadly at what happens to the industry after this? we are seeing coinbase and a number of different crypto companies having major layoffs. do you think we will look back on this moment as an inflection point for the industry? how does it look different in the future? michael: we are crossing the chasm. there is about a trillion dollars in the asset class. $400 billion is bitcoin. the other $400 billion is 19,000 unregistered securities. we are moving from the era of the offshore entrepreneur to the onshore public institution. it's pretty clear from chair kinsler's comments he made in the last few days that they want to see all of the crypto exchanges regulated. they want to clean up the industry. the stablecoin will have to be cleaned up as well. the winners will be the public investors and public banks and
public companies. the losers will be the wildcats and the entrepreneurs that got started that are flying by the seat of their pants. i think it is essential for us to move from a $1 trillion industry to a $10 trillion industry. i welcome it. i think bitcoin has been held back by its association with the anything goes crypto industry. as that gets regulated, then, that will actually create a green light for public institutions and public companies to get much more heavily involved in bitcoin. it will catalyze the next leg of the bull run. emily: michael sailor who apparently has no regrets. always good to have you on the show chair and ceo of microstrategy. have a great weekend. we will have much more ahead. stay with us. this is bloomberg.
emily: every new generation of media has been some best buy advertising. there was little reason to think the metaverse will be different. our brands taking the metaverse seriously? quick takes at a looks -- alex webb takes us through. alex: will the metaverse really be creating new digital economies or is it just about selling existing real-world goods? every new generation of media has been subsidized by advertising, making it cheaper or even free-for consumers is. -- consumers. there is little reason to think that the metaverse will be different. meta-platforms said so explicitly when it unveiled its vision for the platform last
year. >> building digital spaces and digital worlds, they will be able to use ads to ensure the right customers find what they created. alex: ads paired with ar and vr available -- abilities to track your eyeballs and gauge your mood. to what extent are brands taking the metaverse seriously? facebook and meta has been selling virtual billboards in their world but they remain a small size of the overall market. just 67 million americans will experience vr content at least once a month in 2022 and they will be split between different platforms. facebook has 263 million users this year in north america. most of the efforts so far are
focused on selling real-world goods. now he wants you to buy actual sneakers, real cell phones. in other words, a marketing gimmick to attract younger crypto enthusiasts. the ideal is to let brands monitor the entire customer journey from the ad campaign to buying the products and seeing how they use it. it feels like we are a long way away from that happening yet. if the metaverse takes off, there will be big money to be made in advertising. it just seems we are a long way now from that happening at facebook's vision is a distant prospect.