tv Bloomberg Technology Bloomberg July 12, 2022 11:00pm-12:00am EDT
emily: i am emily chang in san francisco and this is bloomberg technology. twitter's lawyer saying the termination of the deal was wrongful. we will talk to another former twitter insight about where the legal saga goes from here. plus, the palatine uphill battle will stop making bikes in house. we will have all the details. and funding for crypto startups, we will ask lightspeed venture partners why they are planning to double down on the blockchain and hunting what they call outliers and putting $1 million behind his new ideas. we will get all of that in a
moment. coming out of the next 24 hours, ed ludlow has all the moves and here we are again. tech is losing steam. >> more muted most of the downside. that cpi data is due on wednesday. i have a public service announcement for you. you know i love to do that when it matters. the u.s. bureau of labor statistics has said there is a fake cpi report doing the rounds online. an eagle eyed investors will wait for the official release of the data. wednesday, a: 30 a.m. here in the united states. some breaking news after the bell as well. the ims has cut its global gdp growth forecast to 2022 to 2.3% versus its prior to .9% forecast.
you look at the market boredom, pretty significant pullback in yields. they would ease up. we are talking about concession resumes -- recession concerns. i also put bitcoin there because we are now below $24,000. looks -- look at that terminal chart pretty quickly. you see that right hand side of the screen, the drop since june traded sideways since that big drop in the month of june at the 20,000 level. this was previously called an inflation hedge. central banks have moved on with their policy via inflation. bitcoin has not really been in an inflation hedge. it is something we are keeping a close eye on. this is not a name i have said out loud for a very long time
but if you look at this chart, massive jumping canoe. i deal with walmart to build 4500 ev's for walmart, really changing the game. this is basically a penny stock. look at that massive job. some mega caps really pulling the nasdaq 100 lower throughout tuesday's session. apple was one of the names pushing to the upside but we are in wait and see mode. these are the critical names in these earnings seasons. we are getting a sense of what is going on in the world. >> let's talk about something else going on in the world. twitter officially suing elon musk to consummate the $44 billion deal he is trying to pull out of. twitter suing to force him to do the deal that he promised to do. asking a delaware judge for the case to be heard in september. we are getting some headlines
about a memo that twitter's leadership sent to staff for an expedited trial. it is not necessarily a great atmosphere among twitter employees given all this uncertainty. this is something we were expecting and the legal saga will continue. >> this was the action that we get. delaware can't filing early in the week. the point that they are trying to argue is that elon musk did not have any grounds to walk away from the deal. there is no such thing as buyer's remorse. elon musk saw that twitter was not forthcoming with the data that he requested in his filing on friday about the issue of bots. in other words, they need to prove that it somehow alter the value of the deal, that it
punched a hole in the deal. we knew this was coming. maybe a little relief rally because we saw this coming but most lawyers think twitter has over the good chance in this fight but it could be a long fight. you want to go to court for a decade? who knows? this is elon musk. >> this after twitter has plummeted and made up some of those losses. thank you. i want to bring in jason goldman. one of the founding members of twitter and a former white house chief. the digital officer under president obama for some insider and outsider perspective. your timing is impeccable. officially this is headed to delaware court. did anyone win in this scenario? >> definitely the lawyers win. you know they are excited when they describe a case as unprecedented.
everyone else is a loser in this. has shown he can't be trusted to execute a signed a deal. the board is not going to delaware to consummate a transaction with a bad-faith actor and the employees are left in limbo wondering what the future of the company will hold. >> when this happened last week, the chairman of the twitter board said they are committed to closing the transaction. they plan to pursue legal action and now here we are seeing them pursue it and then you have ed williams getting into the fray. you also said if i was still on the board i would be asking if we could that this whole ugly episode blow over. hopefully that is the plan and this is ceremony. what do you think the plan is? is this ceremony? >> at this point the board has to sue and try to get the agreement agreed to.
they have no choice but to do that. i agreed that i was the board had more insight at the beginning of this to realize they were dealing with someone who just wasn't serious and did not have a real plan for what to do with the company and instead, led by jack they became happy with this idea of elon owning the company. the board did not realize he was -- didn't realize they were walking into a trap. >> what do you think the real motivation was? >> i think he enjoys using twitter and is addicted to the service and thought it would be fun to own it but i think if you look at the filing statement that twitter filed on the deal that they had a signed agreement just to get him on the board and have a standstill agreement
where he would owe no more than 15% of the company and that he had a conversation with jack on the same day that agreement was announced and it quickly pivoted to i should just on the company as a whole. i think that is one of the reasons why this deal is likely to settle. there are probably a lot of conversations between elon and the company in the pre-agreement phase they don't want to come out in discovery. this is something i ultimately don't think will be decided by the court but will be decided in a settlement between lawyers. >> i wonder how this plays out. if elon musk still has to hold up his end of the deal. is that good for anyone? >> it is not. it is not good for twitter if elon ends up owning the company because he does not have a real plan for what he wants to do with it. he has revealed that over time. there were not any number of silicon valley luminaries that lined up behind elon and pledged
to be equity partners. whether that is the object or free speech advocates, all of those people have gone remarkably silent in terms of their belief in elon as the ultimate owner of this company because in his conversations he showed he was not serious about what he would do with it. elon owning it is good. a settlement is unlikely to equal any amount of value that equals the damage done. the real problem is there are actual employees that want to make a better product and make the company better for the future but they just don't have the leadership that will enable them to do that. >> there are so many that love twitter, love using twitter but twitter over so many years has not been able to parlay that into a significantly bigger business. what we go to increase engagement and drive more revenue to increase the number of users? >> i am not here auditioning for
any job at twitter. i think what the board needs to do at the end of this juncture is find new leadership. that is not a job i am auditioning for. i think they need to look at users that have found tremendous value from it and build engagement around it. i don't think the company is one silver bullet or future away from axing the trajectory it is on but it is obviously something that has always had cultural value and cultural residence and it is something i think continues to play a role in global politics and the global conversation. one point on that is we have spent months arguing what elon has meant about free speech online and he has slowly evolved that viewpoint for meaning anything -- twitter is actually in court in india trying to push back on authoritarian free-speech laws
in that country. there is actual real stakes at play here and the company is fighting good fights around the world. it is just that they are having to do so under this cloud of elon's acquisition. >> jason, as always, thank you for your insight. >> bargain hunters might be a little underwhelmed by the prime day sale. the annual event began today but many sellers are minimizing the discounts to cover their own soaring costs. helping them deepen their relationships with existing customers with deals on amazon gadgets. coming up, peloton will stop making bikes in-house, marking one of the biggest steps yet.
>> peloton is making a major strategic shift to cut streamline strategy. the company will stop building exercise and treadmills. peloton making this change after several months of turmoil. shares of the company are down 75%. mark gurman covers peloton and he is with us now. talk about the significance of a pretty dramatic shift here. >> this is an overhaul of their operations. let's look at apple for a second. apple designed to the iphone and other products. what most people don't know is they have a third party called foxconn.
apple works hand-in-hand with foxconn to build those devices. peloton did both. they built a big portion of their bikes in-house. and contracted out another portion of their devices to different technology manufacturers in asia. what peloton is not going to do is they are seizing their in-house productions. that will simplify the entire business model. instead of having these distinct supply chains, they will have one. they are laying off 570 workers. all of the in-house quality control will be in one place. you will not be split between two development styles. >> will this off peloton's problem?
>> they have many problems and this will solve one of them. one of them was the ability to engage supply and demand. peloton's downfall happened after they overestimated that demand will continue to occur as the pandemic slowed down. that left them with an overabundance of inventory and nearly created the company into the ground. if they had only contract manufacturers, that probably would have been easier to resolve. now they are not owning all of that inventory. peloton problems go far beyond the supply chain. there are issues with pricing and how much the subscription costs. there is competition. there are so many other ones, there is tonal. their product development is taking a long time to answer
your question, this solves one of their problems but there are many more to go, it is sort of like whack-a-mole. >> thank you for sharing your insights with us. there is a canoe story doubling in value on tuesday's session. in order for 4500 men who moved the tech orders to the hometown in arkansas. the company wanted there was substantial doubt about the long-term future but not at least some investors seem a little bit more optimistic. coming up, there has been a major slowdown in crypto funding this year. one venture capitalist focus solely investing in the blockchain.
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>> a story we continue to watch, the delivery company go pup is cutting 10% of its workforce including dozens of warehouses. this in an effort to conserve cash. the job cuts will affect about 1500 people. they will shut 76 warehouses or about 12% of its network. the firm also just announced lightspeed faction, a new team fully dedicated to blockchain investments. venture capitalists have pulled
this. we spoke to a partner. you just raised 7 billion new dollars in fresh venture capital. talk to us about the process of raising this funding. especially in a very difficult macroenvironment. >> getting this done is a reflection of the strength of the franchise and the quality of founders they have been lucky enough to work with. this is them scene is committed to the asset class. we are really fortunate to have raised this capital in a time when i think it will prove to be a very good vintage for the founders to build on. >> where do you plan to deploy this and how fast given these tumultuous market conditions?
>> we typically target a three-year new investment time for a refund. one of the reasons for the scale of this capital base is in 2000, lightspeed believed that innovation and technology would be a global phenomenon. it was a little contrarian at that time but as a result, the firm has built up presence today. there is a lot of opportunity globally. the scope of the sectors has also increased now with pharma and biotech, consumer fintech, crypto, the market for growth is already slow. we think it will remain that way
but we will be patient. >> talk about the global trends you are seeing. how are you seeing the slow down impact start india? are these macro conditions playing out different around the globe? >> i think we see the macro conditions playing out differently across sectors and differently across countries. even within the u.s., consumer has seen impact early on. so much similarly with countries, i don't think we will see over session. the country is growing at about 7.5%.
the central bank is used to the level of inflation there. that has an impact on the financing environment for startups. >> the blockchain encrypt our different things and we have seen the crypto market take a nosedive. we are in the middle of a crypto winter. nobody knows how long it will last. >> when we believe in the future of something, we don't try to time it. in early 2000's, we believe venture capital would be global. that was not a widely shared view. i think none of us would argue
that technology and innovation is global. we are not trying to time the market. a lot of the outsider capital out of the market may be a really great time for the kids to build. >> there are 30 companies that are somewhat public companies. where does the ipo window reopen? >> it feels like it would be longer than the previous downturns given the multitude of factors at play. we are thinking certainly well into 2023. >> all right. thank you for joining us. i know it is a very early morning for you there in new delhi.
francisco. we will get back to the latest with you on twitter and -- with elon musk and twitter. ed ludlow is becky with the headlines. we read some of the fine print now. >> twitter is saying that muska did not have the right to walk away. they say he agreed to a certain amount per share. in that he can't walk away. we have this court filing we can bring up on the screen. musk believes that he is free to change his mind. trash the company, disrupt its operations, destroy stockholder value. and just because the stocks are generally falling down in the sector, he can just have buyers remorse is that basic argument. >> most lawyers we spoke to with bloomberg -- it comes down to material adverse effect.
musk's argument is that there wasn't enough information handed over. musk could win if what they shared did alter the value of the deal. >> silver coin capitals may have a million dollars for your startup. they say they are looking to fund outlier founders and teach them how to make their ideas a reality. we have the partner at sequoia capital here to tell us more. walk us through division for arc and how you think that sets apart which sequoia is trying to do here. >> this is the new seed stage catalyst for founders. we offer a $3 million investor for sequoia, foundation building
topics and you are working alongside a community of really exceptional people who are at the same stage as you. we know it takes a lot more than just money to create a category defining company. we know that founders want company building help and sickly had the privilege of working with some of the best founders for 50 years. we try to take all of those lessons and mistakes, the journey of all the founders we worked with and everything from product to customer obsession to culture to how to hire. that is the seven weeks of jampacked programming. >> applications are open now until july 22. >> that is right. >> you have a few more days. when you say outlier founders, what do you mean? sequoia has said a lot of innovative things in the past. are you trying to find unearthed entrepreneurs and new ideas?
why do you think you need to do this as well to find those outliers question mark correct the venture market has been continuously evolving over the years and i think there are a lot more founders coming into this case as investors and a lot more product thinking and innovation. what can a firm offer beyond money? that is actually a commodity. we think about what founders need. there are customers who work backward from that and we figure out what they need help with. the number one request we get is help with actual company building. we really try to boil down everything we have learned over the years through working with some of the best into the core things -- when i was a founder, there were things i could have gone back in time and told my younger self about how to run a company. that is a lot about what they teach. >> every company gets a million dollars. what is the chance for a follow on funding?
>> it varies from company to company. some are a little bit further along and we put $1 million into their existing feed ranch that they be erased. it is a little bit of a range but the focus is really on how to build an enduring company that lasts for decades, not just how to get to the next quarter or fundraising milestone. there is a little bit of a range. >> given this very tumultuous macro environment we find ourselves in, how was that changing what you are looking for and looking to find at the seed stage or early-stage? sequoia really runs the gamut. >> i would say we have seen multiple impressions and valuations come down. i don't think we have seen ernie's compression yet and i think consumers are feeling poor and that will trickle down into the way people spend both on the
consumer side and the enterprise side. that said, sequoia has been designed to outlast -- we are looking to look beyond those short-term fluctuations. the thing we were looking for before which is founders that have unique insight to have a lot of brick to endure these ups and downs as well as just the difficult journey of starting a company and we are looking for march market share. -- for large market share. >> how bad will this be for tech? >> i think that like i said, we just started to see multiple compression and not yet ernie's compression. >> what do you mean by that? >> we basically -- the public market has returned to historical valuations and
revenue multiples but earnings -- i don't think we have seen the full impact of consumers feeling that gas is really expensive. i can't buy as much enterprise software. i think that may still be coming. that is what we have been forecasting for our founders. some founders are in a great cash position. when we see in these down cycles tends to be that hiring freezes -- everyone pauses and reflects and it actually becomes easier to get a higher concentration of talent versus before when you were competing with every single startup. you would see everyone is hiring and now i think for the mission
driven and people were venturing out of jobs now, it is actually possible to get greater concentration of talent and some people are in a not so great cash position and may need to take more drastic action. >> sequoia is famous for its goodtimes message that you give to entrepreneurs at the height of the financial crisis. grexit was called adapting to endure. it was about how to build those long-term enduring companies and live the cycle. the founder of sequoia had a license plate that said the root -- verruckt on it. that is german for crazy or insane. this is the excess, the high
multiple parties. then there is a correction. a sharp correction were people tend to freeze and then course correction and it slowly comes back and that it happens all over again. that is what we have been seeing play out over decades. it is compressed in certain industries. the best companies are often formed in that correction phase. the founders want to start their company no matter what. they are courageous and brave and they have the grid. they have fewer competitors. we believe that this is a great time to start a company. >> last year, simple -- sequoia made a big break to do away with traditional venture-capital timelines. and keep money invested longer and companies, your portfolio companies going public. some of these have had a tough time in the public markets.
airbnb, doordash, robinhood. is that strategy evolving at all given these tumultuous times and are lps reacting at all or asking for their money back or out sooner? >> the purpose of the sequoia capital fund was beyond the short-term fluctuations. it allows us to be long term partner, the shareholder, the long-term care partner, we don't have to immediately distribute. it also lets us generate superior returns for our lps. we get to capture the compounding value. google, cisco, airbnb, the companies who had the pleasure of -- we had the pleasure of working with for a very long time, we think we are in a better position to manage distributions for our lps.
>> i have to ask you, you mentioned you are a founder, there has been a lot of concern about women backsliding during the pandemic. i wonder if those concerns continue. is there concern about women backsliding in a downturn? are you concerned? do you see a bright future? >> this is a deeply personal issue for me. i was a female founder. i was working on a product targeted at women and it was very hard to fund raise. i never pitched a single woman investor. and i made the connection that the complexion of who makes funding decisions affects what problems and what customers get served in the world by the tech industry. that is part of what motivated me to cofound along the other amazing women and female founders. i think in some ways we have moved forward and certainly the
it does offer a wallet option that allows employers to pay for travel out of state as well as cover everything like fertility benefits. i think a lot will fall on some of the female founders. overall, i am optimistic in the long term but it is always multiple steps forward. >> i appreciate you sharing your thoughts on all of that with us. you have a very long history in this industry. great to have you with us. >> coming up, bitcoin minors feeling the heat with the texas power grid near the brink. we will talk about the impacts of the heat wave in the lone star state that has become a hub for digital assets. that is next. this is bloomberg. ♪
>> we have been talking about startup funding. talk to us about where the tide is going here. click think about the massive disconnect you are seeing here. if you have tens of billions of dollars in the first quarter alone, the funding of the startups themselves has really fallen off and you really start to see that in the second quarter of this year. we are funding drops by 31% according to facebook data. there are some venture capitalists that gave more specifics on what that looked like.
at the seed stage, it is not as dramatic a drop. you can see a 50 or 70% drop in valuations. that is what is making venture capitalists so nervous here. you don't want to catch a falling knife. until you see more stabilization in the industry in terms of where prices will go as well as the shakeout in terms of the product that will make it through the cycle, it will be hard to see tons of money being put to work so we are seeing some high-profile names still being funded. i know we spoke to magic union. but these are one-off situations and not the norm in this environment. like the definition of crypto we will have to see if that will
change by any means. we put money toward projects that are -- you see giving a crypto become a popular environment here. you could maybe see things start to change in terms of definition of crypto but we are looking at the price of bitcoin. it is still king here emily. when you prices stabilize? until that happens, it is hard to see this work. >> thank you for that update. coming up, calling for computer education. we will speak to the ceo about the company mission to boost computer science in schools and all the ceos that have pledged their support. this is bloomberg. ♪
the united states have joined an effort urging governors and state education officials to ensure that all u.s., elementary and high school students have the chance to study computer science. this comes as computer science has skyrocketed. you have been doing this now for nine years, trying to get computer science taught in schools. how much progress has there actually been? >> now it is at 51%. we have tipped it so that if you are a parent and your child does not teach computer science, we want to get to where even if all the schools teach it, we want to
reach every kid. that is the next decade of work, to get to every single student in every school. questions thinking of hundreds more who have signed this letter, what will this actually accomplish? >> it is not surprising to see people like tim cook or bill gates or mark zuckerberg saint schools should teach peter science. what is truly unique is the leading companies and finance, even in coffee or toys, starbucks, nike, hasbro, these companies, nordstrom, ups, walgreens all getting behind computer science to show the computer science is no longer just about jobs at tech companies because every company is becoming a tech company. every couple he has data scientist needs. >> have you gotten a response from the people who have the capability of changing this and adding it to a school
curriculum? >> we have early signs. all 15 governors are actually getting together and we expect by thursday they will make an announcement on this topic. we don't know exactly what it was able to early signs are that it will be tremendous. i am hoping to see all 50 governors united. this is an issue that everybody can get behind. >> you have changed your story over the years with us but i want to remind our viewers that your school did not offer computer science. but you were still able to get access to a computer and it changed your life. if your school offers computer science, do you think your life would have been different? >> ahead of father who was a physicist and a mother who was a computer scientist. we were growing up in post revolutionary iran during the war. if you think about the most underprivileged kids in today's world, the kids were getting left behind. what can we teach them in school that gives them a pathway ahead? or the confidence that i can
build something, make something, i can be a creator. kids want to create. right now they are becoming creators on tiktok or instagram because that is easy. if they knew they could create apps or software, there is a whole world of opportunity to open up as well. >> what are schools getting right when they are trying to deliver this? what are they getting wrong? i have multiple children in school. there is this thirst for more computer science. i even wonder if they are doing it the right way. >> what are the challenges to make sure that computer science is taught creatively? what app do you want to create? what game, what website to draw out the natural creativity and when it is taught that way, it brings diversity into the field because more students are interested in creative stuff than just doing work. >> hello before we get to 100%?
>> i am pretty confident that by the end of the decade, we will. there are now five states that require computer science for graduation from high school. when you do that, you get to 100% and you fix that gender gap in the racial gap. >> this is the secret everything. >> in south carolina for example, the first date that required computer science for graduation, there is more women in south carolina learning interscience than the five states surrounding it. even though those five states have five times more young girls in school, south carolina is beating the total of them. >> how do you think this will impact all this? are you concerned that other things will take priority? >> i think this is the best time to invest in this because many states have surpluses they can spend on education and any location that is worried about economic downturns can bring jobs to the region and in the
past, if you wanted to attract high income jobs, in the world of remote work, also needs to do is educate someone and the jobs will come to the region. even if it is a small town or a verbal region. they can bring high paying tech jobs. >> it has been wonderful to see your progress over these nine years and we will be watching for more. thank you for joining us in the studio. that doesn't for this edition of bloomberg technology. we have a big interview coming up. the ceo of ibm will be with us. we will talk about everything from the downturn to the supply chain and more. you don't want to miss it. i am emily chang in san francisco. this is bloomberg. ♪
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