tv Bloomberg Technology Bloomberg October 11, 2022 11:00pm-12:00am EDT
emily: this is bloomberg technology, coming up tech stocks turn sharply lower as the semiconductor slowdown takes the industry down with it. we will have more on the warnings from chipmakers and when we might see a recovery. plus the gig economy faces a new reality after the labor department proposes some gig workers declassified as employees, sending shares of bloomberg down more than 3%. we will talk about what it will mean for uber, doordash and lyft. we get a glimpse into mark zuckerberg's vision for the metaverse. the company is leaning into the virtual work place with new partnerships with microsoft and zoom. microsoft unveiling a microsoft
headset and showing off his avatar legs. first let's get a look at the markets with taylor riggs. ouch, tech going from bad to worse. taylor: it feels like deja vu when i sit here. it was another day of significant pressure for the major averages. s&p, nasdaq and the chipmakers as you mentioned, off another 2.5%. yes, the bond market reopened today but yields are climbing, that is pushing further pressure on the long-duration assets. change up the board. i wanted to mention more about the chipmakers. a four day losing streak for the stocks. that is the big chipmaker index underway. this is the worst losing streak in the last four days alone, you are looking at a 12% selloff. we will dive deeper into the story. further fallout from the restrictions around the chipmakers and what it means for some of that business and that
revenue in china. i wanted to take a look at the nasdaq 100. this was a five day losing streak for the nasdaq and nasdaq 100. some of the worst losing streaks we have seen this year. look at the key technical levels when you think about hitting the lows we had earlier this year. now, going back to lowe's we haven't seen since march of 2020. from a technical and fundamental standpoint, nasdaq and the tech big companies also being i'd and -- looked at. let's look at these individual stocks. i'm going to drop down to the bottom two, with uber and lyft. huge research notes coming out today, saying that they are looking at ramifications, the labor department on the federal level, issuing guidelines on how to free gig workers if they are not contractors. how does that impact the revenue
and the expenses of these companies, uber and lyft a few of those under pressure today. emily: new improvement on deja vu. hundreds of billions of dollars have been wiped off the chip industry, following a worldwide drop in demand. for reference, taiwan semiconductor, the most valuable chipmaker in the world, suffering its biggest drop since 1994. for more, let's bring in our -- in woo jin ho, our bloomberg intelligence senior analyst, following all of the movement. we were talking about a potential glut in supply for months but it seems to have taken everyone by surprise, this idea that we did not have enough and now we have too much. why has this happened so fast? woo: thanks for having me on again. a couple of things. i think the recession environment and concerns going into 2023 have started to chip
the end markets, servers, pcs, dvds. any electronic goods, that seems to be going back. we saw evidence of the last quarter with respect to amd and intel. they made their first rounds of cuts. when we thought it was over there was another round of cuts by micron as well as amd. later on with the geopolitical risk, that's also waiting. emily: would you say a downturn and chips is a leading or lagging indicator for the rest of the technology industry? woo: if we look at pre-covid the chipmakers were an early cycle and has always been an early cycle industry. it was the first one to come down, once covid hit. once we figured out covid was not going to be as bad as we initially thought. they were the first wants to -- ones to come back up from a
valuation perspective. it's going to take a while for estimates to catch up. i know there were a couple of rounds of cuts on the chip sector already. even at 14 times, it's still not a trough multiple going back to 2018. it's still 17% premium to trough multiple. there may be another round of earnings to reflect 2023 expectations. emily: which companies are in the worst positions based on which chips they make and the most in oversupply? woo: sure. if we think about it from an end market perspective, companies that are over indexed are the consumer side are hurt. one of the reasons why gsmc is hurt so badly is that some of the leading chip manufacturers rely on gsmc. apple, smartphone manufacturers, as well as amd, for their pc chips. those three buckets alone are going to create that slide.
i think, if you think about companies that manufacture their own chips, you have companies like analog devices that do not have as much consumer exposure but they have a fair amount of consumer exposure, as well that may see a negative impact, on -- companies like nvidia that has warned on consumer side. emily: woo jin ho, thank you for helping us work through all this information. our bloomberg senior intelligence analyst. a new proposal from the biden administration classified millions of gig workers as employees, rather than independent contractors, this could have extreme repercussions for uber and lyft. which plunged on this news. tell us what this new law involves? jackie: the proposal is still being considered. it is essentially a new outline
for how companies can determine whether their workers are independent contractors or employees. which carry certain legal and wage benefits, things like dental and medical, we enjoy those as full-time employees however independent contractors like delivery drivers do not have those same benefits. this new proposal is effectively making it easier for companies to look at this certain criteria some of it which has been refined from the trump era role that it is replacing how integral are workers to business overall? how much control do they have over their earnings? how much control do they have over how they can do their jobs? these types of questions, which are really new ones, compared to the obama era rule, which it is mirroring, it is more gig workers friendly.
uber, lyft, doordash instacart all have workers clamoring for these types of benefits. it's a positive for them. emily: so, what happens next? jackie: there is a bit of confusion around just how much of an impact this will have. if you look at the statements uber and doordash and lyft released, they were not surprised. this is something they were expecting since day one of the biden administration. what this does is it's more of an interpretive guidance. it will not wipe out the gig worker classification system. what it is doing is saying, look this is how we are going to look at it from here on out. and it has more ramifications in litigation, if someone sues the company. this is the basis that can be used now. for companies, we look at uber who has had to deal with this in
london when the supreme court over there ruled they had to classify their london drivers as employees. they're not totally new to the impact of what it will take if they have to switch the model around a bit. but it's going to be somewhat of a hybrid from what legal experts, as well as analysts are saying now. emily: in the meantime, uber's former security chief is dealing with legal issues found guilty of hiding information in a hacking attack in 2016. pretty astounding verdict here. what was your reaction to this? what has been the reaction internally and within the industry and in terms of what it means for public transparency? jackie: it's funny because that ruling actually, that trial, was ongoing, while uber had a recent
hack for -- it was there slack systems that had been hacked by someone. it was incredible to see the different reaction the company had. there was a blog post that outlined day by day, what the impacts were to customer data. coming out of that trial it is two different ubers now. that trickle down into how the company handled corporate transparency, now under new leadership, you have seen that shift whether it's through hacks or safety reports, how they view climate progress transparency. the company is really more focused on putting everything out on the table, which is a good thing, especially for customers that want to rebuild that trust, especially if they were around during the early years.
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mark: we built workrooms as a first step towards a virtual office in the metaverse. it feels more like being there than any video call. you see more people's body language and the special audio gives you a sense of each person's place in the room. you can have side conversations with the people next to you or gesture without being there together. it's hard to fully wrap your head around this until you experience it. emily: just some of mark zuckerberg's vision there for the metaverse. among other news, at the event, he announced partnership with microsoft and zoom, unveiled a $1500 headset and says meta will add legs to avatars. let's bring in kurt wagner and david kirkpatrick. what are your big takeaways today, is that the avatar legs?
kurt: the avatar legs was an easy one, little bit better than floating around in the metaverse the headset was sort of the flagship that was announced. it was a high-end vr device. it's, as mark said, it is tailored to working professionals looking for higher end clientele. a lot of the technology they showed off towards the end of the presentation is the stuff that is most interesting. this is lifelike avatars or even the ability to use your wrist as a controller. the problem is it is years and years away. you're asking people to be very patient. you're asking investors to be patient as they work on the stuff. i think that is where the issue comes in. the technology is really far off.
emily: david, the stock dropped almost 4%, why do you think that is? david: well, one way to look at it is, this is a company with 3.5 billion people in a business that is generating $40 billion a year in after-tax profits, for a business that sold 15 million devices in a metaverse product that has 300,000 users a day. that is what the management is putting his primary focus on. if you are an investor in a company that has misguided priorities, i think you would be disappointed. emily: is the workplace ready for metaverse technology? david: no. it is not. it's simply not. we don't want to meet in the metaverse. it's nice, zoom and microsoft,
has talked about making it possible for 3d versions of their products. but that is not what most people want to do. the company is behaving as if it were a game. everything today that was talked about, was as if the company was -- four gaming, gaming aesthetics. that isn't what this company is. it's a scary, scary situation, this company has put itself in in my opinion. emily: kurt, what is your response? kurt: i think david is right. as i alluded to the tech school, , can they convince investors that it is worth waiting 10 years for? as david points out they have a , business here that needs attention now, which is the advertising business. they're dealing with a real serious threat, right here and now with tiktok. and young people not necessarily wanting to use their apps. when you think about that that
is the current state of the business and you look at what the priorities seem to be for mark zuckerberg, it doesn't align. i imagine there are people, given the stock movement today, that saw this and thought man , why are they spending so much time and money on this problem, when have others that need to be addressed? emily: we spoke to frances haugen last week, the facebook whistleblower. she had an interesting thought about sheryl sandberg leaving the company. the company being fully in the hands of mark zuckerberg. take a listen to what she had to say. >> mark has branded himself with people who tell him the same stories over and over again, facebook is a mirror. it doesn't have responsibility. all of the things that were being complained about have been present, we are just showing them to people. we have no power. emily: david i'm curious what
your thoughts are on that. david: i completely agree with her analysis of how they see this. to the degree zuckerberg thinks about the socio-cultural impact of the products he has built, he is still in the mindset of making the world a more open and connected is really cool. he thinks the metaverse is the next stage of that. he doesn't want to take responsibility for the ongoing problems that he has not resolved. i continue to think, the reason the company changed its name almost exactly a year ago at the height of frances haugen's revelations about errors and unresolved problems was to change the narrative which to their credit was successful of ash as a pr move -- as a pr move but is not successful as a business move long-term. now they are stuck with a new name and a sensible direction
that is not really rational. so, they have serious problems. if any other companies had these problems, the ceo would be out. this is a company with no governance, with the board that is just a paperboard, because mark zuckerberg controls it. he controls all the shares. he controls a majority of the shares. he can do whatever he wants. that is a very dangerous situation. it's dangerous for investors to be in this company, even though it's pe is lower than any other tech company by substantial margin. not not a good investment going forward. emily: that's in part because the market caps on dropped so much, since frances haugen, and since the company changed its name. $345 million company david. how bad would things have to get before mark zuckerberg takes it private? david: that is something i have thought about as a possible remedy for the problem the company has because then it can
address the serious challenge without the stock market breathing down its neck and judging it with the voting machine of the stock every single day. they have a lot of expensive problems to fix. it would be a lot better to do it if they were private. i think you would have to get a lot worse. look, the stock is down from almost a trillion to $350 billion now. it could go down to $250 billion, at which point it would not be irrational to take it private since he controls it. emily: kurt, we have talked and seen so much about their vision for virtual reality. how about augmented reality? how much farther does this go? kurt: we saw some glimpses of that in the headset. they're calling it mixed reality. but it is this idea that while you're wearing the headset you can see the world around you, overlay graphics, or digital objects on that world. that is the vision that
zuckerberg has for ar glasses. we might wear them like reading spectacles. you will wear those and that is how you will interact. i think that david's point, what is interesting is, mark zuckerberg was like your betting on me, i have made pretty good business decisions for 20 years. and that is why he has control and that is why people invest in his company. but over the last year he has raised questions over whether this is a pet project of his or whether this is a good use of funds and attention. we will not know that for 10 years. that's the big trouble. it's hard to say whether or not he is right. emily: a very long time, especially if you are an investor thinking about the near term. kurt wagner and david kirkpatrick, thank you both. we will be right back with more of bloomberg technology. this is bloomberg. ♪
emily: more allegations in the elon musk twitter battle. bloomberg has learned before the billionaire revived his proposal to buy the social media company, he accused twitter of ordering a whistleblower to destroy evidence. peter zatko said he burned 10 handwritten notebooks and deleted 100 computer files at the request of managers as part of a $7.8 million package. the sec is weighing in an investigation of the creator of the popular yacht club nft. the sec is whether the nft should follow the same disclosure role. it is among the highest profile nft and has been traded at $2 million. sec has cases against them.
including d $15 million fund. coming up, start getting strapped for cash and it may not change anytime soon. we will talk to the ceo about what they are seeing and how they're coping in the current environment, next. today was amazon prime day, again. it's the first time the company is hosting two big sales the same year. why some of those discounts may be deceiving. this is bloomberg. ♪
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after vc spent years aggressively buying tech startups the current environment, and share prices of even mature tech accompanies have dim the prospects for start ups that were working towards their own ipo. what does that mean? what does the future hold for them? let's talk about that with the ceo of the equity management. caritas has fascinating -- carter -- caritas -- carta has fascinating insights into these pre-ipo companies. what is happening inside of these companies now and what is the mood like? henry: it is a tale of a few stories. it is a story where a lot of these gross companies are in a frozen capital market where they cannot raise capital now because they cannot justify the prices they raised previous rounds. they're not willing to do down rounds because these rounds trigger anti-provisions for early investors. so they are stuck in limbo with these high prices that they
priced six months a year ago, but the public market will not support it and they are trying to do. in the early stage of markets, they are a lot more active. prices are resetting quickly. we are seeing investors active. it's a very interesting market, we see this in our business a lot. where early stage ventures are active and there are active and there is still a lot of deals happening. emily: hmm, what you see happening with hiring and layoffs? we had a guest a few months ago saying he expected to see two to 3 million job cuts across the tech industry. is that even close to happening? henry: not even close. it's interesting. in h one of 2020, when he saw the massive set of layoffs happening, we saw headcount in our customer base grow 7%. in the first half of this year we have seen 12% growth rates. it's not as high as the womb years of 2018 at 2019, when we are growing at 15% to 20%, but
12%, is not as bad as 2020 or great as 2019 but we are seeing a lot of growth being led by taxes. if you look at other sectors like health care, biotech, they are suffering more. but it trends strongly. emily: how do you square that with -- we heard from so many big tech companies, freezing hiring, slowing hiring, there be more deliberate, do the numbers translate? henry: yeah. what is happening the public are -- markets is translating into the private markets. earlier this year there's been a massive capitulation in investors saying all of these companies are overpriced, we don't know which companies will survive, which companies are going to succeed, which companies are not. what is happening now is the emergence of investors, citing, well all companies are not created equal, some will grow
better and survive to this period and others will not. we have to sift through the companies and decide which one will be the winners. you're seeing the bigger companies and the smaller companies that are transactional revenue based, where the revenue can be volatile, are more investors than contractual revenue businesses. when you look at the software business, where have contractual revenue and high dollar retention and high growth rate, they're doing quite well. they are starting to recover. but you see how their transactional businesses, based on media or other types of revenue models, they are being punished more severely. you are seeing a sector or rotation between the higher quality companies in the lower quality companies. that is trickling into the venture world, where you are seeing investors more selective in the business models they are willing to support, rather than support anything that seems like a great idea. emily: in the meantime, carta is expanding internationally.
i understand you bought a three company since june? how are you expanding so quickly in the middle of a downturn? are you seeing potentially opportunistic valuations in there and taking those opportunities as you see them? henry: last year, we decided as a board and company, that we were going to get more aggressive internationally. we have always believed the problem we're solving is ownership and companies, it's a global problem that we can solve across the world. obviously every region has its own nuances and regulatory requirements. we are not experts outside of the u.s. what we have seen, over the last two years, the founder, is all of these carta startups in these different regions. we found the carta of the u.k., of china, south korea, we found
the carta of india. we found the carta of africa, in all regions. almost every developed country now, we have some aversion, some founder has started a carta for that country. we have been talking to these founders and some of these founders we have invested to help support them in their region. others, including the three you mentioned, we have bought the companies after getting to know the founders and falling in love with the team and the product. really, their goal is to build out what we have built in the u.s. we build out for their region and their local market structure. then start connecting these things we have a global platform for equity management. it's an amazing time to do m&a. as prices are resetting, capital becomes more scarce. founders are more willing to look at opportunities to join larger companies. we have a super active team.
as you mentioned we have done at three deals in the last two quarters, which we are excited about. nothing to announce yet. we have more in the pipe as we look across the world and try to find the carta for every country. emily: pivoting to crypto for a moment. you introduced a crypto fund administration whereby anyone can run their own crypto fund on carta. explain that and what the end goal is? henry: we have 60% of our revenue, that comes out of the cap business. 30% of our revenue comes from fund administration where we manage the accounting and investment schedules for venture funds. one of the big things that is happened in the last few years is the rise of crypto, crypto investing. we have done two things on the crypto space. one is we built the software that allows venture funds that are raising crypto funds which are different than traditional
venture funds because they can now invest in tokens and take both equity and other token like investments alongside their equity investments. it's a slightly different way to manage venture funds. we have built software to help those venture funds and on the start upside, there's all of these startups that are raising effectively, capital tokens, what we call a token capital. who owns all the capital in the initial start up? we have one operating both the cap table in carta. emily: henry ward, ceo of carta. good to have you back with us. thank you for stopping by. coming up, could nft's mean the end of a password era for good? unstoppable domains is next. this is bloomberg. ♪
emily: time for our crypto report. we're looking at diversity in web three, with the leading platform unstoppable domains, which announced a new goal, and distributed millions in nft. domains to help them build and control their digital identity. here is the vice president of unstoppable domains, sandy carter joining us for that. i want to talk about the password and username issue, which we have been using ever since the internet has been around. how is unstoppable domains
trying to change that? sandy: thanks for having me, emily. unstoppable domains presents a digital identity to every user. that digital identity can be used to log into over 400 different applications, also be used to supplement emails, encrypted email as well as build a website. it completely changes the model on its head uses one way to get into an application and then that digital identity travels with you and that data stays with the a which is such a powerful proposition. i believe digital identity and ownership is not something that is nice to have but is a human right. emily: how realistic is this and how far off is it? a world where we do not have to use usernames or passwords at all? sandy: i think we are beginning our journey. i like to say that we are in the
dial-up phase of web three. there's so many capabilities, you can already do with your digital identity and log into a set of applications. but, the field is really limitless. i believe in the future, we will be storing health care data, education records, tickets, drivers license in there. it's the right time to get started, playing around and experimenting with your digital identity and to own it now. since you own it you do not rent it. it's very powerful to have a today, as were getting started, versus waiting until it's too late. emily: i know you have been incredibly active getting more women into web3. you have this announcement focused on latinas. talk to us about what this means and how your hoping to increase diversity in this world for an increasingly important population. sandy: yeah.
well, you know, we are early. because we are so early in this initiative, i think it's important that we secure all voices. based on data from mackenzie and deloitte, we know that diversity needs more innovation. inside of web3 and the metaverse, there's only 8% women. we will not get the powerhouse we need if we stay homogeneous. in march of this year, i announced an initiative called unstoppable women of web3, whose goal is to educate the next generation of women. and to help more women come into the space and because i had so many women ask for education and in their own native language, that is why we are announcing today that we are bringing the
education to our latina population and providing that education in spanish. emily: now, we heard a lot of people, melinda gates has expressed concerns about women backsliding as a result of the pandemic and now a macro economic downturn. we have heard concerns about this within the broader tech industry as well. do you have concerns about women in crypto and web3 backsliding or losing some of the progress they have made, given the dreadful economic conditions that we are facing? sandy: it is interesting. i actually got to meet melinda gates and chat with her about this. i think the output that is coming out right now in terms of the amount of interest in web3, conferences, so money questions about what is the metaverse, how do we get started, conferences
around the world are just bringing in so much interest. so i think for web3 and the metaverse, i believe if we can provide the right set of education, we can really accelerate the number of women in the space. the number of developers alone in the web3 space has increased by 66% recently. with the interest now, is that perfect storm. that early days where we can get more women interested, understanding what it is, so that they can jump in and have a really big impact. i think now is the impact -- time, given that we are so early. emily: sandy carter of unstoppable domains. thank you for joining us. coming up, is amazon prime day still worth it? what to expect about the holiday shopping season, next. this is bloomberg. ♪
emily: today amazon's second prime sale of the year, the question on everyone's mind is, is it still a bargain? new research suggests, maybe not. joining me now for more, a marketing professor at the university of florida, college of business, along with our own brad stone . talk to us about your research, the main thesis seems to be that the discounts are not as big as you might think. >> yes.
this is research i conducted with my co-author at the university of south carolina and my colleague at the arizona state university. we invested the products in amazon and we found a new product in the pricing. the seller simultaneously increased the price and displayed list price and made an announcement of price discounts. so in this way the price increase is framed as a discount. the solar -- buyer sasol the discounted saw they could get a bargain but they paid more than the consumer who bought it before. before, the seller display the discount. emily: so you are paying more for something you think you're getting at a discount? brad, is this a long time amazon strategy or is this something new?
brad: i might call it a long time retail strategy. i don't know that it is unique to amazon. i think you can see it in department stores and even discount stores the idea that discounting something and making the discount and illusion, inflating the actual retail prices, is a tactic across retail. it's probably harder to control at amazon, given more than half of the sales will be brokered by party sellers who control their own prices. emily: go ahead. it seems like we saw some lackluster interest, the second half of the year. i am wondering why that is, is it because the discounts are not really discounts? is it because they did this once this year? is it because we are going into recession and people don't have as much money to spend?
jinhong: what i'm talking about is not that they didn't get a discount. if you are charged at a higher price, when you are told that you get a discount. so, usually, the seller displays the list price or make a comparison when the actually , drop the price. because of the price promotion. they may not give you the discount they claimed. in this case, the seller increased the price and tells you of the discount. then two days later, they will remove the discount claim and the dropped price. this is different. emily: brad. talk to us about the actual interest we saw this time around. this whole idea, split it into prime days. the thought was that it would drive more interest. i wonder if it's not working.
brad: i would say to is probably too soon to say that today was a failure. remember this was not a prime day this was a prime early axis -- access sale. it is this new creature. it's hard to compare to the summer sale. it's weird timing. no one is holiday shopping yet, at least if you are a normal procrastinator like me. other big sales days like cyber monday and black friday are around the corner. the numbers don't tell us a consistent story. we can it tell, twitter mentions and chatter about the sales are down. there is one research firm that says sales today were similar to the previous 30 day average. you have another firm saying that the average order sizes are way up and that the big sales, the items are amazon gift cards and echo dots, the small alexa devices. if the purpose of this for amazon is to deepen its
relationship with prime customers and get more prime customers before the holidays to lock shoppers in they can , declare this as a success before they move into the holidays. emily: is there something you think needs to happen here based on what you found. there has been a lot of scrutiny about the way amazon prices certain goods. but not necessarily the project -- practice you're talking about in particular. do we need some regulation? jinhong: the attention is required it to this new practice. the regulation is focused on deceptive pricing, on illegitimate value of the list price, whether it is inflated or fake. this is a different practice this is the manipulation of the , timing of these pricing reductions. the seller synchronized the price increase with the pricelist and the comparison.
that is a new practice, and that is misleading for consumers. emily: what is your take on the signals we are seeing about shopping and consumer sentiment now, heading into the holidays? brad: it's tough. you've got the rise in cost of food and fuel inflation, folks are pulling back, there's no question that overall u.s. spending over the holidays is slowing down. adobe would be about 2.5%. previous years 8%, 9%, it was , higher because of pandemic fueled fear out of walking in the stores. retail has been an anvil for amazon. you got a successful advertising business, aws, even some successful business around third-party sellers and commissions. retail itself, the online stores, they were flat last
holiday season. it was down 4% in the last quarter. i think amazon here, which has guzzled up shares for decades is probably not going to be doing that this holiday season. emily: brad stone, along with jinhong xie, professor at the university of florida. fascinating research from you. we will keep watching to see how this prime day unfolds. that does it for this edition of bloomberg technology. wednesday we will have amazon's head of prime. to talk about prime day 2.0. and holiday shopping sentiment. don't forget to check out our podcast where every get your podcast. i am emily chang in san francisco. this is bloomberg. ♪