'Bloomberg Technology' Full Show (01/23/2023)
I'm Caroline Hyde Bloomberg's San Francisco studio. Welcome to New York together. Back in San Francisco, I made love late. This is Bloomberg Technology and how nice it is to have you here. So many headlines to pass over many of the market moving when this some feel good right now around technology. Despite layoffs, despite everything that's going on and it is centric to being in San Francisco this week with all the earnings to come. First and foremost, we talk about valuations here in Silicon Valley. Microsoft's 10 billion bet on open eye
is just a start of the artificial intelligence revolution. Microsoft's chief product officer is pitching as, quote, the defining technology of our time and more local to us. Elliott's multi-billion dollar stake in Salesforce comes as a wave of activist investors push companies to act more on behalf of their shareholders. And we now know what Apple's mixed reality headset is capable of as the company explores a new approach to eye and hand tracking controls. But first, let's do it. Let's get to these markets because there's another buoyant day and you called it is the mood music turning once again into the green S&P 500. The Nasdaq both up more than 2 percent
for the Nasdaq. So big tech on deck as we know the earnings that come and people are feeling good about it. We're seeing in particular stocks related to chips getting a real bed. We're up more than 5 percent on the Philadelphia Semiconductor Index.
Why Barclays had a no time really upgrading some of the views on Qualcomm. So may have a key chip makers that helped fuse some interest in these particular stocks. And I'm looking at your 60 40 working for you once again. As equities push higher, bonds are actually selling off. Maybe there's still a little bit more cautious about what the Federal Reserve has in store for inflation. Remember, we go into a silent period for the Federal Reserve ahead of their next meeting come January 30 first and the day after when we hear where rates will go, most of the market hoping it will just be a quarter of a point rate rise.
Now, let's head on and have a look at what else has been getting a bit up and some of those more risk on kind of trades. It's a walk. If, you know, over the course of two days, remember, Bitcoin never sleeps, doesn't sleep for anyone. It and Crypto was trading on Sunday and it was down more than 2 percent. We managed to offset most of that and we're only off by about 90 percent over the last couple of days. But today was another day of green crypto bitcoin on the upside. But we're three weeks into the year.
There's still some feel getting around some of the more downtrodden corners of the market, speculative, high and multiple RTX. But the news cycle continues to be a driver. You think about the specific names that I'm looking at, starting with Microsoft. It is really interesting when we got that confirmation that Microsoft is investing multiple billions of dollars into open a ISE Bloomberg ad reported, according to a source, it was in the 10 billion dollar range.
We saw a pop in the stock in early trading, actually a more muted response one. All told, by the end of Monday, session up a percentage point. And then there's this idea that from worst to first, as one person put it, on the Bloomberg terminal, some of the most downtrodden stocks and particularly high multiple names where valuations come down and catch me a bit, both revered and lucid.
The two top performers on the Nasdaq 100 on a percentage change basis, really getting some momentum as we go into their earnings season where speculative tech hasn't had much love. Well, maybe we will now. And Salesforce, it's probably the story of the day, right? ELLIOTT Investment management, according to a source, has built a multi-billion dollar stake. What was so surprising for me, Kyra, is the lack of surprise around this. Very few sell side notes out, but those are saying actually, given the kind of downward long trend on this stock, we're not surprised. I'm looking at the forward 12 month PE
of Salesforce. It's down their financial crisis level. Valuations have come down. It's relatively cheap. But what Eliot seems to be pushing for is shareholder returns and a focus on profit. Yeah. Well, on they all focus on profit is going to be the watchword throughout the week, the month, the year. Ed was just discussing how the focus on investment management has had us all eyes on the tower that is here in San Francisco, of course. What is Marc Benioff? Where is his focus now and what does the activist state really mean for his business? Swooping in, of course, after layoffs, after deep stock plunge and the enterprise software giant nearby Atlanta. Baker is more a renewal Yanna.
As I sit here in San Francisco and I think of initially the worry many, many had for Marc Benioff, perhaps as we'd seen some of the other executives shed away, many thought maybe that meant he was going to be doing more, deal making spending more. But does an investor like Elliot mean that's off the cards? At this point? We don't know exactly what Eliot is pushing for, but we have seen their public statement that was pretty complimentary of Marc Benioff. So it doesn't look like it'll be a nasty fight. That said, Elliott Management has taken on so many big tech companies over time that have made so many changes. So there could really be a range of things that they would like. I think ultimately they want the stock to go up and that they believe there's probably ways for shareholder value to be improved. You know, Liana, this time around,
Salesforce Elliott's name crosses the Bloomberg terminal monthly. It seems to me, you know, the cadence of their investments. What is their track record on working with companies? You said you read the statement from the company.
Deep respect for Marc Benioff is the word they used. It doesn't seem hostile. It seems that. To work with Mr. Benioff over at Salesforce Tower and one of the reasons they might be wanting to work in a friendly manner with the company is that I've been joking with sources that Salesforce is now a hedge fund hotel. There's know first there were star
board. Now there's Elliot Inclusive Capital. Jeff Adam's firm. He used to be a value act as a mayor. And then there's a mystery activists that we're trying to figure out. CNBC has reported on that. So there might be a sense that maybe Eliot's the white knight activist to work with. In 2019, eBay fell in the crosshairs of Eliot and also star board and they gave them both board seats. So that's another example that we're
kind of looking back in history to see what could happen here at this point. We don't know if Salesforce is willing to offer those board seats, but Jesse Cohen, who is the one leading the investment for L.A. management, he sat on some pretty big boards. And Indiana just put into perspective 20 to the last quarter. We saw so many more activist stakes really being built globally, worldwide. How many offenses are there? I can already think of what Disney's out there in Intel, what other companies. So you now there with Disney, that's
kind of the big one that the whole activist community is watching because that looks like it's headed to an actual shareholder vote at some point. Elliot doesn't usually get to that shareholder vote. So I'd be surprised if that's where Salesforce is headed. But right now, we're entering this what we call proxy season. These nomination windows are starting to open at various companies. So we're seeing investors come in and say, hey, we want to nominate shareholders. Salesforce is window is coming up in
February. We'll be watching that really closely. All right. Bloomberg is the owner, Baker, who leads our deals, coverage, investor coverage. Thank you so much. Caroline, welcome to San Francisco. If you jump in a cab NIKKEI, you go downtown, Uber or Lyft, whatever. No, no preference, but you'll see the Salesforce Tower. And this is what jumped out at me on the
Bloomberg terminal, added a single chore about Salesforce is marketing spend as a percentage of its sales. You start to realize what it is that invest. Activist investors might be getting at there almost 50 percent, right. Of that their sales spend being on
marketing, which is kind of mind blowing a little bit. Right. But then they have potential. You know, this is a software company margins.
It also, though, that spend as long as you want on Dreamforce. I think the last time he was at Lenny Kravitz was that these things that RTS basically is a massive music festival. It does a lot for the San Francisco ecosystem as well. Those sorts of events, they bring people to gatherings which have a city that they're really taking on the road to the marketing spend is about being in people and in person and sharing ideas. But the party gonna want him to pull back on that. And this is a company that has had to pull off on the layoffs front, you know, in imposing hiring other areas and where emanate has been just absolutely right.
The other big story we're watching here out on the West Coast is, of course, Microsoft, an open A.I., a reported 10 billion dollar investment set over a number of years, which opened and Microsoft is now concerned, Soul told in a blog. The company saying Microsoft will involve invest multiple billions of dollars. Remember, this is a company that makes more than a million users just within days of launch. Back in November. And we've already started this debate. Where does this all fit in with
Microsoft strategy? Where does it fit in in our lives? The use of chat, G.P.S. and other ISE is a fascinating one. And also, how does this help Microsoft gain market share from the likes of NWS? Now, I know. Amazon is the power player when it comes to the cloud provision overall. The fact that Microsoft wants to intertwine opening I into every of every part of the business, it wants to set itself apart as a cloud offering an opening ISE such kind of way to do it. What's so interesting, though, of course, is the open. I I once upon a time was a not for profit.
Now a capped profit company. So this deal is 10 billion that's being invested. It's kind of awkwardly done, isn't it? Because you're kind of being ISE offering in kind.
Basically open A.I. is able to use the firepower of Microsoft's own cloud provision. So it's a really significant investment from Microsoft. Seven days off today have laid off 10000 staff at the closed profit motorways where basically any money to open a ISE makes, which is by licensing the tools to software developers. They put back straight into the development because they still feel like it's in the nation state after they've paid investors, after they've paid their dues and after they pay their own employees. Yeah. But I mean, we've been trying to
identify what is the next big company for the next decade, the next 20 years. You know, it's a lot of debate whether actually open a ISE it and the emphasis of men. And the new site was amazing. And you're right, Microsoft are already implementing this and Azure cloud the customers you can use charge IPT Or even daily on the imaging side.
So it's out there in the real world. You and I've played with it to a lesser extent, you know, here on the show. But interesting, a lot of math on Chuck G.P.S.. That was my learning, my podcast learning over the course that we can add. I can't tell you how nice is back in San Francisco writing fact that Chuck.
He wouldn't tell you about my family, my son's middle name is Francisco. That's how much the city because of your time here. Yeah, well, let's make the most of it while you're here. Despite somewhat difficult news, the art of covering the shape is very different time from 2016 now. Well, it is, because coming up, layoffs continue in the world of technology climbing to fifty seven thousand this month. This is Bloomberg. We've not been positive on big CAC for a year, year and a half.
We do believe the 23 there is still some deflation to come out of this market after the zero to 20 21. I actually think that the tech sector is one of the few sectors that is really discounting a recession in its outlook. The longer the macro volatility persists, we do expect early stage in seed to start to see that crunch that the late stages have seen.
There is gonna be some amount of normalization of the demand. Quite frankly, we in the tech industrial would also have to get efficient rates, not about everyone else doing more with less. We will have to do more with less. That was just some of our recent guests
discussing the state of the tech sector. And another week, another day, more headlines all to do with layoffs. This Monday, Spotify, 6 percent of staff, 600. And then just as we were getting ready for the show, Gemini, a second round of 10 percent.
Yeah, I'm just keeps going on relenting. Really this, though. Again, it's about a CEO trying to own the mistakes made by saying his was, well, I was too ambitious. They put out a note from Daniel talking about the fact that they once again hired too many, but also invested too far, perhaps in the fact that the executive change is going on at Spotify.
They want to have more efficiency. That is the watchword. This is a debate how much emphasis you put on layoffs announced as layoffs and acted. You know, we had the Challenger Christmas data and people say, well, those are just announcements that are not fulfilled. And there are others out there in the market who say there's bright spots here. And that's why I'm delighted. Say we can discuss with Spencer Green, managing partner at T SBC, which actually is invested in C state companies over the last five years, is a good example.
You invested in Xoom 2011 before they were even had a product. Really? And that was coming out of a financial crisis or a downturn. When you see these headlines crossing the Bloomberg terminal time and time again, Spotify 6 percent, the latest as somebody who invests in companies that actually may still be trying to hire. What's your reaction? Well, I mean, nobody roots for a recession, but it's definitely good for the seed stage economy.
The seed and you heard one of your your prior guests talking about a crunch. And see, we see the opposite. We see that brand new company formations are booming and it's become much easier to hire staff, to hire staff, to hire talent. We had a year ago what I would call a double whammy, that it was hard to hire people. And also these big companies were investing in some of these innovative projects. As they cut their investments, they
leave room for competitors and they put more talent on the street spend. So it delights. Have you in the studio? Caroline Hyde. While we're together in San Francisco,
it feels like the story is he's not just playing out here. The reason you're here is I tweeted over the weekend, hold on. Is there anyone that's kind of actively trying to go out there and hire all these people? Because we do hear that. But we're looking for some concrete evidence that it's true. I mean, are you saying to your portfolio companies, hey, now is a great chance to get top talent? Absolutely. We have portfolio companies. We have one here in San Francisco called
Zoom Transportation that runs electric school bus services for San Francisco and for Oakland and for Los Angeles and so forth. They're hiring. We have a recent company we funded called E Bots that does assembly robots for electronics. They're hiring. Angle Health is hiring. You know, lots of our portfolio companies are hiring.
And a year ago, it was much more difficult for them. It's interesting and I suppose in many ways this is why the relentless headlines that we talk about hung tens of thousands being like go at Metro and the like aren't showing up in the federal data because many would say anecdotally it's not top very quickly. They get great severance and then they move on either to be a at zoom. One of your new ventures at the transport company. Or are they becoming entrepreneurs
themselves? I'm yet to see any sort of charts on new business formation. Are you starting to hear from these people getting great severance packages? I know that they probably want to remain at a company and employed, but if they are let go. Are they willing to take on a risk and build something? You know, it's a huge point. And I think it's definitely fueling a lot of the entrepreneurial activity, because what you have is, you know, as you said, folks who maybe have a little bit of money, they've gotten a severance. They've been doing very well over the last few years working for these larger companies. And in some cases, you know, the Silicon Valley esprit and what's happening in San Francisco has always been so many people that you meet here.
They have another startup going on on the side. So there are people who are. And so if you think about like who's going to get laid off, some of these people, maybe you were not rated as the best employees by their big company employers because they were giving half of their time to the company and a half of the time to their startup. So now you say, well, gee, I've got a little extra cash. I've got all my day free to work on my startup. Not a bad situation. Is that an element that you will saying
this worldwide is very much where the talent that you're currently hiring and seeing hiring from. People want to remain remote. Are you seeing some of your startups that are S.F. based hiring talent? Being let go in Austin, in Miami, where is this all going on in my. It is much more remote than what it used
to be. You know, we've been you know, I've been in Silicon Valley since the 1990s. And it was definitely, you know, you'd set up a facility. Everybody would come there. You even had, of course, you know, companies like Facebook where they were relocated by their investors to Silicon Valley because the story was, oh, yeah, we love you, but you can't do it from where you are. It's not so much a destination for companies. I think a lot of companies are formed here still.
And the companies that are formed here have done so much more with remote talent. And some of it's offshore. More of it now is actually onshore. But outside of the area, the conversation. Caroline keep having is that across the
startup cause, the opportunity of 2023 is going to be seed stage, earliest stage investments. And actually it's the growth stage funds keeping their powder dry even though they raised all that capital right over the last two years. Is that a fair interpretation of where the industry sits? Certainly, I think so. I mean, it TCC, we do seed stage primarily and we feel like the market's coming to us because they need cash or. Well, the market's coming to us in the
sense that it's just hard to make money at late stage right now. If you have a company that was overfunded at too high of a valuation a year or two ago, yes, you can do a down round, you can get a better price, but then the employees are not happy. So you lose momentum in the business. So even though you might normalize or rationalize the pricing of the company, that doesn't mean that it's going to take off and be successful. So I would hate to be writing hundred million dollar checks right now. I think it's a difficult task. ISE checks are you write. We write a million dollar checks into early companies and you think about something like Zoom. There's a photograph which I wish I had
with us, but a photograph of of the same founder, Eric Cuban, two engineers in our offices in 2011. That was the company. It was himself and two engineers. PowerPoint deck. Right. Fantastic ambitions. Those are the kinds of folks that we're funding right now. Tweet us off to the show when you're done. Absolutely. Yeah, I think by LAX and Qatar.
They haven't been a one trick pony to SPC managing partner. He's spent 16 joy having him right here in the studio with us. Nice tweeting from you to get him on as well. Meanwhile, coming up, Apple's headset. It's gonna be controlled by a has my eyes. Well, details on the mix reality device next on price point. It bring back.
NEW DAY, new week, new scoop from one Mark Gurman. Let's talk about new details that are out about the highly anticipated 3000 dollar mixed reality headset by Apple, of course, is according to sources which boast an eye and a hand tracking system that could set the technology pretty much apart from rivals. Right. Mark, you've got this news story and just tell us about how this one's gonna be different from the other ones in the market. Yeah, that's exactly right. So this is Apple's next big thing. They've been working on it for north of seven years at this point.
They have well over 15 hundred engineers on the project. They're getting ready to unveil it in the next couple months to put it on sale later this year. The factories are going to start churning them out starting at the end of next month in China. But the iron hand control, right. Some devices on the market right now already can read your ISE and have hand control. But with Apple's device, it's the way they work together.
That makes it so special. If you remember the touchscreen on the first iPhone, that was a big differentiator. The crown on the watch for this, it's iron hand control. So let me give you an example. The way you control the device is you can just look at something, whether you want to launch an app, whether you want to swipe through a list or toggle a setting.
Right. You look at it and then you pinch your thumb and your index finger together when you're looking at it to launch it, just like on a touch screen. You tap what you want for on a mouse. You point the cursor toward it. And then you click, this is you look and
tap your fingers together. So pretty nifty. I guess the question is, how do we get to a three thousand dollar price point? Right. How does this headset differentiate itself from met his quest? The other real question I have for you is like as an iPhone use, I am thinking about MMO G or MIMO GS and Animal emerges right where you use the camera to kind of map your face and interact with that technology. Is this the kind of extension of that? Yes. So in terms of the price point, well, it
has 14 cameras. Right. You have a bunch of cameras outside. You need cameras that can look forward and cameras that can look up. And you'd cameras that could look down right down to see what your legs look like and what your body looks like in order to recreate what you look like in virtual reality. For that feature you alluded to in Face Time, there's also cameras and sensors inside the device to be able to read where your eyes are looking at.
In addition, there's two 4 K displays, right? You know, the for KATV you have maybe in your living room. Well, there's two of them, mini ones inside of the headset to perform virtual reality, the cameras. Also, in addition to being sensors to see what everything looks like, it's a way to create augmented reality. Right. Azar usually uses clear lenses, but in this case, it's going to use cameras to create sort of a fake of A.R.
VR mixed reality, reality effect. It's pretty cool in practice, I'm told. The other interesting thing to your point is you're going to be able to replicate a lot of the features of an iPad on here. Right. So you'll get safari mail maps, calendar health tracking even. There's also a feature where you can hook it up to your Mac and you sort of can control your back and then you can see what your MAC screen looks like in virtual reality while using your keyboard mouse and track that mark. Very briefly, how much is this moving
the needle for Apple? Valuation perspective from an analyst perspective, the people ultimately think this is gonna be a game changer for them. So in year one, they want to sell about a million units at three thousand dollars. Right. And I believe that's about three billion dollars. So in terms of overall revenue for Apple, it's not going to move the needle in the short term. But long term, this could be a multi hundred billion dollar market in Apple.
Given the layoffs at Metta and the hardware changes at Google and Amazon, right. Well, they seem to have a clear runway for not only VR, but other hardware products in the future. Right. Bloomberg's Mark Gurman another day, another big escape, as Carrie said. Now, coming up, the showdown over censorship hits the Supreme Court. This is state laws in Florida and Texas. Challenge editorial discretion at big social media.
More on that next. Plus, no more access to tick tock universities in Texas. But what exactly are the cyber security risks associated with it? We'll have a discussion next. The Supreme. Welcome back to Bloomberg Technology right here from San Francisco. Caroline Hyde and I made Love Luna is a pleasure to have you back out West back in the Bay Area. We got to talk about social media and we
got to talk about regulation has been a big theme in the show for a number of days now. The federal government and several states have raised cybersecurity concerns, as you know, carry around Chinese owned tick. And as we reported last week, dozens of U.S. schools and U.S. universities had moved to ban the app from campuses, hoping to prevent it from spying on students, asserting the Chinese government could access the private information of its users. Let's bring him, Mickey Ireland, to talk about the potential risks associated with the apps. He's global cybersecurity architect and security evangelist over Checkpoint Software Technologies, which is a cyber security solutions provider.
I mean, you heard the backstory. Caroline and I have been trying to make sense of this for a number of days now. Campuses moved to remove the ability to access take talk while on campus through the Wi-Fi network. What we're hearing from the users is they don't understand the risk that is being warned about here. Is there a risk?
Yes. Yes. First, I want to say thank you so much for having me and Checkpoint. We believe that everyone deserves the best cyber security. So I will say this for raw end users that are unsuspecting or really don't understand the risk. Yes, there is risk.
And this is why we are seeing organizations come together. So agency's enterprise like nonprofits for actually doing a joint responsibility for risk. Right. So we need to approach risk as that. We have privacy and we have security.
We have privacy for data for protected data for privacy in and user data and points also for corporate assets. We also have to protect our network. So people are riding the networks to get to these applications and our networks are vulnerable to attack by malicious actors and malicious spread of malware. So and then we have corporate assets and university assets in this case to protect. So it is a joint responsibility and we
do need to help students understand the risk in and really educate everyone. Mickey, going back to basics, the argument is that ultimately personnel in mainland China might be able to access the personal data of ticktock uses in the United States. The proposed solution from tech talk is to house the data of U.S. users on Oracle servers based here in
the United States. Is that an acceptable mitigation of risk for the industry professionals like yourself? I think I hate to speculate about that, but I will tell you that our checkpoint research, we actually did extensive testing. We're super curious back in 2020 about was Tic TAC. Were they delivering consistent policy and security, privacy and security, rather. And we did find several vulnerabilities.
Our research team found cross site scripting for their ads. We actually found a way to kind of circumvent registration using a mobile device and use it as a mess, you know, spoofing or registration. There is API vulnerabilities. So I guess ultimately what I'm saying is
we need to demand of organizations that are offering social media applications in other applications, primarily for mobile devices, that they actually have a consistent security and privacy policy that can actually address NIKKEI compare ticktock to other virally growing social media companies of old. How many vulnerabilities does it have Visa V competitors? I really I mean, across the board I'd refer to our research team for that. I think that they tic tac to their right to justice tic tac. They actually did fix the vulnerabilities that checkpoint research team presented to them. And did we work together in 2021 to help
them then test these vulnerabilities? I think from my I guess just ultimately what we need to understand is from an attack surface, these applications are going viral. I think Tic TAC now I just install it again to task this over a billion installs or download. There's USA Red. There's now currently over 100 million
active users and globally it's billions of people. Right. So I think that we have to think that these these social media platforms are going to be like a huge tasty attack surface for malicious actors. We also have to take responsibility for our own personal data. When we talk to us about that, because you say you're a self-proclaimed global cyber security warrior.
Be a warrior for us. If I can't leave it up to tick. What do I do to protect myself? Thank you so much. I am aware and I wish everyone would be. And we're asking more people to join the warrior bandwagon. So please do.
But what you need to do, first of all, when you download anyone, I mean from anyone. If you go to the app store and you download social media applications, go read the details, what is their security policy and their privacy policy? What kind of data they collecting on you? And then are you actively looking at the permissions that you're granting to this application when you install it? If it's like click, click, test, you know, touch, touch. And I just gave you access to my phone, my camera, which you're doing videos on Tick Tock. In other applications, your camera, your microphone, your location, all your contacts. I think your calendar. This is probably too much information to share. Then you also fail to read the five fine
print. What are they saying they're doing with analytics that are that are being collected from you? And then who do you trust? Right. Ultimately, you have to have a trust in the application.
Any software can be exploited. They're never going to be perfect. Make you buy it and keep worrying about being away. Checkpoint Global cybersecurity architect. Great to have some time with you, meanwhile. Well, let's head down to D.C. now because we're going to talk much
more about regulation of social media. The US Supreme Court in this instance is actually ISE the Biden administration for input on Florida, on Texas laws that could sharply restrict the editorial discretion. A social media platforms like DAX. Greg Stoll has the latest for us on basically censorship concerns on either side of the aisle.
Greg, just talk us through what, in fact, the Supreme Court wants to hear from the administration. While the Supreme Court wants to hear advice on should we take up these appeals? There are appeals for both sides. There are two cases, one involving Texas, one involving Florida. And basically these are laws where the conservative governors and the conservative lawmakers of those states are saying, we're worried that social media companies are discriminating against conservative silencing conservative voices. So we're going to get in there and we're going to oversee their kind of their content management and say, you know, impose a lot of new requirements on them. And the social media companies are
saying that's a violation of our First Amendment rights. Greg, looking at your reporting on the Bloomberg terminal, you know, you have this Texas set of laws and the Florida sets of laws, the Texas set seem to be the most sort of sweeping in terms of the actions they take against social media platforms. Tell us what that based on what do they require social media platforms today? Sure. The biggest provision in the Texas law would say that that social media companies can't discriminate on the basis of viewpoint. Now, there are a few exceptions to that. But basically the idea is you can't take
something down if it's coming from a conservative voice, if you wouldn't take something down coming from a liberal voice and the social media companies say, hey, that that might make it impossible for us to stop bullying, to stop spam, things like that. There are a number of other provisions involving disclosure and operational requirements as well. And the Florida law has a whole series of of particular requirements that are in some cases the same, in some cases different. One of the ones that a federal appeals court struck down or at least blocked, said that social media companies have to provide a thorough rationale every time they make some sort of content management decision. And to that end, thus far, these laws have been sort of put on ISE, shall we say. Greg, what's the next step? When do we have ultimately from the Supreme Court? Yeah, they are on ISE. Although a federal appeals court upheld
the Texas loss of the Supreme Court turns away. That case, that law will go into effect. So right now we wait for the by the administration. It will probably take several months to say what it thinks the Supreme Court should do and then probably possibly the end of the court's term in June. But more likely, I would say when they come back in October for the next term, the court will tell us whether it's going to take up these cases because of the widespread impact, because of the lower court divide over these issues. There's a pretty good chance the court
will take it up and then those will be huge cases for next term. So a lot of work cut out, I would say. We thank you for your time and we'll continue this really important conversation later this week. We're going to be having none other than the FCC commissioner, Brandon Carr, all about, of course, a focus on take took a focus on social media here in the United States this Thursday. Meanwhile, and coming up, how one
startup managed to raise funds and secure a multi-billion dollar valuation spice and down rounds despite a tough market for startups over the last year. This is Bloomberg. Welcome back to Bloomberg Technology. We do so much in terms of public market
coverage, but Ed, you're so smart keeping us up to speed in the world of V.S. venture capital startups. What's up with what's happening this week? You think talking tech? We need to focus on what's happening in that part of the world because there are so many headlines starting with Sequoias Regional ARM in South and Southeast Asia. It's weighing up special audits of several of its investments in the region following allegations of financial irregularities.
Some portfolio companies, including zoo lingo and go mechanic over in Europe. Highland has raised a new one billion euro fund that aims to invest in private software and consumer Internet companies in Europe. The firm got a focus on growth stage companies.
Interesting that they've raised and close that in this environment. And finally, fintech to H.R. outfit deal says it's reached two hundred ninety five million dollars in annual recurring revenue by the end of 2022. But that was a jump of more than 400
percent from the end of 2021. The company also confirming its valuation has reached 12 billion U.S. dollars Carol. Fascinating that we're getting more focus on valuations where they're being held at after the funding from last year.
Let's talk about it with the co-founder, CEO Alex Poses. Alex, it's great to have you on from Deal. And I was on the Web site. Everything you need to scale a global team. Just talk to us about the need for your services and an environment where unfortunately talking more about layoffs than scaling. How is your H.R.
offering being well scaled in and of itself by other companies right now? Of course. Well, first of all, Caroline Hyde, thank you so much for having you today. Very excited to be here. Know deals started as a company that enables you to hire globally. So let's say it's more Bloomberg wants to hire someone in South Korea and then we'll have the structure to do that just yet. There will enable you to hire someone as an employee there and give them the best benefits in a day. As the company kind of grew, we realized that we could do so much more. Right.
Expanding globally as a company is so key. And right now with the latest release, we basically become the force that age our solution for you to really go global. I'm looking at the global companies, Calvin Klein, Nike, they're all U.S. space, but you've also got 521 Shopify Canadian business. Where for you do you look to increase your own footprint in an economic economy that worldwide is slowing down right now? Yeah, I mean, you know, we've always been agnostic when it comes to regions, right? We want to have the best companies. Obviously, I think over 50 percent of our business comes from the United States. And then, you know, we really have a a
global footprint and heads of countries in every country actually, and really has a global business. You know, being European, myself and my co-founder being Chinese. Right. We really wanted to be able to cover most of the companies from the get go. And that's what we've been able to do so far. So today you have just companies, but just companies from all over the world and across all segments using the IBEX. I want to go back some of the numbers in the timeline at this.
There were reports last May they were raising funds. You closed that deal, I believe, over the summer. You've announced today a valuation of 12 billion dollars.
That is completely at odds with what Caroline and I are hearing every day on this show. Founders finding it hard to raise money down, rounds being more common than valuations growing. Was it a difficult environment for you? I mean, you know, for us when we closed that round in June, really do as not to raise money for the capital.
But, you know, we get to work with the team at Emerson, which is very impact driven. Right. And that's what we wanted to do, a deal. The mission of the company is to help hundreds of millions of people get to work for the best companies in the world. So it was less about the money, but more
about the people. And that's why the valuation was a bit easier to get to. And we've been really focused on the business itself. You know, we're nonstop from September. We actually started being a bit that positive.
So we have a lot of money in the bank. And really it was about getting to the right number for us and bringing the right people. That's interesting. So you're saying essentially that, you know, from very recently you've started to be profitable with the other financial that you disclosed is that your annual average revenue growth essentially jumped 400 percent from the end of 21 to the end of last year.
Are you worried now that when you see layoffs, freezing of expenditures in this environment, that you might see a delayed response from your customer base as well? Well, not exactly, because the way we think about it is there's going to two trends that are happening. The first one is more and more companies are cutting custom software and they want to consolidate their entire infrastructure. And we have this new product that we announced today will help them by being the H.R. infrastructure and the force DAX solution, not just global hiring, but really everything for them. The second part is, as a lot of business are starting to grow global, they realize that a lot of their customers, San Francisco, right, hiring engineers at 500 K didn't make a lot of sense for their business and for their unit.
Economics of thinking about expanding that footprint and hiring people in location ways a bit more affordable is definite trend we're seeing from most companies, and some of the largest ones are coming to us to understand what is the best way to do so. What is a globally focused business right now, Alex? Because many would say the economies A. Two, and particularly as we see yet more geopolitical tension, whether it's Europe versus Russia, whether it's China versus the US. You said your co-founder is from China. How do you see companies wanting to scale their footprint at the moment? Are we being limited to certain spheres? Not really. I think, you know, she's American, but originally was born in China. And, you know, the way we look at the
world, whether it's her or myself, is that it's less about Dow Jones. It's more about the talent. Right. You just want as a company to be able to hire the best people wherever they are and bring them to your company. Right. So I haven't seen people think about regions about where he comes from timezone. Right.
And how you want to build the culture of the company and how you want to be versus you in office and not in office. But when it comes to those yours, we'll see. Maybe Russia get less, less, less hires at the moment. But in general, most people have been, you know, very geo agnostic when it comes to time. Alex, what about your own company and its health? You know, Caroline and I are talking about tens of thousands of talented people in technology being laid off. Are you one of those companies that is
currently hiring? Yeah, I mean, for sure, we are 2000 people across 100 plus locations now. We've always been as efficient as we could and being a bit as positive now enabled us to really be able to scale further. So, you know, we have over, I think, 500 plus million dollars in the bank. We're generating money now, so we'll keep hiring to really bring the message and solution to market and really help companies go global. So, you know, great people send that send them away. All right. Deal co-founder and CEO Alex. Thank you so much for sharing valuation
news, but also giving us insight into what it's like to run a company right now. And for me, that's the takeaways. Well, well and good. Having the voices on the public market, investors, the activists talking about what they want from a company when you're at the helm, trying to raise money, trying to make decisions. It's interesting to see somebody so confident when there's a lot of negativity out there. Well, I mean, a bootstrap business to begin with. Y Combinator, well-known Silicon Valley focus of startup culture. I'm interested that he was talking
already all the lexicon that invested public investors and private investors want to hear Avatar positive. Right. Efficiency is hiring across the world to ensure that they're basically making sure that they're efficient right now, that they're not over scaling, over hiring, over indulging, which is what so many of the big companies have been doing basically, and having to rewind. To be fair, the other big theme that we've heard is that investors look for quality in times like these where, okay, actually being profitable for many companies is a distant dream right now, could be an attractive investment. But if you're scaling a revenue for one, a percent of them in a year's time is doing.
Meanwhile, coming up, we've got so much more to be checking in right here in San Francisco because testifying just down the road. You know, Musk, of course, is over in a court over that 2018 tweet saying that he wanted to take Tesla private. More on that next. Let's bring back. Now with us both stood right here in San Francisco.
Let's do something very local for going viral because the Tesla fraud trial is underway right here in this city and that Elon Musk continuing his testimony right on Monday. And he said, look, the Saudi Arabia sovereign wealth fund, quote, unequivocally wanted to give him the money, but there was no email about it. He just said it was that word was as good as that. But of course, it's all in defenses. Some tweets he sent back in 2018. That's part one of the defense. The other thing and it extends from Friday is that Elon Musk kind of rejected the idea that his tweets influence test the share price. Naturally, he questioned how seriously anyone took his tweets.
But having since bought Twitter, he sorts about Twitter being a very trustworthy, reliable source of news. So what it does in journalism? Yeah, well, we did what we always do in this show. We asked our audience to react to the quote that he put about whether or not his tweet should be trusted. He said, just because I tweet about something doesn't mean people believe it will act accordingly. Do you agree? Negative 47 percent say that's insane, of course. They felt that he puts out tweets that
people believe they act on. I mean, there has been criticism time and time again of the way in which he's perhaps talked up certain companies, certain crypto assets, goodness knows what the right poll move. And they make asset allocation decisions of what he tweets. Yeah. And why he doesn't use a regulatory
filing instead of a tweet. Tweet is his method of choice. Many politicians would agree was a tweet that almost broke the Internet today, as well as Eminem using not Eminem, the rapper Eminem is what you eat. Look at this. We'll bring it up on the screen in just
a moment. Eminem's is reconsidering its spokes candies. You see the former spokes candies along the bottom that they have a new spokesperson.
Yeah. And apparently everyone can rally behind her is kind of what they say. Maya Rudolph. They say, We are confident Ms. Rudolph will champion the power of fund to create a world where everyone feels they belong. Of course, many think this might be about the Super Bowl ads, arguments out from the Super Bowl. Let's wait and see if this is real. I mean, MS. Are determined to break the Internet.
We didn't break the Internet. We talked all about it. That does it for this edition of Bloomberg Technology Tuesday. Well, so much more in terms of interactive advertising. Bureau CEO David Covid is going to join him. Thanks again. We're going to recap everything on the
podcast, Spotify. This is Bloomberg Quicktake.
2023-01-24 15:22
