Transcripts For BLOOMBERG Bloomberg Technology 20240713

Justh to reopen california today taking smaller steps to ease its lockdown later this week. The first state to shut down its in our lets bring Bloomberg Markets reporter, taylor riggs. Why did tech outperform the rest today . Taylor a lot of the optimism new yorkn newsom, from governor andrew cuomo, seemed to turn that around in the final hour of trading. , all of theoned direction today. Fangs,daq along with the the peak out performers. Microsoft, amazon, apple leading those gains. Needp hearing that you that leadership for this rally. Emily Warren Buffett seemed to be driving a lot of the pessimism, saying he got out of airlines entirely. Walk us through how his remarks may have played out today. Since down the lowest september of 2013. Warren buffett said he would rather take losses in those positions. He said, the airline business, and i hope i am wrong, and i may be wrong, but it has changed in a major way. He said the future is much clearer to me. 137ew his cash pile to billion. Opportunities with which to invest, probably the scarier comments that we have heard in recent weeks. Week. More earnings this beyond meet, i know you have been highlighting some of the stories out of that company, lyft. , and taylor let me start with beyond meat. It is a story of the bulls and the bears. You have had three analysts download downgrade this to a sell rating. Concerned about the food service business. Spacetail the grocery has also been under pressure. As i noted last week, there is case, that we bull are worried about food sourcing, these illnesses that keep them from animal to human transition. A lot of this might create the opportunity for labbased meat in a clean, controlled environment. His knee plus, positive earnings from netflix, disney plus, we know this is not a zerosum game. There is some demand for multiple different streaming services. Disney plus could be a winner. Moffettdo have craig today downgrading the stock to neutral. Theme parks and the studio business could be a major headwind. Parks obviously remain closed in many parts of the world. Meantime, to continue our coverage of big tex, we decided to take a closer look at how the sector performed over the past week. Certainly not immune to the covid19 crisis. Tom facebooks user surge to as vanishing forecast, closer spotlight on amazon. Streaming giant netflix kicked off big tech earnings by reporting a search in subscribers in the first quarter. The company cautioned that growth might not keep up, predicting that netflix and disney plus with vast libraries of content, will start to rise above the rest. The streaming efforts will settle out into two dominant players, netflix and disney plus, with the others finding out sooner or later that they were better off being suppliers to those platforms. With an 18 jump in revenue. Here is facebook cfo dave wing. We saw a pullback in advertising at the end of q1, starting around when the who declared a pandemic. Early march, in the first few weeks of april, we were flat yearoveryear. Inly also seeing a jump revenue but warning on ad sales was alphabet. The ceo saying, we are focused on longterm opportunities. ,earch, cloud, Machine Learning hardware. Despiterevenue rose supply chain disruptions early on in china. Partook told us the last of march and first part of april were very depressed and we have seen a pickup relative to that in the secondime part of april. Lastly, amazon, perhaps the most visible tech company in the covid19 crisis, reported shrinking profits amid circumstances that Ceo Jeff Bezos called not normal. The company said it is spending 300 million on inhouse virus testing. A big jump at whole foods stores. Amazon, howok at ponds continue to be a bonanza. Joining us to discuss the current state of the text or is j jacobs, head of research at global x etfs. Obviously, a lot of these companies in your top holdings. Lets start with facebook and alphabet, because they are of course both impacted by a coming add slowdown. It is all about the Current Quarter. How concerned are you that we will see the full impact of the atdemic and it will not look not look good in the shortterm, it is very easy for companies to dial back advertising. They can do it on their computers in a second. Many corporate that feels like they need to be in cash preservation mode can dial back their spend. You are seeing Phenomenal Growth in googles cloud, growth in users on facebook which has been slowing down for many quarters in a row. I see bright spots which think will continue to shine a light on these Companies Even if that means they have to experience a little bit of turbulence. Emily you also hold apple, tesla, microsoft. Which of these companies would you say you are most concerned can weatherr they the crisis . Jay they will overflow they will all face unique. Tesla is a company that has been valued like a Cloud Computing carsny, but creates that traded some of the lowest valuations on the planet. If you look at apple and microsoft, they are hard companies to fire. If you are a consumer whose bone breaks during covid19 you will get a new phone. If you are an advertiser, you probably will not fire microsoft. Emily what do you think the second phase of the pandemic looks like from a tech perspective . Obviously, we saw the last quarter. What is the Current Quarter ultimately look like and what trend will you be watching for clues as to what the Balance Sheet looks like for the next few weeks . Jay we will continue looking very closely at the cloud space. A lot of companies have seen acceleration in acquiring new customers. We want to see how capable they are at holding onto those customers. We look at a company like netflix. They had a huge quarter in new users. The most amazing thing for us is how little money they spent to get those users. 100 per quarter last year. In previous quarters, they spent almost 200. This quarter, they spent 30. That makes them very profitable when they look at how they will break even with that customer. Does that user growth continue in a lot of these Cloud Companies like netflix, and how long can they hold onto these customers and continue to generate new revenue from them . Emily we have been digging deep into the Netflix Library and discovering some old shows. What about when that stream of new and old content begins to dry up . That impacts not just netflix but disney and all of these entertainment companies. Have a prettyo deep of content on the bench still. Ist is being disrupted now 2021 content. What i would not look past is that people will develop content in this environment. Maybe it is not incredibly high production value but there are a lot of creative people out there with a lot of time on their hands. We might see some new techniques that people use, but netflix is certainly in a good position to continue releasing content. Global xy jacobs, etfs. Coming up, we will hear from salesforce chair and Ceo Marc Benioff about a new suite of tools they are releasing to help companies reopen safely. This is bloomberg. Berg. Force. Com is salesforces latest effort to provide companies with a suite of tools to provide companies with readiness to get back to work quickly. I spoke earlier with the salesforce ceo, marc benioff. Marc this is my first pandemic. I am trying to figure this out as i go. Was 90ot know what ppe days ago. Now we have done everything we can to make sure that our hospitals are wellequipped. That is also why we built this suite of software, because we believe this is important. That is why we will have a chief Health Officer at salesforce. I dont know how we can manage a Large Organization around the World Without end. Are we in a recessionary environment . Are we in a depressionary environment . We are taking actions to make sure that we can be successful but also that our customers can also be successful. Emily what is your assessment of how the Trump Administration has handled the crisis and what needs to be done . Marc it is hard for me to opine on government response. I have a lot of empathy for the situation. As i said, this is my first pandemic. Not only for our government but a lot of governments around the world, it is their first pandemic. For those who have been through pandemics before, like south korea, taiwan, japan, they have done a much better job because this is not their first time at this. In south korea, we have employees going back and making sales calls with customers. On may 11, in south korea, we will reopen our offices. They are ahead of us. They are modeling for us here in the United States how to be successful in the future. I am confident, as we have our second or third pandemic, i hope we will do a much better job than with our first one. Emily youve been incredibly active on the ppe front and called on other companies to make a 90 day no layoff pledge, which you have made yourself. What happens after 90 days . This has now become so much more severe economically. Can you reup that commitment or do you think that salesforce may have some layoffs of their own . Marc when this first started and we said this would be three phases. The first phase, this 90 day basis, which we are now getting ready to exit, we really called out and said, lets not lay off anyone in the first 90 days. That is difficult for a lot of companies to do but a lot of companies followed us and have made their own 90 day pledges. It is amazing. Now, we have the ability to come back to our offices fully intact as an organization. That is important for us and i think for others. For those who have let go of people or are experiencing a need to rehire, i hope that the government in the second phase gives companies incentives to rehire aggressively. I think that will be extremely important. Emily going into this, you have been very outspoken about big tech, facebook in particular, very critical about facebook. Obviously, washington has had its eyes on big tech. There is this discussion about whether this will make some of the Big Tech Companies stronger. I wonder if that is something you are concerned about . That big tech could become even more powerful as a result of the crisis. Marc it is very important that every company is doing what they can to improve the state of the world with their organization. When you are the ceo of a company, you have to ask, what am i doing to improve the world for my customers, both commercially and philanthropically. We have seen with other companies, and specifically on social media, with the spread of misinformation, giving people for health information, it is giving people poor health information, it is unacceptable. I was encouraged when i saw several organizations back to make sure that the information getting out to people was true. You cannot be giving people the wrong health information. The government has to step in, regulate these social media companies, hold them accountable. They should be accountable for saying what is true. Emily lets talk about what is next for salesforce. Some of your customers are like marriott and other companies that are really struggling. We are already seeing a wave of negotiations trying to renegotiate with their landlords, renegotiate on software contracts. The ceo ofe been salesforce now for more than two decades. This is not my first economic crisis. When we started our company in the early 2000s, we went through a very severe economic situation. We changed our contracts and cultures so that when we got into a situation exactly like this, that we could operate with integrity. We will make adjustments and always focus on what we can do to make sure our customers are successful. Salesforce chair and ceo, marc benioff. Musk standing by his pledge to sell most of his possessions and two houses already on the market. This is bloomberg. Some breaking news. The retailer Neiman Marcus could file for bankruptcy as soon as this week. The Company Closing in on a bankruptcy deal with its lenders. Pimco among those lenders. These lenders would provide Neiman Marcus with a bankruptcy loan. Lash debt and hand over control to the lenders. Meantime, i want to talk a little bit about elon musk, who tweeted last week that he thought tesla shares were overvalued. The Stock Plunged about 10 . It is backup about 9 . He is making good on his promise to sell his physical possessions his homes ono of the market. Elon musk has five homes. Two of them are on the market. Is he really selling these homes . He seems to be, according to zillow. It is a pretty hard time to sell houses right now. California is still largely under lockdown. I think he is trying to make good on his tweets that he is i guess downsizing is fairly vast carbon footprint. Emily these are not cheap homes. We are talking about a 30 millionmansion, a 9. 5 ranchstyle home. We are never sure what is going butnside of elons head, saying the stock is overvalued, being concerned about the shutdown of the factory, concerned about the coronavirus pandemic being overblown. Dana the backdrop of all of this, one is that musk has a pagelucrative compensation where he gets more Stock Options in tesla when he hits certain milestones. He should get the first trance roughly 750rth million any day now. Workers are furloughed, stuck at home, but he is also about to grow his personal wealth and his stake in the company by a pretty significant margin. I am not entirely sure what set him off on friday with the tweets, but he is saying that he is getting rid of all his possessions. What does that mean . Is he unloading all his stock . Just his houses . What about the jet . He also owns a james bond submarine. He is a billionaire. Interesting if he goes super monastic in terms of his lifestyle. Emily he also tweeted that his girlfriend is mad at him. It was not clear what that was about. He has a lot going on in his life. Isnt he expecting a baby any day . Are pregnantgrimes and apparently the baby is due today. I think a fan tweeted at him earlier and said, any baby news . He responded, and the next few hours, which kind of indicated it was a scheduled thing. He already has five boys from his marriage to justine. This would be his sixth baby. Emily we wish him luck and congratulations. Thank you for the playbyplay. We will be following twitter to see if there are any new developments. Coming up, what the new normal will look like. As the economy comes out of the pandemic, what it will look like in Silicon Valley with more companies laying off employees. We willtalk to a tech veteran and venture capitalist. This is bloomberg. 49. 50 daddy, i found you good job. Now im gonna stay here and you go hide. Watch your favorites from anywhere in the house with the Xfinity Stream app. Free with your xfinity service. Now any room can be a tv room. Stream live tv, on demand shows and movies, even your dvr recordings. Download the Xfinity Stream app today to stream the entertainment you love. Emily welcome back to bloomberg technology. Parts of europe and the u. S. Are starting to ease their social distancing measures, but the question remains, just how bad will the economic fallout be and how long does the economic recession go on for . Joining me now is a tech veteran and earlystage venture capitalist, eric hippeau. Always good to have you here with us. We hear about more people getting laid off every day in Silicon Valley and even marc benioff earlier in the show could not commit to not laying off employees and he is the one who took this 90 day no layoff pledge. That time is coming up and he called another companies to take the pledge, too. As long as this goes on and continues to go on, it is getting harder and harder for companies to make those promises. Have any more layoffs do you think we are going to see . Eric i would say it depends on the sector. In many sectors, such as travel, the bulk of the layoffs are behind us unfortunately. In some other sectors, maybe technology is one of them, people are living month by month, week by week and trying to make those decisions as to when the economy is going to reopen. Luckily in some sectors, technology being one of them, there wont be a need for a lot of layoffs. A lot of it will depend on the shape of the recovery. Has obviouslyh been through the. Com bust and the financial crisis, but this feels different. Im wondering what do you think the tech ecosystem looks like at the end of this . Is whate tech ecosystem is allowing us to work and live through this entire epidemic. Without technology the way it is today, we wouldnt have home deliveries, telemedicine. We wouldnt be able to work at home. Even 10 years ago, none of these things would be very easy. We would not only have the penetration, but the speed we have today. Let alone the ability to exercise at home. Lock peopleou cant into their homes without entertainment. We have all forms of entertainment. All of that is momentum that is carrying us through the covid19 epidemic and will hopefully be part of our lives, not entirely the way it is today obviously, but in part of our lives as we march through this. We will some ways drive the economy of tomorrow. Emily what advice are you giving your Portfolio Companies now . Especially the ones whose business is really at risk . Spoke to them very early in the epidemic. We asked everybody to come up with an emergency plan, even those who might not have been affected immediately by the crisis. Foremost they have to think about cash. Cash is king. They have to emerge out of this crisisk hopefully with one year worth of runway in terms of cash. That determines pretty much have to do. We unfortunately have furloughs and layoffs in our portfolio as we have seen pretty much everywhere, but we have tried to minimize that. The people have to take some tough measures and have had to take some tough measures. Emily now, we are getting some headlines on the terminal that Weworks Adam Neumann is suing softbank over a stock deal that was canceled. Softbank had committed, in some form, to buying 3 billion of then didares but not follow through on that. Another example of companies not being able to follow through on commitments because of economic issues. Wework is an interesting case. A new yorkbased company. Im curious what your thoughts are on this whole situation. Eric our thoughts are that companies that got into this crisis with weaknesses, these weaknesses are being enhanced. And companies that got into this crisis with momentum and strength are going to emerge as somewhat stronger. In the case of wework, that whole financial structure, the dramatic extension plans they had were clearly not viable, not feasible. Mind, iis, in my imagine has only enhanced all these problems because as we go back to work, it is not clear that the wework sharing offices concept is going to the best in order to get people back to work. Emily we are going to continue to follow that story later in the show, but i want to ask you are the ceo of the huffington post. You are on the board of buzzfeed. What happens in online media . We have seen some layoffs in online media. Vox. Com asking for reader donations. Is there going to be a massive consolidation here . If so, who is standing at the end of this . Is anconditional media interesting spot because we have ever seen the amount of traffic, the amount of audience, it is at an alltime high as people are staying at home and they want to be informed and entertained. However, the Advertising Market is in very bad shape. Problematice markets that drive advertisement like facebook and google. Arees are down and people just canceling ads. Those companies that have momentum, had a solid Balance Sheet, has the ability to raise capital will be the ones that emerge stronger. There will be consolidation. You have seen quite a bit of consolation in the sector in the case of group nine acquiring. And other companies merging together. I think this trend will accelerate. We will need to have a pretty big platform in order to make it through. Buzzfeed has reportedly cut salaries and the ceo is forgoing pay for the year to stall layoffs but do you think layoffs could be coming at buzzfeed . Eric i cannot comment on that. Emily what about marriott . This is another company you sit on the board of. You sit on quite a few prestigious boards. Curious how you believe marriott will fare given the titanic hit to the Tourism Industry. Eric the travel Tourism Industry has been hit the hardest as you can possibly imagine. The commercial airlines, 90 of the fleet are grounded. You have hotels that have been forced to close. So, marriott is the leader in this industry. Theiott is, again, one of Strong Companies going into this crisis. The company has a strong Balance Sheet. It will lead to recovery as soon as people start to travel, as soon as people are comfortable staying in hotels. Marriott is going to lead that parade. Emily meantime, you are in new york, you are a stalwart in Silicon Valley as it were. Of course, new york has been the epicenter of the coronavirus in the United States. Im curious what your thoughts are for the new york tech scene obviouslylar given the continuing safety concerns. Many people have died. Many people are still sick. How does new york come back from this . Industry new york tech is extremely strong and has been growing much faster than some other parts of the nation. Again, it is one of these situations where we are having to adapt. For instance, how do you make investments without actually meeting the founders in person . We are learning how to do that. We are going to make investments. Lerer hippea only u, but the new york venture capitalists by in large have capital to deploy. Some of the best investments have been made after they crisis. The best investments were made after the dotcom crash, after the 2008 recession, because people have new ideas that come about. These people, maybe they are laid off and want to start a company as opposed to go work for another company. There typically is a lot of activity as far as private investments after a crisis. Emily eric hippeau, managing partner, always great to have you here on the show. Thank you so much for your perspective. I want to jump back to the breaking news that adam neumann, the former ceo of wework, is suing softbank over a canceled stock deal. Neumann saying softbank reneged on a deal to purchase the of stock. Billion coming up, the new peak on how the ultraweathy will be wealthy will be able to easily trade investments in the private equity space. We will have a special guest coming up. This is bloomberg. Emily a Silicon Valley firm whose clients handle almost 2 trillion in Wealth Management assets has created a new way to trade more easily investments in hedge funds and private equity funds. Is the ceo of thank you for joining us. Eric, tell us about how this works. Thank you for having me on. We started the company back in 2009 to help people and institutions manage their investment portfolio. To your point about having 2 trillion in the platform today, it is really a testament to the institutional Quality Technology we have built to date. This marketplace application we built today connects the rear view our clients are using with the ability to take action and make investments. Whether it is hedge funds private equity investments, private stocks. We know a lot of family offices, a lot of High Net Worth individuals have been looking to deploy more money when it comes to the ipo of stocks. Some of this Partnership Includes equity. How much are these depressed valuations do you see High Net Worth investors wanting to get into those stocks or are they still a little afraid of liquidity they may get . Eric yeah. What we are seeing with these Market Conditions with Public Markets moving around at some of clients the type eyve alreadyhne invested 35 plus to invest in the platform in alternative investments. Their appetite for private Market Investors is already incredibly high. Really, were delivering this marketplace application in response the very Strong Client interest. We partnered, to your point, with some of the best players out there who provide access to private equity and hedge funds. Equitiesrivate shares, in. With melting point solutions, secondary access to buy and sell positions in hedge funds. On the other side of that, our clients do have a compassion in their portfolio. We are allowing our clients to optimize liquidity of their cash positions as well. Are moreu saying they willing to put that cash to work right now . Are you seeing them move more to cash because of what we are seeing about the uncertainty in the covid panic . Eric were certainly seeing our clients use some of the market drawdown, as well as the softness in certain parts of the market as a buying opportunity. Some of our clients have bloombergand other articles about being an opportunity to buy secondary in private equity funds or merge capital. Over the last few weeks as this pandemic has accelerated, weve introduced a lot of problems in the world. Now is the time for innovators and entrepreneurs to really deploy fresh ideas, fresh capital around those ideas to make the impact the world needs right now. They youre backed by former cfo of blackstone and airbnb, also venture capitalist peter thiel. Given the uncertainty to her point, if he a company like wework where we are seeing the former ceo suing softbank for reneging on a deal to buy 3 billion worth of shares, it is a perfect example of how things can go bad. When you had an incredibly uncertain environment on top of that, i just wonder how anxious some of the investors are going to be to get into companies that may actually need the money, but need it for not good reasons. Eric yeah. Were in a really privileged position in terms of the capital backers had investors we have. They very much share our longview. We have been on this mission since the Global Financial crisis in 2009. I think we are in unprecedented territory in a lot of different ways and for a lot of different reasons. How that manifests, it will manifest in different ways over time. We expect around capital backers, we share the long view that what Financial Markets need now more than ever is really enterprise grade and industrialstrength technology to look deeply throughout these portfolios and distinguish certain investments that might have more core fundamentals in this type of market environment from those that are performing exceptionally well. Addepar is providing the way to put together broadbased data as well as regular data across each one of these Investment Opportunities so investors can make datadriven decisions. I want to focus on a very opaque part of the market you are targeting and that is the Hedge Fund Universe. Private equity has been transacting and secondary for a while, trying to make more liquidity available further investors. Hedge funds, since they have existed, have been very opaque. How are investors on your platform going to get more access to the Hedge Fund Universe and you believe this will be able to create more liquidity among those investments . Clear, what we are doing many of our clients already invest in hedge funds. But the exercise of making the investments, filling out documents once they have already made an investment, gathering the data on those funds in a timely way, both parts of that have been cumbersome. Changing theally bargain investor has an in hedge fund for not asking them to rebuild more. What does change is we are providing unified and integrated access to a range of funds, whether it is hedge funds or private equity. Marketplaces our continues to have more and more funds, more and more partners on it, it allows investors to differentiate the funds that are performing particularly well in particular poorly in any certain environment. They can try on different investments and make the investments they truly think are best for their portfolio. Eric, thankight, you for joining us. Ceo of addepar. Thank you both. Coming up, a senior amazon engineer quits in protest of what he calls whistleblower firings. We will be covering that coming up. This is bloomberg. Emily a senior amazon engineer has quit in protest of what he calls whistleblower firings. Vice president and Senior Engineer worked in amazons Cloud Computing unit, i want to bring in met dave you has been covering this story matt day who has been covering this story. He were to compiling blog post about his reasons for leaving. Tell us more. Matt d posted this late last night. It is really detailed on some of the history of an amazon activist group, amazon employees that have been pushing the company for more than a year on climate matters. Amazon fired a couple of their leaders just recently. That was the last straw for this engineer, tim gray, that led him to hang it up and forgo 1 million in salary and stock because he doesnt think what was happening to the employees was right. Emily hes obviously giving up potentially a lot of money here. What is amazon saying about this . Especially in light of, obviously, the firings that have happened which they have said were warranted . Matt amazon is not commenting on grays decision. When it comes to the firings, amazon has pushed back a little firmer in recent weeks, saying criticism of its warehouse working conditions is not fair. They have taken a lot of steps to make the building safer during the pandemic. Theyhave stridently denied were firing people for speaking up. Gray obviously disagrees. He says looking at the facts, the explanation does not line up. Emily meantime, youve got warehouses in france that remain closed. Amazon has been in a dispute with the french government. What is the latest there . Matt amazon says those warehouses are going to stay closed through this week in france. If you order anything from amazon. Fr in france, you will probably get it delivered from a depot outside that country. Amazon does not like the idea of having to essentially pay fines for delivering items employees might want. It is not clear where this one goes from here. Again, similar to amazons defense in the u. S. , they said they want to keep folks safe and france in france. Meantime, jeff bezos is called to testify before the house over antitrust and competitiveness issues tied to how amazon treats thirdparty sellers. We have seen Mark Zuckerberg testify for congress. We have seen sundar pichai, the ceo of alphabet, testify. Somehow, jeff bezos has avoided the congressional hotseat. Do you think this will actually happen . Matt i think that conventional wisdom is now that the house is invoking potential use of subpoena power, there is not a lot amazon can do to fight that if the committee is determined to get him to testify. I think it has been a bit of luck that amazon has not been dragged before. I think some people would acknowledge they have had some good fortune missing some of the tech backlash on capitol hill but they are under the gun right now after that report of potential misuse of individual seller data by the milwaukee journal. Emily all right. I know you are continuing to follow all of that for us. Matt day on amazon. Thank you so much. Just want to recap. Wework has lines coming in. Former ceo and founder adam neumann is now suing softbank over a canceled stock deal. Softbank had agreed to buy 3 billion in wework shares. Softbank is now being accused of reneging on that deal. The independent directors of the we company, the Parent Company of wework, have already sued softbank. This is something we are continuing to follow and will bring more updates as we have them. That is it for bloomberg technology. Im emily chang. Stay with bloomberg. Bloomberg daybreak australia is next. This is bloomberg. Haidi good morning. Im haidi stroudwatts in sitting alongside shery ahn in new york. The coronavirus playing game sees it go to an alltime low. President trump raises the stakes, threatening a fresh round of tariffs on china. U. S. Stocks staged a late rally as california prepares to reopen. Oil is also rising, getting 44th consecutive day. Theres a bleak pictur