This is Bloomberg Business Wait inside from the reporters and editors who bring you America's most trusted business magazine, plus global business, finance and tech news. The Bloomberg Business Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
We want to get to one of the stories that kind of had U shaking our heads again. It's among our most read on the Bloomberg. It's not about the big venture capital and tech firms that tapped into a backstop and ended up with at least some of them getting a billion dollars or more following the collapse of Silicon Valley Bank.
Yeah, some truly unbelievable facts that we had previously kind of known. I mean, we knew that there were, for example, account holders with more than three billion dollars at SVB, and they were made whole.
I think at the time, the idea was.
You've got to make everybody whole, or else we'll see more bank runs all around the country. But in hindsight, you might be you might be attempted to criticize regulators for just giving away money to so many people who already have so much right.
That weren't in any problem so or seemingly so.
I mean, if I A policy lost a billion dollars, it would probably hurt, but not much.
I mean, they'd still be on yachts drinking champagne.
It's a lot, you know, I don't know about that, but it is a legendary and very successful VC firm. So let's get to it. This story is written by our lazette Chapman and Jason Leopold.
Uh.
Let's get to it with Bloomberg News Financial regulations reporter Ben Bain, who edited the story. He's on the phone in DC, so Ben, come on in on. First of all, what's the information that you guys, thanks to a freedom of information request, what you.
Found and thanks to a mistake and a mistake.
There's that too, so so yeah, we what we saw here was really kind of the most detailed information yet of what were the top ten biggest depositors. That's Plicon Valley Bank as it was collapsing back in March. And what we saw was, you know, there there's some interesting names you mentioned, you know, Sequoia Capital on there. They're kind of right near the top of the list. They
had a billion dollars in deposits. Now It's not in and of itself, you know, surprising or or even necessarily news worded that Sequoya, which has about eighty five billion dollars in assets under management, would have a billion dollars
in a bank account. But what is interesting about this is that, if you recall, one of the big shickouts from this March banking crisis was that the US government took the extraordinary step came in and said, look that two hundred and fifty thousand dollars limit that we have as kind of a bedrock in this country for deposit insurance, that's going to go away in the case of Silicon Valley Bank depositors and also Signature Bank depositors, the other
bank that failed in March, because there's an economic necessity,
there's a need for businesses to keep running. Basically, the thought is is that all these businesses had money in these banks, and if they lost the money in those deposit accounts, they couldn't turn the lights on Monday morning, March twelfth, March thirteenth, Pardon me, So what's interesting about seeing names like Sequoya, some of these big VC firms, big technology firms with substantial deposit accounts in Silicon Valley Bank that were effectively made whole or at least backstopped
by the US government. Is that Yes, Sure, there were many many companies, many many tech startups that were backstopped by the government stepping in. But there are also some pretty big players. As you're mentioning, right, you know, a billion dollars wasn't going to make Sequoia Capitals a lot of business. They have eighty five billion. So you know, it's just kind of a glimpse into some of the tough choices of the government had to make when really taking an extraordinary step here.
I wonder, ben if any of it was pre negotiated. I mean, there were worries about a run for a few hours at least right on the twelfth. And if you had a billion dollars in the bank, you might pick up the phone and call the fd I see and say, listen, we're gonna pull it or are you going to cover us?
Well, I don't, I don't, we don't. We don't have that, you know, we don't have that reporting what we what we you know, what we do what we do know basically you know from this list, and you know it was it was you know, we we did get it through for the freedom of through Freedom Information Act requests, and it wasn't you know, made public previously. Was that you know, there were these large firms who certainly did have you know, significant theft in technology and also in
other industries. So just that the story wasn't necessarily as you know, two dimensional if you will, of many many startups and many many small businesses needing to be able to take their to posits right. They're also some very very very big players. They relied in this bank, you know, for many years.
By the way, the fd I SEE apparently mistakenly sent you an unred acted document. They then asked you to please like delete it and not publish it. Why what did they want to redact?
Do you think?
Well, you know.
What the what the fd I SEE said was that they you know, they had intended to partially withhold some of the details and uh because it included you know, confidential commercial or financial information. You know, this the details of who had money you know in Silicon Valley Bank as it was going down. I mean, this is a sensitive information in the sense that you know, this is basically who had the biggest deposits at this institution that we've all been talking about for the last three or
four months. You know that said, uh, certainly that this is part of the story of really one of the financial stories of the year. So you know, it does kind of fill in some details that the public didn't have.
What kills me is that the amount of money that they had at these banks, right, you know that there's only a certain amount in short, So I'm always kind of like, why would you do this? I don't know, I find that well.
Imagine how many banks they would have to put it in if they only put two hundred and fifty grand in.
But I get it, but I just think it's kind of you are potentially putting yourself in a votel. I know, you assume that nothing's going to go wrong, but you know what happens. Having said that, Ben go through some of the other players. We talk abot about Sequoya, So they got a billion dollars.
Shoes a billion they would by the way, if they wanted to keep only two hundred and fifty grand in each bank, they would have to find four thousand banks in America.
I get it, actually I get it, but I mean, so there's other investments you can do that are short term that are also considered safe. Right, there's other things that they can do. I don't know, is that what everybody does?
Yeah?
I think that's that's what you have to do unless you want to. I mean, there are only like five or six thousand banks in the US, so Sequoia would have to use every single one of them, like.
Pretty much, what does Apple and Amazon like, what do they do with all their money?
That's Ben?
What do you think?
I mean, it's a good question, Ben, What do you think?
I mean? I think I think we also just we have to keep in mind that this was an extraordinary event. You know, there have been three bank failures in you know, this year. I mean it doesn't mean that there won't be others, and there haven't bailed theirs since the financial crisis, but the amount of money that was held in these banks, the amount of assets that these banks had, the sides of the bank failures this year, I mean, this is
not a not a standard situation. So yes, there there You know, there is definitely strategies where you don't keep large amounts of money in one account. However, you know, businesses need to run their businesses, they need to have certain types of accounts to be able to make payroll, to have accounts to be able right, yeah, to function. So there, I mean, there is a distinction between interest
bearing accounts and non interest bearing accounts. And you know, after the financial crisis, there was you know a now sunseted exemption where you know, there was coverage for businesses using non interest bearing accounts that could be well about the two hundred and fifty thousand dollars and would it would be covered. So now there's a push to actually, you know, maybe rethink that list.
This sounds like a great Business Week story, like a little white chart like like where all the money goes and stuff like, but hey, Ben, before you go, because we only have about forty forty five seconds. Who else so got some money just quickly.
So so there's you know, there are some interesting uh you know kind of kind of names on there. As you make you with this list. One thing that kind of jumped out to me that was interesting too is that you know, on this list of and if you if you added together ten ten depositors, is about thirteen billion or a little bit less in total. Uh, more than four billion was actually from Silicon Valley Bank. And
also Silicon SVB Financial Ink. So so you know, there there is kind of this now and there is kind of a you know, an ongoing piece of the the bankruptcy proceedings relates to svb's financial the parent company for who should actually get that money. So that's that's a little bit of a side story. But you know, those are a couple of other names that that jumped out. But there's also you know, several tech firms. You know, Bill dot Com was on there, you know, and and
just you know, and others as well. But certainly Sekoia you know, is probably the best known bank for capital firm in the world.
All right, well, good stuff, hey Ben, Thank you so much, Ben Bay and he's Financial Regulations for report at Bloomberg News.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Eastern Listen on Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business app, or watch us live on YouTube.
It's been an interesting week, I think the last couple of weeks geopolitically, you had Prime Minister Modi in the US uh CEOs and the US leaders lining up. He was at the White House. You had Anthony Blincoln working and seemingly having success at mending the relationship with China, only to have the President possibly trip it up again. And then, of course all of this is the Russian
War rages on in Ukraine. So we thought it was time to do a geopolitical gut check, and so we've got a great voice to do just that.
Yes we do.
I'm pleased to welcome a guy who's become a friend of mine over the years on our programs on radio and television, Ed Price. He's a principal at a Ergo. He's also a former British trade official, and he's an expert in German issues and a fluent speaker of German, which I appreciate as well. But he's recently been in Ukraine and spending some time on the ground there and
made some really important contacts. So Ed, let me start by asking you about the situation in Ukraine, especially as we get you know, headlines right now that are really confusing. Reports that Moscow, that Russia has bombed camps of the Wagner Group, which should be you know, this mercenary group that we assume works for Russia.
Most of the time.
We're not sure if those reports we haven't verified them, I should say, independently. But it's very messy on the ground over there, isn't it, and difficult to kind of figure out exactly what's going on and who's winning.
Right I mean, I'll start by saying, I think your German's a bit better than mine. It is messi over in Russia right now. I think probably what's happening is that Progrosion has crossed the line and I wouldn't be surprised at all if he comes to a sticky end quite quickly, and we'll probably we'll probably hear reports of that, or he'll be confined or something other will happen.
To He's the head of the Mercenary group, the Wagner group.
Right, Yes, the head of the Wagner Group. I mean that some of his on camera addresses are completely bonkers. And he's now he's now engaging, as you saw today in conspiracy theories that essentially call out the entire Russian apparatus and describe Russia as something of a circus? Is he defending putin kind of? I feel like he's begging for his life.
Honestly, Well, yeah, I mean, what did you see when you were on your trip to Ukraine? And hello, hello, how are you well?
Well? For for twenty four hours I saw the inside of a night train from Poland because of course there are no flights. But after that I met with the finance minister and others, and really what I discovered is that the Ukrainians are mobilized in a way that's quite spectacular. They have high morale, they are definitely trying to conform to NATO requirements, EU membership requirements. They're trying to root out corruption, and they're trying to do that at the
same time as fighting this brutal war. Now, you know, we probably should talk about the progress or otherwise of the offensive, and my current understanding is that the Ukrainians have only actually put three of their twelve mechanized brigades into the fight because they're on an interior line. They're trying still to probe and push the Russians and get the Russians to misallocate their forces before punching through.
Why do you think the Ukrainians are so focused domestically? And I understand that they want to retake the land that Russia has annexed. But why don't they hit Russia on its own soil?
Well, I mean, this is it. It's hard to tell. On the surface of things. You might say that the West we have been very clear that if they do that, they're in a lot of trouble. But then that's a bit odd because we gave them the means to do it, not least the storm shadow system, which is some pretty spectacular kit. I think that they are masters of the
pr game. I think that they're very very good at understanding that this war is being fought in an information space, and I think that the one thing they don't want to do is to commit a mistake Heaven forbid, some sort of atrocity that changes their wild card, which is public opinion out here in the West. I mean, Zelenski's been clear already that he's worried that at some point the American presidency or the American people could lose interest.
So I think they're being cautious. That said, if they want to do it, they will.
So you know, I mean year anniversary and I hate to say anniversary, but they you know, year marking the invasion of Russia into Ukraine. You know, we've talked to about this. Where are you anticipating this war goes from here based on what you're seeing and what you're hearing.
Well, Carol, it's as I said before, it's a brutal ground war in and I think that I was thinking about this this morning at a time.
When we thought ground wars didn't exist anymore. It's like kind of mind blowing. Please continue.
Well, it's like it's like inflation, right, it's like efficient market hypothesis. It's all these things that we think can't happen and do. And I was thinking about it this morning, saying to myself, well, look, if this wasn't twenty twenty three, but if this was nineteen eighty three, then the headlines would be that NATO weapons, NATO munitions were killing Soviet soldiers in Europe, And that sort of jolted me while I was cleaning my teeth. But the point is that
this is this is a terrifying war. It doesn't seem that there's a military solution, and so the really difficult thing is how and when do you get the Ukrainians to sit down and even think about agreeing that they've lost some sort of territory in order that the Russians are given a negotiated peace. I don't know what you guys think about this, but I can't really figure out whether Zelenski is popular because he's refused to do that, or popular enough to turn on a dime and actually do it.
But at this point, it looks like they're not going to do that, right. I mean, they've proven over the last year that they're willing to die to hold their country. How strong is Vladimir Putin? You know? Does he lose some of his support as now I think more than two hundred thousand Russian soldiers have lost their lives in his war. Does he lose some of his support at home?
Well, if you remember, Matt, when we first spoke about this, I suggested to you that I thought Russian might fall apart, and that might have been the fever dream of a hawkish Westerner. He does seem okay now. It seems that he's managed to protect himself from assassination. It seems that he has some sort of command structure that's still working. I mean, they're still at war. And if you ask the Ukrainians, look what would happen if Peuden wasn't there?
They say it doesn't matter because the rest of Russia thinks and acts in the same way. But again, this we're entering the phase of this war now, particularly with the Damn incident, that anything could happen. And on the other side, I mean, you know, it's not impossible that he's assassinated, it's not impossible that he's placed under house arrest. So he seems okay now, but I think he is probably starting to wonder about how this thing ends too.
How much power does the Wagner group actually have? You know, we read so much about them in the media because they're a colorful bunch, But could they could they turn the tide if they turn somehow against the Russians.
Well, that's super interesting. I mean, I think I think that most of the Wagner group are dead, so they're not doing anything. They're very Unwell, if there was a scenario in which Russia descended into some kind of civil descent or civil war, then anyone with the private army is going to be having a good time of it. And that goes for Wagner too. But I don't think that Wagner itself is anything more than a symptom of
that potential. I don't see that Wagner's got enough agency or or enough power to turn back into Russia and challenge putin fully, like I say, I think progosion is probably going to come to a sticky end.
We're all the allies in this, and I guess I bring it up, and we've just got about a couple of minutes here. I'm thinking of the Indian Prime Minister Modi, you know, in white in Washington, meeting with President Biden and other leaders here and other US leaders, and then of course the corporate community in a big way and really trying to attract a lot of investment to his country. Having said that, he also India is a big buyer
Russian oil. So it's a tricky, you know, relationship. Do these tricky relationships continue with the backdrop of the war.
They continue until they don't. And I would suggest that India, if anything, has the deciding vote in World War three, whether it happens who lines up against who and who wins. If India swings over to a serious neutrality like it used to, or if it, you know, heaven forbid, allies itself with China and or Russia economically or otherwise, then the West is in for a very difficult twenty first century. If, as it seems right now, we can keep the Indians
on board, we may have a different story. So fingers crossed. The Indians are going to lean into their democratic instincts rather than their national.
But we're I think we're happy that they're buying Russia crugh though twenties.
Otherwise, wait, wait twenty seconds. So is that what this was all about in terms of DC. This big ament was just to make sure we've got India on our side, just very quickly, of course, I.
Mean what else is what else is Modi going to get on an airplane for? And how else are we going to welcome him?
Pretty well, because we talked about with our right artist every first place us listen, I wish we had always I always feel like ed. We always want more and more and more time. So come back soon, have a good weekend. Always good to get a check with Ed Price, principal at Ergo, former British Trade official, vice members of the European and British Parliament's worked in the City of London.
Has two master's degrees, one in finance and economics and one in German history.
Sorry to hear he's such an underachiever. Yeah, all right, folks, you're listening to Bloomberg Business Week, and this is Bloomberg Radio.
You're listening to the Bloomberg Business Week Podcast. Catch us live weekday afternoons from three to six Easter on Bloomberg Radio, the Bloomberg Business app, and YouTube. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa, play Bloomberg eleven thirty.
I gotta say this next guest. His company. It's been described by some as Formula one on the water. It involves fast paced and high tech fifty foot hydrofoiling race boats. They're catamarans from different nations and they're all racing against one another. We're both pretty.
We're both pretty site. I mean, I grew up sailing and haven't been lately. You go sailing all the time, and I think we both like racing.
So let's get to it.
He's a five time America's Cup win. Let's laid out there. He was three times a skipper in those winnings of the Cup. He's an Olympic champion as well. We welcome sir, Sir Russell Coots excuse me, ce have sl GP with us on Zoom and New Zealand. Sir Russell, it is so nice to have you here with us.
Tell us a little bit about SALGP SALESGP.
I keep wanting to say GBT because we're so talking about AI all the time.
Well, thanks Carol, and thanks man. It's great to be here. Can you hear me? Okay, yes, yes, yes.
Okay, well yeah salve GP. Yes, it's it's it's certainly exciting Grand Prix racing on water. It's I think we're one of the fastest growing new sports and entertainment properties. As you've described, Carol, we feature high speed racing between rival nations, close to shore racing, with an expanded calendar or expanding calendar of events as we as we develop, so our events span the globe, and we have the top athletes in the sport racing and as you said,
identical very fast hydrofoiling fifty catamarans. In fact that at top speed last year was set by the French team just under one hundred kilometers.
Prayer, I think they were that.
Is crazy and like I was kidding with that, I sail. I've sailed for thirty years and a top speed might be eight nuts.
That is yeah, well.
In the US terms, I guess it's sixty two. It's the equivalent of roughly sixty two miles perer. So you know, we did driving along the freeway the speeds on water of course, powered by nature.
That's the coolest thing.
So Russell I grew up as a Formula one fan and since then have gotten smart and started watching Moto GP because it's so much better. But both of those sports are dirty, loud and dirty, right, just powered by fossil fuels. And the cool thing about Sale GP is that obviously you're powered by the wind, and in fact you're in a way an impact organization, right, you're pushing to fight climate change.
Absolutely well, well we'll certainly, you know, in terms of our purpose, were I think fortunate to be a sport powered by nature, and we are really champiing a world powered by nature in other words, the wind, the sun and the water, and our I guess our focus is accelerating or showcasing the accelerating the transition to clean energy as the number one global energy source.
So we're very passionate about that.
I think everyone in our organization is extremely passionate about it.
We have what we call an Impact League.
Athletes compete not only on the water, but they also we also track the the carbon footprint and they look to reduce that and they compete for points and then and prize money is awarded to their impact partner. So each of the teams has an impact partner and we think that's pretty cool.
Actually, how do.
The teams get How do the teams make money? How do the skippers get paid?
You know, because we're oh, they get they get paid.
They get paid fees like any other professional sport to compete, but they also compete for prize money. So our prize money is growing. So it's it's it's set at five million dollars at this stage for season four and with the final event being a million dollars. So, but they also receive either a salary or fees to race on the boat.
So how do we watch it? You know what with I guess with Formula one.
Now in this country you can see it on on TV depending what your cable provider is Moto GP. You still have to have a subscription. Dorna sells those for one hundred and sixty pounds a year. How do we watch sale GP.
Well Salgp's distributed well now in season four to two hundred and twelve different territories, so in the US you can watch it on CBS or on YouTube, and we're expanding that portfolio each year. So we've just announced new deals with ITV in the UK and a five year or five season extension with Kennel Polus in France. But we are with many of the broadcasters Fox Australia, Discovery in New Zealand, so each of our in each of
our key territories, we have key broadcasters. Our audience is growing pretty rapidly, so we had a three times increase over season two and season three. So our dedicated viewership is around one hundred and seventeen just over one hundred and seventeen million viewers, so that's just over if you look at it, it's just over what is it ten
forards six million per event of dedicated viewership. And then in terms of secondary viewership, which is obviously news and magazines, we also had just under a billion views, so we're growing pretty rapidly. Of that dedicated audience, about sixty percent is linear TV and about forty in the forty percent digital.
So I'm curious about you, sir Russell. Are you do you ever go out in a monohle and just a regular.
Sound because it's such a Carol's a traditional saler, it does.
I do feel like, you know, America's Cup kind of got ruined years ago because.
It's I am such a harsh statement.
I'm sorry. I think it's not just about need, it's about technique, and it's harder when you're going slower, it really is. So I'm just curious how you see it.
Yeah, I mean, I like all forms of sailing, and obviously I grew up racing traditional sail boats, but these new classes are so fast and it still requires all of the same skills, but it's just happening at a much higher.
Speed, all right, So where do you go? I would also go back to how you started this and why you started it.
Well before selve GP, sailing didn't really have a global platform to market the sport on an annual basis. So when you look at what we're doing with seve GP, it's not that different to what is considered normal in most sports. So we.
Put together an annual calendar of events.
We obviously televised that live and promote it, you know, regularly. So really, in many ways, it's intriguing to think that
sailing didn't have a platform like this before SALESGP. You know, that we didn't have a regular professional calendar of events where the top athletes in the sport race against each other on a regular basis, and so that that's that's really enabled us to market the sport more professionally and more frequently, and the growth is really a result of that, and I think in truth, we didn't really have a platform that really delivered exciting racing before these new high
speed boats came along. So that's really been a transition, as has the the sort of the I guess, the way that we televise it these days, with our our you know, broadcast graphics and so forth that are superimposed over the video images. That really makes the sport more understandable for the general sports fan and in particular the racing fan. So we're not you know, with our audience growth, we're not really seeing that growth in sailing fans per se.
We're seeing it in racing fans primarily and also in general sports fans, So you know, that's exciting.
We're talking with Sir Russell Coots. He is the founder and CEO of sal GP, still with us on Zoom in New Zealand. So what's the plan going forward and in terms of your growth expectations on how you want to build this out.
Well, we started with six teams in season one and we've grown that to ten teams at the beginning of season four. And we started with five venues in season one and now we're up to twelve venues in season four, and ultimately we want to build to about.
Like Formula One.
They have roughly a race every two weeks if you look at them of races that they do in a season, and we want to achieve the same sort of consistency of events. So we're looking to build the number of events and probably build the number of teams to around twelve teams obviously linked with the nationalities of their countries.
So the thing that.
Gets people watching Formula One is of course the drama and the personalities kind of the soap opera more than the races. Right, the same is true. You know, Motor GP has been so interesting in the last couple weeks. Will Mark Marquez go somewhere else and leave Honda? How come the ducats are always winning. Do you have the same kind of storylines you think in sailing?
Yeah? Absolutely.
I mean we actually produce a behind the scenes documentary series called Racing on the Edge, which we distribute on YouTube and also our key broadcasters also distribute that as well. But we're looking to to do a similar thing to what Formula One led with and other sports, which obviously their drive to survive programming was extremely successful in terms of promoting the sort of behind the scenes view of athletes and building those personalities, and so we're looking to
do a similar thing in the future. And you know that's I think that's pretty exciting for our sport, but any sport these days, I think people really tune into that sort of content and really engage with it.
So yeah, exciting times.
I think I'm looking at, by the way, video from Racing on the Edge right now and I honestly have goosebumps. I mean, the sailing is so sick is it dangerous? I mean, at these speeds russe all with you know, with the crew on one of these boats, if they run into another one, I can imagine injuries.
Yeah, there's a there's certainly an element of danger, and we obviously take the safety of the league. You know, really it's obviously a priority for us. But it's you know when people come along to our events and that or they witness sol GP for the first time, that's surprise. You know, they've got an image of sailing. I think white triangles on a blue background would be a pretty accurate image.
Of what most people cling. And this is so different, you know to what that image.
Traditional image a.
Lot of money to go basically nowhere. But what's interesting is you guys, with what you can do, you're close to the shore, people can really see it and feel it. And I do wonder about the speed in terms of these boats, Sir Russell, in that it attracting kind of a younger audience, right, I mean, you guys have to be thinking about that.
Sure.
Well, we're also the way we format our programs, so races over two days and ninety minutes, and we have three races or fifteen minute races, three to fifteen minute races per program. So that really is tailored to the modern viewership sort of trends where audiences don't watch long
form content as much as what they used to. So you know, quite often our viewers you tune into, they might only tune into the final race, the final fifteen minute race, and as a result of that, we are seeing a younger demographic following this our racing.
Can I just say, I look at season three, episode nine, and I think somebody fell in the fell in the.
Water, but it's still tied to the boat. So he's like skimming across on the surface.
That was that was That was not Matt Gottrell from from the UK team, and he actually he cracks some ribs as a result of that, because you know, at those speeds, hitting the water is like getting concrete. So actually we made we reviewed that footage and obviously made some adjustments to the to the safety equipment on board, so so that can't happen again.
But yeah, it's there is an element of danger for sure, but.
There's you know, it's obviously hy adrenaline racing and I think the top athletes, top sailing athletes in the world really love this form of racing.
How have the sponsors reacted You can see some of the sponsorship Oracle of course and other big companies, Emirates, I see, how have the sponsors reacted after you know, four seasons.
Well, the thing is that you know, we've we've we've obviously grown pretty quickly commercially as well. And we've just announced some new partnerships with Barla and Apex and they join Rollick's, Oracle and near As as A as a big sponsors and and and what the thing that we're seeing is that these sponsorships are now or these partners are now extending their partner ships to long term partnerships.
So we have a new tenure agreement with Rollicks, which of course is fantastic to have such a premium brand, you know, associated with our sport, and really our format, just like other sports, is allowing these long term partnerships, both with venues and you know, the commercial sponsors.
So just from a financial basis, and I'm just we've just got about a minute or so or just under a minute left here, So Russell, is this, I mean, the goal to be profitable. Are you profitable? Like, how do you think about it on a financial basis?
Yeah, we had a plan to be profitable by the end of season five and we're tracking ahead of that plan now. So we expect to see to be profitable as a league by the end of this season season four. And you know, our revenue sources are made up of pretty similar to mo traditional sports, so we have obviously eventually.
Media will will be a big part of that.
But you know, right now our focus is on increasing our audience rather than revenue in terms of in terms of broadcast and media, but sponsorship and obviously ticketing, uh you know, merchandising and so forth that the traditional revenue that both sports have.
Well, so appreciate you finding some time for us. This was really fun for us and look forward to hearing from you in the future, hopefully about updates and how things are going. Thank you so much. Have a great weekend. So Russell Kutzi's chief executive officers also the founder of sale GP, joining us via zoom from New Zealand. And I mean check out some of the videos and.
Some of the races.
I mean, they just had an event in Chicago and Los Angeles. Looks like finishes today and coming up Central Pay.
Very cool, Very cool, All right, folks, Bloomberg Business Week, Carol Masser along with Matt Miller. We're so into this and you are listening to Bloomberg Radio.
Brom a journal.
Now about you.
Let me drive.
Oh no, no, no, no, who's gone to drive?
Alright?
Please, I'll gravels.
Let's wait, I want to drive.
It's a good question.
This is the drive to the clothes.
Domk me effect well brind on Bloomberg Radio.
All right, everybody, we've got just about seventeen and a half minutes left in today's trading session, getting ready to wrap up the short and trading week. Four days and all felt like not.
Four It true, it did feel you know what. I I still like a four day work week.
A lot of people have been saying this week, we have five days of work in four and it seems so long and it feels harder.
I don't care a day, yes, exactly, yeah.
Yeah, totally all right, So let's get to it, and uh, let's see what Sylvia Jablonski makes of the trade that we got in this holiday shortened trading week. She's CEO and chief investment officer. It defines ETFs. Back with us on zoom in New York City, Sylvia, Happy Friday, Good to have you here and back with us. So, I don't know, how do you make sense? We're seeing a little bit of a pullback. But as Matt reminds us. You know, we've still had some pretty decent games here and quite a bounce back.
Hi Carol, great to be with you today. For me, this week has felt like ten days as well, so I'd rather have the regular work week. I think the market's been a little bit tough, and you know, I come from a seat of you know, a big investor in AI stocks and high growth and things like this.
So yeah, I mean, I think the FED is sort of the hurricane that came into the market this week, and.
They can't just go higher and hire and hire these day I stocks.
You know, I think that they have a ways to go though, right.
You know, I'll take the argument that you know, there's been a lot of growth over one hundred percent or so in some of the semiconductor names and things like that, but it is one of the hottest innovations that is actually going to play out and will actually generate revenue in coming years. But I think what happened in the market this week, though, came to a little bit of a halt because of j. Powell's testimony. Right, so he's
talking about potentially two more rates. He's definitely saying that, you know, inflation remains.
The key issue.
We're not at two percent, and I think it put a damper on the rally that we've seen for the last couple of weeks. So you know, I think until we get it goes back to that, that's the that's the uncertainty in the market, and until that shakes out, we're going to have these kind of range round weeks and maybe some some you know, lazy rallies or pullbacks in between.
What do you see from the flows because last week, you know, Eric Alcunas has been tracking for for weeks and weeks and weeks no flows into equity ETFs, even as the market, you know, runs higher and higher, and finally we got last week a shift and flows out of you know, the short end fixed income ETFs into equities, So like ETF investors were finally getting into this rally.
Has that continued?
Yeah, you know, I think there was a lot of fomo out there, and you know, it looked like the market was stabilizing, inflation was coming down. We kind of got past that last FED meeting, and you know, up until the comments and sach it looked like we were kind of in the clear, at least for some stability in the market.
So I think a lot of it was fomo. There's a lot of liquidity on the sidelines.
As you said, investors had been in those short term fixed income products or cash or you know, the Goldman Sachs Apple account, whatever it might be, and they finally said, oh, okay, I think I can make more than four percent and equity, so let me get back in. And then when you look at you know, kind of where the flows go, places like AI, machine learning, quantum computing, you know, innovation.
This is where people get into ETFs. Right, it's hard to pick the winners, so it kind of makes sense that you would have seen the flows that you'd have seen.
I think it's going to continue. I actually, you know, as.
Much as I hate seeing kind of stock prices fall and things like that on some of the top AI names that we invest in too, I think that these are great pull back by on the dip opportunities.
And then you've also seen.
Some great you know moves in areas like cruises and hotels and you know kind of casinos and you know airlines. Right, that's where the spending has gone from goods to services. And for the next couple of months. You might see performance there.
Sylvia though, and we did see some some nervousness among some of the leisure stocks though, because certainly after those PMI numbers out of Europe, I think there is concerns that, you know, recession, no recession, maybe it looks more like recession, So there's there's nervousness. I want to go back to the tech names, because BFA came out and said tech sector saw two billion dollars worth of outflows in five trading days through June twenty first, it's the largest amount
in ten weeks. Some like you might say, okay, that's a buying opportunity, but how do you fairly value some of these names that are linked to AI? How do you fundamentally kind of figure that out?
Yeah, and that's a great point.
I mean, I think everyone is kind of attaching the word AI to what they do now because it sounds really good. But you know, the way that we think about it is we look at the different sectors and companies that actually make up AI and generate revenue from AI. So I think for investors it's important to look at things like, you know, what is AI powered by?
Right?
And part of that is semiconductor, so you might have names like Navidia and A M D and there.
And why I like those names is because they're quality companies. They have strong balance sheets. You know, they're very much kind of like drinking water for AI. You also need machine learning, and you know, in order for machine learning and AI to work, you need the process data quickly, and for that you need supercomputer's quantum computers. So you have companies like IBM looking you know in that space. You have companies like Microsoft and Google who are already
we know in the AI race. So basically, at this point, I think kind of the more short plays are in the large cap space and maybe the you know, take a kind of gander on it would be the small cap and mid cap tech and semi conductor types of names. But you still want to make sure that you know they have balance sheet because if the FED does continue to various rates, those are the names that get hit.
So again I'm kind of circling back to broad based diversification in that looking at ETFs, but the big.
Uh, well, Nvidia is one that you still like.
Barclay's also says buy AI stocks on any pullback in the rally and the big megacap tech stocks.
I heard yesterday Margie Patel, who is at.
All Spring Global Investments, say she thinks there's still momentum there and as much as you hate seeing winners continue to win, she's sticking with it.
Do you agree, Yeah, you know, I do agree, And I think momentum has been you know, partially the name of the game when it comes to a few sectors, AI being one of them, in particular semiconductors, you know, kind of the generals and the tech space that lead the market, and also e B Right, I mean, there's there's a lot of general momentum in the idea of
artificial intelligence in the future of technology and innovation. And what's great about this is that a couple of years ago we were kind of talking about, you know, there was interesting kind of like far out ideas that might not come to fruition for a decade or two.
And with the AI, I mean, it's already taking place.
Right.
You have robots replacing the people that fact you know, put places like Amazon camp higher in their factories. You know, defense systems are using AI, banks are using AI to better kind of their their credit risk analysis and things like this. So these are actually tangible things that we can understand and see the revenue generation from.
And it played out in this earning season.
I think it's going to continue, meaning companies you know, have called costs, so they did okay, and that'll continue going forward.
So that you say earnings, I just checked JP Morgan for its earnings in July fourteenth. Is that the steel day?
The still Yeah, that is best steel day.
Yeah. So we're just kind of around the corner. Sylvia, have a great weekend. Sylvia Jablonski, CEO and CIO over Defiance ETFs on zoom in New York City. This is Bloomberg Radio.
This is the Bloomberg Business Week podcast, available on Apple, Spotify, and anywhere else you get your podcast. Listen live weekday afternoons from three to six Eastern on Bloomberg dot Com, the iHeartRadio app, tune In, and the Bloomberg Business App. You can also watch us live every weekday on YouTube and always on the Bloomberg Journal