$69 Million Art Auction Is Just The Beginning For NFTs

I mean, I think most people when they saw this headline n f T SAIDs digital art record in sixty nine million dollar sale. Um, most people have been shocked. And everybody I've spoken to, granted they've all been over the age of nineteen, has had trouble explaining it. So we're gonna bring in John Louise, president of Ava Labs, and may be able to better to help us better understand what happened yesterday. Um, when someone agreed to pay sixty nine million dollars for a piece of digital code

somehow attached to artwork. John, Uh, please give it a shot. Hey, Paul, Hey Matt, thank you for having me and Paul's nice to talk. It's been many years since I was on the by side as a techi media industor and you're on the shell side, So I thank yeah. So I think it was fantastic. First of all, how cool was it to watch the artist's live stream or and watch it later on on YouTube and streamed the actual auction.

You got to see how they were. They went from three to fourteen, then you have some big jumps to fifty and then straight to sixty nine. That was just incredible. So I think, you know, what happened yesterday is really a function of not how not just how much people appreciate people's art, which is fantastic. His previous piece sold Little Ways Back for six million, so he's a fantastic artist. But it's also uh enthusiasm for the whole space because a lot of people now thinking what n F keys

can be and what they will do the end. Let's start with that. Let's start with what it is John, because I think people's art is pretty cool too. But what was it that son bought? Okay, so he bought basically an Offlencible token, which is basically a unique digital representation of that and he actually had the only one of that representation. But it's a line of code. But I mean think about it though, the whole space, So that art is fantastic, but the whole space is interested

in this area because business models are going to change. Um. The collectible side of this is exploding. Also because the code enables place discovery better. What I mean by that is because it's cold code, because so it's frictionless. Suddenly you don't have to have paperwork and paperwork upon paperwork. It's digital, and then you have global asset access, giving more people around the world to participate in these things, and that leads to the better price discovery. I just

talked about participating watching it on YouTube. I was fortunate enough as an investor together to go say, I saw that Visa competitors to Christie's and watch how these auctions were done. Suddenly everyone can participate and watch it and see how this was done through the uh oh no, oh no, we lost John, did we? And in an age where you can pay sixty nine million dollars for a line of code, we can't get phone lines to stay good exactly. I mean, I agree with you, Matt.

I I found it is fascinating I'm trying to get I'm still trying to get my head around n f t S and fortunately there's a Bloomberg quick take there that that really further my education. But you know, I guess it's just a question of simply, uh you authenticating these things, John, Do we have you back? Yes? I'm back? Sorry,

all right? John? So yeah, go ahead. So I don't know where I left off, but you know, I was saying I'm very excited about n f t S in general and all these artists using it because business models can change. And what I mean by that is there are there are other rock bands, groups, events, stuff, people all calling us to help them create n f t s. So right now, ticketing, I mean the QR code is

actually fraud with fraud. UM artists now can actually program secondary sales and get a percentage of the sales like they couldn't before. So it's almost like a friend star getting royalties. Tell us. So, I'm president of Ava Labs. We are a blockchain, the next generation blockchain that provides the scale and speed to enable transactions like yesterday's UM sail in and what does and what does Justin Son?

So Justin Son is the investor who bought this. He paid in ether, which is kind of a cool side note, but what does he I mean he doesn't get a painting or there's nothing signed by people. Um what does he have with this line of code? Like can you click on it and see the artwork? Or um, I mean I can't get it? So he can have the representation of it on his phone. He's the only one that has it. But you don't really know what he

wants from it. Maybe this is the way he thinks of his digital identity, his sovereign identity in other words, like we're becoming more digital every single day, and maybe this is the way he wants to represent himself. Think about way back when when Prince had a big fight with his label because basically the Prince name was effectively owned by you know whatever label he was at, and suddenly he trade these symbols to represent who he was

to end around that process. So maybe Justin is using this as a future sovereign identity and to represent and who he is, and that could be very cool. It does say a lot about him. He paid a lot, so that tells you something about him, and it tells you a style of interest in art, so that maybe what he's trying to use it for. Alright, So he's speculating because he thinks he can resell this because there's far more access around the world to buy this and

there's better price discovery. So in theory, I guess I've also seen news John that you know Lebron James Uh creating an n f T on a highlight reel. So this can be applied in theory to almost any type of content, couldn't it. That's right, that's right. Unlike the UH content, a lot of the content we used to study, I'm not sure the content that's being created, and some of these NBA Top shots stuff can be resold. It is really more of a collectible and there's an emotional connection,

just like someone buying baseball cards. They have an emotional connection to that moment, that shot, and they're willing to pay a high price for it, just like I have a at a baseball card somewhere that probably is not worth that much, but it means a lot to me personally. Alright, So what are some of the next applications we should

look for? That's exactly what I was gonna ask. I think you can see business models change UM event ticketing, for instance, right now the artists basically sell tickets and it goes out to the world and sometimes there's resales of it through ticket Master and other places. Suddenly they can have control and see where those tickets are going. And it's better in the sense that you know, QR codes is can easily be replicated and three or four people can show up for that same seat. This will

be harder going forward. Like I said before, artists now can have UM basically streams of revenue associated with secondary sales of their UH collectibles to collect those their art or whatever it is. Wow. This it opens up so many different avenues. I'm not sure where to go, but this is I feel like we're obviously the very very very early innings here and we can learn a lot more as we go along. John Wu, thanks so much for joining us. John will He's a president of AVA Labs,

are based in Miami. Well President bidens one point nine a trillion dollar bill that was recently signed that brings the total, including last year, to six trillion dollars in fiscal stimulus tied to the coronavirus. The question is is that enough? Is that too much? Let's dig in with Near Cassar. He is a Bloomberg opinion columnist and along with Tim O'Brien, uh Near rhoda column saying, you know what bidens were on COVID demands, war time stimulus and

it certainly feels that way. Near, thanks so much for joining us here. When you think about the fiscal studies that we've you know, put through again at six billion dollars or put that in context for us, well, you know, there's a lot of handwrying about the size of this of this relief effort, and I think it's more relief than stimulus, um. And it does seem like a lot

of six trillion dollars is a lot of money. But when you put an historical context, when you look at you know, other big spending measures and we we used as an example, you know, what we spent on the World War two effort. When you put that in the context of a larger economy, it's it's not it's not that big. I mean, one thing to keep in mind is we have a twenty one trillion dollar economy, so six trillion dollars on that is just under thirty in

five alone. Um. You know, defense spending was GDP, so when you put in broader context, it doesn't appear as big. Now that doesn't mean that there aren't reasons to criticize it, as we have said, there are. You know, we wish that the six trillion dollars had been spent more, let's say smartly, you know, more targeted relief, more on infrastructure, education and public health. But size doesn't seem to be a very smart criticism of this, of this relief effort.

I don't know, man, I mean to use the term hand ringing when talking about six trillion dollars seems a little bit loaded. That's a lot of money. And to compare this to World War Two, in which seven five million people died, seems um a grand gesture. I think it's fair to say this is an absolute ton of money going into the economy. And I don't think that Larry Summer's concerns about overheating are going too far. Um. It's it's not that I don't have sympathy for people

who have lost jobs. I do, and I think it's alarming when you look at um initial jobless claims were at records every single week since August, and you know, it's worse than it was in a great financial crisis. But still, this is a big sledgehammer with which to hit this problem. And I think a comparison to World War Two is just going a little far. Well. I mean, you can compare it to to f fine, I mean,

you can compare it to anything you liked. I mean, but not something in which seventy million people died, because that's an even bigger pandemic than this, by like exponentially bigger. Well not in the US, and fairness right, so many five million people didn't die in the US, but but way more how many people how many Americans died in World War Two? But let's leave that aside for a minute.

I mean, I think what we ought to talk about is what is it that we're trying to solve, what should be the solution, and what are the potential problems. I mean, one of the things that Lara's Summers is worried about, as a lot of people are worried about installation. But if I said to you, show me where inflation is is worrisome in this moment, it would be very difficult to produce that evidence. I mean, in theory, you could get more inflation from the cocktail factors that are

on the table. Supply chains obviously are strained. There's a lot of stimulus and relief that's been spent. Uh, you know, saving has spiked. All of that in theory would cause inflation, but there's no we haven't seen inflation. There's no reason to think that worse in inflation is actually on the horizon. Now, now couple that with the fact that you have a

lot of people in this country that are suffering. Yes, a lot of people have done okay in this pandemic, but there are, by by good estimates, there are more than fifty million people in this country that are food and secure. Those people have to be said, um, and so we can argue, especially since their food costs more and more near even though you haven't seen inflation, there has been right in food prices and gas. Well, I mean maybe I should ask you what would you how

would you propose to solve the problem? No, I I'm just pointing out I think that, um, it's better to air on the side of spending too much than too little. But you can't say that we haven't seen inflation and then start talking about people who can't afford food, when indeed, we have seen inflation. Look at ground beef prices, they continue to march higher and higher and higher. Look at gasoline prices. Paul filled up for three dollars ago. And

so we have seen inflation. And listeners and viewers get really angry when they have trouble paying the grocery store bill and it's expensive to dry. I'm there, and then they hear on Bloomberg Radio that we haven't seen inflation, because of course we've seen inflation. It's just that, you know, maybe iPads aren't more expensive, but the stuff they need to live is more expensive. Hang on, we should share the number. So, as you know, core CPI last month,

the number came in less than expected. Year over year, core CPI is up one point three percent and CPI is up one point seven percent. That's still well below the FEDS targeted two percent and well below the historical inflation rate going back to one of two point two percent. So while we can cherry pick, you know, one of the other, uh, one of the other sort of data point, the larger picture still shows that inflation has um has been low and and if anything, we're having trouble even

with the six trillion dollars. We're having a trouble getting it up. And by and by the way, that's been the story of the U S since the financial crisis. People have been screaming inflation since then and the four trillion dollars we spent to stimulate men and we still haven't gotten inviation. So I also want to I also want to point out here that you are correct. I've I've looked into it. Well, in terms of World War two, more people, many more people have died of COVID in

America than died from World War two. Two thousand soldiers were killed in the war thanks to my producer, and well over five hundred thousand have died from COVID. So maybe it is a fair comparison near case or thank you so much for that. We appreciated Lauren sour now for our weekly visit the Johns Hopkins School of Medicine, where she is an Associate Professor of Emergency Medicine. Lauren, we heard President Biden yesterday say that all adults should

be eligible for vaccines by May one. Does that seem aggressive or reasonable to you? I think it's probably both. Actually it is. It will need to be aggressive in order to meet it. But I think it's reasonable to think that with some of these novel strategies that we're going through UM and turning on now that you know that, that we could see UH May first target date. I guess I would call it to get vaccine into the

arms of every American. I mean, I think the key about meeting that deadline is going to be beyond setting up the infrastructure and making sure UM taking that next step to make sure that people are there waiting to receive it, UM, that they can have the access points and safely get to the vaccine, and that they're willing to make it. So a lot of community work has

to happen between now and then. So, Lauren, we're clearly right now in a in a in a period where demand a well outstrips supply, but presumably that's going to change over the next several weeks going into May. Then the challenge probably becomes, as we've heard from many folks like yourself, educating those folks that are reluctant to get the shot. What can you tell us now about your

experiences there? Yeah, I mean, simply having the vaccine, enough vaccine available for everyone in America doesn't mean that everyone in America is going to, you know, wake up on May second with vaccine in their arms. But it's a lot there's a lot of really strong trust rebuilding that has to happen. I mean, UM, during the last administration, we lost we lost a lot of our trusted communicators, especially around health and public health. And we're building that

trust back up. And and there's many communities across the country and even across the Glow that that trust wasn't really there to begin with. UM. And so we have a lot of work to do to make sure that communities, vulnerable communities UM believe in the system that created and is administering these vaccines, and and that that is work, that's real work that has to happen and should already be happening in a lot of places. How do we

go about that? I talked to Richard Edelman this morning, who said, one good idea could be to get corporate bosses to tell their employees because you know, it's it's closer to home, You're you're likely to trust somebody right there, especially UM in a lot of cases, someone for whom you were Do you think there are other strategies that that could work. Well, Yeah, I think, UM the key is to be UM, to be very careful that you're

not moving from building trust to being coercive. Right. And so the boss the employee employer relationship can be really challenging to navigate simply because UM it can go around like work workplace requirements like is this a requirement or is this the trusted relationship I have with my boss,

he's telling me that he or she believes in the vaccine. UM. A place that a lot of this work can be done is in the local church groups, local faith based organization, local community leaders, people who UM who have the trust of their community and can be messengers that this is a safe and effective vaccine and we need this for each other, for ourselves, but also for each other to

keep our most vulnerable population safe. UM. Community work is growing in this space, and I think there's people UM way smarter about it than me, uh, doing a lot of work here to make sure that the message is not just get the vaccine, but here's why you can trust the vaccine, here's why the vaccine is not just safe but also effective. UM. And it's really important to reopening the country. So Lauren, you know the vaccines are

coming fast and furious. That's the good news that one of the concerns that really still lingers out there are some of these variants that are out there. What's the latest. Yeah, there's several variants that I think people are keeping an eye on. I do think that part of what's happening is that this is the first time we've just been having variant discussions out in the public, you know, really, um, all across the board, and I think there there's a lot.

The way we talk about variants is really important because some are variants of concerns. Some are variants to watch because they may change the dynamics of the outbreak or the pandemic, and some are are simply natural things that happened to a virus as it moves through a population that actually doesn't change the dynamic of the outbreak of the pandemic. And so UM, we're watching two or three right now that are I think important and may have

an impact on vaccines and therapeutics. UM. But the companies are adjusting, which is good because UM, along with this increased you know, sort of observing as a variant and the science around it means that we are seeing them faster, which is also really good. What about the kids, Lauren, I mean, the boomers are pretty much covered now. Um. Generation golf is coming along quickly, and then your millennial

cohort is going to get shots. Um. But still we don't really know a lot about kids under sixteen, right, what's gen Z gonna do? Yeah, there's actually work being done on the vaccine side to under like bridging studies to understand how the vaccines do in pediatric populations in the kids. Um, And I think it is a big push to get this work done so that we can take that one step closer to reopening schools safely. So UM,

I agree with you. I think that there's still a lot of work and knowledge building that has to happen in that population. But I also think that it is being done. Um. You know, luckily the the infections are lower, which is great for kids, but also not it makes it a little harder to do the studies. So UM, we have to just sort of keep enrolling as many kids into those studies as we can safely and effectively UM, and hope that on the other end, we have products

that are safe for them and get them back into schools. Faster. Lauren, thank you so much again for joining us and sharing your wisdom with us as we make our way through this pandemic and now through the better times of these vaccinations. Laurence Sour, Associate Professor of Emergency Medicine that Johns Hopkins School of Medicine. I should know that the Bloomberg School of Public Health at Johns Hopkins is supported by Michael R. Bloomberg,

founder Bloomberg LP, Bloomberg Philanthropies, and this radio station. Mark Metric is the CEO of Sacks and Adam Burger Managing director of Insight Partners. The two are working together on the spinoff of what I believe to be one of the most iconic department stores in the United States of America. Sacks Fifth Avenue is a luxury business that everyone sort of grows up knowing. It's kind of the pinnacle um of of luxury shopping as a destination in New York City.

Tourists go there all the time. Um, Mark, now you want to bring it online. Uh, now you have brought it online and you want to make it its own business? Why I separate it? Well, first, thanks for having me. Uh, you know we've been online actually for almost twenty years. So I think it's why partner up with somebody like Insight and go to rapidly grow it. And that's because you know, the luxury online market is about to explode. I mean, it's going to triple in the next few years.

And I am a believer that twenty years ago when we all went online the first time, we didn't invest the right way. You know, we had our scores, we had things we had to worry about, We had to be very you know, we had to make decisions a lot, uh, you know, about about where to invest. And I think this time, this iteration of growth, um, we're gonna be there and we're gonna you know, we're gonna be able to really exploit uh, this market that's that's about to trample. Adam.

Talk to us about kind of your view of the business here. You're investing five million dollars into Sacks and implying evaluation of two billion dollars for this business. Talk to us about, you know, kind of what was behind your investment rationale there. Well, thanks for having me as well, and you actually stole some of my thunder. The rationale is exactly what you said. This is an iconic department store.

This is like a once in a lifetime career opportunity to invest in a legendary brand like this, over a hundred and fifty years old, that is making a very bold pivot to a digital first approach. They have an extraordinary legacy. There's still the place for designers together and create the highest experience for luxury and aspirational fashion. And that's just a rare opportunity for a software company like our software investor like ours that looks at thousands of

companies every year. You don't get a chance in software to invest in How did your whole brand like this? What is it about online the online experience that you think you can improve? Mark? And do shoppers online pick different stuff than shoppers in the store. They're looking for different stuff. Can you aim them at different things? Well? I think you know, first the online um luxury experience,

which I believe we're going to reinvent candidly. You can direct people, you could be there for what they want. But what's great about SASS as a fashion authority? You know, and Adam mentioned it, you know we've been doing this for a hundred years. Uh. In our stores we are an arbiter. You know, we help the customer pick what they want. We're not going to be even online a spear fishing type of experience where somebody wants a Gucci bag or they want this bag and they come and

they get it. Zax is always going to be helping our customers find and experience the best product. Um. So that's you know, on the on the fashion side, on the experience side, we're going to be investing and really pushing to improve cradle to grave, uh, the entire customer experience.

So it's everything from how we market to you, how we connect with you, how we ship you the product, what it feels like when it comes to you, what it's like when you call us to chat with us about it, or god forbid, if you return it, what is that like. So we're investing across the entire experience in Journey, and we're doing it very quickly. I assume returns are pre addressed labels, no fuss, no must put it back in the box and you send somebody to pick it up for me. That is what's going to

be happening. But you know, you know, to be honest, that's not where we are today. But yes, that investment goes towards this and actually you know, up until Monday, Zax charge you for returns. Uh. And one of the first things we did, I mean we closed the deal I believe on Thursday, uh and and really started wheat pivoting and pushing the business. We went to free returns Monday morning, Adam dollars, Where do you think that money needs to be invested? Well, where we're invested in isn't

a great team. And I know that sounds like a slightly glib comment, but that's also just a rare opportunity to have this great team who was running the entire

sex business now coming over and focusing first online. But where they're going to spend most of the money is quite frankly, in marketing and increasing the customer base by expanding the opportunity to a wider audience, and as Mark said, going up and down the line and increasing the experience, whether it's from fulfillment to customer service to a better website experience, all of those are opportunities and we're excited to back a really strong team that's also going to

be assisted by Sebastian Gunningham who's joining the team as an advisor. Uh, and he spent some time building the Amazon marketplace experience. So we think we've not only got a great brand here, but we've all seen a great team. Well what's your exit? I mean are you looking for? Do you have a five to seven year window for example? Um? Do you want to keep a stake in the business? You want to see an I p O. You know, we're not great market timers, and we take a different approach.

We are just trying to build a great business and focus on high growth and free cash flow generation over time. So we don't walk into this with a clear exit strategy. We walk into this figuring out how can we help continue to grow this business aggressively over time? And if you do that, uh, if good things will happen, and great businesses are generally bought, not sold, So we're will keep making it a great business and everything else will take care of itself. Hey, Mark, thank you so much

for joining us. Uh. Really exciting times for Sacks. It's people on that brand. Mark Metric, CEO for Sacks, and Adam Burger, managing director at Insight Partners. They're based in Los Angeles making this investment in Sacks as Sacks really takes a hard pivot to the director consumer e commerce business by spending off sacks dot com, so we appreciate them taking the time. Thanks for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews at

Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Millert. On Fall Sweeney, I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio.