Airbnb Sees High Travel Demand and Uber, Lyft Stocks Sink

soaring inflation. Will talk with Liz Young of Sophi about what it means for the economy, consumers and tech plus substantial demand for travel that is the message from airbnbco Brian Chesky after a much better than expected earnings report. They'll join me live to talk about how tourism is rebounding and that provocative tweet about big changes to Airbnb coming and one third of list market cap wipe out

in a single session. Uber releasing its results early to prevent investor dragging them down to still Uber shares taking a smaller lugdown even after beating estimates. We're gonna speak with Lift president John Zimmer about the market reaction and what's next. All of that in a moment, but first I want to get a look at the markets and

a big day for the US economy. The Federal Reserve has voted unanimously to raise a benchmark interest rate by half a percentage point, stock soaring, bonds rising during FED share j Pal's press conference. Bloomberg's Ed Ludlow is here with the reaction. I take it away. Yeah, the SMP five hundred, the main gauge of US equities rising by three percent. It's biggest jump since May really accelerating those gains throughout that press conference, as we discussed, and that's

that one by more than three percent. We saw yields pull back, especially the benchmark ten year treasury yield, off five pound four basis points to two point nine four percent, and it was interesting to see bitcoin also get caught up in this kind of risk on sentiment. We saw in markets back above thirty nine thousand, pushing towards forty

dollars per token, caught up as eguties are rising. Now come means by Bloombog terminal producer Marguerite points out to me that this is the biggest jump in interest rates since two thousand. But here's the thing, the focus is very much on inflation. The increase the f o m c's target federal funds rate takes us to a range

of zero point five to one. You remember we got that quarter percentage point hike in March, but for much of the last two years, rates have been near zero because the FED was trying to prop up the U S economy cushion U S economy from the immediate impacts of the COVID nineteen pandemic globally, but the gap between rates and where we see inflation, which is at its highest level since the eighties, is the most on record, the spread between those two measures that we track in

the US economy and FED power was saying that he envisages fifty basis point hikes. At the next couple of meetings, he got asked, well, could we see a seventy five basis point hike. He said that that was not currently being considered by the f O m C. Not the only story of the day. M Of course, Lift and

Uber two very different stories, but similar market reaction. Lift off by thirty biggest drop on record, a huge chunk of its market cap lost after he gave a pretty weak outlook, and there are concerns that it's gonna have to spend heavy on driver incentives, which is going to weigh on profit. Uber actually showed some strength interesting ebit DAR forecast, but again the stock suffering in conjunction with

its industry peer lift. Big questions now about how these two companies and bride Sharing stand on their own two feet in this post pandemic world. Then all right, add thank you lots to digest today. The Federal Reserve, as i'd saying, giving a much needed boost to tech stocks by ruling out a more aggressive rate hype path and reassuring the US economy will stay strong. As you mentioned, NASDAC nearly three biggest one day jump in a week. Liz Young, head of investment Strategy, it's so far joined

us now, So look, lot's going on here. What do you think the ripple effects of this are really going to be on the macro environment over the next few months and the next couple of years. Well, the reality of it is that this is the first of probably a few larger hikes that we're going to see. It was important to get this first big fifty basis point hike behind us, because I think the anticipation was really killing us as far as investor sentiment goes. But we're

probably still going to see another fifty in June. We may see again another fifty in July. The ripple effects of those together should hopefully damp in demand to a point that some of this supply demand stuff becomes more imbalanced and we see concurrently a rollover in inflation. The issue here, and I heard you guys just talking about the spread between the tenure Treasury UH and CPI and the spread between CPI and where the Fed Funds rate is. It's not that we're trying to get the Fed funds

rate and the CPI rate to meet anytime soon. It's that as the Fed funds rate moves up, we want CPI to move down, and we want to see that move down, hope fully with a quick pace, because that's what's biting into the consumer. But the issue that we're probably going to face through summer is that we're sitting at an eight and a half percent c p I number. Even if this is the peak, it's not as if it's going to fall from eight and a half percent down to three percent overnight, So there's going to be

a gradual reduction. We're just hopeful that as we raise rates, hopefully for fifty basis points, and we go at it with a heavy enough hammer, that CPI comes back a little faster than the Fed funds rate has to go up. So look, tech equities are among many stocks that have taken a giant hit this year. What does this mean for tech stocks in particular? So tech stocks, if we just use the nasdack to represent tech stocks, the Nasdaq

is in bear market territory. Maybe after today it's narrowly out of bear market territory, but it probably should have been. And given where evaluations were before we started to really worry about Fed rate hikes and monetary policy tightening, some of that needed to come out of the system. Some of that bloat needed to come out of the system. So the correction that tech stocks have seen to this point I think makes sense given the inflated valuations that

we're at. Also, when you look though at some of those tech stocks, they're still at pretty high valuation. So I wouldn't sit here and say that they're not going to go down further and that there isn't more risk in the system. But long term, if we look back on this time period, let's say five years from now, we're probably gonna look at it and say, you know what, some of those names were really good bargains at those levels.

So this isn't okay. Time to be looking at tech as a longer term holding, and longer term here I'm talking about two years, three years, five years, looking at it as a long term holding, and looking for the companies that are high quality, that are still offering you growth prospects, and that aren't over levered or aren't trading at unreasonable valuations given where we are in the cycle.

So I think it's okay, just come towing back in. Okay, how do you look at a company like Lift though losing of its value, Ubers earnings, We're a different story, but we're also seeing them take a slight leg down today. Investors are looking at you know, both of these companies as a gauge of the health of the consumer, right well, and I think there's a lot of different ways to look at the gauge of the health of the consumer.

I think what we're seeing is that, because as I mentioned, a lot of that bloat came out of the system. Now you're seeing companies actually react in the stock market based on fundamentals. So we've gotten not as much of a tail wind from low rates, and you see earnings come out and companies are reacting to that. Generally speaking, the market overreacts in the short term. I also happened to think that this big rally we saw after the FED meeting today was a slight overreaction and we probably

end up giving some of that back. So it's possible that we just need the dusk to settle on some of these companies that have drawn down quite a bit more after earnings reports. But frankly, I want to see the market react to earnings. I want to see the market actually paying attention to fundamentals and wanting to get what it paid is for and holding companies more accountable from a fundamental perspective instead of just relying on the macro backdrop to drive prices. On the other hand, I'm

about to talk to Airbnb CEO Brian Chesky. Airbnb seeing substantial demand through the rest of the year. They say, you know, are you at all concerned that some of the demand companies are seeing is pent up demand coming out of the pandemic and that we're going to see another reordering as we move into next year. Well, depending on the sector that we're talking about, I think the travel sector is still seeing some of that pent up demand that people had been waiting to unleash once they could.

The problem that the travel sector is going to face in this inflationary environment is that prices are going up. Flights are more expensive, hotels are more expensive. All of the experiences that we were hoping to have are more expensive than they were a year ago. So I think people are going to start to make different decisions on

that front. As far as pent up demand, as like if we're looking at goods companies, looking at consumers actually buying things in stores or things online, I think a lot of that pent up demand has already been unleashed, and now we're in a place where we can see steady demand. But I don't know that we're going to see again that huge surgeon demand that we saw when things started to open back up for the first time. All right, Liz Young sopha ahead of Investment Strategy. Great

to have you back here on the show. Thank you everyone, it seems wants to get away. Travel experts expect this summer to be one of the best the industry has seen after two years of pandemic lockdown. If Airbnb's earnings or any indication it will be a busy summer indeed, with CEO Brian Chesky seeing quote higher than historical demand, joining us now to talk about that more. Airbnb CEO and co founder Brian Chesky himself Grime. Great to have

you back on the show as always. I know some of the trends you're seeing surpassed even your internal expectations. What surprised you most about the demand you're seeing? Well, I think what surprised me maybe the most, was that I was expecting last year to be the biggest traveler rebound that we had probably ever seen in a century.

You've never seen so much pent up demand, and I think that that surprised me is we're seeing potentially even more pent up demand this year, and maybe that's not surprising. I think people weren't quite comfortable crossing borders, and yet the delta strained, and I think you're gonna see this summer travel season unlike we've ever seen before. And the thing about travel is there are some things when they're taken away from you, you kind of don't want to

do them again. I don't think that's travel. I think the longer people can't travel, the more they want to travel. The morning bushes they get, so you use the words pent up demand there. And I'm curious how you think this summer might compare to next summer. For example, are you expecting the growth rate to slow down after people get this out of their system a little bit? Um No, I don't think so. I mean, number one, Asia probably won't recover right away. It's going to take some time.

And you know that's where the large percent of the world population lives. So I think that next year you're going to see a huge amount of growth coming from Asia. It's gonna be a little slower this year. We have a lot of pent up demand for Europe and North America. The thing Emily that would just say is this, there are new use cases that are here to stay. People traveling to rural areas, people staying longer, people staying at

me for a month or longer. But then our bread and butter historically has been cross border and urban and that is now back at or above two thou levels. So we're seeing a combination of the old trends coming back plus new trends sustaining. That's going to continue, and then eventually you're gonna have other geographies like Asia comes

So I'm pretty bullish the next couple years. How strong is the consumer in your opinion, because obviously, with inflation, the cost of flights are going up, the cost of travel more broadly is going up, And I wonder if you think is there a point where inflation catches up with the consumer and overwhelmed that pent up demand. I think that it could affect travel more broadly, but I think it's very important for me to distinguish our business.

You know, during the pandemic, we recovered faster than any travel company. That's clear. I don't think that's a controversial statement. And why is that. It's because we have nearly every type of space and nearly every community at nearly every price point. So when people feel like they can't fly they can't afford to fly, they can still get in a car and book an air nearby. And I do think a lot of people still want to go to

the house. Airbing b's are typically still cheaper than a hotel, and so we're pretty resilient no matter how changing travel the man occurs. Lift meantime is getting pummeled today investors not excited about their outlook. Obviously a different company, but another sort of measure of consumer sentiment, and I wonder how you read that, you know, given that people need this kind of transportation to get from place to place airbing,

b or not. I think that every company is different, and so I think that, Um, I think that the phenomenon of how people we're moving within cities is pretty distinct from the phenomenon of people traveling. And yes, people do need uh you know, transportation within markets. But the thing I would just know is about half our business are for stays outside of cities, right, so we have a lot of vacation rentals rural areas where ridesharing would

not be very prolific. Well, on that note, you are saying huge demand for homes, and I wonder how that's translating into demand for urban travel. When do you think tourism in cities will fully rebound. Well, it's already fully I mean it's already above at this very moment with Airbnb. I can't say it's above for everyone. I don't know if hotels are back to twenteen levels, but we are, so I think it's already back. I think the summer

it will be back. But Emily, here's the difference. Before the pandemic really our business was dominated by urban areas and the way people travel. They would go to Vegas or Los Angeles, or Rome or Paris. Now they're consideration set involves hundreds thousand places all over the world. They're open to national parks, They're going to rural area to go into small towns, so there's just a lot wider

options now. Asking about the Apack region, the Apack region still struggling with COVID, what steps are you taking their to use your financial resources widely in that region where there isn't much demand. Do you see things improving there? But they are gradually improving. But money can't fix the problem. People just need to get comfortable traveling and you need to start crossing borders again. That is inevitable. People will eventually cross borders and travel in Asia more than they

ever have before. But until they're comfortable, that's not something we can fix with money. The best thing we can do is wait for that market to be ready. It will certainly start coming back this year. I think you're gonna see a much bigger rebound for Asia probably next year. But again that those questions are kind of beyond me. This is really more a matter of where the recovery is for the pandemic in those countries. Okay, So let's talk about something that's not beyond you, and that is

your work from Anywhere policy. You've announced that Airbnb employees can work from anywhere, and I'm curious how you think that will impact recruiting and impact hiring. Well, I can. I'll give you one stat So we announced last thursday, um it was April that you know, employees of Airbnb can now work, live and work anywhere in the world. If you move within the country you work, We're not going to reduce your pay. A lot of companies do location based pay. We don't do that. Within the country.

You can go to a hundred and seventy different countries, live for nine days at a time. Since that announcement, more than a hundred thousand visits have come to our Jobs and Careers page. A hundred thousand. So I think that gives you a sense. What it tells me is that flexibility is the future. After compensation, Flexibly will be the most important benefit employers can offer. The best people aren't just in Silken Valley. They're not just in New York.

The best people are now everywhere in any company that limits their talent pool to a commuting radius around their office will be at a disadvantage. You justin now an anti party crackdown, tightening up restrictions around Memorial Day and July fourth. You know, still given despite the moves that AIRBNBA has been making, we've seen people evade the rules. We saw what happened in Pittsburgh and is shooting at

an Airbnb that's sadly uh, you know, killed two teenagers. Um, what more steps do you think Airbnb could take in this arena to make sure that people are always safe when they're staying at an Airbnb. Yeah, well number one, Emily, you just said it. We want to make sure that people always feel safe when they're an Airbnb. And the name of the game is we can always do more, and we're always trying to do more than we've done before. So what we've done is we background check everyone United States,

every guest and host. We have a risky reservation system where where we put reservations on high alert during certain holidays. So this Memorial Day and this July we're going to be very much on high alert about parties. We've banned party houses, meaning you can't get an Airbnb for more than sixteen people in a house that's deemed a party. And so we're doing a lot of things. We're gonna continue to get more and more aggressive. Um. The good news is the incident rate has steadily been going down

over time. The bad news is one incident is always one too many, so we have to continue to work really hard. So you tweeted that you will be announcing the biggest change to Airbnb in a decade next week. We're all on the edge of our seats. What more can you tell us? Yeah, you want me to say it right now, I'll just I'll just yeah, I'll just say this. Number One, I'm really excited because we have

the biggest updates to our product in ten years. We've been thinking about this for a very long period of time. I can't say a lot, but I'll just give a couple of clues. Number One, there will be a whole new way to search on Airbnb, and this new way to search, it's going to be a new way to find really interesting homes. And then the second thing is we're gonna have a big step change to our service level and the kind of customer service we offer. You'll

see a number of updates next week. I'm really excited about it. It's May eleven, nine A M. E. Stern Right on our homepage. There will be a small video, a short video, and you can get all the updates. Then we will be watching. I got to ask you about crypto payments. I know that was a top suggestion from your users. What progress have you made on that? We've We've We've been steadily making progress, um in so far that we've certainly researched it. We've looked at a

number of ways that crypto could be used. Obviously, it's a popular request for people to all pay with crypto or be receiving money with crypto. But that's all about all I can say right now. So look, you know, I know you've also been tweeting about web three and you know, curious about what it does and does not mean. How do you see, you know, web three or crypto opening up new possibilities for innovation or are some of

these technologies potentially overhyped? Well? I think both are very possible, right. I mean, I was not around during the dot com days. I was in design school at the time, but um, most of the companies during the dot Com era aren't around. That being said, almost all the ideas from dot Com that didn't work now work in some later incarnation, So I think that's the technology is really exciting. I think the idea of empowering people over the world is really

exciting as well. But I also do think that, like any new emerging technology, the vast majority companies will probably not be around the future, but the ones that will be around could be really really large. Look at the dot com bubble, Amazon emerged from that. It was a huge company. So I do think there will be really large companies emerging. But just like you know, there's a lot of speculation. All right, Well, looking forward to next week. Brian open to speak with you again then May eleven.

Brian Chesky, CEO of air VnB. As always, thank you for taking the time today. Coming up, why father? That is a question being asked inside Twitter right now ahead of an impending sale that Elon Musk. More on what the company is doing to motivate staffers next, This is Bloomberg. A few other stories were continuing to watch Twitter doing its best to quell concerns employees ahead of the Elon

Musk pending acquisition. At an internal meeting, Twitter's VP of product tried to appeal to worker sense of community, saying they have a responsibility to each other. This according to people familiar with the matter. Twitter, which employs more than people, warned about a possible staff exodus and a regulatory filing this week. Musk has suggested cutting costs, including layoffs, as

part of his plan to grow Twitter. The Securities and Exchange Commission is investigating Deity's chaotic debut in New York. That is, when the ridehailing giant raised four point four billion dollars days before revelations of China's probe into data security tank The stock before today DEDE had fallen since last summer's I P O, and the White House is boosting support for quantum computing is trying to pours billions into the next generation technology. President Biden signing a couple

of tech focused directives Wednesday. One would require the country's most vulnerable I T systems to adopt new standards against the threat of code cracking from quantum computers. Welcome back to bloomer technology. I'm emily changing in San Francisco. Let's get back to earnings with lift shares. Tumbling after providing a disappointing second quarter outlook, even as revenue in the

first quarter beat estimates. The right sharing company planning to spend more to attract drivers on the road ahead the stock following as much as its steepest ever drop in a single session. I want to bring in LIFT president and co found or John Zimmer for his take on all of this. So, John, clearly investors are spooked here. What is your response to their response? Okay, it matters to us the response. We don't like it. Um, we take it seriously. Uh, and we believe we're doing the

right thing for the long term shareholder value. Uh. You know, first, reflecting on Q one, Q one was a good quarter. It was a new COVID high for rides. We had improvements on both the driver and rider's side. And and obviously with the market reacted to was us saying in Q two, coming out of Q one, where we have the largest spike in COVID cases with Almer Khan, we want to make some additional investments in the market where we see a lot of upside opportunity for return on

those investments. Um, and I think you know what the market wants to hear is more guidance on what they're gonna get for that, and so we'll certainly do that in the quarters to come. Uh. And it's on us to to prove it as we put up numbers in in twe Q two, three and four. Dan, i'ves of wed Bush. We're for to your spending guidance as in nineteen eighties rock Star like disaster. You know, part of

what you're spending on is driver incentives. You know what about concerns that lists this could lead to a race to the bottom, a subsidy war with Uber. Yeah, well, I think I think that prior statement is extreme and not not really tied to what we're doing here. Uh. And and I'm not concerned about a subsidy battle there. There are some fundamental investments were making. The one that we talked about and they got the most attention is

on the driver's side. You had a lot of inorganic things happening when you have spike in COVID, whether that's a quick reduction in demand, a quick increase in demand, uh, and the need to add a drivers quickly. We are seeing drivers come back organically. In fact, you every year we had sev new driver activations. But based on data we're seeing now, there's a lot more demand on the horizon, and we want to prepare for that in the most

responsible way. To have low E T A s UH and investing in drivers and investing in our marketplace technology to us, is a prudent way of doing that. You've said the cost of incentives will be passed down in part to customers. Do you have any concerns about alienating writers. Um? Well, we we always think about the price. I mean, that's actually a big part of this investment is to make sure we have the best E T A s uh and the best prices in the marketplace. Um. And so

I think we're tying a few separate things. When you have dynamic pricing and prices go up, uh, those go down uh and are paid for by the writer. Um. But we're making a few investments here, that being only one of them. So investors are also wondering if they've overestimated the opportunity in ride sharing our higher prices here to stay. Is ride sharing a utility for the masses or a luxury good? And how much growth is there

really to be had in the rider base? Yeah, I mean we're reporting on QUE one again Q one, we had growth year over year. Uh, you had four point three million more active riders than in a year ago. And so UH we're we're seeing that growth. I think what's not being given credit anymore is the fact that we're coming out of a pandemic uh and and we need to in our business. Demand turns on a dime and supply takes a few additional months or quarters uh to catch up, and we want to get ahead of that.

But do you see right sharing as as a utility for the masses or with higher prices? Is this something that a smaller group of people, only a smaller group of people can afford. Know, a growing number of people, as I just said, with the four million new active writers, are going to be turning into it. We just had two years where people were asked to wear masks and

not be around each other. We're coming out of that. UM. We we have continually seen historically and then now coming out of the pandemic, more and more people turn to this use case. We're gonna be bringing back shared rides, which has been missing for for the pandemic, which is a lower price product. UM we bring in other lower price products with weight and save. So I'm not concerned. And in fact, the message we're saying is that we see the demand coming back and therefore we want to

invest in supply. Now, Uber says they're not going to be spending significantly to maintain or increase supply. You know, they're talking about tweaking their algorithms to make things more transparent for drivers. For example. Is this something that lift would consider other incentives to pull those levers to get drivers to come over. Yeah, this is not pure incentive. So we're we're investing across the board in the experience

for drivers. Uh, and so a lot of that is in our marketplace technology, whether that's maps that improve the experience and allow drivers to to earn more and have higher utilization, whether that's our pricing algorithm to fine tune specific things that happen at say an airport when multiple planes on load at the same time, and all those improvements payoff as as rides continue to rebound, and we we feel strongly that these are the right investments to

drive the most growth in both the short and long term. How much overlap do you see in drivers versus you know, there's Uber drivers that you're competing with for for for people and for food. But are you also competing with instat cart and grub hub and door diash and Amazon and you know Domino's Pizza. They need drivers too. Sure with within the category of drivers, there's the highest earnings historically,

on average have been found within the rides here segments. Also, we typically require uh newer vehicles UH and and background checks and driving record checks are always required on our platform. That is not something on UH in these other industries that you name. That is always the case. UH. And so there are segments of the population that want to earn more uh and that have access to two newer

vehicles and are willing to go those background checks. Now, I want to move to another story, huge shore that we're watching. I know you're watching the lead draft opinion from the Supreme Court that signals that Roe versus. Wade could be overturned and soon. LIFT has already come out in support of women's reproductive rights. Uh. You said you're going to defend drivers facing legal action in states like Texas and Oklahoma, where we've seen anti abortion laws make progress.

What's your reaction to this draft opinion and what more is LIFT prepared to do. It's very concerning. As you said, we've been very clear on our viewpoint on women's right to choose their and have their reproductive uh, you know, health access. UM. And we've made a donation to Play in Parenthood, a significant donation to support their work on that. Uh. We were the first to speak out on the laws in Texas and then more recently in Oklahoma speaking out

as important as are the actions we take. And so we're working to to make sure women who are coming to a different state have access to transportation to make that traumatic experience uh a bit less stressful. Uh. And and will continue to speak out when we think the rights of our our community are at odds with with what's happening in the world. If this issue is turned over to the states, potentially half of states could enact laws like this and some of those laws would be

triggered immediately. Is LIFT prepared to defend drivers on a national level? Yeah, I mean the specific laws that we reacted to in in Texas and Oklahoma. In addition to to disagreeing with the overall viewpoint and and believing that women should have the right to choose, uh, there were laws that said that a driver without them even knowing where they're taking. Someone could be found criminally liable for taking someone to an appointment that they had no idea

where they were going. That that is wrong on many levels, and that is something we will continue to defend. Our drivers from two have any concerns about alienating riders and drivers by taking this stand, I mean, obviously, you know you are running a business. Why speak out on this. It's important for UH companies and individuals to speak out when when they disagree with something. We've We've shown that

throughout our history. We're not afraid to speak up. We think ultimately doing the right thing for society and speaking to that UH can also be beneficial for the business. But we care deeply about our impact UH and our ability to impact the world around us. All right, John Zimmer, Lift President and co founder, thank you for stopping by. I want to stick with Lift and Uber. Now take a culture look at the stock moves obviously that big move from Lift and talk to us about the size

and scope of these moves. Obviously we heard John Zimmer's response there. He said he doesn't like it, but he disagrees. Yeah, and you know, investors clearly concerned right dropping the stock is significant, biggest drop on record. As you said, the other way looking at it is you know, it's more than three and a half billion dollars of market cap loss in a single session. Coming me, it's my Bloomberg terminel.

Look at this chart. This is the way I've been thinking about this throughout the day that these two stocks, in particular since their I p o s, both of which took place in two thousand nineteen, of course, have

not performed well. Right. You see that as we emerged through the the initial phase of the pandemic and things improved, we saw a rebound, but actually as part of the kind of conversation around economic reopening one through the present day, these stocks have seen declines and even Uber down as much as sent one point on Wednesday, ended up dropping by the most in five weeks. There are a lot of questions here about whether these two companies can stand

on their own two ft. There were two quick charts I wanted to show you. The first lift. There are some bright spots. One of them is revenue per rider, pretty high, around forty nine dollars in revenue per rider, right now, way above where we were in two thousand nineteen. But if they're going to spend on incentives growing the top line through raising prices, that's not really satisfying for investors.

Although a lot of Wall Street and this said this was overdone because by investing in the drivers, and you just heard it from John Timmer, that is a bullish sign that lifts sees demand coming in the future. And then finally on Uber, you know, they didn't farewell on the ext markets Wednesday, but lots of people pointing to their different business model. Right orange part of the chart is mobility rides, but delivery increasingly important. They have a

diversified business. And you heard Dorak Kostrasha here and I hope you asked him about this at some point. Well what are they doing to win over drivers? They're saying, come to our platform, don't just drive people, you can also do delivery. You have the choice and maximize the money that you can earn. It's a really interesting differentiation. All right, Buddla. Thanks. Coming up, they're all NASDAC plays in crypto markets and how that could grow with more

regulatory clarity. Talk about that coming up next time now for our Crypto report. And even with falling equities and delayed i p O, some companies are still looking to make their stock market debuts, according to NASDACS Ceodina Freedman. But what insights does the NASTAC have and what role will it play in crypto markets? Freeman spoke with bloom Brigs, Kaylee Lines and Guy Johnson earlier today. Take a listen. NASAC today is actually a scale technology company that serves

the broader capital markets and the broader financial system. So we in fact have a big role to play in facility and helping crypto markets as well as you know, banks and brokers managed new digital assets. So we provide our technology to a hundred and thirty other markets around

the world, including UM. Actually, I think we're up to potentially tend crypto markets now that are leveraging our technology for trading, for surveillance, and for other means that they have to make sure that they can grow and expand

their business. We also have a very scaled anti financial crime technology solution where we are We've created a new module specific to digital markets to make it so that banks can UM evaluate a mL risk as well as fraud risk in their digital wallets as well as in their their more traditional accounts, so we have and we also one third thing is we have a crypto index that we've launched outside the United States. Index products we launched outside the United States, so we have a role

to play there. But as a as a market operator, I think that we were still trying to understand the regulatory landscape as well as you know, the overall maturing of it for the institutional use of crypto before we make bigger decisions a market operator. NASA dack CEO aDNA Freedman there, and it seems California's governor has heard aDNA

Freedman's calls for more regulation. Governor Gavin Newsome just signed an executive order to spur blotching innovation, making California the first state in the US to start creating a regulatory framework for Web three companies. Set in a statement, too often government lags behind technological advancement, so we're getting ahead of the curve on this, laying the foundation to allow

for consumers and business to thrive. I want to get back now to the biggest story of the day, and that is the Fed's rate hike, the biggest since two thousand and the FED signaling more to come. All to Tampa inflation. I'm joined now by Mark Goldberg, a partner at Index Ventures, to give us some thoughts from the VC world, and he's also got some insights on fintech. Mark Goldberg of Index, you so much for joining, Thank you for having only It's a pleasure to be here.

So look, big macro economic changes of foot What is your advice to founders right now in this moment? My advice is to build. I mean we're coming off a year that was the most exciting, exuberant year in not just fintech but in the tech venture capital market in a decade, and where money was was you know, available in spades, and now we're at a time where the market has changed, and what we're telling our companies is a focus on building, not fundraising. So how do you

build without funding? Well, the nice thing is because so many of these great companies raised huge balance sheets last year. Um, they have the luxury of not having to go back to market and so the distraction of you know, constantly funding every six months twelve months has gone away. How is this impacting VC sentiment? I mean, I know the private market valuations are going down. Can we expect that to continue? The way it's impacting sentiment is the sentiment

is about as negatives. If you seen you know, if you saw Bill Girls tweet and just the broader sentiment in south Park today it's negative. I think that's oversteered. I think what we're seeing as an opportunity and if you look at indext other VC funds, the best investments are made at times of um you know, on the other side of a cycle. And that's the opportunity we have in front of it. So how is that impacting

your strategy at Index? Well, we're focused on what we always focus on, which is can we find the best founders and can we get behind generational companies. I think if that north star holds true today through cycles, we're gonna be just fine. You're predicting a tsunami of fintech m and a this year where specifically, I think what we're going to see is a massive wave of consolidation. Again, last year was the party. This year is the hangover. We saw a lot of excitement, and what's gonna happen

now is that consolidation. The exciting thing though, is the number of consolidators in the fintech space. You and I had had this conversation five years ago, we would have thought about fintech as a vertical. What it's done is it has become totally horizontal. The acquires are not just Bank of America JP Morgan, Goldman Sack. Now, it could be Apple, it could be Google, it could be Striped. So the number of acquires has grown significantly. It's going

to be a really exciting year. Well, we see crypto joining forces with traditional finances. That going to be part of the M and A. I think it might be. I think, you know, the crypto yng to the web to yang is absolutely possibility, and I think we'll start to see those combinations in this year. You've made a number of predictions before the start of this year. You said, fintech in the metaverse, gen Z on the rise, gen Z Traders on the rise, Stripe buying, open Sea, they

are rolling out some more crypto features. You know, which of these things do you think is still going to happen? Well, I think we still have seven months of the year, so I'm gonna wait on on a value in of my prediction still then, But I think one of the more exciting trends from last year is this fusion of fintech and culture. And you know, we talked about the you know, meme socks of last year in robin Hood, and I think what we're starting to see is that

fusion of uh fintech entering the pop culture mainstream. The way that cash app has a clothing store. Who would have thought that a bank would be people would be wearing the clothes from a bank. I think that is one of the durable trends that's going to propel us in the next few years. Robin Hood is way down from last year, and the gen Z traders are on robin Hood, so what's going on there? You know? I think robin Hood's genius was the ability to democratize access

to the stock market. And if you step back from robin Hood, that has been one of our biggest themes at Index, which is how do you think about serving the eighty million underserved Americans. Actually, one of my most recent investments is called Nova Credit h They actually are able to offer immigrants without credit score an ability to get a mortgage or a car loan. And we think expanding access is really one of the big themes we're

gonna be working on this year. Now, you are investors in a company or were investors in a company called Fast this you know one click checkout area which just recently disappeared completely, just went under, said they ran out of money. What happened there? Well, our investment in Fast was around this concept, like you said, of one click out, one check clickout, And what I think you saw with anyone who's been through an Amazon checkout experience or Shopify

is there's an opportunity for streamline checkout. That was our thesis behind Fast. Obviously it didn't work out. That's venture capital m but we're still really excited about thesis and getting behind grave founders. Now, let's talk a little bit about spacks. Some are saying that SPACs are a four letter word, and you know, there are many good four letter words, but there are a few not good for letter words. What do you think about that? You know,

I think spots was an interesting innovation. But as with the broader market, um, you know, we're gonna see what's durable and what was more of a you know, maybe something that that didn't last as long. So where are you placing your bets within fintech? Yeah and beyond for me? Right now, what we're focused on is finding opportunities in the fintech space consumer finance. I think there's this tremendous

generational shift. You mean, people that want to do banking from their phone a lot, driven by the pandemic, versus doing it at a branch, so that you know, today less than ten percent of consumers use a digitally native bank. That's going to change in the future. The secondary is gonna be payments. So I think those are the opportunities were most excited about today. Now, you were an investment banker during the Tesla I p O. What was it

like to work with Elon Musk back then? That was of what do you think of him taking over Twitter? Back then? It was quite the formative experience for a twenty three year old straight out of college to get thrown into that. I mean he was the same iconic class to figure he was then as he is now. I think he had a few fewer zeros on his balance sheet at that point, but the same attitude. Do you like the idea of him only Twitter where we're looking at some of your tweets right now, so you're

on there. What I'm excited about is Twitter as a private company, what they can do if they optimize for the long run as opposed to quarterly earnings. So we'll see. There's so much uncertainty in the direction that he'll take the company. But I like the idea of being private and seeing what they can build from there. I think they should open source the algorithm. Is that going to

change things? You know? I can't speak to that, but I think it is going to be exciting what they can focus on if they don't have the same short term horizon. What about employees who want to leave a lot of people there right now? They don't know if they we have literally have a story called why Bother? That's what employees are thinking. We're going to have to see.

You know, there's obviously been a lot of negative sentiment, but you know, if they can make the right long term bets, it's going to be an exciting platform for years to come. All Right, Mark, Goldberg Index Ventures, thanks so much for joining us. Thank you coming into the studio. I appreciate it. Thank you. That does it for this edition of Bloomberg Technology. We'll be back tomorrow. I'm talking to Uber CEO Dara Kasra Shay. He'll be joining us live thirty a m. Eastern time. Tune in for that

you don't want to miss it. We've also got an action packed show Lisa Sue of a m D, and much more coming up tomorrow. This is Bloomberg