Coinbase Earnings and Micron on Chips (Podcast)

This hour plus timing is everything. Just as the US signs the Chips Act into law to make more chips, there are signs chip demand is on the brink of a major slowdown. We'll discuss and would you rather subscribe to an electric car than own one. We're going to talk to the founder of Autonomy and Evie too, a company that allows customers to reserve their own tesla in just minutes. We will get to all of that in a moment, but first I want to stick with coin

base and bringing Bloomberg Shannalibos, Sticctionnale. Let's walk through the top line numbers, miss on revenue, miss on earnings. They narrowed their user forecast, and what I thought was really interesting is the assets on the platform plunge by more than sixty three percent. I mean that seems pretty significant. Yeah, that drop off an assets, that drop off you saw in monthly transacting users, and that drop off you saw on transaction revenue. Really that's a reflection of what you're

seeing at the retail business mostly there, Emily. You heard it from Emily Joy and her conversation with you, is that a lot of retail traders are on the sidelines and this is still such a pivotal business for coin base. You're seeing the stock reacting down more than five percent after hours already. Remember this is after a steep drop off this year. It has had quite a run up in the last couple of days, so it's giving a little bit of that back. You were also seeing, you know,

a lot of its uh investors really reacting here. You're seeing bonds also drop, which is really interesting. You're seeing coin basis then cost of borrowing rise because bond holders are also losing a little bit of confidence there. Uh. The question is what is the forward outlook. The question is that the outlook for the third quarter also does not look so rosy. Those monthly transacting users and trading

volumes are expected to be down again. So a little bit of that run up we've seen in crypto prices more recently is not enough yet to offset some of the pains we're seeing in those trading businesses over at coin base. Now here's a quick listen to part of what Emily Joy had to say. She didn't necessarily sugarcoat anything. She used the word russ herself. Take a listen. I think it was a rough quarter for most companies in

the crypto space. We we obviously had some big episodic events that happened during the quarter, and so some of those asset prices shrunk, which then impacts things like the assets on platform and other numbers. Now, when I tried to ask for her her sort of forecast on you know, when this winter thaws, she said, you know, I shouldn't be prognosticating, but said that she thinks, you know, some of these are crypto industry specific factors that are driving

these trends. Some of it has to do with the broader economy. When it came to hiring, yes, they did get a little over exuberant. What did you make of what she had to say. I think it's interesting, it's certainly true that a lot of other companies did feel some pain when it came to impairment charges. For example, you're getting pretty close there to a half a billion dollars in terms of impairment charges. We've seen similar things in terms of charges at micro Strategy and the Block.

But what about or Block rather the black is the crypto publication, But what about um what you're seeing over there in terms of their cash burn as well? That's another half a billion dollars pretty much right there nearly, And so our own Bloomberg Intelligence analysts are saying that they're going to have to probably tighten the belt a little bit more when it comes to their cash burn given some of the top line pressures you're seeing, uh,

when it comes to transaction revenues. All right, well, we're going to catch that full interview with Emily Joy later this hour. Shanali Bloomberg Shinney boss as always, thank you for your additional context there, Emily Choi coming up. Meantime, the US Justice Department is preparing to sue Google as soon as next month, capping years of work to build a case that it illegally dominates the digital ad market.

This according to people familiar with the matter. I want to bring in Julia Love who just started covering Google for Bloomberg. So first of all, welcome. UM. You know, this is a case that the DJ has been working on for years. What's been the big breakthrough? Um, so thank you so much for having me Emily. And yes, as you mentioned, you know, this case is a long time in the making. UM. D o J first started looking into these questions in twenty nineteen. Um, they brought it.

They brought their first taste related to search. But now we're hearing that they're getting very close to finally bring Bernina case in the ad tech market. So what could come of this lawsuit? What are we expecting? Yeah, there's a lot at stake for you know, there was a very similar taste brought by the Texas Attorney General in which they are actually seeking to force Goodle to sell off parts of its ad business. Doodle currently plays various

roles in this market. It orchestrates the market. It also does business with publishers and advertisers and so so the state of Texas is arguing that Goodle simply must sell off part of its business. It can't see it can't play all those roles, and it's possible that d o J could seek to do something similar. You know, we've spoken with Google executives. You know, I speak to Ruth

poor Ad on the call every quarter. You know, they always talk about how their construction constructively engaging with regulators. What's been their comment on this particular report so far, they haven't said much. They argue that there that their role in the advertising market brings um efficiencies to both publishers and advertisers um. But behind the scenes, my colleagues have reported that that they have made settlement offers to the Justice Department. That's so fire have not done the

trick and a loss. It seems slightly all right, Julia Love, who covers alphabet for us, thank you so much. We're going and we'll keep following. President Biden signed a broad competition bill into law, including fifty two billion dollars for domestic chip R and D. The bill is at the center of the administration's effort to reduce dependence on countries like Taiwan and South Korea, whose homegrown companies are leading

the market. Meantime, Micron Technology plans to invest forty billion dollars chip manufacturing in the US is part of a broader billion dollar investment strategy. But Micron CEO San Jamie Rota told Bloomberg earlier there could be trouble ahead for the chip sector, especially on the demand side, due to the macroeconomic uncertainties, as well as due to high levels of inventories that customers have built across various end mark

gets segments. For US, those in mentalities are being adjusted down and that is what is resulting in the duo's demand flawed US. Here's Gus Burnstein researched senior Analystacy Rascon, as well as our Bloomberg executive editor Free Technology Tom Giles. So, first of all, Tom walk us through more of what the Micron CEO had to say. This on top of what we saw from in video this week and Intel and a m D last week, right the picture from

the chip makers is becoming increasingly dour. Um this morning, basically, Micron said already are lowered. Forecast for how revenue is going to shake out in the fiscal fourth quarter is going to be worse than we expected. It's going to be at the low end or possibly below the low end. That sent shivers across the chip chip Chip making industry. Um. You know, he talked about demand, Uh, talked about build

up of inventories. There's this question about all these PCs that we were snapping up during the pandemic that's starting to level out. So, Stacy, what's your read on this? Is this just you know, periodic correction or is there something more fundamental going on here? Could we be at the beginning of a recession level collapse and chips Well, I mean collapse is a harsh word, but there's been a lot of worries that the very strong demand that we've been seeing over the last couple of years in

the wake of COVID was not sustainable. Um, that some of it was was pulled forward as as work happits change anything, work from home, study from home, play from home. So I elevated demand and that can't last forever. There's also been worries that, you know, in the wake of all the shortages and everything that we've been seeing, that the demand that we saw because of that was actually

stronger than it looked like. There's a phenomenon that happens when customers can't get the parts that they want in the time when that they need them, and they tend to order more. It's called double ordering. It's a very sort of normal behavior. But the problem is to the industry, they never know that it's double ordering. They just they

just see demand going through to the moon. And as as actual end demand starts to lag off, and it is in some of these especially these consumer areas, supplying demand starts to get back into balance, and then you discover how much of the actual demand profile that the customers are seeing as real and how much of it is phantom. The the one thing that Micron said that it was a little different was they started pointing out inventory corrections things like auto and industrial. These are end

markets that have been holding up very well. I personally have been concerned about these kind of double ordering phenomenons in these kind of end markets. And if it turns out that they were holding a ton of like memory inventory, like I don't know why they wouldn't be holding inventory

of other parts as well. So people will potentially look at that statement as low sort of like the next like potential leg down, especially in some of these end markets there was right now the demanding them still looks pretty strong. The timing tom is just so ironic because you've got the US poise to spend billions of dollars on chip manufacturing in the United States. But two, we really need it. This was supposed to this was supposed to be a big day of celebration for the chip industry.

I listened to the Di Biden and his press conference earlier today, and there was hooping and holler and an applause and the audience that's talking about innovation and creating jobs. And at the same time, you have these companies like Intel talking about like slowing down hiring, talking about cutting back on spending. And at the same and then and this is the industry that has been lobbying for months to get the Chips Act through. When's it gonna pass?

When's it gonna pass? And finally they got what they wanted, and it lands with a thud on the worst day possible when Micron makes this announcement a day after in video makes the announcement. But remember, what they're trying to do with the Chips Act is a very long term investment. It takes years and billions of dollars to build these factories.

And clearly we saw during the supply chain crisis, during the pandemic that the US has fallen behind in production of key chips to countries that you mentioned already, Taiwan and South Korea. Stacy, what are your thoughts on this and if there you know, are are are any chip makers poised to what of this better than others or not? You know, I'm thinking Intel, which as Tom mentioned, is

investing a lot of money in America's heartland. They are, and we can argue whether or not Intel has actually been able to productively deploy all of the money that they that they're gonna They're gonna get a lot of money, but you know, it doesn't like go on their balance sheet and then they can do whatever they want. They actually have to sink it into the ground and make productive investments. And given their their near term issues again, they've been over earning for a long time and they

they're ex biting them now. And frankly, I mean even the forecast that they were giving like to justify these investments. My own personal opinion is that that long term forecast at Intel had was outlandish. So I don't actually know that Intel is gonna be able to deploy this stuff in a value add manner for the industry. We don't we won't know for years. The stuff takes years. As you said to um uh to add now this go ahead. I'm just gonna say the general idea of like the

whole long term versus the short term. The industry goes through down terms. It's happening now probably and we'll see where it's now that things said, like over time, we will probably need this stuff, and you sort of think about this. The industry is big. We five and fifty six billion dollars in revenues last year. Maybe we go into a DOWNTRENI but like if even at mid single digit growth over the cycle some years up here, when you're done, it's a trillion dollar industry, and you know,

ten years plus or minus. So I think in ten years will probably be glad like like on a broad basis that some of these investments are being made, does that mean that they were that we're gonna need him now? No, So you're saying we're not going to need this stuff for ten years, it's gonna be a decade before supply meets demand. It's well, I think supplies already meeting demand, right, I mean, supplied near term is coming up and demand

is coming down. But you have to remember, even if we go hole whole hog into this, you're not gonna see any material amounts of capacity for years. Even Mike run talked about they said, we're gonna do like forty billion dollars. They're even planning on bringing any of that stuff online for production until the second half of the decade. This this stuff takes years and many, many billions of diligion.

And by the way, you could argue in that context, and I've been saying this, the fifty two billion dollars or whatever the numbers is a rounding error in the grand scheme of things. This is not really, in my opinion, going to structurally improve the amount of the percentage of capacity that is installed in the US relative to the world. It's not big enough, but it isn't get some of these projects started in the US, and so you have

to start somewhere, and don't forget that. In the meantime, South Korea, Taiwan, these chip makers, they're not going to slow down. They're gonna keep barreling ahead with their innovation and they're spending and the US is going to have to work all the harder to catch up. Very good point. Tom Giles are Bloomberg Executive editor and Stacy rascon Bernstein. Stacy, great to have you back here on the show. Thanks for stopping by. Alright, coming up, Lemonade shares popping on

the back of the next gen insurance companies earnies. We're gonna talk to the CEO next, Mrs Bloomberg. The insurance startup Lemonade says it's on its way to profitability. Shares popped after reporting smaller than expected losses in the third quarter. Lemonade saying can reach profitability without quote any further infusion of capital. Here's Guss Lemonade chair and co CEO Daniel Schreiber. So, Daniel, when do you get to that coveted profitability? Well, we're

turning a corner right now. We've let it be known that within amount of weeks we will see peak losses, so our losses are going to begin to edge downwards. Already in Q four we're going to see shrinking losses even as a business continues to grow. We reported sevent revenue growth year on year, so we're seeing strong growth and drinking losses. So we're very much on the path and this is really a reflection of the business doing

what it was designed to do. This is the output of many product launches, many market launches, well thousands pushes of production software just during the core to the last year alone, and all of these investments are beginning to pay off. It's very gratifying. Now you said you've moderated spending and the pace of hiring and that you basically have enough gas in the tank, you know, not to need any additional capital and to subsist on you know,

the capital that you have until you get to that point. Um, what's your outlook if the macro environment continues to be very challenged, if we go into a recession. Now, we're fortunate to be working in an industry that is pretty resilient when it comes to recessions. So we are seeing green indicators flashing on our screens really across the business, strong demand, strong unit economics, strong marketing efficiencies, strong operational efficiencies.

There are a couple of areas where we're impacted by the macro. For example, loss of capital has definitely shut up, which is why we'll be spending it much more cautiously. But actually, in terms of the fundamentals of our business, insurance as a space, as an industry is reasonably resilient. Inflation impacts us somewhat. Cross of capital would impact us if it weren't for the fact that we're already well funded.

But other than that, we're reasonably impervious to what's happening out there, which is a fortunate position to be in now since the acquisition of Metro mile a third of the business, as I understand it, is renters. The business is cars. What's what are trends are you seeing? Uh in the insurance industry given rising inflation, given consumers under pressure, you know when it comes to basic gas and groceries.

So inflation does affect our industry, and it affects the insurance space perhaps more than others, just because the supply chain impact on the car industry has been pretty profound. You take a kind to a shop today to get repaired, you'll pay a lot more than you would otherwise. And we're not talking about the nine percent inflation. You're talking here about twenty or thirty percent inflation specifically within that

industy street. So definitely an impact there in in an industry where you can't raise prices willing Nearly everything has to be approved by regulators and fifty regulators at that you can often get timing mismatches between the time that you apply to change rates and when you can actually change those rates, and inflation does impact you that way.

We do have the advantage now having acquired Metromile, though, of being in a unique position of having a far richer, more textured, more precise data set on which to price. So the industry at large uses broad stroke proxies, gender credit scores, marital status. Metromile has really been spending last ten years with precision senses driving billions of miles so that they can price and really estimate the risk of

every mile driven for every individual ensured. And having inherited all of that data and now ingesting it into the Lemonade Text Act, we should be in a position to have an advantage play even in the cast space, even under these relatively duress condition that the industry is experiencing. Now, I understand you're also exploring blockchain technology for climate change related insurance for farmers. You know, what's the status of that and the potential of that. Yeah, it's a fabulous initiative.

This is part of the Lemonade Foundation, which is a nonprofit arm So this is entirely nonprofit and we've launched the Lemonade Climate Coalition, So this is the crypto climate Coalition where we're using an avalanche based smart contract to enable subsistent farmers in Africa to ensure their crops. And you're talking about something like five dollars worth of creams over the course of a season, something like sixty dollars

of claims. At those levels, traditional insurance just cannot operate the cost of just selling a policy, of supporting it, of them handling a claim. All of those dwarfs dwarf the kind of fees that I just mentioned, But a smart contract can execute those kind of insurance policies instantaneously and zero overhead. So we're really shifting the higher policy into a smart contract where a farmer in Africa will be able to use their feature phone to buy coverage instantaneously.

That will be translated into a wallet on chain which will execute against a smart contract which will then be parametrically driven so that if there's a climate event, they'll get paid instantaneously with no overheads. It's part of a non profit initiative we're very pout of fascinating, all right, Lemonade co CEO Daniel Trevor, Thank you. Welcome back to Bloomberg Technology, Emily Chang in San Francisco. Let's get back to the markets now and chairs of Tesla, one of

the biggest drags on the Nasdaq. One just after a slew of new single stock e t s that will amplify bets on the notoriously volatile shares hit the market. Bloomberg's at Ludlow here with the details at ticket This is one that caught my eye. We're looking at single name or single stock ETFs, but leveraged and inverse e t S and test is really interesting example some new products on the market launched Tuesday on a day where the stock is down almost two and a half percent.

The whole point of a leverage and inverse e t F is that you want to look for those outsize gains when there's movement in the stock, but there are also the risk, of course of outside the clients. So Direction is one of those providers launching this EATF this Tuesday to take the daily testla ble one point five x one point five times shares e t F ticker t s l L. Now the stock was down two

and a half percent. That's the risk with the leverage ETF because at one and a half times, that meant that that e t F actually fell nearer to five percent or four point six percent during Tuesday's session. Now, if you're a bear and you think the stock is going to go down, direction offers you a bear one x shares E t F t S l S is the ticker. On a day where the stock was two and a half percent lower, this inverse ETF was up two and a half percent on a one to one ratio.

So regulators have been talking about this for about a month because it's not a new product. A XSS came on to the market thirty days ago with a single name Tesla inverse et F, and this is the demand that they've seen. They're offering a number of products across a number of names, but testers where they're seeing trading

volume and influence. So market regulators are getting a little bit worried about this because you're making an outsized bet on a stock that can move in other direction depending on your conviction. And given what we've seen in the markets of late with volatility, this is an area we should keep an eye on him. And thank you meantime, would you rather subscribe to a Tesla than own one?

Joining me now, the founder of Autonomy and ev rental company that allows customers to reserve their own Tesla and other electric cars in just minutes, CEO Scott Painter with me. Now, So, Scott, how would you describe what you do differently here than let's say, just a typical rental car company. Well, a rental car is just something that's going to cost you a lot more. Number one, it's a it's a good option if you're gonna need a car in a city

where you're just visiting for a couple of days. But flexible access to mobility is really about avoiding going into debt, and it's about making it easier, faster, and less expensive. Our belief is that one of the big barriers to mass adoption for electric vehicles is affordability. Uh the average car payment in America today's about six fifty dollars. We've got a product that gets you into a Testle Model three tomorrow for four a month. Talk to us about

your partnerships. Obviously, we know you can get Testla's, but you're also working to increase the supply of other kinds of cars, what kind of inventory or I should say options are there. Well, we've been operating in California throughout the first part of this year, and what we've really proved is that the unit economics and the business really

does work. We've created a very robust demand list and we are now expanding into the model why and we've also today announced in order for twenty three thousand vehicles across seventeen different automakers. So we're really going to be expanding the offer the offering to give customers more choice, and it's going to be the entire electric vehicle buffet, everything from an entry level vehicle like the Bolt e V all the way up to a Hummer V that

might cost you a little bit more. We expect that our order for twenty three thousand vehicle is going to get filled differently by every manufacturer. Step one for us is to place the order, talk with each of these manufacturers about their production timetable when we can expect this order to be filled. But we do expect our biggest customer or biggest purchase order, which is going to be with Tesla, to start being filled right away. Um, We've we've placed an order for as many as eight thousand

three D cars from Tesla alone. How do you finance all of these orders? I mean, you know, rental car companies, it's it's you know, historically kind of a difficult business. Well, you know, fundamentally, we believe that owning an electric car is a good asset at this moment. Right now, you've got structural scarcity for electric cars, just simply not enough cars being made. The factory that makes used electric cars, which is what drives future value of electric cars, is

the new Car factory three years ago. So we're looking very closely at what gets produced, what's going into production. The announcement everybody has said they're going all in on electric. It's not as though General Motors and Forward in Volkswa can have said they're gonna make an electric car. They said they're going all electric, So for is going to be all electric gener Motors by as these production facilities come online and these products become available to consumers, autonomy

is just another way to get access. We also are interestingly not selling you a car. We're not lending you money, and as such you can put this on your credit card. It is a month to month offering. So far less commitment. It does not show up as debt, so it leaves you with available borrowing capability. So it is really modern in the sense that it's also one percent digital. You don't have to do anything offline, there's no negotiation. Everything's

men you driven. What about what gets bought? What are you seeing in your market research about consumer adoption of electric cars? Yeah, our order is really following consumer adopts, and if you look carefully at the cars that we've ordered by manufacturer, these are the cars that we feel are going to be most popular. We're ordering fewer volumes of the higher end or more expensive cars. Our medium price point tends to be right around fifty thousand dollars.

Our primary vehicle, our launch vehicle with the Tesla Model three. We've now expanded into the model why we believe, for example, that the Model three is really this generation's prius, but at fifty dollars, it does represent the medium price point in the pack, and that allows us to deliver a monthly payment. Something will continue to follow. Autonomy founder and CEO Scott Painter, well widely recognized as one of the greatest athletes of all times. Serena Williams plans to retire

from tennis after playing in this month's US Open. Williams, now forty, has won twenty three Grand Slam titles and almost a hundred million dollars in prize money. I asked if she was thinking about retirement just a few months ago when she joined us on the show Take a Listen to what she had to say. That every tennis player thinks about our word as soon as they hit five years, because so this is so intense, it's literally

eleven months out of the year. Um. But I always tell people I'm not planning for tomorrow, only in business. While here we are a few months later and she has made a decision about the R word, And speaking of business, she says she's also going to focus on her venture capital firm, Serena Ventures, which mostly invests in

companies started by women and people of color. I wake up every morning thinking, oh my gosh, I cannot wait to open my computer and look at decks or just talk to the company, or just see how what we're gonna do today. Um, And it's something that is I'm super passionate about. Serena Williams, all right, coming up my exclusive conversation with the President and Chief operating officer of coin Base. What Emily Troy has to say about a quote unquote rough forter She's with us next, Mrs Bloomberg,

onto our crypto report. Now. I sat down with coin base at president and CEO Emily Joy just moments after earnings crossed. It was a miss on revenue and earnings, while assets on the platform plunged more than coin Base also narrowed its user forecast. Here's what Choi had to say about the quarter. I think it was a rough

quarter for most companies in the crypto space. We we obviously had some big episodic events that happened during the quarter, and so some of those asset prices shrunk, which then impacts things like the assets on platform and other numbers. So the monthly transacting users actually beat. But according to many analysts, coin bases losing share. Losing market share? Is that your take and if so, what are you doing to stop the decline? So let me on pipe. I

think there's different pieces of this puzzle. So one is our core retail customer is somewhat sitting on the sidelines in this type of a turbulent market, and we've seen that in past cycles. What happens is they want to sit it out, they want to hoddle for a little bit, and then they come back on and they'll engage with with certain features such as staking and other things. UM. We did talk about the fact that there were some episodic bankruptcies that happened this quarter, and as a result

of that, you know, we were untouched by that. We have incredible risk management UM and we we had zero exposure to that, but there was an aspect of it where we didn't also benefit from some of the liquidity flows that happened during the course of the quarter. And there also is a reality that during these types of cycles you have market makers and high frequency traders making

up the bulk of activity. A lot of that activity happens offshore, and so to that extent, like we might not have participated as much as others in the ecosystem, the way that we focus on that over the longer term is we drive more international growth to make sure we participate in that upside. And we also are investing heavily in products like derivatives, where which our users are showing a lot of demand for. So what's your take

on where we are in the crypto winter. Are you seeing signs of you know, starting to thaw or are we still deep freeze. I am smart enough to know not to make a prognostication on where we are in the cycle. Um, what I can say is that coin Base has now been through for major cycles, ten years of operating this company, and so we just know how to run a long term business. We know how to preserve cash, we know how to operate it so that we're investing in the long term and that's all we're

gonna keep doing. How much of what's happening do you think is tied to the overall economy, to what the FED is doing versus crypto industry specific factors. It's a mix, and it's it's hard to say what exactly comes from the macro what exactly comes from the crypto winter. You know, in some cases they were intertwined because some of the macro conditions caused the run on the assets that created

some of those bankruptcies. So, you know, ultimately, the way that we approach that market condition is we think about how do we drive higher revenue generating activities, how do we cause cut in these types of environments, and then how do we also make sure that we have the absolute risk management in place so that we avoid any any of the contagion that happened, which is exactly what we did. You do say you're going to have limited ongoing hiring. You had a big round of layoffs back

in June. Several companies have had layoffs. I know you and Brian have always talked about you're thinking about the long term, You're looking ahead in the cycle. So what do you think was the miscalculation here? Where do you think things went wrong? You know, it's entirely possible that we got a little too exuberant um as the market got really frothy, and I think that's a natural consequence. I mean, I think we're not the only company to

have experience that. What you saw then was that we took some of the earliest, swiftest decisive action with the cuts. As hard as they were, they were the right thing for the company, and so we're always going to be nimble and adjust to the market as we need to. You did do this big partnership with black Rock. I know investors were really excited about that. Are you expecting more of these kinds of institutional partnerships and what kind

of partnerships. Yeah, Emily, I have one in to do that black Rock partnership since the day I joined coin Base, And to be totally honest, we wouldn't have been ready for it back when I first joined because we didn't have everything in place that we needed to in terms of the product suite and the compliance and everything that we needed um and black Rock wouldn't have been ready because their institutional customers weren't necessarily demanding crypto is a

new form of asset class. It was kind of an idea. So for this to come together now actually during the crypto winter, is such an incredible testament to where we are, where they are, where their customers are. And I think the most important point is it speaks to institutional customers, very traditional institutional customers wanting to get crypto asset exposure. So will we see more of these or are there other institutional partners that potential partners that you're talking to

that are interested. You will see more of these, And honestly, we are the number one partner to partner with those folks, given our focus on regulation, compliance and security of assets. Coin Base has had a bit of a back and forth with the SEC. There are still I believe nine tokens coin base has listed continues to list as tokens that the SEC claims or securities. Why. Yeah, So we

have never shied away from regulation. It's part of our lifeblood. Frankly, it's it was counterintuitively something that we invested in from the early days of the company. So we welcome healthy, sensible regulation. In this case, the SEC has launched an inquiry about nine assets on our platform. As you know, we spend a tremendous amount of time and effort and resources classifying assets and whether we believe they fall into

the security or utility space. UM. If this is an opportunity to have that dialogue again and to make sure that we agree on a sensible framework for that, we welcome it, and we're of course going to partner with the SEC, CFTC and any other regulators or lawmakers on any of us. There's also this insider trading case where a former coin based employee has been charged. What's your relationship with the SEC at this point and what's your comment on that particular case. We have a zero tolerance

policy for front running. UM. We pride ourselves on the amount of security and detection that we invest in to make sure that we can detect for front running. We worked very closely with the d o J on this case. In fact, they publicly lauded us, which is a very unusual thing because we spent a ton of time getting them up to speed on the nuances of the case.

And we'll continue to work with with any regulators and law enforcement on making sure that we nip that activity in the bud Coin based president and CEO Emily Joy. Over Time Sports has just raised a hundred million dollars in funding to expand its leads for the next generation of athletes. The company started out posting high school sports highlights on social media back in in an effort to build an audience of fifteen year olds who love sports.

Over Time now boasts eighty channels across six platforms spanning football, basketball, soccer, and gaming, and over the last year, the company has branched out into running its own sports leagues. I want to bring in overtime CEO Dan Porter now for more so. Dan, I know you started out making this bet on high school, but you've evolved quite a bit since that time, and now you're focusing on sort of next generation athletes maybe just out of high school, talk to us about give

us a snapshot of where the company is today. So today we still have our kind of our core business. Where we went after the audience. You know, the average age of the kind of sports fan and season ticket holder of the Big four sports is still in the forties and fifties, and we made a big bet that we could go out and get that younger audience, and

that younger audience is the core of our community. And what we did is we said, Okay, we have this active community, We're on every social platform, they're super engaged with us, and let's launch our own leagues on top of that. And so we saw some opportunity in the marketplace. We saw opportunities for athlete empowerment. And we've built these leagues with kind of seventeen to nineteen year old players, some are high school age, some are out of high school.

But really it's about the audience. And I think that professional sports is incredible, but every generation kind of wants its own things spoken in its own voice. And so we've launched a league in basketball, in the league in football where we think there's an opportunity to build millions and millions of fans and deliver them kind of sports in their own voice. And that's our big bed and

that's where the hundred million dollars is going. So what's the vision to expand these leagues and also you know, potentially cash in on media rights. So really our our goal over the next three years is to grow audience. It's kind of an interesting thing because you become a sports fan because you have an emotional attachment to a team,

to your city, to anything else like that. And we've got to get out there in front of all of our tens of millions of fans and convince them that our league is the league that they want to pay attention to. And as we do that, and you know, we have already millions of followers on these leagues themselves, we want to bring on more sponsors. And I think

the value that all investors see in sports leagues is rights. Right, you have Amazon and Apple, you have more competitors in the market than you've ever had before, and and we want to we want to build a league the fans like, but also that buyers and media rights like. Now, the goal I know initially was to build this audience. Fifteen twenty eight year old who love sports but aren't consumed by it the way their parents are. What is a young, healthy,

sports loving audience actually look like. So, I'd say, first and foremost, they probably consume it in a lot of different places. And I think that's probably true of you and me to some extent as well. There's no single platform for sports anymore. You're kind of aggregating your information. But I'd say, really two things. One is they want to see athletes who kind of are like them. They can be aspirational towards. Doesn't mean that NBA or NFL

athletes aren't amazing. They are, but the gap between those athletes and I think our athletes in the fan is smaller. And I'd say they want to be participants. They want to not just be expected to sit on the couch and watch, but they want to have input. They want to be spoken to. You know, when I talked to young fans, they tell me like, I want to be seen, I want to be heard for what I bring. And I think that that's obviously true across content and music

and all aspects of culture. Like gen Z and millennials, they want to put their stamp on it. They don't just want to consume it, and that's what we have to figure out how to continue to do as sports leagues. I know you're also working on n f T s. Of course, there's been some skepticism about how big the n f T market can actually be. What are you betting.

I'm betting that n f t s are not an didn't of themselves, but there are means to an end, and so if we can use n f t s to give our audience a chance to participate, to empower them to activate their voice in the space, then that's that's amazing. If if we just think about it as oh, here's another revenue stream, or we should do the same thing as everyone else, I don't think we'll realize the

full potential. But really, at the core, blockchain and n f t s are about decentralized participation and activating the audience, and that's always at the core of what we do. So in some way I think of n f T is the same way I think it's social media, not in an end of themselves, but like a platform to do more for the audience. Interesting, We'll keep watching overtime CEO, Dan Porter, thanks for thank you for having me all right, that does it For this edition of Bloomberg Technology. Tune

in on Wednesday. We're gonna hear from Roadblocks CEO David Buzuki after their second quarter results. Shares are plunging in late trading after a miss on booking. We're going to talk about that, plus what's next for the metaverse, of course, and David Sachs, one of the many people in Elon Musk's inner circles subpoenaed by Twitter. This is Bloomberg