From the heart where Innovation, Money and power. Collie in Silicon Vallet NBN. This is Bloomberg Technology with Caroline Hyde.
And Ed Ludlove.
I'm Caroline Heyde of Bloomberg's World headquarters in New York and Imed Ludlow in San Francisco.
This is Bloomberg Technology.
Coming up, we break down Disney's results. As the media giant takes a hit amid the battle for streaming dominance class.
We'll bring you my conversations from Google io and here from the SAP CEO as the company's team up with Google Cloud to maximize AI usage, and.
Microsoft announcing it's freezing salaries this year. As the tech giant looks to navigate economic uncertainty, we'll bring you the details so much more this hour. And the market too is trying to navigate economic concertainty at the moment. War is about the debt ceiling, worries about the ongoing concerns around US banks, and yet tech in outperforms. We're up only a tenth of a percent and managed to shake off some of the nerves and the rest of the
market at the moment, we're up just some fifteen points. Now, there was economic data that the jobless claim showed some worry about the slowing in the jobs market, inflatory pressure dialing back a little bit when it comes to producer prices, the two year yield is coming down on that perhaps fall down in the inflationary pressure. But does this mean some sort of restrastionary environment? That is probably the watchword
for today. We're look at KBW bank index under pressure with of course pack West the one that we look at front and center. Let's stal it on AND's of cour's happening in terms of the desire to get into a haven means the dollar is going higher, it means crypto is going lower off by two and a half percent. So Bitcoin currently training at twenty seven thousand on the day ed. But go into some of the micro the earnings and the like.
Yeah, actually, outside of earnings, there's quite a lot of newsflow.
There's driving these moves.
Peloton a recall of two point two million bits. We're going to get into that late in the show with Bloomber's Mark Gunman. But at one point in the session that's stock at a record low. It's having an impact. Alphabet pair of Google up significantly five percent, biggest jump since the first week of February.
It's trading at August high.
The market like what it heard about what they're doing in the field of AI, and we will hear more about that as well. Interesting that some of its peers in the AI space, Microsoft and Video a little softer, both of them down around to both of them down around eight tenths of one percent. Disney is the big mover to the downside, and that one is on earnings and miss on subscribers and profit in the current period a loss will be wider or widening from the past quarter.
It's interesting because they're still on track to meet that cost reduction goal, but there are some worrying signs about the cost of streaming. It's streaming or nothing, so let's stick with Disney. Bringing bloombergs Chris Palmery from LA That subscriber miss Chris was quite interesting because it seems to be showing the impact of bringing in an AD supported tier in the quarter gone right.
I mean, some people would argue a cheaper air supported a tier would bring in new subscribers, but need out for the second quarter has lost Disney plus subscribers overall.
That's partly with.
When they introduced the new tier, they really raised the cost of the ad free version thirty eight percent, and so I think you're definitely seeing some people canceled for that reason, and there's concern now have we peaked in streaming penetration.
That's that obviously is worrisome.
Christy McCarthy, the CFO, though, trying to cast this as a blit when it comes to increased spending from a marketing perspective, Chris, why don't investor sort of seeing it as that.
Well, you know, that's the thing is that there's been so much focus in the last few months and less on subscriber growth in these companies and more on let's ring profits from this, but now this seems to be now a focus on both as well. It's going to be difficult. There was a lot of things on the call to ponder suggestions. For example, that Dieiger now lights the WHO streaming service, wants to keep to that and that which means they'll have to buy out the one
third of WHO that they done. There's also a big write off on content that they're now no longer putting on the services.
So at the same time they're talking.
About raising the cost of the Disney Plus service, they're reducing the programming on it, so there's a lot of uncertainty and streaming right now.
And also, I.
Mean the people who've left from the streaming unit as well, the fact that all at the same time they are thinking about costs, they are cutting into their labor, into their talent pool, and a large lot of that comes from the people who actually launched Disney Plus right right, And.
You know, overall we're in the midst of Disney's in the midst of a seven thousand person reduction, hoping to say five and a.
Half million billion dollars in costs.
You know, this was not the maximum quarter for that. It'll be the current one where a lot of the people were let go. But there wasn't a lot of discussion. They said they're on progress to meet those targets, but not a lot of discussion about how much they're really saving. And we'll see this year. So that's another concern. The discussion across.
Spinningbek Television Radio Morning is whether Disney is a technology company or if it's a media and entertainment company.
And it's interesting the.
Bright Spot Chris the Park's business technology company that operates a park's business.
Well, they would certainly like to think that they're technologically savvy. You know, they have all these you know, you can order online, everything's you know, through your app nowadays you're you know, you pay a little extra ZiT the app and you can cut the line on the rides.
So there's a whole lot going on there.
But yeah, but basically this is an experiential business.
Uh.
And you know it's certainly in the future we'll all be watching things online. But you know, it depends on you know, really human interaction to to make those great movies and TV shows work. So you know, I would put Disney in the media and entertainment category more than tech.
And Chris, did they mention AI, Yes, it was a discussion of that, And you know, I don't think that there's there's there seems to be agreement in Hollywood that this is not going to completely replace the screenwriter and and so we'll see how that plays out in negotiations with the writers strike because the writers want that sort of in writing.
Well, thanks for bringing it back to all things Hollywood that you cover as well, Chris, how mary brilliant breakdown on what's happening with Disney, and let's talk a little bit more about how AI is uphending the way in which people are thinking about investing in tech and otherwise in the moment, please to just dive into the markets
a little bit more with Sylvia Jablonski. She's to find CTF CEO CIO overseeing what nine hundred million dollars in assets under management and some of your ETFs really catering to the focus on AI at the moment, Sylvia, And do you worry that there's hype priced in or are we underestimating the amount of change and the amount of well value that can be found.
Oh, good wording and great to be here with you today. Well, I think that we're you know, I think the rise in the stack price this year is you know, perhaps on some of the zuber ands over AI. But don't forget that twenty twenty too. It's very much a tech recession here. So I think a lot of that is catch up and then the inertia behind the AI build out is something that you know, helped propel gains. But
I do think it's underestimated. I do think that tech has a long way to go, and you know, with that comes some other components of tech like semiconductor companies. For example, AI is just beginning and it's been around for a couple of decades, but it is now just
sort of coming to fruition and becoming monetizable. So if you think about what AI can change, it's pretty much every sector out there, everything from healthcare you know, robotic surgery, research to defense, you know, precise information targeting things like that, banks, accuratetit risk, you know, preventing.
SBB types of crisses.
So we're just at the beginning of what is going to be a major innovation in the way that we use technology for the next decade to come.
It was interesting and yesterday when we had Scale AI on and he was saying there's a lot of AI tourists is what he's calling them, not much actually being applied in the market right here right now. But are you thinking along the hype or the reality side of things?
Well, I think it's interesting in your case, Sylvia, because Defiance operates the Defiance quantum etf right, real emphasis on those companies' best position to take advantage of developments and machine learning and quantum computing.
It's not performed as well.
Here today is an as that one hundred down thirty percent last year. What within that basket has worked well for you and what has let you down.
Well?
So we kind of look at it a little bit differently. I think what we try to you know, the way we.
Try to really cater this product and build this product is to give investors access to everything that has to do with the future of technology, machine learning, and artificial intelligence.
So in order to do that, you have to include the big generals that are performing well, like the Apples and Microsoft's you know, ibms NA videos on the semiconductor side, and then you also have to include some of the smaller companies like Amberella for example, that will be part of the you know, the visual aspect of it.
So there are a lot of things that have to happen in order for AI to work right.
You need to be able to gather data, you need to be able to process data. You need a computer that's fast enough to do it. So that's you know, that's why it's called quantum, right. Quantum computing and the speed to sort of process and use all of the data is really the key to.
All of this working right.
And we already hear the criticisms of that that you know AI or you know the initial Bard presentations.
About bad data, right, so you need all of that.
So what performed badly well, you know, high interest rates and small cap growth stocks perform badly. But when they do really, really well is when this innovation truly starts to you know, transform industries and take off interest rates start coming down, and then you get the whole basket performance. For you put the hedge right now or the top leading tech companies that are guiding it forward.
Defines quantum ETF up around twelve percent year today. I think the a's that one hundreds up and twenty two percent of something single names. What are the companies that excite you most of what you just outlined?
Yeah, so I mean for now, just because of the type of market environment you know we're in, I'm sort of sensitive to that. So I'll kind of give you the obvious ones. I think Microsoft, I think Google, Apple, Amazon, Navidia,
A M D on semiconductor. You know, all of these companies I name first because right now, they have balance sheets, they have cash, they can invest in R and D, they can do M and A acquisitions, and you know, take over companies like in the case of you know, Microsoft big investment in open.
Ai to get chat GBT going, right.
So I think that right now they're the companies that are going to be sort of the performers and this you know, kind of the safest place to sit.
But some of the smaller.
Plays out there, I think again, like an umbrella we just haven't heard about for a really long time, or Eve going to pound here. You know, you saw them crush earnings. I think these companies are going to start coming to the forefront in the.
Next couple of years as they.
You know, kind of improve and exceed expectations with their innovations that they're working on.
And Sylvia taking a more macro perspective, can those light now aims outperform even if we see growth continue to even slow down if we worry that we do hit some sort of recessionary environment because the jury seems to be out as to whether the tech is some sort of safety play in this environment or whether it is beholden to macrowing economic environments.
Well, I think it's a great question.
And I think that all of the you know, major kind of indices and sectors and the top performing stocks in those sectors are susceptible to what happens in the macro environment. And you know, that feels like an obvious answer, but it's sort of not. I mean, we have a unique situation now where we have a FED that has you know, kept hitting the gas pedal and rising rates and slowing down growth. So there are very few companies that can truly, truly withstand that and come out.
With you know, double digit performance.
But we have to believe that we're getting towards the end of that.
You know, we saw a PPI member.
It looks like inflation is coming down across all sides CPI, PPI, we're seeing, you know, kind of grow slow. So if the FED kind of gives us a little bit of relief there and these companies that have stood all of this can now actually start to spend and increase and speed up there R and.
D and roll out.
You know, I think it will be a different story, and I think tech will need the market. We need tech right. We don't have enough people filling jobs. We don't have enough factories that can you know, kind of meet the supply and demand function out there. We had so many inventory issues. So tech solves all of this. So if anything, the need for tech and increase of spending there is going to increase.
And what about you know, we talk a lot about the FED, which is a central bag to the world.
What about world stocks?
So what about I looked at Quantum has orangine there of course the French company Airbus. How much are you thinking about positioning yourself globally? Are there winners in Asia as well that you want to be owning?
Yeah?
Absolutely, And this is very much a global story, right, I mean it's it's been, you know, very much discussed that the US isn't a race towards artificial intelligence, for example, versus China.
So you are going to.
Have some companies in China that are leading the charge there, and you're going to have some companies in the US that are, you know, kind of catching up there. But over all, the ideas to get this global exposure to the top companies that are investing in machine learning, AI and quantum computing.
All right, thanks to Sylvia Jablonski's CEO and CIL the defiant ETFs.
Good to see.
We take a number of steps to try and increase the factuality of the information.
The first that we do is we train our models.
To actually understand what is the information on the web that corroborates it, that backs up the information, and if we can't corroborate it, then we will not output.
It, and you just won't show We just want to do the US.
We won't show a piece of information. And if we think a particular query is unsafe, it's harmful, then we will also not provide an AI power.
At Snapshot, Liz Read Carolina, twenty year veteran of Google, we wanted to know what search with generative AI looks like. They went on stage and demoed it and it became really clear what it actually looks like to the consumer.
But what's so interesting about the path that Alphabet and Google are taking is a cautious one that almost sort of the antiphasis to the way in which Microsoft has folded it in with being they're really aware that this can't go wrong. I thought it was interesting that they're calling it a lab.
Yes, so just like with BARD, they will do a waitlisted slow roll out for access testing initially, but we also saw how it relates to docs and sheets and everyday things that people use.
And you look at the market reaction. They've really cheered it.
So slow rollout, but substantive evidence of progress. Here's another Google story for you. By the way, Caroline, SAP and Google Cloud just announced an extensive expansion of their partnership to make enterprise data more open and valuable and to advance enterprise AI development. I spoke all about that with the Google Cloud CEO Thomas Currian and the SAP CEO Christian Client earlier this week.
Have a listen, sales teams can sell the new offering. It will happen, you know, on one paper, with one commercial offering, so we actually simplifying it. And actually for us, it was actually very important that it comes with an attractive price because this has.
To be a win win win situations.
Of course, yeah, we want to give our customers more reasons to go to SAP and Google, but of course we also want to offer this new solution at a very attractive price point.
And Thomas, we come to you and ask how does Google Cloud make money from this arrangement?
Most importantly, I would say, what's the value that customers get out of this? Customers get the value they can improve their understanding of customer, of their end customers or helping, for example, Reschmall in the luxury industry, do that customers can improve the way they manage inventory. The work that are two organizations that done at home depot, customers can
be more recise in responding. For example, if you're e commerce company and you're making commitments to deliver products on time, as we've done with Marcado Libre, customers can plan better as our two organizations have helped Motiformed. So the value that we both bring is helping people use their business systems SAP and Google cloud their data and to transform the way that this of customers and manage their business. That's what drives value and that's what brings customers to both of us.
Christian In the competitive landscape for corporate applications, you look at what Microsoft's done to move early to bring AI into corporate applications. I'm thinking about of course Dynamics three sixty five Copilot is one example. How much of this arrangement is you being conscious of that competitive landscape right now?
And a good piece is at a lot of partners, especially in AI, they are reaching out to SAP because I feel a lot of companies have one challenge today they are buying AI technology, but what about adoption? And now thick about it, eighty percent of the world's transactions are touched by an SEP system. So if you're going to embed machine learning and going forward generative AI in our products, you're immediately going to see high adoption and you immediately unfold a lot of value for the customers
in their business processes. And this is why we are so excited about AI and about this partnership, because you also need high quality data to really pring AI to the next level.
And to that point, Thomas, both parties are expressing confidence that open data cloud is going to basically spur innovation in the field of AI.
What does that look like.
First of all, we've fundamentally believe data has a critical asset for a company, and it's both SAPA and Google's joint belief that that should be open so people can use whatever tools they want to access the data. Second, we are unlocking data and simplifying the use of that data in the context of business processes that large customers have. I mean, the world's largest, most sophisticated companies in virtually every industry round SAP, many are using Google Cloud. The
combination is unlocking how AI is applied every day. Think about a merchandising manager in e commerce trying to figure out how much inventory and what product do I maintain in what location? A supply chain manager trying to figure out where do I need to put capacity in which country. Every one of those customers and many more will be able to use our joint solution to open up how AI is going to help them every day in their day to day work.
Well, on that note, Thomas, are there any specific verticals where you expect this relationship with SAP to help you do better than AWS and azure?
Well, we have very strong partnerships in many verticals manufacturing, automotive, retail, healthcare, supply chain, and logistics. These are all different industries in which we work very closely with the SAP team. There are a super strategic partner with us, not just in how we bring solutions to customers, but also in the deep engineering collaboration and every step as we evolve our offerings together. We think it'll bring value and competitive differentiation.
Just a brilliant interview and really assessing how this is going to impact enterprise. Google House CEO there as well as the SAP CEO ed.
Yeah, there was an interesting one to conduct as well. Between two big name CEOs are coming up. Microsoft buckling down on the costs during a time of mounting economic uncertainty. More of the changes to work as salary's coming up next.
Karen, And this is an interesting one.
Another company we're watching at Chinese company JD dot com e commerce giant Okay just announced that it's relatively recent CEO is actually gonna be retiring already, although a long term person at the business, handing over the reins to a female CFO. As this is a company that is struggling with a focus on profitability at this moment. Shares spiking up more than three percent corn of sales. Earnings actually did beat and the estimates. It's a slowdown when
they managed to beat what the street had anticipated. From New York from San Francisco, this is a bloomberg. It's time now for talking tech. First up, Honheim reports its third straight quarterly profit miss look. It's the company that's the main assembler for most of Apple's signature devices. It's a rebound in the iPhone sales last quarter just failed to offset the weakness and the overall smartphone market. Meanwhile,
SoftBank's Vision Fund look as we're losing money again. That's despite the rebound in tech stocks here in the United States. The unit lost about two billion dollars in March. From March even, and its investments in startups in particular, the private company has fallen about ninety percent during the year. Meanwhile, though the firms are unit that posted some record revenue on a quarter a union basis, but some mixed results. That's a SoftBank pairs to take that chip designer public
plus Microsoft. It's freezing pay for all full time workers this year for what it says to help navigate macroeconomic uncertainty. However, it will consider raising rates for hourly workers. It's the latest US tech leader to really tighten its belt for investments in other areas.
En Yeah, we're going to go to Disney next.
I'm looking at the shares down the most since November, subscriber miss widening loss.
We've got to get to that conversation. This is Bloomberg.
Welcome back to Bluemare Technology.
I'm Caroline Hyde in New York and our.
Meed Lovelow and San Francisco News data earnings. We better get a check in on these markets when it comes to the technology sector. Actually and a's that one hundred slightly outperforming up three tens percent relative to a slightly down market. But there's underperformance in chip stocks. A part of that some names giving up recent gains, some moving to the downside. Maybe some repositioning on who the leading horses.
In the AI race.
Interesting as well as to look at the yield on US ten years softer buy around six and a half basis point seven basis points three point three seven percent Bitcoin as well, we're going back towards twenty seven thousand US dollars per token. That was a level we were at at the end of March. We've lost some momentum when it comes to the biggest cryptocurrency by market cap.
In the equity there is one clear move.
To the downside, and that is Disney, dropping by the most since November. Is subscribe a miss and looking at a widening loss, which the company describes as a blip.
It's all streaming, Carrie, The story is streaming.
No matter how much we wanted to talk about parks and whether this is a tech company or a media and entertainment company, we are talking about streaming, and.
Let's talk about the tech angle with none other than Rich Greenfield. He's in the house here in New York Lightshed Partners. Of course, I mean you said it. We made it in to talk about this today because you don't often see a juggernaut like this move eight percent of the downside.
This is a pretty big move for Disney, and I think you're seeing sort of the whole media.
Sectors under a lot of pressure.
And it's because the traditional, the core business of many of these media companies are broadcasting cable networks, and you're just seeing those businesses really really struggle. I mean, cord cutting is accelerating. You're you know, you're seeing that from all of the major players, whether that's Comcast or Charter. You've seen it with Issue, just seeing really a real acceleration in cord cutting, meeting high single digits.
You're seeing companies like Comcasts have double.
Digit declines in their video subscriber businesses. That's having a real impact on companies like Disney. You saw it at Paramount last week with a huge move to the downside, and Paramount forced them to cut their dividend. All of these companies are struggling with what is the future there, because remember streaming, they're losing money.
Yeah, they're cutting the losses as you.
Just profiled, which is good, but their core businesses are facing more and more headwinds where revenues both subscription revenue and advertising revenue are going down and their cost structures are going up, and their only choice is to massively cut costs. And that's what you're seeing across the board and media now.
Or indeed charge us more when we do get addicted to sentence of screen mass The overall view of Disney Plus is charge them for it or get good advertising.
I think Disney Plus is very similar to what you're seeing out of w Warner Brothers, Discovery WBD. You're seeing similar strategies of both company wanted to be Netflix, Like their goal was to take on and be Netflix, meaning a little bit of something for everyone. It was not just HBO within HBO Max now called Max. I think with Disney they were trying to be a little bit of everything, really broadened out the programming, and I think what you're seeing now is really a contraction back to
what their core is. HBO is really centering back on HBO. Disney is sort of saying we're going to cut a billion and a half of content out of the pipeline as well as on the service itself. They just aren't equipped really financially to go compete at the level of what Netflix is trying to do globally. I think it's actually a very very bullish sign for anyone looking at this space.
You should be buying Netflix this morning.
I mean, that is the career takeaway is that Netflix is increasingly quote unquote one.
Rich consolidation of platforms. The combination of Hulu and Disney Plus. This is what Bobaga had to say. There seems to be real value in general having general entertainment combined with Disney Plus and if ultimately Hulu's that solution with botish about that?
Ay boitish about that?
Well, it's really interesting, honestly, because ed just a few months ago Iiger was talking about how general entertainment was undifferentiated sort of you know, sort of calling into question the future of Hulu. They had retained that in usent
Bank to look at selling Hulu. My guess is they couldn't find a buyer for Hulu, and they realized that they really have no choice other than to absorb it, and so I think and they're also looking at Disney Plus slowing, and so they're looking at broadening the content out. But remember what they announced last night is not really a combination of Disney Plus and Hulu. If you subscribe to both, you'll see a Hulu tile inside of Disney Plus. You won't even get all of the content that's on
Hulu inside of that Disney Plus tile. You'll have to go to the Hulu app for all of the content. But it really I think the key trigger is this essentially is a signed to Wall Street into the broader media industry.
Disney knows they're going to be buying Hulu.
It's probably going to cost them at a minimum nine billion, but probably ten, eleven, twelve or thirteen billion dollars to buy comcasts out of their Hulu stake, and I think that's also adding to the pressure on Disney stock because it's another financial burden that's coming over the course of the next twelve.
Or eighteen months.
Rich are Star Wars fans out there in the audience will notice they're going into May the fourth there were in platform and out platform ads about all of the content that was coming relating to that may the fourth be with you date? Was that the shifting marketing costs that the CFO blamed a widening loss on.
Look, I think one of the big questions for Disney this is broader than just your question on Star Wars. A lot of the core franchises have not been firing on all cylinders. I mean, look, even Guardians of the Galaxy, very well reviewed third film is clearly doing worse than the second film. There is really questions, you know, you saw it with Black Panther like, Disney's having trouble both in their sort of live action film making with their
major franchises as well as animation. I mean, animation is probably the story no one's talking enough about. I mean, last night on the call, Bob Iger congratulated Universal, a competitor, on their animation success with Super Mario. The lifeblood of Disney is animation, and ed think about what was the last Disney animated movie that.
People were really excited about.
It's been years now, and they're really getting beaten to the punch day after day by Universal. And I think it's a problem for Disney. And I think it's what Iiger. I think more than anything, Iiger is slowing down production, focusing on quality over quantity. So it's absolutely the right decision for Iger to do. The problem is, it's not a quick fix. Last time, when he came in originally to Disney the very first time, what did he do. What was his quick fix was buying Pixar. There's no
quick fix. It takes years to turn around animation and even just content. More broadly, you don't just change your movie schedule overnight. And so this is I think sort of what you're seeing in terms of investors. They're becoming aware that the fix for Disney is going to take time.
Fantasia nineteen forty. To answer your question, Caroline, what Disney faces is problems in common with the rest of the industry, one of them being a writer's strike in Hollywood.
Yeah, and to that end, costly labor at a time where they need people to be writing just rich How much is that? Obviously we're seeing overall people worrying about writers strike, about the cost of labor, about trying to tintrim down. Is this something that affects Disney in particular that we spoke about it.
On the Well, I think you should think about all of these companies are losing leave off Netflix, which is making billions in you know, ebitdah and free cash flow. But all of the other legacy media companies, whether it's Disney or paramount ors, Comcast, NBCUniversal, they're losing not a billion, they're losing billions on streaming. So anything that slows production is actually, in the short term financially on.
A cash basis, is actually good for them.
I meaning they will lose less money this year because of a long strike. That's sort of perverse, but that's essentially what's actually good for these companies on a cash basis. The problem is, and I think this is the obvious one, a long writer strike clearly is going to impact linear television.
Come the fall.
You may not see a lot of your favorite shows on air because you need writers for these shows on linear TV for people that are still watching linear TV. And yes, it's shrunk a lot, but it's still a pretty big business for these companies financially, and so that's going to have an impact.
Plus, if the strike goes on long.
Enough, meaning the fall September October, then you start to actually start to impact how much content is on these streaming services, and that could also be a problem for these companies in terms of keeping subscribers. You saw people were clearly frustrated with Disney losing subscribers. Not a big number in the US, but lost a little bit of their subscriber base last night. That's something they haven't sort of seen from Disney in the past.
There are more immediate headline gramming lines for us to focus on with Disney today. But AI did get its way there a bit, and it feeds into the right to strike and what they're worried about at the moment. Is AI in any way you going to help hendags need? Do you think is something to be talking about.
Look, I think AI is a category, is something that can help production. Obviously, there's ways that it can speed production, certainly if you think about what you can do with it creatively. I actually think for most of the media industry, I think AI is certainly a risk in the short term, not because of piracy. I actually think about what the greatest risk of AI right now is imagine the quality of content on YouTube, on TikTok, on Instagram reels.
The better that content.
We're in a war for time, if you think about everything is a war for time. If all of a sudden, the content that some random person can create on their own and put up on TikTok, or create their own newscast, whatever it may be. Like, all of that creates competition for eyeballs. And I think when you're talking about advertising, you're already seeing the impact that things like Netflix are having on taking ad dollars away from traditional media.
I mean, next week's the big TV up front.
Now imagine the quality of sort of user generated content getting meaningfully better or rich.
That's what I do, wor Rich.
Let's go back then to our question of the day, which is is Disney a technology company or is it just simply a media and entertainment company.
Very quickly, I.
Would say it's neither. Disney's an IP company.
They're probably the best historically at creating IP and monetizing it through the flywheel of all of Disney's engines. The challenge is their IP hasn't been as good and the reason you're seeing, look what happened with their consumer products business last night, down dramatically year over year. I think
the creative engines of Disney not are bad. Certainly, I think a lot of other companies would love to have disney struggles, right, because their struggles are still better than a lot of other companies, but relative to where Disney's been over the last five years, Certainly, if you think about Iiger's first run where he sort of went off into the sunset with this incredible run in twenty nineteen, Disney is certainly not firing.
At that level creatively that they were back.
In nineteen, and I think that's what investors are concerned about and looking for them to turn around.
All right, rach Greenfield Likeshed Partners. Thank you very much for your time.
Thanks for having me, Caroline.
I'm still psyched about seeing Little Mermaid. Meanwhile, coming up the impact of China US relations on tech investing in the US and abroad. We're going to discuss at all. Mitchell green from lead Edge Capital is going to be next. Also that we want to keep a close sign what's happening in the world of banking.
Pack West.
It does indeed, lend areas in SF and deposits falling nine point five percent last week after we reported that the Lendo was in talks for potential investors. That the anxiety around the US banking system is still fresh.
This is Bloomberg.
American shine of a lot of common interest climate, nuclear pliferation, anti terrorism, global stability, you know, and we have differences. You know, we're capitalist, they're not, you know, and it's okay, we could short that out, but we need to keep the Western alliances together, not just around war and Ukraine, but around strategic economic or leaderships including trade.
That was JP Morgan Chase CEO Jamie Diamond there talking about the global landscape and the context of rising tensions
between China and the US. This comment comes as US National Security Advisor Jake Sullivan sat down with China's top diplomat Wang Yi in Vienna earlier today, as the White House is seeking to keep relations from getting worse that according to a US official, I want to go deeper on China in today's VC Spotlight with Mitchell Green, CEO of lead Edge Capital five billion dollars in assets under management. You are a VC who has been bullish on China.
When you hear Jamie Diamond and the news flow of the day, do you remain bullish on China?
I think long term we are bullish, you know, predicting that. Thanks so much for having me on. By the way, I think long term. We definitely are bullish. Your term, like I think it's going to be, will be bumpy. It's continued to be bumpy. But I think we would also you know, look, we are not I am not going to come out here and pontificate about the macro and you foreign relations with you know, countries around the world.
That's pretty much the last thing we are experts on.
But I do think an open dialogue between our countries, and I think it is important that both countries realize that both of us need each other, and you know, and you know, a military council would be absolutely horrible for both countries.
You were an investor pre IPO in Ali Baba, and there is a debate, at least in the conversations that I'm having out here in Silicon Valley in your industry about not just whether you should put capital into Chinese domicile startups, but if you should take money from Chinese China based LPs.
Where do you sit in that debate?
We we would definitely be willing to take capital from We do not have any actually I take it back, we have one Asian LP, but we would take additional capital like our companies, you know, which are primarily North American Europe based, so that we obviously we're investors in Alibab and we have an investment in byte Dance and and financial like you know, just like we would we want to have in our next fund which are raised in a few years, we want to have more Middle
Eastern LPs. I would see nothing wrong with that. In Chinese LPs or Korean LPs and things like that. There are there are some challenges in some of these other countries in Asia with getting money out of the country, so they need to have been like you know, they need to have the right structures in place. But like I have nothing philosophically against it at all. Probably the opposite, I'd love to have.
Mitchell, what about just the ecosystem which we build here in the US or indeed in Asia or Europe, the regulatory building blocks being built fast enough enough or with indeed enough focus and knowledge behind them. We think about cryptos startups being frustrated. We think about AI startups looking for leadership when it comes to the guard rails already in place. Do you feel that we've got that safely in the US to thrive in the startup scene.
I think what's interesting is that regulation in China happens like extremely fast, and it's like, you know, like decisions are made by a very small group of people and made very quickly. You know, the largest tech companies in the United States, you know, sure hold a lot of market power and can dictate which companies you know, fail and succeed, and you know what companies pay.
And small companies they can make it. You know, they can make distribution.
Distribution is very tight nowadays in terms of you know, there's only a handful of big internet companies that are all small save smaller companies need to try to get distribution through to grow. The Chinese government just like put a kebash on it with with with you know, ten Cent and Ali Baba like just decided this wasn't like a ten year debate, which is going.
To happen in the United States. There is a lot more regulation that.
Is needed around all this cryptocurrencies.
You know, we're pretty bearish on a lot of these things.
I think they're here to stay, but I think somebod these don't have real use cases where I think the Chinese have done actually.
A pretty good job with a lot of the regular regulatory things.
AI is going to AI is going to open up a whole new can of worms.
My guess is they will.
Figure out how you know, I Joe China has run like a corporation the US. I mean, I just invite you to watch congressional hearings about Facebook and TikTok.
And you know it is.
It is quite amazing, and I think we have a lot of but I think it's going to take a while for regulatory frameworks to come into place, given the lack of knowledge it appears and people you know in Washington.
So despite that lack of AI regulation as it stands, are you backing founders coming to you at the moment looking to build in the artificial intelligence space? What you make of the rate at which companies are sort of dubbing themselves an AI business?
So all these hype cycles like come and go, right, Remember a few years ago everybody said we'd have self driving cars and you know, you know, taxis, ubers and everything would disappear. Pretty sure, I still drive to the office, and I bet you do as well. AI is going to change the worlds. You know, like if you call a Delta Airlines call center, there's no reason you should sit on hold for forty five minutes to just get somebody who you know, probably has to get somebody else.
To help you. Ninety five percent of that can be solved to the computers.
Coding is going to dramatically change, you know, email, all this, All these things are going to change.
It's just going to take longer than people think.
But absolutely, Like we're in business ward, a lot of these companies are still quite small, and we tend to invest in companies with like, you know, ten million to two hundred million of revenues. But absolutely in bessem are just announced they're going to put bestmer Venture Partners just announced they want to put a billion dollars in the like startups in the space.
Make sure given the size of your target companies. I want to ask you about venture debt. Bloomberg writing about the data this morning, the venture debt has gone from record levels last year to twenty seventeen levels in the first quarter of this year. How closely do you track that?
You could have said the same thing for venture funding financing too.
Look, we've lost in you know, not long ago, and I don't know if it was late late March, early April, like Silicon Valley Bank was a major provider of venture debt. Obviously the shell exists, but it's been acquired, so we'll see v As.
Venture financing is down, venture debt will also be down. These things come in cycles.
Like I think it's frankly like if you liked investing in software, Internet, AI, growth businesses, healthcare businesses and two the nineteen in twenty twenty, Yeah, sure, just like if you liked.
Him in two thousand and six, two thousand and seven.
The way you made a lot of money, he was doing it in two thousand and nine and twenty ten. Like we think the next couple of years of least some of the best vintages in like you know, growth equity and venture over the next you know, just because the best time of invest is in a recession.
Keep it on being persistent, Mitchell Green me, thank you so much. See lead edge capsule there, I'm now what's going Viral shares a peloton falling the MoWest point in almost seven months. That's after the fitness company recalled get this two point two million bikes due to a safety hazard with the seat. Mark German break it down for us again, another knock.
Yeah, thank you was always for having me. This is the fourth recall in the history of Peloton, right, this is less significant than the treadmill Peloton recall a couple of years ago where people actually died because of the device.
This is an issue with the seat post on the bike, so that is the metal part that attaches the seat sort of the saddle on the bike that you sit on well using it to the actual core frame of the bike and in some cases the weld joint that area could break off and you could fall off the bike. There have been a few dozen cases. There have been a few injuries. Some bruises are mentioned. The most significant injury that was mentioned is a fractured risk. Obviously, none
of that is good. Peloton and the US Commission that handles Products Safety today announce the recall two point two million units in the.
US and Canada.
They're offering an ad home fix, a replacement part, and a video for you to replace it yourself. But as of now, if you have an impacted bike, these are the original bikes. They're recommending you stop using it until the fix is installed.
Right, and it doesn't impact owners in the UK, Germany or Australia. Our thanks to Bloomberg's Mark German. All right, so that does it for this edition of Bloomberg Technology, Caroline, Yeah, you.
Do not want to forget about our podcast. They catch up on all of it on the Terminal, online, on Apple, Spotify. iHeart from New York. From San Francisco, this is a Breenberg
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