Elon Musk vs SF Mayor and the FTX Warning Signs

the venture capital outlook. We see the insights Brian Lee and Microsoft meets the FTC on its activision deal after striking a call of duty agreement with Nintendo and Microsoft doesn't own call of duty. Yeah, we get to grips of gaming. But first, who else but elon Mark is currently sparring with the city of Francisco after Twitter turns sun space at the company's headquarters and to make shift bedrooms, which it turns out as a possible violation of the

city's building codes. Fra is here with more. We know that he likes to tustle. We know that he likes to Tussele on Twitter, but in particular does he have a like to stand on here? How much of a

focus is this for the city. Well, you know, as the city has said they need to look into any complaints that come forth, and there has been a complaint about the Twitter offices, the fact that they're they're putting beds and armchairs into various conference rooms, which I guess they have room floor because a lot of employees have been cut or laid off, but it is it is sort of unusual to expect employees to sleep with the office in an actual furnished bedroom. I mean, despite the

culture we're speaking about with sleeping bags and knap pods. Yeah, I mean talk to us though more generally about the balance the lack thereof for tech workers at the moment in Sam Francisco, all people having to sleep on the floor. Is this something that happens at Lodgers is very focused on really and elam lass culture? Well, you you see this all the time at startups, right and even even

in early high growth companies. I remember um talking to employees at Snapchat a few years ago about how they'd they'd turned some bedrooms and they too maybe did a code violation in the opposite direction, turning from some residential housing in bedrooms in Venice, California into offices. Um so,

so I think that, um it's not unheard of. What I think we're seeing here is the pendulum swing from being really in the favor of workers, giving workers flexibility, letting them work from anywhere, letting them work from home, to this period where we're seeing this big spate of tech layoffs and people concern for their jobs and in the future of their employment and willing to do, you know, sort of whatever it takes to prove to the employer

that they are hard workers. And so the power is really shifting back to the employer right now in this economic stress time. We reported in this pace that Musque is making these sleeping arrangements available not just for existing Twitter staff, but some of the other workers from his other companies that he's brought in to do that. And we've reported in recent weeks that at first it was you've got to come back to the office forty hours, Then it was some of you be working eighty hours.

What's going on inside Market Street office of Twitter? Right now, everyone's got to be on the tent floor. Dad you've gotta you've gotta show up. If you're as a programmer or a designer, you better be there creating this environment of collaboration, of brainstorming. I think Must really wants to feel momentum from employees. Meanwhile, these are the employees that

were recruited based on this promise of work from anywhere forever. Um. It's sort it was really a pioneer even before COVID in this idea that employees could could really be productive from from any where. They could log into the internet, and Jack Dorsey himself loved to occasionally work remotely as

just a completely flipped culture. UM. And I think one thing we need to be UM maybe a little concerned about here um or at least on the watch for does Twitter actually end up staying in San Francisco, Because we've seen the future of of Musk spats with governments, you know, the most prominent example being moving Tessa's headquarters from Palo Alto to Austin, Texas. I want to think

about what Elon Musk actually said in his tweet. He essentially accuses San Francisco's mayor London Breed of being too focused on this issue, not enough on the Fentinel crisis is an example, and that's what he referenced. We had the San Francisco District Attorney in our office for about an hour last week getting a sense of the priorities in this city. Where does San Francisco revival, if you

want to call it that sit right now? Well, I think that there's a lot of a lot of hope for a different set of circumstances under the new District Attorney, But it's not all on on her um. There is a lot of of bringing energy back into the city that needs to occur, and you know, the layoffs at

Twitter probably haven't completely helped that. Right as he's he's trying to get people to come back into the office, there are also probably a lot of San Francisco based workers who who no longer have jobs on Twitter um, alongside a lot of other layoffs that we've seen at at San Francisco based companies such as as Salesforce. So I do think it's going to be a long road um.

But I think Twitter, of all companies, is is right in the middle of one of the more crime written parts of the city and could be feeling any changes more dramatically Blue, Sarah fro thank you very much. Let's get to an update on the trial of Pharaon NOSS former president ramash Sonny Bawani, which is still underway. Bloomberg's Peter Bloomberg, who is one of our league webits, is following this case and joins us with the lay tists. You know, we've been waiting for this since July. What

is it that we're waiting for. We're waiting on the judge to compose a sentence. Paulani was convicted of fraud, and the judge has to decide whether he'll get a prison term and if so, how long. And given it was more than eleven years for one Elizabeth Holmes, many are expecting what hire Peter Well somewhere around the same amount of time. It could be somewhat less, or it

could be somewhat more. But the prosecutors have made the case that they are equally ah culpable for defrauding investors and that Paul Wanni, in addition, uh was was convicted of defrauding patients. Caroline and I both remember the moment that the sentencing was part us for Elizabeth Holmes herself just a little more than eleven years um at the lower end of the range that the prosecutors and the

judge had kind of discussed. That was severe too many, But there are all others that are saying, actually, in Bowani's case it could be even more severe. Well it could because as I mentioned, he was convicted of additional

counts that she was acquitted of. And also we're waiting on the on on the judge to to to indicate whether he may think that Bowani was somehow more responsible because he's older and more experienced, he had run a software company in Silicon Valley prior to taking this job, whereas she was nineteen year old nineteen years old when she dropped out of Stanford, and so she was was

the younger, less experienced of the two. And then the other wild card, of course is that during her trial she accused him of abusing her during their romantic relationship, sexual and psychological abuse, which he of course wasn't a witness in that case and didn't get to speak to it, and it didn't come up in his own trial. Uh So, if the judge has any conclusions in his own mind about whether Bowani somehow manipulated homes or treated her badly.

That could also factor into the sentence, of course, this being key one that many are looking at in terms of precedence setting as well. Peter Bloomberg, it's gonna be there with all the latest. We thank you so much. We await those headlines. Mean while coming up so much more to discuss in terms of the future of VC investments. In fact, um, we know they're on truck for a sharp drop, perhaps the sharpest in more than two decades

this year. But what is the effect of f t X in particular, Blomberg, let's talk about venture capital investments not too hot right now. In fact, they're about to see their stepest drop in more than two decades, even surpassing the decline of the dot com crash and of course of the financial crisis and Ludlow bring us up

to speed whether the details, Yeah, it's interesting. A data set published by Preaking on Wednesday six billion dollars deployed by venture capitalists globally in the first eleven months two but on a year on year basis, that's a drop of more than which is a big change. Right you think about sort of the energy in these markets. You have to go back, as you said, well close to two thousand years, following the dot com bubble, also following the two thousand and eight financial crisis, and this is

the biggest drop since then. You know, it's an interesting environment, higher rates, putting a premium on capitol, down rounds and markdowns in terms of valuations, and sort of skittishness, nervousness the global economy. What was really interesting for me with two other data points Carrow, China in the US. In China the value of deals down and in the US down. Those are two kind of leading VC markets as well.

So it's a confluence of factors. But we're coming from a high base in one and it's not been a great year. One was extraordinary, We're going to remember. And the comparison is being made by none other than Brian Lee. Were really pleased to welcome him. Now. Has got great data, great statistics, and great context for us because of course, the senior vice president of see the Insights Intelligence Unit, you do phenomenal work just crunching the data and understanding

the mood change here. Just talked to us Brian about where we're coming down from in terms of and overall, whether there's demise sort of folds into yes. Certainly. I think when we talked about one against almost any measure, it was a record year not only in terms of the amount of funding going to private companies, but the number of you as they were actually done. So we were moving out a pace of almost a hundred companies

being funded every day, um and hunt to day. So what we saw was as a byproduct, was enormous inflated valuations that we were seeing from companies not only in the crypto space or in other kind of interesting areas, but telehealth, sustainability, tech, etcetera. UM. In a lot of ways, it felt like there were there was too much money chasing, despite the fact that it was so many deals, too few deals, and there in lies so many issues that now,

of course the main focus is one of FTX. All of these concerns sort of become emblematic in their demise. The fact that we've seen basically a lack of due diligence, money just flying after particular investments, particular companies that blew up the valuation is just extraordinary propensity. But also also interesting about the ft X situation, perhaps the cooling effect it's full from Grace is having on the rest of the VC market is that it too spawned other startups,

It too made investments. Just talked us about the work you've done and how sprawling ft X is own funding and funding in other companies walls. Yeah, So we were learning more every day about the web of investments from not only Sam Bankman freed themselves, but f t X Ventures,

Alameda Research Ventures and their related entities. I think what we've known is that collectively they've made hundreds of investments in private companies across a wide variety of markets, including crypto exchanges, defy n f t s, and blockchain infrastructure, just to name a few. What we found in our research is that when we looked across the portfolio of companies, about three quarters of those investments where an early stage companies.

I think what makes this a little bit thorny is that each of these investments will now have to be properly valued and disposed of as we moved through the bankruptcy process. And this presents a lot of challenges for companies that took money from f t x's venture arms

for a couple of reasons. So number one, obviously thinking about the reputational hit that that f t X has had on the crypto industry, but also the broader valuation declines that we've seen across the past year, it's entirely likely that we'll see equity stakes being sold at a

substantial discount, probably as much as or more. Um So, these types of events and this event, this event in bankruptcy, will trigger a revision of each company's valuation, creating potential issues for them as they attempt to raise additional capital.

And so it's going to be a very difficult process for some of these companies as they think about how do we move forward, how do we raise additional capital at the valuation that we now have um I also mentioned just very quickly, uh that we are also assuming that a lot of these equity stakes are cash. What we've seen from some of the data that that that recently came out is that some companies were funded with tokens, and so obviously that would decrease the value of the

equity state tremendously as the tokens themselves are drastically marked down. Brian, there's also the other side of the equation. I think we can bring up some of the names that invested in f t X in and Sam Bankman, Freed and many of those high profile names had to mark down the value of their states to zero, you know, from from various bars. The question I have for you is about due diligence. How can some of these reputable firms have made these decisions and come up with this result. Yeah.

I mean, while I can't weigh obviously on the specifics of a particular VCS dude diligence process, I think it's safe to say that at least the basic level of due diligences was done here, which would have included things like financials, but also information related to governance protocols. So

that said, I think there's two things that I'd say here. First, if there was fraud, which we believe that there is, if fraud was indeed perpetry, it's entirely possible that there were a number of misrepresentations by Sam Bankman, Freed and

other executives during due diligence that muddied the evaluation process. Second, while every investor in these companies presumably did do their own due diligence, the demand for deals and this sense of fomo that we got in one, especially in the crypto space, definitely affected not only deal terms and valuations, but also likely increase the risk appetite for many. So you want to point out very quickly, Brian, if I may, that, of course no charges have been brought against Sam Bankman

freed yet for fraud. I want to ask you really quickly before we run out of time, what does this do evaluations and interest from private markets in this space going forward? Yeah, so we clearly think that valuations already have been on a downward slope. So from Q one two thousand twenty two on, we've been seeing some pretty

remarkable declines in terms of funding. We think that FTX is only going to compound some of the skittishness that I think that we're seeing from vcs, especially in this area. That being said, a lot of these companies hasn't mentioned earlier or early stage companies, and so as a result, their evaluations might not be hit as hard as well.

You'll see sort of differences in some of those spaces, so crypto exchanges of course, but in blockchain infrastructure and those sorts of their areas you probably won't see as big of a hit directly attributable to f TX. Brian Lee, Senior Vice President, of see the Insights Intelligent Unit Thank you Now. Layoffs are accelerating across tech companies. Adobe has just scrapped about one hundred jobs concentrated in sales. Some of the employees who lost their jobs were given the

opportunity to find positions elsewhere in the company. That's, according to sources, also Planned, saying it dismissed two hundred sixty staffers, around twenty of its employees, citing changing matt or economic conditions and the company needing to rein in costs. The tech industry has been slashing jobs at a pace nearing the early days of the COVID nineteen pandemic. In November, the sector announced more than fifty thousand cuts, for a

total of eighty thousand or so this year. Time now for our top tech calls, starting with, of Course, Carl Varner shares sinking after Webbish analyst Seth bash and cut the online car used retailer to underperform from neutral as follows a Bloomberg report that Cavana's largest creditors, including Apollo Global and Pacific Investment Managers, signed a pact binding them

to act together in negotiations with the company. The move is meant to prevent the credit of fighting each other in debt restructure negotiations, which Basham views negatively, saying investors see a high probability of default and sticking with cars. Tesla may need to make additional price cuts in China in the coming year to stimulate demand, which could put more pressure on automotive gross margins. That's according to Bernstein.

Tesla shares were down Wednesday as it offers further incentives to Chinese customers in an effort to boost sales, and finally, online travel stocks fell Wednesday, the space to be avoided by investors heading into three according to Wolf Research and a note to clients. On Wednesday, the firm cut its view to overall sector from overall underweight from market wait. This following an expected downturn in demand. Carrow, Oh poor, all airlines. Are you getting on a flight anytime soon?

In I might be getting a flight across the Atlantic soon. But you know, I got the stronger dollar. I got that stronger dollar on my side, which is rare in my lifetime, as you know, yes, exactly, and now it is rather nice when you go back to the UK. But all in all, it is just this constant pressure on some of these with these were the beating up companies during the pandemic, then came back and now back

under pressure. But really does feel some of the economic headwinds are so pressing at the moment, particularly when it comes to valuations in technology. Yeah, they had a bright spot coming out of pandemic. Everyone was eager to travel, but then the economic reality here and you can look for a deal online, but it's not always there. So key to keep an up to speed when some of these analyst ratings and these companies and indeed some of the share price falls that we see. Welcome back to

Blooberg Technology. I'm Caroline Hide in New York and I'm alongside Ed Lullow out in San Francisco, and we have got to talk gaming now, because Microsoft executives were actually meeting with FDC chair Lena Kahan to discuss the details of that activision Blizzard merger well call at sixty nine billion dollar deal and Microsoft Nintendo meanwhile agreeing to a ten year deal to bring Call of Duty to the

Nintendo universe. All of that is trying to assuage any concerns around that's seen nine billion dollar deal and of course the agreement itself depends on if Microsoft is actually able to close that's say, seen nine billion dollar acquisition. He discussed all of it. Leon, Nilan and Leah just talked to us Lena Khan in a room Microsoft executives. How much convincing do they need to do to get

this through? Yeah? Well, Lena Khan has been a pretty aggressive any trust enforce her since she was named to the post last summer um. The FTC under her already brought a suit against Meta Platforms over a pretty small virtual reality deal, but one that the FTC was concerned would give Meta a real leg up in virtual reality and allow the social network to sort of dominate that. So they have a lot of concerns about the big tech giants sort of using acquisitions to get a leg

up or become dominant. Is sort of emerging markets UM and Microsoft one of the big reasons it said it needs us steals because it thinks to fetus cloud gaming UM and cross platform giving I e. You know, you don't necessarily need to buy these fancy consoles from Microsoft or a PlayStation or Nintendo. You might be able to, you know, access all the same games either on your computer or your phone and mobile device. So um, I think there's gonna be a lot of concern from the

FTC about whether this gives Microsoft too much power. I think I'm right in saying that. In recent days, Lena Khan commented that there's a misconception the FTC is anti deal. It was also interesting last night lear too look at the Bloomberg terminal and look at our reporting this meeting is happening, and then the headline about a ten year deal with Nintendo for a a product they don't yet own, Call of Duty. And these are the kind of things that that Lena Kahn wants to see Microsoft doing if

they're to have a chance for this deal to go through. Yeah. Microsoft has actually outlined a bunch of things that they're doing to try and like placate the FTC. They enter UM a union neutrality agreement with the c w A

over potential concerns related to labor. They also announced that they were no longer going to require employees to sign UM non computer and nondisclosure agreements related to any like sexual harassment or sexual assault allegations, again trying to suage some of the FTCs stated concerns about non competes, So I'm not surprised at all actually that they announced that, like right before they were going to come here to

Washington to sort of meet with her. The important thing about the Nintendo agreement they signed or announced yesterday is it only applies to the console. If Nintendo was going to offer one of these subscription services, they wouldn't necessarily get access to these games. Well said, and also I want to sort of shine a light on who they haven't struck a deal with MIA and that being Sony.

And there was a great quote coming from Phil Spence, of course, man who manages the Xbox part of the business, and he's really saying that there's been one game industry bunches, but that's really been raising all the objections, and that is Sony. And he thinks actually, basically they're spending all their time talking to regulators and not trying to get a deal done. Truth in that. There is certainly some

truth in that. I mean, Brazil is the only regulatory agency that is so far given um a verdict on the deal. Sony was the major complainant there. The uk c m A has a very public process, so a lot of the filings that go through that are made public, and Sony has been again the main complainant. They're they're very concerned about what having Activision's library of games will make Microsoft a much more appealing gaming platform than PlayStation. Lee and Alan, we want to thank you so much.

I doesn't want to thank Phil Spencer there because we're going to update his photo. It's a little bit an old school one. We thank you. Meanwhile, look, we want to stick with the world of gaming. We want to shift gears a bit because we've talked a lot about, for example, content moderation and freedom of speech on social platforms. Now, a new report by the Anti Defamation League suggests we

look at it from a gaming perspective as well. Now, according to this report, white supremacist ideas gained significant exposure through online video games this year. One in five adults again, one in five reported being confronted by white supremacist ideologies. Now that's more than double the rate of a year earlier. Joining us to discuss anti defamation leads Director of Strategy in Operations Daniel Kelly. The data is significant. It's concerning

because it's also being targeted at children as well. I think it was a pre teens, pre teens taught to us at the moment, the response from the companies that kind of games we're seeing this being involved in, and how they're tackling it. Sure so, right now, the only game company that has an explicit policy against white supremacist

extremism is Roadblocks UM. Other than that, you really don't have any major game company that is UM that has actually an explicitly stated policy saying that extremism is prohibited on their service. And the result of this is what we see in the games said make up the sort of top tier of where players are experiencing white supremacist ideologies at this point, Call of Duty is at the top with adults being exposed to white supremacist ideologies. They're

followed by Grand Theft, Auto Valeriant, World of Warcraft in Fortnite. Now, it's interesting, of course, companies in response to the story being written up have been responding, and Roadblocks, as you say, has a policy overall, and they've been coming back sort of talking at length about some of their views. We know that overall. The spokesperson from Right Games, for example, has been saying they're creating a safe and inclusive environment

for all players, it's core to their mission. Notably, Take Too didn't immediately respond to a request to comment, but call of duties code of conduct. They say they have got prohibits harassment, discrimination, and our games are designed for joy and connection, Daniel, when they want it to be for joy in connection. What can they do actively now to try and suppress such hate speech, such words that

are so hateful to so many. I think there's a difference between having a policy against hate speech and discrimination and having a policy against white supremacists, extremism and extremism generally. What what these responses really show is how early in the process a lot of game companies are in building

out policies around these issues. They're sort of combining a bunch of different phenomena in online spaces into one policy, when in fact, when you look at social media, for example, they've spent you know, a good amount of time differentiating between what is extremism, what is terrorism, what is hate speech, what is harassment, and how do these things manifest in

their platform. I think the game companies need to do a lot more time building policies and operationalizing those policies uh such that they're able to actually action against extremist content as well as finding on their platforms. Are there any technological solutions that a d L is proposing what are essentially tear names right in the gaming industry invest in look at to improve this situation. So I think one area where companies can stand to invest more is

around voice chat moderation. Right now, a lot of tools that are available for content moderation and really focused on text chat, and the technology to detect an action content in voice chat is really nascent in comparison to that, So I would recommend that companies invest in developing the technology to really be able to do voice chat moderation at scale. We thank you so much. Director's Strategy and Operations,

Daniel Kelly. Ramesh Sunny Balwani, of course, who was CEO over at Sarnos, has now been sentenced thirteen years in afford case. He was a former president convicted of conspiring with Elizabeth Holmes, who of course got more than eleven years. So the CEOO Balwani is getting a hundred and fifty five months or hold, so it's twenty months more than Elizabeth Holmes. Now overall, the judge will decide later on

how much restitution Balwani must pay as well. Remember he was of course convicted earlier this year on twelve counts of wire fraud conspiracy to commit wi fraud as well. So we focus in on, of course, the long running saga when it comes to this blood testing startup, and as it draws to a close ed, Yeah, that's right. There was an expectation he might get a more severe sentence. So let's get some other stories that we're keeping across. Robin Hood says activity on the platform is steady, but

is still much lower than levels. Robin Hood reported monthly active users for November of twelve point five million, about thirty three percent fewer than the eighteen million users it reported in one. Crypto trading volume is down sixty year over year, in equities trading volume down fifty four percent, shares of robin Hood and down seven year to date, and things aren't looking better for coin base coming up. F t X is impact on retail investor trends and

also institutional adoption of crypto. But first, let's take a look at n f t sales. They're down to a sixteenth month low following that f t X blow up. This is Bloomberg. We continue to gauge the fallout from f t X. We just had a great conversation with CB Insights about some of the impact it's had their own funding issues and then the funding issues for other companies.

Let's keep talking about the contagion, the chill of the SCRIPTO winto with Shinnani Bassek, Who's going to walk us through, Well, look some of the future issues some of the firms that are currently facing concerns right now. Yeah, we have to look outside of f t X because there are other firms that due to f t X for other reasons, are facing is choose and I want to start with Genesis here because the lending business there that had faced withdrawals.

They came out, the interim CEO came out with a letter to investors giving a general sense of timeline, which is very helpful to understand. As we know they've hired a restructuring advisor. You have part of the letter here saying that they anticipate that will take additional weeks rather

than days to sort this out. So in some ways that creates some sense of calum because you have a timeline here, but again that means weeks of anxiety rather than days of one to figure out what the timeline will be here and whether they will ultimately have to seek a more severe uh you know, coming together of this issue. So that's a genesis itself. That's on the lending side of things. I want to move over to exchanges because in the exchange world there's a lot of

interesting things happening. You've been talking on the show a lot about coin based, very simple story. They're they're saying that revenue will fall fifty this year. I'm not sure

what will look like necessarily next year. But remember so much of this is about what's happening in the broader crypto industry, and I do want to talk about what this means about how other exchanges Caroline are reacting in terms of competitive pressures because you have Finance US cutting fees and remember over at Bloomberg Intelligence, Eric Bacunas has

been really great on this. It was bound to happen, bound to happen, This fee war that you're seeing in exchanges in the crypto industry similar to what you saw in traditional finance. So what does that look like discounts when B and beat tokens are used for fees, volume based discounts, so if you go over a certain threshold and trading, and again this is something that they are proud of their pioneering zero free trading, but these types of moves are going to continuously impact revenue as we

see that few pressure on the industry. Lastly, on exchanges, I wanted to talk about sushi swap. Why because we're talking about centralized exchanges and cryptocurrencies. Let's exactly, so what is happening over sushi swap. You have the chief explaining that there's a liquidity issue that could be created here. The token had plunge, The treasury has one point five years about eighteen months of runway left many projects because

of the crypto winter more, they're facing similar optacles. They have said in this letter here that they don't need to necessarily go by the way of all these other firms that are facing more severe issues, but to be able to stave off some issues here, they do need to meet some changes in terms of how they think about the token arm it's ban swab. Good friend, Shali Bassek,

thank you. How are you across so many things? I mean, all zooming out to the FDS, impact on institutional adoption let's discuss with Stephm Weett, CEO of Front Financial, which advises traditional firms on ways to participate in the crypto space. So we point out its valuation has fluctuated a little from eighty million dollars to around eleven million dollars during this downturn. I mean, you know, clearly there's an impact. Whether you're a retail investor, there's an impact if you

are an institutional investor considering dipping your toe. What is the mood music from the clients that you serve. Yeah, it's definitely had a major impact on sentiments. I mean there's definitely several, Uh, you know, there's several there's many institutional investors who have the gun plans to enter the digital assets space, and you know, even as recently as the Celsius lunar disasters and just the general market downturn as a whole has caused them to step back from

those maybe reconsider them all together. But I will say that, you know, our firm has been around for for over four years now, so we were born in the in the two thousand eighteen downdraft, and there is considerably more institutions sticking around this time than there was previously. I mean, ineen,

it was really aggressive. The degree to which institutions trying to associate from the space, notably the cbo E killing their bigcoin future, was quite extreme, and you are seeing many institutions stick with UH, stick with crypto this time around and see as an opportunity in spite of the sentiment being understandably low. Stephan, Just to be clear, have you any exposure to f TX or any other of Sam Bankman's freeds companies or any financial relationship to him? No,

we don't. We we have to stick for our language in their press releases. We are a public company need but we have no direct well and that means no accounts with f t X or any other relationships like that,

and in material financial exposure altogether. However, as you point out, we are a firm that's operating in this industry and there is indirect impacts as you suggested, such as those two sentiment talk to us about can you give us a sense of how many institutions are coming to how many clients do you have, how many people are wanting to be in this space? Yeah, so we have a bit of a we have a broad kind of institutional client their institutions. There is now an institutional client in

crypto which is really here to stay. And I define those as, you know, the bitcoin mining firms, large blockchain development companies, payment processors that are now accepting cryptocurrency that want to deal in large size, you know via block um. And then there's then there's the active manager, which has kind of been you know, a very kind of slow,

has had a very slow adoption cycle. You know, I think in a lot of ways, the active manager has kind of had trouble seeing where they fit into this space. You know, this space is so volatile that it's not palatable for people to owe, you know, for firms that are trying to focus on strong risk adjusted returns and targeting twenty to annualizer turns to hold assets is volatile passively. But what we did start to see at the end of the year, we started to see institutions that are

viewing the arbitrage dynamics and cryptocurrency. For example, I mean there's a there there are often times where where crypto traders are willing to borrow US dollars at far higher rates then you see in borrowing markets. Uh in traditional finance just due to the lack of dollars in the ecosystem altogether. UM, and these dynamics that really present arbitrage alpha generation opportunities that are quite unique to a nascent

space like crypto. UM. People are starting to understand. So UM, those clients are coming in the in the tens definitely, not in the hundreds. UM, but it is, it is happening for sure. But you, of course publicly traded companies, as we said, and of course, like much of the space, has seen a particular a fall in your share price and market capitalization. When it comes to transparency, when you're putting out are you putting out how many customers you have?

Are you putting out what revenue statements look like? Are we are we expecting fewer people to be entering the space and coming to be served by a company like yours. So I mean, specifically with that farn T, it's a little bit an awkward question. I mean, we went public in at the end of April, right as the market start to accelerated sell off, both in cryptocurrency and traditional finance. So you know, we've been in a position where we haven't really had to guide the market all that much.

In terms of our expectations, and we're finding ways to do that as we understand the environment that we're coming into. Um, you know, for firms like ours, it's a bit of an interesting opportunity landscape because you know, we are getting as of right now, we're getting out of this relatively unscathed relative to a lot of competitors that are going

out of business. So we've actually seen a large influx of clients that are looking to do trades with f R n T now that they're like anuse what numbers are we talking? Yeah, again in the tense, you know, that's that's that's in the tens of clients kind of coming to us in in the in the weeks months, you know, tens, twenties, thirties, that's that's material for us.

I mean, this is you know, I think a lot of time that the institutional wave of crypto has been a little exaggerated in terms of what's actually been happening. People have been taking very broad use of the term institution. But yeah, we're very pleased with the progress that we're seeing, even in an ugly market like this. Thanks for being

that transparent. We thank you for Stefan. We let Franti Financial see of Amazon shoppers are getting scammed by best seller badges, and we're going to break down how this works. So merchants will take popular items like a phone mount for your car and put it in a category with much slower sales. Those phone mounts are gonna rocket to the best seller rank because a lot more people buy

them than by windshield wiper fluid hoses. When's the less time you want some of those If you search Amazon for form mount for a car, you're gonna see a lot of pro ducts, and a lot of those products are going to have the best seller badges. It's kind of a stamp of approval. But only if you take a minute and look more closely, you're going to see that a lot of those phone mounts are in completely

unrelated categories. We're talking things like replacement axle shafts. It's tough to say how widespread this scam is, but Bloomberg found more than twenty five examples of best sellers in the wrong categories based on a search for phone mounts alone. But this is also a time of year when trickery really peaks on Amazon because shoppers are spending so much you a shoppers are going to spend about a hundred

and twenty billion dollars online in November and December. Amazon's policies prohibit sellers from putting products in the wrong categories, but this example alone shows how enforcement is is really hit or miss. I must have been had on a phone case, ed windscreen, fluid pipes, what I mean. It's entrepreneurial, to say the least, some of them playing the system. People always try and do it. But it's a great

piece by Spencer Soap. You've got to go online and indeed on the Blomberg terminal to go read more of it. But that doesn't for this edition of Brienberg Technology. Do not forget to check out our podcast. We're everywhere from New York for San Francisco. This is Broomberg