Powell Spooks Markets, More Job Cuts at Meta

vast tech arena. That's as Sijing ping focuses on fending off US sanctions and achieving self sufficiency in areas from AI to chips. All that and so much more coming up, and there is a lot to digest in the macro part of these markets today. It was one of a perspective coming from Jerome Poal coming out fighting. And we see that maybe the Federals is not done tackling inflation NAS that falls one and a quarter percent, So big tech on deck. We look at all country World Index.

In fact, all this worry around what the Federal Reserve, the Central Bank to the world will do affected European trading. We're off by one point three percent. When you look at the all country benchmarks, and I'm looking at this inversion, this of course is that the two year bond yields the capositor boring at the two year is higher than at the tenure at the moment by a four percentage point, So we see negative one hundred and four basis points

when you're looking in the eleven inversion. This signals the worry that the market has about a recession. To come flick it on a gear. Let's look at the US do a strength that we saw on the back of that hawkish tone, and then that Bitcoin is under pressure too by one point nine percent, and share power ed having some fighting words for crypto in particular as well. Yeah, those fighting words where they were the main driver when it came to single stock names in the equity markets,

although some individual stocks I look too. Rivian down fourteen and a half percent. The company plans to offer one point three billion dollars in green convertible notes that could potentially have a dilutive effect on outstanding shares down the road. Tests are under pressure down three percent. Is must talked about Twitter's debt bird and Amazon was down two tenths of a percent, Alphabet parent of Google down one point

three percent. Those two names Goldman's top tech picks for twenty twenty three, that didn't do much to support the stock. After fed Power made those kinds. Then Meta, I will actually just show the trading Meta had been markedly higher after my colleagues and I reported that more layoffs are coming in the thousands as soon as this week, and then post Power completely fell away, actually ending up trading down two tenths of one percent. That is the effect

the chairman Power is having in this market. Carry and we go back to basics. We haven't talked about this in a little while, but the prospect of higher rates discounting the present value of future profits, particularly for that tech sector, and then you price in that recession risk, which is now back on the table as well. But this is the conundrum, of course, that the Federals of

has to focus on. When you've got inflation still well above the two percent target, it affects the labor market, as you have been reporting, with the likes of Meta, companies have to start to squeeze, they have to put jobs on the line. And I thought that Elizabeth Warren of course, really coming out lasking look what you say to those jobs that are going to be lost, and Chef House saying I tell them that everyone is affected by inflation. But ed dig into the micro detail that

you've been reporting out. Just tell us a little bit about well, what the under duress over at Meta. Whether this is something we can read across to the rest of the tech market. Yeah, understanding from sources is that vps and director levels staff are making lists. These are new layoffs, thousands of new potential job cuts on top of the eleven thousand from last year and on top of the flattening of middle management earlier this year, because

they're still under duress. Right, this is the year of efficiency. It's just that Moore's needed to get there. And when we think about efficiency, many would say that's of course why key growthier names are being focused on, because suddenly

their future growth perhaps looks less certain. It's what we've heard time and time again, particularly from some of the uber bears out there, one of them being Morgan Stanley is Mike Wilson who says, once again, even though we saw the sell off of twenty twenty two, you could see a twenty percent downside for the growth names. Just take a listen. I think there's plenty of stacks that are probably gonna your bankrupt, you know. I mean, I don't think that's a crazy statement, but that's not the

bot of the stack market. Okay, So this is as a pocket of the stack market. And then I would say a bit overall the growthier stuff and the thing that even the sign bols names that have gone too far now because as much as twenty percent to ask no problem growthier stuff. Let's talk about well, one particular analyst who looks across the whole gamut of technology TMT names in general, Needham Managing Director and senior analyst, Laura Martin.

Laura is so good to have you on the show and just tell us the breadth of companies that you analyze. The Are we currently throwing everything out with the bathwater at the moment because we're worried about future growth no matter who you are. Yes, Because as bond yields go up, bonds look more attractive as a substitute to equity. So

we're getting net equity outflows into the bond market. That makes sense economically, and that's a higher level of the capital structure, so they have lower risk in cachase somebody does go bankrupt. And I think specifically, as you get this advertising down draft, advertising has eighty percent margins. So Google, specifically Google and Meta per Alphabet and Meta really are going to be under margin pressure if we go under

recession and if advertising demand gets worse. Laura, in the context the multiples on some of the names that you do you cover. What's the biggest concern to the market right now? Is it this idea that rates will go higher in bigger increments or are we starting to get more and more concerned about how deeper recession might come. So the biggest concern is in a discount of cash flow, which is the academically rigorous way to value these companies.

If you have a higher discount rate any cash flow that comes from like year four in future, like Amazon is making no money, Meta is to have it, you know, really in a down draft in his profit marches that all those out years become much less valuable. And so what you care about a lot is current year cash flow and next year's cash flow. And on that score, Apple ninety billion dollars a year of cash flow, like super Safe feels like a good place to hide super liquid.

Google still continues to have high free cash flow. We'd like them to cut costs faster, but a lot of their value is not past year five, which in a rising interest rate environment, those past year five cash flows are really discounted harshly. Let's dig in on actually the only name that you have an underperform on, and it's Meta. They are trying to tork up efficiency in particular, they are of course looking towards their four jobs that are on the line, Laura, But ultimately I've looked at some

of your decks on this company. After their earnings you said you'd like the word efficiency, but are they just rearranging all the chairs? And the Titanic is one of the phrases you used. True, I mean, I think the question we're asking is does Meta have a terminal value in its core business? Because one of the data points we're reading is most of the layoffs the CEO, Mark Zuckerberg is making sit in the core business of Meta

that's being undermined by TikTok. Assuming TikTok doesn't get banned, the question we have is in the core business that funds the metavers, does he actually have a terminal value, or does he just lose all his creators and all his users in the first Royal countries to TikTok instead, assuming it stays in business. I think that's a very real question for these network effect businesses that benefit from network effects on the way up, it gets slaughtered by

network effects like MySpace did on the way down. Yes, Laura, how worried you about brain drain? I find this really interesting. One source described this latest round of layoffs to me is more of a sledge hammer. If the eleven thousand in November were done with a scalpel, this is a sledge hammer. And I wonder, what's the risk that they lose all of these smart pool that are trying to drive this longer term transition, so they don't even get there.

Agree one hundred percent. I think it's hard for morale to layoff people. I think what happens is if you're not sure you're going to get laid off, your most talented people go and proactively look for another job and get hired away. So you end up left with is a people who can't get the next job, So you end up with the people that are the worst of the Bell curve not the best because the best people

go somewhere else where their job security is intact. Lastly, though, when you hear about actually other areas of focus, particularly for ANAS at the moment, is saying one area that could perhaps be an upside potential is artificial intelligence. Are you buying that, Laura, particularly for some of these big companies that you monitor. So it's a great question. So last year was the year of the metaverse. I think this year is going to be the year of AI.

So the best question is when we're sitting here a year from now, in early twenty four, is anybody talking about AI or removed on to something else. I think most of these big tech companies have been using machine learning for a long time to make their recommendations better, to sort their search pages. They've all been using machine learning, you know, sort of chat, GPT and generative. AI is new to the consumer market, but a lot of these tech guys would say they've been using AI slash machine

learning for years. So UM, I don't I don't know whether AI is as big a deal for these large tech driven companies as it is for the consumer where suddenly there's a use case it's really exciting in both like um both pictures and in and in you know answers. We're going to be putting that to a key salesforce executive a little bit later. Needam Managing director and senior analyst, Laura Martin. What a day to have you on. Thank

you so much spending the time. So I'm now full VC roundup and we're starting with payment platform startup air Wall expect by ten Cent, which just acquired an online payment business license in China. The transaction cleared all regulatory hurdles with Chinese authorities and now allows air walls to become a third party payment provider in the world's second largest economy and boost its access to the local market.

The founders of Argo AI, the autonomous vehicle company that was shut down last year, a launching a new self driving business that could specialize in trucking and ride hailing. According to sources, Amazon which almost rescued Argo last year but eventually pulled out, is not an investor in a new firm, and finally saleforces VCARM is launching a new two hundred and fifty million dollar fund, its largest to date,

to invest in Guess what generative AI startups. The Enterprise Giant also unveiling new tools integrated with open aies technology and dubbed Einstein GPT. They will be used for functions such as drafting, customer service response or initial sales emails.

We'll have more on that later this hour. Of course, Carrow with Salesforces Service Cloud CEO Clara she and ed to that point we were just doing from Laura Martin saying, look, so many of these big tech companies I've been using machine learning and other forms of artificial intelligence for years, and I thought it's really interesting that through Einstein Einstein, I'm sure it's mens known as Salesforce AI is Actually they've been using what is it, two hundred billion AI

powered predictions per day anyway, So what really is this large language model going to be adding to in terms of their overall provision. I think I've got a smile in the corner of my mouth right because you say it Salesforce Open AI GPT in the headline. But it goes back to what everyone's been telling us on the show. Enterprise is where they see the most promise for these applications. It's just the headlines keep on coming and it's not

just enterprise focused software companies using it. There's banks. I've been hearing a plenty of financial companies really trying to harness power of artificial intelligence. We can dive into that a little bit now with stephaniely Chun, general partner over at Portage. It's a global investment platform focused on fintech,

on financial services. You've got what three billion dollars in assets on a management You've recently just closed a six hundred and fifty five million fund three as one of the largest early stage venture funds out there in the world of fintech, and so therefore step artificial intelligence. Is that a height that you're hearing or is it a reality that you're investing in. It's definitely the one exception

to the macro that we've been seeing. And I would say we back the world wist innovative financial services companies, and we're already seeing interesting applications beyond enterprise and beyond the arvious, which I think most people would think, you know, how can AI in a large financial institution really improve customer service? That's kind of the first most obvious place, But I do think it can enable so much more

in the future. I can imagine a world in which your complete financial picture or as a consumer is actually completely automated by AI. So it's beyond just being able to interact in natural language, but also be able to actually have the AI and or machine learning do things

on your behalf. Steph, I know an area in fintech that you're really positive about is vertical sas, And what I wanted to ask you is do you make bets on AI related startups or do you make bets on the companies and startops that will benefit from other AI tools?

Do you see what I mean. I'm much more excited about vertical specific sas than I am about horizontal AI, because at the end of the day, I think you still need very specific, semantic subject matter expertise and a focus on a specific target segment in order to create a great product experience. So we have always been focused on know your customer, serve your customer well, and AI is going to be a tool that allows you to

better serve that customer and that segment. So ultimately, I think we're much more bullish on the vertical focus rather than the horizontal technology, which I think, at the end of the day is probably going to be owned by the likes of open AI ultimately, and I would add one other thing, which is in the future, if the models are in fact kind of commoditize, what really matters is the very specific data that you have, and proprietary data becomes the moat and the major advantage, and therefore

that also favors vertical specific applications versus horizontal applications. Steph, I wanted to talk a bit about the environment that we're in. Matt Harris from Baying Venture Capital Partner's been on the show recently. We had Layliss study from Capital g both basically saying, actually, it's a great time to be writing checks, particularly at the earliest stage of the curve.

Do you kind of agree with then there's a lot of opportunity in this moment, I would say, I would say it depends on how you how you think about what early stages. I think across the board, because of where the fed rates are, risk assets are now out

of favor. I would say the largest impact has been on Series C in Series D in the market where we've seen valuations drop more than fifty percent at Series D, really mirroring the public markets dropping seventy percent I would say feed in Series A valuations which are on the earlier side of the curve have also We've also seen a trickle down effect to there, but it's been the biggest leg so valuations there have dropped more light ten to twenty five percent across the board. I would say

it is a great time to be a venture investor. However, the later stage venture deals, where there's been an exodus and an imbalance of supply and demand in terms of capital, have seen the largest valuation fallouts. When you're looking at the early stages, you do staff where in the world do you focus, Because what's really interesting about your portfolios is so global. I'm looking at French, German and shottech companies for example. Is Europe right? Is it still about

the US? Is in Asia? I would say, we've got a really global portfolio, but a third of our portfolio is in Europe. They are very significant, as you guys would know, regional differences even within Europe in terms of where the regulatory environment is going, in terms of if you look at the differences between banking, insurance, and wealth management. So we see global macro trends as being really interesting. There's investments to be made in Europe, investments to be

made in North America. I would say in times like this where valuations have decreased, globally, we tend to see flight to capital two larger more established markets like the US, like the UK, etc. But obviously within fintech you need to be aware of the regulatory nuances of each specific country. And you are breaking steph Tube General partner at Portage, thank you so much. You know, we're moving our showtime next week earlier in the day, twelve eastern, nine am Pacific,

and we want to take that global view. You know, it's interesting to have a partner on that looks globally and outside of North America. And let's turn very quickly to crypto. Gray Scales fight over its Bitcoin ETF begins in court. We bring you the latest details out from Washington, DC. That's next. This is Bloomberg. We're watching what's been happening in the crypto space, and you know what we see is,

you know, quite a lot of turmoil. We see fraud, we see a lack of transparency, we see run risk lots and lots of things like that. And so what we've been doing is making sure that the that the regulated financial institutions that we supervise and regulate are careful, are taking great care in the ways that they engage

with the with the whole crypto space. Some of FED chair Pal's remarks on the crypto market, of course this morning on Capitol Hill, and in fact some other news in terms of crypto A few minutes ago, we just learned that Finance US hasn't need one court approval to buy Voyage, a digital land Voyager, to end its bankruptcy repay customers. Of course, all of this following the fallout

of FTX. Also today was the start of a court fight between gray Scale Investments and the SEC over plans to convert well It had hoped to convert his fourteen billion dollars bitcoin trust into an ETF police to say, our new resident in town of DC, one Kyley Line. So we miss a lot from New York, but doing amazing work from Washington, including your crypto show, Kayley. Just talk to us about actually what felt a lot of

questioning coming out fighting almost on behalf of Grayscale. Yeah. Really, the tone of the three judges on their suppellate court today really seems to have shifted the odds of many people of Grayscale actually coming out with a victory here. Our own analyst to Bloomberg Intelligence and Elliot Stein previously had a sixty percent chance on the SEC being victorious

in this case. They now actually think it's seventy percent odds in favor of Grayscale, because the judges did seem skeptical, skeptical of the SEC's argument that bitcoin futures should be treated differently than bitcoin spot. Of course, that's the argument that Grayscale has been pushing against, saying you should be treating futures and spot the same, the same concerns about fraud and manipulation. The SEC has should be applicable to both, and it did seem like those three judges maybe more

sympathetic to Grayscale's view. Heading to the market reaction we're seeing today. Saw today GBTC up nine point six percent on the day, so that discount to its net asset value narrowed, Right, the market's going to try and discern what the outcome is going to be. Right. There's a risk in that, of course, and you know you're always hesitant to sale. What would happen if but in the event, ruling fools in gray Scales favor. It opens some doors, right,

What does it mean for them and for this industry? Yeah, I mean if is obviously the operative word there, and it could still be a while before we ultimately get a ruling like second or third quarter. And then when we do, it matters what the language and that ruling is. Should the court rule in favor of gay Scale and put a gray scale and push back against the SEC's rejection of this application, Does it actually force them into accepting it or could it leave a door open for

the SEC to slap it down another way? That will be really important. But of course, if gray Scale ultimately is able to make this conversion, it would get rid of their net asset value discount problem because it would allow redemptions. It would potentially turn into an ETF and it could mean that other products like it could be introduced in the market in the future. And we broke just before you came, of course, the news regarding Voyage

being able to be sold to Binance US. There were other assets on deck when it comes to FTX, and actually it looks as though they're delaying the auction. Briefly, Yeah, ledger X, which was their of it IF's platform. It was actually one of the few areas of the FTX empire that remains solvent, had its auction delayed from today to March twenty second and clear the reason why. But that's something we're going to have to following those k lines. Our Voice, Finn red Voice add in DC, thank you

my fashion til. The US claims that it seeks to outcompete China, but does not seek conflict. Yet in reality, it's so called competition aims to contain and suppress China in all respects and get the two countries locked in a zero sum game. Welcome back to Room Technology. I'm conne Hide in New York and Imed Lovelow in San Francisco. And that was just China's new foreign minister there calling

the US approach to Beijing reckless gamble. And this of course is sort of put in stark contrast with what was happening on the Hill today, Congress moving yet closer to restricting access to China's TikTok app with a new Bible heartisan bill aim to protect US user data. Clearly, the hostility is front and center when it comes to trade technology. We've got the perfect guests to discuss it all. Paul Triolo, All bright stone Bridge Group, Senior vice president

of China and Tech Policy. You're about to go out to China soon, Paul, just talk to us a little bit about, first and foremost what you heard from Chinese leadership today. A really tough stance, finally seemingly that they've decided to fight far with fire in some way. Yeah, I think it's not surprising. UM, this UM, this sort of rhetoric has been teaching, has been very careful not to use this, this fairly straightforward rhetoric in calling you know,

calling out the US policy on China. UM. So it's not surprising. It has come on the heels, of course, of the balloon incident, the cancelation of Secretary of b Lincoln's visit to China, and then a whole host of US actions, export controls UM and other other restrictions on

Chinese technology acquisition. And then of course we've had a Congress hil the hearings last week, the kick off a season of hearings with a House seleuct Committee on China for example, which you know, use some pretty harsh rhetorics. So it's not surprising to see China push back a bit on this, but it is unusual for SEED to use such strong language before we get into the tifatat and perhaps what's happening in terms of privacy here in

the US. I'm interested in what you made of the shake up when it comes to trying to ensure AI, particularly chip making, is front and center for China that they don't somehow lose out despite these trade embargoes and issues that are put on hold in terms of getting

hold and access to certain US technologies. Yeah, I mean, I think the restructuring that we're seeing coming out of the NPC, and of course it's it's early days here, it reflects to some degree in the technology sector, this recognition that the US is putting increasing pressure on key priorities for Beijing, like advanced computing. So we've seen the US take action for example and export controls, and there'll

probably be some restrictions on a bound investment. So I think China is still grappling with the full implications of that, and there'll be a lot of focused on domestic investment in these key herded core technology sectors, for example, like semiconductors and artificial intelligence. But I think that that Beijing is really really struggling to figure out a way to invest, keep investing inst domestic industry and push back probably at some point on some of these restrictions we're seeing the

US erect around China's company's access to critical technologies. Paul, as we came on air about thirty minutes ago, a headline hit the Bloomberg terminal, a news story She's frustration Abiden grows with warning of conflict, and it talks about how a lot of the communications coming from the new Foreign Minister Gang but actually g himself is under a lot of pressure domestically with the economy having to pivot policy to be supportive of industries that they have been

cracking down on for a number of years now. How does he manage that process? To your mind, it's a good question. It's very complicated. I think at one level, coming out of the zero COVID restrictions, China has sort of pivoted in the economic and social sphere to show that it's open for business. And so part of the game is to show foreign investors and businesses that China is sort of back on track after some difficult, a difficult period of zero COVID lockdown, So that's one issue.

But at the same time, China is facing the US restrictions on technology, and also of course concerns around China's continue support for Moscow and talk in Washington and in European capitals about the potential for sanctions. So as as Sea surveys. The landscape here it's it's opening up and trying to portray business as usual, but China is facing a lot of pressure for outside pressure that's going to

push against that. How successful is your mind, is China base in leveraging some of the US partners and allies in getting around this this technological blockade? You know, it seems as if the US is convincing most of the Western world to go along with it. That's very much a work in progress. It's tricky because in some areas

like export controls. Of course, there have been intense negotiations between the Dutch government and the Japanese government about aligning with some of the tough controls that the US put on in October. But with all these kinds of collaborations between allies that the US is trying to align to contain or constrain China and some of these technology areas.

The devil really is in the details, and it can be tricky to get the countries that may have may not have similar kinds of export controls or investment restrictions to go along with this. So it's going to it's very much a work in progress. But yes, clearly China is very concerned about this and is working over time to try to push, for example, for better relations with Europe and try to sort of drive a wedge between

the US and Europe on some of these issues. Talking relations with Europe, byte Dance CEO has been out there trying to woo in many ways European regulators, same as they have been here in the United States, but different tactics being taken on. At the moment, the EU seeds to be more inclined to listen to how byte Dance might be able to put in place restrictions to data flow from TikTok. Use just talk to us about the data the privacy argument that's going on here in the

US vis of each China. Yeah, and obviously TikTok is sort of the poster boy for this. So TikTok has been very aggressive as part of its negotiations with the US government that they've gone on for about two years now installed to be more public about the kinds of procedures as putting in place to protect US citizen data. So over the last month, yes, the TikTok CEO has been very outspoken in discussing all the measures they're taking,

which are pretty considerable. They spent something like one point five billion dollars to architect the sort of US enclave that protects user data and protects against things like censorship and things like and there are also allowing review, for example, of their AI algorithm. Um so, but they have a tall order to convince the US Congress and others in the Biden administration that they're taking enough steps to protect

US US privacy and US user data. The CEO will testify in front of Congress and on March twenty third in front of the House Committee, and that will be a key indicator of how how successful TikTok sort of you know, spin is in terms of convincing US regulators that they've taken enough steps to protect US user data. The Europeans are also watching this very carefully, of course, to see how that comes out whole. With all your

knowledge of China and its leadership. Are you convinced, Well, I've actually I've seen the I've seen the the TikTok proposal, and it looks to me like it's pretty it's pretty tough. It's it's they decided not to contest the national security concerns that the US government was putting forward, and so they architected this system using a lot of a very capable cybersecurity and other data privacy experts to try to

address those concerns head on. So at least from what I've seen, again, it's it's it's difficult to know the full details, but from what I've seen them present, it looks like it's it's a pretty serious effort to address

the concerns. And they spend a lot of money on this, I mean, one point five billion dollars and they estimate it will take about a billion dollars to run that Enclay, and so I think that, you know, that's that's I don't know any other social media company that's taken those kinds of actions to try to address head on those concerns around data privacy and user user data privacy. So it's a pretty impressive effort at least so far. The

question for DC is if it's sufficient poultry. Ali albright Stonebridge Greep, Senior Vice President of China and Tape Policy, thank you so much. Coming up, Elon Musk took the

stage at the Morgan Stanley conference in San Francisco. Will bring you the big takeaways next, including his thoughts on AI and speaking of earlier of AI, we heard from Citadel founder Ken Griffin with this horse on this technology, this branch of technology has real impact in our business, and I'm actually really excited to see how this changes the world. Housing and tech are very quote unquote interest

rate sensitive. Construction and housing I think is obvious when you have a short mortgage cycle, but for tech, we had a decade long equity availability of capital and that's been shut down by the as well, So those are going to feel the impacts. First, a macro perspective, JP Morgan's Global Wealth Management chief Tom Kennedy earlier on Bloomberg Television these thoughts on just how the tech sector is currently evolving amid this new interest rate regime. Let's talk

a little bit more about tech. First up, Apple adding a new color to its palette yellow. The company announced a yellow version of the iPhone fourteen plus today, adding to the existing Midnight Blue, Purple Red, and Starlight options, and sticking with new announcements, Sonos is revamping its line of home speakers, aiming to go after the market more aggressively as well. Of course, Google and Amazon are rolling

out a fewer new products at the moment. The audio company now has two new models, the Era three hundred it's a form of advance around sound, and the Era one hundred, a replacement for a Sonos one, a key rival of course to Apple's Homeporn and Google's nest products,

as well as the Amazon Echo. And finally, Uber when it's launching some new features of its own to make airport travel which I've just done Nestra from step by step instructions to guide you through the airport to walking ETA's It's also expanding availability for Uber Reserve offerings throughout the United States and Canada. Meanwhile, Ed, I've got to get your take right now on what we get lost

in the noise sometimes surrounding Elon Musk. But he did take to the stage on the menu Shy around Twitter today. It's an a Morgan Stanley event. He took to this stage. He gave us ten minutes notice, he tweeted a live link, and then the Bloomberg newsroom just erupted into motion and we gathered the best and brightest across and we did a live blog and well, there are a lot of questions, everything from when the Twitter executive bench going to be as deep as it is is Tesla, what is going

on with Twitter's debt? How is Twitter going to be different to when it was when you required it so much to discuss. Unfortunately, my editor and friend and co sufferer through the process, Sarah Fryer, joins me on set. There were a lot of takeaways you and I wrote about a number of them. One was the debt. I think we start there right in this idea that the debt is one point five billion dollar annually. But he kind of justified the savagery of laying off all of

those staff. What did he have to say, Well, he said, now that debt is about the same as their their cash flow, so they're getting to be cash flow equal, maybe edging towards cash flow positive, which you know, he went on to say that they are now EBBA DA positive And I just think that this is part of his optimism, and we've seen a lot of optimism from from Musk despite spending four to four billion on Twitter, despite doing all those layoffs, he really thinks that he

can turn it around. And and not only does he think he can make a cash flow positive, he thinks that he can rake in more from Twitter's advertisers. We actually kind of learned a little bit about how he's measuring success at Twitter, and you know, you know the social media landscape so well, he said, don't worry about monthly or daily active users. Look at US hours. I think he said, one hundred and thirty million US hours

per day is what Twitter is hitting currently. What does he mean by that, Well, what he means is they have this platform that really has the pulse of the news. It's where everyone's talking about what's happening, and they aren't able to monetize that or make money off it through advertising at the level that he wants them too. He said, actually he was shocked at how poorly they are turning

that attention into money. And one of the barriers to that is he thinks that the ads aren't relevant enough. I think partially that's because Twitter just doesn't gather the same kinds of data on users that Facebook does that

other companies are able to based on their activity. And then the other factor is that there is this big issue about what advertisers called brand safety, which is that we don't want ads appearing next to the lab this tragedy, or even next to hateful commentary what people are saying that that may you may just don't don't want to sell next to that. In Twitter, because it's a place for the news, is also the place for a lot of that kind of content that that perhaps is not

as inspiring. You know, don't necessarily want to think about where you're going to get your next burger while you're watching a tragedy. When we think about oversight in particular under Elon Musk's watch and safety in many ways, I know European regulators have been thinking about this a lot and looking towards some new laws that are going to put into place to protect consumers come twenty twenty four. But it looks as the USFTC, the Federal Trade Commission,

also plans to depose Elon Musk as part of its probe. Right, there are a lot of people interested in this. Yeah, I think that this is a company that is going to come under a lot of scrutiny in part because of the layoffs. You're cutting a lot of staff that

previously We're hired because of of what regulators wanted. They wanted somebody to work on harmful content, to work on taking down information operations from from foreign operatives of the like that that tried to influence the twenty sixteen presidential election. I mean, there were people in place because they were needed at the time. And Twitter is going to have to untangle, you know, did we cut too deep? Did we do we get rid of people that were there

for a reason? Um and and it's gonna be tough to answer regulators, I think Muska saying, you know, we will make those hires we need to make of. We have a lot of priorities right now. Serifi, thank you so much. We were telling you about this earlier in the show Salesforce getting in on the generative AI alms race. Let's bring it so this cloud CEO Clara shay in for more. You've just been on stage, Clara, and you've

talked about Einstein GPT. Let's start here. Did you partner with open ai because it was the best technology or because it was good marketing. Einstein GPT we're really thrilled to announce today at the Salesforce Trailblazer DX event here in San Francisco. Einstein GPT is the world's first AI generative AI purpose built for CRM, and we are taking an open ecosystem approach. Open AI is our initial partner, but we'll be adding additional partners in the coming months.

How does this improve the offering to your CRM enterprise clients? What is it that they're getting out of this now? Einstein GPT is really about combining Salesforce's proprietary AI with an ecosystem of vetted generative AI partners to create personalized content for sellers, service agents, marketers, commerce managers as well as IT developers. And it's for the employees, it's about making them more productive, and for customers, it's about delivering

more tailored, relevant experiences. Because I believe you already deliver what two hundred billion AIPAD predictions per day anyway, we think is customer three sixty Clara, So how does the large language model change things up? If you're a user? That's a great question. So we've been on this AI journey for over seven years now. We introduce the world to Einstein in twenty sixteen and there are over two hundred and fifteen billion predictions at Einstein. It gives out

every day today across customer interactions. Einstein GPT is the next generation of our Einstein AI and it includes generative technology, which means that content gets created for sellers, for example, a draft email to a prospective customer for service agents, a draft response to a customer service chat or email for marketers, generating dynamically generating landing pages and email campaign content. The human stays in the loop. They get final say

before they hit send and open AI say. Look. It allows them to learn more about real world usage. That's critical to responsible development. I'm interested in that responsible development element because it's interesting. Some key financial companies, for example, have been limiting their use employees use of chat CHPT worried about their IP Basically, how are you going to ensure this is a safe space for all your customers

to work in. It's the difference between consumer and business applications. Thus far, a lot of what has been covered in the news about generative AI has been consumer applications that are open ended and frankly have higher safety and accuracy concerns in the business space. We can really focus the use case the job to be done on specifically what does a salesperson need? Specifically what is a service agent

need to do his or her job, Clara. The other big piece of news is Salesforces Venture m launching a new two hundred and fifty million dollar fund specifically targeting startups in generative AI. You alluded to it earlier about future partnerships, but what are you looking for with that fund? That's right, our new generative AI startup fund from Salesforce Ventures. It's really focused on investing in and nurturing the next

generation of AI startups. We believe it's very early days and generative AI, and you know, there's a lot that we don't know yet, and so being able to have an ecosystem play is very important and also to give our customers choice ed referenced at the start. This sort of feels like a pr offensive around AI or a bit of a marketing ploy, but ultimately, you've been doing AI for years. Does it frustrate you that suddenly everyone's talking about chat GPT? Was it needed this sort of

conversation I think it's great. It's created consumer excitement in demand. My eighty five year neighbor even knows about Chatchi Futi and ultimately, you know, businesses they care about AI and the context of driving business results, especially in this macro environment. How do I close more sales? How do I respond to my customer support issues more quickly? And so that's our true north in developing these applications in an ethical

and responsible way. Salesfull Service Cloud CEO Kashy running off stage to be with us. We appreciate it, Thank you so much. Meanwhile, that does it for this edition of Bloomberg Technology ED. But we've got a pretty great lineup of top executives tomorrow. It also so it happens to be International Women's Day. Yeah, I'm really looking forward to some of those conversations, new names, some of them, it's some of them long time guests on this program. Don't

forget been just an incredible newsflow day. You can recap all of it in the world of technology on our podcast wherever you get your podcasts, Apple, Spotify or iHeart, and of course on the Bloomberg terminal. Two days down, three to go before the big move. Character this is came back m HM.