Silicon Valley Bank and Silvergate's Troubles

at integrating AI into the platform. Will discuss. Then the FED creates a crypto oversight team to overlook stable coins. We discussed with the co found of DM stable coin program. For first, let's check in on the markets, because what

a down day. What a worry that we're getting surrounding lenders, banks in general, and of course a lot of those our tech focus and nature NAZAC off by two percent, KBW Bank condext I shine a light on this index because the banking index is having its worst day since June of twenty twenty, off by seven point seven percent, and it's all regarding SVB and indeed silver Gate. I look at a ten year treasury yield that gets bid. This risk of sentiment means money pours back in to

US treasury is yields stopped by eight basis points. Let's move it on. Let's look at the world of crypto, because the worry, the contagion, that implications of a silver Gate unwinding, and indeed what SVB really talks about in terms of risk sentiment around technology, Crypto absolutely being battered after the liquidation of Silvergate. We're off by more than Rod and Ed. Just dig into that a little bit for us, the implications of what now feels traditional finance

meets decentralized finance looks certainly. Sentiment depressed all day long when it comes to bitcoin is an example because of Silvergate. There's also some stuff out there about who being coucoin and what the New York Attorney General is looking at. But here are the concerns right, SVB Financial parent group of Silicon Valley Bank down sixty percent, Silvergate capital down forty two. The concern here is that the impact of higher rates has hit the froffiest corners of the market.

Where are the froffiest corners of the market, Caroline, crypto and technology. The story with SVB in particular is that who are their clients clients, technology companies, startups who are facing cash burn. They don't need cash in the bank, they needed at hands. They're making basically withdrawals deposit outflows, and Silicon Valley Bank is having to react in order to plug the gap. Just to make the point even further, let's look at this terminal chart really quick and just

look at the drama. Biggest drop on record for this stock and is lowest level since September twenty sixteen. Let's get more details. Bloomberg Shnali Bassak joining us out of New York. A lot of stories to cover, But how core is that Silicon Valley Bank client based tech to this story? It is a big part of this story. But you can also talk about balance sheet management here being an issue when it comes to Silicon Valley Bank.

When you look at the Wall Street view on what has happened here, part of the issues were exacerbated not just because of their client base, but because they had to sell securities at a loss. That is something we're not seeing just unique to Silicon Valley Bank. But I will put some contacts here because the point you're making here this not so long ago, a year ago, This Bank was the envy of the industry of many many banks,

from Goldman Sachs to JP Morgan. They loved what Silicon Valley Bank was doing, to the point the you have to wonder, now, is Silicon Valley Bank going to eventually become an acquisition target or is there too much weakness here to make it so? What happens next, I think is the major question that's looming in the market. First of all, val and I think some of the threads that we're going to weave, and I know way want to imply that subs stop drop immediately means that we're

going to see what happened with silver Gate. But ultimately two companies, two banks, are currently facing the headwinds of high interest rates, and both got very focused on certain parts of the market. Yeah, and that is certainly what is in common here. And by the way, there are other banks that also have similar worry around them. Think Signature Bank, where the deposit base was not so loaded to crypto about fifteen percent according to Anile ass estimates

its deposits. We're kind of tied to the crypto industry more broadly, but Signature ninety percent through September. We're really tied of its deposits to the crypto industry. To the point you're making the issues in crypto are not the same as all the issues in technology. But what you're seeing here is this exposure to the industry more broadly becoming a worry for firms like this. I will say

one other thing. Remember concurrently they also announced the capital raise. Yes, this is a market in which the reasons in which you're raising capital are very, very very sensitive. And that is another thing that is a concept of dilution and why you're raising money is a big warning sign for anybody raising money. Ahead suddenly saw that being really shown

out through the KBW Bank indext performance. Today, we really want to function nati bast at the moment for all things weaving together what is happening with the likes of SVG, but also what happened with Silvigate, and we want to dig into Silvigate and crypto a little bit more now with ABA Lab's president John Woo, John, we turn to you for your expertise because you have announcements to make.

You are still building in a space, but ultimately you are currently a man who is trying to digitize the entire and ultimately trying to digitize world's assets for traditional finance,

for asset managers. How hard is that when we see Silvigate having to unwind, or clearly it's going to be a lot harder when all the intermediaries and seemingly all the intermedioris and the on ramps for institutions and individuals into the crypto ecosystem are one by one getting removed either through regulation through bad actors or risk management bad fundamentals like in silver Gate case. So it's not easy. It makes it harder, but you continue to build and

continue to get partnerships. John, you're operating in an ecosystem, in an industry that still wants to build, have access to capital, needs banking services. Just very quickly give us some insight into the conversations you're having with industry peers about silver Gate, about what this industry is going through right now. So when things get better, the issue is if there are no on ramps, no intermediaries to help new institutions come into the space, that'll delay the growth

of the space. The other problem is even healthy balance sheets in this space, they need little things. Banking services like crypto is a fintech business and legitimate businesses need banking services to pay people to do things that every other company does. If we remove the banks that help these companies do that, you're removing companies desire to be on short and unfortunately, US companies will move offshore for

banking services and other things that they need to just operate. Caroline, I just want to go back to the point you and I are making a top of the show, right, which is if you put silver Gate side by side with SVB, what's they have in common. It's a discussion around what the impact of higher rates has been on FROTH, whereas the froth it's in crypto and it's in technology more broadly, we're just seeing a delayed reaction, it seems, and I've seen this, yeah, in my career, my first

part of my career, as in the financial markets. Every time the fed raisers rates, things break, and the first things that break are usually the bad actors and the frauds, and then at the tail end of that bad risk management, bare fundamental and driven company's break. So if there's a silver lining here is now we're at layer two, yeah, and then when things stabilize, hopefully we go back to a stable environment. John R. Regulates turning to you for

advice they should. I was down in DC and talking to senators and talking to other agencies. Are our general counsels constantly down there talking. I think we need to open up a healthy dialogue. It can't be just one way. And if that happens, you'll bring a lot of the

capital markets back and a lot of the innovation bank. Otherwise, like I've been saying, things are going to continue to move off short because a certainty in rules and regulations is happening in Europe, is happening actually even in Asia. What's so fascinating is, of course, at the same time as we worry about silver Gates implications, we think about what's happening with Silicon Valley Bank at the moment. It's

exposure to technology to startups. John just want to bring our audience and breaking news that interestingly, the Founders Fund, which a key VC player, is advising that its own companies should withdraw funds from Silicon Valley Bank. Now we know the CEO of Silicon Valley Bank has been out there trying to reassure clients as to what the stock drop means, what the conservation of its capital. At the moment is trying to signify, but ultimately we are going

to see some concerns being built. I founders found R indeed advising their own portfolio companies to withdraw funds from SEB. Can I ask you, as a founder, John, do you have money in traditional finance? Do you have money with Silicon Valley Bank? Well, Silicon Valley Bank is one of the banks that we use, as well as some of the other ones that were mentioned, So I think the right thing, the prudent thing we've learned is counterparty risk.

Once these things start, this is a classic bank run, and when the blank run starts, you don't want to be the last guy there and wondering what happened. Unfortunately, this is the way banks work. They rely on trust. When they lose that trust, their things really will happen. John S. I know we have so much to discuss about AB and what's happening with Avalanche, but but we have to stick with this story because it's happening in before our eyes. What do you do in this situation?

Do you follow the advice of names in the valley like Founders fund and pull the money? Do you stick with it. I mean, I have to just point out there were a number of names that Bloomberg cited in its reporting that said, what we're seeing in Silicon Valley Bank is not the same as silver Gate, and actually, long term they have a completely solid future. What would you do in this circumstance, Well, hopefully there's enough. What I would do is you have to diversify out and

maybe not pull everything, We'll pull some. We experiened this back in the Great Financial Crisis, where you have to diversify your prime brokers. Luckily, we have already diversified, so we're less exposed and we were literally just a few weeks or months ago. Okay, And I think ultimately we're going to continue to dig to ask questions. Has it been easy to gain that sort of information from Silicon

Valley Bank at the moment? Or relying on analyst reports that we get, and indeed some of the reporting coming from our own journalists. You're relying on your own interactions. The operator always has a better view, you know, the cadence of responses and how things are working, the size of transactions. All of those little subtle hints is what we're relying on. As an operator by the time you read it in the news or something. Unfortunately, it's probably a little bit late. I just want to ask a

little bit. Of course, you are there trying to ensure that your banking is secure, that where your money is putly, your business is on solid footing, and I'm sure you have done it. As you said, you've already diversified. You're also diversifying your business. And just very briefly, John, we bought you on the show because you've done this new deal.

You're bringing Web three to gaming in particular. How hard is that to sign these new sort of documents, get on board the likes of TSM and blitz up when people are questioning the overall Web three trajectory. Great question, and that's the fun part. By the way, no doubt it's harder, especially with US companies, but the cadence and foreign companies is actually happening in this TSM case. Just so people know, this is one of the largest gaming franchises,

the TSMS equivalent of a esports team. It's like the Yankees for esports, and they're going to provide their gamers with some of the requests the gamers want, which is to get more liquidity for their in game items through Avalanche based wallet. Right now, the world works as gamers have closed, loose systems where they buy in game assets on one place that they can't sell and move to another very quickly, or they have to pay large fees

to convert back to US dollars. So they're going to create a wallet on Avalanche where all these different games will have interoperability and make their lives better. John will continue the conversation on the partnership with blitz TSM going forward. There's something happening here right now in Global Silicon Valley, and we're grateful for your insight on it, the lads, President John will thank you very much. How chat gptwo effect.

We have this thing called Erica, which is a virtual artificial intelligence, virtual assistant natural language processing predictive technology that we've been running four or five years and eighty million customers use it one hundred forty five hundred fifty million times a quarter, so we're used to it, but this is now a new one that could change the game of America. CEO there Brian moynihan, And well, let's stick

with CEOs who love all things AI. Because messaging platform Discords just announced its expansion of its own AI offerings, including guess what open aiyes technology they're incorporating into functions like it's chatbot, it's moderation systems, let spring blooms. Cecilia at Dnastasio, who has the story at an event, just

tell us about where they think this will be additive. Sure. So, Discord is a chat apps that one hundred and fifty million people use every single month to discuss everything from video games to anime to classical music. And now Discord is integrating open aiyes Chat GPT technology, which creates kind of human like conversations using AI, into one of its bots. The bat's name is Clyde, and Clyde has existed for

a long time. It's kind of Discord's mascot. But now Clyde will be able to tell users things like the weather or time in another country, or even suggest a playlist for a Discord server using AI chat technology. All right, Bloomberg, Cecilia Dnastasio, thank you so much for your reporting. Caroline. I've got to bring you some more breaking news headlines crossing the Bloomberg terminal. Our sources now telling us that why Combinator is advising its companies in its portfolios to

limit their exposure to SVB Financial y Combinator. The latest name, according to sources follows founders Fun just in the last twenty minutes, those after our declines on Silicon Valley Bank or SVB Financial Group now really accelerating down six percent or so. We'll continue to track the names that are adding to this story blow by blow. We're going to

get back to generative AI though. And let's keep talking about this with Dion Nicholas, who's the CEO and co founder of four four to generative AI company for customer support Automation which guess what carry They also recently announced integration of open AI technology with the launch of their own polls GPPT platform. I saw you smiling. Absolutely, I'm super excited to be here. Let me ask you this,

why why open AI? Why not your own tech? Yeah? Absolutely? Well, to clarify, four thoughts been around for four or five years now, applying AI to help customers and help businesses serve their customers better, and so with support GPT, we're launching today the world's first generative AI platform for customer support automation. The real big thing and the real answer to why why now is that in November, Chat GPT

changed the name of the game. For the customer experience and for consumer expectations, we've been building for four or five years, and we've been very focused on correctness, very focused on building a generation of AI that actually can help customers solve their problems. And what we're seeing now is that it's become mainstream for consumers and that experience, that expectation has risen with Chat GPT, and so we've combined that and we're building out. We're launching support GPT

for customer support. So this is not a marketing exercise or a PR stunt. No, absolutely not, And that's one of the things that we wanted to be sure about. Sure, it's about solving problems for our customers. We actually already have customers of betaing and using our support GPT platform. Folks like upwork, the world's largest talent marketplace, are already

leveraging this technology in production. Carol, We as we do every day, we asked our audience what they think about just endless announcements of partnerships between tech companies and open AI. You know the results as well as I do, Caroline, respondents think this is a pr stunt broadly what we're seeing right now in the industry. Yeah. And meanwhile, don you say, look, this isn't this is about servicing your clients. I'm just really interested in help me understand here. You're

already a leading generative AI company. You're already building your own large language model. What was it that open ai has. Ultimately, you couldn't build a house. So most customers when they interact with customer support, they don't necessarily want a chit chat. They want their problems solved first and foremost. And that was the premise that we launched forethought on all of those years ago, was to use AI to help people

to solve their problems. One of the things that people have seen with chat chypt, hundreds of millions of people have used it, from writers to bakers, to friends, family, everything. They have now seen what it's like to interact with a chatbot that's empathetic, that's human like. That really raises the game and raises the name for customer experience. And that was one of the things that we saw and

our customers saw. We actually I started getting texts from heads of customer support saying, hey, our customers want this kind of experience, and we're betting on forethought, and that was actually the spark that actually helped us to realize, hey, there is actually something new here. There is not It is not just a publicity son, It is not just

you know, the next fad. It is technology. And we ad forethought, have been all in on AI since day one, and so we are staying we've always been on the forefront. The expectations from customers have risen and we're rising, and we're launching support GPT to go and meet those expectations

and bring customers that next level of customer support. Oh is your competition, ben Dion, because we're seeing other key companies that are very close to supporting sales people, supporting other areas of client facing individuals, and they're also using open Ai. Yeah, the big competitor for us, quite frankly, is the legacy chaplot. There have been hundreds, if not thousands, of legacy chaplots that have cropped up over the last

decade or so of innovation. And one of the things that you notice about chapblots is that one we've all experienced them, and we've all found that they are super clunky right, their manual, their decision tree base, and they're more artificial than they are intelligent. And so we've set out to actually really transform the way customer s has done. And it's really that host of chap our companies that we're trying to out innovate and that we've been out

innovating over the past few years. Yeah, we've got to go to some more of this breaking news right around Silicon Valley Bank. Can I just for our audience ask are you a customer or client of Silicon Valley Bank? Yeah, it's interesting. Silicon Valley Bank is one of the banks we actually use here at for though we obviously work with a few banks. So it's interesting hearing the news

go out live these days, so really interesting. Thanks. We don't want to put you on the spot, but I think you appreciate why we have to ask those questions, right Caroline, that this is happening before our eyes. Yeah, and ultimately I have to ask you more on the spot. Therefore, Dion, are you going to be thinking about your relationship with SPB.

We're seeing that the shares are extending their postmarket to climb down why more than ten percent at the moment and a lot of venture capitalists and I know you're back by VC asking their portfolio companies to cut their ties. Well, it's a really dynamic situation. We're definitely evolving and adapting

as we go. But what I can say is, you know, again, we work with multiple banks here at Forethought, and our goal at the end of the day is to best serve our customers, which is again why we're launching this support GPT. But again, there's a lot happening in the space, and yeah, we're excited and watching what's going on, excited for AI, watching what's going on with SVB. We'll let you go and get attention to both of those things.

Dean Nicholas, we thank you, CEO and co founder of Forethought and all things AI and indeed Silicon Valley Bank. Let's bring you where the market is currently telling. The concern is AD and it's in Silicon Valley Banks parent company.

We're currently off by more than ten percent after hours as you break the news that we are seeing yet further moves coming from why Combinator advising its companies to limit SVB exposure at the moment, and indeed, we'd already heard it from the Founders Fund advising its companies to withdraw funds. SUV we remind of you as they currently bank about forty percent of all US VC backed companies, according to its own website from New York. From San Francisco,

this is Bloomberg. It does business with nearly half of all venture backed companies in the United States, said Silicon Valley Bank, the parent company, falling further after hours after of course, it worn the market earlier today that it's hame to shore up its own capital, selling off assets, doing a share sale, and ultimately, now seeing this talk of confidence, the ultimate depositor is moving away from them.

VCS are advising their portfolio companies to cut ties. Yeah. Look, look this is really accelerating after hours with down seventeen percent. Now we haven't even got to the reporting that. According to a source, Greg Becker, the CEO of the bank, held a call with VCS earlier today basically saying keep calm. A lot more to come with this story thus far not keeping calm. We currently see course Founders Fund and Why Combinator advising their portfolio companies to consider ending their

relationships with Silicon Valley Bank. So much more on this story, there's a Blomberg. I want to know how tough it is out there for startups. Look no further than Silicon Valley Bank that, as the name might suggest, it's a lender to venture backed startups. And well it's just announced the trouble that it's in. Its shares have plummeted the parent company of it the most since nineteen ninety eight. Why is it struggling, Well, because the companies that it banks,

those startups currently are struggling to get new funding. They are burning through cash and therefore they're having to withdraw some of their deposits. So q SVB having to sell more shares, having to sell off some of its asset portfolio, and ultimately trying to shore up in some own capital position. This just comes one day after the crypto focused lender silver Gate announced that it was winding down, that it was liquidating after its own customers had to withdraw deposits

because crypto prices tumbled. Look what is to blame here? Interest rates? They're rising as the Federal Reserve raises interest rates to tackle inflation. Suddenly, boring old safe US government bonds are pretty appetizing. They actually give you some yield, So why take a riskier bet on a crypto company or a startup that may or may not pay off.

This ultimately is the end of free money. It means that valuations are sinking and it's hurting certain lenders in companies that bet everything on these tech and crypto sectors. Let's get more into this unraveling story. As the shares continue to drop after hours for Silicon Valley Bank, We've got putting bogs, Max Rays, who's been across this story

and just talk to us. Ultimately, now it seems to be the venchure capitalists who we're getting the cools from the CEO all of the slicon Valley Bank to calm and stay calm. And now I'm not saying Colm in tending their portfolio companies to cut ties. Yeah, I think that's a great way of putting it. I think again, the thing to keep in mind is what the interest rate environment is doing to these banks that I've decided to really push into particular sectors. Silicon Valley Bank and

Silvergate have a lot of differences. Obviously, Silicon Valley Bank has been building out the specific franchise for decades, while Silver Gates pushing to crypto. It's relatively more recent, but the similarity is that they took a bet on a very very specific sector of the US economy, and as interest rates continue to climb, as you know, they're the areas that they focused on their backyards as it were

sort of dried up, they've been forced to reckon with that. Obviously, that led to Silvergate to make some decision to wind down. We're still seeing how this is playing out for Silicon Valley Bank right but clearly client and investors are worried max to recap the reporting twenty one billion dollars off their securities portfolio. They're selling at a loss. According to a source, Greg Becker met with venture capitalists and clients

to kind of reassure them what's going on. I do want to show what Greg Becker had to say today about the actions that Silicon Valley Bank has taken. We're taking these actions because we expect to continue higher interest rates, pressured public and private markets, and the elevated cash burn levels from our clients as they invest in their business.

You reported that actually in the market, many do not believe that this situation with Silicon Valley Bank is the same as with Silvergate, explain that to us correct, and again it goes back to the idea of the franchisees being different in terms of their value and in terms of what happening. Right, I would say that folks expect Silicon Valley Bank to have more kind of more strength

in its franchise because they've been doing the longer. They have more capabilities as a bank, while silver Gate wasn't really interested in being a bank by any traditional sense. Right, Silvergate's value was that it was a willing to touch crypto or at least Fiat currency from cryptoclients, and that I was giving them a way to exchange with those funds with each other as part of their trading activity, which is not really, you know something, the normal course

of banking. While Silicon Valley Bank, even though it likewise took a very narrow approach, does use both sides as its boundary. You know, it does lending, it does deposit taking. It's not just trying to gain one side of it or the other. So that's why folks are kind of rooting for them and expecting them to pull through this with more confidence than they did silver Gate. Let's therefore,

talk about next step smax. What do you look for to ensure that Silicon Valley Bank can whether this current storm. The fundamental question going forward is going to be how many more of these clients ought to pull their deposits come more withdrawals we see, and how that affects the

bank capitalization. What ended up killing Silvergate, right, but the fact that even though it could honor the withdrawals that we're seeing, it was no longer as capitalized as well as it had been due to that, right, and there are various ratio of capital ratios and the one we need to satisfy as a regulated financial institution. So that was one of the key sort of issues affecting silver Gate.

Going into it again, investors, people who watch the market see key differences between Silvergate and Silicon Valley Bank, But that is what people will be looking for. How will the franchise fair as its continued max rays tterriffic reporting. I think it's probably just the start of this story. We'll track it in the days to come. Now let's get to the world of crypto kind of more broadly. Today the FED announced plans to form a crypto oversight team.

This has FED Vice chair for supervision. Michael Barr discuss the impact of stable coins on the financial system, listening consider their consequences if a stable coin not subject to appropriate supervision and regulation were to be adopted as a widespread means of payment, which some stable coin developers state as a goal. Stable coins have the potential to scale

quickly because of network effects. An unregulated, unsupervised deposit like acid could create tremendous disruptions, not just for financial institutions, but for people who might rely on the coin if it were to get wide adoption. Let's talk about the network effects as stable coins with Morgan Bella. She's the co founder of Facebook's DM stable coin program, but also partner at NFX, a VC focused on network effects. One point one billion dollars of deployed capital assets under management.

You heard there what the fed vice share had to say. Are you convinced by it? Thank you so much for having me And yes. At NFX, which stands for Network effects on the board, we are believers in network effects. There's a creator of DM unbeliever in stable coins. So hearing Michael Barr acknowledge stable coins in that way, I'm trying to stay net optimistic, but I am admittedly a

bit nervous that oversight could maybe go too far. I don't necessarily see network effects and these assets taking off quickly as a bad thing, which definitely feels like he's coming at it with a negative tone. And of course that was the ultimate demise of DM when it had to sell itself, I have to say, ended up selling itself to the likes of Silvigate Bank in and of itself, some of the assets because they had to be and went on into unwine because ultimately the didn't feel the

regulatory environment was ready for that. What are you hoping to hear from regulators that they do indeed recognize ultimately the importance of stable coins because you've written an essay on this. I did write an essay on this. Thank you for reading it or commenting on it. I'm hoping to hear that the US government recognizes that stable coins

are a huge asset. So dollarization is an effort that the US government has been trying to push for over two hundred years, and not necessarily in scalable ways, like the US government to this day backs up physical trucks of cash into villages around the world. If you believe that the future of money is more digital than it is physical. Stable coins are a real tool to further push dollarization, which as an American is pretty awesome. And

not all stable coins are created equally. I've said there's fifty shades of stable coins, but there are what we coined as safe stable coins, which we define as assets with digital representations of actual dollars. So let's say a safe digital US dollar has a physical US dollar in a bank account somewhere, and the US government should see that as a great tool. So I'm hoping that the US government realizes that stable coins are really not an issue or a matter of crypto first, It's really an

issue and matter of dollarization and US hegemony first. Yeah, financial works is second, and crypto is just kind of the infrastructure of which is built. But when you have of course, bas saying they scale quickly due to network effects, and he warned that therefore if they go unchecked, ultimately there's a risk they're a tremendous risk. Is the risk really ultimately for him? That well, it gets bigger than non digital cryptocurrency. I really just want to shake him.

If he's listening, I'd love to shake you. So we'll message him. The risk, yes, thank you. The risk where I will admit and see your risk is that there are fifty shades of stable coins, as I mentioned, and they're not all quote safe in that people are using the three letters USD and tacking it onto various assets

which could be misleading to consumers. And the onus is on the consumer to do the homework on their own to decide if you know this version of digital USD is is this one not etc. But if they are regulated for which there are some issuers for which there are actual physical dollars, like at least one in a bank account for every digital version, Like if that takes off quickly, like I don't, that could be a good thing.

Like again, the US government has been trying to push dollar hegimony for two hundred years and not quick and scalable ways, and this could really really be a great tool for that. Morgan DM the association's assets sold to Silvigate. You a co founder of DM, What is your reaction to what you're seeing happen with silvi Gate. It's all kind of disbelief. So I was not at DM for I left right around when that's it was being negotiated so I wasn't there for that, but I will say

that I was. Even though DM did not take off or succeed in the ways that we had hoped and dreamed, I was excited to see the assets live on with the hope that another entity, not Facebook, would potentially help bring these ideas to life. So it is a bummer to see that not be the case with silver Gate. But yes, a great partner at the time, and they like, we were happy to find the home. But it's all kind of surreal, Morgan. We have to ask as well.

The other big piece of breaking news is SVB Financial Silicon Valley Bank. Are you a deposit client of that bank? We're showing a chart on the screen, biggest drop on record this Thursday. I have a friend visiting who got to the office today and was like, you didn't tell me this guy would be falling. And I thought he was referencing a reigning in San Francisco, but he was referencing Silicon Valley Bank. So definitely still in shock and awe.

Their NFX is a client of SVB. To be honest, they've been a great partner to us, as they've been a great partner to everyone else. In Silicon Valley, in the broader tech world, and they've really been a pillar of industry in a really positive way to date. So this is deeply upsetting to see we don't know much. We're watching it like everyone else is watching it, and as information unfolds, advising both the portfolio and ourselves accordingly,

but more good enough. Will you have to ultimately advise your portfolio clients, even if they are a great partner, to set their links to pull their deposits. Then that's like the multi billion eller question of the day. If we do feel that it is unsafe and puts our companies at risk, we will do so. But we will tell for that what would be the signal that you then think it's unsafe. The biggest question that we're asking is how will this impact our portfolio companies from operating

their businesses in the day to day. And I don't think we're worried about everything vanishing, you know, overnight, but we are worried about our companies being able to access working capital that they need to run their businesses today, tomorrow and over the next few months. So it's unclear exactly what the objective sign is that we are looking

for but that's kind of the question we're looking to answer. Morgan, thank you so much for coming on for talking all things crypto, all things traditional finance, and make so clear with us. We appreciate it. ANFX partner, Morgan Bella coming up. Walmart, Well, it's narrowing the gap with Amazon for wealthier online shoppers. We'll dig into it next. This is Bloomberg. Walmart Plus launched in twenty twenty, and it's beginning to creep into

the crucial demographic dominated by Amazon Prime, wealthy shoppers. New data shows that the share of Walmart Plus subscribers with an income of above one hundred and fifty thousand dollars actually rose thirteen percent in the past year alone. But it's a long way to catch up to Amazon Prime seventy seven percent control of the demographic. Let's get to spend the SOAPA who covers all things e commerce for us, and ultimately there is a flywheel effect going on here. Yeah.

So Walmart Plus launched in twenty twenty and it's starting to pick up some steam. And what we are seeing is just like Amazon early on back in two thousand and five, minutes to launched Prime, the whole prospect there was, let's offer a really good selection, really good prices, bringing more customers, and it all feeds on itself, and we're

starting to see some of that with Walmart. But the real interesting thing was these more affluence shoppers that they're getting more people in that one hundred and fifty thousand plus a year annual income area that you normally associate with Amazon, and we're starting to see Walmart get more of them. All right, Bloomberg Spencer, SOAPA Triffic Rapporting, Thank you very much. South Korea is pushing to be a major player in space exploration by twenty forty five. With

treaties that are limiting tech capabilities. South Korea's rocket scientists turned to the Internet to find an engine that they could mimic. Chief North Asia correspondent Stephen Engel got exclusive access to South Korea's rocket launch program. Have a listen. South Korea has lofty goals for its fledgling space program that needed one giant leap of faith in a search

engine to get it off the ground. Treaties between established space powers like the US, Russia, and France prohibits certain tech transfers to aspiring space club nations like South Korea, leaving its small team of pioneering rocket scientists discour the web for ideas. We looked up on the internet to compare and find a suitable launch vehicle. La I was a SpaceX Falcon Merlin engine. We developed Nuri looking at the picture and using it as a point of reference

to design. Carol Sin is a fuel tanker. This is an actual Nuri three stage launch vehicle, not a replica. And Bloomberg News got an exclusive and unprecedented tour of the entire Naro Space Center where the first two Nouri rockets were launched, including the first successful test mission last year. What did you feel when it launched for the first time?

My Harneyson feeding festive and praying please. The next launched, perhaps by as early as this may, will deploy actual commercial satellites powered into orbit by those SpaceX inspired but locally made engines, and they're nearly three hundred tons of thrust. We're trying to build a SpaceX like company. It's a model that Mary's elon must cost efficiency with South Korea's prowess in advanced chips. At present, the Nuri costs about eighty million US dollars per launch, compared to sixty seven

million for the more powerful, larger payload Falcon nine. That's largely why later this year, South Korea's government run Kari will transfer its commercial rocket launching to a private company rocket engine maker, Hanwa Aerospace. We're seeking to see if Karnach can make the Neuri rocket profitable, but it's a very hard task. Elam must have made a very type

market for other companies. This is South Korea's main launch center and launch pad for the last two Nuri rockets and the next one that will be launched sometime later in twenty twenty three. But over here they're going to expand it because they have larger ambitions for destinations further afield, including the Moon and beyond and liftoff of Artist one. Namely participation in the NASA led Artemis program to return

man and payloads to the mood. National security too will be a key driver at a time when North Korea is improving its rocket capabilities and the sanctioned Russia means

one less rocket launch provider available to South Korea. It's important to find cheap launch vehicles from a business perspective, but I think it is very important for the country to have the ability to put satellites or things like this into space when we want to to get into the once fairly exclusive but now increasingly crowded global space club. South Korea may emulate another American accomplishment, the Kennedy Space Center, to transform these sleepy islands in the nation's south into

an aerospace industry epicenter. Stephen Angel Bloomberg News at the Narospace Center, go Hoong, South Korea. From South Korea and space to the here and now on the ground. When it comes to financials, let's look at Silicon Valley Bank still tumbling after hours after of course says concern about companies starting to pull their deposits. Yet further from this particular lender, Hannah Miller is with us and of course a key component of lending too VC back to US companies.

But down now, Wollman twenty percent. What are you hearing from some of the venture capital companies. Yeah, so we know that there's a lot of concern among venture capitalists. We know firms are pulling funds from Silvergate and advising their portfolio companies to do the same from SVBS from SVB, Yes, that's correct. We know that there is a call this morning where sbb CEO advised the clients, which included venture capitalists,

to remain calm. He said this multiple times. But still there's a lot of concern here, and this is a developing story that we're keeping closehauts on. Just give us a sense of size and scope. Basically, most of Silicon Valley uses this as their banking of choice. Yes, this is a key component in Silicon Valley. We know venture capitalists gravity towards this bank. We have big names connected to Silicon Valley Bank and ultimately Hannah, we're hearing, you know,

the Greg Becker. This CEO is saying, you know, stay calm, but when you've got founders fund of course, confounded by Peter Teal saying that there's no downside to removing your deposits when you've got why Combinator perhaps advising their companies to do the same. Feels like this is going to be a crescendo effect. Yes, that's what we're keeping tabs on. People are nervous. Yes they're being told to stay calm, but that seems to be sparking even more anxiety among investors.

So we have portfolio companies on edge. We have vcs on edge. This is a very intend of story, very very quickly. What do we not know? What's still to find out? We need? We are certain that more people are pulling funds from SVP. We don't know what's going to happen here. In terms of getting them know right side up, we of course put out our feelers and we are in constant conversation with Silicon Valley Bank. We'll bring you any up to date information from that particular lender.

But Hannah Miller, we thank you so much. And that does it. From this edition of a very breaking news heavy bloom Bag Technology. Yeah tomorrow, Twitter spaces twelve Eastern nine MS. I know what you and I are going to be talking about. This is erupted into a huge story around Silicon Valley Bank. This is Bloomberg