From Marhart where Innovation of Money and Power Collie in Silicon Valley NBN.
This is Bloomberg Technology with Caroline Hyde and Ed loved Love.
I'm Caroline Hyde at Bloomerg's world headquarters in New York, ED. He's off today. This is new Meg Technology. Coming up, We're going to talk the state of hiring in Silicon Valley after yet another blowout US payrolls report, and we'll bring you the latest information from the trial of Sam Makmin Freed is the FTX co founder Gary Wang justifies that he and mgmin Free committed a multi billion dollar.
Forward with customer funds.
Plus, we'll wrap up the latest from Google's anti trust trial and bring you a new report that shows the US is warning the EU on his AI regulation and competition. First, so let's check in on these markets because look, blowout jobs number. We see the ramifications in the bond market, but actually tech managers to push on through after initial knee joke reaction to that three hundred and thirty six thousand jobs report, we actually see.
The nasack managing to push on higher one point two percent higher.
As we close out the week, US tenure those selling off were up some four basis points. Once again, we're heading like multi decade highs here since two thousand and seven.
Four point seventy six is where we trade.
Bitcoin actually on the higher side, so a little bit of a desire to get into the risk assets on the back of some of these numbers. But let's have a little look at what's happening in terms of the micro the individual stock movers in the world of technology PDD.
Just on a tear. Is this team that's calling is.
The fact that everyone's going to Halloween outfits for a cheaper price point. We are seeing outperform over the last few months and weeks and currently on the day up eight point eight.
Percent as performer. On the last that one hundred adym.
As well also happening helping really upset the Nasvack initial foulter on the job's data.
We're up some four percent, so a lot of the.
Chip makers managing to push on the higher side, and video also helping on the points perspective. And I'm looking at Tesla though on the downside it had been off more than multi percent at one point, we're now off by eight ten percent. This is thing once again, cut prices, particularly to the Model Y, the Model three up to two point two five one hundred, two hundred and fifty being pulled down in terms of a price point, just
keeping on pushing that. Maybe as we see the bomb market sell off, let's have a little look at what's happening, though more broadly in the macro data, because maybe Elon's reacting to that jobs hiring, specifically in the tech sector. We want to be bringing in Daniel Zau, of course, who's lead economist senior manager at Glassdoor, and ultimately Daniel.
We are seeing what has been a focus on, of course, an issue of hiring within the technology space, and I'm interested as to whether or not that's really being born out from a macro perspective. I think we're still waiting for our guests to be brought on, so we'll give him a moment to be sap. But we have been seeing,
of course, what has been pretty buoyant numbers overall. We're seeing the fact that we're unemployment rate holding at three point eight percent after a surge of unemployed re enter this job's market participation participation remaining unchanged at sixty two point eight percent. We want to dig into some of the areas that we've seen some growth. I'm looking at hospitality and leisure, education, healthcare sectors which have really been
leading some of these rebounds. But for us in the technology sector, we've just been talking about well, letting go of people, and now more broadly thanuel, we're seeing well, they're focus on maybe people starting to rehab in very specific spaces like AI.
What do you see in your sectors, Well, we.
Definitely are seeing that the tech sector the way that softest has manifested has shifted over the year because at the start of this year we saw this big wave of layoffs that company is large and small in the tech sector. But now it's more about that softness and hiring the difficulty in some of those laidoff workers from finding new jobs. And in fact, this is something we see reflected in how employees are talking about the tech sector. I've seen that employee confidence in the tech sector has
measured on glass Door, is actually below fifty percent. That means that under fifty percent of tech employees actually have a positive business outlook for their employers. That's not really a great situation to be in for the industry.
Can you give demographics on that regions on that the kinds of people who are nervous here.
Well, generally speaking, entry level workers tend to be a little bit less confident than say, executives, and when you think about that, that totally makes sense. But I think one interesting cut of that is actually middle managers have seen a pretty dramatic decline in their business confidence as well.
I think part of that might be because you look at companies that are cutting costs, while a lot of that pressure falls on middle managers who have to enact these cost cutting measures at the same time doing more with less as they tried to get those costs under control.
How much is flexibility or a lack thereof faring weight at the moment. It's interesting that we're worried about participation rates in women. We've actually seen that recover now perhaps pull back a little bit.
There's a lot of talk within the tech sector in particular that.
We want you back in the office, and that impacts certain people more than others.
Well, definitely, we know that flexibility is a really appealing feature for jobs beyond the tech sector, for really everybody, and of course it manifests in different ways. It might be flexible work arrangements in terms of location or in terms of hours. But it is absolutely something that we see employees care a lot about, job seekers care a lot about. But we are also seeing that a lot of employers are pulling back on those options as they really try to get cost center control and try to
be as productive as possible. But on the flip side, you know, the evidence I think is mixed.
There.
There are a lot of employers who are getting by just fine and flexible in those flexible work arrangements. So it's really up to employers to figure out what the best way is to manage their workforce.
Now we have seen really the oxygen within technology space just been sucked out of the room by artificial intelligence. What is happening from a training perspective, What is happening from job openings, and whether or not companies can fill those job openings for AI within their own labor forces. It exists, although they're having to reshuffle the benches a.
Little bit here.
I think that's a great question. I think it's a little bit early to say, because all of these new generative AI tools are pretty new and a lot of companies still haven't figured out exactly how to use them. They haven't figured out what their strategy should be for using and experimenting with these tools. So I think right now we're just seeing a lot of experimentation and there
aren't really a lot of firm plans in place. But I think that training is a really great way that employers can reward the loyal employees that they have by giving them opportunities for career growth and skill development and really get access to a pool of talent that offers them a lot.
Wage growth slowing from a macro perspective in the job's data four point two percent year of a year.
What in wages looking like in the tech sector.
Well, in the tech sector, we are seeing that wages aren't necessarily falling, but they're more stagnant year every year. And I think that also it's important to keep in mind that compensation is not just about your base salary, right, It includes especially in the tech sector, it includes bonuses, it includes equity, and that is a place where we
have seen a little bit of a pullback. So it's not necessarily that people are getting their bonuses cut or their equity packages cut, but when they're looking for a new job, well, maybe the size of the package that they can actually demand is not as large as it might have been a year or two ago.
What signals now do you look to Like you're measuring sentiment, which seems to be on the downside, Where do you look next? Because many in the macro perspective are thinking this job's market has to eventually start to cool, even though it defies that every single month it feels like well.
I think it is important to see that marriage of hard and soft data together because we do see that the hard data is looking really healthy for the job market, in fact, almost shockingly healthy compared to what we were thinking coming into the year. But I think it is really important to look at that sentiment data, especially as
we look at how employees feel. Because who knows businesses better than their employees who are on the front lines every day, who are interacting with customers, actually seeing how the business is operating. That's why we think you can't discount these soft sentiment indicators.
Particularly from the middle management layer. Daniel, it's great to have some time with you. Thank you for the expertise, particularly in this sector. Daniels A of Glassdoor.
We thank him. Meanwhile, coming up now, we're going to unpack the.
Latest developments from Google's anti trust trial. Rebecca Allensworth, professor at Vanderbilt University Law School, going to be joining us speaking of antitrust. We are watching shares of Microsoft and indeed Activision. Remember next week the CMA, we're likely to get that announcement as to whether or not this deal has.
Been rectified enough for them to allow it to go through.
In fact, we understand reporting from the Verge saying that Microsoft certainly thinks that this deal will be completed as soon as next week, and we understand that there was Today was the last day that they could get any comments as to the CMA's points of this particular deal.
We're trading higher from New York this Bloomberg Technology. This is a great bit of reporting Anna Bloomberg today that apparently new analysis from the US State Department is warning the EU policy makers about its proposal for generative AI regulation, saying that look, it's too vague, could foster in favoritism for big tech firms. Anna Edgerton, one of the key
reporters on this, Seattle bureau chief for Bloomberg News. And what is the argument here that this head of the curve regulation that they use getting in before other countries. It seems seems to have favor big tech even.
More than small Yeah, these are really interesting documents. You know, some of the arguments we'd heard before, but the level of detail in these documents was really interesting to see the kind of exchange between policymakers in the US and their current counterparts in Europe. Now the sources of we spoke with, so that this was offered in a spirit of cooperation and alignment of values. Does it not meant to criticize the EU when it comes to writing regulation
for AI. It's really important that even the definitions of like what artificial intelligence is, what do we mean by foundation models, what do we mean by generative AI, that those definitions are aligned so that whatever policy has passed in the European Union can then be kind of working together with whatever policy is eventually passed in the United States, and that it's even possible for companies to comply with both.
The AI act.
I mean many had pushed back against it because it wasn't just about the underlying foundational models and how they're built, but then how they're applied as well. The original idea was that it would just be within their applications and when it's risky or not. But now they seem to want to have transparency about what's within the foundational model
or how they built it. Is that the key issue of sort of competition here, is it because it's going to be so expensive to be able to give that sort of transparency.
Yeah, there are a lot of issue US and like you said, it's really interesting to see how this conversation in Europe develops. Because the AI Act was pretty much ready to go at the beginning of this year. It was focused on the riskiness of that end use. Like you said, this is a risk based approach, which the
US supports. But then with the release of chat, GBT and other consumer facing AI products, there was really a kind of growing concern that these the application of these tools wasn't enough to regulate, that there needs to be some kind of regulatory rules for the way these models are even developed in the first place. And that's where we started to see a lot of pushback from companies who initially, I think we're pretty open.
To the AI Act.
You know, they're open to this risk based approach, but what they don't want to do is to have regulators in Europe saying how they can or can't develop the underlying models. And that's where we see the United States kind of saying, you know, some of the way that this has written could cause problems for innovation for the little guys who are trying to catch up with some
of the bigger companies that already have these models. So, you know, we know kind of how this was offard from the United States, but what we'll be watching really closely is how this has received in Europe.
Anna Edgerton, thanks so much for bringing us this great story. We really appreciate it. Meanwhile, look, it's the same names that keep coming up time and time again. And of course who's building a foundational model Google and who's been under other anti trust viewpoints, shall we say, and potential regulation right here in.
The US alphabet parentor Google.
Let's just revisit what's been happening throughout this week, the trials that's underway, the assessment of also what's happening with Amazon to Rebecca Allensworth joins US professor at Vanderbilt University Law School. Boy, busy time in the world of anti trust, and we all knew it would come eventually. All seems to have arrived at once like buses. I'm interested, Rebecca on what you think about the alphabet case in particular.
We've had some really phenomenal in terms of kind of shocking pieces of revelations coming from none other than CEO's of rival companies like Sati Nadella.
That's right.
So the big news out of the Google anti trust trial this week is the testimony of Sakunadella. He testified about what it was like to compete with Google and painted a very bleak picture, and so doing sort of seemed to paint a little bit of a bleak picture of his own company's ability to compete. So he must have been feeling like he was walking a fine line there.
But his point was that you know.
We could, we could approach Apple with the same billions and billions of dollars, and they were never going to take it. They were always going to go with Google. And it's basically impossible to compete with Google on search.
But therefore does that play into Google's hand and at least his argument, well, Apple's argument has always been Google's a better product. It's not that they're just too big, it's that that that much better.
That's right, But the rest of the testimony over the past few weeks, a lot of it has focused on this idea of scale and how scale is essential to build that better search product. So part of why Being was willing to pay as much as it was to be the default on Apple was that they wanted to get the scale. It was worse worth it to them to lose money on that deal in the short term if they could have the user data to build a product that could really compete with Google.
And so the question in this.
Case, one way of framing it is, you know, is Google better because it's big or is Google big because it's better. Google wants you to think the latter. They want you to think that they one and they're big because they have a better product. And I think the government is trying to tell a little bit of a different story, saying you kind of have to be big to be good. You ought to let other companies have a shot at becoming big.
And I suppose this does push us forward to a and era in which perhaps Alphabet's Google is under some competitive threat because of generative AI, because we're starting to see well chatchebt open AI's relationship with Microsoft maybe bear through, Maybe bring people across to a different kind of search product. But more broadly, what did you make, for example, of the reporting around the AI Act, the worries that the smaller companies might not be able to compete with the
big companies. How much of this just is a never en conversation when it comes to size and power.
So absolutely, any kind of regulation, well, unfortunately most regulation. We won't say any regulation, but a lot of regulation does benefit big companies in the sense that compliance is expensive. It's expensive to comply with the laws, and sometimes that's something a small company can't do. It's another reason why being big is important and why we need to allow other companies besides behemoths like Google, at least in the search space, to get that kind of size and scale.
What's a little funny about this, of course, is Microsoft is not a small company by any measure, but it is in terms of market share for search.
Yeah, you've had the smaller players like Duck dot Go for example, giving evidence a CEO there as well, and interesting revelations as to who might have bought who at what point. Rebecca moving on to what's also been front and center for us has been the FDC's analyzation of Amazon in the marketplace. What's also interesting is the CMA over in the UK also looking into well interpretation of cloud and how Offcom has felt that perhaps is not
much competition in that space either. Can you just paint a picture of how regulation is evolving here?
UK? EU? Is everyone fighting the same fight? Here?
Everyone is fighting the same fight in the sense that everyone's recognizing the market power of these platforms, the way that technology is changing fast, and therefore the competitive conditions are changing fast and wanting to be adaptive in their regulation to foster competition in all these new areas. The suit against Amazon is represents the third major strike by the government against a major American platform monopoly, and I guess the last one left is Apple.
Indeed, and I think to that point, when you're drilling in on the likes of Amazon and Amazon also getting into other people's competitive space, of course, it's becoming an advertiser in and of itself and being able to draw that away from perhaps some of the social.
Media giants out there.
How do you see ultimately these sorts of inquisitions going. Do you think in any way that the FTC will win out and bedrout or lay ultimately not even need to win this case to change the direction of the way we think about monopolies and power and regulation.
Both things are possibly true.
So, first of all, it's too early to say that the FTC and the DOJ's attempt to brain in big tech has been unsuccessful. They've had some disappointing losses in court, but they've also had some small wins. And it's also only been a couple of years since they've been trying to do this. We look back at the seventies when in retrospect antitrust turned on a dime, but actually it really took many years for that to crystallize. And so
I do think it's too early to say. And I think as far as the long run prospects for these imperatives, I think that it depends on the political will. Law is not impervious to what the people want, and I think people are starting to be more skeptical of market power by major tech monopolies.
They send me r And in that respect, we will, of course aware that the FTC investigation of Amazon is going to take well at least eighteen months even to start.
Do you think the timeline is here in any way you know, in an.
Investors' mindset, something that they should be thinking about.
Well, you sort of said it before when you said you have to win to change, to change the situation, and I think that the delay is kind of a part of that explanation. So, yes, it may not be true that you file a suit and then you know six months later there's a resolution and you have an outcome.
In fact, it might take so long.
That the competitive conditions change and the thing that you were suing about isn't really true anymore because the market's moved on. That was true about the Microsoft case. It took too long to really allow Netscape to survive. But that doesn't mean it doesn't have a detern effect. If these companies know going forward, going into their business dealings, then that they're gonna sorry.
Sorry, Rebecca, I'm gonna have to end you there because we've just got warning that the president is walking out. Rebecca Allensworth there, Let's now go to president on the Jobs Office.
We've created thirteen point nine million new jobs. Heard me say it before, and we're gonna keep saying that. My dad had an expression, it's a joey. Your job's about a lot more than the paycheck. It's about your dignity. It's about respect, It's about being a Look your kid in the eyes, honey, it's going to be okay, and mean it well. Three hundred and thirty six thousand more Americans, if they have children, can say that to their children
and mean it. The unemployment rate has stayed below four percent for twenty months in a row, for the longest stretch in fifty years. We've achieved a seventy year low, and unemployment rate for women, record lows and unemployment for African Americans and Hispanic workers and people with disabilities, folks who have been left behind and previous recoveries and left behind for too long. We have the highest share of working age Americans in the workforce in twenty years, and
it's no accident. Is bidnomics. We're growing the economy from the middle out, the bottom up, not the top down, and inflation's coming down at the same time. It's down sixty percent since last summer. Core inflation was just two point two percent over the past three months, and now we have the lowest inflation of any major economy in the world. Today, we're celebrating National Manufacturing Day. We didn't name it that it was already National Manufacturing Day, but
it seems appropriate. I can think of no better way to mark the occasion than to thank the thirteen million Americans who are manufactured in manufacturing jobs as we speak.
They're restoring our pride making things in America. And today I want to highlight that of those thirteen million manufacturing jobs, eight hundred and fifteen thousand of those jobs were created since I took office, twice as many as the previous administration, and report when we learned earlier this week that's spending on construction for new factories being built to generate more
economic growth and jobs hit an all time high last month. Folks, bidnomics is about investing in America and investing in American workers and business are investing more manufacturing than ever before. I'm bringing the supply chains home. Before the pandemic, supply chains was a phrase most people didn't even associate with, didn't think much about. But today, after a few delays and availability of parts and products, everyone has known about.
They know why it's so important. My economic plan is bringing supply chains home and investing in the industries of the future so we can make things in America again with American workers. We're creating good jobs and communities all across the country, including in places that have been left behind for the last in some cases twenty years. Factories they used to work at for years and years shut down, leaving them with no options, no jobs in that community.
All over the Midwest and all over the Northeast that under Bidenomics, you won't have to leave home now to get a good job. I don't know how many times I heard and out on the road people saying, my kid came up to me, got a decent education in the state, came up to me and said, Mom, I got to leave no jobs, no jobs. Well, you're going to be able to find a good job close to home more and more all across America. We're also making sure the jobs we're creating offer workers are free and
fair right if they choose to join a union. To form a union, Bidenomics is leading to surge and unionized workers exercising their collective bargain the rates. For example, our clean school Bus program under the Bipartis Infrastructure Law was replacing dirty diesel buses with clean electric buses, so children getting out and off those buses can bring clean their
diesel fuel. We're encouraging the companies building those buses to allow their employees to unionize if employees choose, and it's working. We saw in Georgia when blue workers at Bluebird, the electric school bus manufacturing company that's receiving federal funds, voted to unionize because that was their choice. Treasury Department laid out recently in a major report that unions and collective
bargaining are good for the economy overall. They help raise wages not only for the workers and not factory, but for everyone, whether or not their union, whether or not you belong to a union, and they also increase excuse me, they also increase corporate growth. And today's job report is just another example of what it looks like when we focus on building an economy from the middle out and the bottom up, not the top down, while bringing deficits
down at the same time. You know, just this summer, I signed strong bipartisan laways shook hands with a former Speaker, and we passed in the House and the Senate as well to cut spending by one trillion dollars over the next ten years. Unfortunately, last weekend, Republican House members decided
they were going to put that progress in jeopardy. Instead of honoring that commitment they made, they once again brought us to the brink of a government shutdown, creating unnecessary instability and risk in order to secure more extreme cuts and programs that help working Americans and seniors. Cuts that would have hurt everyone, from US manufacturing, that would have stimy the pay of military people, a whole range of things.
They tried cutting funding by thirty percent for small businesses which are growing under our administration, for local manufacturers for manufacturing, and extension Partnership program that helped small and media sized manufacturers attract and train workers and grow their businesses. But
we stopped them. Quite frankly, I'm sick and tired of Republicans in the House saying they want to cut the deficit when all they really want to do is once again cut taxes for the very wealthy and big corporations, which will only add to the depth. So when I was able to cut the federal debt by one point seven trillion over that first two years, we'll remember what we were talking about. Those fifty corporations that made forty
billion dollars weren't paying a penny in taxes. Well, guess what we made them pay thirty percent, fifteen percent in taxes, fifteen percent, nowhere near what they should pay. And guess what we're able to pay for everything, and we end up with the actual surplus. You know, it's not about That's not what the economy reason needs right now. More tax cuts for the wealthy. I've said it before and I'll say it again. We've cut the depths of over
one trillion since we've taken office. The laws that I signed will cut up by another one trillion over the next ten years, and my budget would cut it by another two point five trillion over ten years. Here's the deal. The federal debt went up by fifty percent under my predecessor, in part because he passed a two trillion dollar TAXI cout overwhelmingly skewed to the very wealthy and large corporations.
I believe we should be reducing the deficit by making sure that the wealthy and large corporations and just pay their fair share. I mean that's going to pay ninety percent. Just pay their fair share, by cutting wasteful spending on special interests like big oil, all the money they made,
paid so little in taxes, Big Pharma, same thing. You know, we just gave the American public a real gift in terms of what not gift, but fairness in terms of what they have to pay for insulin, what they're gonna have to pay for other things.
Well guess what that Also President Biden making comments on the job's data, of course, a blowout number of three hundred and thirty six thousand jobs being added. Notable that participation rates perhaps bearing between men and women. So we keep an eye on what President Biden is saying, and of course he's turning his attention.
To tax rates as well, particularly for corporates.
Let's turn our attention now to the trial of Sam Magunfried. FGX co founder Gary Wang said he and magwin Freed committed a multi billion dollar fraud with customer funds that led to the cryptocurrency exchange's collapse. When he took the stand to testify, Please to say that Mrs Hannah Miller has been well across this story for the last several years. But also now as we see this what's going to be a six week trial come to bear here in
New York. What did you make of Gary Wang in particular, I mean, they certainly didn't make high contact.
It's very damning testimony. Gary Wang has laid out on multiple times that Sam Bankman Breed was a guiding force in terms of setting up special privileges for Alimeter Research as an FTX customer. I mean, the advantages Alameter had are absolutely stunning.
Billions that they had basically as a credit line is the accusation here, and ultimately that really the defense argument that simumnfreed couldn't be across everything in Alometer Research. That was the lot of the role of the CEO seemed to be being undermined here.
That's correct.
Yeah, Alimeter Research had a sixty five billion dollar line of credit. No other customer had a line of credit over a billion dollars, so this is pretty insane. They were also allowed to have a negative balance on their accounts, they were allowed to withdraw their accounts wouldn't be liquidating if their crypto bets went sour. And it seems like Sam Bakman Freed, according to Gary Wings testimony, was well
aware of this and people were trusting his judgment. And in terms of setting up these advantages for Alnita.
Has there been anyone that's come a little bit more towards Sam Munfried's defense here in terms of who's been giving evidence. It was notable that other long term friends people had beensity with then did come on board and work and perhaps sort of tried to echo that he wasn't someone who was flamboyant. Even though there was a lot of money being spent on a penthouse, he wasn't spending it lavishly on himself.
Yes, Adam Yrdidiot testified yesterday he's a former friend of Sam Bateman Freed's. He had worked for FTX.
He testified that Sam didn't live.
This arsentagious lifestyle, that he wore regular clothes. But I believe that's offset by the millions of dollars in real estate purchases that FTX made and the luxe lights employees had in the Bahamas.
Annamella, great podcast on the extraordinary dealings of FTX and Downfall, and I'm sure you'll continue to be an avid viewer and listener in on all that's happening in the trial in her in New York. We thank you so much for running us through what happened yesterday. Meanwhile, turning to another story that we've been following phenomenal one in terms of the world of diversity. Fearless Fund so VC foundations
grant for businesses run by black women. Now it has been prohibited from closing its application window on September thirtieth, all then from picking a winner until further ordered by a court. This is following the lawsuit from the American Alliance for Equal Rights. It argues that the program by the Fearless Fund violates Section nineteen eighty one, which bans racial discrimination in contracting.
Let's bring in.
Bloomberg's Kelsey Butler to break down what is a complex but far reaching argument that's happening out in Georgia right now. Ultimately, the argument here is that you cannot level up in terms of allocation of capital here by only giving money certain funds to women of color. What is their argument in particular against Fearless Fund here.
Absolutely so, as you mentioned, the group behind this says that this violates the Civil Rights Act of eighteen sixty six. That is, essentially, by targeting a specific group though they are under a resented it leaves out other groups, specifically
on the basis of race. And I think something interesting to remember here is the person behind the organization that's suing Edward Bloom, who you know, the name might not be familiar, but is a conservative activist who was involved in the case against Harvard, and as we know, the Supreme Court ultimately banned the use of banned race conscious admissions in colleges. So affirmative action is no longer the
reality when it comes to college admissions. And certainly that when I think emboldened him and probably other conservative activists that you know have an issue with diversity programs.
This has got to just be one of quite a few funds that have been set up to allocate money to minorities, whether it's to entrepreneurs who or women diverse entrepreneurs. In many ways, what is the far reaching effect to something that is going on for one particular fund in the moment.
I think this is certainly going to have a chilling effect to you know, we're not only seeing this play out in courts, but we're seeing politicians dive in and specifically target and you know, name check companies, and so what that is doing, and what I'm hearing a lot about is that companies don't want to put a target on their own backs. By loudly talking about their diversity programs, by even really keeping ones in place that they already have.
They're now you know, running those by lawyers and seeing are we in any way potentially running a foul of the law or going to you know, shine a spotlight on.
What we're doing.
Thank you for shining a spotlight on it with your reporting, Kelsey Butler, really setting up a situation here that many of VC and indeed Corporate Allocator are now considering. Let's to get a little bit deeper. Joey Mack is also at the front of this. He's a CEO of Chicago Blend. It's a nonprofit working to advance diversity, equity inclusion in the Chicago region's bench capital industry. And this does have
far reaching effects. What are your questions coming inbound for you at the moment from diverse founders, diverse bcs who are now worrying about some of the funds perhaps that they've raised from Corporate America.
Yeah, well, thank you for having me.
Certainly we were shocked by the brazenness of this lawsuit, but not at at all surprise, because we know this is part of a broader push to diminish diversity efforts in business. Certainly there are lots of questions coming in and around, you know, what does this mean for me for my firm. But at the end of the day, sewing firms like Fearless Fund does nothing to move the
industry forward. It only reinforces existing inequities within ventures. So, you know, our message to those firms that are investing in underrepresented founders is to continue doing the work. This is going to be a long legal battle, it's just the beginning stages of it.
So while that's playing out in.
The courts, we're encouraging firms to continue investing in underrepresented founders.
Now, we do know that the statistics are pretty awful when it comes to diverse allocation. I mean, ultimately, what is it, less than two percent of overall capital deployed is in women led startups, black founders in the US
getting even less than one percent of total venture. But to play the other side here, is it right that you should have affirmative action that you should have certain funds allocated to only minority led businesses to help with leveling up, to help with equitable distribution of capital.
Is there another way of.
Doing this, Joey, you know, at the end of the day, having more more diversity among the investor class will enable more diverse, more.
Checks to be written to underrepresented founders. So you know, we know that.
People tend to associate with and invest in other people who look like them. So you know, for us, we look at what does diversity look like across the venture ecosystem, across the ecosystem to people who are making those investments, and we've seen that because of the severe underrepresentation of specifically women and people of color, we're seeing that translate
to who's actually getting checks. You know, ultimately, if we can get more dollars in the hands of underrepresented founders, they'll be able to build companies, penetrate new markets that a lot of investors aren't currently looking at, and ultimately build companies that will be durable and that can serve totally different segments of the population that are being overlooked right now.
Joey, we're looking at Chicago Blendbacker's bad being one of them. Tech stiles manifold are any institutions and I think of the Fearless Fund, for example, that has had money multimillion dollar allocations from MasterCard, from Costco, from Bank of America. How many of these institutional companies and institutions are worried about supporting non for profits like yours, funds like Fearless Funds.
Well, I can speak about the companies and the corporations that have been supporting us. I think they support us because they share our commitment to diversity, equity, and inclusion. They see the business case for why we need to continue investing in underrepresented founders, and you know, they continue
to support our work. So, you know, although this chilling effect that your previous speaker mentioned is certainly very real, you know, our message to them, as well as to other funds, is we need to remind.
Ourselves of why we're doing this work.
Ultimately, we need to focus on getting more dollars, more ventor finance dollars in the hands of underrepresented founders, and that's ultimately how we're going to build a more equitable and competitive tech ecosystem.
So, when someone is looking for advice, when they're looking at what's occurring in Georgia, when they're seeing what's happening with the Failest fund, what are you saying to vcs that do have a mandate as it stands to just allocate to women of color, people of color, diverse founders.
More broadly, yeah, well, you know, people are definitely fired up, and right now we need to be educated about the legal issues and implications at hand. So that's where Chicago Blend has been focusing our energy. But we also need to be prepared to speak up and stand up against this broader back flash to diversity, whether it's in venture capital or in business more broadly, so again, our advice to firms that investment representative founders is to continue doing
the work. That's ultimately how we're going to bring about positive change.
Are you seeing an off institution speaking up?
Well, Again, the the organizations that we work with, they've been very supportive of our approach to increasing diversity.
But I do think that, you know, we.
Would be great for the business community to remember why they are investing in uh in diversity efforts. More broadly, several of the organizations that we work with, they make investments internally as well as externally to support diverse and our message to them is please continue to double down on that.
Joey Mack, great to have some time with you. Thank you so much, CEO of Chicago Blend. We really appreciate some of the expertise coming from the advice you're currently giving. Meanwhile, coming up, we're going to talk about cyber MGM says it's recent computer hack into its casino hotels.
It's going to cost a big time. We'll have all the details next.
Meanwhile, look, you've got to keep an eye on some shares that are on the move today.
Amazon. We look at Yeah, we were already.
Discussing some of the regulatory overhang, but on the higher side today at more than eight tenths of a percent. Interesting, they're going to be focusing on those satellites. Of course, they've got two test satellites to be going into lower orbit today on a rocket. We understand at two pm ET we keep a nice un.
Of that from New York. This is Bluebeg.
Technology MGM, and has just said that the recent compute to hack that shut down many services at its casino hotels will reduce its third quarter profit by about one hundred million dollars, and the company also incurred almost ten million dollars in costs fighting the attack, with the most related to technology consulting services, legal fees. It's all according to a filing now cybersecurity insurance should cover most of the cost, ENERGM said, although the full impact has yet
to be determined. For more we're pleased to welcome J Blue, chief security officer cybersecurity firm Rapid Stefan, who is trying to analyze ultimately the costs for businesses here. I can imagine in a macro environment, companies have been reticent to spend on things that they feel are extra but cybersecurity one area that they pull back on and ultimately does it end up hurting them in the longer term.
I think absolutely, as they are not spending enough preventatively.
And you know, there is a rough number that we've tossed around in Europe for quite a long time, which is ten percent of your total IT spend is what you should reserve for your cybersecurity spend on making sure that all the things that you integrate into your netw or consistence also have this component for a cybersecurity whether that's monitoring in detection or prevention of vulnerabilities, or you know, all of the other kind of remediation stuff that you
would need to have on hand in order to combat such an incident, and you know, have a certain part reserve for outside council as well as forensic support. But most companies aren't doing that preventative stuff and then they wind up being caught off guard during an actual incident.
We've had so many headlines so it's MGM, whether it's the ongoing fallout for Clorox, which is again is trying to really lay bare how much this is going to cost from their own cybersecurity hack. Is this something that people are regulators to trying to eye. Ultimately, we're seeing carrots put in place of like, hey, the upside of not getting a cyber attack, but also a stick put in place.
Absolutely so from an SEC perspective. As you know, there was a new SEC disclosure for cybersecurity incidents, and it's about reporting material incidents within four days of you know, knowledge of the company that they actually occurred and that they.
Are indeed material.
And this is in order to help shareholders make better decisions about the companies that they've invested in. I would argue though this is remarkably difficult to do for a lot of these companies. First in terms of determining what is a material incident in the fog of the actual incident. That's really hard to do, so that four days is an ambitious, aspirational kind of thing that you know why you're actually doing all of this response to an incident,
that you can understand the material impact as well. So that's going to be difficult, and I think the Cloros example is going to be a sort of poster child for a lot of people in the cybersecurity industry who are wrestling with this, because you do see that Clorox is going to report a decline in their profits because of this incident, not only the direct cost impact but also the fact that they couldn't stock shells with their product.
And then subsequently, we'll need to report to shareholders what the consequences of this cybersecurity incident was. And coincidentally, it was the same group that attacked MGM.
Yeah, can you check to us about the troop miscatisfied?
How and what are they bringing to bear that is so upending certain companies.
Well, they're clearly.
Interested in profit, or at least that's what they claim to be interested in. So there are opportunistic attackers from that perspective who are looking for someone who will pay their fees. They're working together with a ransomware group that was formerly or associated with the Russians Alpha V and what they're causing is an enormous amount of impact to these companies to just you know, get that data ransomed, make sure that those operations are locked until the ransom gets paid.
What we keep hearing time and time again is that AI in particular is going to make companies more vulnerable, but also give them the armor that they need to be able to prevent against such tacks. Who's winning out in this race to ensure that AA is being adopted at the fastest pace possible.
You know, initially I thought that defenders had a huge head start in this AI raise. So we've been having machine learning techniques for a very long time and a lot of cybersecurity tools, and the only types of AI attacks that we were seeing are something called domain generating algorithms, and it is exactly what it sounds like, which is just that you spin up a domain like ww dottle up or you know, some difficult domain dot com in order to stop Defender from finding out what all of
those evil domains are and blocking them. So those are the only things we were saying, and now we're seeing, of course, with things like dark Birth the ability to craft more, you know, better phishing mails, et cetera. And I think that the de vendors are losing their advantage. That advantage is slowly but surely slipping towards the adversaries.
And we need to kind of make sure that cybersecurity companies are adopting AI measures in their products and that our consumers are buying those products the likes of.
I've certainly had Prime oyin Han and other CEOs say like the one area that they never are going to sacrifice, no matter how many macroeconomic headwinds are is the cyber allocation and the focus on just protecting customers and indeed every stakeholder. Is that something you're seeing ring true or ultimately, have you seen companies worldwide pullback?
And what is your answer to that.
I do think you're seeing a decline overall in the amount of appetite to spend on all types of IV things, including cybersecurity. So I'm not seeing that. Actually I would love that to be true. Let me be clear, but I think that you're seeing Caesar budget's shrink as the importance of this role tends to increase, so globally, the trend is not favorable for security when you look at, you know, the actual budget incapacity of these chief security officers.
Want to be keeping a keen eye on. We thank you for breaking down so expertly. What currently is a foothedge, A bloom chief security officer who is probably quite busy, a supersecurity firm Rapid seven, great to have her in the studio.
X of Course, formerly known as Twitter, is.
Giving banks an update on efforts to reinvigorate growth into the PLATF CEO Linda Yacarino, saying that it's testing three tiers of premium service, which would allow the company to charge customers different amounts depending on how many ads are shown. Numgust asiaccounts joins us on more and this all is coming out as they're trying to persuade debtholders in particular that well they're managing to grow.
This business exactly as we all know that takeover of Twitter was extremely chaotic forty four billion dollars, which is quite a lot, thirteen billion dollars in debt, and so the bankers that help finance that take over want to see what are they doing to make money, especially after advertising revenue declined sixty percent and so that's where these advertising tiers come in. Now is going to be for
premium users. So again premium, which used to be called Twitter Blue, you pay about eight dollars for some additional features like the ability to edit your post and things like that, and so excess testing having three different tiers, so basic, standard and plus. Similar to the way that whour Netflix operates, the more money you pay, the less ads you're going to see.
Kyme.
We talk about how for the advertisers are feeling at the moment, did we get any sense from Linda Yakarino that they're coming back, staying back and paying more.
So one of the things that ex did say is that advertisers are coming back. So they said in June about seventy five percent of their top one hundred advertiers. So you think of about some big marquee names, we've got seventy five percent of those were back in June. Now that number is up to ninety percent. But they are spinning significantly less, and even X admitted that, and then even by some sort of independent third parties they're estimating it's like seventy eighty.
Percent less in some cases.
So it's definitely not where it was historically, and advertising revenue has made up the majority of revenue for X traditionally about eighty ninety percent of their revenue.
Now, going back to the slightly chaotic purchase of this company, it's not just debtholders a one time with Enoon Musk.
It seems as their regulators do too. Can you update this with what's going on with the SEC right now?
Yeah, So again going back to chaotic, right is the word when you think about the takeover, when actually before must acquire the company, he acquired a stake, So we had about a nine percent steak in Twitter at the time, and whenever you acquire over five percent stake, you have to dispose that to the sixth Stree and Exchange Commissions the SEC within about ten days must disclosed it, but dispose it about a month later, and so the SEC began to probe and like why did you dispose this slate?
And must was.
Actually supposed to testify last month, but a couple of days before, like ten to fifteen days before, he started making objections saying maybe we could do a different data, do a different location. And so now they're trying to compel him and try to push him to testify regarding the takeover.
I spere of course the attorney from US saying enough is enough. You've had multiple times with the interview's ash accounts. Thanks so much for bringing us up speed on all things X. Meanwhile, that does it with this addition of blue Meg Technology. Don't forget to check out our own podcast. You can find it on the terminal as well as online.
On Apple, Spotify, iHeart.
We've got a big week coming up for you next week as well as we head to LA from New York. This is Blueberg Technology.