Starlink in Ukraine and Meta's FTC Troubles

investigation over his deal with Twitter or potential deal. We should say, we'll talk about all this and what it means for the company's future with Twitter founding member and a former board member, Jason Goldman, and pure speculation that is what Meta is calling the FTCs antitrust concerns over a deal to buy the VR fitness company within unlimited What hurdle Zuckerberg will face trying to dismiss the case this hour, all of that in a moment, But first

it was a brutal end of the week for markets. We're gonna get the latest now with Bloomberg's Emily Graffito. Emily, what a week? And what a Friday? Hi, Emily, what a week? I mean? Stocks pretty much ending in the red. To finish a volatile week. We saw the SMP five hundred pretty much falling all day, finishing down about two point four percent. This is after that one year um you Michigan inflation expectations survey rose for the first time

in seven months. We saw traders ramping up expectations for how aggressive the federal reserve was going to be. That US two year yield topping four point five percent for the second day in a row. NASDAC one hundred underperforming and really coming under pressure. In the technology spaces, those semiconductors, the Philadelphia semi Conductor's indexed down about four point four six percent, all about a lack of demand and again

can scerns of those rising rates. Taking a look at some of the individual movers in the SMP five hundred in the stock market, Apple down about three point two percent today. It was actually the biggest contributor to the SMP five hundreds declined today. Twitter, though rare stand out here, up just a little bit about point two percent to

finish the day. This is after it's reversing course after it fell yesterday on news that Twitter sawt documents last week related to a federal investigation into that Musk deal. And speaking of Elon Musk, let's take a look at Twitter stock falling about seven percent seven point seven percent today. It actually closed today fifty percent below it's November closing high. The stock has just been absolutely crushed me one year

down about twenty percent. However, I looked back to how it performs since the end of twenty nineteen, it's still up about six hundred thirty percent. It's easy to forget about that that Tesla has had when we look at these short term movements, but overall, Tesla getting crushed with the rest of the stock market. Emily Good good point, Emily,

thank you for that update, Emily Graffeo. Meantime, the Pentagon says it is in touch with SpaceX in regards to Starlink satellites in Ukraine that provide crucial broadband support in the war against Russia. This following Elon Musk's threat to cut off financial support for Starling terminals in the region. He's putting pressure on other entities now to step in and make up the shortfall after costing SpaceX at least eighty million dollars. The Pentagon says it could turn two

options other than Starlink. This all following an earlier dispute over public comments suggesting the government and Kiev seed territory in exchange for peace with Russia. For more on this, I want to bring in Bloomberg's at Ludlow as well as Dr d J. Peterson, president of long Geoglobal Advisors, which is advising business leaders and investors on short and long term risks of the Russia. You crane war and I want to start with you. What exactly did Elon

Musk say and why is he saying it right now? Yeah? So in a tweet response, uh, he basically said that he was following the advice of a Ukrainian diplomat Ukrainian envoy who had used profane language which I won't repeat on this program, but basically said Elon Musk should take a hike for want of a better expression, and must

said in his tweet, we're just following his recommendation. That led to a wide range of media coverage and suggestions that actually Elon Musk might pull support either funding support or literally operational support for Starlink in the country. And we know, as you said, m that that the Pentagon say As of Friday, they're engaged with SpaceX over the broad issue of starlink and depends on saying that they'd

have other issues. But for SpaceX, this is very much an issue of cost in terms of how starlink's operating in that country. Did you how crucial is starlink to Ukraine's defenses? Emily, I think it's central to their defenses. If you think about first of all their ability to wage war, you think about how much they have integrated Western military gear into their operations. Well, the communications is

essential as well. And one of the things that Ukrainians have done much better than the Russians is actually coordinate their defense and offense across a very very long a line of contact. And so this is essential, um for coordination, it's essential for targeting and using the Western technology very well. Um, if you think about a lot of this area, it's very rural, it's spread out, their very great distances, so

traditional radios might not work. As we know, Um, the Russians have knocked out so much infrastructure, So this is crucial and it's it's actually a very important leveraging factor of leveraging all this other assistance at the West is giving, can you give us an idea dj how much these satellites costs to manage and whether that resonates with what Elon Musk has said here right that there's a lot of just kind of debate around the numbers, and as

we saw with the Twitter deal, kind of playing loose with numbers around what is real and what is not real in the in the Twitter verse. So I think we do have to take these numbers with the grain of salt um. You know, generally speaking, if you look at what has been deployed in the field already that we know is about twelve thousand units, it is has cost probably around eighty eight million UM two hundred millions. So that number that that that that that he has

put out is not is not too bad. I mean when you get to these issues around he's raised the issue of just maintaining the satellite network and side or security. Well, that's the cost of doing business as a big global firm. So I'm a little bit less um, I'm a little

bit more skeptical of that. I think another thing we need to pay attention to if you're looking at the cost side is obviously the Ukrainians have asked for much more in terms of these units on the ground, the transmitter units, I mean, do they need them all when they get them all? So that goes into say the four hundred million dollar number that UM that UM SpaceX has put out, So that's that's an ask, it's not

necessarily going to be delivered. And then finally I want to add that we've talked about a commitment about over a year, and frankly, from my perspective, long Global Advisors take is that this war is not gonna last another year. Russia has only months to fight, so it's not clear really how at this point. Well, they need all these all the satellite comms for for an entire year, so

it needs to be played out. But officials that I've talked to in the US government say it's not a reasonable ask, and it's not an unreasonable left not only for the US but also for all of our allies that are supporting so combined UM, I think there's a

lot of countries that would be willing to contribute. Meantime, there's a report that Elon Musk spoke to Russian President Vladimir Putin before he made those public tweets public comments that public Twitter Bowl poll suggesting how Ukraine could seek peace with Russia, of course widely criticized. Elon Musk is denying that that he spoke to Putin. What do we know about this? Yeah, and categorically Elon Musk has denied

that he spoke directly to put In about Ukraine. So Monday of this week, Ian Brema, who is the head of Risk consultancy Group Eurasia, said that he spoke to Musque about two weeks ago. He hadn't been planning on revealing what was in that conversation, but decided to in his regular newsletter after he saw Musk's own comments on Twitter about Ukraine, and he said that Musk had told him. Musk had told Maramma that he had spoken to Putin about the issue of Ukraine, you know, which was controversial.

Um so must denied it that. Musk went further to say that he hadn't spoken to Putin for about eighteen months, which you know essentially predates the war the current conflicts in Ukraine. Did you why imagine Musk would present this starlink issue to the public, given the controversy about whether or not he spoke to Putin and when, and given the controversy over his Twitter poll in general. Emily, that's a great question, and frankly I find a dumbfounding. Um

really Um. Musk got into a lot of trouble um politically obviously as as as as as well as reputationally by making uh this statement about Russia. He got a lot of favorable press in Russia. Um. Not a good thing. I also think the timing is very bad because it's on the heels of days of massive Russian attacks on Ukrainian infrastructure. So is he It looks like he's you know, he's trying to pick play up a situation where Ukraine's in a bind um and that's not good either. There

is a deal to be had here. I think the Allies are more than willing given all that we've spent. Four million UM dollars is actually not that much. So there is a deal to be had here. But he's not doing He should not be presenting himself as a global states and as not his strength, and he is clearly screwing up on this repeatedly. All right, not mincing

words there. Dr D J. Peterson, long View Global Advisors President, along with our own ad Ludlow, we're gonna have a little bit more on the musk Twitter saga later this hour. Here's something else we're following. Instacart slashing its valuation for the third time. The new valuation of about thirteen billion

dollars was announced internally this week. According to sources, it was valued at most thirty nine billion dollars back in March, instat Carts executives reiterated the company still intends to go public,

but is waiting for market conditions to improve. Meta is pushing back against the FTC's attempt to block its acquisition of the virtual reality app within Unlimited Meta, arguing the FTC hasn't laid out the elements to show the deal announced in October would actually hurt potential competition in VR fitness. Earlier this week, Mark Zuckerberg advertised the metaverse as the

future of work, gaming and entertainment. Here to discuss Bloomberg's alec sparanka, So what precedent, Alex is this feud between Meta and the FTC setting. Yeah, so this is actually um a move that is under the umbrella of FTC chair Lena Cohn. She's taking a much more aggressive stance against big tech and this suit to block the acquisition of within this virtual reality fitness company is one of those kind of big swings she seems to be taking now.

The latest drama Emily Um last week the FTC actually narrowed its argument to block the deal, uh, basically only leaning into this idea that the acquisition would kill potential competition in a future market. They killed the argument that the acquisition would consolidate power under Meta with its feat

Saber app. In response to that, Meta is coming out this week and basically saying, Hey, if this is the argument you're making, we don't think you have enough here um to actually block this deal, and they're asking the judge to dismiss it. In terms of what happens next, Emily, the judge can rule on this and have some hearings or uh, the hearings on the injunction could actually still go forward in December and the judge make a decision

after that. But either way, Emily, folks who watched the FTC and it's anti trust Um actions and Meta and the metaverse be paying attention to this at least through the end of the year. Why is Meta so keen to buy a virtual fitness company? Yeah, and and I think an illustration of that, Emily, we saw it firsthand, if you were like me with an oculust dropped your face. This week, Meta had their Connect product conference on Tuesday, and they showed off basically all of the things they're

bringing to the metaverse right now. Uh, Meta's argument to get folks living in this virtuality world, it's really dependent on what you can do there. They talked about video games, they talked about a lot of new partners, but this fitness idea that they spent a number of minutes talking

about it on Tuesday. Fitness is one of the things that they said their users come in every month for and within game Supernatural is one of these fitness apps where you can have the controllers in your hand, you can have the oculus on your face, and you can move their body. So it's key to this kind of argument for them of why people need to show up to the virtual world that frankly, they're spending ten billion dollars a year on now. Meta reports earnings in just

a few weeks. Obviously, the market cape cap has tanked over the last year. It's of the revenue is going to metaverse efforts. What are you watching for I mean, I'm watching what investors think. As you said, the stock is down more than six since January. UM. They are also paying attention to what's paying the bills for Meta you know Meta who used to be called Facebook, who owns Instagram and all of the social media properties. It's

been a really tough year for marketing budgets. Advertisers haven't been spending us much on ads, which is where all of the social media properties make their money. So that's what I'll be paying kind of the most attention to. And frankly, Emily, that is probably the thing that's going to determine how much patients investors continue to have with Mark Zuckerberg, the CEO, and his aspirations to spend a tenth of every dollar that comes in onto something that

you know hasn't really materialized, this metaverseus digital universe. Alright, Bloomberg's Alex Bringa, who covers social media for us, Thank you for keeping us up to date. Okay, coming up, network effects made Facebook, Uber, even Bitcoin a thing. What's the next big thing? We're going to talk to an investor focused on betting on network effects. Next. This is Bloomberg Network effects impacts all of them. If you're gonna be spending your life synergies building a startup, it's going

to take your effort. You're trying to defend the business area that you've carved out, you might as well be working on a business that has network effects, because then you'll have a shot at going the distance and making a real impact in the world and creating true value for your employees, for your investors, and for your whole network. Part of the teaser there for the venture firm NFX is Master Class on Network Effects, a new program by the venture capital firm to help startups build at scale

from more on. And I want to bring an NFX founding partner, James Currier. James, it's kind of like a VC master class if you will. What who founders get access to with this and what are you hoping they take a way? Yeah, So, as you know, Nfects is a seed stage firm, uh, probably the largest seeds stage only firm in the in the world. And you know, our mission is to help ten million founders. We can only invest in a few hundreds, but we can help

them with software and with content. And the content that we've most recently released is this masterclass on network effects. So the name of our firm is n Effects, which stands for network effects. But you know, and we've done blog posts, and we've done tweets, we've done other ways of sort of educating folks about what we see with network effects and how you use them to build the

giant companies of today in the future. Uh. This masterclass is our next level product where we encapsulate about twenty years of learning about network effects and then bring that into three hours of video so that founders and teams with the founders can really educate themselves quickly about this most powerful tool in building giant, important tech companies. So we mentioned companies like Facebook and Uber and you know, even bitcoin um has been a success because of network

network effects. What are the startups that are being built now based on network effects that you think are going to be the next big thing. Yeah, So companies like Mammoth Biosciences is building a platform network effect like an operating system really like a Microsoft or an iOS but they're doing it in the biotech space. They're based in the Bay Area, recently raised it over a billion dollars and we think, you know, Jennifer Doubt of the ERN

Nobel Prize winner is one of the founders. This company is going to be a monster. Another company you might have heard of recently is called Incredible Health, which is run by him On Abuside uh in Rome, and they have built a marketplace between nurse labor forces and then the hospitals that hire them, so they install software in the hospitals and then they bring the hiring to to

the hospital so they can find the nurse. Is that they're understaffed on so many businesses, both in marketplaces platforms as well as the ones you're talking about like Twitter and Facebook which have direct network effects because there are actually sixteen different network effects. We're finding a lot of different companies that are today building a new ways using these techniques that can create multibillion dollar companies and Incredible Health at Mammoth or two that are our unicorns and

and heading on up from there. While we've had both u I mon Abusie and Jennifer down on the show, so I'm glad we're on the right track. Um, you know, we are in the middle of a massive downturn. There could be a lot farther to fall here. How concerned are you about that? And you know how is it impacting your investment strategy. Yeah, you know, NFECTS as sort of largest c fund, we see across a whole bunch of different verticals like marketplaces and fintech, prop tech, games, biotech,

web three. We're investing across a lot of different verticals, and but we're investing for seven to ten years from now, So in that way, we're a little bit insulated from the current market conditions and are still looking for founders with big ideas, particularly ones with network effects, because the next two or three years won't really matter for them when we invest this year. What will matter is what the market conditions are seven years from now and what

the market will value them at. Then the market will decide. But in the meantime, we're looking to build you a hundred million of revenue two million of revenue in real businesses, and we can invest now. So actually, we do feel like now is the best time in the last four years to start a company, So we're leaning aggressively in.

We leaned aggressively in during COVID. We actually ran a program called fast where we offered one to one, one to two million dollars for fiftcent of companies within nine days, okay, and we touched four thousand companies at that time, right at the beginning of COVID, and now that we're in this downturn, a similar thing is happening. So so does that mean you're not worried? I mean, last quick question.

I mean we're talking about instant We just talked about instat cart slashing its valuation from thirty nine billion to billion. I mean, you're seeing some huge haircuts here we are, and those companies were seated six twelve years ago. Our venture firm started five years ago. So we are still in the period of rapid growth for a lot of our companies, and so far we're not affected by these

huge markdowns we're seeing. And again, where we're deploying capital is for seven to ten years from now, and most seed funds are doing that. That includes us, because we're focused on that stage. All right. NFX founding partner James Courier on your new VC masterclass, Thank you for stopping by. Welcome back to bloom More Technology. I'm emily changing San Francisco.

We've got some breaking news crossing the terminal now that News Corps does indeed UH confirm it will explore a combination with Fox Corporation, News Corps saying received letters from Rupert Murdoch and his trust to that effect. There had been some reporting that Murdoch was considering reuniting his media empire if you will, that he split back in, news Corps now confirming that it will explore combining once again

with Fox. Meantime, Elon musk steal to buy Twitter has had so many twists and turns that one might forget. This all started back on January thirty one, that is, when Musk quietly began buying Twitter shares. He's since gotten a lot louder in so many ways, and Bloomberg Business Week broke down Musk's tweets by the numbers, joining us now for more on an in depth look at what's been going viral all year long? Really is Bloomberg's at ludlow.

So Business Week seek the numbers here. What interesting insights did that yield? Yeah? I think first of all, it's the frequency and volume of the tweets since January, right.

I think in May we were surprised how quickly Elon must put the deal on hold and raise his concerns about the level of bots on the platform and if we put the chart of his weekly tweets volume of weekly tweets, you can see that just after that deal is put on hold, there's kind of a big spike in the number of tweets he's making, right, and he's talking a lot about the concerns, in particular about bots, and then things go very quiet, and of course, just

a few weeks laid everything changed because Twitter sues to enforce the original terms of the deal. He tweets, means, he tweets emojis, he tweets pauls. Does he have a favorite kind of tweet? What's really interesting is that the overwhelming number of tweets that must sends a replies, and this was why everyone was so interested in this deal in the first place. Right. Elon Musk is one of the most active and well followed users on Twitter. But

it's not just him sending original tweets. It's mostly him replying to other users. And we know that he engages really actively with other Tesla users, people that he is a fan of, people interested in SpaceX, and you can see from that chart quite clearly that that's how he uses engagement. Very few of the tweets he sent since January thirty one, have been retweets either what's you know tweeting about the most? Is it Tesla? Is it Twitter?

Is it's SpaceX? Isn't repopulating the world? You know, m you and I have been living this deal night and day about Elon must buying Twitter. But actually, if you break down the tweets and do the analysis, he's not obsessed with Twitter. He's not tweeting a lot about Twitter. Most of it is about his other companies, Tesla, SpaceX. You know, he's really engaged when SpaceX has a successful mission.

He tweets a lot about Tesla. Space generally is a topics high up there ev you no surprise and you look down, they're Actually the interesting number to me is Crypto. You know, he hasn't tweeted as much as one might think about Crypto, at least in the tweets sent since January thirty one of this year. And and you know when he has talked about Twitter, you know where does he focus? I mean certain there are certain tweets, of course, that have gotten a lot more attention than others. Well,

this links to that first chart box. He tweets a lot about the box issue on the platform, right, he doesn't necessarily talk so much about some of the characters involved management. He does on occasion, but the focus is really on box, which is one big portion of that pie chart on your screen. The other one that I find really interesting is is the number of tweets about

issues of censorship and bias. And we know that one of the big considerations for Elon Muskus policy, right, we want to know what policies will change in terms of content moderation and who will be allowed on the platform, will allowed back onto the platform, if indeed he does go through to buy this deal. But that to me, of before that pie shots certainly the most telling. All right, i'd lovelo. Thanks for walking through all of that for us and bringing us all the data. Joinings. How to

continue this conversation. Jason Goldman one of the founding members of Twitter. Of course, he's also the former White House Chief Digital Officer under President Obama. Always some good insider outsider perspective from you, Jason. You know, one of the latest developments that we haven't talked a lot about yet, these revelations from Twitter that Elon Musk was being investigated by federal authorities over his acquisition conduct if you will.

What do you make of this? Yeah, I mean it's difficult to say because we don't know which federal agency was investigating. I think it's a little premature to think there's much fire there, because this could be as simple as Twitter's lawyers trying to get their hands on the on the information that Ellen shared with the SEC. We know that he was contacted by the SEC as related to this deal, and so it might just have been something that they put in the filing to get information

and about that. So without actually finding out what kind of investigation was involved, it's a little premature to say, oh, there's something super nutty going on here. That being said, you can never really discount the super nutty in this particular story. So what's your hunch. Does a deal happen by October? They are there more surprises between now and then? I think it's again, I would never rule out more surprises. I I believe a deal happens, I just don't have

a ton of high conviction about it. Um. I think what's likely happening now is that the lawyers from both sides are trying to figure out how to execute this deal. Uh. In in between two parties that have absolutely no reason

to trust one another. And so it's how do we get all of the money in one place and you show us that you have all the money, and then we quickly take all the money and you get the Twitter, uh without you know, without involving a lot of other contingencies, which Twitter is just not going to accept at this point. So say you On gets the Twitter and it happens in a couple of weeks, what do you think happens to Twitter under Elon Musk And what's the biggest risk?

I think the biggest risks are sort of twofold. One is I think there's gonna be a lot of brain drain. I think a lot of people are going to either leave of their own volition or or be fired, and we'll get into why I think that's a problem for

the company in the world. And then the other is I think Twitter is just going to be subject to the kind of reactive decision making that Ellen has shown, both publicly in his comments about the company and now privately in what we've seen from the tax Uh to be someone who's just you know, doesn't respond well to pushback or criticism, likes to be praised, likes to be given.

Uh you know, accolades about um, you know, how smart he is and and and what great ideas you could bring forward and but despite all of that, just still does not have a serious plan for what to do with the for what to do with the platform. And I think that puts the company in a dangerous place, and I think it puts its users in a dangerous place. Okay, here here's a some our question another way. What's one thing that Musk could do that would make Twitter better?

And do you think he'll do it? I think, oh, the easiest thing that he could do to make it better is to immediately remove himself from the decision making involved in it, Like if he if he somehow moved the company into some kind of foundation and said this is going to be running a nonprofit way. You know, actually, you know, Jack and I don't agree on a lot

of things. But Jack has this notion about, you know, Twitter returning to be a protocol, and you know, this this notion that it needs to be just one client running on top of a technical protocol. If if Elon were to kind of divest himself of the authority and decision making power around the platform. That would be one positive thing he could do and then just leave it to actual subject matter experts to evolve the technology needed

to do that. So I've been dying to know what your thoughts are on the text exchanges between Musk and Jack. You know, what was your big takeaway? I mean, of course you had this hunch all along that they were somehow in cahoots. Yeah, I mean, I think it was pretty obvious from the proxy filing that Jack had had a conversation with Ellen in which he expressed his own

opinion that would be better in independent hands. We find out from the text the text that Jack, when Ellen agrees to do this, the Jack has overcome with emotion that he would then say later publicly, as you know, the singular solution to Twitter's problems has shown up. You know, he was he just couldn't believe that this, you know, Messiah had arrived to save Twitter from this board that Jack had both put together as during his ten years running the company, but now simply couldn't stand to be

in business with anymore. And so the text reveals someone you know and Jack who was just frustrated and pretty much done running the company, and then willing to completely throw under the bus anyone at the company, including Prague, the CEO, who got in the way of Ellen coming in to take it over, despite the fact that Ellen at no point to Jack, either in private or in public, expressed any real idea of what he wanted to do with it, certainly nothing that was in line with what

Jack thought needed to happen. This idea of making it a protocol, that's nothing that Ellen has picked up at all. So I think the text just revealed, not only from Jack but in general, just how uh, you know, how willing people are to appease Elon and that anyone who pushes back on him immediately gets, you know, pushed to the side. We haven't heard from the other Twitter founders of Williams and biz Stone, you know, I know you're close with them, and I'm what do they think about

this to the extent that you can share. Yeah, I prefer to just sort of speak for myself. I I am close with the other the founders and a number of other early employees. Um, but you know, I think for for all of us that were there in the early time of the company, you know, we've all we've always had self inflicted wounds. We've always had, you know,

periods of turmoil with the company. I think despite differences in terms of like, oh, you know, I didn't think Jack should be CEO, and then Jack didn't think that I should be CEO, and that was a big rift in the company, I never really doubted, for example, Jack's willingness to do what was necessary to make Twitter a better product in ordered, I doubt that he had true conviction and passion about how Twitter should grow into the world. What we're seeing now, though, is just someone who who

doesn't have that kind of expertise. We're seeing instead someone who's been told by everyone who's blowing up his text messages in the world where at large, that he's the second coming of Thomas Edison. He's a genius who can enter any problem, and despite a lack of subject matter expertise, he's going to be able to um fix these very difficult problems. And that's dangerous. That's dangerous for the geopolitical reasons that you talked about at the top of the show.

That you're talking about someone who is incredibly susceptible to flattery and influence and believes too highly in his own abilities and that's going to create the context for a large mistake to happen, whether that's you know, shutting off access UH in Ukraine, or that's UH inadvertently or purposely revealing user data to an authoritarian state that's trying to

get information about dissidents who are coordinating on Twitter. Remember Twitter has never really had a problem with China because Twitter doesn't exist in China, but Elon us in China. Tesla exists in China. So now China has an incredibly strong lever over Elon in order to jeopardize user safety and and and jeopardize dissidents in Hong Kong, time one or wherever else. That's a real problem. Uh. And it doesn't require it doesn't require a secret you know, conversation

between Elon and Putin. It's just obvious on his face that he's going to be susceptible to these kind of pressures quickly. How concerned are you about this all happening right before a midterm election, you know, especially given your time with the Obama administration. I'm not too concerned about I'm not too concerned about the mid terms. I think it's too close to the to the mid terms to be a problem I think for future election cycles, not

just domestically about but around the world. I think it is a concern because not so much for putting the thumb on the on the scale for a particular political party. And I don't think Trump should be on Twitter, but I also kind of discount how important that is. I think it's more than a problem that around the world.

We know, as you know the Washington Report Washington Post said that autocrats are to use the platforms to spread lies about opponents and whip up violence and mail on and that's a problem because Ellen is going to be able to tip the scales for those kind of forces around the world. Jason Goldman, one of the founding members of Twitter, the former White House Chief Digital Officer. Always

good to hear your thoughts. Jason, thank you for stopping by coming up the crypto exchange that just raised a hundred ticks five million in a downturn. You just swap CEO Mary Catherine later with us next to tell us more this is Bloomberg crypto exchange unit swap is just raised a hundred sixty five million dollars in a series be funding round led by Polychain Capital. This value is

the company at one point six six billion dollars. Unit Swap says it's one of the largest of funding rounds for a crypto firm since the market downturn earlier this year. Even as the cryptal market is still struggling and some of investors are starting to lose confidence in d five, Unit Swap CEO Mary Catherine later joins us. Now, So, um, Mary Catherine, what is it do you think about unit Swap that you know god investors to pay up given

these very difficult market conditions. Thanks well, thanks for having me on. I think what we've learned in the past six months in crypto as we've seen the importance of decentralized systems at the core of some of this new technology, and also the importance of safety and security. And Unit Swap has been committed to safety and security since day

one and never takes custody of user funds. We are decentral We've built decentralized trading protocols and then products on top of them that essentially they are I mean that you're not managing actual assets, you're not managing users assets, You're giving them open source technology. And then web and mobile applications to access that technology. So I think what's really different about unit swap is again it's a fundamentally

different technology stack from a centralized exchange. It's a it's a novel innovation, completely new technology, Whereas the crypto firms that you saw software over the past six months are those that are really using traditional, traditional tech stacts. Traditional

centralized exchange models ultimately had risk management failures. And so I think that in our investors recognized and the market recognized that decentralized protocols have unique advantages that not only can benefit crypto markets, but also traditional markets more broadly, and that you know, swap Labs is really committed to as I mentioned, security, but also bringing more and more users into this space because the entire ecosystem and market

needs to grow and again needs to be more accessible, easier to use, and safer in order for that to happen. What do you think this says about the popularity of decentralized projects in crypto over the longer term. Well, my hope is that the benefits of the decentralized protocols will become recognized and that will have again more products that make them easier to use. Today, it's still a little

bit too cumbersome. It's too hard to explain what are the benefits of the central ovation or to the benefits of being able to have different custody models, uh, the transparency, the lower costs that come with the centralized technology as prastructure, it's a lot to explain. And so what we're focused on for the next several years with this funding is making it easier and more accessible from more retail users but also UM even traditional investors and pools of capital

to access the technology and realize it's benefits. So I think it's an endorsement of the fundamental innovation in the technology and in de centralized finance UM. But again when it's being built by teams that really understand the importance of security and simple use for experiences. And then still a concern about security. Why has there been so many hacks in defy and how do we prevent those in

the future. Yeah, well, just as with any financial system or technology, UH, there are course risks UM that need to be managed. Some of those are technical, So having audited code is critical. UM. We have multiple audits, multiple

third party audits of all of our code. UM. It's a key part of deploying smart contracts, and so I think that's the best practice that in an open source UM sort of open garden, what people can just launch new technology, UH, they don't necessarily not all projects necessarily go through those same controls UM. So that's a key

part of that technical risk. There's also an element of just having a security mindset of anticipating all the different things that can go long UM, both in the UM in anything that's a financial transaction, and also into in deploying smart contracts. When you deploy a smart contract to blockchain, it's effectively permanent, it's effectively immutable, and so the level of battle testing in advance of that is huge UM.

And not all projects treat deployment as a final commitment, and so it means that sometimes people are launching projects and users may access them UM and not realize the

risk that they're taking. So I think that we're going to see UM, We're going to see a whole new level of UM security and see if you expectation among users and cautiousness and so winning users trust, earning their trust, earning their UH their business is going to become all the more important because unfortunately many people have been burned, but that is in the context of defied where many

of the risks are like the technical. Over the past six months, many of the large crypto challenges and failures have been failures of risk management, had been traditional financial services style failures of not managing users funds accurately. And I think that it's it's really important that people understand those companies, uh, you know, Celsius and the like. Um, we're not necessarily we're not using the technology that we're

going to swop used for example. Um, they were traditional, their traditional models were frankly they mismanaged their users assets. So too important. It's very important we just aggregate those risks, the financial risk management that is critical for those companies that do touch users funds unlike us, and then also the technical risks. All right, Mary Catherine later CEO of Units,

thanks for sharing your perspective. Guilty. That is the verdict from a jury in the fraud trial against Nicola founder Trevor Milton. Let's bring back I'd love who's been following this case every step of the way, and you've been in the courtroom. Tell us a little bit more about the verdict today. Yes, so Trevor Milton was found guilty on one count of securities fraud in two counts of

y fraud. It's important to note that he was found not guilty on the most serious counts of securities fraud, which would carry a maximum penalty of twenty five years in prison. Um Like, this was an astonishing case. It went on for a month and essentially what the government proved was that Trevor Milton lied, made misleading statements and exaggerations about the company's technology, it's progress, it's order book, but crucially that those statements had pushed investors, retail investors

in particulars by the stock. That is the burden of proof that was on the government, and the jury returned an astonishingly quick verdict on Friday. Right. Why do you think the jury returned it so quickly. It's it's impossible to say, m I mean, it has been a one month trial. Um that there was a pause for around ten days because some of the defense council got COVID frankly, um but one juror that Bloomberg spoke to leaving the

courts simply said the evidence was clear. That the government presented a number of witnesses, many Nikler employees, present employees, people that were there at the time, documentary evidence, appearances from Trevor, text messages is um and the defense's argument was very simple that that basically Trevor genuinely believed that

what he was saying was true. He never set out to defraud everyone, and that everyone around him at the company was saying the same thing, and that if investors really looked at regulatory filing scuments, they would have found the information that should have informed their decision anyway. So it's it's been a very busy long trial, but five

hours that's a very quick verdict. Interesting, and you've made the point that the defense argued he didn't lie, he just may be overpromised and said what he believed to be true with which is something that is, you know, maybe kind of common in Toilkin Valley. So it'll be interesting to see how this impacts the tech industry more broadly. At Ludlow, thank you for your excellent reporting on this case.

That does it for this edition of Bloomberg Technology. Coming up next week, we've got next few venture partners Melody Co joining us to talk about women lead and minority leads to artups um. Have a wonderful weekend everyone. I'm Emily Check in San Francisco. This is Bloomberg