From Mahard where Innovations, Money and Power Collie in Silicon Valley, NBN. This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
I'm Caroline he at Bloomberg's world headquarters in New I med louveload.
This is Bloomberg Technology.
Coming up the latest updates from the earthquake in Taiwan. That's as the island faces its worst seismic event in twenty five years.
Full coverage ahead.
And then look at the broader implications of this human tragedy for.
The global economy.
Plus Disney's months long proxy battle nears its end as shareholder's place their final votes in the battle between the mouse House and Tree, and will sit down with one shareholder Ross Gerber.
And Spotify and announces its rising prices again and several markets for the second time in a year. It's all step towards researching a long term profitability. We'll discuss that and so much more throughout the app at first to check on in these public.
Markets and look a reprieve.
We've got a strong set of data when it comes to ADP numbers, when it comes to the labor force in the US, but maybe it just to pull back in the services area that breathes life into the equity market. After the biggest sell off in a month yesterday, we're
up five tens percent on the Nasdaq. I'm looking at a tenure yield that just continues to crescendo higher at the moment, and this is borrowing costs really move with the idea that the market thinks maybe we won't get those three rate cuts that the Fed Reserve has signaled for this year.
I'm looking though, also what happened in Taiwan, trading notably down by some six tens percent, not an enormous move after what was a serious human tragedy and one that has implications on technology that will dive into in a moment.
Look at what's.
Happening in the world of crypto, just briefly, because this acid a choice at the moment, currently actually up one point four percent, just spiking a little bit in the last couple of hours of training. We're still only at
the sixty six thousand dollars level. There's market moves, the fact that the ETF flows perhaps a slowed somewhat, and what that means for VOLI trading over in Asia, interestingly, particularly when it comes to some of the algorithms that end up selling bitcoin on the back when we get the inflow and outflow data from ETS.
But and you're going to focus more on Asia right now.
Yeah, These are the US listed shares of the technology companies impacted in Taiwan. TSMC, the world's biggest contract manufacturer for chips front and center. The ADRs have risen because of a positive operational update. Will bring you the details in just a moment. Micron has a big presence as well. It said that it's evaluating the situation on the ground in Taiwan, but all of its staff were safe. Caroline, bring our audience the absolute latest details of what happened in Taiwan.
Yeah, because occurred last night.
Seven point four magnitude earthquake struck Taiwan and it was, as we've said, the biggest seismic event by magnitude to hit the island. So it's nineteen ninety nine now. So far, the death toll has reached nine, it's injured close to a thousand people, and it's leveled dozens of buildings on the eastern side of the island.
As some of these pictures show shocks.
In fact, were felt as far away as Japan and as but any damage from the quake has been closely watched for potential effects look on the.
Global economy as well.
Given its technology output, this island is dominant in chip manufacturing industry, and it also accounts some more than half of global market for laptops and motherboards and network devices. And we've got to go into the implications for companies right now too.
Yeah, honing in on the companies that operate in Taiwan the island to tech firms are still assessing impact from the earthquake. TSMC, the world's number one chip contract manufacturer, had halted some chip making equipment and plants and evacuated them. But these are the latest headlines from TSMC, the company saying in the last half an hour they don't see damage to critical tools, including all their EUV gear, and
they're expecting to resume production of semiconductors overnight. Let's bring in Bloomberg z And King, who leads semiconductor coverage at Bloomberg Technology Ian. What is the latest please for TSMC.
Yeah, I mean what they've done is come out and really reassure people that yes, this isn't great. Yes, there's been an impact, but it's still within the bounds of what we can fix and fix quickly given our contingency plans. So there will be some wafers loss, there will be a bit of manufacturing loss, but not the kind of months of disruptions that we've seen in the distant past and with other supply chain disruptions that we saw during the pandemic.
Just give us the context a little bit of just how integral Taiwan TSMC players like fox Conn as well when it comes to phones and laptops are to the global economy.
And yeah, I mean everything goes through TSMC. If it's the processor in your iPhone designed by Apple, it's made by TSMC. If it's the supercomputer in a data center based on a chip from Nvidia, that's going through TSMC. If it's a modem that's allowing your phone to connect to a network that's Qualcom, that's going through TSMC, I mean, the list goes on and on and on.
Everybody depends on them.
Okay, let's talk about what else is operational on the ground in Taiwan. I it was interested to read about Micron's footprint, For example, Ian there's a lot that happens there. We're talking about semiconductor manufacturing, but it's also at the circuit board level, the context of laptops and PCs. What other names are impacted and which areas of the technology economy should we look out for.
Yeah, I mean, historically Taiwan was an absolute center of effectively assembly of electronic devices. A lot of that has moved to mainland China, so it's not as crucial as it used to be in that area. But there are still a lot of technology companies that work for the sort of better well known names like Dell, like HP that also operate in Taiwan. And as you mentioned Micron, that's memory chips. Memory chips are really important as well for your PC, for your smartphone.
And there is notable reaction across competitors right now when you're looking at the rest of the chip stocks, I'm looking at the well, the Philadelphia Semonconductor Index, most in the green, Micron leading it, Broadcom Land Research.
But lastly, there's an interesting exception.
And you would have thought Intel Arrival would have done well out of the back of any supply chain headaches for rivals, but not so today.
Yeah, this is an unfortunate kind of consequences that any bad news for TSMC should be good news for what Intel is trying to do, which has effectively become a competitor for TSMC. It should have people saying, hey, we need to diversify geographically. Who can we do that, Well, here's Intel. But because of some of the financial disclosures that Intel put out there last night, that, unfortunately, at least in terms of Intel stock price, is not the case.
Ian.
The story with Intel is that it has different businesses, right, and we're talking in this instance about the foundry business. Intel wants to do what TSMC already does, be a contract manufacturer for third parties. And when I was looking through the financial disclosures they made, it's not just that they're booking less revenue on foundry. It's not just that
the losses are widening. But their projections to the end of the decade make you a little bit concerned that they actually will get back to the era where Intel had north of sixty percent margins and they were the technology leader. That's the story that Pat Gelsinger, the CEO, has been trying to tell all three of us for quite a long time. Just explain I guess the shift in timeline that Intel disclosed last night.
Yeah, I mean there wasn't a shock for those who've been studying it closely, but it was arguably a reminder that, look, this is an extremely expensive turnaround. You could argue that Gelsinger was intellectually honest and upfront about things, and people really should have been paying attention, but some of them weren't. If you're a casual investor, if you've got other options, why wouldn't you be investing in in Video, qualcom, TSMS,
all of these other companies. What Intel did was really remind people that, yes, they're on a tough road and they still have a ways to go.
In The stock is down six point eight percent. Intel they have a new CFO. Who is it all right?
It's a new CFO for that foundry division. Yeah, the main CFO is still there.
Got it?
Than King, We thank you really taking us around the world the chip industry today.
We appreciate it enormously.
Meanwhile, coming up, while we're going back to Disney's months long proxy battle with Trains Nelson Pelts, when it's finally coming to an end.
Today is the day that we get the shareholder meeting.
We're going to be discussing it next with one key shareholder, Gerbert Kawasaki CEO Ross Gerber.
This is bo Make Technology.
Today is the day Disney's shareholder meeting will determine the future of the entertainment company's boardroom, and a winner will emerge from a lengthy proxy battle between them and the activist events investor that is Nelson Peltz. Now, MIXT sources say that, look, Disney is close to clinching and win over Pelts and Tryan with vanguards backing that of Disney. Let's talk to Goebel Kawasaki CEO Ross Gerber, who you've thrown your support behind Disney, behind.
Bob I Go.
And it looks as though, well most of the investor based retail and some of their big shareholders are doing the same.
Well, yeah, I mean I gres phenomenal executive. This is Nelson Peltz. Is absurd. He's wasted so much time and money.
You know, he's made a ton of money now on this activist campaign irrelevant of really, he's going to accomplish nothing. I think Disney's gonna win this, you know, pretty solidly with the backing of the institutional shareholders you know, as well as many retail.
Shareholders like we are.
So the bottom line in this is, how is Nelson Peltz gonna do anything better for Disney other than cut costs?
And that's already.
Happened, mister Geber.
Whether mister Pelts is absurd or not, he set out in a one hundred and thirty three page manifesto a lot of grievances right, focusing on the streaming business. And so let's say whatever happens right, say Iiger is successful. The question that mister Pelt's raised was how do you get that streaming business to profitability without depending on a strategy that is raising prices for consumers while cutting the
costs of content production. Do you have firm in your mind and answer to that question.
Show go. That is the answer.
When you have shows and you have content that people want to see, they will pay for subscriptions.
It's just what's happening in streaming.
We're seeing it with sports subscriptions now too, where people are signing up to watch a game on Paramount Plus and then they're sticking sixty to seventy percent of the time after the game's over. So the shows the hit shows, the talent, the ip that bring viewers in is what makes these streamers profitable. Like Netflix every week now Flets has something good on every week. So finally Hulu and Disney Plus are stepping up their game. They've combined the apps, They've built it onto one platform.
Now there's a tech side of this.
This is a big thing that Disney's done to cut costs and make their library even more accessible to many different you know platforms. But the bottom line is the shows drive Disney's success, and they have hit shows right now on their platforms. And that's the Eiger magic that pelants can never do.
Goeberg Kawasaki your affirm according to the data or my Bloomberg termo one hundred and thirty one thousand Disney shares or so, what is your firm's physician on Eiger succession?
Well, you know, being a Disney shareholder in my whole life and going through the you know past with you know Eisner and all the trials and tribulations. Eiger is a young CEO based off the average age of a presidential candidate.
So I'm not sure what will happen next.
I think there's some confident executives that he can you know, pick to take over that are hopefully more digitally focused, and he's got some of the same team members around him from you know, building Disney Plus in the past.
So I'm not sure where he goes with this.
We'd like to see an internal succession, as Disney typically does that, but it's going to be really hard to find a replacement for Aiger, as it's always been a big challenge for Disney over its long history.
Just really quick carry.
The argument that Ross has made before is that if Joe Biden can run for reelection as president, then Bob Ayger can do another ten years at Disney.
Oh yeah, yeah, he's Rus. I just rereat share to make it simple for the audience.
Carry. Sorry, yeah, no, I mean Iiger is in great shape.
I mean he's mentally and physically fit, and you know he's riding his bike on Sunday mornings at six am, like twenty miles.
But he's shown in the past Ross that he wanted to exit and then he had to come back, and I think ultimately the new board has really been focused on trying to understand where the path of the future is. Who are in the internal candidates with the external candidates, and it's got to be yes, someone who's digitally focused. But Disney is a behemoth. It isn't just.
An exposure to digital is an.
Exposure to parks, to experiences, to cruises, it's an experience to big hit shows that go onto your movie theaters. How can we find someone who can be basically the consolidated leader of a business like this, Well, you.
Just brought up probably one of the more challenging issues, right, Like running parks and resorts is nothing like running the streamer, and so somebody having these sort of skills to do it all is really a big ask. And hence why I heard and they got James Gorman on the board to try to help succession planning. But it's a challenge to find somebody with that type of operational expertise like period.
So what I think is Disney's really big, and when you look at the ESPN piece that they're sort of carving into its own sort of business, and then parks and resources and experience and then you know the rest of the business, the streaming in the studios, I think they really need free, strong leaders that are sort of have a CEO that's great at running those.
Three leaders because each leader is going to have to be different.
And this is the problem that a lot of massive companies, whether it be Apple, Microsoft, whatever, are facing is they've become so big.
And so profitable. Can one person really run all of this? You know? So I think we're you know, this is a challenge for a lot.
Of big companies, including Disney, is where do we go from here with secession planning? Because finding another Eiger is obviously not going to happen.
One reason I might want to hand over the baton sooner rather than later is because he's fed up with mudslinging coming from.
People like Elon Musk.
And it's interesting that Elon Musk has decided to pile on it the last minute saying he would support Well Pelts joining the board. We know he's got an axe to grind against Bobbigo. What did you make of that coming?
Well, hopefully Eli could keep his job as CEO of Tesla at this point alone make a record.
For activists, because what's going to happen is Pelts is going.
To buy Tesla Max and be calling the board of Tesla because an opportunity is arising for an activist in.
Tesla right now. That looks amazing.
So the best thing Elon could do is get his butt back to Tesla and start working on getting these cars out. You know, he's got to get cyber truck out, he's got to get full self driving working. He's got to you know, deal with competition. And instead he's tweeting every day a bunch of garbage. So, you know, look at the performance of Disney versus I think somebody tweeted this. You know, what's the performance in Disney versus Tesla over
the last six months. And fortunately Disney's the top holding in my fun GK And you know, our clients. We have very close relationships with our clients and they love these companies. But sometimes things change, and we've had to deal with the changes in Tesla for the negative and for the positive.
We are seeing positive.
Changes for Disney and it's become a very good returning investment for our clients.
Just give us the context on Elon Musk running Tesla, the environment with which he's running it at the moment, the response on X of basically calling out certain individuals posts calling them idiots, because the ev landscape itself is contracting byd sales dropped forty two percent. He's referring to the competition coming from China. In fact, yes, we saw a pullback in terms of deliveries from Tesla yesterday, but actually reclaimed it spots the number one provider of EV's globally.
Can you respond to the criticism that Elon Musk has of you, Well, yeah, of your tweet and calling you basically an idiot.
Yeah, yeah, you.
Know I've been called that many times by Eulon, but somehow, you know, I've survived this line.
And we went to the same college. But that said, I think that if you look at global sales of evs.
It's up thirty five percent year over year. Tesla's losing share. Buid EV sales were actually up year over year. It was total sales, So it's easy to cherry pick numbers, but the EV market is growing. Only nine percent of US consumers are buying evs. So really the truth of the matter is we can all call names, and we can all look around and you know, make excuses. The economy is very strong here in the United States. The
economy in Europe is okay. China is definitely an issue, and it affects Tesla, But when you look at the gap between production and sales, that's not an economic issue.
That's a sales issue. So once again the guy throwing out names and all this kind of stuff because he doesn't like what people are saying about him, mister free speech, you know, but the fact of the matter is his free speech has cost Tesla shareholders six hundred billion dollars in losses, and Tesla car owners have lost fifty billion dollars of equity.
In their vehicles.
And he's even forced to hurt Ceo to lose his job because it was such a bad investment buying Tesla's for her. So let's be real, Eli, like, it's time for you to grow up and accept reality that you're causing enormous damage to one of the most consequential companies in the world because your behavior on Twitter, and nobody wants to hear his opinions.
You know that's a fact.
Ross. I'm just sorry, Caro.
I've invited Elon onto this program many times, and in this case I'll write to him again and say, you know, Ross responded to your post on X he can come the show. He obviously has declined or to do that, but.
Throw in the U Penn thing maybe maybe.
Yeah, Listen, he's not going to debate me. He doesn't want to debate me because the fact of the matter is.
I'm not scared of him, and he's so used to bullying everybody out of the business.
He's not gonna bully me.
So, you know, the reality is he's got to get his focus back on what's important, which is solving climate.
It's not free speech, So okay, you know, I'm sorry.
Don't apologize, ros Gerbert. It's great to have you on.
Gerber Karasaki CEO surviving another day of some munth slinging on Twitter or x, but also talking us through Disney as well.
We thank him for it. This is Blue Bang Technology.
It's time for talking tech. This is what I broke last night with the Bloomberg Deal's team. Chipmaker Sarah Brass Systems has picked City Group as the lead bank on its initial public offering. Sourcings telling us that the Silicon Valley company chose the lender after holding discussions with potential
advisors on a US listing. Sarah Brass is targeting that listing in the second half of the year and may seek evaluation above the four billion figure it achieved in its last twenty twenty one funding round, and during the phone call between President Biden and China g the two are said to.
Have discussed TikTok.
White House spokesman John Kirby told reporters that Biden reiterated to Gie his concerns about Chinese ownership of the popular video sharing app. He said it was not about a ban of the application, but rather US interest in divestiture.
Carol, Meanwhile, let's talk about a previous President Trump who is suing two co founders.
Trump Media and Technology.
I mean, then they set the company up improperly and shouldn't get any stock in it. This comes amid wild swings in shares of the recently public company, of course went through a spac Let's talk about it all the legal battle that is with Bloomberg's Bailey Lipschaltz, and so just talk us through us about the issues the co founders have of truth social with Trump.
Well, there were an initial lawsuit from the two co founders saying that they were going to be diluted out of their eight point six percent steak in Trump Media and Technology Group. And this is a counter lawsuit from Donald Trump saying that they deserve nothing. And this is really a deal that has had a number of lawsuits from the two co founders to the founder of the actual spac that brought Trump Media public, who was suing about his steak. So there are a number of lawsuits.
It's really mind boggling to try to put into perspective just who is arguing what at this point. But as far as we know at this point, UAV, which is the investment group behind those two co founders, they currently have, according to filings, a north of five percent stake in Donald Trump has a roughly fifty seven to fifty eight percent stake in Trump Media Bailey Estate.
In what exactly I think this week we learn the reality of what the company is does, its finances and its scale, and actually there's not a lot there, not a lot there.
Really, the flagship product is truth Social. The company declines to provide typical metrics, average users, monthly average users, any real data point behind that. But they did in their twenty twenty three filing update that they lost more than fifty million dollars and generated and easily four million dollars in revenue. So it really has seen.
We've really been.
Tracking the technology company that trades under DJT. It really is more of a memestock, a investment that people are buying because it has the potential to be sold to someone else at a higher valuation as opposed to the actual underlying business as it is fit.
Right now, Bloomberg's Bay Lipschotz, who's being kept busy by the latest despach and what a story it is, thank you. Now coming up on Bloombow Technology, Spotify raising prices for the second time in a year. This is one actually that there was pretty immediate reaction to on different social media platforms because investors like it.
The shares are up.
If you're a consumer and you have another subscription where the cost is going up, maybe you think again, I don't know.
We're going to get all those details.
Next from New York City, side by side, this is Bloombow Technology.
Welcome back to Bloomberg Technology. I'm a a loveo.
I'm Caroline High. Let's get a quick check on these market, says could. Right now, we're actually seeing a bit of a reprieve after yesterday's sell off. Now notably we've got a bounce back of six ten percent on the NASTEP one hundred. Remember yesterday the benchmarks basically fell the most in a month, as we're worried about guess what macropolicy, federal reserve policy, whether or not we will indeed see three rate cuts happening over the course of the rest
of this year. The market has started to doubt that because there's some really robust data think of ADP that comes in today. But nevertheless, we managed to shake off those losses. Not so in the bond market. We're still up by some three basis points on the tenure Bitcoin THO like alongside some of the other tech risk assets were up nine tenser percent, still sixty six thousand O well off those previous highs. Move on, have a look at some of the individual movers that we've got on
the nose today. Look, there is a human cost disaster that we're talking about that's happened in Taiwan following an earthquake. The ramifications on the global economy is something we've tried to debate and think about. TSMC is actually up one point four percent and is coming out and saying, look, the impact of TSMC operations from this earthquake should be manageable. According to City Group Spotify our five point seen percent.
We're going to dig into why that's on a price point change that they're currently offering.
But let's look at Disney down a quarter of a percent. We are all.
Anticipating that intant shareholder meeting, the proxy battle that has been.
Going on for months.
The deluge even ads that we may able and serve to get out there and vote if you're a retail investor and well, Pelts versus EIGA will win.
Ed, let's get more on the mouse house with the take from the in house Bloomberg intelligence and this Guita Rang and Nathan and Gita. You did two interesting pieces of research earlier in the week published on the Bloomberg terminal that with Disney pulling ahead, seems like that's still the case. Look at cash flow and look at fundamentals. Why was that your thesis?
Yeah, thank you so much, Ed.
So, I think you know what Belts has kind of been agitating for, Disney has more than delivered. Right, So Disney has I mean, Belts has been speaking and kind of constantly. His rallying cry has been on the poor stock prize performance, on you know, poor financial performance. And barb Iger, what he's done ever since he's come back is he's really taken control of the narrative here and he has instituted really broad reforms.
Across the company.
Of course, the most critical being the cost cuts. And we've seen cost cuts across the board. We've seen their content budget kind of slashed pretty dramatically. And what that's doing is it's improving earnings power at the company and it's improving free cash flow. And so we're going to see a seventy percent surge in Disney's free cash flow. We're almost back to pre pandemic levels. Remember before they went into streaming, they were generating about ten billion.
Dollars in cash flow.
Of course, that went down pretty dramatically through Covid, through the Fox acquisition, With the streaming launch, we were down to close to about five billion dollars in twenty twenty three, but we're going to be up to eight billion, more than eight billion actually twenty twenty four, and probably even ten billion next year.
If Nelson Pelts, if Jay Russulo, who was the previous CFO, don't get board seats, maybe they've ended up winning anyhow. If they've pushed ultimately these focus on costs, this focus on profitability to go hand in hand. How much do you think the fact that Vanguard and Black Croc have come out and support to Bobby Gay do you think that ultimately they're saying, you've got to stand by this, You've now got to enact some of these changes we need to see.
Yeah.
I think Disney definitely obviously has the edge, Caroline, as you just kind of pointed out, as they kind of go into this home home stretch of this meeting. But I think to a great extent, I think Pels has also been a clear winner. I mean the stock price. Ever since he started agitating in October of last year, the stock price is up forty five percent, and I
think it's definitely added. You know, obviously, Iiger has constantly complained that having all these activists investors kind of breathing down his neck has been a constant distraction for him, and to some extent, I think that's that's justified. But I think at the same time, kind of having them, you know, light of fire there was was kind of important for him to really accelerate kind of the change, right.
So we've had him do some pretty transformative stuff, whether it's you know, charting out ESPN's digital future, whether it's kind of putting Disney on financial on on firm financial footing, or whether it's the sixty billion dollar investment in Parks. So I think to a great extent, Pelso's also one, even if he doesn't win the actual.
Vote, Etha.
So it's great to get your perspective Blomberg Intelligence and I still be they're viewing, I'm sure later today Keithan Wang and Ethan we thank you now. And even more news coming out of the entertainment industry. Spotify, well, it's going to be raising the price of its streaming service in several key markets for not once, but the second time in this year.
And it's a step of course, to keep.
On moving towards long term profitability, joining us for more relmost Felix, Gillette and whole host of news happening in entertainment right now, Spotify.
One to two dollars.
How big a perspective is this that they're now going to have to start charging for audiobooks.
It feels like, well, I think it's a big move because for so long Spotify kept the price same right and now they've reason that, you know, the rising prices twice within a year, and I think that you know, part of this is the introduction of audio books this last fall. You've got fifteen hours with your premium plan and you only paid if you went above those fifteen hours. So Spotify has been paying these book publishers but not
collecting money. So now basically what's going to happen is if you want to keep listening to those audio books, you're going to pay a dollar or two dollars more a month, depending on your plan.
But they're also going to introduce a basic.
Plan with just music and podcasts.
And if you don't that that makes important.
Right.
The shares are up six percent ish big on track for theduce jump since the first week in decend it. So there's the thing the investors like, yeah, which carry outline is maybe towards profitability, but the consumer is going to look at it and go, it's another thing, I got to pay more for. What are they getting in return? You know, what is the access that comes with it?
Well, then that much because they've already had free audio books, you know, so basically they're getting the choice, do you want to pay for audio books or do you just want to.
Just listen to music and podcasts.
So it's a little bit more choice.
Let's stay in the world of entertainment and those that represent those that have big podcasts on big music endeavor. I mean we've long heard from Ariammanuel sitting with our own Lucas Shore at events that we have, of course, like screen Time, he didn't like being a public company ultimately.
Or where his share price was, and now they're going back private.
Yeah, there was always this frustration on Ari's part that you know, the market wasn't valuating these collection of assets the same way they saw them. But it was always a little bit of a confusing mix, right, it was talent agencies, it was opened that you know, sports betting, information, bull riding, you know, the spinning off of UFC and merging with WWE and what did it all add up to.
I think this will give you know, the company more flexibility to make sense of those assets, maybe sell off some of the pieces there without quite as much scrutiny from investors who didn't really get the vision.
The shares actually moved on this, but I think we kind of knew it would be done. Yeah, there's an interesting paragraph in the story, which is including the Tico Aero element Silver late gave us a twenty five billion dollar enterprise.
He's making it the.
Largest private equity takeover of a public company in more than a decade. Why do we care about this maneuvering.
I think it will be interesting.
It gives I mean a little less visibility to what's happening in Hollywood. From my perspective, I could see WM you know, you could see there what was happening with the streaming with Peak TV as their revenues grew. We're going to get a little bit less visibility into that. You know, we'll still be able to see what's happening with UFC and WWE.
But yeah, it'll be interesting to see Ari.
I think it'll give him more flexibility to make some moves, and he's been a big player in Hollywood, so I think that'll be fun to watch.
Bloomberg's for Felix Jillette.
Your world's very busy at the moment, Entertainment media a lot of fun now coming up on the show, We're going to be joined by Brim Financial CEO Rasha Katabi on the company's brand new series C Round Big numbers. That conversation is coming up next. This is Boomberg Technology.
Okay.
Today fintech company brim Financial announced an eighty five million dollar Series C funding round on the back of strong revenue growth. The company provides credit platform programs as a service to banks and large enterprises and says it's rapidly increasing its market share. Let's break it all down with brim Financial CEO Russia Katabi Russia. Good morning to you from New York City. What are you going to use the money for.
We're going to be focusing on our expansion and the robustness of our credit card platforms, and we're really excited about the three is Thank you for having me.
On ed Russia. Interesting.
Of course, you're building the business in Canada, you're looking at penetration here in the United States, and you say that you're going to be redefining the credit card and payment infrastructure landscape.
For those not steeped in the world of fintech, outlook like.
Well, you know, we're seeing a lot of changes in the market, you know, carolinne with just the capping of the fees that you know was just announced in the US,
which we think actually is really positive all around. But it's going to have an undeniable impact on credit card issuers and it's going to highlight the importance of the product construct the strength of the platform capabilities, and that is what's going to drive with the positioning and competitive landscape as opposed to leaning in too much in interchange revenue the way you know, value propositions used to you know, be front of the center.
So you're kind of helping financial companies make their mark, stand out offer things.
But it's notable.
You say, Masscard, Visa had capped ultimately some of their fees, but they're also getting fees in other ways. There's another great story coming from our n Pager reporter here saying that Masscard actually plans to increase certain credit card fees beginning April fifteenth, and these are going to be more network assessment fees. So do these credit card companies end up making money no matter what, Well, you.
Know, when you hold the keys to the castle, you always have a way to protect your share of revenues. I think, undeniably MasterCard and Visa are great companies that play a key role in the ecosystem, and undoubtedly I don't think this is going to impact their revenues or their stock price.
Karen I, Russia.
Today's Tech Daily newsletter is a look at the funding environment for startups and what our colleague career and outlines is. It's been a pretty rough start to the year. And if you're not an AI company, you're not allowed or allowed, but you're not going to be able to raise funds. That's the kind of thesis outlined in the Tech Daily. But you did raise funds and you're not an AI company on the face of it, how difficult was it and how did you go about it?
Yes, we certainly it's a significantly harder environment, a more challenged environment than a few years ago, let's say so. The entire process of raising fund is much more rigorous.
You know.
Luckily for us at BRIM, we've ted xed our revenues since the Series B and we've expanded our product and platform capabilities significantly in both the credit card and payment space. We've also signed on some really awesome partnerships that are
key in the fueling the global expansion. You know, I refer you to the master Card partnership that we announced in December twenty twenty three, where MasterCard in the US selected Brim to be their credit card platform as a service strategic partner, really to help their own customers be competitive, offer innovative product and payment solutions, and better serve their own customers, whether they be consumers, small businesses, or large companies.
There's one word I don't think I heard do you use yet? Which is profit? Did your investors in this Series C upround want to see some profit?
Yeah?
Thank you for it was a very robust upround for Brim since our Series B, and I think it's simply a testament to what we've been doing for the past three years. The massive growth very much the market is
reacting to that, and we're thrilled about it. On AI and you said, on the face of it, we're not an AI company of course, However, AI undeniably is being rolled out across the Brim platforms, and that together, combining it with open banking capabilities that we're rolling out, is going to enable our clients to unlock key new opportunities.
So interesting your background two decades in the capital markets, you're a TV bank, you're at Merril. You then seen this problem gone out and fixed it. Now you're looking to the US. Is it talent that you need. Is it marketing spend that you need to hit B to B audience?
Where do you deploy the money raised?
Yeah, that's that's asking. We're definitely focusing on the hiring already, Caroline. Our company is half US half Canada more or less from a staffing perspective, we are going to be definitely increasing our footprint as well as you know folks that are going to be joining brim that are all US based. Currently we have our CEO in Miami, our CFO is in the Bay Area, and definitely that I think that that trend continues.
A truly sort of decentralized business at the moment. From financial CEO Rushia Katabi, really great.
Task in time with you today. Thank you.
Coming up, we're going to be joined by thread Up CEO James Reinhart because in the company's latest findings on resell industry trends and guess what's sprinkling of.
Ai too, and Caroline, I'm going to continue keeping an eye on what's happened in Taiwan. You know, the worst seismic event earthquake in twenty five years. Sadly nine were killed. But these are the US listed shares or ADRs of TSMC, the biggest contract chip manufacturer in the world. They're near session highs one and a half percent. If you look at the cell side reaction, everyone's pretty sanguine that this
is not going to have a big impact. City calling the situation on those key chip plants in Taiwan manageable that will continue to track the latest that is coming out of Taiwan.
This is Bloomberg technology.
Let's talk about the resale market. Well, if you're apparel, because it's a booming industry. The second hand in peril market is in fact growing eleven percent annually on average in the United States, it's at according to thread up's latest report, and that market is even slated to reach seventy three billion dollars by twenty twenty eight. Let's get the person behind this report, thread up CEO James Reinhart,
joining us for more. And we've seen many ways people wanting whether it's environmental reasons, whether that's right now, actial reasons to basically be more thrifty.
Right, absolutely, yeah, I mean that's certainly the trend these days. People are looking for value and they're looking to be unique, and I think that's where resale really hits the bid.
What I find so interesting about this, James, is the marketplace technology must be involved to assign a value to any specific garment, as much as the participation of the seller and the buyer.
Right, just to explain the process.
To us, Yeah, sure, I mean, you know, thrifty secondhand has been around a long time, right, eBay, Craigslist, you know, really invented this market, you know, over thirty years ago. I think what's changed over the last ten years is companies like Threadup that have come onto the scene and really brought technology to the forefront. So we run four distribution centers around the country where consumers send us their goods they're no longer wearing. We process all of those goods.
We process more than one hundred thousand unique items every day, nearly sixty thousand brands in our system. We process those amps, we put them online for resale, and then we allow buyers to shop like they're shopping on Amazon or Nordstrom. And so we've really built a consumer experience that I think meets the consumer where they are and really is technology driven demographics.
James.
I mean, I've come to thread Up for children's clothes because ultimately, I think that's they're getting through them really quickly, and you want to be ensuring that you're being environmentally friendly and a little bit thristy on it.
But who is generally your buyer right now?
I think what's so remarkable about the resale industry is, I mean your experience is a classic one. You know, our original tagline and our business was clothes.
Don't grow, kids do.
But what you're finding is, whether it's Gen Z or millennials, gen X boomers, everybody is starting to approach thrift in a more mainstream way because the value certainly is something that the consumer cares about today.
And one of the things that thrift.
Provides for folks no matter your age, is the ability to find something that's you unique. Right it's not on the store at at your favorite High Street store. It might be from a few years ago. And I think that combination of uniqueness on top of value is something that transcends generations. I mean, just as just because we get older doesn't mean we don't want to find great deals and we want to be our unique expression of ourselves. And I think that's what's driving it.
You've kind of led us to competition. You know, you mentioned the history of thrift, particularly the digital marketplace, you know, Craigslist. When I moved to the United States was kind of my first introduction to that. Who is now your biggest competition and do they have the sophistication of live data marketplace that you do.
Yeah, I think where the industry has evolved five, six, seven years ago, you would sit in a room with a number of people and they would say, Oh, I use Threatup, or I use the Real Reel or one of the other peer to peer marketplaces. And I think what's fascinating now is that you're in a conversation with you know, half a dozen people, and every single person is using one of the thrift companies. And so I
think it's a rising tide lifts all boats. I think generally speaking, thrift and resale as a category is taking share, you know, from mainstream high street apparel brands, and I think the data shows that consumers are.
Thrifting more and more each year.
I mean, the resale market's growing three times as fast as the traditional retail market.
So we personally worry.
A little less about the competition and ultimately about the size of the opportunity, and I think that the opportunity is large, and you know, we'll take our.
Chances on the field.
So when it comes to basically preaching to the non converted, it's going to be influencers, Right, How are you marketing at the moment in a digitally savvy manner?
Yeah?
I mean do we work with a lot of influencers. We certainly are in the ad markets, We do a lot of direct mail, we do TV, and I think generally speaking, the fastest way that the resale business has grown is through word of mouth and through tastemakers and influencers talking about the destigmatization of secondhand and I think ten years ago it wasn't cool necessarily to shop secondhand. And I think thread Up deserves a lot of credit.
We deserve a lot of credit for creating momentum in an industry where now it's actually one of the coolest things to do.
You talk to young.
People, you talk to celebrities. It's vintage, it's unique, it's resale, and so I think all the stigma has gone away, and I think that's really what's going to drive momentum in the category over the next ten years.
Treed Up CEO, James Reinhart.
Great to have you talk us through the industry and the way in which you're navigating it.
Thank you very much. Indeed, meanwhile, I mean we've.
Got to go back to what is going to be a big event sports technology investors and media investors coming up later in the show.
It's a Disney show.
Yeah, like Disney shares Softter six tens percent. We're probably still even treading water at that level. The latest reporting is that Bob Ayga has the support of the big institutionals, black Rock, Vanguard.
The wild card or the unknown.
Is the retail group you know that traditionally might go with an activist, but tune in because we're gonna be on it all day long.
And I think ultimately retail investors tend to go with the board that's in place. And certainly, if you've been in retail investor, you've been bombarded with a whole number of ads asking you to do just that. But as we're just discussing with geetha ultimately maybe trans.
Kind of one here.
The final thing.
It's so weird, but one pm Pacific, four Pmison there's a webcast. I wonder if like it's the most watched AGM of all time.
We'll find out all of Omaha might have something to say about that. That does it for this edition of Bluebog Technology.
Check out the pod.
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