Tech Stocks Drop, Hot Job Market

firm lead to Sunbroker's going manual. But first we've got to talk about these markets are really hot jobs print for the month of January, putting pressure on the FED to look at raising rates. That's the market take on all of this, and then we digest starnings and that's that one hundred down one point eight percent, although as we said, it ended the week up on the week, meaning five straight consecutive weeks of games. The Philadelphia Sundy Conductor Index also kind of in line with that, down

one point nine percent. Is yields continue to push higher. Bitcoin essentially did nothing in reaction to what we saw from the data. It kind of traded sideways around twenty three thousand, five hundred dollars per token. There's still momentum in the earning story in both directions. Switched up the board to look at the names that we're thinking about, particularly Apple. It was so interesting because the post market reaction Thursday to Apple's miss was negative, and yet we're

up two point five percent. There was some optimism around what Tim Cook had to say on reopening in China. Not so for Alphabet, the parent of Google or Amazon. Those shares really dropping and then accelerating their declines following that hot job sprints. Of course, their earnings were not impressive to investors, worrying sounds about the trajectory three, which will get into. And then Meta actually had been high, continuing its momentum from its earnings that beat earlier in

the week. But then we had that jobs print as well, and that's where we got to go because the focus on data is back, the focus is on the FED is back. To Boomberg's repick, it joins me from Mount in d C. Read hit me with the numbers that we got from the eco sphere on Friday. Well, first of all, I'm always here to report good economic news. So that's that's a great way to end of Friday. UM. But what we saw was we saw that employers added about a half a million jobs in January, which blew

past estimates. And it was this really broad based game that really kind of showed this this restrengthening in the labor market when we didn't really know it could get any stronger. So you saw the unemployment rate fall to three point four percent, which is a fifty three year low. UM. We saw this broad based hiring. We saw the average work week tick up, showing that there's still kind of

that robust labor demand. And we saw wages, while decelerating from the prior month, we saw them still continue to climb at a robust rate. Read. You're the only person that I know that can go through all of that was such beaming joy on a Friday after what has been a busy day in markets, volatility driven by the numbers. Here, I am broken and exhausted. You just keep going, fine, let's go with it. I think that the narrative is I framed it. We go back towards the FED right.

Good economic data, bad news for markets, and that's because of what we think the FED will now have to reconsider what is the market saying about the Federal Reserve in response to the numbers that we have on the screen. So especially whenever you get a number like today in the week of other strong data that we've seen, Um, you saw job openings rally back above eleven million. You've seen jobless claims, so applications for unemployment you've seen them fall.

And the last four out of the last five weeks, UM you've seen kind of susteemed strength and the consumer UM, it really makes the a the Fed's job more difficult. And you know, some of my colleagues had a great story out today about how when you see jobs numbers like today's, it you know, really strengthens the Fed's resolve to you know, push rates above five percent. Alright, bloom Bloomgog's re pick. It just fantastic rapporting on that ECO data.

That's Friday. I want to hone in on the tech sector and put it in the context of job cuts, all of those that we've seen, particularly in two Boomberg's m Live team has been asking if these cuts have been too large, too small, or even too premature. Here's what some of Bloomberg Television's guests have had to say

about that question. Even after all of the recent layoffs that you've seen for many of the large tech companies, we still see tech, as you know, relatively bloated in terms of if you look at how much it's you know, employment counts have grown relative to its real sales growth over the past several years. Even after you adjust for the recent layoffs. For every big tech company that's having layoffs, there are many small organizations who are eager to gobble

those employees up. So I wouldn't say that there's a dearth right now. What we're seeing, however, is CEO is taking advantage of fear in the headlines. So I think that these layoffs put these companies in a position where it's more difficult for them to show better than expected sales and profits, because if they had better than expected sales and profits, why are they cutting head council significantly. You're at the place where layoffs are the most likely

catalyst to give FED confidence inflation. We'll get back to two percent, so I expect sort of towards q t Q three you'll see the margin improvements and bottom line improvements on earnings that resolve from the layoffs and then the cost cutting. But we're not going to see it just yet, so I think it'll trickle in and then in the coming months. So you've had the ECO data,

you've had the earnings. Let's get to the macro and the earning season at large with Alex tap Scott, Managing director over at nine point Partners, the Digital Asset Group over six billion dollars US and assets under management or eight billion Canadian dollars and Alex, it's quite the week to digest. I'm grateful to have you with me. I guess let's start on the jobs data, really hot print

here in the US for January. You know the logic here, I guess from the market's reaction is the FED will have to rethink about the timing of a policy pivot and then in the context of higher rates, discounting present value, future profits, tech, etcetera. Is this a think again moment or is this just a blip? Well, I guess we're back in the zone where good news is bad news. UM. I think that the market reaction was pretty predictable given the much harder than expected non farm perils. But as

you pointed out in your opening segment. You know, the market has been up five weeks in a row, and the NASDACK, which is obviously highly sensitive to interest rates, UM is set to close up or I said, I should say recently just closed up over three percent for the week. So I think we probably do for a

pullback after a pretty blistering hot period. And as I see it, I don't think the number today UM, as one isolated data point is enough to derail this risk on trade that we've seen to pick up the last a while. So you yourself personally do hold Apple, Amazon, Alphabet, the parent company of Google. I think you also hold

Microsoft as well. Is we reflect on the week of earnings, you know, one of the takeaways that that other guests have said is that essentially this is definitive proof megacat tech is not immune to what we see in the global economy. Was that your takeaway as well? Well? I don't. I think that's been obvious for the past few months. You know, I think going into two thousand and twenty three, investors had really been pricing in the worst case scenario.

For the start of this year. I think expectations were that inflation was going to keep running hot, and that was going to force the FED and other central banks to continue to jack up braids, and that we were going to be doing at some point for you know, some kind of economic um slow down, maybe even a major recession. So far, the data has not borne that out. Now. I wouldn't say that we're out of the woods yet, but I think that the worst case scenario is really

no longer the base case. And I think a soft landing went from something that was kind of a pipe dream for a lot of balls to something that's increasingly being priced into the market, and when that happens, I think that that's obviously going to cycle capital back into stocks.

I think a lot of managers started the year very underweight um, looking to wait and see how the FED reacted, and you get this foe mode getting the year as simple as it might sound, where they have to play catch up to make sure they don't miss their benchmarks. And I think we're starting to see that trade playing it too right. There's this idea of tough comps right or unfair comparisons between Q four two and Q four

twenty one. Apple was a good example of that in their commentary around the difficulties they had in the last three months two, but also the idea that it wasn't fair to compare with the year the period a year ago because of the different product release timings. You know, how good was Q four twenty one compared to what we saw in the most recent earnings period. Well, as you pointed out, every company is different, and an Apple's case, you know, the product cycle can weigh on earnings and

on revenue. But I think in general Q four two thousand twenty one, so a little over a year ago was kind of like the Goldilocks zone. You know, we had all this deferred consumer spending because people have been walked up during covid um. You had an economy that was still growing in a very fast flip, and the inflation concerns weren't quite as you know acute, I guess as they are today. And so you saw that transferred into consumer spending, you know, business spending on advertising, spending

on cloud and so forth. That translates into the earnings for these companies. So I would say that looking at you know, most investors were looking at this earnings prints from these different companies hoping to avoid the worst and to be clear, like tech earnings were mediocre, and I would say kind of a mixed bag. You know, Facebook beat on earnings and revenue but had exceptionally low expectations.

Apples you put it up mixed, mixed on both. But ultimately, you know, A, we're comparing it to a period that was you know, if not an lt lier, very difficult ump compared to what we saw last year. Uh and B. I think that really people are trying to look forward um to see what these companies are going to do, to try and write the ship and uh, yes, know, well how zeroed in? Then is this market on the

bottom line? When we talk about what we learned from earnings about three going forward, the answer seems to be not that much other than the zeroed in on cost. Yeah, well, in a zero interest rate environment, it's a grow at all costs kind of market, right, And that's why you saw you know, unprofitable tech companies trading at sky high valuations and and that was true also for big cap tech companies. And I think we're starting to migrate from

a top line market to a bottom line market. There's an increasing focus on costs, all the inputs that go into Uh, you know the financials for these companies, and as as you've pointed out, there's been some job cuts and some other trimming, and I think if you look at the earnings calls for these companies the past week and a half or so, that's something that they've really drilled down on, and I think investors are pricing that and they're thinking, Okay, well, if they can keep cutting

cost even if revenue is flat, then I'm going to see bigger earnings and I want to buy into that trip. All right, Alex Taps got managing director over at nine Point Partners Digital Asset Groups. So good to have you here with us. Tech is really doing quite terribly on fundamental so well. Tech companies are ripping on their stock prices. They're having an awful earning season. It's a pretty direct and our assessment from Credit Swiss is Jonathan Golob on

how text faring. Let's continue the conversation a mega week of megacap tech earnings. Just getting e commerce perspective. Rachel Typograph, CEO and founder of mick Mac, a global econ commerce enablement and analytics platform for multi channel brand. You heard what Jonathan Golob had to say, about how tech he's doing. In summary, not very well when you looked across Amazon on the e commerce side, and also as it extends

to what Alphabet had to say about core search. What was your takeaway from this week, Rachel, Listen, we all knew this was going to be a tough week, but we're talking about the three biggest players in advertising. We have Google, we have Meta, we have Amazon. They each play a fundamental role in the ecosystem, but times start changing. With Google, they've had the stronghold in search, but they also sit on this amazing asset YouTube, which is an

incredible place for brand awareness and engagement. You have Meta, largest player and Social. They've done a phenomenal job of building out full funnel ad solutions across Facebook and Meta. And now you have Amazon, the largest player in e com which is also another way of saying they're sitting on a treasure chest of purchase data waiting to be monetized.

And what's changed in the no I'm starting instruction, Rachel, I want to I want to zero in on that because this is what surprised me about this earnings report from Amazon. Last quarter, the upside surprise was advertising, and this quarter the downside surprise was the AWS didn't come in to save the day. But we didn't really even talk about advertising, and you're basically saying that this is some unlocked still locked up potential to the commerce giant. Absolutely,

AWS was an amazing way to offset margins. Advertising is an amazing way to offset margins in the losses of their traditional retail business. So Amazon's ad business grew in Q four It was now becoming a very very close player behind Meta. And the reason for this is because of the headwinds that Google and Meta have experienced changes in Apple's iOS fourteen cookie list Internet, they started to undo the way that direct response advertising fundamentally worked in

platter platforms like Meta and Google. As a result, advertisers want to be able to demonstrate the r o I of their marketing investment, and Amazon is sitting on all of this purchase data to be able to demonstrate to advertisers direct attribution. And so Amazon is really writing the tail winds that are in fact Google and Metas headwards. Let's zero and a Meta. That was the surprise of the week, probably you know, a the response Metas shares

jumping by the most in a decade, Thursday. But the other data point is Facebook at two billion daily users, up seventy million from a year ago. What is Meta done to make its platforms interesting again, because presumably the market reaction is the investors saying this bodes quite well

for advertising revenue going forward. It Yeah. So the way that people measure the efficacy of their advertising dollars is through this mythical model called media mixed modeling, and what it requires is that brands need full funnel marketing in order for the math equation to work. They need to have upper funnel media that's letting people know, hey, I exist in the world, mid funnel media that's encouraging them to buy, and then bottom of the funnel media that's

pushing them towards the path to purchase. Bottom of the funnel media think Amazon, think Walmart, think Instacart, all of retail media. It's typically expensive. Upper funnel media is more affordable. Meta remains to to be a really strong platform for upper funnel media. Mick mac We work across eight hundreds of the biggest brands in the world, and we actually

saw paid traffic within Meta increase by eight. We saw the client in Google by seven and what that demonstrates is that advertisers still seeing Meta as an upper funnel channel. And what's happening is that people are moving dollars out of Google because primarily that's search, into Amazon because Amazon is the new search. Hey, Rachel inaggregate, what did we learn about the health of the advertising market for social media companies this week? We're learning that people are continuing

to spend. Is it the gold rush of no? But are billions of dollars still moving into platforms like Meta and Pinterest and TikTok. Absolutely, and TikTok continues to be a platform that everyone should be watching. We saw massive amounts of dollars again shift away from platforms like YouTube into TikTok. In two, Rachel, I finally want to go to Twitter. Since Twitter has gone private, there's less fund

to be had. That's not true at all. You can just go to Elon Musk Twitter, which we did today, and Elon Musk is talking about sharing revenues from ads with the creators. And I'm interesting your take on this about Twitter's pivot to a created driven platform. Do you think he can do that? Listen, Ellen is trying everything right now to keep dollars within the platform. At MICMAC, we've essentially seen a hundred decline in paid media traffic

and Twitter since he took ownership. So with creators, it's actually an interesting play YouTube did a very similar move where they share the ad revenue with creators. As a result, many many influencers have built six figure businesses on YouTube and it's encourage them to move away from platforms like Instagram into YouTube for content creation. So I do think there's an opportunity for Twitter to engage with creators in this way. But it's not novel. It's a proven playbook

that works in environments like YouTube. Alright, Rachel Typograph, founder and CEO of MCMAC, thank you so much for joining us this Friday. Now, Rivian is developing an electric bike that's potentially expanding the ev maker's product lineup. This is something I was reporting earlier today for Bloomberg. CEO R J. Scarings disclosed the e bike effort Friday at a company wide meeting all hands. That's according to my sources, a small group of engineers is already working on this project.

Are J. Scarings told his staff the company owns patterns for electric bicycle components and designs now coming up. Derivatives traders sent back to manual processing thanks to a cyber attack earlier this week. We have the details on that coming up next. This is Bloomberg. A cyber attack earlier this week sent derivatives trading back to the nighties. Bear with us joining us for more. Bloomberg's Katherine Doctor who had that scoop, explained the basics of this story to

meet Catherine. So just this week, Ion Trading, it's a software firm that is the key to many markets across the globe, but this specific software was for derivatives trading, and earlier it started in Europe. Some of the systems were down and it came out that there was a cyber attack, and ultimately that meant that derivatives trading was up ended across the world. And it's really been a

disruption and this target which is ongoing. The systems are still down across the globe and only just now either coming back online or moving elsewhere are UM. There's been a ripple effect and there has also been UM many developments even even currently UM we're we're calling sources because it has come come out on the UM cyber attack. The the actual attacking website. UM that this uh, this software is now not on their target lift, so we

might actually see some developments and some resolutions soon. Um. This is a story, Catherine, of technology gone wrong, just terrific repulsing from you and the team. My understanding is that we've had responses from the US Treasury Department and also some banks. What are they saying, Yes, so today, UM, we put out some reporting on the banks that are either directly impacted, and what they are saying is that they are managing their trade, some of them manually, so

they're going back to UH. We do refer to the nineteen eighties when this world of derivatives trading was more manual and less automated, less dependent on computers and electronic trading um than it is today. So they are trying to resolve this issue. They are manually reporting so that they can abide by their regulatory guidance, and the regulators are are giving some flexibility as well. They've extended some deadlines and some of their reporting requirements that are due

at the end of this week have been extended. It feels like this is just the start of this one. Bloomberg's Katherine Dougherty, Thank you very much. Welcome back to

Bloomberg Technology. I'm Ed Ludlow in San Francisco. Now, Google has invested almost four million in the AI startup and Thropic, which is testing a rival to open a eyes chat GPS that according to a Bloomberg source, the deal gives Google a stake in Anthropic, but it doesn't require Anthropic to spend any of the funds buying cloud services from Google. It's been a long week of AI headlines and I want to break them all down now with Saga Shah, head of Responsible AI at fract Or, a global AI

provider to fortune companies across finance, healthcare, and retail. Let's start with that and Google, Sago, you you operate in the world of AI. I know that you're following the headlines and technological developments closely. You know the executives over Alphabet and Google were ready for the questions when you're going to pull back the curtain. But what did you, as an industry participant, actually learned this week about Google's

latest in artificial intelligence? Shan, I think this is about anything big phonol of us don't affect as we can understand. Definitely you know doc after Google's learnings report, for sure, but that also indicates a lot about the macro about environment, not just about chagpt right, the digital business going down, not not growing as fast as it was last two years like that sort of sort of a micro trend.

But the most interesting part has been UH agupty and this investment and Tropic as well as the internal arms of Google all coming together, which was a great thing to see. Uh. For example, the internal Lambda which is the language models UM. Right. Uh. They are now using that UM for the apprentice pat internally to test. They've asked all their employees to start using it and sending feedback. Right,

that's an interesting move. The other deep mind UM which also has you know the almost the best day algorithm at two thousands ten right, That is a London based company that they acquired, and it's sort of become the you know, part of Google. They have also in UM. I asked keep my indortional get involved in this. Uh. In this charge is UH And of course the Tropic, as everybody's noticing, it's just another one of those investments, which is a significant investment, still less than Microsoft some

more d billion darted investment and open Aye. So I feel Google is of course trying to match up the speed as well as using all H A I methods to catch up. And it's possible it may you wouldn't go, you know, better than anything else out there, considering the advances it has already made. Um in the world of the other conversation has kind of emerged over the course of the week is who's ahead and whose best position

to commercialize artificial intelligence? The stock market is also paying attention, right we we We look at some interesting names, C three AI, big Bear AI, even buzz feed whose stock has been a w over the place because of their relay s and ship with open ai for the use of chat GPT. We're sharing just some of the jumps on Friday, big Bear up for what was your conclusion this week about who is leading in the field of

our official intelligence? Is it Microsoft? Is it Google? That's a tough question, frankly, and I would I would reflect upon it in a different way. I think the race is much longer than this year, uh, Frankly. Chart deputy generative AI, which is a larger umbrella in with synthetic data, language models, all of these other types of algorithms are also being used. Right. Uh, it is still a little far away from being where let's say Google searches for today.

So it's I think it's out in the open where the competition will land. And let's say Google use it's all its data, all its algorithms, all its investments towards that. And then Microsoft is doing the same. If it integrates open air with let's say Microsoft teams and all of it's A locations, will the search consumer search move from Google to Amazon product searches or within the Microsoft perhaps, or maybe Google will develop something much better. That's a

sort of a debate we keep having every day. Um, but I think it's a little away from the stock market. Like the stock market reactions are, I feel quite stark. So this, uh, I would expect less stark behavior going forward, because you will start seeing the improvements in the right the way I currently it's only Uh, it's very infinite.

It still cannot be trusted to do many things. It can do basic stuff like a replication of natural language and you know copies media um from you know, NBAS contracts, etcetera. And so that those jobs may get you know, repurposed to something more meaningful. Um. For some people, you know, the upscaling, maybe requirement so and so, some of those things will happen, but it is still not going to be completely disrupt TiO as we are seeing, at least for the next few months. We're still is far away.

So side it will give me then a taste of the here and now, the reality, right and what fractals doing. You know, we started this segment by saying, you are providing AI right now to fourtune companies. What does that

look like? What does that even mean? Yeah? So practical is uh, we are a set off you know, five thousand people to believe we're providing text services in AI to almost one fifty plus Fortune Friday companies across all healthcare you know, financial services, insurance, consumer goods, retail, and so on. And we for us, every strategic decision, tactical decision, operational decision that corporate person or consumer is making right, how can we make that better using AI? And when?

When when I say AI, it's so much broader term to us. It is AI plus cloud engineering, which enables a just human centered design, behavioral sciences which enable user adoption. So all of those things come together to help companies

make better decisions. We also have products which help behavioral sciences to solve complex problems, like one of our company's final my works very closely to reduce human trafficking, to reduce HIV in Africa in Initia, you know, and so on, and other such products which help in let's say, training analytics with There is one of those companies which we invested in which helps create the data science professional pool in the world. It's the largest training platform and so on.

So that is what we're trying to do with cultivating a community of data scientists who can work, you know, in this new environment because a lot of our skilling is required in this environment and a lot of business problems can be solved using AI, but there is always a human also required. So how we believe is people without AI will offer comparental people with the it is was this human Sagasha just a really deep read on what's happening in this space right now, a head of

responsible AI of fractal Thank you. Now coming up, Calls are growing for banning TikTok in the US. Could it actually happen though we'll discuss this is Bloomberg. Could TikTok be banned in the US, just over two years after the Donald Trump administration tried to force the Chinese parent company Bike Dance to sell it's US business. There are new legislative efforts to ban the social media app out right. Two bills have been proposed, one in the House, one

in the Senate. But it's a tricky issue. Policymakers are walking a really interesting line. Of course, they want to keep American either status safe and make sure that there's no influence from foreign governments on users in the US, but they also don't want to upset a really important and increasingly powerful voter base, being young Americans who are loving and finding a lot of delight from the TikTok app.

That's reflected in the mood in d C. Daniel Flatley, a reporter for Bloomberg News, was sitting in his car a block away from the Capitol when we spoke. You won't find very many lawmakers on Capitol Hill who are unabashed supporters of TikTok. They say that they have some concerns. My patients just run thin. If they've got a solution set, they ought to lay it out. And if they don't, I think you're going to see if they ever get to a solution. That may be moot because individual states

or Congress may act. It's not totally clear or whether they have the appetite to ban it completely, because that would be taking things up pretty far and could potentially be challenged in court. So we'll see how all that works out. The app is already banned on all devices issued by the federal government. A number of states have followed suit, as have publicly funded universities in those states. Some have advocated using the prospect of an outright ban

as a bargaining chip for negotiations with China over tech. Ultimately, if Congress fails to make any progress, it will fall to President Joe Biden to find a way to rein in the Chinese tech giant that was Bloomberg's Alex Webb, Alex Brinka, and Daniel Flatley. Now, let's talk a little bit more about this, bringing gen c VCS found and CEO Megan Loist for her take. Megan, you know VC founders, You know gen Z tech TikTok is an app you used by okay, broad demographic, but gen Z as well.

The other side of this debate is the use of base and then saying we don't get it, we don't get the risks, we don't get why you're taking this away from us. Where do you sell on that? I think it's interesting, right. I think of there's two two sort of users you have to think about. There's the people who consume TikTok content like me, and there's also the creators who their livelihoods are dependent on TikTok and

their followings. So for users who are spending fifteen and twenty hours a week on TikTok and it's their number one sport of entertainment, uh, they're obviously concerned that's going to be taken away. But for creators where they're actually monetizing on TikTok, and seventy plus percent of creators their number one sorts of income is actually through brand deals. You take away their main platform, you take away a

lot of people's livelihoods. And so I think people are up in arms, especially gen Zers who make up sixty plus percent of TikTok's users, um, simply because you're taking away either our main source of entertain men or our actual source of income. And so and again, the number one career path for gen z eears today, we want to be YouTubers, bloggers, content readers, and so this is going to continue to be a theme for a lot

of people. And TikTok is our platform of choice. So and on the founder side as well, you'd see a lot of consumer founders scaling their businesses on TikTok. It's a great path for distribution and building an authentic organic presence versually doing a lot of paid marketing. And so you're actually taking away a lot of opportunity from founders as well. Right colloquially, gen Z is anyone born in the late nineties through I think until that's pretty wide

group of people that we're talking about. I'm interested in gen Z fee cs the kind of community that you founded and started because it is an ecosystem of both founders and vcs. And the other debate that we that we want to have you on to talk about is how those people will fare in three. Are colleagues at Bloomberg Opinion Allison shre you Go write this column this week titled gen Z startups will face a tough sell

in three. In other words, they're entering an environment where they're trying to raise money, get businesses off the ground. But the world's changed. What are the conversations you're having right now with the community that you founded. Yeah, I think the funding environment is difficult for younger founders and older founders. The average age of a founder is about

thirty five years old. But and I understand the conversation with investors where it's like, Okay, maybe there's less risk in backing experience founders who have done at once before. But on the flip side of that coin, uh, there's a generational opportunity in backing gen Z founders who are building problems from themselves. And you see this with every generation.

It's not something that's necessarily unique with gen zum but it's really important because when you look at the world today and make the problems that we're facing and experiencing, uh, gen Z founders have naturally they experienced the pain point

firsthand and they can build around that problem. Even for me as a gen Z investor and formally as investor at the Heppo General Atlantic Large funds, I tended to back first time founders gen Z founders because I infinitely understood their take as an investor, and so what I'm seeing broadly is it really encouraging founders to go back to the fundamentals and so thinking about their unique value prop and why they're building the problem, what makes them

the best person to build that business. Really just thinking about founder market fit, which is true for gen Z founders, millennial founders, gen X founders, any founders, and so I think, you know, broadly, I think there's still a massive opportunity to be backing gen Z founders, young people who see problems authentically from the gen Z perspective. Megan, when you look at opportunities yourself as an investor, I know you back a lot of gen Z founders. What are thematically

the areas you're most excited about? Twenty three? We just had thirty seconds. Yeah, So we actually do a poll every year. This year, the top three trends that gen Z investors are tracting our climate, tech, AI and m L which is a very through part hapic right now, and then fintech as well, though those are three areas that we're tracking, And even just this week, I've been pitched on a bunch of generative AI companies and so a lot of younger founders are building an AI. Probably

gen Z VCS founder and CEO Megan Lays. So great to have you on the show. Thank you so much for joining us. When you think of indoor cycling at home, you probably think of Peloton. But there's a new kid on the block, Swift, which some cyclists use when they can't ride outside, and which takes you. Okay, bear with me inside the metaverse Quick Takes. Tim Stenovic took a ride with the company's co CEO, Eric Men. There you are. Now, I gotta catch you and I'm cheasing you. Now, where's

the sprit? That's what I'm waiting for. Yeah, you left me in the dust there. When it comes to indoor cycling, pretty much everybody has heard of Peloton, but Swift is what a lot of the serious cyclists use when they're just not able to ride outside. Here's how it works. A smart trainer connects to apps and it can adjust to make it harder, like if you're going up a hill. One of those apps is Swift. It helps you exercise, but it's also a game. You're peddling your bike in

the real world, but you have this avatar. I wanted to learn more about Swift, and I thought there was no better way to do that than to go for a ride with the company's CEO. I'm in New York City, you're in Long Beach right now. We're three thousand miles away, but we're we're actually riding together on screen. Is this the metaverse to you? Absolutely, it's a net averse. It's a virtual space where people come together. There, they engage, they build communities. If you look at the clubs that

we have, we have well over twenty clubs. It's really interesting. The power of the community is I think unique to with how do you develop courses? What's the process there? We have a fantastic creative team and what we've learned that over the years, These magical places like Latopia and now mccourie Islands are the kind of maps that our community would like to spend more of their time on. And that's partly because we can do crazy things right.

We can create tunnels under the water in the seabed, we can create roads above Manhattan. There are other people who can try to replicate and be a more of a simulator. We want to be our own thing, and I think we can enhance what the real world is and and just making much more interesting to do things that you otherwise can't do. We see a lot of companies raising prices right now because of inflation. Am I correct in thinking that you guys have not raised prices.

We did raise prices five years ago, but we have not done so since then. But let's be honest, the cost of running our business has gotten more expensive. It's been really tough to supply. Chain issues are real. We are trying to run a business that is profitable at some point. It's not. At the moment. We're really focused on trying to onboard as many customers as possible and trying to make the pricing accessible. You've raised over half a billion dollars. Your investors want to see a return.

What's the exit for them? I think we all have aspirations of taking this company public. There's no doubt about it. Our investors have invested in this business because they think we will be the category leader. You know, we believe we can do that through through product. Take us into the decision to launch hand cycles and tell me about the reception and what you've heard. Back in September, we finally launched the hand cycle. It develops everyone, but those

who are using are really those who are disabled. This is really about, you know, leaving up to our values, which is about diversity and inclusivilty. We have some responsibility and making sure we make those investments. What's the breakdown those with mail versus female men women? So there's a lot of work to be done there. And then this is why the sponsorship of the Woman's sort of Fronts is so important for us. Take me through the r

all I on that. How does that translate into more people, you know, paying fifteen bucks a months with if you're going to sponsor a bike race, the sponsor the Towtter Fronts. So when the opportunity came up for us to really help support and relaunch the Woman's sort of Fronts, we jumped at it. We'll have to find a sprint to do. That was last I feel so bad, I'm throwing my colleague much so, why towel You used to work at a bank? Yes, now you ride likes all day. I

started my career on Wall Street many years ago. One of the inspirations for startings with was to recreate my community, my experience, the competition to training that I had in Central Park. What does with look like three or five years from now? I think there will be a convergence. It's our job to make the interplay between indoor and outdoor as seamless as possible, so that what's not lost in that interplay is a social connection and the ability

to share experiences. I think that is a big unlock for how we can really contribute to the cycling industry. I've never done anything like this before in terms of interviews. You know, I've not done this before either, But I'm told that there are some tech leaders who on a monthly basis get on Swift and have their catch up. I think they find it amusing to be able to do some exercise at the same time. All right, Eric, I'm gonna catch you. Oh who you are? Okay, that's

enough for me. That's not work out rutual high five. That was great, Thanks very thanks him. See it again. Yeah, let's do it again. I would love to quick takes, Tim Semic There some breaking news on the Bloomberg terminal. Elon Musk has defeated the Tesla shareholder suit on the sweets about taking Tesla private. The juries found that Musk did not mislead the public about the Tesla take private deal. We'll have more in that in the coming days. That

does it for this edition of Bloomberg Technology. Don't forget check out our podcast I Heeart, Apple, Spotify, wherever you get your podcasts. What a week. This is Bloomberg Pick who give a big too big