From Bahard where Innovation, Money and power Collie in Silicon Valley, NBN. This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
I'm Caroline Heide at Bloomberg's World headquarters in New York, and I.
Med Lovelow in San Francisco. This is Bloomberg Technology.
Coming up from Teszla to Netflix. We're going to wrap up the week of tech earnings and of course push ahead to the big names reporting ahead much more to come.
Plus, we'll sit down with the head of KKR's Tech Growth Fund to discuss where his firms these opportunities in technology after they just raised three billion dollars.
And we're going to wrap up our coverage from New York Tech Week and hear from two venture capitalists where they're choosing to invest. Let's dig into what President Biden himself was saying last and a direct appeal to the American people just work funding for Israel and indeed Ukraine's war efforts.
Take a listen, am awesome food and represent different threats, but they share this in common. They both want to completely annihilate in neighboring democracy, completely annihilated tonight.
They're innocent people.
All over the world, who hope because of us, who believe in a better life because of us, who are desperate not to be forgotten by.
Us, and are waiting for us.
But time is over.
The essence, we want to discuss this further with Nick Waddams and over in Washington. Nick, it is a moment where, of course President Biden is appealing for more funds to be allocated at a time where.
There is no Speaker of the House.
But bring us up to speed with really the concerns we have about an escalating conflict across the Middle East.
Right So that's the big question on everybody's mind right now. We're expecting that Israel could launch a ground invasion into the Gaza Strip really at any time time, and the US is saying they want to show their.
Full support for Israel.
While also wanting to avert a humanitarian crisis or a further humanitarian crisis that could further exacerbate tensions in the Arab world and potentially draw in Hesblah fighters and maybe even Iran.
So you saw the President ask for another.
About well more than one hundred billion dollars in funding last night. That money would go primarily to Ukraine, but there would be about fourteen billion dollars for Israel to supply it with munitions and other weaponry.
Aim mostly at missile defense.
So the concern there is that Israel, Israel's iron done system would be overwhelmed in the event that Hezbollah really launches a full scale missile attack. So a complicated and tricky tightrope for the president to walk to both pledge his support for Israel but hope to avoid that urgeoning humanitarian crisis.
Nick lead our national security coverage here at Bloomberg and this show is Bloomberg Technology.
He talks about.
Iron Dome in real time broadly across the Middle East region. Now there is literally conflict. The United States has bases in several countries where they are dealing with missile attacks and thinking about the response. They are engaged in sort of active military operation. Could you just explain to our audience what is happening across the region on Friday as we speak, but also heading into the weekend.
Well, you know, the primary issue obviously is that impending Israeli ground invasion, but you did have this situation yesterday where the US reported three incidents where drones they noticed what They called it an uptick in hostile drone activity, so drone attacks on US forces stationed in Iraq and
also in Syria. There were minor injuries reported. But while the Pentagon was trying to say, you know, these are isolated incidents, what you see there is just a more hostility toward US forces in the region, and the concern there would be that the US itself would be pulled into this war. The administration has been flowing military assets to the region. They knocked down three cruise missiles from
Houthy rebels in Yemen. But you are seeing this greater US involvement, and that has raised concerns that the US could possibly be pulled into this. The administration is saying, no, we would not put boots on the ground, but they have been sending more fighter jets, obviously aircraft carriers. So there really is that the concern that is the US looks to deter Iran and other actors.
That itself itself could be drawn into the conflict.
Be nice, Nate Wadhams, who leads our national security coverage out of DC, Thank you very much. I want to stay in the world of gey politics. Karen, talk about those new US rules which have aimed at restricting cutting edge technology going to China, and they've really hit She is one name this week which is in Nvidia. You see it there on a five day basis down nine percent, the worst two day decline in the last two sessions in more than a year.
The US curbs.
Threaten a fifth of Nvidia's revenue, which comes from China, particularly in the data center context Like this is a stock trading at its lowest level in a round a month, on track for its worst weekly decline since the weekending September second, it's a timing issue, right, because it's also stock goes up more than one hundred and eighty percent year to date.
Yeah, and been the name in.
AI And that's the context, right, how far this stock has run and times before we've seen pullbacks, worries about the fact that the euphori are around this name Particulian relationship to artificial intelligence has just gone too far too fast? Is it really a one trillion dollar opportunity here in terms of its own market capitalization?
Each time we've seen.
The pullbacks end up with a rally further and you have ended up being burned if you sold off and gonnas nose. We can ask Kathy Wood about that one when she has dan played this name since the start of the year. But it does feel like this has been a turning point in the last five days. Ed, what's so interesting? As you pointed out time and time.
Again, this was not new news to a large extent.
In fact, our own in had been reporting well month or so ago that it is likely that these particular chips designed for China would end up being swamped by what is a geopolitical context.
This week's trading has been a surprise because in June Ian did report that the US would expand curbs to include a eight hundred and h eight hundred the China to chips specifically, and it happened, and video is supply constrained, right, they can just ship the GPUs elsewhere for the market's concerned, all right?
Coming up.
Shares of Tesla could be facing one of its worst weeks after posting disappointed their.
Kind of results.
More in that next carry that stock down fifteen percent on the week.
This has been bow Technology.
Okay.
Shares of Tesla falling again today after missing three q sales and profit estimates. While CEO E got mass dialed back on growth expectations, the stockdown as much as fifteen percent, more than fifteen percent so far this week, and as we've said on this program already today, that puts Test on track for its worst week of the year on a weekly performance basis. Let's bring Boomberg Sean Okaine out of Texas, who was all over these earnings, and let's
just start with the basics. Margins, worse than expected, missed on EPs, missed on sales.
Give us the numbers. Well, I mean, we see.
An adjusted automotive gross margin when I'm removing all the regulatory credits of sixteen point three percent, and that is a figure that everybody's going to focus on all year ever since these cuts begin. You know how much of that profit was Tesla going to eat into to keep demand where they wanted it to be.
Now, we knew that they.
Shut down the factories for some upgrades this quarter, We knew that there was going to be some pullback in some of those numbers, but you know, it all lined
up a little bit worse than we were expecting. And honestly, for me, the thing that I keep coming back to is their operating margin is now down to just over seven percent, and in January of this year, Zach Kirkhorn, who was at the time still CFO, said that that's actually the number they focus on the most internally as a management team, and they wanted to push in front of the street and say, hey, you should focus on
this too. Less about the gross margins, which are going to be a little bit volatile, and that operating margin is now lower than it has been in the last two years and way off it's high of about twenty nine percent, So we definitely some harsh numbers. The real question now is like, sort of how much can they pick that up in the following quarter where they need to push about four hundred and seventy five thousand cars out to hit their one point eight million target for
the year, And that's definitely something they can do. It's not an enormous jump or compared to the last couple quarters, but we'll see where it goes.
It's interesting that Adam jonas Cole is one of the most bullish analysts out there in terms of price target. He's been saying, look, this is the read a cross for the rest of the ev market, and boy, if Tesla's hurting, then looking everyone else. He does think this is just short term pain.
Longer term, the focus is still there. They will be able to boost the overall volumes.
But are people thinking this is more of a car company than a tech company at the moment?
Sure?
I mean, I think it's evaluation still shows that people are expecting a little bit more, you know, car company plus, I.
Guess is a way you could look at it.
And one of the big questions I think moving forward in this quarter in twenty twenty four is we heard a lot of talk the other night about cost cutting. It really sounds like Tesla is doing a little bit less sort of boasting about cost cutting as they have in the past and coming up with innovative ways to lower the costs on their side. Now it sounds like they're really kind of like racing the price cuts on
the consumer side with these cost cuts internally. So can they cut more cost out of the car as fast or at least, you know, nearly as fast as they're cutting the price on the front men? And you know, I think it seems like they're probably getting to a point where there's no return. They've cut so much cost out of these cars until this next generation platform comes out that has to be a lot cheaper to produce.
So I think we're really ending or coming coming to a head there with this generation of cars built on this platform that's been around for many years.
Seana Kain, great breakdown.
We thank you, and indeed looking at the tumult when it comes to share prices of Tesla.
Let's look at another Eno Musk venture for a moment.
X social media platform known as Twitter previously is launching two subscription plans, with the most expensive tier eliminating ads entirely.
Now.
This comes as the platform begins it's testing of a one dollar per year subscription fee for new accounts in an effort to cut out spam and those body accounts that Elon Musk was always so frustrated about ed.
So many options.
Let's get some other earnings out there. This week, Netflix, the streaming service posting, is best quarter to subscriber growth in years. When it reported earnings the other night, the company credited the strong programming slate, but also it's crackdown
on password sharing joining us now. Alicia Reese of Webbush, this was one of those things where we talk about all the other stuff, right, advertising content, strategy, and then the subscribing numbers hit and we go back to the only thing we care about subscribing numbers.
What was the main takeaway for you?
Yeah, the subscriber number is really benefited strongly from the password sharing crackdown. You have the families who chose to add their extra members. That's eight dollars a month in the US and similar elsewhere, you know, and that's in grandma kids going away to college, Auntie's boyfriend's girlfriends, everyone who they want to add onto that account and didn't want to kick off.
That's a nice boost for our poo.
And then all those people who got kicked off are joining for their own accounts and often on the ad tire but you know, and that's pulling our pood down a little bit.
But that's really boosted subscriber numbers.
And I think the most important part of the ad tier by itself is that it's reducing churn. It's giving people who would otherwise churn out for a period of time because there's no content that they really want to see and pay for, they can just lower their monthly fees and go on the ad.
Tier for a period of time or end up staying there.
Meanwhile, like we're just talking with Tesla and they're trying to calibrate the costs of the business and the fact that they have pulled back on content and they're releasing things more specifically, Is that the right tactic to be going for at the moment?
Alicia, Yeah, I think so. Well, there are two things that are really benefiting Netflix right now.
Before the Hollywood labor strikes, they had already reduced content costs, all of the streamers had. They're just reducing volume, and Netflix was guilty of, you know, basically buying everything they possibly could and just seeing what's stuck on the wall.
So now they're a lot more focused.
On quality of content instead of volume of content, because the volume really just it makes the user it just takes too long to find something that they really want to see.
And having those quality shows there, that's what really is. It's good for retention.
So they're focused on quality, and they're also focused far more on efficiency of content, using that global content that can cross regions.
Squid Game was the first major.
One that they saw the how well that worked, and now with the strikes, they're looking at more licensed content that they haven't They haven't used this strategy in a while. They've been doing exclusive content and original content and now recently they licensed suits and.
This is an old show and it just you know, it did really well.
And they're working with Warner Brothers Discovery on licensing content that was that is on Max and this is no longer exclusive, but it's doing well on their program. Warner Brothers needs the money. Netflix has the viewership. It benefits everyone. It's a win win situation and I think that's really going to help Netflix to continually expand and it's pretty cash flow.
Yeah.
Well, Netflix remains on your best ideas list as they seem to be pushing into the future as you'd like to see. Alicia Reise of Webbush, great to have you on the show.
We really appreciate it.
Let's speak about crypto for a moment, and some of the optimism around bitcoin once again being shown. Is it managed to just crack through that thirty.
Thousand dollars level once more.
This again is about the hopes that it might be able to see a spot bitcoin ETF come to the market, if not one too, but the plethora that have currently been put forward now we understand at the moment that we are seeing this broader rally. We're looking towards GPDC in particular Grayscales own trust. Remember, they could be a DC court walling on that ETF application as soon as today.
The SEC of course, had asked a federal jodge to dismiss its case also against some Ripple executives at the moment, and there seems to be this moon music shift that we will see Grayscale prevail in the end versus the SEC. See backing down versus Ripple, and ultimately there's all kind of hinting that we will see ETS being adopted at sometime soon, at least before January.
Let's have some more bitcoin chat, Caroline, because our next guest is so confident about the growth of crypto. He's predicting that bitcoin will not only breach it's sixty nine thousand dollars high at some point next year, but go to or beyond one hundred thousand dollars per token. Here in the studio, Sonny saying, co founder and CEO of a new company, Beluga, which has just raised four million dollars, which we will get to.
Why so confident? What are you basing this call on? Yeah?
No great to have. You know, we have you on again.
Bitcoin's become very resilient, right and you're everything seeing it today go up.
Well, the markets are going down.
And next year we have what we're I would say is a perfect storm happening. You have three things happening. The bitcoin ETF, which we're all talking about. The SEC's is going to have to went on this one. They'll delay as much as passed well by.
Q one Q two.
Next year you'll have an ETF live.
Then you're gonna have interest rates hopefully coming down next year too. And then third, which I think is the most important one to hear, the bitcoin having happening in April, and normally after that four to six months after you see the bitcoin price really run. So the last all time high was sixty nine thousand dollars, which happened after the bitcoin having four years ago. I think we take that out and actually reach one hundred thousand.
Next year and of next year.
Larry Fink, who is the CEO of black Rock you probably know, outlined this idea based specifically on the events of the last week, that bitcoin is behaving as a haven asset, based on everything that's happening in the world right now, you believe.
That that's yes and no. So that's happened.
It's working out this way for the last couple of weeks. But again like a year ago and during the pandemic, it didn't work out that way.
It treated just like a risk stock, and so.
That narrative has proven true sometimes and not the other times.
I think the other three events that.
I laid out for next year are more importantly as what's going to drive the price up next year.
I mean still, I think the entire market looks at Larry Fink Hope and Mouth, but.
They about shift he seems.
To have had around bitcoin, and ultimately it seems to be he's saying customer driven. I'm interested in what you're doing about customer driven to your new enterprise, Beluga. You've been raising funds I think four million seat capital coming in because ultimately we talk about institutional adoption, we talk about retail though having pulled back, how are people using crypto other than a risk us it.
Yeah, that's the main thing.
So we raise a four million dollar round, which we raised in March during the doldrums of the crypto winter, but we really start a Bologa to help people not only onboard the crypto, but do more with their crypto. And you know, it's estimated that there's four hundred million people around the world that own crypto, which is amazing, but only like ten to twenty million them.
Are actually doing it with their crypto.
We want to help people not just buy and hold anymore, but actually stake when play, earn, pay and use crypto. There's all these new crypto launching every day, whether it be web three games, crypto, credit cards and use staking products, lending.
Products, and no one knows how to use them.
They're not feeling confident to want to try to understand these PROCs at all. And that's where the job Belugas helped get these people that already own crypto to start doing more with their crypto.
Okay, why you doing that and not sort of legacy traditional finance.
And also the name Beluga yes.
Great, so first to name Beluga. Everyone in crypto wants to be a whale. Belugas are some of the smartest whales out there, so we want you to help.
Become a smart crypto whale.
Why I'm doing this, I've been at bit pay for nine almost nine years since twenty fourteen, and I was always on a mission to help people do more with their crypto. And I even though I was in crypto for nine years when state when DeFi came out a couple years ago, I can understand how DeFi worked. I had to google how do I defy? I end up
in Reddit and then got scared away. And there's a lot of people that are in crypto that you know, are afraid to admit they don't actually understand how it has worked, and we're trying to help them do more with their crypto.
Sunny thing the name. We thank you for explaining and indeed what you're all about. Co founder and Seeo Beluga, Welcome back to Bluemok Technology.
I'm Caroline had in New York and I.
Met Lovelow in San Francisco, and we're all still here in New York picking ourselves up after a pretty.
Social week of engagements.
Because it's been officially tech week here in the city, it's coming.
To a close.
Over the last few days, we've spoken with a range of founders of investors to break down what makes NYC a unique and thriving technology hub. One of those entrepreneurs and venture capitalist is. Ben Leahir spoke to us just about his experience operating and investing in New York City.
Take a Lissen.
I feel like every week is New York Tech Week. We are in really an explosive period of growth. And you know, when we started the firm, New York was this sort of very tight little tech ecosystem there. I felt like I knew every founder building something. And it's been this steady drumbeat for over a decade now and it does not feel like it's stopping.
And every day there's another sort.
Of West Coast VC or you know VC from other market that's setting up shop and trying to hire.
In the market.
And I think that this is an amazing place to build a company, and I don't think anyone really questions that anymore.
It's interesting that that's happening in a time in the current economic environment where people are worried about, well, the growth capabilities of certain companies and the access to capital. Why do you think it's been able to grow bring over the sequoia Xandresen's.
In a moment where we're in kind of in a downturn.
Yeah, I think that part of it is personal decisions that founders make. This is a great place to live. It's an incredibly high quality of life. There's amazing diversity, There's so many interesting people. Every industry has some foothold here, and so you know, it starts with talent. And I also think New York has generally had a pretty aggressive posture in trying to make this hospitable place for companies to come in.
Bild.
This is also the home of so many large industries, whether it's healthcare or financial services. You know, this is a place where media, commerce, sort of the powers that be are here, and so it makes sense to build in this market. And now with more access to capital here, I think it makes it an even better place for people to come and build.
Ben It's interesting because you mentioned all those areas of well, big institutions, big companies that already and ultimately industries that have grown here, and I'm the thriving ecosystem around them.
I mean, I think of some of the companies you've backed, Oscar Health of course, aligning itself.
With the healthcare industry that's here in New York. We think of Rezi, a consumer company that you've backed, and we think of some of the other areas of the consumer will we Parker and they're like, what is thriving here at the moment? Is it the time to be putting money behind consumer companies? Given the consumers in a wirring place? Is it more of a time for fintech to grow? Do you think it's all of the above.
I don't think that there is a sort of industry or area that is specifically I mean, certainly, for US an area of focus that were very early stage investors
were focused on talent primarily. There is certainly some softness with the consumer, although I think that the reason that consumer companies are more challenging to build these days is less macroeconomic consumer issues and actually more just the fact that so many consumer companies got built with a sort of similar playbook, a lot of the same sort of advertising strategy. Is a huge over reliance on a few large social media platforms that have been flooded with brands.
That were flooded with VC dollars.
It just grew too quickly, and so I think that there's some there's been a big cleanup and sort of adjustment in what's happened in the sort of direct consumer commerce space.
These things go in cycles.
I'm a you know, in my heart, I love consumer. We've done very well with consumer over the years. And while we're doing less these days than we have in some past cycles, I don't feel like that's a permanent change. I feel like that's a cyclical one, and you know, we continue to want to find great consumer companies.
Dual companies have to be AI companies at the moment.
At the moment, if you're an AI company, it's certainly helpful in terms of how a bunch of the mid and late stage vcs and frankly a lot of early stage vcs will view you. AI is both the most exciting, you know, change in technology that we've seen in the last decade and also a HiPE cycle. You know, deals are overvalued, there's going to be a bunch of value destruction. There's also going to be some extremely important companies that
get built right now. And I think, like with anything, it's a place to play, but it's also a place to show restraint, and you need to make sure that whatever your business model is as a fund you don't via late the principles of what your model is. When there's a space that people get excited about, depending on the.
Hype cycle, the Hippo managing partner, been there there, let's continue the technic conversation. I mean, please to welcome and Doug, founding partner at Female Founders.
Fund, which was born almost a decade ago.
And now finally we see all the celebration of the tech ecosystem at a time that is sort of uncomfortable because we are seeing companies having to think far more about profitability than revenue growth. How are you seeing that outcome juxtaposed with the zuberants around VC's coming here.
Sure, So, first of all, thanks so much for having me. I would say, you know, we see this both within our own portfolio, but also in the broader ecosystem. You know, I think there was a recent step that came out that there are over a thousand privately held unicorns that you know, I think in the next year will run out of cash, and so across the board, I think there's this push and need to really rethink your business
model because there's not a lot of growth capital out there. Unfortunately, the IPO markets you know, have not opened up I think the way that everyone thought they would. And so whether you're a late stage company or you know, seed early stage company. I think the way that investors are looking at businesses has shifted fundamentally.
And so therefore you're giving an awful lot of advice to your founders. I'm sure in this moment, what are the areas that do manage to meet from this so called zombie moment? Is it the time that fintech canotform? Is it a moment that if you've got AI adjacent, you have to suddenly really integrate.
That within your business model.
So I think it's imperative, you know, for all founders to really think about AI and how they can really use it to create efficiency within their companies. I think for us, you know areas that we have been excited about and invested in in the past year. So one
would be healthcare. We were early investors in Naven and that company has gone on to perform incredibly well, particularly in the last two years, and as a result of that, have really doubled down, you know, whether it's in fertility, maternity, serviacy, menopause. I think there's a lot of opportunity across the board.
And then the other sector is climate tech. So seventy percent of the deals we've done this year have actually been in climate tech, ranging from a waste management software solution to you know, the first hydrogen powered private plane.
What's interesting is both those things where you reference women's health, you're also of course born of in the idea that there is so much underserved talent within female founders that you can allocate to over and above others. There's also these two things are sort of becoming politicized in some way, at least allocation of funds two minority founders has And in d climate tech, how have you found that New York has been able to sort of isolate itself from that a little bit?
Have you ever had to waive it from your overall thesis?
No, I mean I think what's been incredible to see, you know, you mentioned in nextureill be ten years when you think about the quality and quantity of deal flow and how that's expanded, it's been incredible to see, you know, that not only are there more companies, but the founders you know are now some of them are second time founders,
some of them have already had exits. And so I think that that truly speaks to a broader opportunity that I think others have have recognized, which is really exciting.
I know it's ed in San Francisco. It's so good to have you on this show. And I just want to say, you know, fantastic coverage by Caroline this week for New York Tech Week. We've kind of had the founder the VC perspective and also the academic perspective. And the bit that there's kind of left to talk about is what it's like to run a VC firm in New York City. You know, vcs make money from the
carried interest on the fund and the management fees. There's all these great names that have moved to New York to do that. What's it been like trying to hire these people the associate to get more partners in.
Yeah, I mean, I think there's definitely been an appreciation for vcs, you know, for example that work in the valley. And I think Ben mentioned this earlier. The quality of life in New York, the diverse city of industries, diversity of people, I think has really attracted some great talent.
When it comes to talent, ultimately, of the founders that you find and the institutions that are backing them at the moment, what are you thinking about m and A as route to exit when you're thinking about helping these talented individuals who are potentially looking at a runway that's about to run out. Do you think there will be a lot more consolidation within some of the companies that you have rather than having to I an IPO exit that at the moment keeps and be on again and off again.
Yeah.
No, I mean, I think in reality, most exits do tend to be M and A. And I think that twenty twenty four will be a big year for M and A because I think a lot of companies will have to seriously consider the fact that, you know, if the IPO markets don't open, that's a real kind of
outcome for them to consider. I think for us, you know, as we look at these new newer areas, for example, within climate and healthcare, where we've been investing for some time, there are a lot of acquirers and it's a fairly inquisitive industry as well, and so that's definitely part of our consideration set.
And remind me the founders you find they mean a New York.
Based do you like to look agnostically across the US?
Yeah, so we are about sixty five percent New York based, So we are betting big on New York. We think that, you know, there'll be a lot of really exciting momentum in the years to come. And you know, majority of our exits have actually all been New York based companies want.
To watch and adogl and of course with those exit comes funds to reinvest within those ecosystems. And as they say, second time founders, we thank her for joining us from the female Founder's fund.
Ed ovch Yeah, terrific conversation alert for everyone watching the program. Right now, the final domino has fallen. Clavo is the last of the recent IPOs to now fall below its IPO price. We're trading right now at twenty eight dollars and ninety two cents a share. The IPO price was thirty. Think about think about Birke and Stock. The last holdout's gone.
Caroline, I'm sorry to end Friday.
I want to down want it down ed.
You talk talked to Anna about the short lived IPO window, and in that moment this really happened.
Coming up on the.
Show, KKR has just closed its third tech fund at nearly three billion dollars. We're going to talk about how the firm plans to invest that big money globally.
This is Bloomberg Technology.
KKR announcing it's closed its third tech growth fund that nearly three billion dollars is going to focus on investing in leading growth technology companies across North America, Europe and Israel. KKR's head of Tech Growth Dave Walsh, joins us now to discuss Dave, welcome to Bloomberg Technology. I guess give us then the description of the companies that you're looking to target, maybe more mature companies which indus trees you're going to go off to sure Ed.
Yeah, and thank you again for having me on.
Really appreciate it.
Right. We think it's a really exciting time to continue our growth strategy, which we started almost a decade ago now. And the types of businesses that we're looking for, as you mentioned, you know, are ones that are a little bit later, we like to say, businesses that have actually established their product market fit.
And ones that are really scaling.
We're an organization like KKR that has a really broad set of global resources can help bring those to there and work collaboratively with the company to really take them off and from good global enterprises to really strong global enterprises, and it's across various areas, Internet, software, fintech.
We probably have done the most in software.
We continue to have that be a major focus of what we do. And then we have some very specific.
Areas underneath those those broad those broad categories where we spend our time.
We're talking in billions of dollars. Right, you've third fund, You've done growth, you've done tech. I really trust me who the LPs are because how KKW does is you take some money off the balance sheet KKR, but you also take outside money. And so who are those LPs who kind of wanted to do long term business with you and get into tech.
Yeah, no, you're absolutely right.
We've had a long history of supporting our funds with our own capital, and we did it here too with over ten percent of the fund. But we do obviously have a number of outside LPs, and and they're really they range from you know, large pensions and endowments through to high network platforms and individuals as well as you know, directly into the high network individuals themselves. And and the nice thing for us, it's a very broad mix, and it's a set of LPs that have been with us
over the course of the three funds. So we have a lot of re up in the funds, you know, given our performance to day, and I think people buy, you know, really believing in the philosophy of how we're looking to do growth equity.
So it's been a nice a nice mix of LP.
I think people that really see this opportunity that's ahead of us. You know, it's obviously been a bit of a challenge time and technology and growth equity the last couple of years. But I think a bit maybe you know, equing with a new said and Ben right before me, feels like it's a very big, long runway of new, great companies that have been funded over the last few years that will be maturing into our sort of strike zone.
And I think a lot of our industries you saw that, Dave.
I ask a sensitive question because it's a sensitive time and of course there is exposure when you're looking at, particularly investing in security companies, cyber companies that may well be based in Israel at the moment. How have you been navigating that with founders, How have you been thinking about future investment opportunities and the worry about the ecosystem.
Yeah, no, thank you, Caroline, definitely sensitive question, and let me just first and foremost you know, hearts go out to the you know, just you know, the humanitarian trategy that's going on there, for.
Sure, it's just heartbreaking of us.
We've had right now two businesses, one that it's actually headquartered in Israel, business called art List and now that has a substantial presence there at CEMPRIS and just you know, as we sit today, we're just in constant contact with the business to understand really what the implications are of what is going on over there, how it's impacting them as a business and their employees, and cannibly just trying to support them the best way we possibly can to continue to navigate as.
Things continue to unfold in the area.
More broadly, we have seen and believed that Israel has been a great place for technology innovation for a very long time, and I don't think there's any reason to believe that it won't be for a long time in the future. And so for us, you know, we will just continue to spend time there when we can, as things get back to a place when we can travel there and continue to build relationships because we do think in the long run technology will continue to be innovated in Israel and be.
A place that we want to spend time.
Thanks so much for answering that, Dave. I'm interested in the follow up.
We just had a great conversation with Arnauld Jougal, who runs Females Founder's.
Fund here in New York, and she.
Was referencing a statistic that basically a thousand unicorns are out there, so worth more than a billion.
And about to run out of money.
You come with this really eye opening amount of money to be invested in growth opportunities while everyone else is kind of worried about the growth trajectory. How do you see this current environment that we're in.
Yeah, no, it's a great call out. And beyond the thousand uniforms, there are a lot of other startups that were funded from twenty seventeen to twenty one who are growing up in a very nice way and maybe you haven't reached quote unicorn status or are still great businesses. So this is why we think it's a tremendous opportunity to have this capital.
Now.
We think the next couple of years there are going to be you know, many companies that start getting built into the next generation of big technology leaders. And so the way that we're thinking about it is just trying to be just and around the key attributes that we're
looking for in business. I already mentioned things like product market fit, but really strong management teams and great alignment with the management teams and boards as to their aspirations of growing the business usually globally where KKR can help.
And so for us, it's going to be a lot about focusing our energy on piecing through those businesses that frankly probably didn't quite cut the grade that were funded either Unicorn status or otherwise, and honing in on those businesses that really need all those attributes that I talked about that we can partner with for five, six, seven years in the future to turn them into really large enterprises.
They welsh great to have some time with you.
A new campaign to reverse the negative narrative surrounding San Francisco and a more companies has started.
It starts right here. Campaign has launched by.
A group of local business leaders and billionaires Blue Best California, Bererier Chief and Breslau joins us now to break it down, not you, the idea that tech billionaire CEOs try to boost the imagicicity.
What is striking to you about this campaign?
I think first of all, that it's deemed necessary that for the first time, perhaps in recent history, San Francisco has to convince itself and the world that it's actually a cool place to live and do business.
I mean, we know that there are peaks and troughs, particularly when it comes to tech.
But look, E Seth was born in the gold Rush. Why is this time different?
Why are they having to lure in and remind people of ultimately what's always sold itself.
Well, a few reasons.
One is the city has the highest commercial vacancy rate in the United States, so about thirty percent of downtown buildings are currently vacant, a very slow return to office, a sentanyl epidemic in the streets, record numbers of unhoused people, and I think also the social media effect. In previous boons and busts, San Francisco really did not have to contend with the amplification of its woes. And I think the city, you know, it's basically become a.
Character and a political drama.
It's a shorthand for democratic rule, and everybody loves to pound on San Francisco and its problems.
Very very quick. Who are the names the individuals behind this.
Well, Chris Chris Larsen from Ripple Labs, Don Fisher, Larry Bear of the Giants, and several other funders.
So they put together about.
Four million dollars.
And this is a campaign that's going to run for years, and it's starting now in part because the world will be coming to San Francisco in November for APEX.
Well in a few weeks.
We'll see how the world responds. Comen Wrestling great to have some time in the Bluemg's California burero chief all.
Over that at campaign.
Meanwhile, that does it for this edition of Bluemg Technology.
And yeah, just a reminder and a thank you to those that listen to the podcast Apple, Spotify, Iheartmloomberg and of course we're on YouTube from SF in New York.
This is Bloomberg.