War In Ukraine's Affect On Technology Companies

How mapping technology has become increasingly complicated as Russia rains down on Ukraine and relief efforts to help millions of ukraining refugees and residents who have stayed behind. We're gonna talk with flex Sport about the challenging logistics of providing humanitarian a and how the war is royally global supply chains.

Russia's government is moving closer to seizing and even nationalizing foreign owned companies that are leaving the market over the invasion of Ukraine, while planning measures to coax others in disdaying. Creton Harrison with us now to discuss. So Creton, what what companies is Russia trying to take control of, or even temporary control of, and how would the government actually pull this off? Yeah, they're not they're not revealing a lot of their plan here about what kinds of things

they would want to take over. You can make some guesses based on there's there's even some public comments from from officials in Russia that have been walked out by other agencies about some of the aircraft that's in in Russia right now that's owned by lessers and whether they might see some of that. So that's just one example. There's a Russian agency who is that don't know, we're not going to say necessarily do that. That person spoke out of turn. So this is a very confusing time.

But with what the action of the government would allow them to do. Is it says that if there's a company where uh, you know, you have you have Russian members of a board and maybe that's for the local operating unit or something like that, that that might be a company that that that could be uh taken over, uh at least on temporary basis. So this is this is very very fuzzy and can be interpreted a lot

of different ways. It probably will be interpreted a lot of different ways depending on what happens in the in the weeks to come. If you're a company the this operating in Russia was until very recently operating in Russia. I guarantee you looking at this very seriously and trying

to figure out what it means for you. But all the companies we've we've tried to reach out about this, including uh Larry Culp, the CEO of a General Electric who was on Bloomberg Television earlier today, are so far saying, uh, they don't see any immediate concern of any assets seizure. So this is this is something that's going to play out for a while at this stage. And of course we just reported on Goldman already moving employees out of

the country. What can companies do to avoid this? Faith Yeah, I mean, as we've seen all week, you know, companies have been very careful in their language about what they're doing when they stop doing business and rushing. You see the words suspended or paused quite a bit. In many cases. McDonald's was a very prominent example of this. Companies are continuing to pay employees at the local level. You can think of that as one potential strategy here to avoid

getting nationalized. They're having assets c s because you can argue that you're still in the country. You're still paying Russian employees. You're still there as a business entity. You're just not actually, you know, doing business at the moment, but you plan to eventually, so that that maybe one tack the companies are trying to take to protect their

long term interests here. Um. Ultimately, though, you know, if you have money in in the Russian economy that you can use to pay workers, at some point, you've got to figure out how to replenish that that could run out at some point depending on how long, uh, this situation takes to unfold. Uh, you know, you you could have a situation where companies that were trying to hang on by paying employees might have to might have to make another decision. All right, question again, what does this

mean for everyday people in Russia? Bloombergs, Creighton Harrison, thank you for that context. Meantime, everyone feeling the pain at the pump, especially drivers for Uber and Left as the war in Ukraine drives gas prices in the US to an all time high. Bloombergs Jackie Dablos as a story, Jackie, in California, I saw prices as high as seven dollars,

I mean, unprecedented. How are drivers dealing with this, well, this is truly taking um a huge cut out of their take home pay, and the impact has really been indiscriminate. We saw drivers that are driving fuel efficient cars a prius even that are seeing their gas bill go from ten percent to six of their net earnings. This is just completely unprecedented and it's really making them reevaluate. Is this side hustle even worth it? And what are the

companies doing about it? Are they doing enough? What drivers tell me is that it's not enough. You know, they have partnerships with this app, for example, called get Upside, and it's effectively a rewards app that gives you cash back for your fuel purchases. But drivers tell me that this is really a laughable solution and it it's not sustainable. As you said, gas prices are upwards of seven dollars. You know. Once driver spoke with me and he said

he was paying upwards of five dollars. He's losing money every ride he takes. He does not have the option to quit the app, but it does beg the question should companies be on the hook for helping them more, especially because as independent contractors, they're the ones footing the

bill for every single expense. Now, the President himself has said, Look, the American people are going to have to be prepared for a certain amount of sacrifice and a certain amount of pain if the United States is going to take this kind of a stand against Russia. In talking to drivers, do they understand do they sympathize with with the Ukrainian people and what the United States is trying to do here? There definitely is a huge tension there. You know, they

completely sympathize. However, they've been putting up with high gas prices and the impacts of inflation for months. It's been acknowledged by you know, even uber CEO. It's not the first time that they've raised the alarm about the impact of gas prices. And this just seems to be a real breaking point for so many And so while they I think they understand the broader plight of the Ukrainian people and the complex nature of the conflict, um, I think at this point they have enough options out there

within the gig economy from door dash in to cart lift. Uh, you know, there are other places to go um even outside the gig economy as well. So it's something they're considering, And what does that mean for consumers and riders, are prices going to go up? You know, we've already seen high fares for a while due to the driver's shortage and gas prices. What Uber had to say, for example, uh, is that for every increase from today's average gas price levels,

because consumers will only see a one percent increase in fares. Now, that may sound small, but when you take into account how quickly demand is coming back and supply is not shifting as quickly to meet that demand, we're going to see elevated fares for at least a few more months until they're able to sort through that supply issue. And yes, gas prices will eventually start to trickle down to how

much we're paying um in fares overall as well. All right, Jackie Dabolos who covers Uber and lift for I thank Jackie for that update. Coming up, Apple and Google maps in the crosshairs of the war on Ukraine. How space, satellite and big tech companies are navigating geo political termoil. That's next, This is Blueberg. Soon after Russia launched its invasion of Ukraine, Google and Apple disabled key features of their map services. They're including real time vehicle and foot

traffic data. This out of concern that live insights into what streets or shops were busy could be exploited by Russian forces to harm Ukrainian citizens. In fact, the nuances of mapping has become significantly more of a political hot potato in just the last two weeks. I want to talk about that in more. Chad Anderson, founder and managing partner of Space Capital, in early stage venture capital from

that invests exclusively in space based technologies and chat. Many of these space based technologies are delivering information to these big tech giants that enabled them to change these digital maps in real time. What do you make of the this new if you will, digital battlefield? Certainly true. The Russian invasion of Ukraine has really spotlighted the strategic importance of space infrastructure for the US and are allied satellite constellations.

Spaces is clearly a target and among the critical domains to protect as this as this UM conflict unfolds. You know with the Google Maps UM and and and Apple Maps scenario, they this is some of the first information that we got about UM. The Russian invasion UM came about because of the traffic information from Google Maps. So um, you know, these companies have have decided to turn off

that functionality. They're still getting turned by turn directions, but they've turned off the traffic and foot traffic functionality because it can alert the other side as to um where Ukrainians are. Um and and as well it goes both ways. But they've decided to turn it off to protect those those citizens in the Kuran. Well and at what point does that potentially undermine Ukrainian effort to resist the invasion or flee to safety? I mean, have we outsourced too

much power, too big tech. Well, they've turned it off. From a global perspective, UM, I'm not privy to who they've turned it on and off for, so UM, I imagine that companies have um this type of functionality and capability. So let's talk about the space companies that are getting dragged into this mess. These satellite technology companies that you know have been floating around owned relatively quiet outside of the ear It's atmosphere, but suddenly find themselves in the

middle of this geopolitical mess. Yeah. I mean, this crisis has really highlighted the growing capabilities of commercial satellite companies. UH, companies like max Are and Planet and Black Sky are providing observations of what's happening on the ground, so we're getting really ground truth and this is vital information for anyone trying to keep up UM from a humanitarian perspective

or monitoring the situation UM military, civilian. This is giving us, you know, without the spin, we're able to see with our own eyes what's actually happening on the ground. And I think that the amount of data that's available today is really unprecedented. This open source information is is really important for everyone involved, including the reporters that are on the ground UM looking to tie the pieces of the

story together. We also saw Elon Musk's starlink very publicly to the aid of the Ukrainian people, and it just sort of drives a point home about how powerful and impactful these technologies can be in terms of just changing the shape of of modern communication. You know what kind of risks do these companies face and how are they

navigating these challenges internally? Certainly, I mean SpaceX turn Starling on their satellite communications constellation made it available in the Ukraine UM upon request, and it's really showcasing you know what a capability like this can provide in terms of redundancy and capability. I mean they're providing vital communications services UM where in a previous era, UM the invading country could just attack the fiber lines and and or attack

in some other way and shut off the Internet. So we really have resilient communications and can activity here, which is also essential in terms of getting vital fact truth, you know, like from the source information. And we talked about a lot about this in our our latest thesis paper, this dot com Playbook. The nature of satellite communications is

going through a fundamental shift. I mean it's going from being a niche comms product making up about less than a percent of global broadband Internet to being a Internet backbone in space where we could see twenty times the capacity come online in the next five years at latency that rivals terrestrial and there's not much that Russia can do about it. From a practical perspective. Um Elon Muska

said that they can shake their fist at the sky. UM. You know, Russia's trying to jam those signals now, but UM SpaceX is able to overcome that with a simple software update, So you know. Cybersecurity is also a key a key area here for companies and and military as well.

It's really a fascint nating domain given that a lot of these companies are often fielding requests from governments to draw the maps a certain way than sometimes showing different maps in different countries, and you wonder how they can, you know, overcome some of the transparency or lack of transparency issues there. Chat Anderson Foundery, managing partner of Space Capital. Thank you for helping us work through that time. Now

for our crypto report. With bitcoin dropping back below forts in eracing nearly all gains from the optimism surrounding President Biden's executive order on crypto, Bitcoin and other cryptocurrencies are now falling, with stocks amid high inflation data continued ga political turmoil. As we continue to watch this situation in Ukraine, I want to get all get more on this and the future of their new crypto fund. Michelle Buy a

partner at Sequoia Capital, which recently launched such a new fund. Michelle, thank you so much for joining us. Of course, Sequoia is not new to crypto investing, but this is the first time you've launched a sector specific fund. Why and why now? Yes, thank you so much for having the Emily,

it's great to be here. We've been investing in crypto for several years, over five years now, and in getting feedback from our founders about the best products to serve them, realize that we served equity based crypto company is very well with our seed, venture and growth products all the way from seed to I p O, but that we could do more for token based crypto companies. And so this new fund is allowing us to take a more active management role with our liquid tokens and will complement

our broader efforts. And we thought this was a great time because it was, you know, given driven by feedback from our founders, but also because cryptos at such an inflection point in terms of both users and talent entering the space. We think we're just at the beginning of an s curve that will see pick up dramatically over

the next decade. Now. Sekoia has invested in bitcoin and etherium itself, for example, but also in companies like f t X. When it comes to the token side, water tokens and blockchains that you find particularly interesting, it's a great question. I think we watch the developer momentum on each layer one blockchain and several of the layer two's very closely. That's an important signal for us. And so bitcoin has a particular type of community and a particular

use case. You see something's being built out with a lightning network. Uh that one of the companies we are privileged to partner with Square now Block is very involved with as well as then on Ethereum tremendous applications development

and decentralized finance and f t S web applications. And then we've also seen a lot of developer uptick on Salana and some newer chains like Avalanche near Cosmos, and so we watch all of that very closely, and that's how we determine where we wanna, you know, double down or spend our time in terms of those different ecosystems. Now, last year of Sequoia's new investments in as I understand at the US and Europe or in crypto, that's a really big part of the pie for a long time

more traditional tech venture capital firm. Do you see that portion of the pie rising into Is this going to become an even bigger part of Sequoia's portfolio? I personally do as someone who spends all my time in crypto. I think there are just tremendously talented founders entering the space and more and more engineers, developers, designers who are excited about building in all aspects of crypto, and so

I think that will only increase over time. We have Sequoia have a thesis that that crypto is going to impact both the financial sector as well as broader Internet services, so that's consumer and enterprise, and so we expect crypto to eventually be uh in all of those sectors. And I would I would expect that everyone at Sequoia is eventually a crypto investor. You've talked about how this is gonna be very different from traditional venture capital investing. Tell

us a little bit more about the fund structure. How are your investments in in crypto and the cryptocurrency industry? Is going to be different than what we've seen Tekoia do before. Yes, So what's interesting about investing in more traditional equity based startups is that you effectively get a piece of paper that says you own a portion of a company, and you don't really do much with that piece of paper. Over the next several years, you help the company grow, of course, but the piece of paper

is sort of irrelevant. In crypto, it's quite different in that if you are getting a token, you can actually use that token to the benefit of the company or the project. And so what we can do now more flexibly is be able to, for instance, steak our tokens to help secure a proof of state network. We could provide liquidity to protocols uh and just do a lot more activity with our token then you would with an equity. So obviously we've seen a ton of activity in the

crypto space. We've seen the power of crypto to be used to support war efforts. In the Ukraine, for example, there's concerned about crypto being used by Russians who should be facing sanctions to circumvent those sanctions. What's your take on how the war on Ukraine is impacting the crypto space and where this is headed. Yeah, well, first, I mean, we are all heartbroken by what we're watching. It's certainly

HiT's very close to home. Sequoia has Ukrainians who have Ukrainian family, we have companies who have you know, employees in Ukraine, and of course many users, and so it's something that we watch every day and our heart goes out to all of them, and we do all that we can. We're really proud of the way that our crypto and other companies have stepped up to support all

the efforts. So I've worked very closely with Sam and the team at f t X. They've gone above and beyond to both donate to you, creating and users on the platform, as well as comply with all sanctions, which they are very capable of doing. It's often a misnomer that, you know, cryptocompanies can't They can certainly comply with sanctions and and they and all the companies we work with will um and so we are. And then there are

other companies. Airbnb has been, you know, offering housing and so folks are doing everything that they can to support Ukraine and comply with all all of the efforts for sanctions. And do you look at cryptocurrency as a safe haven or a safer asset than a traditional equity in this moment? I mean, we've we saw some optimism around at least the way bitcoin was trading. We've seen that be wiped away. We've seen a lot of volatility. You know, how should

we make sense of cryptocurrency as an asset? How is Tequoia making sense of cryptocurrency as an asset. I think we're in this interesting moment where all of crypto gets painted by many investors with a broad brush, when as the world more comes to understand crypto will see that

assets are quite different. And so the volatility that you see with bitcoin or what you're buying the bitcoin is very different than what you're buying with an application token or any other type of you know, crypto asset, whether it's an n f T, etcetera. And so I think there's you can certainly look at the volatility and you can say, you know, is bitcoin trading more like inequity? Is a trading more like a commodity? How should it trade?

But the truth is that we're just very early in the world understanding bitcoin and broader cryptocurrencies, and I think the way those assets trade over time will change a lot. All Right, Michelle buy a partner at Sequoia Capital, Thank you fascinating. We'll be watching the move Sequoia makes in this space. Well, Stripe is announcing they're launching payment support for crypto businesses, including exchange whallet's and n f T marketplaces.

They'll also be partnering with f t X and f t X c US to improve pipes know your customer protocols. We had a chat about crypto Astrike president John Collison a few months back. Take a listen to what he had to say. One thing we're really hung up on is of commerce today is cross border. That's it like. It feels like it should be much higher, especially on the Internet where it's so easy to have a cross border interactions, and so crypto is one very exciting, uh

direction for for for trying to solve that. Coming up, we're going to talk about Web three, mixed reality and the metaverse. That is next. This is Bloomer. Welcome back to Bloomberg Technology and Emily Changing in San Francisco. Get ready for the launch of Magically to The company has raised million dollars and funding shifted its focus to enterprise customers. I want to talk more about that journey with Peggy Johnson, the CEO of Magically. Peggy, thank you so much for

joining us. So we're looking at the latest iteration and improvements on mL one. What are some key changes you're making with the latest version of the technology. Thanks for having me back, Emily and um the latest version is focused on enterprise. In FACK, it's purpose built for enterprise and what we heard that folks in the areas of healthcare, defense and manufacturing needed we're a bigger field of use, so we've doubled that field of view. That's the area

that you can place the digital content within. We've also improved the optics from one end to the other. There's the there's better text ledgeability, uh, the images crisper and clearer. Um. So we've we've done a lot to focus on the improvements that were needed to meet the specific use cases in those three areas. So what are the market opportunity here?

Who do you see using this? Well? I d C says the market opportunity and enterprise a r S thirty nine billion dollars by but the real near term opportunity is in those three areas. So, for instance, in healthcare, we are making the device able to take into the operating room and doctors can now wear it during surgery because they can still see the patient in front of them, but they can hang a variety of screens around them

to check the patient's vitals. We've also changed the orientation of the field of view to be more up and down, so they don't have as much body movement. They can just glance up, see the vitals, and look back down at the patient. In defense, we have a variety of use cases, largely around training and command and control scenarios.

And then in manufacturing frontline workers gives them the ability, um really to be hands free and continue to do their job, but to have digital content put in front of their eyes that can help them do their job better. Meta's Oculus headset is obviously the market leader for VR right now, though still the market is small. You have Microsoft's hollow lens in a R. Where do you see Magic leaps headset competing? And how well I see us as the leader in the fully immersive a R sector.

So some of the other devices in a R might be UM just meeting a narrow enterprise use case. With all of the new improvements in our device, we can meet a much broader set of use cases. And so you can think of us sort of as the higher end, the where you need more accurate placement of that digital content in your physical world. And those are the requirements of the three markets were focused on. The device looks like a blend of a R and VR. You know

why of thing, Mixed reality is the way forward. I've spoken to some folks lately who think it's all about a R and that you know, most consumers and employees if if you're using this through your business don't want to be stuck in a virtual world, you're right. And I think the real promise of the metaverse is in augmented reality. We want to have our heads back up again and seeing our physical world and just having that

content intelligently placed into that world. And so we are focused on a R that we did introduce an interesting new innovation called dimming, where you can take the light out of what you're seeing and you can have almost like an a super focus on something. So doctors can take the light out of a bright operating room and just see the knee in front of them that they're operating on. And we can do that globally, or we can do it and just segments in front of the screen.

Super complex to do because a R is all about introducing light in front of your eyes and we're actually removing it. So do you think the metaverse is overhyped? Well, I think we're at the beginning of a technology and I think oftentimes new technologies do get a bit of a hype psychle We are staying very grounded and what the technology is capable of doing today. Over time, I think you'll see the further expansion of into consumer a r but the device is going to have to be smaller, lighter,

more of a glasses format. We've made steps toward that with Magic Leap to. It's about uh less weight and about half the volume of Magical Leap one, but it's going to be another or two for consumers. Okay. Peggy Johnson, CEO of Magically, thanks you for stopping by. With the Russian invasion of Ukraine escalating, so is the flood of refugees of neighboring countries, most of them women and children. Bloom Brooks Town McKenzie is on the ground at the

Poland Ukraine border. We are on the Polish Ukrainian border, a place called Medica, where the number of refugees continues to rise. The United Nations saying one point to million people have crossed over from Ukraine into Poland just in the last three weeks alone. We are our three weeks into this war and the needs of these people very acute. Indeed, in temperatures that are well below zero, freezing temperatures and difficult conditions. At the top level, we are getting and

hearing of more funding the United States. The Houses are representatives. They're signing off on about thirteen and a half billion dollars worth of funding. Part of that will go towards the humanitarian crisis on the ground here. The i m F pushing through emergency funding at one point four billion, and the Europeans as well Ukraine and officials saying they expect to see the first transs EU money coming through

as early as next week. But this is a reminder the numbers and the human toll of the need for spending for people whose lives now are very much uncertain and the prospects very much unknown for what is largely a population of women, children and the elderly on the Polish Ukrainian border. For Bloomberg, I'm Tom Mackenzie. Thank you Tom. And with Ukraine's taking refuge in Poland as along with Moldova, Romania and other neighboring countries, there's all ads logistical challenges

on top of the devastating humanitarian crisis. The logistics company flex Sport is lending its expertise to relief efforts and charting cargo and passenger planes to and from Ukraine. I want to bring in flex Sport CEO Ryan Peterson for more. So Ryan talked to us a little bit more about what exactly flex Sport is doing here and the logistical challenges that you're navigating. Yeah, hey, thanks for having me

on as a really terrible situation. So um flexport dot Org is our impact arms and what we've done is partner with the United Unitations logistics clusters organizing sort of coordinating the overall refugee sites to to provide relief goods, medical care, shelter and and other things that are needed

to help these people. So they're on the ground and we're partnering then with Unice, SEFF and a painful of other really established aid organizations to help fulfill almost the wish list of these refugee sites of what are the products they actually need? Uh, and then also tapping into corporates and companies that we shipped for to get products

flowing from wherever they are in the world. A lot of it's coming from the US because that's where Flexport is headquartered, but much cheaper if we can find things in Europe and bring them by truck across domestic trucking within within the European Union. So we've been bringing these goods to Poland, Romania, Slovakia. So far Um it's you know, kind of a drop in the pocket, but we're getting started.

We've raised from over fifteen million dollars from donors to help us pay for all these flights and get them you know, and all the transportation to get their goods flowing. What's been the hardest part of getting aid to the place is where it's needed most. Historically, it's a coordination

problem as much as anything. So over the last few decades, over six of all the goods that are donated or delivered to humanitarian disaster sites natural you know that natural disaster or conflicts like this, over sixty the goods end up in the landfill eventually, uh, sort of wrong products, wrong goods, sent to the wrong place at the wrong time, nobody there to receive the cargo. So it's a it's a complex coordination problem. This is something that Flexiports uniquely

good at. So we we started this in seen Um following the Syrian Civil War and during the midst of the Syrian Civil war to support refugees in Turkey and in Jordan's um and working backwards from those sites, from those refugee camps of exactly what do they need? What are the great people on the ground doing distribution and needs assessments, say, here are the products we need and

we're ready, raise our hand, ready to receive them. And then partner with great aid agencies and nonprofits and for profits around the world who have those products are can coordinate delivery and make sure the goods don't go to waste, and to make sure there's not chaos, like if a truckload of stuff derives and no one knows what's in there and no one's expecting it, it can actually slow

things down at these sites. And one of the big problems is too much stuff is donated that's not the right stuff at the right place, at the right time. So that's what we're trying to solve for now. Russia's invasion of Ukraine has already disrupted the global supply chain. Add to that the sanctions the UH impact on Russian oil.

What shocks are you seeing in the supply chain and what are the reverberations you're expecting and we've been through, you know, now a couple of years of supply chain shocks and are we do have a very resilient economy of resilient logistics infrastructure, but you sort of keep pushing the line and testing it and it's sort of it's resilient until it's not. So. Um. Big things right now are we've lost the ability as an aviation air cargo industry can't fly over Russia anymore, got to go around.

That means extra stops, delays, um pretty and or fuel costs. Of course, Russia is one of the biggest providers of energy to the world, flitting fuel for aviation and that so fuel prices are going to go through the roof and rased prices both for air and ocean freight in all forms of trade. Basic trade and freight runs on runs on this energy. Um. But the thing that has me worried the most is actually the loss of grain. And Russia is the number one exporter of grain in

the world. Ukraine is number five. And if if this grain doesn't reach the market, and it looks like Ukraine's probably not going to plant grain this season, that's that's gonna drive huge problems for any food importing nation as well as fertilizer. Bellar versus a major export or fertilizer, you're gonna lose that. So African countries, many developing nations, Central Asia, Middle East depend on these inputs and on this food for their population. It can get really scary

if that doesn't arrive. Surely that's going to impact supply and prices. Meala Kunis who was born in Ukraine, and Ashton Kutcher, I know they're directing portions of a go fund me they set up to support flex port all with Airbnb. F t X as CEO has been involved. I'm curious how much he's donated and how much crypto donations in general have contributed to your overall pie. Yeah, so we're really pleased to have partner great corporate partners.

F t X has made a big, meaningful donation over four thousand dollars from from the company so far, and then they're setting up to promote uh the ability for all their users to provide donations via crypto to the go fund me that Mila and Ashton set up for

the cause. I don't have the access for how much that's come in, but it's just getting started take a little while to wire these things together and such a short notice to get crypto set up with all the regulations that go into that, but that's happening right now, so really proud of that. And also Shopify, who's a major flexible investor, made a big, meaningful contribution donation to the cause as well, So I really really really excited to work with such great people. All right, Well, we're

going to continue to monitor efforts. Thanks Ryan for taking the time to explain that to us and for the work that you're doing there to get those supplies that are desperately needed to the people who need the most. Flex Port CEO Ryan Peterson, thank you. And that does it for this edition of Bloomberg Technology. I'm Emily Chang in San Francisco. That's all for today. We'll see you back here tomorrow.