From Marhart. We're Innovation of Money and Power Collie in Silicon Vallet NBN. This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
I'm Ed Lovelow here in San Francisco. Caroline hides off today. This is Blueberg Technology coming up on the program and Elon must bid to make X and Everything app. The company's changing its policies to expand data collection while offering an array of new features. Will break down exactly what's
changed overnight for the social media company. Plus full earnings coverage Ahead will break down results from Salesforce, CrowdStrike, and Octa, where CEO Tom McKinnon will join us for an exclusive conversation, and the race for the first Bitcoin etf Who's going to win? We're going to discuss with one firm buying for that title. Bit Wise CEO Hougan joins us to weigh in. Right to our top story and back to X planning to collect biometric data from users.
So how are they getting it and just how or they use it?
Let's break it all down with Bloomberg's ashe accounts who reported on the story over night.
Let's start with the new policy.
What is it that you noticed X is doing differently in terms of which data is being collected.
Well, if you look at their postily added in this section about biometric data. Now, in actual policily, they don't go into what that means. But from what we've seen other companies do, we know that it means things like fingerprints or iris scans or facial images. And so they, based on your consent, will start collecting that data if you allow them to.
There's also i think jobs data, right, jobs data and education as well. So you and I had the same question straight away, which was how do they collect this biometric data? So I asked X and this is what they told us, mister director, if we can bring up their statement to us on the screen, basically two ways you have the option to issue them a government issued ID and take a self as sort of a two stage verification. What do you make of the process that they outlined.
You know, it sort of fits in line with what Musk has said, right. One of the things he talked about when he changed the whole verification process was like, there's too many bots and spam and fake accounts, and so if you think about it being able to upload your government ID and then a picture is a much more robust verification process because up until now all they really did was ask people to have a verified phone number and then a display photo, which you know, you can.
Sort of game that system a bit. So it falls in line.
With that, and what they're saying to us in this statement is that, you know, impersonation is still an issue on the platform. There are a couple of Ed Ludlow's floating around that are not me. They've since been taken down, but they think that it will deal with that.
Wasn't the only piece of news.
Musk kind of followed up afterwards to say there will be an offer of video and audio calling, but without having to submit a cell phone number.
What was the new stuff there?
It's part of this whole idea of the everything app right. He's been very vocal about we want more video, more audio, like we want people to come to X and do everything, and so this seems like a play on that and not having to use a phone number. You just get on it and you can sort of chat with people. We'll see what it looks like, but it falls in line with sort of his broader vision to make that everything up all right.
Bloomberg's Asha counts dealing with what was some pretty late news last night, but it's had a big response. So let's keep the conversation going with Jennifer greig Or, Syracuse University Associate Professor of Communications. Jennifer in the first instance, the specific data sets, X is asking for your reaction.
To that, well special thanks to Asia and everybody, you know, reading the fine print and highlighting the things that are coming and being added, because that tells you something, right. And so sure there's the biometrics piece. I'm sure he's clarified now that it's for you know, validating that they are who they say they are for these authenticated accounts, right.
But you know, I think the fact that it's jobs, that it's education, your job and your education tell you something, right, They tell you maybe your income, how they can influence you. But it's a demographic that provides you know, targeted marketing, I would say, and that's one reason they're capturing that maybe why that's a new thing.
X talks about the impact this will have encountering impersonators on the platform. I myself have had impersonation accounts of me pop up on the platform several times. In recent months, do you give them the benefit of the doubt that that will be an effective way of countering that.
I think that's what they're hoping for. But again, you know, bad actors can always get around things, right. But the more trust we then put into this authenticated identity, the more risk there might be introduced too. So I'm remembering back, you know, to like when the ap account was had and had said that you know, something happened at the White House and then the stock market crashed, right, you know, So I think once you put more trust in it
too is problematic. I think what we've learned over the past year since Musk is that centralization is inherently risky and that maybe it's not a good idea to have, you know, so many professionals and jarlists and everyone tied into the space which is controlled essentially by you know, an individual. Now, it was a corporation before, but there were issues under Dorsey and what it was corporate too.
So I don't know.
I think that you know, he's trying to solve or something, but the risks aren't necessarily new and they're not going away. But he is trying to get more people to stick around, and again, Twitter X platform whatever you want to call it now hasn't totally failed, right, so, but it has evolved. So I think we need to keep an eye on, you know, how it's changing, how he's trying to retain people and to maybe generate some revenue.
X the platform formerly known as Twitter is the line that we repeat daily on this show, Bloomberg Technology, Jennifer. There are certainly some jurisdictional and legal questions that arise from this policy move. I note that if you go to the policy page, the biometric data in particular is quote based on your consent as a user, but it is personally identifying information. And therefore I ask about GDPR in Europe and what you think will happen in that region.
Yeah, and so I like how Musk is clarifying that this is for the premium users. But there are class actions here even in the United States about the capture of biometrics data in like the state of Illinois. That's where that's most relevant because they have some unique kind of legislation there. But it wasn't really transparent that this is what they were doing as a company. But you know, photo scans are pretty standard. We saw issues with meta
Facebook as well in the past. And when it comes to Europe, you know, they have definitely more privacy initiatives over there. We're way behind here in the United States. But gdpr essentially is about consent, you know, so it's nice to know when something you know really personal is being collected, but also the ability to like opt out of things. I don't know, I feel like this free Twitter app, if you're a free user, you're just you're paying more and more with things like not being able
to consent to certain things being collected about you. And maybe some people are like whatever, I don't care scan my face, or I don't care a track, or I go on the internet. But it's what happens to that data in aggregate, right? And then who does Musk and other corporate actors share this data with? And I particularly am interested in, like how do they share data with governments? So not just the you know, you know, the United States, but also like Saudi Arabia, right that is also an
investor in Musk's enterprise. So you know, once that data is collected, these tools are created, you know, the risks essentially grow sometimes without the public knowing.
So I just want to raise some awareness around that.
Too, Jennifer, you raise the idea of the data being used in aggregate and the other piece of news overnight is X offering video and audio call function without having to submit a cell phone number, you know, moving away from social media. Your view on and everything app and the data relationship there.
It really is proving to be an everything app. He wants to collect everything. That's really, so.
The more data the better.
If they're making something like more squishy and loose, is because they want you to contribute more. They're essentially lowering the barrier to entry, right, So I would say, if you don't have to include a phone number, which again can be considered personal information, a lot more things are
tied and validated through our cell phone numbers. So I would say that wants to you know, maybe generate some more views and use of live streaming, the video apps, the voice you know, audio and that can be collected too. So that's another biometric piece.
Two is your your.
Voice as as a print to it as well. So and I think we have to really just continue to keep an eye on AI and how all of this data is being captured to train future models. So you know, again the more voice that submitted, the more that can be analyzed and used in the future, potentially even without
our consent. So we just have to be careful, you know, what we're contributing, and hopefully at some point we can get away from such centralized, you know, spaces that are governed by you know, wealthy folks like Musk or corporations, because it becomes really a target of intervention of governments and stay actors, and that that's just going to get oppressive for the people.
Down the road.
Jennifer Greigel, Syracuse University, Associate Professor of Communications. Always great to have this discussion on Bloomberg technology, the journey to a potential Bitcoin ETF. There's been a bumpy one, but some key decisions in the race are trickling in this week. And first start with bitwise. The SEC expected to respond to its own filings, followed by black Rock, Invesco and others over the next forty eight hours or so. Delighted to say we're joined by bitwise, So Matt Hogan, so
let's start there. Have you heard anything from the SEC, any updated communications or questions, because my understanding is the deadline to respond to your ETF application is Friday.
That's exactly right, thanks for having me on. The SEC has forty five days to initially respond to applications for novel ETFs like a spot bitcoin ETF, and that window ends Friday for us. Historically, the SEC has extended their review. They can move those deadlines out by another forty five days, and that may happen. If I were an investor looking ahead, I'd circle October sixteenth as the next big deadline to watch.
That's forty five more days after this weekend, and also forty five days after the Grayscale ruling, which is the last day the SEC could appeal. So this week is momentous. October sixteenth may be a very good day to keep an eye on.
There's a question on how the SEC acts. Do they approve each application one by one, to your mind, or do they go by a common clock whereby they let everyone launch it once?
What do you think?
Yeah, you know, it's a great question. We don't know.
If you look back at the history of the SEC's treatment of ETFs, you can see examples of each and so we have no idea what their plans are. I will say, on half of investors, the best outcome is likely to line up multiple ETFs and allow them to launch it once. That'll create the most competition, the lowest prices, the best products, and be the fairest probably to be asset managers who have worked so hard over ten years to get a spot Bitcoin ETF approved.
So if we do get approval, that's what.
I'm hoping to see, But of course anything could happen.
We could see it in any which way.
We're showing Bitcoin's performance in the session off by one and a half cent, but at around twenty seven thousand US dollars per token. The point being that the sort of euphoria of the US Appeals decision.
Was short lived.
I thought that that was supposed to be a starting gun or signal that this is great news for crypto.
Yeah, I think it is great news for crypto.
Right Crypto is going from a niche asset to a mainstream asset. This was an important step along this journey. But my expectation is about what we're seeing today. I think people likely to overestimate the short term impact of an ETAF and underestimate the long term impact of an ETF. That's what we saw when gold ETFs were approved in two thousand and three that really transformed gold as an asset class, moved.
It into the mainstream.
But it's not as if gold took off on the day it was approved, and I'd expect the same thing about bitcoin. People want this to be a one day story. It's fun to follow the race, but this is actually a ten year story. This is about bitcoin moving from the edge of the investment community to the center of the mainstream allocation space.
That's really exciting.
But if you're investing in that, you should be thinking about ten years and not a few days.
When you say if you're investing, I wonder who you're referring to there, because the kind of two mainstay concerns of the SEC is the participation of retail investors also the idea of market manipulation. Have you been active in it? In sort of addressing those concerns with the I get itsa.
Yeah, absolutely.
You know, we've submitted over four hundred pages of academic research demonstrating that the bitcoin market of today is not the bitcoin market of five or ten years ago.
This market has matured.
I think it's matured to the space that we can have a bitcoin etf available. And the big point is investors are allocating to bitcoin already, they're using consumer apps, they're using other tools. All an ETF would do is make it safer, cheaper, and provide more regulatory protections to help investors get better exposure to something that they're finding
their way to get exposure to as well. I will say we started this journey on spot bitcoin ETFs ten years ago, and the SEC was right to deny bitcoin ETFs.
At that point.
The industry wasn't ready, the institutions weren't ready, the infrastructure wasn't ready. But I think today it is and it's time for us to move forward.
How do you move forward?
And when you know, we just showed the calendar of everyone that could potentially have an ETF approved, it's quite a few of you. So how are you competitive against the large pack?
Yeah? Bit wise, crypto is all that we do. We've been doing this for six years. We work with thousands of financial advisors and tens of thousands of investors. We've helped them navigate the great parts of crypto and the challenges. I think some investors will want to turn towards large, familiar asset managers like Blackrock, and others will want to turn to a crypto expert that they can call up and get answers from that are informed about what's going
on in crypto. If you look at ETF's historically, specialist asset managers that focus on something twenty four to seven three sixty five win more than their fair share of assets.
And that's what Bitwise is provided.
You know, we're the largest crypto index fund provider in America and we want to take that expertise into this spot bitcoin ETF market and serve investors that way.
Bit Wise CIO Matt Hayugen just such a timely conversation as it develops. Come back and join us on bloombog Technology blow by blow. Thank you very much. They're coming up here on the show. Activist investors called on salesforce to boost profits and the company's making good on that bet. We'll recap the numbers from Mark Benioffs Software Empire.
Coming up next.
We're also looking at shares by the way of CrowdStrike. Another earning story, biggest indusday rise since May. The security software company issued forecast feeding second quarter earnings and a guidance upgrade, prompting Frankly, several analysts to raise their price targets on the stock up nine percent in the session. This is Bloomberg Technology time for talking tech. First up, we spoke a little bit yesterday about the release of
Huawei's surprise smartphone. Now Chinese state media is ailing the launch of the Mate sixty pro as a victory in the ever so tense tech war against the United States. A number of Beijing back columns have run overnight praising Huawei since the device's released, which happened to coincide with
Common Secretary Gina Romando's visit to China. Sigma Smartphones Apple taking a greener approach to producing some of its upcoming smart watches, Bloomberg reporting the companies trying out three D printers to make the gadgets in order to use less slabs of metal. The new approach has the potential to streamline Apple supply chain and be more eco friendly.
Apple declined to comment on the story.
Plus, in an effort to fend off further antitrust scrutiny by the European Union, Microsoft is offering to unbundle its Teams video conferencing unit from its business software package.
In Europe.
EU investigators are examining whether Microsoft breached competition rules by offering teams with Office and Microsoft three sixty five in a package. This follows a complaint from Salesforce and its messaging platform Slack, which they may three years ago. Sticking with Salesforce, the company boosting investor confidence after posting strong second quarter earnings beat lest I set the numbers with Bloomberg Intelligence senior tech analysts An A.
Rag Rana.
There was a lot that Salesforce did to their credit right, raised prices for the first time in seven years July. They've cut headcount. What jumped out to you from that earnings print.
I think the bookings number or what we look at called CRPO grew about eleven percent in constant currency, and I think that was a surprise to a number of them, number of people, I would say, which is partially the reason why the star is up.
You know.
I think we were expecting that going in because we already heard from the likes of Microsoft and Amazon that there is some stabilization in the decline in take spending, so we weren't looking for a bad print, but I think the expectations were very negative going into the quarter.
AI we just got to talk about it.
You know, we lean in on this idea that on a per user basis, Salesforce can shock seventy five hundred dollars per user. Right, top line growth was eleven percent in the court of gone. But this is a company that used to grow twenty to thirty percent top line. Does AI return them to that level of growth?
Oh?
No, No, twenty to thirty is very I mean, it's out of the question in my view. When you look at a company like Salesforce, given its size, given the end markets, you know, this is a company that, in our view should grow revenue somewhere between ten and fifteen percent. You know, if you're really in good times, it will be closer to the thirteen to fifteen percent mark. In bad times it will be around the ten percent mark. The end markets are the software products that they're selling.
I mean they are close to I would say, you know, in line with the software industry. Not not so much in that twenty percent range anymore.
And Rag, I know you.
Zero it in on the fundamentals. You have better command of the numbers than anyone I know. But I want to ask about Mark Bennioff. You know, investors made it clear what they wanted and Mark Benioff did it focused on profit.
You see, it's a lot.
More to goal when it comes to profit, and Mark's done a good job about it. But I think you know, it's going to be a lot more than where we are right now. And the only reason is because they spends still a lot of money on sales and marketing compared to their rivals like Microsoft or Article, so we expect margins to go even hired over the next few years.
Yeah, they raised their operating margin guidance for the fiscal year by two percentage points. Anarag Rana, senior tech analyst for Bloomberg Intelligence Goods catch up.
Thank you very much.
Welcome back to Bloomberg Technology ed Lovelow here in San Francisco. This is what the technology sector looks like in e equity markets andw's that one hundred slightly higher. The story of the week's kind of in economic data and earnings. But remember we get jobs data Friday that will inform what the Fed does and therefore the rates narrative and how we value many of these tech stocks, particularly on the NATS. That one hundred elsewhere slight outperformance for chip stocks.
We're going to talk a bit later about Broadcon reporting after the bell that dragging it higher. Ev Names pushing it a little higher as well for General Motors up nine tens one percent.
Tesla flat.
Why news that the United States is going to offer twelve billion dollars of public money to retrofit plants that currently make combustion engine vehicles and transition them to plants that make electric vehicle offerings and platforms. Tesla not going to benefit from that because, of course it's pure play. It doesn't need to convert any of its existing US facilities, but it is a story that will continue to track
those funds coming from the US Department of Energy. Finally, in terms of what's driving US higher modestly on the nazet one hundred, it's the megacaps really that are doing well. Amazon is pushing higher Broadcom, as we talked about, reports earnings after the bell up two point three percent, pushing the Philadelphia Semiconductor.
Index higher to the upside.
Apple actually lost some of its earlier gains in the session, and Meta is actually one of the big points drivers to the upside on the social media side, up eight ten of one percent. Right, our other top story, let's turn back to the data policy change is at X, the platform formerly known as Twitter, planning to collect biometric data.
Job and school history.
I do want to point out very quickly, though, that the company told me this morning this only applies to premium users who pay for an ex subscription. Joining us now with reaction Adam Kovekovich, Chamber of Progress founder and CEO, and let's start there. Your reaction to this policy change.
Well, I think sometimes when you see companies roll out these terms of service, they're a little bit of a roadmap of their plans.
They may or may not come to fruition.
They write them to give them sort of maximum flexibility. But I do think these are probably a bit of an X ray into the product plans inside ELI and Musk's head. And on the one hand, it shows that Mask, like a lot of leaders of the big companies, are sort of racing to compete and invad each other's product spaces and kind everybody kind of wants to become the everything app. That's probably great for consumers and it creates
more competition. On the other hand, Musk has frankly done allowed to destroy user trust and X over the last few months, So it's kind of far from clear that consumers are prepared to follow him on this expansion agenda.
I'd note that on my X timeline at least lots of users have responded to me saying, you know that they're not comfortable with this move or they cannot believe that you have to pay for the privilege of handing over a wider set of data to X and elon Musk. The company's position is that by having dual verification a government issued ID and then a selfie or picture as part of biometrics, and those biometrics come from your government issued ID, that will help them crack down on impersonators.
This is what the company told me this morning in a statement. What do you make of that, Adam, the ability through this data to tackle impersonation?
Well, I think it really on why they're doing it.
Do they need biometrics to become the next Venmo or do they need it to solve a trust in verification problem that must himself create it? Right, look for payment services like Venmo, like Apple Pay, biometric data is very valuable for securing phones and transactions. And if that's why they're doing it, that's a level of security most people
would welcome. But if they're doing this because they have a bot problem and a false impersonation problem, no one did more to create that problem than Elon Musk himself.
Right. He completely misunderstood the.
Value of Twitter's old Blue check value verification system and sort of auctioned it off as a source of revenue. That in turn meant that a lot of bots controls have bought blue checks now and sort of diminished user trust in the platform. So after taking all those steps, is a bit rich to say that they need biometrics to solve the problem. It's a little like saying, you know, we need to install a top of the line alarm system because oops, we got rid of all of our doors and locks.
A few months back. It's maybe best to just focus on the basics first.
What's interesting with that position, Adam, is that the Chamber of Progress represents the industry, right, the technology companies, And I understand that your work is so that they could contribute it in a better way to society. But give me your personal your specific thoughts on a platform like X including biometric data, jobs data, education data, albeit at will and only to pay subscribers.
Well, I think the reality is that Again, if they're doing this to inject more competition into the marketplace, for example, to compete with LinkedIn in job search, or to compete with Venmo and payments, or.
WhatsApp and messaging, all that is great.
You know, I think that it's a healthy dynamic that we have companies and if I almost having a degree of paranoia that leads them to compete with each other, particularly the big companies, well resource companies.
That creates more options for consumers. All of that is really great.
But on the other hand, the ability to do that does depend on trust. And you know, so I think, for example, a lot of people tried out threads because they were dissatisfied with Twitter and all the changes going on there. But frankly, Meta had done a lot too over the last you know, several years to establish trust with its users, you know, billion Instagram users, right, They had invest in things like content moderation and so, you know, I think it's great to see companies.
Expand and compete with their rivals.
That's beneficial for consumers, but it's only possible if you sort of have a baseline of trust you've established with your core users to begin with.
This all comes down to the idea of an everything app, you know, moving towards what we see in Southeast Asia and other parts of Asia where it's multifunction platform. The other piece of news of Night was the addition or the upcoming edition of video and audio calls without having to register a cell phone number. What do you make of that move towards the everything app?
Well, again, I think in some ways a number of companies are trying to create the everything app.
They'd all like to create the everything app, right.
You see, you know, TikTok getting into e commerce to compete with Amazon. You see again both TikTok and Meta competing against Twitter in this sort of text only posts, this audio video calling, you know, in some ways could be competing with WhatsApp and Facebook Messenger and an I message, and that could be beneficial as well. So I think the quest for the everything app is a great one.
It has to be done in a way that solves a problem for consumers, you know, I think I could you know, I think a lot of times, for example, when I'm doing a DM conversation with people in Twitter or used to be knows Twitter, I could see times with that be beneficial to turn that into a call.
On the other hand, if.
If any one follower of another person on X is able to bring them out of the blue, that could be a recipe for stam call.
So it depends on how it's done right.
And you know, he talked about X becoming a global address book, but Twitter is not a global address book for most people. Most people aren't even on Twitter. And there's a little bit of a guest here. But I think between how he uses it and how most people.
Use it, Adam does X, the platform formerly known as Twitter, have an outsized side to impact relative to its size.
Still, oh, absolutely always has. I mean, and he and trust me, I think that he you know, he's done a lot to eroad that, but you know, there's there's still a lot of real.
Time conversation happening there.
Of course, metas trying to challenge that with threads, and I think, you know, has has drawn a share of that conversation.
But there's no question that there's still a lot happening on X.
I still enjoy using it a lot of the time, and and and so I think that, you know, I hope that it actually becomes a healthier place for a conversation because that kind of trust and verification aspective is kind of essential to being a place that people want to hang out.
Yes, Kobaco, its Chamber of Progress founder and CEO.
Great catch up, Thank you.
Coming up here on Bloomberg Technology, We're going to talk AI funding and defense tech with Blauserbiri, partner at Lux Capital. Our VC Spotlight segment is coming up next. I have to say that's a pretty old photo of Blau.
Check it out.
He see what he looks like when he's on set. Next, this is Bloomberg Technology. AI's startup co here is working with banks to raise a fresh round of financing, just a few months after its last one. That according to Bloomberg sources, the Toronto based company backed by investors like Oracle and Nvidia's being advised by JP Morgan and Goldman Sachs.
On the potential round, the open AI competitor just raised two hundred and seventy million dollars in all right, let's stick with AI startups and venture money and get the VC perspective on today's VC Spotlight and bring in Blau Zabiri, general partner at Lux Capital, a five billion dollar firm. The founds and funds emerging science and tech ventures pretty much.
All over the world.
And that's why I'm happy to see you, because since last we spoke, you seem to have spent a lot of time on an airplane and visited a lot of countries.
What have you been up to, Oh, it's been a busy time in Ventory Capital. I've been traveling around the world visiting portfolio companies in Europe, in Asia, Who've been to several countries in Europe, went to Pakistan, went to Jordan, and then obviously all over the US with companies coast to coast.
Is there any sort of thematic divide of what you invest in in Europe visa b what you've invested in here.
In the United States?
Is there sort of a distinct pool of talent there?
You know? Generally no, So as you said, we invest in the intercision of technology and sciences, solving hard problems and frankly matter that matters. You know. While a lot of people in Slicon Valley might like to be thought leaders and think of vision themselves as visionities, the reality is capital follows talent, and talent follows interests, and the interest right now is in solving important, interesting problems, and
that's where we're spending our time. So you know, a couple of areas that emerge frankly globally for us to invest in. It is securing life and environment, So it is companies like sale Drome that are working on climate change and you know, hurricane intensity and understanding whether patterns that affect globally, and defense and national security. It is
advancing and promoting you know, our profitability and productivity. So companies like Applied Intuition building autonomous cars and enabling transition to electric vehicles. Globally, we're working on enabling free expression. Democracy is very important. So companies like hugging Face that are like sort of a global leader in the largest community machine learning developers around the world frankly, and the companies based in Europe as you know, headquartered in Paris.
And then we had Clemmed the CEO on the shoah. Was it this week or last week?
Guys?
I think it was last week, But they've just raised money as well. And what was interesting there is that they're going to use it for the talent because it's creving expensive. Just talk a little bit specifically about the hugging Face investment.
I think, you know, machine learning AI revolution is happening globally, and I think it's happening with people. So this is not something that requires significant amounts of capital and deployment into capex, into hardware systems.
But what's really.
Happening is people around the world are developing solutions using AI that previously was simply not available or just too expensive to develop. And that is happening everything from you know, fintech and traditional enterprise software all the way to solving
healthcare problems and productivity and industrial solutions. So that's what Hugging Face is doing is the largest community of machine learning developers and models literally all around the world, and the capital that they raise is to make sure that they invest in it.
Yeah, cleansed along on the show last week.
The story for the firm this year has been that latest one point one five billion dollar funds for science deep tech. In the time that that was announced back in April, I think, have you literally just been writing checks? How does it work mechanically when a firm raises new funds, Can you just go out there and start deploying technically.
Yes, we start deploying capital when we raised it from the LPs. We have obviously, this is our fund aids. We've been you know, we five billion dollars under management. We've been deploying capital from previous funds as well. Our focus is going to continue to be the investor the intersectionion of technology and sciences, and this could there could be physical sciences, everything from semiconductor chips to autonomy, automation, industrial automation. You saw the news about Apple using three
D printers, et cetera. It could be life sciences, you know, reducing human suffering, developing new drugs and therapies. And it could be computer sciences, you know, machine learning, AI, cybersecurity, and preparing for defense.
Frankly, and an umbrella area of interest to myself, my colleague Zett Chapman, who's been writing about it, but also LP's is defense. What do you say, why is this now in vogue? For want of a better expression, I don't know if it's in vogue.
I think it's more importantly a realization that, whether we like it or not, we are at some sort of a war. There is a war going on in Europe between Ukraine and Russia and US technologies from the pub private sector and the public sector have.
Been very influential there.
We are at odds with the CCP that have aggressive designs that is increasingly hostile towards the US, and the realization that the last twenty years of warfare were a gorilla warfare in the Middle East, going downtown house to house, and now we're facing an extremely sophisticated enemy with digital tools, autonomous systems AI based solutions that are frankly pervasive in our lives and offensive from the CCP. They see that
as Zyzego some games. So we have to prepare for that, we have to work for that, and I think the change that has happened is a realization that the old school way of working through five six large primes and developing technologies just doesn't work. You have to work with the private sector to bring new technologies in, whether it's drone systems or detection systems. You know, Sale drone has hundreds of drones around the globe, connecting data and analyzing data.
This is what's needed for where the water is going, and hopefully we can actually reduce human suffering and reduce casualties in doing that, not putting humans in harms.
With Lawsaberry General partner Locks Capital. Great to have you on set in San Francisco. You've been around the world this year.
I mean you have to just engineer things to operate within certain guardrails and boundaries. You have to seer things in the right direction. So is the world suggesting that the whole world replaces human connection with the chatbot? If that is truly the case, I promise you've been bigger issues than moble. I don't think you will ever replace the need for real love and human connection.
That was Bumbles, CEO and founder talking with Bloomberg's Emily Chang about how chatbots are no substitute for a real date. To take that from me now, tune into that conversation tonight at ten pm Easteron on Bloomberg Television and at eight pm Easton.
On Bloomberg Originals.
Now, Identity management company Octa out with earnings that beat expectations and announcing it's raised it's full year forecast. Joining us now for an exclusive conversation Todd McKinnon, octor CEO.
Tod it's so interesting to me some.
Of the size of the deals in the quarter gone and the impact that the size of those deals have had just explain that the psychology and behavior of some of your customers and what they're willing to commit to.
Thanks for having me on Bloomberg Technology ED. It's great to be here. Large organizations particularly are really seeing the value of identity. Whether it's a big company like NTT Data globally is using Octa to secure their workforce and allowing them to adopt different technologies and work from anywhere, or it's one of the biggest consumer packaged goods companies in the world that has disparate brands. They're trying to bring a single unified login experience to Identity is at
the key to that. And these companies, despite macroeconomic uncertainty, are pushing forward with these strategic projects, and we're lucky enough to be able to work with them, and the results are reflected in our business.
CRPO.
There are some analysts that kind of we're a little disappointed your reaction to the Bears.
Well, I think that we're being cautious about the economic outlook. There's still an economic headwind in the technology sector, and we're being proven about our forward guidance to make sure that we manage through that appropriately.
But at the same time, our growth.
Was very strong in the quarter, twenty three percent revenue growth in this environment, and most importantly, we generated almost fifty million dollars of free ash flow in the quarter. So we've proven that the market for identity is so attractive that in any economic environment, we can grow the business with profitability.
Net retention rate, I know, it's something that our Bloomberg intelligence and lists looked in. What's driving that in its kind of downward trajectory.
Well, it did tick down from last quarter, but remember we have one hundred and fifteen percent net retention, So customers bought a dollar a year ago, that same customer on average is now paying us a dollar.
Than fifteen cents.
So that's incredibly an incredible testament to our customer success and also the product innovation we've delivered. Just in the last few weeks, we've announced Octa for the Global two thousand, which lets the largest organization in the world flexibly adjust their business strategy on a solid identity foundation. Is they adjust their strategy in these macro economic times. And another one is Octa Device Access, which secures the actual log in at the end computer all the way through to
the company's entire infrastructure. So the business is strong and customers are having success, and we're excited to work with them.
Tod, I think I heard you say AI on the call eight times and chat GPT four times.
What's the AI story for Octa?
Well, first of all, in the big picture, Ed, I mean our industry in the world hypes a lot of things. I think AI may be under hyped, and that's the potential. I mean, you have all the right ingredients of a true technology revolution. You have a breakthrough hardware with what's happened with GPUs, you have computer science breakthroughs, which with what happened a few years ago with the Transformers paper and that pouring into large language models, and you have
a killer app. You had Chat GPT come out and just take over the world. And that's the Netscape moment of this AI revolution. And talk about the economy, I think what really could get the economy in terms of tech spending and tech investment really down is this focus on AI. Every company I talked to is thinking about how they can become an AI company. And it's just similar like in the late nineties when every company had an Internet strategy.
That's what we're on.
The precipice of and we benefit from that. Actor is the login for chat gbut they use our customer Identity cloud to connect their customers to Chatgbut and so it's every whether it's open AI, whether it's scale AI or recurrency SAI. We're the identity company for all these AI startups and innovators.
And doctor shares off session high as was still up twelve percent, on track for the best days since March on an ch day basis. Tom mckinn and opt to CEO, thank you so much. Sadly, that does it for this edition of Bloomberg Technology. But don't forget recap on our podcast. You can find it on the terminal as well as online Apple, Spotify, an iHeart from here in San Francisco.
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