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tv   Bloomberg Technology  Bloomberg  August 2, 2022 5:00pm-6:00pm EDT

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announcer: from the heart of where innovation, money, and power collide in silicon valley and beyond, this is bloomberg
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technology with emily chang. emily: i'm emily chang in san francisco. this is bloomberg technology. coming up in the next hour, it looks like we are in for a busy holiday travel season. airbnb preparing a massive share buyback, anticipating the best revenue in the company's history. we will get into the details. huber shares soaring almost 19%. i conversation with the ceo about the shift in demand and supply and whether uber is, as he says, recession proof. and the results are -- bloomberg surveyed more than 1500 investors about the musk-twitter saga and only one in four believe the world's richest man will end up shelling out the $44
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billion. we will talk about the implications for musk, twitter, and tesla. a big swing through the trading session as house speaker nancy pelosi arrives in taiwan and the fed signals more rate hikes to come until inflation is under control. ed ludlow is here to walk us through the day and a lot of earnings. ed: airbnb down almost 9%. kind of a mixed bag. bookings came in softer than expected but expectations are very high. outlook for travel demand looks good. investors not usually impressed even with a $2 billion share buyback. it is worth noting there is an employee share issue that might upset that. and outlook for the current quarter was weak compared to at the street was looking for. there's a sign there is a drop in demand for pcs in particular. taking market share from the likes of intel, still suffering from lack of pc demand.
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one surprise, paypal, up 11%, doing a much bigger share buyback, elliott management exposing a big share and outperformance with the company put into effect cost-saving measures effectively. as you said, it was a very busy news day. the story being nancy pelosi going to taiwan. the geopolitical tension causing stocks to swing between gains and losses. and a lot of fed speak. the fed will continue to raise rates until inflation is under control. the semiconductor index a sickly flat and yield hovering around 2.75% on u.s. 10 year. there were other news and other stories in play as well and you can't forget how busy this earnings season is. uber up almost 19%, a really strong performance. demand seems to be there but they also had to lever pricing
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and discipline. pinterest, a real surprise. they were able to do well in a difficult add environment. according to sources, the world's biggest maker of ev battery cells has delayed a decision to announce its north american plant because nancy pelosi has gone to taiwan. they don't want to get in the middle of the geopolitical tensions. tesla closing up 1.1% for dropping by 1.2% after we publish that story. they have contracts to supply cells to those names. emily: we will talk about that when later in the show. i do want to talk about this big visit. u.s. house speaker nancy pelosi touching down in taiwan. this makes for the highest ranking american politician to visit the island in 25 years. the timing of her visit is particularly sensitive for china , coming one day after the 95th
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anniversary of the people's liberation army. i want to bring in ian marlowe, joining us from washington. he's been covering this story and how it is developing. talk about how significant this visit is and what that stake. we have the founder and ceo of strategy risk here as well. i think it's hard to overstate just how significant this visit is. ian: it significant for a couple of reasons. she's the highest ranking official to visit into a five years. newt gingrich went in 1997. but it's a sensitive time in u.s.-china relations. you've got forces on both sides in the u.s., you've got midterm elections, a lot of debate about whether she should go or not go and whether it would look weak on china. china itself, you have xi jinping balancing covid zero
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policies with a slowing economy and a really important party congress coming up later in the fall where he is expected to secure a third term. you have a lot of sensitive dynamics internally and internationally, we have a situation with the u.s. leaning on china over russia and the war in ukraine. you have a lot of high-level dialogue on the biden administration's china policy. and then you are playing with this extremely toxic situation and taiwan is just the most sensitive issue. pelosi visiting at this point with the rhetoric cranked up on the chinese side in particular, u.s. officials failing to calm down and convince the chinese side that they are not trying to erase the status quo here, it
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has a mix where we are seeing the most extreme chinese military response since the mid-90's, in decades. emily: china has already announced these various military drills and missile tests. how much retaliation versus posturing are you expecting to see? isaac: companies should fear retaliation asymmetrically. worry less about military drills, more about executives from u.s. corporations getting arrested or detained or harassed in china or chinese companies treating u.s. companies differently or beijing suddenly discovering a major u.s. corporation committed tax fraud or has some irregularities in their books. beijing loves to play it this way so there's plausible deniability and it reminds the business world that in beijing's mind, the business world is also
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responsible for what the u.s. government is or is not doing. emily: we've already seen some retaliation from this big battery company which pushed back land to announce a plant in america. taiwan is a huge tech hub in the global supply chain. what kind of disruption longer-term do you think there could be to the global and tech economy? isaac: it's hard to imagine a more concrete reminder that investing in china, chinese supply chains, u.s.-china relations will be unstable for the foreseeable future. best case now is these regular fluctuations, regular risks of not getting the goods when you need them, not being able to parse or understand chinese policy. people need to throw out their old assumptions and work with the assumption the supply chain will continue to be disrupted. certain companies that say they will be able to do something won't be able to do what they
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are saying. not to be alarmist but it's possible moves like these lead to a war or at the very least a proxy war between the u.s. and china. if that happens, all the assumptions underpinning u.s. china investments for decades will be written off. emily: talk about the plans for the rest of this trip and the signaling you are expecting to see not just from beijing but the white house. iain: i think we have seen the white house playbook over the last couple of days. there was a shift from denying the trip was even happening, probably the worst kept secret given that it was the most tracked plane in history. at the moment, we are looking at the white house shifting to putting the onus for escalation on china itself, saying pelosi's trip, which we did not have any say over it doesn't move the needle, it doesn't change u.s. policy toward taiwan either way.
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there is a ball is in china's court. the amount of escalation we see, some people are talking about military exercises off the coast amounting to an effective temporary blockade, we are seeing missiles potentially crossing over taiwan and landing off the coast. there's a potential for miscalculation. at the moment, we are waiting to see how long this lasts. we know that there will be drills for the next few days and now it's a matter of seeing whether china's telegraphing of this stuff in advance is enough to allow u.s. officials to manage the situation so there is no miscalculation and veering competition into conflict. emily: u.s.-china relations
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evolve over decades. what kind of inflection point is this going to be? how long could this reverberate? isaac: i don't think this is going to be an inflection point. the inflection point is beijing's decision to put a million muslims in concentration camps and the potential for xi jinping to get returns for the three major positions in the chinese economy. if beijing decides to invade taiwan, it will be a massive up turning of the status quo. not that much of an inflection point. emily: thank you for weighing in here. we will continue to follow every detail of this visit as it plays out. coming up, airbnb readies a 2 billion-dollar buyback as travel continues to rebound. but not enough for investors. shares down after hours.
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but a big spike for uber after more than doubling revenue. we will hear from the ceo later in the show. this is bloomberg. ♪ >> the marketplace is more balanced, the number of new drivers we are adding is up over 70% on a year on year basis. surges down, eta's are down, so the business is really hitting on all cylinders and it's reflected in the stock price, which is great. ♪
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emily: airbnb shares down in late trading after reporting second-quarter results, despite revenue in the current quarter would be the highest in its history. the jeffries managing director and analyst joins us to discuss.
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you have had airbnb benefiting from the travel rebound but investors not happy with this report. why is that? >> book inc. -- bookings whole about 5% below where the street was at. ultimately, there's a fear this was the summer of travel, that everyone went to europe. in california, they saw bookings down as europe saw a huge boom. many of us, including my own family went to europe and came back and started looking at our credit card. but look at the bill. perhaps there's a travel hangover coming in the fall and winter. that may be a fear many investors in my position said i just took a big trip, time to tap the brakes and put money nelement.
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see gas prices shift, others are -- restoration hardware, uc we call it a discretionary recession. airbnb for the most part, it is money spent for fun, it's not a must-have, it is a nice have. what i'm trying to put in, why would people be bearish from here? those would be the reasons to be bullish. they are in an incredible position. an incredible selection of portfolio and there is
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incredible innovation relative to any other consumer brand, it's the best ui and best experience. emily: they did come out with categories which was their big design change. you cover uber as well and i'm interested in comparing them. from our interview today, he said uber is recession proof. take a listen to why. dara: because we are in multiple businesses, both in mobility and delivery, we have the kind of business that can perform an all weather but at the same time, we are being disciplined in terms of costs to make sure if the environment gets tougher, we are prepared. emily: you saw huber's number today. do you think uber is recession proof and is it more recession
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proof than airbnb? brent: to some degree. we are starting to go back to work, back to events, traveling to kids sporting events. we are using not only the cars but bikes and scooters. i was a huge adopter of the scooter line. this summer, with my family in europe, the partnership with uber. ultimately, i agree with that to some degree. the question is ultimately around discretionary travel. when we look at airbnb compared to other travel names, you can see a travel hangover post this summer. there could be a setback on that site. the positive thing for uber is employers, including their own employer, is saying get back in the office. we still have covid cases flaring and i think ultimately, people are reluctant to want to
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be in mass transport and still feel comfortable perhaps being in the back of a car going into the winter if we see at another phase of covid cases. i don't disagree. i think there is an element of the business that can maintain, but the one thing going for uber right now is the valuation. it's the worst sentiment of every tech company we cover. they are showing cash flow and are effectively doing what we think is the right thing. it's got a bottom line and they are showing it to be possible with their network. emily: thank you for giving us your quick reaction on both of those companies. coming up, huber is seeing a slowdown on the west coast but a pickup in the east. will have more of my post earnings conversation with dara khosrowshahi, who is quite happy about the stock pop when we talked this morning.
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that's coming up next. this is bloomberg. ♪
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emily: uber defined inflation in the second quarter, reported better than expected earnings. growth bookings including rideshare and delivery rose to all-time high. i spoke to the ceo about everything from surge pricing to a slowdown in demand on the west coast. dara: to some extent, it's a continuation of the last few quarters. but we are hitting a scale point here. $29 billion in gross bookings, up 36% on a year on year basis as it relates on a costing currency basis. our emed off, well bit of -- our
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ebita well above guidance. well above street estimates, etc. anticipation of strength coming and a really important factor is we are cash flow positive. $280 million in free cash flow which is a big factor in being self-sustaining and profitable going forward. when we look at the environment, the marketplace is more balanced. the number of new drivers we are adding in the u.s. is up 70%, surge is down, eta's are down, so the business is hitting on all cylinders and it's reflected in the stock price, which is great. emily: i want to ask about the broader environment. i hear people say uber is expensive and we are seeing uber benefit from this when you look at your earnings and the bottom line. how do you think about this dynamic longer-term? do you worry about alienating
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customers given this is the worst inflationary environment in uber's history? dara: inflation is hitting all of us, whether grocery prices or fuel prices. remember food -- remember fuel is a big component of our drivers costs. that affects prices as well. you do see that in our results. while trips were up when he 4%, which is healthy growth, gross bookings were up faster than that. -- trips were up 34%. the good news is surge levels are coming down. as the market place becomes more balanced, we see strength in terms of trip growth going forward and we are hoping if we do our jobs, and so far, so good on onboarding more drivers, prices on uber will ease going forward at the same time drivers will make really strong earnings as well. emily: we heard 70 dire warnings about the economy.
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jamie dimon says he's preparing for an economic hurricane. i just spoke to apple ceo tim cook who says he plans to be deliberative and apple spending. if we continue to see these downward trends, what is uber's strategy to navigate continuing downward trends? dara: you are seeing it in our results. there have been a bunch of earnings results out there and sometimes they have been less than great. uber's earnings have been terrific in every way. topline growth, profitability growth as well. at the same time, we are being disciplined in terms of how we grow going forward. this is why our margins are improving, fleet -- free cash flow is positive as well because of the scale we have. because we are in multiple businesses, both mobility and delivery, we have the kind of business that can perform an all weather.
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at the same time, we are being disciplined in terms of cost to make sure as the environment, if it gets tougher, we are prepared. emily: you mentioned west coast markets are taking a little longer to come back. i'm thinking about san francisco and how it has been a struggle to get workers back to the office. how are you thinking about this and uber's own flexible work policies? do you see the flexibility you are giving workers holding up into next year? dara: it does feel like a tale of two coasts. when we look at the east coast, new york am a even atlanta, austin, dallas, our business is roaring back at this point and we feel great about it. the san francisco market, los angeles, seattle, they are certainly coming back but when you look at absolute levels versus pre-pandemic levels, it is a very different story.
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we will keep pushing and do our part to make sure we've got ample supply in those markets and the service works very well. emily: you can check out the full interview with dara khosrowshahi on bloomberg.com. the results are -- bloomberg server 1500 investors about the musk-saga. we will tell you where they are placing their bets next. this is bloomberg. ♪
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emily: welcome back to bloomberg
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technology. i want to get back to our top story and that is u.s. house speaker nancy pelosi's visit to taiwan. we are seeing a major company react in a bloomberg scoop -- world's biggest maker of ev battery cells has pushed back plans to announce a north american plant because of this visit. ed ludlow helped rake the story. what do we know about this decision? ed: sources say they work considering siding there next plant in the united states. there were agreeing incentives and they were choosing their preferred site. given the geopolitical tension between the united states and china, due to speaker pelosi's visit, they should push it back to september or october. emily: so they are not saying it's not going to happen, just the announcement. ed: there is a commitment to do this. they are a big supplier to
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tesla. they have an agreement to supply for the future. ford and tesla were key to those talks but it is too hot right now. they are trying to think about potential incentives from the federal government in the united states. they just don't want to get caught up in this. emily: how strategically important is this company to tesla or ford? ed: the reality is they are a chinese company. it's the crown jewel in china's ev industry. it's the biggest maker of ev battery cells. but the whole issue is there's not enough supply. we need more battery cells, more players. having that plant whether it is in u.s. or mexico nearer to where vehicles are being built is so important. if we've learned one thing in the last few years it is that quickly overseas. now we have geopolitical issues
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in the way. emily: are you seeing this as a company that could have a significant presence on this side of the pacific ocean? ed: the commitment they are making initially is $5 billion. that gets you quite a lot of factory. the footprint we have reported on is very big. we are talking about ev battery cells at a mass scale and for multiple players. think about the plant in nevada or on the east coast. it is big and it is important. emily: bloomberg terminal client think elon musk will be forced to own twitter by the end of the saga. about 75% of 1500 respondents say musk won't end up owning twitter. it's a deal that led him to offload $8.5 billion of tesla shares.
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joining me now is catherine fattah's with -- you put questions to jean muster. how does this play out in delaware court? >> i'm going to agree with the respondents. ultimately this deal does not happen. it's not clear why it made sense to begin with and i understand elon musk is very smart, he took tesla from a lossmaking deal and made it a success and made paypal a success. maybe there was a theory he was going to turn around twitter and pull something else out of his hat that apparently he's lost interest. i thing it's time to move on.org. emily: what does it mean for twitter and what does it mean for tesla? catherine: for tesla, it's quite disruptive. i wonder if they are going to try to get more than the billion
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dollars? for people who believe in elon musk, they thought wow, he's going to get involved with twitter and turn it into a gold mine. for twitter, it is not good either way. it's been disruptive. twitter shareholders are going to get a lot of money, now they are not. twitter's business model is struggling anyway. for tesla, it might be good news because it was a distraction. it was a distraction for tesla shareholders. they want elon musk focused on tesla, bringing the wonderful things he's done operationally, supply chain, efficiency, the great things that make tesla led it is. emily: tesla has a huge footprint in china. i'm wondering how you think this big visit, nancy pelosi going to taiwan against the wishes of the
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chinese government, if there is an impact here? catherine: clearly there will be an impact. china understands the importance of tesla. tesla is in many senses, the crown jewel. if china wanted to retaliate, tesla would be an easy target. remember tesla has big plans for china. not only do they produce a lot there, but it was going to be a big market for them. certainly this would keep me up at night if i was on the board of tesla. he's going to have to figure out how to move forward. emily: you wonder if it is keeping up elon musk. tesla us valuation, spacex's valuation, how much is on musk alone, his cult of personality? catherine: i think currently a lot because he does have this fabulous track record and people look at what he does.
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he can take anything and turn it into gold and he's done it. he deserves the reputation. but a lot of those things can be learned. i go back to steve jobs and apple, i never thought apple could make it without steve jobs. guess what, i was wrong. apples beat in the stock market by a thousand percent. there is life after elon musk, there's life after all of us. but i don't want to minimize his importance to spacex, and i think it's real. he's brought process improvement, efficiency, if you look at the way the cards are -- the cars are manufactured, he's clearly very smart. emily: does that mean you think tesla's valuation is fair? catherine: no.
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i don't think tesla's valuation is fair. i think it's overpriced. if you compare it to microsoft and apple, amazon, those are going up in the mid teens, maybe not that much. i understand tesla revenues are going up but if you look at those other companies, they are trading at 30 times free cash flow. tesla is trading at 300 times free cash flow. this is priced for perfection. nothing can go wrong. everything has to go right and i've never seen that happen before. investors are ultimately going to be disappointed. even if every one of its goals are achieved, i don't think investors are going to be pleased from iran. -- pleased from here on. emily: thank you for stopping
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by. coming up, 100 technologists signing a letter to congress urging for more skepticism in crypto. we talked about the optimists. we're going to talk about the pessimists, next. this is bloomberg. ♪
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>> the no intermediary system doesn't scale. three to seven transactions per second is a hard limit. >> it doesn't do what it say it does come it's not secure, not distributed, not reliable, it doesn't scale. it doesn't actually do anything. >> they don't work for payments if the payments would be processed by the normal system. >> it will crash because all bubbles crash. >> wake me up when the transition happens. >> the problem is locked chain adds insecurity. it adds all sorts of inefficiencies. it makes things worse. >> it creates a problem of he who has the gold makes the rules. >> right now, people are losing their money. they are getting hurt because there is so much fraud. >> from a technological
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standpoint, there's no innovation. economically, it is a self assembled ponzi scheme. emily: the professor of the science department at uc berkeley and a computer professional and computer professional at the harvard school. they are some of the signatories to an open letter of -- open letter to congress signed by 1500 technologists urging lawmakers to take a critical, skeptical approach toward industry claims crypto assets are an innovative technology that is good. we talked to a lot of the bulls. i haven't talked to so many bears. talked -- talk about their message to congress. sonali: it's important to her member there is a bit of a war in washington going on. when you think about cryptocurrency, the people who don't want congressmen and women
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to be supporting them and the ones who do are pouring millions of dollars into lobbying campaigns and political campaigns, to crypto friendly -- i talked to anthony scaramucci about this earlier and there are many people who think this is going to be a key issue leading into the midterms and otherwise. emily: what's the problem for the folks who signed this letter? some of the concerns are technical, not being able to reverse transactions, concerns about data privacy and the sense that is crypto something that is a solution to something looking for a problem? why crypto when fintech does the job? we already have digital payments to some degree. when you look at the data from it, it's interesting because you saw cryptocurrency, transaction volumes surpassed that of visa. it's come down more this year. which will win out at the end of
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the year and which technology will be dominant? the skeptics in this letter attest to the idea that bitcoin and blockchain more broadly is not the solution to these problems. emily: there's a lot of complicated dynamics at play. we reported on the revolving door between the crypto industry and capitol hill. you have crypto companies making big donation to head of the midterms. you have crypto lobbyists shaping policy. is there enough skepticism on capitol hill of this industry? sonali: i think time will tell how much there is a push or pull. you are asking a question where it seems like there's a lot of lawmakers that go out and in a regime where the head of the sec has -- sec has been cracking down on enforcement issues in a way we haven't seen and the tensions boil over. where's the support with someone
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he millions of dollars going into support the industry? this is not a panacea. you are looking at the industry and this is a thorough and long critique of the octane technology itself as problematic is how they are phrasing it because fraud mitigation is a big issue when it comes to blockchain. let me give you another perspective -- the conversation with the ceo of nasdaq told me there could be a day when every asset on the planet could be digitized. these researchers -- the fraud mitigation part is such a key argument to people who believe in it and the people who don't. emily: i want to talk about another developing story. i got off the phone with the ceo of robinhood. robinhood announcing they are laying off 23% of the company.
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here's a couple of thoughts on that call -- i anticipated what we saw in 2020 and 2021 would last longer than it turned out. that is on me. all functions would be impacted but these are concentrated and they over hired in the support function. this is a big chunk of jobs from what was a hot come rising company. they've only been public for a year. what is your take? sonali: the comment that you put out there has gone viral as being shared broadly. the it's on me comment. if it is on him, what other pressure is there to change the course of the business? they pre-reported. they were not even supposed to report their earnings and did fall short of expectations, including the core business, the
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payment for order flow, the money that comes in from the stocks and options business. remember the crypto business is a small fraction of what they make overall. the point i have been making is we know ftx has grown with a few hundred employees, a lot smaller, a lot more nimble but robinhood has hired many hundreds of people and now you are seeing a shopper a reversal and that's going to impact an entire industry here. emily: we will continue to watch that one play out. thank you for your insight. bloomberg's sonali basak. that company crypto farm is going to have to pay $30 million penalty to new york state. a statement from the new york department of financial services points to significant failures in the areas of bank secrecy,
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anti-mentoring -- anti-money laundering and they will be required to perform a conference of evaluation. coming up, rising enterprise software startup brings in a tech veteran. we will ask about the state of the cloud war, next. this is bloomberg. ♪
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emily: cohesive he has a new ceo on board. the cloud wars continue in a looming macroeconomic downturn. it's always good to get your
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thoughts on big church trends over the years. in the middle of the pandemic, i remember reading this story -- you voluntarily decided to leave and take some time off in the pandemic and that was a trend among tech veterans like yourself. how did you decide this was the right move? >> it has been a great sabbatical, almost 20 years since i took one. emily: what did you learn from your sabbatical? >> to spend more time with my family. that something all executives could learn. it has been great. met a lot of entrepreneurs and it was in that context i met the current founder and i spent the last few months, i heard great things about them. these guys have the best tech in the platform. a few weeks ago, i decided to
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say yes and today is day two. emily: so you think more it tech executives could use a break? sanjay: more of us could take that time. when you have a point in time where you can take the time off, what is the thing closest to you? whether it's family or a hobby. it -- i wasn't ready to retire for life and i wanted to get back in the saddle. emily: what are the trends we should be watching as rising inflation and all these businesses talking about being more disciplined. we just talked about robinhood laying off 23% of its workforce. sanjay: just look at the recent results -- i built relations with them and there's tremendous opportunity. i think cloud and cybersecurity
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are doing well. if you are in those sectors, you have to prepare for a potential recession. it's a smaller company than i've seen before but if you have great customers like we do, they told me they have not seen tech like this -- that's the list of customers you want that will take you through tough times. emily: this visit by nancy pelosi to taiwan which could have broad implications. the tech industry has deep ties to china. what do you think the longer-term implications of this are? sanjay: i think we have to have an and policy. i'm thrilled the chips act was signed. that's good for us. but we need a strong tie with taiwan. a strong relationship with
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especially taiwan semi conductor. whether it's cars or health care devices or smartphones and a strong relation with taiwan and the u.s. signals to other people who may not want to see that happen we are standing by our neighbor and friend. emily: are we already in a recession? should they call it? sanjay: i'm not an economist. i think you have to break -- when you have the war in russia and ukraine and these factors, the currency issues, brace yourself and what do you do? if you are a company, i've seen this in 2008 -- it's not first when i've seen. great companies get stronger. some rate companies were born during a recession. google was formed in 2000. that's my message -- great
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companies can thrive even further if you are using the system to force multiply and keep retaining and recruiting good people. emily: the ceo and president of cohesity. we will be watching you on your next adventure. that does it for this edition of bloomberg technology. tomorrow, i will be speaking with the airbnb ceo, brian chesky. and microstrategy's, michael taylor about his plans to step down and focus on bitcoin acquisitions. definitely a show you don't want to miss. don't forget to check out our podcasts wherever you get your podcast. i'm emily chang in san francisco. this is bloomberg. ♪
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