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Old and New Wall Street Will Converge This Week: Basak · Bloomberg Intelligence

0:00
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
0:04
Speaker 1: my co host Matt Miller. Every business day we bring
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Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
0:11
Speaker 1: with essential market moving news. Find the Bloomberg Markets podcast
0:15
Speaker 1: called Apple Podcasts or wherever you listen to podcasts, and
0:18
Speaker 1: at Bloomberg dot com slash podcast. Let's bring in Wall
0:22
Speaker 1: Street reporter Shanale bastok Now, who has taken a five
0:26
Speaker 1: day mini sabbatical to read Jamie Diamonds annual letter. Hanally,
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Speaker 1: I'm just wondering, after you got through the sixties six
0:35
Speaker 1: page home, did it give us any hints as to
0:38
Speaker 1: what to expect from the earnings report coming on Wednesday.
0:41
Speaker 1: Listen the fact that he thinks that things are going
0:43
Speaker 1: to be good, Til says a lot, right, because you
0:47
Speaker 1: have volatility now down a little bit, which you know,
0:50
Speaker 1: on the face of it is fine, it's nice, it's boring.
0:54
Speaker 1: But banks make money when things get volatile. Banks don't
0:58
Speaker 1: make money when things get too rough for people to
1:01
Speaker 1: really engage in markets, right, Sonali, what's what our expectations
1:06
Speaker 1: here as would come in for these banks? Here this
1:09
Speaker 1: earnings because We're gonna have a lot of the big
1:11
Speaker 1: ones on Wednesday. Yeah, I've got to say I've moved
1:13
Speaker 1: on from Jamie Diamond, Daniel Letter all the way to
1:17
Speaker 1: the Satoshi Nakamoto white paper again because on Wednesday we
1:22
Speaker 1: have both JP Morgan reporting and coin bases direct listing.
1:26
Speaker 1: So you have Old Wall Street New Wall Street. You
1:29
Speaker 1: have a confluence of events that I think are very
1:31
Speaker 1: exciting actually, and coin base is going to be using
1:35
Speaker 1: the direct listing model, which you know, we've wondered for
1:38
Speaker 1: a long time how much that type of a model
1:41
Speaker 1: is going to eat into the traditional I p O
1:44
Speaker 1: s that make the banks owe so much money. As
1:46
Speaker 1: we know, the banks make less money and do we
1:48
Speaker 1: know how much less they do make on a direct
1:50
Speaker 1: listing versus a traditional IPO. Well, here's what's interesting. They
1:54
Speaker 1: don't make less money per bank, they're just a lot
1:58
Speaker 1: less banks working on them. So where you can have
2:00
Speaker 1: a dozen or so underwriters on a direct listing, there's
2:04
Speaker 1: really only a few that work on sorry, and on
2:07
Speaker 1: I p O there's only a few that work on
2:08
Speaker 1: a direct listing. So Goldman and Morgan Stanley are they've
2:12
Speaker 1: really gotten ahead of this. They've been able to make
2:14
Speaker 1: a business for this of themselves. Cited Al Securities, which
2:18
Speaker 1: is usually the market maker for these direct listings, they've
2:21
Speaker 1: made a big business for themselves. But on NASDAC, you
2:24
Speaker 1: don't need a market maker like sited Al Securities. NASDAC
2:27
Speaker 1: kind of does the process for you. UM. And so
2:30
Speaker 1: it's a big day for the exchange, and it's a
2:33
Speaker 1: big day for UM the you know, I like how
2:36
Speaker 1: Bloomberg Intelligence puts it. You can expect coin baseed to
2:40
Speaker 1: eventually become a bank for crypto. It's also a big
2:44
Speaker 1: day for UM, the bitcoin community or the crypto community,
2:48
Speaker 1: because this is a much more democratic way of giving
2:52
Speaker 1: investors access to your shares. Right, if you do an
2:55
Speaker 1: I P O, you need to be a buyer in that.
2:59
Speaker 1: As a retail investor UM, you need to get syndicate.
3:02
Speaker 1: That means you have to have developed a long relationship
3:05
Speaker 1: with your broker. You have to be a big play.
3:08
Speaker 1: You know. It almost seems unfair for you know, a
3:12
Speaker 1: mom and pop investor because there's no hope in heck
3:15
Speaker 1: that they can ever get any syndicate. They have to
3:17
Speaker 1: buy it after it starts trading, and typically after a pop. Right, Yeah,
3:21
Speaker 1: that's really the hope here that the direct listings can
3:23
Speaker 1: make this much more democratic. Uh, let's see how it
3:28
Speaker 1: works out at the end of the day, right, Let's
3:30
Speaker 1: see how many people actually start to buy into coin
3:32
Speaker 1: base and then you know, Matt it also it's become
3:36
Speaker 1: more than really a hundred billion dollar company in private markets.
3:40
Speaker 1: Do they keep that evaluation as they become a retail play.
3:46
Speaker 1: You can make the argument both ways, right, if bitcoin
3:49
Speaker 1: continues at its current pace, if they add more products,
3:53
Speaker 1: if you get more retail interests, and you see coin
3:55
Speaker 1: based going much higher, and it is good. But on
3:58
Speaker 1: other areas you can say maybe some of these companies
4:01
Speaker 1: have waited very late, um, and you know, do they
4:04
Speaker 1: face potential down rounds when they get into public marks.
4:06
Speaker 1: Will also be interesting to see if the price in
4:09
Speaker 1: bitcoin fades a little into this, because that's a hundred
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Speaker 1: billion dollars that's essentially going to come out of crypto
4:16
Speaker 1: market cap, isn't it. Yeah, it's it's pretty incredible here.
4:19
Speaker 1: The coin based play is really looking beyond bitcoin, right
4:23
Speaker 1: and looking at them getting into other assets like areas
4:28
Speaker 1: like custody. Right, making bitcoin more easily held and tradeable
4:34
Speaker 1: for large institutional firms, because firms like JP Morgan right
4:40
Speaker 1: have been so slow to get into this kind of
4:42
Speaker 1: new new era of finance. Yeah, that's kind of where
4:45
Speaker 1: I went to go. What are the the big banks
4:48
Speaker 1: saying about crypto because it feels like the late to
4:52
Speaker 1: the game. It feels like they don't or they have
4:55
Speaker 1: not made a big commitment. How are how are investors
4:59
Speaker 1: thinking about this? Well, one thing that's pretty incredible, as
5:01
Speaker 1: we've in recent we've got news that Goldman and Morgan
5:04
Speaker 1: Stanley are taking steps to make it more available for
5:07
Speaker 1: their private wealth clients. There's a couple ramifications for that. One.
5:13
Speaker 1: Crypto was supposed to be this great equalizer, Yet at
5:16
Speaker 1: the banks it's being made available to the wealthiest clients first,
5:20
Speaker 1: So that is kind of against um the whole heart
5:24
Speaker 1: of what crypto is supposed to stand for. The other
5:27
Speaker 1: thing about it is again it's years later, right, it's
5:30
Speaker 1: a crypto, it's bitcoin above fifty dollars is when they're
5:33
Speaker 1: starting to sell it. Does that big give a big
5:37
Speaker 1: boost to the price or are they getting in late?
5:40
Speaker 1: Only time will tell that story. You know, the folks
5:44
Speaker 1: that have gotten in much earlier through other means outside
5:47
Speaker 1: of the banks are probably much happier today. Um, but
5:50
Speaker 1: you do see the banks trying to embrace it. Just
5:53
Speaker 1: got twenty two here. But you speak to the wealthiest
5:56
Speaker 1: investors on Wall Street, are you noticing an uptick in
6:00
Speaker 1: the number who are interested in bitcoin? Oh? Yeah, even
6:03
Speaker 1: traditional hedge fund managers. You know, watching Dan Loebe tweet
6:06
Speaker 1: about it over the weekend is is you know a
6:08
Speaker 1: fun change to watch. Yeah, that's interesting and I think
6:12
Speaker 1: the we are seeing that institutional uptake guys, and again
6:16
Speaker 1: even on the corporate side, with Tesla obviously putting it
6:20
Speaker 1: on its balance sheet. Shnei Bassk text so much for
6:22
Speaker 1: joining us, giving that preview of earnings and preview of
6:25
Speaker 1: coin base on Wednesday, Shanellie Basket, Wall Street reporter for
6:29
Speaker 1: a Bloomberg News where was appreciate getting the update on
6:32
Speaker 1: all things Wall Street. Now let's get straight to Duncan Aldred.
6:37
Speaker 1: He joins us from General Motors, where he's a vice
6:40
Speaker 1: president Global Buick and UH and gmc duncan. Great to
6:45
Speaker 1: have you on the program. I gotta say, ever since
6:48
Speaker 1: I was a kid, Arno Schwarzenegger started driving his mill
6:52
Speaker 1: speck h one hummer around l A I have wanted
6:56
Speaker 1: one and I still want one, preferably with a big
7:00
Speaker 1: six point seven Leader turbo diesel. But you're bringing back
7:04
Speaker 1: the Hummer in a much more eco friendly way. What
7:08
Speaker 1: kind of um demand are you seeing? Yeah, good morning,
7:14
Speaker 1: Great to be with you. Well, we're seeing it. Huge dayman.
7:16
Speaker 1: We revealed the pickup truck version of the GMC Hummer
7:20
Speaker 1: EV in October, and we've just revealed the suv version
7:25
Speaker 1: of it. About a week or so ago. We started
7:27
Speaker 1: taking reservations. It's first to say that the the reservation
7:32
Speaker 1: count is huge. We did a limited edition first edition
7:36
Speaker 1: which sold out in a matter of minutes, both for
7:38
Speaker 1: the truck originally and then more recently for the suv.
7:42
Speaker 1: And this is very different to that that vehicle that
7:44
Speaker 1: you just mentioned there as you say, this is a
7:46
Speaker 1: true zero emission all electric vehicle. But believe me, the
7:51
Speaker 1: performance and capability that this generates really does put that
7:55
Speaker 1: original Hummer into the shade. Zero to sixty in three seconds,
7:59
Speaker 1: to the truck up a little bit longer for the suv,
8:02
Speaker 1: the ability to go in the most difficult off road terrains.
8:07
Speaker 1: This is a super truck. And we coined the phrase
8:10
Speaker 1: on this because this really is the world's first super truck,
8:12
Speaker 1: whether it be in pickup truck or suv. Guys, all right,
8:16
Speaker 1: what are these super trucks gonna set me back? So
8:21
Speaker 1: they started eight dollars um and they go all the
8:24
Speaker 1: way up to a hundred thousand dollars. But before that
8:27
Speaker 1: you get in an amazing amount of capability. I mentioned
8:31
Speaker 1: there the zero to sixty type figures, but you've also
8:36
Speaker 1: got four wheel steering. So these are big vehicles, but
8:40
Speaker 1: they've got a turning circle thanks to all four wheels
8:42
Speaker 1: turning that is the same as a small car like
8:45
Speaker 1: a Chevrolet Sonic for example. That four wheel steer function
8:50
Speaker 1: also allows you to go into what we call crab walk,
8:53
Speaker 1: which means the vehicle can drive in a diagonal fashion,
8:56
Speaker 1: which you might think, why do I need that, But
8:58
Speaker 1: certainly when you get into extra him off road environments
9:01
Speaker 1: to help navigate around, it's an amazing feature. But to
9:06
Speaker 1: be honest, it just makes you smile when you do
9:07
Speaker 1: it because you see the horrid the horizon going in
9:10
Speaker 1: the wrong direction when you're driving, So that's an amazing feature.
9:15
Speaker 1: We have what's called an infinity roof, so the six
9:17
Speaker 1: panels which all come off the store in the front
9:20
Speaker 1: of the vehicle where an engine would be in a
9:23
Speaker 1: traditional vehicle. You can store the infinity panel roof and
9:26
Speaker 1: the rear drop glass actually falls down, so you basically
9:29
Speaker 1: make this vehicle are convertible. We think it's probably the
9:33
Speaker 1: first all electric convertible in the world, and of course
9:37
Speaker 1: you're getting that amazing open air experience with a near
9:41
Speaker 1: silence from the propulsion system because it's electric. Um. It's
9:46
Speaker 1: also got super Cruise, the latest generation of super cruise,
9:49
Speaker 1: and this is what a lot of people refer to
9:51
Speaker 1: as autonomous driving. We call it a driver as this feature,
9:54
Speaker 1: but it allows you to drive along the highway, take
9:56
Speaker 1: your hands off the wheel completely, and it will even
9:59
Speaker 1: do overtaking maneuvers as well. So this is a vehicle
10:03
Speaker 1: that's truly revolutionary, truly a super truck. And whilst the
10:08
Speaker 1: upper price bounds, we think it's incredible value of money.
10:11
Speaker 1: It will be amazing. I mean, I'm looking forward to
10:14
Speaker 1: the SUV version which comes out. I think what late
10:17
Speaker 1: three and I think it's gorgeous. I gotta ask, though,
10:21
Speaker 1: Duncan Um, what's your answer to the current uh, the
10:26
Speaker 1: current crop of gas powered super trucks you've got the
10:29
Speaker 1: doddre M t r X, so I think blew everybody away,
10:32
Speaker 1: and Ford plans to answer could they kind of flubbed
10:34
Speaker 1: it And now they're gonna answer next year with the
10:36
Speaker 1: Raptor are But these are you know, more than six
10:39
Speaker 1: leaders v a supercharged or turbo charged with seven hundred horsepower.
10:45
Speaker 1: Does GM have an answer to that? Yeah, we do,
10:49
Speaker 1: And again you know we were still we're still selling
10:52
Speaker 1: traditional based vehicles as well, and I love them. But
10:56
Speaker 1: if his performance that you're looking for, then quite honestly
10:59
Speaker 1: nothing and come close to um to the hummary V
11:02
Speaker 1: whether it be in truck, pickup truck or SUV. Guys,
11:05
Speaker 1: we're talking about eleven and a half thousand pounds of talk.
11:09
Speaker 1: We're talking about a thousand horsepower on the truck and
11:12
Speaker 1: about eight thirty on the SUV. And as I say there,
11:15
Speaker 1: you're talking about instant acceleration zero to sixty three seconds
11:20
Speaker 1: on the truck and about three and a half on
11:22
Speaker 1: the SUV. So this is this gives truly kind of
11:26
Speaker 1: unprecedented levels of performance. And he doesn't just do it
11:30
Speaker 1: in a in a way that he's a pure brute force.
11:33
Speaker 1: I mean, for example, when you choose to go for
11:36
Speaker 1: this great zero to sixty time. Obviously, in the safe
11:39
Speaker 1: conditions you engage what's called what's the freedom mode, and
11:43
Speaker 1: what that does. It lowers the vehicle to its lowest
11:46
Speaker 1: level because the suspension goes up and down, the seat
11:50
Speaker 1: starts vibrating. You get almost like an amusement park theater
11:53
Speaker 1: within the vehicles. All the screens begin to display things
11:57
Speaker 1: and you count down them. Boom, you you express the
12:00
Speaker 1: the gas story, you press the accelerate, the pedals pedal, Yeah,
12:09
Speaker 1: no gas pedal. Now all right, that was good car talk, guys.
12:12
Speaker 1: I'm glad we have you. Guys got the chat your
12:14
Speaker 1: little auto stuff. Duncan all Dread, vice president Global Buick
12:18
Speaker 1: and GMC talking about electric vehicles coming to the truck market.
12:23
Speaker 1: And I know one Matt Miller is a psyched, so
12:25
Speaker 1: that's good for him. This week, we're going to see
12:30
Speaker 1: a big, big I p O and it's in the
12:32
Speaker 1: crypto space coin based coming public this week via a
12:36
Speaker 1: direct listing at a staggering valuation, staggering to me at
12:39
Speaker 1: least of proximately one hundred billion dollars. Let's get the
12:44
Speaker 1: latest on this. We can do that with John Woo.
12:46
Speaker 1: He's a president of Ava Labs based in Miami. So, first, John,
12:51
Speaker 1: thanks so much for joining us here. I love for
12:53
Speaker 1: you just to simply describe what coin base is and
12:56
Speaker 1: why it is so critical to the crypto world. Okay, Paul,
13:00
Speaker 1: nice to be here. So, a coin base is a
13:03
Speaker 1: crypto exchange. They are very important to the cryptal world
13:07
Speaker 1: because they are one of the few properly regulated exchanges
13:12
Speaker 1: allows FIAT onto the cryptal world, so they provide that
13:17
Speaker 1: service in a compliant way, and that's why it's so important.
13:21
Speaker 1: You know, Before I go to bed every night, I
13:23
Speaker 1: always like to dream about, Uh, had I bought like
13:28
Speaker 1: three thousand bit coin when it was at seventy five
13:30
Speaker 1: dollars apiece, then I would have liked to sell it
13:33
Speaker 1: out around seventeen eighteen thousand at the peak and u
13:37
Speaker 1: and then and then buy back in when it dropped
13:39
Speaker 1: again and then sell it out again at like sixty tho.
13:41
Speaker 1: So I would be like a billionaire right now. Would
13:44
Speaker 1: I be able to do that on on coin based
13:46
Speaker 1: that would that be the best place for me to
13:47
Speaker 1: do it? Yes, that you are allowed to do that,
13:52
Speaker 1: That's one of the places you can do it. But um,
13:56
Speaker 1: you know I can test the fact from having been
13:58
Speaker 1: on the bi side before. It's easier to just buy
14:01
Speaker 1: and hold the concept of trying to capture a move
14:03
Speaker 1: and being able to navigate the daily trading. These are dreams, John,
14:08
Speaker 1: This is my This is my dream every night. It's
14:11
Speaker 1: nothing that I could actually have done. I think it
14:12
Speaker 1: would be ethically wrong for me. But um, is coin
14:16
Speaker 1: based then the best place to do big bitcoin trades
14:19
Speaker 1: securely for a US investor who wants an experience that's
14:26
Speaker 1: similar to what they do at the brokerage houses. The
14:29
Speaker 1: answer is yes, all right? So John, is this a
14:34
Speaker 1: way for investors if I wanted to buy into this
14:37
Speaker 1: coin based IK? What I be my major play here
14:40
Speaker 1: is Hey, this gives me exposure to the crypto world. Yes? Absolutely.
14:47
Speaker 1: I think the one thing that you would have to
14:49
Speaker 1: consider it though, is how correlated is this to just gitcoin?
14:54
Speaker 1: I think of the assets custody by these guys is
14:58
Speaker 1: just bitcoin. So if you want to get exposure to
15:02
Speaker 1: anything below the top five coins, this is okay way,
15:08
Speaker 1: but it's not probably possibly the best way to do it.
15:12
Speaker 1: So uh where else should investors look? Then? Right now?
15:15
Speaker 1: And does this crypto boom still have room to run.
15:22
Speaker 1: So in terms of I answer backwards in terms of
15:25
Speaker 1: the boom, I think you'll absolutely have room. Because the
15:30
Speaker 1: market cap in crypto has gone from about one trillion
15:34
Speaker 1: at the end of January to about two trillions. Part
15:38
Speaker 1: of that is just you know, the price of BPC
15:41
Speaker 1: going up, but if you look at what's beneed that
15:44
Speaker 1: and the faster growing parts of it, even at coin
15:47
Speaker 1: basis custody, it is etherium and some of the other alternatives.
15:52
Speaker 1: Bitcoin has proven to the world the first generation of
15:55
Speaker 1: crypto was good for a digital currency. Ethereum is now
15:59
Speaker 1: showing people that hey, there could be utility. There's this
16:02
Speaker 1: whole defined network popping up. There's these n f t
16:05
Speaker 1: s that you and I have talked about in the past.
16:07
Speaker 1: So there's starting to begin use case and what I
16:11
Speaker 1: call second generation of crypto, which is the ethereum and
16:14
Speaker 1: some of the other alternatives. Is ethereum help me out here.
16:18
Speaker 1: Is ethereum a competitor to bitcoin or is it just
16:21
Speaker 1: a use case at bitcoin? How do we think about
16:23
Speaker 1: it in the context of bitcoin, Because we are hearing
16:25
Speaker 1: more and more about ethereum as a stock price or
16:27
Speaker 1: as the price of the currency continues to rise. Sure,
16:31
Speaker 1: the easiest way to think of Ethereum is that it
16:34
Speaker 1: is showing the utility. It's kind of like iOS on Apple.
16:39
Speaker 1: It is the platform that allows applications, whether in the
16:43
Speaker 1: traditional world Facebook or clubhouse or TikTok, to build on
16:48
Speaker 1: top of that iOS because it has a platform to
16:51
Speaker 1: allow developers to come in and be creative and create
16:54
Speaker 1: use cases on top of it Um. That's the best
16:58
Speaker 1: way to think about Ethereum. Whereas Bitcoin, the best use
17:02
Speaker 1: case actually frankly is still digital goal storage of value,
17:07
Speaker 1: and that is because the call it think of it
17:09
Speaker 1: as the operating system. The mechanism on Bitcoin has certain advantages,
17:14
Speaker 1: but it doesn't have speed, it doesn't have transaction capability,
17:18
Speaker 1: doesn't have smart contracts on top of it. That's what
17:20
Speaker 1: ethereum has provided. Now there's a whole new group while
17:24
Speaker 1: called crypto free point. Oh, and that's the guys below
17:28
Speaker 1: the full and those guys are now making those transaction
17:32
Speaker 1: happen at a very very fast paced no latency and
17:37
Speaker 1: making it cheap. So you know, we've talked, we talked
17:40
Speaker 1: about n fps in the past. There are people right
17:42
Speaker 1: now who go to Etherium. They purchase a n F
17:46
Speaker 1: key somewhere, but they had to pay thirty to forty
17:49
Speaker 1: in gas prices, which is effectively transaction costs. So that's
17:53
Speaker 1: going to be prohibitive of creating a proper digital economy.
17:56
Speaker 1: So you have a whole new generation now of call
17:59
Speaker 1: it platforms that are allowing better technology, better way of
18:03
Speaker 1: setting things up, allowing people to actually transact, allowing a
18:07
Speaker 1: digital economy to really thrive. That medium exchange should not
18:11
Speaker 1: be prohibit to becoming a nice economy. So tell us
18:16
Speaker 1: quickly again what you're doing at Ava Labs, because you
18:20
Speaker 1: you know, come from a full Ivy League pedigree, NBA Harvard,
18:23
Speaker 1: you worked at Tiger Management. What what do you do
18:27
Speaker 1: and what is your platform capable of? Great so on,
18:31
Speaker 1: President of Ava Labs. Ava Labs is the team behind
18:34
Speaker 1: the protocol Avalanche. Avalanche is the next generation blockchain that
18:38
Speaker 1: is compatible with Etherium. So exactly what I said before,
18:43
Speaker 1: where I think the first generation crypto Bitcoin was digital money,
18:47
Speaker 1: second generation was applications, utility and an ecosystem. Third generation
18:52
Speaker 1: are going to be Avalanche like platforms that allow people
18:57
Speaker 1: to transact and exchange things cheaply. It's almost like my Friendster,
19:03
Speaker 1: my Space, and now we're in the world of Facebook
19:06
Speaker 1: where we're gonna about to really take off. All right, well,
19:09
Speaker 1: it's great to get your insight on all things crypto. John,
19:12
Speaker 1: thanks again for joining us. Hope to have you back
19:14
Speaker 1: again soon. John Woo, they're the president of Able Labs
19:18
Speaker 1: talking to us about the coin base. I p o
19:21
Speaker 1: this could Paul be a hundred billion dollar company. It
19:24
Speaker 1: certainly is value that way privately. And the question is, um,
19:28
Speaker 1: how will investors who have bit up crypto assets so quickly? Uh,
19:33
Speaker 1: you know, um embrace coin coin coin base absolutely, and
19:37
Speaker 1: it's gonna beet direct listing mat so it's gonna be
19:39
Speaker 1: really interesting to see how this thing trades when it
19:41
Speaker 1: does come out. Yeah, I think the direct listing aspect
19:44
Speaker 1: of it is really cool, so you could get a
19:46
Speaker 1: lot more retail. This is Bloomberg. Now we're to bring
19:52
Speaker 1: in anag Rana. He is Bloomberg Intelligence senior industry analyst.
19:58
Speaker 1: And of course the chips time it is on today.
20:01
Speaker 1: We'll get to that. But first off, this morning we
20:03
Speaker 1: saw Microsoft headlines cross they're gonna buy Nuance in a
20:07
Speaker 1: sixteen billion dollar deal that is their second largest in
20:11
Speaker 1: history and I read your b I piece and you
20:15
Speaker 1: have a really cool chart about the reach, the product
20:19
Speaker 1: penetration of Nuance. Ten tho organizations use it, but I
20:22
Speaker 1: thought it was amazing of hospitals in America use nuanced solutions.
20:29
Speaker 1: What does this company do? So in the simplest way,
20:34
Speaker 1: if I'm a doctor and I come back after visiting
20:37
Speaker 1: a patients, I need to transcribe that soft to that
20:40
Speaker 1: particular you know, dictation of the of the chart. Um.
20:44
Speaker 1: The software allows me to transcribe it as as as
20:48
Speaker 1: you and I are talking. The software transcribes and conversation
20:51
Speaker 1: in the background, and that really has been their full
20:53
Speaker 1: tape for many years. And that's really where the crux
20:56
Speaker 1: of the product is. And this is what we think
20:59
Speaker 1: Microsoft is going to scale it much bigger, all right,
21:03
Speaker 1: So I mean nineteen point seven billion dollars, that's a
21:06
Speaker 1: that's a big number to the Matt Miller's and Paul
21:08
Speaker 1: Squeeneys of the world. Um, but the Microsoft that's not
21:11
Speaker 1: so much here. So I guess they're thinking about the
21:14
Speaker 1: total addressable market. Let's just give us a sense of
21:17
Speaker 1: the strategy behind Microsoft. But what they think they can
21:20
Speaker 1: do with this asset. So think about it. It Currently
21:24
Speaker 1: healthcare accounts for close to eighteen percent of uss GDP
21:28
Speaker 1: in terms of total expenses. It's an area which is
21:31
Speaker 1: probably the biggest problem area for any corporation that's out there,
21:34
Speaker 1: is a problem for all politicians. But and we have
21:37
Speaker 1: always said for years, I everybody said it for years
21:39
Speaker 1: that only technology can solve this problem of you know,
21:43
Speaker 1: waste stage. Now the pandemic is a catalyst for people
21:46
Speaker 1: to say, can we do a lot more work digitally?
21:49
Speaker 1: And this is one of the the you could say,
21:52
Speaker 1: nuggets of where as we go more digital, you want
21:56
Speaker 1: to get more things that can transcribe using you know, voice,
22:00
Speaker 1: using AI. Yeah. I mean when you when you talk
22:03
Speaker 1: about what doctors use it for um, I'm thinking like
22:07
Speaker 1: my mechanic could use this from my bike. I got
22:09
Speaker 1: carb flow, I clutch slippage, you know, um, if you
22:14
Speaker 1: have an old bike, those things are a problem. But
22:16
Speaker 1: you could use it in so many different ways. For example, finance,
22:19
Speaker 1: the financial industry could use it in um looking at
22:22
Speaker 1: a client's portfolio. Are they gonna stick with just health
22:25
Speaker 1: care here? I don't think so. In fact, one of
22:28
Speaker 1: the things being pointed out in our written research is
22:31
Speaker 1: conversation is increasingly becoming the most important way people interact
22:36
Speaker 1: with any application. So you know, from the consumer point
22:39
Speaker 1: whether that's Alexa or City, but from you know, other
22:42
Speaker 1: areas as well, whether it's your HR software down the road,
22:45
Speaker 1: you know, whether it's any other productivity application that helps
22:49
Speaker 1: you become more um, you know productive. You will be
22:53
Speaker 1: using voice as the first way of command to you know,
22:56
Speaker 1: to interact with the person on the other side, and
22:59
Speaker 1: that's this software. You know, the guts of this software
23:02
Speaker 1: is so important because you can use it to create
23:05
Speaker 1: customer service chart pots. For example, you've covered Microsoft for
23:09
Speaker 1: a long time. They typically, uh, don't acquire a lot
23:13
Speaker 1: of stuff. They're not very active in the M and
23:15
Speaker 1: A market. They did by LinkedIn and now this deal
23:17
Speaker 1: on a couple of others. Is that going to stay
23:19
Speaker 1: the same or do you expect them to try to
23:21
Speaker 1: step up and go stick growth rate with with some acquisitions.
23:24
Speaker 1: So I think one of the biggest thing I would
23:26
Speaker 1: say is they would want to use the growth rates
23:29
Speaker 1: not by actually acquiring something for the take of revenue,
23:32
Speaker 1: but it's going to be technologies that have very large,
23:35
Speaker 1: you know, implications. So for example, this particular applications, as
23:39
Speaker 1: both of you mentioned, will have applications not just in
23:42
Speaker 1: the healthcare vertical, but almost everything that Microsoft does, So
23:46
Speaker 1: you know, it's it's it's a question of acquiring the
23:49
Speaker 1: software and where the end markets is incredibly large. And
23:54
Speaker 1: I think that's really what we will be looking at,
23:56
Speaker 1: is whether they keep on investing in areas where, um,
24:00
Speaker 1: you know, the the end markets are not tiny but
24:03
Speaker 1: have a very large addressable market. So I just want
24:06
Speaker 1: to quickly get you to touch on the chip summit
24:08
Speaker 1: that's happening today. We've seen the problems spread across a
24:12
Speaker 1: number of industries. Just thirty seconds here and act what
24:15
Speaker 1: what do you expect to be accomplished? See, I don't
24:19
Speaker 1: think that SUBMIT is going to accomplish anything concrete in
24:22
Speaker 1: a sense that that's a problem that just cannot be
24:24
Speaker 1: solved so quickly. But we are I'm happy that they
24:27
Speaker 1: are discussing this problem just because as an agent, we
24:30
Speaker 1: really need to get a lot more semiconductor work done
24:33
Speaker 1: in the US rather than you know, being a hostage
24:36
Speaker 1: to the the the a the ation mevendors. Realistically, un
24:41
Speaker 1: will we bring chip manufacturing to the States. It's very
24:46
Speaker 1: difficult to say whether we physically bring it not, but
24:49
Speaker 1: we really need to have a way to make sure that,
24:52
Speaker 1: you know, similar to the way we are getting drugs
24:54
Speaker 1: or we're getting the vaccine and you know, without a
24:57
Speaker 1: problem from anywhere in the world, we need to make
24:59
Speaker 1: sure we get the most access to it before anybody
25:01
Speaker 1: else does. All right, don Rock, thank you so much
25:03
Speaker 1: for joining us. We appreciate that Anor rack Ron has
25:05
Speaker 1: senior software and I T Services analyst for Bloomberg Intelligence,
25:09
Speaker 1: helping us break down the Microsoft deal again. Nineteen point
25:12
Speaker 1: seven billion dollars total consideration, big premium um, but as
25:17
Speaker 1: Annoragua was mentioning, UH, it increases Microsoft's UH positioning and
25:22
Speaker 1: enhances its positioning in healthcare as healthcare moves into the
25:26
Speaker 1: twenty first century. So sting follow up on that. Thanks
25:30
Speaker 1: for listening to the Bloomberg Markets podcast. You can subscribe
25:33
Speaker 1: and listen to interviews of Apple Podcasts or whatever podcast
25:37
Speaker 1: platform you prefer. I'm Matt Miller. I'm on Twitter at
25:41
Speaker 1: Matt Miller V three on false Sweeney I'm on Twitter
25:44
Speaker 1: at pt Sweeney. Before the podcast, you can always catch
25:47
Speaker 1: us worldwide at Bloomberg Radio.