Latest / Bloomberg Intelligence / We're Arming The Rebels Of Amazon: Shopify COO

Transcript

We're Arming The Rebels Of Amazon: Shopify COO · Bloomberg Intelligence

• 0:02
  Speaker 1: Welcome to the Bloomberg Penl podcast. I'm Paul swing you
• 0:05
  Speaker 1: along with my co host Lisa Brahmas. Each day we
• 0:07
  Speaker 1: bring you the most noteworthy and useful interviews for you
• 0:10
  Speaker 1: and your money, whether at the grocery store or the
• 0:12
  Speaker 1: trading floor. Find a Bloomberg Penil podcast on Apple podcast
• 0:16
  Speaker 1: or wherever you listen to podcasts, as well as at
• 0:18
  Speaker 1: Bloomberg dot com. So Shopify, I've got a stock for
• 0:21
  Speaker 1: you Shopify, Lisa. The stock is upcent over the last year.
• 0:25
  Speaker 1: These are the good folks that help merchants set up
• 0:28
  Speaker 1: and manage their online stores. Stock has done phenomenon well,
• 0:31
  Speaker 1: just had some great earnings out on the last couple
• 0:34
  Speaker 1: of days. Hardly Finkelstein, chief operating Officer Shopify, joins us
• 0:37
  Speaker 1: here on our Bloomberg Interactive Broker studio. Hardly, thanks so
• 0:40
  Speaker 1: much for being with it. Usually we chat with you
• 0:41
  Speaker 1: on the phone, so it's good to have you in
• 0:42
  Speaker 1: studio to be here. What is driving the growth of Shopify.
• 0:46
  Speaker 1: I mean when people think online, they just they just
• 0:49
  Speaker 1: and they think retail. They just think Amazon putting retail
• 0:51
  Speaker 1: out of business. But there are a lot of retailers
• 0:53
  Speaker 1: using your technology that are kind of getting it done right. Yeah,
• 0:56
  Speaker 1: there's a million merchants, a million stores now on Shopify
• 0:59
  Speaker 1: and they old sixty one billion dollars in two thousand nineteen.
• 1:02
  Speaker 1: That's up about forty nine percent from the previous year.
• 1:05
  Speaker 1: Our revenue for two was approximately one point five billion.
• 1:08
  Speaker 1: That's up. So certainly I think people are beginning understand
• 1:11
  Speaker 1: what Shopify is and what we are is where the
• 1:13
  Speaker 1: world's first retail operating system. And uh, we have stores
• 1:16
  Speaker 1: that are starting on shop If they getting really big,
• 1:18
  Speaker 1: that's the all Birds, that's the bombas Socks of the world,
• 1:21
  Speaker 1: that's the gym Sharks of the world. They're becoming category leaders.
• 1:24
  Speaker 1: But also we we also big brands I mentioned kitchen
• 1:26
  Speaker 1: Aid and PepsiCo and PNG that are also moving over.
• 1:29
  Speaker 1: So they use you, your guys platform as opposed to
• 1:31
  Speaker 1: building themselves. Is that kind of the way do you
• 1:33
  Speaker 1: think about Yes, some of them built these homegrown stores,
• 1:36
  Speaker 1: homegrown stores and decided they don't want to run massive
• 1:38
  Speaker 1: engineering teams. In other cases, they're migrating over from the
• 1:41
  Speaker 1: large enterprise offerings. So if you look at a chart
• 1:44
  Speaker 1: of your stock since the end of two thousand and eighteen,
• 1:47
  Speaker 1: it's just con stratospheric, right, I mean, it's just absolutely rocketed,
• 1:51
  Speaker 1: and I'm trying to understand how you maintain this sort
• 1:54
  Speaker 1: of momentum at a time when there is a lot
• 1:57
  Speaker 1: of competition and at a time when there still are
• 1:59
  Speaker 1: a lot of questions about the economy. Yeah, So a
• 2:02
  Speaker 1: couple of things. First of all, I think when we
• 2:04
  Speaker 1: first swent public, which is does in fifteen, Shopify was
• 2:06
  Speaker 1: really e commerce provider for merchants and entrepreneurs and small
• 2:11
  Speaker 1: businesses in English speaking world. Since then, we've expanded well
• 2:14
  Speaker 1: beyond e commerce. We now power physical retail across If
• 2:17
  Speaker 1: you walk in any Albert store, you'll see Shopify powering
• 2:20
  Speaker 1: the physical locations, and we do that across thousands of
• 2:22
  Speaker 1: brick and mortar stores. We have a capital business. We've
• 2:24
  Speaker 1: given them more than eight hundred million dollars in cash advances.
• 2:27
  Speaker 1: We have a payments business. We're launching a fulfillmance business now.
• 2:30
  Speaker 1: And we've also expanded beyond just our core geographies um.
• 2:33
  Speaker 1: In fact, we've grown our um the amount of merchants
• 2:36
  Speaker 1: on our platform outside English speaking countries from twenty four
• 2:39
  Speaker 1: percent last year to this past quarter, and so we're
• 2:43
  Speaker 1: seeing a larger TAM and we're doing more for our merchants,
• 2:45
  Speaker 1: which is why I sort of refer to us as
• 2:47
  Speaker 1: this retail operating system, not just an e commerce provider anymore,
• 2:50
  Speaker 1: so you know, as an e commerce provider or expanded larger.
• 2:54
  Speaker 1: You guys did not come out of Silicon Valley, did
• 2:56
  Speaker 1: you. You You guys are in Ottawa. We are absolutely abel
• 2:59
  Speaker 1: like the start up community, the startup vibe in Canada.
• 3:03
  Speaker 1: It is audaa Audawa the place to do it? Or
• 3:06
  Speaker 1: is it just entrepreneurs kind of all over? Yeah? Actually,
• 3:08
  Speaker 1: I think startups in entrepreneurship and technology has become geographically agnostic.
• 3:13
  Speaker 1: I actually think it's an advantage to be outside of
• 3:15
  Speaker 1: Silicon Valley. I have a lot of piers that run
• 3:17
  Speaker 1: companies like like Hours in the Valley and they tell
• 3:19
  Speaker 1: me that the average tenure of employees they're super short,
• 3:22
  Speaker 1: like eighteen months. We see incredible talent coming out of Canada,
• 3:25
  Speaker 1: we see incredible loyalty, and I think there's something to
• 3:28
  Speaker 1: be said about being the best place to work in
• 3:30
  Speaker 1: any single geography. And I think Shoplay is the best
• 3:32
  Speaker 1: place to work in Canada and one of them around
• 3:34
  Speaker 1: the world. What about competition, I imagine that Amazon would
• 3:38
  Speaker 1: love to get a piece of what you're doing. Yeah,
• 3:40
  Speaker 1: So we don't get be with Amazon, our million merchants do.
• 3:42
  Speaker 1: And I think what Amazon is doing is they're trying
• 3:44
  Speaker 1: to build an empire, and what we're doing is we're
• 3:46
  Speaker 1: arming the rebels, and the rebels are winning. So you
• 3:49
  Speaker 1: see companies like Nike moving off Amazon because they want
• 3:52
  Speaker 1: to have a direct relationship with or in consumers. All Birds,
• 3:55
  Speaker 1: for example, if you try to buy All Birds and Amazon,
• 3:57
  Speaker 1: you can only find fake all Birds and and and
• 3:59
  Speaker 1: Albert has been built on Shopify. So basically the idea
• 4:02
  Speaker 1: here is rather than go to Amazon, you're trying to
• 4:04
  Speaker 1: give them tools to be able to do it themselves
• 4:06
  Speaker 1: and create a platform. How do you offer them the
• 4:09
  Speaker 1: same kind of visibility that they may get in an Amazon. Yes.
• 4:13
  Speaker 1: So certainly if they're gonna put their products on a
• 4:15
  Speaker 1: marketplace like Amazon or eBay, they're going to obviously, uh,
• 4:19
  Speaker 1: they're gonna rent their customers to those to those brands.
• 4:22
  Speaker 1: We actually created a platform where our merchants are brands
• 4:25
  Speaker 1: can actually find their own customers and own them, whether
• 4:27
  Speaker 1: through social media or you can buy marketing directly from
• 4:30
  Speaker 1: Shopify on things like Google or Facebook or Snapchat or Instagram,
• 4:33
  Speaker 1: and so rather than simply giving them, customers are renting
• 4:36
  Speaker 1: them the way Amazon does, and eventually they can take
• 4:38
  Speaker 1: them back. We actually empower these merchants to create their
• 4:41
  Speaker 1: own customer basis and then connect directly with them. Where
• 4:44
  Speaker 1: are you guys investing in heavily in SFN shop Life
• 4:47
  Speaker 1: Fulfilm Network. We think that is if you sort of
• 4:50
  Speaker 1: look at what we've been doing the last couple of years,
• 4:52
  Speaker 1: we're taking off all the different challenges that a small
• 4:54
  Speaker 1: business or a big business may have. We think fulfillment
• 4:57
  Speaker 1: is one of those things people don't want to use,
• 4:59
  Speaker 1: uh the party logistics companies because either the requirements and
• 5:02
  Speaker 1: moms are way too high, or they put everything in
• 5:04
  Speaker 1: the same box with their marketplaces logo on it. What
• 5:08
  Speaker 1: we're doing is we're creating this network of third party
• 5:10
  Speaker 1: warehouses were aggregating them using technology and software. We bought
• 5:14
  Speaker 1: a company in Boston called six Rubber Systems last year
• 5:16
  Speaker 1: for about four and fifty million dollars. They're going to
• 5:19
  Speaker 1: provide incredible robotic technology to make all warehouses a lot
• 5:22
  Speaker 1: more effective, and then we're gonna democratize shop of the
• 5:25
  Speaker 1: Fulfilming Network. The way we've done with e commerce. Just
• 5:27
  Speaker 1: real quick here, I'm wondering what's the most effective platform
• 5:30
  Speaker 1: for advertising that you found. It really depends, I think
• 5:33
  Speaker 1: for a lot of these DTC brands, the ones that
• 5:34
  Speaker 1: are you know, new director consumer mattress companies or companies
• 5:38
  Speaker 1: like that. Honestly, social media seems to be the best one.
• 5:41
  Speaker 1: Now that being said, others are are in more of
• 5:43
  Speaker 1: these traditional industries. Their TV is actually working really well
• 5:46
  Speaker 1: for them. Interesting, Probably real quickly, Elon mess Musk is
• 5:49
  Speaker 1: taking advantage of this surging share price to sell some stock.
• 5:53
  Speaker 1: Are you guys interested in selling stock? Not at this pine? Okay,
• 5:56
  Speaker 1: Harlie fickle ste and thank you so much for being here.
• 5:58
  Speaker 1: Charlie Finkelstein, two operating officer of Shopify based in Ottawa,
• 6:02
  Speaker 1: joining us here in our interactive broker studio. Well, the
• 6:14
  Speaker 1: global travel industry is really at the forefront of feeling
• 6:18
  Speaker 1: the brunt of the coronavirus. You know, I'm thinking cruise ships, hotels, casinos,
• 6:23
  Speaker 1: really seeing business impacted significantly in the shares of those
• 6:27
  Speaker 1: companies reflecting it as well. Our next guest has a
• 6:30
  Speaker 1: equally cautious view of those sectors. Tuna A Moobi. He's
• 6:33
  Speaker 1: a director and industry research analysts at cf R A Research.
• 6:37
  Speaker 1: He joins us on the phone, Thanks so much for
• 6:39
  Speaker 1: joining us again. I know you've gone become more cautious,
• 6:42
  Speaker 1: downgraded a bunch of stocks. Tell us how you see
• 6:45
  Speaker 1: kind of some of these uh, casino companies, cruise lines
• 6:48
  Speaker 1: and the like. Good morning, uh Paul, my friend, and
• 6:52
  Speaker 1: thanks for having me. Um. So over the past um
• 6:55
  Speaker 1: two weeks or so, we have actually taken a more
• 6:58
  Speaker 1: dare assessment of a potential impact of the coronavirus on UM,
• 7:03
  Speaker 1: you know, the overall tourism and UM, you know, the
• 7:07
  Speaker 1: cruise ships, UM, the online travel companies, the casinos. The
• 7:12
  Speaker 1: one constant theme has emerged is that, UM, you know,
• 7:16
  Speaker 1: while it's very difficult to quantify the overall impact, and
• 7:19
  Speaker 1: of course no one really knows the duration of how
• 7:22
  Speaker 1: long it's gonna last, but we think that it's starting
• 7:24
  Speaker 1: to take a toll right now. And you just heard
• 7:27
  Speaker 1: about you know, the higher number of death tolls UM,
• 7:31
  Speaker 1: as well as more cases being diagnosed. So my sense is, UM,
• 7:34
  Speaker 1: you know, the market may still be underestimating the potential
• 7:38
  Speaker 1: impact of this, if you remember, UM, I think it
• 7:40
  Speaker 1: seems to be some comfort level that if you compared
• 7:43
  Speaker 1: to the um the Stars or the Bola, and while
• 7:46
  Speaker 1: those cases were ultimately you know, resolved, limiting its impact,
• 7:50
  Speaker 1: what warries us here is really the speed and severity
• 7:53
  Speaker 1: of of the of the new cases that are being
• 7:56
  Speaker 1: diagnosed on the death toll, which kind of leads us
• 7:58
  Speaker 1: to believe that this is gonna come. You need to
• 8:00
  Speaker 1: be an overhang as as the year goes on for
• 8:03
  Speaker 1: for quite some time. You know, it's so interesting to
• 8:05
  Speaker 1: hear you speak, because we speak with economists and investors
• 8:08
  Speaker 1: who say they're expecting some sort of V shaped recovery
• 8:11
  Speaker 1: in the economy of China and beyond. And I'm wondering
• 8:15
  Speaker 1: as you look at MGM basically withdrawing their entire outlook
• 8:19
  Speaker 1: for the year, citing the disruption from the coronavirus, the
• 8:22
  Speaker 1: fact that they get twenty seven percent of their business
• 8:24
  Speaker 1: from Macau UH and are losing and estimated more than
• 8:27
  Speaker 1: a million dollars a day based on the current shutdown
• 8:30
  Speaker 1: that we're seeing, how can we even be so sure
• 8:34
  Speaker 1: that a place like MGM could compensate for this later
• 8:38
  Speaker 1: on we can be at the short answer, We're actually
• 8:41
  Speaker 1: are taking a more negative view of MBM downgrading to
• 8:44
  Speaker 1: itsell ahead of their earnings. Um, you know report last night.
• 8:48
  Speaker 1: I think that just confirmed to us, um that you know,
• 8:51
  Speaker 1: no one really has a handle of this. So they
• 8:53
  Speaker 1: talked about the expanded burn rate about one point five
• 8:57
  Speaker 1: million dollars on a daily basis evil, while the casinos
• 9:01
  Speaker 1: have been shot down mostly for peril, and that was
• 9:04
  Speaker 1: also a thing that we heard from Wind Resources and
• 9:07
  Speaker 1: in Las Vegas. So I think you're really starting to see, uh,
• 9:11
  Speaker 1: you know, the casinos starting to feel the brunt of this.
• 9:14
  Speaker 1: And remember, um, you know, these are you know, in
• 9:17
  Speaker 1: an industry that was alreadily already I'm sorry, already massively
• 9:20
  Speaker 1: impacted by the Hong Kong protest. So these latest coronavirus
• 9:25
  Speaker 1: issue just seems to be adding a saut to to
• 9:27
  Speaker 1: injury and really no one how to handle on on
• 9:30
  Speaker 1: when this is gonna dissipay. Now, one more thing I'd
• 9:33
  Speaker 1: add is that even when the situation is resolved, typically
• 9:36
  Speaker 1: from a historical perspective, we usually see several months before
• 9:40
  Speaker 1: things can get any semblance of normalization, which is really
• 9:43
  Speaker 1: why we think this twenty um at least the first
• 9:47
  Speaker 1: half certainly is gonna need much more caution to know
• 9:50
  Speaker 1: this is definitely specific to the casino industry the travel industries.
• 9:55
  Speaker 1: Is there, though, a broader brush that we could paint
• 9:58
  Speaker 1: in terms of the potential longer term impact given your
• 10:02
  Speaker 1: experience examining the corporate balance sheets of these companies as
• 10:06
  Speaker 1: well as the likes of Amazon and Netflix. Well, you
• 10:10
  Speaker 1: know one thing that I'd say that China overall, um,
• 10:15
  Speaker 1: you know, most of these companies you talk about, Amazon
• 10:17
  Speaker 1: and Netflix have a relatively limited direct exposure in China
• 10:21
  Speaker 1: poly due to the regulatory um environment now. But I
• 10:25
  Speaker 1: think the UM what I see is some type of
• 10:28
  Speaker 1: uh uh you know, um kind of tangential fallout from
• 10:33
  Speaker 1: this geopolitical situation. UM. A lot of these companies, even
• 10:38
  Speaker 1: when they are not directly operating in China, have some
• 10:41
  Speaker 1: type of strategic partnership. That's true certainly for online travel companies,
• 10:46
  Speaker 1: and of course casinos have a huge stake in there.
• 10:48
  Speaker 1: So every industry is different. China itself has been a major,
• 10:54
  Speaker 1: uh you know, kind of driver of global tourism outbound travel,
• 11:00
  Speaker 1: and I think what's important to remember is that while um,
• 11:03
  Speaker 1: most of the issues right now appeared to be limited
• 11:06
  Speaker 1: to China, they could be. In fact, it broader geopolitical
• 11:10
  Speaker 1: impact across even the US and other uh you know
• 11:14
  Speaker 1: markets like Europe. Of course, that depends on how fast
• 11:18
  Speaker 1: those uh cases travel, but overall, while the overall impact
• 11:22
  Speaker 1: on GDP growth is the relatively meted at this point,
• 11:25
  Speaker 1: I think you could actually uh see that situation get
• 11:28
  Speaker 1: out of control pretty fast. So so it's just on
• 11:31
  Speaker 1: the cruise lines here. I know, when you talked to
• 11:33
  Speaker 1: a lot of people about, you know, why don't you
• 11:36
  Speaker 1: go on a cruise, one of the concerns is just
• 11:37
  Speaker 1: being you know, stuck with so many people in a
• 11:40
  Speaker 1: confined area, and it just seems like, you know, these
• 11:42
  Speaker 1: outbreaks of diseases are perhaps more common there. Do you
• 11:45
  Speaker 1: think there's longer term risk to kind of just the
• 11:48
  Speaker 1: whole market, you know, total market size for the cruising
• 11:52
  Speaker 1: industry from this, I think what's interesting that before this
• 11:55
  Speaker 1: coronavirus outbreak, um, you know, the cruise industry fundamentals were
• 11:59
  Speaker 1: pretty healthy. We're expecting the you know, kind of a
• 12:01
  Speaker 1: near record year based on advanced indicators of booking and pricing,
• 12:05
  Speaker 1: on board spending. Um, you know, all of those indicators
• 12:08
  Speaker 1: seem to be holding up well. Now, Uh it seems
• 12:11
  Speaker 1: like all bets are off when you kind of hear
• 12:14
  Speaker 1: stories about you know, the diamond prices being quarantined and
• 12:17
  Speaker 1: several other ships unable to find landing ports or destinations.
• 12:21
  Speaker 1: My sense is that there is a certain amount of
• 12:23
  Speaker 1: weariness out there, um among potential cruise passengers in terms
• 12:28
  Speaker 1: of booking pending the resolution of this issue. So, um,
• 12:32
  Speaker 1: I think you're starting to see the guidance from cruise companies. Uh.
• 12:36
  Speaker 1: You know, at risk is actually why we took a
• 12:38
  Speaker 1: more negative stance on Royal Caribbean as well as um
• 12:41
  Speaker 1: A Norwegian Cruise, both of which we downgraded well obviously
• 12:45
  Speaker 1: along on carnivals. So uh, this is something that's gonna
• 12:48
  Speaker 1: over over the industry until any more visibility in terms
• 12:53
  Speaker 1: of the potential resolution to not just real quick here
• 12:56
  Speaker 1: thirty seconds. Do you buy this argument that Netflix is
• 12:59
  Speaker 1: getting a whach boost from this because people are sitting
• 13:01
  Speaker 1: home and doing Netflix and chill rather than going out
• 13:04
  Speaker 1: potentially getting coronavirus a leita. That's something we've heard before,
• 13:09
  Speaker 1: but I'd say a little bit far fetched at this point.
• 13:13
  Speaker 1: It's really hard to kind of connect those dots. That
• 13:16
  Speaker 1: being said. I mean, I can understand why, you know,
• 13:19
  Speaker 1: maybe isolated cases that could be true, but hard to
• 13:22
  Speaker 1: generalize here do you know, Moby, thank you so much
• 13:25
  Speaker 1: to know MOBI director and industry analysts. It's c f
• 13:27
  Speaker 1: R A Research and joining us on the phone from
• 13:29
  Speaker 1: New Jersey, I love that I write a bunch of
• 13:31
  Speaker 1: stories about how Netflix. You know, we talk about the
• 13:34
  Speaker 1: negative impact of the coronavirus, but there are companies benefiting
• 13:37
  Speaker 1: because people are staying home and they've got to do something,
• 13:39
  Speaker 1: so they might as well watch movies. On Monday, the
• 13:54
  Speaker 1: Department of Justice and anced charges against four members of
• 13:58
  Speaker 1: China's People's Liberation Army hack of Equifax, and this was
• 14:03
  Speaker 1: something that exposed millions of Americans and their private data.
• 14:06
  Speaker 1: It raises questions. Putting aside this particular case, it raises
• 14:11
  Speaker 1: questions about just how well we are able to detect
• 14:14
  Speaker 1: the attacks that our data is exposed to every single day.
• 14:19
  Speaker 1: Joining us here in studio, Steve Wagner, Global Managing Director
• 14:22
  Speaker 1: of Decision Analytics four experience. Uh, Steve, so glad to
• 14:25
  Speaker 1: have you. I want to start with that, where are
• 14:27
  Speaker 1: we when it comes to detection when it comes to
• 14:31
  Speaker 1: these attacks? Sure? Well, the particular angle that we tend
• 14:35
  Speaker 1: to come at this from in my business is is
• 14:38
  Speaker 1: really fraud and identity um within commercial transactions? So a
• 14:43
  Speaker 1: lot of ways you can answer your question. We're focused
• 14:46
  Speaker 1: on that particular angle UM I think when we think
• 14:50
  Speaker 1: about it, and we just released a study that we've
• 14:53
  Speaker 1: done a six hundred six thousand, five hundred consumers and
• 14:58
  Speaker 1: six fifty bi no. This is in thirteen countries around
• 15:01
  Speaker 1: the world, and we've been looking at this question of
• 15:04
  Speaker 1: how businesses should sort of say, shape their understanding, how
• 15:08
  Speaker 1: do they react, what do they do? So the big
• 15:10
  Speaker 1: issue is businesses faced with those kind of security threats
• 15:15
  Speaker 1: instinctively sometimes will just clamp down, right, I you know,
• 15:19
  Speaker 1: the best thing for me to do is to not
• 15:21
  Speaker 1: be involved digitally with anybody. Of course, that doesn't really
• 15:24
  Speaker 1: allow you to do business very much. So the business persons, Yeah,
• 15:28
  Speaker 1: the business person really has to think through what's the
• 15:30
  Speaker 1: right way to do that, what's the right way to
• 15:31
  Speaker 1: make commerce work? So what our business people are generally
• 15:35
  Speaker 1: thinking about is how do I create an extraordinary digital
• 15:38
  Speaker 1: experience for my consumers? That's what they want to do, right.
• 15:42
  Speaker 1: What we found in this particular study was that of
• 15:46
  Speaker 1: businesses believe that they're actually doing a good job of
• 15:50
  Speaker 1: identifying who's coming to them, um Electronically, fifty of consumers
• 15:55
  Speaker 1: believe that the business is actually understand who they are,
• 15:59
  Speaker 1: which is obviously a significant mismatch. So do you think
• 16:03
  Speaker 1: the businesses that think the businesses think they're doing a
• 16:06
  Speaker 1: good good job identifying who their customers are? Is that
• 16:10
  Speaker 1: is that kind of false sense of security there? Do
• 16:12
  Speaker 1: you think that that is a really valid number? Well? What, well,
• 16:16
  Speaker 1: I think the numbers valid in the study, but what
• 16:18
  Speaker 1: they're what you have to get to in order to
• 16:20
  Speaker 1: understand that mismatch is the way businesses are looking at
• 16:23
  Speaker 1: it today versus the way consumers are looking at it.
• 16:26
  Speaker 1: So the way when you when you talk to a consumer,
• 16:29
  Speaker 1: what do they care about first and foremost in the
• 16:31
  Speaker 1: digital interactions, they care about security. So actually, when you
• 16:35
  Speaker 1: talk to a consumer your business, you're dealing with them
• 16:38
  Speaker 1: online in disha of security. Make them feel better, make
• 16:42
  Speaker 1: them happier to interact with you. A business. On the
• 16:45
  Speaker 1: other hand, when you rank their priorities, number one in
• 16:48
  Speaker 1: their priority list is uh creating an experience that is
• 16:53
  Speaker 1: targeted to that individual, right, So in other words, they'll
• 16:56
  Speaker 1: look at it, they'll say, yeah, I understand. I know
• 16:58
  Speaker 1: who Paul is. I've seen them before. Um, that's all
• 17:00
  Speaker 1: I need to know. Now. The real question is whether
• 17:02
  Speaker 1: or not the things I say to Paul and what
• 17:04
  Speaker 1: I do with Paul is really on target or not.
• 17:07
  Speaker 1: And the consumers just saying, hey, look, actually, when you
• 17:10
  Speaker 1: asked me for passwords and you asked me, you know,
• 17:12
  Speaker 1: put me into a credential environment. That's what I'm willing
• 17:16
  Speaker 1: to share. So, you know, but this goes really to
• 17:18
  Speaker 1: the heart of do you know who you're dealing with?
• 17:21
  Speaker 1: Do you know what the incoming attention you're getting really
• 17:27
  Speaker 1: is about. According to the same study you you talked about,
• 17:30
  Speaker 1: how fraud continues to increase, with fifty seven percent of
• 17:33
  Speaker 1: businesses citing an increase in the past twelve months. And
• 17:36
  Speaker 1: I just wonder how much this is an increase in
• 17:38
  Speaker 1: the ability to detect some of these and how much
• 17:41
  Speaker 1: is an increase in attacks or is it both? Yeah,
• 17:44
  Speaker 1: So I think there's an opportunity in the market right
• 17:46
  Speaker 1: now because I think what we've identified this mismatch between
• 17:50
  Speaker 1: how consumers feel and where businesses are. Businesses also believe
• 17:54
  Speaker 1: that if they really understand who the consumer is, fraud
• 17:57
  Speaker 1: will go down so sort of it's clear in the
• 18:00
  Speaker 1: study that businesses aren't quite getting it right yet. So
• 18:04
  Speaker 1: what businesses need to do is UM is take more
• 18:08
  Speaker 1: advantage of the data and the analytics that are available
• 18:11
  Speaker 1: within these online digital environments. So right now, I don't
• 18:14
  Speaker 1: think they do that enough. They tend to say, all right,
• 18:17
  Speaker 1: I've gotten passwords for this individual, I know their name,
• 18:19
  Speaker 1: I know if you I know them. But actually there's
• 18:22
  Speaker 1: a quite a bit more UM available, and in particular,
• 18:27
  Speaker 1: there's there are quite a few individual threat modality fraud
• 18:32
  Speaker 1: tools that you can use. And the question is are
• 18:35
  Speaker 1: these being knitted together into a comprehensive way or our
• 18:39
  Speaker 1: business is just employing Oh, I use I use device,
• 18:41
  Speaker 1: I d oh, I use biometric behavioral biometrics, I use this,
• 18:46
  Speaker 1: when in fact, what you really need to win today
• 18:50
  Speaker 1: is you need a comprehensive capability that incorporates sort of
• 18:53
  Speaker 1: all of the different tools that are available, layers that
• 18:57
  Speaker 1: with UM analytics so that you can really instruct strong defenses.
• 19:01
  Speaker 1: Steve Wagner, thanks so much for joining us. Really fascinating
• 19:03
  Speaker 1: that discussion is more and more of our time is
• 19:05
  Speaker 1: spent online. Uh, you have to balance the does the
• 19:09
  Speaker 1: business know me and are they protecting my data? And
• 19:11
  Speaker 1: all those times. Such an interesting concept that, you know,
• 19:14
  Speaker 1: there's one thing about having artificial intelligence detecting all of
• 19:17
  Speaker 1: the incoming threats. It's another thing just know who you're
• 19:20
  Speaker 1: dealing with at any given time and how do you
• 19:22
  Speaker 1: do that well, and that sort of dual approach to
• 19:25
  Speaker 1: trying to stave off some of the attacks that are
• 19:27
  Speaker 1: seeming that seemed to be increasing for every business that
• 19:29
  Speaker 1: does that does that operates in the online world, which
• 19:33
  Speaker 1: is everyone everyone. Steve Wagener, Global Managing Director, Experience Digions
• 19:37
  Speaker 1: Decision Analytics, based in Orange County, California, but joining us
• 19:41
  Speaker 1: here in our Bloomberg Interactor broker Studio Tesla really in
• 19:56
  Speaker 1: the front and focus today which shares up one point
• 20:00
  Speaker 1: six percent. This is amazing because ahead of the open
• 20:03
  Speaker 1: we saw shares down as much as seven point two
• 20:06
  Speaker 1: per cent. And this comes after a filing showing that
• 20:08
  Speaker 1: they planned a two billion dollar offering of common stock
• 20:12
  Speaker 1: taking advantage of the rally and the share price that
• 20:14
  Speaker 1: we've seen that's been absolutely astronomical. I'm trying to understand
• 20:20
  Speaker 1: a why people don't seem to care that they're going
• 20:22
  Speaker 1: to be diluted, very very marginally. But typically this is
• 20:26
  Speaker 1: something that that matters, uh, and be why then Tesla
• 20:30
  Speaker 1: didn't raise more? Kevin Tynan joining us here in our
• 20:33
  Speaker 1: interactive broker studios Kevin Tyne and Senior Auto's analyst for
• 20:37
  Speaker 1: Bloomberg Intelligence. Kevin, let's just first talk about the response.
• 20:40
  Speaker 1: Why are shares up today? Um? Well, because I think
• 20:44
  Speaker 1: the idea of adding uh capital of the balance she
• 20:49
  Speaker 1: wasn't an overhang, right. I think that the investors believe
• 20:53
  Speaker 1: that they are. He said this in the middle of
• 20:57
  Speaker 1: they're going to be profitable from here forward. They're going
• 20:59
  Speaker 1: to fund themselves from here forward. So I think that
• 21:03
  Speaker 1: that removed the bear case or that bear argument at
• 21:06
  Speaker 1: that time. Uh So, needing a little bit of capital here,
• 21:10
  Speaker 1: it's it's it's not that big a deal to sort
• 21:12
  Speaker 1: of reverse, especially when you think of the circumstances, right,
• 21:15
  Speaker 1: it was it's a no brainer considering the way the
• 21:18
  Speaker 1: stock is run and and the amount of it's it's
• 21:21
  Speaker 1: absolutely the right thing to do. And to your point,
• 21:23
  Speaker 1: I would say, why not do even more than that? Um?
• 21:27
  Speaker 1: But but a lot of the way this has managed,
• 21:29
  Speaker 1: this company has manages about that perception, right, Just the
• 21:33
  Speaker 1: idea of burning short sellers, right, is just something you
• 21:36
  Speaker 1: don't really see from most ceo s. Right, you run
• 21:39
  Speaker 1: the business the right way, uh profitably growth and that
• 21:44
  Speaker 1: takes care of itself. To actively sort of target that
• 21:48
  Speaker 1: group is just it's just unorthodox. And I think that's
• 21:50
  Speaker 1: a big part of it, is that perception that raising
• 21:53
  Speaker 1: capital shows a sign of weakness, that we can't fund ourselves,
• 21:56
  Speaker 1: when in fact it's just part of the process and
• 21:59
  Speaker 1: when it make sense to do so, you do it.
• 22:01
  Speaker 1: So the company also announced that they're going to spend
• 22:04
  Speaker 1: about three and a half billion dollars in capex this year.
• 22:07
  Speaker 1: Give us us Is that enough for some of the
• 22:09
  Speaker 1: plans they've announced. It is because of UM he loves leverage,
• 22:16
  Speaker 1: and really in this environment, who doesn't UM. So a
• 22:21
  Speaker 1: lot of that fixed investment will come from from borroing,
• 22:24
  Speaker 1: like so, even the Shanghai factory was money taken down
• 22:28
  Speaker 1: from the from the Chinese government, and same thing probably
• 22:30
  Speaker 1: with Berlin. So so that capex number that they put
• 22:34
  Speaker 1: out there probably does not include anything they would borrow
• 22:37
  Speaker 1: to UM to build those factories or to expand out
• 22:41
  Speaker 1: and get to some level of scale in China. Whether
• 22:44
  Speaker 1: that's distribution infrastructure or sales infrastructure. All that stuff will
• 22:48
  Speaker 1: come out of that cap X number, but the buildings
• 22:50
  Speaker 1: themselves will come from the borrowing. Ela Musk has said
• 22:53
  Speaker 1: that they were not going to be raising more capital
• 22:55
  Speaker 1: this year, so this isn't about face for him. Also,
• 22:58
  Speaker 1: Tesla has been cutting pockets expenditures over the past few
• 23:01
  Speaker 1: years in response to criticism about burning through cash, and
• 23:05
  Speaker 1: they reported an actually that profit, which is one of
• 23:08
  Speaker 1: the reasons why shares rallied so much. Given that, and
• 23:12
  Speaker 1: given that they seem to be doubling down on the
• 23:14
  Speaker 1: spending and not necessarily the cash generation, why are investors
• 23:18
  Speaker 1: so sanguine about this move? Well? I think also to
• 23:22
  Speaker 1: keep in mind the projects that he's that he's teased, right,
• 23:28
  Speaker 1: so there's roadster two point oh, there's semi truck, There's
• 23:33
  Speaker 1: there's cybertruck, there's Model why coming, There's all these grand plans.
• 23:37
  Speaker 1: There's Robotaxi fleet a million units in so so investors
• 23:43
  Speaker 1: the reaction will be like, he's funding the growth, right,
• 23:47
  Speaker 1: There's enough things to do, there's factories to build, there's
• 23:49
  Speaker 1: products to put out there that this is what you
• 23:52
  Speaker 1: have to do. You need capital do it and that's
• 23:54
  Speaker 1: what he's doing real quick. What's the demand for electric
• 23:57
  Speaker 1: vehicles to have a boy, you know, it was is
• 24:00
  Speaker 1: in the one percent range in nineteen, So one of
• 24:05
  Speaker 1: the bulls think it will be well if if you
• 24:08
  Speaker 1: ask the Uber bowls, it's gonna be that everybody who
• 24:12
  Speaker 1: owns a car will have to have an electric vehicle.
• 24:14
  Speaker 1: Plus it's not only a vehicle, right, it's your smartphone,
• 24:17
  Speaker 1: It's it's everything. So Tesla as a technology company can
• 24:22
  Speaker 1: be all things. Everybody who needs a car and a
• 24:24
  Speaker 1: phone is their addressable market. Kevin Tyne and Senior Auto's
• 24:28
  Speaker 1: analyst Bloomberg Intelligence joining us here on our Bloomberg Interactive
• 24:31
  Speaker 1: Broker Studio. Tesla stock up just you know, about one
• 24:34
  Speaker 1: and one and a half percent here, But that back
• 24:36
  Speaker 1: on the news of a two maybe two point three
• 24:39
  Speaker 1: billion dollar stock offering, UH and the associated the dilution
• 24:42
  Speaker 1: and supply into the marketplace. Just extraordinary that the stocks
• 24:45
  Speaker 1: trading up. But Kevin was mentioning there is a lot
• 24:47
  Speaker 1: of capital demand for this company and there's a cull
• 24:50
  Speaker 1: to of belief behind Elon Musk, and I think there
• 24:53
  Speaker 1: are other company companies that if they suddenly decided to
• 24:56
  Speaker 1: invest money in some questionable project, people wouldn't rally behind them.
• 25:01
  Speaker 1: Elon Musk is a different case. It's a different case.
• 25:03
  Speaker 1: It is a cold stock for many. Thanks for listening
• 25:06
  Speaker 1: to the Bloomberg P and L podcast. You can subscribe
• 25:09
  Speaker 1: and listen to interviews at Apple Podcasts or whatever podcast
• 25:12
  Speaker 1: platform you prefer. Paul Sweeney, I'm on Twitter at pt Sweeney.
• 25:15
  Speaker 1: I'm Lisa abram Woy. It's I'm on Twitter at Lisa
• 25:18
  Speaker 1: abram wits one before the podcast, you can always catch
• 25:20
  Speaker 1: us worldwide. I'm Bloomberg Radio.