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A Deep Dive Into The GameStop Hearing: MIT's Aral, Ritholtz · Bloomberg Intelligence

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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
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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
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Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
0:15
Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
0:18
Speaker 1: at Bloomberg dot com slash podcast. Let's bring in Barry
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Speaker 1: rid Holtz Shall we Bloomberg opinion columnists, host of Masters
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Speaker 1: in Business on Bloomberg Radio, which I highly recommend. He's
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Speaker 1: also the founder and chairman, of course in chief investment
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Speaker 1: officer of Riddholtz Wealth Management. All right, Barry, we've got
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Speaker 1: some folks going to Congress, going to Washington, d C.
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Speaker 1: Today to talk about that all the game stop stuff.
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Speaker 1: Would it be naive of me to expect any meaningful discussion?
0:46
Speaker 1: Dare say, maybe even some action items. What are you expecting? Um,
0:51
Speaker 1: a lot of noise and fury and nothing, A whole
0:56
Speaker 1: lot more heat than light, to say the least. Look,
1:00
Speaker 1: this is really a very very specific incidents that this
1:04
Speaker 1: is not a systemic problem. You have a whole bunch
1:09
Speaker 1: of board people at home, you don't have access to casinos.
1:13
Speaker 1: Take a take a message board that, by the way,
1:16
Speaker 1: has talked about hundreds and hundreds of stocks over the
1:19
Speaker 1: past decade, and they happen to find one that had
1:24
Speaker 1: what not only was it under ten dollars, which means
1:28
Speaker 1: it's pretty cheap, but it had an enormous short interest
1:32
Speaker 1: and and uh cheap stock options and and that combination
1:37
Speaker 1: along with free trading and the gamification of trading on
1:41
Speaker 1: the robin. They know, yeah, that's that's right. It's you know,
1:46
Speaker 1: not everything is going to be spent on on chicken tenders.
1:49
Speaker 1: You've gotta leave a little money for the for that
1:52
Speaker 1: coal option, gamma squeeze play. But you know, this is
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Speaker 1: this is really one of those things that Congress should
1:59
Speaker 1: be focusing on big systemic problems, not whether this one
2:04
Speaker 1: stock was pumped or dumped by this one group of
2:10
Speaker 1: of message board officionados. The SEC is more than capable
2:15
Speaker 1: of enforcing if if a crime was committed and pursuing it.
2:19
Speaker 1: And yet and yet, Barry, this is the one issue, Uh,
2:25
Speaker 1: this is the one issue that um Ted Cruz and
2:28
Speaker 1: AOC get on the same page for. You know, what
2:32
Speaker 1: does that tell you about? It tells you that the
2:35
Speaker 1: most dangerous place in Washington, d C. Is between a
2:39
Speaker 1: television camera and and some of the higher profile congress people.
2:44
Speaker 1: That that's what it tells you that, look, you know,
2:48
Speaker 1: there is a legitimate issue that lots of people are hurting,
2:52
Speaker 1: and that some people are doing silly things with their
2:55
Speaker 1: rent money because they don't see any other way to
2:58
Speaker 1: to earn a living. Uh. That's an issue that certainly
3:02
Speaker 1: is worthy of debate. But the specifics, the contours of
3:07
Speaker 1: the GameStop trade are so specific to this one company.
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Speaker 1: You know, it's an outlawyer, and I don't think you
3:15
Speaker 1: can demonstrate anything worthwhile about markets and regulation and what's
3:20
Speaker 1: going on by holding up you know, one out of
3:25
Speaker 1: stocks and saying, look, the system has broken. I think
3:29
Speaker 1: hang on, I think you're ignoring one part of it.
3:31
Speaker 1: Which I'm not saying that I buy into this theory,
3:35
Speaker 1: but if you're, if you're into conspiracy theories, it's pretty
3:39
Speaker 1: easy to imagine that super billionaires that were trying to
3:43
Speaker 1: short this company to death, we're able to control robin
3:46
Speaker 1: Hood which they pay right for traffic and then cover
3:52
Speaker 1: it up. Well. The the other cool thing if you're
3:54
Speaker 1: a conspiracy theorist is that those super billionaires also control Congress,
3:58
Speaker 1: so you're never going to find out about it. But
4:00
Speaker 1: what do you think about the possibility of any ties.
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Speaker 1: So it's wrong to call that a conspiracy theory because
4:09
Speaker 1: various trading firms, from Citadel to some of the other
4:12
Speaker 1: high frequency shops, they are robin Hood's customers. They're the
4:17
Speaker 1: ones who pay robin Hood. You know, there's this illusion
4:21
Speaker 1: that the users who are buying and selling stocks on
4:24
Speaker 1: robin Hood are the customers. That that's wrong, that they're
4:28
Speaker 1: the product. Their order flow is what gets sold. It's
4:31
Speaker 1: like radio and when you ask people what what are
4:34
Speaker 1: what is radio's product? And most people say, well, radio
4:36
Speaker 1: sells advertising and the answer is no, radio sells an
4:40
Speaker 1: audience to advertisers. Well, robin Hood sells an audience of
4:45
Speaker 1: traders flow to market makers and high frequency traders who
4:50
Speaker 1: pay them. So it really reflects a people calling this
4:54
Speaker 1: a conspiracy theory. This is really a textbook example of
4:58
Speaker 1: Dunning Krueger effect. These people just simply don't know how
5:04
Speaker 1: markets operate and how trading operates. Now, I'm not saying
5:07
Speaker 1: this is the optimal circumstance, and I'm not saying this
5:10
Speaker 1: is better or worse than other ways of doing it.
5:13
Speaker 1: But the simple facts are that in order to improve
5:17
Speaker 1: both price discovery and reduce the spreads between the bid
5:20
Speaker 1: and the order. But but bear, you're not saying that
5:22
Speaker 1: Ken Griffin ordered Lad to stop the Reddit attack. No,
5:28
Speaker 1: the Lad was out of capital. There are specific rules
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Speaker 1: from the SEC and you cannot allow thousands and thousands
5:36
Speaker 1: of clients to buy billions and billions of dollars of
5:41
Speaker 1: stock and risk having that get cut in half and
5:44
Speaker 1: not be able to settle because you lack sufficient capital.
5:48
Speaker 1: And to Lad's credit, he went out to Goldman Saxon
5:51
Speaker 1: Chase and got a couple of billion dollars in one week,
5:54
Speaker 1: and the next week picked up another three billion dollars,
5:57
Speaker 1: but they had to put a bosch on buying more stock.
6:04
Speaker 1: I'm not I'm not buying that, Barry. He went on
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Speaker 1: clubhouse and told Elon Musk they wanted three billion dollars,
6:10
Speaker 1: but it took him then twelve hours to get him
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Speaker 1: down to like one five. Give me a break if
6:14
Speaker 1: you can. If you can bargain them down like that
6:17
Speaker 1: and going round up billions in twenty four hours, why
6:19
Speaker 1: do you need to stop trading? Why not just we'll
6:22
Speaker 1: continue this conversation at at a later day, will swap
6:25
Speaker 1: conspiracy stories. Barry Ridholts, thanks so much for joining us
6:29
Speaker 1: here at Bloomberg Opinion Collins and host a Masters in
6:31
Speaker 1: Business on Bloomberg Radios. Also the founder, chairman and chief
6:34
Speaker 1: investment officer of Rit Holt Well Management. Well, Matt, we
6:39
Speaker 1: just concluded a spirited debate with our Bloomberg Opinions Barry Ridholts,
6:43
Speaker 1: on the value of these hearings today, these game stop hearings,
6:47
Speaker 1: Barry suggesting maybe a little bit more show uh than
6:50
Speaker 1: any substance. But our next guest, Matt, says, game stop
6:54
Speaker 1: hearings today, they are necessary. Se Non are all director
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Speaker 1: of the m I T Initiative on the Digital Economy
7:00
Speaker 1: at m I T s, Professor of Management I T
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Speaker 1: Marketing and Data Science and founding partner of Manifest Capital. Uh,
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Speaker 1: sign on, thank you so much for joining us here.
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Speaker 1: You know we're really having a debate today, saying should
7:13
Speaker 1: we even be having hearings on this issue of investor trading?
7:17
Speaker 1: Give us your thoughts, Well, I mean I think that
7:20
Speaker 1: we have to know more about what happened. Uh. You know,
7:24
Speaker 1: this is in a sense an unprecedented UH, sort of
7:29
Speaker 1: new form of crowdpower. UH. And there are multiple different
7:34
Speaker 1: types of speech going on in the UH in the
7:39
Speaker 1: reddit sub reddits that are driving for instance, the game
7:42
Speaker 1: stopped stock price, and we need to know more. We
7:46
Speaker 1: need a full SEC investigation and hearings can help as well,
7:50
Speaker 1: because we don't know, for instance, where there people involved
7:53
Speaker 1: in this conversation that had ties to institutional investors. While
7:58
Speaker 1: some had funds lost money, others made a lot of money,
8:02
Speaker 1: like black Rock I think made something like three billion dollars.
8:05
Speaker 1: And the former CEO of Chewy was a big holder
8:08
Speaker 1: of game Stop stock prior to the ride ton. So
8:11
Speaker 1: we need we need to we need to know more.
8:14
Speaker 1: You know, I've noticed, um after this, during and after this,
8:18
Speaker 1: all of my friends from high school, who never cared
8:20
Speaker 1: about what I did for a living started calling me
8:22
Speaker 1: and asking me about this stock and that stock. UM.
8:26
Speaker 1: My wife, who doesn't know anything about the market, she
8:29
Speaker 1: thinks the word rally is funny. She said, should I
8:32
Speaker 1: get a robin Hood account? I mean, everybody, the shoeshine
8:35
Speaker 1: boy is getting in on this now. The question is
8:38
Speaker 1: is that dangerous? Muhammadi Arian also asking is this causing
8:42
Speaker 1: a danger. What are you thinking on Well, I mean,
8:45
Speaker 1: I think that the democratization of the markets is a
8:48
Speaker 1: good thing. I don't think that in any way we
8:50
Speaker 1: should limit anyone's access to the markets. But I think
8:56
Speaker 1: what we're seeing is that we don't have a full
9:00
Speaker 1: asp on how the information ecosystem that we've created in
9:04
Speaker 1: the last ten years or so through social media is
9:07
Speaker 1: related to the financial ecosystem that we see. So obviously,
9:11
Speaker 1: if there was misinformation flowing in these conversations, that would
9:16
Speaker 1: run a foul of the sec that's pure market manipulation.
9:22
Speaker 1: But if people are just raw rying their stock purchases
9:26
Speaker 1: in a public way as they're buying stocks, it's not
9:28
Speaker 1: clear that any of that is illegal in any way.
9:31
Speaker 1: There's also a third form of communication, which is about
9:35
Speaker 1: coordinating um stock purchasing, which is kind of akin to
9:40
Speaker 1: collusion on the producers side, but it's not really the same.
9:45
Speaker 1: So we have to know more, and we have to
9:47
Speaker 1: think about the implications of the ties between the information
9:51
Speaker 1: ecosystem that we have and the financial markets. All right,
9:55
Speaker 1: we're rejoined by Barry rid Holtz, Bloomberg opinion columnist. Barry,
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Speaker 1: you know we're seem to sign on a row of
10:01
Speaker 1: m I t you know, making some really valid points
10:03
Speaker 1: about bringing and trying to get some more information here
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Speaker 1: through uh congressional hearings here, bart do you think this
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Speaker 1: is just something that the SEC can deal with and
10:11
Speaker 1: it's just a regular old short squeeze that we've seen before. Well,
10:15
Speaker 1: it's a combination of a regular short squeeze with a
10:18
Speaker 1: bit of a because the stock was so cheap, and
10:21
Speaker 1: because there was such a large run of out of
10:24
Speaker 1: the money care options, there was also the gamma squeeze
10:29
Speaker 1: aspect of this. I'm not sure what Congress is gonna find.
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Speaker 1: I don't know if they're the institution best equipped to
10:37
Speaker 1: investigate this. The one caveat I would really emphasize is
10:42
Speaker 1: the you know, Wall Street bets Unreddit. I don't really
10:45
Speaker 1: see how this is very different than what we used
10:48
Speaker 1: to see with the Yahoo message boards or the Raging
10:51
Speaker 1: Bull message boards in the es that we lived through this.
10:56
Speaker 1: Here's a question, Barry, how is it Is it the
10:59
Speaker 1: same as you know, Facebook and Twitter being manipulated by
11:03
Speaker 1: the Russians as has been alleged during the two thousand
11:07
Speaker 1: sixteen election. I mean, if they could do that, if
11:10
Speaker 1: you buy into that, Um, why couldn't they also mess
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Speaker 1: with us markets by you know, fabricating Wall Street bets
11:17
Speaker 1: on Reddit. News flash, don't get trading ideas off of Twitter.
11:22
Speaker 1: Let me let me write that down. I mean a
11:24
Speaker 1: lot of this stuff is really just basic common sense.
11:28
Speaker 1: My assumption is if I read something on Facebook or Twitter,
11:33
Speaker 1: especially about a stock where another person might have obsested
11:37
Speaker 1: financial interest, my immediate assumption is most of this is
11:41
Speaker 1: probably nonsense. Now, maybe that's because I'm an old skeptic
11:46
Speaker 1: who's been in the markets for too long, but I
11:49
Speaker 1: think the youth kind of have to learn um information
11:53
Speaker 1: theory and who they can trust and what's signaling? What's noise? Hey?
11:58
Speaker 1: Sign it? You actually wrote a book on this incitled
12:01
Speaker 1: The Hype Machine. How social media disrupts our elections, our economy,
12:04
Speaker 1: and our health, and how we must adapt. Give you
12:07
Speaker 1: this game stop Reddit? Uh, you know trading event as
12:13
Speaker 1: perhaps something bigger in the economy, in our trading. How
12:17
Speaker 1: are you kind of piecing that together? Well? I mean,
12:20
Speaker 1: I think that a big difference between the message boards
12:24
Speaker 1: of old and uh, the information ecosystem of today is
12:28
Speaker 1: algorithmic amplification. You know, this information moves so fast and
12:33
Speaker 1: scales so rapidly today and is driven by algorithms routing
12:40
Speaker 1: information uh in different ways across the network that we
12:43
Speaker 1: have to understand the scale, speed, and potential impact of
12:48
Speaker 1: this information diffusion in our society today. And I think
12:52
Speaker 1: we have to see it as a little bit different
12:54
Speaker 1: because we're seeing almost weekly, uh, you know, ripped from
12:59
Speaker 1: the headlines, uh, the impact of these social networks and
13:04
Speaker 1: social media companies on our society, whether it's uh the
13:07
Speaker 1: spread of political misinformation or coronavirus vaccine misinformation, or signing
13:12
Speaker 1: the rise and fall of stock prices. What do you
13:14
Speaker 1: think about the populace concern that these billionaire masters of
13:18
Speaker 1: Wall Street were able to whip robin Hood into shape
13:22
Speaker 1: and break the backs of you know, Joe Trader. Well,
13:26
Speaker 1: I mean, I think that the David and Goliath story
13:28
Speaker 1: doesn't really apply very well to game Stop. I think that, uh,
13:33
Speaker 1: you know, anybody who understands the business model of robin
13:36
Speaker 1: Hood knows that it makes money from institutional clients that
13:41
Speaker 1: are providing the back ends of the trades, that they
13:45
Speaker 1: are essentially giving commission free to the retail investors. So
13:49
Speaker 1: I think that robin Hood has a precarious future, both
13:53
Speaker 1: because of backlash from the retail investors when they were
13:56
Speaker 1: not allowed to sell the game stop stock price, you
13:59
Speaker 1: know stock they were buying, but also from the realization
14:02
Speaker 1: that hey, maybe we are the product here and maybe
14:05
Speaker 1: the institutional investors the client. So Barry earlier, we were
14:09
Speaker 1: having a heated discussion about, you know, kind of whether,
14:12
Speaker 1: uh that David Portnoy's of the world were right in
14:15
Speaker 1: saying that, you know, the robin Hood and the other
14:17
Speaker 1: platforms they screwed us by not allowing us to trade
14:22
Speaker 1: and Elizabeth Warren and exactly but again that the narrative
14:27
Speaker 1: coming from those platforms, it's like, hey, we were just
14:29
Speaker 1: you know, doing what we have to do to meet
14:31
Speaker 1: our margin calls. How do you come down on that? Yeah, no,
14:34
Speaker 1: that's exactly right. So you guys touched on three really
14:37
Speaker 1: important things. First, you know, this is a company that
14:40
Speaker 1: has grown so rapidly robin Hood, that their their capital
14:45
Speaker 1: base just failed to keep up with the massive run
14:47
Speaker 1: up in the assets on their balance sheets. I clearly
14:50
Speaker 1: think and you could see in the multiple times they
14:54
Speaker 1: tapped various lines of credit to add capital to their
14:57
Speaker 1: balance sheets that that was clearly a risk management process.
15:01
Speaker 1: And and it's very imaginable that had the stock collapsed
15:06
Speaker 1: before they had settlements done, they would have been short tens,
15:10
Speaker 1: you know, hundreds and hundreds of millions of dollars that
15:12
Speaker 1: they couldn't afford. So that's number one. Number two, I
15:15
Speaker 1: totally agree with the professor about the impact of of
15:19
Speaker 1: all the algorithmic stimulus UM. And it's not just it's
15:23
Speaker 1: not just Twitter and Facebook. You have to look at
15:26
Speaker 1: UH ticktock also is something that's using UH that approach
15:31
Speaker 1: plus the gamification of stock trading, that's a very, very
15:36
Speaker 1: dangerous combination. I love having we have Barry ritt Holtz
15:40
Speaker 1: whose podcast as Masters of Finance, and then we have
15:43
Speaker 1: the professor who are probably teaches Masters students at m
15:48
Speaker 1: i T professor. One quick final question we've been talking
15:51
Speaker 1: about T plus two, which is like you have to
15:53
Speaker 1: use a cotton gin and a printing press UM to
15:56
Speaker 1: verify that you bought stock these days, When are we
15:59
Speaker 1: gonna start using blockchain and make it faster? Oh? I
16:02
Speaker 1: think that's a great question, and I think that, uh,
16:05
Speaker 1: it's interesting to juxtapose that with the rise of the
16:09
Speaker 1: price of bitcoin recently, because I really think that the
16:12
Speaker 1: major innovation. There is the blockchain. I think that you're
16:15
Speaker 1: going to see blockchain uh sort of um become a
16:19
Speaker 1: decentral decentralized verification technique across many different industries, and I
16:24
Speaker 1: think it's going to spur a ton of innovation. Uh.
16:27
Speaker 1: It's a way to keep things decentralized but also verified.
16:31
Speaker 1: It's a way uh to to give people assurances um
16:36
Speaker 1: that that I think could be very helpful in a
16:38
Speaker 1: number of industries. Santana Role, thank you so much for
16:41
Speaker 1: joining us. We really appreciate gating your perspective. Snana Role,
16:44
Speaker 1: director of the m I T Initiative on the Digital Economy.
16:47
Speaker 1: And Barry Ridholts, thanks for coming back again for another segment.
16:50
Speaker 1: Barry Ridhults Bloomberg Opinion Commus, Masters in Business Podcasts and
16:54
Speaker 1: Ridholt's Wealth Management Matt A great discussion there. We'll see
16:58
Speaker 1: what happens on these hearings this afternoon. It should be
17:01
Speaker 1: very interesting, folks. When I tell you that rich green
17:07
Speaker 1: Field of Lightshed Partners is one of the leading voices
17:11
Speaker 1: in the media, telecom and technology space, uh, take it
17:15
Speaker 1: from me. I've been covering a space for a long
17:17
Speaker 1: time and he really got me to rethink a lot
17:19
Speaker 1: of my assumptions over the last several years, particularly as
17:21
Speaker 1: it relates to media and technology converging. Rich, in my mind,
17:26
Speaker 1: was the absolute first analyst on Wall Street to predict
17:29
Speaker 1: the secular decline of some of these traditional media companies
17:32
Speaker 1: due to their inability to pivot to technology such as
17:35
Speaker 1: streaming and the Netflix of the world. And Rich joins us. Now, Rich,
17:38
Speaker 1: thanks so much for joining us here. You've done such
17:40
Speaker 1: a wonderful job for your clients talking about the convergence
17:44
Speaker 1: of technology and traditional media, and now you're bringing a
17:48
Speaker 1: fund to market to capitalize on some further trends in
17:51
Speaker 1: that space. Tell us about it. Well, look, I think
17:54
Speaker 1: the key for us has been you can't understand what's
17:58
Speaker 1: happening in the public markets without understanding what's happening in
18:01
Speaker 1: the early stage startups that are affecting the media ecosystem.
18:05
Speaker 1: So give you an example. You know, look at look
18:08
Speaker 1: at Facebook, right. You know, we were writing about Facebook
18:10
Speaker 1: back in two thousand seven talking about why every media
18:13
Speaker 1: company should be buying it literally obviously none of them did.
18:17
Speaker 1: That was five years before Facebook went public. But look
18:20
Speaker 1: at Facebook today versus you know, even Disney is dwarfed
18:23
Speaker 1: by Facebook, right, and despite all of that, Disney has done,
18:26
Speaker 1: and Disney had to go out and buy Fox to
18:28
Speaker 1: get this, you know, to try to scale up. You know,
18:30
Speaker 1: I think that, you know, sort of there has been
18:32
Speaker 1: sort of a lack of understanding of the legacy media
18:36
Speaker 1: companies of technology and it's why we're really from a
18:39
Speaker 1: research standpoint, why we've devoted so much of our focus
18:42
Speaker 1: to looking into the future and trying to figure out
18:45
Speaker 1: where the media, tech and telecom sectors are going. The
18:48
Speaker 1: natural evolution of that is, well, you see all these companies,
18:51
Speaker 1: you're meeting, all of these companies. We want to invest
18:54
Speaker 1: in some of these companies at the earliest stages, at
18:57
Speaker 1: the seed level in the Series A, we're seeing the
18:59
Speaker 1: man away as part of what we're doing on the research,
19:01
Speaker 1: and now we can actually put capital behind them. And
19:03
Speaker 1: so we've gone out and raised Lightshed Ventures Fund one,
19:07
Speaker 1: which is a seventy five million dollar venture fund that's
19:10
Speaker 1: going to invest on the private side of the TMT
19:13
Speaker 1: ecosystem and really put our core theses that we have
19:17
Speaker 1: for the public companies to work on the private side.
19:19
Speaker 1: And I think both of them will be very, very
19:22
Speaker 1: symbiotic in terms of how we leverage our learnings across
19:24
Speaker 1: the two places. So Facebook has to be a unique
19:29
Speaker 1: case because there are very few products used by you know,
19:34
Speaker 1: well over a billion people. I guess water and air.
19:37
Speaker 1: You can't really own this. Is there something that you
19:41
Speaker 1: think is um nearly as exciting though? Is there anything
19:45
Speaker 1: new that we don't know about that you think maybe
19:48
Speaker 1: could be the next almost kind of close to possibly Facebook?
19:54
Speaker 1: A guy that that's a tough one. I mean, what
19:56
Speaker 1: what could be used by two and a half billion
19:58
Speaker 1: people for thirty forty five mi it's today? I don't know.
20:01
Speaker 1: I mean, look, I met Daniel e eleven years ago. Um,
20:05
Speaker 1: you know, before they had even launched service in the US.
20:07
Speaker 1: This is the founder of Spotify, and you know we've
20:10
Speaker 1: been friends with Daniel ever since. And you know, following
20:13
Speaker 1: from the earliest days the Spotify story and obviously you
20:17
Speaker 1: know that's now grown to be a gigantic company and
20:20
Speaker 1: a public company. Uh. And so we're always trying to
20:23
Speaker 1: figure out where kind of where the puck is going.
20:25
Speaker 1: I mean, right now, I'll tell you big categories that
20:28
Speaker 1: are of interest to us. You know, you look at
20:30
Speaker 1: what's happening in audio, I mean, I was an early
20:33
Speaker 1: investor in one dry that just got acquired by Amazon. Obviously,
20:36
Speaker 1: Spotify has made a lot of acquisitions in the podcast space,
20:39
Speaker 1: So audio broadly defined, I mean, look at clubhouse and
20:43
Speaker 1: Twitter spaces right this specifically, Yeah, Well, I'm just saying
20:48
Speaker 1: like audio is exploding, right, Like we're all realizing that.
20:51
Speaker 1: You know that there's this incredible opportunity in audio to
20:55
Speaker 1: make money. You know, it's it's because you don't have
20:59
Speaker 1: to be staring at the screen. You can do two
21:00
Speaker 1: things at once. You can be walking, you can be
21:02
Speaker 1: at the gym. You know, you don't have to be
21:04
Speaker 1: staring at a screen, and so there's a lot of
21:07
Speaker 1: incremental time spending your day that audio can fill in
21:10
Speaker 1: a lot of value add from audio. And I think
21:12
Speaker 1: whether it's podcasting, whether it's um, you know, kind of
21:16
Speaker 1: live audio, the way we're seeing in clubhouse and Twitter spaces,
21:19
Speaker 1: and I'm sure it sounds like Facebook's already moving into
21:21
Speaker 1: that to try to copy it. I think there's a
21:23
Speaker 1: lot of opportunities in audio that are really interesting. Again,
21:27
Speaker 1: will any of them live up to be Facebook sized businesses.
21:30
Speaker 1: It's way too early to know, but I think there's
21:32
Speaker 1: tremendous value creation in the audio sphere. And then on
21:36
Speaker 1: top of it, I'd say, this whole creator economy is fascinating, right,
21:39
Speaker 1: I mean, we you know, it's funny in your intro
21:42
Speaker 1: you are talking about sort of this collision of media
21:44
Speaker 1: and tech. You know, obviously we we came up with
21:46
Speaker 1: the hashtag probably seven years ago of good luck Bundle,
21:49
Speaker 1: which was sort of the break part of the legacy
21:51
Speaker 1: cable bundle, which you know, seven years ago, if we
21:53
Speaker 1: were on Bloomberg, I think a lot of people listening
21:55
Speaker 1: would have called us a heretic. Now it's consensus thinking
21:58
Speaker 1: that the bundles collapsing in linear TV is going away.
22:01
Speaker 1: But I think the logical next step to the shift
22:04
Speaker 1: from the traditional TV to streaming TV is actually the
22:09
Speaker 1: creator economy and watching individual creators. And I don't just mean,
22:13
Speaker 1: you know, watching them on YouTube in the sense of
22:16
Speaker 1: like you're watching somebody you know, uh, you know, you
22:20
Speaker 1: do comedic stuff. It's watching somebody play a game on Twitch. Right,
22:24
Speaker 1: It's like there's you know, it's not even just playing
22:27
Speaker 1: the game. Obviously gaming is exploded, but watching people play
22:30
Speaker 1: games has become massive, and you look at roadblocks in
22:34
Speaker 1: Minecraft I mean, look roadblocks like we have to leave
22:38
Speaker 1: it there. Rich, well, we'll bring it back just because
22:40
Speaker 1: of the time, but will certainly bring you back and
22:42
Speaker 1: get some more thoughts on this. We appreciate a Rich
22:44
Speaker 1: Greenfield Partner media annalyst that light Shed partners. While the
22:49
Speaker 1: power crisis in Texas continues, continued brutally cold weather through
22:54
Speaker 1: the middle part of the country, extending all the way
22:56
Speaker 1: down into the southern parts of Texas. Unprecedented cold there
23:00
Speaker 1: really impacting the entire grid. Joe Carol Houston, bureau chief
23:03
Speaker 1: for Bloomberg News. He joins us on the phone from Houston. Joe,
23:07
Speaker 1: thanks so much for taking the time. I know it's
23:09
Speaker 1: tough down there. I'd love for you to share with
23:12
Speaker 1: our listeners what it's like on the ground in Houston,
23:16
Speaker 1: for you and your fellow citizens down there. Well, we're
23:20
Speaker 1: above twenty degrees fahrenheit this morning, which is uh, it's
23:23
Speaker 1: probably the best it's been in four or five days.
23:26
Speaker 1: It does feel like we're we're sort of on on
23:28
Speaker 1: the back side of of what was you know, quite
23:31
Speaker 1: a disaster. Power is coming back to in much of
23:34
Speaker 1: the state. Um, the real challenge now is actually believe
23:38
Speaker 1: it or not it's clean water. The water systems are
23:41
Speaker 1: down everywhere because the power was out, and so you've
23:43
Speaker 1: got boil orders, um, pretty much everywhere. So energy isn't uh,
23:49
Speaker 1: I mean clearly it's not your first concern. You want
23:51
Speaker 1: to stay warm, you want to stay healthy. Is it
23:54
Speaker 1: possible for everyone to do that? Or is are those
23:58
Speaker 1: two you know, may issues causing big problems. Still there's
24:03
Speaker 1: still big problems in a in a lot of places.
24:06
Speaker 1: But instead of five million people being without power, it's
24:09
Speaker 1: down to about about five thousand. UM. And like I said, water,
24:13
Speaker 1: water is becoming the big challenge because you can't you
24:16
Speaker 1: can't go to home deepo or lows excuse me, and
24:19
Speaker 1: buy some five gallon jugs anymore. It's all gone and
24:21
Speaker 1: you can't find gasoline to get you to tenny stores anyways.
24:25
Speaker 1: Grocery stores are closed or empty, fast food restaurants are
24:28
Speaker 1: not open. Drudge stores are closed. Um. So even though
24:33
Speaker 1: like I said, we're on the back side of it,
24:34
Speaker 1: it's we're not all in the dark um and cold. Um,
24:38
Speaker 1: there's still there's still quite a ways to go to
24:40
Speaker 1: claw out of this, all right, Joe. We're several days,
24:44
Speaker 1: four or five days into this with a little bit
24:46
Speaker 1: of perspective here, what the heck happened? What went wrong?
24:51
Speaker 1: We see a lot of finger pointing, but I'm not
24:53
Speaker 1: really sure I'm getting a full picture of what happened. Yeah,
24:58
Speaker 1: it's really, it's really and you're at the blame game
25:00
Speaker 1: is already starting at the state and the city levels. Um.
25:05
Speaker 1: You know, the weather was just so extreme so quickly
25:07
Speaker 1: that the generators failed. They froze over um and so
25:11
Speaker 1: there just wasn't enough power being produced it. So it's
25:14
Speaker 1: it's unlike any other sort of power out. You know,
25:17
Speaker 1: we get hurricanes here every single summer and the power
25:19
Speaker 1: goes out because all your lines and your poles get
25:21
Speaker 1: knocked down. This time it wasn't e meant, the poles
25:24
Speaker 1: and the wires are fine, They didn't freeze and snap.
25:26
Speaker 1: What happened was it just wasn't any electricity to push
25:28
Speaker 1: through them. And so, uh, you know, the governor has
25:31
Speaker 1: already talked about, you know, doing an investigation. We do
25:34
Speaker 1: think there'll be some sort of a restructuring of the
25:36
Speaker 1: of the grid. What um, medium to long term problems
25:42
Speaker 1: do you expect from from this, Joe? I mean, you've
25:45
Speaker 1: already talked about the immediate problems people are facing. Is
25:48
Speaker 1: there going to be damaged that you're still trying to
25:51
Speaker 1: sort through come summer, I think there will be a
25:55
Speaker 1: lot of it has to do with people haven't experienced
25:58
Speaker 1: burst pipes here before from from the cold, and so
26:01
Speaker 1: nobody really knows what they have because it's still too
26:05
Speaker 1: you know, too early to check. And uh, I mean,
26:08
Speaker 1: the plumbers are going to make a fortune for sure. Um.
26:10
Speaker 1: We already have folks coming in from other states, um
26:13
Speaker 1: to help with the with the pipework. And you know,
26:16
Speaker 1: it's gonna be like any sort of a post storm
26:18
Speaker 1: rush where we're suddenly you have a lot of roopers
26:21
Speaker 1: coming in from out of state because there's a lot
26:22
Speaker 1: of money to make. Joe, what I learned through all
26:26
Speaker 1: of this is how unique Texas is in terms of
26:29
Speaker 1: its electricity. You guys have your folks in Texas has
26:32
Speaker 1: its own separate grids, separate from the Eastern grid and
26:36
Speaker 1: the Western grid. Is there a sense of to what
26:40
Speaker 1: extent that independence may have contributed to the problem here.
26:45
Speaker 1: It's still it's still early in the process, you know,
26:48
Speaker 1: as far as anybody investigating, but definitely it's it's an
26:50
Speaker 1: island it's a huge island. Uh, and normally it creates
26:53
Speaker 1: more than enough power. UM. But certainly if if we
26:56
Speaker 1: could have pulled power from Oklahoma or Louisiana, arkans Aw,
27:00
Speaker 1: how that might have mitigated some of this. It's a big,
27:03
Speaker 1: beautiful island of freedom and barbecued beef. I love Texas
27:08
Speaker 1: so much. Um. On the other hand, I'm hearing reports
27:11
Speaker 1: that a lot of people are price gouging for things
27:14
Speaker 1: as small as bottles of water, um, to things as
27:18
Speaker 1: big as actual electricity. Are you Are you hearing any
27:21
Speaker 1: report to that as well? Yeah, we're hearing in an
27:24
Speaker 1: adultal reports of of folks taking advantage of it. At
27:27
Speaker 1: the same time, you have county officials saying, you know
27:30
Speaker 1: that won't be tolerated. I'm not sure on the ground
27:33
Speaker 1: how much can be done about necessities. If it's something
27:36
Speaker 1: you need right away, you're gonna have to pay for it. Joe,
27:40
Speaker 1: what's the latest on a sense of timing to getting
27:43
Speaker 1: back to some form of normal water, normal, electricity normal, um,
27:50
Speaker 1: just a little bit of normalcy in this pandemic world
27:52
Speaker 1: for the good folks of Texas. We we have, at
27:54
Speaker 1: least in here in South Texas, we have two more
27:57
Speaker 1: nights of of below freezing. I think that's where we're
28:01
Speaker 1: going to see whether the improvements we've seen in the
28:03
Speaker 1: in the generation system can take can hold. And then
28:08
Speaker 1: if it holds through those two freezes, and I think
28:10
Speaker 1: then I think folks will get a little more confidence
28:12
Speaker 1: about UM, you know, climbing out of the nineteenth century.
28:15
Speaker 1: What kind of help, emergency help have you gotten in
28:18
Speaker 1: their FEMA National Guard? You know, I see some terrifying
28:22
Speaker 1: headlines on your bio page. Texas medical facilities running short
28:26
Speaker 1: on oxygen supplies. It seems like something the army needs
28:29
Speaker 1: to bring in. Yeah, the National the governor sent out
28:32
Speaker 1: the National Guard two days two or three days ago,
28:35
Speaker 1: mostly too to help evacuate uh folks, uh you know
28:39
Speaker 1: who had no heat, to get them to warming centers.
28:41
Speaker 1: There was something like a hunter and eighty five shelter
28:43
Speaker 1: set up, big shelter set up around the state. UM
28:46
Speaker 1: and and you know, last time we checked, those shelters
28:48
Speaker 1: were all full. National Guard was still trying to find
28:51
Speaker 1: place to put people. UM. FEMA came in with some
28:54
Speaker 1: some some generations, you know, some some generators to help
28:57
Speaker 1: state agencies do their thing. But that's the extent of
29:01
Speaker 1: it right now. Hey, Joe, thanks so much for taking
29:03
Speaker 1: some time to join us. I know you must spend
29:05
Speaker 1: our tremendous amount of stress here as you deal with
29:07
Speaker 1: all of this, So the best to you and your
29:09
Speaker 1: family and all the Texans. Here's as you guys deal
29:12
Speaker 1: with just another issue on the top of the pandemic.
29:16
Speaker 1: As if that weren't enough. Joe Carol, he's a Houston
29:18
Speaker 1: bureau chief for Bloomberg News, joining us on the phone
29:21
Speaker 1: from Houston and Matt It's just brutally you think, you
29:24
Speaker 1: know how much more can can folks take? And then
29:27
Speaker 1: all through the Midwest from North Dakota all the way
29:29
Speaker 1: down through Texas, just brutal, brutal weather. Uh and some
29:32
Speaker 1: of the ramifications from a power perspective and a water perspective. Wow.
29:36
Speaker 1: Especially you especially have to worry about those people that
29:40
Speaker 1: um have a disability or the elderly whose kids you know,
29:44
Speaker 1: maybe working out of state. I mean, there are a
29:46
Speaker 1: lot of people, um who must be in dire, dire straits.
29:50
Speaker 1: So hopefully things can turn around for those good folks soon.
29:54
Speaker 1: Thanks for listening to the Bloomberg Markets podcast. You can
29:57
Speaker 1: subscribe and listen to interviews at Apple p Podcasts, or
30:01
Speaker 1: whatever podcast platform you prefer. I'm Matt Miller. I'm on
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Speaker 1: Twitter at Matt Miller. Yet I'm fall Sweeney. I'm on
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Speaker 1: Twitter at pt Sweeney. Before the podcast, you can always
30:11
Speaker 1: catch us worldwide at Bloomberg Radio