>> from the heart of where innovation, money, and power collide. this is bloomberg technology with emily chang. taylor: this is "bloomberg technology." a choppy day of trading, the s&p 500 having the worst days since june of 2020. and of course the deal is on, at least according to twitter. the company says they are not backing down and retail stocks slide. what does it mean for the capital market? i will be speaking about that with their ceo, james reinhardt. we will get to all of that in a moment.

let's get to the market with our very own ed ludlow in the place i miss most, i left my heart in san francisco. ed: yeah, it's sunny and calm, we call it a choppy day of trading, right? ultimately down 6/10 of 1% on the s&p 500. 4/10 on the nasdaq, contrasted with the designs from wednesday with the market more sanguine. ultimately in the last hour or so, negative territory. $30,000 per token, general risk off sentiment on the fed, inflation concerns. corporate earnings season continues. cisco steadily holding declines. cutting their annual sales

forecast supply chain problems in china, a proxy or barometer and cisco tends to do well. cutting the sales forecast, it's interesting. applied materials, key chipmakers lower. they gave a tepid forecast. supplies running at capacity. these are not the things we want to be hearing. we will talk about it later in the show. twitter higher, according to sources with executive saying that the deal is not on hold and there is no such thing as the deal being on hold. apple was a big laggard, according to sources at a recent org meeting they presented their latest virtual reality headset, you know what they look like.

a sign there could be more on the horizon. we need more hand gestures like that from you -- taylor: we need more of those hand gestures from you, ed. jason, what do you make, quickly, of these volatile markets, particularly within your world of technology as well. >> it's interesting, if you look at tech overall it has outperformed on a one-year basis . remember that it was really strong on the back half of last

year, particularly microsoft and apple, which make up a large percentage of the tech index. the first half of the year have been tougher, high profile disappointments. facebook, meta, amazon, netflix. but i do think that within our universe of disruptive companies , it has been interesting because within the last few days of significant downdrafts in the market we have seen significant outperformance. we have to remember that mid-cap growth specifically has been under a tremendous amount of pressure for the last 12 months and we may be close to finding a bottom. taylor: interesting. mid-cap makes me think of a few headwinds. these long-duration assets, with smaller down the scale, less healthy balance sheets. thinking about the fundamentals, when growth at any costs doesn't work anymore, how does that impact the way that you look at these companies?

>> absolutely great question. we have always been focused on cash flow and even though we are interested in disruptive companies with earnings in the future, we want to see free cash flow as soon as possible and some of these businesses have strong strategic positions. this isn't a fear of missing out portfolio. there are a lot of interesting names with free cash flow support. talking about 2% to 4% free cash flow yield companies, like zoom info and zend ask. -- zen desks. intuitive surgical. i think investors are starting to realize hey, i have been paying higher and higher multiples for consumer staples companies for safety and they are only giving me a 4% free cash flow yield and the reality is that these costs are going to hit them disproportionately. i think that is what we have been seeing these last you days.

the real economy stops are going to be hurt i inflation and their are too many investors hiding out there and we might start to see a rotation with some of these skinny balance sheets, high pricing power high intellectual property businesses that exist in the disruptor portfolio. taylor: within the portfolio, how defensive do you feel like you need to be in terms of catching those better opportunities, with cash after inflation being a money loser? >> great question. i would not want to make a call on the market. i do have concerns about how the inflation filters through the economy, particularly consumer spending overtime. we are already seeing that show up, walmart, target, etc.. i would say our portfolio is definitely tilted in the health care sector.

we want to be defensive from that standpoint. but even those names, high-growth, are down a lot from where they were, you know, nine to 12 months ago. as i was saying earlier, they are starting to bump up against interesting valuations where you can get 2%, 3% cash flow yield for a company growing its top line a 20% to 30% and if we enter into a kind of exclusionary environment where real growth becomes elusive, i think that investors will be coming back to companies like this. taylor: i was speaking to anastasia earlier and she said maybe not always looking at valuations is not the best way when you are going about investing. how much are you really looking at valuation versus some of the other big technicals with a massive selloff of indiscriminate selling where valuations look good but the market frankly doesn't seem to

care. >> ultimately, as they say, short-term markets, ultimately valuation will matter. one of the companies in our portfolio has private equity interests that have been broadly reported. i think you could start to see more of that in the kind of disrupted innovation space. i think we have to stay focused on valuation and owning the businesses that are disruptive. taylor: sounding like the good csa charter holder that he is. i remember and i understand what that means. i think that when we talk about the bubbles, right, and some of the hysteria in the market, we understand the disclosures when we think about ipo's wanting to raise capital.

was the stock market one of the first indications of little frothy and over our skis as we looked at the peak market bubble? >> 100%. i think that what happened was during pandemic it really was these growth companies that have massive revisions because they were kind of leading us through the pandemic. think about companies like exuma, moderna, biontech, etc., it generated a halo on all things innovative growth where there would be this massive acceleration even when the pandemic was over. i think that there's a lot of curves, curve bawling that goes on in the market and i think the equity markets, our friendly investment banks, responded by, by taking anything public that was remotely innovative.

a lot of these companies went public way too early. frankly, when we look at the fact that small cap growth underperformed large-cap growth by 25% last year, the most since 1999, a big part of that is all the supply that was pushed into the market. interestingly if we look at where investors and households have been putting money, they generally put it into large-cap funds, right? a mismatch of supply and demand, that's one of the reasons i think that kind of the mega caps kind of blend in the back half of 2021 while some of the mid-cap space was decimated. taylor: quickly here, just one minute left, is this just a u.s. story? are you a u.s. only focus here within these volatile markets? >> within the disruptive etf we only boast those u.s. listed companies.

we only have one adr, no other stocks. taylor: really appreciated, jason. keeping us up to date on all things big tech in these volatile markets. coming up, with investors significantly pulling back on software stocks, we will be speaking to analysts at rbc and -- and how that might affect their quarterly results next week. this is bloomberg. ♪

taylor: investors are finding

shelter from the deepening bear market selloff and pulling back significantly from some of the software stocks. joining us now is vanessa rubio marquez -- is rishi jaluria. it's another big day when we think about valuations and the re-rating of the high flyers during the pandemic. kick us off, broadly speaking. how are you looking at valuations at this moment? >> thank you so much for having me. increasingly we have to get away from the profit experience we have had for the past two years during pandemic and drill more on free cash flow and profitability. to that extent we are seeing attractive opportunities out there with high quality companies and zoom info trading with pandemic darlings going through struggles where's the -- zoom where we like these sort of names and the fact that there is valuation support on the profitability basis, we think

these names can do well in any sort of environment and have a long runway of growth. we are increasingly looking at profitability more than we use to. taylor: when we look at the multiples on the cash flow, how much of a focus is the positive earnings over negative earnings? rishi: with those companies i think free cash flow matters a lot. you have to look at free cash flow rather than earnings. you obviously still have high quality businesses you can value on earnings. microsoft training at 20 times forward earnings. you definitely have businesses where you can look at earnings but the reason we always look at cash flow is number one it's a metric that's hard to manipulate, unlike earnings, and number two because of the online subscription dynamic i just

mentioned. taylor: what do you make of that fig selloff? you would think microsoft with a massive strong balance sheet and huge free cash flow and strong debt ratings, the indiscriminate selling in the market, what does it tell you in the future capital for these super healthy companies? rishi: i think you hit it on the head, it's indiscriminate selling and investors are fearful and it is more the uncertainty that is killing everything. if it was an actual 1990's style recession right now, there would be a lot to the lesson of the unknown. will it be like 2008? it's making investors sell off everything along with the fact that these stocks all benefited during pandemic and it's time for investors to take a look and

say, let's separate put a quality business is from where investors have been throwing out the baby with the bathwater. that's what i think is happening here but i think it has created some opportunities. taylor: how are you thinking about strong companies going forward? rishi: we are bullish on microsoft, for example, it's one of those names that should do well even in a downturn. aviva is another name we like. it's a very defensive sector. hub spot, another name we are taking advantage of on the pullback. companies with profitability on valued cash flow with multiple growth drivers to continue growing. especially microsoft and viva, they should hold off well even in the event of a recession. taylor: what about these big

pandemic winners like zoom? doc you sign, -- docusign, how consistent do you see that revenue cash flow going forward? rishi: yeah, absolutely. i will put one of them aside as we are negative on them but with zoom in dockusign, they are very focused on their second act. zoom, for them it is zoom phone and adjacent events. for docusign it is clm lifecycle management. i think that the uncertainty is holding the names back. it's why zoom trades at 50 times cash flow for what i think is a quality business that has good economics integrate technology. it's the best videoconferencing technology that exists out there but all of the uncertainty is how many people are left in the world to do videoconferencing? where is there to go after

webex? can you prove the second and third acts of the business are for real? then we could start to see rating on the stocks. sonali: the argument has always been that companies will continue to invest in technology and you see these companies as recession proof, affectively. what companies do not do well in those slowdown environments? rishi: i think there are a couple of categories. any piece of software that is a nice to have not a need to have, right? i think you can find plenty of categories that are on the more discretionary nature where if push comes to shove and you had

to unplug them, it's ok, but you cannot unplug your crm or move your workload off as your. it's the discretionary's that we think will do poorly. and then it is companies that are really levered to the d.c. back to businesses, right? it's no secret that we are seeing a lot of d.c. funding dry up with companies focusing on profitability and we are even seeing layoffs from those software companies and any software company that is disproportionately exposed to the low-end of the market with this frothy d.c. back to businesses, we think those are definitely at risk in the downturn. sonali: really appreciate taylor: -- taylor: really appreciate it, rishi jaluria. we are going to discuss the latest at twitter. this is bloomberg. ♪

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taylor: time now for a bloomberg scoop, the twitter takeover drama continues as executives tell employees that the deal with elon musk is not on hold and is moving forward as planned at the agreed-upon price. joining us once again is our very own ed ludlow. i wanted to discuss our twin z's wedding planning and we had to do the story of the day, according to producers. ed: right. well, there is a lot of talk about. the head lawyer, had a policy at twitter basically stood up to say not only is the deal with elon musk not on hold, but there is no such thing as the deal being put on hold. literally a quote from within the meeting. this has been an area of intense interest. twitter users, fans of elon musk, this was a move by them to

reassure twitter employees that this was going to go ahead and that this is what they were working toward. taylor: why the need to even address this? ed: he tweeted that the deal was temporarily on hold because he felt the data that twitter provided in a regulatory filing, saying less than 5% of the users on the platform were bought, wasn't accurate. saying he didn't believe the data they provided and he wanted to know more and he stated on twitter in classic elon musk fashioned that until he had more evidence, the deal was temporarily on hold. i remember bloomberg reporting as well that according to sources in the background, whatever elon musk was saying, his advisers and bankers were getting on with it, working with the other side and with twitter to get the deal to happen at the original price.

$54.20 per share to take twitter pry it -- private. taylor: a lot of drama continuing to play out. i want to go to potentially more of a staple for us here, apple. we had a great story here from mark, talking about their headset. i know you love to do that hand motion to really describe that headset for us visually. showing it to the board, a significant sign of progress? ed: right, i don't have a prop but the latest version was delivered recently and it's a good sign that it's at the stage where it could be the next big thing. looking at that pie chart that is so important for apple, 80% of the revenue dominates, what's the next generation of revenue product for augmented virtual reality? that's one way of doing that. we are hearing the headset has amazing processing power, the same kind of chipped semi conductor power that the latest generation of mac has and in

previous years they tested software on competitor headsets with a market dominated by meta, right? can apple catch up? it's very exciting. taylor: have to get your hands on that ship, first. ed ludlow, very appreciated. our next guest, hunkering down ahead of what could be a turbulent time for the fundraising market. we will have that story, next. this is bloomberg. ♪

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>> it is the single most competitive market in the world. how can we have far more companies be public companies where their success is enjoyed by american investors saving for retirement or otherwise? everything we keep piling onto the list of obligations and responsibilities for a public company discourage that from happening. we have seen thousands fewer companies in the public market today than 25 years ago. i hate to say it, but shame on washington for forcing so many investment opportunities outside of the line of sight of the american investing public. taylor: that was the citadel ceo ken griffin talking about the

deals he is seeing in the u.s. right now. he also warned how the chaotic rockets are making it harder to look at new deals and ideas. for more on how this is affecting startups, i am joined by the founding partner at able. great to have you here. talk to us about the volatility we are seeing in the market and the impact you are seeing if at all on the fundraising as well. >> thank you for having me. we are seeing some of the later stage vc market state -- market shift shifting down a bit. many investors especially crossover funds with private public exposure, a pullback. we are hearing about flags as markets starts an oracle -- normalized. we are also seeing share in unicorns and extended share in bridge rounds.

the stages that precede seems somewhat insulated. it's a matter of time before we see that instability feed into the early stage. many of those precede and seed rounds are out sizing their current wave for a little more cushion so they have runway given the macro uncertainty we are seeing in the later stage market. taylor: are you telling companies to slow down to prepare? in boston two days ago, one of the vc's i was speaking to told his companies be prepared to not be able to fund raise for 18 months. >> absolutely. that's good advice. it is a good framework and way of thinking. our best advice to any founder is to remain disciplined and utilize an roi driven framework to prioritize.

irrespective of the macro environment, we have always said the best companies with outstanding metrics, fundamentals, and unique competitive advantage will continue to get funded. there is still venture funding out there. they will go out to the best founders and is this is. we have also said to our founders, many of them try to optimize for higher valuation. there may be advantages to remaining disciplined on valuation to avoid being in a situation where it's hard to clear that valuation at the next round given the continued challenges in the macro environment. >> the shift is no longer a unicorn at any cost. looking at more or sooner profitability? absolutely. it is no longer growth at any cost.

it is trying to focus on the fundamentals and to build a strategically competitive business that is grounded in good economics. taylor: you talked about in the slowdown, you will still get funding for companies with that ideas. where are the good ideas? >> we are focused on what we call narrowing the wellness cap. the delta that is grown over the past two decades as economic indicators such as gdp per capita have gone up into the right while our measures of overall well-being including physical and mental health have stagnated or decreased. where most focus on overlooked or underserved demographics where there has been stigma. one area is the health. we have invested in several companies. one in five u.s. adults and kids suffer from a mental health or substance abuse issue in a given

year, but over half have never received treatment. it's also an opportunity that is right for technological innovation given the significant supply and demand imbalance that we see in this sector specifically. 80% of rural counties don't have a single psychiatrist. the number of psychiatrist entering the profession have been trending down. our thesis is that technology can help unlock a lot of value and opportunity. taylor: i hear you, but also coming out of the pandemic, this felt like such a competitive space. you get advertisements all the time of all of these mental health apps on your phone. how do you differentiate if there is the need, and it also

feels competitive as well? >> going back to that, we focused where we have seen technology can make a big difference particularly in the mental health sector. we looked at services and technologies that allow personalization for an employee to determine exactly what care, what mental health modality is most effective for their needs. we also look at digital services to access quality care virtually. taylor: another great thing here is backing female entrepreneurs. if there's a big take away from 2020 and the pandemic, it forced us to stop, slow down, look at the quality around us. you are doing that as well.

how are you looking at investing and supporting female entrepreneurs? >> that is been our focus since inception. we have always said that we invest in the most talented founders and they happen to be women. women make the best majority of purchasing decisions. as investors, we are looking and talking a lot about founders and entrepreneurs have lived experiences that uniquely qualify them to solve the problem. from our perspective, understanding the female point of view is critical to success and to scale. there has been progress. last year, women raised more venture dollars and executed more to greater valuations than in the past decade. the percentage share of funding to all female teams have declined for the second year in a row.

we need more diverse perspective, more women independent -- decision-making roles at investment firms. it's not just good work, it's good business. women on founding teams, they perform 63% better than all-male founding teams. they generate 35% higher investment on return than all-male teams. taylor: we really appreciate it. coming up, closing the gender gap. now in the digital art world. my conversation with one of the biggest artists in that space is next. this is bloomberg. ♪

taylor: time for our trip to report. -- crypto report. our guest is one of the cofounders of the feminist protest our collective. great to have you with us today. talk to us about the new initiative you have and the more equalizing within the lgbtq community that you are looking for in the crypto world. >> it brings together one of the biggest minds, influencers, collectors in the digital art space. to close the gender gap. our thinking is that crypto and

digital space promised to build a new world. a lot of people in this space believe that the world has to be more open and accessible for everyone, equitable, and the belief we bring together people in space, prominent artists in space. everyone else following this model of the world -- >> i'm curious about diving into that world. your website points out some of the issue that there's not a lot of diversity in the space yet. you're getting together with the members of this, how do you defeat this problem and are there challenges to doing so?

>> when considering membership, we try to make sure we have an equal amount of members and systems in place that help to maintain that. we have a program sponsored bite -- there are a number of female artists. we prefer to partner with girls and lgbtq people. we always maintain, we watch who we invite. it's never just a girl party. culture is created is so repulsive to people from outside.

it doesn't allow to really scale and reach options. >> what a story it was launched on the ten-year anniversary since your rest in moscow for an anti-vladimir putin protest. i wonder if you can tell more about the power and crypto you found to bring people together especially since you were part of such a big part of what raised money for ukraine. >> i've always been connected with the world of technology. activists have to be smart about crypto and the tech world. may ethan's didn't change really over the last 15 years. trying to sustain goals with new

tools for example when it started in the end of february, we put together ukraine dao and we were able to raise $7 million in today's. crypto was the preferred currency. for speed and efficiency. >> the argument against that is that the highflying and fts, highflying crypto, it is come down a lot since price -- in terms of price. are you worrying about continuing in this market when prices aren't what they were a few months ago? >> i'm not worried.

i'm looking at crypto as a tool and nothing really changed. i think there are a lot of use cases, a lot of applications for building better governance levels. i'm looking forward -- i think the current market allows us to find things better and more interesting, deeper than means to get rich. >> speaking of deeper reasons for cryptocurrency, one of the things that you have talked about is reproductive rights.

what you have called the summer of rage. how do you see that playing out for members of the community talking about reproductive rights in the united states? >> there were some currencies on the auction at christie's and revolving around topics of justice and a question of what we're going to be able to raise, not just the conditions in the u.s.. ultimately, various recommendations to see how we can help them to onboard their members to provide them better governance and also tools for their goals. >> we appreciate it.

we appreciate both of you joining this program. coming up, it has been a hard week for retail stocks. you're going to be speaking to a ceo on whether they are seeing consumers pullback and the trends across secondhand apparel. this is bloomberg. ♪

taylor: retail stocks got a big hit this week. the ceo of threadup joins us. but first,

i think the bigger issue underway is the lack of supply chain issues that you are starting to see is that one area for you -- >> definitely, we don't have exposure to china. we're still dealing with freight and labor costs. it's nice to be in a market where everything we are selling back to the american consumer is being sourced domestically from the american consumer. >> talk to us about inflation. a huge concern. one of my bigger concerns is if walmart and target aren't figuring out how to manage it, how are you doing? >> i don't think target and walmart, it's all different stories about the result. for us, ultimately what we see as a consumer is that it seems like they are getting a little pinched. pinched at the pump, pinched on groceries. you can see this across consumer discretionary spend. what we are seeing is this is now a time where discount secondhand apparel can shine.

our job is to make sure consumers are aware of the value you can get. >> i'm looking at your resale report talking about how the market is expected to grow by 127%. how do you make sure you are meeting your audience that you have the right inventory at the moment? >> leo shoppers, their pursuit of secondhand is moved from going to occasionally think about shopping secondhand to being one of the first place is young people are going. that's really exciting change. we're trying to make sure that we are there as consumers. >> we were showing a chart about how the consumers are looking at north america.

that area is leading growth. how much of this is a global opportunity? >> this is the first time we have done global in terms of our reseller port is looking at global trends. they are really positive whether it's in south america or europe or australia. across the globe, retail is growing. -- resale is growing. the opportunity to shop more sustainably is not a u.s. phenomenon. problem we are solving for consumers is a global one. i think it's exciting for us to see that type of global growth. the global market is supposed to triple over the next five years and that is weighted more toward north america.

>> you mentioned to sustainability. i'm curious during times when consumers are feeling pinched, is it a necessity or a desire to be sustainable? >> what we have been trying to keep top of mind for consumers is great brands, great prices, we believe price and value is the number one consideration. we always edit the caveat of great brands at great prices in a sustainable way. young people are saying i want to change the way i'm shopping and i want to be more sustainable. now is our time to improve. >> we appreciate you spending time with us. that does it for this edition of bloomberg technology. we will be right back here tomorrow. i hear emily chang may grace the

building. also, make sure to check out our new podcast. you can find it on the terminal, online, apple, spotify, and i heart. this is bloomberg. ♪

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