announcer: from the heart of where innovation, money, and power collide in silicon valley and beyond, this is bloomberg technology with emily chang.

emily: i'm emily chang in san francisco. this is bloomberg technology. coming up in the next hour, support much go -- twitter's lawyers say the termination of the deal was wrongful. we will talk to a former twitter insider about where the legal saga goes from here. plus telecoms uphill battle continues -- the connected fitness company will stop making bikes and house. we will have the details. funding for crypto startups plummeted last quarter. we will ask likely venture partners why they are planning to double down on the blockchain. and sequoias janice lee will talk about their new plan to hunt for what they call outliers and put $1 million behind them. first i want to get a look at

the markets. tech pulling stocks lower ahead of key consumer data coming out in the next when he for hours. ed ludlow has all the moves and here we are again -- tech losing steam. ed: more muted moves to the downside then perhaps we saw on monday. that key cpi data to you on wednesday at 8:30 a.m. eastern time. i have a public service announcement -- you know i love to do that. the u.s. bureau of labor statistics put out a statement this evening saying there is a fake june cpi report doing the rounds online. any eagle eyed investors watching the show, wait for the official release of the data. wednesday, eight: 30 a.m. eastern time in the united states. also breaking news after the l from the imf. in the last few minutes, the imf cut its global gdp forecast to 2.3% versus the prior 2.9

percent forecast. you look at the markets board on my left & -- left-hand side, a significant pullback in yields. eased off on the 10 year. we are talking about recession concerns and we have d -- focused in on this idea and getting more granularity. looking at bitcoin, below 20,000 u.s. dollars. if i look at the bloomberg terminal chart, being caught up in this risk off sentiment, you see that right-hand side of the screen, the drop since june traded sideways since the big drop in the month of june at the 20,000 level. this is an asset previously called an inflation hedge but as central banks moved on what their policy to fight inflation, it coin has not been an inflation hedge and has traded sideways. we are keeping a close eye on it. let's talk about ev's real quick.

look at this chart on my screen -- a massive jump in canoo -- why? a deal with walmart really changing the game. this was a penny stock tuesday morning and look at that massive jump. in terms of the other movers i'm keeping an ion, it is the mega caps. really pulling the nasdaq 100 lower. one of the names was apple pushing to the upside but we are in wait and see mode. these are the critical names starting in july where we get a sense of what's going on in the world. emily: let's talk about something else going on in the world and that is twitter officially suing elon musk to consummate -- that is a word they used -- at 44 billion dollar deal he's trying to pull out of. twitter suing to force him to do the deal he promised to do, asking a delaware judge for the case to be heard into number.

we are getting headlines about a memo twitter's leadership sent to staff asking for next but i did trial. it not necessarily a great atmosphere among twitter employees given all this uncertainty. but this is something we were expecting and the legal saga will continue. ed: bloomberg reported sunday that this was the action we would get -- a delaware court filing early in the week. the point voters board and management is trying to argue is elon musk did not have any ground to walk away from the deal. there's no such thing as buyer's remorse. elon musk says twitter was not forthcoming with it data he requested on day t lifted in his filing on friday about the issue of bots. what elon musk will have to prove in court is the way twitter acted, the information it did or did not share has material adverse effect on the deal. in other words, they need to prove it has altered the value of the deal, punched a hole in

the deal. elon musk will have a hard time doing that. we are up .8% in the after hours, may be a relief rally because we saw this coming. there, according to people we have spoken to come has a good chance in this fight. this is elon musk we are talking about, the wildcard man. emily: they plummeted yesterday and made up some of those losses after hours. i went to bring in jason goldman, one of the founding members of twitter and former white house chief digital officer under president obama. your timing is impeccable. officially, this is headed to dollar court. does anybody win in this scenario no matter what happens? >> definitely the lawyers win. you know the lawyers are excited when they call a case unprecedented and complicated. that's code for there's going to be unprecedented legal fees.

everyone else is a loser for sure. elon has been shown -- has shown he cannot be trusted to execute a deal and now they are going to delaware to look at the transaction and the shareholders are left wondering about what the future will hold. emily: the chairman of the twitter board said they are committed to closing the transaction and are committed to it. then you have ed williams getting into the fray. you and ed worked closely together, saying i'm sure there are legal and fiduciary reasons you have to say that, but if i was still on the board, i would be asking if we could let this whole ugly episode blow over. hopefully that is the plan and this is ceremony. what do you think the plan actually is and is this ceremony? jason: at this point, the board has to sue and get the agreement agreed to.

they have no choice as fiduciaries to do anything but that. i think what ed was expressing is what i agree as well, is i wish the board had more insight at the beginning to realize they were dealing with someone who just wasn't serious and didn't have a real plan for what to do with the company and led by jack, they became besotted with this idea of elon owning the company. the first step of avoiding a trap is knowing it's there and the board simply didn't realize they were walking into one striking a deal with the line in the first place. emily: why do you think elon did this in the first place? when venture capitalists said he was wanting to sell some tesla stock. but do you think the real motivation was? jason: i think he enjoys using twitter and is addicted to the service and thought for a while would be fun to own it. if you look at the proxy filing statement twitter filed on the deal, they had a signed deal -- they had a signed agreement

where he would own no more than 15% of the company. then he had a conversation with jack the day that was announced and it clear pivoted to i should just own the company as a whole. that's why this is likely to settle. there's probably a lot of conversations between elon and the company in the three agreement phase they don't want to come out in discovery, so this is something that ultimately will be decided by the courts but will be decided in a settlement. emily: i wonder how this plays out. if elon musk ends up having to hold up his end of the deal and twitter wins, is that good for anyone? jason: no. it's not good for anyone. it's not good for twitter if elon ends up owning the company because he doesn't have a real plan for what he wants to do with it. he has revealed that over time. there were any number of silicon valley luminaries that lined up a hind elon owning the companies and pledged to be equity

partners, whether that's entries in the horowitz or sequoia, all of those folks have been remarkably silent in terms of their belief in elon as the ultimate owner of this company because in his conversations, he showed he was not serious about what he would do it that. elon owning it is not good. a settlement is likely to equal any amount of value that equals the damage done. the real problem is there are actual employees who want to make a better product and make the company better but they just don't have the leadership that will enable them to do that. emily: let's be clear -- there are so many, including elon musk co. love twitter and love using butter. but twitter, over so many years, has not been able to parlay that into a significantly bigger business. what is your plan to increase the number of users and drive revenue? jason: let's be clear -- i'm not

here auditioning for any job at her. what the board needs to do at the end of this juncture is find new leadership. that is not a job i am auditioning for. they need to look at users who have found tremendous value and building gauge meant around it. i don't think the company is one silver bullet away or one feature away from sticking the trajectory it's on. it's obviously something that has always had cultural value in residence and continues to play a role in global politics and the global conversation. one point on that is we have spent months arguing what elon has meant about free speech online and he has slowly evolved that viewpoint from just meaning anything to comply with legal requirements in a local regime. in the meantime, while we are trying to tease out any meaning on what his position is, to prison court in india trying to push back on authoritarian creep

into free-speech laws in that country. there is real stakes at play and the company is fighting good fights around the world. it's just they are having to do so now under this cloud of elon's acquisition. emily: real stakes in deed. jason goldman, as always, thank you for your insights. bargain hunters might be underwhelmed by amazon's two day prime day sale. the annual event began today but many sellers are minimizing discounts to cover their own soaring costs. coming up, peloton is going to stop making bikes in-house, marking one of the most dramatic steps to simple if i its operation cut costs. all the details, next. this is bloomberg. ♪

emily: baton making a major strategic shift to streamline its strategy. that company will stop building exercise bikes and treadmills, a big bet of the former leadership team. making this change after several months of turmoil. shares of the company are down 75% so far this year. talk to us about the significance of a dramatic shift. mark: this is an end to end overhaul. let's look at apple for a second. apple designs the iphone and their other products. but what most people don't know is they have a third party

called foxconn that manufactures them. apple works hand in hand with foxconn to build those devices. they don't do it in-house. paula taunted both. they built a big portion of their bikes and house using their own facility and contracted out another portion of their devices to different technology manufacturers in asia. what wattana's going to do is they are seizing -- what borton --peloton is going to do commented of having to -- two distinct supply chains, they are going to have one. they are laying off 570 workers and their in-house facilities and they believe this is going to up the product quality is there has been issues there because all the in-house quality control will be in one place. you won't be split between two development style. emily: will this solve peloton's

problems? mark: peloton has many problems. this will solve one of them, the ability to gauge supply and demand and tie it to production. downfall happened after they overestimated demand would continue to occur even as the pandemic slow down. that left them with an overabundance of inventory and nearly cratered the company into the ground. if they had only contract manufacturers, that probably would have been easier to resolve because now they are not owning all that inventory. they are working with a third party and it will give them better supply and demand and allow them to optimize the supply chain. but peloton's problems went beyond the supply chain. there's issues with how much their subscription costs or people even wanting to buy their equipment. there's competition, nordictrack and 70 other companies. there's the question if they are even hitting the market with the correct products.

they've been developing a rowing machine for three or four years. their new tv connected device has not gotten off to a start. this solves one of their problems, but there are many more to go. it's sort of like whack-a-mole. emily: thank you for sharing your insights with us. shares ofcanoo soaring, at one point doubling after the struggling electric vehicle start up one in order for 4500 vans mark. they moved its headquarters to walmart hometown. in may, they weren't there was substantial doubt about its long-term future but now at least some investors seem a little more optimistic. coming up, there has been a major slowdown in crypto funding this year. we will chat about that with one venture capitalist doubling down with a new team focusing solely on investing in the blockchain. ♪

emily: a story we continue to watch -- a delivery company cutting 10% of its workforce, including dozens of warehouses, an effort to conserve cash. the job cuts will affect about 1500 people in the united states. they will shut 76 warehouses, about 12 percent of its network. lightspeed venture partners paid $7 million for an early and growth stage all -- onto her. they announced a new team fully dedicated to blockchain investment. venture capitalists have cooled on crypt though recently.

they are a partner and join us now from new delhi. you just raised $7 billion in fresh venture capital. talk to us about the process of raising this funding in a difficult macroenvironment. >> getting this done is a reflection in the strength of the franchise and a healthy base that is sophisticated in seen through multiple cycles and committed to the asset class. we are fortunate to have raised this capital at a time that will hopefully prove to be a good vintage for venture and founders building for the next seven to 10 years. emily: where are you planning to

deploy this and how fast given the tumultuous conditions? >> we typically target a three-year investment time and one of the reasons for the scale of this capital basis over the last 20 years, innovation and entrepreneurship would be a global phenomenon and it was a little contrary and that time. as a result, the film -- the firm has built a presence and we have 70 investors across 12 offices in six countries. there's a lot of opportunity globally. the scope of the sectors we invest in has also increased with pharma and biotech in addition to enterprise consumer, fintech and crypto and so i think we are seeing a lot of opportunity in these areas. the market for growth is already slow and we think it might

remain that way but we will be patient. emily: talk about the global trends you are seeing. how are you seeing the slowdown startup in india. is it similar to what we are seeing in the united states or are these playing out differently around the globe? >> it's really interesting question. what we see is the macro conditions play out differently across sectors and across countries. even in that u.s., consumers could see impacts really early on. enterprise, not just yet. sectors like biotech will have different dynamics. in india, i don't think we are going to ca recession. what we are seeing, and we have been used to inflation again,

the central bank is somewhat used to managing that level of inflation. but what we are seeing is an outflow of foreign investment as capital moves out of riskier countries and that has an impact on the financial environment for startups. more so right now than the macros. emily: obviously crypto in the blockchain are two different things. but they are certainly linked and we have seen the crypto market take a nosedive. nobody knows how long it's going to last. why double down on the blockchain now? emily: at lightspeed, conviction is important for us. what we believe in the future of something, we don't try to time it. in the early 2000's, we believed venture capital would be global and that was not a widely shared view. we committed to that and, maybe for a decade, it wasn't clear that was the right call.

sitting here today, none of us would argue that technology and innovation is global. i think similarly with the respect to blockchain. a lot of the infrastructure we are looking to invest in, we are not trying to time the market. we believe the next few years, with a lot of the foam of out of the market, it may be a great time -- a lot of the fomo out of the market, it's a great time for venture capital to invest. emily: lightspeed has invested in 30 companies that are now public. when does the ipo window reopen? >> i wish we had a crystal ball. feels like it's going to be longer than the previous downturns given the multiple of factors at play. we are thinking well into 2023. emily: thank you for joining us. i know it's a very early morning for you in new delhi. appreciate you waking up.

we will keep watching. coming up, female-led startups had a record year for funding. 2022 looking like a different story. we will ask one of the partners at sequoia capital. this is bloomberg. ♪

emily: welcome back.

in the last hour, twitter has sued elon musk to force him to consummate his buyout of the social media platforms. we have read some of the fine print. ed: they're basically saying he does not have the right to walk away from an agreement that had very few conditions. we have a quote from the court filing. must apparently believes that he of like any other party is free to change his mind, trash the company, disrupt operations and walk away. just because -- he can't just have buyers remorse is their basic argument. emily: do they have an argument? ed: to most lawyers, they think they do. elon musk's argument is that

there was not enough information handed over on bots. did they or did they not share off -- share enough data? did what they share alter the value of the deal? most say twitter has a good chance. emily: sequoia capital may have $1 million for your idea. the vc firm is accepting applications. they are looking too far -- fund outliers and teach them how to make their idea a reality. walk us through the vision and how you think this sets apart what sequoia is trying to do. >> thank you. this is the new catalyst for -- we offer capital, and you are

working along exceptional people at the same stage as you. we are doing this because we know it takes a lot more money -- a lot more than money to create the company. sequoia has had the pleasure of working with some of the best founders. we try to take all of those lessons, mistakes, the journey of the other founders and boil them down into foundational concepts. from product to customer obsession to culture to how to hire. that has set this programming for this. >> when you say outlier -- applications are open now until july 22? when you say outlier founders, what do you mean? sequoia has done a lot of innovative the past. for instance, your scout program. why do you think you need to do

this as well to find the outliers? parks >> the venture market has been continuously evolving over the years. there are more founders coming into the space as investors. what can a firm offer other than money which is a commodity and a board member. what do founders need? how do we work backward to find out what they need help with? the number one request we get into thing we deliver its help with actual company building. we try to boil down everything we have learned over the years through working with some of the best into the core things that for example when i was a founder, there were things i wish i could have gone back in time and told my younger self about how to run a company. that is a lot of what arc teaches. emily: what is sequoia's steak and what is the chance for follow-on funding? >> it varies from company to

company. some are precede to people with an idea and some are further along and we put $1 million into their existing seed round that they have already raised. it's a little bit of a range. it's focused on how to build an enduring company, that last decades not just how to get to the next quarter or next fundraising milestone. emily: given this to mulcher was macroenvironment -- tumultuous environment, how does this change what you are looking to fund at the seed stage or growth stage? sequoia runs the gamut. >> i would say we have seen multiple compression and valuations come down. i don't pick we have seen earnings compression yet and i think consumers are feeling poor and that's going to trickle down into how people spend in the behavior of buyers on the

consumer side and the enterprise side. sequoia has been designed to outlast the cycles in the tech industry. the purpose of our firm is to look the on the short-term fluctuations. we are looking for the same thing we were before which is founders that have unique insight who have a lot of great to endure these ups and downs as well as the difficult journey of starting a company. we are looking for large markets where we think you can almost define a category from stretch to create a new one. emily: what is your read on the macro environment right now and how this will be for tech? >> i don't have a crystal ball, but i think we have started to seek not earnings compression. emily: what do you mean by that? >> the public market has returned to historical valuations of revenue multiples.

earnings -- i don't think we have seen the full impact of consumers feeling gas is really expensive, my company had layoffs, i can't buy as much enterprise software. i think that might still be coming. that's what we have been forecasting for our founders. we called the meeting recently where we gathered our founders and walk them through what we are seeing in the market and what we see about forecasting financial planning and how to lead in uncertain times. that's what we expect. it's on a case-by-case basis. some founders are in a great cash position. what we see in these down cycles tends to be the hiring freezes, everyone pauses and reflects. it becomes easier to get higher concentration of talent versus before, you are competing with faang companies. everyone was hiring. now for the mission driven, for the people who are venturing out

of jobs now, it is possible to get a greater concentration of talent. some folks are in a not so great cash position and they need to take more drastic action. emily: sequoia is famous for its rip good times message which you gave to entrepreneurs at the height of the financial crisis. what is the headline of the presentation today? >> it was called adapting to indoor. how to build enduring companies and outlive the cycle. the founder of sequoia had a license plate that said the german word for crazy or insane. some of the wisdom the gets passed down from him as well as throughout the partnership has been that tech moves in the cycles. there are four phases. the one we were just and was called that, the excess the high

multiples like parties. then there is a correction where people tend to freeze. then it slowly comes back. then it happens all over again. over decades, it is compressed in certain industries like crypto, i would say the 12 year bull market becomes a four year bull market companies are often formed in the correction phase. it is the founders who are mission driven, they want to start their company no matter what, they are courageous and rave and have the grit. they have fewer competitors. we believe that now is a great time to start a company. emily: last year, sequoia made a big rake with tradition to do away with traditional timelines and keep money invested longer and companies, your portfolio companies going public. some of them have had a tough time in the public arc it like

airbnb, doordash, robinhood. is that strategy evolving at all and are lps out sooner? >> the purpose of the fund was to look beyond those short-term fluctuations. it allows us to be the long-term partner, the shareholder, we don't have to immediately distribute after the ipo to lock in return for our lps. it allows us to generate superior returns, we get to capture compounding value. some of the best companies like google, cisco, airbnb, the companies we have had the pleasure of working with for a long time we have a lot of information about how well they are doing. and the real what those founders are truly like. we think we are in a better position to manage the situations for lps and founders that we are the long-term partner. emily: i have to ask you, you

are on board and found it yourself. it has been concerned about women backsliding in the pandemic. i wonder if those concerns continue, if there is about willie -- women backsliding in a downturn? are you concerned or do you see a bright future? >> this is a deeply personal issue for me. i was a female founder. i was working on a product targeted at women and it was very hard fundraising. i never pitched a single woman investor and i made the connection, i realize that the connection of who makes funding decisions affect what problems and customers get served in the world by the tech industry. that is what made me invest. in some ways, we have moved forward.

certainly, the percentage of women check writers at vc firms has gone up from 9% to 14% in the last four years. at sequoia, over 25% of our investing team is women is high for the industry. there are some steps forward, but there are also some steps back for women overall in this country. the overturning of roe v. wade is a tragic step backwards. a lot is going to fall on the tech industry, innovative founders, employers to help move the ball forward for women. i am very proud that sequoia is a backer of maven clinic. a leading women's telehealth platform. it does everything from pregnant seek counseling to ivf and egg freezing to maternity. i have used it through pediatrics. i just texted baby questions to

a pediatrician and it's a great service. it offers a wallet option that allows employers to pay for travel out-of-state as well as to cover things like fertility benefits. i think a lot is going to fall on hopefully some of the female founders. overall, i am optimistic in the long-term but it's always multiple steps forward then a few back and we continue to make progress. emily: i appreciate you sharing your thoughts on all of that with us. great to have you with us. coming up, bitcoin miner's feeling the heat with the texas power grid near the brink. we will talk about the impact of the heatwave in the lone star state that has become a hub for digital assets. this is bloomberg. ♪

emily: time for our crypto report. joining me now is sonali basak. we've been talking about startup funding for crypto. talk to us about where the tide is going. >> think about the disconnect you are seeing. billions of dollars in the first quarter alone raised for venture capital in the crypto space but the funding of the startups themselves has fallen off. he started to see that in the second quarter of this year where funding dropped by 31%. there were some venture capitalists this book to us that gave more specifics on what that look like. at the seed stage, it's not as

dramatic of a drop. in later rounds, you can see a 50% to 70% drop. you don't want to catch a falling knife. until you see more stabilization in the industry in terms of where prices will go as well as a shakeout in terms of the projects that will make it through the cycle, it's going to be hard to see tons of money being put to work although we are seeing some high-profile names being funded. you and i spoke to an nft marketplace just weeks ago. these are one-off situations and not the norm in this environment. emily: how easy is it going to be to spend this money that venture capital funds have raised? will they be able to put all the money they raised to fund crypto to work? >> it's a good question you have to see if the definition of crypto will change. will you start to put money

toward projects that are salon are based or web three based? maybe you can see things start to change in terms of definitions of crypto, but again we are looking at the price of bitcoin. it is still king. wendy prices stabilize? until that happens, it's hard to see massive amounts put to work. emily: thank you for that update. coming up, calling for computer education. we will speak to ceo about the company's mission to boost computer science in schools and all of the ceos that have pledged their support. this is bloomberg. ♪ what if you were a global bank

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emily: over 500 of the top ceos in the united states have joined code.org to ensure that all u.s. elementary and high school students have the chance to study computer science. this comes as the man for computer jobs has skyrocketed. many of the jobs are unfilled. joining us is the founder of code.org. you have been doing this for nine years. trying to get computer science taught in schools. how much progress has there been? >> when we started, 10% of the schools taught computer science, now it's 59%. we want to get to the point where 100% of schools teach computer science. only 5% of high school students

study computer science and we want to reach every kid. that's the next decade of work to get to every student in every school. emily: you have hundreds to have signed this letter. what will this accomplish? >> it is not surprising to see folks like tim cook or bill gates or mark zuckerberg say they want to see schools teach computer science. what's extraordinary is to see companies outside of the tech sector. coffee, toys, starbucks, nike, hasbro, nordstrom, ups, walgreens are all getting behind conspiracy science -- computer science. every company is becoming a tech company. every company has data needs or cybersecurity needs. emily: have you gotten a response from lawmakers? >> we have early signs.

the national governors association, all governors are getting together tomorrow and we expect by thursday they will make an announcement on this topic. we don't know what it's going to say, but the early signs are that it's going to be tremendous . i hope to see all 50 governors united behind something because this is an issue that everybody can get behind. emily: i want to remind our viewers, you grew up and ron. -- in iran. you were able to get access to a computer and it changed your life. if your school had offered computer science, would your life have been different? >> my father was physicist and my mother was a computer scientist. even growing up in iran during a war, i was learning to code on my own. when you think about underprivileged kids in today's world, what is the one thing we can teach them in school gives them a pathway ahead? or gives them the confidence that i can build something, make

something, change the world, i can be a creator. kids want to create and right now they are becoming creators on tiktok or instagram because it's easy. if they knew they could create absent software, there's a whole world of opportunity we would open up for them as well. >> there's also the how. what are schools getting rate? what are they getting wrong? i have multiple children in school and there's a thirst for more computer science. i wonder if they are doing it the right way. >> one of the challenges is to make sure it is taught creatively. it's not like learning and memorizing and passing a test but what do you want to create? what app, game, website to draw out their natural creativity. when it's taught that way, it brings diversity into the field because more students are interested in creating stuff than just doing work.

i'm confident that by the end of the decade, many states are saying it's going to be required for graduation. when you do that, you get to 100%. you also fix the gender gap, the racial equity gap, every student learns. emily: this is the secret to everything. >> pretty much. in south carolina the first state that required computer science for graduation, there are more young women in south carolina learning computer science than the five states around it even though those other five states have more women in school. emily: how do you think the macro economic conditions going into a downturn it's going to affect this? >> i think this is the best time to invest because many states have surpluses they can spend on education. any location worrying about economic downturns can bring jobs to their region.

in the past, if you wanted to attract high income jobs, you had to attract an office to be built. in the time of remote work, also one has to do is educate people and the jobs will come to a region. emily: it has been wonderful to see your progress. we will be watching for more. the founder of code.org, thank you for joining us. that does it for this edition of bloomberg technology. tomorrow, the ceo of ibm be with us. we will talk to him about everything from the downturn to the supply chain and more. you don't want to miss it. this is bloomberg. ♪

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