tv Bloomberg Technology Bloomberg January 21, 2022 5:00pm-6:00pm EST
caroline: i'm caroline hyde in new york in for emily chang. this is "bloomberg technology." the worst week since the pandemic shut america down in march of 2020. plus, we'll talk with brad brooks about the big crypto selloff we are witnessing and bitcoin hitting its lowest levels since july. we'll have all the details. and with all the volatility in the markets, we'll take a look at which brands have the best staying power. we'll dive into the best companies in earnings and growth. first, we've got to dive into these markets. what a finish. a volatile weekend. tech stocks dropping this friday, investors focusing on the warring signals as earnings season gets underway but also what the federal reserve will do next week. ed ludlow, you've got the breakdown. ed: so much read on the screen, right? the take away, the nasdaq having
its worst week since march, 22 any. -- march 2020. the index following with the same pattern, tech stocks broadly feeling that pain, and the philadelphia semiconductor index down for a fifth consecutive day, such an outperformer in 2021. and then you get the end of the short, long short week. you get there and then bitcoin comes at you and 5:00 p.m. eastern time on a friday. last hour, bitcoin has fallen from $38,000 to $36,000. did they get the memo late? caroline: that happened yesterday, right? ed: what is happening? they're trying to keep us on our toes. i do want to focus on the equity markets. that bears tilt i was talking about, you're right. we came back from the long weekend holiday and looking at the outlook for rates, the fed, focused on yields. later in the week, yields receded a little bit.
we had that news from peloton, a lot of news around netflix. and we focus on earnings, a look at the decline and how that carried on. i want to look at those stocks specifically. peloton rebounding on friday, the ceo came out late thursday night and outlined their plan to get back on track, cut production volumes because of weaker demand, shrink the company, make painful layoffs, and investors responded positively. but netflix, the biggest drop since july of 2012, down more than 20%. we know the story, an outlook of subscribers faster than they were expecting. changing macroenvironment and competition. what a week. caroline: the perfect marriage of macro and micro. let's stick with where ed was leaving off. to discuss what's changed,
senior investment strategist joins us now from new jersey. always great to have your analysis. what do you make of the drops? >> it's been a brutal week for investors, not only tech investors, but investors broadly, s&p down 7%, and nasdaq down 12%. that's three weeks of 2022 already. what we think about is we really do try to take a step back and think where we are in the macro picture. and what we see is really we're still in mid to late mid part of this economic expansion. so, certainly you guys referenced 2020. this is not an economic year like 2020 was. we're still looking at gdp growth plus 24%, still earnings growth this year. we're still looking at a consumer that remains pretty healthy. corporate balance sheets remain pretty healthy. we are not by any stretch, and certainly by any forecast we've seen, heading into any sort of
recessionary environment. so we would not expect the markets to head towards recession like their market drawdowns. now, the nasdaq has broken some important technical levels. could there be more pain ahead? absolutely. but what we're thinking about, where can investors win? we do things well. think -- we do think noncyclical investments hold up well. for those investors that are longer-term, that don't have the tech exposure that they want, we do see that story coming back into favor, especially as growth doesn't slow, perhaps by end of this year through next year. and so don't give up all hope yet. we do think volatility is likely. we are hopeful that the fed steps in and may be a little bit of hope underneath this market. but in the meantime, make sure
your portfolio looks balanced, has at some of those values cyclical and non-us exposure, as well. caroline: do you think the fed will back off because of gyrations in the market? mona: what's interesting is some of the market has done the work for the fed. we've had rates move from 150 to 180 levels in the 10 year. we've had markets price in four, in some cases five rate hikes for 2022. we certainly seen an end to the balance sheet tapering, markets pricing in qt now, balance sheet contraction by mid this year, as well. so when the fed does meet next week, we don't expect them now, or the probability of them having a hawkish surprise for markets is much lower. so could they, in fact, then come out with a slightly more dovish message than the market expects? perhaps the probabilities are tilting in that direction. right now, the markets are in a bit of a void. they are waiting to see what is on the mind of jerome powell and the fed, certainly waiting to see how earnings season plays
out. both of those could be a source of stability in the weeks ahead. caroline: mona, many like to say this is a healthy correction. many don't say it's a healthy bear market. but i am interested in whether you think this is actually, a lot of that brought forward valuation, front running a lot of the growth that we were yet to see in some of these stocks is actually just coming out of the market somewhat. should we find a sort of level? is this, in some way, where tech stocks should be trading? mona: yeah, it's a great point. we have said and we have looked at the historical analysis does show that as the fed starts its tightening cycle, valuations do compress. and we do see the highest value, more speculative parts of the market underperform. so when you look at tech thus far, the nasdaq down 12%. but if you look at more speculative place, work funds down 24%, bitcoin now down also 20% plus. so we're certainly seeing within
that tech spectrum highly speculative values of the market underperform. that does make sense. we continue to see rate volatility, especially as we get through this fat hiking cycle, that could continue to have or spark volatility in those tech markets. from an s&p 500 perspective, down 7% -- and we've said this in the past, any given year historically, the five to 10, maybe 50% range are the norm. last year and the year before, we haven't gotten many. so perhaps we're starting the year with a bang, but perhaps the volatility is returning back to normal levels. and perhaps offering some opportunities, especially if you think about these pullbacks as opportunities to diversify portfolios or add to risk if you haven't done so already. if we don't see that when he percent plus drawdown, it may take a little bit -- 20% plus
drawdown, it may take a little bit. caroline: next week is going to be a big one. always great to check in with you. thank you for your expert analysis there. meanwhile, stay well and have a great weekend. and they continue to look atgrs. in terms of lawmakers, going to rain in big tech? google wrapped up spending in washington last year. according to disclosure reports, the company spent 9.6 million dollars on lobbying in 2021, more than a 27% increase from the previous year. still to come, we'll talk more about tech stocks seeing massive selloffs and an interview with the ceo of silicon valley bank. we'll see what he has to say in terms of public markets and the private markets. this is bloomberg. ♪
caroline: great look again at how tech stocks performed today. it wasn't pleasant if you are long markets. let's talk about what it all means in the context of investing in technology for the year. can you make a trend out of this for 2022? greg becker is with us, ceo of silicon valley bank, you just had your own numbers. what is it about roughly 50% of venture capital companies out there in the u.s., many vc firms, bank with you? you had a record year. is that likely to contain? >> it's great to be here. interesting week on bloomberg. caroline: kudos for sticking with us. we thank you. >> no problem. some calmness. we think about this daily basis, weekly basis, but to think about it longer-term. we had a great year last year. last year was a record year in almost every category.
we had almost 70% asset growth. our net interest rate was up, incredible. and we had a great fourth quarter. what was also positive is we increased our guidance for 2022. and that's before there was any benefit of rates. so that's the good news. clearly the challenge is what we're all seeing right now, the tech correction we're watching on a daily basis. caroline: from your perspective, did you see it coming? did you feel this is where valuations had gone too far too fast and needed to see some realignment? four did this take you by surprise? -- or did this take you by surprise? greg: i've seen a lot of different cycles. it always feels like the public markets tend to, i would say, overshoot the mark periodically, and then under should the mark periodically. and if feels like that's where we were last year. everything was priced to perfection. everything was going well.
nothing could go wrong. this is not the world we live in, especially with high-growth companies. the fundamentals are still very, very, very strong. some are being impacted negatively with the pandemic and supply chain, or with the pandemic hopefully being behind us in the not-too-distant future, some of the pandemic stocks correcting. but if you really look at the fundamentals of so many businesses, it's really the valuation is just coming down a little bit. and we also see that almost in every situation, when rates start to pick up, you start to see the highest growth stocks tend to pull back. so i don't think we should be that surprised we are sitting here right now. caroline: talk to us about what the private markets are telling us right now. because with the public markets, as you say, sometimes the pendulum swings too far one direction or the other. you got the vision fund, saying that markets are overvalued. you have the cathie wood's of this world saying she's never seen such a disconnect between private markets and public
markets than there are at the moment. is the private market getting the memo from the public market? returning to see valuations come, too,? greg: the public markets are mark to market every minute of the trading day, so you see that impact and easy to volatility, right? credit markets, the only time valuations change, for the most part, is when a new round of financing is raised. and that price is set when that money is raised. you don't have the day-to-day volatility. last year was a record year for fundraising. it was a record year for money going into central backed companies, almost double what it was the prior year. so our evaluation is healthy, very high-priced to perfection, absolutely. but there's so many incredible companies in that portfolio. so do i see 2022 and see some valuations correcting with some of these companies?
the answer is i do. but again, that's a healthy market. it's a healthy market in the public. to be honest, it's a healthy market in the private. so that being said, what i've said for years is you look out, and, the promise innovation economy is going to be up and to the right. it might be a little zigzag on the way up. we're still thinking not just this quarter, next quarter, not just end of this year, next year, we continue to invest in this market across our entire platform. caroline: greg, of course you are commercial. also, got the invested -- investment banking part. will you see more companies -- less companies want to go public, start to say private longer? or do they do their fundraising outside the public glare with volatility upon us? greg: i can say that in two different ways. one is all talk about the
market. and the other is all talk about our business relative to public tech stocks, capabilities we brought on board. so last year was an incredible year. we looked at the number of spac's, new ipo's, it was a really prolific year. so we expect the same thing in 2022. the answer is no, we do think it's going to be softer. but there's still hundreds of an -- and hundreds of companies performing exceptionally well that, to be honest, should be and could be public come panisse. whether they choose desk companies -- companies. whether they choose to come out this year, that's up to them. they can perform as private companies. they're going to wait and see what the market looks like. but there will be companies that will go public. for us, we had a health care business in investment banking, done externally well the last couple of years. we built onto that health care service, now technology, so we're starting from a really
small base. we feel good about the upside for technology banking this year because, again, week're just building that capability. some ipo's, but most of it run m&a, private m&a and those sorts of things. you have to understand where things are coming from. but it's going to be softer than last year. caroline: craig becker, always great to catch up with you. thank you, ceo of silicon valley bank. meanwhile, coming up, it's not just tech stocks seeing large corrections. so is crypto, bitcoin down to a six-month low. not quite in a bear market, but close. we talk to the ceo of bit fury. that's next. this is bloomberg. ♪
not just the claims themselves, but stocks continuing to sink. question on many a mind is how low will they go? our next guest might be able to bring an insight into that. i want to send it over tish and ellie bassett with more. >> absolutely. we're going to listen to what happened yesterday. brian brooks, the ceo of bit fury, was one of the people who testified. not your first time in washington. you were one of the main banking regulators. but what was the tone like for you yesterday in a caring like this compared to what you've seen in the most recent years? brian: the tone was, frankly, so much more substantive and so much less political and i watch the stuff pretty closely. it might have thought the hearing was focused on bitcoin mining and energy usage among other things, and you might expect this to be a democrat versus republican issue with republicans on the free-market side. but the tenor of the hearing was
much more measured than that. i think both sides were accepting that bitcoin, in particular, and crypto in general is here to stay, that adoption has been very widespread. and the issue is how do we mitigate some of the worst effects while allowing this technology to grow? i thought it was terrific. sonali: one of the points he made is that the bitcoin is more productive for the economy per usage than the banking system. i'm curious as to why this is what you are using to measure the energy consumption as a whole for an industry rather than the absolute usage of energy for bitcoin itself. brian: so, the way i think about it is everything we do consumes energy. i'm talking to you on a macbook computer, which had to be charged earlier today. you're sitting in a tv studio using lights. everything uses energy. how much productivity do you get per unit of energy? and that's a notable fact.
it turns out i'm sitting here in an airport right now. the global aviation industry consumes 11,000 terawatts of energy and it only generates a few hundred billion dollars of market cap for that 11,000 terawatts. bitcoin has generated $1 trillion of value for 188 terawatts of energy. shows that it's a good way of creating and storing value the market has decided is valuable. so when you're talking about energy in the world, what you want to figure out is come already devoting every watt of energy to the most productive use? and it's pretty well -- sonali: if you use a bitcoin minor and the energy does not get used for their home or their small business, doesn't that pose a problem for the person in the community? brian: that is actually a great question and i'm glad you gave a chance to rebut that suggestion because a lot of people seem to have in their mind a zero-sum
approach to energy and a lot of other things. if in a given town there is only so much energy to go around any bitcoin minor took it, you'd probably be right. but the business model of bitcoin mining is to help utilities build more power production. one of the main things we do is we joint venture with utilities and renewable providers who want to bring more power into a community. the problem with the economics of those is the baseload consumption may not be higher -- hike enough to justify the new capacity. we are the ones who are bringing you the additional capacity for all of the other purposes in your life. sonali: i want to pay the a little bit. we've seen such a selloff in bitcoin and other crypto's lately. what are you hearing about what they are planning to do withholdings? do you see more selling? are you buying the debt? -- debt? -- dip? brian: not that i am giving
advice to other people, but yeah, i'm buying the dip. i'm not advising others to, but i definitely did. but i'm a random walk down wall street kind of guy. i don't believe in following short-term pricing. people who check their account every day wind than people who don't check their account everyday. the more important things to know is a headline in money magazine which reports that the majority of millennials and gen z americans are putting crypto into their retirement plan for goldman sachs recent finding that bitcoin has now overtaken 20% of the store of value market for gold. these long-term macro trends are much more telling than short-term prices, which go up and down depending on risk appetite. tech had a bad day in washington and crypto is just part of that. you shouldn't be doing this for
the short term. sonali: great insight. thank you so much for joining us. let me send it back to caroline. caroline: phenomenal day when you're looking at some of the whether the crypto coins, not just bitcoin but you look at some of the other key protocols that are all being thrown out to one side. has anyone been telling you when they might find one? sonali: that's a good question. it's all about risk management. if you can't find the bottom, you are unwilling to invest. that said, we are finding more what it means to have a correlation. there is a sense it was financial markets and that's not necessarily the case. caroline: what is it, like 0.4? the whole thing, unfortunately, for now, digital gold argument.
sonali: absolutely. we'll see where it goes next year. caroline: we have plenty more on crypto. we have micro strategy moves on the back, as well, bitcoin accounting. and the man who has pivoted into the world of crypto. this is bloomberg. ♪ is bloomberg. ♪ every day in business brings something new.
so get the flexibility of the new mobile service designed for your small business. introducing comcast business mobile. you get the most reliable network with nationwide 5g included. and you can get unlimited data for just $30 per line per month when you get four lines or mix and match data options. available now for comcast business internet customers with no line-activation fees or term contract required. see if you can save by switching today. comcast business. powering possibilities. and there you have it. woah. wireless on the most reliable network nationwide. wow. big deal. we get unlimited for just 30 bucks. sweet, but mine has 5g included. relax people. my wireless is crushing it. that's because you all have xfinity mobile with your internet. it's wireless so good, it keeps one-upping itself. take the savings challenge at xfinitymobile.com/mysavings or visit an xfinity store to learn how our switch squad makes it easy to switch and save hundreds.
caroline: welcome back to liver technology. it was a bliss -- to "bloomberg technology." ed: it's been a really interesting week. a lot of the big moves in bitcoin came friday. you see on the left-hand side of the screen, we've fallen from $43,000 to $36,000 per token on bitcoin, not very quickly. i guess the question is, what is
the next level that we're watching? i guess $36,500 would represent 50% of that peak. the two has profile of which were coinbase and robinhood. coinbase biggest drop on record since it listed last year, down more than 13%, closing at the lowest level since it listed last year, similar story from robinhood, dropping 5%. the equity markets closing at the lowest levels since it listed last year. we've seen these things move in lockstep. we have asked the question if bitcoin is inflation hedged. but what we know about these exchanges is volatility has been good for them when they reported earnings. these might be new to you. the future of finance index, 22 companies across the world, disruptive technologies, crypto related companies.
it's an interesting gauge because when you put it alongside the crypto index, which is largely bitcoin and in theory of -- etherium, you can see that kind of symmetry in the way they move year-to-date. we lost about $1 trillion of value of cross crypto since that november peak, much of it coming in bitcoin. where do we go from here? take a breath. it's been a very long week. caroline: it has. take a breath, maybe something stronger, as well. we want to stick on the crypto indications. is it time to buy the dip? star kelly capital, one of the key thought leaders in this space. i'm really interested in what you're seeing in terms of white people aren't buying at the moment, why there is no cattle -- why people aren't buying at the moment, why there is no catalyst.
whether it's digital gold, risk asset, where do you stand as to what point the price gets so low that retail institutional comes into play? >> yeah, don't be mistaken by the libertarian gold bug, bitcoin holders. this is not an inflation hedge. this is a risk asset up and down. it's even more of a risk asset now most of the crypto market cap is etherium, solana, and a lot of other stuff that is basically technology where we're pulling forward massive assumptions of global growth into the present. and this is why the market caps for all of these coins of vasily within a massive range. and that's why at start killer, we run a momentum oriented strategy because it's just momentum all the time. one of the really important aspects of that strategy and what we look for, top to bottom, is basically the volume profile.
this market is largely retail driven, still. the inflow of that capital is a persistent bid on the market. they are throwing market orders every day. when the volume disappears, these things are basically illiquid. and without those bids, you're seeing what happens right now. and that volume has been gone for a while now, which is why we've basically been in cash for a number of weeks and hedge even before that. at some point, yes, the drawdown will get so significant that we'll want to bid again. 31,000 is kind of a number that we are looking at. i would be surprised if we don't that there at some point. it may not be in a straight line but i would be surprised if we don't get there. at that point, you should see some support come into the market. is it totally possible we have another 80% or 90% drawdown in the asset class? yes, that is 100% possible here. caroline: why has the retail bid is evaporated of light? leigh: it's a great question.
i think that's more tied up in the macro oriented environment. yes, rates are one piece of it. i think there's also people just going back to work. there are a lot of different pieces to that there are more macro oriented than cryptocurrencies specific. caroline: what about your own view on what access -- as a class you get into? -- asset classes you get into? certainly blockchain's, microstrategy's, the waste in which you can take the stock market view on crypto, or indeed there are the coins themselves. not just bitcoin, but going to the whole range. where are the opportunities in the asset sector? leigh: the way we look at equities that are crypto tide, most of them are associated with what we term the casino. and during a raging crypto bull market were all of this retail flow is coming in, you
absolutely want to own the casino. you want to own coinbase. you want to own robinhood. you want to own those other names. right now when that volume is gone, absolutely not. that goes for the cryptocurrencies themselves, too, all of the lending protocols. you don't want to be anywhere near those things because there's just no volume right now. caroline: and from your perspective, what point do we stop being so beholden on retail investors for the volume? because i saw again and again, 2021 was about the institutional player coming in. leigh: the institutions are here. we have a pretty big firm and there are more coming. you've seen all the capital that other venture firms have raised. here's the issue and why i don't think we are going to see a slowdown in the volatility anytime soon. in equities, there's basically a buyer of last resort at some multiple because market
participants in history have basically agreed that apple is not going to trade five times early. that would be crazy. if it does, is going to trade for a day and bounce hard. because there's a buyer of last resort at that mobile -- multiple. crypto, because of the assumptions for future growth are so extreme, there is no buyer of last resort's. things can go down and that would be completely rational, just as rational as them going up 100 times over the course of a six-month period. oath of those things are completely irrational and those of the markets we are going to have to deal with. caroline: we thank you for taking a moment out of a busy day and unfortunately for anyone doing crypto, a busy weekend, too. we thank you. meanwhile, rejection of microstrategy. the u.s. secure is an exchange commission says the firm can't pull out bitcoin's swings. the enterprise software making
-- software maker said back in 2020 it was buying and holding bitcoin and it was one of its key business strategies but used measures to show its income would have been if it didn't have to impair the volatility cryptocurrency. now coming up, the power of the marketing in the digital era. what works? what doesn't? power instead of disrupting? maybe peloton. this is bloomberg. ♪
there hands on their first mix reality headset. the iphone maker had plans to reveal the new device as early as this june at debbie debbie d.c. and release it later this year -- w wdc and release it later this year. the device was overheating. that means that an interim as early as this year or next year with a wider consumer release in 2023 is more likely. the headset is planned to have superfast chips, immersive audio and speaker technology, and capabilities for media consumption, gaming, and communication. the headset will be pricey and probably cost well more than $1500. the product will be apple's first new bet since the apple watch and should enable new active -- applications through its app store. apple then plans to use wwdc 2023 to engage in vr and app developers to write software. the first headset for apple's
ambitions in the space. the company is planning and augmented reality headset as a follow-up later this decade. i mark gurman. -- i mark gurman. this is power on. caroline: don't forget come you can subscribe to mark's newsletter at bloomberg.com. let's talk about peloton. it's been trying to push through the pain of slowing sales, stock rebounding slightly after the ceo vowed to slash costs as the company looks to reset production levels to sustain of a growth. peloton is reeling from a slow down from customers returning to a more normal life, also adjusting reports the company had shut down production, saying the inflow is incomplete, out of context, and not reflective of peloton's strategy. i want to stay on the topic of peloton because our next guest has a thought on why it struggled of late from a marketing perspective. joining us now is jeff.
he's also the author of a new book, exponential: trance from your brand by empowering the interrupting. welcome to bloomberg technology. before we get onto the individual expertise of the book and the story you're telling, what's the recipe for peloton? what has gone so wrong in the way they talk to the consumer? jeff: i think the peloton story can be broken up into a tale of two cities, the rise and the fall. and they're both really highly interrelated. so during the rise, what they did was they empowered their audience. it wasn't new technology. it wasn't new tech new communication. -- wasn't new communication. let's connect and empower people. let's give them the right context, the right place, the right time and improve their lives. we thought they would get look hanging fruit. but the big question now is what's going on? and the issue is, they're not
playing offense with their brand. think about a few weeks ago when there was the sex and the city reboot and all of a sudden, the stock-price went down 4% in one day because somebody died on the show because they were using the peloton bike. the company with a $10 billion market cap, they shouldn't have that kind of impact from a fictitious seen on a show that very few people are aware of and very few people have actually seen. so what i think they really need to get back to is playing offense with their messaging, communicating to people what makes their product different, what make the product better. it's clearly a great product. but once you get past the low hanging fruit, it gets harder. caroline: for many who use it avidly, they don't care. but it's about the messaging to the new user. and talk to us, therefore, about the ways in which -- who would you say had the perfect strategy over the years? they analyzed which businesses get it so right. jeff: i think the poster child
for the company that really does it right is patagonia. and i always look at the world through the advertising lens. and what they do is they don't use traditional interruptive advertising. they create immersive content. they empower people. they educate people to let them understand how they can defend the environment better. but i think as effective as patagonia is, a lot of people miss analyze it. they think it's a green story. and brands need to realize people don't wake up in the morning expecting every brand to hug the trees and save the amenities. it's about empowering people. it's about improving people's lives one small step at a time in an authentic way. caroline: what was interesting about patagonia, perhaps they got hijacked by tech pros, banking burros. i remember people stopping people buying companies organ -- ordering their clothing. was that the right tactic, to reclaim their messaging, not let it be taken away from them in
some way? jeff: it's a very bold maneuver and i think that's why patagonia succeeds. they are bowled over and over and over again. at one point, they took over their entire website with a message that said don't buy this jacket, and they literally talk people out of buying more products from them because they wanted to educate people about manufacturing byproducts and garbage from consumerism. so boldness is the'way to go and that's whats missing with peloton, is that they're just not bold with their external advertising. caroline: jeff, but about the means of communication, and also the ramifications there? we are seeing the ups and the downs of the likes of tiktok, some of how vitriolic and, in some ways, negative tiktok can become against one particular human being, for example, as we've seen. how are you seeing companies embracing the right format for their messaging? jeff: that's a really fun
question. and i think the advertising, and excuse me, the automotive industry opened our eyes to to it. the typical person spends 13 hours on their journey. once they decide they want to buy a new car, 13 hours before the complete and purchase. most brands are focused on a, a few seconds through the journey toward let's try to hit people with a bunch of tiktok messages. the real answer is how do we find what people are really looking for? it doesn't need to be superficial and we don't need to use interruptions on tv or tiktok or whatever news platform is out there. let's understand the journey and exactly what people are looking for so we can bring meaning and value to that communication flow. caroline: really fascinating expertise at the right time we need it. of course, author of his new book. go and have a look. exponential: the lessons learned
how to transfer him your brand. coming up, how to make sure women founded startups can get the funding they need. talk about the latest report on what needed to happen to level the playing field. the next was of interview with bloomberg technology. that's next. -- an exclusive interview with "bloomberg technology." that's next. ♪
caroline: so, the age-old question, how do female offenders get a larger piece of the investment by after recent pitchfork -- pitch book showed only 2% of venture capitalist in 2021. conversation is more relevant than ever. let's bring in past year into this conversation, just releasing some really interesting findings from a three-year pilot program in order to make sure their investment flows are more
diverse. the ceo, sharon, joins us now. fascinating. that's what's so enticing about the story. you don't just pilot program in that there was racial bias baked into some of your investments and decision-making. sharon: absolutely. caroline, thank you for having me on for this conversation. you're absolutely right. the rating is well worth doing if you're am investor out there. it was clearly humbling to be an organization that thought it had removed bias from its investment prius -- process only to learn we intersect gender and race, we had just as much of a problem as other organizations. caroline: and to that point, you then sort of look at trying to fix that. from the immediate, [gasp], i can't believe this is occurred, what was it you needed to do?
sharon: your inhale was exactly what my inhale was. it was a very public moment when we discovered it. it was at a dinner party hosted by the company that we did not invest in but without was best in class. an 80% of the ceo's were black. and then, feeling kind of smug in that moment, inclusion at that fantastic dinner, reflected on our portfolio, which had zero black ceo's in it. but here were the companies that had passed on but were exceptional. we're hosting a dinner to catch up on the. you're right. we jumped right in. day two -- i called day one the dinner. day two was a really hard moment for us, organizationally. we had a frank conversation about the finding at the dinner. and then we did the hard work of looking at our personal data. you know, you mentioned that in the market, something's happening that's not allowing venture to flow. that's all well and good.
but what we did was delve into our own data and made, in this report, our actions and our findings very public because we leave it's part of the solution. caroline: ok, so three years since the pilot lunch. you're doing the learnings. your portfolio is now how much people of color? sharon: the fund is 50% black female ceo's. we only have four companies right now. but it's through the hard work that we did that we were even able to deploy that. the direct investment program, 25% of their investment posts learning are into black female ceo's. fundamentally, what we had to do is acknowledge while our sourcing and screening and investments of the businesses were hugely inclusive, and we had removed bias in that, we had failed to appreciate. we're truly at that final moment of investment decision-making and private equity or venture
capital, a huge deal on that personal conversation and the gut check. that's where we found that our gut check had bias built into it. and we had to find very thoughtful and process driven ways to remove the gut check from our investment decision-making. sounds counterintuitive, but its the hard work we had to do. we're better investors for it. our performance not only continues to be exceptional, it usually inclusive of women in color. caroline: what was it, the gut check moment? was it the fact that because he went from similar background that you weren't getting the understanding that you wanted, and therefore how you're ensuring you're going geographically where you need to go, the pipeline is where you needed to be? sharon: in fortunate thing about bias is that it hated in the softer sciences. and it's not as easy as exactly this.
but i'll give you example of some of the differences. one was questions asked at the point of investment. when we measured the questions asked, the black women were asked what they had achieved with the capital they've raised so far. our white women tended to be asked about the potential of their business, where they were taking it, the opportunities for investing. so you can see how just that subtle distinction, very subtle, right? nuanced. so what we had changed is the questions we asked. we did not deviate from the questions based on the entrepreneur, but instead had investment rigor in everything, including the final decision at the point of investment. caroline: really fascinating. thank you so much, sharon, for spending our time. we've all got to gut check ourselves and think deeper. we thank you. have a wonderful weekend. stay well, all. that does it for this edition of "bloomberg technology." some breaking news for you,
david: rethinking where we are. this is "bloomberg's wall street week." this week bank of america ceo on the move to digital banking. >> it makes us efficient which is a good thing. david: larry summers on growth in the face of rising rights. >> the gravity of our situation is still understated. david: former qualcomm ceo on the semi conductor chip shortage. >> we