Kalshi's Court Fights, Regulating Prediction Markets

23:28Carol Massar:You speak of stars and I feel like with AI, there's lots of shiny new things out there, to say the least, Larry. In the story that Bailey wrote, and I highly recommend everybody check it out on the terminal. It's all about you guys. He quotes you or he points out how you argue that the market has become overheated. His competitors are chasing every hot AI name, which has driven valuations to become expensive. Just really briefly, I mean, what kind of correction are you looking for and what names do you think are going to be maybe taken down just quickly? Yeah, well, I think the specific names of inflated valuations that we view internally, we'll leave out of it.

24:07What I would say broadly in the market is when everyone's hopping on, it tends to not end well. And there was a period of time where it was very difficult for AI companies to raise money. We were a large investor. And if you look at the cybersecurity AI business whiz, it raised capital at a point in time post-COVID. It was very difficult to put together their money at a$10 billion valuation that goes on to sell to Google a couple years later at$32 billion. The time to make the 2, 3, 4, 5 Xs in these businesses, in our opinion, for the most part of the names that you're all reporting on, have kind of, were there.

24:43And we're looking for the next chapter and the next businesses for what we think will be coming over the next few years to get involved with today. And so I think it's natural, it's cyclical. Valuations rise and fall. And deploying capital. You need to be very careful right now, just given the multiples that deals are getting done at and the FOMO picking up. Being in Chicago, we're able to be a little bit immune to that. I think that's one of the benefits.

25:07Carol Massar:There's a Midwestern sensibility. We feel it. We feel it and appreciate it. You don't even have a New York office. Come on. Having said that. Yeah. I do wonder about SpaceX because that was one of your investments. What is the status of that investment now? Do you still own SpaceX? Yeah, we don't comment on our dispositions. But what I would say about SpaceX is, first of all, betting against Elon is a good way to lose money, typically. And I think they'll go on to even greater things than today. I think fundamentally there's an issue with the IPO market that's being played out right now, real time, with how you see SpaceX trading.

25:42I think there needs to be some change on how and when options are allowed to come in. You have a massive business that's a fantastic business and shareholder creation event that's taken place. But you have a very small float, indices forced buying, options coming online. You have a high push on the stock price on the upside. And then you have a massive amount of float coming to market. And so it's just a supply and demand situation where you're going to see these companies be stressed, even with positive results like you saw come out of the business today. So I think it takes some time to work that out.

26:19You need to get the float working properly globally in a massive business that raised a small amount of money compared to its private market cap. And I think SpaceX is an illustration of what's likely to come with many companies that will seek IPOs in the near term. We need to address the way that IPOs are done. It's going to continue to be an issue for the world's best, fastest growing, most dynamic, largest businesses. Larry, we have about 20 seconds here, 30 seconds here. Just walk us through how you're thinking, though, about deploying capital and how you're thinking about the exit environment.

26:49I mean, are you looking for some of the bigger positions to go public later this year and into next? And would you try to sell before that IPO or immediately after?

26:56Carol Massar:Really quickly, if you could, please. Yeah, really quickly. Look, we have a job to do for our LPs. We look at harvesting our positions as they meet our return profile, and we'll continue to do that work, which has allowed us to raise the capital in which we've been able to. I think that the next group of companies we work on are going to be from the same fundamental kind of thought process, which is we want to partner with businesses, help them manage their cap table, help them work through the difficult issues, and stay private as long as they'd like so they don't have to live their day in 90-day increments and have you all talking about the pros and cons of their public report.

27:34Carol Massar:Listen, when we leave and a guest and we have a million more questions means you've got to come back. So please come back. I would love to. Thanks for having me and I look forward to it. All right, Larry, thank you so much. Stay with us. More from Bloomberg Business Week Daily coming up after this.

27:55Sophistication, class, restraint, dignity. None of these words have anything to do with Super Troopers 3. One, two, three, go. Barbara in the house. Hope you guys aren't too drunk already. This Friday, no new info on the guy who did it. Oh, so it couldn't have been a woman? Sexist. You ever see Ocean's 8? Enough. Super Troopers 3. Only in theatres. Friday. Rated R. Under 17. Not admitted without payment.

28:25Carol Massar:AI is entering its most consequential phase where scale, safety and sovereignty will determine who leads and who lags. Join Bloomberg Tech in London on November 2nd and 3rd as global leaders across business, finance and policy examine the defining tradeoffs shaping the future of AI. Thank you to our presenting sponsor, Salesforce and supporting sponsors, IDA Ireland and Schneider Electric. Learn more at BloombergLive.com slash Tech London.

28:54You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app. Or watch us live on YouTube. Shares of Neutron Holdings, better known as LIME, ticker LIME, hit a new high today. This after the company reported its first financials since going public earlier this summer. Revenue for the$1.7 billion market cap company increased to$304 million. That was up 24 % year over year. And the guidance, too, has investors excited.

29:27Carol Massar:Yeah, for the third quarter guidance, revenue in the range of$340 million to$360 million, adjusted EBITDA in the range of$120 to$130 million. And we should point out that after the report, KeyBank Capital Markets analyst Justin Patterson raised the target on the company to 37 from 33 a share. So the stock right now, just below$36 a share. We've got with us Wayne Ting, the CEO of Lime. He joins us from San Francisco. Wayne, good to have you on the program. We went through some of the numbers here. As I mentioned, the company's first report since going public. I'm just wondering, before we get to sort of the nitty gritty, what is the strategy or the difference between communicating with a group of private investors ahead of the IPO and now communicating with this wider audience of public market investors?

30:15I would say, I mean, I think the heart of the strategy doesn't change. Like we want to continue to deliver great growth on top line and bottom line, which is what you saw. in our Q2 results. I do think the immediate reaction that we can get on a day like this, right after earnings, that's certainly new to me as a CEO who's managed a private company historically. But I think what investors are looking for is strong growth, strong growth in top line, strong growth in profits, continue momentum in the business, which is, if you look at our Q2 results, exactly what we delivered. Go ahead. Oh, so I want to talk a little bit, But here in New York, I don't have access to Lime bikes.

30:58There are some Lime scooters in parts of the city, right? You're correct. We do operate in the eastern Bronx and western Queens, but we're not in Manhattan. So city bike dominates on the bike side here. I'm just wondering, are markets big enough for more than one micro-mobility provider?

31:23Definitely. And in fact, most of the markets we're in, Lime is in 230 cities around the world, 29 countries. In the vast majority of our markets, there are multiple operators. In fact, I would say competition improves all of us. And I know in New York, oftentimes I hear New Yorkers talk about the fact that CityBike isn't super, there could be improvements to price, to reliability, to quality. And I think introducing more competition helps the consumers. It helps the city. It helps improve service. So absolutely, I think New York can, there could be multiple operators. In fact, I think the people who will benefit will be the consumers and the citizens of the New York.

32:07Yeah, I think the comments you made about City Bike, anyone who has used City Bike here in New York can relate to those. Does that mean you have plans to launch the bike service in New York City? so um we are at tim as you point out we're already in new york city and uh the department will expand i guess expand it has been so we have to work with the city to scale the operations to more boroughs and we're certainly very interested to bring lime service to more boroughs across greater new york and lime is the global leader in shared micro mobility by far and we are the global leader because we have the best hardware.

32:45We're vertically integrated in software, hardware operations and government relations. And I would love to bring that level of service and quality to more New Yorkers and more neighborhoods.

32:56Carol Massar:Hey, I want to ask you specifically, Wayne, about the Uber partnership and the Uber relationship. You were backed by Uber. They were expected to control, I have to look, I meant to look at holdings, more than 20 % of the outstanding shares following the IPO. And then at 2025, 14.5 % of Lime's revenue came through the Uber partnership, the remainder generated directly on the Lime app. Tell me about the Uber partnership and relationship today. Sure. So Uber is an incredibly important and strategic partner for us. Anywhere Lime and Uber both operate, you can access a Lime bike and scooter directly in the Uber app.

33:37And as everyone knows, Uber is the biggest transportation platform out there. and it's a great new user discovery partnership for us. And when we launch a new city, Uber also allows us to scale faster and get to reliability faster because day one with Lime launches, millions of users will be able to access Lime directly in the Uber app. So that partnership remains very strong and it's a long-term partnership. In fact, our two-way exclusive contract lasts for several more years and our expectation is we're going to continue to invest and scale up that partnership over time.

34:16Carol Massar:So remain on their app as well? Yes. Okay. Okay. For the long term or for at least a few more years or maybe even longer. Hopefully even longer. Okay. Yeah. And at least here in New York, again, Lyft has the City Bike Partnership. So, you know, to actually, and Lyft owns City Bike. So that's one thing to keep in mind from the competitive landscape. In terms of the actual modes of transportation you offer, the e-scooter, the e-bike, the seated e-scooter, which form are you most bullish on? Which form has quicker adoption, higher adoption? Which form would you rather somebody take when they're faced with a choice?

34:57I would say I'm agnostic to the various. We are the biggest operator of e-scooters and e-bikes and we recently introduced a new sit-down form factor called lime glider and actually one time magazine's best invention of 2025. what i want people to do is to drive less help us solve some of the transportation challenges that we see in cities all over the world congestion is a problem parking is always there's not never enough parking sustainability is a problem all over the world and the number one source of carbon pollution in the united states and in europe is from transportation and any mode online you're being offered a reliable more affordable and far more green alternative to driving and so i would say any mode i would be great and it's better than the congestion affordability challenge from cars that we see as a problem urban transportation everywhere.

35:58What's the break even on an e-bike when you make that initial investment in e-bike? How long does somebody have to ride it hours-wise for that to make sense from an investment perspective? So we have a really good payback and return on invested capital. So the average e-bike e-scooter that we buy is roughly$1 ,300 in terms of a fully landed cost. And we typically pay back that initial investment in less than 12 months. And these vehicles last five years plus. So our total cash on cash return is four to five times our initial investment. And we continue to improve our cost to serve and improve the utilization of our vehicles.

36:43So I feel like there's even upside to that payback that I just described over the long run. Wayne, thanks so much for joining us. Wayne Tang, CEO of Lime, joining us from San Francisco. Stay with us. More from Bloomberg Business Week Daily coming up after this.

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38:15Or watch us live on YouTube. I want to talk a little bit about defense technology, specifically personal defense. Burnett Technologies makes non-lethal alternatives to firearms, thanks to CO2-powered gun-like devices that shoot projectiles. We've got with us Conn Davis, the CEO of Burnett Technologies. The firm has a market cap of around$106 million. Conn joins us from Tampa, Florida. Conn, good to have you on the program. So you sell to law enforcement security. Can anyone buy one of these, what you call launchers? Absolutely. Our primary customer is actually the consumer, and they are legal in all 50 states.

38:54So anyone can purchase one of these devices. And they really are a great option for people looking for a personal protection device. How do you make sure they're non-lethal? So we do a lot of testing to make sure these products are non-lethal. It's really about the velocity and the type of round that we use. So there is a hard plastic round that's quite large. It hurts, but it does not penetrate the skin. The other option is a chemical irritant round made of powderized pepper and tear gas that can incapacitate someone for about 40 minutes.

39:27Carol Massar:Talk to us about the financials. The stock's been under a ton of pressure. And you did report earnings back in July. I think you talked about fiscal 2026 would not be a revenue growth year. But you did expect improvement in the second half of the year compared with the first half as retailers get ready for the holidays. and you're doing some other, I guess, internal marketing and so on and so forth. But why aren't people, why do you think it's so tough? You do direct to sell, you've got retailers, but why is it the numbers aren't better? Right. Well, right now where we are is we need to get the message out about the product.

40:07Everyone we talk to and understands what this product does gets really excited about it. And frankly, those turn into sales pretty quickly. Where we are today, though, is there have been historic advertising restrictions on things that look like a weapon. So we are in the middle of a marketing shift and a pivot in order to get the message out much broader into a wider audience. So that's what we're doing. We're expanding our SAM by about 10 times over the next six to nine months as we really reach that new consumer audience. Yeah, we're going to talk about supply chain in a second and sort of how you're dealing with tariffs and component costs and plastics as a result of oil volatility.

40:46I'm curious, though, about the market for law enforcement, because when we think about nonlethal devices for law enforcement, it really seems like Taser owns the mind share and owns much of the market. How do you compete with that? so really you compete with that in the law enforcement market by effectiveness and the differences between the taser product and ours so the taser product has a range of about 20 to 25 feet so it's a pretty close-in product additionally you have to be pretty accurate with it given the fact that you have to get two electrodes into an individual for us we have a range that's much further, about 60 feet.

41:25And when our projectiles hit, they create a six foot cloud of gas, which really will impact an individual, even if you don't directly strike them.

41:36Carol Massar:So interesting. And we may come back to talking a bit more about the business and the outlook. But one of the things that we like talking here at Bloomberg Businessweek Daily, smaller companies, companies with a different footprint, is what so much of our economy is small business, right? We know that. We talk about it all the time. It's the backbone of the U.S. economy. I am curious, what are some of your pain points right now in terms of supply chains, tariffs? We have a president who, you know, continues to make some comments about different types of tariffs right now. Earlier, we mentioned President Trump writing tariffs price floors to boost U.S.

42:16Carol Massar:polysilicon. There's a lot of different dynamics. What a large company can deal with in their massive supply chains, they often have leverage. Smaller companies, it could be trickier. Talk to us about your supply chain. It can be trickier. And frankly, businesses are looking for stability, especially smaller businesses, so that we can plan and grow going forward. Where Burna is uniquely positioned is several years ago, we made a pivot from pivoting from manufacturing overseas to producing all of our products domestically here in the us and you were in south africa before we were we were in south africa before from a manufacturing point of view we moved all of that to indiana uh over the past five years and even more than that we started moving our components and other pieces of our supply chain uh to domestic us sources which that has proved a real benefit for us as you've seen energy prices become volatile and shipping prices go up and down with that.

43:15Carol Massar:That's interesting. So financially, it was a smarter move. I'm just curious about labor costs. Or is it all automated? Like things we always talk about being so much more expensive to do in the U.S., but that has not been the case for you? That has not been the case for us. I will tell you that we pay a little bit higher of a labor cost, obviously, here in the U.S. than we would overseas. However, we make that up in quality. So the quality of the manufacturing that we can do and we control it ourselves. And when you're talking about a life-saving device, having a quality manufacturing process is really important.

43:49Additionally, if you think about the shorter supply lines and supply chains that you have there, you can pull a lot of money out of your inventory when you are manufacturing domestically. How much did prices go up when you started manufacturing domestically? They went up$0. We did not increase prices at all. How much did you absorb? Understood. We understored, absorbed about 500 basis points on the cost line that we've now worked through from a manufacturing efficiency point of view. So at this point, I would call it neutral. When you hear about the on-shoring conversation that we've been having over the last, well, I mean, it really goes back to 2017.

44:30But I think at least in this term, since, you know, January of last year. do you think like like we talked to the former cfo of levi's for example and he says we're never going to make levi's jeans in the u.s i mean apple is not going to be making iphones here yeah they're going to make more and more in india but they're still making them in china like what takeaways do you have for other small businesses about the how realistic it is to onshore in in an environment where manufacturing is so specialized globally and where costs vary so much? So I think it really comes down to how much labor is in your cost stack.

45:14The more that you can drive an efficient manufacturing process and pull individual labor out, the more you're gonna be able to manufacture in the US. Additionally, when you're a small business, the ability to reduce the amount of money that you have in working capital from an overseas exposure point of view is massive. You know, we can ramp up and ramp down manufacturing much faster than we can if we had a large supply chain. That really gives us much more flexibility and allows us to be nimble to what the consumer demand actually is.

45:47Carol Massar:So again, you know, one of the things you certainly play into the consumer market, right? You're direct to consumer. You also sell to retailers, right? Who sell to consumers. Based on that, who is your consumer typically? And I'm curious, kind of where are the markets or the stores that you are selling the most? And what are you seeing about kind of the health of the consumer? Yeah, absolutely. I will tell you that, you know, our view is that the consumer is definitely under pressure and they're making trade-offs in what they're choosing to purchase and the events and things that they're trying to do in their lives.

46:20You know, we still see really strong sell-through in our channels that are, you know, sporting goods and outdoor stores. So think Bass Pro Cabela's, Sportsman's Warehouse, stores along those lines still definitely see strong sell through to that consumer. Again, more of that enthusiast outdoors oriented consumer. You know, where our opportunity is going forward is to expand beyond what has really been a pretty narrow early adopting audience to now reach that wider mass audience.

46:50Carol Massar:Yeah, it does sound like, you know, going back to the product itself, I mean, some of this stuff you have to kind of inform, right, in order to sell. There's an educational aspect to this. And I guess it sounds like that's what you guys are figuring out to some extent. That is. That's where we're focused right now. And we're doing a lot of partnerships both with, you know, people online, but also with local community organizers to help get the word out about the product and to train people. So what about the product pipeline and ways you can expand the products that are offered? When the people at your company who are in charge of that pipeline come to you with pitches, what are they pitching?

47:33So I will tell you, we have a great R &D organization based just outside of Boston, Massachusetts. And we're pitching in looking at a couple of different things. One, it's how do you reduce the complexity of the product category we have now so that we can lower those manufacturing costs, as I discussed. Second, beyond that, is starting to talk about how we develop more form factors so that people that aren't comfortable with something that looks like a firearm or looks like a gun, that they still have an option to protect themselves in an active way versus just a passive way.

48:06Carol Massar:Hey, one last thing. You know, we talk supply chains and I'm just thinking about policy. We mentioned the president, you know, different times coming out tariffs and different policies that impact large business, medium sized small. What else could this administration do as we get ready for midterms to help out smaller businesses and just got about 30 seconds? Yeah. So, again, it comes back down to really laying out a policy framework and just being consistent. The biggest thing for small businesses is the volatility. That volatility really creates uncertainty, both with the consumer and with investments that we're trying to make as an organization.

48:41Carol Massar:Are you saying this administration isn't consistent? I'm saying we need more consistency. OK. We've had a lot of back and forth and up and down in tariff policy and in oil and gas prices. The more we can be consistent there, the better. Yeah, that certainly is being felt in some days differently than others. Con Davis, thank you so much. Covered a lot of ground. CEO of Burner Technologies joining us there from Florida on this Wednesday. This is the Bloomberg Businessweek Daily Podcast. Available on Apple, Spotify, and anywhere else you get your podcasts. Listen live weekday afternoons from 2 to 5 p.m.

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