Transcripts For BLOOMBERG Bloomberg Technology 20180123

Performing restorations. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Parenti. Sa this is bloomberg. Bloomberg technology is next. Emily im emily chang, and this is bloomberg technology. Coming up, twitters ceo makes his exit. While the top job at sophia. Ceo plans to put ahead. Ehailing giant s, countries ushering in companies ushering in the next tech breakthrough. Twitter Cielo Anthony Noto has resigned to the ceo position at social finance, or so fi. Hes played a leading role at the company and has his work cut out for him at sofi when he takes over in march. He will fill a Leadership Void after fallout from accusations of sexual harassment. For more on how this all went down, we are joined by Bloomberg News tech reporter selina wang. How did this all play out . How big a loss is this for twitter . Reporter they certainly delivers a blow for twitter, especially at the beginnings of their early turnaround strategy. They are finally starting to show some revenue and user growth. Did put insaid, noto place much of the structures they needed to start this turnaround, paring back some of the other parts of the business to focus on user engagement. Some sources have also said this could provide a Good Opportunity on product division, and this may the and adjusting way for jack to pursue some other pass that had not been possible with noto. Tweeted imorsey happy for him and really proud of everything hes a compass that twitter. Hes been a friend, partner, and mentor to me. He will always have my friendship and gratitude. Thank you. We love you. Lets talk about the real logistics here of the fact that they are not refilling this position, and what that means. Reporter i just got off the phone with a source. It is not clear for sure they will not fill the position. First of all, they are going to assess come at a they keep the current organizational structure they have right now reporting up to noto . Jack was in charge of the engineering and consumer part. Noto was in charge of the business structure. Do they want to change that . If so, they want to promote someone to fill that role or hire someone from outside . For now they will try and disperse that have the top ranks fill in the position that noto is now leaving. The leader of global ad sales will be the immediate person to fill in, but youre absolutely right. We have a dual ceo at this company. Without a coo it certainly presents a problem. Emily julie, by all accounts this seems to be a win for sofi. What is the word youre getting from the company . I think it is a big boom for their business. In many aspects, ive used so at this darling that has always done so welcome, but 2017 was not that great a year. They lost their coo, their chief revenue officer, now they finally have some clarity bring in a bigname that brings together a good balance of finance and technology that should be good to get sofi back on track. Ipo is on cagney said the horizon for 2016, i think that was the original timeline, and we are already in 2018. Emily i can only imagine that the culture there has been somewhat beaten down by all of these sexualharassment allegations, which didnt just service with my candidate, but thats my cagney with mike cagney, but others as well. I think right now people are still just one into wait and see what anthony brings in, but they are glad to have an adult, so to say, in the room. A leader, someone to look to. For a while there was no one to say, this is our strategy right now. Everyone was in wait and see mode for a long time. Emily twitter is about the report earnings, and the company has been improving when you look at the numbers. What are we expecting . Is anthony noto leaving on a high note . I think that is a really great way to put it. He has put in place a lot of the fundamentals and now they are ready to bloom. It is a very opportune time for him to leave. The expectations are good. The analysts ive spoken to dont think him leaving is going to fundamentally change the pieces about the company. For a long time twitter was actually shrinking, and now they are slowly starting to grow. One of the metrics that looked very positive is the daily active user growth. Has been looking very positive in terms of the users coming to the platform, the time they are spending on the platform, and a lot of that should be credited to jack as well since he is the one spearheading a lot of the actual user interface and product update the algorithmic timeline and the notification changes, the explorer cap changes explore tab changes. Anthony leaving is not going to change that. Emily were going to continue to cover this story later in the show. Bloomberg lp operates a Global News Network on twitter called ticktock. It is an all or nothing a package for the billionaire founder and ceo of tesla. Tesla has granted elon musk a largest of its kind of 2. 6 billion stock award. If fully vested over a decade, Stock Options could make him up to 55 billion. It appears to be teslas way of ensuring that must will stay. Still ahead, nasdaq posts a record high as stocks continue to rally. We will talk to one Hedge Fund Manager about why now is the time to invest in big tech. This is bloomberg. Emily netflix surging nearly 10 in tuesdays trading session, its best performance since july 2017 after reporting its best quarter ever. The jump in stock price has helped push streaming giant passed a 1 billion valuation. Netflix helped lead the nasdaq higher of the session, closing at a new alltime high, helping the massive tech rally was tech rallyyear throughout 2017 continue into the new year. We have your the manager of a hedge fund. Why invest now in tech . Guest most of the gains in our fund our tech related. We think it is a particularly interesting time in tech, despite the fact we have been on a nineyear bull run in stocks, and tech has left that has has led that. We focus on ecommerce, advertising. In the United States, ecommerce as a percent of retail is about 11 what 5 , 12 penetrated. In china that number is 70 or 18 ,but that is 17 or but that is early. The dollarslf of spent in advertising are spent offline. As Companies Look more and more towards getting our ally getting roi and targeting to shiftthey will look from offline to online, and we expect the majority of that to come out of television. Emily lets talk about the online ad game which google and facebook currently own. You see the up and comer as amazon. Guest amazon has been quietly been building a multibillion dollar at business. It started a couple of years ago, primarily targeted at pcgs. It is very hard to distinguish Product Types on amazon. The ceo of the big four ad agency mentioned that the conversation is around, how do i avoid commoditization on amazon . The answer to that is spending at dollars to differentiate that product. If you think about where amazon sits, they are at the bottom of the final. They know exactly the funnel. They know exactly when and where you convert. Facebook and google are at the top of the funnel. They can track you across the web, but they may not know whether you actually convert on that product. That is kind of the holy grail to advertisers, and why they are more attracted to and thinking about advertising on amazon relative to google or facebook. Emily using amazon could surpass google or facebook . Guest it will be tough. Google is about an 80 billion or 90 billion at business. We do think that over the next 10 years, theres a real possibility that amazon becomes number two and does surpass facebook. Emily bad news for facebook. Guest not necessarily because most of that share comes out of tv, and primarily google. Facebook is a little bit of a different buy in that it is more of a brand builder then a direct to consumer or ecommerce. This is very transformational for amazon. We think the better costs to look at our facebook and google. Is amazons revenue were to grow to 50 of advertising overtime emily if you hedge, how you do that . Guest theres a lot of folks that are losing. Traditional retail has obviously been a big area of shorts for us. If you think about it from an advertising perspective, each incremental dollar that is spent on amazon is one less dollar likely spent on tv through a traditional ad agency. We are particularly worried about the sustainability of the traditional ad agency model, which charges 20 to 30 for every ad placed on television. Emily if theres a stock market correction, how are you preparing for that . Guest we always have to be cognizant that there are factors we cannot control, but we do tend to run a pretty diversified portfolio from a long and short perspective. There are a number of industries we think are being disrupted that in a market downturn will go down faster. Emily what about a company like netflix come over you see the stock price completely divorced from subscriber growth . The stock continues to be on the rise despite the billions of dollars of commitment in original content they had. Guest the new subscriber opportunity in the United States certainly is starting to decelerate. Still growing, but decelerating as netflix moves of that penetration curve. The big opportunity is overseas. When we step back and think about there are 6 billion to 7 billion people in the world, all those people want to enjoy content. Netflix is the largest repository of ondemand content in the world. When you think about the cost of netflix in this country, your paying roughly 11 to 12 a month. For uri take our family to the movie theater, getting a cedar for you or i to take our family to the movie theater, getting a sitter, that is a lot more money. The point is i think theres a huge opportunity here to raise price. We think that netflix can double, triple, even quadruple prices and not sustain a high level of turn. 80 to 100 a month for cable. Emily what about all the cable options you wont have . Guest live sports is important. Options offering ondemand packages. Disney will be coming out with an ott package for sports. There will be and often to consume that, then obviously you have google and facebook likely to bid for some of these rights and take them online. Emily thank you so much for joining us. We will see if you are right. You are looking at a live shot now of the senate floor as they vote on the nomination of Jerome Powell for Federal Reserve chair. President trump picks in november to replace current fed chair janet yellen when her term ends in early february. His nomination is expected to pass the senate. We will continue to monitor this vote. This is bloomberg. Emily Texas Instruments out with earnings, falling short of some estimates, declining as much as 6. 7 . Texas instruments is the largest analog chips in many devices. Taiwanese electric scooter maker nigro wants to make sure its vehicles dont add smog to the air. Our chief north asia correspondent Stephen Engle take a look at how this tech upstart backed by former u. S. Vice president al gore is disrupting a gas entrenched market. Stephen locals call this the school the scooter waterfall. Noisy, obnoxious, albeit necessary mode of transport. Heres the thing taiwan wants motors by 2021. This company is called by some the tesla scooters. For about 10 years, taiwans government has been pushing for an electric scooter to turn this very dirty mode of transportation into cleaner transportation. Throughout the 10 years, it was extremely unsuccessful until we came along. Equivalent he it can go zero to 50 kilometers an hour in just four to five seconds. Top speed is 100 Kilometers Per Hour with a 110 salon arrange. ,hen the batteries are zapped just swap them off at a kiosk. Will change the game ultimately was the way we fuel the vehicle. Pop it in. By late or not theres anything wrong with the vehicle. Talk to the server, program the new batteries. It takes minutes, not hours. Stephen another Green Tech Company not spending time thats not wasting time not wasting time turns taiwans abundance of manufacturing waste into some 1200 recycled materials, whether it is window shades made of discarded Circuit Boards or tile from nike shoes and apparel. One thing is anger. As all this new intelligence, ai, and software we can play not a peoplelike are doing what we can do for the environment. Stephen both simply want to get toxicity out of our increasingly crowded cities. Emily Stephen Engle, our north asian correspondent. Tencent is investing in a french retailer to help it challenge alibaba. They have signed a term sheet for a stak that could help revivee the struggling french retailer. It would also further expand tencents Global Payments across the country. After months of delays, apples home potstickers will be pod speakershome will be available to purchase on friday to go on sale on friday. Coming up later in the hour, ubers ceo speaks to bloomberg talking about aiming to be profitable in three years. You can find highlights from bloomberg from bloomberg , and youy on twitter can follow along with tv on the bloomberg. , go backatch us live to interviews, send us a message any time with questions or comments. This is for bloomberg subscribers only at tv. This is bloomberg. Are we questioning the kind of trade that has been controlling this Global Economy for so long . That is probably the big risk out there at the moment. I am a Alisa Parenti and washington. Here is a check of your first word news. Lets take you to the senate floor where they are holding the final confirmation vote for Jerome Powell to become the next Federal Reserve chair. He is said to be officially installed as Janet Yellens excessive. In eastern oklahoma, five employees missing after a natural gas well explosion. The owner, pattersonuti energy is pledging a full investigation happenedblast which monday at a drilling site about 100 miles southeast of tulsa. Avos, speaking at the World Economic forum, they want against isolationist measures by some of the worlds biggest nations saying that we must accept globalization is slowly losing its luster. He believes the Indian Economy could hit 5 trillion by 2025. And Illinois Senate senator Tammy Duckworth has told us that she is pregnant. She is expecting her child, this will be the first time a senator will have a baby while serving in the chamber. I am a Alisa Parenti, this is bloomberg. After five 30 p. M. In washington, it is 6 30 a. M. In hong kong. We are joined by david a glace david ingles. Id i am looking at some of these markets, these futures contracts, most of the markets sayunderway and suffice to we have had a massive runup in equity prices, especially in hong kong. You are looking at futures down a bit. Hot, a lot is piping of people are watching this, people are continuing to get in and pile in. Andlook at these volumes his momentum metrics, all showing signs of overheating but the money continues to file in from china and other places. When you look across markets we are looking at a tepid start to the equity session. We are looking at a few data points, trade comes out of japan, we have inflation out of malaysia, we are watching the dollar index about to break 90. The Commodity Prices are also in the mix. Australia is said to be opening a little bit lower. Early herer market in asia, i am david ingles. This is bloomberg technology, i am emily chang. Emily the twitter ceo has abruptly resigned and is taking the top job at south five. This after falling monday when reports for service had came about. This sets up real challenges for twitter because he was a reassuring voice for investors. Who covers the Company Joins us now by phone. What do you think the Biggest Challenges are, anthony . Anthony i think the challenges arent that investors want to see this return to Revenue Growth and i think anthony, under his purview, he was at revenue onto the systems and decommissioning formats that werent working so the challenge is really revenue and longerterm, the challenge is growing that user base. So going from his 330 million or so global user, that is something that is more scaled. I would think you would want to get a billion, five or 700 million and i want to see more users so that has to do with the product, that has to do with underlying growth which goes back to making the product better. Finally, what i would say is that anthony was instrument of on cost control. He has Profit Margins to record levels. Engagement was accelerating and investors like to see that. People checking into their twitter more frequently and so my interpretation is that if he was leaving, there is a possibility that this is the writing on the wall and that these inflections that investors want to see may not be as realistic or apparent and that could be at but it could also be that he has a really nice offer at a really Exciting Company to be a ceo and here is a very driven and ambitious executive the top executive, wants to be the ceo and it could be a referendum on what he thought his chances were going to be to become ceo at twitter. That they look for a ceo job for quite a while and that by now, the numbers at the Company Actually look pretty good. This means he is leaving on a high note. Users, is 507 million that realistic . The user growth has been happening in fits and starts and plateaus and it seems like that is way out of reach at this point. Issue is valuation. If you are right and the target to 350 are constrained million users globally, i think it gets harder and harder for twitter to grow and it certainly a basis that is quite high. The way i was say is that it gets more difficult for them to grow into devaluation unless they can scale the user base. I think there are some encouraging things, fundamentally for twitter going on right now, i mentioned them, cost controls, accelerating the ad revenue inflection to positive, it is now looking for 7 and Revenue Growth in 2018. If you are to tell me that that were to inflict further and the numbers were good, i would tie you that that would be heartening for the stocks, it does come at a delicate time. It is at a time where expectations are starting to ratchet up of little bit and now with leadership turning over, there are questions as to how they can replace an executive of this caliber internally at twitter. Diclemente, breaking it all down, i should also add that bloomberg lp operates there. Of the startups on the planet is turning a corner when it comes to profitability. Then in the companys out of the bed would be losing billions of dollars a year. John deliberate spoke to over ceo of Bloomberg Live events at the World Economic forum. Take a listen. The core business, the ridesharing business can be profitable within three years, we will continue to make very aggressive investments in building out autonomy because we think that is a terrific opportunity. For building on new technologies such as elevated where nearterm goal, theity is not a longterm growth is. We will look to balance nearterm profitability. But we will always be a company that takes a risks. Do you think that drive to become profitable fight against this culture change if you want to make you talk about making money but not at all costs. Do these two things out of dont think profitability and culture are the issue. The company in the past was willing to make tradeoffs as it related to how we do business and i think it was guilty of hubris, it was guilty of thinking that they knew better than others and i think that what we know now is that breakneck growth can hide that there are no excuses for not doing the right thing and that you do have to make tradeoffs and as a management team, with visibly talking about this trade is that you have to make, we have to a little more patient sometimes, working with governments, regulators, etc. Takes longer. In the end you build a more lasting business. So, maybe what we went through was necessary, though we are here, we can control our actions from this moment onwards and i think everyone at over from this moment onwards was to build a great company, not only in terms of growth but in terms of the kind of Company Anyone want to work at. Do have a hangover from last year which is that all the regulatory problems, all the cases against you, i think your six criminal probes going on. You fear most . Are think that all of them serious issues and my response will be transparent and were going to take responsibility for our actions. I do think that there are certain circumstances where there was smoke but no fire. I think as a company we have to defend ourselves and work within the appropriate frameworks and my goal was to get beyond this stuff. Surely they would go right to the heart of what uber is. I think they do but i think there is a way of being smart but transparent at the same time and that is where we have to take the company. Emily that was the ceo of over with John Mickelthwait of bloomberg. , what do Eric Newcomer you think of what star had to say . What did you find the most newsworthy . The tackle, measured ceo they all want. I think the guys on profitability is almost more interesting. It is so far away and super noncommittal. Lost r they will have lasted it will have lost 4 billion, it make sense that he is trying to get himself some time to turn that around but it is just another sign that the margins are a big problem for the company. There, i think that is the biggest news. What about what he had to say about the culture . He said there is no excuse for not doing the right thing. Over did not do the right thing uber did not do the right thing. I think it is the right thing , going to london, negotiating, overll talk about whether needed to break a most to isablish itself, now that it established, i think we do the right thing which means following the laws while youre being investigated by the justice department, that is a pretty smart and necessary thing for the ceo of over to say. We will have much more from the conversation later in the show. Breaking news, the senate has voted to confirm Jerome Powell to replace janet yellen when her term as chair and in early february. You are looking at a live shot of the floor there, this is bloomberg. Emily bitcoin saw a dip, hitting before desperate below the 10,000 market. These parks are a spinoff in which developers clone Bitcoin Software to capitalize on the withcs familiarity digital currencies. Discuss, isow to joe. They are currently tracking about 130 funds that invest in crypto. We are all talking about the plunge this year, what is your read on that russian mark will we see a bounce back . It is a new reality . We have seen the same depth dip. The plunge is due to a couple of things. These investors have been in the at at since bitcoin was thousand dollars. Of course there is some profit taking and seasonality. We saw a 60 day recovery over the last couple of years. If it bounces back, how far how much higher does it go . At the end of december, it was about 14,000. When we saw a similar dip in september, it took about 45 days to recover. We could see that 45 days to recover to 14,000. There is a lot with the bitcoin for the speed and cost of transfer. If that happens, you can see bitcoin going to exports. Regulationslobal impacting this . You are seeing a lot of mixed messages. We are with ceos and mining exchanges. That is how powerful they see cryptoassets. China is just understanding how they want to deal with it. The volatility helps i give managers take some profits as well. I wonder if we will see china and south korea backtrack. This may be an unfair analogy. If you look at china blocking facebook, everybody thought that would only be temporary. It has not changed and it like it never will. Over you could see is a develop of its own ecosystem with cryptocurrencies. That would be very exciting, i think it will just take some time to develop. 1928. s look at btv this shows have bitcoin compares to other cryptocurrencies. I am curious about china developing its own ecosystem, what would that look like . Other regions like russia have looked into creating their own crypto currency at exchanges, their own mining firms as well, there is a lot in the bitcoin ecosystem. What they tried to do is hedge and have people in the active space for mining funds and ico funds with these new coins that come out. There is so much involvement with this these Crypto Assets within ae could be year distraction . Ou see right now we are over 500 billion. , the story had been about bitcoin lowering its dominance, going from 70 of the whole market cap to about 30 . When we see is the alternative coins becoming a case for these alternative coins actually disrupting with their blockchains, other industries, not only this value like bitcoin, payments and other things that i think the story is about to alternative coins. That is how the Hedge Fund Managers profit, they dont just invite invest in bitcoin, they invest in other icos. Also, a buy low and sell high and mays and repeat. As an investor, how is your heart rate . Do you try to keep a level head about this or does your heart skip a beat when you see these big moves . The markets dont stop, i think that for us, we know our Portfolio Funds this is the first Crypto Currency Fund fund. Any Portfolio Funds, their job is to hold in this ever coins and get in at these laws. That is what they have been doing, the average Portfolio Fund wealthy promoted at 1400 , this average one performed at 3800. So, yes, it is a job. But there is a reason we do it. The ceo, fascinating, thank you so much. Working with Financial Advisors to work toward a financial a potential sale. Cons or tracks online viewership and Box Office Results of hollywood those is working with Goldman Sachs to reach out to per potential suitors. No formal sale process has started and they may choose not to proceed with any changes. Over ceo from our composition, what he has about the speech of the road from Autonomous Cars to electric vehicles, this is bloomberg. Oury now, more from conversation with the uber ceo. He was talking about how technology will bring changes to the road. Dara there are three key transport directions. Autonomous, directive and shared. I think are necessary to get to the next level of city planning. I think that you need autonomous, you need a electric and you need shared. Behink that it is going to taking some time, true autonomy for every single case is some ways away. What we bring is are developing autonomy and we will have Autonomous Cars on the road, notn the next 18 months as a test case but as the real case out there but over the. Intime, we will bring autonomous transportation and feather attend with the nonautonomous transportation with drivers. If youre means in phoenix and you make the whicht to go from a to b is what you do with it over, 95 casesre may be where we dont not improper or the may not be the right whether or there is a nice and on the boat or you may not have two or three ways of getting from a to b. Or you may say that is not an autonomous use case. For 5 of cases, everything is going to fall into place and we will send an Autonomous Car, the user will be able to pick an Autonomous Car and we will be able to service that a four b. Thats 5 will go to 10 and 15 computers and our our algorithms learn about what it takes to drive in a city in a reallife situation and that minute of every day driver, the computer is going to get better and no phoenix better and better and in five years, we will have the perfect driver in phoenix, we will have to retrain that driver in every single city, we will have to build out 3d maps of the cities and it will take time but over a. Of time, you essentially have a driver who becomes the perfect driver, it will take 10 or 15 years but that is the feathering in nine talking about. Will a child born today had to learn how to drive . No, i dont think so. Emily that was dara speaking to bloomberg. We will have more coverage along with great guests from davos. This includes jamie dimon. Oft doesnt for this edition bloomberg technology, we are Live Streaming on twitter, you can check us out at 2 00 p. M. In san francisco, that is all for now, this is bloomberg. 7 00 a. M. Here in hong kong. I am yvonne man. The come to daybreak asia, talking trade. Yvonne President Trump confirms his stances. Are offering ars robust defense of globalization. From the global headquarters, i am betty lou in new york. Betty Central Banks make the headlines, the boj governor quashes speculation about imminent normalization and all change at the fed, jay powell is confirmed in the last