Transcripts For BLOOMBERG Best Of Bloomberg Technology 20180218

From the Goldman Sachs Technology Conference. We will hear from tech heavyweights throughout the hour including the ceos of gopro, ripple, fireeye and bill girly of benchmark. Lets get it up with david solomon. The year has set up in a way that i think it should be very constructive for ipo activity. Ipo activity picked up a little bit toward the end of 2017. We have a very healthy ipo backlog but we also have an environment for a variety of reasons why 2018 should set up to be a great year for this in the Technology Space. Points are they out the right now or bubbling . I think private market valuations actually have tightened a little bit over the course of the last 12 or 24 months. Capital has been a little tighter for private market funding. I wouldnt say that valuations are bubbling but there is no question that in an environment for the last five years where growth was sluggish investors were really looking for a place where there was growth and Silicon Technology was a place where there was a lot of growth. When you look at a company like amazon growing very percent on 189 of revenues and a company like facebook on 40 million of revenue, it is growing 40 . These are Big Companies with large market caps on are growing very quickly. That obviously creates interests for other businesses. Are you same valuations are plateauing or going down . I dont think theyre going down. As long as Growth Continues and the trajectory continues, i think there will be plenty of capital available. But some of the private Capital Raising has tightened up a little bit. We are seeing a lot of volatility, you expect that to keep up . There is no question that the volatility we have seen over the last couple of weeks as a result of what we are talking about with respect to economic. Utilizing signs of wages increasing. If people think there is a chance for wage increases in the economy, that will bring volatility back to a normal environment. There is no question that volatility spiked a little bit over the last couple of weeks but it is coming off extraordinary loves and it would be healthy at this point for volatility to be more normalized in the context of a longer market. I would expect to see more of a normalization of volatility versus the ultra low volatility environment we have seen over the last couple of years. Your advising ball, but do you think that size of a deal will be an outlier . Dollars are a very large deal. One of the things that is interesting, bring us back to the Technology Space is when you look at these companies that have 500 million plus market caps on they have not really participated, they have pretty much grown organically. Is it possible that one of these companies steps in and wants to address space and does something that is very significant in size . Sure that is possible. Speaking about cryptocurrency, obviously so much curiosity about it. How can goldman help clients who are interested . We are watching the space and we are interested as well. In the moment, we are clearing some future products, that activity is small, we have no immediate plans to start trading these currencies. Theres a lot of hype activity around this. We are watching this space cautiously. We are trying to watch it on like everybody else. Whether or not cryptocurrency has become a sort of value is something we will watch very carefully. You have been vocal about hiring and promoting women. What are you doing at Goldman Sachs to make that happen . Diversity is hugely important at Goldman Sachs. For us to be successful with our clients and really excel at the Human Capital of organization, we have to have a diverse organization. For 20 years we have been working on improving diversity. We hire a lot of people and we have been very focused on trying to hire the people out of school and match the diversity of the world that we are hiring, whether it is women or it is black americans or hispanic americans. We are looking for opportunities to increase the diversity of our population. We have brought the diversity of women into the summer classes that will come up from something in the lower 40s to the higher 40s by really focusing on that entry point in the pipeline. If you do that and your entry point is hiring a lot of people and creates more diverse populations over time, you should do better at having a broader pool to promote more women through the organization. That was david solomon, the Goldman Sachs president and coceo. Apple addressed tim cook and among the issues talked about, it special dividend and a slowdown in the mobile payment space. He also addressed succession plans saying one of the most important roles as ceo is properly passing the baton to the next leader. Coming up, we talk to the men who used to run twitter. Dave joins us to talk gender inequality in tech and more, that is next. If you like bloomberg news, check us out on the radio. You can listen on sirius xm, this is bloomberg. Emily the louisiana has predicted losses. Freight and autonomous cars. He had joined the company in crisis. Using the lack of surprises. The comments came the day after ubuer reported a loss of 4. 5 billion dollars for 2017 on the revenues of 7. 5 billion. We have been examining the maledominated culture in the tech industry. This man has made it his mission to hire as many women as men at his latest company chorus. I would like to invite dick. Dick i want t keep it at 50 men and 50 women in engineering. When you fall behind as is Common Knowledge based on all the gender and diversity studies that come out of all of these Companies Like twitter, facebook etc. When you get behind on things like gender diversity, it becomes impossible to catch up. You have women engineers were interviewing a companies. They are spending all the time interviewing other engineers then they are not ready production code. That is one for good example of how hard it is to catch up when you fall behind. I just decided that the way to deal with that is to not fall behind, give yourself the excuse of we just had to get the right seven people in here and if there are several seven men, we will catch up later. I decided it was 5050 early on. It was always that way and it would be easier to stay that way. Why dont more ceos and founders think like you . Dick i dont think about it. If you are a firsttime founder, youre trying to raise money and find Product Market and wake up every morning and be responsible for people i am not responsible for. They feel like that is something they could deal with later. There is probably a general sense of there is only 30 people in the company, that will be an issue because we are out of whack but we will do that later. The reality is once you fall way behind, it is almost impossible to catch up, everything in the organization starts to work to favor the existing imbalance and to keep it going. Not for any nefarious reason but that is just the way everything in the company is. For example, if you have 90 men in engineering, the Junior Engineer guys are hanging out with other Junior Engineer guys. They know mostly guys. That is it gets reverted in. That is what i mean by falling behind that imbalance. It starts reinforcing itself. And its what it is not unique in this, is there anything in particular that you learned at twitter where you saw things go the wrong way that could have been better if there had been more equally smart equality . Dick when youre a leader or a manager, 80 of what youre doing is listening and gathering feedback. If you have the broadest possible set of its perspectives, that will be different than having a very narrow set of perspectives. What you can move more quickly because you think about if you have a leadership team. This is 50 men and 50 women. You have a serious lack of your user base might be wondering about why. I always thought that that was something you should work toward, have more of those a less narrow socioeconomic demographic, genderbased set of perspectives in decisions being made. I continued and moved on to twitter it has been a child moment for twitter. Mainly revenue gain in alleged earnings results. We got his take. Jack has been very carefully and thoughtfully back on the rise of the Management Team over the past few years. There was a lot of news about executive departures in 2016 but at the same time, jack was doing a great job of filling in people with those positions. Leslie has done a worldclass job. I dont know him personally but everyone speaks of him. Anthony is worldclass, he is a great human being, you will be an extra ceo, i really excited for him but jack has done a great job of building the bench over there. Do think the turnaround is longterm or is this just a shortterm thing . Twitter is one of the most important platforms and mediums in the world. I have every belief and hope that it will continue to be an independent company and thrive. One of the many things i door about jack is that he is a very calm and patient and thoughtful leader. That is exactly what you want in these, over the long course of the future, this is how they will steer the ship and build a Successful Company and not freak out when the market zigs and something changes in the nearterm. All by way of saying i think he is the right person to now that they have this company on a financial trajectory that the market and internal team like and can work against, it will come he will continue to be the lead person to lead the company. I love that the people in the company feel that they have the wind in their sails. You can see it when you go hang out with people in the company. They are confident, theyre happy, they feel like they have momentum. What you think of the chatter and who could be a likely suitor . That chatter comes im confident and sure that jack has them all focused. Inside facebooks hellish two years we just spoke earlier about then 32 bother advertising from facebook and google. Do you think facebooks loss is something that twitter could gain . Or is this something on the platforms will have to reckon with . The biggest consequence for twitter was the statements coming out of facebook just a couple of fridays ago that they were going to rethink the way the newsfeed worked to be much more about social sharing and what your friends are up to and less about but let news and publishers and media. If i heard mark correctly. That to me is a big boon to twitter. Twitter has always been about that, this is what is happening now in the world, the pulse of the planet, working closely with media companies. Publishers, etc. To the extent they can now feel like this is we had a place for publishers again we are working with things like realtime events and what is going on while it is happening. This is a giant boon to twitter. That was dick costolo. And a reminder, bloomberg lp operates a breaking news network on twitter called ticktock. Still ahead, well hear from wall street heavyweight Heather Bellini who covers off of that and facebook for Goldman Sachs, her take on performance in 2018 ahead. Plus we will speak with the fire and ice ceo and quiz him about the cyber attack at the olympics. This is bloomberg. The ceo of salesforce as a is coming at facebook and it wont be pretty. Marc benioff said that the reason 30 paul house from the social media giant is just the start of a growing backlash against facebook. He also criticized facebooks decision to dismiss human editors in favor of our rhythms saying that that started the downward spiraling that they are in today. I post this question to our next guest, Heather Bellini. We talked to her at this recent Goldman Sachs conference and i asked her how concerning is the threat to post ads from facebook . I think that if you are a chief marketing officer, you want to make sure you are protecting your brand but brand safety is top of mind. It is not just for facebook but youtube, google, i think maybe some of this might be a little overdone. I do think facebook and google are trying to create an environment where this type of backlash is occurring but i think theyre making a lot of efforts whether it is investing in people to try and make sure theyre getting rid of this content before it ever comes online or investing in a are ai or machine learning, these are platforms that have exploded over a very short of time and i think it is a process that they are truly focused on. How much do think it will impact revenue . You think it will have a Material Impact on revenue . You have to think about the platform. Whether it is facebook, google, youtube, these are multibilliondollar multibillion user platforms. If you look at daily active users for facebook 1. 4 billion. There is probably a billion half plus on youtube. If youre are an advertiser are you going to walk away from that many eyeballs western mark Sheryl Sandberg said we could deliver the super bowl in terms of reach every day. Just domestically focused advertisers. I think this is a call to action. I think the cmos of these Companies Want to see what being done but i think facebook and google are responding in kind and i think it is a process but i dont think they can ignore these platforms. About for the fact that users do not grow . I think it was it hundred thousand users. Users in canada is under 90 million users. You are at a point that even when we model out, we dont model a lot of growth, if any in daily active users for the company just given the percentage of the population they are already heading. I dont think that should be a big surprise. If you look at the growth and the users, it has been predominantly outside of the u. S. It wasnt all that surprising to me. I get to continue to focus on is the value that advertisers are getting from this platform despite what they might be saying in back channel. They are getting a lot of improved targeting, better targeting than any other media. Theres a return on investment in his ads continue to go up. Facebook continues to improve the reach and targeting. Therefore you are seeing at pricing going up. It is working the way it should at this point. You mentioned youtube, youtube ceo said facebook should get back to baby pictures. Facebook has been making algorithmic changes to show more posts from friends. It is interesting to see the dichotomy there with youtube and its own issues. They have the brand safety issues to be aware of. We talked to add partners and agencies a lot, i would say there just as concerned about that on youtube as they are with facebook or maybe some of the other social media platforms. I think in partnership with the advertisers have other measurement perspective, people want to see the standards continue to move in the right direction. I think it is unfortunately a sign of the times how this message has evolved and is platforms maybe david get not that they went off the rails but they said the issue has been what users have been posting on all of the sites. I think, collectively, everyone is more focused on it. You started to see that change with some of the on rhythmic changes but i think youtube is focused on it as well. Emily that was Heather Bellini. The analyst at Goldman Sachs. Still have, bill will join us for an exclusive interview as the waymo over trial wraps up. Why hes very optimistic about over under new leadership. All episodes of Bloomberg Technology a livestreaming on twitter. You can check us out at 5 00. This is bloomberg. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. Show me the olympic winter games leaving every competitor, threat and challenge outmaneuvered. Like ive never seen before. Xfinity x1, yeah, i always know the scor. Triple corks in 4k. Lookin so sick. Stream live on every screen, every win, every trick. 2000 hours of coverage, get your mind blown. 50 olympic channels, yup, youre in the zone. And if theres something that you want to see, pick up that voice remote and just say show me. Experience nbcuniversals coverage of the olympic winter games like never before with xfinity. Proud partner of team usa. Emily bill has been making headlines recently. He helped lead the ouster of Travis Kalanick from leadership. He took the witness stand and spoke to us kim Goldman Technology conference in San Francisco and we get started by asking the about the state of venture capital, take a listen. This is something that has been going on gradually for a 20 year period rather than something that just happened yesterday. Go back years and decades ago in the venture industry, they were famous people hyper competition has made it so the majority of the biggest fears is missing out on the next investment. They are afraid to have a reputation as some of who asks too many questions or pushes too hard. I think it has led to a situation where there isnt a lot of stewardship for discipline. This is a tricky problem. The thing that let us here is the systematic competition. I think this is something there is a lot of by side. You are increasingly reaching down and they said that is what we just experienced. I think it is a broad problem. Listing the legislative environment, how has the rate increase impacted the industry . What the smartest investors tell you that macro is impossible. I think it is extremely likely. A lot of the investment categories are due to the success of this interest rate. If you give texas parliament the ability to drill holes and sell up as money, as many as you possibly can. There is no speculation and more money in late stage available to these private companies than ever before. I dont know what changes it, smart people would say that inflation is going to cause the bed to raise and they may not be awol we look over. Utah state softbank, coming in now with a first look at deals, more money than anyone, is that a concern for you . How that one of the things i talked about is it is a natural quirk to eventually go public. One of the things that i believe strongly is that being public actually helps the companys run better. It is enforced discipline. You have to be under a game. I equated to playing in the nfl versus college. The biggest risk i see is these massive amounts of money which are denying that natural evolution. But here is how i look at it. Like it or not it is a reality. It is a reality we have to adapt to. We are spending time they bring bring out how to evolve. We are always forced to play the game on the field. Help us make sense of that huge spread between this loss and those losses whatever go away . One good thing is that sean got involved in those days being distributed. I am further away and i am super excited about everyone in the things that they are accomplishing. There are some really strong proper drivers, they are eyeing the market of some of the other geographies and you are starting to hear that over its business is being very successful. Im very optimistic. We have a great new team on board that know how to run profitable companies, it will take some time. Youre forced to play this game on the field issue. Bloomberg waymo sabbath settled. How do you feel about that . How do you feel another them drawn avoided this long, drawnout public trial . Are you hopeful that there are more skeletons . Im super excited about where we are now verse where we were. I think it is very clear from london, waymo, the door is starting to build up a track record of having put out these fires and attacked these problems. I dont know if there may be more, i have a high degree of confidence that our probability of mowing through them is way better than it was and i think he is starting to earn credibility in that role. You are an investor in hacker one. Do you think this is going to have an impact . Both over and macro unspoken part of the senate and answered questions and went through all of those details. Do you think the developments are going to impact how those bounty programs are going to i think people want to make sure that the structure and the systems that are set up are being used in appropriate ways and i think both direct and martin have made comments. If they could do it over again, they would change those new policies that get built javelins program. Sheryl sandberg said it is the best way to protect yourself, it is the only offense of solution. Most Security Solutions are building a bigger and bigger dams and trying to hold people out, this is the best way to attack. One of your founders we tell her story and you said yes when a lot of people said no. You hired sarah, what specifically are you doing at benchmark to get more women on the benchmark team and to improve diversity . There are a couple of trends that are super helpful. I think people like you sounding the alarm and raising awareness is super helpful and what youre done is amazing and all these people are talking about it. It heightens peoples attention. Either the other thing we can do is point out the progress a little bit more than we have. If i look at all of our companies in the executive room, it is remarkably different today as a percentage than it was. Even in the board room. This is an outlier but highlighting that data point can be successful, just by happenstance, this is the next room marker, polo, katrina and heather. So things are happening. Here is the problem and by drawing attention to the progress, you invite more people to try which is helpful in the overall process. That was bill gurley and bloombergs selina wang. Ebay is betting on ar. They will be rolling out augmented reality shoppers. They are hoping to keep money on the platform. Ebay had a strong Holiday Quarter with 170 million buyers and a 10 increase in russian volume. Coming up, hackers took him at the winter olympics, we sat down with the ceo of one of the firms on the front lines of cybersecurity and took stock of the dangers that, that is next. This is bloomberg. Shares jumped to the most in two months on your and sales that beat analyst estimates. Brett is also predicting significant lean narrower losses this year. Blue apron is bleeding customers. It had nearly 750,000 users compared to a hundred 80,000 at the same time a year earlier. Lets head back to the Goldman Sachs Technology Conference where we caught up with limited against players in the Technology Conference. Ripple has run up and down with the markets, take a listen. We have already seen the markets bounced back some. I dont follow a day today but the peak of the market is probably midjanuary the total asset class is over 800 billion. It dropped down to maybe 300 billion and a bigot is back to 450 or so. That is a ton of volatility. My counsel is dont follow day today. If you believe this is fundamentally a movement that is changing the nature of a new asset last, you need to measure that over months and years, not day today. Ripple is doing really well at the end of last year. There is talk of it being the next bitcoin. Is that a benchmark . I publicly disclosed bitcoin is bracing digital gold but it will not solve a payment problem. The time it takes to confirm a bitcoin transaction is three or four hours and that is per transaction the these are up 15 per transaction. That is faster than swift in contrast, ex rp is a thousand times faster and a thousand times cheaper. A fraction of a cent to confirm a transaction and it takes three seconds to confirm a transaction. I look at bitcoin as solving different problems to what we are solving. I dont think there will be one Digital Asset to rule them all. I think you will see multiple players have success in this market and i think that is how the market is behaving when you have some quality rise into the top and overall market caps on been trending. A lot of the volatility is due to regulation. What are you expecting . I hope there is more regulation. If we want this whole asset class to grow up and, of course they will be regulation. I dont think theyre thinking about the benefits. The revolution of blockchain will not happen from outside the system. It will happen from inside the system. Governments will not go away, the banks will not go away. Some come from that libertarian view. We are working with the system, we count the bank of england as a customer. The Saudi Arabia Monetary Authority is a customer. Central banks are working with ripple today. What you think of regulation should be . It shouldnt change much. When you are executing a transaction you are going through one regulated Financial Solution to another regulated Financial Solution. This doesnt change. We are just begging the probably much more efficient, much faster, much cheaper. When he was in the regulatory will change, x rp is not circulating any things. What about what is happening in asia . I think the only thing that concerns me is during the baby out with the bathwater. Not all Digital Assets are the same. We did an oped piece written by already compliance officers to talk about some of the differences. You have some Digital Assets that are designed for anonymity. They are designed to circumvent regulation. I fact on the counter of the company talking about Digital Assets for drug dealers and people on tax evasion. Of course there will be enforcement to get that. That is crazy to me that he would say that in a public setting. X rp is working with Central Government is working within the Regulatory Framework. They should be Regulatory Framework applied to the Digital Asset and crypto market. You just partnered with one of the largest digital wallet Payment Companies in china. What does this mean . We think about an inoperable world. With a wet how we think about brexit between them. I think if people understand the proposition, our pipeline of customers have certainly grown. Im excited to come back and keep you posted. Cryptocurrencies, 2018, what are you expecting . I think you will continue to see a lot of bullish behavior. We are in the adolescent stage of developing a new asset class. You will see continued volatility. That was my conversation with brett brown house, the ceo of ripple. The winter holidays are up to a roaring start including feelgood stories and a cyberattack. This has caused mitigations to fail. Theyre talking about the hack and what thread out there. I went through about four different ways of hacker security. What i mean is modern nations engaging in Cyber Operations. Nobody knows what the rules should be, what is offlimits, what is fair game, how do you conduct espionage . The secret are the medium right now. It is hard to figure out who is doing it. A lot of times it is like a gray area. That is the phase we are in my now, we are seeing a lot of attacks with nationstates, i think the gloves have come off yet. There are Different Things being sent. It is interesting this idea of right and wrong, given there are attacks that are ok. Every nation wants to defend itself. You can get to geopolitical conditions, there will always be espionage and ideological differences. I think every nation is developing a modern capability for Cyber Operations and we have not figured out how to operate. How would you describe russia verse china and north korea and how they have evolved. As the defenses get better, the offense gets better. The russians are great at this, they dont have to be surreptitious and commit operations but they cant operation in the scale and scope that the chinese do. The chinese have been operating with some level of engagement. They had a broad berth of targeting what they are a little more obvious. Didnt do as much counter forensics. North korea is a little less predictable, they hack for multiple purposes. They hack for money and to be destructive. We have seen vietnam get on and iran is getting very big in Cyber Operations. All that is the different mobile capability, different targeting and different counter forensics. Any insight into who is behind the attacks, maybe russia they were banned for doping. I dont know who was behind it, we dont have attribution just yet but that is another example you have to do your physical security at his major events but you also have to do your cybersecurity. I have not noticed a big change. The impact and consequences seem higher than in the past. It used to be when you were hacked you knew it. When youre hacked and you know it, the bottom line consequences are growing, therefore, more borders hedging, more ceo attention. We need to get a good roi on the spending habits. Have you seen any market directions from that . I dont know if i have. There are thousands of companies claiming to do cybersecurity. I question how Many Companies the market can support. Thousands feels like a little bit too much for me. That was kevin speaking with us at the Goldman Sachs Technology Conference. After one of the biggest cybersecurity attacks in history, equifax has hired a new head of data security. Jamil well during the Credit Reporting Company as chief Information Security officer and report directly to the ceo. He previously held a similar job at home depot. Coming up, gopro is out of the drone business, what is next for the extreme adventure Camera Company . This is bloomberg. Jeff lucas says he is leaving snap. He joined snapchat from viacom and was crucial to building relationships with advertisers. He is the third executive to depart in the last four months. It lost its head of engineering in november. They said they want revising lucas. Gopro has recently gotten out of the drone business. Optimism for his adventure Camera Company he spoke with selina wang at the Technology Conference in an exclusive interview with the new Revenue Streams and if is is a position and a partnership or acquisition has changed. My job as ceo of gopro is to look for opportunities to realize our vision and created create as big an opportunity for investors as possible. If we can achieve that more easily and more quickly with a partner, we would jump at a chance to look at that opportunity. Have interesting suitors reached out . No comment. If you end up changing your mind, let us know. According to a recent report, your chief operating officer was late in the company and he was someone that was supposed to turn around the business. What is going to others executive turnover . Cj was a terrific asset to the company, he helped us build our software team. He was part of the team that has been leading us to turn around and he has done a terrific job and we thank them for that. Now that gopro is even more focused in 2018 and moving forward in our camera, have an cloud businesses, the scope of the job just got smaller. In addition to becoming more focused with our product line, our Management Team is becoming more focused we are a smaller, more focused business, we have a great leadership team. Talk to me about your efforts to attract and retain top talents. It starts with having a big enough vision and opportunity for people to come and grow their careers. Gopro is known as being a very Innovative Company and we have been extremely innovative with our products and pioneering and helping people capture and share these in new ways. We have to be continued innovators of business and grow our business model. That is something we are starting to do with new programs like subscription. We shared we will be going to subscription part of our business in 2018 and moving forward. His initiatives like this that continue to excite, attract and retain talent. We learned recently that the drone business will be shutting down and that is something that investors were really excited about to rejuvenate growth. What can be expected in 2018 . We have a lot of opportunity in our core business. I will give you an example we are spending roughly half the advertising dollars to sell approximately the same number of cameras we did yearoveryear. That tells you that gopros lineup is selling much more easily and we see an opportunity to increase however ties into significantly grow our business this year. We will do that in our operating envelope of 400 million. There is significant opportunity to grow gopros business. That was nick woodman speaking a supposedly to bloombergs selina wang at the Goldman Sachs technology company. That does it for this edition of the best of Bloomberg Technology. We will bring you the best in technology throughout the day. Remember, all episodes of Bloomberg Technology are Live Streaming on twitter. That is all for now, this is bloomberg. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. Brilliant ideas, powered by hyundai motors. Idea, ideas there are artists whose work draws in when they are in front of the world, then all of a sudden a new journey starts