No one knows them better than dan tillman. Plus, working from home, bitcoin and more. And demand for electric vehicles. We hear from the ceo. We have to get back to the markets. This is the top story of the markets ending the day near the session highs. Stocks tech stocks are ending high. President elect nominate janet yellen to be treasury secretary. So much news on the day. There is more positive news around vaccine. We have this big, cyclical valley. That brings another record high for the small caps. As you are pointing out, it has taken a few years for them to get a record high. Day, hitting the alltime high. The energy index is up. It will be interesting to see what is there and what happens in the future. Some are saying that the excitement around the iphone 12 is priced in and the buyers are stepping away. Nominate is likely to janet yellen, the former fed chair for treasury secretary. The markets took a move up. There was a moment where the s p 500 dipped ever so slightly. There was some wobbly trading. Janet yellen guided by through the crisis. She was on the fed during the financial crisis. Style, thatow her she is one that really favors messages veryher clearly. This is not enough to get out of that range. We have been watching this range over the last few months. Markets certainly did respond well to janet yellen. Youre talking about janet yellen. The key thing for me what i kept hearing about was the stability that she provides. Did the markets like the stability . Do they like her policies . Think he really like is her messaging. She is solid in terms of the messages that she delivers. She really leads the markets where they want to go. This will work well for the cyclical trade. I think it has more to do with the catch up piece of it. We had tech up in a big way. The banks are still down 20 . Energy, thel for new york bank is up. That is where money can go. Waiting on that ever elusive stimulus. Thank you as always for joining. Another vaccine issuing promise in the fight against the coronavirus. This prevented a majority of people from getting the disease. It stopped an average of 70 of participants from getting ill. Effectiveness did rise to 90 for one of two regiments. It was the second sentence that caught my attention. 70 , 90 but neither of that meets that really high bar set by pfizer. Line upes astrazeneca in your view . This is good news. It is a Different Technology than pfizer and modernity. You take all the results together. A lot of vaccines are likely toward. As for the results themselves, they are of confusing. Main fulle does, the dose was only 62 effective. Second thursday tested they only tested that one on a smaller number of patients. They said that one was 90 effective. How do you do a lower dose . Why would a lower dose be so much more effective . That is not what you expect. They do not have a good explanation of that. Basically, there was a skeptical reaction to that. What does that mean . That means that they are not as far along and they have to adapt the trial to test this new, lower dose. There is a lot of confusion. People were not sure which number to believe. A wealthy country that has access to more effective this might be all that is left. Analystske with the just a little while ago really raised the confusion about that trial, maybe it was inflated and he was not sure if the u. S. Would even legalize this vaccine or have it in the u. S. The company saying, we will release the full data and analysis within a few days. What did you need to see the squash some of the skepticism . There needs to be a clear explanation of why the results are so divergent so you can think about, what are the results for efficacy . The u. S. Trials are bigger than these trials and that is testing these higher dosings. The ones that need to be shown the higher of the two dose regimen, now they might have to switch the u. S. Trial also testing the lower dose regimen. It kind of leaves you in a quandary of what to do. What is approved . If most people have been tested . It is not bad news. Is this just a little bit less effective than some of the other vaccines or is it significantly less effective . And if so, why . This is one that has a long overhaul, they were not fully reassured about the safety. Wanted to hear more about the safety data. There are more questions about this one because of the confusing data set. Taylor the devil is in the details, do we assume that distribution and equalizing the Playing Field . This vaccine does have advantages in distribution over the mrna vaccines. This can just be basically refrigerated and does not have the same freezer requirements as the messenger rna. This may be an easier one distribute. If they can come up some dose that is maybe just a little bit less effective than the mrna vaccine, that would definitely be an advantage. My understanding is that the u. K. Will get a lot of the first doses of this vaccine because it was developed in the u. K. I dont know what the roll up rollout is going to be after that. There is definitely a deal with warp speed as well. It remains uncertain right now which vaccines will go to which countries. Taylor not only with countries, but you think in the cities and rural areas. The idea of pfizer and moderna, these freezing cold temperatures. Temperatures that they need to be stored in. Can we get them to Rural Counties in the u. S. . Pfizer says they are working on a system, they have these containers that can be used, it will be shipped to places that have freezers. From there, i guess it can be put in the dry ice packages they design. They said, yes, they can do it. But it is more difficult and complicated. The next thing to happen will be j and j probably early next year. That technology is more similar to the vaccine rather than the mrna vaccine. Novavax using more traditional technology. All there could be a lot of vaccines out there. There could be confusion. Which one to get, or to go to get it. It could get very confusing if there are four, five vaccines at work. We are just parsing out the details of which one looks best for which people. Taylor like you said, just the Technology Behind this, the speed at which we have gotten these vaccines years before people thought it was possible. That was robert, thank you for joining. Coming up, facebook, your member you remember that 22 billion whatsapp acquisition. We look at how they may be having a more lucrative quarter. This is bloomberg. Taylor messaging might just prove lucrative for facebook. They acquired the popular messaging app whatsapp in 2014 for 22 billion but since then, the app has not generated the kind of returns they were hoping. Recent developments to show signs of the Company Might have plans to monetize the app even further. Joining us, the executive director at m km partners. A buy rating on facebook. Great to have you. Talk to us about what you think about the whatsapp evaluation as it relates to the broader world of facebook. Thank you for having me. It has been six years since facebook acquired the second largest platform on social media, that is whatsapp. Whatsapp is the second largest platform in terms of number of users. There are more than 2 billion monthly active users on whatsapp. Has not yet made significant inroads in making money off of whatsapp possible significantly large user base. I think we put out a note earlier this week saying that facebook is on the cusp of monetizing users in india and brazil, showcasing how they can make money off of not just advertising. We are going to see actuating revenues, actuating monetization. Taylor india and brazil, why have they been able to show progress there is that . Progress there . Does that translate into progress in the u. S. . Rohit whatsapp could be that one super app that is the gateway to the mobile ecosystem in those two countries. In the u. S. , we still do not have a super app. We use amazon for commerce, google for search, and youtube for something, so on and so forth. Outside of the u. S. , countries such as china and india, there is this notion that there is one main app. In china, maybe two or three apps that most people use to find other services and products. In india and brazil, whatsapp is trying to be that super app. A position that unlocks many more ways for the company to make money. In india, a license for all the users on the system that is a significant development. At the present, they have a license but there have been some false start. We have been monitoring that development. That said, beyond advertising, the market is huge. Hink Whatsapp Taylor whatsapp is very monetize a book. Taylor how stiff is that competition . Wepay, companies that have already created that super app, are they already dominant . How does whatsapp make inroads . Rohit in india and brazil, we have been paying attention to a couple of things. Google pay is used in india. It is probably a number three player right now. Number one is a company that is owned by walmart. There is no Chinese Super app this largess whatsapp in terms of users. Having a base of whatsapp users could help whatsapp windy incumbent win incumbence in india. Again, you are talking about thinking over the next five years, this is a company seen for many things. Taylor Rohit Kulkarni of mkm partners, great to have you. Coming up, we are taking a look at one cloud company. Why they are forgoing the traditional ipo. This is bloomberg. You will see a flood of ipos between thanksgiving and christmas. If those are received well, that bodes well for 2021. Taylor going public via spac or merger. The company is one of the largest microsoft 365 Development Teams outside microsoft itself. Why a spac versus a traditional ipo . On spac side, two main reasons. We looked at a traditional ipo as well as a spac. We are the largest developer for microsoft 365. We actually looked at both rounds. When we met jeff epstein, exoracle ceo, we felt that their Capital Knowledge would help us with the next stage of evolution. Second, in the spac world, everything is much quicker, so that would allow us to continue growing our business, a market with 250 million active users, growing to 500. We have 7 million and there is much market to go get. Taylor on that note about the business, do you ever worry about customer concentration and not being diversified enough . We have been a microsoft partner and independent Software Vendor for the last years. Years. It iseen the largest Enterprise Cloud today. We do follow our customers. By definition, many of our enterprise customers are multicloud. They could have Microsoft Office 365 for Office Collaboration but they may also have aws for compute, salesforce for crm. We already support some of our customers around cloud backup, around salesforce, around dropbox, and also supporting aws and google, around compliance. Taylor pushing into some of the financials, you generated 148 million in total revenue for the year. That is 26 growth yearoveryear. Can we expect those numbers in the next five years . It is rare to find a 90yearold software company. Old software company. We did the Cloud Transformation in 2011. Now, out of the conversion, we have highgrowth, predictable growth. This is our second Straight Year of nearly 30 arr growth. Revenue wise, we are looking at 30 yearoveryear as well. We are a highgrowth company that is also cash positive and margin positive. We are well north of that rule of 40 as a key metric. A great part of the subscription is thes model predictability of our business. Going into the year, over 70 of revenue is already spoken for. Major market share in this market with continued highgrowth. Taylor you are unique in that you have some real insight into customer behavior, i. T. Tech spend at this moment. How is tech spend . There is massive acceleration towards cloud. The microsoft ceo famously said the Digital Transformation journey is now compressed in a matter of weeks. We see this as well. Surveys of ceos of major fortune 500 companies also tells us that even after the pandemic with vaccines on the way here, the movement to cloud, a massive migration of data. Cloud is there. Now, customers are looking at leveraging data to innovate and collaborate faster. Taylor thank you as always for joining. Coming up, will consumers spend or save this Holiday Season as the pandemic battered economy continues to affect budgets . We will hear firsthand from the paypal Ceo Dan Schulman. This is bloomberg. Taylor welcome back to bloomberg technology. Im ylor riggs in new york, in for emily chang. As we head into the Holiday Season, resurgence of covid19 cases around the world impacts consumer spending. The paypal ceo sat down with emilchg to dcuss how a pandemic driven shift to Digital Payments and ecommerce has transformed consumer behavior, and whether itll affect the end of the year. Dan i dont think it is an exaggeration to say the pandemic accelerated the shift to digital by three to five years and three to six months. It is not even hyperbole, it is just the math of what we are seeing. You are seeing a huge shift from physical to digital and it is not even not just that shift from physical to digital but even instore has gotten more digital. You are seeing blurring between online and offline. Obviously, more and more people are shopping online but not even when they are going into the store, they dont want to touch cash anymore. They want to use cards or qr codes. The other thing you are seeing is that 40 to 70 of consumers dont want to touch cash anymore so youre really seeing a decline in the usage of cash which is why you are seeing a version and Digital Payments. Emily could this lead to the disappearance of cash, would you say . Dan i think a lot of people predicted the demise of cash and have been wrong over the years but there is no question that the use of cash and the prevalence of cash in transactions is dropping somewhat precipitously and whatever that trend rate was, it is now much more accelerated. Emily what are you expecting to see then as we head into the Holiday Season . Dan yeah, well, i think there are a couple of Different Things we are going to see. First of all, youve got over 50 of the population that is concerned further health about going into physical stores. By the way, that was a survey we did pretty all the explosion of the pandemic. It is probably a much higher number. People are going to move their spending online. If you look at 18 to 55yearolds, about 75 to 80 of them, a huge proportion, say they are going to do substantially all or at least half of their shopping online. You are going to see a dramatic increase from people shopping instore to shopping online. You are also going to see more of a spread of the holiday spending. Before, it was very peaked from black friday to cyber monday. That is going to be elongated because the Logistics Distribution are such that retailers are trying to spread that as opposed to have it peak. The final thing we are seeing now, which i think is really encouraging, is twothirds of americans want to shop at Small Businesses. And, that is really encouraging because Small Businesses have really suffered during the pandemic. I think a really interesting fact that i love seeing is that as Small Businesses have moved digital, the sales they are seeing have gone dramatically outside of their local market. So, when somebody puts in paypal for a small business, 75 of their sales are outside of their home state. That is a pretty remarkable occurrence. So, Small Businesses are dramatically increasing their market. Emily so, what is all this telling you about the health of the American Consumer . Obviously, we have been in a recession. A lot of people have lost their jobs. Theres also this increase in activity online. Dan i think we are clearly seeing more americans than ever before worried about the state of their financials. The pandemic, in my view, just exposed more evidently the trends that you had almost two thirds of americans struggling to make ends meet at the end of the month pre the pandemic. We are living in a time where people are really struggling to make ends meet and this pandemic has only heightened that and brought more attention to it. I do think there are ways that the government has weighed in to try to help. I think you need to do more of that going forward. Businesses like paypal have tried to help as well. We should not underestimate the stress of the American Consumer. Emily the pandemic has sprung this conversation of working at home into the spotlight. You are at home, im at home. How is this changing how you think about your Office Footprint knowing if a vaccine becomes available, we are still looking at at least the middle of next year at the earliest . Dan i think that is right. From our perspective, we are probably looking at the end of the summer into the fall before the vaccine can really take enough people take up the vaccine, which we are hopeful about. I dont think we are ever going back to what was. I think we will go into a new normal. New normal, based on what we are seeing and as with think about the future of work, is probably going to be some hybrid of people continuing to work from home and coming into the office. Maybe working from home two to three days a week, and in the office two to three days a week. Some people will forever be at home, and others will be more in the office. But, the vast majority will be some kind of 32 hybrid, i think. Taylor that was the first part of our conversation with dan schulman. Shulman discusses paypals embrace of cryptocurrencies and what he calls the demise of cash. That is next. This is bloomberg. Taylor bitcoin has been on a tear lately, crossing 18,000 last week and still keeping up the momentum on monday. This after paypal said in october it will now allow users to buy, sell and hold cryptocurrency. Emily chang asked paypal Ceo Dan Schulman whether the digital coin is finally going mainstream. Dan we knew we were going to get high demand because we did research on this for we introduced any product or service. We try to work handinhand with regulators to ensure anything we put into the market around cryptocurrencies was safe and secure and easily understandable by our consumers. But, the demand has been overwhelming for us. Somewhere between two to three times what we expected on our waiting list. I think the really interesting thing that we talked about is not just being able to buy, hold or sell cryptocurrencies, but early next year, we are going to allow those cryptocurrencies to be used as a funding instrument, just like a credit card or a debit card or cash in your account, to be able to purchase at any of our 28 million merchants around the world. I think that will fundamentally bolster the utility of cryptocurrency, really moving it from kind of an asset class today to more of an ability to use it in everyday transaction. Emily how long do you think before crypto goes mainstream . Or do you see that happening now . Dan i think there are two things that are going on. One, as we talked about before, you are seeing the demise of cash. You are seeing more and more digital forms of payment, and forms of Digital Currencies. There are two forms of Digital Currencies that are very difficult and distinct. The first are cryptocurrencies. They are not backed by a fiat government currency. As we can put more and more utility around those and take advantage of some of the modern technology around that, i think working handinhand with regulators, we can increase some of the utility of payments and transactions. The other is central bank issuing Digital Currencies. I think based on my conversations with regulators and president s of Central Banks around the world that is no longer a matter of if, it is a matter of when and how they begin to issue cbdcs. They are exploring that very seriously. There are some trials underway but i think the intersection of Digital Currencies and digital wallets like paypal and venmo are natural. Emily bitcoin has been on a bit of a bull run, in part because of the paypal news. I wonder what you see the biggest risks being. Obviously, there is government acceptance and regulation. What about security . What are the things that could prevent cryptocurrencies from getting to the point of being truly mainstream . Dan i think there are some base foundational elements for any type of Digital Currency or payment financial instrument to gaining mainstream acceptance. There needs to be trust. That is really the foundation of the entire monetary system. Trust in the value of that underlying asset and currency. That trust comes from security, which is incredibly important and paramount. It comes from Regulatory Oversight to be sure it is used for the appropriate purposes and not used by cyber criminals, etc. And finally, that your privacy as an individual is respected. I think those are three crucial things. I think it is one of the reasons why we introduce cryptocurrencies the way we did. Handinhand with regulators, putting it on the paypal platform so we can ensure security, that trust, and we can work handinhand with regulators. Emily a lot more services are adding the buy now, pay later option. Paypal is not adding this to its wallet. Does this concern you that it means more people will spend more than they should right now . Dan i dont think so, because i think the way we are doing this is that were assuring somebody has the wherewithal to go and do these kinds of purchases. Just like we do today in any of our credit offerings on paypal. This is a responsibility we take quite seriously. One of the things we do, emily, that is very different than others is we use our own proprietary modeling to look at this. Many people look at just fico scores. We look at a lot of her own modeling, the history consumers and merchants have, and base Credit Conditions on that. I think buy now, pay later gives consumers a ton of flexibility. I love our Value Proposition on that. We can offer that to merchants without additional fees and give consumers flexibility to pay interestfree payments which i think should be helpful for consumers in this Holiday Shopping time. Emily you and i last spoke when paypal went public and spun off from ebay. It has been a few years since then. Where do you see the innovation coming in payments over the next few years . Dan there is no question in my mind that as we move into the Digital Economy, digital wallets are going to evolve substantially. And we are putting a tremendous amount of investment in the past year and next year into transforming both our paypal and venmo app into much more expansive, everyday use cases. They are not just going to be for checkout online. But they will be for checkout online and offline. But, they will also include Financial Services like being able to directly deposit your check onto the platform. Savings capabilities. Investment capabilities. Taking all of the capabilities from our honey acquisition. Shopping tools, like what is your wish list . Price monitoring, coupons. Deals that can be offered directly to you. And putting all of that capability into our digital wallets because that is what people want to do right now. They are using it in the Digital Economy and our services and products need to expand dramatically to serve our 360 Million Consumers today in a much more expansive way. Taylor that was paypal Ceo Dan Schulman speaking earlier with bloombergs emily chang. We have some news we would like to bring your coming from the u. K. That relates to huawei. It falls into the technology theme. The u. K. Is said to be weighing a huawei installation ban in 2021. They are trying to do this to appease some lawmakers. There has been some rebellion within the party, so this would help appease some of those lawmakers were looking for huawei installation ban in 2021. We do know that lawmakers are set to debate a security bill next week. That would really look at stricter rules on how companies can use huawei 5g gear. So this, of course, further developments coming as they weigh what could be a huawei installation ban in 2021. Coming up, electric vehicles are taking center stage as more and more people are looking to save on fuel costs. We look at one ev startup focused on offroad and adventure vehicles. That is next. This is bloomberg. Taylor the electric Vehicle Market is getting recharged today with stocks continuing to surge, some nearing a 300 gain this month. The ev startup rivian is having a tough time meeting demand for its battery electric pickup truck, warning it sees supply constraints through 2023. Despite that, the company has its eye on markets outside the u. S. The ceo r. J. Scaringe spoke with bloombergs ed ludlow about the companys strategies. R. J. we have to get gas powered vehicles off the roads and replace them with much more efficient electric vehicles. To do that, it means we need to focus as a company on the industry. We see electrification happening strongly throughout the world. We see it throughout asia. For us, these are important markets and these are markets that our Product Portfolio is going to. As we launch future variance in our portfolio, we see those very nicely in europe. The whole business, the Vehicle Platform and architecture is set up from the beginning to support sales across the world, not just the United States. Ed finally, president elect biden has some clearly stated policies when it comes to clean energy and electric vehicles. What do you think a Biden Administration would mean to the vision you just outlined . Do you see a Biden Administration putting the United States into a quicker timeline for electrification . R. J. in terms of electrifying, we have two views. What happened in the corporate world and how they are helping. The products they create. Then, you have the regulator side and working in policy and accelerating that. Were seeing increasingly across the world, many major markets in countries that have lots of sales driving targets towards 100 electrification. We have seen that across europe, china. I think thats a good thing for the world. I think it is a necessary thing to make this shift faster. Of course, we are watching closely to see what happens in the United States. We hope the u. S. Will be a leader in helping create policy that makes it easier for consumers and makes it easier for manufacturers, all of us to drive towards that future. Taylor that was the rivian ceo speaking earlier with ed ludlow, who is also joining us now. Ed, not just rivian, but the whole ev space on a tear in the stock market. Ed todays driver was a note from wedbushs analyst dan ives who raised his target for tesla at 1000. He sees ev demand really taking off over the next 18 months to two years. Hitting 10 of new Passenger Car sales by around 2025. What is so interesting, think about the big picture. You see on your screen, the blue bars are factory electric vehicle sales. They are a tiny proportion of the car sold around the world. It is not until 2040 that you see battery electric vehicles becoming 15 of new vehicle sales globally. We have a long way still to go. That is Bloomberg New Energy Finance data we are looking at. What we are seeing is some optimism, some enthusiasm and change of psychology from investors. Not just looking at tesla, the market leader, but also looking at these other startups and legacy players like General Motors and ford, and thinking this is a good thing to make. They are addressing demand with new vehicles. Taylor what is interesting when you talk about pickup trucks, we think of them as a highermargin, bigger business. Maybe something that differentiates yourself from tesla. What does an ev pickup truck mean to you . Ed it is really interesting because here in america, is a clear preference to the pickup truck or bigger vehicles. About 80 of vehicle sales in the u. S. If you look across the models out there, particularly tesla and chevy, but they are not in line with the type of cars americans like to drive. It is always puzzled me why they puzzled me whys they are not more bigger factory electric vehicles. Now in 2021, you see the likes of ford, General Motors, rivian, bringing electric pickup trucks the market. Look at wall street notes, you see some of the names. They think that will be a driver of consumer demand for these products, i talked about price parity but its also about performance. Can your electric vehicle do the same thing that the gas equivalent can do . Until that is the case, i dont think we will see much ev options particular in the u. S. Which has lagged other markets like china and europe. Taylor we only have about a minute left. What struck me as earlier, you were talking about dan ives of wedbush and the price target upgrade. He said 1000 and it struck me. This is a huge call. How do you think about what is really driving these upgrades we continue to see . Ed tesla may deliver 500,000 vehicles this year. By comparison, toyota and vw will do 10,000 vehicles apiece. Morgan stanley is looking beyond the vehicle and looking for the topline growth tesla could see, which is an area where they could lead in terms of robotaxis. Other automakers are looking at that space. In the future, there are other products that come along with electrification, the increased computing capabilities of these cars. Theres a lot in the valuations that investors are finding in Companies Like tesla that go beyond producing cars with four wheels with a battery electric powertrain. Taylor thank you to bloombergs ed ludlow. One day you will give us more than just tesla on this program, but i love it. Continue to stay with us because it is done with this edition of bloomberg technology. Im taylor riggs. And bloomberg daybreak asia is coming up next. This is bloomberg. Businesses today are looking to tomorrow. Adapting. Innovating. Setting the course. But new ways of working demand a new type of network. One thats more than just fast. You need flexibility to work from anywhere. And manage from everywhere. Advanced technology. With serious security. And reliable coverage, nationwide. Forwardthinking enterprises, deserve forwardthinking solutions. And thats what we deliver. So bounce forward, with comcast business. Wannits timeight and for aerotrainer. A more effective total body fitness solution. announcer aerotrainers ergodynamic design and four patented air chambers create maximum muscle activation for better results in less time. It allows for over 20 exercises. Do the aerotrainer super crunch, push ups, aero squat. It inflates in 30 seconds. Aerotrainer is tested to support over 500 pounds. Lose weight, look great, and be healthy. Go to aerotrainer. Com. Thats aero trainer. Com. This is bloomberg daybreak middle east. Tracy janet yellen as treasury secretary. Being seen as market friendly. Manus sentiment is getting a lift. Positive news from astrazeneca. There are questions about the study. We have the details. Yousef corporate defaults in
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