Transcripts For BLOOMBERG Best Of Bloomberg Technology 20170422

First, to our lead. Anticipation has been growing around the release of Samsungs Galaxy s8 smartphone with more than one Million Advanced orders, a new record for samsungs home market, but will the demand be there. Growth is expected to slow down this year. We caught up with an analyst and cory johnson. There is a lot riding on it. Samsung has a reputation to repair. We collaborated with the to do this quick study to see. The note 7 issues did not seem to be a barrier. They said that was not a deterrent for them to consider. With existing owners, it was 65 , so i dont think that is in the mind of a consumer as big of a deal as people made it out to be. They may be more cautious in their review to say this happened. I think they are playing the cards, but the reviews have been good, and people have been raving about the screen, so i dont think the note issues are as bad as people think, but now samsung needs to ramp up their marketing. Caroline you have been cautious to get to excited about s8. Cory i dont think i have been excited about a device ever. Samsung needs this to work. It happens at a time when the refresh cycle is lengthening. Samsung got a little past because the consumer dynamics have changed, so they were able to skip a cycle or half a cycle and have a shot to maintain their leadership. Caroline ahead of the game when it comes to the iphone eight, we were discussing, and he was saying what we were expecting, and a lot of it was in the s8, and xiaomi as well. Within this research, we look at what drivers things consumers are most interested in, and screening camera were still be highest purchase drivers. We will see a move to bevel design, then that trickles down to the low end. Value consumers will want as big of a screen as possible in a small form factor. Caroline sticking with smartphones, the man who founded the worlds most valuable company is confident apple will remain on top of the game. We sat down with Steve Wozniak and disruption technology. Disruption does not mean a big, widescale, all jobs. This means the Company Comes across with a new idea, new approach and everybody says that is the way of the future, and a lot of Companies Get disrupted, put out of business. That is what disruption means to me. When human life gets disrupted, every change in technology has changed how we live life. It has been dramatic from personal computers, smartphones, highbandwidth mobile. You could say that disrupted the ways of the old. We lament using some of the things that were so precious to us, but the way i always look to change is we create a new world is different, we lose some things of the past, but it is good. It is too early to come to that sort of horrible, overall assessment. I think we have a pretty good Employment Level right now. Caroline what about apples role and what products they will unveil. What do kind of features do you think will need to come from the smartphone to remain a dominant force. I am not annexed for it. I dont speak for apple. I read as much as you. Ive probably read less than you about what the possibilities might be. A huge company has to look to stay huge, keep alive, and keep going. Apple has done it by spotting new trends come a making changes, going new directions. I would like to see apple in a huge market, like self driving cars. What is apple going to offer that is different from everyone else that will put it in a leadership position . Walk into any phone store and thats what you see on all the smartphones, so maybe apple will take a leak and self driving cars, and that will be the way for everyone. Caroline fascinating. Apple has clearance for trials for autonomous technology. Are you an optimist about where in deed apple and the big tech players will remain . Will we see facebook, google, and apple still the top most Viable Companies in the world and that time do you think . Know, there are always new things that become these huge entities that take our life sometimes in a new direction. Apple, google, facebook will still be huge and large. The trouble is you get to a certain point of wealth that 60 years is too soon a time to disappear and go out of business. The only way apple could go out of business is to merge with google and changed its name. Just a joke. Caroline that was Steve Wozniak. Moving on to tablets, apple controls 25 with its ipad, but can it keep up . Mark gurman got his hands on the latest ipad and new red iphone and took a closer look. This is the cheaper ipad, 329, the cheapest apple has come out with. You will want this ipad if you are buying in bulk. If youre looking to save until an ipad pro model comes out, it is good especially if you dont need support for the smart keypad or stylus. The new ipad is faster than old ipad air models. For investors, it reinvigorates the ipad line at a time when tablets are in question. If you are a pro user, you might like the option to look at two windows sidebyside. I had read Bloomberg Technology homepage on one side and google on the other. It makes it easy to search for things then view them. You can also copy text between the two sides. In the notes app, you can use two fingers like a cursor. I highlight a hair graph, tap it, cut and paste. It makes it really easy to manipulate a few characters to make sure you are highlighting what you want. The new ipad is now on sale. You can find us each week on facebook, twitter, and the Bloomberg Technology homepage. Thank you. Caroline that was Bloomberg Technology reporter mark gurman. Coming up, we head to facebooks f8 conference next. If you like bloomberg news, check us out on the radio. You can listen on the Bloomberg Radio app, bloomberg. Com, and in the u. S. On sirius xm. This is bloomberg. Caroline now to facebooks annual developer conference this week. In his keynote address, Mark Zuckerberg signaled a major focus Going Forward will be augmented reality. Even if we were a little slow, i am confident we can push this augmented reality platform. It will go into glasses we all want, the same technology, and this is another step on the path of their. Caroline we went live to the f8 developer conference with sarah frier. Snapchat announced they started doing this 3d overlay on the real world just in time because facebook comes out at their big developer conference and basically says this strategy that snapchat has, we are going to win at it, so zuckerberg is confident that despite the slow start that they are going to be the ones that are going to get people used to augmented reality, first through their phones, then through some sort of device. Caroline they made a big push into Virtual Reality with the purchase of oculus, many questioning the price they paid, but they are not giving up on vr, but there is a focus on the space they launched today. Vr has become this incredibly crowded market. It is the social Communication Software that helps people build their relationships like they do on the main app, so what they introduced was faces where you can hang out with your friends and family in this avatar world. Caroline plenty of energy from the speakers and developers in the crowd, but there was an awareness made by Mark Zuckerberg, noting this tragic occurrence over the easter weekend in cleveland, a murder taking place and sadly broadcast on facebook. Our hearts go out to the families and friends of Robert Godwin senior, and we have a lot of work and will keep doing all we can to prevent tragedies like this from happening. Caroline are you surprised he mention this . I think his word choices very interesting, prevent tragedies like this from occurring. What is the tragedy . This murder went viral . This will be tricky for facebook to navigate in the future. They rely so heavily on humans to flagstaff when it needs to be taken down. When it was flagged, it took 28 minutes to take it down, but the internet moved faster. What they need to do, and others have echoed this, is to use Artificial Intelligence to determine if these videos are inappropriate for the platform much earlier on. Caroline there are still opportunities it would seem. Sarah frier, fantastic reporting from f8. There was also news on the companys messenger platform. Facebook announced new features to make it its primary app. I asked about his goals to make messenger a onestop shop for users. It depends on what you are trying to do, but there are lots of things that belong in a conversational context to it when you think about the messenger app, it is the place you go to to coordinate plans him of making reservations, building a playlist with friends, or many other things that require some form of conversation and coordination, so instead of switching to other apps, you can do it right there and then inside of messenger natively, so it is easier to do the things they were already doing. Caroline therefore no cap switching, keeping within messenger, and using bots. There was a lot of hype in 2016. Can it live up to the hype in 2017 . Every new technology has a hype cycle when it lives on a platform as largest ours. I feel like we have made a ton of progress, up to 100,000 bots, 65 million businesses, of which 20 million respond to messengers on messenger every month. Things are happening and they are happening because we have learned a lot and because we have built a successful Developer Ecosystem around the product. Caroline of course for those viewers out there, internet bots is a way of having applications run swiftly, therefore give us the monetization strategy. How will businesses be using this in pain you . The way we are thinking about monetization is if we create more value inside of conversations in messenger for businesses, then you want to create more of these, and a great way to do this is to buy ads in newsfeed in the main facebook product, then open conversations inside messenger. It is creating a new demand for ads, and over time we will test ways for companies to advertise inside of messenger that does not get in the way of messaging. Caroline how big of a part of facebooks revenue do you see messenger being . Do you have a target . We dont break that out. It is very early. It is only something that any companies who have built a presence on the platform could start doing since last december, so it is very early still, still very small, but we think with a user base that is what it is and a thriving ecosystem that we will be a wood to build a strong business. Caroline still ahead, what bill gates says about brexit and how it can affect Scientific Research in the united kingdom. That is next. Uber has lifted the veil on its finances. We will run through the numbers. This is bloomberg. Caroline this week, celebrations for the fifth anniversary end geneva, switzerland, producing a roadmap for the control, elimination of the worlds tropical diseases by an the end of the decade. Though gates helped to kick off the event, and manus cranny set down for an exclusive interview. They discussed the impact of u. S. Taxes, immigration, and brexit. Take a listen. Tax structures, you cant say they are unimportant, but the basic idea of what is going on, whether it is Drug Companies coming up with new drugs or software, it depends on the innovation and are you meeting the basic needs people have to communicate, manage their business and things like that, so california is a high tax location, and yet Silicon Valley remains the center of huge innovation, stronger today in terms of its share of the Digital Innovation than at any time in history, so i am not downplaying tax issues, but what ceos and Tech Companies wake up thinking about every day is how they are going to use ai, where does their ai connect customer problems. Your mentioned your meeting in terms of informing the president and go thing his knowledge base. When you talk about a threat of an insular america and an america with immigration. An and in how big of a threat is in immigration change in america . America hasnt had an open door for immigration for a long time. We have a lot of comfort get a complicated policies that have to do with ringing family members over, some skillsbased programs like the h1b, if you can fill a job that can otherwise be filled that helps the american economy, you can do that. There is this area of uncertainty. If you want to grow jobs, bringing foreign talent end, starting to companies or filling new roles, that is a net jobs accretive. People are worried you are bringing in people and lowering wages, so having systems that differentiate between the job substitution peace versus building jobs around that unique talent, the government will probably try to do that harder. The fact it is evaluated in the framework of jobs and economic growth, that is fine. High skill immigration can meet that test. Educating somebody and having them leave the country where other jobs could be created around that person is in a great jobs move. As an irishman with two passports looking at brexit, but you as a Global Technology man, how do you look at the u. K. . This is a long goodbye, or an opportunity for the u. K. . What is the threat from brexit as you look at it from your Vantage Point . The u. K. , whether microsoft, where they have a huge lab there, cambridge, or for the foundation. We have over a billion dollars of active grants to institutions in the u. K. To build new tools for us, it after the United States is by far the number two place with a huge distance to number three, so maintaining that scientific excellence, having the right type of r d collaboration, where the u. K. Has been a huge net recipient of r d dollars, i have been pleased with the chancellor and the Prime Minister have said scientific leadership, creating good jobs, having the strength is fantastic in the u. K. , that they will work to maintain that, because it would be a huge loss for the world and the u. K. If that was not done. It can be done. They made it a bit more complicated by not being part of the eu, and just the uncertainty about the rules about people, r d, some people are getting concerned about that. Our foundation will be here 10 years from now, 20 years from now, so we can be calm, and i am sure we will get asked as these choices are being made had to keep that very strong momentum, scotland where livestock is unbelievable, imperial oxford, i think they are being careful to make sure they are not dropping off on that. Caroline coming up, the state of diversity in the workplace. That is next. And a reminder that all episodes of Bloomberg Technology are Live Streaming on twitter. Check us out at bloombergtechtv weekdays at 5 00 p. M. In new york, 2 00 p. M. In san francisco. This is bloomberg. Caroline welcome back to the best of Bloomberg Technology. In recent years, a spotlight has been placed on Silicon Valleys lack of diversity. As a response, companies have been making efforts to become more try parents more transparent on Diversity Efforts by publishing diversity reports and pouring millions into initiatives with the aim of recruiting and retaining more women and minorities, but much of what they have done has only shown incremental results. We sat down with two women who have potato mice the fight against Sexual Harassment who the fightmized against Sexual Harassment in the workplace. We sat down with anita hill and ellen pao. 25 years ago, there was not nearly the public reaction we have today. Today, specifically with the bill oreilly situation, you have 50 corporations have responded, and resisted, and pushed back on the idea of adding their names to this kind of behavior. You have a public that is enraged and is responding. Women are protesting, telling their own stories. It is a more public conversation. 25 years ago, we had a president publicported it, and the went along with it. This time, with the president supporting bill oreilly, the public is just not buying it. Caroline the public sentiment has changed. Do you feel the same as in 2012 when you came up against your previous employer and took them to court . Do you think things have changed for the positive . I think they are believing people when they bring up their experiences. I think people are now recognizing there is a bigger problem. That there is discrimination and harassment in the workplace, and it happens to anyone, and it is no longer what did this victim did wrong. Needs toroblem that change. So, it is a different perception than 25 years ago when people were less educated. Caroline how is technology making the difference . The tech scene is starting to show slightly better numbers when it comes to females in the workforce, but, clearly, there is still evidence of sexual discrimination when they are there. The presence of black and latinos in Many Companies seem pathetic. It is a systemic problem that started decades ago when these companies became successful, and they were started by white men, and they made money to invest in other white men. It is an epidemic of power of pattern matching. It is something that has happened to women. It has happened to racial and ethnic underrepresented people of color, to people who are lgbtq, every group that is not part of that court, original founding set of fathers from Silicon Valley. So, how do you change that culture to make sure everyone is included . Not just a few more women or black employees, but you are getting the best employees for the job and giving them the opportunity to do their best work . Caroline are you holding some startups or Bigger Technology companies in the light to show the way things can be done . I think there are some companies that are thinking about it in a helpful way where they are starting to experiment. I do think you need to think about inclusivity of all people, not just certain groups. You have to think about it comprehensively across your company, so it is not just hiring people and making sure they succeed, that it is about making sure they are on board arded, havey are onbo mentors and sponsors, promoted equally, given the same opportunities across the board, and the third eases measuring,. So, the Companies Taking the time and effort to see what levels of diversity they have, what the sentiment of the different groups inside those companies are, will have the data to help them succeed. The question is, are you going to take that data, share it across your team, and focus on these problems . For me, one of the clear pieces of information about the bill oreilly problem is about changing the culture and environment to make sure that when you put all these things in place that you actually follow through with an idea of increasing and maintaining increased diversity. Caroline that was anita hill and ellen pao. Now still ahead, this week kicks off with netflix earnings and subscriber gains in the First Quarter fell short. We will explain what is behind the slip. Bloomberg got its hands on a 400 juicer that has raised millions from vc firms. Seems ow we will explain next. This is bloomberg. Caroline netflix released earnings at the beginning of the week. Investors focused customer focused on customer additions, and the numbers were below expectations. They were more than half a million behind consensus estimates. We dug into the numbers with a company that collects data on streaming viewership. By missing estimates for the First Quarter, they will have to come through with a strong addition in the Second Quarter, but the market and challenges they face around subscriber churn will not subside anytime soon. So, the pressure will get real in the Second Quarter. Caroline the pressure getting real in the Second Quarter. What about the content . Content to be thicker and faster and the the seconder in quarter. Are they lining up the comment to draw in these new subscribers . Netflix has made substantial investments in terms of developing their own, original content. In general, investors looking up the value of netflix just based on their previous subscriber acquisition was is a missed opportunity. If we look at the ways they can still monetize the audience, regardless of if they get new subscribers, such as things like branded content, merchandise off of new original content they own, there is more diversification and opportunity to monetize audience for netflix other than whether they get 5 million or 4. 5 million subscribers. Caroline that is interesting. Greg, should we be shifting our attention away from subscriber growth and looking at other numbers . Before i ask you to dig into expenses, should we be looking at areas of opportunity to grow . Thats one thing i expect to hear more of Going Forward, what their innovation platform is. The concept of taking a couple of tv shows and selling to subscribers is getting more competitive and wellworn. They need some sort of innovation platform to bring the Competitive Edge up in the Second Quarter quarter, so i would expect to see something there. Caroline andre, did into these innovation platforms. Who would you see them selling the homegrown content onto . What sort of areas of there . Nity other are live sports is out of their specialty and a very expensive arena for them to challenge other people in. If you look at the branded content, across the over the top ecosystem, most of the growth has been in adsupported content should i dont see beend supported content in adsupported content. I dont see domestically that they will start showing 15second or 30second ads, but having an advertisement shown in luke cage and showing that household bought a hyundai, those are significant dollars, so a lot of the innovation may be in ways they can get brand engagement, sponsorship, and merchandising in particular. Caroline an interesting area. Maybe more product basement Going Forward. What about the ongoing splash of cash we continue to see . 1 billion on marketing in 2017, add that to making the content and at what do we see a reigning spending . F this or do we not . The Revenue Growth number support a Company Still in growth mode. At some point, they will need to figure out how to make the adjustment into more of a mature, Going Forward business. They need to figure out a way to manage subscriber churn in a costeffective way, and obviously avoiding mistakes on longterm content costs. All three of those will be important Cost Management tools as they evolve from a Growth Company to a more steady state profitable company. Caroline now to a bloomberg story that has taken the internet by storm. U. S. Based juice machine maker juicero raised 120 million. They convinced investors they could create the tesla of juicers. Bloomberg got its hands on the machine with a 400 price tag, but is it really worth it . This is the juicero, a coldpressed juicer made by a startup in san francisco. When the machine first launched, it cost 699. In january, it cost 399. It makes juice by squeezing of cut up vegetables. They say you need this presser to get the juice out of its packs, but we decided to give them a squeeze test of our own. After two minutes of squeezing, no expensive juice machine needed. Caroline that was the voice of ellen huet who wrote the story gaining major traction online and on the bloomberg. Here to join us is the coauthor of the piece with ellen. Fantastic piece, fantastic reaction. This is backed by some stand out vcs that are perhaps embarrassed. Huge venture funds invested in this company. Thrive, Jared Kushners company, Google Ventures all putting in about 120 million in two million into juicero. Caroline has there been any response in terms of how juicero is reacting to this . It is such a punchy price tag. One investor went on the record and said he absolutely figured out on his own that the bags could be squeezed, but our understanding from sources of the company and investors that it is an issue that has not been broached or discussed. Perhaps the company does not see it as an issue. They would not go on the record with us. Caroline the company has a significant background in terms of design. It was intended to be the tesla of juicers. It has 400 parts, a scanner, a microprocessor giving it this high price tag. Originally, the machine cost 700. The price dropped to about 400 in january. The Company Wants to be considered an innovative tech leader. Food tech is a huge topic in Silicon Valley. A lot of venture funds are pouring in money into Companies Like impossible foods, hampton creek, and juicero has caught the eye of a lot of firms in san francisco. Caroline coming up, the inside track on uber. Why the privately held company has decided to unveil its financials, next. Plus, former microsoft ceo Steve Ballmer gives us details on his new venture aiming to make Government Data more accessible, next. This is bloomberg. Caroline former microsoft ceo Steve Ballmer believes in data. He believes in it so much that he has launched a comprehensive data look at government spending. David gura asked him if it has gotten any easier. Take a listen. Measuring productivity is a weird concept to me. Measuring how people live, how they eat, what their housing looks like, how much money they have to spend on those things, that looks clear to me. Obviously, we all like having cell phones. It has changed lives and made things very different, and yet it does not show up in a particular way in some of the gdp and productivity numbers. To me, that may not be the most important point relative to what we are trying to do with usafacts. We have gdp, all the numbers out there, but im not sure it captures the citizens experience, and never will capture the citizens experience. David when you look at tech or the sharing economy, it is hugely popular, more and more people becoming part of it. Yet, it is not making a ton of money. When youre looking at data, what do you make of that . We dont have data that relate specifically to the topic. My own sense is that tech is enabling people to do new things in cheaper ways. That is all positive for quality of life. Whether we can capture that precisely in our data, who knows . But i am a big fan of tech. I was in the Tech Industry for a long time, and i see a lot of potential for tech to transform peoples lives. David what is your information message to President Trump over how the tech sector has affected innovation . As a ceo at microsoft, i appreciated the value of people who were not u. S. Citizens and the impact they could make it, particularly in these high Skilled Engineering jobs. When i look at the broader set of numbers, the total number of people who come to the United States under h1b visas is about 165,000 people a year. Relative to all people coming under visas to the u. S. , it is a small number by percentage, two plus million come over all, 165,000 come on deck. If you look at where the visas are used, some of it is going into google and microsoft, but some is going to outsourcing jobs. People who are on the front end of outsourcing for example in india. So, it is a broader and more complicated question, but based on a relatively small base of numbers. If you add all the new visas, it is not a dramatically High Percentage of the workforce. David i heard you have an amazon echo. You are a fan of the device. Amazon is a hugely successful company. What does an upstart tech company do in the face of a behemoth like that one . Or against microsoft a few years back . What is the best route to compete with the company like that . The key is to find a place where you have a unique concept, product concept, and understand how it will fit the user, and try not to be in the place where the behemoth can logically and easily go. You dont want to be building something that would let her be would better be done as a feature of the market leader, if you will, as opposed to an entirely new product. Unless you are interested in having your Company Acquired by the behemoth. If we look at how amazon and facebook got going, they had a unique product concept and jumped on it quickly and drove to critical mass. By the time that happened, it was far enough away that the s, microsoft or google, people werent responding fast enough and these new behemoths can grow up. David your dad worked for ford , and you drive ford cars. We have seen the ceo going backandforth between washington a lot. We have a president who interfaces more with business ceos. Is that a good thing . And what is the role of government in encouraging innovation and entrepreneurship . Well, at the end of the day, i think business has to take care of itself when it comes to innovation. Not that i either like or dont like a role for government, but it is the creativity of the people in the business that will lead to these innovations. Business execs can give input on and blah, blah, blah, but at the end of the day, the number one drivers will be what the businesses do that are largely independent of government. Caroline uber has lifted the vid on its financials. In an unprecedented move, the company showed the numbers exclusively with bloomberg and shows bookings more than doubled last year to 20 billion, net revenue was 6. 5 billion, while net losses were 2. 8 billion. The revelation comes as the companys Corporate Culture comes under fire. We caught up with our Bloomberg Technology reporter, eric newcomer, and brad stone. We have seen this movie before, right . Amazon, losses over 1 billion, 1. 4 billion at the time, 50 of revenues, extraordinary. Uber has some advantages that amazon did not. It is a private company. We are in this extraordinary capital environment where it seems a lot of people are still willing to provide these companies money. Uber is expanding geographically as a platform, uber eats, uber rush, so i tended to give these companies the benefit of the doubt. Obviously, it has to grow into that loss and continue to show growth. Caroline what interested me is how murky some of the numbers are when you are looking at them. Eric, talk to us about this. The losses dont include stock compensation, automobile purchases. How much bigger could they even the . They even be . Uber refers to them as losses. They lost at least 1 billion in china, so we are looking at 3. 8 billion which is historic. It is hard to find a private company that has lost that much money. Even with that, we are not quite capturing the full extent of it. Actuald looking into the money in, money out, so if you look at that, you can see the losses dont encompass the full extent of the cash burn. Just to add on to brad point, uber would say they are experimenting in parallel rather than in cereal. They are doing everything at once, because investors are providing them the opportunity. While amazon has been aggressive with their cash flow, uber has been able to try to do it all at once. After the 2000 dot spending, there was a layoff of workforce, so there are dangers. Caroline how much do we read into that investors have given them this cash and they have put it to work, and one investor is jeff bezos. How much do you actually think he actually says you need the gym today and you need it the jam today and you need to keep on spending . Jeff bezos invested early on, so he probably, i dont know he would back this kind of company now. I guess we will see. This is a company that has gone out every year, the public scandals over the past couple of months, and you have these numbers which arent for the faint of heart. I think we will see if they go back and raise capital, what that valuation is. It doesnt seem the same optimism is around ride hailing. If they can raise more money or we see a Public Offering in the next 12 months or so, then we will see how investors are reacting. Caroline maybe this is trying to distract us from those scandals. Eric, is that your viewpoint . Also, yet another push from uber to allow tipping in new york and california. Do think that will be allowed . Why dont they allow it . I do think they need to read employees and investors and partners that this company is not an floating and they think the numbers reflect well. Bookings are going up, losses are flat, and that is what they will be looking at. On the tipping issue, i said i think they could launch tipping this year. They want to do it in the situation where they get credit for it. They want to do it in a way that is palatable to them. So, i think it will be interesting to see how they react. I noticed in our story that uber was not totally disowning the push here. So, it will be interesting to see whether they let new york be a test case, but there is soulsearching within the company about how to handle tipping. Caroline that was Bloomberg Technologys brad stone and eric newcomer. That does it for this edition of the best of Bloomberg Technology. Tune in for our exclusive conversation with drew houston the ceo of dropbox. , all episodes are now Live Streaming on twitter. Check us out at bloombergtechtv weekdays. That is all for now. This is bloomberg. Nejra coming up on bloomberg best. The stories that shaped the week in business around the world. A snap election looms in the uk and the results of a referendum reverberate in turkey. The biggest change to the constitution since the formation of the republic 93 years ago. Nejra investors wondering what is next for the central banks. Our interviews this week offers some insight. I think the inflation mandate we well have to watch closely. The strategy of going gradual is one i have supported. The basic trend is towards 2 in a gradual manner. Nejra danger lurking ahead for markets