After pelotons 20 drop since its ipo, we look at another company with its eyes on connected fitness. The c. E. O. Of mirror joins the program. But first, to our top story. Its all about the continuing escalation of the u. S. China trade war. U. S. Markets closed lower on tuesday. This, as bloomberg learned that the Trump Administration is discussing possible restrictions on portfolio flows into china. That includes a particular focus on investments made by u. S. Government retirement funds. Joining me to discuss is bloombergs stocks editor dave wilson in new york. Dave, start with just talking to me about the selloff that we saw a little bit today. How much did china play a role in this . Dave well, they certainly played a role to the extent that if you look at Chinese Companies that trade here in the form of american depositary receipts, they took a hit. I mean were talking about online retailer Alibaba Holding down 4 . Their rival j. D. Com down 4 . The Search Engine by do, baidu, off by about 2 . And beyond that, we started to see how the back and forth between the u. S. And china is showing up in terms of individual companies and industries. I say that because three biggest declines in the s p 500 today were Lab Equipment companies, all down more than 6 . You had this dutch company, a competitor of theirs come out and say their thirdquarter sales growth didnt measure up to their own forecast because of weakness in china. So thats one piece of it. Another piece, the chip maker may be best known as a supplier to go pro, one of the biggest customers is chinas hick vision which happened to be put on the u. S. Blacklist yesterday. So you saw those shares take a hit, as well. Down 9. 5 today. Taylor dave, i like that you talked about the black list. That was along with another story that we were following about the u. S. Talking about restricting some of the flows into china. Im showing a chart here on my terminal. Its all about the Foreign Direct Investment into china and i wonder if this comes as you still has seen a lot of investors go in, if the u. S. Stopped buying Chinese Companies, would they really be hurt . Dave they would be hurt to the extent that you would lose sort of an investor base. And bear in mind, according to current reporting, theyre talking about u. S. Government Pension Funds specifically, not even necessarily state funds or private funds or wider range of Institutional Investors that put their money into the a. V. R. s of Chinese Companies. So its looking relatively limited at this point. Its enough to suggest if nothing else that the trade issues going back and forth between the u. S. And china, it may be more of a challenge to get those settled when you know you now have the question of financial flows as part of the mix. Taylor you have been covering this story, i want to show you another chart here in my terminal, its all about the companies with exposure to china that get a lot of their revenue from china. They have been underperforming as well. Do you continue to see this trend, dave, where if you have exposure to china you can just assume underperformance . Dave well, we have seen it with kyagen as an example. We have thirdquarter earnings coming up in a couple weeks and we will have a pretty good idea by the time you get results, thinking about a company like caterpillar or boeing, the automakers, perhaps, there are a lot of companies that do a substantial amount of business in china that are laying out their results. You have to think there will be more examples like kiagen and more reactions like in the u. S. Lab equipment stocks, its a matter of time. Taylor bloombergs dave wilson, thanks for joining me. And u. S. Scholars are calling for more cooperation with china. That follows washingtons decision to black list some Chinese Tech Companies over involvement in alleged human rights abuses. Daniel rosen, he is the founder of Rhodium Group says there will be Collateral Damage to other companies. He spoke with mike mcgee at a conference in denver. Daniel this is affecting those companies, the ability to maintain their financing, their contract relationships, their place in other peoples supply chains. There are hundreds and hundreds more companies that have similar profiles one way or the other, theyre also thinking about this could spill over to them. There is a fairly hefty chunk of hightech activity here thats been implicated by this move and i think its going to take a little while for people to sort it out, but its going to create some Collateral Damage i think here. Like one major drone manufacturer that was interestingly left off the list, but for the most part its covering most of the names people thought might be pulled into this. Mike how does that affect u. S. Companies . Do we see a spillover effect . Can they replace the business . I understand that also they can use overseas subsidiaries to go around the sanctions . Daniel folks have been doing this in the trade space, right, for the past several years already. So thinking about how you can legally appropriately skirt some of these risks by using your overseas operations as a buffer against the injection of new policy regimes that are frankly untested and so part of the risk and uncertainty that nobody knows how this these things are exactly going to be enforced, what is an adequate compliance, what kind of expectations are going to be from the bureau of Industrial Security or whoever, the Commerce Department is responsible to oversee these sorts of things, but there is absolutely going to be an effect both on who American Companies are using as suppliers and lets not forget, there is almost certain to be some kind of reciprocal retaliation against american firms from the chinese side. Mike what kind of retaliation do we expect . Daniel interestingly, we also had another story this week you want to talk about having to do with finance flows, right, and we have seen china already threatening to retaliate against chinese investors putting money into u. S. Governmentrelated finance vehicles, but likewise, china has an unreliable entities list that is sort of analogous to the entities list that washington is maintaining threatening to put American Technology companies on to that list on the grounds that they are going to be influenced by american political consideration, not just market considerations. Can china really live without those firms . Well see. Probably an open question and a lot of those Chinese Companies will have to scramble to figure out what it means for them. I dont think anyone really knows off the top of their heads. Mike the story you mentioned that bloomberg was reporting that the administration, the Trump Administration is still talking about capital controls of one form or another on china. Can that work . Daniel you know, you guys have done a great job on this story for about three weeks now since it first started to cook up. And there is an aspect of this which was to be expected and if you think its important to have the degree of disengagement or decoupling in trade terms that we have already normalized and made a legitimate part of discussion, it is natural to at least do an inventory of what kind of financial flows there are between the official sectors, right, from u. S. Into china and china into the u. S. , right. That doesnt mean there is necessarily going to be action. I think people need to do a careful stock taking and do the math before they think about what the policy options might be. Definitely there are some folks outside of the white house that have wanted to jam this into the oval office and make this part of a conversation before the president , before the white house is ready to really put this at the center of the table. Certainly there are some hawkish folks inside the white house that would like nothing but to add additional elements to the Disengagement Party thats been going on the past couple years, finance, additional sanctions actions having to do with whether its iran stuff or north korea or what have you, there is plenty of more things that can be thrown into the mix. There are definitely people on the inside that would like to see that happen. Mike for people watching the whole trade dispute between the u. S. And china, one of the frustrations has been to figure out exactly what donald trump wants. From the chinese side, what is xis motivation now . Daniel well, the answer used to be easy, stability, right. He wants stability, time for china to consolidate its economic transformation, transition, the party ability to control and manage risks at home and to hold at bay any kind of shocks that are outside of the ability of the government and the party to manager and control. The problem is were now at a point where stability is no longer an option. Taylor that was daniel rosen, founder of the Rhodium Group speaking with mike mckee. Samsung posted Quarterly Earnings that beat estimates. There was Strong Demand for the south koreans company smartphone. Samsung was helped by the debut of the new iphone 11 pro. That phone uses samsungs digital display screen. And coming up, u. S. States probing facebook over advertise advertising and competition met with top d. O. J. Antitrust officials on monday. We have the story next. And if you like Bloomberg News, check us out on the radio. You can listen on the bloomberg app, bloomberg. Com and in the u. S. On sirius x. M. This is bloomberg. Taylor we have some news crossing the bloomberg terminal that the white house is saying that President Trump will not participate in impeachment probes. Again the white house saying that President Trump will not participate in impeachment probes. We will bring you more headlines as they come. Now on monday, new York Attorney general letisha james, the top met with top antitrust officials in washington to discuss a multistate antitrust probe into facebook. They raised the prospect that the states could join the federal investigations similar to the way states collaborated with the u. S. Antitrust case against microsoft in the 1990s. To discuss and joined by Bloomberg News reporter ben brody and with me here in San Francisco is bloombergs kurt wagner. Do we know what was discussed in these meetings today . Ben well, the emphasis that the attorneys general who participated put out was that they were especially talking about consumer data which has been a huge problem of theirs as well as the antitrust case generally about social media. It doesnt give us a ton of detail into what theyre looking at, it is interesting that it sort of straddles a serious of a series of interests. The d. O. J. Is particularly interested we believe in the aspects of consumer data that play into antitrust whereas the f. T. C. Is looking into Digital Advertising and mobile apps. So it seems like they were all discussing their probes and what exactly theyre going to do in terms of teaming up is sort of what were watching from here. Taylor and, kurt, hard to imagine that this litigation an and these probes are not the biggest Business Risk facing facebook right now. Kurt to hear about the data stuff and the advertising, theyre one and the same. This is facebooks bread and butter. They make 99 of their revenue from advertising. So if youre looking into facebook from a Data Collection standpoint or from a targeted advertising standpoint, its one and the same. I dont know how these agencies are going to break this up. Maybe ben knows more than i do. I just feel like this is going to get really muddy really quickly. Taylor good segue. Ben talk about the different probes, you have state, federal probes, some are privacy, some are antitrust. Are they all working together on one probe or are these all segmented . Ben for right now, we can tell theyre fairly segmented. Its common for all of these agencies as well as the states to be having conversations even if theyre not officially working together. Its entirely possible, we believe we could see one f. T. C. Probe, one d. O. J. Probe which is a particular interest of attorney general william barr and all of these states, we believe there is a couple dozen of them right now, more than the eight that we were looking at before, they could all be moving along separate tacks and all come together. They could come together in different combinations. Usually if they do, the federal agencies would lead, but right now we think its pretty interesting d. O. J. And f. T. C. Have literally been talking about turf battles and squabbles pretty publicly especially on facebook. I think its possible that facebook will have to deal with an array of these which is in some ways more difficult than one of them. Taylor how much of a game changer is it if they do all come together and its a targeted, im thinking microsoft, circa 1990s. Ben right, well, in some way, the power of microsoft in the 1990s was actually that the states and the federal agencies were able to come together for a time and do their document review, pursue their theory of harm, litigate in court, but they were also able to split apart at some point and the states were able to say, hey, we actually want more than this when the d. O. J. Eventually pulled out under the george bush administration. The power is that sometimes they can come together and combine forces, but sometimes theyre actually able to split and attack from multiple different sides. Thats a real danger for facebook here. Taylor kurt, we talk about this every day, have we heard yet facebooks response to this . Kurt yeah, its been pretty consistent for some time now which is that, you know, facebook being big is good for facebook and its good for tech because they are able to, you know, fight off all these issues that people keep bringing up. Election interference, hate speech, stuff like that. So from a should we be broken up standpoint, that has been their party line. When you Start Talking about advertising or Data Collection, facebook has rolled out a bunch of Different Things since the 2016 election around what they collect and how they let people know what theyre collecting. I think from an advertising standpoint, their argument is going to be, rerun an ad we run an ad auction. We let advertisers bid on how much they want to spend on each ad and as a result, how can we be inflating prices if their they are bidding against each other. Taylor great segue, you talk about ads, youre one of the hardest working people here and come out with a story about twitter saying that they have used phone numbers for added targeting. So far twitter stayed out of all of this regulatory scrutiny. Where does this now put twitter . Karl its not great. Its a little bit complicated. When people upload private information for security reasons, for example, you have two factor authentication to protect your account, you might give twitter a phone number or email. The expectation is that that is except strictly for security. Kept strictly for security. What we found out today is that twitter was actually using those emails and phone numbers to target people with ads. They were using the security information to make money. And they admitted that today in a blog post. It came out right before we sat down, its still pretty new. This is the kind of thing that facebook was doing and one of the many things that the f. T. C. Said you had to stop when they settled their 5 billion privacy exempt this settlement this summer. There will be regulators asking questions about this im sure. Taylor wonderful. So many other questions that well have to get to another time. That was bloombergs ben brodie and kurt wagner, thank you both for joining me. Coming up, real and urgent. Thats what five republican senators are calling the threat from huawei. We discuss how to handle relationships with huawei next. And Bloomberg Technology is Live Streaming on twitter. Check us out on technology. Follow our global breaking news network on tictoc on twitter. This is bloomberg. Taylor we need to update you on an headline i mentioned earlier. In an eightpage letter laying out the white houses concerns about the impeachment inquiry, the white House Counsel says President Trump will not participate in an impeachment probe. The white House Counsel writing you have designed and implemented your inquiry in a manner that violates fundamental fairness and constitutionally mandated due process, but simply you seek to overturn the results of the 2016 election and deprive the American People of the president they have freely chosen. Now, switching to another story were following, five republican senators told microsoft that the this comes after one of told microsoft that the threat from huawei is quote real and urgent. This comes after one of microsoft top executives complained that the government had not been open about why u. S. Companies should not do business with the black listed Chinese Telecommunications firms. To further discuss, i want to bring in Bloomberg Technologys gerrit de vynck. Gerrit, what does real and urgent mean . Gerrit real and urgent, the characterization that these senators on the hawkish side, and the u. S. Government sort of officially, the u. S. Security kind of establishment has looked at huawei as a company that they really dont want to be doing business with, they would rather their allies around the world not do business with. Thats of course because this company is very closely connected to the Chinese Government, many of its founders, executives are former Chinese Military personnel so there is this sort of view that is, that huawei is very closely connected to the Chinese Government and could potentially, you know, spy on other countries through huawei technology. Thats the view of the u. S. Government. Taylor gerrit, we got our hands on the letter, if you read through it, what were the specific allegations . Gerrit i dont think anything in the specific letter were brandnew and the senators actually refer to a lot of information that they said was already public and like i said, this is something that has been going on for a while. In the original incident that sort of prompted this letter was microsofts brad smith, one of the most outspent Technology Open outspoken Technology Executives out there, we respect the governments position, we dont understand specifically the top secret things that theyre really referring to. This letter doesnt refer to those top secret things. It reiterates the stuff that brad smith already knew about when he made the complaint in the first place. Taylor you know, microsoft has complained that the u. S. Government officials werent open enough. Now that they have this letter and they have the specific claims, what can microsoft do . They still cant do business with huawei, how does this help them . Gerrit i think that this letter is more sort of on the political side of things. The senators are always sort of positioning themselves as very strict proponents of u. S. Interests and they want u. S. Technology companies to kind of fall in line. There has also been criticism of google of having an a. I. Research lab in china saying do you want to support the future of u. S. A. I. Or chinese a. I. And the companies have been clear that we are u. S. Companies but were global and we want to work around the world. The political view of the u. S. Government and these senators in particular is a little bit more hawkish than the Technology Companies are comfortable with or would want to be and in an ideal world, they want to sell a lot of stuff in china, they want to work closely with china, as you know, very, very important and rising country. So theyre sort of at odds at the end of the day with the u. S. Government, so far, theyre definitely going to follow the law. They are based in the u. S. And theyre going to follow what the u. S. Government tells them to do. Taylor while and with this letter, you could claim that the u. S. Government officials are doing their part in attempting to be more open and transparent, does this satisfy the likes of microsoft and other Tech Companies who wanted to work with china and Chinese Companies like huawei, at least for the time being . Gerrit yeah, they havent really said anything about it. I dont think microsoft is going to say much more about this. I dont think that its particularly satisfying. I think the companies at this point after months and months and months of this fight with huawei are realizing that, look, they arent going to be able to deal with this company. They have to curtail their efforts to work deeper and deeper into china and hold out in hope that the next u. S. Government is actually more open and to sort of going back to working closely with china. Well have to kind of wait and see. Of course, there is an election coming up. Donald trump could win again and its unlikely that his position will soften on china even after that election. Taylor Bloomberg Technologys gerrit de vynck, thank you for joining me. And coming up, back to the black list. The u. S. Claims chinas a. I. Companies are human rights abusers, but being banned with doing business with u. S. Companies will do to them at home. Thats next. This is bloomberg. Taylor this is Bloomberg Technology. Im taylor riggs in San Francisco. Now back to our top story. It is all about the latest in the u. S. China trade war. A day after the Trump Administration blacklisted eight Chinese Companies over alleged human rights violations, china is signaling it will hit back. A spokesman for china said, we urge the u. S. Side to immediately correct its mistake and stop interfering in chinas internal affairs. China will continue to take firm and forceful measures to resolutely safeguard national sovereignty, security and your development interests. Joining me to discuss, sarah mcgregor, and in studio, shelly you banjo, who covers china tech you you are for us. Sarah, let me start with you. Is this part of a broader trade strategy . Sarah it definitely begs the question whether it is part of the Trump Administrations trade strategy to increase the leverage, ratchet up the leverage. As we know, a similar blacklisting to Companies Like huawei, they are not part of the official trade discussions, they always end up in the mix and it seems like trump holds them out as a bit of a carrot to say i can go easier on huawei. I can allow these businesses to start doing business again on some level if you give us this and that. I think it comes at a curious time with these trade talks resuming for the First Time Since july between highlevel officials in washington on thursday and friday, but it might backfire. It could actually serve, i think, to anger the chinese, to sour the mood ahead of the talks. Taylor shelly, if anything has been a carrot dangling, it has been the tech sector. Why target the chinese tech sector . Shelly ai is an area that both the u. S. And china are both competitive. It is obviously very important. These companies are the leaders in ai and facial recognition, like hikvision. These companies present a big competitive threat to the u. S. So, the u. S. Administration is saying we have leverage that we can do something about it. Taylor sarah, you heard shelly mention ai. Does this seem like it is more of an ai issue or human rights issue . Sarah that is also what is interesting. Previous companies from china have been added to this trade blacklist which restricts u. S. Companies from doing business without the chinese firms with the the chinese firms unless they have special access from the commerce ministry. So, previously, it has been about National Security concerns. It is perhaps that these Companies Might have close ties, according to the u. S. , with the Peoples Liberation army. Or have done things where they think they could be open to espionage in the u. S. In this case, with the restrictions yesterday, it is about human rights the concerns. Mass detentions of these muslim minorities in china. This opens up a new front in the trade war where i think National Security, the u. S. Saying it is doing something in its own interest is one thing, but to criticize china on the human rights record and restrict Chinese Business in the u. S. On those grounds, that opens up a new can of worms. Taylor a colleague over at Bloomberg Opinion wrote a column on this, saying all of these eight specific companies, two he is focused on. Because they target ai. What do we know about these specific companies . Shelly these are the leaders in ai and facial recognition. Sense time as the worlds biggest ai startup. Megvii filed papers to be an ipo. They are clearly the leaders in china, but also globally. They definitely sent worries across the u. S. , could these companies rival u. S. Technology companies in the u. S. . Could they be collecting data from people in china, people around the world that could become a threat to the u. S. Going forward . Taylor how does china respond to this . Shelly both companies have come out and said we are doing nothing wrong. They have said we are not in the region of china, which is what the u. S. Authorities are the human you s rights atrocities have occurred. Theyre trying to say we dont know why we are on this entities list. We dont belong here. That is what has riled up china, saying this is clearly a bigger issue, a political issue. You are starting to infringe on our sovereignty and we dont want the u. S. Meddling in our own business. Taylor sarah, this is eerily reminiscent of the huawei ban. Any thought as you look as how huaweis ban has unfolded . Any takeaways from this situation here . Sarah the huawei case shows us there are no guarantees. Trump did say months ago he was going to allow on a casebycase basis where there were no National Security concerns for u. S. Companies start doing business again with huawei. They put in their applications and these companies are still waiting and they are still begging the Trump Administration, saying in the meantime, huawei is still doing business with our competitors in europe or other places where they dont have restrictions and we are losing ground. We are not making money we need for investment in research and that itself is a National Security risk. I think what lesson these companies that deal with the new chinese firms that have input on that have been put on the list is, dont hold your breath. You think there might be some loosening of restrictions at any point in the near future, you might want to think twice because the Trump Administration seems to really be serious about this campaign for blacklisting these Chinese Companies. Taylor shelly, as the Trump Administration has shown it is really serious about this, you have seen chinese tech stocks get hit much harder. Im taking a look achart we have pulled up in the terminal and it is the chinese tech etf minus the u. S. Tech etf. It shows major underperformance in the heightened periods of trade tensions and volatility. As you have been covering the tech sector, you assume the underperformance will continue. Shelly they are definitely facing a lot. There is weakness at home, consumer weakness in china. But also a Bigger Picture which is what is the future for some of these companies . Two of the latest on this list, they are not publicly traded. But, they both have aspirations for an ipo. And if they are going to be on this blacklist in the u. S. , it cordons off an entire huge market, you have to wonder what investors will want to continue putting money into them or buy their stock if they go public or whether or not they can do an ipo. Taylor we will have to wait and see. Shelly banjo joining me in San Francisco, and sarah mcgregor, thank you. International companies have found themselves embroiled in the middle of the controversy surrounding free speech in china. The latest gaming company, activision blizzard, banned a player and rescinded money for supporting protests in hong kong. For more on how these companies are finding themselves involved in international politics, asia Society Fellow isaac stone fish. Thank you for joining me. To get us started, what are your thoughts on companies punishing employees for speaking out . Isaac i think it is wrong. I think that American Companies have long been criticized for only aligning their values with maximizing shareholder profit or in trying to find a way to best serve the investors. And, really not paying attention to the employees of their own organization. I think the other problem with it is that American Companies do not need to yield to the communist partys way of doing things to succeed in beijing. I think we are seeing, hopefully, the beginning of a value shift on how American Companies deal with their chinese partners. Taylor talk to me more about why you think they dont have to yield to beijing. Because it feels to me they are caving to pressure simply because they need to operate in china because that is where future growth is for the top and bottom line. Isaac there is huge opportunities in the Chinese Market for a lot of American Companies. The issue is that what has happened in the past is most American Companies have done this, they have caved. I have not seen any appreciable difference between the American Companies that have caved and the American Companies that have not. There are plenty of examples. Most of them are quiet and they will not go into them publicly. Of the American Companies that say i am sticking with my values, sticking to my guns, and for their business in china to not recede. I think the other thing we will start seeing, which i hope we start to see, is more coordination among American Companies about how they can protect freedom of speech of their employees together. We have seen that with universities who have faced pressure from beijing. We saw it with the university of california system where one of their institutions invited the dalai lama to come speak and beijing tried to punish them. All of the uc schools stood together. It mostly worked out for the uc system. Taylor if we dont get that type of cooperation, what is the potential american backlash as seen as imposing on free speech . Isaac that is a good point. I think the other importance of doing this is so that, i mean, as anyone who has scrolled through twitter in the last few days has seen the backlash against the nba and blizzard. And, news just broke about espn the Sports Network also trying to suppress views that are in a way critical to the communist party. The backlash is really huge and significant. That will have real financial implications for american businesses in america as well. I think the other piece of this is these Companies Need to have a foot in the American Market when they are thinking about what they are doing in china. The nba did something a little cute over the weekend by putting out two different statements. The statement in english was far more mild and the statement in chinese was far more conciliatory towards beijing. People can read both languages and those things will get translated and get viral on the u. S. Side. Taylor a lot of lessons still to be learned. That is isaac stone fish of the asia society, thank you for joining me. Coming up, looking in the mirror. How one tech startup wants to get you fit in your living room. We speak to the ceo and founder of mirror, next. This is bloomberg. Taylor it is a battle of the exercise bikes. Peloton is suing competitor echelon fitness. It accuses its rival of flooding the market with cheap copycat products while trying to cut undercut pellet gun. Peloton. No response yet from echelon. Peloton went public last month. Speaking of the boutique studio fitness market, another startup in the space is making news today. Mirror, the interactive mirror that lets users stream live workout classes at home. It launched a new feature on tuesday. It will allow customers to take classes with a personal trainer. Joining me to discuss new york is the founder and ceo of mirror, brynn putnam. Great to have you. Talk to me first. Given it is such a competitive space in the fitness market, is personal training really the way you want to stand out . Brynn absolutely. We are interested in ways we can add increased values for our member base. And, the ability to give our member base personal training ondemand in their home at a fraction of the cost of a regular personal Training Session they would have in a gym is a compelling offer. Taylor the 1500 price tag for the mirror caught my attention because it does undercut pelotons bike that starts around 2000. Is that also the goal . Brynn we are interested in being able to bring topquality fitness the people at a price point that is affordable. We offer financing for as low as 42 a month. Personal Training Sessions are 40 per session, a fraction of what you would pay at a gym. Taylor talk to me about that reoccurring revenue. The monthly subscription. We know a 1500 mirror, 40 Training Session is probably not enough to satisfy investors. What is the reoccurring subscription . Brynn members pay 1500 for the mirror and then 39 a month for up to six members. You, your partner, your children can enjoy classes for 39. Taylor we have learned a lot of lessons from peloton. They said we are a tech company and they came to market. They fell 20 since the ipo because the market said you are a fitness company. Are you tech or fitness . Brynn i think the peloton fluctuations in price are really showing us that the market does not like uncertainty. It really is challenging to put peloton into a single business category. Are they an Ecommerce Company that sells bikes . A Media Company . This is something we are really acutely aware of which is why we are focusing on ways to add value to our baseline of subscriptions through additional premium content starting with personal training. That enables us to not only add increased value for our current already engaged member base but to reach new segments. With this addition, we have the ability to add on new types of content to our baseline offering. In the nottoodistant future, you will be using your mirror not just for fitness and personal training, but also fashion and telemedicine. Taylor have you felt increasing pressure in the last few months to be profitable . Brynn i think both public and private markets value both strong growth, as well as strong gross margins. I think we are acutely aware in order to be sustainable business, we need to have both growth, both growth and strong economics. Taylor talk to me about concerns over Corporate Governance. Companies like wework are really scrutinized. Have you felt pressure on your Corporate Governance practices . Brynn there is a lot of capital available in the market. I think there are also a lot of vcs interested in giving companies the right amount of capital at the right amount of time. And i think it is our obligation as founders to ensure we are not over capitalized and being fiscally responsible. For us, it is something we are acutely aware of and interested in building the business for the long haul. Taylor you talk about companies being valued with strong future growth opportunities. Where could we see you next . Just a mirror other products . Or other products . Brynn we are focused on building a dedicated channel into the home as well as original content. For us, mirror is our flagship product and we grow by adding new and exciting types of content onto our platform. In the nottoodistant future, you will be able to use your mirror to meditate and look for other nonfitness vertical launching. Taylor mirror ceo brynn putnam, thank you for joining me. And, still ahead, we continue our conversation on the u. S. China trade tensions heating up. We saw we talk to u. S. Based company tile on why manufacturing its product in china is becoming a problem. Thats next. This is bloomberg. Taylor microsoft upgraded to a buy by jefferies with a target of 150 a share. 160 per share from 93. Microsoft is one of the top picks and believes there is a clear line of sight in doubledigit Revenue Growth given its large and diversified size. Cloudflares mission to build a more secure and dry liable and reliable internet has not been enough. Technology analysts issued favorable remarks tuesday as the postipo quiet period ended, but they showed weak support for the stock as price targets implied limited upside. Susquehanna derivative strategists say to buy ebay call options ahead of Fourth Quarter catalysts, specifically the Strategic Review around potential asset separation. He believes the long haul strategy is warranted given the riskreward profile. Now, i want to get back to the main theme of the hour and that is continue trade tensions between the u. S. And china. One Company Feeling what many u. S. Based companies are tile. It creates devices connected to a mobile app, helping users locate their personal items. Tile manufactures a significant portion of its product in china and continues to maximize its monitor manufacturing in fiscal environments to maximize its opportunities. To discuss, i am joined by ceo c. J. Prober. The question of the day is how the trade fights are impacting you. C. J. maybe a little context for why this is so relevant today. We launched four new devices today. It is our best lineup ever. It is headlined by a new sticker product that really addresses a much broader set of use cases that our customers have been asking us to address for them. Because we manufacture a product, we do a lot of that in china, the trade wars and the policies there are impacting us. So, we are subject to tariffs which went into effect on september 1. We do support the policy, but one of the challenging things for Companies Like ours is we didnt have a lot of notice that tariffs were going into place. I think we have four weeks notice. While we support the policy when you think about building product, we didnt have a chance to react. Taylor one of the things we heard from companies is they the elasticity of a supply chain. They need two quarters to move manufacturing. What is your leeway, legroom . C. J. it does take time to shift the supply chain. If you think of a business like tile, we have started in the u. S. Now we are a global business. We are selling in well over 40 countries. We have our community expanding throughout the world. When you have complexity like that, we are in 40,000 retail stores. We are growing like crazy in japan. Last quarter, 160 growth. You need a supply chain that meets the needs of both. Both retell customers, distribution customers, then we have a big direct business as well, so selling into those direct customers. So, theres a lot of complexity into making moves. It takes time. Taylor have you started moving manufacturing in those places . C. J. no, we are basically viewing this as an opportunity. We support the policy. Now, we are taking the chance to reshape our supply chain in a way that serves our customers best. Both, again, direct customers and retail customers. Taylor talk to me about the new hardware launch, which is great, but also a software component. You were here a year ago and you said sometimes you dont need the hardware because the software is bluetooth enabled and in connected devices like google home and amazon alexa. How is that integration between hardware and software . C. J. great question. A few things that are not super wellknown about tile. One is we have a Community Find platform. It is basically the largest lost and Found Network in the world. If you leave your tiled item at a starbucks or on the train, it gets found by the community. We have an app mesh network of users that are helping you locate your things. The second thing is our big focus is around embedding the tile capability into thirdparty products. Weve announced about six or seven different audio headset partners. We have launched products with Companies Like bose and skull candy. We are looking at new big verticals like laptops and cameras and wearables. Anything with a bluetooth device. There are 30 billion of those shipping over the next five years. It could be a tile with a software update. Taylor we only have about a minute left. How do you respond to some reports that apple could be coming out with a competitor product . Do you see apple as a colleague or competitor . What do you do if that is the case . C. J. apple has been a great partner for tile. The way we think about the rumors around the competitive product is that it is really validation. We have been building this category for six years. It basically illustrates this is a real pinpoint. Of those 30 billion devices that are shipping over the next five years with bluetooth, only 4 of those will be apple devices so it is a big opportunity for the rest of the market. Taylor tile ceo c. J. Prober, thank you for joining me. That does it for this edition of Bloomberg Technology. Bloomberg technology is livestreaming on twitter. Check us out technology. 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