In a down market, the company priced overnight at the high end of the range had been looking for between 20 and 29 a share, 26 and 29, priced at 29, raising 1. 1 billion, making it the seventh overall biggest deal this year to go public it has been a rough and tumble ride for unicorn brand name ipos, the Ride Hailing Companies lyft and uber struggled, lyft having seen a new low just yesterday. Slack also having seen a new low yesterday. Smile direct that went public two weeks ago seeing a new low, down 38 from its debut. Among the only ones of the big stellar names thats higher from its ipo is pinterest that one is up 45 the market continues to be ver cautious on these deals as they go forward the price at the top is certainly encouraging for the company and for the nasdaq which has seen a large number of ipos this year, some 50 ipos, raised more money initially than we have seen from the deals that they saw last year nonetheless, still one of those things people are watching as we see the ipos getting more scrutiny, particularly Companies Like peloton that are growing quickly. They doubled revenues, doubled ridership, membership, had a billion of revenues last year, still are not profitable we will let you know when things are set to open. Theyre still trying to settle the book here, well get back to you when we have more. All right thank you for that Bertha Coombs. Lets bring in peloton investor, managing partner hans tung and bob pisani bob, can you give us lay of the land what environment theyre walking into tough one you saw bertha noting decline. It is true, pinterest is up overall, this week, these stocks are being killed pinterest down 10 , 12 . Slack had a new low, down 10 . Lyft at a new low, down 10 . Smile direct, remember, they priced above the range 23, 19 to 22. It is 14 now. We are watching peloton, waiting for that to open here. There are some indications i saw earlier on twitter, maybe 25 we have to confirm that, see whats going on. The point is were in a tough ipo market my biggest indicator, ipo, big performer on the year, up 30 is down notably the last several days, up 23 on the year, lowest level since february what were seeing is push back on valuations and companies that are not profitable and i think we have governance issues, share class, insider dealings, i think thats having impact with some companies as well. Hans, lets bring you in as well peloton, big brand, big name, but ive got a problem with it maybe you can help me sort through it it is the cost of Customer Acquisition. Heres a company, churn is low, marketing costs doubling every year, 324 million in the last fiscal year for a half million riders if word of mouth is so good, why do you have that spend that much on marketing churn is low, 95 retention rate we havent seen anything like this before. At the same time, as you know, costs of Marketing Online with facebook have increased quite a bit. Partially due to the environment, not the product itself. Hans, you have the subscription model that represents revenue, you have 4,000 tread mills, account for the vast majority of sales from an investor standpoint, which is more important . I think what you look at the math, you dont want to pay anything up front. It is 50 a month for a bike for 39 months. You look at that, thats essentially the cost of gym membership you split cost of peloton, it is different with two people, it is a great deal part of the reason people are buying it. And the experience is unique i wonder to what degree easy money in this economy is skewing Business Models. I mean, with peloton, i question is this a Niche Company . It is a 1200 bike and subscription after that. How many people can afford it. But theyre spending all this on marketing acting like it will be a huge audience. They can spend it on marketing, investors have given it to them. If they grew slowly, would the model look different this was a lot of the comments over wework situation it was a long path to profitability. We are in a period where investors push back behind higher valuations and companies with very long roads to profitability. I tauklked to renaissance on th. They lose money and sales, you can get away from it a certain period of time when the market kihits the skid thats what we need to concentrate on there are people, retail interests that will buy peloton, it is a terrific company, theyve done a wonderful job building it. The question is whats the right price. Nobody says peloton has something wrong with the company, it is what will you buy it at. Will it show a path to profitability a few years down the road that i can clearly have confidence in. Thats what gets the ipo people going crazy. They have been pushing back for a couple of months, prices are too high smile direct a wonderful company. It has done fine why did they price above the range . They really got slammed. When you see the model is not working, path to profitability is not there, investors pull back see what happens with peloton. It is not the company, it is how much youre willing to pay for future potential profits that are still not there. Hans, a lot of focus especially in the last couple days on dual class share structures with everything wit wework, a number of Companies Went public with this structure in place peloton joins that list today, as someone thats invested in so many startups, peloton included, how are you thinking about the structure, do you think the time is coming where it actually starts to go away. I think it works for certain companies. Jon mentioned earlier on cnbc that he raised quite a bit of money to get here. 50 ownership in the ipo now you want a chance to this market how investors are worried about companies. The one in new york has studios, multiple different devices all right, hans, were going to watch thanks for helping us set the stage. Peloton is a two time cnbc disrupter 50 company, our team in cnbc, please, making sure, looking out for you guys we know all about peloton and highly recommend check the cnbc disrupter list, a lot of very successful Smart Companies a lot of people at cnbc worked a lot to get that listto you you want to know what the cutting edge is, i read it, i look at it carefully, you should too. We should mention, comcast is an investor in peloton david faber is sitting down with a power panel, some of the biggest names in tech for a conversation on 5g and whatever else david asks. Thanks, jon hopefully youll pay close attention as many will we talk about 5g on our network, focusing on customer applications, fact that you can download a movie more quickly. This is a rare opportunity at the conference and a lot of ceos in attendance. I have the ceo of ibm, qualcomm, and verizon with me today to talk about broadly speaking 5g thank you all for taking some time we talk often about consumer applications, steve, back to you and i, ill start with you you and i began talking about frankly enterprise opportunity for what 5g was. The opportunity in terms of the internet of things, how many chips would be in Different Things for lack of a better term, what it meant for another industrial revolution. Lets start there. Where are we on that time line as opposed to hans who is rolling out new cities or regions with 5g are where are we on industrial time line for applications it comes in a second wave first wave, youre getting the socalled more g phase of cellular, but the real exciting part, and part with huge economic potential is the internet of things or digitization how do they deal with data and infrastructure, products, customer data. Increasingly more is wireless. You look at the economic benefit, did a commission to study Something Like 12 point something trillion of economic value by 2035 enabled by 5g. The majority outside the cellular space youre seeing a change in technology not unlike electricity or coming into factories, the change in the way industry will work and the way infrastructure will be controlled will be dramatic. Thats why you see governments so interested in this transition i want to talk about that as well give me an example, give viewers a hard world example, even if it is a number of years away what youre talking about when you talk about that transition. Connected health care, for example. Delivery of health care in the United States, which is a large percentage of the gdp, high to mid teens of gdp, a small improvement in delivery of health care, just the monitoring of people, how you impact their lives, tremendous economic benefit, tremendous benefit to people because you can connect people you get the telematics off how theyre living and control outcomes better. Same in transition, same in education, and on top of that, how do i deal with impact of the cloud to business, which i have great colleagues here know better than i do, all enabled by 5g. And were going to talk about the cloud and what it means with lack of latency and the edge hans, how important is this longer term for verizon . You show up with us on air or do an Analyst Meeting or quarterly call, most are not about this opportunity or were going to have a phone, when are you rolling out in this area so what about the larger opportunity . I go back because when the design was done on 5g, 2 to 4, was the speed. When five was designed, the idea was how can you enable enterprise and society much of what became enormous latency, battery lifetime, securer transactions on the network, and much of that was designed for enterprises and today were spending a lot of time on that. You should talk one is mobility, thats what were building out in cities in the u. S. Now now there is five years, and the third is clearly will we bring 5g to the edge for enterprises and fourth is cost talk about 5g mobile edge compute, thats the third. We launched home and mobility and will launch that this year. Fourth quarter of 2019. Yes the first mobile edge compute centers based on 5g will be this year were going to have Customers Using it then bringing it further out, and customers that it is how do you transform a factory, all 5g, how do you do warehousing. With all this ubiquitous coverage and speed and latency i spend a lot of time with large enterprise to understand the platform and partners like ibm, how they come in with software it will be a combination a lot of people are trying to understand the different responsibilities or opportunities. Let me come to you, last time we spoke on air was i think mid july, you announced the at t may have been the red hat close, but it was around announcement of the at t strategic alliance, multi year alliance. You said at the time and in the press release, 5g enterprises will one day rapidly transmit from multiple clouds and billions of edge devices with increased reliability and security, reduced latency as hans indicated, and eventually it will help businesses transform the user experience, optimize processes across industry and retail, transportation manufacturing what does that mean . With my colleagueshere and work with hans as well, if youre a company, this does by the way open up two markets for ibm ill come back to. The enterprise idea, it is convergence of a couple things the 5g which everybody thinks big band bwidth, but you have Networks Like hans are cloud fieing they can put Software Defined services up fast third thing he mentioned which was this Edge Computing, what does that mean to a company, it means i can almost do real time analytics anywhere i actually believe with 5g, biggest impact probably will be enterprise first and even in an enterprise, some cases would be fixed campus, in a perimeter, easiest way and to me real quick examples of things were already working on. As an example, steve mentioned health care. My mom was recently in the hospital i spent a week coordinating moving big files from each health care provider, or go to remote surgery internet 4. 0, picture walk in a factory, it is wireless. Think of the wires, cables, what it could mean to safety and maintenance. Thats one theyre working on. A retail store if i could look at all that video real time, i could stock shelves differently. If i am a car, car to car, for safety reasons, two cars are communicating. Thats another one were working on the other is if you think of first responders, working on one with drones and what would you do with wildfires, airports, it is security. I actually see use cases everybody is working on right now, and two big spots for us, one as hans said, these networks, part of it is they have to cloudify what that means i will give you my simple, he is the obvious obviously every new york is becoming Software Defined instead of hardware with its own specialized software, difficult to change, theyll make it like a cloud, put up new services easily thats an easy thing to understand networks are something that have to be reliable big opportunity for us we have never been a network provider, with red hat, theyre in 120 telcos. So be the cloudification and you need systems incidetegrr to build these on one hand, he will get productivity in the network, for parts of the cloudification, 50 productivity. You explained well. I think it is simple you disconnect hardware and software and do things youve never done on the network before so and that is enabling 5g you need to have it connected to have a chance to have the reliance and security and all the latent speeds. Steve, you have been sitting here, sort of silently listening. Does it all make sense it does whats interesting, there are several hundred billion Dollar Companies working in hybrid cloud. You should think of that as the first step toward the real dream, how do i get the computing and data close together to make real time decisions. The economic value that will come out of that, Business Model evolution, the way in which winners and lose,ers, a lot of winners really, it will be tremendous. How does that happen. Talking about moving Computing Power to the edge of the network. Whats interesting, the trend is undeniable. The number of meetings you can have, places like this, everybody is interested in doing it we have been in this industry, i have been in this industry for three generations of cellular. This is the one with the easiest sell with enterprise they all realize the strength of it the point is how do you get technology at scale, get partnerships across companies. No one company can do this thats where youre seeing excitement and energy. And on market size, hybrid cloud is 52 trillion, and new markets like what we talked about to cloudify networks, to us, 50 billion new market out there. This is a lot of new creation. There will be some cannibalizization out there, but there are new markets to be formed i think hybrid cloud is it youre going to connect things across all different points where the data happens to be so much isnt done because of latency. If you do remote surgery, you cant have it pause. This latency, hans, what is the latency . Down to 15 minutes, you would have on a 4g network 100 at best another thing i agree with both of them, dont understand, i think we understand, this transformation, g is broader than the previous gs when i talk to enterprises, they see it and understand it they do they get it . They need a migration, it is a lot to understand. Thats why we are dpigiving e launched 5g compute now. Thats where we talk to enterprise this is transformation of size for a factory, for warehouse, retail store or private 5g network or hospital. All of that is transformation. With technology, service, integration, all of that steve, how much time do you spend with enterprises, we talked about ip and how it figures into the business overall. Are you there already . Things yet to come youre going to be asked to create essentially in terms of ability of chip sets and ip to accomplish we have been spending a lot of time. You look at, it starts with what we put in standards bodies to enable this. We did that five years ago in previous lives. And in addition, theres a reason we have enterprise wifi business and strong one, we know those worlds will collide. We assembled assets, partnerships and technology to enable it. Thats what we have done in the history of the company, bet on things ten years before they happen we have a lot of conviction that this trend is an attractive one. Significant trend like this that we are flushing out creates opportunity and also danger to a certain extent, markets can change dramatically. How do you think about it when you are potentially going up against the likes of microsoft and aws who may also choose to move closer to the edge and offer many of those team services. I view it very different. I view it as pure opportunity to us with red hat already in, 120 telcos and operators, you need an open source foundation, i believe you need open foundation here in the network. And then to steves point, it is hybrid cloud the network has to connect to a lot of other things. This really does give them the base basis to have open, this is not about one Company Providing all the answers. He has a software network, cloudify it, but you need a base under that which red hat has a foundation for it has something to build on thats pure opportunity. 50 billion segment over years to come. But the other part, both my colleagues said it well, what we are doing with the enterprises now, this is all reimagination of work. This is all brand new work youre not cannibalizing the goal is get in with design wins in early experimentation, they will have to traverse Current Operations to the new, which is what comes back into a hybrid cloud you can decide to run work wherever you need to run it when youre ready when i am ready to go to the edge, i can. I cant overestimate enough its 5g technology, also cloudification of the network, and third he is Edge Computing it is convergence of the three that make it different for enterprise i think we all agree in the enterprise, some of the first use cases we see that were working on, calling them fixed perimeter, meaning go to a factory, make it wireless. You realize what that would mean to a factory, the flexibility or p p predicted whats it going to mean we build the mobile edge compute for the factory, then the factory needs application, which we probably dont have, put that on top in edge, compute and store everything in the factory, you can make quick decisions, reconfigure all your robotics in the factory, et cetera thats first use so thats the fi