orck market be the only lack across asian markets down .02%. made market traders have the $.5 million in illegal profits by investing in shares ahead of softbank announcements. traders are believed to be outside the u.s. on orderays they want to freeze the traders'assets. global news. 24 hours a day. powered by more than 2600 journalists and analysts in more than 120 countries. you are watching bloomberg. let's get a check on the markets. and the topics also gaining ground. this is bloomberg. ♪ caroline: this is "bloomberg technology." coming up, snap expected to price at $17 a share, but is the devil in the details? we will break down the pricing of the biggest social media listing since twitter. talking of twitter, the social media company recruits machines in its fight against abusive behavior. we will explain. and toshiba offers its memory chip business to the highest bidder, foxconn emerges as a front runner. why the taiwanese companies billionaire founder covets the technology. first, to our lead. i am in new york, where snap is set to price shares of its ipo at $17 each. that price is $24 billion on a diluted basis. the parent company of snapchat says it will be the biggest social media listing since twitter went public more than three years ago. shares of snap will start trading thursday on the new york stock exchange, and we will be there live. joining us as our guest host is david kirkpatrick, alex barinka, and in san francisco, the managing partner of good water capital. i wanted to start with you, because tomorrow the question is $17 a pop, will the shares pop? guest: it depends a lot on what the investor demand is. especially in the aftermarket. what we have seen is that these companies have a lot of volatility. twitter top a lot and facebook struggled to hold its ipo price. caroline: alex, 10 times what it is worth is what is being reported. $17 a share. is there enough being left on the table? alex: you have to remember that facebook had the trading day glitch as well. some of that is playing into it. will sayubscription, i that everyone is fighting for allocation for these buzzy companies. it seems like they don't want it to fly off the charts. folks do not want the idea that you have left money on the table. we will be watching tomorrow to see what happens and see if there is as much demand as there is buzz around the listing. caroline: most of the orders came in at the $17, $18 range. certainly morgan stanley and goldman sachs leading the underwriting do not want to leave too much money on the table. david kirkpatrick, you have been telling me this is a nosebleed valuation. david: i still think it is, but on the other hand there is nosebleed worth of demand. a huge amount of people want to get in on the hot new thing, who see this as the first opportunity of its time in a -- of its type in a number of years. i suspect a lot of them are out there in the marketplace after the ipo as well. i would expect the stock would go up somewhat after the ipo. caroline: you have so much experience in this, you helped twitter come to the market. daily active users is something that has been striking the market in particular. there has been a slowdown in snapchat's daily user growth, whereas that was not the case with facebook or twitter. do you think that is a cause of ?oncern guest: i think that is the biggest concern facing the company right now. if you look at them compared to facebook and twitter at the same point, snapchat is growing half as fast as facebook and twitter were on a quarter on quarter basis. as you track to the trajectories of facebook and twitter since their public offerings, it is really a tale of two cities. facebook has continued to grow at a really rapid clip while twitter has slowed down. it's about couple of years for twitter to prove that their mobile tragedy was a right one. daily active users, they might be far less than instagram, but they are addicted. alex: they are, and that is kind of the bet for snap. you heard them push on the roadshow, we are not trying to win everyone everywhere on the platform, we do want them to be more engaged. we did see things with engagement as well. but they are trying to keep folks in the platform, and that is how they are trying to bring in advertisers. again, it is still so early in their moneymaking process. they have only been making real revenue for about two years. caroline: more than $400 million. alex: but when you compare that to the big peers, it's drops in the bucket. as they continue to pitch themselves to advertisers, they need to prove that is the right thing to be going toward and that they can keep users on the platform, especially if growth falters. caroline: david, a lot of the chat has also been about the control that the two key cofounders maintain. this is a leaf out of the book of google and facebook, which has steadily taken control back as leaders of the business, but they have already proven. how much is being talked about in the market, and people are trying to push back, regulate? david: it is something zuckerberg began by essentially retaining control to an extreme in the sense that they are giving absolutely no control whatsoever to the shareholders. my feeling in terms of what they have to ignite is actual profits. facebook have money coming in. they had $400 million in revenue, but $500 million in losses. that is a $900 million span. they have serious work to do to make a real business that makes profits. bringing in money from the ipo will help them find that and also develop new capabilities, but i am a little skeptical about this as a business business still. caroline: at good water, you have done some numbers. you have touch elated when they will make a profit, not until 2019. i am interested in the value proposition in the longer term. if we do see a pop tomorrow, how long will that last? you have argued this could be an m&a target in the longer term. guest: i think an asset like this with a strong, committed audience of 18 to 24-year-olds is something that a lot of companies will covet, potentially as an acquisition, if they are not able to get the business model working. the way i would think about snap is as a media company, not a social network. facebook can target every single user in the world, but snap, at 150 million highly engaged 18 to 30-year-olds, could be a very valuable media company. caroline: i was reading an article, and the target worldwide is not a billion. they have already said they are not really going into the emerging markets. alex: to the point of it being a media company, that's where it starts to get interesting, because you think about where they are trying to steal ad dollars from. you have your mobile platforms and digital platforms like facebook, google. they are trying to take money and advertisers from them. but when you think about snap as a second screen to a tv, that is where big money is, and when you know your target market, that becomes more attractive. the issue is right now snap is not giving it a lot of data to advertisers, and advertisers want return on investments. if i'm going to put money with you, what do i get out of it? these will be some of the challenges i am sure evan spiegel and his team are thinking about as they are trying to close that $900 million gap between revenue and profit. caroline: we have the breaking news now, it is official, reports of pricing of the ipo is indeed at $17 a share. david, going forward, when you look at these advertisers, what about the hardware side of the equation? people are excited about the glasses, there are reports that they're looking into drones as well. how important are these? david: the glasses are a cool thing. a very small number of people got them. who knows that they could be part of an actual business? we don't know. a lot of people have been talking about how snap's real opportunity would be to go into augmented reality, and the glasses might be a touch of feet in the water for that idea. it is a wonderful concept. but look at how much money another company has spent trying to build an augmented reality product, and you realize that is not easy to do. i am not holding my breath about them being successful at hardware. i do believe they are successful at an entertaining and engaging experience for young people. you have to give them enormous credit for that. i don't really think of them as a media company. they are a weird hybrid, because they have network effects. it gets better when more people use it. they also control the advertising in a way that no social media company has ever done. they treat that more as if they were a cable channel. they put out content, and they are selling ads against the content they essentially program. that is interesting, but whether the valuation on that should be considered comparable to facebook, which i frankly doubt, if it was a media company, the valuation is a lot less. caroline: the key question is, do you wish you had got in on this company, and do you think it is a good bet to be buying in right now with the leadership having full control? guest: of course i wish i had bought into this company. this is the one that got away. every early investor who is not a venture investor is feeling that right now. on the issue of control, it is not an issue. i know the optics of giving no voting rights to the shareholders looks bad, but at google they have a very similar structure. and they control the company. at facebook to have a similar structure and the founders control the company. notably, twitter does not have the structure, and twitter has underperformed with a lot of challenges at the board level and at the management company level because of the lack of clarity from a founder with the moral authority and the long-term vision to make strategic decisions. david: do you see spiegel as a zuckerberg-type personality? guest: i think he really is. evan, i met him in the fall of 2012, before you did his series a funding round. i remember as we took a walk on the beach in venice, he told me he was going to take down twitter and facebook. caroline: why didn't you buy in? [laughter] guest: that is a much longer story in the way that decisions get made. but he already had a clear vision, and he had already identified tencent as the model he admired most in the market, and he wanted to build a platform that looked a lot more like tencent. he had just rebuffed an offer from mark zuckerberg the previous week. he had flown down to see him. caroline: we thank you very much for your time. great analysis for us. of course, alex barinka will be live tomorrow from the new york stock exchange, and david kirkpatrick is sticking with me. now a quick update on yahoo!, the company just filed a 10k in the annual report measuring the company's financial health. a few highlights for you. ronald bell resigned from the company's general counsel. also, marissa mayer let go of her bonus. given the 24th -- 2014 security breach occurred under her tenure. bloomberg received a statement from mayer saying, "i have agreed to for go my annual bonus and annual equity grants this year, and i wish the bonus to be redistributed to our company's hard-working employees." wow. coming up, twitter continues to fight off abusive tweets. this time the company is turning to algorithms. we will bring you the latest next. this is bloomberg. ♪ caroline: the fight continues for twitter as the social network takes additional steps to cut abusive tweets. this time twitter says they're turning to algorithms to fight abusive behavior. the announcement comes after a record 3 million tweets were sent out last night regarding president trump's address to congress. joining us, cory johnson, and still with us, david kirkpatrick, tech economy ceo. corey, to you first. how they are filtering these basically no eggheads , anymore is the idea. cory: i think the idea is there are people out there who send nasty things to people they don't know and, for whatever lack of bravery they exhibit in real life, they are quite brave online, saying horrible things to people. and it is a function of anyone who is on twitter. the more big you are on twitter, the more likely you are to encounter these trolls, and the company has not done enough to stop it. obviously they have had these tools at their disposal and chosen not to use them in the past. they have decided they can't put up with it anymore. caroline: david, too little, too late? david: i don't think it is too little, too late, but if mean tweets have become an entertainment feature on television, they have a problem to solve. i'm am really pleased to see them taking this step. i do think it is not irrelevant that mark centerburg put out zuckerberg put out that idealistic statement about all the ways facebook could make life better for its members just a few weeks ago. i think that is something of a prod here to twitter to do something similar. caroline: it was notable that new year's resolutions we heard from notably jack dorsey put out on twitter but he wanted to hear from his user base and what he would put in place in 2017. interestingly still, the company does wildly well. a record-breaking amount of tweets, but it does not seem to find the love from its user base to encourage more to join. cory: you are right at the heart of this. what is the biggest problem with twitter's business model? everyone knows it, it is the number of users that have. it is not just the interpreted from these angry tweeters and twitter trolls. these are people very engaged with twitter and sending out lots of mean tweets. there is also the question of the validity of how many people are on twitter. twitter cannot afford to take hits in its number of users. twitter cannot afford to decide in one quarter, 10 million of our 350 million users are horrible people, or 10 million of those user accounts are 2 million horrible people, and they are cleaning the service out. they can't see that number go down, wall street will not tolerate it, advertisers won't tolerate it. they are really up against it here because they want to protect the number of users they report, even though they don't actually want all those people as users, as evidenced by these trolls and what they are doing to try to limit them, but not completely get rid of them. caroline: interesting david, 250 million is more than snap has, but they have never had sorts of issues. david: they certainly can't show any user declines of substance. they would really be hitting the market. have anyhe, if they hope of growth, they have to reduce the problem of abuse so that ordinary people feel comfortable being there. they have a lot of interface issues they still have to address. they are working on some of those, but this is key as well. caroline: cory, is there any change in the valuation going forward? at the moment it is near where four.ually ipoed what are we looking for four to start to show some beacon of light to the investor base? cory: how much it charges for advertising growth, and growth of users, as we have mentioned. they had problems all along there. but we have seen increasingly, facebook and google are gathering up all the energy and expenditures going on online. so advertisers leaving twitter and leaving yahoo!, where are they going to go? are they going to go to snapchat? that is a big question for investors. are they going to go to facebook or google, or will they stay with twitter? the problem for twitter, they wanted to be a cleaner service without all these trolls. i liken it to breaking up with a bad boyfriend. you might hope there is a better boyfriend out there for you, but you've got to get rid of the bad one before you can find a good one. and this is the dilemma that twitter faces. caroline: cory, you are full of great analogies today. thank you very much. cory johnson live from san francisco. david kirkpatrick is staying with me here. uber ceo travis kalanick has issued an apology after being caught on camera arguing with a driver. in a video obtained by bloomberg, kalanick is seen posting about the company's tough culture before be raging a time drivera long asking about cutting fares. >> you know what? some people don't like to take responsibility. good luck. staffne: in the email to he expressed remorse. he released a reaction saying, to say i am embarrassed is an understatement. it is clear this video is a reflection of me and the criticism we received as a stark reminder that i must fundamentally change as a leader and grow up. this is the first time i have been willing to admit that i need leadership help and i , intend to get it. it is the latest in a series of embarrassing incidents for the company. in january more than 200,000 people deleted their accounts after the company was accused of protesting a strike protesting president trump's travel ban. in february the company was besieged with issues involving sexual harassment. coming up, along the startups -- standouts was apple hitting an all-time high. one analyst says the stock still has room to run. a reminder of our interactive tv function. you will find it on tv on bloomberg. you can watch us live, see previous interviews, and dive into the bloomberg functions we talk about. you can become part of the conversation by sending us an instant message during our shows. it is only for bloomberg subscribers, i'm afraid. check it out. this is bloomberg. ♪ caroline: apple hitting an all-time high after a bullish report on the iphone maker. >> there's a lot of anticipation building up for this new phone. in september, there is maybe a difference where we have not had a substantial difference since the 6 and 6s came out. it seems like the momentum tried to creep up a little more. if you look at 2018 earnings with growth, if they can deliver mid single-digit growth, you can get more run out of the stock. caroline: meanwhile, box reported a fourth-quarter loss that was better than forecast, but the company gave an outlook that trailed estimates. the enterprise cloud technology has seen its shares double in the past year. and apple just scored a major win. a u.s. appeals court has tossed out a jury verdict against the company over patent infringement allegations involving its itunes software. it was for $533 million. the patents owned by smart flash are invalid. this is the second time apple has succeeded in getting a big dollar patent decision overturned. in 2011, they won a reversal of a verdict on how documents are displayed on a computer screen. that one was for $625 million. coming up, snap set its ipo price. they were being in trading on we thursday. take a deep dive on the financials and discuss the company's ad strategy and whether it justifies its heavy valuation. from new york. this is bloomberg. ♪ >> is 1:30 p.m. in hong kong. i have an update of the top stories. said reserve governor is painted a positive picture of economies at home and abroad. he says on interest rate hike is likely to be appropriate soon. he's usually considered a god, but he says the u.s. economy transition --in usually considered a golf. -- dove. >> foreign growth is on more solid footing. wristed outlook are as close to balance as they have been for some time. it would likely be appropriate soon to remove additional accommodations continuing on a gradual path. >> the u.s. justice department says attorney general jeff sessions met twice with russia's ambassador to the u.s. during president trump election campaign. jeff sessions said under oath and during his confirmation hearing thatcontact had occurred. house democrats, including house leader nancy pelosi, are calling for sessions to resign. the new head of china's banking regulator has pledged to crack down on shadow lending. they saidn beijing, they would work closely with other authorities and come up with new rules to rein in risk from the expansion of wealth management products. such products now feed $4 trillion. global news. 24 hours a day. powered by more than 2600 journalists and analysts in more than 120 countries. you're watching bloomberg. let's get a check of the marketing in the asia-pacific today. day that we are having across the asian region. we have seen a little bit of a dip coming throughout of shanghai in late trade. the hang seng has briefly flooded with a 24,000 level. as a litmus test that he cannot break through. hsbc are rallying on the share buyback. nursing strong support come through from energy plays. a thrill you is up 1.3% on the close. seenthe first when we have on the off the share market in six sessions. you can see alumina leading the gains. the nikkei up by almost 1% at one point touching its highest level since december of 2015. missing a record rally on the back of wall street after the stronger dollar weaker yen playing into think there. worth having a look at the korean want today. it is stronger now against the dollar. we are live from london at the top of the hour here on bloomberg television. this is bloomberg. ♪ caroline: this is "bloomberg technology." our top story this hour, snap pricing its ipo shares at $17 a piece, higher than the expected range. it is said to be 10 times oversubscribed, and that gives the company a value of $20 billion based on 1.2 billion shares outstanding on the ipo. basis a $24 billion evaluation. the owner of the company snapchat will be the biggest social media listing since twitter went public more than three years ago. david kirkpatrick is still with me. guest host for the hour. and joining us from seattle is debra williamson, and from san francisco, sarah frier, bloomberg technology reporter who has been all over this snap piece of news. first of all, sarah, give us the update in terms of the amount of voter subscription. 10 times, we know that people tend to put in orders for more than what they wish for. but it does seem to have been correlating around the $17 to $18. could it go higher? sarah: they want to price it at a level to ensure they meet the demand, but not too much that they don't get a nice bump on their first day of trading. so although it is priced at $17, because of that outpaced demand, it could have gone even higher, but snap executives want to make sure that tomorrow, when the shares start trading, you get a nice, healthy trading bump, and people will say the ipo went successfully. caroline: deborah, you're an optimist when it comes to snapchat. give us what the advertisers are looking at. when you aream looking at the 18 to 30-year-olds. 158 million users? how much bigger can it go? >> i think snapchat has a long road ahead of it. this is a company that has only been selling advertising for a couple of years. we have heard the news about slowdown in user growth, but i fully believe that as snapchat grows and matures, we will see more usage among older generations, moms, maybe even grandmas, and i think that will be exciting to work. -- to watch. caroline: can it be achieved? david: debra is among the few people i have heard say that, and i know investors are hoping for that, but i don't agree. i think there is not in the evidence that is happening. to say it could happen is highly speculative. i don't see this company being the next facebook. i think it is a great company. it has achieved enormous successes. it will likely continue to be a major platform for young people. but to be a multipurpose communications platform that spans the globe, i don't see it. caroline: deborah, your reaction. >> david, i respect your work as well. you after member facebook, when it first launched, was only popular with young people, only popular with college students. it took time for facebook to build an audience among older people, and it did do that. snapchat is different, my daughter uses it like you won't believe. iwatch are, and i go i don't really understand, but i think what snapchat is doing is incredibly important. they are changing communications for young people, and this is something we need to pay attention to, just like facebook did when it launched. david: i agree with everything you said. in fact i have a 21-year-old , daughter who is a compulsive user of snapchat. on the other hand, she is also a huge user of instagram, although she has dropped facebook. so let me put to think that you, one is instagram is competing with snap. neither facebook or twitter really had head-to-head competitors when they went public. second of all, facebook was solidly profitable when they went public, and this company is so far from it. don't you think these are big differences? guest: absolutely, and you are right, instagram has a lot going for it, particularly because it is owned by facebook, but you are seeing instagram -- teens and young adults are using instagram in a very selective ways, to only post the best things, to only follow but they want to follow, not with that rabid intensity of young people using snapchat. that is one key difference to keep in mind as we go forward. caroline: let's bring it back to sarah. when we are looking at the numbers, revenues have gone up seven times. they are just over $400 million. people are saying it could hit $1.8 billion by 2018. that is some of the analysis out there. how will they adapt to making money with this business? certainly they have to learn a lot. sarah: last week, i spent a lot of time with advertisers in new york city, talking about them with what it would take to get snap to the not just an experimental side of their budgets, but part of their ad spending for their clients. they mentioned they need it to be easier to buy snap's ads, they need to be sure of the return on investment from those ads, and the need to be able to target and measure their audiences the way they are able to on other platforms. when i say other platforms, the big one is facebook. facebook can give you very granular targeting for your audiences, but also youtube. youtube has dominated in mobile video advertising, and if snap wants to be the sort of millennial version of tv, they need to make sure they can compete with that. they have made a lot of progress in the last year. advertisers spoke highly about the understanding of the market. he comes from banking so this is very new, but there is still a lot to do. david: khan is a genius, in my opinion, but one of the things snap has said is they are not going to target the way facebook has. they are not going to gather personal data and show their ads based on that. so if that is what advertisers are seeking, isn't that unlikely that those advertisers are going to get what they are looking for? sarah: well, they are getting some of it. right now on snap, they can target based on what lifestyle categories you have been looking at on discover. let's say you read a lot of people magazine channel. they would be able to target to you based on that. there are 100 plus different ways to target people by interest. then, of course, you can target by other things like email lists that match with marketers. none of that is anywhere close to what you get on facebook. on facebook, you can see someone got out of a relationship and moved to a different city, all these things that really help advertisers target people at a moment in their lives when they are most likely to buy something. but i think the part where snap is set apart is the geographic targeting. a lot of people don't talk about this, because we mostly talk about video ads, but the geo filters specific to retail locations or that might allow you to unlock a deal, those are becoming a lot more popular, and this is their one self-serve ad product that could meet a lot of small businesses' needs. caroline: debra, you've got so much data you ripped apart. give us your view on where snapchat goes with revenues over the next few years, really riffing off what david put to sarah? guest: the three things that sarah mentioned that advertisers are looking for from snapchat are the same three things that advertisers were looking for from facebook in the early days. so we may see snapchat change its tune overtime. in terms of the ability to target, we will have to wait and see. to get to the point about ad revenue, we are forecasting that snapchat might have $900 million in ad revenue this year, more than double what we expected last year and what we saw in the f1. this is a company that is growing. you are right, it is not nearly as big as facebook, but you have to get this company the benefit -- give this company the benefit of the doubt. they have developed super creative ways to advertise, whether it be vertical video war -- or sponsored lenses, sponsored filters. all these things are new ways to advertise, and they are innovating just as much as facebook did in its early days. caroline: great conversation throughout. thank you so much for your ongoing analysis. david kirkpatrick, i'm pleased to say, is sticking with me. coming up, toshiba is selling its chip business for $13 billion, and it may have found the perfect bidder. details next. ♪ caroline: toshiba is looking to sell its memory chip business at a value of $13 billion. that less than earlier reports had suggested. according to people familiar with the matter, toshiba is willing to sell majority stakes in the unit or the entire business. one person interested is foxconn's terry good. he says he is very serious about the bid. i am joined by peter. he is in our tokyo bureau. good morning. why would toshiba be picky about this? reporter: to back up a step, toshiba is reeling from financial troubles in its u.s. nuclear business. of course it is a broad icon with many different is this is, but it is going through this process of trying to shore up its balance sheet because of the write-down and will have to take with its nuclear business, so it is looking at selling a number of assets, everything from the elevator business and hospital business, to the crown jewel, the memory chip business, which could be worth $13 billion, more or less. it has begun to solicit bids from a variety of companies, and a person from foxconn expressed that he is interested. all the other companies interested are already in the flash memory business, so they would face an antitrust review or some kind of regulatory scrutiny that would slow down the process. that is a problem for toshiba. they need to be able to get this cash quickly. there are also financial bidders in the mix, including a couple pe firms, but they will not have the opportunity to capitalize on synergies like some of these technology companies themselves can. terry won a contentious bid, and it looks like he is coming back to toshiba to take over the chip business. david: it is a crown jewel of any company, and this is one of the central technologies of modern life. we have to look at this and see that she would certainly want to our lead -- only at foxconn. also, we have seen how beautiful foxconn is at executing things, just creating this incredible production machine. so they will take this technology and drive it forward in a way others probably cannot. i think it is a promising idea, but it's got to be tragic for toshiba to lose this extraordinary business. caroline: the valuation is $30 billion. why is it less than what was originally gone for? what are people picking apart? reporter: bidders know that this is something of a fire sale. haveyou have to sell and to sell relatively quickly. it would like to avoid an antitrust review with some bidders already in the flash memory business. it is also a challenge that the japanese government is not anxious to let this business go abroad. terry gou does have a lot of potential to come into this. he has never really run a business like this before. it is incredibly capital intensive, cyclical. the core business of foxconn's -- foxconn is assembly. they make playstation said things like this, not this is a much more capital-intensive business. it will be a challenge to integrate it, but he shows promise with the investment he made a year ago. david: peter, how would you compare this memory business with some of the other top players in the market? how important is it relatively? reporter: toshiba is number two in flash memory behind samsung. samsung is the leader in this market. the others that are below those top two, sk hynix, western digital, are a bit smaller than toshiba, so it is a very strong and good business. the japanese government has been asked to questions about whether they would be ok with a foreign bidder taking over this operation. and so far they have said they probably would, although it is very strategically important for the technology industry. they have been proud of this historically, but i think at this point there are domestic bidders that have emerged as better contenders than foxconn or some of these other companies have. caroline: thank you, fantastic reporting. joining us live from tokyo. and david kirkpatrick, i did you farewell. he is are contributing editor to bloomberg news as well. thank you for being live with me in new york. great to have you in person. coming up, we will speak to a ceo who is betting on the next growth market for wearables, it targets your ears. that is next. this is bloomberg. ♪ caroline: where is -- wearable supplies are looking beyond the wrist. a new gadget category is being pioneers known as hearables, which can alter what we hear around us. bloomberg and are at large cory johnson recently spoke with the doppler labs ceo. asked what problem he is aiming to solve. guest: i would not say we are trying to solve a problem. we are trying to give people superhuman hearing, giving people the ability to hear the world, so you hear what you want to hear and don't hear what you don't want to hear. cory: so they are not headphones. guest: definitely not. they are headphones plus. they do stream music, but basically there was a predecessor product for this, called here active listening and , all it did was allow you to augment the outside world. cory: kind of like tin cans? with strings between them? guest: i would say more like spectacles. but for your ears. the first product was a bit of a toy. the idea was we wanted to give you control over your hearing. the basic premise of that is that we believe the future of computing will happen on the body. everybody is making bets on the eyes and wrists, and we need to bet on the ears. we believe putting a computer system in your ear will be the future of how we interact with technology. mainly because voice and audio are much more natural way to interact with each other and interact with computers. tapping on a piece of glass is one thing, saying hey, order me an uber, or hey, i want to go to dinner with you -- it's a more natural way to compute. cory: and we see that happening with alexa and google play. guest: absolutely. we got very lucky to be honest. we were building in a vacuum. very secretly this product, and then apple remove the headphone jack and i was a huge moment for us. we are a wireless products and we do stream music so that was awesome. with alexa, google home, and all these things, it has become mainstream. cory: google has seen some criticism from the likes of marc benioff and others from jumping on the voice bandwagon. but it seems more like there was a technological wave cresting. guest: that's a great question. for me, it was actually more cultural. i am not an engineer. my background is in film and music. what i saw was computers becoming more and more alien. you can think of google glass. we started the company right in that moment where people were like people are going to put , tech on their faces and where it all the time, and it is going to be awesome. i was sitting there saying, no, they are not. and simultaneously you have this movement of beats, wearing five pounds of plastic on your head and doing it proudly. cory: with weights. they have no audio quality. but they are very expensive. guest: there were these cultural practices happening that silicon valley was not thinking about. they were obviously starting to think about ai invoice, which was a big part of what we were doing. so we thought there was a coalescing. we use the term wearables, but they don't like it. wearables are commoditized tech. but i'm talking about truly indispensable computing on your bodies that leverages cultural relevance. for us, that means we have worn tech in our ears for decades. why not leverage that? the analog there is the iphone. right? cory: inventory drops, they get gross margins, compression, and competition from companies who don't care about patents and just make cheap copies. but, you've got companies like fitbit who have fabulous margins, or apple, fabulous margins, who are deeply in the consumer electronic space. how do you make sure you are the latter and not one of the former? guest: we pride ourselves on not being a gadget. when i say best analog since the iphone, there are two big things. steve jobs was smart enough to launch a pocket computer and not call it a pocket computer. the iphone was a pocket computer, but he was smart enough to say people are already carrying computers in their pockets, and i will leverage that to get them a new device, the iphone. now it is easy to forget the original iphone did not have an app store. so it is two things we are , leveraging a phone in your ears, and we want to build a platform on that. but you also have to question, the way you don't become a gadget is you focus on the software and the backend. that's what apple did. not only is the hardware great, but you have the incredible app store, you have this connectivity to a robust software platform that makes it truly indispensable, above and beyond the hardware. cory: further, where are you guys in terms of development? guest: nobody is doing what we are doing. there are a lot of headphone products. there are a lot of true wireless headphone products, but we have four processors in each ear. it truly is a computer. with that allows us to do is stop the audio in your ear and transform it. we are the first product you can wear in your ear and still walk around. caroline: fascinating. that does it for this edition of "bloomberg technology." tomorrow, we will be covering the snap ipo from every single angle possible. live reports from the new york stock exchange and great interviews. you do not want to miss it. remember, all episodes are live streaming on twitter. this is bloomberg. ♪ anna: marching towards a hike. hike isest rate likely opprobrious and with dollar rallies. manus: asian stocks rally after the dow closes above 21,000 for the first time. it is the fastest 1000 point gain in history. anna: snapping up a skyhigh valuation. snap begins trading today after the photo app shares surged. manus: the speedbump. britain's house of lords rebuffs article 50, voting to protect the rights of eu nationals

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