Shipments l 4 from a year ago because the Worlds LargestSmartphone Market is out of firsttime buyers. It is working out well for apple. In the first quarter, apple had the biggest cheer of chinas market followed by xiaomi. What does this mean for the world of tech giants . Joining us is brad stowe of Bloomberg Businessweek and ceo of bob, i will start with you. Bob it is entering a new phase. What we have seen over the last couple years is this in normans adoption of these smartphones, the tablets. In china in particular everybody is crazy about them. Those are the primary Computing Device of a of people in china. The reason why apple has done so well is of course, lots of people were waiting for the big version of the iphone. They finally got it. Things have done well. The things you have to be cautious about, i would argue samsung is the canary in the coal mine. They were first to the large smartphones. They did very well. Then they hit a wall. I think what will happen is, the rest of the history the industry will hit the wall. The other problem you have is once you get the big smartphone, the debate the desire to upgrade is less frequent. They dont have automatic updates in china. Emily bread, you spoke with xiaomis ceo. Brad they have been preparing this for their history. Xiaomi is not just building a smart phone, it is a brand. A call to get a cult you get membership to. To the extent that china is moving from becoming in emerging market to a mature market they are reliant on online sales. I think xiaomi is wellpositioned. India brazil russia, mexico, xiaomi is focusing on those markets. Emily brian, you have a good sense of how consumers are feeling were seeing alibaba take a big stake in a you as company. Alibaba once most of its revenue to come in from overseas. Brad there something going on for alibaba. Alibaba is so big, they are playing defense and a lot of other companies are playing offense. We are talking about mobile to a certain extent. Alibaba was late to the game in terms of mobile compared to competitors. While there overall volume increases, the relative revenue decreases on an absolute basis because of that. Alibaba is looking abroad because they are trying to find new markets to grow in while competitors are moving into china and growing in their own markets. Emily apple is not giving up on china. Tim cook was there today. He signed up on chinas twitter today, a partnership with the World Wildlife fund in china. Bob, what do you make of that . Bob apple sees their future growth will be in china. The u. S. Smartphone market has already hit the kind of peak levels were seeing in china. For the foreseeable future, the u. S. Market will be a tough spot. Apple has to make a bigger play in china. Not everyone in china knows or thinks of apple as a Green Company that thinks about the environment. This is a Public Statement to say this is how we think and you should think of us in a positive way. You are important to us. Emily if not china, where else . Brian we are two hours in a game of risk. Apple is trying to ask expand to china. Alibaba trying to get a foothold in the u. S. Nobody talks about 11 main anymore. They did a horrible job to marketing u. S. Consumers. Instead, they are investing in zoo lily and lift. Alibaba made a secret investment. We are seeing that play out on both sides of the pacific. Emily bob brian, and brad thanks for joining us. Brad, you are staying with me. It is time for the future is now. Wall street is not listening to the valley, with nasdaq dipping its nose into bitcoin. If the program works, they could be looking at a more expensive use of the technology. Take a look at this chart. Bitcoin with a big be, the Technology Behind crypto currency known as locked chain technology. It is a digital ledger that tracks the history of transactions for a single unit or coin. The nasdaq wants to use the technology, not the currency, as a way to audit transactions accurately. You want to be able to fire up trades quickly. Until now, wall street has been conservative about digital currencies. Recently, we saw the Stock Exchange invest in coin based and dutch banks have experimented as well. However, the risk is now gone. Coming up the skyhigh valuations that have become commonplace in the valley. Also i will shoot my first onair periscope video onset with the apps cofounder. We will be right back. Emily welcome back. Im emily chang. President obama named airbnb ceo ryan chest he the president ial airbnbs ceo for global onto partnership. He wants to increase internet literacy and education in cuba. Airbnb entered the company six weeks ago. I asked him about the big push into cuba. Brian we have 2000 homes in cuba. That took us three years to get 1000 homes in San Francisco new york, and many big cities. These are cities that are large. We have never had a market row as fast as cuba. By all indications, this will be a huge opportunity. For half a century, americans have had a desire to go to cuba. It was not easy. Now it is easier. Emily how do you, you are meeting the president today and are the darling of the community. How do you make the decision to raise more money now versus going public . Brian we have not actually make made any decisions. We have no immediate plans to go public. The focus is on what is best for the business and our community. We do not need to raise more capital. It is a solid business. That said, we are always open to opportunities. It is based on our expansion plan. Emily bloomberg reported you raised money at a 20 billion valuation. When talking about pressure and responsibility as ceo, how do you make sure you live up to the numbers . Brian first of all, we have nothing to confirm. There has been no financing that has occurred those are rumors. More broadly, the question of how do you live up to high expectations, i think we all have to realize the gravity of what we are doing. We have a Huge Community that depends on us. Hundreds of thousands of people we have pulled cities we uphold have polled citizens in the community. It is humbling to see all these jobs and all these people depend on us. Emily i know you have been doing a lot to improve the quality and experience of renting and airbnb. I am a huge customer. My editor just got back from paris, where she had to cancel her airbnb because she walked in and the towels were wet and it was not clean. There is a whole echoes system of startups welding off your success would you consider buying a company like that or integrating some of their services into airbnb to improve Quality Control . Brian im excited about the idea that it is an ecosystem. That is more entrepreneurs we empower, especially if they are making the experience better. As far as whether we want to acquire one of them, we have no immediate plans. Im excited about People Living on and thriving. Emily i want to bring brad stone back in. What do you think about this cuba push and the white house pitching its wagons to airbnb . Brad the white house has recognized airbnb diplomacy. Airbnb is bringing more people online and facilitating new kinds of payments. It is a seductive thought that could lead to greater freedom. It is great for airbnb. They are fighting statebystate political battles. Emily airbnb diplomacy. We will add that to the dictionary. Speaking of that speaking of valuations, we have heard a lot about big funding rounds. Can we really trust these numbers . This is the word i want to talk about. Waterfall. What does that have to do with unicorn startups . Quite a lot. It is describing the Way Investors reduce their risk by locking in a high valuation for their money if the company gets sold for less than what they bought in for. In the process, earlier investors, like employees, will not get the favorable terms. Take a look at this chart. Here is the unicorn. Early employees get some equity, but this is early territory. Valuations are low. The unicorn is doing well and ready for outside funding. A funding round enables the unicorn to have a growth spurt. Right now, things are going well. So well that money is pouring in. Late stage investors are onto something good. This is where protective measures come into play. We see some of these huge valuations. I spoke to revolution founder steve case former ceo of aol. Here is what he has to say. Steve last year, 75 of Venture Capital went to three states, and those markets are hypercompetitive. Valuations in many of those cities and sectors are on the high side. Emily what are you doing to protect investments . We have talked about liquidation preferences and terms that investors are building into deals to make sure they are protected. What kinds of things you do what terms do you build into your deals to make sure you are getting a good deal in the end . Steve we are more careful, investing larger sums 3040,000,000 dollars versus four or 6 million. We are looking for companies that arnie have traction, tens of millions of dollars in revenue, and there is more diligence. We are more careful. We structure the later stage Growth Investments in a way to try and not only maximize the upside but also protect us on the downside. Emily what do these trends mean for employees . If investors get better terms, where does that leave the people building the companys . Do they lose out . Steve theres an opportunity for everyone to make money and be successful. It is important to make sure management teams and employees have the right incentives. I saw this with aol when we started in 1985, 3 of people work connected. It took us a decade to get traction. It was a struggle. But eventually, we broke through and build a company that was valuable. We had a philosophy of having all our employees have stock options. Lots of people who came in in Customer Service ended up doing well. Emily steve case of revolution. Brad, the question im getting to is are the unicorns not really unicorns in the end . Brad i have little sympathy for employees. They have seen the valuations go from 1 billion to 40 billion in some cases. They are on a great ride. When you compare it to companies 10 years ago, steve mentioned aol they went public earlier. They had a rocky ride. Employees had to stay there for longer to see that increase in their stock. Now, companies are delaying the ipo. It is a protected environment. The employees are doing fine. Lets not shed too much of a tear. Emily brad stone, thank you so much. Coming up, 10 paris 10 paris save twitter . Emily welcome back to bloomberg west. It is time for the daily bite. One number that says a whole lot. Todays bite is for 430 billion. That is the total amount of cash reserve that for five tech firms have in overseas accounts. Apple microsoft, google, cisco, oracle, all have large amounts of cash and a majority is held abroad. These pileups mean incentives to park profits in overseas countries. 90 of the cash held by these companies abroad and while google keeps 60 of reserves in overseas accounts, we will see if the white house is able to coax any of the money back to the u. S. To one of the most talked about startups of the year periscope. The app bought by twitter. Periscope is attracting celebrities, news outlets, the ceo joins me in this studio with more. Lots of concerns about twitters user growth and engagement. Can periscope save twitter . Kayvon that is a provocative question. Our focus is building and an amazing experience. We have a crazy idea we worked on in a garage. Our focus now is, can we deliver on our vision . That is to create a wacky teleportation machine. We are stoked to partner with twitter. Twitter is happy to have us. Emily others have used the word superextraordinarily awesomely excited about having periscope join twitter. My question can periscope save twitter . Kayvon the exciting thing is the vision is the same. When i think of periscopes potential, i think we can read the visual pulse of what is happening in the world. That is twitters vision as well. Instead of realtime video, it is 140 characters. They complement each other in a powerful way. I dont see it as saving twitter, i see it as complementing and propelling twitters vision. Emily we are doing our first onair periscope right now. Wave to the camera. Lets talk about monetization. How you make money . Kayvon it is not in the forefront of our minds. Well launch the product less than six weeks ago. We believe that we can build a product that people love to use, and we will figure out how to weigh how to monetize. Emily how seriously do you take meerkat . Kayvon we dont think about our competitors too much. Emily why not . Kayvon we want get anything done if we did. Our focus is, how do we excel and execute . There are so many people in this space. It is a compelling space. There are a couple now, there have been many in the past, which is one advantage we had of entering the landscape when we did. We were not first. We could look at others and what they did and didnt do well. Emily we are getting live reaction to our periscope popping up. 10 meerkat, they are talking about working with facebook. Can periscope work with meerkat or facebook . Kayvon we Just Launched a facebook integration. That is sensible for them. We deliberately want to integrate with twitter. Even before the acquisition, we think of twitter is a place for life conversation. It is the only world platform that focus on live commentary. As a distribution mechanism, it makes sense. When emily chang goes live, she should syndicate to her twitter followers are in facebook is great for other things, but not for what is happening right now the world. Emily facebook has a billion users. When has 300 million. What is the advantage . Kayvon it doesnt mean it when ba syndication platform. We look at it as, what do people use the platforms for . If i am trying to get a sense of, a pulse on what is happening around the world, i think of twitter. Lots of people in the world think of twitter. They dont think of, which platform has more users . They think this is the medium more i learn what is happening around the world. Emily 734 people watching us right now. Not bad. I will have to do this every day. Lets talk about piracy. You guys made a big splash during the mayweatherpacquiao fight. His twitter excited about piracy . Kayvon i tweeted after the fight, we are no way centered on piracy. That is not something that keeps us up at night. Emily howdy prevented . Kayvon we were excited about what we got to see is people like hbo taking us behindthescenes into the locker rooms, showing us the locker rooms. That is what you dont get to see on tv. Periscope can enable that. Piracy is something that has been around on the internet since forever. It is something that we, as part of our policies and how we craft the product, it make sure we make sure it is not part of the product. Emily can you identify when someone is shooting a live event that is not supposed to be shot . Kayvon that is something we are interested in, we are interested in partnering with commercial partners. What when he evolved tools look like to battle piracy . We are able to respond within minutes, which is extraordinary. Other than some unusual circumstances like the fight, piracy has not been a big issue. There have been more articles written about game of thrones then there were episodes. Emily ceo of periscope thanks for joining us. Thanks for joining us at our new time. We will be back tomorrow for 30 p. M. Eastern. That resulted a from San Francisco. Ie secretary of energy earnest monis is here. He has been negotiating a Nuclear Agreement with his irani and iranian counterpart. He served in the clinton administrations undersecretary for energy and in the White House Office of science and technology pol