>> the chinese president met with business leaders and said that the relationship has enormous potential on the same day that we learn about records of federal workers that are stolen. experts are blaming the chinese government. how is obama to approach friday? ♪ emily: this is "bloomberg west." coming up, uber goes after

chinese commuters. it is the first time uber released a global product. how badly does it need china. officially hitting 400 million monthly active users, what is next for instagram? you will not want to miss my interview with sam altman. i caught up with him today. that is ahead on "bloomberg west." first, to the lead, the guest of honor on the coast, the chinese president. he made the rounds among the business elite in seattle. there are serious tensions between the united states and china on the economy and cyber security. there was a major winner, boeing. joining us now, what can you tell us? >> good to speak with you.

right now, i am at the plane manufacturer north of seattle. it is interesting, looking behind me, every single 747 comes out right through those hangars. as for the deal between the united states and china and with boeing, that have greenlighted the purchase of 300 planes from boeing that will go over to china and the total for all of them is $38 billion. beijing has also greenlighted a finishing center and it is the first time that they will have a center in the country. airbus has one. this is a big coup for boeing. emily: cyber security is an elephant in the room. we learned about the cyber security hacks and the record stolen and the experts say it is not just chinese hackers.

it is the chinese government that is behind this. what did president xi have to say about cyber security? >> flatly and hands down, he says that china does not hack. they say that china backs companies that hack the u.s. and around the world. we know about the office of personnel management and washington, d.c. has been hacked and has compromised former and current federal workers. united airlines united states has been hacked. xi is addressing it. looking ahead to what is happening, we will see if the words translate into action. we have a pew study that came out that said that cyber security and cyber espionage is

one of the top three issues for americans looking overseas to china. emily: what can you tell us about any progress that was made at the meeting between xi and the tech leaders, like tim cook. >> it is good that you brought them up. it was a closed door meeting. we do not exactly know what came out of that. we did see tim cook leaving and we got good footage. in terms of what happened behind the closed doors, that is for the 30 executives from the united states and china to digest and talk amongst themselves. emily: all right. in seattle, at boeing, thank you for your report today. i want to talk about the visit

and what the president had to say. we do not know what went on behind closed doors. how productive do you imagine something like this is? >> i don't know. i am not there and i cannot speak to it. i do not think anything much comes out of the meeting. the issue between the united states and china is that there is a lot of talk around industrial espionage in technology and the other issue is around services and cloud services have certain limitations and difficulty in offering services in china. i think that google, obviously, made it very clear that they

have issues with china. there is a lot more work that needs to be dumb between the united states and china from a technology standpoint. it is more visible and it is more about the jobs. it is about yesterday's technology and the older, industrial way of doing things. the future is about economy and we need to have much more priority. emily: we have the importance of united states tech companies to china, like apple. it is ironic that facebook is blocked in china and google is off of mainland china. what does the president have to do when the chinese government says they do not hack? privately, u.s. officials are saying, absolutely you do. >> they say one thing and do another thing. i think that we have to confront this issue. i think we still think of war as

old school, industrial war. emily: we are in the middle of a cyberwar right now. >> it has an impact on everyday basis and the chinese president denying anything is happening, i do not have to believe it and neither does the president. emily: om malik, you are sticking with me throughout the show. all of you apple enthusiasts are probably counting down to friday when iphones will be delivered. the big apple will have to wait. apple is telling new yorkers of delivery delays because of the pope. yes, pope francis arrives in new york city this thursday and friday after meeting with the president in washington. apple sent an e-mail to customers in zip codes affected saying that there will be traffic restrictions and they will make it up to new yorkers on saturday.

ups has a service morning on his o.bsite, to from washington, to new york, to philadelphia, it is ok. you can wait. it is because of the. -- the pope. up next, my interview on tech valuations and unicorns. plus, a startup that helps investors get gadgets off of the ground is no more. details on the rise and fall of quirky. ♪

emily: welcome back. i am emily chang. i sat down with sam altman. he tweeted, "i am more scared of unit economics than burn rates." >> companies lose money before making money. that happened at facebook and google. that is ok. i worry about companies that are losing money and have no plan to make money. these super-low-margin businesses that operate like they are high-margin, that is a problem. so, if you have the operating culture of facebook, but the margins of amazon, that is a problem. emily: what are your plans? >> to make a lot of money. this is like a lightbulb for people.

sometimes, it takes 20 years and, eventually, it happens. it is ok to lose a lot of money up front and you can invest in growth. you have to have a plan to make lots of cash. emily: this is the economic demand of shifts. why are so many investors getting in to on demand set ups? >> uber has burned more capital than any other startup ever. i do not think uber is immune to this. i think they will be a hundred alien dollar -- hundred billion dollar -- $100 billion plus company. emily: what do you think of the

changes reddit made? >> i disagree with the premise that reddit needs to make a come back. it is growing fast and it has not done the easy wins. you should prefer the unoptimized startup. there is no great mobile strategy and you can be even better. starting optimized, there are no easy wins. emily: she spent a few months at reddit and she decided not to appeal the kleiner perkins situation. what is your reaction to that? >> i do not want to comment on a

situation to appeal or not. i enjoyed working with her and she brought women into the forefront of public interest in the way that was important. emily: did you learn anything? are you doing anything different? >> everybody talks about diversity and the thing you should do is not talk about it and just act on it. we have a fla, equal -- flat, equal partnership and we fund women at the rates that they apply. there are things that we can do to help. i don't think that diversity in tech is just about men and women. we try to go in a lot of different directions.

emily: do you think funding at the rate they apply is enough? >> it is hard to do more than that. we want to encourage more women to apply and women in our partnership go and meet with them to talk about startups. it would be hard for us to fund at a higher rate than when they apply. emily: how do you see that going out? >> it seems expensive to me. maybe it gets more expensive or crashes. companies that really matter returning quality of life for people. so, i tried to pontificate on the environment to people who come on the show. emily: is the unicorn theme dangerous?

>> what do you mean by that? emily: i talked to mark about seeing unicorns rather than a $1 billion valuation. >> more than half were valued at $1 billion and $1.5 billion. people are obsessed with getting to this mark and they are willing to put structures on terms to get there. if you look at the financial data, you would say there is some fraud going on. there is a huge desire to get right to $1 billion. i do not care about it and i don't think it will make a company great or not. emily: will it come back to bite them? >> if you should have been worth 200 million and -- two and

million dollars and you are worth $1 billion, that will come back to her you. -- to hurt you. you can get terms that will come back to bite you. emily: sam altman, the president of a startup. he seems to have hit a groove now that he has done this for a year-and-a-half. he is not shy about saying what he thinks. >> it is great. i am glad that he is more plainspoken. he does not get into specifics. name the companies you do not think are doing ok. if he knows, he should talk about it. i talked to people around companies and i learned a lot about those companies. emily: hang on.

bill, who i interviewed last week, expressed concerns about on demand startups and compared it to webvan. everybody loved it. it was not, economically, possible. >> people who are close, there is a gray area on whether they make it or do not. i do not think i am equipped enough to make a judgment call. if sam feels there are companies at risk, he should name them. he is pretty plainspoken, otherwise. mostly, the other thing i say, startups should not optimize for evaluation, that starts at sea level. that education of valuation and

being smart about how to value your company has to start at ground zero, not at the $1 billion valuation. they should have this in place to make people more educated on these things. emily: om malik, you are sticking with me and we will talk about uber in the next block. first, quirky is calling it quits. develop inventors consumer products and filed for bankruptcy. it is a far fall for the company that once raised $79 million from ge and kleiner perkins, among other investors. visio have said that they were out of cash and later, the company was halting activities. they plan to sell their assets.

four $15 million. according to cb insights, 30 startups have failed this year. we will be right back. ♪

emily: it is time for the daily byte. the number is 400 million, the number of monthly users instagram says they have, more than twitter. they say most of the user growth comes from europe and asia and it is music to the ears of the guys who own instagram. facebook bought it for $1 billion in 2012. according to forbes, it will reach $1.5 billion in revenue. when it comes to global cities, uber has a new favorite.

they are testing out a new service called uber commute and it is the first time they are rolling out a global product outside the u.s. it follows the chinese market leader. joining me to discuss the change, gabe. i lived in china and went to chengdu. i can imagine this is a service the chinese would be excited about. anything that helps pay the bills, essentially. testing this service in china, what you make of this? >> it is smart. even if they fail, nobody notices. they have to try china and india as markets. that is where the future is for uber and things like uber. emily: first of all, are they in

second and third tier cities and do they have a commuting carpool service? >> they have 80% of the market, compared to 20% and they are in 60+ cities and they are big in china. in terms of uber doing this, i agree with them. i wonder, with the issues of them being cast as the taxi competitor, are they re-casting themselves as a transportation company? emily: there are some questions about how the chinese government is going to regulate you they may require drivers and cars to be commercially licensed.

om, you did an around the world tour and you had observations about how it works abroad. at the same time, we see uber having trouble in paris. courtingly against -- the ruling against their service. there is a service a lot like uberx. >> i loved the experience of never having to bother with telling people where i am going and that was great. there is an abundance of drivers. it does not work when there are not enough drivers. in tokyo, they did not have that many drivers and they times are longer than you and i are used to. stockholm, the wait time was 7-12 minutes and the pricing was lower than what i paid in san francisco. the effect is based on the

number of people who drive for uber. the more people there are, the faster the prices go down. that is the they are good at. -- the thing they are good at. emily: quickly, you were part of the department of transportation in chicago and washington, d.c. these regulations are different. can uber and lyft triumph? >> china is a different animal and subsidy rules. whoever subsidizes the most gets the most drivers. i think that it is a different animal and i liked the partnering over there. it does not mean we shouldn't. emily: all right. gabe, we have to leave it there. thank you both. tomorrow, i will interview the ceo of oculus. do not miss it.

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