♪ mark: i'm mark crumpton. you are watching "bloomberg west." let's start with a check of your first word news. the leaders of the roman catholic church and the russian orthodox church sought to repair a fractured that has divided christianity. the pope and patriarch signed a joint declaration on religious unity. it was the first time a pope and a russian patriarchate ever met. president obama signed a bill that will hit north korea with more stringent sanctions for refusing to stop it nuclear weapons program. democrats and republicans joined together to improve it with a vote. the vote came less than a week after the north launched a rocket carrying a satellite into space.

presidential candidates in both parties are campaigning in south carolina. former florida governor jeb bush is drawing larger than expected crowds. his campaign says that events are being moved to larger venues do to increase demand. hillary clinton is also campaigning in south carolina before attending a dinner event in minnesota along with bernie sanders. and donald trump has tweeted that he will soon sue ted cruz for not being a natural born u.s. citizen unless he cleans up his negative campaign. cruz does not ted clean up his act, stop cheating and doing negative ads, i have standing to sue him for not being a natural born citizen." global news 24 hours a day, journalistsur 2400 around the world. i'm mark crumpton. emily: i'm emily chang and this is "bloomberg west." coming up -- a rough ride for the markets. tech stocks feeling the pain. some investors say valuations

have further to fall. we will discuss. could chinese companies that's a higher ipo price at home than abroad? we asked why chi wants dude to to sell back its stock. and silicon valley's attitude problem. mark cuban calls out silicon valley's attitude problem. first, to our lead. another week of extreme volatility as companies adjust to a new reality. trigger-happy investors are ready to sell on the slightest sign of instability. both worth half of what they were before the last report. stockse so-called fang are not safe.

amazon and netflix among the biggest losers. activision and pandora plunging off the back of their latest reports. how do we talk about what is happening in the markets? my guest host for the hour to discuss and paul kedrosky in san , diego and oliver renick in new york. oliver, what happened today and this week? oliver: as you pointed out, a lot more volatility in the markets. seems like that is what we can expect as investors tried to -- investors are starting to reconsider what they are paying for companies. you're going to see more of that volatility, more of that whipsaw. today in particular, we saw a rebound. the story on the week is clearly in the red, negative. earnings are still beating expectations overall, but they are they are not very good. negative. when you guys are talking about tech, we have a chart looking at

what happens to tech companies and consumer discretionary companies during earning seasons. we see lots of volatility. we are looking at swings. up, down, the average move is huge and i think it is closely related to that is where growth is in those two sectors. emily: each of these has a different story. which one are you looking at more closely as the overarching example of what is going on here? guest: there are so many conflicting forces going on. the tableaux story was shocking as was linkedin in terms of sheer collapse. the broader story is there's also this macro phenomenon going on with sovereign wealth funds being forced to do an awful lot more selling than they might have hoped. and what you are seeing in part here, stocks that were very resilient getting sold because there is a demand for cash by the sovereign wealth funds. and that is making things even worse.

there are two forces going on. one is nervousness about tech, but the other is mad selling by sovereign wealth funds. the commodity holdings are collapsing. emily: the c.e.o. of linkedin gave a rousing speech at the all hands meeting. take a listen to what jeff weiner had to say. >> we are the same company we were the day before our earnings announcement. i am the same ceo i was. you are the same team you were the day before our earnings announcement. and most importantly, we have the same mission, vision, and sense of purpose in terms of our ability to create economic opportunity. none of that has changed. emily: why is all of this happening? keith: that's a good question. i am more of an expert on private markets, not so much the public market. i think it is a different era. i tweeted over the summer that

the steroid era of startups is over. in baseball during the steroid era, people were hitting 30 or 40 home runs. quite common to do. it turns out historically it's extremely rare to hit 30 home runs. the same thing has been true of technology startups over the last three or four or five years. they have been aided by environmental factors and made it look easy to build a company, raise money, whereas oxygen is very expensive right now. on the public side i think there , is always a macro component to this. stocks are valued, the alpha and the beta component. a lot of people seem to miss corporate finance theory. you can continue to execute as much and as well as you like if the beta component of your stock changes because of the macro environment and comparable companies are adjusted, you are affected. i think there are isolated circumstances that apply to each unique company. twitter is different from linkedin which is different from facebook, etc. -- that there are

macro themes that had more of an effect than they expected, which is not atypical. emily: paul, you have an interesting theory. as to why. you say it started with private market valuations and that spilled over into public markets. flesh this out for me. paul: this falls on the point that keith was making a second ago. there has been ricocheting repricing. , unicornarkets companies, had become more expensive than private markets. so people were looking into public markets and going, look how expensive private markets are. so private market valuation started coming up to reflect this price asymmetry. and now, the private market prices began being adjusted late last year after the steroid era was ending. that started to affect tablet -- private market prices, and is public market prices came down,

it ricocheted into private markets again. pricing in both markets affect the other. emily: did the unicorns caused this selloff? keith: i doubt it. there's a complicated relationship between public and private markets. i don't think the private par markets can really drive the public markets. look at the velocity of transactions. private markets are such a small component. it would be difficult to be the driver. there is an interactive dynamic because a lot of people can choose to invest in private markets or public markets. there are crossover investors. if they see an ability to make money they will shift. , there is some relationship, but i do not think there is -- that is the primary driver. emily: what is the sense from investors on where the settles? does the tech sector have further to fall, and if so, how much? oliver: that is a good question. look back at may when the s&p was at its all-time high. tech, consumer discretionary,

these growth areas were trading at p/e levels that were pretty high. closer to 19 or 20. it has come down to 17 or so. now it is a little more in line with historical averages for stocks overall, the question of whether or not these companies have further to go is largely a question of how much risk investors want to take on. is what we are seeing a dramatic shift in terms of repricing assets that were able to get highly valued for a long time? or is this just sort of a correction happening rolling through different sectors and now it's going through tech and now it's going through financials, and some of the companies that have held up pretty well. the answer to that, i think, will give you an answer to whether tech has further to go. emily: paul, further to go, yes or no, quickly? paul: i think we are much done. we have companies trading close to cash and assets on the tech

public market intech which is a , bit silly. keith: i think there is asymmetric downside, but it's more likely to get worse than better. emily: ok. we love to disagree on the show. thank you. paul kedrosky, thank you so much, oliver renick, thank you as well. keith, you are sticking with me. a story we are watching -- baidu says it has has received an offer by two executives to buy all of its holdings in chi.com. they are offering to buy an 80% stake. worth $2.8 billion. why do it? spinning out qiyi essentially takes the company private. it could seek an ipo in china where it could potentially get a higher valuation from investors than it would in the united states where does not have the same name brand recognition.

the payment arena continues to heat up. paypal launching its latest initiative aimed at making it easier to buy what you want. and later in the hour, can google search predict election results? we will take a closer look. ♪

emily: square gained the most in three months after visa disclosed details about its stake in the company. these are acquired shares in square in 2011, but terms were not revealed until now. media reports initially suggested visa was buying a new 10% stake in square. visa clarified, saying that it current holdings were about 1% of square's fully diluted common stock. the stock price still up on the news, indicating investors are still interpreting this as a good thing for square, which is down 29% year to date.

harper reed is the head of commerce at braintree, a subsidiary of paypal. keith rabois with me and the studio and he happens to be the former c.o.o. of square. you were at square when visa made this investment. what is the significance of this and how should we be interpreting this? keith: this is a mechanical filing. this is not the first time "the wall street journal" has gotten stories about square wrong. they have basically been wrong three or four years. this is an artifact of how you do a cost structure. there are different rights and cost thresholds. this is a mechanical conversion by visa. emily: it is being interpreted by investors as these a may be -- visa may be likely to be buying square. how likely is that? keith: i doubt that square wants to sell. they are massively undervalued.

people will appreciate it over time. it takes time for companies to bake. paypal went public at a $700 billion valuation. google went public at 25 billion dollars. facebook at $50 billion. sometimes you need more data points. i think as square puts more on the board, it will be appreciated. i would be a buyer at this price. emily: there are people who question square's long-term sustainability. keith: sure. emily: when you look at all of square's businesses, which could be huge in the future? keith: i think all of the services to small businesses are impressive. it's probably the second largest aggregation of small businesses in the world. it has a market cap based on small businesses and serving them in several verticals. square has more than google, more than anybody else. that is a very valuable asset as you continue to provide products and services to that core user base.

it is almost impossible to accumulate at aggregate. everybody has tried and have failed except square. emily: harper, i want to bring you into this conversation. you have some news to announce. of course, paypal and square are competing in the same arena. what does this mean for paypal? harper: i have not been paying attention to square for some quite a while. i do not know whether that is good or bad. i cannot comment. i have no idea. emily: keith is chuckling over here. let's talk about buyable pins, and the paypal buy button. talk about what this mean in terms of paypal's long-term vision for the future? harper: the exciting thing about paypal is it does have a very good name with retailers. it is much bigger than buyable pins or buy buttons. it is about how we create simple and agnostic technology that

propels retailers into the future of commerce. often they are left out and don't have great technology. we are here to help them innovate. emily: what are the metrics you are watching, and what happened with pinterest buyable pins in general? harper: it is a new medium. it is like many of the channels retailers are using today. there are lots of opportunities in social media, marketplaces. we see this with a lot of businesses in the space. one of the things about paypal commerce is, how do we give all of the channels -- and the future channels to the retailers in an easy to use fashion? it is all very complicated. doing all of this heavy lifting is a complicated thing for a retailer who is just very good at selling shoes or apparel or what have you. we are here to do the heavy lifting. keith: harper, why didn't you announce retail partners yesterday?

harper: we are trying to keep it a little under wraps in our beta period. one thing we are working through is how we charge for this. this is a new product. it's relatively agnostic. it means not everybody is going through our payment methods. there's a lot of details to be decided. what it means in a broad way is it is free, and we need to figure out how we will charge for this. the main reason we did not announce it is because it is a set of tools. the customers using this uber, facebook messenger, very exciting, and a handful of small retailers that we are not talking about right now in this beta period. emily: keith, does it bother you or matter for square that paypal is not thinking about square? or worried about it? keith: they are in different markets. paypal serves online transactions pretty well. square powers the real world. that is 20 times larger.

i think square should focus on the real world. eventually paypal will figure out that is the more important part of the world. emily: all right, love having you on the show, keith. you are staying. harper reed, you are sticking with us. we will be talking politics with you because you are the former c.t.o. of obama's campaign. uber is increasing its focus on emerging markets. they just raised $200 billion from an investment vehicle headed by a russian businessman. this follows reports from russian media last month another russian media tycoon invested several tens of millions of dollars in uber in the summer of 2015. when we return, we will take a look at google's crystal ball. how search results can predict the way we vote. ♪

emily: so, could google's search engine become a crystal ball for

elections? that is what happened over the new hampshire primary, where the proportion of searches on google tracked with the way that voters cast their ballots. harper reed of paypal still with me, former cto of obama's election campaign and we have in washington campaign-finance reporter jim higgins with us, and keith rabois still with me in the studio. what did you find? jim: a data scientist would say it is not predictive information, but it is a window into the psyche and the questions of the electorate in new hampshire. you saw the top searches were for bernie sanders who won, and donald trump, who won on the republican side. you can look at the data and see where people were interested in the name. it is hard to tease out if they were for or against though. emily: harper, obviously campaigns are aiming to be more tech savvy.

how my campaigns and candidates use this information? can it help or hurt them? harper: that's a good question. it is a wonder if campaigns are paying attention to that data. i think there are a lot of other indicators of interest. i think that is part of the grassroots organization democrats and republicans are both doing, knocking on doors and asking constituents, who are you going to vote for? that seems to be a pretty consistent way to do that. this is exciting. it is another data feed for campaigns to use. emily: tim, we got similar data from canada's most recent election, the u.k. elections, and the greek referendum last summer. is google search data as accurate in other situations? tim: we are just seeing live data from last summer, so those are examples where we are seeing pretty interesting results. political scientists and statisticians are studying this information going forward.

one of the things we see is now that more people are paying attention, google is really trying to make a business out of its ability to survey its customers. you have the search results, the trending search results information, but you also have be paid survey ability where a client can go in and do a quick survey on how a candidate did. that is part of the growing array of business options. emily: keith, what you make of this? keith: it makes a lot of sense. i have read that google search results predict, for example, real estate prices in phoenix. google search results were debated at the board level in terms of licensing that data to hedge funds in 2001. there is clearly some signal. the question is how much effort has to go into normalizing it. i think it is a really interesting signal. emily: hearing that, harper, if you were advising president obama or hillary clinton or bernie sanders right now, how would you be dealing with this information? harper: i would hope it would be

president obama for a third term, but i would think we would be looking at this data, as keith mentioned, as another signal. you can do the same thing with twitter, other search engines. i think the key is blending them into some synthetic value and value matchesat your own polling and feet on the ground so you can have a better birdseye view of what is actually happening. algorithms have gotten so good it is fairly easy to predict election results based on the information that is out there, and yet we have this race that turned out in a way nobody expected it to. and donald trump is still in it, for example. what is going on in predictive election studies? you know, how much do the votes

and campaigns really matter? 10: absolutely. it gets to one of the issues why this google information is so interesting. telephone polling has been under fire, because in large part everyone has gotten rid of their home telephone and have cell phones. the old way of doing telephone polling is crumbling and it is hard to get the correct pulse of the nation, or even in these places like iowa and new hampshire. there is an expiration of other -- there is an exploration of other possibilities. if you look at a company like surveymonkey, out there as well, trying to do opinion based gathering, not the traditional way, and it's all about trying to get information and react towards it as we go. we see the campaigns going to south carolina and nevada. emily: interesting. tim higgins, our campaign finance reporter. harper reed of paypal, formerly with the obama campaign, and keith rabois, who is sticking with us.

coming up, the williams publishing platform has grown to attract big-name contributors like hillary clinton, bono, and elon musk. we are talking medium, next. ♪

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emily: apple is said to be biting deeper into the world of original content with plans in the pipeline for its first scripted tv series. "vital signs" will reportedly started apple executive and be ,ofounder and producer, dr. dre this is according to a person with knowledge of the matter. it is still not clear how apple plans to distribute the show. for more on that, let's bring in our entertainment reporter from l.a. what do we know about this? lucas: we know that apple is funding the show dre will star in and is producing. it is the latest sign apple is taking producing seriously.

it wants to not just distribute, it wants to produce. the real question is whether this is just supposed to benefit the music service or whether it is also intended to lift the tv service. i have a hunch, based on what i'm being told, it is more for the music service. a documentary movie with taylor swift last year that was supposed to lift up subscribers of the music service. i think this could be something similar. but they have talked about making tv in the past, which is why this is getting so much attention. emily: it's interesting. actually, netflix took a bit of a hit today on this news. do you really see a correlation? lucas: not a bit. i don't get that at all. i think if apple decided that it wanted to make a lot of tv series, then it might pose some threat to netflix, but, at the moment, netflix is one of apple's best partners. when you think people use the apple tv to do? they use it to stream netflix. emily: maybe it is an experiment for apple, but what are its longer-term ambitions?

lucas: it seems to be figuring those out. we ran a story that apple is talking to producers and financiers about wanting to fund premium scripted television. i got a sense from a lot of people that that was a serious interest, but they said that apple wasn't quite sure what they wanted to do. paying to produce radio programs is one thing. it's not that expensive. when you want to spend money on television, that's a serious capital outlay. if there's anyone who can do it, it is apple. do they want to be spending $3 billion, $5 billion per year to produce tv. emily: what does it mean for a potential apple live-streaming service? lucas: so far, not much. only because the last thing we heard, that service was suspended. we reported that a couple of months ago and cnn had an interview with the ceo of cbs, who said he had not spoken with them for a while.

emily: apple keeping us guessing. as always. lucas shaw in l.a., thanks. we will be right back. ♪ emily: now to medium, the blog platform by ed williams. it is almost five years old. it has since evolved into a community where anyone can contribute as writers on a huge variety of subjects, anyone from bono, laying out his marshall plan for africa, to hillary clinton, criticizing donald trump's immigration policy, even elon musk. revealing new fire safety features for the model s. joining me now to discuss the growing library of content and high-profile contribute, the head of corporate strategy and

an element at medium. thank you so much for joining us. how do you get hillary and bono to write on medium? edward: that's a good question. we have a team that works to cultivate high profile individuals and organizations. we have one of our people in washington who has developed relationships with hillary's campaign, all of the campaigns, and the white house, who is one of our most innovative publishers on medium right now. emily: how does this fit into your broader strategy? you are trying to bring publishers onto the platform. edward: we believe medium is a place where anyone who wants to share thoughts and ideas with the world can do so and find an audience and engagement and interaction. we think by having these campaigns doing things and talking about issues they care about and interacting with the medium community, it sets an example for anyone who wants to do that kind of thing, whether it is an unknown individual or

student in texas, all the way up to a ceo or the president. emily: president obama published the state of the union address on there before he actually delivered it. edward: yes, he did. emily: let's talk about some of the most popular posts. i have my personal favorites. talk about the biggest hits on medium. edward: every now and then, a post goes viral and goes crazy. most recently there is a , publication on medium called "billfold," that had a really interesting story about the need for women to build up a fund and financial independence, so that they can not have to -- so they can have independence. but virality is not what we are shooting for. what we are really shooting for is people finding the engagement and interaction from a core audience in driving thinking forward. so, we love it, sure, when a post gets millions of hits, but

we also like it when a particular writer finds the 20,000 people who really care about his story, and he can find them and interact with them and drive his understanding of a topic. emily: paul ford, who wrote the famous "bloomberg businessweek" story. but took up the entire issue. my favorite post was by a breast-feeding mom who could not find a place to pump. that went viral. edward: it not only went viral, but now they changed their policy around breast-feeding. having that kind of impact is something we absolutely love. emily: why won't medium become just the next tumblr, the publishing platform of the moment? edward: tumblr is certainly a successful thing. emily: but growth, as far as we know, has plateaued. edward: we are much, much smaller than tumblr right now. we feel there is a whole range

of opportunities to extend beyond that particular forum. we are very cognizant of medium being a broad name. whether you are writing a personal blog post or running a publication or a brand communicating to customers, there is a very broad surface area that we think medium can address, and we don't want to be formied into a particular or type of content. if twitter loses the 140-character limit, how is twitter not a threat to medium? edward: there are people writing on the internet all over the place. and certainly people will write , longer things on twitter, but, if you look at the kinds of things that do well on medium and the way that people invest in crafting stories on medium, it is very different than a long tweet. emily: two years from now, what is medium? edward: we think it will be the

default place to publish for the world for publishers and individuals. we think there will not be a better or easier place for you to publish. whether you are professional, an advocate, or a person who wants to tell a story that happened, we think that's what it will be. emily: edward, thank you so much. twitter is rewarding loyalty. ceo jack dorsey is getting more -- giving more equity as he seeks to turn the company around and retain talent at the top. adam bain was awarded $1.9 million in restricted stock units. he was on the show yesterday. based on twitter's current share price, that's worth about $30 million. that is not all. twitter's cto is getting $1.25 million in restricted stock . andricted stock units 600,000 in restricted stock

units. all of these additional stock awards will vest over 40 years. in january, twitter lost five of its top executives. including the head of engineering products, news, and human resources. speaking of twitter, its new timeline option just lost a follower. the london tube announced it will be cutting back on its use of twitter for real-time updates, saying the recent changes to the way twitter presents tweets defeats the purpose of sending alerts. this week, twitter rolled out a new option to display posts based on popularity. coming up, mark cuban talks tech with us. does silicon valley have an attitude problem? the dallas mavericks' owner thinks so. find out why, next. plus, the app promising to make the roads safer by remembering the driving history of everyone else on the road. is it cool or crazy? maybe both. we will discuss. ♪

emily: he is a businessman, film producer, author, television personality, and philanthropist. he is also the owner of the dallas mavericks. mark cuban sat down with bloomberg's stephanie ruhle in toronto and began by sharing his thoughts on silicon valley. take a listen. mark: culture matters. silicon valley has a very specific culture. it's the old hollywood culture. when you hear about the old days of hollywood from 30 years ago, 50 years ago, and you hear stories about people saying you are always looking over the shoulder for your next bigger star, the better script, in silicon valley, everyone is always looking over your shoulder for the next startup, the better startup, the bigger unicorn. people don't just dig in and go to work. i think dallas, austin boston, , new york -- there are so many

places right now, minneapolis, pittsburgh -- that are hypergrowth for startups, the culture makes it so much better for companies. i think silicon valley has become a significant negative. there's only one good thing about silicon valley. that's were the people who create the access are. there are people who will buy your company. the vc firms -- we will find a greater fool to buy your company. silicon valley is better at that than anywhere else in the world. stephanie: why not go bigger? why would you not want to become a constructive activist? you clearly understand companies and culture, leadership, entrepreneurship. the criticism of activist investors is, well, they only know how to play the markets, but they don't know how to turn around a company. you could do both. mark: every friday night on abc on "shark tank," with all of the replays, there are 20 million people who watch any given episode. stephanie: those are small companies. mark: not the point.

the more important reason i do the show is every single friday night, all those repeats reinforce the message that the american dream is live and well. if there is some boy or girl watching, and in the back of their mind, there is an amazing idea and we give them confidence to go out and start that company. we send a message that being an entrepreneur is amazing. it's a great thing to do. if we can do just one of those, two of those, five of those, and have that spread, that's far more than i can do as an activist. stephanie: you don't look at ibm and think, i have got to turn it around? mark: i think watson needs to work or they are in trouble. i think it has a chance. financiallyme so engineering driven with all the stock buybacks, they have some great technology there, but it doesn't really drive their business yet. stephanie: you talked about it data and analytics and how it

played such a big role for you and your team. that's only gotten bigger in the last year in precision medicine and connected fitness. how are you using it now? mark: there are two elements. one, how do you acquire the data? we went from fitbits with basic sensors and heart monitors and blood pressure monitors and pulse monitors -- now, everybody is pushing for new ways to measure blood. whatever it may be. new sources of data. that is the first element. the second part of it is the brain. the real upside of analytics from a sports perspective, how you analyze the brain, train the brain, deal with issues that are not obvious. you can have all the physical talent in the world. we can put you in better shape than the 6 million dollar man, but if your brain is not where it should be, if your mindset is not right, none of that matters. stephanie: a year later, are you seeing results? mark: we have a product that i invested in. all it does is train, retrain your brain.

we went from let's test for basketball iq, see how quickly they can identify plays, two two these are different chain scenarios. how quickly are you able to make the right decision? we have been taking our rookie, justin anderson, some of our other rookies, running them through these drills. you can see the improvement. emily: bloomberg's stephanie ruhle with mark cuban, the one and only. now to an app that rates every car on the road to predict accidents before they happen. it just launched on the apple app store. our middle east editor took it for a spin. reporter: when driving, there is only so much your eyes can see. even onboard cameras or apps can't tell you what is coming around the corner. >> captured event. reporter nexar says it can.

: >> it is analyzing everything around you while you drive. network thatng a will monitor all of the roads and be able to warn drivers and prevent accidents before they happen. by tracking everyone's trajectories. reporter: it says it has profiled more than 10 million vehicles and their license plate. if they have been caught being reckless or causing an accident, pp warns other users next time a car comes their way. will the proliferation of the app make people better drivers? i have a feeling that i'm driving more carefully. it probably has more to do with the fact he is letting me driving his expensive car rather than concerns another user are building me. there are some serious privacy concerns here. not everyone will be pleased with the prospect of having their every move on the road monitored, filmed, and send out for analysis by a startup. everyone says law-abiding drivers needn't be concerned. >> you can't really expect privacy on the public roads. there is no law that gives you

privacy on the public roads. recording cameras is something done for many years already collecting license plates is , something that has been done for many years already. we are connecting the dots in a new way and building a network to go beyond it, documenting and actually preventing accidents, definitelyk this justifies recording and capturing you while you drive. elliott: for now, nexar is focused on rolling out the app and building its network. the money it reckons will come later from insurance companies looking to speed up the claims process and by offering evidently good drivers discounts on their premiums. elliott gotkine, bloomberg news. emily: now to a story where watching on the big screen. hasbro believes the world still has an appetite for another

"invasion of the decepticons." the second-largest u.s. toymaker is betting on three more transformer films released in 2017, 2018, and 2019. the next installment stars mark wahlberg and will again be directed by michael bay. the movies have made nearly $4 billion worldwide. who is having the best day ever? some hints. he is a rapper, producer, fashion designer, and a very outspoken tweeter. the answer, coming up. let's take a look at this chart. while investors have been fretting over the future of yahoo! and twitter, linkedin stole the show this week, perhaps not in the way it was expecting. ♪

emily: in this edition of "out of this world," european scientists say there is almost, quote, zero chance of hearing from the space probe again. this was part of the european space agency's mission, the

first robot to be dropped on a comet when it landed in 2014. the last contact with philae was in july, and conditions on the comet are so cold that the probe cannot function. before we lost contact, the probe sent back tons of data about the comet scientist was been years analyzing. philae is sitting on a comet some kilometers from earth. 220 million we have been talking a lot today about volatility in the markets, especially the tech sector. yelp plunging to the lowest level since 2012 after announcing their cfo would be leaving. pandora also plunging after its latest report. how does it all translate to the private sector? back with me, keith rabois of coastal ventures. you said earlier you thought the public market still had further to fall and the private market valuations have a lot further to fall. keith: i think we are going through a major seachange. we have seen a difference in degree.

a difference in kind is coming. in 2000 -- not to say we are on the precipice of a 2000 collapse. but in 2000, march, when the first bubble exploded, between march and june, there was suspended disbelief that this was a temporary inconvenience. in june, when the market crashed again, people realized there was a permanent seachange. right now, there are a fair number of investors and founders that think we are in a temporary adjustment, as opposed to a permanent new normal. i think this is a new normal i.e., things are going to change , radically for the next one year to three years. not everybody is adjusted to that. when that mental model shifts, all -- will break loose. emily: how much farther do valuations fall? i don't think it is a function of valuation. there's not necessarily a market clearing price for private companies. i think investors are switching from a default -- fear of missing out model to a default

pass model. you have to have an extraordinary team, extraordinary metrics. extraordinary value proposition and market opportunity to get funding. i think that is what we will see that will be different from the last three years. emily: what companies are in danger? keith: i won't name the companies. any company that has a very high burn rate will have a real challenge, because the leverage you have under your control are not easy to pull in a compressed period of time. one of the most expensive things about running a company these days are salaries for engineers, designers, real estate costs -- those things are not easy to change very fast. they are painful, sometimes catastrophic. if you are running into a wall at a really high velocity without a lot of money in your bank account, that is a very painful adjustment and often craters companies. emily: instacart is one of your investments. a lot has been made of the on-demand economy.

maybe that is in trouble. they have cut staff, raised prices. what's going on? keith: i think it is doing really well. it cut some recruiters. maybe they will slow down the pace of growing the company. i think maybe technology companies have over hired. the average technology company is between 25% and 50% bloated. i think that culture will change. they cut 12 recruiters. they did not cut them all. how many recruiters do they actually have? proposition and retention curves of consumers, the unique relationship instacart has with whole foods is something that is permanent. people will decide where to buy their groceries company -- completely differently in the next decade, and instacart is leading that. emily: you are spending on buying houses and flipping them. any concern about this company with so many illiquid assets operating in an economic downturn? keith i think it will do better : in an economic downturn. if you think about the value

proposition we offer any seller in dallas and any seller in phoenix today, soon to be national, to sell your house in about three days. we give you a definitive offer instantly that allows you to have liquidity. on your largest asset. that has never existed before. you can't trade in your house like you trade in a car. you have to list it on an mls service and it takes 80 days to 120 days. we are giving you liquidity. when things are going down, the certainty of an offer is more attractive to sellers than in a hot market. i think we will double our growth, probably have a better margin if the market shifts. emily: keith rabois, always great having you on the show. thank you so much for joining us. time now for the best day ever. kanye west premiering his newest album, clothing line, and even a videogame in front of a packed madison square garden.

20 million people were streaming , it's a lot of eyeballs on this one-of-a-kind music event. the album, "the life of pablo," will be officially released soon. that does it for "bloomberg west." have a wonderful weekend. we will see you on tuesday. ♪

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