♪ caroline: i am caroline hyde. this is the "best of bloomberg technology." where we bring you our top interviews from this week in tech. snap filed for an ipo, $3 billion, the details ahead. plus, apple sales at an all-time high and facebook sees mobile ad revenue pop. we break down the big tech earnings of the week. ge's digital pivot, the ceo

shares how the biggest manufacturers turned to big data and won. bloomberg exclusive interview. first, snap filed its long-awaited ipo with an initial price of $3 billion, planning to raise $4 billion for a market value of $25 billion. the parent company of snapchat is the first u.s. social media company to go public since twitter. the ipo is the first opportunity for outsiders to get a close look into the company known for its culture of secrecy. bloombergup with the technology reporter. >> i was looking at revenue of $404 million last year, and an net loss of $514 million. you can see how much cash this company is burning.

i bring that up because we have seen the headline daily active users, the revenue number, but we did not have a sense for how much they are having to spend to get there. this is the first glimpse that investors have to take into account. can i balance the amount they are spending with the opportunities they are pitching when i'm trying to get to that $25 billion market valuation. >> when you are looking at the business model in general, we are seeing a secretive company having to disclose significant losses, but that valuation? >> the thing i started looking at intently were the risk factors. there are familiar things. there is the competitive landscape. it keeps getting copied by facebook and instagram, companies with more resources and reach. there are issues like founder

control. we will have to see if we want to bet on this company long-term. the founders retain the majority of voting control. the user growth, after twitter's ipo, that is what people are talking about. user growth at snapchat is 158 million daily users, more than twitter has, but a little bit more than instagram has for the product that copies snapchat. >> so when you are comparing -- >> right. instagram has 400 million overall. >> we have a fascinating approach from you, the cofounder of evernote. also in your role as a vc. general catalyst is an investor in snap. what makes this attractive?

>> too much of the company has not been revealed. we are super excited about snap. very few companies change consumer behavior as they did. maybe three or four over the last decade. they are an extremely good company, a consequential product, and amazing execution. the enthusiasm for the ipo bodes well for the rest of 2017. caroline: we have a company exiting, investors how excited and willing have they been? >> this is a down time for tech ipos. there has not been a lot of new issuance out there. that does bode well for the snapchat listing, and they have not been able to make a big bet with a lot of shares offered that promises returns and big growth, which is what snap is pitching here. as they cycled through, looking at the first few pages, we do

see a lot of looking back on the past development. we don't see a lot of roadmapping going forward. there is strategic vision, but when you look at the information that investors will digest, you have the numbers, and you have to believe the story management is pitching throughout the roadshow. caroline: you didn't go public. what are the trepidations as a founder when looking to go to the market? why is there not as much meat to the bone as the potential of snap? >> i think it is always a trade-off between access to capital and how much distraction there is. you pick the best combination of that. where we were at at a smaller scale, it was easy to have as much access as we needed on the private markets, and going public is a lot of work and kind of a distraction because you

have to be open and match wall street time estimates. snap is doing amazing innovation, augmented reality, wearables. they probably have more stuff that is in a longer timeframe then quarter to quarter. >> snap said its performance will be "lumpy". they would have to make fits and starts of investment in new products, and their revenue growth may not be predictable. caroline: we are looking at 158 million daily active users, they are going back every hour, minute. >> right. they are so engaged. >> the engagement is the behavior change. this is why it is a good time for snap to go public because they have done something to transform the way people live their lives.

it is great to give everyone who wants to be part of that opportunity a chance to do it. caroline: how does the app make money? >> don't know how an app that since disappearing pictures makes money? you are not alone. snapchat is not just selfies. now they are pitching themselves to investors as a camera company. >> snap is not just about ads. core to their concept is creating content. that is what the revenue generators are all about. that's what lenses, geo filters are all about. >> lenses, you are straight into the camera. brands can pay for filters that you can overlay on photos and videos and send them to a friend or group. >> geo-filters overlay the where and when businesses are people -- businesses or people can pay

to include a app. i can also send my snap to a feed which my friends can see. which brings us to our third revenue generator. our story. >> our story is a group of feed that snap goes through and grabs publicly posted snaps and puts it into one video feed. we have seen this around in events like the women's march or donald trump's inauguration. >> discover, starting in 2015 , brands started uploading mobile magazines that create stories in a more millennial-friendly version. with ads slotted in between, of course. >> you can't forget the spectacles. you can grab these for $130 at pop-up vending machines around major cities. you take a 10 second videos and it goes straight to your snapchat app.

>> advertisers for a while have been wary about using snapchat , because they are insistent on vertical video ads, when advertisers are used to the horizontal shape of tv. they are warming up to it. >> the true test will come in the years after snap goes public , because the revenue model is only a couple of years old. caroline: coming up, fitbit struggling to maintain momentum. the stock taking a hit this week. more details ahead. plus, we dive into apple earnings. ceo tim cook a said the company's services business will be the size of a fortune 100 businesses in 2017. here he is with more. >> it was our best quarter ever for services. almost seven point $2 billion in revenue -- $7.2 billion in

revenue. app store customers broke all-time records during the holiday, including $3 billion in purchases in december alone, making it the app store's single best month ever. ♪

caroline: fitbit had a rough week, plunging 16%. the company is eliminating 6% of because of falling demand. the fitness tracker is forecasting full-year revenue grew 17%, down from a previous forecast of 26%. apple shares popped after reporting first-quarter revenue $78.5 billion. up 3%. a beat on iphone unit sales, 78 million units in the quarter due to strong demand for the iphone 7, and its services business saw 18% revenue growth. a principal analyst with forrester research joins us with more. >> iphone sales make up the majority of apple's revenue at

this time. while the we look at global smart phone subscribers, that will grow 50% over the next five years, but apple makes a lot of money selling phones. unlike some of their competitors. if we look at the markets they are pursuing, middle-class and upper-class, that growth will not be as high. when we take that into account, it is doubly impressive, the numbers for 2016. caroline: what was coming across was they are doubling down on the services area, doubling the size of this unit, which is as big as a fortune 100 company, doubling that over the next four years. how much is services the right bet for apple? >> it is absolutely the right bet, until they start selling other appliances like refrigerators and cars, there are only so many smart phones and tvs you can sell. i think there are some areas like apple pay where there is

low consumer adoption, a love and percent in the u.s., but a lot of upside. caroline: when you look at the other products they sell, the cfo saying this is ipods, apple tv, but do they need a lot of products? the watch looks like it is selling relatively well record , a fourth quarter? >> i don't know if they need another product. smart watches are only a fraction of total wearables, but they will be 40% in five years, so there is a lot of upside as we move from 18% of u.s. adults owning a wearable to 29% in four years. caroline: what struck me was the lack of mention of china. brazil is going well, turkey going well, but china seems to be a slow down area. are they right to focus on china

or switch to india? >> apple makes a lot of money selling phones. they are profitable. they want to cell phones -- they sell phones profitably. you have to look at the markets where there is the most upside. china is a tougher market, but they have done well. not where their biggest growth will come from. caroline: the right sort of country given the average earnings power in india is less than china. do they have as much of an opportunity in that country, do you think? >> if we look at the growth of smartphone adoption in china, 50% over the next five years, but in india, that will almost double. if you look at each market, about one billion people, the middle-class and upper-class are very large markets, even bigger than the united states. a lot of upside. caroline: staying with apple, a bloomberg scoop. the company is designing a new chip for mac laptops. take on chips would

more functionality currently handled by intel processors. they are already used in the latest macbook pro. facebook earnings out this week, and mobile ads continue to dominate the company's revenue. we will break down all the numbers next. ♪

caroline: now to facebook earnings, a 51% jump in sales to $8.8 billion topping , projections. advertisers continue to push to reach consumers on mobile phones. the social network's user base is continuing to grow, 2 billion monthly active users. this move solidifies facebook's

position behind google. >> i am sure there are some people who would be upset that the numbers aren't even better than they are, but come on, analysts were expecting incredible results, and pretty much everything beat it. we have 25% of the world's population using the platform on a monthly basis. i cannot see any clouds there. caroline: three times the u.s. population. david, dig into the growth of drivers. when i was speaking to the cfo, he was trying to point out that it's business is mobile, now 5 million instagram.

that is growth. >> they are doing superbly on mobile. when i look at growth drivers and think about where they are real prospects are going forward, it is the truly global nature of their business. if you look at the growth in asia and the rest of the world, africa, latin america, they are doing surprisingly well, and this is where i've thought there ir long-term potential was, because they make 10 times more per user in the united states than they do in asia, and yet, the opportunity down the road to build those numbers more to parity is real, so they are getting faster user growth in those regions and making more money per user. start there. their asian revenue was up 59%. and the rest of the world, 52%, so even though the numbers are

small compared to the u.s. and europe, there is opportunity long-term. caroline: the potential needs feeding. we are hearing the cfo saying they need to spend aggressively. it seemed to be the head count, 34% ramping up in the fourth quarter, and they will accelerate that more in 2017. are they spending wisely? >> i think so. to achieve innovation, whether ad products or expansion, you have to have the resources. if you have the cash, that is where to spend it. the idea of ad product animation goes hand in hand with feature set innovation goes hand with feature set innovation. that will change as they cloak global markets as well. the expectations in asia are different than the u.s., the u.k., and europe, so you have to invest smartly and get the best

engineers to do it. i do think it is smart. caroline: david, what about the move to video? video is what sheryl sandberg and mark zuckerberg have been bringing up. there is a wall street journal piece out saying they may be developing a tv app. is video still hot? >> that's where they can compensate for this problem where they have saturated our news feeds, particularly mobile, with as many ads as we could handle. so, they have to charge more per ad or grow their user base, or find other kinds of ads that make more money, and video ads can do that. i thought the journal piece suggesting a set-top box, a tv app, but my guess is they would

like to have some kind of app that allows you to watch tv and still be on facebook on tv. they have tried various versions of this in the past, but it has not worked. wey can show us at well watch tv, and they can continue raking in more dough. caroline: mark zuckerberg saying he will seek original content deals and is still putting video first. melissa, i will find a cloud in the silver lining. facebook did lose out in court, oculus intentionally built on stolen technology. $500 million, the damages they will have to pay. that is a portion of the price tag of what they bought it for in 2014. is this of particular concern? >> oh, gosh, i don't know. of course it is a concern. it is a court ruling that will hit the pocket book. that is always a concern. i do not want to minimize that. oculus being an engine for

innovation, anything that questions its source code is going to be of concern, but $500 million is something that will continue to be litigated for a while, versus the growth for the core platform. i am sure it is a concern. is it a dealbreaker? i can't see it as being that. caroline: david, what about fake news and how much zuckerberg has been trying to respond to this, potentially awkwardly to begin with, but now with some fervor and perhaps chose to orchestrate how he interacts with his own user base. >> it is a concern to the intelligentsia. it is not a concern to the average facebook user. mostly they want to be entertained and diverted, and they are. i do think facebook is taking the issue seriously. i think you will see them taking

more measures to avoid seeming to compound the partisanship that is so big a problem and so cash a big problem in so many societies around the world. the problem is they are so global and operating in so many languages that this problem is global, even the russian interference in the media, so it will not be easy to get a grip on this right away. i think they will over time. on oculus, i think oculus is looking like something they overpaid for. unlike instagram on which they got a spectacular deal. palmer may take some of the blame for this lawsuit loss, also some embarrassing behavior around politics. maybe they are regretting their association with him. they have brought hugo barra in to take over oculus. i think he will be a great leader for that part of the company.

caroline: coming up, tech mobilizes against the travel ban. we cut through the confusion and analyze the opposition out of silicon valley. a reminder, all episodes are now live streaming on twitter. check us out at @bloombergtechtv weekdays at 5:00 p.m. in new york, 2:00 p.m. in san francisco. this is bloomberg. ♪

caroline: welcome back to the "best of bloomberg technology". i am caroline hyde. silicon valley finds its voice as president trump's immigration ban fuels outrage across the tech sector. trump's next order on immigration may even be a greater blow, targeting work releases that google and apple used to recruit talent overseas. on monday, sean spicer address the reform effort. >> you have already seen a lot of action on immigration. whether it is that or spousal visas, there is a need overall

to look at all of these programs, and you will see executive measures and comprehensive measures to address the problem. >> this h-1b order is a much bigger threat to silicon valley than the order that trump issued on friday, although i think this h-1b visa order could be more popular among average americans than the immigration order on friday. especially in congress, republicans and democrats, there has been concern that tech companies have abuse the h-1b process to recruit overseas engineers at the expense of american ones, and used it to suppress salaries for tech workers in the u.s. caroline: we have just seen

pictures of the protest that occurred over the weekend. there has been fighting talk coming back from president trump about the reasoning behind these particular demonstrations, perhaps the chaos we saw in the airports. >> for sure, he says this order was entirely aimed at making the u.s. safer. he has compared it to a review of iraqi refugee, the flow of iraqi refugees from that country in 2011 by president obama, but there are key differences. in 2011, the obama administration said they had specific, credible evidence that iraqi nationals might be planning terrorist attacks in the u.s. 2 iraqi refugees were arrested in kentucky shortly before obama issued that order. in this case the administration has not offered any evidence of a credible threat to the united states.

there simply imposed the order and claimed it has to be in place for security reasons. caroline: thank you. u.s. tech leaders came together in unified anger over the weekend in response to president trump's order. bloomberg has this recap of who said what so far. >> mark zuckerberg was one of the first to speak out. in a post he wrote "like many of you, i am concerned about the impact of the recent executive order signed by president trump. we need to keep this country safe, but we need to do that by focusing on people who actually pose a threat." "tflix ceo wrote the next day trump's actions are hurting netflix employees around the world, and so un-american it pains us all." uber statements grew over the weekend after early backlash over surge pricing. the ceo tweeted "the travel ban is against everything uber

stands for. any driver who cannot work because of the ban will be compensated for lost earnings." lyft also promising to donate $1 million over four years to the aclu. airbnb ceo offering free housing to refugees and anyone not allowed in the u.s. elon musk also weighed in. remember, the ceo was born in south africa. he tweeted "the blanket entry ban on citizens from primarily muslim countries is not the best way to address the country's challenges." he went on to ask followers to read the order and said we will seek advisory council consensus and present it to the president. at least half of the top 20 tech companies were founded or are led by immigrants. among those, microsoft ceo, google ceo, and apple ceo tim

cook, all issuing statements condemning the travel ban and supporting their immigrant employees. caroline: for more on the tech industry impact, we bring in bloomberg's senior executive editor of global tech editor of global tech coverage and bloomberg's managing editor of asia tech coverage. we are seeing tech standup unified in anger? >> this is a massive political repudiation of the trump administration. 2 things are going on. silicon valley derives enormous strength from immigrants. number two, these are blue state companies. their employees by and large did not want to see donald trump president. they are reacting very negatively to this immigration

executive order and putting pressure on their leaders to take a stand. caroline: fascinating. many are citing the fact that steve jobs himself was the son of a syrian. where do we go next? there is concern building among those leaders that next will be the visas will be analyzed and perhaps executive ordered against. >> that's right. they depend on bringing workers in from around the world. either for short-term or longer-term for assignments. to be clear, maybe it's good to begin with a caveat. we saw the draft of an executive order. it has not then signed by president trump. it may be modified before it is signed into law. there are a couple of things that are very clear. the work visa programs do not work to the original purpose of their legislation. two, the changes are consistent with the populist statements president trump has made. it looks like trump and congress will look at a variety of

reforms aimed at giving american workers priority, then paying workers coming in from the outside more money rather than bring in lower wage workers and pay them more. caroline: what seem so interesting is that this is more fuel to the fire. there were some olive branches to begin with. it was only december 14 that we saw tech leaders in the room with donald trump. will that unwind? >> no. that is why executives like elon musk and travis kalanick see the need to be on the business council despite the pr price of among employees and customers. they want a seat at the table to push their agendas. the h-1b program is prized in silicon valley, and they want to maintain it, so that's why they're trying to advocate on their own behalf. caroline: is there an update on the timing of this?

you said the executive power is not quite as strong on this front, but could we see it as soon as this week? >> there is speculation that it will be coming soon. it will be difficult to tell given the backlash on the original executive order on immigration. i do think you will see a split over the h-1b issue between the u.s. tech companies recruiting highly paid workers from overseas to work on specialized assignments, and the outsourcing companies typically bringing in workers who are paid less money. the reforms are aimed at splitting those two and looking at the differences between them. if there are fewer visas to the outsourcing companies, then there may be more available to companies bringing in specialized work. caroline: when we are looking at so many actions we are seeing, donations to the aclu, that seems to be an interesting tact

some are taking, perhaps not speaking directly against trump, but putting in help for their own workers. >> not to interpret it cynically, but tech ceos are striving to demonstrate they are bona fide. the pledge of support to refugees. lyft donated $1 million to the aclu, they hit a home run. uber stumbling. there is not a lot of rationality behind this delete uber campaign, but people, the crowd, concluded they were not being strident enough in their communications on the executive order, and here they are on their own statement, so a little optics at play here. caroline: we heard from another big tech voice, this time from

canada. on monday, bloomberg tv canada caught up with the blackberry ceo who advised donald trump. he shared his views on why he opposes the ban. >> i understand the reasons of protecting the u.s. in terms of safety of the country, but this is an extreme move, and one that came quite suddenly. caroline: chen later said the travel restrictions were too broad and confusing to be successfully implemented. still ahead, our exclusive conversation with the general electric ceo. if you like bloomberg news, check us out on the radio. you can now listen on the bloomberg radio app, bloomberg.com, and in the u.s. on sirius xm. this is bloomberg. ♪

caroline: after a long courtship, snap plans to list shares on the new york stock exchange instead of the nasdaq. that is according to a person familiar with the matter. general electric has been focusing on software and analytics, so what can we expect from the industrial company in the near future? the general electric chairman and ceo set down for an exclusive interview in boston. take a listen. >> it was more the recognition that our new jet engines have a couple hundred sensors and provide a continuous stream of

data. we made the decision that we wanted to model that data on behalf of our customers. not relegate it to someone else. that led us back into the chain of adding talent and building software platforms. our theory is every company will have to be a digital and software company. we want to lead that path and that is how we have invested. >> do you feel at home with that? >> i have had to relearn. one of the things when you are running ge is you always have to say, why not us? it's kind of like, what is next, let's try, so we brought in a lot of people from the industry to help us. myself, i have had to learn new ideas. >> loosen your tie. >> exactly. >> how do you do that? the company has a famously strong culture, which is not exactly the same -- >> we had to change. you have to recruit the talent.

then you have to get people that are comfortable with the speed and culture of silicon valley, the way people get paid, the pace you have to go. people have to lrn to live in a horizontal and vertical world at the same time. which is hard. then we have to bring the digital people. if you are in an airplane at 35,000 feet, do you want the people who made that engine to quit every five years? you have to bring a little bit of the industrial thinking into the digital realm. >> what with the company look like in 20-30 years? >> we will still have an industrial core, but will be a big software player. we are going to be deep. i don't know we will be broader or in more industries, but we will be much deeper. we will go information all the way through how things get made,

so a ge that is deeper but not broader. >> the same industries -- >> analytics, making the parts. that to me is more value for the industries we serve. getting back to your global point, one thing about analytics is that it democratize is -- democratizes the supply chain and says you can do at a factory with 300-400 people what used to take you 2000 people to do. we are investing in both of these and a substantial way. >> the idea of a conglomerate. you are now a much more focused company. with the arguable exception of the medical services bit. that seems more separate. is that fair? >> the genesis of our medical

business comes from the global research center. we basically invented the x-ray tube 100 years ago, all the life sciences comes out of our research centers. we see health care as part of the package. it all rests on a common core. >> do you think the core of ge is still that management ethos? >> nothing is general anymore. when i first became ceo, we were in insurance, media, jet engines. that is too hard today. i think you have got to have this combination of depth and breadth, and managers who are more technical domain spreaders. so we have had to reshape. >> ge is going to work in -- and andoing to work at nbc

medical services, that is shifting? >> it is much more constrained today. we want people to be broad to, but they also have to be deep. you can't pick the right ideas and drive the change required. caroline: that was the ge chairman and ceo. coming up, uber's ceo slams on the brakes, calling it quits on trump's economic advisory council. all the details ahead. this is bloomberg. ♪

caroline: france has issued an ultimatum to uber, pay more or risk new legislation that would set a new minimum wage for drivers. the country wants an agreement in place as early as next week between the company and drivers union, stating protests over better pay. a mediator has been appointed to coordinate discussions. if talks fail, france will recommend a legal minimum based on time and distance traveled. meantime, uber ceo travis kalanick quit trump's economic

business advisory council after a petition calling for him to step down. his participation on the council prompted blow back on social media following president trump's controversial executive order on immigration. it snowballed into a #deleteuber campaign. we spoke with the reporter that covers the company. >> it is a pr disaster for uber. they got a lot of blame for seeming as collaborators for joining the council. elon musk and others are on it, but the backlash for uber has been strong. caroline: it feels rather unfair in that respect, others ceos and leaders have not had this act -- had this backlash. when uber at a time continued to service of jfk airport.

it's worth noting that lyft continue to serve them as well. it's seems a storm they failed to deal with properly. >> there were a lot of factors. uber started off with a combative reputation, so did not have a lot of goodwill with people. it underestimated how much -- it is a product in big cities where many users are in the streets for these protests, so it underestimated how strong a stance they would take given the demographics of its own users. caroline: we did hear from travis kalanick, promising to put forward concerns from users to the president directly. what can he do now if he is not on the advisory council? >> it is an about-face. with trump. we have not figured out what the two said, but he will not be able to with trump attend the ay meeting and voice those concerns.

caroline: we also caught up with brad stone of bloomberg technology following the uber and airbnb for years. he has written about them in his latest look, the upstarts. latest book, the upstarts. >> it really is remarkable how these two company started eight years ago, both founders kicking around at the inauguration of barack obama and talking about their crazy ideas. the book entered why and's the the 2 book intertwines stories, very representative of this last wave of silicon valley innovation. unlike facebook, microsoft, and google, it was a fight for both companies in every city, and i chronicle how they did it and why the ceos had to be different, not introverted storytellers, but leasing together these coalitions, bringing their

customers to support them to create these international companies. caroline: you say about how their characters were different then founders of google, moresoft, they were no extrovert, and that did not always sit well with big investors. >> that was fascinating for me. we consider venture capitalists the soothsayers of our world, but it is hard for them to see the future as well. 150 of investors who got in 165 email in about uber cab and 2010 the opportunity need to invest did not reply to the email. the ceos seemed so different. investors were not sure they could trust travis kalanick. people are embarrassed

to say that they missed out on these huge companies. caroline: enter staying that travis is aligning himself with donald trump, being on the advisory panel. they're not afraid to rub up close to authority. >> let's be clear. this is the source of the backlash, the delete uber campaign. travis is on this council with the elon musk and the ceos of ibm, gm, nike, and they want a seat at the table. it is not that unusual. yet, we have to say that people have an ambivalent relationship with uber and seem to be willing to expect the worst from it. through almost a sort of misunderstanding over the weekend because uber was facilitating rides to jfk, so was juvenile and lyft.

they do not tell their drivers what to do, but they tweeted a message saying they would not turn on surge pricing, and nevertheless it was construed as an advertisement, and now we have this mess. caroline: it is something you document well in your book. perhaps sometimes a few pr master strokes gone wrong when it comes to uber. what i am fascinated about is the new administration. airbnb is a threat to one of donald trump's own business lines. how much has he spoken to come -- how much has he spoken to, for, or against the startups? >> donald trump is probably the world's most visible hotelier. perhaps not a great position for airbnb. they were closely aligned with the obama administration. brian chesky had a relationship with the president, and yet the challenges these companies have faced have been fundamentally local. cities and states governing their future.

so, the threat with trump is he can get on his twitter soapbox create problems for the likes of airbnb. it would be a conflict of interest, but that has not stopped the president in the past. it is one of the reasons why we see travis stay on the council despite the hit. they want a seat at the table and further their agenda. elon is on the council as well and has an agenda. as it relates to alternative energy. he does not get the criticism, and uber does because it is high profile. caroline: that does it for this edition of the "best of bloomberg technology". we will bring you the latest in tech throughout the week. two in each day at 5:00 p.m. in new york, 2:00 in san francisco, 6:00 a.m. in hong kong. do not miss our interview with tim armstrong on tuesday. remember, all episodes are live streaming on twitter at @bloombergtechtv weekdays. that is all for now. this is bloomberg. ♪

♪ alix: coming up on "bloomberg best." the stories that shaped the week in business around the world. central banks keep policy in a holding pattern. no news is an indication of good news? >> the fed did not push back against the markets view regarding interest rates. >> how many ways can you say neutral without saying neutral? there are worries over immigration. business leaders react to orders from the white house. >> we are beginning to see cracks in this very brief embrace between big business and the trump administration. >> i don't know why anybody expects anything different. this man is doing exactly what he said. alix: ge's ceo illuminates the