caroline: i am caroline hyde. this is the "best of bloomberg technology." we bring you the top interviews from this week and tech. a stock more expensive and less control than any media company before. plus, the new deal for yahoo!. the offer that could end its long dance with verizon. apple reaching new highs. what is behind the surgeon can it sustain? potential investors are

scrutinizing snap financials. according to the filing, the maker of snapchat is offering 200 million shares. at the top end of the range, snap would have a market value of $18.5 billion. we spoke with david kirkpatrick and cory johnson for more. >> what becomes of this, i don't know. it is a high valuation. on the positive side, they have big growth numbers on a year-over-year basis. is an extraordinarily high price for any company of any kind with any kind of growth metrics, but for one with negative gross margins, with growth is slowing so much, where there are big questions raise,

this roadshow will be an interesting one, but there are some strange things in the filing, a very unsteady growth rate. the first quarter of last year had only 14% growth sequentially, then they turned that around. these of the things that will come up on the roadshow. caroline: what do you think? how much is riding on snap and its founders and how much they get to take come, but the rest of the tech community on how successful this ipo? i think the industry is watching this with fascination. this company does rise above the rest in that it is at least , and more or less legitimately compared, to companies like facebook, google, and twitter.

it is way smaller, but has that seemingly potential to be an new kind of communication given the passion that young people have developed for it, so it does symbolize what some people think is the next phase of technology, driven heavily by video. on the other hand, it symbolizes a kind of distorted financial mindset where they are not giving shareholders power. pioneeredhat facebook creating two classes of stock has been taken to an extreme, every tech company thinking the founders ought to have complete control, which is what they have here. that is something the industry is watching with ambivalence. caroline: this lack of voting rights, it seems to be according to the filing that it was the first u.s. company to level best and have no voting rights whatsoever.

is that why they are being more cautious with the overall they wish and of the company? worth lessompany is money to shareholders for a number of reasons. when it doesn't have profit, free cash flow, when the owners of their shares exert the rights. there are a lot of things snapchat is doing that will give it a lower valuation, but whether it is beyond the pale, it is hard to say. it is bothersome when you're looking at companies like groupon. it doesn't bother with berkshire would haveut it bothered yahoo! when investors had to say that company from itself. when companies face plant, we are investors can say the owners of this company and we can make this thing better. that will never happen for snapchat. caroline: david, you know the

inner workings of facebook and mark zuckerberg well. leafas we see snap take a out of mark zuckerberg's book, we are seeing facebook copping what snapchat is doing. can snapchat change the way in which the world works? >> i don't think facebook is primarily copping snapchat. there are features they have borrowed, and that has been acknowledged by instagram and others. the twoarison between companies goes so far. facebook when it went public had the potential to become a world altering service that was used by a most everyone. believe that is true of snapchat, you almost can't and iy this valuation, don't think you can justify that kind of talk about snapchat. it does not have in my opinion in its current design the

potential appeal to our parents, children of all ages, ordinary working people. it does not have that capability, so it is not a true comparison. snap is: next up for the roadshow, where management will travel to los angeles, san francisco, and new york to pitch the stock. when deciding whether or not to put money into snap, investors are going to compare the company to its peers, twitter and facebook. what is snap hoping you will equate them to? neither. snap executives want you to think of them like amazon. seem strange? there is a method to the madness. because snape is a secretive company, investors will have to decide whether they trust management to build they business. for now, it is unclear what that

will look like. ande the company grows expands, management has told bankers that financial performance could be "lumpy." the revenue model is only a couple of years old, and losses are higher than sales. sound familiar? those are amazon trademarks. alarmed investors with his massive spending to get into new markets. so far, his efforts have been successful. others have been duds. the bottom line is that amazon investors have had to be patient, and in the long run, it has paid off. 43 thousand up percent since the company went public in 1997. in the past 10 years, it is up 2100%. snap is a much younger and riskier bet. will be evan spiegel

asking potential shareholders to trust him. naroline: coming up, verizo close to a renegotiated deal with yahoo! after security breaches. we will break down the tentative deal next. later this hour, we hear more from the man credited for the payment app loved by millennials. the ceo joins us. this is bloomberg. ♪

will beginerizon offering unlimited data, charging $18 a month for a single user -- $80 a month for a single user. an about-face for the biggest wireless provider in the steadfastlyhas

refused to offer unlimited plans. verizon is getting closer to a renegotiated deal for yahoo!. balked at the first price after massive data breaches. are sharings ongoing legal responsibilities related to the hack. will walkshareholders away from this fairly happy because there was a risk that verizon might walk away from the deal. has been going on has been who has more to lose here. i think yahoo! has more to lose. if yahoo! did not get the sale done, they would probably have to rerun that sales option that took months, and they probably would not have gotten as high of a price. verizon had the most synergies

to offer. know, we areing we happy with only a discount of $250 million. it may change, but in that ballpark. caroline: i spoke to tim armstrong, and there seemed there was a desire to get their hands on yahoo!. closes.hopeful the deal we have a high appreciation for yahoo!, we just need to figure out value changes based on breaches. the value change has been negotiated. what about the next steps for both? indeed, where verizon pushes now. >> you got the reason why verizon was willing to accept such a deal. they feel like they can put yahoo! and aol together.

we have already reported that there was a conversation between verizon's ceo and the virgin media ceo about a massive deal for charter communications. we don't know if that will happen, but verizon is looking at 10-12 acquisitions after yahoo!, so getting this deal done allows them to move on to what ever is next. you have to think there is a to likelihood that could be a bigger deal. fraction of larger the company, so from yahoo! standpoint, they are willing to accept the discounted price to get a buyer for their property, but so they can monetize yahoo! japan and alibaba, which is the crux of yahoo!, and that is what they need to figure out. is somebody going to buy this stuff?

would it be alibaba? all those are still outstanding questions. caroline: you are a disney man. i want to make the most of you while you are on the show. also on apple, we are talking deals there and maybe lack there of when it comes to apple. cashple has this enormous file, hundreds of millions of dollars, and tim cook has signaled over the past 12-18 month that apple may be willing to do some bigger deals. they have grown products organically, shying away from m&a, but 10 cook promised they will do something big. we have not seen it. my colleague alex webb dug into that to figure out why they have not done this. they are not really structured to do big deals as a company. they don't have a big m&a team.

they don't like working with investment bankers, so the mechanics of being able to do a deal is not easily there for them. not to say they won't, but the investing community has scratched their heads and set, ok, you said you wanted to do deals, but why haven't we seen it? maybe their culture is not structured to do this, unlike at&t and time warner. meantime, this week, apple hit a record high, investors optimistic the next iphone will drive a resurgence in sales. alex webb joined us to lay out what is behind the stock surge. as much as the stock is at a record high, they aren't not at the record market capitalization because of the buybacks in recent years.

they are below that piqued market cap, but the stock is the highest ever. it is tentatively so close to $700 billion. is it just the market rising? is there is a about the apple business model? boost off the a earnings call, and the expectations for the next iphone sales, but since then, it has taken a spill two weeks ago, then the forecast for the present quarter and how that ford imply sales will go the next iphone have kept people optimistic. digging intoi and recommendations on apple, one buys.41 are we likely to see the rally continue? >> that is the implication, yes,

but we are getting close to the target price. 142 dollars is the average on the system, so it will be interesting to see how compelling the next iphone is, how they attract new customers in asia and china, and that will speak to the attractiveness of apple. we have seen competitors in asia have developed phones which are as good as the iphone or approaching the quality of an iphone, but they don't have the brand cachet, and that remains a differentiator, that shininess apple has about it and its attractiveness as a brand. caroline: and how much bank from their buck they can get from their user base. they say they have a one billion pieces of equipment. >> that is the narrative that the executive team is trying to push.

they say they intend to double services revenue over the next the averageand revenue per user is a statistic that people are keen to look at. it is a high-margin business selling services. replicable,tely apple music, television content, as well as the app store, which sells a huge number of products every year and apple gets a cut of that. bloomberg'sat was alex webb. coming up, wall street meets silicon valley, and that goldman sachs technology conference, highlights from our interview with david solomon, next. this is bloomberg. ♪

story we are watching, commuters in india face disruptions this week, uber and another ride hailing giant bringing the city to a standstill. drivers strike for better pay and working conditions. meanwhile, staying with uber, a little-known option available. it is said to have a program that let's those who work at the company for four years, sell back 10% of uber shares. they said the plan cap's buybacks at $10 million per employee, but it is meant to give uber in place an incentive to stay. the company has no ipo inside.

this week, we were live from the goldman sachs technology and internet conference in san francisco, where investors and bankers converge with tech titans. deals are ushering in an .ggressive era of m&a we spoke with david solomon about the rising tech deals and activity in the space at the conference. lot ofe is certainly a capital available for companies that are growing. that capital is available privately away from the public market. last year certainly was a historically low year in terms of ipo activity. i believe these things add then ebb and flow, so we are hopeful to see more of ipo activity this year.

if they are able to run their businesses, grow, and access capital privately and there aren't other pressures, these companies are putting off the opportunity to come to the market longer, and the reason they can is because of capital available privately. i would expect to see companies come back to the market, but that process will be thoughtful, methodical for these companies. caroline: we saw plenty of consolidation and m&a while cash balances were heavy. wemight see more cash, if see money brought back into the united states. in the tech space is active right now. we have been involved in 14 m&a transactions since the first of the year. that is more than we have seen and a comparable six-week period since the late 1990's.

i think there are a number of reasons why that is occurring. one thing that is happening is you have very large companies that are growing quickly. over 50%last year grew on a 28 billion dollar revenue base. a $130grew 27% on billion revenue base. they are taking revenues away from other businesses, disrupting, and that puts businesses in a place where they have to think about strategic options carefully. we will see consolidation in the tech space, and activity levels will continue to be high this year if the environment stays the way it is now. it will be a relatively good m&a year. caroline: let's talk about

fintec. lloyd blankfein said goldman sachs is a technology company. are you hiring more technologists and engineers than bankers? >> we clearly are using technology and our business more than we would 15 years ago. it is easy to go look at the equity trading business 15 years ago. it was voice to voice, person to a fast and now there is system of connectivity and people trade equities electronically, so that is a in the people and systems you need. aspectsgoing on in most of the business. the firm adapt to those environments, and we have a diverse workforce, and we obviously need different talent. we have increased the number of stem graduates because there is more engineering work, coding

work, and we look to make technology investment that can lever our ability to serve our clients, so we need more of those people. it is a diverse group of people that puts us in the best position to service our clients. as we discussed, the quality of our people and ability to attract great people to differentiate the firm is important to our overall business. caroline: does your culture have to change to attract these people in? do they want more parental leave, holiday? >> i don't think it is fundamentally different again people today coming into the workforce want to work for a great organization with terrific people that serves clients, has a business purpose, gives them ,he opportunity to learn, grow so we have been focused on cleaning the best work environment for long-term growth, positive experience, economic reward. people believe if we do that, it

is good for shareholders, clients, and a positive cycle. caroline: you got into digital lending, how is growth there? >> that is a new business and platform we started. we think we are in an interesting position given our balance sheet and funding, but without the legacy history that other commercial banking competitors have come a we are in a position where we can build a taylor technology product to clients, a very targeted universe we are going after, but we think we have an interesting product and are excited about the growth opportunity. so far, it is off to a good start. my conversation with goldman sachs code cheap off rating officer david solomon. , generalcome keith alexander joins us to discuss the new administration's approach to cybersecurity, next.

if you like bloomberg news, check us out on the radio. bloombergsten on the radio app, bloomberg.com, and in the u.s. on sirius xm. this is bloomberg. ♪

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hi grandma! and the fastest internet. [ girl screaming ] [ laughter ] welcome back to the "best of bloomberg technology". i'm caroline hyde. are investigating the extent of contact between president trump advisors and russian intelligence agents in the lead up to the election. this after michael flynn step down this week. the developments are the latest example of national concern about russia's cyber capabilities and influence on u.s. national security. we spoke with retired four-star general keith alexander. he is now at the helm of ou ironnet cybersecurity. >> i don't want to get in front

of the president not having seen the executive order. what he gave to the press about addressing government, getting their i.t. infrastructure ready, getting government and industry to work together and address key problems, those were all in the right venue and what our nation needs to get started. the key thing you see in his approach is that he is delivering on a campaign promise that we will take cybersecurity seriously and address this problem, and to do that, we need government and industry to work together. onnet does look to the government as a potential client. you have worked in the nsa. were you privy to conversations as they worked towards this draft. are they looking to the private sector for advice? >> they do. they reach out and give people that can really read a chance to look at this and give advice.

i think that was one of the great privileges and honors, to sit in as a listener with the president and others and talk about it after the press left. i thought that was a great way to build on it, and you can see they are taking that input and continuing to refine that executive order in a thoughtful way. caroline: the former mayor of new york, rudy giuliani, expertise, do you think? >> he has the management and leadership insights of how you bring industry and government together, and that is an important part of this. when you look at folks like rudy giuliani say what does he bring to the table, he can be one of the people who healthspring industry and government together , and that is as important as bringing in technical folks like myself and others to talk about the actual problem. caroline: let's talk about russia and all of this comes on the back of revelations that russia was behind cyber attacks

in the run-up to the election. are you about relationships with the trump administration and russia as other seem to be? >> i take a slightly different and probably unique view, but here is mine. when a new president comes into august, one of the things we ought to do is say, is there a way we can work with other nations? and if so, how do we do that? what is the right relationship the united states should have with russia, china, and others? and can we do this in the peaceful way. can we come up with the relationship. where are the limits to that? thisthose limits and set according to what his administration will do. one of the things i take great comfort in is that some of the people he has brought into his cabinet. y oflook at secretar

state, this is a great individual. and secretary of homeland security. you put those together, he is getting people who will give him candid advice. my experience inside that room once the press left, that is what he is seeking, candid advice. it was amazing to see him go around the table, talk to people, get their insight, listen. you know what i thought? that is the president our nation needs to see. he is listening, getting this right, and is going to build this out and address problems we need to address come and that is a good thing. so going back to russia, the first step is we don't want to step out with a, let's go to a conflict. is there a better way to do this? if the answer is yes, we should research that first, discuss it, state to state and others. caroline: we have already had michael flynn, the national

security advisory team in disarray. can you talk about whether that is a weakness and a worry? i think they selected somebody already. i heard. i think that broke the press and that is out there, so i i am not breaking in new come of that is what i heard. i worked with bob. he worked with general mattis. you have other great people in this. keith kellogg and others, and on homeland security come he has great people there. the good part is he is reaching out and getting good talent. that is a good thing. could we see the relationship with trump and some of the u.s. secret services be impossibly damaged from some of what happened?

is there any vitriol or fight back? >> in the room i was in, you could say that for the current director of nsa. not at all. completely professional. is looking president at these things. he is making statements, but at the end of the day, when i saw him reach out in discussions with mike rogers and with others, i don't see that happening. caroline: can you give us a global perspective of where is the need of greater cybersecurity, preventative measures? you are getting potential calls. is the u.s. a key concern? >> the u.s. is in part because we are a country, when you look at how you attack the united .tates, terrorism, cyber

if those are the two vectors, we have done a good job on blocking terrorism or do to keep that up. .hat is a key for our future a lot of work there, but our cyber defenses aren't there. fixed government. wean industry hit by cyber, would see that after the fact. that is not where we need to be. it needs to be defensive. we need to be able to defend the nation that network speed so if somebody tries to hurt us, we can stop it before the attack cripples us. so that is where we have the biggest needs and things to move forward on. when i think about the greatest concern i have, it is when i look at that and think, ok, this andhere secretary gates leon panetta and others say

these are issues per we don't need a pearl harbor. found comforting was trump listen to those things. he said we are going to make steps. i don't know we will get it all done this week, but i think they will address that and we will see movement on. we have to get industry and government to work together, but it starts with the first step. up, the: coming pentagon is paying hackers to test its key internal systems for any weaknesses. we will hear from the so-called ethical hackers hired to carry out the bug bounties. from the coo.r this is bloomberg. technology ♪

caroline: facebook is adding live games from mexico's top soccer league. through a deal with univision, broadcast 46ill

games starting saturday through the playoffs. the commentary will be in english, and facebook streams will only be a loud in the united states. financial terms were not disclosed. at&t and its directv unit are being sued for collusion to cheryl l.a. dodgers baseball games. the accusation comes as regulators and politicians assess at&t's planned purchase of time warner. at&t has dismissed concerns the takeover would limit competition and plans to fight the antitrust case. u.s. cybersecurity continues to be a major theme under president trump, and with vulnerability concerns rising, a three-year or million dollar contract to carry out bug bounty's across the pentagon. completed anrs ra

exercise, with more down the road. the pentagon certainly recognized the threat is just as fast for government as private enterprises. toy realize the only way stay ahead of the threat is to utilize the same hackers who are attacking them every day. they are trying to get that adversarial perspective when someone is trying to break into critical assets that are running this nation. it is exciting to see them take progressive approach, like the technology companies have done for years. caroline: you are a man with experience working at the department of defense and nsa. talk to us about your experience. you just ran this exercise. what did that bring up?

was the pentagon surprised by the number of vulnerabilities they had? >> the government has taken a consultative approach, let's do assessments on our systems, taken reports and remediate the problems. is that wence here have had 80 of the top hackers across the united states trying to break into a very critical system. this is the first time the government has attempted something like this. within a few hours, we found something pretty critical. they remediated the problem very quickly. it is a widely deployed system across military branches and the government as a whole. caroline: just looking at the screen, cyber incidents versus federal investments, phenomenal growth and cyber threat, not so much growth in the amount of investment in cyber attacks

coming from the government. >> it is scary. the government is starting to recognize they need to be thinking outside the box and take these progressive solutions. we have a massive supply and demand problem as it relates to cybersecurity jobs. over one million jobs remain unfilled globally. that will sky rocket to one point five main jobs by 2019. by utilizing these crowd sourced approaches is the only way to stay ahead. 80 of the tophad ethical hackers in the united states. are you looking to ethical hackers outside the u.s.? >> we do leverage hackers all over the world. we are in 40 different countries and utilize them for our enterprise-focused customers. the government is a little more sensitive, but we do expect them to expand the scope overtime. we think they will be

comfortable with the idea of bringing more people outside the boundaries of the united states, starting with our allies, then hopefully expanding from there. that graphic as to how much cyber threats have increased. is it just the media has got excited about it? or indeed the 1512% growth in cyber threats in the last 10 years, have they got more frequent and more damaging? >> the threat is increasing in velocity, but we are doing a better job of spotting the attacks, so the data is a little deceiving. we have better technology and capable of figuring out when people are hacking our networks, and because of that, the number looks like it has been

increasing, but we have been attacked by other entities for a long time. this is nothing new. it is just getting more sophisticated and we are hearing about it in the press more than we have before. ceoline: that was synack jake kaplan. ar bill ready on paypal's let us deal. of bloomberg technology are live streaming on twitter. in news out at 5:00 p.m. york, 2:00 p.m. in san francisco. check us out. this is bloomberg. ♪

back now to the goldman sachs technology and

internet conference in san francisco. this week, hey pal announced plans to acquire tio networks, a bill payment processor that process $7 billion in 2016. we caught up with the paypal coo bill ready that help turn turn venmo into a payment app. about how we democratize the management and move money around the world. the underserved is how we think about bringing folks into that democratization. of bill pay as a critical service for those folks, and we also think about the underserved as a population of more than a third of the u.s. population, 2 billion people plus around the world underserved by traditional so weial products muss

,hink we can get a halfway heart of our broader vision. caroline: are you thinking about bringing consumers from tio on to paypal products? , you cano, with tio walk into a store and make a bill payment, 65,000 locations around the u.s.. , where youpal cash can walk into a 7-eleven, load money onto your paypal account, and even though you may not have had a bank account or card, all of a sudden you have money and a paypal account and are part of the digital economy. now you can walk into a 7-eleven and load cash on to that and you are part of the digital economy. we think with this acquisition that we can get access to broader products as well. caroline: it screams of

underserved, a merging markets as well, so how does this fit into the internationalization of paypal? >> we are in 200 markets, 200 million consumers, and 2 billion plus consumers are considered underserved worldwide. we think about ways we can serve those folks and bring them into the digital economy and give them access to financial inclusion. international remittances often serving the underserved. greatnk of this as a compliment to what we are doing with zoom and access to the underserved worldwide. caroline: you join paypal through an acquisition, bringing venmo into the larger hub. what is the mindset of paypal about acquisitions at the moment?

you talk about the underserved, is it only debt everywhere you want to make acquisitions? onwe have had a huge focus mobile. we did more than $100 billion in mobile last year, and we think there is a huge move to consumers moving to mobile as their primary device. we have led the way and want to continue to push. we think about financial inclusion for consumers and merchants. where we willes have a lot of focus it we have had a number of great acquisitions, and we have looked to grow organically. we did 11 plus strategic ortnerships in the last year so, and that included not only these are, mastercard, traditional banks, where we are partnering to bring services there, but folks like facebook, google play, and other

technology partners we are working with, so we are bringing spirit andup innovative mindset to acquisition and the company itself to drive mobile financial inclusion as part of a broader ecosystem. change whenat was a you got into the set and mastercard. how is that coming to fruition? many people say paypal was leading the charge and drop the ball and let other companies get spaceof it in the fintech . does that help win back some of that space? >> paypal has been one of the most successful fintech companies over the last 20 years. andpartnership with visa mastercard really is a demonstration of how our interests are aligned with the ecosystem. we have always pushed for the digitization of cash, and brought a lot of for them to

players like these are, mastercard, issuing banks and those players, and historically there are some places where we were not working so closely on those things, but we always had cash is theerest as common enemy and bring that into the digital world. we have led the way on that and partnered with those banks to let us do even more. caroline: staying at the goldman sachs technology and internet conference, we spoke with a member of the paypal mafia, max let's an. take a listen. >> the road is shaping up nicely , but we are not particular focused on measuring ourselves up to any one particular giant. excitedore about crating value for our partners, but the dig trend in a wrong one,een

where companies, not us, walk out and say everyone here is a bunch of idiots. we will not be anything like you guys, and that is wrong. the american financial system is probably the single best one in the world, and being a member of the club is a central part of our plan and anybody who wants to be around for the long term, so i want to grow my way into the club. caroline: tell us about that growth. what products will you be looking to next? >> we are focused on our consumer credit to view of the world. bringingcited about out new and interesting flavors of our products soon, but do we have some brand-new things we are working on? i'm afraid i have to keep them a secret, but i think

delivering value directly to the customer is something we are excited about, so at some point, we will create things that speak directly to our customers. caroline: you say the u.s. is the single best economy in terms of its banking. what about the regulation? we are looking at the regulatory environment becoming easier come perhaps the dodd frank act will change, a net positive or net negative? >> it depends on the outcome of the changes. much of the rhetoric around regulation stifling innovation is not untrue. i happen to agree that loosening some of the really tight grips that we have put on the industry after the 2008 crisis, it has been a while. i think we can start being more but a fairlending,

amount of what was put into dodd-frank -- throwing it all out wholesale is also a mistake, so it is more nuanced. regulation is important. it is necessary. marcus don't always correct itself quickly enough. engage withant to the regulators as they reshape the rules right now. tooline: is it important engage with the new administration as well? >> i think so. it is important to engage with the democracy if you believe in a democracy. sticking your head in the sand and saying i don't like what is happening in washington is foolish. we have a responsibility to be part of the conversation, not run away from it. caroline: that does it for this addition of "best of bloomberg technology". we will bring you the latest throughout the week. .une in tuesday

each day at 5:00 p.m. new york, 2:00 p.m. san francisco, and 6:00 a.m. in hong kong. that is all for now. this is bloomberg. ♪

carol: "bloomberg businessweek" welcome to -- welcome to "bloomberg businessweek". i am carol massar. oliver: i am oliver renick. the kremlin influencing elections around the world. carol: all that ahead on "bloomberg businessweek". ♪ carol: we are with megan murphy of "bloomberg businessweek". look at thee a potential for a china-u.s. trade war and how we should look at it. not