caroline: i am caroline hyde. this is the "best of bloomberg technology," where we bring you all our top interviews from this week in tech. coming up, snap pitching a stock to investors that is more expensive and comes with less shareholder control than any media company before. we will dig into the details. plus, the new deal for yahoo!. we preview the offer that could finally end its long dance with verizon. and, apple reaching new highs. what is behind the surge, and can it sustain? first to our lead. potential investors are scrutinizing snap financials.

after it set the terms of its ipo. according to the filing, the maker of snapchat is offering 200 million shares for $14 to $16 each. at the top end of the range, snap would have a market value of $18.5 billion. that means the snap cofounders evan spiegel and bobby murphy could each take him a check for as much as $256 million. we spoke with david kirkpatrick and bloomberg tv editor at large cory johnson for more. cory: what becomes of this, i don't know. i mean it is certainly a high valuation. on the positive side, they have got some big growth numbers on a year-over-year basis. we all know these story of who they are reaching and how hard those consumers are to reach, and how valuable they are to advertisers. but this is an extraordinarily high price for any company of any kind with any kind of growth metrics, but for one that has negative gross margins, with growth is slowing so much, where there are big questions raised, this roadshow will be an interesting one because there's

excitement around the deal, but there are some very strange things in the filing, not least of which a very unsteady growth rate. there was one quarter on a sequential basis, the first quarter of last year, and only 14% growth sequentially, then they turned that around. so what happened there? how does the business work? these are the things that will come up. caroline: david, what do you think? how much is riding on snap and its founders and how much they get to take home, but the rest of the tech community on how successful is this ipo? they have got to get it priced right. david: it is one of the biggest ipos in recent history. i think the industry is watching this with fascination. this company does rise above the rest right now in that it is at least sometimes, and more or less legitimately compared, to companies like facebook, google, and twitter.

obviously, it is way smaller, but it has that seemingly potential to really be a new kind of communication given the passion that young people have developed for it, so i think it does symbolize what some people think is the next phase of technology, driven heavily by video. on the other hand, it also for me symbolizes a kind of distorted financial mindset where they are not giving the shareholders any power whatsoever. the idea that facebook pioneered creating two classes of stock has been taken to an extreme, and now every tech company seems to think the founders ought to have complete control, which is what literally they have here, so that is something the industry is watching with ambivalence frankly. caroline: cory, this lack of voting rights, it seems to be, according to their own filing of snap, that it was the first u.s. company to level this, to have absolutely no voting rights whatsoever. when going to ipo. is that why they are being more cautious with the overall price tag?

cory: the company is worth less money to shareholders for a number of reasons. the company is worth less to shareholders when it doesn't have profit, when it does not have free cash flow, when the owners of their shares exert their rights. so 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. not having voting rights does not bother anyone when a company is run as well as facebook. it is bothersome when you're looking at companies like groupon, where you have multiple classes of shares. it doesn't bother with berkshire hathaway, but it would have bothered yahoo! when investors had to come in and save that company from its self, which is what happened. so we have seen over and over again when companies faceplant, outside investors can come in and say we are the owners of this company and we can make this thing better. that will never ever happen for snapchat. caroline: david, you know the

inner workings of facebook and mark zuckerberg well. even as we see perhaps snap take a leaf out of mark zuckerberg's book in terms of voter control, we are also seeing though facebook again and again trying to copy what snapchat is doing. is the competition that fierce? can snapchat change the way in which the world works? david: i don't think facebook is primarily copying snapchat. i think there are product features they have borrowed from snap, and that has been acknowledged by instagram and others. so, but, i really think the comparison between the two companies only goes so far. facebook when it went public had the potential to become a world-altering service that was used by almost literally everyone. unless you believe that is true of snapchat, you almost can't justify this kind of valuation, as cory is pointing out, and i frankly 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 just doesn't have that kind of capability, so it is not a true comparison. caroline: and next up for snap is the roadshow, where management will travel to cities including los angeles, san francisco, and new york to pitch the stock to prospective investors. bloomberg's sarah frier and alex barinka report. >> when deciding whether or not to put money into snap, investors are inevitably going to compare the company to its peers, twitter and facebook. so which is snap hoping you will equate them to? neither. my sources say snap executives want you to think of them like amazon. seem strange? there is a method to the madness. sarah: because snape is a secretive company, investors will have to decide whether they trust management to build a business on the backs of highly engaged young users. alex: for now, it is unclear what that would look like outside of the snapchat app.

sarah: while the company grows and expands, management has told bankers that financial performance could be "lumpy." and don't forget that snap's revenue model is only a couple of years old, and right now losses are higher than sales. alex: sound familiar? razor thin margins and fluctuating financial performance are amazon trademarks. sarah: ceo jeff bezos has alarmed investors with his massive spending to get into new markets. so far, his efforts have been successful, like amazon's e-commerce platform or its cloud services. while others have been duds, like it's smart phone. alex: the bottom line is that amazon investors have had to be patient, and in the long run, it has really paid off. sarah: the stock is up 43,000% since the company went public in 1997. and in the past 10 years, it is up 2100%. alex: but amazon is a once in a decade consumer company. snap is a much younger and riskier bet. for now, snap ceo evan spiegel

will be asking potential shareholders to trust him. caroline: coming up, verizon is close to a renegotiated deal with yahoo!, but a cheaper price after revelations of security breaches. the surprises just how little that discount is. we will break down the tentative deal next. and later this hour, we hear more from the man credited for the payment app beloved by millennials. venmo's ceo joins us. this is bloomberg. ♪

caroline: verizon will begin offering unlimited data. the company will charge $80 a month for a single user. that is $10 higher than the plan offered by t-mobile. it is an about-face for the biggest wireless provider in the u.s., which had steadfastly refused to offer unlimited data plans. meanwhile, verizon is getting

closer to a renegotiated deal for yahoos internet property. the deal would reduce the price of the deal by $250 million. verizon had balked at the first price after yahoo! reported massive data breaches. now both companies are sharing ongoing legal responsibilities related to the hack. bloomberg's alex sherman joined us with more. alex: yahoo! shareholders are going to walk away from this fairly happy because there was a risk that verizon might walk away from the entire deal altogether. and the game that has been going on the past few months has really 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, people may remember, took months and months and months, and they probably would not have gotten as high of a price. verizon was the obvious buyer

here with the most synergies to offer. so yahoo! has to walk away from the same given everything we know, we are happy with only a discount of $250 million. that number may change, could go up a little bit, but it's going to be in that ballpark from what we hear. caroline: alex, i actually spoke to the ceo of aol, tim armstrong, just last week, and it really did seem there was a desire to get their hands on yahoo! and its consumers. let's have a quick listen to what he said last week. mr. armstrong: i am hopeful the deal closes. i think we have a really high appreciation for yahoo! overall. we just need to figure out value changes based on breaches. that is really how simple it is. caroline: the value change has clearly been negotiated. what about the next steps for both? indeed, where verizon pushes now with yahoo! consumers. alex: you just got the reason from tim armstrong about why verizon was willing to accept such a low discount there. they want yahoo! to feel like they can put yahoo! and aol together. part of why they want yahoo! is

so that he can move on. we have already reported that there was a conversation between verizon's ceo and the liberty media ceo potentially about doing a massive deal for charter communications. we don't know if that will happen. it was very preliminary, but we do know that 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 high likelihood that that could be a bigger deal than yahoo!. on the other side, really, yahoo!'s internet business is only a small fraction of the larger company, so from yahoo!'s standpoint, they are willing to accept the discounted price to get a buyer for their property, but also so that they can monetize yahoo! japan and alibaba, which is really the crux of yahoo!, and that is what they need to figure out. is someone going to buy this stuff from them?

is it going to be softbank? is it going to be alibaba? are they going to trade for a while? all those are still outstanding questions. caroline: alex, you are a busy man. therefore, i want to make the most of you while you are on the show, but also on apple. we are talking deals there and maybe lack thereof when it comes to apple. alex: right, apple has this enormous cash pile, hundreds of millions of dollars, and tim cook, their ceo, has signaled over the past 12-18 month that apple may be willing to do some bigger deals. they have not really done deals in the 40-plus it year history of the company. they have really just grown products organically, shying away from m&a, but tim cook has made the investment world think they are getting ready to do something big. we have not seen it. my colleague alex webb dug into that to figure out why they have not done this. and part of the reason why they happen is that they are not really structured to do big deals as a company. they don't have a very big m&a team. they don't have a history of doing deals.

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 i do think the investment community has sort of scratch their heads and said, ok, look, you said you wanted to do deals, but why haven't we seen it? part of it may be their culture is not structured to do this, unlike at&t and time warner. they have spent hundreds of billions of dollars on acquisitions. caroline: bloomberg's alex sherman there. meantime, this week, apple hit a record high. investors are optimistic the next iphone will drive a resurgence in sales and help the company services business growth. bloomberg technology reporter alex webb joined us to lay out what is behind the stock surge. alex: as much as the stock is at a record high, they aren't not at the record market capitalization because of the buybacks they have done in recent years that help to prop up that stock price. they are below that peak market cap, but the stock is the

highest ever. caroline: market cap closing at 699.31 billion. it is tentatively so close to $700 billion. is it just the market rising? is there is a about the apple -- is there exuberance about the apple business model? alex: it did take a boost off the earnings call, and the expectations for the next iphone sales, but since then, it has taken a spill two weeks ago, and since then the forecast for the present quarter and how that could imply sales will go for the next iphone have kept people very optimistic. caroline: i mean, if i am digging into analyst recommendations on apple, one sell, 41 buys. that is on this particular stock. are we likely to see this stock rally continue? alex:, well that is certainly the implication of those stats, yes. but we are getting close to the

target price. it is not vastly above where it is now. i think $142 is the average on the system, so it will be interesting to see how it -- in particular by the end of the year how compelling the next iphone is, how they attract new customers, particularly asia and china, and that will speak to the attractiveness of apple as a brand. we have seen that the competitors in asia have increasingly succeeded in developing phones which are as good as the iphone or approaching the quality of an iphone, but they don't have the kind of brand cachet that apple has, and that remains a push it is the extent to which that remains a differentiator, that shininess apple has about it and its attractiveness as a brand. caroline: and how much they can get bang from their buck from their user base. they say they have they have a one billion pieces of equipment.

it is all about the services sector as well. alex: that is the narrative that the executive team is trying to push. they say they intend to double services revenue over the next four years, 2021, and the average revenue per user is a statistic that people are increasingly keen to look at. it is a high-margin business selling services. software is infinitely replicable, and that is why apple is pushing into things like apple music, television content, as well as of course the app store, which sells a huge number of products every year and apple gets a cut of that. caroline: that was bloomberg's alex webb. coming up, wall street meets silicon valley at the goldman sachs technology conference, highlights from our interview with david solomon, next. this is bloomberg. ♪

caroline: a story we are watching, commuters in india face major travel disruptions this week. both ride hailing giants, uber and ola, are bringing the biggest cities to a standstill. drivers strike for better pay and working conditions. demands include a revision to the minimum fares, reducing the commission rate, and limiting the number of cap's registered on the apps. meanwhile, staying with uber, a little-known option available. the $69 billion company is said to have a program that let's those who work at the company for four years, sell back 10% of uber shares. this according to people familiar with the matter, who said the plan caps buybacks at well below $10 million per employee, but it is meant to give uber employees an incentive to stay given that the company has no ipo insight. 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 aggressive era of m&a. wednesday we spoke with david solomon about the rising tech deals and ipo activity in the space at the goldman sachs conference. >> there is certainly a lot of capital available for companies that are growing. a lot of that capital is available privately away from the public market. last year certainly was a historically low year in terms of ipo activity. and i am a big believer that these things kind of ebb and flow, so we are hopeful to see more of ipo activity this year. but i think when you look at the world that a lot of these companies operate in, if they are able to run their businesses, grow, and access

capital privately and there aren't other pressures from shareholders or venture capitalists, these companies are putting off the opportunity to come to the market longer, and the reason they can is because the capital for growth is available privately. so i would expect to see more companies come back to the market than we saw last year, but i think that process will be thoughtful, methodical for these companies as they are growing. caroline: we saw plenty of consolidation and m&a while cash balances were heavy. we might see more cash, if we see more money come from abroad back into the united states. >> m&a in the tech space is pretty active right now. in fact, we have been involved in 14 m&a transactions since the first of the year. that in that six week period is more than we have seen in a comparable six-week period since the late 1990's. i think there are a number of

reasons why that is occurring. one of the things that is definitely happening here is you have very large companies that are growing very quickly. facebook last year grew over 50% on a $28 billion revenue base. amazon grew 27% on a $130 billion revenue base. as those companies are growing, they are generating cash, generating market cap, but also taking away revenue from some other business, disrupting to some degree, and that puts businesses in a place where they have to think about strategic options carefully. so i think broadly speaking that we will continue to 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. i think it is going to be a relatively good m&a year. caroline: let's talk about disruption. let's talk about fintec. and how goldman sachs is evolving. lloyd blankfein himself said back 2015 on a podcast that goldman sachs is a technology

company. how are you adapting? are you having to hire far more technologists and engineers than bankers at the moment? >> we clearly like everyone 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, the way people traded equities was voice to voice, person to person, and now there is a fast system of connectivity and people trade equities electronically, so that is a mastership obviously in the staff you need, the people you need, and the systems you need. that is going on in most aspects of the business. the firm itself obviously adapts to those environments, and we hire all kinds of people. 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, we need more of those kinds of people. i would not say more versus finance majors or those with the business ground, but 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: you help to drive a lot of innovation in the investment banking unit. does your culture have to change to attract these people in? do they want more parental leave, more holiday, more flexible working? >> i don't think it is fundamentally different. young 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 the opportunity to learn, grow, and really excel, and so we have been focused on creating the best work environment for long-term growth, positive experience, economic reward. we believe that if we do that, it is good for shareholders,

clients, and a positive cycle. caroline: you got into digital lending. you have markets which is consumer-based. how is growth there? >> that is a new business and a new platform that we started. we think we are in an interesting position given our balance sheet and funding, but without the legacy history that a number of the other commercial banking competitors have, we are in a position where we can build a tailor technology product to clients. we have a very targeted universe we are going after. we think we have an interesting product and are excited about the growth opportunity. but it is new. but so far, it is off to a good start, and we are excited about the opportunity. caroline: my conversation with goldman sachs co-chief opperating officer david solomon. still to calm, former nsa chief turned ceo general keith alexander joins us to discuss the new administration's approach to cybersecurity, next. and if you like bloomberg news, check us out on the radio. you can listen on the bloomberg

radio app, bloomberg.com, and in the u.s. on sirius xm. this is bloomberg. ♪

caroline: welcome back to the "best of bloomberg technology". i'm caroline hyde. u.s. officials are investigating the extent of contact between president trump advisors and russian intelligence agents in need up to the 2016 election. this after trump's newly appointed national security adviser michael flynn stepped 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 and former director of the nsa keith alexander. he is now at the helm of ironnet cybersecurity, and in town for the industry's conference. general alexander: one of the things, i don't want to get in

front of the president not having seen the executive order and what they are doing about it. i think what he gave to the press about addressing government, getting their i.t. infrastructure ready, about getting government and the industry to work together and addressing some of the key problems, i think those were all in the right venue and what our nation needs to get started. i think 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. caroline: ironnet, we were just talking about, ironnet does look to the government as a potential client. you have yourself the experience having worked in the nsa. were you privy to conversations as they worked towards this draft? are they looking to the private sector for advice? general alexander: they do. they reach out and give people, more than just me, people that can really read, they give them the chance to look at this and give advice.

i think that was one of the great privileges and honors, to sit in there as one of the cyber listeners 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 much of that input and others and continuing to refine that executive order in a thoughtful way. caroline: some of the other people they have looked to was the former mayor of new york, rudy giuliani, does he have the relative expertise do you think? general alexander: he has the management and leadership insights of how you bring industry and government together, and i think 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 helps bring 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 the problem. let's talk about russia and all of this comes on the back of revelations that russia was

behind some cyber attacks in the run-up to the election. how concerned are you about relationships with the trump administration and russia as others in the government at the moment seem to be? general alexander: i take a slightly different and probably unique view, but here is mine. when a new president comes into office, 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 that the united states should have with russia, with china, with others? and can we do this in the peaceful way that will help the world? and so step one is research that. see can we come up with the relationship? where are the limits to that? find those limits and set this according to what his administration is going to do. you know one of the things i take great comfort in is that some of the people he has brought into his cabinet. you look at the secretary of state. this is a great individual.

and then the secretary of defense, a personal friend, tremendous capabilities. and the secretary of homeland security. you put those three together, and 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. you know, it was amazing to see him go around the table, talk to people, get their insight, listen. and you know what i thought? that is the president our nation needs to see. he is listening. he is getting this right. he is going to build us up. he is going to address the problems we need to address, 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? and if the answer is yes, we should have research that first. and we should have discussed it, state to state and others. caroline: was the research too close? we have already had one person

step down, michael flynn, the national security advisory team in disarray. can you talk about whether that is a weakness and a worry? general alexander: i think they selected somebody already. i heard. bob harwood. i think that broke in the press and that is out there, so i am not breaking it new. that is what i heard. i worked with bob. he worked with general mattis. he was at centcom at the same time. i know that he will do a great job. you have other great people in this. you have keith kellogg and others, and on homeland security, you have tom. he has great people there. the good part is he is reaching out and getting good talent. that is a good thing. caroline: could we see the relationship with trump and some of the u.s. secret services be impossibly damaged from some of what happened prior to him being

a president? do you think there is any vitriol or fight back? general alexander: it is interesting. in the room i was in, you could say the same thing for mike rogers, the current director of nsa. not at all. completely professional. he had outreach. i think the president is looking at these things. he is making statements, but at the end of the day, when i saw him reaching out to that in his discussions with mike rogers one-on-one and with the group there 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? when you are looking at ironnet cybersecurity and you are getting potential calls, is the u.s. a key concern? or not compared to the rest of the globe. general alexander: i think the u.s. is, in part because we are a country and when you look at it, it is how do you attack the united states? it is terrorism, cyber. if those are the two vectors, we

have done a good job on blocking terrorism. we need to keep that up. that is a key for our future. a lot of work there, but our cyber defenses aren't there. we have not fixed government. we do not have the government-industry partnerships. and an industry hit by cyber, we 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 at network speed so if somebody tries to hurt us, we can stop it before the attack cripples us. so those are the things where i see the biggest needs and things we have to move forward on. it is those kinds of things, when i think about the greatest concern i have, it is when i look at that and think, ok, this is where secretary gates and panetta and others said, these are issues.

we don't need a pearl harbor. the part i found comforting was trump listened to those things. and i think in saying that, 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, and there are a lot of of steps, but it starts with the first step. ♪ caroline: coming up, the 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, next. plus, paypal buying of tio. we hear from the coo. this is bloomberg. ♪

caroline: facebook is adding live games from mexico's top soccer league to its growing streaming sports portfolio. through a deal with univision,

the network will broadcast 46 games starting saturday and running through the playoffs. the commentary will be in english, and facebook streams will only be allowed in the united states. the financial terms of the agreement were not disclosed. and staying with sports broadcasts, at&t and its directv unit are being sued for collusion to show l.a. dodgers baseball games. the accusation comes as regulators and politicians assess at&t's plan $85 billion purchase of time warner, which would create a content distribution giant. 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 about vulnerabilities rising, synack received a contract to carry out bug bounties across the pentagon. ethical hackers completed an exercise, with more down the road.

we spoke with the ceo with more on what the experiment found. >> the pentagon certainly recognized the threat is just as vast for government as private enterprises. they realize the only way to stay ahead of the threat is to utilize the same hackers who are attacking them every day. they are using the hackers further advantage, they are -- four they are advantage trying to get that adversarial perspective when someone is trying to break into critical assets that are running this nation. and it is really exciting to see them take this progressive approach, like the technology companies have done for years. the health care companies have jumped on board, and finally we see the government jumping into the same space. caroline: you are a man with experience working at the department of defense and nsa. talk to us about your experience. indeed, you just ran this exercise. through february 7. what did that bring up? was the pentagon surprised by

how many vulnerabilities it actually had? >> the government has taken a consultative approach, let's bring in typical government integrators, let's do assessments on our systems, take reports and remediate the problems. the difference here is that we 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 ever attempted something like this on an internal sensitive asset. and just within a few hours, we found something pretty critical. it ended up on secretary matti'' desk within 24 hours. 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 we have up at the moment, cyber incidents versus federal investments, phenomenal growth in cyber threat, not so much phenomenal growth in the amount of investment in cyber attacks coming from the government.

are they starting to wise up? >> it is scary. i think the government is starting to recognize they need to be thinking outside the box. they need to be taking these more progressively leaning solutions or they will never stay ahead of the threat. we have a massive supply and demand problem as it relates to cybersecurity jobs. over one million jobs remain unfilled globally. and that is going to skyrocket to 1.5 million jobs by 2019. there is no way we will hire all of this talent, so by utilizing these crowd sourced approaches, it is really the only way we are going to stay ahead. caroline: talking about the global aspect, you said you had more than 80 of the top ethical hackers in the united states. are you looking to ethical hackers outside of the u.s.? this is where a lot of the cyberattacks come from. >> we do leverage hackers all over the world. we are in 40 different countries and utilize them for our enterprise-focused customers. the u.s. government rbc is a little bit more sensitive to leveraging people in russia and china, eastern europe and so forth. but we do expect them to expand that scope over time. when they get more comfortable with this concept, we think they will be comfortable with the

idea of bringing more people outside the boundaries of the united states, starting with our five allies nations, australia, canada and the u.k., and then hopefully expanding from there. caroline: we saw that graphic of how much cyber threats have increased, particularly within the first few weeks of donald trump's presidency. is it just the media has got excited about it? it has caught our attention? or indeed the 1512% growth in cyber threats in the last 10 years, have they got more real, more frequent, and more damaging? >> the threat is definitely 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 better capability to figure out when our people actually attacking our critical networks, and because of that, the number looks like it has been increasing, but in reality we have been attacked by other nationstates, 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. ♪ caroline: that was synack ceo jake kaplan. coming up, we will hear from the man who will help settle your debt. we will hear from bill ready on paypal's latest deal. a reminder that all episodes of bloomberg technology are 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: back now to the goldman sachs technology and internet conference in san francisco. this week, paypal announced

plans to acquire tio networks. tio a leading bill payment processor that processed $7 billion in 2016. we caught up with the paypal coo bill ready that helped turn venmo into a payment app. bill: tio is a bill pay provider for the underserved. from the beginning, it was a democratize or of money, paypal, and we think about how we democratize the management and move money around the world. the underserved is a big part of how we think about bringing folks into that democratization. and bringing venmo to the underserved, we think of bill pay as a critical service for those folks. it is also the underserved we think about as a population of more than a third of the u.s. population, 2 billion people plus around the world that are underserved by traditional financial products, so we think we can get it halfway, not only into financial inclusion, but into the financial economy and

how we think of tio as part of our broader vision of how we democratize the movement of money for people around the world. caroline: are you thinking about bringing consumers from tio on to paypal products? which ones are easy to offer them right now? bill: well so, with tio, you can walk into a store and make a bill payment, 65,000 locations around the u.s. we have similar products with paypal for example, like paypal cash, which we announced a few months ago, where you can walk into a 7-eleven and load cash on to that account or card, all of a sudden you have money in a paypal account and are part of the digital economy. you might not have been able to make digital purchases before, but 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 serves a customer segment where we can give access to broader products as well. caroline: it screams of

underserved, un-banked, i think for the emerging markets as well, so how does this fit into the internationalization of paypal? bill: we are in 200 markets, 200 million consumers, and 2 billion plus consumers are considered underserved worldwide. and so we think about ways we can serve those folks and work them into the digital economy and give them access to financial inclusion. zoom that we acquired 18 months ago, it has international remittances often serving the underserved. bill pay is one thing that zoom provides for those folks, so we think this is a great compliment to what we are doing with zoom and access to the underserved worldwide. caroline: you joined paypal through an acquisition. you brought braintree, venmo, into the larger hub. bill: that is right. caroline: what is the mindset of paypal about acquisitions at the moment?

you talk about the underserved, the unbanked, is it only debt -- that area where you want to make acquisitions? bill: we have had a huge focus on mobile. that is part of braintree and venmo coming in. 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 computing device. that is where we have led the way and want to continue to push. we think about financial inclusion for consumers and merchants. it is interesting to us, because those are places where we will continue to have a lot of focus and where we have had a number of great acquisitions, and we have looked to grow organically. we did 11 plus strategic partnerships just in the course of the last year or so, and that included not only visa, mastercard, and traditional banks, where we are partnering to bring services there, but also folks like facebook, google play, and other technology partners we are working with, so

we are really bringing that start up spirit and innovative mindset both to acquisition, as well as within the company itself to drive mobile financial inclusion and partnering with the broader ecosystem. caroline: that was a change when you got into the visa and mastercard. how is that coming to fruition? because many feel, dare i say it, that paypal was leading the charge years ago and they dropped the ball and let other companies get ahead of it in the fintech space. does the visa and mastercard agreement help win back some of that space? bill: paypal has been one of the most successful fintech companies over the last 20 years. i think the partnership with visa and mastercard really is a demonstration of how our interests are pretty aligned with the rest of the ecosystem. we have always really pushed for the digitization of cash, and brought a lot of volume to players like visa and mastercard, issuing banks, and

those types of players, and historically there are some places where we were not working so closely on those things, but we always had a common interest as cash is the common enemy and bring that into the digital world. i think we have led the way on that, and partnering with visa, mastercard, and banks lets us do even more. caroline: staying at the goldman sachs technology and internet conference, we spoke with a member of the paypal mafia. take a listen. max: by growing as quickly as we have been, the road is shaping up nicely, but we are not particularly focused on measuring ourselves up to any one particular giant. we are more excited about creating value for our customers, our merchant partners, but i think the big trend in fintech has been a wrong one, where companies, not us, but many companies walk out

and say everyone here is a bunch of idiots. we are just not going to be anything like you guys, and that is just wrong. the american financial system is probably the single best one in the world, and being a member of the club is an essential part of our plan and anybody who wants to be around for the long term, so i do not think i need to jump into being a giant, but i need to grow my way into the club. caroline: tell us about that growth. at the moment it is retail specific consumer credit. what products will you be looking to next? max: i think we are very much focused on our consumer credit view of the world. we are excited about bringing out a bunch of new and interesting flavors of our products soon, but do we have a couple of brand-new things we're working on, which i am always loath to preannounce. i'm afraid i have to keep them a secret, but i think, i think

delivering value directly to the customer is something that we are very 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 perhaps the regulatory environment becoming "easier" for some of those banks, the dodd frank act will change, a net positive or net negative? max: i think it very much depends on the outcome of the changes. much of the rhetoric around regulation stifling innovation is not untrue. in other words, i happen to agree that loosening some of the really tight grips that we have put on the industry right after the 2008 crisis, it has been a while. i think we can start being a little bit more open about, for example, rules around lending, but a fair amount of what was put into dodd-frank is as true

then as it was today. so just throwing it all out wholesale is also a mistake. so it is more nuanced. regulation is important. it is necessary. markets don't always correct itself quickly enough. despite being a free market capitalist, i happen to believe in the need for regulation. it is important to engage with the regulators as they reshape the rules right now. caroline: is it important to engage with the new administration as well? max: i think so. i think it is important to engage with a democracy if you believe in democracy. i think just sticking your head in the sand and saying i don't like what is happening in washington anymore is foolish. as business leaders, we have a responsibility to be part of the conversation, not run away from it. caroline: that does it for this edition of "best of bloomberg technology". we will bring you the latest in tech throughout the week. tune in on thursday, and 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. ♪ . .

♪ resources dominate australian earnings. all set to gain from the commodities rebound. it extends corporate tax rates to help slow growth. the eurozone delays greece's latest payout over a bottle about i.m.f. involvement -- battle about i.m.f. involvement with hearings from a former finance mr.. it is just past 9:00 here. just about an hour from the open.