♪ caroline: i am caroline hyde. this is the "best of bloomberg technology." coming up, we head to las vegas, nevada for ibm's interconnected conference and speak with ibm ceo ginni rometty on everything from the cloud to ibm's partnership with wanda. at the same time, marc benioff says the window for acquisitions is closing. and eliminate the brilliant

,, that is what uber board member arianna huffington promised to do. we were live from ibm's main cloud conference in las vegas. the company is focusing big on growth in the cloud, which makes up 17% of company revenue, or $13 billion worth of business. we caught up with the ibm ceo ginni rometty and asked what it is about ibm's cloud business that sets it apart from the fierce competition. the id. cloud is the platform for a new era of business. platform.is the it establishes three things. one, it is enterprise strong. you have to prepare them for the future. it is the data first architecture, and it is cognitive at its core. when i say about it being enterprise strong, one is its

ness, which we will come back to. today we also announced on theain in production ibm cloud, up to transactions a 10,000 second. that is what you need to do with blockchain work. we are the first quantum computer available on the cloud. you can't do this on your premises. enterprise strong, you have to have security better than anything else. when it comes to being data first, very different than some of the consumer clouds out there. when we say data first, you have to be able to protect your clients insights, not distribute them. when you look at some of the consumer guys out there, they

take data and they distribute this. some call that commoditizing or democratizing. we said, no, the value of our client is in there inside. we can give them data control and tell them that data is not intermingled with the somebody someone else's. it is isolated. we are not monetizing it. the insights are yours. we can show you how to protect it. that is data first. the third part that distinguishes us is watson. what is different from ai is that it is trained in industry and domain. think about something. of all the data in the world, 80% is not searchable. i think people think everything is on the internet. 20% of the world's data is on the internet. 80% is not. that is where the greatest value is. that is what watson has been trained to deal with. everyone will be caught but if. caroline: cloud at the moment is 70% of your revenue. what do you want it to be? gini: that's right.

we see lots of clients moving their businesses onto the ibm cloud. as i was just sharing with the group, we do 97% of the largest banks in the world. we do 80% of the airlines. if you look at all the telcos, 90% of telcos and credit card transactions come through us. so, the ibm cloud is about helping them bring that into a future world. caroline: will it build your revenue? gini: it does. you see that in our global technologies business. many people say that business is running services for other people would go down, and it hasn't. we have built our backlog for the last few years, and it has been growing, and the work at the heart of that is around the cloud. what is a fallacy for many customers is they will build many new things on the cloud, but they have reasons they have data -- we have to build these hybrid cloud environments and the best public cloud. we are living in both of those worlds.

caroline: will the revenue drive cloude garnering from the drive revenue growth in the next couple of years for ibm. gini: it will. it will. you mentioned 70% of ibm revenue. is $13.7 revenue billion, and it grew 35%, so as cloudke a look at our analytics revenue, watson, , mobility, security, those are what we call strategic imperatives. that has been growing at 14%. it is $33 billion, 41% of idm ibm complemented by the work we do in our core franchises, which may not be growing, but are important businesses we run for many companies in the world. together we are growing in the places we are investing to grow, and those other areas, we are moving with the market here. caroline: china is fascinating. you just got back today. talk to me about the partnership with wanda.

will you always have to be a partner with someone in china? how i important will china be for ibm? will be a partner on the cloud, but we have a very large business in china. we were one of the first. we have been there well over 35 years. very well-established brand, very well respected brand. we are partnered to those banks the banks there and how those banks are run. they are some of the most sophisticated financial systems in the world and require volumes that are unbelievable to manage. with the cloud, wanda is one of the most accessible private companies in china. great attitude about agility, skill, and wanting to move forward, and as well, they have a huge business that will also be on this cloud, so it will be both a customer in the cloud and a partner in the cloud, and a great footing, because they have a big ecosystem. so our ibm clients and the

largest ecosystem around wanda coming together, so i look for to that being a successful partnership. , ceoine: marc benioff salesforce and king of the deal, says the window for deals is closing. that extended conversation, next. a reminder that all episodes of bloomberg technology are live streaming on twitter. check us out at @bloombergtechtv, 5:00 p.m. new york, 2:00 p.m. san francisco. this is bloomberg. ♪

♪ caroline: we continue our coverage of ibm's main cloud focused event called interconnect. some 20,000 cloud customers and partners gathered in las vegas, and while there ibm discussed it is teaming up with salesforce to integrate the artificial intelligence capabilities of their two business software companies. now thereby, offering more advanced data analysis. we caught up with ceo marc benioff, and when i asked what watson is providing salesforce that it did not have internally

or through m&a? take a listen. marc: what we have been able to do is really find a way to work with both of our companies together. a great example, you probably know because you just flew into san francisco, those crazy crazy hailstorms we had last week. you know, we manage five of the top five insurance companies. those companies want to know when that hailstorm is about to happen, and they want to notify those customers to put their cars in the garage. [laughs] the combination of ibm and marc: the combination of ibm and salesforce let's us do that. watson is going to tell us with the weather, the hail is about to come, and we can notify those customers to get those cars in the garage, and the rest is magic. caroline: you are a company through internal r&d, was it easy low hanging fruit to go with watson because they had it already they are on offer?

marc: we have some incredible ai technology ourselves, but it is very tightly integrated into our core platform. it is called salesforce einstein and has been available to all of our 150,000 salesforce customers around the world. the opportunity of watson is to bring a general purpose ai platform is programmatic, so they can extend our solutions. caroline: you mentioned insurance companies. where else in your product line, where is the low hanging fruit? where is the demand coming from for your ai product? marc: you can see a must every industry can be smarter, and you find employees able to extend the capabilities through artificial intelligence. with the salesforce einstein for example, we are seeing salespeople more productive than ever before. they are able to know exactly who to call on, when to call on them, how to call on them in a prioritized way. that is all done by einstein.

that is the power of ai inside crm. caroline: you got such global reach. you just announced a partnership with aws in australia, significant growth in europe and asia. where geographically is eating up the desire to get into artificial intelligence? marc: oh, you really see that across the whole world. you know, software is eating the world. we know that. we have read that, right? but ai is starting to percolate into that software across the world. in fact, we are really seeing ai inside all of these different jobs and work streams. and the advances in ai have far our industry's expectations over the last several years, and now vendors like salesforce and ibm can extend and complement our solutions with this amazing technology. not just machine intelligence, not just machine learning, but even deep learning as well. you probably saw two weeks ago, coca-cola announced with us that they will be building these coolers that have cameras in them, and the cameras can do real-time inventory management,

t to know what is happening inside the cooler, so as people take those cokes out of the cooler, trucks are automatically rolled to the stores knowing they have to replenish supplies. caroline: it sounds phenomenal, disruptiontion jobs will be significant. what does it mean for your bottom line? what does it mean for your topline revenue growth? whether it is einstein or watson, what does ai build into that? marc: salesforce is one of the top five software companies in terms of growth. you saw that. we just delivered a phenomenal quarter. it is the best quarter in tech. you saw our deferred revenue hit $14.5 billion and 28% for the quarter. that exceeded our expectations. and a lot of that is driven by ai. it is also being driven by a lot of other major trends, including the cloud, including social networking, including mobility because our customers are moving to those for trends, and we need

to align salesforce with those four trends to get growth to happen. that is how we have created extraordinary growth. caroline: crm is where it remains? marc: well, you know that crm is growing of the enterprise software segments and will be the number one segment by 2020. and we are the number one vendor in crm. so we are uniquely focused on sales, service marketing, , community, analytics, commerce as well. caroline: you mentioned how ai is going to be affecting jobs -- does the world, does the united states realize how much this'll make people lose jobs? marc: oh, well, that is really the $64,000 question. that is why went to washington. i am focused on that issue. the workforce will dramatically change over the next 1-2 decades, and it is going to be driven a lot by artificial intelligence. and that is why we need to start retraining in new types of job development before this technology really hits. i called for a moonshot, 5

million apprenticeships in the united states based on a lot of the things we learned from countries like germany and switzerland. we can bring that to the united states and improve the quality of our workforce, and i hope the our u.s. government listens and creates that moonshot. caroline: do think everyone can be retrained at the end of the day? marc: absolutely. i mean, there are so many vehicles to educate people, especially here in the united states. we have phenomenal opportunities, community colleges, universities, k-12 systems. but also, you see a lot of workforce development programs already. there are so many people ready for these next-generation jobs. i look at the things we are doing with veterans using salesforce. we are bringing them into our company and retraining them using salesforce. on the bigger picture, salesforce will create 2 million jobs and add $400 billion to the gdp by 2020. so we are really focused on creating these new jobs and getting people ready for salesforce jobs, and i think creating platforms for that is

so important. i think apprenticeships are the key, and also automation and one-on-one. caroline: you are looking at lot.g unlawful lo hiring an awl you are looking at growing an awful lot. i have to ask -- you have been an acquisitive company. does that remain the case of the valuations remaining for an acquisitive company? marc: last year, i was super clear i thought there was a window that was really open for m&a activity, and we bought a phenomenal company, demandware. it is the number one company in commerce. we deliver commerce solutions to so many companies around the world. adidas will do $1 billion to $2 billion in e-commerce on the salesforce platform this year. then we have some amazing private companies as well like quip, which is this amazing productivity tool. well, a lot has happened, as you know this year. which is the markets are roaring, so the m&a windows have really narrowed. and because the m&a windows have

narrowed, i don't see us doing a lot of m&a this year. caroline: that was salesforce ceo marc benioff. coming up, uber held a conference call this week after a string of scandals that the company and board member arianna huffington says changes must start at the top. more on the details, next. and tech giants around the world are doing everything to avoid being hacked. that includes china's baidu. we will tell you how they are combating hackers, next. this is bloomberg. ♪

♪ caroline: now it has been quite the week for a uber. in response to continued hr crises, the ride hailing giant held a rare conference call to reporters on tuesday, the aim to provide an update on its efforts to fix an internal culture that has been rocked by a long succession of scandals. which scandals? well there is the exit of jeff

jones and three high-level employees. the lawsuit by waymo. of course, the sexual-harassment scandal. >> they sort of advertised it as we are not going to make any news. they said some interesting things. they said they would have a diversity report by the end of the month. eric holder's report on their sexual-harassment and cultural problems would be out by april. they made commitments to work on the organization. their head of hr said they had the cult of an individual and needed to change that. so it was sort of -- >> the head of hr referred to their own organization as a cult? >> the idea was we have some good advise, pull yourself up i by your bootstraps and go out there. that becomes excessive and

creates this culture where one superstar is more important and the team. cory: companies have problems. some might be unusual, but this airing of the dirty laundry does and working it out publicly does not seem like the uber we know. >> it is a company consumers have a close relationship with, so there is an obligation to own up to their customers. it is not b2b companies, salesforce selling to other corporate's. it is a ride people are taking every day and need to explain to riders and drivers what they are trying to do. theme on the bigg them call, trying to say they are going to improve the product to make their lives easier. cory: when you have an asset-less business, where you don't own the stuff, you're demanding the attention of customers and providers of the service. with competition, these guys are leaving cars every day.

>> people forget uber wanted to with brand,ear off and that is why jeff jones was a marketer. it was supposed to be all about brand, and obviously it has been destroyed the first three months of the year. cory: we have a quote from the call. this is jeff jones. "the beliefs and the approach to leadership that guided my career are inconsistent with what i saw and experienced at uber." that really seems like it is referring to something that went down. >> it is a pretty biting comment. clearly he disagreed with the ceo travis kalanick on a lot of issues. one was this tipping issue. he supported tipping drivers. another was just safety on the platform. he had concerns about -- their leasing program encouraged

less safe drivers to join uber, so there were debates within the company in which they seem to be taking different sides. caroline: now to a company out with earnings this week. tencent posted fourth-quarter profit that missed estimates, and tencent faces competition in the mobile gaming market. meanwhile, the shenzhen-based company is revving up its battle with alibaba in advertising. they are attempting to lure more app.n its wechat messaging we spoke with our bloomberg technology reporter. >> this cost of revenue jumped 60% from a year before. i think investors are ok to take a hit on profit margins at this point because we are seeing a lot of growth in other revenue streams. they have been expanding into cloud computing, mobile payments come into a lot of new content, and the video business as well. caroline: when you look at

profit of 47%, most would die for that number and not be too upset by it. give us your sense of video and cloud. is this where we are seeing it come in? >> it is interesting because on the earnings call, management reiterated over and over again why video is so important. there are significant losses in that business, but they are putting in billions of dollars to acquire and make content because they realize that taking a loss in the short term is worth it. because video is such a way to make advertising dollars, get subscription dollars, and hone people into their ecosystem. good content is what drives users, and like amazon, they know content will drive more people to their platform. caroline: now i fascinated by am the new mini-programs, and app withinith an the wechat app to order cars,

food. how much is this catching on for wechat? >> the rollout got a lot of mini-app got a lot of attention because it seems to be a potential threat to apple and the app store. they did not give a ton of details on the metrics of this. they did say the purpose is not to monetize, but make it easier for users. they use the bicycle sharing program in china as an example. you can scan a qr code and the .ini-app pops up within wechat they say that this type of ecosystem building has created more downloads within the app store as well as within the mini-app. it is a high barrier of entry to get somebody to download something. this way someone can access something without leaving wechat. caroline: now with companies facing increasing security threats, most tech giants are taking increased measures to prevent a data breach. this includes chinese tech giant baidu. the company has revealed the

facesng profession or it from hackers and the steps it is taking to combat them. tom mackenzie has the story from beijing. tom: baidu's head of cybersecurity knows he has a fight on his hands. he says hackers test baidu's defenses every minute of every day. in the most serious case, he said a gang was put together to steal baidu's prized automated driving technology. >> it is difficult to know who employed them to do that, but we definitely no someone tried to hire someone in the underground market to steal the things for us. >> cyberattacks can come from automated hacking or from sophisticated gains. baidu has responded by boosting its security team and backing what might be called ethical hackers, like the blue lotus team.

they showed me how they can open up my phone. so i am going to test out one qq.com, and now we see hacked by blue lotus. supporting these guys is one way to keep china's best it minds on side. and, the professor says there is a growing demand for ethical hackers. >> they probe for weaknesses that could be dangerous and then report them to companies, including apple and google. tom: baidu has teamed up with some of its competitors, including tencent and alibaba, to go on the offensive. >> the underground industry is sogger and stronger, we must help each other. we are not the enemy. they are the enemy. tom: the threats are only expected to increase, and china's tech giants are gearing up for the long haul.

tom mackenzie, bloomberg, beijing. caroline: still ahead, google's crisis spreads with some of the biggest marketers halting spending. we will bring you that next. this is bloomberg. ♪

♪ caroline: welcome back to the "best of bloomberg technology". i am caroline hyde. google's advertising crisis has gone global after the biggest marketers halted spending on youtube and the company's display network. the controversy eroded last week after the london times reported some as were running with youtube videos that promoted terrorism or anti-semitism. institutions including the u.k. government and the guardian newspaper took down ads. from the video side. th largests six pulledsing company

advertising. this week, the crisis went global after marketers including at&t, johnson & johnson halted spending on youtube as well. google tried to head off the backlash by implementing new tools and policies and many advertisers were waiting to see details or results before placing ads again. we dove into it all on bloomberg technology. >> there are a couple of things. one is the political climate. there is sensitivity around fake news, hate speech, and terrorism. there has been this growing noise about google and facebook and the control they have. marketers are pushing for uniform measurement standards and third-party audits. they see an opening and are seizing it.

caroline: it continues to spread. brian come into you. you downgraded alphabet to hold on the news. you worry was this could have global repercussions. he clearly does. how much do you worry about the stock performance going forward? >> i think it is subject in small part if not a major part two headline risks. you will see more brands demonstrating their concern and announcing they will be pulling their ads from youtube. so far, google does not appear to understand the gravity of the situation. it is on some levels mind-boggling, but also not surprising because it is google-ly. this will continue for a while. they will solve it eventually. when i meant the repercussions would be global and have an impact on their business, it is not about the boycott. we will never see it in the numbers unless this did persist for weeks on end. what will happen to us every

advertiser will have a conversation with google that is not focused on what the strategy should be using search to enhance brand building, how to think about moving money from tv into digital and youtube. not on how to shift spending into google from facebook. the conversation is about brand safety. google is on the defensive for the next 3-6 months in any conversation they will have. that will have meaningful impact to expand their business at the pace they would have by the with the large brands that are serviced by agencies. caroline: let's look at the display ad business and youtube that it is affecting. this is not the search business. this is not the major cash cow. how does this affect advertising spend generally?

>> search is google's bread and butter. it represents three times what it spent on video on youtube, so search in the u.s. is about $37 billion this year. 78% of that is on google, so by far the dominant player. video advertising is $12.5 billion, so again a third of what search represents over all, and google has about 20% of the u.s. digital video advertising business, so we are talking about big dollars. this does come at a critical time for google. they are trying to expand the conversation, draw those tv advertising dollars, trying to present themselves as more of a haven for tv-style advertising. the search business is something they have been doing and know how to do. it will continue. they know it better than anybody else, but video, certainly google and youtube have a major presence, but there are other players who are fine for those same advertising dollars, so the stakes are high. caroline: you have been nodding your head through out. brian called this google-ly. we have heard from eric schmidt and the chief business officer. why are they not reacting faster? >> to be fair, brian is the only analyst who has downgraded this. maybe there are not expectations this will change that caliber of the conversations, but google has weathered this before. my sense is they are not really panicking, and maybe they should be. we have to think about the fact that a lot of advertisers don't have a lot of other options. where else are they going to go? they may go to facebook, snap, verizon aol, but google is still

the best bang for their buck. caroline: coming up, snap trading got off to a volatile start and analysts can't seem to get behind it, now two analyst from consensus out with buy on the company. we will hear the calls next. this is bloomberg. ♪

caroline: a story we are watching, ant financial is considering making a higher offer for money gram. in january, china-based ant financial announced its plan to .25uire money gram for $13

per-share, pending regulatory approval. last week, euronet made an offer. it is likely ant will make a down to ring offer. instagram is expanding into booking and reservations. the photo sharing application will allow users to set appointments with bars and restaurants by clicking a button. the upcoming feature will give advertisers a direct way to measure the power of the app and could pose a challenge to companies like opentable and yelp. now to instagram competitor snap. while its highly anticipated ipo came with a lot of fanfare, it also brought a lot of scrutiny to snap, which has been slowing its user growth. since snap went public, not one analyst was the first to

initiate coverage with a buy rating and $25 price target. then another analyst followed suit and shares gained 9%. % in wednesday trading. we caught up with him on monday after he casts this outlier view along with cory johnson. >> what it boils down to is three things. innovation on the camera. we have not seen that much innovation since the actual invention of the digital camera in 1975 aside from pixel quality. and i think as they push on hardware and software side, i think they will be an a position to take over the camera app over your phone. now that is the the hook. the money, the holy grail, will contentm these premium deals they do where they offer a differentiated mobile optimized experience, where with competing platforms it is plug-and-play. if you have a mobile-optimized

and differentiated one, you can really separate your self from the pack. lastly, it boils down to incentives. if they move towards a tv-type affiliate model, what will happen is the financial incentives of the content producers will jive much better with the experience and interest that the in do users are looking to face, and when you have that balance, you will be in a position where the rpu trajectory will grow at a 60% rate. caroline: cory, respond on that. there is a lot of needs there to achieve. a lot of also concerns, a slowdown in daily active user growth. cory: i think what is going on with this company is how much revenue can the user support is an interesting one?

how many ads can they put on the app? on the and can they sell that inventory? or is facebook and google many and dollars that there is not room for other outlets out there. that is an unknown question. the other big issue is this head to head competition with instagram. when instagram launched instagram stories, the dramatic growth snapchat had seen fell off a cliff, and cameras will not make up for that. fundamentally they will have to sell ads on the platform to get the platform to grow, and it looks like instagram stories is preventing that from happening. we will know in a couple of quarters that they can grow this business or not, but right now it looks like they are in trouble. caroline: james, respond to that in terms of the competition out there. can snap create a new model and get content that has not been designed for other users and

create something different and make money at the same time as facebook and the like? >> i am going to have to fundamentally disagree. cory: what? how dare you. showing off. >> what facebook is trying to do and doing well at it is direct response, trying to get the immediate conversion right then and there. how do they do that? it is based off hyperbolic content and what is called click bait. cory: fake news. >> it is a revenue sharing model. the more clicks, the more revenue you generate. what snapchat is trying to do is replicate television, where it is about brand dollars and affinity. then you compare the facebook and snapchat dollars, facebook is about 30% of the ad market for digital and direct response. now the television dollars is

40% of the $600 billion ad market and they have not moved over to digital at all. and why haven't they moved? because the ad products and experiences on mobile do not jive with the marketing goals that these companies have, because you are not building affinity for crest, coca-cola, through a click. i think if you can create tv-like experiences with premium content, which facebook is not willing to pay for and snapchat is in a curated way, those dollars come in in a much more meaningful way. it is not fighting dollar for dollar with direct response. it is about winning new dollars stuck in television. cory: what we have seen in technology businesses of all kinds is we have seen the big companies are bigger than the number two players. intel is bigger than amd. thanook is bigger other social media.

they are fighting over peanuts because they don't get that network affect. you can see in the slowing user .rowth fundamentally, they have to change their user growth number, and it has not happened. >> in all fairness, the user growth only moderated in the second half of this year. yes, instagram did slow it down, but ultimately where are the users growing? they are growing from the most affluent, dominant, tier-one markets in the world. where as facebook is growing from around the world and lower you can argue lower value users are the incremental users coming to the platform. if you on the most affluent users in the world, and if you can start to shift ad dollars over, you can move it in a meaningful way.

caroline: now fast food giants have placed big bets on technology with aims of getting a competitive edge. with both well-known and upstart restaurants getting into on the action. bloomberg has more on the story. >> the automation wave has arrived, and it has whetted the appetite of your lunchtime favorites. mcdonald's is the latest company latest fast food company to take advantage. the company has begun testing mobile ordering and payment in u.s. cities. it says all 14,000 of its national restaurants will be equipped to handle mobile orders later this year. the creator of the big mac is late to the party. other fast food chains have already adopted this kind of technology to help boost sales. domino's is the leader here. for the past five years, the company has been emphasizing all the ways you can order pizza with minimal human contact and maximum digital contact. it has introduced ordering methods through facebook,

twitter, complete with emojis, and the apple watch. and as the company builds up its , it is seeing financial results. since 2008, domino's the share price has increased 60 fold. the company is now worth $9 billion. starbucks also an early adopter. with mobile order and pay technology. in the u.s., mobile ordering is 7% of all company-owned store transactions. however compan, the company maya victim of its own success. customers who order drinks and food on their phones to pick up in-store are seeing longer lines, resulting in traffic and lower sales. one san francisco chain may offer a glimpse of the fast food future. eatsa is a highly automated food chain where ordering takes place on ipads or mobile. there is no need for cashiers or servers, just a few human hands working behind the scenes.

the core premise is maximizing efficiencies. where this may lead is anyone's guess. all the evidence is showing we are marching towards a fast food world where human intervention is optional. caroline: coming up, we catch up with fitbit ceo james park as the country rings in its 10th anniversary. we dig into the mounting challenges facing the company. 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: fit it is turning 10, and the last decade has been anything but a walk in the park. five years ago, cory johnson took a walk with the then private startup ceo james park. now over 60 million products so later, the two took another walk on the streets of san francisco. cory: when we talked five years

ago, you said we are software guys making hardware. james: when we started, we did not think about the challenges we would encounter. we just went ahead and did it. we are really software guys. cory: five years later, james park is sticking to that claim, even though it is the companies hardware. james: two thirds of our engineers are hardware engineers, but it is about the combination of the two working well together that creates the magic. i don't think we can quickly classify ourselves as a hardware or software company. cory: hypergrowth might be hard to manage, but growing sales more slowly is difficult. james: we had a rocket ship of a company for quite some time. as you pointed out, we shipped our first product in 2009. about 5000 units.

, about 5000 units. last year, we shipped over 20 million, so we have been stretched for growth, so now we are moving to a different environment, so it is a new set of issues that myself and the company face. cory: which are what? james: moving from an environment of hypergrowth to one where we have to be efficient and focused on fixing a lot of the things that we had kind of ignored in the past just because of our growth profile, but i think that is a good thing for the company. it is time for us to reflect , look at the things that are working, not working, make the right fixes. cory: fit to first ever contraction has been painful to employees and wall street. since the company's ipo in 2015, shares have plummeted 71%. cory: are you glad you did the offering? i wonder if in retrospect you look back to the ipo that was something where the negatives

outweighed the positives? james: there are always negatives and positives. the positives for us are the that for the longest time we weren't well-capitalized as a company. we had hypergrowth, but our balance sheet was always pretty light, so we always viewed the ideal is primarily a financing event. when we went public, we raised hundreds of means of dollars and it was the largest consumer electronics ipo in history, so a that was a huge event, put a lot of cash on our balance sheet to . in december, we had $700 million in cash, and that gives a lot of confidence for us to operate the business going for it. cory: working capital? james: working capital, sleep at night money, r&d, m&a, they give flexibility to the business. cory: when you look at the stock is stockock price price, but what does that mean

for you and the business plan in keeping the high margins and the other decision to have made there. ? if you lower prices and cut margins, but you chosen not to do that. why is that? james: pricing is something you cannot reverse from, so we want to make sure people really value our products, and i think maintaining pricing discipline is an important part of that. and we do invest a lot in pretty significant, innovative, and original research and development, and that is something we want to continue. you know the stock price and the public investors, that is all very important consideration in how we run the business, but it is also one input. what shareholders would like us to say is to properly manage short-term interest, but also look at the long-term. and you know i hope that we are able to do that as a business. cory: fading customer demand caused fitbit's fourth-quarter revenue to fall 19%.

fitbit is announcing a restructuring plan, taking a $4 million charge, and laying off 110 employees, so how does fitbit plan to turn it around? james: we are going to streamline our product portfolio. more importantly an importance on coaching, guidance, personalization. because the later adopters want solutions rather than data and tracking. and then, you know, we want to move into adjacencies like smart watches. you know the acquisitions of of pebble, vector, and coin, all play into that strategy. it is a move that will immediately double our adjustable market, so that is a huge area of growth. hinted there, i are form factors we are looking at as well. and then as part of a restructuring, we are looking at the business into perspectives.

moreconsumer, but importantly, what we call enterprise health, where have already targeted employers, but to target and a focused way insurers and other partners in the health care ecosystem. cory: and the opportunity for 100,000 units of the time. james: that would be an incredible opportunity for bulk, recurring sales tied to health plans. cory: ultimately it comes down to inspiring sales and getting customers on their feet. what is something you would have told a five year younger you? james: there are things that are easier to manage as a private company because you are less visible and not being judged on a day-to-day basis. cory: right. james: so a lot of the things you have to do to chart the path to growth and profitability are definitely harder in the spotlight. what i think about on a daily

basis is how we transform fit it from a product that is kind of nice to have into something that is a must-have, and a lot of that will come into how we integrate into the health care ecosystem. caroline: that was fitbit ceo james park and bloomberg's cory johnson. in this edition of out of this world, spacex ceo elon musk is no fan of the new federal law that authorizes $19.5 billion for nasa. president trump signed the bill and it included for the first time human exploration of mars, something musk has publicly championed as well. yet in a string of tweets elon , musk pointed out the law does not include additional funding from ours. he wrote "perhaps there will be some future bill that makes it different from ours, but this is not it." and speaking of nasa's plans going forward, on monday, we hear from the one and only bill nye on his recommendations to

president trump's national transition team. tune in each day 5:00 p.m. new york, 2:00 p.m. in san francisco. remember all episodes of bloomberg technology are live streaming on twitter. check us out at @bloombergtechtv. that is all for now. this is bloomberg. ♪

♪ david: your last name is krzyzewski. mike: it took me a while to learn how to pronounce it. david: after three years, you had a losing record. mike: a lot of people were calling for my firing. david: you won the national championship. mike: i said we were going to win. i don't know if i believe that, but we ended up winning one of the greatest games in the history of college basketball. david: last year, you won your third gold medal. guys to have those got with