♪ emily: i am emily chang, and this is "bloomberg technology. " up, apple's numbers before the most anticipated iphone launch yet. we spoke with tim cook, and we have hit the responses -- we have his responses coming up next. the big focus on tesla's model three production, and whether

the model can compete with its luxury cars. we will speak exclusively to the ceo jack dorsey. apple shares soared to a record high after better than expected revenue forecast. analystres calmed concerns that the new iphone might be delayed. we spoke with tim cook on a phone call. he told us that it appears more users are waiting to upgrade to increase media reports about the new iphone. says that it seems they have been louder and more frequent than in the past. we broke down the guidance and earnings. >> there is a lot to look forward to hear. on the one hand, the market is , sog to grow by about 60%

there is a lot of upside in that market. there is more to come should there is a lot of upside to come with things like virtual assistant and home assistance. there are also all the services like apple pay. emily: he told me that over the last 12 months, the milestone of earnings have been projected to be met, but not this soon. >> yes, i think they have to be happy about that. it is an important revenue stream for apple as it will be for other competitors going forward. they: what is your take on broader apple ecosystem? iphone, a lot on the and we know we are expecting a new one in the fall, but everything else is moving the boat essentially. >> it was impressive in the first quarter when you saw iphone unit sales be basically

flat, but services like app s tore downloads and apple music subscriptions rose significantly. so, can that services revenue continue to grow quickly even if iphone sales do not. on that note, everyone was focused on this revenue guidance, as it may give some indication on when the new iphone will start being accounted for in the revenue. what do you make of it? on the one hand, the services could make up for a greater portion of the revenue, what -- portion ofrt, -- the revenue, but the iphone could help as well.

>> that is true. it is something we will have to watch their you report in the future. timy: when i spoke with cook about china, he said the results were very encouraging. he said that they thought they would improve some, but ipad results were strong and the services industry was very strong. that the iphone on the mainland so theyntially flat, essentially feel pretty good. >> the matter what tim cook says, the most important question for iphone is how the next version of iphone will sell in china. i do not see many encouraging signs. this was the sixth quarter in a row where apple had declining revenue in china. in iphonea big lift six sales in china in the past,

but i do not know what the demand in china is for the next version of the iphone. so, that is the biggest question hanging over the company. emily: there are those local brands which are now surpassing apple in china. >> what to look out for is that apple still gets about 85% to 95% of smartphone software cells -- sales. they may not ever be the most popular smartphone make in the world, but the question is how well they are doing in china with middle-class performance and whether or not they can afford to purchase an ecosystem of devices. the other thing that determines how well apple will do in china is in the chinese language and providing the services that the chinese want. emily: with the new iphone we are expecting in the fall, we could see a four digit price tag

on the highest priced iphone. even as competition in rise of -- in china is rising, the price is also going up. will consumers want to pay for it? >> i do not think anyone knows what the demand will be for an iphone that is in the $1000 to $14,000 range. some analysts follow the market in china, and they say price is sort of an interesting signal. that if it is expensive than it is considered a luxury good, and then people might want it more. however, i do not think anyone knows what the demand is going to be like for a thousand dollar and up iphone. sales we did see ipad increase, and tim cook pointed for airpcreased demand

ods. >> yes, there has been a six week to eight week wait for airpods. with the ipad market, that is a little bit harder. on the business side, is it going to compete with something like the surface or microsoft tablets? think it is going to be a bit andeight and see -- of wait see to see what they do with the ipad in the long-term. emily: is the iphone all that matters? is an iphone is -- apple iphone company for the foreseeable future, yes. sony'sin other earnings,

turnaround seems to be on the right track. they posted earnings that topped analyst estimates. they showed a healthy music business, and increasing sales consoles and games. we will have more earnings later in the show including tesla's record cash burn. how you love must continues to spend big to bring more electric cars to the road. plus, sky high tech evaluations and silicon valley's relationship with the white house. this is bloomberg. ♪

♪ emily: square's lending business

is booming. i sat down with chairman and ceo jack dorsey to ask him about what is driving growth. he spoke about square's burgeoning market of customers. >> we realized recently that we are not really competing with financial institutions and banks and traditional lenders. we are competing with people friends andir family and asking for a loan, and that is a massive market. emily: i also asked him what he think about skyhigh evaluations of other tech companies. an economists. theo to the market, and market decide the value of this particular thing, but it will always have ebbs and flows.

it is not something we control. we control whether people want to use something we are building. yes, andr seems to be they use it enough that people ask for recommendations about what kind of tools they should use. so, that is a thing we control, and that is what we focus on. emily: you must have keen insight into the health of the u.s. and the global consumer. where do you see people spending and not spending? >> we see people going to our purchasing, and those trends continue to be positive. the great thing about square's business is that it is nondiscretionary, so everything away, but you have to be able to make the sale. we feel good about what we are

seeing in the economy and how we will continue to thrive and support that. about there has been talk sexual harassment in the tech agency and the lack of women in tech. what are your thoughts on that? >> it is something where -- it is a situation where we have to bring a lot more attention to it. on and hass really always been on making inclusion first. we are building an organization where people feel like they belong and feel like they can contribute and feel a part of. we also need to make sure that it is not just an environment where people belong, that they can actually help contribute to decision-making. that they can help make sure that they -- that they help own our outcome. between silicon

valley and president trump still seems quite large. roles doou -- what ceos of tech companies play in closing that gap? >> i think we really need to speak up. if we cannot speak up and be transparent about how we feel hen we arecy shifts, t going to move backward as a country and in the world. e, it is myone's rol ro --nd every citizens' every citizen's role as well. emily: how concerned are you about economics and political uncertainty right now?

>> every decision has to deal with uncertainty, and we just have to be comfortable with that. thatconomic uncertainty people talk about is not something i necessarily feel on a daily basis to affect my decision-making. what i am concerned with is the economic disparity we see in this country and around the world. -- we will a company play a small part, but a part toolseless, is to provide for people to engage in the economy and participate in the economy. and we will do our best to do that. that is what we are focusing on to try and help fix. impacthow does that where square goes next? you have been expanding abroad. where to next? >> we want to go everywhere.

we want to be a tool and service that is successful for everyone in the world. we have a look more friction in our industry, because we have to work with regulators and banking partners. every local market has its own rules and regulations, so we are going to take our time. we do not need to be first to market, we just need to be the best option out there. emily: that was our exclusive interview with square ceo jack dorsey. coming up, bitcoin's big split. the reactions coming up next. this is bloomberg. ♪

♪ emily: earnings season is wrapping up but not before we get numbers from snap and alibaba next week. getpoke with one analyst to his take on what is coming up next for tech stocks. >> to takeaways, that demand

will stay consistent. i think this is our 17th quarter in a row of about 15% ad revenue for facebook. about 20% year over year growth for amazon. we are seeing very consistent demand trends. point to is that investments are heavy and they were heavy that year before that. companies they do have a lot of new opportunities to go after whether it is amazon talking about advertising revenue or netflix spending more money to build out international conference -- content library. there is no scenario under which margins are not want to expand here. emily: facebook and google still dominate the pie. is there any room for other players at this point? sigh.s a big >> yesterdays. -- yes, it is.

they all want a little bit of that first location from google and facebook, but in order to get much more from that, there is no one out there really getting $5 billion in ad revenue. you really have to come up with innovative advertising formats. chance of better getting there, but it is starting from a much smaller base. emily: what about taking on some of snap's ideas, are you worried about that? >> we clearly do not know the stock yet. we will see what happens. emily: you are holding that? ,> yes, we are sticking with it because there are two things that the company needs to do. they need to accelerate their daily average user growth. snap needs to get the growth rate we accelerating, and then they will doubt a self-service advertising solution, so the need to do that to get more advertisers on the network and cause their ad revenue growth to

stabilize. it is still growing in a triple digits. there is no other company out there with triple digit and growth. growth. ad emily: you think they can keep it up though? >> i think so. it is similar to facebook 607 tors ago with the mo -- facebook six or seven years ago with the mobile thing. they need to make sure that snap is properly working with android. they also need to make sure it is growing at a faster level. they need to roll out better and better features. they need to do more of that. if they do, i think it is good. if they do not, then i do not think be a use will flatlined at best. emily: amazon is being very

aggressive about moving into new markets. are you concerned? >> no, not really. 20 years of growth, investment, losses, gained, i think they have kind of proven -- emily: big bets. >> yes, they are big bets. they have had a couple of successful big bets. i think these echo devices are a home run. large,ceries is a very logistics business, and amazon is logistics. over time though, they have built of trust at least with me. netflix is spending billions of dollars on original content, and now you have competitors like hulu with hits now. isyou think netflix's burn sustainable?

guess to much about netflix, and that is because we found among amazon customers about 50% of them are netflix subscribers. rs, it is 70% of them. i think what is happening here is the death of the big unbilled. more -- the big bundle. more and more internet users are going into prime and into netflix. i think netflix is the biggest beneficiary of that. the proof of that point is the fact they are going to add more subscribers this year than last year in the u.s.. we are not at the end of the s curve yet. emily: that was mark haney. currency, one digital bitcoin, has split into.

this comes after a debate on how to scale bitcoin and increased inck size, the size of file which transactions are recorded. caroline hyde joins us from london to explain what is next. it is almost philosophical in nature. it is about what they want to see bitcoin become. how the ecosystem is wanting to see bitcoin sustained value. safe, digitala .sset class there's also the fact that transactions have become costly, so how to you scale? and they have been able to segue up to that in that they have gotten most ecosystems to agree to increased block sizes by doub le. from one megabyte to two

megabytes. that was not enough for a small group of asian entrepreneurs and investors. re wanted even bigge scalability from one megabyte to eight megabytes. that happened today with bitcoin cash. we now have two different currencies that are going different directions. they are being supported by different digital technologies that align them. the block chain is not different. emily: what does this mean for bitcoin traders? caroline: a lot of volatility, a lot of question marks, and a lot of decision-making about if you want to back bitcoin cash or not. if you earn bitcoin right now, you are allowed to get bitcoin cash automatically. it is only if you have had your

bitcoin's stored in a supportive wallet, in supportive areas and companies which will allow you to have those bitcoins and get bitcoin cash as well. one interesting backer said that he does not want bitcoin cash, keep it coming because he does not believe in the underlying technology for now. so, if you are a bitcoin user, you see a lot of companies drawing their coins out of the exchanges, because they are not different it into a exchange. you are seeing a lot of people trying to work out where the prices are going. about three hours ago, the new digital currency was mined. is trading at it coinabout a tenth of the

tneth -- tenth of the price of bitcoin original. we saw split last year in sdram and assyrian classic. could this be the demise of bitcoin cash as well? many out there are saying we could see a new precedent being set. could we see this more and more? when you have a new, more penetrable bitcoin. >> could this keep on happening? bloomberg's caroline in london. out its most affordable car yet. will it attract the masses?

we will discuss. tv, 2us out at bloomberg p.m. in san francisco, this is bloomberg. ♪

emily: welcome back to the best of bloomberg technology. of thetarting deliveries long-awaited model three. the company said it has taken more than a half a million orders of the electric vehicle with people forking out deposits of $1000 each. will it live up to the hype and appeal to the masses? take a look. >> the very first tesla model three. 30 new owners are getting the keys to their cars tonight at a celebration at the factory in fremont, california. the big challenge will be keeping up with demand. the model three was unveiled to great heights last year.

tesla's inroad to the mass market with a base price tag of $5,000. elon musk has reaffirmed they will be turning out 20,000 model threes by the end of the year and 50,000 by the end of next year. he admits it will be a hard path. >> we will be in production hell. welcome. [laughter] welcome to production hell. for at least six months, maybe longer, i look forward to being -- if youyou in hell are going through hell, keep going. emily: some say the model three could be as transformational as the iphone and it may well be the most daring feat yet for elon musk. just another electric car or a car that will change the future of all cars?

event the that company reported record earnings and it almost doubled the $622 million it went during the first quarter in the lead up to the rollout. covering all things tesla as details of earnings emerged. >> across the board they spent they wouldy said spend a lot but they spent less than investors were feared -- were fearing. they installed the solar roof. the fears of cannibalization were not as realized. let's talk about the cash burn. spending, $1.16 billion in the second quarter for tesla. >> they have signaled they would spend heavily to bring the model three to market.

they still have a lot of cash on hand which is get them to the end of the year. >> let's talk about production. he said over the weekend when they unveiled the model three that he would be going into production hell. what is the trip through hell mean for investors? hell is on through everyone's mind. what does he mean? is there a supplier issue or a snafu? there was nothing in that any earnings report. >> he is saying they can get to 5000 model three's a week by the end of this year? is that possible? >> that remains to be seen. the cars that were handed over to employees were largely handbuilt so now they will begin the true beginning of mass production. it is pretty steep. everyone is wondering what the ramp looks like and what does he mean when he says hell? they are sticking to the

aggressive timeline. half a million cars in 2018 and a million cars by 2020. seeingntory -- are we more demand for the other models? >> when they released the sales figures this month they were on a drop, you see the rise of inventory on a balance sheet. they want to get more model s and x's, out to stores. they need to have extra cars around for test rise. that is an interesting question for the call today. is the rising inventory something to be concerned about or are you making sure that your showrooms have the latest and greatest? >> and the upcoming semi truck? the model y. any new details? >> the model y is a crossover. they are looking forward to adding the semi to the fleet. that is supposed to be late september. >> what about solar panels and

the solar roof as well as g igfactory. >> they have started to install the panels on employees homes to test them. what about solarcity -- is the brand going away or are they switching to groups? projects mention of the in australia which is a big energy storage project in south australia. >> when it comes to deposits, what is the likelihood that all those orders for the model three comes through and are completed? >> it depends how long you are willing to wait and whether you will qualify for the federal tax credit or not. right now you get up to a 7500 dollar federal tax credit on the car but that begins to ratchet down when tesla hits a certain volume. the big question is where are you in line and how important is the tax credit to your pocketbook as you make this interesting decision and if you live in a part of the country

where you're not get the car for another year can you wait that long? emily: uber is getting more competition in bangkok. itsn's line is expanding taxi service to the city. it will be on offer by the end of the year and will team up with the bangkok taxi co-op network which operates 20,000 cars at present. up, futuristic transportation reality. talking to cofounders about historic testing. airbnb's global head of risk management on what the platform is doing to garner public trust. this is bloomberg. ♪

>> hyperloop one just completed the second phase of testing in the nevada desert. reachingpe accelerated 129 miles per hour. it glides using magnetic levitation which limits aerodynamic drag and allows for a top speed of 700 miles per hour. we spoke with the cofounders about what this means. >> we are now 300 people strong.

up the last 2.5 years of starting the company has been about improving the technology. now we have shown at hyperloop one that hyperloop is real and works and now we move into what we call the don of the ofmercialization -- the dawn commercialization of hyperloop. all the dialogue and studies with governments around the world, we have shown in the videos you saw, the actual full-scale hyperloop working with the pod traveling at incredible speeds, faster and faster, now we move on to the commercialization process of actually building this out around the world. emily: i have the ticket you gave me. to ride the hyperloop. when will i be able to use this? >> sooner than you think. ticket,a very special emily. you are guaranteed to have a ride on the hyperloop. that is a promise.

emily: josh, what is the timeline? monday fore time cargo and passengers -- what will the time before cargo and passengers? into mass it manufacturing, that is what is next for us on the engineering side and we think we will be able to do that by the 2021 timeframe. emily: how do you overcome cost barriers and safety concerns? >> basically, the way we have architected the hyperloop is to make it the cheapest, fastest, safest, cleanest form of public transportation in the world. the way we designed it, the reason it can be cheaper is that the motors we designed only have every 30the line

kilometers where as other solutions have continuous wayevs and motors that are more expensive to operate and maintain and build out. what you will see in the future is, similar to what we have seen with paris and brussels being connected with high-speed rail, there are not even any flights between those two cities anymore. everyone is taking the high-speed rail route. what is interesting about hyperloop one is that our solution essentially will be an ip solution and a control system and automated solution so we oft to engender thousands companies around the world that are building these hyperloop's around the world using our technology. emily: elon musk is the one who came up with the original white paper on hyperloop technology and he has always said he does not want to commercialize it. -- he just waited "

just received approval to build underground new york, baltimore, washington dc, new york to d.c. in 29 minutes." what do you make of this apparent push into hyperloop with this company? >> hyperloop one is focused on getting the real hyperloop out to the world. the world is a big place. infrastructure is difficult. to move forward. you need collaboration of governments around the world. we have been in deep discussions with governments for a long time. we can build it overground, underground, tunneling is just one of those solutions. it is also very expensive to just do tunneling. we want to have a multi modal solution and spread that around the world. emily: we are hearing from sources that elon musk they want to build all the components.

what would it be like to go up against him? being able to do this in 2.5 years, have 300 brilliant minds -- we are focused on execution. there are probably many partnerships to be pursued. has been some turnover particularly on the tech and engineering side -- how are you handling that? >> we have had no search of people -- we have had no shortage of people interested in working press. head ofbrought in a new hardware engineering who came from google as well as a new software lead starting in about a week from now. there are candidates knocking on the door. emily: the cto moved on and there was a lawsuit and i am curious, what you learned from that experience and how you are moving forward? >> we are focused on building

the real hyperloop, building around the world, as we have pod, with the xp one traveling at those speeds and breaking records. we are very focused on the future and that is all we care about. youy: i have to ask you, are one of the earliest investors in uber, what are your thoughts on the recent resignation and who do you think is the right person to lead the company forward? >> i think uber is one of the great companies of our generation. it impacted the world and the , it has its reach lessons to teach and that historic run. it is the fastest growing company in history. they will have, some friction and they have taken that seriously. it is one of the greatest

opportunities for an incredible leader and ceo to come in and help lead a company that is at the forefront of where transportation solutions are going. emily: that was hyperloop one josh --er sherman and cofounders sherman and josh. doubling down now on the three key areas. airbnb continues to come back complaints on its screening process for hosts and gas -- and guests. we spoke with nick shapiro. >> there is a crisis of distrust. people are trusting less in institutions and trusting in each other more. airbnb was designed to build trust. we went back and looked through how we can leverage that new phenomenon and that is when we started to come up with, it is

about a hierarchy of needs and we need to facilitate that trust. emily: what does that mean? you are using technology to facilitate it. >> absolutely. people need to know they will be safe. we do a number of things to use technology to do that. we risk assess each reservation. we run global watchlist checks . just being safe is not enough. we use technology to build connections. there is a messaging system where you can learn more about each other and there are reviews of previous history. people need to know they are not alone. airbnb is there for them. if they get to a listing and it is not as they want it or advertise, they have someone to reach out. about whatcurious you bring to airbnb from your previous experience? >> airbnb, the tech sector

sharing economy is filled with some of the most optimistic people in the world. emily: exactly. >> brilliant and optimistic. i come from a background -- i bring a different light to that. i am way more cynical. because of previous experiences. , healthy dose of cynicism matched with optimism and brilliance is a good partnership. emily: the hotel lobbying groups are upping their attacks on airbnb. there is one recent ad connecting the platform with terrorists. had he respond? >> -- how do you respond? >> it is despicable. i know people who have lost their lives and to have an issue like that politicized to make a business point or to continue to price gouge consumers is hurtful. safety is the number one priority to airbnb. it is the thing we focus on the most.

we do a number of things like background checks -- that hotels don't do. emily: talk to me about background checks. there was a recent report of a woman who was saying she was sexually assaulted by a host and she claims that a background check would have revealed that this host had been arrested in the past for battery? he denied the allegations. how are you handling this case and what do you actually tell guests about their hosts and vice versa if something is flagged? >> the behavior of this woman -- this encounter is important. we remove the post and we offered her our full support. a background check was done and there were no prior convictions on the host. when you do background checks, it is hard to hold someone accountable when they were acquitted of an offense. emily: is it making you think

differently about the process? is one too many. safety is our number one priority. where always going back and looking if we should have done something differently. we will do that every time something happens. emily: lastly, you are getting into magical trips and connecting people to take you around for a more well-rounded experience. increasing the amount of time that guests will spend with these people. what does that mean in terms of trust and safety? >> we need to peel back the curtain and let folks what we do to build this trust and to keep them safe. --want to make informed said decisions. we cannot eliminate all risk but what we can do is tell them exactly what we do and make sure they make the best decision for themselves. airbnb's global

head of markets management, nick shapiro. how facebook is incorporating ai into video chat, next. check us out on the radio. you can now listen to us on the radio app. this is bloomberg. ♪

>> facebook came out with numbers on instagram this week. it's young users spend an average of 30 minutes a day on the app instagram is crediting much of the growth and engagement to its story feature which was launched a year ago in answer to snapchat. it now has 250 million daily users. facebook is said to be developing a video chat device for the home. it would mark the first major hardware product.

it could be announced next spring. this will be basically, video chat, facetime as you know it on steroids. it will be a big screen the size of a laptop on a stick in your living room that will have a really high end camera that will allow you to talk to people as if it is a more immersive experience. one of mark zuckerberg's goals for the future is to bring people closer together. they want to come up with technology that would prevent us from having to be tethered to our phones. that we could be in a physical environment and enjoy our lives but still feel like other people can share those moments with us. time former google executive -- julie, do people want a device like this?

>> facebook has to make a play in the hardware space. if you look at where future growth is going to come, we have 33% of consumers using some kind of virtual assistants in the home today. hardware using a device. voice services and services like ace book is describing are absolutely critical to future digital experience and facebook has to make a play or be left out. emily: what else do we know about what they are working on? and how they position themselves against google and apple and other services? >> this voice touchscreen device could get a lot more fancy. you could add a 360 degree camera. the camera they are working on has sensor technology that can lock in on things that move.

say if your grandmother is calling in to talk to your kid, he can hold of a painting and the camera will follow it. the other thing they are working on is something similar to the --gle home and alexa devices canre simple speaker that use facebook power and the ai assistant they have been working on. that kind of thing could be killed considering competition in the market. emily: tech giants are doing the same thing essentially with different tweaks. who is in the best position to succeed or is it anyone's game? >> it is still anyone's game. building hardware is not hard but assembling services and doing voice with language generation and understanding is very hard to do. google knows a lot about our day-to-day lives, apple has a great connected ecosystem of products, amazon knows about my

shopping and music habits, facebook knows about my social media habits. emily: facebook doesn't make hardware. >> it is hard to do. up secret here is in the set for ease-of-use. and how well it is done. this is hard to do. only 8% of consumers have one of these devices but in the future many will. that does it for this edition of best of bloomberg technology. we will bring you technology throughout the week including earnings from his knee and snapchat. remember all episodes of bloomberg technology are live streaming on twitter. check us out at bloomberg tech tv. that is all for now. this is bloomberg. ♪ is this a phone?

or a little internet machine? [ phone ringing ] hi mom. it makes you wonder... shouldn't we get our phones and internet from the same company? that's why xfinity mobile comes with your internet. you get up to 5 lines of talk and text at no extra cost. [ laughing ] so all you pay for is data. see how much you can save. choose by the gig or unlimited. call or go to xfinitymobile.com introducing xfinity mobile. a new kind of network designed to save you money.

>> welcome to bloomberg businessweek. >> we are coming to you from inside the magazine's headquarters in new york. >> inside president trump's chaotic white house. >> and how brothers managed to turn lines of code into millions of dollars. ahead on bloomberg businessweek. ♪ >>