♪ ♪ emily: i'm emily chang, and this is "bloomberg technology." coming up, apple's numbers before the most anticipated iphone launch yet. we spoke with the ceo tim cook about the quarter. his thoughts, coming up. plus tesla posts numbers for the , quarter. smaller than expected, that investors are looking ahead of the curve. the big focus on tesla's model three production, and whether the car cuts into the sales of

teslas luxury cars. and the square continues its banner year with a better-than-expected quarter. first our lead, apple's shares surged to record highs. the figures called and analysts concerns that the new iphone may be delayed. in a phone call with ceo tim cook, he told me that more users are waiting to upgrade to reports about the new iphone. he said it feels like the rumors are much larger and more frequent this year than in the past. we do believe that has created a pause. it is likely larger than previously. we broke down the guidance and earnings with the julie ask. and our bloomberg gadfly cheryl. >> there is a lot to look forward to hear. on the one hand, the market is going to grow about 50%, so over the next five years, so

there is a lot of upside in that market. there is a lot more to come with the smartphone needing a bigger ecosystem in people's homes, a lot of upside to come with things like virtual or voice assistants, and then there is all of the services they sell, whether it is apple pay or other services. emily: he told me that over the last 12 months, services have become the size of a fortune 500 company. it is a milestone that we had wanted to meet, but not this soon. we cannot be happier without that business is going. >> 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. as these other hardware markets begin to mature. emily: what is your take on the broader apple ecosystem? we focus a lot on the iphone, and we know we are expecting a new iphone in the fall. but everything else is also moving the boat, essentially. >> yes, i agree with that. it was impressive that in the third quarter when you saw

iphone unit sales be basically flat, that services like store downloads and apple music subscriptions, that rose very strongly. so the big question for me, was can that service revenue, continue to grow quickly, even as iphone sales don't? so how independent is services revenue from the iphone? emily: on that note, everyone was focused on this revenue guidance, because it may give us some indication, julie, of when the 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 and on the other hand the iphone could come sooner than we think? >> services will move the needle that much in the near term. apple is still a hardware company. 60% to 70% of their revenue still comes from the smartphone. that is going to be their biggest category in the foreseeable future. emily: let's talk a little better about china. we saw a 10% decline

year-over-year, but that decline is slowing. so, last quarter was a 14% decline. when i spoke with tim cook about china, he said the results were encouraging. we thought we would improve some, but we improved a bit more. ipad results were strong, and the services industry was extremely strong. the iphone on a year-over-year basis was essentially flat, so of the to the projection market. so we feel really good. cheryl, what do you make of this? >> no matter what tim cook says, the most important question for apple is, how will the next versions of the iphone cell in china? and we somewhat i see, i don't see a lot of encouraging signs. this was the sixth quarter in a row that apple had declining revenue in china. the declining market in china has changed, markedly since late 2014 when apple got a big lift from iphone 6 sales in china. i don't know what the iphone demand is in china for the next

version of the iphone. to me, that is the biggest question hanging over the company. emily: we do of course look at the rankings all the time and there are local brands that are now surpassing apple in china. >> one of the things to look at is that apple still gets 85 to 95% of the profits in iphone as hardware sales. apple is not trying to win the race. they are not trying to be, and they won't be the, the number one smartphone maker in the world. the thing that will guide how well apple doesn't china is how will they do with services and the chinese language, and providing the services that the chinese ovulation wants. emily: something else that is of course, interesting, is that with the new iphone we are expecting in the fall, whether it is called the iphone eight or , we could see a

four digit price tag on the highest priced iphone. the one we are expecting will have an oled screen. even as competition in china is rising, the prices going up. are consumers going to want to pay for it? >> i don't think anyone knows what the demand is going to be for an iphone that is in the $1000 to $1400 range. some analysts who follow the market in china, they say price is sort of an interesting signal. if it is expensive, then it is considered a luxury good and people might want it more. but, i do not think anyone knows what the demand is going to be like for a $1000 and up iphone. emily: i want to point out a couple of other things. we saw ipad sales increase. julie, and the state of the ipad has been a question. also, tim cook pointed out to me the enthusiasm for air pods. this is a lower revenue product.

they are increasing their production capacity for it and are very optimistic. >> yeah, there has been a six to eight week wait for air pods since they first launched. they should increase capacity, right? it's a good product. the ipad market, that is a little bit harder. from the business side, is it going to compete with something like the surface or microsoft tablets? it doesn't quite have that functionality. but is it more than a device for entertainment, and that lean back experience in the home? so i think it will be a a bit of weight and see to see what it makes a difference to the sales in the long-term. emily: last word. even if air pods are doing well, the ipad is doing better. is the iphone all that matters? >> apple is the iphone company for the foreseeable future, yes. ♪ that was forrester principal analyst julie, and number gadfly's cheryl. in other earnings, sony's turnaround seems to be on the

right track. the company reported quarterly profits that topped analyst's estimates. sony sell strong demand for smartphone. they showed a healthy music business and brisk sales for their consoles and games. they beat the analyst average projections. we will have more earnings later in the show, including tesla's record cash burn. how elon musk continues to spend big to bring more electric cars to the road. plus, our exclusive interview with jack dorsey on square's booming lending business. and 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 talked about square's burgeoning market of customers. new end under banked. we are notzed that really competing with financial institutions and banks and traditional lenders. our average loan size is $6,000. we are competing with people going to their friends and family and asking for a loan. and that is a massive market. emily: i also asked dorsey what he thinks of the skyhigh valuations of other tech companies. take a listen. jack: i am not an economist, so i don't know how to answer that question. we live in a market, and markets decide to evaluate it at this particular thing, so we will always have ebb and flows. that is not something we can control. what we control is whether

people want to use something we are building. our job is to make sure that the answer is yes, and they want to use it so much that they cannot help but talk about it with people who ask for recommendations about what tools they use. trying to get out of this nasty contract, where should i go? that is the thing we control and and that is what we focus on. emily: you must have a keen insight into the health of the u.s. and the global consumer. where do you see people spending and not spending? and what is your confidence? jack: you know, we see people going to our sellers, and we see people purchasing and those trends continue to be positive. and i think the great thing about square's business is that it is nondiscretionary. so, everything else can fade away, but you have to be able to make the sale. i feel really good about what we are seeing in the economy and also how we will continue to

thrive and support that. emily: there have been a number of reports about sexual harassment in the tech industry. people have lost their jobs. it is renewed concern about the lack of women in tech. what are your thoughts on that? jack: it is a situation where we have to bring a lot more attention to. our focus has always been on inclusion first, making sure that we are building an organization and an environment, and a company that people feel like they belong, and people feel like they can contribute to. and they feel a part of. we can say that but we also need to make sure that it is not just an environment where people are long, where they can actually help contribute to decision-making. ,nd make sure they continue they help own our outcome.

emily: the gap between silicon valley and president trump still seems quite large. what roles do tech companies play, and leaders like you, jack dorsey, can do in closing that gap? jack: i don't think there is any difference in the role that tech play -- companies play or individuals like i play. i think the most important thing is to have an open conversation and speak up. if we can't to speak up and transparent about how we feel about policy shifts, we are going to move backwards as a country and as a world. so, that is my role. that is our cap's role and our -- that is our company's role, and our industry's role, and it is every citizen in this country's role as well. i will use my role and my experience to inform what i believe is right, and what i believe is necessary. emily: as somebody who runs a company that moves a lot of money around, how concerned are you about not just economic, but political uncertainty right now? jack: well, every entrepreneur

or leader has to deal with uncertainty. we just have to be comfortable with it. and the economic uncertainty, let 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 that we are seeing not just in this country, , but around the world. our goal as a company, we have a very small part, but it is a part nonetheless to continue to , provide tools 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're focused on, trying to help fix the red we're not going to do it alone. but we are going to have a loud voice as we do. emily: last question. how does that impact where square goes next? you have been expanding abroad. where to next? jack: we want to go everywhere. we want to be a tool and service that is successful for everyone in the world.

we have a lot more friction in our industry because we have to work with banking partners and we have to work with regulators, and every local market has its own rules and regulations, so we are going to take our time because we want to do it right. we do not need to be first in market. we just need to be the best option out there. ♪ emily: our exclusive interview with square ceo jack dorsey. coming up, bitcoin's big split. how the top crypto currency exchanges are reacting to the offshoot. next, this is bloomberg. ♪

♪ emily: earnings season is wrapping up, but not before we get the numbers from snap and alibaba next week. we spoke with mark mahaney to get his take on what is ahead for tech stocks. >> to takeaways the demand , one, trends remain consistent.

i think this is our 30th quarter in a row, and our 17th quarter in a row at 50% year over year as revenue for facebook. and about 20% year-over-year for 10 years now, for amazon. we have seen very consistent trends. investments are heavy and will be heavy the next year. these companies clearly want to maintain these growth rates and they think they have a lot of new opportunities to go after, whether it is amazon talking about advertising revenue, or it -- or netflix spending money to build its international content library. these companies remain in growth and investment mode. there is no scenario under which margins are not want to expand -- are going to materially expand here. emily: let's talk about advertising revenue. facebook and google still dominate the pie. i mean, is there any room for other players at this point? >> like a snap for a twitter? -- a snap or a twitter? emily: yeah. that is a big sigh. >> yeah. it is. it is unknown. whether they can get to a couple billion in revenue, probably. we call it the experimental budget zone.

you can get a couple of billion dollars from advertisers, they all want a bit of diversification from google and facebook. but in order to get much more than that, there is no one out there really getting $5 billion in ad revenue. you have to prove your roi, and come up with innovative advertising formats. we think of the two, snap has a better chance of getting there, but it is starting from a much smaller base. emily: snap has been struggling. facebook has been taking on some of snap's most popular ideas. are you worried about snap? >> absolutely. we initiated $24. about three months ago, so 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. first, they need to reassert that their average user growth, and it is the same thing with twitter. if the users decline, the stock will decline. snap needs to get that growth rate accelerating. they rolled out a self-service advertising solution. they need to do that to get more advertisers on the network and cause their ad revenue growth to stabilize.

look, it is still growing triple digits. there is no triple digit grower ad revenue there -- triple digit ad revenue growing out there. it is snap. we think the valuation does not reflect that. emily: do you think they can keep it up though,? >> i think so. one, they are fixing their android problem. they were blindsided. like facebook was, four or five years ago, with the mobile thing. back then that was new? emily: the mobile thing? >> yeah, the mobile thing. [laughter] the android thing is what blindsided a snap. snap needs to make sure it's app is fully integrated on all android devices. that is a couple of quarters fixed, the second thing, is that they need to get their users growing again, or continue to grow at a faster level, and that is by continuing to roll out better and better features. snap maps falls into that. i thought that was a pretty cool feature. they have to do more of that. if they do, they will grow. if they do not innovate, the average user growth will flat line and the stock will flat line. emily: amazon forecasting potential quarterly loss for the first time in a while, being very aggressive about moving

into new investments like groceries. are you concerned? >> no, not really. i mean, come on 20 years of growth, investments, losses, gains i think they have proven , -- emily: big bets. yes, but they are successful they bets. the best single trend is cloud computing and that was amazon's big bet. they have had a series of other good bets like the third-party marketplace, the kindle family of devices has been pretty good. i think these echo devices, they have a home run on their hands. so, i'm willing to allow them to invest. by the way, groceries is a very large, logistics business, and amazon is logistics. a little bit of concern. but over time they have built up the trust, at least for me. emily: amazon seeing more success. with original content, and at netflix, of course spending , billions of dollars on original content. now you have competitors like hulu now. with the handmaid's tale, do you think netflix's burn is sustainable? is it paying off? >> i will not side so much with

netflix. the reason is, we have run surveys now, for three years in a row, and we find that amongst amazon customers, 50% of them are netflix subscribers. customers,zon prime those who get their free video, revenue percent of them and a growing percentage of them are netflix subscribers. i think what is happening here is the death of the big bundle. and consumers, especially the more advanced internet users, don't go into prime, and they are going to netflix. i think you have this huge secular tailwind, the shift over to streaming and netflix is the biggest beneficiary of that. do you know why? they have great content, that is the proof of that point is the one. 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 for netflix. emily: that was mark haney. -- mark mahaney of abc capital markets. history has been made in crypto currency. the number one digital currency, bitcoin, has split in two. the move comes after a long debate over how to scale bitcoin

and increased block size. those are the files in which transactions are recorded. causing some miners to start a new strand called bitcoin cash. caroline hyde joins us from london to explain what is next. caroline: the split is really almost philosophical in nature. it is what they want to see bitcoin become. part of the ecosystem is wanting to see bitcoin remaining a basically a stored value a safe, , digital asset class. but they're up also been a growing clamor for the scalability to keep up. the fact that transactions have become sluggish and costly. how do you scale? and they have been able to compromise this so far, with a segue up to that in that they , a software upgrade where they agree toged to increase the block sizes by double. from one megabyte to two megabytes. that was not enough for a small group of asian entrepreneurs and

investors. and developers. they wanted even more scalability, they wanted to go from one megabyte to eight megabytes. it happened today with bitcoin cash. almost like a stock split in the same way they have the same history, now we have two different currencies going into different directions. instead of fostered on different business models, they are supported by different digital technologies underlying them. the protocol, the so-called block chain is not different. -- is now different. emily: so, what does this mean for bitcoin traders? caroline: a lot of volatility, a lot of question marks, a lot of hand wringing, and a lot of decision-making about if you want to back bitcoin cash or not. what we have actually seen, is that not everyone, in the whole ecosystem is going to back this new digital currency. if you own bitcoin right now, you are allowed to get the coin cache automatically. but that is only if you have had your bitcoin stored in the

supportive wallet, in the supportive areas and companies and exchanges that will allow you to have both bitcoin and get bitcoin cash as well. for example, fred wilson, who is a backer interestingly of coin base, saying i don't want it, because ikeep do not believe in the underlying technology for now. so, if you are a bitcoin holder, you have actually seen a lot of turbulence a lot of companies , drawing their coins out of the exchanges such as coin base, because they are not try to put it into a different exchange. for the time being, you are seeing a lot of people trying to work out where the prices go. i can tell you about three hours ago, the first bitcoin cash, the new digital currency was mined. at the moment, it is trading at only about a 10th of the price of bitcoin original. >> fred wilson also told us that he is very bullish about other

cryptocurrencies. what is next for bitcoin? will we see more offshoots? caroline: it is interesting. this happen to ethereum. last year, we saw a division, a so-called hard split in e therium. that is why you have a theory -- you have etherium and etherium classic. will that be the demise of bitcoin cash as well? many are saying we could see a new precedent being set. could we see more and more? do we have a more impenetrable bitcoin? many felt, overall, this was the joy of bitcoin. and that it was -- the joy of bitcoin, that it was immutable. now, that is been undone. that is the key question, can this keep on happening? the strongest will survive. emily: bloomberg's caroline hyde there in london. coming up, tesla just rolled out the most affordable car yet the , model 3, starting at $35,000, but will it attract the masses? we will discuss.

of a reminder, all episodes "bloomberg technology" are live streaming on twitter. 5 p.m. in new york, 2 p.m. and san francisco. his is bloomberg. ♪ who knew that phones would start doing everything?

entertaining us, getting us back on track and finding us dates. phones really have changed. so why hasn't the way we pay for them? introducing xfinity mobile. you only pay for data and can easily switch between pay per gig and unlimited. no one else lets you do that. see how much you can save when you choose by the gig or unlimited. call or go to xfinitymobile.com. xfinity mobile. it's a new kind of network, designed to save you money. i enjoy the fresher things in life.o. fresh towels. fresh soaps. and of course, tripadvisor's freshest, lowest... ...prices. so if you're anything like me... ...you'll want to check tripadvisor. we now instantly compare prices... ...from over 200 booking sites... ...to find you the lowest

price... ...on the hotel you want. go on, try something fresh. tripadvisor. the latest reviews. the lowest prices. ♪ emily: welcome back to the best of "bloomberg technology." i'm emily chang. tesla started deliveries of the long-awaited model 3. 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. so, will the car live up to the hype and appeal to the masses? take a look for yourself. >> these are the very first tesla model threes. 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. touted as tesla's inroad to the

mass market with a base price tag of $35,000. elon musk has reaffirmed they will be churning out 20,000 model 3's by the end of the year, per month and 50,000 by , the end of next year. but elon musk admits that it will be a herculean task. >> frankly, we are going to be in production hell. welcome, welcome, welcome to production hell. [laughter] where we are for at least six , months, maybe longer, i look forward to working alongside you journeying through hell. and as the saying goes, if you're going through hell, keep going. [laughter] emily: some say the model three could be as transformational as the iphone and it may well be musk's most daring feat yet for elon musk. will it be just another electric car, or a car that will change the future of all cars? days after that event the company reported record

second-quarter earnings, including a record quarterly cash burn rate. it almost doubled the $622 million in through the first quarter, up to the lead up to the model 3 roll out. we spoke with bloomberg's dana hull who covers all things tesla as details of earnings emerged. >> across the board, they spent less. they said they would spend a lot but they spent less than investors had feared. model three reservations are through the roof, and they have darted installing the solar roof. the fears of cannibalization are not as severe as some had been concerned about. they have seen an increase in reservations for the us and ask s and as wellel as the three when it was revealed. >> let's talk about the cash since the three was revealed. burn. i am looking at the bloomberg. tesla spending $1.6 billion in the second quarter. >> they have signaled they would spend heavily to bring the model 3 to market, so they still have

$3 billion in cash on hand to get them through the end of the year without having to do any kind of race. emily: let's talk about production. he did say over the weekend when they unveiled the model 3, that he would be going into production hell. that they all would be going into it. what is the trip through hell mean for investors? >> well, i mean, the trip through hell is on everyone's's mind. what does he mean? is there a supplier issue or a production snafu? there was nothing in that any earnings report. emily: he is saying they can get to 5000 model 3's a week by the end of this year? >> yes. emily 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. 5000 a week from 30 or 50 is pretty steep. so everyone is wondering, what does the ramp looks like, are there any potential roadblocks 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. emily: let's talk about inventory. are we seeing any signs that the model s or model x is softening? >> that was the big fear when they released the sales figures earlier this month, there was a quarter to quarter drop, and you could see the resume inventory on a balance sheet. what they have said is they want to get more model s and x's, out to stores. because some stores were operating without any fleet models, and they have to have -- they need to have extra cars around for testers to read that is an interesting question for the investor call today. is this rise in inventory something to be concerned about, or are you making sure that your showrooms have the latest and greatest? what the model y. about the upcoming semi truck? any new details? >> the model y is a crossover. the shareholder letter ended on , we are looking forward to adding the semi to the fleet. they are supposed to unveil it in late emily: and what about september.

solar panels, the solar roof, as well as gigfactory. -- gigafactory. what are we learning there? >> they have started to install the solar roofs on the homes of some employees before they roll them out. it is interesting to figure out what is solarcity at this point? is that brent going away? are they completely shifting to roofs? there was a mention of this project in australia, which is a big energy storage project for south australia. emily: when it comes to the have -- the more than 500,000 deposits that they have, people who want to be model three, 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 $7,500 federal tax credit on an electric car, but that begins to ratchet down once tesla hits a certain volume. so the big question is, where are you in line? how important is that tax credit to your pocket look as you make

this purchasing decision? if you live in a part of the country, where he you will not get the car for another year, can you wait that long? emily: that was dana hull. uber is getting more competition in bangkok. according to reports japan's , line is expanding its taxi service to the city. the company will start offering it by the end of the year. it will team up with the bangkok taxi cooperative network and initially operate 20,000 cars. coming up, hyperloop one gets one step closer to its futuristic transportation reality. we will talk to the cofounders about this historic test. and we stick with airbnb's global head of risk management on what the platform is doing to garner public trust. this is bloomberg. ♪

♪ emily: hyperloop 1 just completed the second phase of testing in the nevada desert. a prototype accelerated reaching 192 miles per hour. the pod glides above the truck use it magnetic levitation in a nearly airless to to limit aerodynamic drag and allow for a top speed of 700 miles per hour. we spoke with the cofounders about what this means. >> we are now 300 people strong. the last two and a half years of

starting the company has been about improving the technology. now we have shown at hyperloop 1 that and now the move into the hyperloop is real and it works andnow the move into the, now the move into the dawn of commercialization of hyperloop. so, as all the travels we have been doing in the conversations and dialogue and studies of 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. and now, we move on to the commercialization process of actually building this out around the world. emily: so, sherman, i have the ticket you gave me. [laughter] >> the golden ticket stucco -- the golden ticket! >> when will i be able to use this? >> um, sooner than you think. but keep that ticket. that is a special ticket, emily. you're guaranteed to have a ride on the hyperloop of hyperloop

one. that is a promise from the both of us. emily: so josh, what is the timeline? when will you have it up and running for cargo and for passengers? >> the next phase is to move this into production space. we have to make sure that it can be reliable for 30 plus years, and actually get into a mass manufacturing market. 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: sherman, how do you overcome cost barriers and safety concerns? sherman: that is a great question. 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 to be on the line every 30

kilometers. where as other solutions have continuous maglevs and motors that are way more expensive to operate and maintain and build out. so, what you will see in the future, which is very 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 automation solution. so we really want to engender thousands of companies around the world that are building these hyperloops around the world using our technology. emily: now, elon musk is the one who came up with the original white paper on hyperloop technologies, and he has said that he does not want to commercialize the technologies. by now he has the boring

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

to actually build all the components. what would it be like to go up against him? we are i think, as you have seen being able to do this , in two and a half years, have 300 brilliant minds, we are very focused on execution. there are probably many, many partnerships in that space to be pursued. emily: so, there has been some turnover, particularly on the tech and engineering side. how are you handling that? josh: we have had no shortage of people interested in working for us. we just brought in a new head of hardware engineering who came from the google x program as -- and a few other things, as well as a new software lead starting in about a week and a half from now. so there are certainly candidates knocking down 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? sherman: you know, we are incredibly focused, as josh said, on building the real

hyperloop, building it around the world, as we have shown with the major milestone of the xp one pod, traveling at those speeds and breaking records. we are very focused on the future, and that is all we care about. emily: talking about the future, sherman, i have to ask you, you are one of the earliest investors in uber. what are your thoughts on travis kalanick's recent resignation, and who do you think is the right person to lead the company forward? sherman: i think uber is one of the great companies of our generation. the impact it has had on the world, the scale of its reach, every company has lessons it has learned and that historic run, it is the fastest growing company in history. at those speeds, they will have some friction and they have taken that seriously.

i think it is one of the greatest opportunities for an incredible leader or's eeo to get to come in and help lead a company that is at the forefront of where transportation solutions are going. emily: that was hyperloop one cofounders sherman and josh. airbnb is taking steps to building trust between hosts and guests. the peer-to-peer vacation hospitality website, plans on doubling down on three key areas. safety, connection, and support. this comes as airbnb continues to combat complaints on its screening process for host and guests. as well is facing numerous attacks from hotel lobbying groups. we spoke with airbnb global head of press and risk management nick shapiro. nick: there is a crisis of distrust right now. people are trusting less and these main institutions and trusting in each other more. and airbnb was designed specifically to build that trust. we went back and looked through how we can leverage that new phenomenon, and that is when you started to come up with -- it is about a hierarchy of needs, and

we need to continue to facilitate and held that trust. emily: so, what does that mean? -- enfield that trust. emily: so what does that mean? nick: people need to feel that 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. against all of our users worldwide. we background check hosts and guests in the u.s. just being safe is not enough. we use the technology to also build connections, build detailed profiles, there is a messaging system where you can learn more about each other and there are reviews of previous history. on top of that, we know that people need to know they are not alone. airbnb is there for them. so if they get to a listing, and it is not what they wanted or as advertised, they have someone to reach out. emily: you have a national security background. you were deputy chief of staff in the cia. during the obama administration, i am curious how your experience informs what you are bringing to airbnb and how you can complement that? nick: great question. airbnb, the tech sector sharing

economy is filled with some of the most optimistic people in the world. emily: exactly. nick: brilliant. and also very optimistic. i come from a background and bring a very different light to that. i am way more cynical. it comes from the previous experiences i have had, but i think a healthy dose of cynicism matched with optimism and , brilliance that most of our engineers bring to the table 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. how do you respond to that? nick: it is disgraceful and despicable. it is disrespectful and i know people who have lost their lives. people have fought really hard for this country and to have an issue like that politicized, to make a business point, or to continue to price gouge their consumers, is very hurtful. safety is the number one priority to airbnb. trust is the fundamental

currency in the sharing economy and it is what we focus on the most. we do a number of things, like background checks. hotels don't do that. emily: talk to me about these background checks. there was a recent report of a woman who was a guest, saying that 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. you know, how are you handling this case, and what do you actually tell guests about their hosts and vice versa if something is flagged? nick: that is a good question. first, let me say, the behavior of this woman encountered allegedly is abhorrent. -- the behavior that this woman encountered allegedly is a part. that is why as soon as she told us, we removed the host from our community. a background check was done on the host in question, and there were no prior convictions. when you do a background check and there are previous charges, but no convictions it is hard to , hold someone accountable if they were acquitted of an offense. emily: is it making you think differently about the process?

nick: every incident should make you think. one incident is one too many for us. safety is our number one priority. we are always going back and thinking, should we have done something differently? we will do that every time something happens. emily: lastly, you are getting now into these magical trips, and connecting actual people who are going to take you around for a more well-rounded experience. this is increasing the amount of time that guests will spend with these people. what does that mean when it comes to trust and safety? nick: you know, i think what it means is we need to work extra hard to peel back the curtain and let folks know what we do to help build this trust, and what we do to keep them safe. we want people to make informed decisions, and want them to know that when they are signing up for an adventurous experience, or travel, that we cannot eliminate all the risk. what we can do is tell them exactly what we do, and make sure they make the best decision for themselves. emily: that was nick shapiro. coming up, facebook is betting

big on hardware. how it is incorporating ai into a video chat device, next. and if you like bloomberg news, check us out on the radio. you can listen on the bloomberg radio app, and on the bloomberg radio app. this is bloomberg. ♪

emily: facebook came out with numbers on instagram this week. the company says it young users spend an average of more than 32 minutes a day on the app. for those users 25 years and older usage is more than 24 , minutes a day. instagram is crediting much of the growth and engagement to its stories feature which was launched a year ago in answer to snapchat. instagram's version has more than 250 million daily users. now to a bloomberg scope facebook is said to be , developing a video chat device for the home. it would mark the first major hardware product for its lab,

and the product could be announced as soon as next ring. we spoke with sarah frier tough -- who helped to break this story and the principal analyst at forrester. >> this is going to 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 with people as if it is a more immersive experience. one of zuckerberg's goals for the future is to bring people closer together. in this building eight hardware lab, run by regina dugan, you want to come up with technology that would prevent us from having to be tethered to our phones. enough we can be physical environment and enjoy our lives, but still feel like other people can share those moments with us. that is the higher level. emily: julie, do people want a device like this? julie: i think facebook has to

make a play in the hardware space. if you look at where the future growth is going to come, you know, we have 33% of consumers using some kind of a voice or virtual assistant or a device in a home today. 8% using a hardware device. voice services and services like facebook, are absolutely critical to future digital experience and facebook has to make a play or be left out. emily: sarah, what else do we know about what they are working on? and how that would position facebook, these of the google and apple, and amazon with the echo. sara: first of all, this voice touchscreen device could get a lot more fancy. you could add a 360 degree camera. the camera they are working on has this center technology that can lock in on things that move. say if your grandmother is calling into talk to your kid,

he could hold up a painting, and the camera will follow it. the other thing that facebook is working on is something similar to the google home and alexa devices you were talking about. a more simple speaker that can use the facebook power and ai system that they have been working on. that is a lower end device. we have heard from our sources that kind of thing could be killed considering the competition in the market right now. emily: ok, julie, if all four tech giants are doing the same thing as essentially, with slightly different tweaks who is , in the best position to succeed here or is it anyone's , game? julie: it is still anyone's game. everyone has their strengths and weaknesses. building hardware is not hard but assembling the services and doing voice well with language , generation and understanding is very, very, hard to do. google knows a lot about our day-to-day lives, apple has a great connected ecosystem of products already in my home

amazon knows about my shopping , and music habits, facebook knows about my social media habits. emily: facebook doesn't make hardware, right? julie: they do not make hardware, and it is very, very hard to do. the secret here is in the set up and ease of use feature. how well it is done. this is hard to do. only 8% of consumers have one of these devices, and it will be something that will find in every one's home in the next five to 10 years. emily: that was sarah frier and julie hast. at forrester.yst that does it for this edition of the best of bloomberg technology. we will bring you technology throughout the week including earnings from from disney and snap. to need niche day 5 p.m. in new york and 2:00 p.m. from san francisco. . check us out at bloomberg tech tv. that is all for now. this is bloomberg. ♪

♪ >> 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. >> and uncovering power brokers. >> all that ahead on "bloomberg businessweek." ♪