>> i'm in washington and you're watching bloomberg technology. xxx we start with a check of your first word news. president trump isn't backing down in the war of words with north korea. he doubled down on his warnings to kim jong un in new jersey today saying the north korean leader will, "regret it fast if he moves on guam or any other u.s. territory." trump says north korea has gotten a pass from former administrations for misbehaving. a national survey by the nonpartisan kaiser family foundation finds most people polled believe it is time for the gom to give up trying to replace obama care. in fact, four in five people want the administration to help fix its flaws rather than try to undermine it.

only three in 10 want republicans to keep trying. congress has given final approval to a bill to trim a growing backlog of veterans' disability claims. the house approved the bill today sending the measure to president trump now. it would cut the time it takes for the v.a. to handle appeals regarding disability payouts. the nfl has suspended dallas cowboys star running back ezekiel elliott for six games. he has been under investigation for more than a year for alleged incidents of domestic abuse. global news 24 hours a day, powered by more than 120 courns. this is bloomberg.

>> this is bloomberg technology. coming up, tensions escalate across the korean peninsula. meanwhile, president trump is meeting with his advisers after tweeting military action is "locked and loaded." we'll explore every angle of the global crisis. plus the currency market pushed to an all time high. could tensions on the korean peninsula be partly responsible? we'll look into why this volatile asset is considered a safe haven. and validating the valuation. the tech climate has ended in record territory but how long will investor risk for start-ups continue? we analyze the data. but first to our lead. president trump is doubling down on his threat toward north korea. speaking in new jersey the president said north korea will regret any action it takes gainst the u.s. or its allies.

president trump: if he utters one threat in the form of an over the threat, which by the way he has been uttering for years, and his family has been uttering for years, or if he does anything with respect to guam, or any place else that is an american territory for an american ally, he will truly regret it. and he will regret it fast. >> this comes after president trump's earlier tweet saying the u.s. military's plan to deals to deal with north korea are, "locked and loaded." now this hour the president is expected to speak after his meeting with u.s. secretary of state rex tillerson and u.s. ambassador to the u.n. nikki haley. we'll bring you the president's remarks. first, joining me from washington is our bloomberg national security reporter. bill, what do we expect to come from the meeting with nikki haley and rex tillerson? diplomacy behind the scenes? bill: i think, yeah.

we may hear a little bit about whether there is any back channel talk or any plans for the u.n. security council to maybe take up some more consideration of tougher sanctions in the days or weeks ahead. but right now, you know, i think it was literally just a week ago that the security council passed a billion dollars in sanctions against north korea. i think a lot of people have been surprised by the tone, the debate between u.s. and north korea taken this week. they'd like to give sanctions a little bit more of a chance to take a bite. >> talk to us really about what is at risk and how realistic it is that we could see any sort of escalation and particularly in just not words but deeds. because the russian foreign minister lavrov saying risks are very high. bill: there are a lot of signs we would look for if a major conflict were about to happen and frankly we just don't see

that taking place right now. we just put out a story on bloomberg.com about this. some things, you know, in terms of deployment of additional naval forces or bombers to guam in the pacific, those kinds of things haven't taken place yet. personnel, u.s. personnel, families of diplomats and the military who are stationed in south korea, normally you would try to get some of those people out, either order them out or give them an option. none of that is taking place. on the north korean side they would be undertaking some civil defense measures, practicing getting the elite out of pyongyang. so a lot of those kinds of signs we would expect if a major conflict were imminent just aren't on the table at this point. >> i know we've become slightly numb to the fact donald trump takes to twitter to announce a lot of things but it is quite shocking it is being used in this means. talk to us about perhaps the democrats' reaction. because they are worried about

the growth in tensions and have tried to remind many of the constitutional requirements here of any preemptive strike in north korea. bill: sure. a couple things there. everyone has long grown used to over-the-top rhetoric from the north koreans. we've never seen the u.s. respond in kind over more than 20 years of difficult relations between the two countries. democrats are saying that donald trump is effectively drawing his own red line in the sand. that he may, or may not be willing to enforce. or if he does enforce could lead to a real nuclear catastrophe. so they're actually pointing to the same kind of criticism trump had of president obama when he failed to attack the syrian regime afterth use of chemical weapons. democrats are saying, now trump is drawing a red line over north korea and we don't think he is ready to enforce it. >> our national security reporter from bloomberg news. thank you very much indeed. of course we will bring you

that speech from donald trump as and when he finishes his meeting of course with rex tillerson and u.n. ambassador niki haley, going straight back to new jersey for you. now, from politics to another area where trump has had an impact. of course talking the tech sector. the number of interview requests from u.s. companies to foreign tech workers dropped by 60% between the second and fourth quarter 2016 amid the presidential campaign according to data released by hire, a job site that matches employers with candidates. the drop in interest indicates that u.s. companies are thinking twice about hiring foreign tech workers amid uncertainty about immigration policies from the trump administration. joining us now to discuss is my guest cohost for the hour, founder of a group which aims to support london tech stocks up, finding new investors, new talent --. >> thank you. >> what amazing statistics you seem to be having. not only 60% back in the second half of 2016 but even the

second quarter of 2017 still seeing a fall off in u.s. companies willing to interview tech talent from abrood. >> i think we'll see that drop even further with the announcement that came out two weeks ago that further immigration restrictions are going to be p you the in place. i think the number is going to be reduced by half over the next few years. so this trend is going to continue. i think the tech industry in the u.s. is probably pullingth hair out. they must be because this already was a scarcity of really good talent. this is really compounding the problem. >> what does it mean? do we start to see potentially other hubs benefit, maybe here in europe even? >> yes. well, i think a couple things. one of the immediate beneficiaries will be canada. canada has a very friendly immigration policy especially toward entrepreneurs. i think weeling' see europe and in particular the u.k. benefit. when we surveyed tech london advocates a couple months ago 60% said trump's policies on

immigration in the u.s. will be favorable to u.k. tech. this will have global ramifications. >> u.k. tech though. we're facing the brexit concern, immigration issues, all of our own. are you hearing from the entrepreneurs you speak to in london they are struggling to get eu workers into this country as well? >> yes. we are seeing something similar happen here. so the message to the government is, look. we're dealing with brexit. that is reducing the number of job applicants. eu nationals don't feel welcome at the moment. we don't want to lose them. let's sort out the eu nationals that are here and we're pushing hard and campaigning hard to say we need an immigration briefing. let's get third party sponsorship of visas and introduce a tier five tech visa. initial indications are very receptive. we'll see if it actually happens. we'll be pushing hard for that. the government knows it needs to address the situation here and they also see the opportunity to potentially from the u.s. as well. >> the u.s. tech giants are

doing a lot of hiring here. still they are remaining committed. >> a lot of investment going in. google, h.q. has just been formally approved. we're seeing the commitment double down. i think that message is also reverberating with policy makers in the home office to say, ok. let's make sure we're prepared with the right level of talent and let's not forget the home grown talent. just launched a digital skills partnership. so there is a two-pronged approach. let's get immigration policy right and invest in home grown talent. >> i can't go without having seen some of this heafness we've seen on the public market, the semiconductor, one of the chip makers in germany for example. i'm looking at as i get to the bloomberg, this is a great chart that shows you how much we've seen a sell off. globally in the blue line you're seeing how u.s. tech industries have performed since the beginning of the year, actually since donald trump's own inauguration we've seen asia tech index all start to

fall off. european tech is high school low. i want to go back to donald trump's effects. a bit of a sell off in recent weeks. but donald trump hasn't really stopped the bullish run in public tech stocks. why do you think that hasn't been the case? >> i think if you look at the overall markets, you know, the whole emphasis on deregulation, on cutting red tape, that is very much permeating his administration and his cabinet. so even though he takes up a lot of volume on media, at the same time there are actions happening behind the scenes. and i think ultimately the technology sector in terms of stock valuations have been benefiting from that. i think the real question is how long is this going to continue? we've seen the markets rise and rise and rise. unemployment is at record lows. there's going to be a point where this is going to start to change. is that within the next couple months or the next couple years? we're not quite sure. i go think there is a sense that valuations are very high

and can they really stay at those levels? >> we're talking about private company valuations a little later as well. great to have you with us. now, the battles for control of the board room at uber continues. three investors in uber sent a letter to benchmark capital stating a lawsuit was designed to, "hold the company hostage." the investors also asked benchmark to step down from the board itself. -- to be clear, you don't hold seats on the board or they don't hold seats on the board or a majority of the company's stock but in the letter they said they're seeking other shareholders to add their signatures. coming up, bitcoin is bigger than ever as it his a new record high. next we'll discuss efforts to make it more main stream among traditional and institutional investors. this is bloomberg. ♪

>> now bitcoin's performance shows no signs of letting up this week. take a look inside my terminal. type in g # btv 1861 if you have a terminal and you'll see digital currency reached another record high friday. the line in purple. after weathering, remember the split that occurred that was threatening to jeopardize growing main stream interest? now some are speculating it could be a haven amid rising geo political tensions. the total value of all this currency set a new high today rising above $126 billion the first time in history according o data from coin market cap.

here to discuss this an advocate. fascinating moves we're seeing. what is so interesting is also that you're seeing the south korean yuan being one of the major currencies being at the moment traded versus the number two -- could bitcoin, digital currencies be the new haven of choice? >> well, i think it is going to take some time to get there but i think every time we see pisodes like this it awakens people's interests in this currency. what i find interesting is the dollar has stepped back. normally the dollar is a safe haven currency. not so. therefore gold is doing better. but crypto currencies and are doing really well. i think as investors look to diversify and move into digital assets bitcoin is going to benefit. >> there is still some nervousness, a lack of liquidity. there are exchanges, raising money the likes of coin based,

a hundred million dollars. but still you're not seeing the institutional pay -- not embracing gdax quite as quickly as they might wish. what is the tentativeness, the cautiousness here? >> a bit of the chicken and the egg. you want the institutional investors to start embracing it but many are still worried about security and as you say the lack of liquidity. the exchanges are very fragmented. so there is kind of a discussion that is saying, do we need to centralize the exchanges and have a larger exchange whereby the liquidity issue starts to disappear? and then when i think you see something like that happen, many more institutional investors will start to pile in and it will keep going. but we have to remember it's still very early days. this is a relatively new concept in currency. most people are on the sidelines. you've probably got your more risk aggressive investors looking at this. slowly, steadily this is going

o become more main stream. >> by its very nature digital coin wants to clear away clearing houses and then we have banks and institutions saying we won't do it unless there is a clearing house. >> it is tricky but the classic behavior we've seen all along with banks. they haven't embraced disruption. they've gone in the other direction so i think if they're smart they'll say let's really embrace this. i think some of them are. they're investing in block chain capability so they're trying to get in and understand it. get behind some of the start-ups to is -- to see is it really going to be part of the future and is there an opportunity to get more deeply involved? my view is they will start to embrace this much more. >> and then working with ripple which is i think the number three crypto currency. what about the hub that wins? we sit in a financial services hub that is london but over in

switzerland, calling itself what, crypto valley, new york where you've just been. where wins? >> i think we will see multiple hubs. london and new york will do very well because you have a lot of talent that is already here. obviously the valley will do well. i think if you look at china, china is investing in this very heavily. there is a lot of bitcoin mining going on in china. so you will have pockets of expertise around the world. i don't know if there is one center but maybe six to eight and i think london and new york will be those centers. >> where do you get excited -- are you someone who dabbles in digital currency space? is it something that you've been hearing generally more people start to become accepting of and wanting to know more? >> yes. i've gone from shunning it to kind of saying i think i should e trying this. and putting at least a little bit in to see and understand

how it works. >> how easy is it to do that? >> i don't think it is that straight forward. you have to have a bitcoin wallet so companies like coin base are doing well by setting that up and trying to make it easy for people like me to get more involved. i think there is a massive effort under way to educate people about this, how it works. what kind of investment profile do you have? and if you are willing to take some risks and watch the volatility and the price, then this is your gig. over the next few years as that settles down i think more people like me will take it seriously and say, look. i might take a small portion of my portfolio and put it into bitcoin. >> fascinating. and see how the rest of them fare. now coming up more details on tesla's big bond deal, which has better than expected interest from investors. this is bloomberg. ♪

>> as the e-commerce giant looks at longer-term financing for its $13.7 billion holdings according to those with knowledge of the matter. bank of america, goldman saks and jpmorgan will lead the discussion on monday. the online retailer has previously received a bridge loan to finance the acquisition of the supermarket chain. tesla boosted its debut bond $1.5 $1.8 billion from billion. elon musk meeting bond buyers earlier this week and reportedly putting on the charm offensive. here to discuss what the deal could mean for the company joined by our bloomberg news reporter who covers tesla. this is fascinating.

while the high yield debt market has had perhaps a bit of a shaky week we've seen demand pour in for this high yield bond. so much to the extent that actually they didn't have to pay too much of a premium. and that actually scaled it higher so the deal went well. >> yeah. the deal was up sized which was great news for tesla and they need cash as they ramp up the model three and the factory in nevada and con to expand sales and service operations. they went to the bond market and the bond market responded. > how important is it? it means perhaps delusion, a slight bristling of the investor base. this is widening the capital market access now. >> i think it was a really interesting move. your top share holders were probably getting a little tired of being delude. elon, himself of course is the the areholder in tesla

timing is interesting. an interesting summer for the bond market. this gives tesla another cash cushion as they continue to ramp. what do they do the next time they need cash? i mean, is this sort of a one-time thing or are they going to continue to go back? is it back to equity the next time? >> clearly, demand is there for the high yield. talk to us about how the ramp is going. they've got some big, hefty lines to meet it would seem if they're going to get production out when they need it for the model three. >> yeah. so far all we know is they turned over roughly 30 cars to employees and made about 20 others that we saw at the big launch event last month. but when the next cars come out, everyone is waiting to see whether they'll really hit this run rate which is supposed to be 5,000 cars a week by december. so it is a very steep production ramp with a lot of validation testing that still needs to go on.

while musk apparently had a blue model three with him in new york this week, you're not really seeing them driving around the roads quite yet. it is going to be a while before we really see the cars, but i think the reason why tesla did this now is that the early reviews of the vehicle have been very positive and, you know, get the money while the buzz is still very strong. >> definitely. great to have you. thank you very much for your reporting, as ever. now next the tech stocks up. a new record. investor cash is flooding in but can it last? we speak to one professor who is calling for caution. and if you like bloomberg news, check us out on the radio why don't you? listen on the bloomberg radio app, bloomberg.com, and u.s. and sirius xm. this is bloomberg.

>> you're watching bloomberg technology. let's begin with a check of first word news. president trump is not backing down in a war of words with north korea. on friday he doubled down on his warnings to kim jong un. president trump: if he utters one threat in the form of an over the threat, which by the way he has been uttering for years, and his family has been uttering for years, or if he does anything with respect to guam, or any place else that's an american territory for an american ally, he will truly regret it. and he will regret it fast. >> the president says north korea has gotten a pass from former administrations for

misbehaving in the past. he added millions of americans support his words because the u.s. finally has a president who sticks up for the nation. the trump administration is quietly engaged in back channel diplomacy with north korea des patient the escalating rhetoric. -- despite the escalating rhetoric. the associated press reports both sides have been addressing american prisoners in north korea as well as deteriorating relations between washington and pyongyang. despite reported differences with president trump the australian prime minister made it clear where he stands in the crisis with north korea. >> we stand shoulder to shoulder with the united states. the treaty means that if america is attacked we will come to their aid. if australia is attacked the americans will come to our aid. we are joined at the hip. the american alliance is the bedrock of our national security. >> meantime the u.s. and south korea plan to move ahead with

large scale sea, land, and air exercises this month in spite of the deteriorating situation with north korea which says the exercises are a rehearsal for war. the annual joint exercises now fall during the timeline when pyongyang says it will be ready to launch missiles into guam. japan has started deploying land based patriot interceptors in response to north korea's threat to send ballistic missiles over its air space into guam. it said friday the service-to-air interceptors are being deployed at four locations including hiroshima. kenya's electoral commission has declared the incumbent kenyatta the winner of the presidential election. the opposition has rejected the results. international observers are urging all losing sides to resolve any disputes in court. venezuela's president wants either a face-to-face meet org phone conversation with president trump. friday he aaddressed members of

the # 40 member constitutional assembly which has now broad powers to rewrite the nation's constitution. global news 24 hours a day powered by more than 2700 journalists and analysts around the world. this is bloomberg. ♪ >> breaking news. white house and republican ficials are said to be thinking about joe man chinn to run the energy department. the move could boost president rump's agenda. why does this announcement matter and how does it help the legislative agenda? >> earlier today i spoke with several sources who tell me

senator joe manchin, a moderate democrat from west virginia, who is up for a tough re-election fight in the 2018 mid-term elections has emerged as someone who could be a potential contender to lead the department of energy. now, of course, that would involve some switches and changes withen the president's cabinet. what would have to happen is the secretary of energy currently is rick perry. he would have to go to the department of homeland security which has left open a vacant seat ever since general kelly, the previous owner of that spot so to speak, went on to become the president's chief of staff. now, should senator manchin, should this all go down, it would allow there to be a new open seat in the senate which arguably would give republicans the opportunity to pick up a spot in the senate just bringing them one vote closer to get key hedges slate iff items passed, such as the

affordable care act. i went right to senator manchin's office when i was speaking to my sources and i asked his spokesman about what would happen and whether or not senator manchin would accept the position if he was offered it. but when i asked this, the statement that i got was, well, i'll let you decide. the quote "senator manchin has not had any recent conversations with the administration about the secretary of energy position. he remains committed to serving the people of west virginia." so didn't answer my question about whether he'd accept the position. i can tell you senator manchin was under consideration for this position back during the trump transition period. but according to my sources he walked away from the deal because he wasn't guaranteed the opportunity to bring over his own staff. >> great scoop. great hustling as well going up and asking. who knows, a politician dodging a question? but this has been such an

incredibly busy time for you as washington correspondent as well. i mean, talk to us about the latest news when it comes to north korea and the tensions building between the u.s. there? >> the tensions have absolutely been building. there are several people in washington including in the republican party, who are a bit apprehensive about the fiery rhetoric so to speak coming from president trump. there are others within the trump administration who really viewed them as a political asset, that unpredictability in the geo political state really trying to press china to address north korea because that is where the comments are coming from, people like commerce secretary wilbur ross really could matter. if the chinese don't play ball to address this 33-year-old dictator, kim jong un, of north korea, with his brazen attempts to have a nuclear weapons program, that really could pose more geo political risk. that said, the president today speaking publicly saying that he does not think that north korea should at all mess with

guam with their missile range or missile launches. i think that as this continues to develop you'll notice what we've seen on the domestic policy front emerge on the foreign policy front where the president is using fiery rhetoric while his top luntz, top cabinet officials, are being a bit more constrained in their rhetoric. and market reaction, yes, there's been an increase in market volatility predictions but that said, while markets have dipped somewhat they have not dipped significantly. so far on the developments of north korea. people are apprehensive about it, though. >> certainly we saw a bit of stablization today. brilliant reporting and great scoop. thank you for joining us. ow, it's a good time to be a startup in america. the barometer which measures the health of the business environment for private tech firms in the u.s. hit a record high up 44% from a year ago. but a new study out from the

university of british columbia is sounding the alarm about a certain set of start-ups, the unicorn. unicorns are start-ups worth $1 million or more but the study says the average unicorn is over valued by, get this, 50%. joining me now to discuss this is one of the authors of the study of stanford university's graduate school of business. great piece of academic work here. and talk to us about the unicorns that are over valued so when i am excitingly reporting, i'm wrong, am i? >> first of all, thank you for having me on the program. we do show that all the yune corns are over value -- unicorns are over valued relative to the reference points that you and everybody else uses. and the reason behind that is when 's easy to explain

people use public companies as a reference point, public companies typically have only one class of shares, common shares. so most people assume this unicorn has only one class of shares. in fact, uber has 12 classes of shares. and when uber raised its values to -- valuation to $70 billion the latest rounds of investors got additional preferences and rights relative to everybody else including common shares. and what valuation people use assumes that every single share that uber or others, other unicorns issued exactly the same rights and preferences than the haft crop of shares. so basically what happened is that the last lot of shares has more rights, down sized protection, upside benefits, that common shares and other investors don't have. then equating all of the prices it just does not make sense. >> so not all shareholders are

created equal. not all shares are created equal in the private companies. how can you inform who should be informed, who is most vulnerable to perhaps this over zealous valuation in these companies? >> you are absolutely right. we find that on average a unicorn has eight different classes of shares. all of the classes typically have different rights. different cash flow rights and different control rights. i think that first of all employees of this company should really be aware this the reference prices they may use to think aboutth compensation, is not the right one. it does not make sense to use these prices to think about their potential wealth. investors in these companies should be aware the reported valuation that is used by ubers and other unicorns is not the fair -- it is about 50% less. also i believe that these companies are so important now for the u.s. and global economy

and it is such an important class these days. i think the regulators should find it more and more interesting to look into the difference in the fair values and the reported valuations. >> i feel bad we've just been referencing uber here. of course how broad a pool of privately held unicorns were you looking at? and how prevalent is this? is it every single one is over valued? >> we looked at the sample of 100 -- all of the companies are unicorns, all of them have reported valuation over $1 billion and all of them are over valued. let me give you an example. recently went public, blue apron. at its a unicorn that private round, valuation of 2.2 billion. that was the reported valuation. we find that the fair value at the time was 37 -- at the time

over rated by 37%. so that the rate at the time was about $1.6 billion again because of the additional rights the last investors got. blue apron recently went public about five, six weeks ago. and it's -- the valuation was about $1.6 billion, about 25% below the valuation, reported valuation two years ago. it neatly coincides with our estimate that our valuation produces. >> and now its valuation is just $973 million looking at the bloomberg -- thank you very much indeed for joining us. now, apple and the irish government are said to be nearing a deal that would protect the government from losses while it holds on to nearly $17 billion of apple's cash according to two people familiar with the matter.

the money was set aside after the european union told apple to pay nearly $15 billion in back taxes. the eu said apple received unfair tax deals from the irish government. the cash will be held in escrow bay the irish government pending appeal that could take as long as five years. now, coming up, a major life line. we'll check out the details of that $170 million investment and the influx of cash. that's next. this is bloomberg. ♪

rges hewlett-packard enterprises heading to the stars with the help of spacex. elon musk's space technology company will carry a super computer to the international space station.

the launch is set for august 14 and aims to test how computers function in space. hpe has said friday the launch is part of a joint experiment with nasa that will track to see the computer's performance during a year in space. now, back down to earth. sound cloud is getting a financial boost from new investors. rain group and singapore's holdings have agreed to pump $170 million into the popular but financially strapped digital music service. though the life line has come with strings attached the berlin based digital service will replace its c.e.o. and shift its business strategy to focus more on selling tools, artists, and other content creators. joining me now to discuss is bloomberg news reporter from los angeles and still with us my guest cohost and tech advocate founder, no relation. first of all, great scoop. great piece of research. and what are we foreseeing, the valuation came down hugely didn't it in this new round?

>> yes. sound cloud several years ago was one of the hottest companies in digital media especially in music, you know, a huge number of people who use it every day, every month, beloved by the artist community, many of whom expressed dismay over the past couple months because there had been some thought the company could disappear all together. and what ended up happening was they accepted a deal where they get enough money to continue operations and try to figure out what the business model is going to be. sound cloud has had a long audience for a long time but never figured out how to make any money. they are now going to try the more tools based approach. it doesn't sound like a huge potential business. but it's enough to keep things going and it seems like they didn't want to make -- do an outright sale and have a brand new owner that would take full control. so they opted for this in between deal where they sell large chunks to two different entities.

>> i remember when we heard sound cloud was trying to do a deal with spotify and wanted a billion and now it is worth far less. what does this say about the european tech scene? does it worry you at all? >> well, i think it certainly says something about sound cloud that the model simply wasn't working. going up against spotify, going up against apple and competing head to head even though they have some really loyal users who absolutely love the service the model is flawed and they just couldn't with stand the pressures from some of the other bigger guys. i think they're right to shift the model. the new c.e.o. they're bringing in has a background in terms of how you use tools, how you help music and content creators get things going in the right direction when it goes on to digital platforms. that will be a good service and carry from vigneault where he did just that so he knows this world really well. to lucas's point is it going to

be big enough to drive sound cloud's future? i think that verdict is out. >> i mean, lucas, we have to be questioning whether they're going to be heading to the heavy heights of unicorns any time soon. talk to us about whether the pain is over in terms of staff cuts as well. they shared about -- shed about 40% of the employee base. are those sorts of cuts and dramatic shifts over due think? >> for the time being they said as much. after those cuts they centralized their business really in berlin and new york. the new c.e.o. is based in new york. one question i didn't get a chance to ask him yesterday was whether he would be relocating to berlin. my sense is that he would stay in new york. but kind of one of the most interesting moments. my colleague and i interviewed cofounder, alex, the new c.e.o., some of the new investors yesterday. we asked about morale and how this sense that the company's best days were behind it. people who are very upset there

had been all these cuts and maybe too much of a talent drain. and they pushed back rather forcefully. they were insistent that as soon as people found out there was this new direction and the sound cloud had enough money to keep going that that would stop and that, you rnings people would be excited to work there again. whether that happens or not i can't say. but that suggests to me that for now they are happy with their current size and have a plan and of course will wait and see what happens. >> certainly some of the musicians that love it i'm sure will be breathing a sigh of relief. great reporting. thank you very much for joining us. >> now, coming up we'll discuss one of the biggest stock stories of the week. shares of snap took a hit this week now trading at the lowest level ever. that's bloomberg.

>> now to snap. shares continue to the lowest price yet since the march ipo after the company reported another quarter of slowing growth. several analysts cut price targets after the disappointing earnings results. i'm looking at the bloomberg, at analysts' recommendations, and we have got just within person going from a buy to a hold. but overall we've got price targets being cut as you see in the white line and the price just turned sour. what is it with snap? is it just the competition coming from facebook do you think? >> he think competition from facebook is key. obviously with instagram. i think, you know, snap has to look at its model and say, can we sustain this? and going head to head. it has some good things working in its favor. if you look at the average user per day, 40 minutes per day on average for snap versus 20 minutes per day for facebook. the level of engagement snap

has is far higher. high school against the younger demographic, which advertisers love. they've got some things going. the revenue numbers i thought looked pretty good. but can this model be sustained when facebook and instagram have just replicated what snap has done? so snap is going to have to think beyond what it currently does to say, how do we do things differently? they are a public company now so it is going to be under that public company gaze that they'll have to do some things differently. >> i think it is interesting we're seeing the two beacons of 017 in the ipo market. one being snap. seeing the challenges, not spending as much for marketing, losing some customer base but many worried about another key player being amazon. what do you do if you're a smaller player? what is this? >> well, i think that is going to be probably the future for both of them over the medium to

long term. if they can't change their business models and survive on their own they have to put themselves up for sale which is really sad. i think the bigger issue here is you have big technology giants -- facebook, amazon, google, etcetera, that are calling a lot of the shots and can go in and say ok. look at the interesting startup over here. we need to go after them. either directly for them or acquire a competitor and replicate what they do. so this is an interesting landscape where i think start-ups, scaleups, entrepreneurs who look at the big tech companies may start to say, are they really there to help me out? are they going to undermine my business model over the longer term? we are not quite at the cusp yet but i think we'll see more startup back lash against some the bigger tech companies. are they too big to fail? >> an interesting point. when you are speaking to the entrepreneurs you represent and advocating on their behalf what

is sentiment like at the moment and optimism? they are meant to be a group you can't kick down. >> no, you can't. and the entrepreneurs that i meet who have these great visions and ideas are so passionate about it. but i think part of it is going to have to be this is the reality of the world we're operating in. this is the landscape with these big tech companies that you need to be mindful of. you need to figure out how you keep them close, keep your friends close and your enemies closer as part of your strategy and figure out can you really disrupt in such a way that they can't replicate what you're doing or is it just not of interest to their business model? google looks and says well really that is not core to who he we of. shall -- who we are. let's get behind them. that is what i am hearing on the street level and i think there could be concern growing over time. >> wonderful to have you here. on a friday night. founder and advocate, a joy to have him joining us in london

that. does it for this edition of "bloomberg technology" from all of us here in london wishing you a very good weekend. this is bloomberg. ♪ got you outnumbered.

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