♪ >> and brad in for emily chang. this is "bloomberg technology." in the next hour, we became a regal car company, those are the words of elon musk after reaching his goal of building 5000 model threes in the final week of june. we have reaction and analysis. plus, dell is going public again offering a cash and stock deal point $7 billion

entering a new stage of multiyear turnaround plan. more institutional investors are diving into kudos and coinbase is taking customers. how one of the world's biggest crypto exchanges plans to sign under management by the end of the year. story,st, to our top while to has let engineered a late quarter production for the model three, it delivered fewer sedans and cuts than the second quarter than expected. the late surge has thousands more of the cars in transit towards buyers. for the first time, tesla exceeded its target of building 5000 model threes in a single week. isning us from los angeles the chief investment officer, ivan, and in new york, max check in -- chaffkin. tesla's news crossed its benchmark, why all streets -- wall street's understated response?

>> the stock is down -- because ofr auto trade issues. and thep in the morning fact that they have produced many model threes in the week is very powerful and popular. . >> the big question is, is it sustainable. cars is a great accompaniment -- 5000 cars is a great accompaniment but can they make that every week? >> i believe they can. i think the factory has more than enough capacity to produce the cars. they are in a facility that wants to produce over a million cars in the 70's. there is more than enough capacity, plus today, they have one of the most advanced assembly lines ever made. i think they will be able to sustain the production level and

this takes tesla to the next auto to a mainstream manufacturer. coveredx, you have tesla four years. right?n't take a break, there's a lot of pressure on this company? is this the turnaround at some tesla watchers hope it is? >> you have to hope that the way elon musk has been living where it seems like he has been up all night and leaving the factory, you would hope that he takes a day or two and rests because all of these employees indicated in the email that they have been working nonstop to it the milestone. what they're doing now is not sustainable. the hope is, as time goes on, they will be able to improve the robotic manufacturing line and that will get them up to around

5000 cars. the idea would be getting to the production numbers without feeling they got punched in the face. that has been what has happened to tesla. brad: elon you know the employees that they have just become a real car company. that is ironic considering the market cap exceeding many traditional car companies like gm and ford. why did he write that? >> because the model preproduction level is the transformational car for the company. it takes them from the niche car producer which originally sellingproducing and $20,000 -- 20,000 cars a year, to getting to $100,000 -- 100,000 cars year. if they maintain the production rate, they will produce over 600,000 cars a year. they are then able to fill what is very strong demand.

they will allow production of trucks next so they are evolving. i think they view themselves as more of a technology company than a car company because they do sell solar panels and the batteries as well. brad: if you are a tesla customer that had an order for a while on a model three, does it concern you at all the perhaps your automobile was made outside of the factory? do we know whether tesla has cut corners on the quality of the automobile's? >> only time will tell. overall quality of the cars are very high. the customer satisfaction is very high, the enthusiasm is really, thend strength in the car is its simplicity. the power in the design, and technology. they have had very few mechanical or technological issues.

a lot -- they do monitor all of the cars and monitor the software issues by pushing down software updates by satellite. they are always improving the cars that have been on the road for a long time. brad: elon's twitter feed has been a circus show -- a delightful circus show. does the company have to grow up now or are we going to continue to be entertained by elon and his push back on some of tesla's critics? >> i think the real car companies think he is joking. he is felt for years that tesla is a real car company and that was a dig at skeptics. one thing that is noteworthy about this being pushed to have 5000 is that this is the first time i can think that elon musk has paid attention to what wall street and what outsiders are saying. they said you have to hit this milestone and he basically said,

ok, i will do whatever it takes. he said he will fly production lines and cargo planes, build this giant tent and we will do everything we can. i think that is interesting. it strikes me as a concession that he has made in wall street and the outside world where he has to act more like a conventional company. mentioned some of the upcoming milestones and benchmarks such as lowell have to meet. are they going to have to go such that has low will have to meet. are they going to go back to the -- >> the meaning of this $500,000 are00,000 car mark, or they on track by the end of the third quarter, it will make it must easier -- much easier to raise capital. building cars is a capital intensive process, and they will

have to, and they should raise money. every time they come to the capital market, they have done well and in well-received. i think they will come at the end of the year. question, west started the conversation by talking about the underwhelming market reaction to tesla meeting this goal. has some of the glow faded from you lined and are the markets looking at tesla a little differently these days? >> i don't think so. i think the reason for the thetion at the $500,000 -- 5000 milestone, was it kept secret. and if you're reading his twitter feed closely, they were telegraphing this for about a week. i think people knew they were going to hit it but there was some question of how they were going to do it. i think we still do not know how they were able to hit milestone, but you have to think, this is a

big moment for elon musk and for tesco a -- tesla and electric vehicles. 5000 cars is nothing to slip at. brad: all right, thank you both for joining us. a story we are watching in an isort to cut costs, htc laying off the 200 employees and buy one. about a quarter -- in taiwan. that's about a quarter of its staff. they are struggling to hold onto market share. you may remember htc offloaded about 2000 jobs to google as part of a larger deal with the company late last year. dale isp, michael the companyrough ground up next. if you like bloomberg news, check us out on the radio. you can check us out on the bloomberg radio app, bloomberg.com, and on sirius xm.

this is bloomberg. ♪

brad: the world's largest private tech company is going public. dell is climbing the returns by buying out tracking stock in it swap deal valued at $22 billion. the ceo and founder preached the benefits of it. >> as a privately controlled company, your time horizon is different.

you reimagine your business, think about your business in years and decades. reconceptualize how you are investing and what the real priorities are. brad: bloomberg technology's and grant joins us now brooke sutherland who has been writing about the dell move. let's start with you. tell us how they're going public. >> this is a direct listing that is more akin to spotify's. the idea is dell gets all of the benefits of going public with none of the drawbacks. you are not seeing michael dell on some roadshow convincing investors you should invest in my company. you are also seeing that gives him a tremendous amount of control. in the process it simplifies the corporate structure because tracking stocks is unusual.

it was meant to mirror the value of silicon valley the dell has a controlling stake in. so, it gets rid of that and has more control over vmware. it also gets to flood on the public markets and get all of the evaluation benefits, all of the share benefits without traditional drawbacks. brad: brooke, you call this in your opinion piece of pass -- path of least resistance. why? among the vmware shared folders -- shareholders, they wanted to keep this a public investment. hard and were very vocal and wanting the him where to remain an entity that they could invest in as a standalone. as our argue in my piece, winning that is not necessarily the best outcome for all.

stupefied --els simplified the structure but does not go far enough to you still have vmware, as much as shareholders wanted to be back -- push back as being part of dell, it is very much a part of it. most stocks with that the dynamic tend to trade at a discount. brad: nico we just listened to michael dell praising him being a private company. what has changed? nico: i actually saw him in april doing that. what has changed is a couple of things if we consider the timing, it comes about five months after dell said it was considering its options. it also comes after the company started this big turnaround when it decided to go private. it's all the hardware landscape is changing around it and really needed to try to figure out how it could catch up, and about the easiest way to do this was with

the least amount of scrutiny possible. i think he is feeling more confident than he has in a while. dell saw double-digit gains in servers and in storage. it has been a really good i.t. spending environment after years of middling or declining i.t. purchases by companies. so, he thinks now is the time to get all of the benefits which could even include m&a benefits. he could do a share swap in the future rather than having to pay cash. that is a precious resource. they don't have a tremendous amount. they have to pay about $40 billion of core down -- scored at down. brad: it seems like we have seen this movie before. dell bellyflop as a public company, the tequila early as the cloud transformation swept over the enterprise space. are you confident that it is different this time around? brooke: i think the proof is very much going to be in the

result. i think we have to see how they handle it. to me this does not necessarily solve a lot of their problems. were lookingy they at these types of transactions in the first place was because the company was burdened with a significant debt load from its purchase,om the 2016 and has to find a way to do with that -- deal with that. as nico said, this is not reluctant option of potentially merging with vmware down the road. coming back, this is an intermediary step. brad: what is the next step? do think it is a merger with the m where or another idea? or anothervmware idea? brooke: dell is paying a premium for the tracking stock you are talking about the material bigount and there are holders at that tracking stock.

elliott is one of them, carl icahn is a holder of the tracking stock. so is this going to be good enough for them? we will have to watch. brad: nico, last question, talk about the competitive environment that they face. cloud providers like amazon and microsoft, so how does delve there is a public company considering competition? nico: comparison to hpe which is one of the closest companies, dell will have to probably, in the short-term, should he get highere investors, trade and with more momentum than hpe that has been challenged. part of that is because of the close integrations with the software makers. to remember, have leads the market in so many of these categories when we think about hardware. they are leveraging vmware as much as possible. it has a lot of credibility among companies that one to more modern infrastructure when we think about i.t.

public comes to the clouds, dell probably will not see their explosive growth and, should we see the i.t. spending environment, cut back a little the hardware vendors, dell's stock will take a beating. brad: nico grant and brooke sutherland, thank you both for joining. maker up, e-cigarettes jule is seeking more than a billion dollars in its first funding round. we talk about how traditional tobacco fate and they are expanding. remember to tune into the boston fireworks special this fourth of july. you can watch it live in the u.s. at 8 p.m. eastern right here on liberty, listen along on bloomberg radio, or catch it anywhere on bloomberg.com. ♪

brad: electronic cigarettes

jewel labs is raising $1.2 billion to target the global meeting market. that's according to people familiar with the matter. the company is valued at 15 billion making jule more valuable than some silicon names -- silicon valley names. who broke the news, joins us now. a lot of people probably have not even heard of jewel labs -- jule labs. >> they have created a replacement to the original tar burning cigarette. the people who created it thought we will create this product that will be better for you than to -- smoking a traditional cigarette. does not have the tar, uses a inhale theou then nicotine. they thought they were doing something really great for the world. the problem is, teenagers love jule and it has become extremely popular in schools, especially

among high school students. it is a very controversial product. there are a lot of investors not willing to invest. a lot are willing to invest because they're raising $1.2 billion which is pre-money, $50 billion evaluation. brad: one of the numbers that jumped out is jule has captured 60% of the e-cig market. that is what companies like philip morris is trying to do. what did they do right? >> they launched in 2015 and they already have 60% of the vape market. they are also replacing traditional cigarettes. we are seem philip morris's stock are down 24%. british american tobacco is also down 24%. down 24%.cco is also e-cigarettes are growing. they grew about 3.5 percentage points this year and the cigarettes are going down. they went down about four percentage points a year.

people are not necessarily quitting smoking, they are just replacing it with raping. brad: and the u.s. food -- vaping. brad: and the u.s. food and drug administration are not happy about this. what are the regulatory challenges for jewel -- jule? >> the fda knocked on the door and said we need to know more about their product. what are the health concerns, provide us with research. you also need to tell us about your internal marketing materials. are you trying to target children? which, you know that is an audacious ask. --julesaid we do not said we do not cater to that. there are other bathing companies that are doing other colors as well and flavors. there are other companies that

have more can flavor friendly and colors -- kid friendly flavors and colors. aad: they can say this is healthier alternative than traditional cigarettes, but still, i imagine that's not true. >> some say it is much better than smoking a cigarette. causing a it is problem called popcorn lung. i'm still trying to wrap my head around it. it is relatively unknown at this point. it is unknown as a technology and we know it is extremely popular in this is one to watch. question, they're raising $1.2 billion. what are they going to do with it? >> they are planning to expand outside of the u.s.. they are expanding it to asia and south america. brad: olivia zaleski, thank you very much. coming up, back to tesla's newly released reduction figures.

why hitting this milestone could be a double-edged sword for the carmaker. bloomberg technology is live streaming on twitter. check us out at technology in full of the breaking news network on twitter. this is bloomberg. ♪

brad: this is "bloomberg technology." on brad stone in san francisco. back to our top story. elon musk produced by thousand model sedans in a week -- 5000 model sedans in a week. now, the ceo has the challenge of winning over doubters who say this is not sustainable. joining us to discuss bloomberg opinions is liam denning. liam, it is fair to say you are among the doubters? >> some healthy skepticism, yes. brad: they have hit this remarkable threshold, elon seems like he pushed the company

almost to the breaking point to get there. the question is, is it sustainable? >> fairplay to the company, they hit their 5000 a week target like they said they would, and i will taket of bulls comfort from that, but i think it misses the bigger picture here. that, to be a profitable carmaker, which does lie has yet to prove they can be, they need to have sustained high-volume, high quality production. hitting the target in one week at the end of the quarter is kind of in a repeat of what they did at the end of the first quarter. it is not prove that. it hits a moment in time, the one target, but in some prove -- but does not prove they are on the sustainable thing. week --u said the first burst week at the end of the quarter such a baseline. our you confident they can do

the 5000 model threes per week? liam: what i observed, on the last three quarters, we saw a huge number of data points. in general, they have hit these burst weeks and that sets the average for the next quarter. based on that, you might think they can indeed keep going at 5000 a week. goinglso talked about more to about 6000. the issue here is, can they do it profitably? what youk about highlighted, the second assembly line, they made about 1000 cars on that last week, give or take. if they are working 24/7 which they have seem to be doing, that equates to about one car to every 10 minutes. that is nowhere near what you need to be getting for a profitable carmaker. brad: liam, tesla was so focused goal,s 5000 cars per week

it really came to define what observers of tesla were looking for. what is the next milestone or benchmark that people will be looking for to grade elon's performance at tesla? two things will be interesting, one will be the results that come out in a month. we will see with the cost has been in terms of profitability and cash flow. the other big one now is the company insists that it will get to gap rapid debility and some form of cash flow later this year. that is the key for this company. it needs to show it can turn a profit, produce a mass-market car, and become self funding. becoming self funding is the key here. brad: profitability and self funding, liam denning, thank you so much for joining us. ramle cofounder exhibit of

newibabaram is starting a -- to explain how the company came about. we found this company eight years ago. help visual and -- visuallypeople impaired by the people. they can read to you, identify faces, credit cards, millions of products, and more. >> chris william had a test, didn't he? what did he think? >> he was amazed. we try to identify his face and it worked perfectly. he was really excited. >> you have high hopes, you think this could be bigger than mobileeye.

there are 350 million blind people in the world which is not good news but it is a very big market. device,it is a reading also, dyslexic people, which is three or 5% of the people can now use it as a reading device. on top of this, citizens who can still read the get tired very quickly can use the device. altogether, we combine all of these operations and it is more than one billion people. >> it has a tiny camera and microphone. what is your intermediate-term goals? a looking to raise more money? would you like to sell the company or perhaps float the company? >> we build the company to make it a real company.

round, and wep are about to do another round about a year from now. i believe to a do have years after this round, we'll start to consider the company for ipo. as we did for mobileye, it is process of building a company is a real company. >> what is next for the products? you have this down now, do you expand on this somehow? what you technologically working on? >> it is endless development. the next development is going to be speech recognition, for example. you will hold a document annual asked the assistant, what is this? the device will say this is your phone bill. you can ask what is the total, and the system will tell you the total is $200. then, that is it. it is in development and we will

improve more features and more intuitive human machine interfaces. the use of this product will be big. >> we talk about mobileye, the reputational autonomous drivers have taken with uber suspending testing after the self-driving car killed a pedestrian outside of phoenix. does that damage the momentum toward a future where we have driverless car's? anymore soa mobileye you are asking an expert who has devoted most of his life in mobileye, but i believe the wave of building autonomous vehicles is so big and nobody can stop it anymore. maybe some delays here and there, but the benefit to humanity is so great that it is

eventually going to be part of our lives. believe that some countries will be illegal to drive anymore. because drivers are response will for 90% of accidents. brad: that was the cei and mobileye co-founder. the global market could do something that it has never done yet, shrink. solar is down 3% earlier based on the most conservative of three scenarios modern by bloomberg nes. -- modeled by bloomberg nes. china decided to hit the brakes for the rest of the year. coming up, one of the world's largest cryptocurrency exchanges is going live with the new custody service. details on the next. this is bloomberg. ♪

brad: from ridesharing to bike sharing, lyft is buying motivate. this follows uber's purchase as well. are beginning to experiment with electric bikes. terms of the deal were not disclosed. custodyt week, coinbase excepted its first deposit and is now open for business. saysryptocurrency exchange 10 hedge funds and family

offices have begun using the company's service. the goal of the services to safeguard digital tokens in a manner similar to traditional securities. have 100 large institutional customers by the end of the year with as much as $5 billion in assets under management. with more detail is adam white, coinbase institutional dp and general manager. also with us in york, bloomberg executive editor, joe weisenthal. thank you guys for joining us. adam, let's define our terms. not everyone is probably familiar with the terms. adam: in the simplest discussion, us wanting today allows an institution to store their cryptocurrency in a safe, compliant manner. stakes,ple look at the there has been a history of security incidents. at coinbase we have made security our number one goal. intowe heard as we move

the more institutionalization of the space, large hedge funds, large brokerages said we cannot begin to trade currency until we have a safe way to store it. we announced at the end of last year that we would not -- we would build a coinbase custody. we launched it today and we already serve about 10 hedge funds. brad: crypto praises have had a rough rise. they have been criticized for volatility for a number of years. have investors stayed out because of the absence of this kind of service and will this maybe rectify those rough waters? adam: i think it is the opposite. what we have seen with the recovery, the price of bitcoin nearly touched $20,000 at the end of last year. all digital currencies reach about 800 billion. that has come down. institutions are more eager than ever because they may be thought this was a train that they missed. i think they have the feeling that they have an opportunity to get in. that throughhing

things i coinbase custody. brad: joe, have you believed in that? joe: i find his answer to be one of the most important themes for the space because there is no doubt that the second half of 2017, there was so much interest in the institutional money, the wall of money that was supposed to be coming in. platforms likeke the coinbase platform which everyone said was missing, there was a custody, legal clarity, and in the money would come in. i've been fascinated to see that buildout of the institutional infrastructure not only coinbase and others coinciding with just the relentless selling. no news whatsoever has boosted the price of any cryptocurrencies.

really, the exact opposite of it second half of 2017 where is clear the infrastructure is being built out in the capacity for the institutional money has expanded, but not done anything to boost the prices at all. brad: adam, is the demand from institutions the same now in july as it was when you announced this at the end of last year? adam: i think it is greater than ever. institutions are thoughtful, deliberate, and they do reverse diligence on our firm. we spend a lot of time with our coverage group headquartered in the newark office meeting with institutions -- new york office meeting with institutions, educating them on who we are and what we use. to do cold on how storage. we bring in things like the random number generator, to store these funds safely was military grade.

we work with them on. brad: what competition do you see from jpmorgan and traditional custodians? adam: we focus more on what our customers want. there will be an opportunity to work with others in the space. when you look at what institutions want, they don't want one custodian. they want to store their funds among many. we are in conversations with others in the space, like we are with regulators and customers constantly. joe, pretend adam is not here and tell me about what you think about coinbase's competitive area. joe: i do think it is fascinating the way you seem to have two different clusters of companies reaching towards the center, so obviously, you have the upstart like coinbase and like others who, like all the time seem to make into roads to resemble more legacy banking

institutions and broker institutions. so you have entities like circle, square, and on the other hand, you have the legacy organizations which were very skeptical about the whole space and dipping their toe into provide crypto services. it feels like some bigger battle is coming, and it is unclear what will win out. curiously from adam, there is a debate about how this whole space will of all, whether it will be very bitcoin centric or whether there is room for lots of different coins and protocols. i'm curious whether the institutions that are signing early on for the new coinbase service, how interested they are in holding a multitude of different coins. adam: that is a great question and spot on. our clients want us to expand to more countries and add more assets. right now, when we launch, we support for assets. and we haveereum,

plans this year to add many more. that's at the forefront of our product roadmap. olga announced today with the interaction of this -- introduction of this, we expand -- plan to expand to asia. brad: adam, i will give you the last question. crypto assets have been on a steady decline all year, is this the kind of thing that is needed for restoration and trust in cryptocurrencies? adam: you know this better than anyone. market are not rational. to work in the space, you have to have a 20 year or 30 year vision. our ceo last year put out a series of tweets saying we have year and we have seen these rapid runoffs and recovery. it gives us an opportunity to stay focused on the mission. that continues to invest in the infrastructure and resources to bring the new asset into mainstream. for us we tend to look at much more different metrics like the

number of developers in the space, new teams launching, number of daily transactions on digital currency. those continued to move up and to the right so we are optimistic. brad: all right adam white and joe weisenthal, thank you so much for joining us. he was a driving force behind amazon's kindle and alexa business. now, he is trying to visit -- bring news learning to the masses. our conversation with ian freed next. this is bloomberg. ♪

brad: voice-activated speakers are becoming a more prevalent part of people's lives. the king of the market is the amazon echo. 41 million americans will use one at least once a month in 2018. this puts amazon market share at 67%. that is expected to drop to 61% by 2020 but is still almost

double its biggest driver, -- biggest rival, google. teachingusing it as a tool. that is something our next guest is making happen. ian freed was with amazon where he led the team's that worked on various projects. he is now the ceo of a company that is teaching kids all about music using amazon's alexa. ian, thank you for joining us. for having me brad. i've been a fan. brad: thank you, and we have met many years ago when you are watching the amazon kindle. tell me, what is bamboo learning? ian: bamboo learning is a british startup that i cofounded and it is set up to create applications that are fun and interactive, to teach kids as young as six all the way up through teenagers and adults

different things that they might like to learn casually in five minutes or less. music theory and learning music, as i recall it from my very brief attempts as a kid, is very visual. you are reading music, hunting for the keys on a keyboard or strings on the guitar. why is a voice-activated speaker the right forum for learning music for kids? ian: that is a great question. we think there's a few things. one, it is supplemental to perhaps taking music lessons. one of the interesting things that my cofounder learned is that music teachers often won't teach younger children how to play an instrument until they can learn to read. she and i both believe that children as young as six should be able to learn music. of ave some examples

six-year-old learning with bamboo music. and, deciding after interacting with bamboo music and doing some of the questions and answers that we have interactively that she would like to take a lesson. she is now learning the ukulele. she is not yet a strong reader but she is already learning how to play music based on starting with bamboo music. brad: ian, bama music -- bamboo music joins thousands of other alexa skills, and for those part of thee not audience of "bloomberg technology," how do they find it? a masking this is a former amazon executive. how does amazon solve the discoverability problem with the echo considering now this explosion of new apps that is available for the device? is aeach application

developer so we had bamboo learning how to do our own job at getting the word out. that is part of it. this newst created features of that when you talk to your echo and you would like to try out bamboo music for example, you had to say to a neck oh, alexa, enable bamboo music and it will start the skill and start explaining how it works. we have to do our job and amazon is increasingly finding ways to make the skills much more available to customers. you can also go to the amazon store and search bamboo music and find it that way. brad: we don't have a lot of time left, but i want to ask you about your personal journey. yet gone from being an investor of the echo to a developer for it. why leave amazon to go do this? ian: great question. i had an incredible time at amazon. i worked there for over 12

years. i learned quite a bit across the board from business to technology and the tenor of felt it was time to try something new technology etc., and i felt it was time to do something new. it started as a fun project and with my cofounder, who is an andrt in k-12 education music, we thought it would be really fun to educate through the bamboo music skill. brad: can't wait to try to myself. ceo, ianarning, and freed. that does it for this episode of "bloomberg technology." we will return later this week. that is all for now. this is bloomberg. ♪

♪ yousef: this is "bloomberg daybreak: middle east." our top story this morning. manus:'s beijing allowing the currency to weekend to combat the impact of tariffs? yousef: is has not taking a break just days after hitting it target and declaring the firm a car company, elon musk is said to be posing production what is behind this stock check of 70% fall this year. yousef: and will the rba hold rates again? we get