tv Best of Bloomberg Technology Bloomberg August 5, 2018 5:00pm-6:00pm EDT
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emily: i'm emily chang, and this is the "best of bloomberg technology." coming up in the next hour, apple reports earnings that beat expectations with an upbeat forecast for the current quarter. we will bring you all the highlights. plus, five important words. tesla says it will be sustainably profitable and cash flow positive by the end of the year. , and sets yet a higher target for the model three, aiming to make 6000 cars a week by the end of the month. still, the company managed to burn through $740 million last
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quarter. we will discuss. an investor is buying facebook as investors flee. he tells us why he is still a big believer in mark zuckerberg, ahead. just last week, it looked like the tech sector was in for a massacre this earnings quarter thanks to a disastrous showing by facebook. but then came apple. the iphone giant surged this week following its earnings report as much as 9% and thursday, it happened. $1 trillion. apple became the first u.s. publicly traded company to cross that milestone. just how did it get there? bloomberg's mark gurman has the answer. mark: after months of waiting, it finally happened. apple has become the first u.s. publicly traded company to hit a $1 trillion valuation, leaving the likes of amazon, alphabet, and microsoft in its wake, but not far behind. >> two, one. [cheering]
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mark: apple's milestone is significant and a testament to the rapid growth spurred by products like the iphone and ipad, as well as ceo tim cook's leadership after taking over from visionary cofounder steve jobs in 2011. [applause] >> and we are calling it, iphone. mark: but let's not forget that what is now the world's most valuable company was on the brink of bankruptcy as recently as the late 1990's. that was until cofounder steve jobs returned to the fold. since then, it was one success after another. and in the seven years since jobs' death, cook has launched apple to new heights with new devices like the apple watch, iphone x, and the air pods. he has also pushed the company deeper into new services like apple music, which is now a key revenue driver. and cook and his team are not stopping there. they are keeping apple on the technological edge, delving into
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self-driving cars, augmented reality, and health care. what does he think of apple's latest milestone? cook told bloomberg in an interview, "i don't really think about it. that is the truth. i still view apple as a pretty small company the way that we operate. it is not numerically, but the way we function is similar to that, to be honest." and to grow beyond $1 trillion, apple has to keep churning out cutting-edge smartphones while finding its next big hit and growing the digital services business. a larger version of the iphone x and a cheaper model with many of the x's features are on the way. beyond that, a.r. could revolutionize personal computing again, while a great online video push is coming soon to an apple screen near you. emily: here to tell us more, the voice you just heard, bloomberg tech's mark gurman and caroline hyde. and with us in minnesota, loup ventures managing partner gene munster.
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gene, i will start with you, given you have covered this company for years. what does this actually mean? gene: well, i think this means that apple has become really the fabric of our lives. i think it is just testimony to that, that this is something we do not even think about we rely on apple's devices. i think that is one piece of it. i think it also means the company is so big right now it has an unfair advantage over a lot of other companies, just given its market cap, the stock it has. if they ever did want to acquire companies, they have more leverage on that. and last, i think it is a wonderful reminder to people to stick to doing one or two things exceptionally well. in apple's case, it has been one thing exceptionally well. and tim cook got a lot of heat over the years for not going down in the phone, coming out with a cheaper phone in the mass-market, and he got distracted or criticism for not doing m&a, but he stuck to what
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he believed in and i think that was a third piece i take away from hitting this milestone. emily: i do have this chart in my gtv library showing apple at the top, but trailed by amazon, alphabet, microsoft, all in sort of a pack rising behind apple. mark, you also make the point in your story that tim cook has had a lot of successes, even though he has also caught a lot of flack for not being steve jobs. mark: right, and this is no accident. if you remember that tim cook took over as ceo back in the fall of 2011, there was so much talk of, is he going to steer the company to new heights? is he going to be able to do more than stabilize it? and at the same time, there was a lot of talk of, will he let this company go? is it going to become a company that became under john scully and other past ceo's who replaced steve jobs originally? the answer was a resounding no. this is that a market cap that was three times what it was when steve jobs passed away, and that is just a number, but the
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number is still representative of this historical marker, which represents so many new products over the years, smaller products, the apple watch, etc. emily: apple isn't the first company to hit the trillion dollar market cap. it was actually petrochina, which fell as oil prices fell. caroline, you are digging into some of the other historical markers here, and having the highest market cap isn't necessarily a recipe for success. caroline: certainly not. casting my mind back to microsoft, a key tech player, who back in 1999 hit that half a trillion dollar mark, and then it had four successive years of downward trajectory, it languished at the number 300 in terms of market capitalization. it does not always spell this is going to be a winning streak for the company. you mentioned petrochina. because oil prices crashed, it swiftly fell off its perch as well. so it does not always spell glory, but what is going to be
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taken into account when it comes to apple is not only is it ahead of the pack when it comes to the other in excess of half $1 trillion companies, it is about $100 billion worth more valuable than amazon and well ahead of microsoft and the like, and alphabet. its price-to-earnings is pretty reasonable. it is the lowest of those kilotech companies. it trades at about 18 times future earnings. when you compare that to amazon, who are nipping at its heels, it trades at more than 100 times future earnings. this is a company that is already raking in a quarter trillion dollars in terms of revenue every single year and it makes money -- no wonder its valuation is so high. emily: gene, what are the risks for apple? is there any risk that apple hits this mark and then falls back down, given the challenges ahead, even though it is still relatively cheap compared to its tech peers? gene: so, there is no immediate risk, and that always concerns me when i can't identify an immediate term risk. but i don't see any immediate term over the next one to two
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years. there probably, over the next five to 10 years, is going to be the emergence of wearables. and this idea, it is an augmented reality first, which is something apple believes strongly in, but that will be a shift in terms of the devices people are going to use. so the good news for investors is, we have a clean sailing ahead for the next several years, but the risk is kind of down the road relative to what can happen when we have the next hardware shift. and to remind people, that is one thing that apple has done brilliantly well, is this idea of embracing the innovator's dilemma. when they had successful products, 2005, the ipod was just over 50% of revenue, they were very aggressive at creating a new product to cannibalize that, with the iphone, in this case. in the future, apple will have to cannibalize the iphone and that will present some risk to the story.
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emily: mark, wearables were up 60% in the last quarter in terms of revenue, but will it be the apple watch or air pods that cannibalize the iphone? probably not. mark: that's absolutely right, and to your point, no. it will be another product, augmented reality glasses. that is apple's next big thing. emily: how big can that be? mark: yeah, and we declared that was the thing about two years ago. this is really what tim cook is banking the future of the company on in some respects in terms of hardware. the company has well over 1000 engineers working on this, an augmented reality headset that is designed to eventually succeed the iphone, to take the heat away from the apple watch not doing as well as expected earlier on. this is their next big product. emily: gene, are you as optimistic about a.r. as mark is here? gene: yeah, mark has done a wonderful job of covering the topic, and i wholeheartedly
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agree this is kind of the next thing in terms of the mobile device, but it is going to be a long time away. i am very optimistic about apple's business over the next several years. i just want to emphasize that piece, because their hardware business, the iphone business is operating almost like a services business. but kind of putting it all together and answering your question, emily, is that i share mark's optimism about the future impact that augmented reality will have on consumers. emily: and caroline, it is not just products that have led to this run-up, it is also share buybacks, correct? caroline: certainly when it comes to the share price. i mean, there is a fascinating chart that really highlights how much the ramp up in share price has been driven by buybacks. they bought back phenomenal quantities of shares, billions spent since they first announced those buyback intentions. and actually when you do all the math, you can see that basically 42% of the share ramp-up is actually because of these share buybacks.
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now, that doesn't mean the market capitalization is driven by that, because of course when you buy back shares, there are less there times the price of them in some ways, to hold to your capitalization, but you drive up your overall price of each share when you are making the earnings they have managed to have. so a little complex realization in market caps, but certainly the share price ramp-up has a lot to do with buybacks, not just innovation. emily: coming up, tesla ceo elon musk offers a mea culpa after scolding two analysts on the last call for what he called bonehead questions. more from tesla's report, ahead. and if you like bloomberg news, check us out on the radio and listen on the bloomberg radio app, bloomberg.com and on sirius xm. this is bloomberg. ♪
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emily: google staff awoke on wednesday to surprising news. their company is working on a search app tailored and censored for china. the company has been working on the project codenamed dragonfly since spring 2017. this would be an about-face for google, which largely withdrew from the country in 2010 when it refused to sell censored content. the project was kept secret from all but select teams and leaders and sparked a furious internal debate. some good news from tesla this week. the company burned through less cash than wall street feared in the second quarter and has ramped up production of its model three sedan.
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production hit 5000 a week multiple times in july, and ceo elon musk predicts 6000 a week for late august. stock soared wednesday after musk apologized to the analysts he scolded earlier for asking "bonehead and dry questions on the company's previous earnings call." >> i would like to apologize for being impolite on the prior call. there was really no excuse for bad manners, and i am battling with myself in that regard. the reasons of course, i got no workingnd i've been 110, 120 hour weeks. excuse, mythere's no apologies. emily: we spoke to tasha keeney of ark investment and bloomberg businessweek's max chafkin wednesday as the call was just beginning. tasha: we are very much looking forward to more news about this china factory. in the letter, they said china is one of the largest markets
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for ev's, and that is true, but it is also one of the largest markets for autonomous driving. and we think that is the largest market opportunity ahead of tesla, a $10 million market globally in the next 10 years. we are looking forward to that. we think they could raise some capital to support that and we are ok with that. emily: you have been diving into the numbers for the last hour or so. what else do you see that we are not looking at? max: yeah, i mean the big question for me and it hasn't been answered yet, is demand. so we know that tesla, based on what they are saying, they have not even tried to sell the cars and they are selling them really, really well. we don't know what has happened with these hundreds of thousands of reservation holders. some analysts had suggested the possibility that there were lots of cancellations, tesla has kind of pushed back on that, but i think in the long run, that will be a big question. like, how many people really want this car? you know, famously, electric cars are a very small percentage
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of the total auto market. obviously, tesla thinks that is going to grow and there's a lot of reason to think it will grow, but it is unclear just how much and just how badly people want these things. emily: in fact, tasha, goldman put out a note saying they have seen interest decrease as availability and test drives had increased. does that concern you? tasha: you know, i think there is more than enough demand for the car out there. and i mean, we are seeing that in the sales. the model three sales outpaced all midsize premium sedans, and that is pretty amazing for a new car. so we are really not concerned on the demand side and we have seen really great resale values from these vehicles as well. so if you look at model x, it sells for $75,000. four years later, it is worth $45,000. that is $10,000 more than a comparable bmw, so we think these cars are a great investment. we think once they go autonomous, you can actually make money off of them. we are really not concerned from the demand side.
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emily: still, the bears are out there. david einhorn shorting tesla, elon musk not so happy about it, in fact responded to a resort from bloomberg's tictoc, saying "tragic, will send einhorn a box of short shorts to comfort him through this difficult time." as always, punchy. max: i think this is -- this is the elon that investors want to see, because like i said, the happy warrior, he is punchy, but at least he is rolling with it. because in that report, einhorn was complaining about the quality of his car and saying he was going to cancel his lease. so the fact that musk is sort of taking it as a joke will probably be seen as a good sign from investors. emily: musk has opened the call with a number of other tesla executives thanking them for their "mind-blowing performance" over the last month and confirms
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that they have been doing 7000 total cars weekly into july. tasha, obviously, the numbers are moving in the right direction. do you think that it is sustainable, even without that tent and the human production line outside? tasha: you know, i think tesla is really working hard on that sustainability aspect of it. they said they hit 5000 multiple times. of course, people are looking for that to be continuous, but you know, to take a step back, i think there is a lot of undue focus on the production numbers. people are really missing this long-term story that tesla is producing this unbelievable product that actually improves after you put it on the road. i mean, no other automaker is doing that right now. these cars improve overnight. they gain value, actually, after you acquire them as a customer, and that is really the tesla advantage, the software advantage. and that is not going away anytime soon. and that is why they attract such talent, because they have
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this star figure, elon musk. emily: that was tasha keeney of ark investment and bloomberg businessweek's max chafkin. still ahead, seems like selling consumers on cool tech gear just proved easier than convincing investors of it. details on sonos's stumbling on the public market, next. and later this hour, earnings forecasts fell short this week. a rare miss for the company. we will speak with square cfo. this is bloomberg. ♪
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emily: uber announced it will be shutting down its self-driving truck service as it chooses to focus solely on car development. uber acquired it in 2016 in the effort to remake freight trucking. a self-driving car service has been surrounded by controversy following a lawsuit against uber claiming that levandowski stole trade secrets.
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as competition in the self-driving car industry heats up, uber says it will move self-driving truck employees to other roles in the autonomous vehicle department. meantime, shares of wireless speaker maker sonos began trading thursday on the nasdaq after an underwhelming initial public offering. company priced shares below the market range and they raised about $208 million. that gives sonos a market value of around $1.5 billion. in april, the company hoped for a valuation twice that size. our bloomberg ipo reporter caught up with the sonos cfo. patrick: it was the tech headwind we have seen the last couple of days. as we got on the road, it became apparent after the facebook drop and some of the weakness that investors were getting a little skittish. alex: and patrick, i hear you, but tenable listed last week above an increased range and the discount was more than we have seen tech stocks fall out of bed. were there certain points in sonos's business that investors are paying more attention to that perhaps they didn't get as
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excited about as i know you are? patrick: well, i think the whole roadshow was about educating investors in terms of our model, and i think the quick reaction is always oh, they make these great-sounding, great-looking speakers, so they are a hardware company. we did have to spend a lot of time helping investors understand that we are a totally different type of company that builds products that last for a long period of time and people come back and buy more of those products. so we are unconventional in that sense. as far as i know in consumer electronics, we are the only company that approaches it the way we do. so certainly some of that education was necessary as we went through it, and so i think there is that element, of course. alex: when i talk to sonos owners, they do love the product, but we all know that a product does not a good business make. when you do talk about that narrative that you are pushing to the street, where is the growth going to come from? is it convincing folks to upgrade to new systems, new
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speakers? is it the platform itself? where do you see that growth in the future? patrick: yeah, so in this first phase, we have really been successful in breaking into the traditional home audio market. people that were looking for stereo systems in their home. what i am most excited about and what our investors got excited about was the fact there are 176 million people around the world that are now paying for streaming music. they are paying $120 a year, they love music so much. it's $149 to start with sonos. and what our job is right now in this second phase is to get people who have all that great music from pandora, apple, you know it, on their phone and get them listening to it out loud at home. that is exactly where we come in, because of our open platform supporting all those services. that is really what we are talking about in this next phase at sonos and what i am excited about. alex: patrick, on the roadshow, you talked a lot about the opportunity that voice-activated speakers brings and we pair alexa with the next age of voice
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activated speakers, but amazon also strike, they fear into other technology companies. how do you manage that relationship going forward if they decide to push more into the wireless speaker space? patrick: you know, we managed the relationships with amazon, apple, and google for over a decade. we have put our music services on their platform. we work closely with them, respect all those companies. we have put alexa on the platform, google assistant will come this year. it has been beneficial for both sides in terms of them getting services into our seven million homes and us being able to offer that voice control of the music experience. so, based on our experience to date nd the last decade of history, i expect that our partners will continue to want to bring their latest and greatest service to sonos and we will bring that into millions of additional homes and it will be beneficial for both sides. alex: looking forward to the latter half of the year, you are a public company now and some of the macro trends will undoubtedly impact how your stock trades, whether it is tech
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earnings from the broader group or political tensions with the likes of china. what are the biggest risks for your business in the second half of 2018 when you look forward? patrick: i really feel, after 20 years in the tech space, i feel it is more about what you are doing and executing in your own business. obviously i realize and i am a realistic about watching things around the tariffs and things like that, but it is more where we are right now in the market with a huge opportunity in front of us. i am much more focused in how we execute, the products we need to bring to market, the countries we are opening, and i feel at our size and scale, some of those macro trends, we will watch and be mindful of, but it is also the opportunity ahead so big and we are so early in the game that a lot of those i think we could maneuver around. emily: bloomberg's alex barinka speaking with sonos ceo patrick spence. coming up, he's a big backer of facebook and despite its last
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emily: welcome back to the best of bloomberg technology. i'm emily chang. has facebook hit bottom, or does it have further to fall? signs it may be running out of new users. investors reacted swiftly. one person who is not worried investor gary vaynerchuk. , here is what he had to say when one twitter user asked him about facebook's drop last week. i bought the stock today. that's my thought. we sat down with gary for a wide-ranging interview that began with what else but facebook. gary: i bought a couple hundred thousand dollars worth of shares. i bought some more this morning
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because i am a long-term believer in the stock, and i don't think there is going to be a lot of moments over the next three to four years, outside of macro economics that i will be able to take advantage of it. you know i do not tend to buy a , lot of publicly traded stocks. my original facebook came pre-ipo but it got hit when all the cambridge analytica stuff happened, and mark was on trial, i bought a ton. and then obviously, the missing numbers or news recently, i have been buying up a little bit more mainly because i think in the next 4, 7, 9, 26 years, it is a good buy. emily: so it is interesting, and that is a big bet. roger, the early facebook investor who will has been very publicly critical of facebook, he compared facebook to philip morris in terms of facebook's negative impact on the world. what about concerns about fake news? what about online hate? what about concerns about our privacy?
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gary: i think there is a stunning non-conversation about taking on some sense of responsibility, meaning sure, but choosing cnn, or fox, or msnbc has as many dynamics as what you are seeing in your feed, and more importantly what you are choosing to consume as real. i mean, to me the thought that facebook is any different than twitter or instagram, which obviously they own, or websites or you know a million different ways we consume, is kind of laughable and silly. i mean, visa and target, and the american government itself, has had breaches of information far more dramatic. and so you know, yeah. i understand the concept, but i think making you know making a , jump from philip morris, which systematically spent lobbying dollars and tried to pay off politicians for four to five decades to suppress information,
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is an awfully big jump by that person. emily: what about profitability versus privacy? will one always trump the other and can we actually trust facebook? gary: you know, i have no problem trusting facebook any more than i trust any other company on earth. profitability and privacy is kind of funny to me. we choose to do convenience over profitability every day of the week and privacy -- i mean, the way we pick privacy on a pedestal is almost nonexistent in our actions. every person watching this right now gives up privacy every day for convenience and speed. so whether it is going to be amazon, or google, or facebook, any of these companies that sits as a layer on top of the internet, we have shown through our action over the last 30 years and continue to with the usage of instagram and others. i love all the people protesting facebook on instagram. we prove as humans all the time how we think about privacy, we
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love to talk about it, but do not fear it as much because the underlining issue is the amount of bad things that happen to the health and well-being of our family and having our money stolen is extremely far and few between. emily: what about the forces that may be bigger than us, the fact that russia tried to hack our elections using facebook, and that there is evidence they are doing it again to sow discord? has facebook done enough to prevent itself from being weaponize to? gary: facebook, this network, fox, cnn, twitter, it is all the same game where i think about it from a macro which is, we make decisions. facebook or the russians did not make us pull for trump or hillary. and so i think the information that people are buying ads and running them in our streams is very interesting. because if you look at the execution of people that run political ads, the cost of penetrating somebody with a different opinion versus one
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that already reinforces your stance is where this gets more interesting. you know i think this is one of , the great examples in human time of us not interested in accountability. facebook did not make you a racist. you made yourself a racist. emily: let's talk about twitter. because you know you use twitter a lot, and we saw the same huge dip on the back of twitter earnings. it is very clear that twitter is just not in a high-growth state. they have hit a plateau and in fact they actually lost users over the last quarter. the influence is there. the president of the united states is using it as his megaphone. it is not the next facebook. gary: no, but it was never the next facebook. the truth is, facebook is all encompassing, right with , instagram and who knows what mark and cheryl and the team are up to on their next m&a. they have got whatsapp, yes, it is not the next phase that --
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facebook. i assume it is not priced on wall street in the same manner. i will say this, if you look very closely to moon pie, a small snack brand, if you look at what wendy's is doing, the business world is starting to understand how to use facebook to drive business. we are working with kraft heinz on miracle whip. it stuns me how much twitter is the backbone of driving sales at albertsons and walmart. so i will say that maybe the width of attention on twitter is not growing to a stock market's wants and needs, but the depth of attention in the platform, and the ways to maneuver in it, and its ad products, over the last three to four years i have been quite critical and not excited about twitter publicly, but i, no question, have seen over the last six to 12 months a resurgence difference than let's say the trump effect in just how much attention is in the platform.
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and when you have attention, you have the ultimate currency. to me, it will be interesting to see what they do with their ott. i think they should play in that space. they were flirting with that a year or two ago. again, i don't know how earnings are done or how much the street values things, but i will say depth and maybe not width is emerging on twitter. emily: the top five companies by market cap are facebook, amazon, google, microsoft. in 2007, just before the financial crisis, one of them was a tech company, which is microsoft. is the market putting too many eggs in the tech basket? gary: look honestly, and i want , to be very fair for the audience, i think about things in such long-term, like the thought of me understanding the short-term economics of 90 day terms and numbers that most of the viewers here play on, and the arbitrary nature, and the fact that we are playing financial engineering, not actually building businesses, in the macro, of course not. we are not going backwards. tech companies will continue to gain momentum. let me pull it out right here.
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this is where we actually live, not here, so in the super long-term, no. in the short-term, i have no sense if the market has overpriced these companies based on what the numbers they can hit over the next 90 days. but like people are not going to be watching abc and nbc over netflix. people are not going to be consuming newspapers over facebook. that is only going to -- we are just starting in that world. short-term economics and the way this street likes to play, that is up to all of you guys. but the danger in the 5, 10, 15 year macro, i don't see it because you know the reality is we are only heading in one direction which is technology does not care about our feelings or our short-term judgment or wall street. it just continues to advance, and humans are engaging deeper and deeper and deeper and will continue to in perpetuity. emily: that was vaynermedia ceo gary vaynerchuk. coming up, square's stock has doubled this year but spending on new businesses and growth is tempering profits.
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emily: when it comes to square, investors expect a lot. shares have doubled this year after a 154% gain last year. that means pressure to outperform analyst expectations this week, but instead they got a rare miss. the company spending on new products and growth tempered profits. we caught up with square cfo
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sarah friar on thursday. sarah: great quarter, 60% topline growth. we are super impressed. it is really speaking of our strategy in investing to grow, and so we think the right balance with all the opportunity in front of us, we want to put money back in the business. so we did beat on the top line with that 60% growth. on the bottom line, we want to invest but also do it with financial discipline. we actually maintained our guidance for the full year, so $240 million to $250 million of adjusted ebitda. that actually stayed the same. if you look at the back half of the year that is three points of , margin expansion. so we want to invest to grow, but do it with financial discipline. emily: so shares have more than doubled now so far this year. what do you say to the investors who say that is just too rich and investors are expecting too much? sarah: it comes back to what is the opportunity in front of the company? we were very clear at the beginning of the year we were focused on omnichannel, financial services, and international. those are three massive
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opportunities for the company, and we keep adding to the product list. it is opening up a more and more greater market. in my mind, what we're focused on is how do we continue to grow a big, impactful company? how do we do more for our sellers who are seeing buyers show up everywhere? how do we build a big individual platform with cash out, and then -- cash app, and then finally, how do we take this all out onto the global stage? emily: give me some more specifics of where you see investing in the business and where you see the most returns as a result of the investments. sarah: sure. i will start with omnichannel. one of the big megatrends in the world, buyers are showing up everywhere. they are off-line in your store, but they are online on your app, and they could be in a marketplace, you name it. so as a seller, you need to always make sure you can make the sale. one of the biggest investments for us has been, how do we do that across every vertical? we made a fairly large acquisition in q2 of weebly to continue to augment that. we have put a lot of investment into the cash app, our platform
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for consumers, frankly to open up access to the financial system. we started with p2p, and that would keep adding more and more utility. the cash card itself tripled in just the -- tripled in volume in the first six months of the year, so another big place for investment. emily: we all want to talk about bitcoin. how many customers have you added since you started buying and selling bitcoin? sarah: sure. if you look at what bitcoin is, it is another piece of utility in that cash app. we started with p2p, you can keep a card, keep your balance, go to an atm and buy crypto. we talked about 7 million monthly active before december when we went live with crypto. we have not given a new metric, but you can clearly see under the hood that there is real growth because we are a top 30 app in the app store. in fact yesterday, we were 15, and we typically go even higher towards the end of the week. something that is rarefied there and a really good way to monitor the growth going on in the platform. emily: so you can buy, send, and sell bitcoin right now. why not let people receive bitcoin?
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is that something you plan to do? sarah: again it is about utility. we want to make sure do people really need it today? so just opening up buy and sell, which is the easiest way to do it, that is the first step. it is a way of seconds and you can make that purchase. that is the great first step from a bitcoin perspective. emily: the price is extremely volatile and you have generated almost as much bitcoin revenue as you lost. you brought in about 3 million more than in the prior quarter. jack dorsey has said it does not just stop at buying and selling, so what are next steps? sarah: i think utility in the cash app, the next steps for us there are what else do consumers want to do when they start holding an account? so i really have a new thing, boost, which is effectively a rewards and loyalty program for think about it as a a prepaid debit card, really almost unheard of in the industry. what boost allows is a carousel for sellers to say, i want to be able to drive buyers to my platform, and the buyer can look at it and say, i really want that 15% off a shake shack
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burger, or i really want one dollar off my coffee. that's my prepared boost. these are just examples of how we are trying to rethink what financial services looks like for individuals. emily: what is the thing that has surprised you most since you started working in cryptocurrency? sarah: on the crypto side in terms of a surprise, just the fact that it is one of many pieces of utility that people want. it is not the be-all and end-all that i think we hear a lot on financial news. rather it is just like any other form of investment people are making. they want to have access and that is what square's purpose is. emily: that was square cfo sarah frier. up next, naked labs created a product that might know your body better than you do. we will take a look. and how the company is bringing 3-d scanning technology into the home. this is bloomberg. ♪
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emily: it goes way beyond a normal scale. start-up naked labs has made a 3-d body scanner with a full-length mirror that people can buy for their homes, the first of its kind. it delivers information on your body, including weight, height, bmi, measurements. the company just raised $14 million, led by the venture capital fund. we spoke with one of their more recent partners and an early uber and spacex investor. cyan: originally, the goal is to have it in every home. to begin with, it will be the person who buys a peloton, who really cares a lot about personal fitness, so the price point is higher to start off with. emily: it is $1300 and a scale is more like $20. cyan: you think of televisions,
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when they first started out, they were $23,000 for flatscreen tv's. if you are a pioneer in the space and someone who is an early adopter, you are paying more, but eventually we can drive the price down the scale. emily: how does the technology actually work? cyan: it has sensors that do depth reading. and so when you stand on the scale and put your arms up -- have you tried it? emily: i have not. i will take one. cyan: i highly recommend it. i will try to hook you up with doing one. you basically stand on the pedestal, the pedestal turns around. afterwards, in about a minute you get what looks like a silver surfer image of yourself, a flattened out image, and you can see a 3-d model of yourself. emily: so talk to me about the potential here, the kinds of information this can give you and how it might change your life or how you live it? cyan: well you know, i think we are scale obsessed and obsessed with numbers that do not really ultimately matter for your health. you get on a scale and you are like, gosh, i am two pounds heavier, five pounds heavier, 10 pounds heavier, but you are working out at the gym, and you are making dietary changes, those changes really matter.
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when you get a 3-d body scan, you can see what those life choices, how they are impacting your body. like sometimes when you work out, you are gaining weight so you might become discouraged if you just got on the scale every day. emily: what about the privacy issues here? we are so concerned, especially in light of the facebook data scandal, what companies know about it how they are using that , data, if they are being honest and if they know where our data has gone? cyan: naked labs takes that very seriously. that is one of the reasons why all of the scans are done on the device. emily: so it is stored there. cyan: it is stored there and does not go back to the company. the only thing that goes back to the company is that silver surfer image of yourself. emily: you joined founders fund now a couple of years ago, and you were an angel investor before that. you backed uber and spacex. what do you think are the big megatrends now? cyan: oh gosh. well i know what i'm personally , passionate about. i don't know that i follow the market and try to figure out
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what the biggest trends are, but i am personally very passionate about the future of entertainment, so i have been doing a lot of investing in that area, and so i have been turning over rocks. i don't know if you have heard of hatsune miku, she is a virtual pop star who is a hologram, billions of people watch her. also there is little michaela on instagram. she is a virtual influencer. so i went there. so there is things i am looking at and trying to figure out, what is the next pokemon go? how are we going to interface with our phones? how is augmented reality going to impact us? those are the things i am excited about. emily: you invested in uber. do you think scooters are the next big thing or not? cyan: i don't know. my personal opinion is no, but i do think they are necessary for certain people. like people are really happy about them and they are cost effective and an affordable way to get around town. emily: i have to ask you about elon, since you invested in spacex. it is tesla earnings day. the founders fund backed tesla. does that concern you at all that he is running two
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companies he has a lot of side , projects, he is tweeting all the time, including minutes before the earnings call. does that concern you as an investor from an execution perspective? cyan: we are pretty bullish on elon, as you know. we are very proud of everything he has accomplished, and it is a lot to take on but i think he has shown he can do it. but you know i don't speak to , elon on a day-to-day basis, and i do not even know the breadth of everything he is doing. emily: what about bitcoin? founders fund has made it big -- made big bets on cryptocurrency. it has been unusual. this venture in general, do you think that -- are you still bullish? do you expect to make more investments given the volatility in the price? i know everybody was excited about blockchain, but let's talk about the values. cyan: i think as a team, we are still bullish and personally, i am also still bullish. i hold on for dear life. as a store of value, i think it
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is incredibly valuable, basically digital gold. it is not the best way to transact, and so i think there is going to be other types of currencies that are good for that and different infrastructures, but it is good for store value. emily: a lot was talked about when peter thiel backed donald trump and how that impacted others. i am curious if it changed your experience at founders fund changed. if it has had a negative impact or changed the way you guys do business or interact in the business room? cyan: i think it made us closer at the firm, mostly because we like to celebrate diversity of thought. and not everybody there agrees with everyone. you know, we have people who voted for bernie sanders and we have people who voted for trump. it is a very personal decision. and so it is one thing that we actually talk about a lot of things that have nothing to do with politics, like the future of the world, and you know like what exciting things we could be investing in. politics has very little to do with what we do, but if anything, i think it made a lot of us stronger because we got to
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really know each other and collaborate with each other more. we had to be pretty strong. emily: have things changed since you moved to l.a.? cyan: we see him more, actually. emily: really. cyan: if you think about it, his office was right next to ours and he could walk over for an hour or so. now he comes in and is there for a full day or two. and so we actually see him in the office more as a result of him being in l.a., which is great. emily: now here in san francisco we are seeing increasing anti- tech policies, like bans on scooters, limits on commuter buses. i saw you tweeting about the promise of a silicon valley in the midwest. you know, why stay in san francisco at all? peter is in l.a. could you see the firm moving elsewhere, or do you see potential elsewhere? if so, where? cyan: it is always possible. we are not discussing it right now. i do think we have started looking outside of silicon valley for other possibilities, like the next great company might not be in our backyard. so we have looked at the
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midwest. we are looking at asia, we are looking all over the place. and so we are no longer location specific. so we are sector agnostic, location agnostic, stage agnostic. and so i think that is just -- we are not going to stop investing here, and we are not going to stop being here in the foreseeable future. emily: i am interested in diversity issues, and you have spoken out on them. you are a self-taught engineer and entrepreneur. what do you think is missing from the conversation about diversity in silicon valley? cyan: diversity is often sometimes things you do not see. it is sometimes not what is on the outside. for example, i identify as gender queer, and by the way thank you for asking me about my , pronouns. that was very inclusive and wonderful. thank you. i think a lot of the times when we are having these discussions, we do not realize there is neurological diversity so sometimes people say things like, that person is dense or whatever, and they are on the spectrum. and there is things like that that i think age diversity --
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these are certain things i do not feel like we are having a lot of conversations about that also matter. emily: thanks to cyan banister, partner at the founders fund. and that does it for this edition of "the best of bloomberg technology." we will bring you all the latest in tech throughout the week. tune in tuesday, when we check in with etsy ceo josh silverman after the company reports earnings and get new clarity on the digital tax bill. 5:00 in new york, 2:00 in san francisco. bloomberg tech is live streaming on twitter. check us out, and follow our global breaking news network on twitter @tictoc. this is bloomberg. ♪
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haidi: president trump redirects his rhetoric. he says he has the upper hand on beijing. they refused to back down. ramy: rising tension with washington forces the riyal to historic lows. aussie's recent recruitment the not go long. ramy: jamie dimon says prepare for higher rates including the benchmark 10 year yield at 5% or more.
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