emily: i am emily chang and this is "best of bloomberg technology " where we bring you all of our best interviews this week in technology. we speak exclusively to the ceo on the outfitter's newest friend. and building to be the world's largest payment network. thanacing more disruption ever, arthur kelly lays out his

strategy. the retail industry also battling tech changes. hear more from crate & barrel. over the last 46 years, gap has grown from a single store to a global business. with 3300 brick and mortar stores, it is betting even bigger on the future of e-commerce. it introduced six new brands. i sat down with the cap ceo to talk about the new men's leisure brand. and to talk about his strategy on a gap come back. >> we have been fairly forthright in saying the importance of old navy in our portfolio today. if you look at size and profitability, it has already surpassed gap grant. brand, is still very relevant to our consumers. it is 50 years old.

brands morph and eve all. gapre trying to position brand back to its core. i love every brand in our portfolio. we have been very forthright with the investment community about being responsible managers with the investment portfolio. we want to create value for our investors. "best of bloomberg technology what about -- emily: what about banana republic? >> what we are doing is when it was at its best. we went through a tortured fashion phase especially for isen but banana at its core fabrics,trals, amazing incredible hand field and versatile pieces at a slightly

higher price point. it is not a work brand but a life brand. as we have put product back in notstores, on trend but tortured fashion, we have seen the customer respond almost overnight. emily: when do you see banana back at its best? >>--is away something you are aiming toward but i expect to see a long run of banana continuing to grow and grow market share. i'm excited. its best isa is at an extraordinarily high quality, well made and fairly well priced alternative to contemporary brands. emily: i am all about its best i banana. that is my preference. in theave a flight suit assortment right now that is very cute. i showed it to my nephew's p.m. is ay who is an f8 -- who

f-18 pilot and she looked amazing in it. emily: can it break out in its old -- in its own metric? >> we want people to understand the powerhouse that we have in that branch. i see nothing that will slow the brand down. it continues to be 50-50 stores online. shop seamlessly across the online business, the catalogue, and in our stores. i am not going to call an end in sight because there is no end in sight. we feel thishad -- is a brand with significant growth potential. how are the inventory issues working out? inventory has been completely in line across a company with the exception that we took some product out of gap brand. issuescause of inventory

but more because we did not feel it was on brand. it is one of the reasons why the stores feel cleaner and tighter because there is not as much breadth of assortment. we are missing the color and pop inside the brand. we said quarter on quarter improvement, i am looking forward to the holiday. we have a new president there. gapy: what does next gen look like to you? >> of the whole company. to growoing to continue our digital business at an accelerated pace. we have had excellent performance and we will continue to grow the business across the entire portfolio. we are adding a new brand with hill city and we're looking at other places where we feel there are white spaces. i am not previewing a slew of brands coming but i do believe

we have a new opportunity to add new brands on the platform whether organically or through acquisition. does cap look like in five years? -- gap look like in five years? brands in our portfolio. an amazing digital business. maybe 50% or 60% of the company. we probably have the same number of stores but different. and maybe stories that are not quite as big and stores that have more technology in them. we have a full suite of digital capabilities that our customer uses for their shopping, buy-in, and fulfillment experience. and an exceptional experience that is on the channel across all of our brands. the gap ceo speaking

exclusively to bloomberg technology. thishares are up over 40% as the company faces an onslaught of new competitors. if you like bloomberg news, check us out on the radio. this is bloomberg. ♪

emily: over the last 60 years, visa has become the biggest payment network in the world. shares are up over 40% in the last year as we set faces a backlash of -- over fees. newilers are coming up with ways to reduce the fees that they pay. more now than ever. joined us to discuss

races approach and the future of the company. >> the exciting thing for us is that this is just the beginning. the payment space is getting more exciting every day. we have the ability to continue to displace cash and check which is still $17 trillion spent last year. we have the ability to open new segments. it is not just about consumers purchasing but governments are distributing funds to their citizens. space. a new exciting in fact, the cash and check displacement opportunity there is larger than the consumer space. we are working on our network rails moving in the other direction. we are pushing moneys to people's bank accounts and cases there.use and we continue to partner with a lot of new and exciting players coming into the space. the future is bright. i look at it as 60 years very

young. emily: this involves a lot of frenemies. you have partnerships with companies that you compete with including paypal and stripe. how will you use technology to compete with technology? >> it is a community of friend may's -- frenemies. that look to cooperate and work together make all of the difference in the world. you mentioned paypal. on friday, i spent a couple of hours with dave shulman. working with a lot of other players to do just the same. my view at visa is that we should be open to talk to anyone about anything. and we should assume everyone can be a friend until they prove otherwise. that is the only way you figure out about how to move ahead. note, we know

that the online checkout experience has become a little cluttered. there are so many icons. visa is partnering with mastercard and amex and discover to provide a unified button. what have you learned? standard coming out of this. i think we are all united in the -- of thethere is a checkout experiences. the reality is that the e-commerce experience is still lousy. too many people shop without coming to the purchase. this is the lost volume. lost volume to retailers, networks, and banks. we are simply trying to make the experience for the consumer that much better which makes it better for everyone.

discussionslot of in the standard-setting group about making sure the technology is ready and we are excited about the prospect of having it come to market probably sometime in the early to mid 2019. emily: there is still a war for dominance. you mentioned paypal as a frenemy. could paypal the included in this unified button in the future? >> we are open to everyone. the reality is that paypal button with it being the in the e-commerce space. whether it they would look to the second button, i don't know. you would have to ask paypal. the reality is that our goal is to make the payment system as easy as it can be. emily: does a button have a

name? term -- a technical secure remote commerce. that is a lousy term. we will have to do a better job of marketing it. when we come to market. tbd.is still we are still working to explain to merchants how it works. most merchants want a better experience at the point of checkout. they want to make sure their buy asrs are enabled to much as possible. including a great website and checkout experience. as we learn and have more discussions on march -- with they will understand that our goal is to make the experience better. have: multiple payments been fairly slow to take off in the u.s. percentn half a comes from mobile.

how quickly and how much do you see that growing? alfred: we are on a bit of a crusade to promote contactless payments. one country that is behind much of the rest of the world particularly the developed world is united states. lumped --tructure is is plumbed to participate. the reality is that this , 3.3ded set of cards billion visa cards, only fairly has -- have people started putting chips on the cards. i think as contactless payments take off, the formfactor of both the card and the mobile phone where the cap it -- where the

tap experiences better will both be aided by contactless payments in the united states. emily: will this further hinder the adoption of apple pay or samsung pay? alfred: the reality is that they are partners as well as many others in the space. many of the samsung phones and apple phones have embedded in them the cards. this will facilitate mobile payments that have visa cards stored in their wallets. amazon has shown no lack of ambition of getting into new markets. they will be a huge player in the payment space. what threat are you preparing for from amazon? is a wonderful

partner of visa's. they are also very customer focused. they want the customer to use whatever product they are most comfortable with. it remains to be seen what they will do in the payment space. emily: wouldn't they use their muscle to muscle you out? want what is best for their customer and if their customer wants to use visa or the visa card issued by our banks around the world, their customer centric approach to guarantees that they will offer the widest array of options to their customers so they do not turn anyone away. that is central to their strategy. emily: you're working with car companies. can you give us more specifics?

when i talked about some of the some of the future being bright, i did not talk about the internet of things. connected cars and homes are an incredible growth opportunity for us. 46 million merchants around the but wexcept visa cards think it should be 10 times that and the internet of things will be one of the things that does that. we are speaking to manufacturers in the automotive space as well as but we think manufacturers of home appliances, and our task is to make sure we are creating an on ramp for payments so payment facilitation happens as the manufacturers build the next generation of cars, equipment, and appliances. when you are right your refrigerator, and you realize you are out of milk and butter, you can make a payment without going to your desk, jotting down a note to purchase these things

that the physical store. at this stage, we are not prepared to talk about who we are talking to but i can't say that we are talking to a wide array of manufacturers. ego -- ceo, alfred kelly jr. audi takes aim at tesla revealing a brand-new all electric suv. --.event bright raised we will hear from the ceo.

emily: tesla has rival carmakers on its tail. jaguar, bmw, and mercedes are raising their own electric cars into development.

at a launch event in san francisco, audi joined the fray. take a look. tesla customers are getting anxious. >> i notice it is popping up on twitter quite a lot. where is my model three? emily: as elon musk promises to deliver. >> we are building cars as fast as we can. emily: the company is facing new competition. from withint just silicon valley. instead, traditional manufacturers are targeting tesla. audi used san francisco to launch its battery-powered crossover. with a price tag of $75,000 it gives a model x a run for its money. >> we want to merge the new world of electric mobility together with 100 years of experience. emily: bmw is also designed for a slice of the market. while the world largest market

-- maker of luxury cars, mercedes, has a range of vehicles with more than $12 billion already invested in the project. are investing in electric mobility. we believe technology is ready for the very first all electric suv for mercedes-benz. emily: we can expect to see more high-end rivals. carmakers do not just need to meet shifting consumer taste, they also need to meet increasingly stringent emission standard. some countries are working to ban combustion engines altogether in coming decades. bloomberg's david westin caught up with the president of audi for an interview are around the launch of that new all electric suv. he started by asking, why now? have had the perfect time.

three things have come together. the market acceptance is building each and every day. secondly, we wanted to launch with a proper audi. not a quirky car. a full stop audi. and the third thing is the cost situation. we can put ourselves in a position a make a profit. when those three things came together, that is when we want to hit the market. >> let us pursue the question of cost. what is the price point of this vehicle? sell this vehicle. that is why we picked our price point and we want to make profit. the car is $74,800. it competes with the x five. that is where the market is. the largest chunk of vehicles. we won at put one in this weak spot. >> this is not the last audi

electric, you have a plan to ramp up several in the next few years. will you go with a more inexpensive model? i think our first three vehicles are going to compete on the higher end. we would like to establish ourselves as the premium player in electric before moving downstream. the next three vehicles, the first behind me, and then a sport back, and then a magnificent gt. it is not a pure play volume game. and then we will work our way downstream like a model three. >> are you worried you are late to the marketplace? >> i am not. there is a lot of hype about people saying there are cars but physical, luxury, premium cars on the ground, the air is quite thin. there is tesla and nothing else

has hit the ground. there is a lot of hype but on the market, we will be the second car on the market. i think we are timed perfectly. and the market is growing. we anticipate 300 plus electric vehicles by 2023. companies aosting fair amount of money. you sell the softbank investment into cruise for gm. and the investment fund anterday announced investment in a different electric vehicle. investmente a huge in electric vehicles? >> we can. audi has 12 electric vehicles funded by ourselves. be aey thing is to successful company. if you're are successful, you generate the revenues to

continue to invest. this is huge technology that cost a lot of money. we believe we can fund it. and we want to because these are technologies we want to have in-house that we want to be able to support. you have to have them under your wing. we feel we have the capital to develop this with a properly scaled business. --what about the on about the autonomous part? --when will you be autonomous? level two.icle is a it has tremendous amounts of safety. this is dramatically different from autonomous. that technically means no steering wheel, no pedals. frankly, it will be a while before that is happening on american roads. bloomberg's westin with

the audi ceo. coming up, amazon's refreshed thisct line was unveiled week. we have all of the details coming up next. this is bloomberg. ♪

comcast business built the nation's largest gig-speed network. then went beyond. beyond chasing down network problems. to knowing when and where there's an issue. beyond network complexity. to a zero-touch, one-box world. optimizing performance and budget. beyond having questions. to getting answers. "activecore, how's my network?" "all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. emily: welcome back to best of

"bloomberg technology." i'm emily chang. president joined me immediately after the new lineup was revealed. echo dot was a great seller for us. we've improved it a lot of different dimensions and we think people will love the better sound. also, the echo show as a brighter display and it continues on our past to have

alexa show you things. product that brings alexa into your car. to talk about the microwave, the most unexpected product you unveiled today. how does it work? how is this a good opportunity? it was about building a reference design to show you can connect anything to the internet and make it smarter. i mentioned earlier today that microwaveace on your has been stuck in the late 70's for a long time. alexa can make it super easy to cook. it we have -- replenishment services. there are so mean products, are you concerned that customers will get confused or overwhelmed?

david: i don't think so. one thing we have strived for its giving customers a lot of choice. are good about identifying what they want to buy and what they want to use. on top of that, the review system and amazon lets customers tell people what they may like about them. it helps people choose. we think the breadth of product is good for customers. deviceyou unveiled a new to make sound richer, what is the potential in the high-end speaker market, where you have entrenched competitors? david: i would consider them partner. reallye passionate about great sound around the house and the convenience it offers.

now they have a lineup of products that integrate alexa into them. we want customers to have alexa everywhere. we have more mainstream products, but we know the level of sound that customers are expecting will continue to improve over time. we need to improve on behalf of customers. emily: you brought up your partnership with spotify. do you worry about cannibalizing your own product line? david: we don't think about it that way. we want to give choice to customers. the nice thing about alexa is the service is open to developers of all types. spotify has been a great partner of ours. it is still growing. we think that's great of customers want to go that way. music,proud of amazon

that there's not going to be just one winner in music. be one musicll service that wins it all will be unlikely. i'm sure spotify and amazon music will be on that. emily: when it comes to the smart speaker business, amazon had an advantage. google home is rapidly encroaching. is this a space where there are multiple competitors? will there be one competitor that takes the greatest chair? about thaton't think aspect. we don't focus on competition. we take a step back and say what do customers want? if we make great products and great services and a great developer platform, customers will come. or y, wewe sell

think alexa and echo is the leading system in the home today. we will have to continue to work hard on behalf of customers moving forward. emily: that was the amazon senior vice president. they went public on the new york stock exchange, selling shares at the high-end. they raised $230 million. -- ceo andh the cu cofounder after the listing. juliette: what we have been able to outline is the market experience is still very underserved. we see 40% of our new event creators coming onto the platform after not using a technology platform. that really tells us we've been able to uniquely aggregate

creators who before that point have not been served with great technology. emily: it seems like everyone is pushing into this experiences business, whether it's spotify or airbnb. how does that differentiate itself? julia: because of our self services approach, 97% of our event creators use the service. that natural behavior allows us to continue to grow our business model. to allowon being able creators to get to the core of the problems they are trying to solve and growing their businesses. we've been able to do that consistently. that has grown our strength in the market. we see a lot of competitors. competition,id of but we see opportunities to drive partnership. we have a partnership with

spotify and we help artists sell tickets to their own shows. emily: investors always want to know what's next. how are you sure you're not a one-stop from a shop? julia: it's 95% of our revenue today. we are proud of the traction we've been able to achieve in the market. not scale and efficiency is tapped out for us. when we look at the market, we see 4 billion paid tickets in terms of adjustable opportunity for us. we want to aggregate tickets are platform because that means the event creators are succeeding. beyond that, we look at other areas were we can develop the platform for these creators as they run their businesses. pushing further into those problem areas and creating solutions is what we are focused on in addition to the

transactional volume. emily: revenue growth accelerated, but losses widened. when do you see losses narrow? had a net loss in 2017. we are continuing to strengthen in 2018. that is the match of this scale. creators00,000 event using the product. we will make inroads toward profitability. we have been great stewards of capital historically. positive for a accelerated growth. you talked about expanding internationally and developing revenue streams. can you give us some examples geographically where you intend to do that? a: our core global

markets have room to grow. when we look at that opportunity, we are only 7% penetrated. that allows us to push into those growth opportunities, whether it's the u.k. or germany or australia. we look toward areas like asia and see an expansion opportunity in the future. markets, weglobal have a lot of headway to grow. emily: she was speaking from the new york stock exchange. conversation with the ceo of crate & barrel. how he is leveraging tactic to keep the home where company irrelevant. -- relevant. plans to go back to china have caused one research scientist to quit. this is bloomberg. ♪

emily: help the -- apple may have gotten a endorsement. the --n the opinion of this doesn't mean the judge residing will follow that recommendation. us that he thinks there is a chance this case will be settled this year. we have a dispute over the price of ip. we think that's moving into a time where our strategy is unfolding and the environment is such that you are in a position where you will get it done. at the same time, there is no opportunity and partner for qualcomm then to work with apple. it makes sense that they would be partnered.

those things tend to work out. the way we think about the businesses you get the disputes figured out and you move on. believe apple over the customer? steve: if you have leadership technology, your roadmap will eventually dominate the business relationship. there's no reason why that should be the case. emily: you are taking of the world's most viable company. they say the patents they are paying you for are invalid. how does something so better get resolved favorably? steve: bitter might be the wrong term. we have had disputes with licensees in the past. it's no different than that. these are just bigger companies. company,a very large

but we are not a small company in terms of executing the strategy we have. those things will get resolved. sometimes on the courtroom steps, sometimes they don't. the strategy is playing the way we always thought. as more retail shifts online, a growing segment is home wares. wayfarer says they are growing at 15% annually. traditional retailers like crate and barrel have to adapt. chandra interview, emma asked how social media is changing the way customers engage with the brand. momentretailers at the have to transform to the digital era. customers are increasingly interacting with us across different channels.

one of the things i have driven as an agenda is ensuring we are delivering consistently, whether it's through instagram or pinterest for digital services which offer online design services and 3-d visualization. we need to change. technology is a big driver. know that home is a category that customers love. there is more interest in design and interior design and customers are amateur designers. that's great. emma: let's stick with your consumer mood online. you are trying to reach them in terms of advertising. how are you serving them online is your e-commerce business grows? neela: over 50% online, the

shift from two years ago. 40%,-commerce sales are that surprises people. emma: people would not expect that for large goods like furniture. neela: they have become comfortable. that is higher with established brands they trust. they know us for our quality. 47% as a high-growth number. i don't really know where it will top out, maybe 50% or 60%. i don't think it will go higher than that. there will always be a customer who has a convenience purchase they are making the store or really wants something today. emma: you talked about are they helping you make decisions? neela: good question.

that's the most exciting part of our business right now. the reality is we are able to leverage customer data in a way that we were never able to do before. one of the things we talk about is one customer view being able to map all of the interactions we have with customers and offer them a highly personalized experience, whether it's online or by email. they expect that from us. studio,ludes our design when someone comes in for consultations, they can look at what they have bought before and what is there browsing behavior. offer important for us to the pinnacle of customer service. emily: that was the crate & chandraeo with emma appeared in a race around the moon, will it be the hair or the tortoise that comes out on top. we will talk to a former

astronaut who knows a thing about going into orbit. this is bloomberg. ♪

emily: it was revealed that google wants back into china. according to reports, they were willing to work with the chinese government to censor search results. one of the things that led google to pack up and leave earlier. they have left the company in protests, saying they cherished working at google and hold colleagues in high regard. i can't work in a company that will not internally clarify its ethical red line in areas where it engages. those were the words from jack paulson. jack: i found out about this through the reporting on august 1. it was a very vocal three weeks following that. i was trying to raise concerns

internally. there was a lot of pushback and talking about it. it was a very exploratory project, not many managers knew anything about it. when you raise a concern it, you your concerns will eventually be handled. i submitted a conditional resignation saying if this is true, i am forced to resign for ethical reasons. even after submitting that resignation, it felt like i receive no clarification on what the red lines might be crossed. after another week passed, i submitted a formal resignation. i wrote a document explaining my reasons, some of which you quoted at the very end. part of thatr

document, you are avoiding profiting from the erosion of protections for dissidents. there is a possibility that other nations will try to leverage us and china. this,oogle has said about we've been investing for many .ears to help chinese users our work on search has been exploratory and we are not close to launching a search product in china. what are your concerns about google going back into china will and potentially censoring results according to chinese law? divert to the human rights coalition letter that was written on august 28. human rights watch, amnesty international, they laid out

their concerns clearly. they can say it more eloquently than i can. i would call on everyone to read that, part of the reason i ended up resigning his before i left that letter came out. i tried to raise it as a point as to why the human rights concerns are an issue. that letter was still not responded to. googlethat was a former research scientist. now to some positive news for elon musk, spacex has announced that a japanese billionaire will be the first private customer to hitch a ride around the moon and back. 20 mission is scheduled for 23 and will take for or five days to complete. he wants to take his favorite artists with him. take a listen. choose to go to the

moon. i am very glad to be here. i am really excited. i really appreciate to be able to share this honor with you. one man who knows travel isabout space charles bolden who spoke with me from north carolina. he spoke about his own experience in space. charles: the biggest challenge for anything that involves human spaceflight is the life support talked about that a little bit in his announcement when he talked about the closed loop on the water systems. days, but you can't go

in and take a couple of bottles of water along with them. they have to have a way to recycle water or producers. we used fuel cells with oxygen and hydrogen and one of the byproducts was water. you are looking at closed loop life support systems for air, water, filtering waste. that youro make sure systems are as reliable as possible. that's the biggest challenge. emily: you have the opportunity to visit google origin and virgin the lactic, how do you compare spacex to what you cnet blue origin and elsewhere? charles: i think everyone is doing their utmost and working at breakneck speed. we were talking before and i referred to spacex as the tortoise and the hare.

vocal.e very visible and they have great goals. you have blue origin that has many of the same goals and aspirations, but they are very quiet. they have a measured schedule of activities. i think you are going to see they are going to be side when we finally talk about humans routinely in space on a commercial space craft. i think they will be right out front, alongside each other. emily: you've been up in space. was it worth it? : all i had to do was be a marine. it is incredibly worth it for anybody. the opportunity to see this planet from that vantage point is unlike anything else a human will experience. himreally excited about

decided he wants to take some artists. astronauts are not good storytelling. hard, but i really toll use the term "awesome" describe the view from earth. writers, theys, will help us understand this incredible planet on which we live far more than any scientist or engineer or some like me can do. emily: that was a retired astronaut talking to me about the spacex mission to the moon and back. that does it for this edition of best of "bloomberg technology." we will tell you all the news on technology throughout the week. we are live streaming on twitter. check us out. follow our global breaking news

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