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 gap ceo on the outfitter's newest brand. and building to be the world's largest payment network. but facing more disruption than 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 gap 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 brand. gap brand, is still very relevant to our consumers. it is 50 years old. brands morph and evolve.

we are trying to position gap 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. emily: what about banana republic? you are in the middle of a turnaround there. i >> what we are doing is when t was at its best. we went through a tortured fashion phase especially for women but banana at its core is about neutrals, amazing fabrics, incredible hand feel 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 our stores, on trend but not tortured fashion, we have seen the customer respond almost overnight. emily: when do you see banana back at its best? >> being its best is 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. when banana is at its best it is an extraordinarily high quality, well made and fairly well priced alternative to contemporary brands. that's when banana is really chugging along, that's what it's doing the best. emily: i am all about safari banana. that is my preference. >> we have a flight suit in the assortment right now that is very cute. i showed it to my nephew's fiancee who is a f-18 pilot and she looked amazing in it.

emily: can it break out 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. our customers shop seamlessly across the online business, the catalog, and in our stores. i am not going to call an end in sight because there is no end in sight. we feel this is a brand with significant growth potential. emily: how are the inventory issues working out? >> inventory has been completely in line across the company with the exception that we took some product out of gap brand. less because of inventory issues but more because we did not feel it was on brand.

we took that product out. 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. that's when you see his fingerprints on the brand. emily: what does next gen gap look like to you? >> of the whole company. we are going to continue to grow 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.

we are continuing to look at what acquisitions might be for us. emily: what does gap look like in five years? >> additional brands in our portfolio. we have an amazing digital business. maybe 50% or 60% of the company. we probably have the same number of stores but different. and maybe stores 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, buying, and fulfillment experience. and an exceptional experience that is omni-channel across all of our brands. emily: the gap ceo speaking exclusively to "bloomberg technology." visa shares are up over 40% as the company faces an onslaught of new competitors. if you like bloomberg news,

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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 visa faces a backlash over fees. retailers are coming up with new ways to reduce the fees that they pay. technology is disrupting the payments industry more now than

ever. the ceo joined us to discuss visa's 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. we have a new exciting space. 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 creating new use cases there. and we continue to partner with a lot of new and exciting players coming into the space. i think 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 frenemies. the ecosystem is very interesting, it requires a lot of players to come together and make it work. people 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. we have a wonderful relationship with them. we are 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. make sure you have wonderful engagement with as many people as possible. emily: on that 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? >> this is a standard coming out of this. i think we are all united in the fact that there is a -- of the checkout experiences. the reality is that the e-commerce experience is still lousy. too many people shop without coming to the purchase. consumers get confused when they get to the situation where they have to pay for whatever it is they bought. 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.

we are in a lot of discussions 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 early to mid 2019. emily: there is still a war for dominance. you mentioned paypal as a frenemy. could paypal be included in this unified button in the future? >> we are open to everyone. we are open to anybody who makes the payment ecosystem better. the reality is that paypal started with it being the button in the e-commerce space. whether they would look to the second button, i don't know. you would have to ask paypal. i think 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?

how have retailers responded to it? >> it is a technical term -- secure remote commerce. that is a lousy term. we will have to do a better job of marketing it. when we come to market. that is still tbd. 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 consumers are enabled to buy as much as possible. that's everything from a great website and checkout experience. as we learn and have more discussions with merchants, they will understand that our goal is to make the experience better. emily: multiple payments have been fairly slow to take off in the u.s. less than half a percent 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. beencountries, they've taking off. one country that is behind much of the rest of the world particularly the developed world is united states. the infrastructure is plumbed to participate. many of the terminals are ready. the reality is that this embedded set of cards, 3.3 billion visa cards, only fairly recently have people started putting chips on the cards. most or committed that as we move toward replacing cards over time, they will embed the ability for contactless payments. i think as contactless payments take off, the formfactor of both the card and the mobile phone where the tap experience is 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? apple seemed to be the declared leader. 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. that's perfectly good for us and good for the ecosystem. emily: 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? alfred: amazon is a wonderful partner of visa's.

we have a terrific relationship with them. they are also very customer focused. they want the customer to use whatever product they are most comfortable with. i think it remains to be seen what they will do in the payment space. you would have to ask them. emily: wouldn't they use their muscle to muscle you out? alfred: they 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 business 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? alfred: when i talked about 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. we are the largest network in the world 46 million merchants , around the world accept visa cards, but we 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 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. payments are enabled so that when you are right in front of 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 at the physical store.

at this stage, we are not prepared to talk about who we are talking to but i can say that we are talking to a wide array of manufacturers. emily: visas ceo, alfred kelly. coming up, the electric car wars have begun. audi takes aim at tesla revealing a brand-new all electric suv. event bright raised $240 million in his ipo this week. we will hear from the ceo. this is bloomberg. i♪

emily: tesla has rival carmakers on its tail. jaguar, bmw, and mercedes are racing 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 3. emily: as elon musk promises to deliver. >> we are building cars as fast as we can. emily: the company is facing new competition. and it is not just from within silicon valley. instead, traditional manufacturers are targeting tesla. audi used san francisco to launch its battery-powered crossover. it is due to hit showrooms by the end of the year. 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's largest maker of luxury cars, mercedes, has a range of vehicles with more than

$12 billion already invested in the project. >> we 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. that ev industry could be worth $560 billion. carmakers do not just need to meet shifting consumer taste, they also need to meet increasingly stringent emission standards. 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 around the launch of that new all electric suv. he started by asking, why now? >> we 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. not a kind of car. a full stop audi. and the third thing is the cost situation. we can put ourselves in a position to 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? >> we want to 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 wanted to put one in this sweet 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. we want to get the prestige and the brand and the recognition. 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. the jaguar hasn't come yet.

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 300,000 plus electric vehicles by 2023. >> this is costing companies a fair amount of money. you saw the softbank investment into cruise for gm. you saw the saudi investment fund yesterday announced an investment in a different electric vehicle. do you have the resources where you can make a huge investment in electric vehicles? >> we can. audi has 12 electric vehicles funded by ourselves. the key thing is to be a successful company. if you are successful, you generate the revenues to continue to invest. this is huge technology that costs a lot of money.

we believe we can fund it. the reason we want to find it is 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 autonomous part? when will you be autonomous? >> this vehicle is a level two. it has tremendous amounts of safety. it allows you to cruise hands-free. this is dramatically different from autonomous. that technically means no steering wheel, no pedals. frankly, it will be awhile before that is happening on american roads. emily: bloomberg's david westin with the audi ceo. coming up, amazon's refreshed product line was unveiled this week. we have all of the details

coming up next. this is bloomberg. ♪

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"bloomberg technology." i'm emily chang. amazon held a surprise product launch in what is an annual affair. the senior vice president joined me immediately after the new lineup was revealed. david: the new echo dot was a great seller for us. it's been the best-selling speaker ever. we've improved it a lot of different dimensions and we think people will love the better sound. also, the new echo show has a brighter display and it continues on our past to have alexa show you things.

i would be remiss to talk about alexa auto. it's a new product that brings alexa into your car. emily: we have to talk about the microwave, the most unexpected product you unveiled today. how does it work? why do you think this is a good opportunity for amazon? david: 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 the interface on your microwave has been stuck in the late 70's for a long time. we think with alexa, we can make it more convenient and super easy to cook. we have -- replenishment services. it the microwave will automatically reorder new popcorn. emily: 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. when we offer more selection customers are good about , identifying what they want to buy and what they want to use. on top of that, the review system at amazon lets customers tell people what they may like about them. it helps people choose. we think the breadth of product is a benefit for customers. emily: you unveiled a new device 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. i am a big customer of their products. i love them. their customers are passionate about really 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. i know they will. emily: you brought up your partnership with spotify. you have your own music service. do you worry about cannibalizing your own product line? david: we don't think about it that way. what we think about is 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. there are millions of us on a five customers -- spotify customers on alexa. it is still growing. we think that's great of customers want to go that way. we are proud of amazon music,

that there's not going to be just one winner in music. that there will be one music 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. do you think this is a space where there are multiple competitors? will there be one competitor that takes the greatest chair? -- share? david: we don't think about that aspect. we don't focus on competition. instead, 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. whether we sell x or y, we 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. brightt bright -- event raised $230 million. i spoke to the ceo and cofounder after the listing. julia: 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. i think that alone 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 bright -- event bright 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. we focus on being able to allow 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. we are not void of competition, 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 product shop? julia: it's 95% of our revenue today. we are proud of the traction we've been able to achieve in the market. that scale and efficiency is not nearly 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 -- on our 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? when these the profitability. ? julia: we had a net loss in 2017. we are continuing to strengthen in 2018. that is the match of this scale. we have 700,000 event creators using the product. we will make inroads toward profitability. we have been great stewards of capital historically. we think about reinvesting in the future to drive a positive for accelerated growth. emily: you talked about expanding internationally and developing revenue streams. can you give us some examples geographically where you intend to do that? julia: 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. beyond their, we look toward areas like asia and see an expansion opportunity in the future. in our core global markets, we have a lot of headway to grow. emily: that was julia hart speaking from the new york stock exchange. coming up, our conversation with the ceo of crate & barrel. how she is leveraging tech to keep the home where company relevant. it's been eight years since google left china over censorship issues. plans to go back to china have caused one research scientist to quit. this is bloomberg. ♪

emily: apple may have gotten a endorsement. they won the opinion of the court. they said it did not infringe on qualcomm patents. this doesn't mean the judge residing will follow that recommendation. they told us that he thinks there is a chance this case will be settled this year. steve: 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 a deal could get done. at the same time, there is no better 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 business is you get the disputes figured out and you move on. emily: you 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 -- on the world's most viable company. they say the patents they are paying you for are invalid. how does something so bitter get how does something so bitter get resolved favorably? steve: i think 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. we are both big companies. they are a very large company, 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. emily: 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. in a new interview, emma chandra asked how social media is changing the way customers engage with the brand. neela: all retailers at the moment have to transform to the digital era. we know that our 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. our customers are changing. we need to change. technology is a big driver. we 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. we can embrace that for the new era. 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 we can embrace that for the new , has your e-commerce business grows? neela: over 50% online, the shift from two years ago.

also our e-commerce sales are , 47%, that surprises people. it's actually not that. 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. emma: are you expected it to go higher? >> 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 technology, how 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. customers increasingly expect that from us. that includes our design studio, when someone comes in for consultations, they can look at what they have bought before and what is there browsing behavior. that's important for us to offer the pinnacle of customer service. emily: that was the crate & barrel ceo with emma chandra. in a race around the moon, will it be the hare or the tortoise that comes out on top. we will speak to a retired astronaut who knows a thing or two 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. a research scientist has 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. he joined us from toronto to explain his decision. 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. as an employee when you raise a concern, you are told 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 conditional 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. i circulated that throughout the company.

emily: another part of that 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. what google has said about this, we've been investing for many years 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 and potentially censoring results according to chinese law? jack: i would divert to the human rights coalition letter that was written on august 28. 14 organizations including 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 is 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. emily: that was a former google 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. the mission is scheduled for 2023 and will take for or five days to complete. he won't be going alone. he wants to take his favorite artists with him. take a listen. >> i 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. emily: one man who knows something about space travel is charles bolden who spoke with me from north carolina. he shared his view on spacex and his own experience in space. charles: the biggest challenge for anything that involves human spaceflight is the life support system, elon talked about that a little bit in his announcement when he talked about the closed loop on the water systems. it's only 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. -- produce it. on the shuttle, 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. you want to make sure that your systems are as reliable as possible. that's the biggest challenge. emily: you have the opportunity to visit google origin and virgin galactic, how do you compare spacex to what you see at 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. i just use that term because spacex is very visible and

vocal. 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 -- side-by-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. that's why i refer to them as the tortoise and the hare. emily: you've been up in space. was it worth it? charles: all i had to do was be a marine. that was easy for me. 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. i'm really excited about him

decide he wants to take some artists. astronauts are not good at storytelling. i work on it really hard, but i still use the term "awesome" to describe the view from earth. it's an overused word. i think artists, writers, they 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. you can tune in every day. we are live streaming on twitter. check us out. follow our global breaking news network tic-toc on twitter. this is bloomberg. ♪

emma: coming up on bloomberg best, the stories that shaped the week in business and around the world. >> more tariff trauma as the u.s. and china escalate the trade spat. >> we are hearing china will not engage. >> truth or dare between donald trump and china. >> north and south korea hold nuclear negotiations and the boj on stimulus. >> the doj would be looking at whether tesla broke any fraud laws. >> the ceo of ubs says his bank is planning for the worst. >> you don't know what is going