emily: i am emily chang in san francisco. this is bloomberg technology. coming up in the next hour, netflix shares surged. will the video streaming giant lagging tech stocks? ibm's revenue missed. we survey it's moved to the cloud in a market dominated by amazon. and hitching a ride for an ipo. morgan stanley and goldman sachs are pitching to underwrite uber's public offering as lyft chooses jpmorgan to run its ipo.

netflix shares rallied in late trading after they crushed third-quarter earnings. all eyes were on subscriber growth. netflix had rejected 5 million additions and reported 7 million globally. it was a record for the third quarter. and, it appears netflix's record of setting new programming is paying off. this helps to attract new subscribers. during us now from boston is the -- joining us now from boston is the true optic's ceo. also joining from l.a. is lucas shaw who covers the company for us. lucas, pull out the highlights

for us. the forecast for subscriber is beating estimates but the earnings forecast is light. lucas: the thing would netflix is that investors always look at the subscriber number. by and large, the revenue story for netflix has been pretty positive because they are boosting the amount of revenue they get for subscriber means each subscriber they sign-up should be net positive for them. the take away, they are on pace to add 29 million customers this year. i went into this quarter thinking it was possible that they would report a decline in subscribers. instead, they post their biggest you're ever by about 5 million. at a certain point, you run out of superlatives to talk about the growth of this company. emily: andre, what do you believe is driving this growth? is it the new netflix original shows? >> i do not believe it is the new netflix original content at all. i think there is a certain part

of the success of netflix that can be attributed now over the last few quarters to a rising tide floats all boats. growth across the top kenexa tv and not just domestic in the u.s. but every broadband internet connected market in the u.s. is phenomenal. at some point, the street has to stop looking at netflix from a standpoint of today hit or miss their own estimates in terms of what growth will be and look at it as a normal company. there are three things i would be worried about in terms of future if i was netflix. regardless of what the story was this quarter. that would be at&t, disney, and free ott solutions. the value and demand for content that hbo and warner media would have when they launch their content and the massive growth of free ott is more significant from netflix in the last few quarters.

emily: given netflix is so far ahead of other streaming providers at this point, do you share those concerns that it is about other free over the top competitors? lucas: i think the free one is not a concern for netflix. they have competed with a pretty popular service called youtube and both companies have done fine over that period. the competition from disney and at&t is very real. those two big companies have troves of libraries that are popular and are both going to be pulling back movies and tv shows from netflix to boost their own services. the netflix counter would be that, one, they have been building over the last few years a studio and their biggest hit, stranger things, is something that they made themselves and not something they got from

another studio. to andre's point about the rising tide, you can see at&t and disney grow without it necessarily hurting netflix. there will be a lot of competition in the developed western markets. overseas in particular, netflix will far ahead. emily: i'm looking at a chart where we follow netflix's results. this is a chart of their margins which appear to be very strong. that said, if it is not a result of the original content investments, are those investments worth it? netflix is warning about its negative free cash flow and it added in results to investors but they recognize this but they believe investment is worth it and will pay off in the long-term. is it?

andre: the team at netflix is intelligent and they saw the economies of scale changing three to four years ago and they started to make their investment. netflix knows they have no technological barriers to entry. at some point with the proliferation of ott and connected tv, the providers they rely on will bring that in-house. that is why they prepare this original content strategy for quite some time. what i will disagree on, looking at youtube with the overwhelming majority of the content being user generated, now would you see a crossed free at solutions whether it is pluto tv or others is high quality, affectional content licensed from mgm's, sony's, and others. that is where, domestically in the u.s., the majority of the unique household growth has been.

and in the international market, it is not so much having to worry about the disney's or at&t's, it is the global tv's and brazil that owned all of the popular rights. netflix has had problems competing in these markets. my concern is, in order to compete on 100 different fronts at once and having original content in the native languages and different john rose, the amount of money netflix will , the amount genres of money netflix will have to spend on content over the next few years is so unprecedented that i would be concerned if i were netflix. emily: and international is where the growth is coming from, but can they keep it up? andre, and lucas shaw, thank you so much. staying with earnings shares of ibm, they dropped it after hours trading and he missed expectations. -- and they missed expectations. this comes as ibm shifts its focus to the cloud division where revenue rose by 10% to $4.5 billion. joining me now from new york is

york is our next guest. why the miss? >> there are a couple of things we expected and some unexpected. the company goes through ceos and with that, you would see the growth come down a little bit. but there is cognitive solutions where we saw growth go down to -5% in currency. the positive side has global business services which grew 2%. it is that 5% decline in cognitive that is a little alarming because that is where a lot of technology set. we saw such a decline in that segment. emily: ibm continues to unveil new car products but they got to cloud revolution late. can they catch up? anurag: there are a few ways to look at it. what ibm wants to do is

modernize older clients that are usually on premise and want to move their applications and data to the cloud. that is more of a hybrid strategy. problem is, those companies take a long time to move their portfolios to the cloud. also in that area, we think microsoft is somebody that has a very strong public cloud presence and a strong in the enterprise. emily: ibm shares are struggling over time. is this something that they can turn around? anurag: i have said this for years, they have made the right investment in the area, but competition is so tough from very large vendors out there and they have a sizable legacy portfolio of products. you have to be patient with this particular limit. the 5% decline is a bit concerning because that is based on the next gen technologies and

the software products out. emily: all right, anurag, we will continue to follow ibm results as they roll out. thank you. two of silicon valley's ipo's on tuesday. the latest details on uber and lyft. that is next. this is bloomberg. ♪

emily: two ipo's that could be

hitting the road. uber has received proposals up to $120 billion. goldman sachs and morgan stanley reportedly delivered the proposals last month. that was not tuesday's only ipo talk to readlyft hasn't collected -- talk. lyft has selected j.p. morgan chase. there valuation is to top $15.1 billion. for more, let's bring in alex barinka and eric newcomer who covers this for us. eric, what do we know? >> these ipo's might come on top of each other early next year. even though the uber's ceo says they are targeting the second half of next year, i think they are both in a hurry to get out and they could be right on top of it. emily: i thought lyft would be first? alex: that made sense for lift but it seems like uber might try to rain on the parade. uber is the bigger company and

when lyft goes out, i bet investor questions will be what comes next. look at it over, they have food -- look at uber. they have food delivery, scooters, and other things. lyft wanted to head off those questions by getting out first, what if uber jumped the gun and pulls the trigger, they could cause a narrative problem for lift but they could call up other problems. eric: the valuation is the headline. they say they can convince the world that is what you are worth. emily: they have to be careful about that. eric: right. they are setting a high expectation. lyft has a high valuation, but with uber, the defense is that they have the ridesharing business that is global and they have stakes in various companies like grab. they have a huge autonomous

business and a food business that is bigger than grubhub. you pick up all of the pieces together and have the story for why this is this huge company. emily: talk about politics of the banks. jpmorgan doing lyft means they will not be part of uber's ipo. alex: this is being called conflicted out. theseoarded relationships with the former ceo. jpmorgan had been working with uber for a while but they looked at the layout and assumed goldman and morgan stanley would end up with the lead roles. that means a smaller fee share for jpmorgan. they are consistently third behind those two other firms. having a lead less plot on what could be one of the biggest ipos of the year is a good look for them. that seems to be some of the hind the scenes imaginations going on. for lyft, it seems like the get one of the top buy you synthetic

things except is what is happening. emily: this is the international story developing by the second, but there is a lot of concern about softbank's connection to saudi money despite that the government continues to deny they are behind the disappearance of the journalist. eric: at this point, uber has the money. so much of the money is tied to the saudi's. they have 3.5 billion directly from investment funds. softbank is only a small part of the trouble. it is about managing those relationships. i would love to be in the board meeting where they have to have it out over his decision to leave the saudi forum, but i do not think they can give the money back at this point. it's keeping the distance while realizing they have a saudi board member. emily: there are reports like

other companies are considering that. are their broader concerns in the ecosystem among the ventures -- among investors to the connections that they have? alex: the moral conundrum is so huge that i question whether or not public market investors will look at this and see if it is a problem. being on the board, that could be a governess issue. the fact that they took money in the past, less so. for public market investors, my gut says they will buy into the story of the company and not care about these broader governance issues unless something comes out again or if the execs line behind the saudi

-- align behind the saudi government. emily: alex barinka and eric, thank you much. with cashless retail on the rise, tech is changing the future of money. one company months to make sure you managed well. how it is using technology to improve our relationship with money, next. "bloomberg technology" is livestreaming on twitter. check us out @technology, and be sure to follow our global news network, @tictoc, on twitter. this is bloomberg. ♪

emily: bloomberg's sooner than you think conference brings together investors who technologies are changing the world. from cashless retail to ai, tech is affecting our money for the better or worse. one finance company is betting they can improve this relationship. sophia offers a wealth management services providing

everything from student loans, refinancing, to mba loans. caroline sat down to discuss. >> our mission is to help people achieve financial independence and realize it their ambitions. it is about having enough money to do it you want. in order to do that, we have to help people get their money right, which means across all of the activity they do from borrowing, to saving, to spending. money is a core element to saving and spending.

>> when you talk about adding the checking account, to a certain extent, when you talk about other areas like wealth management, this is a competitive landscape. it is served by banks and startups. would you see the hottest competition coming from? >> we think we can really differentiate ourselves in those five different areas, but also focusing on other things members want. we provide benefits beyond the financial products. we have career coaches, social events, networking professionally and socially, so we want to build a complete value preparation -- in addition the convenience. caroline: he talked about money raised and a big chunk of that $2 billion came from a fundraiser from softbank. how important is the money you get from the investors? >> it is very important. it is honored to be a part of the softbank family. masayoshi son has been incredibly successful as an on-chip newer and innovator and investor.

it is a huge asset to have softbank and him as our largest investor. we cannot be prouder. we want to make sure we are aligned with investors like him that have the same view and are willing to make large investments to capture that opportunity. caroline: let's talk about cryptocurrencies because it is something you want to offer by 2019. i want to understand about the overall technologies that drive crypto which is blockchain. is this something you are looking to integrate within yourself to make loans quicker and to use that technology? >> over the long-term, we would love to partner with those investoring in blockchain. blockchain has a lot of opportunities to bring out inefficiencies. it would be great to be in a position someday where we improve or fund alone and sell the loan -- a loan, and iselle -- and sell the loan.

the cost of capital goes to zero allowing us to get better values to our borrowers and lower rates. caroline: in the culture was something you were tackling. when you took the helm, there were concerns about sexual harassment allegations under previous leadership and perhaps a toxic culture. that has been something across silicon valley. how do you tackle that? >> i could not be prouder of the progress we have made. secondarily, we want to build a world-class culture. part of building that is defining what matters the most. we defined 11 core values which we think will make us build a foundation of one of the best cultures in the world. the only thing difference between our company and being the best culture in the world, is us. it is not require capital or

technology, it requires leaders and a team committed to building a foundation over a great culture. emily: that was the sofi ceo there with caroline hyde in new york. microsoft's cofounder passed away monday at the age of 65 after battling lymphoma. he founded the iconic company and he went on to be a philanthropist, real estate owner, and a sports team owner. he left behind a league you see -- legacy of ai as well. i spoke to someone about his contributions. >> i'm deeply saddened because i think he was one of the giants in the tech industry.

his partnership with bill and what microsoft did was tremendous. after microsoft, he went on into interval research and his institute for ai, both of which had a lot of friends and i'm saddened by that. >> over the values he was committed to? >> it felt like it was about openness and sharing in the not -- sharing and not about building an empire. he did it quietly. it is not like he was beating his chest and telling the world what a great person he was. he felt this was the right thing to do and he hired great people on a great path, and hopefully they will be able to continue. emily: paul allen was 65 years old. ♪

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emily: this is bloomberg technology. back to our top story, netflix came roaring back. the company forecasting at 1.5 million paid subscribers, almost twice the number from last quarter. they are well on their way to half of all u.s. households. joining us with more -- paul, despite these stellar results, we had a guest who is very concerned netflix will not be able to keep this up in 100 different markets around the world, different languages and

produce original content to sustain all of them. would you agree? paul: i don't think i would. netflix has challenges ahead, and they do include tailoring the content for some of the markets they serve. some of them are not english speaking, and they have had more strength in english speaking markets. they have their work cut out for them, but netflix with these results and other great quarters, they had really just knocked it out of the park and shut down naysayers and. considering the challenges, i am overall optimistic about their future. emily: given the rising streaming comparatives, disney or at&t, apple, and amazon and google catching up, can netflix sustain its lead? how does the battlefield change?

paul: netflix has been the leader for a long time. companies like amazon, who live in some of the other ones have definitely ratcheted up competition, but they have not come close to catching netflix in terms of penetration, the number of shows it is producing and overall leadership in this space. long-term it is possible one of them catches netflix, but in our forecast horizon, which goes to 2022, we don't see that happening. netflix continues to be the leader not just in the u.s. but globally in terms of number of subscribers. emily: i have a chart from the top life blog where we are seeing netflix results. where do you see the future growth coming from? paul: it will be outside the u.s. that has been the case for several quarters on the

subscriber side, and lately on the revenue side. the reason is simple. in the u.s., i will not say they are saturated but getting closer to that ceiling of what the growth potential might be. they have big markets outside the u.s. where they are not nearly as far along the path of penetrating those. india, asia is a big focus, but even western europe where they have quite a bit of strength, germany, they still have room to grow. then there is latin america where they have made lots of inroads, but there are big populations that i think they still have a lot of ramping up to do. emily: netflix out with a strong forecast. thank you so much. coming up next, we have a chance to reset world equality thanks to ai. how this man believes we can

accomplish that, in an exclusive interview. a different kind of unicorns in silicon valley. dominated by women. talking about their fund. this is bloomberg. ♪

emily: emily: emily: when it comes to developing the next wave of tech startups, one person is at the center of both. he has 1400 tech investments like dropbox. he is also the cochair of open ai, a research company with a

stated mission to make sure humans and ai can safely coexist. who can talk about when it will arrive? no one but sam altman. sam: i think it is a question of time frames. i view the next few decades as the most important milestone in history right around the corner. 10 years or 100, i don't think it matters given the magnitude of what is happening. it is coming soon enough that we need to think right now about how we want this deployed, however what gets benefit, how we will make it safe and good for humanity. emily: do you think ai will share our values? sam: we have a team working on that now. how we import human values, how do we teach a collective human value? i am more optimistic that we will be able to accomplish that. emily: do we even want ai to

share our values because there are many inequities we may not want to be replicated. sam: one of my hopes for ai is it will help us be our best. it will help us in providing our best and stop our worst impulses. we have a lot of known psychological flaws. we have in equities in the world. ai is a way where we can decide what is good and make sure the ai honors that and keep that fundamental. there is a lot of good ones. the injustices we cannot address. emily: elon musk who founded this with you has been concerned about the possible future of ai. how possible is the apocalypse? sam: it is hard to say when you have any credibly confident technology here is how it will go. i am personally optimistic we

will get to a good future, but it will require hard work from talented people. emily: how big a risk is it that ai is off-track or it supersedes human intelligence and has a mind of its own. sam: people worry about a kid in a garage will invent ai and misuse it and -- one thing i have become confident is that will not happen. this requires truly massive resources, giant data centers, custom-built chips. we will know all the products in the world. some will be private, some by the government. as we get closer and closer, those projects will come together and make sure we are thinking about safety and control issues. emily: looking towards the future, there is concern artificial intelligence research

could evolve and we need a different approach to achieve the breakthroughs we were hoping for. you agree? sam: not at all. if you look at the results each year, it is incredibly more impressive every year. not long ago [indiscernible] now we can make incredibly sophisticated video games with hundreds of thousands of actions being taken. we have made algorithmic progress each year and hardware progress. we can use 10 times more computing power every year. the rate is incredible, and that will continue.

recently had a team of bots play against the best human players, but the humans do not win. is that a setback? sam: i don't think they will win for much that are -- longer. we get better and better. every two weeks, our bots have in 90% win rate against the box from two weeks ago. the rate is unbelievable. emily: what is underhyped?

sam: the killer robots thing is overdone. i think people talk about self driving trucks and the impact that will have on jobs, and that is true. they don't talk about the white-collar work ai will do. repetitive human work that doesn't require promotional connections between people, that will be done in the next couple of decades better, cheaper, faster by ai. it is always about factory robots and self driving cars. emily: what is overhyped? sam: killer robots thing. emily: they will not kill us? sam: some will eat some jobs, and some will kill humans like self-driving cars. but it will be positive for humanity. emily: you believe ai can supersede human intelligence? sam: it will. there is a debate on timeframe, but it takes unique human arrogance to believe ai cannot supersede humans. emily: what about that scares you? sam: so many things. what does it mean to build something more capable than ourselves? what will that rolled look like? how will it be shared? how do we make sure it is not a handful in san francisco reaping all the benefits? we have an opportunity that comes along every couple of centuries to redo the socioeconomic contract. how we include everybody and make them a winner and how we don't destroy ourselves in the process. emily: you shared controversial talk about universal basic income. how is the work with ai related to social inequality?

sam: it is nothing compared to what we could have if we don't address it because ai will be a powerful lever. we have an opportunity as we write the social contract to think about how we can get towards a more equal world. we will never get all the way there. human flaws run deep, but we will have an opportunity to push the reset that and think about button and think about the world we want. universal basic income is one part of that. i don't know what to call it, universal basic meaning, we will have plenty of resources for everyone, but how do we make everyone happy and help them find their purpose? emily: you are still spending

half your time at y combinator. what trends are you seeing when it comes to the value of startups being created, the valuation being created, and if it is working? sam: i made this public bet three or four years ago when everyone was saying there was a bubble. it is looking pretty good. everyone was like, it is ridiculous or you will lose the bet. everyone was saying there was a bubble. now most people are not saying there is a bubble, so i am nervous. everyone is now operating, back to operating mode where everything is great and it will keep going up. i am more nervous than when i made that post three and a half years ago. i try not to get too focused on bubbles because i keep [indiscernible] i want to invest in shares that will work through multiple busts and bubbles over the decades that it takes to create a company. when you look at the moment, sure, plenty of stuff seems out of whack, but on the timeframe i think about, i don't care about

that much. in terms of trends, one trend we are seeing that is affecting all startups now at least in the bay area is the competition for talent with the tech hyper caps is very difficult. when you have google or facebook finding the best engineers and putting these incredibly large compensation packages in front of them, how assertive can concentrate and attract talent, it is a hard question. it is one of the first questions i ask startups. what is your approach? would you give them a huge amount of equity? is the mission so important? it is astonishing how many people don't have an answer. emily: how do they compete? sam: any of those things are one approach, but many have not thought of it at all. emily: you try not to think

about whether or not we are in a bubble, but you think we are in one right now. sam: i think we are, i think some valuations are too high. some are too low. if interest rates go up a lot, that will have a ripple effect. i think it is like not that binary question. it is more likely to be true than it was in 2015. there is still a lot of startups i put a lot of money into current valuation, so i am not trying to figure that out. emily: you suspended your role on the part of the saudi future city. why did you decide to do that? sam: i feel out of my area of expertise. i have a lot of questions and i would like to wait for those to be answered. in general i believe you should wait to make any sort of

-- wait for the data to make any sort of decision, but this case is exceptional. emily: sam altman of y combinator and openai. saudi arabia has pulled out of a planned deal with virgin hyperloop one in retaliation for the founder billionaire richard branson freezing ties with the kingdom until more details are known about the alleged murder of the journalist. officials in riyadh have denied the journalist, a prominent critic, was murdered, entering its consulate in insmed bull. istanbul on october 2. four runner ventures has invested in some of the biggest companies in a generation like warby parker. the partners join us to talk about the hottest trends they see coming next. this is bloomberg. ♪

emily: retail e-commerce sales have gone up up almost 25% year on year. a growing number of startups are taking business online and using consumer data to their advantage. a san francisco-based forerunner ventures has already got several companies, and they raised another $60 million to back the next generation of e-commerce startups. here to tell us more, the general partner's brian o'malley and yuri kim. $360 million is a lot. where do you plan to deploy it? yuri: we have been looking to the best companies in commerce and that fund is continuing to do that with the same basis. thinking about commerce end-to-end, not only where people are buying them but how. also the tools and technologies that power all of those business models on the back and. emily: how did the fundraising differ?

brian: we had a long history with some of our lp's, and fundraising was about going to the well and continuing relationships. forerunner, we are doubling the font size and want to bring new folks to the table. we can handpick who we want to work with and who would be strategic to the firm. emily: there is a lot of money out there. multibillion-dollar funds have already been raised this year. is there too much money? are you still seeing opportunities in e-commerce that you saw when you and kristin or their earlier? eurie: commerce is a broader set. what kind of transactions don't have a digital component today? looking at the landscape, we are excited about the innovation, how much the existing landscape is transforming itself end to

end. expectations are growing. there are new needs that need to be met. emily: amazon is threatening all e-commerce companies, so where do you see opportunities to invest in companies that will not be eaten by amazon? brian: amazon gets one out of every two dollars online which is a crazy high amount. they play to certain strengths here they are about convenience, timeliness, but they haven't been a strong around branded products. they haven't been a strong around services. the companies we are touching, several of them play in different markets like pharma or ppg, financial services. we think about amazon, but we also think about empowering companies competing with amazon and others in different markets.

emily: southbank is deploying a lot of money into the tech ecosystem. it is coming from saudi arabia and a lot of money in the tech ecosystem from saudi arabia. is that a problem? brian: this is something we are all digesting in real-time. saudi arabia has been putting money in the tech ecosystem for several years and has been a strong supporter of the ecosystem. historically founders have not asked to question where the money is coming from. the consumers of our companies haven't asked that question, so this is something we are digesting as an industry and we will have to think about harder going forward. we take a lot of pride in our lp's and where money comes from. we will see if this experience changes that. emily: you do have money from the saudi government. some of your portfolio companies as well? brian: we do not.

the question with softbank, is a fund like softbank the right fit? hundreds of millions of dollars for tort we have been asking those questions for the last year because softbank has shown up with a different value proposition. maybe it is not right for some. it adds another layer to the conversation. emily: you joined kiersten back in the day. for a long time it was all women, then you decided to hire brian. only about that. was that a conscious decision? eurie: we never started the firm with having it being all-female. kiersten and i met, we had a shared passion. i was enthusiastic about what she was building. it was three women, four, then we thought, we are looking at

the consumer, the consumer is diverse. we were not necessarily feeling like we had all the voices represented, so we thoughtfully decided we didn't want to hire a male participant to our team. we had kj, and the last month obviously brian joined our team. we have jason as well. when you start your team with diversity in mind, it will evolve to that point naturally. we didn't hire anybody thinking about being a man or woman but whether they would agree, fit the job. emily: what do you bring to the table? brian: besides being a white -- i have been in this industry a long time, got several perspectives, but i bring a special relationship with the forerunner team. we see the world in similar ways, and we are excited what we can build with this new fund. emily: brian o'malley, eurie kim, thank you for stopping by.

that does it for this edition of "bloomberg technology." we continue to follow netflix results. netflix added far more subscribers in the third quarter and issued an upbeat outlook for the next is coming months. 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. >> the following is a paid

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