♪ emily: i'm emily chang in san francisco. this is the "best of bloomberg technology." we bring you the top interviews from the week in tech. coming up, what a week it was for big tech earnings. we break down the highlights and low lights. plus, truly historic is how elon musk is describing tesla's third quarter. the company reports their first profit in five years. can they do it again and again? and why the head of softbank was a no-show in the desert, and what this means for the future of the vision fund ties to saudi

arabia. but first to our lead. it was a huge week in tech. it started with a surprise third-quarter report from tesla. along with microsoft, alphabet, twitter, and snap. but we have to kick things off with amazon after the bell. >> if you look at the revenue miss, especially on the guidance side of things, a big number. the spending part we are not worried about much. we expected spending pressure across the board. the wage hike issue was one of the uncertainties. from the business perspective there two areas for weakness. one is whole foods, the physical stores. they were lacking a full quarter . that is one area where maybe the physical push is not growing as fast as we expected. and the second area is international growth. in general, that slow down materially.

not to mention a change in the holiday season for india that pushed out sales, but that becomes a worry as well. so if you take those two things out of the equation and a look at the advertising division, they did fine. there was slight growth rate decline in terms of the last couple of quarters, but in what we are seeing so far, these are the two areas where we are worried. emily: and you know that fine is not acceptable for jeff bezos. what do you make of this? >> we are seeing strong growth. i don't think jeff bezos has anything to worry about in areas like private label products, where amazon is placing a lot of focus on. we saw back wrote 22% year-over-year. and especially on commodity products. amazon basics is their behemoth. 60% year-over-year growth in non-commodity amazon private label products and huge growth in advertising revenue. i mean, up to 10% of all product

searches on amazon come from a sponsored search. and that is up from 3% in january 2017. there is huge room for growth. emily: let's talk about that. alphabet and facebook have dominated the digital ad market. amazon is a distant third, but could catch up. you will hear what was said about this in the next segment, but can amazon really get there? >> retail is a big segment for google. it is the biggest vertical for them. and now we are seeing larger brands warming up to amazon a lot more. 100 plus million prime members is too big to ignore. so now what happens, as sales -- ad so do at dollars dollars with it. amazon is targeting 2 buckets, the search bucket and the trade promotions bucket. so they do get to benefit from that shift that is happening from bigger brands. and they can deliver. you are advertising the product and you know how much the sales

were and all that, so the targeting becomes better. google needs to go the opposite direction. partnerships with commerce. and we think google should be more aggressive in e-commerce , and of course take the cloud stance more aggressively when amazon is encroaching on them from an advertising standpoint. emily: in the meantime, costs are going to go up. amazon is increasing wages and opening hq 2. they will be creating 50,000 new jobs. how will that cost impact coming quarters? >> i think they have a ton of room to grow and offset those costs. again, to piggyback off of what you were saying, 50% of product searches online occur on amazon, not google. like the actual e-commerce product searches, stuff people want to pay for. as they invest in those tools and costs go up, they will see a much higher spike in the return.

emily: talk to us about what is happening globally. there is a turf war in india in particular, but also in other parts of the world. >> that is one uncertainty we have yet to figure out. hopefully we get some guidance on that on the call. is tariff uncertainty causing guidance to go down? there is an indirect impact from third-party sellers and what it means for third-party sales growth. so hopefully we will get more details on that, but that is definitely a concern. emily: the amazon earnings call is scheduled 25 minutes from now. what do you want to hear? >> how the investments they are making in their advertising platform are paying off. international growth. i agree there is a lot of room for opportunity and a lot of risk if they don't execute properly. and i would love to hear more about how they are interacting with the rest of the ecosystem. i think that both retailers and

brands are probably very reticent about what is happening right now and very nervous. they need to create more of an equilibrium like google has done in that market. emily: we have a holiday season coming up, increased postal rates, sparring with the president, how are the next few weeks -- the next few weeks are critical for amazon every year, but maybe this year in particular. >> especially given the guidance. wall street will expect more than what they are guiding, given the holiday season demand, especially with so many more prime members versus what they had last year. what it boils down to is are they able to manage the cost in terms of capacity to deliver these products and meet those numbers? because we did see that created an issue in 2014. and remember, amazon used to talk about profits will ebb and flow. they were flowing. now guidance is suggesting there

might be some ebb because of rate hikes, postal rate hikes. the things you have talked about. emily: apple ceo tim cook touting the importance of privacy and legislation to protect it. speaking in brussels, cook slammed tech companies that monetize their business by collecting user data, meaning facebook and google. in the meantime, the facebook ceo mark zuckerberg defending his ad-based business model and said he is aware facebook needs to do more to protect user privacy. coming up, tesla investors cheer the company's best ever quarter. but wall street is not ready to drop its caution stance just yet. can elon musk keep delivering? that is next. and if you like bloomberg news, check us out on the radio, listen to us on the bloomberg app, bloomberg.com, and sirius xm. this is bloomberg. ♪

♪ emily: tesla shares soared.

this after reporting third-quarter results on wednesday. tesla usually gives two weeks notice when earnings will drop, but this time the company gave barely two days. as elon musk hinted, tesla has made money. the company's net income was $312 million. analysts expected a lot. and get this, positive cash flow of $881 million. tesla made an average of 4300 model 3's a week, with 455,000 people expressing interest. if elon musk can keep selling that production, big revenue and real profits. we break it all down. >> the big thing is obviously they are profitable. huge, the first time they have been profitable since the third quarter of 2016. so it is their third profitable quarter ever in their history, but demand is still really strong. that is the surprise. the bear thesis is they pulled

2003,l of the stops in and they would be no more demand , but the deposit number is still 900 million in deposits. even though they have worked through some reservations, but as more cars get on the road more people are ordering them. emily: the question is, can they do this again and again? will it become routine? >> this is what we are watching for. there is a lot of speculation these numbers might be frontloaded, but this was a huge beat, as we all saw. elon said, we expect to be profitable going forward from q3 onwards. if they can repeat this going forward, it is a huge win for tesla and shows the power of the brand more than anything. emily: normally tesla gives a significant amount of notice for earnings. this happened in less than two days. on monday nine, -- on monday night, we found out tesla would be reporting today. they prefer to have more notice, so is there anything unusual about that?

[laughter] >> to be fair, tesla always reports earnings on a wednesday. next wednesday is halloween. some analysts were asking, could you please not do it on halloween, some of us have kids. so we were actually expecting the earnings to come next tuesday or possibly pushed to november, but clearly they had a good story to tell so they pushed forward. everyone was expecting this as good news. emily: let's take a deeper dive into the numbers. the company said still on target to deliver 100,000 model x cars this year, and of course we are always looking at the model 3. when you look at the actual delivery numbers, are you liking what you see? >> yeah. i mean, one of the big things about the delivery numbers is all of the models were strong. model 3, model s, and model x. we haven't even seen the base model 3. that is the key part of looking forward. when the base model 3 comes out, a lot of consumers will want this car at $35,000 or at the

lowest price. there's plenty of demand for tesla. it is a brand that has so much power. it is almost like a lifestyle thing like google or apple. as long as consumers are still interested, they will do well. traded at new session highs, after hours trading up 14%. this is after a very tumultuous quarter. elon musk's run-in with the sec after he claimed he was planning to take tesla private and have the funding secured for it. tesla and elon musk have been fined $40 million and he is stepping down as chairman. so what are the outstanding issues with the settlement? a judge approved it, but we are waiting to see who will become tesla chair. >> we should know who the new ,hair will be by mid-november and the board has to appoint to new independent directors. we do not know who those folks

will be either. the board has been mum about the search process. it is unclear if they're leaving it internally or contacted a search firm, but that will change the dynamics of the board. emily: in the meantime, they're supposed to be monitoring his tweets and communication, correct? >> that obviously has not kicked in yet. emily: the tweets continued. i'm curious if you remain concerned about elon musk's other behavior and is that is something you are watching. >> it is something we are watching, but i think the reality is tesla has a lot of leeway as a brand when it comes to consumer perception. it is always under scrutiny, that i think a lot of consumers do see this as elon is different. as long as he doesn't do anything egregious, we can take some of that, as long as he is building these beautiful cars. and hopefully the quality comes along with it. so i think the brand does have some leeway with consumers. emily: well, tesla also got a boost this week from citroen research, one of the most outspoken short-sellers. on tuesday, ahead of the

earnings, he announced he is now long on the company this quarter , writing, "like a magic trick when everyone is focused on elon smoking weed, he is quietly smoking the whole auto industry." earlier this year, they sued tesla and musk for stock manipulation. caroline hyde and scarlet fu caught up with left and asked what changed. >> elon musk has made such a sideshow of himself that people started to forget about, including myself, the underlying business. all the headlines are about how elon musk said this and that, then you read about the car. as a short seller, i am always rechecking my thesis. a few weeks ago i was short. and this car is dominating. the model s is dominating. they are completely smoking the competition. can they make money?

i started to read more and go deeper. and i realized that for all these years, i didn't really understand the tesla story. musk is uber tesla bull, but i think being short going into this quarter, knowing that he made earnings a week earlier right on top of ford's earnings, and knowing the company is finally hitting stride with production of the model three. i see the short interest and i am like, oh no, that is wrong. the october 24 the new date for earnings is a positive sign. where are they going for capital needs for tesla? there is always a worry that they may have to raise more money. are you not worried about that anymore? >> we will know in about 26-27 hours? see if they generate free cash flow. for years, i have doubted musk.

when i heard the word giga factory, i laughed. there are so many things that tesla said they were going to do and i laughed. so sure enough, i think the guy has the quickest settlement ever with the sec. he got them to work on a saturday. when he said they would be cash flow positive this quarter, i am not going to doubt it. i will wait and see. >> we need to put tesla in the context of the bigger automotive picture and demand as well. auto sales have plateaued. they peaked in september of 2017 of 18.4 7alized rate million. would tesla be subject to the same industry headwinds, cyclical headwinds? >> no. that is the amazing part about it. that is what surprised me. not only is tesla eating from bmw, mercedes and audi, but also from toyota and honda. people pay more money to drive a tesla. it is a revolution i underestimated, the way people are buying these cars. so the numbers you are talking about are 100% true for other

automakers, not for tesla. it is what it is. >> where does the price target go for you in terms of -- >> this is where it gets tricky. the real question, as a short seller, i say at the end of the day, it is a car company. but we are facing estimates on old-school manufacturing. the more that you read, you see by not sourcing as many parts, by not having as many parts with dealer networks and unions, where does this model take you? you don't know. munro and associates out of detroit, one of the leading auto industry experts, say they can do over 30% gross margins on the model 3. i am sure they will do more on a crossover. so we do not know. that is where it has become a black box. emily: that was andrew left of citron research. still ahead, we stay on earnings and break down the main takeaways from alphabet out thursday.

and later, twitter surged the most in eight months as they blew past their forecast. why advertisers are spending more. this is bloomberg. ♪

emily: let's get back to this week's main headline in tech, earnings. we parsed through alphabet results after the bell and i spoke to a alphabet ceo. take a listen. >> i guess what i would start with is, i don't think it is a coincidence that you see a lot of big cap technology and communication services companies missing on the revenue line. i think a lot is due to currency with the dollar strengthening significantly over the course of a quarter. i think that when you look at s, it was bythe mis a hair. it was a miss, but a very small miss. if you round, it was not really

a miss. it was a good quarter. it is amazing to me how very few people seem to also be focusing on the earnings beat, which was substantial, aided by a lower tax rate, for example. but overall, i think this was a solid quarter, above 20% growth again. and it seems the trends are intact for the company to be successful for a number of quarters to come. emily: there is concern about , on google and facebook's tail when it comes to digital advertising. i asked someone if she thought about amazon as a threat. she said whenever new inventory is created that creates interest we would see digital advertising, so this has expanded the opportunity to tap into digital ad budgets. bob, do you buy that? >> that makes a lot of sense on where they are trying to go, especially with all of the

things around youtube and other content available. the other thing, she mentioned briefly some of the r&d costs were higher. they have a lot of investments in hardware and youtube services, youtube tv for example. and i think that those are interesting opportunities moving forward. at the end of the day, it is getting expensive to get to the right people and get the services out, hence the acquisition costs are going up. that is an issue. but like the gentleman said, it hit it, but barely missed. and the opportunities moving forward for them are still very strong. the concern is the regulatory environment. what will happen? there are a lot of clouds over google/alphabet and those are the concerns that people are thinking about and that we have to think about long-term. emily: let's talk about some of those clouds. privacy, fake news, being called to testify before congress and not showing up, all of these are concerning. and i asked her if privacy concerns are having an impact on users and advertising, and she

did not really answer that question. i also asked about china and google's plans to reignite its search engine in china. she told me, at this point we continue to help and support chinese users from google apps and google translate. we are not close to launching a search product in china. and given the share scale of the market, we are focused on making sure we are doing the right things for the long-term. scott, what do you make of that? >> the way that we thought about this is that while that would be great from a financial and operational perspective, for google to reenter china, the reality is, especially given the growing tensions between the two countries and their governments, we see that as a long shot , particularly over the near to intermediate term. it is one of the reasons why we upgraded shares of buying baidu.

we think that has been an overhang for that company and its stock. we don't think that is viable at this point for google to reenter china. i think they have far more priorities elsewhere. i think just the political pressure and complexity, cost, and risk of failure are so substantial, i think continuing to invest in things that are working, things like waymo, those are the things that google and alphabet should be investing in right now. emily: do you think that google should have not dropped project maven and continued to work with the dod? she talked about how they believe it is important to work with the military and laid out the ways they are doing so. but when you talk to amazon, jeff bezos and microsoft, they are saying our country needs to be defended, so we are going to work with the department of defense.

>> my opinion on that is i think that they should have continued to talk with the government about the contract. you are talking about a $10 billion opportunity, which would have been tremendous for google and its cloud business, which they have been investing in, but that could have been a game changer. and i am not clear on what the opposition was in terms of moving forward with that contract. you pointed out good rationales that other companies have articulated. no, i think it was a mistake to walk away from that contract, particularly at this stage. emily: bob, google also has some business being done in europe and facing the $5 billion record fine for antitrust issues and she -- for the android issues i should say, and she talked about how it remains to be seen how that will play out. how much do you think that will hurt them? >> i do not think it will hurt

them very much financially, because there are few alternatives. ironically, in some ways google can make more money because the phone makers will have to pay google for services they gave away because they have to be offered as an alternative. in a weird way i think it actually helped them. in the long-term, the financial impact i think is small. most of these controversies in the near term will not have a big influence on them. the bigger question is as gdpr gets enforced, as the u.s. develops whatever equivalent it will create, as other countries do this, how does that fundamentally impact the business model of what google does around customized advertising and data tracking? again, none of these things will impact right away but longer-term they are issues that have to be addressed. emily: coming up, the softbank ceo dropped out of the saudi conference of this week and what it means for the future of their vision fund.

that is next. and we are live streaming on twitter, you can check us out at technology and follow our breaking network tictoc on twitter. this is bloomberg. ♪

emily: welcome back to the best of "bloomberg technology." i'm emily chang. the killing of journalist jamal khasoggi caused plenty of big names to pull out of the saudi arabian investment conference this week, and that includes softbank's masayoshi son. the move came after saudi officials admitted to killing the 30 -- the journalist consulate. -- inside their istanbul consulate. son met privately with crown prince mohammed bin salman on monday, his withdrawal from the conference added to the list of high-profile exits that included the softbank coo. remember that saudi arabia remains one of the softbank vision's biggest backers. they have committed $45 billion the first fund and promised

another $45 billion to future funds. we talked about this with the founder and analyst of constellation research. also sarah who covers all things venture capital. >> they dropped out in a much much more gentle way compared to some of the other business leaders who left. it was a compromise. he went to riyadh, met with the other saudi officials on both sidelines of the conference, but did not go to the conference itself. however a lot of softbank executives remained at the conference. scarlet: -- emily: we've seen many stay away from the conference. they have continued business relationships with saudi arabia. do you think that the turn of events could change the relationship between foreign businesses and saudi arabia? or do you think it will eventually be business as usual? >> you know, i think the money is too hard for people to turn away. i think people were hoping this would blow over, and when it didn't blow over and it got worse, people got scared.

a lot of startups have a progressive viewpoint. to have this type of money taint or impact their perspective of what is going on is a challenge. the double-edged sword is for saudi arabia to move out and progress, they have to make these investments. there are going to be a lot of difficult decisions for startup entrepreneurs and a lot of the investors. emily: sarah given the scrutiny, , what are the chances softbank will actually go elsewhere hunting for the next $45 billion for the next fund? sarah: it will be hard to say at this point. it will be interesting to see if an argument gets made. much has happened with china that softbank can influence saudi arabia from within and help it become more progressive in certain ways. i think a lot of people will be starting to try to tell a different story about saudi arabia. emily: it is worth mentioning that saudi arabia has a long

track record of investing in technology and it has a long record of human rights violations. so is the result of this going to cause entrepreneurs and startups to look more critically and at where their money is coming from, especially if it is saudi arabia? ray: i think we are going to see a transformation long-term in saudi arabia. this is a lesson learned for startups as well as saudi arabia to recognize their actions have a huge impact around the world. investors will take note to see see what type of ethical reforms take place in terms of how their actions affect their investment pieces, but how those actions affect investors' perceptions of doing business in saudi arabia. emily: sarah, you have been speaking with venture capitalists and startups. what is the sense you are getting? is there any instance of a start up turning away money? sarah: i have heard there is a startup currently weighing a term sheet from softbank because

of these allegations a term , sheet they probably would have accepted without much thought, they are really wondering whether to take the money or not. i think more broadly startups are going to start asking more questions about the investors, that their own venture capital investors have. that had not been the case previously. emily: and we are seeing tech employees have a lot more influence over their employers. one example is the google protest that caused google to not renew a defense contract. do you think we might see some sort of revolt within companies that used to take money from certain sources that are deemed unethical? ray: we definitely see that. here at half moon bay, the top conversation was do we accept money from countries that might not have the same values or views on human rights or ethics, and held a big discussion today really about what happened. i think you will see that. there are a couple of companies, softbank as well as sarah was

saying, they are seriously evaluating the term sheet. they are wondering if they can take that money, if they can put some conditions on behavior as to what to do with the money. i think we are going to see that. the other piece we may see with softbank, if they use that last piece of the vision fund. there is about $15 billion. they might say that's just excess expense and not recognize that revenue for that fund. so we may see some actions like that to soften the blow. emily: that was ray went of constellation research and bloomberg's sarah mcbride. coming up, twitter surges. the social media platform brings in a strong third quarter. how it is doing that while fewer people are using the platform? that's next. this is bloomberg. ♪

emily: twitter surged the most

in eight months following third quarter forecasts that blew past forecasts. despite the numbers, monthly average users decreased by 9 million from the second quarter. that means the social network now averages 326 million mau's. this comes as twitter continues to purge fake accounts. we sat down to talk about the third quarter results. >> we are challenging a ton more than we used to so that 9 million number is something jack talked about in front of congress in we've become more september. sophisticated in our understanding of how people create spamming suspicious account so we can detect and prevent their creation or stop them after they've been created. how many get through really depends on how many of them should get through. we test far more accounts that -- accounts than are suspicious and that helps us understand the behavior. just because an account is created on a web browser in a certain country with a certain ip address doesn't necessarily

mean it shouldn't be on the platform another one might be. there's a lot that goes into it. emily: as a result of this, you have said monthly active users will continue to decline. how much? ned: we said that mau would continue in the fourth quarter because of decisions we might make around sms contracts we have with carriers. we don't forecast mau when we go out further than a quarter. we have done that the last few quarters because we could see a decline coming. we wanted to step back and share that with people. when we talked about it more broadly, we will don't want to be constrained by the metrics. we want to prioritize health because it's a critical growth factor to make sure the company is a safe place for the people that should be on the platform. we are removing suspicious behavior whenever we can. sometimes it affects the disclosed metrics. sometimes in like the second

quarter when we removed dozens of accounts and they were largely inactive it doesn't , affect the matrix is as much. emily: tell us about the health. yesterday, we saw tweets promoting fake bomb scares, fake hashtags filled with conspiracy theories. how is this still happening? ned: we still have work to do. there is so many ways for us to address these challenges and how the bad behavior on twitter. we one of the great things about , twitter we are able to benefit from is because it's public and open in real-time. we find things that are corrected by the platform itself, by other people on twitter who say that's not true. or you may believe that, but i , believe something different and i want to tell you what i believe. the fact that the platform is open really makes it different and allows us to take a different approach around policy and enforcement than others

emily: we are in a time of may. extremely divisive politics. just this morning the president we did a very big part of the anger we see is caused by the purposely false reporting of the mainstream media i refer to as fake news. it has gotten so bad and hateful that it is beyond description. mainstream media must clean up its act fast. i know in the past, you've said he is an influential person, is an influential person, and i wonder is the president getting a pass from twitter when it comes to what is true and false, what is hateful and not, what insights violence and what does not because he is the president? ned: i will just go back to what i mentioned about twitter being public and open and real-time. those are things that allow people to see what a public figure is going to say regardless of their party affiliation, regardless of where they are in the world. they can learn from it. they can respond to it, they can observe how others might respond to it. we believe that allows for a

healthy public conversation, that allows for people to have more information than they otherwise might, whether it's in the united states or brazilian and mexican elections which were just completed. it's an important part of our purpose, to serve the public conversation so people see what others are saying. emily: twitter has been clear about the need to do more. jack dorsey has been clear. how many more people are you hiring? how many more people are you dedicating to this problem? ned: health is our number one priority. we think about health, growing audience, improving revenue products and sales as our biggest priorities. i don't expect those to change much as we move into next year. i think because twitter is public, open and real-time in nature, we can leverage those characteristics and still accomplish a lot through our twitter services team and machine learning that we use to amplify our policies and the twitter services team. emily: are you actually going to add more people? ned: we have been adding more people. we are growing 15% as we invest. i would expect this to continue.

it's not against anyone priority, it is against all of those priorities to really grow the business and execute the opportunities we see. net siegel.er cfo -- ned segal. joining us now to discuss this is selina wang. deborah. what do you make of these numbers? advertisers are coming back and spending more. but monthly active user keep going down. in some ways it can be difficult to see the progress even though twitter says we are challenging every week. >> yeah, absolutely. talked a lott about health. if you're going to get healthy, you need to lose some weight. in the case of twitter, losing the weight is losing a few million users. overall i think that is a positive step. i think twitter's focus on the

daily active user number is important and needs to be done. i think that the steps twitter has taken to make its ad products better, to reprove itself to advertisers are starting to pay off. so once this weight loss is gotten done, hopefully we will see users rejuvenate again. and then we will see advertisers come right along. emily: selena twitter does not , report daily active users. and you know, you do wonder why. >> absolutely. the fact that they don't report it means there is something they are not comfortable with. port that the dau is below half of what the mau is. there is a lot of room for growth. something that was concerning, dau went single digits for the first time in several consecutive quarters of double-digit growth, so that means there healthy clean up efforts is hitting their daily active users. that is the number that really

matters. that is what really matters to advertisers showing true engagement. they need to show that these cleanup efforts are not going to let them monetize better and are actually going to draw more users to the platform. emily: that is the question whether they will. certainly the cleanup efforts are incredibly important. what is happening on twitter is driving the national and international conversation. but you know, once twitter gets its act together, are they going to add a significant number of new users? or is this the size of twitter? some 300 million users. is this it? >> you know, it is hard to say if this is it or not. i think what we are seeing now is twitter finally coming to terms with what it really is. it's not a social network that is going to be the size of instagram or facebook. it's a platform for real-time news and engagement. and to the extent that it can promote that uniqueness from the social platforms, i think

that will draw users back. i think this constant back-and-forth of how many people does twitter have, they just need to embrace what they are. and if it is 300 million, if it is 400 million, advertisers are going to embrace that as well. emily: i want to talk about snap. snap reported numbers and all eyes were on user growth. the social media company reporting the number of daily users fell for a second to 186tive quarter million, almost exactly in line with analyst estimates. forecasting trend continuing and gave a weaker revenue of $355 million estimate. this coming as snap struggles to fend off facebook's instagram, whose story feature has become the preferred for millennials. deborah, can snap reverse the trend? >> that's a big question. honestly, the -- both snapchat

and twitter are in a similar position in many ways. they both saw the same user decline this quarter, but better than expected revenue, so that's a positive thing. similar to twitter, we've got a situation with snapchat where its daily active users -- twitter is mostly active users, but in the case of snapchat daily active users have declined yet again for another quarter. this is definitely concerning to advertisers. and the fact that snapchat has been able to monetize those users to better expected extent is good. but that is probably not going to continue forever. i think we are going to have to see snapchat do more to restart that user growth. emily: how, how will snap do that? >> they could figure out android. the android app has been a thorn in snapchat's side for a long time now. i think once snapchat figures that out and relaunches a solid well performing android app,

they are going to get naturally more users who use android phones, especially markets outside of the united states where android is really popular. hopefully they will figure that out. remains to be seen how quickly. but hopefully they will figure that out. emily: that was deborah williamson and selina wang. still ahead, women in the workplace. a new report shows women continue to be underrepresented at every level. why the movement seems to be stagnating. i had. this is bloomberg. ♪

emily: spacex is looking to goldman sachs for some help. elon musk's space travel company is seeking a half billion dollar leveraged loan. goldman is leading talks with potential investors this week according to bloomberg sources. spacex's evaluation has climbed to $28 billion as it has

routinely launched and landed rockets for reuse, reducing the cost of space travel. this means it is the third most viable venture backed startup in the u.s. after uber and airbnb. well, year after year, companies continue to declare they are committed to gender diversity. but according to a new study, progress is not just slow, it has stalled. compiling data from over 400 companies with some 20 million employees, the 2018 report shows that women continue to be underrepresented at every level. while more and more women are doing their part, earning bachelor degrees, in asking for promotions, and staying longer in the workforce, only one in five senior leaders is a woman and only one in 25 is a woman of color. we discussed this with the president and the chief inclusion officer. women are leaning in and companies need to lean in now. women getting college degrees,

at higher rates than men for years. women are asking for more, they are asking for promotions and raises as often as men. and they are not leaving the workplace. companies need to do more, and the biggest thing is they need to treat diversity as a business priority that it is. what do you do when you want to hit a goal? you have a compelling case, you set goals, you track progress. you report progress. you hold leaders accountable, and too few companies are doing all of those things. emily: you've been working on this report since 2012. what is different this year? is the difference that there is no difference? >> we see that companies are stalled. what we find is we are getting closer to understanding some of the root causes. companies say we understand we have a mega problem. help us start to break down problems we can solve in units of one or two years. this will take 10 years to shift five, a whole generation. an example of that is tell us about the only, tell us about micro-aggression. tell us if targets work.

and how other companies do it. just a couple of examples. emily: you are singling out the idea of only this year. the only woman in the room and the experiences that woman has as a result of being the only woman in the room. why is it so important to understand that experience. >> women who are only's are having a markedly different experience than women who work with other women. they are more likely to face those everyday slights we have all experienced. -- you are mistaken for a junior you are spoken over in a , meeting, you have to prove your capabilities over and over again. only'sars women who are down. they feel under pressure, isolated, on guard. it's hard to imagine women can be their best selves and do their best work if they feel that way. emily: square when it comes to , hiring, one of the things they do is put women on a team with other women. a lot of teams are only men because men still dominate the workforce.

but the idea is that by being on a team with other women, they will have that sort of camaraderie and networking and the experience will be better. but it comes at a cost. is that something you would recommend? >> i think it's a good strategy. in a world where you don't have enough women, how do you retain an advance what you have? putting them together creates a different culture. it starts to tip it. they have role models, they have their own peer network, and they start to advance. if you are the only one over a long amount of time, you start to feel less motivated to stay at that company, less satisfied. more interested in leaving. if you leave, that's not helpful. emily: but there is a compromise. i mean you have teams of all men making decisions about other things without women on those teams. >> let's be clear. i don't think it's a simple choice. this one and done approach, a single woman on a team or now two women on a team, i have

diversity, has to change. until we get to women at every level, so we are not picking and choosing where to put our underrepresented women across the team. a good strategy is to group women together and accept or accept or realize that that leads to better diversity of ideas on that team and hopefully better performance of that team. so then you can point out they look at our blended teams and look at the performance they are getting. >> it's not a one-shot deal. you can fix only's, but if that is the only thing you do you , probably won't have a lot of success. the hard thing for management teams, you have to do things in concert, and you need to stick with it. if this is a seasonal initiative you won't be any better than you , were last year. emily: what's the experience for women of color? >> the experience for women of color, we saw this last year as well it's worse. ,they face more barriers to advancement. they get less support from managers, less access to leaders

and senior leaders are the ones who open doors and get you noticed and they are promoted more slowly. emily: how do we know this isn't just solving a white woman's problem? all the talk is about gender, not as much about race. >> our report focuses>> heavily on women of color and this year we are looking at lesbian women as well. they are having a worse experience in the workplace. we cannot agree with you more. elevating women and advancing women means all women. the women who need the most support in the workplace based on all the research we have done is black women and making sure their voices are heard. emily: you are not only the chief inclusion officer at mckinsey, you are the leader of services. this is a notoriously male-dominated industry. we cover it every day. that must be interesting juxtaposition for you. >> it's a couple of different hits. one, for anyone in technical fields, women like engineering is harder. being a person of color is harder. it is worth noting for men of color, it's not an easy road as well, or for anyone who is gay.

but one of the things that is interesting is, in the tech field, if i were to put a slight silver lining on it, there is radical transparency. you also have people who grew up in an environment where they understand data. so i do think on the level of hope, one of the things the report does, we put it out there. as an example, there is one company where men felt that gender policies were going to hurt them. and they were like 30% off the benchmark of how everyone else felt. the ceo said let's have a town hall meeting and put it all out here. here is what you guys said. let's explore that. that will not fix the tech culture in one go, but i think the emphasis on data and transparency is something we can benefit from. emily: that was the lead and president rachel thomas and lorraine a key. that does it for this edition of the best of "bloomberg technology." we will bring you all the latest in tech throughout the week. tune in every day. 5:00 p.m. in new york, 2:00 in

san francisco. we are livestreaming on twitter. check us out and follow our breaking news network tictoc on twitter. this is bloomberg. ♪

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haidi: welcome to daybreak australia. shery: i am shery ahn. sophie: i am sophie kamaruddin in hong kong. we are counting down to asia's major market open. ♪ haidi: these are the top stories we are covering in the next hour. more signs of a slowdown in china. industrial profits declining for this consecutive month. october cannot and soon enough for some. -- end soon enough for some.