emily: i'm in lee chang in san francisco and this is bloomberg technology. coming up in the next sec and hour, doj subpoenaed snap. did they mislead investors ahead of their ipo? uber and lyft launches reward programs for riders. will it be enough to keep customers coming back? facebook and freedom of expression. what is stopping the network from getting back into china as

google continues to quietly explore reentry? fi of snap plunged after the wednesday company said the u.s. justice department and securities and exchange commission are looking into allegations that it misled investors ahead of their idea last year. -- ahead of the ipo last year. snap said it is operating with both during the investigation. investors have claimed that the company did not disclose how competition from instagram hurt its growth in 2016. snap was once a popular apple teenagers and has reported a drop in users for two consecutive quarters and projecting more losses in the third-quarter. we have sarah frier who is covering snap and our ideal reporter, alex barinka oh. what are they looking at here? sarah: we don't know. we'll we know what snap has told us which probably has to do something with the competition from instagram which although the company did talk about it during the ipo process,

definitely downplayed it. alex and i were working on stories about this at the time. they were saying their android products were the main problem with a slowdown in user growth and the instagram stories that they copied from snap has been a huge factor in snap's inability to retain growth further. emily: the sec said they cannot comment on an open investigation. there is also this whistleblower lawsuit where the former head of growth also claimed he was misled about how quickly the company was growing. snap has said the claims are meritless and the ipo discloses were accurate and complete, but talk to us about how this ties into previous allegations. sarah: there were allegations snap was not fully giving people accurate information about the rate of growth. the company -- from what i know on reporting on this, the road to the ipo was fast. they had to go in and figure out

how to get all of their accounting set to go public. they did it in a much faster timeframe than most companies would. i think that lawsuit, we have not come to a conclusion on whether that whistleblower is correct. it raises questions about the company and how prepare they were to go public and how much they knew about their own visibility to the future of the company's potential success or challenges. emily: alex, we expect lyft, uber, potentially airbnb to go public next year. is this a lesson to be abundantly clear and cautious in your disclosure? alex: it is. i think about all of these companies are creating new niches within tech. there are new types of consumer tech companies. they have to grapple with this idea of not only pitching their own company story but pitching the story of the industry and

what metrics does that mean and where the actual competition is. in the context of this, i think definitely that folks will be thinking about what numbers they are putting out there, what picture they are painting in making sure they are addressing the questions investors have. to sarah's point, i remember talking to folks at the investor meetings and everyone said the elephant in the room is instagram, but they are pointing to android. when i think of what the elephant in the room might be for uber and lyft it will be potentially the scooter business and potentially folks where they are living. all of these ideas that investors will be thinking about might not be what the company has on their mind, but they have to address these things. emily: facebook has ratcheted up the competition with snap. where do things stand in terms of growth compared to instagram? alex: instagram's story, the small part of instagram, has more than doubled the users of snap itself and instagram

overall as a product has more than one billion users. that compares to less than 200 million daily users for snap. it's not a direct comparison because instagram is talking about monthly users and snap talks about daily, but this is a problem companies will have when they go public. if investors a snap will be the next facebook, nobody is really the next facebook. they do not want to tell people they are like instagram either. maybe that is a problem when you are going public trying to create a market for your stock by telling people about what they own already, but then afterwards, you are trying to walk that back and say we are more about messaging or more about content and not. social media snap has a problem -- not social media. snap has had a problem identifying what kind of company they are. emily: it was a great nugget in

one of our bloomberg news pieces that the last time three tech companies of the size had gone public was when bill clinton was president. walk us through the timeline for the potential ipos next year, and what could set them off track? alex: that is my story in business week. right now, in terms of more than $10 funny wish in tech companies, 2000 was the last time. that's the last time when palmpilot went public. right now, it seems you have the critical momentum, especially in the consumer tech companies. you have uber, lyft, maybe airbnb. all of these companies that consumers know that have done a good job of saying private and raising money privately. if markets stay stable, that is what you're looking for. as long as volatility stays low, it seems next year could be the

biggest year for u.s. listings on record following a really big one for china tech in the u.s.. all signs seem to point toward a large listing in 2019. emily: we were speaking to an investor who said they could come out public as well but it depends on if market conditions are right. could they go all out at once? alex: it could be. we see a lot of timelines moving up for 2019. there are questions around what does the interest rate rise me for equities. will there be an and to the fiscal market? if you're ready to go, then after the full year earnings are in, you might as well get out the door. investors will have big questions on their hands for

which teams they will bet on for those ipo stocks. emily: alex barinka, sarah frier, thank you both for weighing in here. palantir and morgan stanley are at odds over the secretive data mining company's valuations. they have cut valuation of a minority stake several times in the last two years, estimating $4.4 billion. well below other appraisals. the company tried to buy back all of its stock held by morgan stanley's mutual fund while morgan stanley refused to budge. the next quarterly price update is due thursday. uber has announced a new loyalty program in nine u.s. cities. this is two days after lyft announced its own reward program. who is playing catch-up? we will discuss, next. if you like bloomberg news, check us out on the radio. listen on the bloomberg app, bloomberg.com, and, in the u.s., sirius xm. this is bloomberg. ♪

>> internally, i think we have set the norms out and i think we are starting to change is a company and become the kind of company we are proud of, but we have more work to do to make sure those behaviors define how leadership acts, and how four france,levels down in one of our operational managers acts. emily: that's the uber's ceo speaking about the company culture on the wall street journal tech v-live conference in california.

uber is offering its most loyal users cash back for rides, priority air pick up and others. this is after lyft announced a similar loyalty program. it should be rolled out by the end of the year. still to discuss is the uber head of rider experience. how will this work? >> this is the first of its kind in the ridesharing industry and we think about it as an investment in our customers. they will earn points and status toward benefits that matter to them. emily: lyft announced their rewards program on monday. the reviews are mixed. here? playing catch up >> we are focused on our customers and this has been a long process for us. we have been working on it for

the better part of a year. it started with a lot of deep customer research trying to identify what benefits matter to customers. what we're rolling out today, available in nine cities and available broadly in the next few months, is a series of benefits to customers can take advantage of. in addition to that, all customers in the u.s., all of their rides and eats they start today will count toward their loyalty status. emily: there is still a question of whether rideshare is a commodity. is an uber ride equal to a lyft ride. what will convince your users to choose uber over lyft? nundu: we have been doing a number of product improvements in order to engender trust. all of the launches we had with

safety or the super rewards program for example. we understand it is large journey and customers have a choice. if we continue to invest in our customers, we develop a relationship with them and deliver the best service we can, we are confident we can offer the best product for people that need to take a ride in the city or order some food. emily: let's talk about some of the benefits. cashback, free cancellations, price protection, upgrades, no delivery fees on uber eats. i understand the cashback is five dollars for every $250 you spend which seems tiny. nundu: i think cashback is an important component of rewards program. we found that and we found customers whether they take uber x, uber pool or others, they want rewards. the five dollar cashback is just one component of a full rewards program. as we talk to customers, there are many aspects of ridesharing

where people one quality and consistency. those other benefits you mentioned, like priority pickups at airports, are also benefits that we hope resonate with our customers. emily: how much business will this drive? if it drives a lot of business, will that put pressure on already slim margins? nundu: that's an interesting question. this is just the early days on a program, and we know this is the first step in a really long journey. we are confident the level of investment we are making into customers will pay off in the long-term, and we feel if we develop that kind of customer relationship, our customers will continue to choose uber for many years to come. emily: the logistics behind this i imagine are just immense. walk us through some of the challenges you had to get through to make this work on the backend. it sounds obvious in theory, but i imagine it took a lot of time to get to a point where you are

ready to roll this out in confident it would work. nundu: that's right. we have been working on this for the better part of the year and the reason why is two fold. we have to do a lot of deep customer service to identify benefits that matter to customers. because this is the first of its kind program, we need to understand which benefits resonate. we did focus groups across the country to understand what matters. in addition to that, there is a serious technology left to deliver some of these benefits to customers. we rallied teams to work together under the support of dara and others to see if we can deliver something with benefits that hit a whole number of areas in the rideshare and eating experience. that is where you see things like price protection. all of it needed to come together to deliver what we think is a full-featured program.

emily: nine cities right now. when you expand to more and abroad? nundu: we are excited to roll out quickly in the u.s.. in the next few months, you should expect or see the program launching in the city for you. the international expansion's top of mind. we have global customers so we will use the first few months of launching in the u.s. to understand what benefits matter, what benefits are resonating, and lunch as fast as possible to the rest of the world. emily: there's no question the last year has been transformative. how would you as an employee described the changing culture since dara took over? are things better from your perspective? nundu: 2018 has a been fantastic year for uber. i have seen the incredible transformation uber has had on the world. the mission and the people that work at uber continued to inspire the employees and myself. dara has been a big part of that and projected of vision of uber as a complete transportation

service. things like this program tied together over eats, ridesharing, and assumed e-mobility. just being part of that and looking back at all the amazing roads and inspiring people we work with this continues to make , me excited about uber's future. emily: that's the uber head of rider experience, thank you so much for joining us. as we mentioned earlier, that uber ceo spoke on tuesday at a live conference and he mentioned the company is not ready to make a decision on its relationship with the saudi public investment fund. take a listen to this. >> until we learn more, we are not in a position to act one way or another. we are righteous to learn more and we will talk to the board

and decide what the best move forward is. emily: we will talk about that and more on tomorrow's show with tony west. you don't want to miss it. the airline investing in tech startups, why jetblue has launched a venture capital arm. "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: when you hear the name jetblue you probably think airlines. but, in silicon valley, the company is branching out the venture capital. they invests and partners with early-stage startup at the intersection of tech and travel. the president said done with scarlet fu at the speaker series to talk about wine airline meets a venture capital arm -- new the venture capital arm. >> we have to start thinking about innovation from the outside in.

the idea was to be in silicon valley separate from the airline so we can move quick and nimble. with corporate venture capital, one of the challenges, often it was because someone from the parent company would go out and start investing, but not understand the venture world or someone from venture would start investing but not understand the parent company. you have to understand both. what we did is you have to understand jetblue and all departments. i had the wonderful opportunity to hire most of our directors so i even helped robin promoted to the ceo role.

i did hire my boss as well who's our digital officer. i wanted to have someone would also understand venture. the idea was moving at a silicon valley and i brought on our manager director, deep connection to do silicon valley. the two of us have since expanded its a we have an investing side and an operating side. the whole idea is that we invest and we want to invest for returns, but it is much more about the strategic values of jetblue. how can we reduce costs, enhance safety, improve customer service. that we measure those. in the end, it is easy for startups to get money. it is harder for starters to get access to a company like jetblue so we give the money and access.

that is the magic sauce. scarlet: you mentioned strategic couple of times, how much of this motivation is financial? bonny: clearly we want to make investments that are wise investments. we will not invest in the company unless we think they will succeed and make money. we're not looking necessarily for the 10x or the 100x. will they provide insights and value to jetblue? i might get the 10x in return on jetblue as opposed to when they exit. there is certainly a level -- the team is incented to make sure we have good financial investments, but when i go into a room and i'm with other vcs, they are focusing on one thing, right? return. we're looking at the return and strategic value. the strategic value is far more important than a financial return.

i would say 70-30. scarlet: do the portfolio companies need to be ones that could potentially partner with jetblue or folded into what you do, or do they have to be connected to transportation anywhere? or could it be a really cool idea you like? bonny: that's a good question. we are here to support jetblue now. about 40% of our investments are for deployment at jetblue in the next year or two. 60% of what jetblue might be. with wayne gretzky, he says we skate not whether park is but where the puck might be in the future. one of the startups we worked with early on, they had six people coming out of m.i.t. and they had really cool weather sensing products but did not quite know what to do with it. we partner with them. now, they are already on their series b and deploying across insurance and automobiles, and

outdoor sports. a real accurate prediction in the team -- and the team has quadrupled since then. it is unbelievably accurate weather prediction because they use cell towers. think of radar, it is not that accurate because it is broad. think of how many cell towers there are. it turns out there are these smart m.i.t. phd's that figured out that cell signals attenuate differently depending on the intensity of the weather. emily: that was at cornell university part of the cornell tech at bloomberg series. coming up, facebook and freedom of expression. what is stopping them are -- from getting into china? we'll discuss, next. this is bloomberg. ♪

emily: this is bloomberg technology. i am emily chang. facebook has been banned in china since 2009, but if it were to return, it would do so in a way to preserve rights of privacy. they say it is also impossible to move back. but google is considering a return to the country despite conflict with its size. how do they feature in china? we have several people turning us to discuss.

facebook says it returns to china only if it can do so in keeping with its values of free expression where free expression is censored. does that mean it is impossible? >> let's be a little clear about the situation. there is no possibility facebook gets to be unblocked in china anytime soon. but the company does have a business selling ads to chinese companies that want to reach people outside. they are making money in the chinese market, and they have tried every once in a while to launch an app. there was one goal coal or for balloons, it did not do that well. it was a photo sharing app.

they are interested. facebook itself, the main social network, is unlikely to return. emily: carol samberg spoke about this when she testified on capitol hill. listen to this exchange with senator marco rubio. >> we would only operate when we can keep our values. >> that would apply to china as well? >> it would. emily: next to samberg was an empty chair for google. they did not show up. this was at the height of the china controversy. would you make of her statement in that context? sarah: it is easier for facebook to say they are adhering by their strong values when you have google getting pushed back for its plans to enter china including from their own employees. the project which sundar pichai says is critical, that needs to be what facebook would say. they used to say on their earnings call, they would say our mission is connecting the world.

how can we connect the world without connecting one of the most populous countries? now google is under the microscope and getting pushback for it, this is not the time for facebook to be in that camp. emily: google executives have been having informal meetings with employees to get them on board. i did speak to the cfo of alphabet about this. she said we are not close to launching a project and we are making sure we are doing the right thing for the long-term. mixed messages there. what is your take, whether facebook or google going back to china? >> you have made all the right points which is it is also impossible to operate a truly free and expression platform of any kind given the censorship requirements of the chinese government. it is clear certain data information will be blocked from chinese users and not have a full understanding of the world.

given data localization requirements put on businesses in china, it is hard to say the company would protect the privacy of the users with complete certainty against government intrusions given it will be located in the country. you have already made a great point that since they are blocked now, but for any company doing business in china, they have to look at what the risks are, the human risks to their end-users should their data be exposed, express contrary opinion, express behavior that seems unpopular. they are potentially putting lives at risk. emily: sundar pichai has pushed back on those points. he said google does operate in other countries where there is censorship and they applied by those laws. if google were to enter china, they could combat misinformation that already exists. he referred to false

advertisements about cancer treatments that have led to patients being not treated appropriately. what about those arguments? >> i am a fan and in favor of more truth and free expression around the world. but there is also the other side of the argument that by validating of a censored regime, buying into the notion certain information should not be available to individuals because the government disagrees with that, you are validating a censorship machine and more countries will come to the companies and say you did it for china, you can do it for us as well. the bigger picture is we look increasingly at a bifurcated internet where you have a chinese model and american model and other countries will have to decide which one they follow. if you look at more totalitarian or authoritative risks and regimes, those companies will sign up for the chinese model.

emily: that is a huge issue, a tale of two internets being written as we speak. thank you so much. sticking with china, sorin and all says in a new report that this company is uninvestable after a review of data points. erik schatzker spoke to the man earlier about this. erik: it purports to be china's third-largest economy behind jd.com and alibaba. it is the fastest-growing internet company. emily: blue orca's capital founder. $1 billion. what is the plan for all of that cash? we will discuss. siri is a household name but can

apple deep up with alexa? we will talk to the founder. this is bloomberg. ♪

emily: baincapital ventures has raised its largest fund yet at $1 billion. it is the latest in a line of once modest venture firms to raise mega funds area they last clocked in at $655 million. joining us from our boston bureau, the stock trend managing director. thanks so much for joining us. 10, 20 years records, so much money coming in. how does that impact how you spend it deal size, deal volume?

>> we are excited about the oversubscribed fund, and it is real validation. when we did the first 18 years ago, we have been evolving and improving ever since pre-we have been incredibly fortunate to partner with a number of many visionary founders and management teams along the way that truly are transforming major industries. we continue to do the same thing and we will with this new capital, that pace of success is accelerated in recent years with incredible exits in our portfolio with companies like docusign and surveymonkey. better never been positioned to capitalize on this. our team is evenly spread against west cost that west coast offices and the east coast here in boston.

emily: you have said you are planning to spend the money on automation, but so has every other venture fund on this show. how do you find enough opportunities that are differentiated that make sure the sectors are not overhyped? scott: that is the right question and our answer is to have the right presence on the ground in the geography were that is happening. there is no way to pick the right opportunities and founders unless you can build those and plan to add value along the way. we do that by having teams focused on early-stage investing on the ground in the be it -- the bay area, boston as well. emily: $250 million of this money to invest in later stage startups were you are competing with softbank and others. what do you say the differentiating factor is?

scott: the $250 million to invest vehicle is different than the mega funds you are referring to. we use that vehicle where we have identified an opportunity where the check size is larger than we would normally put into our 60 $600 million core fund. it allows us to go up to $40 million on the same investment. we want to be in a position to be able to fund the most exciting, which require $40 million or more appropriate for $650 million. this allows us to play in that ecosystem as well. emily: we have been talking about getting women into venture capital. you have eight who are all men. what are you doing to do -- bring more women in? scott: unbelievably important.

we have had diversity of thinking and opinion and personnel since baincapital is a public equity firm. as a fundamental tiller of baincapital adventure strategy for the last 18 years. we are actively trying to improve the pipeline of great candidates to add the terrific women already on our investing team. we do that through our own recruiting efforts, partnership with organizations like always and female founders, and the best we can continue to do is find people like our new partners on the west coast that can help us not just diversify the thinking of our team but candidly the network and relationships and capabilities. emily: your strategy is to promote from within? scott: the outside, within, all of the above. emily: scott friend, thank you

so much for stopping by. companies like apple, google and amazon have invested billions in voice assistants. we will see the technology integrated and how. this is bloomberg. ♪

emily: in 2010, this man received a phone call from steve jobs. he was proposing a deal for the first true automated virtual assistant that he had built for $200 million. .hat was siri he agreed to the proposal. theory became the proposal -- siri became the onslaught of many others. 50% of households use intelligence assistants.

he is continuing to lead the voice revolution. the ai company is behind samsung bixby which just opened to third-party developers it i sat down to talk about steve jobs and the future of voice technology. >> started with a phone call. he called me out of the blue and said we love what you are doing and can you come over to my house. i would like to talk about it with you. emily: did you fall out of your chair? >> a little bit. not the normal startup routine after you launch and have steve jobs call you and invite you over to his house. but we were flattered, but we were very interested. emily: you went. >> we went. emily: you met with him. >> we had a three-hour discussion in front of the fireplace. chatting about the future. he was convincing us that they

would win the smartphone awards. we called it throwing in together, that we can really build a new way to interact with devices, especially the iphone. emily: at a number of different companies were trying to buy siri. >> we had offers but we were not ready to sell. when steve calls and every technologist wants to take what they are working on, their baby and go big with it, that was a pretty hard thing to refuse. but we did decide -- it was a long process. and he called me like 37 days in a row. he was calling me at midnight. he was very involved and engaged in getting siri to be a part of apple. emily: that is what you mean by relentless. you went to develop with him. what was that like? > he was very active in this. we met every week and went

through what we want her to do for the first thing of apple? it was fun to work with somebody like him, so detail oriented, that had a strong opinion about what it should do. we had a lot of good debates about it. emily: what was his vision and how did it jive with yours? dag: the first thing he wanted was to make it revolve around the basic everyday use cases, calling and messaging, reminders and things you saw in the first version of siri. we wanted to get into more things like conversational commerce, the ability to buy a book and reserve things, take things that were harder to do with your phone. because you can use your voice to do it, make it much easier. emily: the funny thing, are you a man or a woman? what is your answer to the question of her gender?

dag: siri is actually genderless even though the name in norwegian means beautiful woman who leads you to victory, we decided not to make it one gender or another and have it be a persona that is there to help you. emily: and you are right, you can choose male voices as well as a default. siri was first integrated into the iphone 4s. now we are up to the iphone xs. has it lived up to your expectations? dag: on the positive side it has gotten faster, speech recognition is better. i would have liked to see siri evolve to do more things, have greater capabilities to become a bigger part of your life, merely because it is doing so many

things for you. that was the genesis for the next company we started was how do we make it go from not a novelty but sort of utility in your life to something much bigger, a paradigm, be really reliant on and use in your everyday world. emily: why hasn't siri gotten there? is it apple? dag: to some extent. they had a different focus than where we started originally. emily: what would you like to see apple do differently? dag: see them open up to a third-party ecosystem. that is something we are doing now. i think that is the big missing piece. if you look at something like the app store, it is a perfect metaphor. the iphone actually launched in 2007 with a few apple apps on it, the weather and basic things. when the apps store opened, it unleashed creativity of

developers around the world. that changed the world. emily: you took the rare step of selling your next start up to samsung instead of a u.s. company. why? dag: we wanted ubiquity. when you look at the fact samsung sells 500 million devices a year of all different types, we saw an opportunity to take our technology and put it in place where it can affect millions of people around the world, lots of different context, different kinds of devices, the sheer scale is an ideal platform. emily: you talked about bixby. what do you think he can compete with apple and amazon and google at this point? dag: one of the points i made at the talk yesterday if people don't remember this but google was the 14th search engine to

enter the market. we are still in chapter one, not even the introduction to this story. i don't believe there is a timing issue. what we want to do is gain momentum and get the world of the developers in an app store like way but bring it to ai. we have a thousand things you can do with an assistant, it becomes a much more important part of your day. emily: you think we will be relying on one or two like google, just one, or do you see manyusing manny -- assistants in the future? dag: ultimately it will boil down to a few. you will see minor assistants that will specialize in things. it will become such an important part of your life, all the personalization it learns about you, i think ultimately it will,

people will use one far more than others. it becomes more like the search market. emily: do you see this being integrated into washing machines and refrigerators? what does that world look like? dag: it is already happening. you will have it sooner than later. bixby will be on a billion devices, and that is just samsung. we will open it up to other third-party hardware as well. emily: what do you say to people who think these listening devices are creepy and they don't trust -- these listening devices are creepy, and they don't trust amazon and google not to listen to them? when they don't want them to be listening. dag: i would say don't buy them, but the reality is all the companies i have been associated with take privacy and security very seriously. people have asked me is my alexa

, listening to me or my home pod or bixby -- it is listening for a wake word. that word is the thing that lets it know that you are ready to tell it something and give it some sort of command. the bigger risk is yes, there is security concerns when your whole house is full of devices that could possibly listen in. there are risks with hackers or somebody breaking in, but it is not the companies themselves. there is no behind-the-scenes conspiracy to listen in on what everybody is doing. emily: full of stories, the ceo and cofounder of this lapse and founder of siri. that does it for this edition of bloomberg technology. join us tomorrow about company leadership, ending force arbitration and much, much more. bloomberg tech is livestreaming on twitter. find us on @technology.

this is bloomberg. ♪

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