♪ emily: i am emily chang in san francisco. this is "bloomberg technology." slack is going public through a direct listing. new details are out. why the company is taking this nontraditional route. plus, intel tumbles, the latest sign the rebound in semiconductor stocks may be over. we will hear from the ceo. amazon attempting to narrow its delivery window to one day for prime members.

morgan stanley says this will turn amazon into a logistics giant, forcing fedex and ups to catch up. first, slack going public, only it is foregoing the traditional ipo route in favor of a direct listing. it plans to list on the nyse, and now we have a better look at the company's financials. revenue doubled to $401 million, but the company still isn't profitable. to tell us more, we have our bloomberg deals reporter and our venture capital reporter. you have been covering slack for a long time. what surprised you in this filing? >> it was a chance to look at how losses have stayed the same, while revenues are going up. people are curious why slack is losing money. one interesting thing is their

aws bill, $50 million a year for five years. people are looking at where slack will be getting revenue, from big enterprise customers? that seems to be their plan. what are they doing to get expenses in line and flip to something that can be profitable soon? emily: by going the nontraditional route, they will not have a traditional roadshow, so they will not be selling themselves. >> there is no roadshow and no underwriters. they are not leaning on the bank. they will decide on a price and confirm that the morning of the listing. they open at that price and allow the shares to exchange freely. direct listing makes a lot of sense because they have a lot of cash on the books. they don't need to raise capital. they need to create a liquidity event for employees and shareholders. emily: tell us why stewart

butterfield wants to do it this way? >> we do have a guess. one person said slack has a lot of cash, $850 million, according to the filing, so there is less of a need to raise more. that is an advantage. if we were to read the tea leaves on slack's personality as a company, they are choosing this because it feels more fair, giving mom-and-pop investors the same opportunities as big investors to get access early on. there is not the lockup for employees. emily: employees can sell right away, perhaps a more democratic way. >> when you do a traditional ipo, the banks will favor the big institutional investors, so a direct listing allows them to create an even playing field.

emily: why don't more companies do it this way? >> they don't have the cash. >> and you need name recognition. you're not doing the roadshow. slack is a company that is well known, very well known in san francisco. we use it at bloomberg. i am not sure it has the widespread knowledge like spotify did. emily: or even uber. i have this chart that shows ipos rebounding in 2019. this is showing the value of ipos in the united states in the first quarter. olivia, how are investors receiving the direct listing? are they excited? >> we are seeing some trading happening. they had to open shares, secondary shares trading to price discovery. that is coming in at the highest at $26. emily: let's talk about uber.

we got more information about their pricing, lower than some ought, and perhaps more in line with where we see lyft trading. >> it is more conservative. emily: they would be targeting an $84 billion valuation. >> they, bankers were pitching them on $120 billion because they wanted the business, but $84 billion is a high valuation for uber. emily: how does slack fit into this picture? >> slack will be one of a crop of companies coming out. people will want to pay attention to how it performs. we will have to see whether the direct listing does well and achieves what slack wants it to, a smooth transition from private to giving liquidity to shareholders and employees. spotify did well last year.

slack talked about how spotify was the model, although spotify was not mentioned in the filing. they are hoping the same process at spotify will happen with their stock as well. emily: next week, presumably. talk about the next few weeks. >> uber goes on the road. they are coming out with this conservative mindset. their growth has slowed. doordash is growing and they are taking account of that. so i think we will see them having a conservative approach. we can expect they will raise their price range. they will come out slightly above where they raised the price range to. emily: pinterest also took the conservative route. thank you both.

i know you will be busy over the next days and weeks. bloomberg beta is an investor in slack. coming up, tesla continues to lose. we will talk to the analyst who called the latest earnings report a total debacle, next. if you like bloomberg news check us out on the radio, bloomberg.com, and in the u.s. on sirius xm. this is bloomberg. ♪

♪ a long week for tesla. analysts expected a first-quarter loss, but not as big as the one it reported. the carmaker lost almost $500 million, a record drop in deliveries, and its largest ever debt drained cash to the lowest level in three years. elon musk told investors losses would narrow and tesla would return to profit in the third quarter. one analyst said it was "one of the top debacles in 20 years of covering tech stocks on the street." our guests are joining us now. so, dan, you never mince words, but one of the top debacles ever? >> my opinion in 20 years of covering tech, if you look up disaster in the dictionary, you

would see tesla's quarter. it is about guidance and the company not fessing up to where it is. they could focus on robo taxis and other fictions. investors are focused on the cash and demand. i think the company did one of the worst jobs possible at calming that storm down. >> this is a crazy week where elon musk has an autonomy day on monday, earnings reports wednesday, and thursday and friday, a huge selloff. it is at the lowest point it has been since january 2017. big holders seem to be selling. emily: meantime, dan, you said elon musk and co appear as if they were in an episode out of "the twilight zone."

what do you mean by that? >> i mean it really seemed they were not dealing with reality and demand and what is currently happening. it felt like a company not focused on demand. 48 hours talking to investors, as nervous as i have seen investors in many years. when it comes down to the cash, what does that burn look like? and do they have to raise capital? they have to raise capital. the question is, can they raise capital? emily: let's talk about what you mean by the cream cheese on the bagel. robo taxis, insurance products are distractions from the growing demand woes not being addressed.

you think they should not spiend this time on autonomy and explaining their future fleet of self driving cars? >> right now it is about demand. it is about logistics, sales, marketing, stimulating that, making sure they are cutting costs for the model three. going forward, what the profitability looks like. instead, you are focused on sci-fi novels over the next four or five years. that is not what the street is focused on. to do an autonomy day two days before earnings was the silver bullet that shows the company is not focused on what they should be. there is a feeling there is no one to navigate, especially with an inexperienced cfo. emily: you have been covering tesla for many years. how does the sentiment now compare to other eras of tesla sentiment?

>> tesla is always a roller coaster. this is more negative than in some time. that is reflected in the share price and the fact that tesla has not hired any big-name executives in months. the last person they hired quit after a few months. this is the first rodeo for the cfo. analysts are still getting to know him, but they are not hearing back in a timely fashion. there are lots of unanswered questions. emily: elon musk and the fcc told a judge they have not reached a settlement and need more time. is this a concern for you, this having to do with elon musk's tweeting habits? >> it continues to be another distraction for the company, for investors, where they should be focused on the core issues at hand. this is something you want sooner rather than later, but in traditional tesla fashion, it continues to elongate.

it is a slight overhang on the name and speaks to a broader issue here. the question investors have is, where are the adults in the room? emily: all right, questions indeed. daniel, you are sticking with me. thank you so much. coming up, concerns continue to swirl that intel may lose its lucrative hold on the market for computer processors. our conversation with the ceo is next. this is bloomberg. ♪

♪ emily: this week, more earnings. alphabet monday, apple on tuesday. the iphone continues to face demand issues. wells fargo cut its forecast. one voice is still optimistic. dan and mark are with us. dan, you are optimistic. why? >> we have gone through some dark days with demand in china. we are seeing demand in china pick up. i think you will see that this quarter. gene is a conservative guy, but given 350 million iphones and the next 18 months in the services business, we continue to stay positive. this is all install base story. emily: meantime, dan, we are waiting on details, but i just

got the headline that elon musk has reached a settlement with the fcc. we don't know the details, but i will watch for more headlines. does that give you some solace? >> as we were talking, i think this speaks to one less overhang on the name. focus on the core business. take the side shows and distractions out. this is an overhang that investors don't have to have nervousness about. emily: we heard that dan is optimistic, but what is the rest of the investment community watching for? >> a lot of people, and dan included, have been interested and surprised at the stock

price's elevation since apple announced its first year-over-year holiday quarter earnings fall in 18, 19 years. that was a huge deal. that was a huge negative, yet the stock is up so much since that point. the question is why. investors and analysts seem optimistic about apple's future. even though apple services seems to have pulled together a bunch of services they are planning to launch over the next 12 months and bring up the announcement date for services. that works in some respect. people seem to be optimistic about that. emily: i want to drill down in china and what you see happening there, signals you are getting from the supply chain. do you think the slowness will continue and that is something apple will adapt to?

>> it is a new normal. in terms of december, we started to see a pickup in this quarter. 60 to 70 million iphones in china. they are coming up for an upgrade in the next 12 months. the price cuts are starting to help. we expect more price cuts, especially 10r, and that could mean 10 million to 15 million iphone units in china. right here it is about the install base story. everyone knows iphones have matured. that is why every iphone is key for services and other areas they can monetize over the next four years. emily: what about services? tim cook has been trying to pivot the company and messaging, talking about services. we saw the streaming announcement this quarter,

though there are still questions about how much that will contribute to the bottom line and what they will charge for it, but what are you expecting when it comes to the services business? >> we have done the math on this recently. the average selling price of an iphone is $700 to $800, the 10s starts at $1000, but now apple has services that cost about $10 a month. you have the apple tv plus service later in the year, apple arcade, icloud storage, the percentage they will get from transactions using the apple card, applecare, so let's say apple can get the average customer to pay between $30 and $50 a month for services. that equates to between the asp of an iphone or $1000 based on price every two years, so even though the upgrade cycles are slowing because people don't want to pay so much for phones,

other reasons because the phones are lasting longer because they're getting good. they are still adding another reoccurring revenue cycle worth as much as an iphone every two years. i think analysts and investors are seeing how lucrative that can be for apple. emily: dan, what are your thoughts on the shares? they have come up from a low in december. we're seeing most big tech stocks rising back up this year. will that continue? >> oh yeah. it will continue to move higher. the services business is worth $450 billion in revenue. it will be a ho-hum quarter after the bell. they will give conservative guidance for june. fundamentally, this will march higher into the september product cycle. we could see new highs in apple in six months to nine months, specifically as you get street cred for the services business

and the install base. emily: dan, always good to have you and mark will be busy next week reporting results. shares of intel tumbled after it cut its full-year revenue outlook, the latest sign the 2019 rebound in chip stocks may be overdone. bob swan spoke to bloomberg today by phone to discuss the report. >> the quarter, we came in better than expected, both topline and bottom line. what we saw are some underlying trends, in terms of memory pricing, the consumption of the purchasing we saw last week. we are going though a digestion phase with our cloud services provider. and third, the slowing of growth across the board for our business in china had a real impact, so despite a quarter better than expected, as we look

forward for the rest of the year, we think we will be in a digestion phase coming off a strong 2018, but the demand data consumers and enterprise is looking for, storage, and analytics that go with that, which bears well for our business, we think it is as strong as it has ever been and will continue to be strong in the medium and long-term, so our view is the end markets are strong and we are going through a consumption period in the u.s., but china as well. >> intel is up 23% this year, even beating the s&p 500. i'm curious, will orders pick up once customers deplete stockpiles? >> that is our expectation. we indicated yesterday we believe we will be going through

a digestion period, and the signals from our customers as they think they will start buying more in the second half of the year, so our expectation is the second half will be stronger than the first half. emily: bob swan there on bloomberg earlier. coming up, tired of waiting two days for your amazon prime order to arrive? amazon has a new prime push to bolster e-commerce sales. we will tell you why next. monday kicks off our coverage of the milken institute conference. you can watch it for interviews with guests, including stephen schwarzman. this is bloomberg. ♪

♪ emily: this is "bloomberg technology." i'm emily chang in san francisco. amazon reported higher than expected profits in its most recent quarter, mostly coming from its focus in cloud computing and digital advertising. e-commerce saw its lowest revenue growth ever at 10%. so, amazon has decided to bolster that business with a new tactic. here's what cfo brian olsavsky revealed on thursday's investor call. brian: we're currently working on evolving our prime free two-day shipping program to be a free one-day shipping program. we are able to do this because

we spent 20-plus years expanding our fulfillment and logistics network. this is still a lot of work to do ahead of us. emily: it looks like prime one-day shipping is coming for u.s. customers. to discuss, deren baker, ceo of jumpshot, a company that delivers intelligence for the company's biggest clothes platform. also, bloomberg's brad stone. can they pull it off? brad: amazon has 100 fulfillment centers in the u.s. 12 years ago, when they announced prime, maybe it was 12 or six. not only have they gotten close to major centers, it will be expensive. it will be $800 million quarterly hit that will hurt margins. the other thing is that two-day shipping is kind of old news. walmart does it, ebay does it. some companies do not charge, so amazon is raising the bar and forcing competitors to invest as well.

emily: that said, when i have needed something fast, i have tried amazon one-day shipping and i feel like one out of two times, it does not come in one day. and i get this note saying that my package is taking longer. tell us about the risks of not delivering when you promise this. deren: i think this is a shot across the bow to the physical retailer. the walmarts and targets that have hundreds of retail locations. upswing on partners who buy online. i think what amazon is saying the kinds of products that people care about with one day shipping has been products. shampoo, deodorant, paper towels. they are saying i will take this massive war chest, spend $800 million on one-day shipping. bet my logistics will make this work and force everyone else's hand. this is a pretty interesting move for the other retailers to match. emily: even though the

competition may be catching up, i have this chart showing amazon's cap compared to walmart, completely dwarfs walmart. brad, talk about these trends we are seeing in the e-commerce business. why is e-commerce plateauing? brad: one possible reason -- we have reached a point where the growth area of part of those things you need immediately. the supermarket items. amazon has been trying to crack the grocery business for a long time without a lot of success. the whole foods business is somewhat flat. moving to next day shipping could be a platform to get further into those businesses, even health care. when you order some over-the-counter drugs, you don't want to necessarily wait two days. next day shipping gets them to these hard to crack categories. emily: you have been drilling down into some of the other trends, including clicks on ads. what have you seen? deren: the advertising business,

even though it is growing 34% quarter over quarter, what we see is the percentage of product use that comes from a sponsored search, the effectiveness of their inventory has plateaued at 10%. emily: what does that mean? deren: the total volume of sponsored searches is going through the roof, 30% up. amazon will have to invent new products. they have to come up with video ads to compete with facebook. they have to watch out for competition. walmart. the same 10% stat on amazon is 1.5% on walmart. i think that advertising business is one that amazon has the pay a lot of attention to. emily: we have talked about how amazon is behind google and facebook, but could be catching up in terms of the digital ad business. are you optimistic? brad: there is a big opportunity there, but it has never been quite in amazon's dna to put a video ad on the site or banner ad. finding ways to insert ads into search and product listing

pages. i think the opportunity is there. the biggest challenge is whether they really want to do that, because they are famously a customer centric company. customers do not want to see an ad. you can rationalize it leads to a better search product, but it could be a distraction and worse user experience. amazon maybe have to sacrifice some of their values. emily: i wonder how long it will take for other retailers to catch up or delivery services to catch up, and then what will amazon's edge be? deren: i think amazon has an edge. they are a logistics company in a lot of ways. they have a good edge if they can execute against this one-day shipping. if they choose to get serious about advertising or more serious than they have been, they have a good opportunity. i think they have to decide are

they a marketplace, an advertising company, a little bit of everything? emily: they will invest $800 million to push down the delivery times. will that cut into the bottom line? brad: they warned on the call it compresses margins. you can assure that everything is delivered in a day or you can only show customers a selection of products that apply for prime shipping. they can gradually move products into and out of the prime window. i suspect they will do that and manage their cost over the years. emily: brad stone, deren baker, thank you both. could there be a bustling economy on the moon in just a few decades? one startup thinks so. as part of bloomberg's next job series, an engineer at a japanese startup is working to make that vision a reality. ♪ >> on the moon, with the sun shining, it is blindingly bright.

where it isn't, it is pitch black. the surface is covered in the finest particles of sand. it's a tricky environment for even the most advanced machines to navigate. and before fleets of these things start roaming the real moon, this engineer has many late nights ahead. perfecting this rover and testing it on an artificial landscape like this one will get us one step closer to establishing the first human settlement away from earth. one day, when you and i make it up to the moon, it could be thanks to here. >> my name is -- i built the lunar rover. [speaking japanese]

>> never seen a driver like this. >> when you think of the space rover, you might think of the moon buggie used in the apollo missions. or the opportunity rover on mars. next to these two creations from previous settings, the machine is so small, it looks like a toy. the team is racing against the deadline of 2021. when a spacex rocket will blast ispace's lender, carrying two into the orbit of the moon. after a soft landing, each rover will roll out and roam the lunar

landscape, sending images, video and mapping data back to earth. the japan aerospace exploration agency. here on earth, this is the closest thing to the moon. ♪ >> [speaking japanese] >> [speaking japanese]

>> after a few final preparations, they started the test. >> [speaking japanese] >> up first, a series of 10 meter crawls. with every run, the team reconfigured the rover to have a different weight distribution. the plan was to see which versions will be able to run straight. and measure how much they would veer off-path.

then, it was the hardest part of the day. the lunar hill climb. with a chance to play a very tiny role in establishing humanity's presence on the moon, i couldn't resist. >> [speaking japanese] ♪ >> [speaking japanese] [laughter]

>> dear future lunar residents and lunar tourists, you're welcome. emily: bloomberg's aki ito reporting there. coming up, millennials and gen z may be digital natives, but the way they interact with storage is quite different. how one app is tapping into gen z's wallet, next. ♪

♪ emily: while retailers and marketers have worked hard to tailor to the millennial

audience, it might be time to focus on the next generation, gen z. the group of kids and young adults between seven and 22. this is making me feel really old. estimated to have $143 million in spending power, according to report from barclays. one mobile shopping out, dote, is tapping into that market. designed specifically for gen z shoppers, dote allows users to connect and shop more than 150 brands, including urban outfitters and forever 21, from one app. it has raised $220 million in funding and the latest edition of the retail transform series. we are joined by the dote founder and ceo, lauren farleigh. welcome. aside to be here to make me feel old, tell me more about the app and how it works. lauren: it is a social commerce app for gen z. we have 3.2 million users.

i started dote out of my own frustration to shop from my phone. i grew up in alaska so i did not have access to malls. i moved out to the bay area and worked on mobile games. i saw that market move to mobile and create businesses and fun experiences. these are things that happen with shopping. games are early on new platforms, but i did not see anything after doing it. emily: are there aspects of gaming built into this platform? lauren: absolutely. we launched shopping party, a new feature that some people are calling the twitch for shopping. a livestreaming shopping experience that allows implementers to shop live with their audience. emily: social commerce really has not taken off. it sounds great, but there is really no good way for me to buy what my friends are buying. i can see what they like on pinterest. instagram has been experimenting, but is it really possible? lauren: i think it absolutely

really is possible and the time is now. gen z is shopping fundamentally different than generations before. they are mobile and want to do everything they can do from their phone. second of all, they are social. celebrities and the people driving the purpose decisions are social stars. youtubers, instagrammers. with dote, we allow you to collaborate and shop together. really taking a lot of what we lost when we moved online back into the shopping experience in terms of interaction. emily: how do you make money? lauren: we make money in two ways. we take a cut from a retailer partners for every transaction generated on the platform. at the end of last year, we launched a private label with a big youtuber named emma chamberlain. emily: how much traffic are you driving? lauren: we don't necessarily disclose that, but we have 3.2 million users on the platform. emily: you were on apple's original show, "planet of the apps."

gwyneth paltrow was a judge. apparently, she stayed involved with the company. tell me about that. lauren: absolutely. i think what gwyneth has done was really about storytelling and commerce built around a person. that is not that different from what dote is doing with the youtubers and instagram stars. she has been instrumental in helping us develop that. emily: what sort of advice has she given you? lauren: she has given me advice from what products to use to how to think about storytelling. she comes from that storytelling background. here in the valley, we are so metric driven. also, thinking about the emotion and the aspiration behind these purchasing decisions. emily: who do you think of as your competition? instagram? lauren: good question. i think recent moves by these big players have been validating for us. i founded the company in 2014.

i have believe this is a big market. but the way those folks are approaching it is a more business-first, how do we make our purchase funnel easier with our ads business? for dote, it is about building a shopping experience. emily: what is next? lauren: lots of stuff to come. continuing to invest in social and these private labels. emily: dote founder and ceo, lauren farleigh, thank you so much for stopping by. coming up, as google employees continue to process the company's sexual harassment policy, the company rolling out new policies designed to help them speak out. but, unrest at the tech giant continues. we'll discuss next. this is bloomberg. ♪

♪ emily: as we mentioned earlier, elon musk and the u.s. sec are settling a legal dispute over his tweets. the tesla ceo needs clearance from a lawyer before making future posts on social media. there are several topics that follow under the umbrella that needs approval, including details of sales numbers, production at the carmaker. however, musk still faces more legal headaches. the judge refused to dismiss a lawsuit brought on by a british rescue who got offended by being called a "pedo guy." several months after thousands of employees walked out of google, the search engine unveiled another round of policy

changes to address employee concerns about misconduct. staff can lodge complaints through a website and there is a program to provide better care for employees during and after investigations. joining us to discuss is mark bergen. what are the new policy changes? mark: google addressing a pretty squeaky wheel. they have had employees since the walkout, even before, protesting policies around military work, their work in china. this is an attempt to give them a channel to feel like they can address these internally rather than taking it outside. emily: where they can complain about anything. mark: wire broke the story that the leaders of the walkout wrote an internal email to the company saying they have been retaliated against. one of them who works for youtube says she was asked to take a sick leave. the other was told to walk away from her a.i. ethics work.

these are pretty significant leaders. the company has been active, arguably, ending the military projects. arguably, ending a lot of their work in china. prompting thousands of employees to walk out of their jobs. emily: google has previously said about the walkout -- "we prohibit retaliation in the workplace. employees and teams are commonly given new assignments or reorganized to keep pace with evolving businesses. there has been no retaliation." they are denying they have retaliated. mark: google employees held a retaliation townhall to collect more stories about this. we reported late last night there has been a case filed with the national labor review board claiming around workplace organizing that google retaliated. emily: that google violated federal law. mark: this is escalating pretty

quickly into an issue. now that google removed the mandatory arbitration clause, it is something that will not necessarily be settled behind closed doors. emily: you spoke to a lot of employees. is this feeling widely held, this concern widely held? i feel like i hear this a lot. i also hear that google is a great place to work. mark: 100,000 people at this point. emily: they don't all feel the same. mark: the contractors which are even more. i would say it is not everyone there. google is like a nationstate. it's international. that has been the problem for company management, that they have traditionally been able to have this transparent a lot of debates inside the company. inside of h.r., they said they used to have robust debates but they stayed inside the confines of the company, but now they are spilling out. part of it is the trump era. part of it is the debate around a.i. ethics.

and part of it is how leadership has handled the flareups. emily: how is it impacting their work internally? is this new era of unrest impacting the day-to-day? mark: it is a good chance it will not impact their search ad business. the biggest impact is in cloud. this is a business, one of the largest cloud buyers is the federal government. the work in china. two areas we have reported. they have an interest in continued relationship with the government. you can look at saudi arabia, another big potential market. a lot of conflict. the oil and gas industry. emily: bloomberg's mark bergen will be all over alphabet earnings next week. talk to you then. that does it for this edition of "bloomberg technology." on monday, i will be anchoring the show from washington and speaking to republican senator marsha blackburn of tennessee,

talking about regulation and the role of tech in politics. have a wonderful weekend, everyone. this is bloomberg. ♪

>> the following is a paid program. the opinions and views expressed do not reflect those of bloomberg lp, its affiliates, or its employees. >> this program is a paid presentation and spot you by dr. ho:'s circulation promoter. heather: on today's show, we are talking about circulation. if you suffer from pain in your neck, shoulders, or lower back, bad circulation in your legs, pain in your hips, knees, or ankles, or pain from arthritis or sports injuries, we will speak to dr. michael ho, inventor of a device that relaxes tense muscles and