♪ >> i'm taylor riggs and this is the best of bloomberg technology were bring you all of our top interviews from this week. coming up, ipo woes. butork was meant to embark obligations have delayed the ipo. plus, is it of right time for facebook to tout a device that can listen to you in your own living room?

adaptation.imate bill gates wants to help invest nearly $2 trillion to help the world become more resilient. his thoughts on and dental solutions for climate change -- potential solutions for climate change. wework was the roadshow that wasn't. of the most anticipated debuts of the year is postponed until october. they're looking for time to calm investor doubts about its dropping valuation, governance problems and financials. point, this was supposed to be a $47 billion company. that number is now $15 billion and could be even smaller. joining me to discuss this was the cofounder and chief revenue en,icer at equity is an -- z a marketplace for pre-ipo shares. lot to address

before they can go out to the investors and ask them for their they were looking for $47 billion and now we are hearing it could be as low as $12 billion to $15 billion. they have made a lot of changes to corporate governance, but investors are looking at valuations, whether they will improve financials, and whether more is needed for them to be convinced about the valuation they want to get. taylor: this morning, they spoke with the cofounder of loop ventures. i had a comments as it related to the valuation. take a listen. >> the valuation is really a wake-up call to private investors that the public markets are holding them accountable. the specific reason i think this report reflected that was the aount of cash burn, what is consistent theme and your setup

addressed this. companies are losing a lot of money and are being held to lower valuations. in the case of a we work, it is even more than what tesla lost to put that in perspective. taylor: react to these comments on valuation. phil: i would say wework is kind of in a space of its own. having lost $2 billion in 2018 i think a mix of lyft, uber, and wework planning to come public in 2019, i think we are seeing the most losing companies. amongst these types of groups of companies, we also see plenty of companies that are burning only $100 million, $200 million in cash. we work is an exception to the norm, but writing off $37 billion of value over a period of 3-4 weeks will catch the attention of a lot of capital and venture investors. taylor: we can joke about how you value company using a discounted cash flow to evaluate a company that does not have

cash flows. but on a serious note, how you value this company? >> sure. the first thing we started by looking at is multiples of revenue. the first thing we found, they were trading at one or 1.5 times revenue. we work earned revenue in 2018, such come out at that evaluation -- so to come out at that evaluation seemed ludicrous. i think the biggest thing for wework is trying to explain itself as a technology company when it is really a real estate company that has some technology bells and whistles. so i think this is a big wake-up call to recalibrate those expectations. taylor: talk to me more about that valuation. what did the private market see that the public markets are missing? was thating we saw there actually wasn't that much interest for wework,

particularly at the valuations it had obtained. we saw much healthier markets for companies that went public recently, companies like docusign, slack, that were little bit more popular with investors. we would have expected to see something similar for we work because the brand is so ubiquitous. however, there was hesitation. if you get north of $20 billion in valuation, you are not talking about hundreds of unicorns anymore. decacorns drops precipitously and when you have that valuation coupled with losses, it was kind of a recipe for disaster. we have been in very much a bull market not only in public stocks but in private companies and that has led to founder-friendly terms on how they raise capital. at some point, you are going to have the pendulum swing. i think when you have this kind

of headline, a cut in valuation will shift those numbers over to investors that will ask for more corporate governance, reasonable valuations, and other parts within the cap structure that they feel more comfortable with. taylor: when we were talking about bondholders, you mentioned that $6 billion financing was contingent upon raising $3 billion in that ipo. assuming that doesn't happen, when does we work get more cash and where? crystal: i think the simple answer is they always need to get more cash as soon as possible. if the ipo does not happen by the end of the year, they may look into tapping into softbank to get more funding. there were some talks about softbank being willing to put in another couple hundred million dollars into the country. but that would not move the needle. they definitely want to do an ipo to recapitalize. taylor: quickly, any ideas on when is the drop dead deadline for raising more cash?

phil: i have to think they want to push this over to 2020 but with only about $3 billion of cash available to them, things could get really messy starting in q1 of 2020. -- 2021.rly with particularly with some lenders have promised capital if they raise their ipo before 2019. if i were them, i would spend the next quarter really tightening the belt, trying to overhaul spending, negotiate with some of the banks. taylor: that was phil haslett tse.loomberg's crystal in luxembourg, and apple lawyer says that the company is the world's largest taxpayer. they are urging the general court to overturn an order from the european commission that it pay a record of $13 billion in back taxes to ireland.

maria tadeo filed this report from luxembourg. >> apple is coming face-to-face with european regulators and the -- in the biggest tax case in the world. the company has appealed a 13 billion euro fine imposed in 2016. the idea behind it according to the europeans is that apple received special tax treatment from the irish government which allowed the company to pay artificially low taxes. apple says this is not the case and has appealed. if you are hoping to get a sorry moment from the company, that was certainly not the case. apple said they pay the most tax in the world and claimed the decision from the europeans lacked any logic or sense, and they believe that the numbers were tweaked in a way that presented apple in a bad light. essentially, the goal was to portray the company adds paying -- as paying no

taxes. if you look at the european side, they tell you that they still believe they are right, that it is pretty obvious that apple has set out a tech structure in europe to pay the least amount possible. they do believe, if the arguments are validated or vindicated by the courts, they can continue to get tough on american tech companies to make them pay more in europe. of course, these cases are happening as tensions continue to play out between the united states and europe over big american tech. the president of the united states donald trump has said many times that this is only happen because they cannot compete on the innovation, so they must compete on the taxation. what comes to the year, they deny this is the case. they just want everyone to pay their fair share. taylor: coming up, part of our exclusive interview with ibm ceo -- ibm's ceo. why she thinks blockchain is all about trust.

and if you like bloomberg news, check us out on the radio, on the app, or in the u.s. on sirius xm. this is bloomberg. ♪

taylor: ibm announced wednesday it would open the first quantum computation center in an effort to expand its fleet of quantum computers and fully realize the business potential of the technology. the real-world application is something that caroline hyde covered when she spoke down with ibm ceo ginni rometty. ginni: why look at the future, technology is coming. we're all about applying them to business but we build some of the world's leading technologies here. cloud and ai, everyone talks about that. to be done, but we will park those for a minute. the next two blockchain and quantum.

thele overestimate them in beginning and then underestimate them in the long term. asked mechain, if you one word i would associate with blockchain, i would say trust. crypto is a use for that aside. -- a use, put that aside. blockchain come it should put trust between parties who don't even know each other. and it would do what the internet did for communication between lots of parties. so a great example on trust, what it allows you to do is you and i can share a transaction together. i don't have see anything you don't want me to see. and once the transaction is completed, it cannot be erased. why do we each keep our own checking accounts?

the old days, we would each balance our checkbooks and the like. if i said to you a hundred dollars i would check my own notes. so is the same idea. -- it is the same idea. big application is sickness. food safety. getle all over the world sick from food safety, it's a big problem. we started something called food trust. think about this on walmart, carrefour, competitors all being willing to join. , what, unilever, driscoll they are saying is we will all put our data on here about what row on the farm this came from. ,o that when there is an issue and my goodness, we have done millions of transactions through this, i can pinpoint where the

bad spinach is versus call all of it back. because a third of food is wasted in this world. to me, that is one. and quantum, jumping over. think about the word trust, quantum will solve problems that traditional computers today, no matter how fast they are, caps off. -- caps off. -- cannot solve. quantum bits have infinite states. they are for the kinds of problems that come up today, you could never model it. it would run forever. i am exaggerating a little bit. there's a reason there are wetlands in biology. it is an approximation. they can't get an exact simulation done. what quantum will do is things like drug discovery and material sciences. risk management, logistics.

a truewere to watch model of caffeine, you need a computer a 10th the size of this planet. if you wanted an actual simulation. so we are ready with our quantum systems. we have made commercial ones available through the cloud. daimler working on new materials like batteries in cars. jpmorgan is working on things like pricing different options and risk. drug discovery. we have got a huge network of clients and now is the time to get used to it. side,d add one other there is a dark side. one dark side is that quantum can break traditional encryption that has protected most of the world. we announced some new systems

last night that are prepared for quantum already. security thatur runs all of those mission-critical systems are quantum-safe. so we have been building something called lattice kind ofphy, a encryption that quantum cannot break. if i'm going to build a tool that is that powerful, i/o it to society to make sure that i also address the downside. so we put effort into preventing it from being that powerful. taylor: that was part of bloomberg's exclusive interview with ibm ceo ginni rometty. and coming up, listening in. facebook confirms it will resume collecting and transcribing user audio clips from its in-home video devices. we hear from facebook's vice president for augmented reality. and later, corporate ventures

data analytics company slumps. we get details with the ceo. this is bloomberg. ♪

taylor: facebook confirmed it will resume collecting and subscribing -- transcribing audio clips. i spoke to the vice president for augmented and virtual reality at the launch of a new generation of portal bull -- portable devices. take a listen. >> we are so excited about our new products. screens oriented towards connecting people with the ones they love the most through video calling. to look likesigned picture frames, so they can fit in as naturally as if they were picture frames.

taylor: another cool thing you are launching is the tv portal. tell me about that. ofportal tv takes advantage the biggest screen and people's homes and turns it into an immersive video calling device. taylor: one thing that stuck out to me was the price point which feels like you are really trying to push into a competitive space. .ow do you stand out >> all of these devices are focused on connecting you content of which is great and useful. what comes to connecting with the people you care about, that is what was missing. with portal, you can use toebook messenger, whatsapp connect in a rich, immersive way with cameras the folly around the world and our hands-free -- that follow you around the room

and our hands-free. taylor: you mentioned cameras. i have to mention there was that button where you could turn the camera off. privacy has been a huge concern. was that the focal point? >> yeah, when you are introducing new devices, people have never experienced anything like portal. we wanted to make sure they were comfortable. so these generations don't have controls, they have integrated shutters that cover the camera see that it is not seeing you. taylor: what about the microphones? >> they have a light when disabled so that you know they are disabled. alternatively, you can leave it on if you want to use assistance like alexa. taylor: if i say, hey, portal, and i being reported? it sends a reporting or voice

clip up to the servers to get an answer back to you. if you have it enabled, we may renew the voice recordings to improve the quality. it sends a reportingbut you cae on the device itself or your facebook activity log. taylor: privacy data has been a big focal point of facebook. is now the right time to be launching new products where there is a camera or microphone when there is so much of scrutiny and arguably the least amount of trust and facebook? -- in facebook? >> it is the right time. essence ofis the what facebook does and that's what these devices are centered around. we have taken every precaution we can to make sure people feel comfortable with the devices in their homes. when they have that experience of connecting with somebody that they care about who does not live nearby, they will

experience something special. time when comes at a antitrust scrutiny is at the highest. when you think of facebook, a lot of people think of apps and software. is now the right time to expand and go into tech, homes, and tv? >> this category is so new. smart displays have only been in the market for two or three years. it is early and everyone wants to experiment. it is not very big, but it is growing year-over-year. if people decided they are excited about video calling, and we think they will be, portal will be a great fit for them. taylor: joining me to discuss further is kurt wagner who covers facebook. i wanted to talk about the privacy issues that are going on. frankly, that opt out button is not an opt in. does that go far enough to quell

our concerns? >> the big issue we have seen so far with the transcription happenings is that people just did not know about it. people were not aware of the audio was being transcribed at all. at the very least, facebook is at least acknowledging this. they made it part of the presentation with the press so while it is not necessarily important, you think they might make this the default. at the same time, they are technology and in a way that none of these companies were doing. taylor: what do you make of launching in your living room cameras and microphones when a trust in the company is at an all-time low? >> you asked about this, i asked them this, it seems crazy. are not only adding a device to your home, but one that had a camera or microphone on it. at the same time, when is the

right time? a year ago certainly would not have been any better, is a year from now any better? i understand why they are pushing forward his you don't know when will be the quote right time. but more than any other company than they have been dealing with this privacy and trust issue. it is hard to get into someone's living room when people don't trust you. taylor: this is a competitive space. you have comcast making an announcement and companies like roku, name it. this is very competitive. how does facebook differentiate themselves? they were clear, they set the they were clear, they set the differentiator is the video call. this a portal might be used for a facetime call, but through their hardware. and in some cases, through the tv set. they think that differentiates them from all of the others.

they kind of said, listen, there is a ton of places to go to do that stuff. the differentiator is at the video camera. i think it would make sense if they had both but that is what they are leaning into. taylor: when would we see facebook come out with a version of google home or alexa? to the salon.alk you can either talk through alexa or you can say hey, portal , waking it up for basic commands or requests. those are the things they are collecting and transcribing. but the bigger question is when will they have their own assistant? something that would give you a bunch of different options. right now, they don't have any plans to remove alexa. but clearly, they are getting started on that. up, what does a $17 billion data analytics company --

that's next. and we are live streaming on twitter. check us out on technology and follow our global breaking news network at tictoc on twitter. this is bloomberg. ♪

best ofme back to the bloomberg technology. i am taylor riggs. companies may have flashed wednesday as they entered the venture capital world. the first is $100 million. it is an innovation fund, while the other is $50 million and it is a social impact fund. doug merritt touted the move. corporate classic fun. we are super passionate about data and the power that data can bring to solve the worlds problems.

those two funds are constructed to help invest in companies that have more of a commercial purpose on using data to solve different issues from health care to consumer issues to privacy issues. leveraging this platform, we are opening to investing outside. the other one is a social fun. the transformation from an industrial economy to another is dislocating. aree are organizations that trying to help from reskilling the population all the way through to different beneficial programs and areas of human trafficking that would not be commercial entities. goodreally do an amazing using data as a backbone. taylor: analysts are bullish on the stock. they are really bullish on the future growth opportunities. where do you see that future growth? thee have focused on

technical departments for the organization. they are fully digital already which means they have overwhelming amounts of data at their disposal if they needed to craft signal. of that data is it can also be used for manufacturing optimization, supply chain optimization. focus is still so early in the journey, we look at that 5%ket as being less than penetrated. the bulk of the focus remains on hyper security, id resiliency, developers and helping those buyers serve the rest of the organization by taking that same data and using it for other -- customerving our serving or cost-saving activities. taylor: this was on news that cisco had tried to make an acquisition port data dog. data dog rebuffed the offer.

the point is the broader landscape. furtherssume they made acquisition or do you get bought out? >> [laughter] the thing we can control is who do we focus on. we are actively always looking at additional technologies that can help our customers. i would anticipate there will be more in the future. see so much opportunity. we are truly at the beginning of this data era. whatever it takes, organic or inorganic to make sure that customers can turn data into doing and not just be overwhelmed by is something that we are committed to. taylor: within the cloud space, how do you compete with the big guys? whoon, oracle, et cetera, not only have that but they have their own data analytics

company. thee are adding value to different data services that those vendors provide. we are enhancing and enriching the services they offer. the reality that any of us live in when you are with google, microsoft and amazon is you have to have ways to value up the stack. we keep finding ways to add much more effective value to the services. you also, the multi-cloud horizon, to take that value up even higher for organizations that have heterogenous landscapes. taylor: jp morgan analysts upgraded the stock today. future bookings are strong. how do you forecast future bookings? how do they look? in an economy is

interesting state. the last two quarters, there is a lot of change. the people are adjusting to change. the data initiative and the digital transformation we have been talking about for a decade remains at the top of the mind for leaders. when you are facing the cloud vendors that bring new business models, you must keep investing. far, we are not seeing any big impacts on our outlook for our products. there is a quarter by quarter outlook on that. the broader tax spending environment? how has the consumer spend felt? >> we have a secondary impact. experts have to bear the burden of tariffs and reevaluate budgets.

and what they want to spend that money on. we trade internationally or we sell internationally. currency is an issue for us. u.s. dollars has an effect on us. they have to quantify what the new price is based on their own fluctuation. it is not quite the same impact that shipping physical goods has. ultimately, we are at the service of our customers and that's taylor: you introduced some recent line changes. how much of a tailwind is that for you going forward? >> the main focus we are driving is serving our customers. customer success is our number one business criteria. this was a key element. modeling, we think it provides more leniency with what they can do with software. there is so much data that with

an easier pricing metric, they can put more data in and get more value back out. ,aylor: that was doug merritt ceo of spunk. data dog joined bloomberg tv this week. they went public on thursday. bloomberg caught up with the ceo. >> that is what we do. focus on making customers life's simpler. -- lives simpler. premiseave a lot of on can testers. it is crowded in the cloud. how do you compete with companies to win share from them? the market is going very fast.

really, the way we compete is we focus on the cloud. we built from that from day one. we focus on getting the breach. you do that? what is the point of differentiation for this company? we started the company between teams that did not ci tie and did not look at the same kind of data, our focus from day one was to get data from sources into one place. >> everything in the public market is overshadowed by what has been going on with we work. terms just done an ipo in of the day one pricing, what would your advice be to them for

going public? saye don't have much to about them. we actually use them. the best to do is focus on your customers and focusing on having a business that stays healthy. that is what we do. we keep doing that. it has been a subject where some controversy recently in terms of should companies have so much control of companies going public, was there any discussion on pulling back on that? >> for us, what is important is we are building for the long-term. we want that to remain the case as a public company. that is why it was important for us to have -- we have investors.

i wanted to make sure -- >> another story that has been much in the news is interest from cisco. talk to us about that. and why did it make sense for a company like facebook to be public and independent? >> i cannot comment on the rumors we have heard. what i can tell you is that the market we are in, we see there are many more problems we can solve for our customers. from that perspective, it makes sense. >> dcm and a down the road? -- do you see an and a down the road? that was data dog ce's ceo

with bloombergs and hammond. we will check in on the performance of process and its tencent stake next. the world's second richest person on climate change. we will hear from bill gates. his thoughts on the kind of adoptive action we can take now to protect the planet. this is bloomberg. ♪

taylor: just last week, investors piled into the newly listed internet unit from south africa's masters. stocks jumped as much as 32% above its reference point before declining. assets include a lucrative stake

in china's tencent's holding. i caught up with the ceo, bob van dyck and asked what he sees that investors should be open to. >> the stock was quite positive. we expected it to be volatile in the beginning. there is a new listing. becher waltz have not -- the share walls have not received their shares. generally, i think people are more excited to have a more exciting internet group listed in europe. now the right time to be ipoing? >> we are growing fast organically. i think the timing is perfect. taylor: you mentioned classified. for is the next business ipr? >> we are a growth company and

we want to see this next wave of growth happening? that is the first priority. taylor: what sectors are you assessing next? -- investing in next? >> there is so much we are excited about. using more meal occasions to order in or order at home. that is an opportunity we are excited about. taylor: talk to me more about food delivery. the competition is heating up. you have more companies coming out that are trying to invest in that market. how do you stand out, how do you differentiate yourself? >> what we see that is important is to have local operations. what we have seen in markets like india, what it requires to be successful is different from what it requires in other markets.

being an excellent operator on the ground, they understand what the restaurants need. they are having an efficient and scalable operation. taylor: talk to me about being in the local market in china. how does that work. >> we are an investor in tencent. we have $.31 of the shares. at the market, it is probably the most internet -- attractive internet market in the world. has fantastict position in the market and the best leadership team. we are happy to be active in the markets with tencent. taylor: you talk about food delivery. i know that you are an investor in ai, that is all the rage these days. outside food delivery, where do you see the next frontier? >> if you look at technology that is going to make a massive difference in our lives, i would say machine learning is the one that stands out. it will be as transformational or maybe even more so than

mobile phones have been over time. it is really changing how people interact with the internet. i think it is going to be relevant in all of the business stuff that we have. achieving this is a huge interest for us. taylor: a big thing in the market has been finding the path to profitability. as you look at what companies -- as you look at companies you do and don't like and look at what sectors you want to be involved in, how important is it to be able to see the roadmap to the path of profitability? >> that is an excellent question. if you understand a business model well, you grasp the details of it, you find investing. as long as you know the model well that you are investing in, in the end, you need to make money. taylor: we talked about india and china. we have not talked about the u.s..

would you ever consider big investments in the u.s.? >> yes. it is a good thing we speak about that because we are a growth company. not necessarily just a growth market company. we invested quite a bit in the u.s. in the last three years. in a company called lacko, which go, which is something that people sell via mobile phone when they don't need anymore. taylor: tell me about that. >> what it does really well is make something that you don't need anymore, it makes it as easy to sell as throwing it away. taylor: i want to end on a broader question about being in the midst of the u.s.-china trade wars. you have been focused on china. has the tariffs or the trade war impacted any of the relationships between the u.s. and china? ,> so, if you look at the u.s.

what we have in china, i think they are operating mystically. it is a strong chinese franchise. i would say the operations of the business have not been so much impacted. it obviously has impacted investor sentiment. it has had an impact on their share price and hours as well. taylor: are you pope or sleeve focusing -- purposely focusing on companies that don't have the international exposure that are subject to trade headlines between them and the u.s.? >> one of the things we do is take a long-term perspective on the road -- world. it has served us well over time. we typically take 10 year horizons. we would not worry about what happens today or a year from now. was ceo bob van dyck. coming up, clearing the fog on climate change. we will talk sustainable investing and hear how the world's second richest man is helping those hit hardest.

that is bill gates, he is next. this is bloomberg.

taylor: the united nations climate action summit is due to be held next week. most americans agree that climate change is something that needs to be addressed. bloomberg is part of the covering climate now project which includes more than 100 news outlets. cbs news recently conducted a poll which found 56% of americans think we should be addressing climate change right now. bill gates has invested billions in clean energy to tackle climate change. but his latest strategy is not to try and prevent it. he wants to help those hit hardest by climate change and that is geared toward adaptation. the world's second richest man recently spoke to eric in seattle. >> if you cannot support

air-conditioning, if when your crop fails, you don't have a past thatcount to get so that your children are having enough tea, if you live near the , climate change is caused by middle income and rich people. the people who suffer by far the most will be the poor. it is very unjust, even eventually, for the wealthy people, it will be bad. for the next 34 years, most of it will hurt the farmer. why focus on mitigation and adaptation to claim a change instead of combating the root problem, carbon emissions? not an area the foundation gets involved in. that is where you are trying to switch to clean energy or

meat that is or made without cows. that is big private sector stuff. >> you invest in that? >> i invest millions in those things, including nuclear reactors, to help. adaptation, which is taking in the fact that there will be climate problems and we need to help those who are hurt by it by giving them better seeds that can deal with the drought or that are more productive and can save more money, those things the foundation is very involved in. most people think about this mitigation of reducing emissions. the idea of how you minimize the damage which they call and adaptation, that gets their attention. others,why i and a few a great group of people, created a commission about this adaptation issue that, later

this year, it will make it more clear that there is work to be done there. >> do you think climate change is stoppable or maybe even reversible at some point? have are not going to year where the world is cooler than it is today. , the averagere global temperature is going to go up a lot. in the next 50 years, it will not go down. how much does it go up by, does it go up by two degrees, three degrees or four degrees, that is in our hands. if we ignore the problems, we will have something that is a four degree scenario, which means forest fires, days that humans cannot go outside if you live near the equator. it is pretty extreme. seriously people are

going to take it and what types of innovations will come along will determine where in that range we are by the end of this. i hope we don't run the experiment of being higher than two degrees. it will take a lot of commitment and a bit of luck on the innovative breakthroughs to be able to get there. >> there are a number of different ways of fighting climate change. renewable energy is one of them. do you think government should subsidize global energy or should take up -- should that be dictated by market forces alone? >> the costs have come down dramatically. some of that has helped drive .he volume they are not going to come down much more. there should be shipped into things that are more limiting like energy

storage, offshore wind, which is still at a premium price. lots of places we need the market to get going. the progress in solar and wind is very helpful, but the sun does not shine 24 hours a day. if you are far away from the equator in the winter, you cannot get as much, and that is just for the electricity piece. that's only 25 percent of emissions, so we need a lot of efforts, but that subsidization, that accelerated rollout -- that's one of the few advances we have. it's less than 10% of energy generation. the global economy has a lot of energy generation, but it's one of the good is that has been developed. -- one of the good things that has been developed. taylor: that is it for the best of bloomberg technology. tune in at 5:00 p.m. in new york

and 2:00 p.m. on -- in san francisco. check us out at technology. global to follow our breaking news network at tictoc on twitter. this is bloomberg. ♪

jonathan: from new york city for our viewers worldwide, i'm jonathan ferro bloomberg "real yield" starts right now. ♪ coming up, a fractured fed delivers another rate cut as trade ties between the u.s. and china resume. optimism driving junk-bond toward a fifth straight week of gains. yield hit 20-month lows. the new york fed rolling out an old tool, funding markets signing some stability. we begin with the big issue. a fractured fed meets a wall of skepticism. >> a lot of dissension in the ranks. >> there is a little bit of a split in the dots.