♪ stone in sand francisco and this is bloomberg technology. next hour, will pressure point to the trump administration leaves portfolio flows into china. that includes possibly delisting chinese companies like alibaba and baidu from u.s. stock exchanges. the trump administration is weighing a new weapon in the

trade war with china. we work snow show. we will review the week in tech. but first to our top story, the trump administration is weighing a new weapon in the trade war with china. bloomberg says officials are discussing ways to limit portfolio flows into china. a move that could include delisting major chinese companies like alibaba from u.s. exchanges. the move could impact of billions in the markets and the nasdaq s&p 500 and dow were all in the red following the report. joining us to discuss in los angeles is bloomberg's sarah is -- who's been covering the trade war. sarah, what is the goal of u.s. policymakers here? are they trying to punish or

just protect u.s. investors? sarah: it's interesting that with the trade war this is not meant to be provocative or to push china into the corner and remind them of the leverage the u.s. has. that said, this capital, these talks in the capital restrictions on china are not part of the trade talks and they're trying to keep them separate. i think if we look at the marco rubio's of the world, who've been trying to push for this kind of thing in the past, it is more of a moral or ethical argument. they're saying, do we really want american investment funding a nondemocratic government? they alleged human rights issues in china and other things. and i think they believed that they do not want to give money to this rising strategic and economic power to the u.s. brad: so sarah, alibaba listed on the new york stock exchange. baidu is on the nasdaq. what does this mean for those companies?

sarah: as you said in the opening, brad, this is very much in the beginning stages and trump has not approved it. it's serious but it's not going to be put into place tomorrow or anything. it's the delisting of these chinese companies and some data shows that there are 156 chinese companies on the three biggest exchanges in the u.s. this isn't small changes we're talking about. for some of these companies, it has been a huge win for them to get into the u.s. market. they've seen a rules-based approach and ways for these companies to expand themselves. it would obviously be a pretty big move for these companies and it wouldn't be taken lightly. brad: sarah, tell us a little bit about peter navarro, the white house trade advisor and one of the primary sources behind this thinking. sarah: so, all along in the trade war, the question is who

has trump's ear? there's always a lot of speculation. with a proposal like this, it's clear that advocates like peter navarro and outside advisors like steve bannon are behind it. they are some of the key advocates. they are very hawkish on china. as i said earlier, they really see a decoupling of the u.s. and -- in china, whether it's a markets or otherwise as a key of punishing china cutting them off. they see china as a bad actor in the world and a very big threat technologically economically to the u.s. something of this extremely it wouldn't be surprising that peter navarro would be an advocate of it. brad: we've heard now for many months that the primary goals of the trade dispute has been to over the markets to allow more access to those markets into chinese companies. so wouldn't this move be contrary to that goal ?when move -- goal? absolutely, these tariffs

are predicated on the belief that the u.s. wants a trade deal and increase transparency three at the same time, to make sure the's a level weighing real for american companies to compete better. but then we see these moves that are completely against odds like the proposal and the capital restraints. we see section against companies like huawei that total u.s. suppliers. currency manipulation. some of the actions seem at odds and could make you believe perhaps that the trump is using -- the trump administration is using some of this leveraged in ways that run against what it says it's stated trade policy is which is to make everything better for u.s. companies, a global, level playing field. i think it leaves a lot of people in a fit of a confusion about what really is the goal of the trump administration.

brad: so, last question, i'll make it a quick one. on one hand, we could have a trade resolution and on the other hand is the prospect of a fallout decoupling from the chinese economy. which way are we heading right now? sarah: that's the million-dollar question. i think we have some talks coming in the next few weeks. at this point, it would be small wins. the two sides came out of the meeting saying china has agreed to agriculture purchases and the u.s., maybe to really move forward on granting these huawei licenses as promised, for instance, i think that would defuse the situation even a little bit. worse case scenario, with the these capital restraints. there's sort of multiple ways this trade war can go. that's why it's so important as we look ahead to the trade meetings between top officials, we can really get a sense of where is this headed now? what's the latest direction? brad: ok, bloomberg's sarah

mcgregor joining us in los angeles. thank you for joining us. while the u.s. and china remain far apart when it comes to trade, the u.s. and japan sealed the deal this week. the agreement between tokyo and washington ensures tariff free cross-border data transfers. that includes videos and video games, e-books and software. so, what does that mean to the u.s. industry? earlier today, i asked martin schroeder. martin: well, it's a really important agreement because digital trade is a component of the economy is growing much faster than the rest of the economy. it's the growth of jobs which are now digital focus. it's important for the entire digital economy. what's really important within this agreement, this really sets the gold standard for what we think these digital trade agreements should really look like. it has the components, the elements that we have been strong proponents for.

brad: it's part of a larger agreement that includes reduction of tariffs on farm goods. the u.s. chamber of commerce says it doesn't go far enough . and it actually raises the specter of u.s. property to go further. does this go as far as it needs to go? martin: believe me, this is absolutely the gold standard in digital trade. let me walk you through a few pieces. the things that the international community can now look to as they think about how they enter into these kinds of agreements. so first, there is free data flow. obviously, there is privacy and security, but also free flow of data across all industries. in an industry where data needs to be kept for security reasons, that will get covered but by and large, data across all industries can move freely. very important. secondly, it doesn't have any data localization mandates. so, neither of the two governments are going to force a company or force any participants to store their data

in a particular place. it's very unproductive and it doesn't achieve what they are trying to achieve. and then thirdly, to your question on intellectual property, this agreement does two things that make it the gold standard. one, it protects your source code. neither country will force you to give up your source code. we have never given up our source code and we never would. but it goes another step, as well. it also protects the algorithms that you use in your software. when you think about the source code and the algorithms, that's the critical design elements of the next century of the software driven economy. brad: so martin, what does that mean to glencore a company like ibm that has a sizable business in japan? martin: it gives us a framework by which we can be very confident as we build our business in japan erie it that -- business in japan. that these two economies are going to operate in a digital way that we think is the right

way to do it. more importantly, as we are out talking about digital trade with all of the other places we do business, it's very clear and we can point to the gold standard. standard exists in the usmca agreement. we've been very active promoting usmca from a digital trade perspective. now we have two good examples. challenge now is we have to get many more countries to adopt these digital trade standards. brad: we are very far from any kind of trade agreement with one of those, china. perhaps we can dream. what would a digital trade agreement with china look like? martin: input only, i'll do them in reverse order because i think there are elements of this that will be important in that discussion. that's all about protecting intellectual property and protecting algorithms. any regional trade agreement between any countries needs to protect source code and algorithms. there is obviously an element to this that says we can't make anyone store their data in a

particular place. data localization mandates should be removed from these. that would be a big component of something that we would want to see. then again, just the idea that data can flow freely. that's the way the world supply chains work. that's the way the banking systems work. and any country that wants to be integrated into this global supply chains or global banking system really needs to recognize those three principles because i really think that's how the rest of the world is going to be thinking about digital trade. brad: martin, a quick last question. what does this agreement mean for the u.s. technology consumer? martin: this is a big help. when you think about the digitization of the world, any discussion we have going on with our clients, we're an enterprise focused business that our enterprise clients are serving consumers. this allows our enterprise clients to digitize their

processes and offerings in whole new ways. we've seen a lot of innovation coming out of technology. that innovation and this agreement between the u.s. and japan can continue and now we have to make it much more widespread. brad: that was martin schroeter, senior vice president of ibm global markets. coming up, micron has a very bad day. the rest of the industry follow suit. that's next. this is bloomberg. ♪

brad: micron is having its worst day in the year. shares tumbled on the heels of micron giving a forecast that was below expectations on thursday. but some analysts say the worst

may not be over for the company. let's bring in bloomberg's ian king to discuss. ian, i think of it as a bedrock. what could they possibly say to instigate such a selloff? ian: you are vesely pointed at the numbers, not really that scary, 11% down scary. really, what was happening was a common thread that was going on. that was, they were pressing the red panic buttons for chip investors. there's been some upticks, but that might be inventory build, not related to demand. and inventory is absolutely the worst thing you can say in the chip business. brad: so what i'm hearing is that this could be a problem for the semi conductor industry and tech overall. the trade war hangs over

everything right now. ian: you're absolutely right. stocks say everything is fine. memory chip market is very volatile market. micron is one of those companies that says they can go and buy stuff from wherever they want, they can buy from samsung, wherever they want. why are you hurting us? that's the most representative of this kind of conundrum that a lot of tech companies are facing. brad: most people probably haven't heard of micron that -- and recently the president of the united states went to the un's general assembly and talked about micron. let's listen. president trump: a company owned by the chinese state allegedly stole micron's designs, valued at up to $8.7 billion. soon, the chinese company obtains patents for nearly an identical product. and micron was banned from selling its own goods in china.

brad: ian, what is the president talking about here? ian: well, some of those references i'm not 100% sure with. there was a case here and it's an ongoing case that started an investigation in taiwan. --na is trying to build taiwanese company was allegedly facilitating the theft of micron's designs to take them to china which as you know is trying to build its own memory chip business that's an ongoing situation and something the doj has looked at and lauded the taiwanese for trying to do something about. brad: now, there's an entirely separate trade-off between south korea and japan. i would imagine that would help micron's prospect because then samsung have limited interest to the interest market. but that does not seem to be the case here. ian: yeah, the idea is that the

japanese and koreans are angry with each other and the japanese have threatened to cut off crucial supplies to make memory chips. that would not be good for micron because where else are you going to go in get chips? -- to go get chips? it turns out the answer is that the chinese are the biggest market for this thing and they have gone ahead and bought a load of these things in advance to forestall a possible benefit, any switch in market share. that wasn't taken too well when they talked about that. brad: ian, last question, is there a chance we're going to look at this week and what has happened to micron as the canary in the coal mine for the semiconductor industry or tech in general? ian: that's absolutely the concern. when you look at the money that has come into the stock and in chips in general, what they are saying is it's hard to see that right now. brad: ok, we'll see what happens. thank you very much. coming up, unprofitable companies are raising the most cash since the dot com era.

what's the risk? that's next. this is bloomberg. ♪

brad: now to the story we're following, the continuing black eye for the ipo market. shares of balaton fell for the second straight day of trading. the startup has dropped by double digits since it went public this week. the poor debut is adding to a year of lackluster ones, which included the likes of uber, lyft, and wework. it's been a banner year for tech companies, yet it's gotten really ugly lately. what's happening? is this just one of those imperceptible shifts in market psychology?

guest: no, i don't think so. that's extreme. what we're seeing is a moment of recognition. the private markets, the bankers and public markets have to come to terms with how the private shares are valued. overall, it's been great. $50 billion raised so far. exits are important. everything is fine. weweork is an outlier. it's getting a hit because of wework and the issues right now. but overall, i think the ipo process is alive. the pipeline is robust. everything is going great. it just needs to -- we need to tweak the model and the valuation is what's broken at this point. but overall, i think the ipo process is still alive and doing very well. i hear youo what

saying is that the markets have been able to accommodate the valuations set by these private markets. what's the role of the investment banks? what should they be doing as they ushered these companies down the runway and recently to try to disastrous ipo offerings? guest: yeah, so i follow this market very closely. i think what's going to happen is, in the early stages, i can understand that you need proof of concept, the revenue so the valuations reflect that. i think expectations have to be managed and bankers have to play a big role saying this is and this is what the public markets are expecting. and so, i think bankers will play a very big role in getting this over.

it's important that if they play a big role in this. ipos are very important and the majority of them are doing well. you have to give them some room. and finally i want to add, how do you value a company? that's not easy. with lyft and uber, transportation companies. these are excellent companies, by definition. they're disruptive. surprise discoveries going to be tough. you need to come to terms with that and understand let them grow. let them be. we need them. wework has shelved its ipo. there's still over 100 startups that have filed to go public that are on the runway including some of yours at manhattan ventures. how do you advise them? is the ipo door still open right now? guest: it's wide open. i think you'll see them come to

market. the valuations are going to be more rational. that's the biggest thing. i think everything is going to be more rational. that's good. it needs to come down, let it be more rational. let there be a path to profitability, even if you're not there, explain it very well. get there and that's what we do. when we invest in these companies we look for that unless we have that, we tell our investors that you have to be careful. all that's factored in that's the right way to invest. don't just throw money at an -- any ipo. look at it. look at the corporate governance structure then enter the market. brad: two of your companies went public this year, lyft and pinterest. both of those are laboring under a dark cloud. what do those companies need to do in this market environment to change the perception that they went public at a difficult time?

guest: we are very happy with both investments. they're doing very well. lyft is getting tethered to uber and uber's problems. lyft is a very good investment. it's a very good entry at this point. lyft on ak at long-term basis. we didn't expect it to just take off. there's a huge market of on-demand transportation. transportation as a service is going to be huge. lyft, in particular, this is why is a pured in lyft, play focus in north america , where the economics are the best. they have a path to profitability. they already said that 2019 is there peak investment year. optician and pricing is getting more rational. i think these guys the last two quarters were very good. we're very happy with lyft and i think pinterest is also a very good story and it will continue

to do well. brad: thank you for joining us. coming up, a handful of tech ceos step down. more on ark to juul, dizzying week in tech. this is bloomberg. ♪ devices are like doorways

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♪ brad: this is "bloomberg technology." i'm brad stone in san francisco. a tech trend this week was the revolving door. three notable ceos stepped down in the midst of controversy. adam newman of wework, devin of ebay, and kevin ransom juul all are being -- to discuss, and bringing in andrew challenger, vice president. he's joining us from phoenix, arizona. adam, thanks for joining. why is it a volatile time here

for ceos of american companies? andrew: yeah, it's really not even just the tech sector where we see this volatility. we recorded 159 ceo departures in august. that's the highest single month of ceo departures that we've tracked over the first eight months of the year. we've tracked 1009 ceo departures. that's the largest number we've seen over any eight month period since we started tracking in 2002. so that includes 2008 during the recession. it's tough to hold on to the top role at the home of a company. brad: that's remarkable. what's going on? why the turnover? andrew: there's no simple answer. part of it is certainly the predicted economic slowdown around the world. it's getting some people -- boards are a little jumpy,

they're making changes. we're seeing some ceos stepping down at a time -- stepping down by choice at a time when the company is doing well financially. they can go out on their own terms and put into place their succession plans. and then we're also seeing a lot of tech companies. the area where we saw the second most number of ceo departures. a lot of that -- we're in a 10 year bull market run right now. tech companies that started off have had founders move up with them for a long period of time. some of those companies are moving into a more mature phase of their organization. and corporate boards are finding that these younger, often founder ceos are not able and don't have the skill sets to navigate the company in this next period of their lives. brad: let's talk about who's replacing those founders'ceos.

-- those founders/ceo's. i'm curious if you see any trends in replacement ceos. companies like wework and juul, they're searching for a contrast to the visionary charismatic, slightly unpredictable founder-ceo? andrew: yeah, i think you saw a great example of that at juul, where they moved to a new ceo that is a longtime executive in the tobacco industry. it's such a clear example of a founder that broke through regulatory paradigms, made something out of nothing, but has now run into the next phase of the company's lifecycle, where they're dealing and navigating with a very complicated, bureaucratic, slow-moving regulatory environment. and so i think they made a very smart move by bringing in an executive from the tobacco industry that has a lot of experience there. brad: andrew, real quickly, let's talk about ebay.

scott, the cfo, now replacing devon whenbig as ceo. does the fact that the cfo has taken over signal financial engineering is in ebay's future? andrew: well, the entire push to have him removed was really propelled by active shareholders in the company. so they have a clear sight on the bottom line. looking at the numbers, they're probably pretty happy with the naming of the cfo of the organization, somebody that's going to be thinking about cutting costs. but they're also going to be looking for one of their main complaints, which is even though there had been growth at ebay, the growth wasn't seismic enough. it wasn't large enough in this environment where you'd think a company like ebay would be doing fairly well. i think they'll continue to search and maybe look for another transformational type of ceo.

brad: ok, andrew, challenger of challenger gray and christmas, thank you for joining us. the week also centered on the ipo craze of 2019. but as we're noticing, planned offerings have been close to disastrous. bloomberg learned that part of the reason endeavor got cold feet is the poor performance of palatine in this first day of training. investors soured on the startup known for its exercise bikes and allowed users to join along in virtual spin classes from home. palatine shares have tumbled more than 10%. to discuss this another top tech stories of the week, we're joined by michael factor. also with us, bloomberg businessweek's max chafkin. michael, let's start with you. it's a tough week to do a week in review because so much has happened. let's start quickly with wework. do you see any path forward for we work after the week that it had? michael: i think they just mischaracterized themselves as a

tech company. and softbank reinforced that by making big investments and i think investors figured out this is a real estate company. and so every time you see them compared, you see them compared to other real estate companies and multiples are just much, much, much lower. and there really isn't a lot of tolerance for losing money in the business. they have 15 year leases and then they turn around and carve that up, rented out piecemeal to individuals and small businesses. there's no tech involved there. i think that's starting to weigh on all the other companies. it's actually weighing on netflix. they are a tech company but you're seeing their valuation drop. palatine arguably is a tech company. they're delivering health services, workout services into the home. it's actually pretty smart. but the valuations are coming down because investors aren't buying it anymore. brad: max, lots of companies, airbnb and postmates among them, are still looking at the ipo

markets and wondering if they can get out the door. if you're in their shoes, looking at what's happened to palatine and wework, what lessons do you take from it? max: yeah, i'm sure they're worried. we saw airbnb come out publicly saying we are going to go public next year, and i assume that was kind of a response to watching wework have all its trouble, they want to communicate to their investors that they're still committed to getting them some liquidity. i think as michael says, there's this thing where a lot of companies that were not really tech companies were selling this vision of network effects. in wework's case, it's that we're not just a sublet, we will be a hub for where you live and educate your children. and there will be members who do not rent the space who will pay us for some reason. it was a lot of magical thinking that depended on this one guy. now, the thing about wework is that, as a business, there is something solid about subletting.

it's more of a problem for softbank, arguably, then it is for wework. i think wework can have a real business. how do softbank deal with a huge write-down? brad: michael, let me ask you about that. do you expect softbank in the broader private markets that have a bid up these valuations to be humbled by recent events? michael: i think this is like that tulip bubble. i read this brilliant book by brad stone and it talked about the sharing economy, and that made sense to me. if a company, through technology, can get individuals to share their assets and give their time, then there is a lot of profit to be made. in that frenzy, we started classifying companies like wework and pellet gun as tech companies. no, softbank overstepped. they made a mistake. as max said, they're going to have to take a write-down.

this thing isn't going to recover that valuation. brad: next, let's talk about facebook. the doj investigating facebook, in addition to the fdc. if you live in washington and you're not investigating facebook, you have to ask yourself what you're doing there? but we recently reported sheryl sandberg going to washington next month. so, what does this mean for facebook and how they steer out of it? max: don't forget, you have congress. you also have state attorneys general and you have the european union. there are many, many government entities looking at facebook closely. i think when we saw mark zuckerberg testify in congress in the wake of the cambridge analytica thing, he repeatedly brought up the idea that facebook is an american social network and is in competition with china, with chinese social networks, particularly tictoc, which has been growing fast. so i wouldn't be surprised if you see the message from facebook coming out that you don't want to break us up because our competition is outside the u.s.

you would be damaging an american technology company and you don't want to do that. brad: michael, amazon had a hardware announcement, its annual hardware announcement. we talk a lot about amazon over the years. new echos, a ring where you can talk to alexa, earbuds they announced. was there anything in that hardware announcement and the strategy that surprised you? michael: yeah, the glasses are easily the dumbest thing i've ever seen. [laughter] michael: and you know, i saw the funniest line on twitter, buy the glasses and alexa sits on your face. that's just the dumbest thing i've ever seen. i think amazon is grasping at straws on its hardware strategy. i understand an in-home health device, so i understand the echo devices. and to some extent, i understand the integration with a ring because it gives you your whole

home amazon eyes. i think some of these other things are solutions to a searchable problem. we need new earbuds like we need a new hole in the head. it just seems like a really stupid move. brad: i presume you're not wearing the eyeglasses now. michael: these are real glasses. max: i feel like i have to defend amazon. brad: go for it. max: for intellectual curiosity, i think the argument here for what amazon is doing is number one, they're kind of known for releasing crazy products. they do this sort of thing all the time. arguably, they do not have the same brand as apple does. no one blames them when they put a dud out there. even in the branding of these products, they're calling it the day one addition. they're not presenting this as a consumer product. the other thing is, the whole bet with alexa is you can get it everywhere. they want people to use this thing to do other things beside listen to music.

i'm sure they realize that it's pretty weird to put a smart speaker on a pair of eyeglasses. but maybe somebody uses it and maybe it's more about communicating the value of alexa to the world. i mean that's my best attempt at what this thing is for. brad: thank you for that. we'll count on seeing you wearing a pair of those glasses. we're going to leave it there. michael pachter and max chafkin, thank you so much for joining us. coming up, regulation reality. we look at why libra coin has not been as quick out of the gate as hoped. this is bloomberg. ♪

brad: it's been a rough week for cryptocurrencies, with the likes of bitcoin tumbling more than 20% over the past week. some have attributed the decline to facebook ceo mark zuckerberg

hinting that the launch of its libra coin may be delayed. earlier, bloomberg's guy johnson and vonnie quinn spoke exclusively to bertrand perez, the libra association coo about the challenges they're facing in bringing libra to market. bertrand: we are engaged with a discussion with the regulators on both sides of the atlantic. both those discussions are important, and that's the reason why we've taken so much time early before launching anything, because we knew we would have questions coming from regulators from different parts of the world. right now, our discussions with regulators is for us to prove that we're going to provide a proper solutions and proper answers to their questions and concerns, where when it turns out to aml and counter financing of terrorism. the launch date will be depending on how those discussions go, and how quick we get approval from the

respective regulators. guy: ok, let me try and pin you down on this one then. the pushback from regulators has been fairly fierce. do you think that you're going to be able to launch in the first half of 2020? yes or no? bertrand: for now, we are still discussing with regulators. what i want to be clear is as we've said, we won't launch a platform that's not compliant with regulations across the world. as far as we don't get those proper regulatory approvals, we are going to continue working and, as i said, we won't launch anything before that. vonnie: so, how is your application for a license going? the swiss regulator, who has to be on board here as well, as europe and the u.s. bertrand: a few weeks ago, it

was decided that we should be regulated as a payment system. this was the announcement made by them a few weeks ago. and right now we're in the process of submitting and applying for that license. so, over the course of the next few months, so ideally before the end of this year, we would be applying to the fin my, and then they will be reviewing our application and we'll decide upon the license for this payment system network. vonnie: talk to us about hiring. what does it look like right now? how many do you have in geneva? how many are you hoping to hire soon? and will they be technical or will the technical staff be more in silicon valley? bertrand: so, geneva is the headquarter of the libra association. so right now, we're a little shy of 10 people. and the idea is that we're going to start staffing in different areas, whether it's compliance, whether it's finance operations,

tech operations, and also we will have engineering people here in geneva, in addition to the resources that we have in the silicon valley. guy: mr. perez, are you as advanced in the hiring in your regulatory approach as he would -- you would like to be? did you expect to be where you are now or did you expect to be further forward in all of this? bertrand: well, everyone would prefer to be more advanced, but all the discussions we're having with the regulators and the questions they're asking, and the fact that we want to be a long-term platform that's sustainable and compliant, i think it's worth having those discussions and going through the details with the regulators, even if that's consuming sometime. it's worth it because again, we're here to build a long-lasting platform that's there for the long-term, that will bring a lot of benefits for the customers. we don't want to do that in

competition against compliance. so that's key to our platform. and we better have those discussions again in advance. and that's why we decided to announce the projects are in the early stage so we can make sure we've provided the proper answers to the questions. and then we can -- once that is clear, we can move on with the execution phase. brad: that was libra association coo bertrand perez. still ahead, hospitality started sondra digs into the hotel market to keep up with airbnb. we'll have the details. this is bloomberg. ♪

brad: apple is taking on hollywood. dow jones is reporting that the company will bring feature-length films to theaters before releasing them on their streaming service. apple hopes the move will attract big-name directors and producers. and apple reportedly hopes to avoid the tensions that have bubbled up between theater chains and another hollywood

player, netflix. in the past year, hotel chains and home sharing sites have started encroaching on each other's turf. airbnb advertises hotel rooms on its platform and marriott recently launched a homestay offering. the latest player to blur the lines is short-term rental startup sonder. the san francisco-based hospitality company is expanding beyond its network of vacation apartments, signing leases with several of the beaten paths mom-and-pop stores in recent months. is sonder a rival to airbnb or a partner? to discuss, we're joined by olivia carville. olivia, i guess i'm unfashionable because before your story, i've never heard of sunder. tell us about it and how it fits into the fast-growing short-term rental market. olivia: yeah, they're a

relatively unknown company. the interesting thing about sonder is they're trying to target the sweet spot between a home and hotel. they want to have that funky vibe of an airbnb with a cool furniture and a hip neighborhood, but also with the convenience of a hotel. so they offer 24/7 concierge service and cleaners, trying to target the business consumers and travelers as well as those who may not want to stay in this in business district in a mess of hotels but want the convenience of one at the same time. brad: olivia, you're right that sonder is a partner to airbnb. but it almost sounds like it could be a competitor. why is airbnb not threatened by this upstart? olivia: i feel like airbnb might be threatened by sonder one day. but sonder is relatively small. they only have about 10,000 listings globally. and they're also using airbnb as a platform to advertise their listings. so, they really view airbnb as a partner because they need airbnb to connect to their potential consumers. so, from airbnb's perspective, sonder is actually like another listing on their website, rather than a rival necessarily.

but it's also important to remember that airbnb is moving more and more into that boutique hotel space. so, as we get further along the line and sonder continues growing, maybe one day they will be deemed a rival. brad: or could they be deemed an acquisition target? airbnb wants to expand its hotel listings. some of the hotel chains are going to think twice about partnering with a potential juggernaut like airbnb. could airbnb turn to sonder for say, an acquisition? olivia: definitely possible. airbnb has invested in a direct competitor of sonder, and that happened earlier this year. and we also saw airbnb go after the hotel tonight acquisition earlier this year. it was a $400 million acquisition, the biggest to date so far. so airbnb is definitely actively looking in this space, and it's likely that they've been talking to sonder or will be doing so. brad: one of the things that has

slowed down the short-term rhyme tour market is the regulatory hurdles, particularly in cities like new york. does sonder face those challenges? olivia: one thing that's distinctive for sonder beyond the typical airbnb is they're legally compliant in all 21 cities that they operate in. so, they're more interested in going after the hotel licensesin -- essences in order to legally provide accommodation, rather than necessarily disrupting the market and trying to take on municipal -- municipalities over those regulatory shows. brad: so, it's not a regulatory hurdle. what could slow sonder down? olivia: well, i talked to a bunch of skeptics who say one of the biggest issues for sonder is actually its business model. we've heard they've been signing on with leases with about 60 different small and medium-sized hotels. typically, they're signing

five-year leases and then they're going to revamp the property and rent them out on a short-term basis. the long-term rental deals like short-term arrangements is very similar to a wework model. people have been asking questions about how much is -- how much debt is sonder going to take on before they start turning a profit? people have been asking questions about that and we'll be looking at the company closely as they sign these leases. brad: last question, olivia, and i'll make it a quick one. are rental capitalist as excited about sonder as they were about airbnb? olivia: it doesn't appear so. they're one of -- sorry, they had a funding round in july, a $225 million round. so that actually vaulted them into the unicorn category. so, in that degree, yes they are. i think you're right and what -- in what you said earlier, they're not very well known at

this stage, which is surprising given they have a $1 billion valuation. brad: bloomberg's olivia carville, thanks for joining. that does over this edition of "bloomberg technology." reminder, we're livestreaming on twitter. check us out at technology and follow our global breaking news network at tictoc on twitter. this is bloomberg. ♪

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