♪ taylor: i am taylor riggs among this is "best of bloomberg technology." we bring you all of our top interviews from this week. coming up -- >> it is a very complex project, and as you say, it is risky. taylor: mark zuckerberg describes a libra as complex and risky. more on his testimony in front of a house panel on capitol hill. amazon's big bet.

to be $800 million investment into one day delivery pay off in the latest earnings report? details ahead. and twitter mrs. third-quarter revenue estimates. why new user growth did not translate into ad sales. facebook dominated of the week in tech with mark zuckerberg defending his social network before congress on wednesday. what was scheduled as a hearing on the cryptocurrency libra also included issues like antitrust and privacy. >> is in a currency? are you a bank? what is this association? >> it is a very complex project. and as you say, it is risky >> do you consider libra to be money? >> i consider to be a payment system. >> it's like me having my money in wells fargo bank. >> you could think about it that way.

the we are not a bank or applying for a bank charter. >> that is the problem. that's what we're facing. not going to launch the system here or anywhere else around the world until we get approval from relevant regulators. >> the american competitiveness angle and cognition with china is a national security issue. >> in china, especially during they really kicked off this private partnership with companies to race to try and build a system like this weekly -- quickly. >> will it be possible to conduct anonymous transactions? question.n open >> it's pretty hard to stop anonymous trading. have i missed something there? >> i think this is more of a policy issue in question. ,> as your code currently exist

can you transact anonymously with libra? >> congressman, it certainly would be possible to build a system that would allow that. you a simple question, are you a capitalist or socialist? >> congressman, i consider myself the capitalist. >> frankly, i'm not sure we have learned anything new here. emily: bloomberg's kurt wagner was at wednesday's hearing and had this to say. >> people still do not trust facebook that was the over arching theme from a lot of the andtions we've heard feedback from members of congress, basically pointing out things that facebook has done wrong in the past and asking given your track record, why should we trust you with a new cryptocurrency? at the end, it was , afterntative mchenry almost six hours of questions a

testimony, said i'm not sure we learned anything new here. it was a little bit of an unfair blanket statement but at the same time, despite the fact that we had all this time to hear from mark zuckerberg, we did not walk away with a bunch of big questions answered. taylor: when pressed on why we should trust facebook, what was his response? >> facebook is just one of 21 different companies that are overseeing the cryptocurrency. facebook is putting out there that we are not the only people making a decision here. we want to work with regulators . we want you to tell us how this is going to work. it is not going to be only our call. that is obviously a very important element of all this because for the people who think facebook has too much power or it cannot be trusted, the idea that they are bringing others into the fold or that they are following rules that someone else creates, that will give them a lot more flexibility to get this thing off the ground. taylor: we heard him also bring in china and say if we

don't do this, china will so we have to do is to get ahead. we have a sound bite from what zuckerberg was saying about china. take a listen. >> as soon as we put out this white paper on libra, we saw in china especially, they immediately kicked off this public-private partnership with some their biggest companies in order to race to try to build a system like this. a digital renminbi that they could use as part of their belt and road initiative, their foreign and economic policy to grow influence throughout asia and africa and other areas. taylor: is zuckerberg right in bringing in china here or is he just playing to all of our fears about china taking over? >> i think there is probably some validity to this concern. this idea that there are companies and the government in china that really wants to accomplish a similar problem. they have the technical ability

to do something like this areas -- this. i do think this is a very convenient argument to make , especially right now and especially in front of this congress, given the issues we are dealing with with china. it seems like now is the time to play up this fear that china is the real threat here. we heard him say this last week. when he gave a speech at georgetown about free expression, he talked about the internet rules they have in china and if tech companies like facebook don't support free speech, you might look up and see that is gone from the internet because chinese companies are controlling it. so he has played on this fear before. taylor: that was bloomberg technologies hurt wegner. -- kurt wagner. for more on this in general, i andinsight from an analyst sara miller, deputy director of

the open markets did -- institute. >> nothing was answered other than the commitment that libra will get regulatory clearances before launching. how, and whether the product exists after that i think is still very much to be determined. it was a promise but not one with any specifics, any timing, or in my opinion, any clarity. taylor: sarah, are the problems here not about libra but the fact it is libra and facebook and that facebook's name is attached to the project? >> i think that certainly does not help. from the hearing today, there are two takeaways in my view. one is that libra is toast. number two is that mark zuckerberg got roasted. like, you know, he did not do himself any favors here. the idea that regulators in the u.s. or around the world are going to allow mark zuckerberg to potentially undermine the

entire u.s. financial system is highly unlikely at this point. i don't think he did himself any favors at all, and a just open -- it just opened him up to being a punching bag from both the right and left on a whole host of issues that went far beyond libra. taylor: karen, you chuckled a little bit when sarah said that libra was toast. do you agree that libra feels a little bit dead on arrival? >> i said before that i think this is the worst product launch ever, and that is counting the new coke. the reason for that as they did not understand a very fundamental fact. the payments system, currency, transactions, it's about other people's money. social media raises a lot of privacy and other issues, but you're putting economic quality equality onty -- the line when you start dealing with other people's money, and i don't think to this day mark

zuckerberg or facebook at that. this is different. congress told him that today from both sides of the aisle. i'm not really sure they get it now. taylor: that was part of my conversation with karen, managing partner and cofounder of federal financial analytics and sara miller, deputy director of the open markets institute. coming up, and earnings bonanza. we begin with the path to profitability. tesla roars with surprise profits in the third quarter. we hear from an analyst. plus, wall street expected growth from amazon this earnings season. did they deliver? and if you like bloomberg news, check us out on the radio, the bloomberg cap, and in the u.s. on sirius xm. this is bloomberg. ♪

taylor: tesla shares spiked after the company reported a surprise third quarter profit. ceo elon musk took to twitter, less then one hour later, saying he was "super proud" of tesla's team. for great execution and the support of tesla customers is greatly appreciated. with more on the earnings-per-share picture, margins, and what the company is -- says about china, i spoke to an analystand -- from wedbush securities. >> if you look at the margins of profitability, that is the feather in the cap, and i think that is the surprise. this is something where, if they can maintain this, this could be a potential game changer for them going forward. taylor: the problem is you can't cut your way to growth. if you are seeing a topline decline for the first time since 2012, is it sustainable to cut your way to growth?

>> in our opinion, that is going to be the challenge for them, to navigate profitability while they are trying to get to growth, given what is happening in china. that is going to be the key in the conference call, majors -- major shortcomings, but that is really the key going forward. taylor: part of the profit picture and revenue picture has been the competition we have talked about between the s, x, and y, and the model three, which is the lower margin. how do you feel about the composition? with model three, given where margins are it is going to be difficult to get there from a margin perspective. y is going to be key going into 2020. that will be a big focus on the conference call, as well as china and the giga-three

buildout. taylor: amazon reported third-quarter earnings thursday. one of the big indicators of growth was expected to be the free one-day delivery. for more, i turned to our guests. there was a lot of angst around cost. toknew it would bring costs it, albeit for a couple of quarters, and the variability played out. they are also spending a lot on content and aws. so there is a spending cycle going on which makes the next the anxietyarters continues for -- from a cost perspective. but you are clearly seeing a sales impact. it will pay off longer-term in terms of market share and asenue growth but as far

cost of variability is concerned, we think that will continue for a few quarters. emily: are you concerned about the rate of spending? or is this one quarter and we should brush it off? >> i don't think it is one quarter but it does not concern me. you saw was amazon prove to the market they could drive profitability. they pulled unprofitable products, they emphasized aws. increasedave seen is spending on the things that will drive customers to you is amazon all over the place. one-day shipping getting products back on the shelf. what you see is their strategy is world domination. anywhere you can buy a product, they want to offer it to you and figure out how to monetize it. and is market share dominance the right strategy? >> i mean, they have proven it works.

if they wanted to work, it will work. -- want it to work, it will work. it is a rate of 36 billion. they are market share leaders in infrastructure services. that adjustment needs to be happening in terms of expectations for that revenue size. if you actually look at the advertising division, you saw growth acceleration this quarter. what we feel happening is advertising will slowly take center stage as aws takes a central role. taylor: we have a chart showing revenue growth for aws. how concerned are we that this is slowing? it is slowing multiple quarters in a row. >> there is concern, but i think there is a big market out there for them to go after. i believe microsoft is doing a good job and google is investing heavily in web services but

amazon has a big leg up. i was speaking with a jefferies analyst who brought of microsoft yesterday. he said microsoft and their as zure products will benefit from the shift to the cloud more than hands-on. are we seeing amazon web services lose some of the market share? >> i'm not sure about that in terms of amazon losing. microsoft winning, yes. that is the hybrid strategy they have been successfully executing and it should continue to benefit them. the market here keeps growing at a healthy pace. there is enough room for three players. google has also stepped its gave up quite a bit in the last couple of quarters, really. at the same time, i think amazon can hold growth in the 30% plus ,ange but advertising

disclosure of advertising is going to become more and more critical. this business can be significantly bigger than what is right now. they have the opportunity and better targeting in many ways because they are almost just before the decision. they have a very good roi potential. and as this business gets bigger, they might pull the disclosure card. rubber have eight of the u.s. was disclosed in 2015, and suddenly, the profitability perspective was changed? now, weight will shift more and more on advertising as aws plays a defensive role. taylor: if that were true, why are we looking at low forecasted topline revenue if they have that advertising powered muscle? they are probably looking at consumer spending and making sure they are conservative for what is a big holiday season. but i agree that when it comes to the areas of market share they are growing in the investments they are making, then their ability to juice more

revenue, i think they have a lot more opportunity. that was jumpshot ceo deren baker. twitter said there were 210 million daily active users of its photo messaging app snapchat in the third quarter. shares of snap have more than doubled in value so far this year. a research analyst joined us right after the call. >> there was maybe a little bit of disappointment from shorter term investors with regards to being a bit of deceleration relative to q3. i feel like the company addressed it pretty well. this still viewed as a largely u.s.-centric story was very strong and they are adding more users in the rest of the world. there's a little bit of a lag,

but it feels like they are getting the right pieces in place in regards to monetization. taylor: are you happy with the updated guidance you are getting from management? >> i think they are fabulous results. there has been a wall of worry with regards to user growth. the user numbers were fabulous for the quarter. outlook was very strong as well. and, i think when you talk to the company -- at this point, ownership has probably been a bit more hedge fund centric in nature. they have been spending a lot time with the community. the feedback i have heard is it is great. we love to own stocks when they jump 20%. we don't like owning them when it goes down 20%. i think they are doing an effective job tightening up the range of expectations. i look back objectively and i'm like, 50% revenue growth, that is fabulous. those are terrific numbers. taylor: i'm showing a chart to our audience of the growth really in this daily active

users. now hitting 210 million. what else do you need to see from this company to take on bigger companies like the likes of twitter or instagram? michael: what i have been seeing in terms of the proprietary research that we do, i would like to see a continued adoption of advertisers. where if you look at twitter, pinterest, snapchat, they are more niche by way of comparison versus let's say google and facebook. seeing that continue to move in the right direction, continuing to see new ad product innovation is key. one of the things where i feel like i have gotten a lot of questions from investors is they want to understand what is the opportunity in terms of advertising? it is a slightly harder format to monetize in verses discover lenses snap select. i think the message you heard pretty loud and clear on the call was this is a function of growing demand.

there is more than ample supply and i think there is a lot of headroom for the story. taylor: that was michael levine a pivotal research. coming up, things get five-year for wework. news of worker layoffs and a softbank rescue plan. details next. and the new york stock exchange president joins me to talk ipos and the rising inquiries around direct listings. this is bloomberg. ♪

emily: it is the end of one of the more dramatic business debacles in recent memory. softbank has come to the rescue of wework. japanesed the conglomerate will get 80% of the

office rental startup. the founder will walk away with about $1.2 billion. last january, they had a $47 billion valuation. now, the bailout values them at less than $8 billion. ellen huet provided the latest on where things stand. >> there are three parts. , a5 billion debt package tender offer, available for adam neumann to use if you would like to sell that the shares, and then 1.5 billion of an accelerated weren't -- warrant. is softbankkey here is coming in at a lower and lower average price for their transaction. if there is a payoff, they could win big, but what the other investors feel? >> this is going to be an ongoing conversation to figure

out the nitty-gritty of this deal. you are right. softbank is doubling down on its ownership and buying shares at lower and lower prices. the 1.5 billion is coming at much lower than even the tender offer. bey clearly believe it could very valuable. at the same time, you have a lot of employees looking at these thinking how am i ever going to get what i expected this equity might be worth? particularly for employees who joined when they got options , many of them are underwater. this came up in an all hands meeting today with the executive chairman of wework. employees are concerned about how this is going to play out for them. taylor: describe some of the other reactions you got from the employees when they heard about these about these bailout packages. >> one former employee called it a platinum parachute. they feel like him walking away as a billionaire, to them it

hurts and it feels painful that the company didn't even have enough cash to pay out severance packages for the thousands of employees they plan to lay off . meanwhile, adam neumann walks away with on top of his tender a $185f availability, million consulting fee which was explained to employees, that the fee was something they had to pay him to get him to agree to a noncompete and remove himself from the board. emily: coming up, we are not done with earnings. we hear from the twitter's ceo after the company reported thursday and missed on revenue. we find out what happened. micron's chief executive paint a rosy forecast on-chip demand amidst lingering hangovers from the u.s.-china trade spat. we are live streaming on twitter. technology and

follow our global breaking news network tictoc on twitter. this is bloomberg. ♪ from the couldn't be prouders

to the wait did we just win-ners. everyone uses their phone differently. that's why xfinity mobile let's you design your own data. now you can share it between lines. mix with unlimited, and switch it up at anytime so you only pay for what you need. it's a different kind of wireless network designed to save you money. save up to $400 a year on your wireless bill. plus get $250 back when you buy an eligible phone. call, click, or visit a store today.

>> welcome back to the best of bloomberg technology. twitter shares plummeted after reporting earnings of missed -- it missed revenue estimates. it seems they added plenty of new users but struggled to sell advertising marketing them in the period between july and august. i spoke about that with ned siegel. >> i would say advertiser sentiment seems to be strong. we had a couple of product related issues where some

settings did not work as expected. i realized that during the quarter. that impacted us by about three or more points. we expected to have four more points of impact in q4. >> how is that going to impact your financials, perhaps even more into 2020? >> we are working hard to remediate these things. it means communicating clearly so people understand when something did not go the way we expected it to to the people who are affected to our other stakeholders, there were tweets about this stuff during the course of the quarter. the second is to make the setting work the way we had expected it to. and then we work with partners and we think internally about the best way to make sure that we are giving people as good an experience as possible on twitter. that means the tweets they see and adds they seek were respecting the settings. finding them away to give them a good experience. an example would be measurement partners who helped advertisers understand the success of their

campaign. we are working hard to get them better data. >> a lot of people said this was one of the first signs you have broken some trust with customers and that this was an opportunity for regulators to talk to them about data privacy. have you been in touch with regulators about data privacy? >> we are always in touch with regulators all over the world. it is an important part of understanding their priorities and the principles we used to make decisions about what questions we ask people, how we display our policies on the service and how they play out in the product we deliver. when we do that, we find we can come to better conclusions and we can lay our policies out better for people and they can understand our business better as well. pictures a positive

over at microsoft where the company recorded first quarter growth in nearly every arena on thursday. i asked the analyst for his impression. >> the cloud, they are crushing it. it is absolutely incredible, a $33 billion run rate that they to 15rate currency growth up from 14 last corner. they have embraced the shift to the cloud. the ceo got ahead of this. they are taking shares from oracle and ibm. we think that the momentum continues. what is notable is that they have massive backlog. many of these contracts, they

are not recognizing the revenue over the quarter. they are recognizing it over multiple periods. these are multiyear contracts that used to be 10 and 15 20 million and now are measured in the billions of dollars. is why the stock continues to grind higher. with taxes.n overall, you can't dream up a better quarter. >> that was jeffrey's analyst, brent thill. the company posted a weaker than expected forecast on tuesday. it is another sign that a rebound in demand for semiconductors will take longer than expected. i caught up with ian king. towe are expecting things continue to decline. but at a better rate.

the declines will be smaller. what we got is the reverse. instead of a three or 4% revenue, they are predicting one at the midpoint. >> we had thought that 56% of their sales came from stable markets. or auto sectors. did any of that stability help them? >> absolutely not. communications was their worst market, down 20%. automotive is one they cited as being considerably worse across the board. lead some of the sectors in comedic asian. -- communication. what can we expect that company in the coming acacian sector going forward? >> they were not at all positive about that. component important of cell phone systems.

if you are looking for a readthrough on whether big telcos are spending on their network, this would not be a good sign. >> i want to talk about conversations we have had on the trade tensions. we heard from the ceo of the company and i want to take a look at what was said. to macro events. specifically, if you think about when there are tensions in trade , what do businesses do? they become more cautious and they pull back. we are at the very end of a long supply chain. when the ones at the front pullback, it becomes a traffic jam. >> so, clearly putting a lot of the blame on trade. is that valid? >> there are two ways to look at it. up until now, they have not done that. they have been reluctant to assign blame. they have said the evidence, we cannot ignore it.

on the whole, they have been getting questions. how can you prove to us that this is market share? their answer was market share takes a lot longer to shift. of course it is the economy, of course it is trade tension. >> that was ian king. as chipmakers are reeling from the u.s. trade war and the huawe i band, he is focusing on the return to growth. oniscussed with sanjay thursday. memory thatind of speeds thanu faster flash memory. highernsities that are than that memory.

this is to accelerate deep learning workloads. what is introduced today is the fastest drive in the world. >> is this really banking of the future of the cloud? it is a technology that works well. of course, it is a technology that can be deployed to other market applications such as mobile or other intelligent devices on the edge. the trends of artificial intelligence today are the ability to process data. that means you have to be able to have installations. you have to store data.

you have to process it fast. it needs the kinds of solutions micron makes. deviceshe intelligent from smartphones to automobiles. was micron's ceo. spotify.re was we hear from the new york stock exchange president, stacy andingham on the popularity the atmosphere of the delayed we work world. building habitats for space. this is bloomberg. ♪

>> there is a growing chorus on the direct listings as an alternative to ipo. that is being led by bill gurley of benchmark. spotify led the trend in 2018 and, so far, airbnb has also indicated it is leaning toward a direct stock lifting next year. i caught up with the new york stock exchange president, stacy cunningham on monday. >> if you take a step back and think about why companies choose to go public, there are typically four reasons. one is access to capital. credibility ofhe a public listing and the visibility of that event. the third is liquidity for early investors and their employees, who often get paid in shares or auctions of stock and want to be able to use that to buy a house.

four is currency so they can engage in mna. what we are seeing now is for many companies, because they are much larger companies, in the private market space, it is more than liquidity for their employees that is driving the public listings. that allows you to ask yourself, can we decouple capital raising from a public offering? that is what spotify started. barry mccarthy asked that question for you he said why do i need to go the traditional ipo method if i am not looking to raise money. that was the genesis of the direct listing. >> how does your world change between a direct lasting -- listing and an ipo? >> we have been helping companies come to markets so they have access to capital for a long time. the ipo mechanism that we talk about so much and are so familiar with has only been around since the early 1970's. that does not change our job.

our job is to help find price. we are uniquely positioned to do that at the new york stock exchange because we have a market maker. with the direct listing, they are looking for that opening price in the morning to establish what the value of the company is and where supply is an demand is. that is the job we do every day. >> you are in san francisco because you are attending meetings and conferences about direct listings. in your conversation, what do you hear from underwriters who, it used to be profitable to help underwrite an ipo and now they are try to get more involved in direct listings? >> i think they are trying to serve the customers. they want to be helpful and provide resources to their customers. they are engaged in the process. we have seen them take a real leadership position on how we can use this as an additional tool and product. they can offer their customers. >> you have said you're getting

more tech companies on the nyse. you modernized your rules. you allowed nonprofitable companies to lift. was that a good decision? do you consider yourself an enabler in those companies? >> many people do not realize that the stock exchange did not allow companies that were pre-profitable to lift on the exchange. many companies have come to the public markets prior to being profitable. we modernized our lifting standards. the question you're getting at is are those come he's good for the market? it is very important for a company, it is not unusual for them to be pre-profitability when they lift but have a plan to get there. investors can share in that process and ultimately, they do

become profitable. ieshave seen that with compan out there. >> that was stacy cunningham. coming up, private companies tap to create space habitats once the international space station retires. at by onee the feet b boston-based company. that is next. this is bloomberg. ♪

>> 2020 has been dubbed the year of artificial intelligence and tele-performance is headquartered in paris, france.

they are getting aggressive when it comes to ai. i got all of the details from ceo daniel julian on thursday, from new york. >> i don't know if i am going to speak a lot about nigeria because it is a premier for us in the country. helpct, it is much more to -- then to help customer service. what is sure is that all of the companies all around the world deliver much better consumer service to their customers because the customers have taken the power. and the idea of chatterbox is very interesting. do you see chatbox becoming more

and more of your business? >> the first time i heard about the chat box, i was a little bit depressed. have a service of people helping the customer to solve their problems on the day today. i was thinking my god, they are not going to do the job. that was for five years ago. guess what? moreompany has never grown than over the last five years. what is happening is the world everyday.demanding yes, we need the chat box to help. they are assisting us. experts to better serve the customers. the customer is still human

being. >> how are you also using ai and your business in content moderation? >> in content moderation, i does and typically, ai ease relevance for 95% of the world. whatmake the difference in is offending and not offending. what is part of the story. the ai is to dream. i would say illuminate 95 -- eliminate 95% of the issues. they are 5% of

the issue that needs to be reviewed -- there is 5% of the issue that needs to be reviewed by human beings. it is a race that is never going to end. ceohat was tele-performance , daniel julian. over the past few decades, the international space station has allowed astronauts to live, work and conduct research in microgravity's. with the stations planned retirement by 2030, private companies are being asked to create the next generation of space habitats. in bostonactoring for 3d printing in mars that can build the next generation of space habitats on mars. it is technology on the cutting edge. >> we will return american astronauts to the moon. not only to leave behind footprints and flags, but to

build the foundation we need to send americans to mars and beyond. proposed mission, along with spacex -- some companies are thinking beyond habitats like space stations and actually building on the surface of other permits. >> i was designing the building skyscrapers and i saw you on and that for me was a trigger. i thought this would actually happen. it has been my dream to put a building on the moon or mars. if he is going up the pace he is going, it could definitely happen within my lifetime. i want to be the one to build it. in this warehouse, architecture firm ai based factories are refining the production of a four story structure they created for national competition.

providing the next generation of state habitats on mars. >> when we started designing, we looked at everything that has been done already and tossed that aside. what we were given was a set of guidance from nasa. they think the best way to build a habitat on mars or the moon is the materials that are there. if you have seen sci-fi movies, you might see glass and steel domes on distant planets. the reality is to ship that kind of material to the moon or mars would be so expensive you would never be able to build in the first place. the idea is to send a 3d printing robot, which can harvest and material and bill that. material isnable made from recycled plastic or from oil and sugarcane. on earth and found mars. >> we have tested this material.

it is three times a strongest concrete. it can prevent itself from being pulled apart which is something that concrete is not very good at. why this thing is shaped like an egg. it is a structurally optimized form. it is thin but it provides the strength the big needs. that is why it is shaped the way it is. the shape accommodates for extreme differences in pressure and temperature on the surface of mars. research needs to be done to find out how 3d printing could work in the unique environment of space. >> you are dealing with a completely different set of his ax and environments, which is .ery harsh

finding solutions for how to do anything in space, there is no such thing as brute force when it comes to space. the sign is elegant, lightweight and a cost effective solution. beginninghallenge is going to print with the dirt. then we printed out on the moon and finally on mars. >> the first customers could include nasa and companies like spacex. before that, ai space factories hope their technology could be monetized as what is transformational on earth. >> the challenges of building on mars forced us to make this jump in construction technology which we can apply on earth. rather than building with steel and concrete, which are manufactured and energy intensive materials, we can go to a site and allow a 3d printer

to print in the most sustainable way possible. we never would have found these ways if it were not for the challenge of building in space. >> 3, 2, 1. and lift off. the first commercial launch of kennedy space center's c.storic in 3 >> that is part of bloomberg's original series, giant leap. you can check out more at blumberg.com. that does it for the best of bloomberg technology. at 5:00 p.m.day . atyork and 2:00 p.m sanford cisco. be sure to follow our global breaking news network, tictoc on twitter. this is bloomberg.

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jonathan: from new york city, for our viewers worldwide, i'm jonathan ferro. bloomberg real yield starts right now. coming up, investors shaking up weak data, hoping to resolve lingering macro issues, as broader credit remains, more cracks are showing in leverage loans. looking for clues beyond the next rate cut. we begin with the big issue. debating whether we have seen the worst of it. >> the u.s. is in a good spot. >> manufacturing is weak globally. >> are we going to see something as bad as 2015 in terms of a global industrial recession?