♪ ♪ taylor: i'm taylor riggs in san francisco, in for emily chang. this is "bloomberg technology." coming up in the next hour -- stock record. tesla shares touched $420, the goal price elon musk outlined this past summer. he joked about the milestone on twitter. how much higher can it go? plus, automated hacking. in 2020, online risks will morph into new threats. is your information safe? we will talk to the ceo of cyber

security firm proofpoint. and 2019 ushered in some of the biggest tech ipos ever, as pinterest, peloton, uber, and lyft all went public. wework, however, stumbled to debut. we will have a recap of it all. first, to our top story. tesla shares set a new record high and reached that infamous $420 mark. you will remember $420 was the price ceo elon musk claimed tesla would go private at last year. earlier today, musk tweeted, "woah, the stock price is so high. lol." joining us to discuss is our bloomberg news reporter, ed ludlow. another day, another record high. what is driving it for tesla this time around? reporter: the momentum is all about china, taylor. overnight, tesla secured $1.4 billion in financing from local banks and much welcomed cash injection. that built momentum from last week, where in november, new vehicle registrations for tesla in china hit a five month high.

you'll remember those vehicles are subject to a 25% import duty. the logic follows that if tesla get the plant -- can shanghai plant up and running, they can offer vehicles that are more competitive priced, and the unit costs will be lower. they will be able to get deeper into the more addressable market in china. that is really where recent momentum has been driving the stock higher for tesla. taylor: i want to come and show a chart i am showing here inside my terminal. it is the share price, then the shorts, which recently since the summer had been getting crushed. what caught the shorts off guard so much? reporter: longer term, the momentum extends from the profit surprise that came in at $1.86. the forecast was for a loss at $0.24 per share, and so that is really what happened. the stock is up 66% since that point. but really, elon musk and tesla are the masters of keeping

everyone from tesla fanatics, to consumers, to wall street firmly focused on the horizon of what is to come next. the best and most recent example from that is the tesla cyber truck. that is the ev pick-up truck that will not go into production until 2021 but all that people have been talking about in recent weeks. that is really what tesla is best at -- keep people focused on the positives in the future rather than focus on the short terms financials of the present for tesla. taylor: bloomberg's ed ludlow, thank you for joining us. now, we are coming up on not just the end of the year, but the conclusion of a decade, and big tech has definitely made its mark. we are joibed by mark mahaney of rbc capital. simpleto start with a chart. come look at the terminal here. continuing to crush the s&p 500 this year.

what happened? even with all the risks outstanding, big tech is the star performer. >> i think it has to do with the revenue that has been extremely consistent for these names. some wonderful data points. google has gone 39 straight quarters of 20% revenue growth. facebook has gone 35 quarters of 35% revenue growth. and amazon has done something of 72 quarters of 20% revenue growth. organic revenue growth. it is so rare you get that kind of consistency at that level of scale. they become compounders. there is a bit of extra in facebook after it traded off aggressively the year before, but people like compounders, and these stocks have them. taylor: we talk about the key things of 2019. it would not be 2019 if we did not talk about the year of the botched ipo. did the market finally learn this year about the difference between growth and growth at any cost? >> i think so. if you set it up that way, the market goes back and forth. sometimes it wants growth,

sometimes it wants value. i think lyft and uber were gunning their businesses for growth thinking that's what the public markets wanted. the public market unfortunately for them changed their mind right when they had their ipos. it was an issue for both of them and they both have done the right thing. they have come out and committed to and they would turn break-even or profitable. in the case of both companies that is in 2021. taylor: you have been covering this sector for decades. do you feel that the market, even though it has a short memory, changed structurally when it comes to viewing profitability? or do you think we could easily go back to favoring growth over value? >> i still think we will favor growth over value. put this in context. uber was in a very unusual ipo. we had never had a company go public with that level of losses, $3.5 billion. i would be careful about

extrapolating from that. lyft also had big losses, over $1 billion. and then wework came out potentially offering more of the same and with some management questions, as well. we just had three issues that the public market said "ok" on in the first two cases and then "no mas" on the third one. if you want us to buy your to change your orientation, and they have. taylor: there are some other tech ipos on a smaller scale chewy andover, pinterest. they are trading below their ipo price. was there a broad based theme or something idiosyncratic going on with them? >> i think it was something idiosyncratic and something to do with the timing of their lockup expirations. they generally outperformed the market and stayed above their ipo price. one clear trend is that the public markets are trading the lockup expirations, putting a lot of pressure on going in and buying them coming out. my guess is that the same is going to happen when we look at both of those assets since

six months from now, they will be high above their ipo prices. that is our guess. taylor: you also mentioned uber and lyft a few times. both stocks are down 32%, 36% since their ipo. what happened besides just timing? >> these things could have been poorly priced. i think that from time to time happens. it is a very hard thing. trying to place a lot of paper out in the market with unusual circumstances, very high losses for each of these assets. they also were reporting decelerating revenue growth going into their ipos, so i think a lot of it has to do with these things being poorly executed and poorly priced. it is easy for me to say that on the research side, i am not a banker, but it hard to escape that conclusion. taylor: you are on the research side, which means you are looking at the fundamentals. when you take a look at cash flow analysis and all of that, do you believe them when they say they could be adjusted to be positive by 2021, which both companies are aiming to do?

>> with uber, you have to peel apart the business. the eats business is still in the food fight stage, if you will. but on the ridesharing business, there was one number to keep in mind. the 20% take rate, 20% margins, that is a good business. public investors, as they realize that, are warming up to uber. taylor: the other big, big theme of the year was streaming wars. you covered netflix -- did they do enough in 2019 to offset competition coming quickly and coming at them fast? >> probably not, but they are getting awfully close to solving that problem, i think. the hedge is generating international, original content -- original content in international markets. they will launch something like 130 new series for the international markets. for the philippines, for south korea, for germany, for turkey, etc. that was the single biggest trend in consumer entertainment

streaming. everybody is streaming. taylor: i was reading though, correct me on what your research says, that domestic subscribers are more profitable than those international subscribers. so while netflix is going international for the growth, are they as profitable as those really strong domestic subscribers? >> there's kind of two answers. that is a great question. in some markets, the margins are higher overseas than they are in the u.s. the profitability of the market is determined by competitive intensity. which determines how expensive the market is, and how expensive the content is. butt tell anybody this, this is the most expensive market in the world when it comes to producing content. and that's the simple statement. there are markets overseas where netflix can scale with better margins. i think that statement is very widely believed in the financial markets. i think the financial markets are wrong on that. taylor: i want to end 2019

before we take a look at 2020 with what stock surprised you the most, whether it was to the upside or to the downside in terms of where you thought they would be, and then where they actually came in at. >> netflix i didn't think would miss the u.s. subs prior to the streaming launches. that was a big negative surprise, to me. our big positive surprise which we got right was facebook. we thought it was way oversold last year. it owns the two largest social media assets and messaging applications in the world. it is a great business model, and investors forgot about that. they have come back to it. that was the positive surprise. taylor: facebook is going to lead us right into our next conversation, because mark mahaney of rbc is staying with us. next, we go through his research on what to expect from his big top tech calls in 2020. and if you like bloomberg news, check us out on the radio. you can listen on the bloomberg app, bloomberg.com, and in the u.s. on sirius xm. this is bloomberg. ♪

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taylor: we are back with mark mahaney of rbc capital. now it is time to take a look forward to 2020 and fresh off the press, 53 pages, your top picks for 2020. i was shocked, number one is uber. how the heck is your top pick uber? mark: it is our facebook of 2020. it is a dislocated stock, unpopular, it's a failed ipo, it has this eats business losing a lot of money, nobody wants to buy uber. we think the story is going to get better and better as we go through the year. it is likely to have more upside like facebook did. the economics are starting to prove themselves out. what economics are starting to

-- what this company has to do is bring down operating losses each and every quarter. we think they will, and we think that by the end of 2020 going into 2021, we can have a break even quarter. taylor: moreso than lyft, because of its diversification? rather than just rideshare? mark: i think they are probably joined at the hip. it is hard to see one dramatically outperforming the other. what i find is that the shorter term oriented funds have preferred lyft because it does not have the food business and is just in the u.s. market, but the flipside is that uber has more leverage, they can sell one of their international assets. and they also have 70% market share in the u.s. generally the company with the greater market share determines economics. that is uber. taylor: how do they overcome this in five, ten days? mark: i don't think it will be implemented immediately. i think this is going to be a court fight. we think that it could lead to something like a single digit percentage increase in cost.

there are two or three hedges. first, uber and lyft gave out a lot of subsidies to drivers in order to get them to drive with uber and lyft in the first place. if you are giving them benefits, there is less need to give out subsidies. second, they can pass some of these expenses onto consumers. and third is, there is only a small percentage of drivers that are actually full-time drivers. those are the hedges. taylor: i want to take a look at number two and number three top picks, google and facebook. with all of the risks, the antitrust, google and facebook are number two and number three. mark: i think regulatory fares fears have been rising for a couple of years. i think we are close to peak regulatory fears. it is highly unlike these assets get broken up. in which case, we have already seen the worst of it. we have seen fines imposed against both companies, and it has not impacted their advertising revenue growth rates. the interesting angle on google is that as the business has

finally gotten scalable and big enough it is less of a drag on margins, so you could actually have a positive earnings story out of google this year. with the two cofounders kind of stepping aside, we may get more rationality in some of their investment spending, what they call the other bets area. taylor: are you thinking facebook is poised to see better ad revenue growth than google? mark: absolutely. keep in mind, we have two things coming up this next year, the quadrennial year. we have the olympics and the elections. i think both of these companies materially will benefit from that. facebook and google are a great way to play that. taylor: another big tech name is notably absent on your list. where is amazon in your bull thesis? mark: i think there is an overhang there. for us it is a medium buy, not a strong buy. as a long-term asset, it is great. the overhang is that the aws business has been slowing down, margin pressure, greater

competition from microsoft. i think we and investors want to see clearing of the air before we get more aggressive on the stock. taylor: i want to go down into some of the smaller companies. we were talking about netflix earlier. i heard spotify kind of compared to netflix in terms of going to the original content model. do you see them doing that? does that give you greater visibility on earnings growth potential for the company? mark: there are pros and cons with spotify versus netflix. the pro is they are not going to spend as much on original content as netflix is. the negative is that they have got much less leverage versus their suppliers. there are three major music labels. that means spotify's gross margins are always going to be smaller than nerflix's. the pros and cons either way -- we like spotify into this next year, we think they will wrap up some label deals and be a gross margin catalyst. taylor: when it comes to streaming wars, roku is another

company that you like at this point -- trading right now at a 140. you have a 160 price target on roku. is this just a good derivative play on the streaming wars, or do they add something special? mark: i think that's exactly it. there are three or four derivative plays. off the streaming wars. they have all traded like derivatives. roku is almost up 300%. trade desk, 150%. up.ai is these are not new secrets. you just pointed out there is maybe 10% to 15% upside to the price target, not dramatic. i guess i am struggling a little bit and there is probably risk -reward in large cap than small cap. taylor: as you looked at 2020 overall, you see mostly positive sentiment heading into the year. overall, is that a correct way to characterize how you're

feeling about the sector going into the new year? mark: i think the sentiment on the names is generally bullish, relative positive. it makes it tougher to really get a lot of upside in stocks. that makes you want to look for that dislocated stock. we had facebook as one of our top picks. we got it right, we got lucky going into 2019. what is the facebook for next year? with uber, it is dislocated stock, but i think investors will come to it as fundamentals turn. taylor: that is mark mahaney of rbc. thank you for joining us. and coming up, we have seen rampant cyber attacks in the past few years on both personal and institutional scales. what will the threat landscape look like in 2020? we will find out next. this is bloomberg. ♪

taylor: how to stop cyber threats? cybersecurity concerns have been on the rise as data breaches

frequently occur in spaces like financial institutions and social network platforms. with 2019 wrapping up and an election looming in 2020, we are now joined by the proofpoint ceo to discuss what the cyber landscape will look like next year. proofpoint helps companies worldwide safeguard their data. i wanted to go to that first, how much you look at the space in 2020, do you expect firms to increase their spending on cybersecurity? >> i think the reality is the cyber concerns are increasing, not decreasing, because we have seen very highly visible attacks. people need to improve their posture. i expect spending on cyber related products and services to increase over the coming year. taylor: you were talking about three key trends. the first of which is they

target people, not the infrastructure. how are they becoming more personalized, where more and more, we get tricked, if you will? >> i think the reality is infrastructure broadly has become more secure. some type of targeted attack using some sort of social engineering. they look at your facebook account, instagram, they try to find out something about you and they craft a lure to try to make you click or engage with in some way. tayor: what do we do to stop it? is there anything7 >> a number of things. we provide security to help organizations block these threats. we also do work helping raise awareness for every single employee. we can all be better at ensuring we are not being lured into a cyber threat. the unfortunate reality, if they attack you at work, they probably will attack you at home as well. taylor: the thing that shocked me was email.

i thought we knew how to ignore spam emails. how are we still getting tricked by emails7 >> it is the way that business runs today. allou look back, 94% of breaches come back to a single person, and being targeted is either an email or some way an employee is interacting with some cloud app. taylor: we are quickly approaching 2020 elections. what are the threats at this moment, the biggest issues? >> any time there is some form of uncertainty around major events, and election eighth is a perfect -- and an election is a perfect example, you have more actions by cyber actors. people will click on things and are more susceptible to being lured into some kind of attack. taylor: how are you assisting political campaigns in that? >> for us, we are trying to help all of our customers be better secured and secure their

employees. we are very much focused on watching what threat actors are doing and where the market is headed, making sure we are one step ahead from where the threat actors are. taylor: do you see similar threats like we saw in the dnc hack with clinton back in 2016? are those threats similar, and are we better prepared? >> i think we are better prepared, but the attacks are probably more sophisticated today. as we enter the election year, you will see more participants more broadly in the threat environment. everything from state actors, to organized crime, to anyone trying to take advantage of another person. taylor: what do we do to prevent -- not hacking on voting machines -- but utility, power grid. is there anything to do to prevent those, which fortunately have been fewer in the u.s.? >> i think there is broader awareness today across all of those organizations. they are raising the awareness of their employees and improving their infrastructure. i think that going back to the first point we made, the thing

that is most vulnerable today is people, because that ultimately is the root of any kind of breach that ultimately happens. organizations are thinking harder about how to better defend their people, because they are the key to unlocking what is behind those doors. taylor: any big change we can make today to help keep the election safe in 2020? >> i think everyone needs to be vigilant. over the last 18 months, $26 billion have been lost related to even a simple category as business email compromise. so the motivation and incentive is there, and we all as individuals at work and home need to be more vigilant. taylor: thank you for joining us. still ahead, from being one of the most promising unicorn start-ups, to a failed ipo, we explain the wework debacle. that is next. this is bloomberg. ♪ ♪

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♪ ♪ taylor: this is "bloomberg technology." i am taylor riggs san francisco. in less than a year, wework went from being the darling of the venture capital world to needing a rescue package and financing from goldman sachs to avoid collapsing. bloomberg original presents the story of how the company got here. take a listen. >> in less than one year, wework went from one of the most highly -valued startups of all time to losing more than 3/4 of its ousting its rockstar ceo, and desperately needing a cash

bailout just to keep the lights on. to understand how we got here, we need to take a look into mistakes made along the way. >> the ambitious vision of wework is dead. period. >> this is a case study of when a company got too much money too fast with no oversight. >> they are no longer the market leader. that company is going to get smaller. the story is over. >> as late as summer 2019 the co-working company was considered one of the most valuable startups with a $47 billion price tag. more than airbnb and spacex. but in just a few months, that valuation has vanished and the very future of the company is in doubt. to understand how this happened, it all starts with the company's now former ceo and founder adam neumann. >> adam neumann is the co-founder and was the ceo for a long time. he came over to new york for college after being in the israeli navy and started a baby

clothing line with knee pads. >> his landlords were showing him a building in brooklyn where he came up the idea of sub -dividing that space with his co-founder, a trained architect, and they came up with a plan and they started a company called green desk, which they sold. it was the first iteration of wework, which they started in 2010. >> a new environment for the workspace. co-working was where it started. today there is a movement in changing the way people work. >> 2010 was a great time to start a co-working office with lots of empty office buildings and vacancies. we were a sensible solution for them. the first building on grand street in downtown manhattan was where wework launched its first spot. from there it was boom. from 2010 to 2011, it doubled in size.

growth was exponential. >> business gew quickly and by 2015 the company quadrupled its valuation to $10 billion. 23,000 customers paying memberships in 32 locations, renting desks for as little as $45 per month. >> the whole idea was let's not just be a commercial office leasing setting. let's accelerate the new world of how people work and make it better. >> community, being surrounded by a group of like-minded individuals being part of something bigger than yourself inspires people to work harder, spend more time at work and have fun doing it. >> this excitement drew in more investors to the company. >> this company is not 2.0. it's 10.0. taking it to the next level. when you walk into their space, you see the energy and excitement and you see the interaction, it is a very powerful concept. >> the most crucial investor

would be softbank. >> the time wework really started to take off was when softbank invested in 2017. they gave them a valuation of $20 billion and that is when you start to get into the high ranks of other venture private companies. >> with softbank's investment wework expanded its footprint , throughout the world. >> it's the beginning of this partnership between adam neumann and masayoshi son, the head of softbank. they have this meeting that is told again and again in the lore of wework, where adam made this pitch and he said, that is great but let's make it bigger. >> wework is one of over 80 companies that softbank's vision fund has backed with $100 billion. >> there is lots of money out there in this unique period of transformation. let's make everything happen faster with more money. let's enable companies that have smart ideas to get even more ambitious, bigger, and faster.

>> after getting these investments from softbank and license to spend quickly, that is just what wework did. opening more offices around the world, making investments in a variety of different companies, and even opening an elementary school in new york city. >> it's almost stuff of legend now, how recklessly wework spent its money from a company makes wave pools to a company that makes super foods led by a guy adam met surfing. >> when you see a startup in the commercial real estate sector investing in an indoor wave pool company, and in a children's school, you know something has gone wrong. taylor: that is part of spectacular rise and fall of wework, a production of bloomberg originals. you can watch the rest on bloomberg.com. the uber ceo says the company plans to be a one-stop shop for

intercity travel and it may include flying taxis. he spoke at the economic club of new york in december. >> ultimately, where you are going to be with uber is we are just going to be an app, if you want to get from point a to b, we will tell you the smartest way to get there. we're doing it in little ways. it takes huge amounts of data to figure this out. if you are in new york city, if you happen to be at 42nd street, and you are going to jfk, and you hire an uber black, we may tell you to take an uber copter. that is technology that is being built right now. all you need to do is imagine a world where the copter is replaced -- taylor: the mayor of london was not impressed with uber's response to its regulators. they revoked its operating license in november. >> they were quite brash and

aggressive. let's see when they go to the courts whether they change their tone. i hope they do because, actually when you speak to londoners who use private hire vehicles they quite like it. taylor: the mayor says he will not compromise on public safety and uber should communicate better with transport authorities. uber ceo travis kalanick was forced to resign after a series of scandals. since then, the replacement has pushed the company beyond ride sharing. but it hasn't been an entirely smooth ride. as 2019 wraps up, uber is set to be one of the worst-performing stock debuts of the year. it is down 30%. burdened by the losses and the long-term viability of the business. emily chang sat down with its

ceo for an exclusive conversation. >> part of our business has to fight for money. and if they're not deserving money, they are not going to get it. so believe me, internally, there is a lot of creative destruction and lots of competition and if one part of our business is not carrying its own weight, we will pull back. we pulled back out of china and we turned the $2 billion investment in cash into what can be $10 billion in a stake in didi, a very big ridesharing business in china. so, we are in the end, we are looking to build a business. we want to build a business in alignment. if something is not working, we believe we have demonstrated the financial discipline to make the right call at the right time. emily: driver protests are not unusual. when we last visited, there was a driver protest outside. democratic presidential

candidate pete buttigieg was out there. he said gig is another word for jobs. that means you are a worker and you ought to be protected as a worker. there is support for legislation that would force companies like uber that rely on contract drivers and delivery people to make them full-time. why shouldn't they be full-time? >> because they do not want to be full-time. some do, but more than half of our drivers in the u.s. drive less than 10 hours with us a week. listen, right now california has an historic opportunity. we are having these discussions and we want to get to solutions. we're offering $21 minimum an hour when you are driving on the platform. we're offering benefits, and we're offering a voice as far as how you are going to be treated. 21 bucks an hour compared to 12 dollars an minimum wage. hourthis is real money and these are real rights, and you get the flexibility that every single uber driver or courier wants because they can come into the

market when they want to or out. this is a historic opportunity to revolutionize the gig economy, and i do not think gig is a type of work. to say there's only one way to work and everybody needs to be full-time, it satoru, i don't etc., ihat's -- i don't think it is correct because it takes away flexibility and flexibility is absolutely some thing that all our drivers price. >> can you give flexibility and safety at the same time7 >> if the legislators work in the interest of making something happen, absolutely. and you know that we are making very significant investments in safety as far as the safety center, tracking your ride, etc. we believe we are "the" leader in safety as far as transportation goes in the world, and we will continue to invest aggressively there. emily: as the stock goes down. drivers are picketing outside. the press is writing about helium balloons. how do you stay focused on the

long-term? >> you put your head down and work and know that this is a once in a generation company that will change how people access opportunity and how people move. the work we are doing is really important. everyone is going to look at the short-term price. it is part of being a public company. people have worked really hard and the equity is a representation of their work, but i think the people here understand that if they keep innovating, if they keep working hard, the rewards will absolutely come. can't control the timing but you absolutely can control the outcome. taylor: that was uber's ceo speaking to emily chang. and coming up, ipo's or direct listings. seeing a trend in how companies choose to go public. we will hear from our interview with the nyse president next. this is bloomberg. ♪

♪ ♪ taylor: there is a growing chorus on the benefits of direct listings as an alternative to an ipo, largely led by venture capitalist bill gurley. spotify loved the direct listing trend in 2018. and so far, airbnb has indicated it is leaning toward the direct stock listing next year. i caught up with new york stock exchange president stacey cunningham in october. they expect more companies to embrace the direct listing mechanism. i asked, what will tilt the scale for companies preferring direct listings over ipo's? stacey: if you think about why come please choose to go public. typically there are four reasons. one is access to capital. so they can raise some money. two is having the credibility of a public listing. the visibility of that.

30's liquidity for early investors and employees. very often getting paid in shares or options of stock and want to be able to use that and go buy a house. four is currency so they can engage in m&a. capitalnally, access to has really been the primary driver in raising money, and what we are seeing now is for many companies, because they are much larger companies in the private market space, it is more the liquidity for their employees that is driving the public listings. it allows you to ask yourself, can we decouple capital raising from a public offering? that is what spotify started. the cfo of spotify asked that question. why do i need to go with a traditional ipo if i'm not actually looking to raise money? so that was the genesis of the direct listing. taylor: how does your role change between a direct listing and an ipo? stacey: we have been helping companies come to market so they have access to capital for a very long time. the ipo mechanism that we talk

about so much has really only been around since the early 1970's. so that doesn't 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 that is assigned to trading each of these securities. with a direct listing, they are looking for their opening price in the morning to establish what the value of the company is and where supply meets demand. that is the job we do every day. taylor: you are in san francisco attending meetings about direct listings. in your conversations, what do you hear from underwriters who used to be profitable to help underwrite an ipo? now they are trying to get more involved in direct listings. what do you hear from these conversations? how they are trying to get more involved in directly. stacey: they are trying to serve their customers. as their needs have changed, the banks are looking at how they can be helpful and provide resources to their customers. they are very engaged in the process. we've seen them take a real leadership position on how we can use this as an additional

tool they can offer their customers. and that is what we are seeing happen. taylor: you recently are getting more tech companies on the nyse. which previously they were listing on the nasdaq, because you modernized your rules, allowing non-profitable companies to list. but was that a good decision? do you consider yourself an enabler in some of those unprofitable companies? stacey: many people do not realize that the new york stock exchange listing standards did not allow companies that were pre-profitable to list and many of today's companies over the past several years have come to the public markets prior to being profitable. so we modernized listing standards, and since then the vast majority of tech proceeds have been raised on the new york stock exchange. but the question you are getting at is are those companies good for the market? it is important, it is not

unusual for them to be pre-profitable when they list, but then have a pathway to profitability. how are they going to get there? investors can share in that process and they do become profitable. we have seen that with tons of companies. taylor: finally here, how has wework changed the market? stacey: i think there's a conversation. i will never talk about specific companies, but there are conversations the market is having around discipline and governance in companies, around the valuations of private markets versus public market. this is not about one specific company. it is about trends in the market when there are fewer investors determining the valuations of a company. it is not price discovery like in the public markets with many investors. nobody can value, there are tons of smart people in the private market space. nobody can value the company the way the public market does. that is real value the public markets give to investors and employees and all main street investors as well. taylor: that was stacey cunningham, president of the new

york stock exchange. still ahead, one unicorn company chose a direct listing instead of the conventional ipo. we will see what the company's executive said about his debut next. this is bloomberg. ♪

♪ taylor: wrapping up 2019, we saw another unicorn hit the public markets in june. slack, the messaging company, went for a direct listing instead of a traditional ipo. but since a successful trading debut, slack has seen its stock plummet by 17%. emily chang spoke with the cofounder and ceo stewart butterfield in june. >> there is no need to raise primary capital. we came in with $800 million on the balance sheet. we did get more freedom and how we tell the story. in addition to our road show. instead of only having a road show in private rooms, we were able to do an investor day

livestream and make the video available for everyone. that has put us in a great position. emily: slack is still unprofitable. the markets have rewarded profit, even slim ones. how far out is profitability? >> our primary focus is to invest in growth. and as we continue to build on the new category, that will be our focus for a long time. but our near-term priority is to drive towards cash breakeven. confidence in the company believing we can invest and also drive towards near-term profitability. emily: how much of a priority would you say that profitability is? >> i think i don't want to get too technical about it. there is a lot of deferred revenue. accounting profitability isn't that much of a priority. as allen was saying, bringing in more cash than we put out on an ongoing basis is a priority because it allows us to control

our destiny. the ideal is we continuously find new opportunities to invest and further grow the business. we don't need a lot of free cash flow, just a little. emily: revenue growth is slowing. what are new sources of revenue? >> what you are seeing is we are making great traction with customers. we've gotten 95,000 new customers today. enterprise customers 635 , customers over 100k in revenue. we are scaling. some of the growth will mathematically come down, but we are very optimistic about the opportunity. we believe it is a huge new category to be built. we are focused on that. taylor: now, peloton reported a narrower loss than expected in november. the ceo spoke to bloomberg's caroline hyde and romaine bostick. >> we are profitable in our u.s.

bike business. we got to profitability. we are still profitable and now we are investing in new future growth drivers, international, the u.k., canada, germany next month. we are investing in our digital business, new content facilities in new york and london. these are investments we are excited about, but our core business is profitable. the headline coming out this morning, triple digit topline growth and single digit ebitda loss. closing losses from q1 last year. so we are feeling great about not just prioritization of growth but for us it's also prioritizing profitability. it's not either/or because the fundamental model is gorgeous. >> there are still questions of how to achieve that. as a public company you know that analysts can be relentless in asking for more and asking for something new. we have an exercise bike. we have a treadmill.

what type of products and services do you have to expand on what you have already built? >> good question. we have a lot of things planned in the coming years. >> and you can tell us all that, right? [laughter] again ourbe honest, core bike business is profitable. it will be profitable over the next couple years in the u.k., and canada. and our tread business is subscale from a manufacturing perspective. it has lower margins, but as it goes to scale, the margins and unit economics go up as the cost gets sold down to the manufacturing scale. we don't need to launch more products or more geography to get to profitability. we may choose to invest in those things over time but it is not something needed for profitability. >> do you have to lower prices? you have free trials. how fierce is competition?

>> for better or worse right now we do not feel like we have a true like-minded competitor, a tech-based, well-capitalized company. it is always been a question of, should you lower the price on the peloton bike? i founded the company with my cofounder 7.5 years ago, it has been incredibly academic to think about lowering the price. when you are doubling the company in size every year, including last quarter, 103% topline growth, it is somewhat academic to think about lowering price when you are making, selling them as fast as you can make them at the current price point. we feel pretty good. the value our members see when they buy one, and they can for $50 a month and divide that by two because your partner also rides. for a household that's less than $50 for adults for for fitness

classes with the best instructors in the world, it's a pretty good value proposition of the current price line. taylor: that was peloton's ceo john foley. and that does it for this edition of "bloomberg technology." a reminder, we are livestreaming on twitter. this is bloomberg. ♪ here, it all starts with a simple...

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