good morning, it is 8:00 a.m. at lyft headquarters in san francisco, 11:00 a.m. here on wall street. "squawk alley" is live ♪ ♪ one day more good thursday morning. welcome to "squawk alley." i am jon fortt with me, morgan brennan and david faber. carl has the morning off

and we start with lyft set to price later today as investors await the biggest tech ipo this year so far since alibaba's 2014 debut. lyft which remains locked in a battle with uber says revenue crossed. losses shy of 1 billion. joining us, david chow, from d.c. m ventures, the only silicon valley investor in careem david, a lot of action in the past few days on investments in ride hailing as we look ahead to the next phase, what's important in the space? >> what's important in the space is for uber and lyft to have a great ipo. and i think you have next

generation companies, for example, companies like lime which is the number one scooter share in the world and delivery, certainly companies that deliver cannabis and grand, number one scooter share in latin america i think the on demand share economy in delivery is going to be a hot space. >> is it the amount of load the drivers are carrying, delivering things other than people, delivering food, et cetera, is it extensions into areas like scooters is it autonomous driving to change the economics of companies, is that what's going to get them closer to profitability of say even just those things, what's the most important? >> i think what's most important is you have to have a long term view, very much like amazon story that took 10, 20 years

i think companies like uber and lyft, their margins can literally double, triple, as autonomous cars kick in from probably next 5 to 15 years. and it will significantly improve profitability. >> we're going to get the final numbers later today. what do retail investors need to know there seems to be a lot of excitement, not every tech ipo in recent history has been so good >> be assured they're not overpaying we're all excited. levi strauss is holding up well, but the market is closed four months there's a lot of pent up demand. there's a lot of nice tail winds. i think what i keep hearing from retail people are the valuations david, let me ask you, last round of funding was 15 billion,

now there are reports to value it at $22 billion. we're interested in the retail investors that are going to buy it what justifies 50% higher valuation than a few months ago in the last round of funding is there something that's suddenly changed about the company? >> no. i think when you look at software companies trading at 10 x trailing revenue, they're growing 50% a year companies like lyft are growing double that pace then their margins are probably half the software company. so that's even 10 x trailing is a pretty good benchmark, with 2.2 billion that lyft did in 2018, you get 22 billion multiplied by ten, is fairly priced from the comparable perspective in tech

>> david, lyft views social responsibility as a key part of its brand. some people roll their eyes at that i'm curious, how important does that become for the customer base and now for the shareholder base >> i think it is very important because i think it is certainly one of the reasons they were able to gain share, particularly in the united states, and i think the ones that are using uber and lyft are millennials and genz these are the generation that may not buy their own car ever i think the social awareness, consciousness, climate change, global warming, these are all very important aspects to the gen z and millennials and i think it helped to have that

positioning. >> lyft spent a lot on marketing and general administrative costs in 2018. i think something like 1.2 billion or more. when you look at it, more than half of revenue. a lot of times investors with an ipo like to see a pathway to profitability or some way to get control over those kinds of costs. as i look at this s1, marketing costs are keeping up with revenue growth so what kind of skepticism are you hearing or do you expect because it is not number one in its market. >> i think the concern is it is a long path to profitability, if at all 2.2 billion in revenue, $911 billion in losses, and no obvious way to get over the goal line losses in theory can stay for years and years until investors start caring about it. we saw that in 2000, suddenly people cared very much about a certain amount of revenue being made, if you didn't, they

knocked the company down and then they cared about losses that were excessive. they'll reach a point here we're going to have a test of the market three, four, five months from now, when you have 60, 70, 80, 90 ipos of lesser quality names than lyft, we're going to have a test people are going to be forced to figure out what they want to own or don't, stuff is going to drop that's my concern. lyft is not the first one. they're not getting 50% valuation over the last round of funding, uber talking about 78 billion last round, i hear numbers of $120 billion. that's what i'm concerned about, four, five, six months down the road, how long can you keep doing that >> well, i don't think the last round valuation is relevant. what's relevant is compared to other tech companies, you look at the comparables, they're right in the fair market zone.

and in technology you have companies like amazon 10, 20 year stories in 2001 amazon only had 3 billion revenue, was losing $1.4 billion $1.4 billion in 2001, in 2019 numbers, those are bigger losses than uber and lyft in 2018 >> david, you're invested in lyft will you stay invested in this company or stay invested in careem if it is taken over by uber or are you pulling out your money and put it to work somewhere else >> i think i would stay in i think both of these companies are going to continue to grow. as the population gets younger, there are more and more people coming online that are not going to own cars, who are going to share ride >> all right we'll see if the price is right

later today. david, bob, thanks don't miss special coverage of lyft's public debut on "squawk alley" tomorrow. talking tech regulation. we'll hear more from sara eisen on that interview and what it means for stocks at home and sallie krawcheck announcing a new round of funding from big names like melinda debates, paypal, master card. quexjoins us nt. "sawk alley" after this quick break. ht to the course for just $39.00 ? yup that's what we do. and you guarantee they'll get there? yup that's great! i have two sets. you know ship sticks only ships golf clubs? right? honey are we there yet?

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getting a check of markets higher off the highs of earlier in the session dow up 29 points, 25654. the s&p and nasdaq hanging onto gains. materials and consumer staples, best pfoinerrmg sectors. more "squawk alley" after this break. is not an option. more than half of employees across the country bring financial stress to work. if you're stressed out financially at home, you're going to be too worried to be able to do a good job. i want to be able to offer all of the benefits that keep them satisfied. it is the people that is really the only asset that you have. put your employees on a path to financial wellness with prudential. bring your challenges.

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the fine is a punishment for illegal behavior what's important is change of behavior for the future. we see some change when it comes to google shopping and android with android, google have said they'll make a screen available for uses to be able to choose another browser, another search

engine if that's their choice. >> that was the top antitrust regulator. google is not the only company facing regulatory head winds facebook, amazon, apple are all coming under scrutiny, size, concentration in their markets mark mahaney, lead internet analyst helps us break it down mark, whether it is the comments about google or the sweeping copyright rules that seem to be moving forward in the eu, you talk about regulatory risk, whether it is a real threat in the u.s., but seems like it is coming to fruition for tech companies in europe. how should investors think of that >> you're right. it is a bigger issue this has been building two or three years. the companies, faang stocks most in the headlines are google and facebook google pulled off a rare trick of pissing off chairman of the joint chiefs of staff and chief

regulator in europe. they obviously turned tone deaf i would argue. look, it is an issue what it probably means for investors is multiples will be somewhat limited, a point or two, turn or two in terms of the pe multiple that the market is willing to put on names is probably down. facebook trading 18 times next year's earnings. we think it can rerate and go higher, probably won't recover to the 25 level prior to cambridge issues >> i want to go back to comments you made about google. sundar pichai in d.c. yesterday meeting with key federal officials, including president trump. the yes i think for me is what is all of that going to mean in terms of google's aspirations longer term in terms of china? >> i think that's gotten google in some hot water.

>> yep. >> it looks like it is reported they have been involved in ai developmental efforts in china, but have been unwilling to do work with some of the projects in the pentagon. that quite rightly raises issues for u.s. policy makers and u.s. military, quite rightly it does that if you step back, there are still issues google has in china. and there's some context here. google took a highly principled stand ten years ago, refused to be involved in sensorship, took itself out of the china market, hurt its market cap and growth potential and did that it seems like things changed at google seems to be less principle than there used to be in the past china as an end market for google is de minimis and probably will be until there's a regime change in china, don't count on that. that's always an overhang on the stock. it seems like they tirnd it into a bigger political issue than it should be. something's changed at the

company. >> that interview was interesting to me, she seemed to be arguing that google has changed its behavior, even though the fines don't hurt it that much. she really sounded like she's not trying to retroactively fix the market, she's trying to for the future make sure things are fairer in a way, isn't that great news for investors that there's not some punitive perspective here, as long as we take her at her word >> yeah. i think so look, just the facts on google, they have been aggressive in some marketplace businesses. you go back five, six years ago, there were reviews taken off yelp, trip adviser, amazon and brought over to google there were things done that were clearly overly aggressive and regulators should have stepped in, almost a question mark now why u.s. regulators didn't do that, european regulators did, and seem to have had the right focus. there have been calls in this country in the u.s. to break up,

cause forced sales, divestitures, that seems too extreme, i know investors wouldn't want that, hard to see logical reasons to do that the path in between of preserving privacy concerns and promoting a more competitive marketplace seems to be the right direction for regulation it seems like where it is going. i don't think you see a dramatic change in business models. they had the tripm and tack, an investors seem to have a limit again on the multiple, but not a dramatic limit. >> i was struck by your comments about google slash alphabet in terms of change you've seen. we remember when they went public, what were the first lines of the perspective, don't be even. i'm curious. lyft going public tomorrow, stressing social responsibility. is this a real thing

do people actually care, do their employees care, do their investors care, will it continue to present a discount to the multiple they might otherwise get? >> david, you're asking a broad question whether environmental social factors weigh into investment decisions by large institutional investors, retail investors, et cetera everybody. i think the answer is yes. so that's one of the reasons why companies are pitching themselves to investors and to users as being more environmentally, socially friendly i want to be careful here. i don't think there's blanket pressure on multiples across the group. i look at a couple of names where i think the regulatory risk is overstated netflix is an example of faang stocks that faces the least regulatory risk. i think amazon faces relatively low risk this is a problem with defining the end market amazon isn't an online retailer, they bought whole foods,

building out physical store networks doing that, look at them versus the entire retail market there's no domination issue there in terms of their market that issue comes up with names like facebook and with google. those are the ones that are really the most regulatory pressure and should be >> thank you always good to get your thoughts >> thank you, morgan. lyft and uber expecting to go head to head on the way to an ipo. who will succeed we speak to the former trulia ceo, pete flint. and an interview you don't want to miss. tomorrow, lyft founders john zimmer, logan green, ahead of the compans o. quk le will be right back ith dr. francis? oh yeah, he's ok. umm... just ok? guess who just got reinstated! well, not officially. nervous? yeah.

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closing the gender gap, ellevest raising $33 million in the recent funding among the investors, melinda gates, joining us, sallie krawcheck. that's an impressive list. >> we're pleased with the list. >> 33 million in new funding what does it let you do, how long will it last? >> it let's us do what we're doing which is engaging with more women, both for investing and for content that help women

get in greater financial control, the response to what we have been doing has been so great, we started with digital investing, high net worth women said i want in, women not ready to invest wanted in. the more we help women get in financial control, the stronger the mission, the stronger our society, nonprofits, families, and the up side on the company is tremendous. >> what is it that resonates or focuses you on women in terms of the differentiation of their needs? >> you know, when i started people said this is a realdea. money is gender neutral, women don't need their own thing facts are the facts. women kept 70 krenlts out of every dollar in the bank and men invested much more women are looking for, i hate to say it, they're not big traders, not looking for what's the market going to do they're more about help me ellevest, identify, quantify, invest for me to work to reach

the goals like buy a home, start a business, retire well, have a baby it is much more goals based. they also love impact investing. the opportunity to earn a competitive return while having positive impact on the world around them which wall street hasn't been serving. >> how quickly are you growing, is it word of mouth? >> the answer is quickly it is not only new inflows, but attrition rate even in the month of december was a low single digits percent when they had record net outflows, we had record net inflows, women were standing their ground when we look at cost of acquisition, it is below so many digital first advisers because the product market fit is strong and the brand is strong and growing. so we get a tremendous amount of new clients not from facebook ads or twitter ads but women talking to women and sharing the

content. >> if the numbers i'm looking at are right, you have around 23,000 clients at th$23,000 cli. a quarter billion in assets. >> or even more. >> roughly but somewhere in the neighborhood of $10,000 per client what's on average, what's the median, and who is the person who is coming to you versus going with their 401(k) provider >> the median is much larger one of the things i love about ellevest, given the mission orientation, we have no minimum, no investing minimum that was important obviously we lose money if someone vests a dollar or a hundred dollars or $5,000, but if you think about it, investing in wall street has felt unapproachable for these women, particularly women of color, and the minimums kept it out of their reach. with our mission, say let's reach on down.

>> who do you see as competitors? when you are raising money, how do you see yourself as a company. >> it is funny, some folks that said no to us said what if a competitor gets in, sally. i am like it is a $7 trillion investable asset market. i think we can handle one other person but overall for us the competitor really is inertia as mentioned, these women have most money in cash, some of them, i'm going to get to it but what we found is not that we are risk averse but risk aware if we don't understand what's beta and alpha, better go study that, we like to get as, we wait and it cost women hundreds of thousands. some women a million plus over the course of our lives. we provide this investing without having all of the jargon we don't dumb it down but use language we can all understand immediately.

>> 33 million, which is a significant sum, given what the total is now 70 million raised what is the most productive use for that capital in terms of growing the business, is it straight on marketing? how do you go about allocating it. >> it is continuing to reach out to more women, continuing to do what we do, more content, more financial advisers and high net worth. we may have a few other products but we're not ready to announce anything today we love the business we're in. while a quarter billion sounds great, asset managers, wealth managers have billions and billions and our market is trillion strong. we have a ton of runway. >> i am curious given your experience, typically we bring you onto comment broadly as well, but goldman, sachs comes to mind, what they're doing in markets and approach to the consumer you spend a lot of time on wall street do you think it will work? >> yes yes. technology is so important we are able at ellevest to

provide highly customized, i argue the most customized investment portfolios for these individuals. it is not your portfolio and your portfolio, it is your home goal is different from your retirement goal is different from your retirement goal, different from your baby goal. so technology enables us to take vast quantities of information and highly personalize we are the ones that take into account women live longer, salaries peak sooner it is beyond the capacity of the human mind and we can bring the digital offering to the women at 25 basis points whereas traditionally, cost of intermediation in the retail business has been two and a half or two and a quarter percentage points that money goes back into their pockets. we know a great investor can outperform by one percentage point a year, we are delivering that already through lower fees. there's always room for humans

and we have financial advisers, but tech enabled humans. >> thank you let's get to kelly evans for a news update. >> hi, morgan, hi, everyone. here is what's happening the secret mueller report on russian interference in the 2016 election is more than 300 pages long, according to officials with knowledge of it, that's raising questions about the substance of william barr's four-page summary he sent to congress. at least seven people killed, 28 more injured when a fire broke out in a high-rise in bangladesh's capital many were trapped. after battling the blaze several hours, most had been rescued. north korean state media reporting two days of military meetings were held this week in pyongyang with thousands of military officers in attendance. north korean leader kim jong-un presiding over meetings, being wildly applauded by his army leaders. and it is opening day for

baseball ballparks across the country are doing away with baseball's iconic snack, peanuts, to support fans with peanut allergies. many teams named specific game days as peanut free. don't think that bodes well for cracker jack either. that's the cnbc news update this hour let's get back to "squawk alley. >> kelly, thank you. lyft gearing up to an ipo tomorrow ahead of uber is winning the race to public market in a company's best interest in 2011 zillow made its ipo ahead of trulia. then acquired them two years later. former ceo, peter flint took the real estate company from concept to ipo to merger pete, great to speak with you today. >> great to be here. thanks for having me >> so going back seven years ago, you were in a similar position to lyft in the sense

you founded and were running a company that was disrupting a very long established industry top line growth but not making money. shares pricing above the expected range, which is what's anticipated with lyft. and going head to head chiefly with one other main rival. how would you advise lyft going into the ipo, and more importantly, what do investors need to keep in mind that maybe they're not necessarily thinking about in the coming days and weeks ahead? >> yes so this is an incredibly exciting day for lyft. they have been working on this many years and today is a monumental day. the opportunity in front of them is a trillion dollar annual spend by american commernsumers. $2 million a day, obviously losing a lot of money, but the company that started slow. they let uber take a lot of

narrative. now they're fighting back. and their entry to go public first is a sign they're trying to take the narrative back, trying to come out into a leadership position to be seen as the innovator, to try to catch up to where uber is today. so that's kind of working. the losses are enormous, but the opportunity is enormous. gone from 25% market share to 39% market share now they're raising a bigger war chest to do that i think the real question long term is how the market plays out. in many ways it turned into a duopoly. they're finding out is this going to turn into a price war it is already an epic war which is fascinating consumers and the media and financial press, but is it going to be a price war. is that going to be bad for investors, is that going to be bad for the company. my sense is it won't be a price war. both companies want to be successful, they have been

mirroring pricing somewhat, mirroring each other's businesses somewhat, now looking to differentiate in the eyes of consumers and investors. for lyft, differentiation is singly focused on the transition opportunity and on their brand >> it is already a price war that's my concern looking at the s1, lyft spends so much to keep drivers happy. whenever i ask drivers, lyft or uber, most drive for both, talk about incentives from lyft as a rider, i get in sen tiffs from lyft. once they go public, there's pressure on incentives uber has the scale to come out ahead, don't they? >> i think that's the fear that's absolutely the fear from investors. looking at the real estate marketplace industry, we looked at it globally, it is likely in

these marketplace businesses in transportation the same things happened this is why lyft is being aggressive they don't want to be seen as number two they want to be seen as number one. that single lar focus, uber is spread across multiple continents, across uber eats and uber freight and core businesses what lyft is counting on is singular focus to own that square on the home screen, own the application. at the time they can creep up market share to become the number one that's obviously the fear for the companies. longer term, questions around autonomous longer term, how do the businesses evolve, can they capture market share both of them, trying to gain market share, own that home page, own that button on the home screen to make them more

positioned for autonomous. >> a lot of focus on dual class share structure. is it a mistake for lyft to implement that >> it is essential the companies -- interesting when true leah went public second to zillow zillow took narrative, captured investors mind share we didn't implement a dual class stock structure. and the companies merged, i sat on the zillow board, and saw firsthand how a founder controlled company helped them to think long term and this is a long term battle this is not about market share gains this quarter or next quarter, it is about who is going to win or be best positioned to win when autonomous is a mass market

proposition. it was fascinating to see zillow being long term from the outset. cudos to them. and the margin, when it is marginal, makes us think short term it is absolutely the right thing to do for lyft to have this structure. investors may not like it, but to capture long term opportunity, i applaud them for doing this, even if it makes a few investors upset. >> interesting take. we appreciate it pete flint thanks for your time today. don't miss special coverage of lyft's public debut starting 9:00 a.m. tomorrow up next, looks like ride hailing is here to stay as lyft and uber are headed to the public cities around the country are showing growing concern about the impact head of the nyc taxi and limousine commission for the next few days, she's outgoing, joins us to discuss. first, rick santelli, what are you watching >> i am watching a trader get some volatility sold

markets are stabilizing to some extent in treasuries, mutual arrangement with stock seems to be calmer today. we're going to talk about disruption, like trade disruption it effected gdp this morning right after the break. if you're turning 65, you're probably learning about medicare and supplemental insurance. medicare is great, but it doesn't cover everything - only about 80% of your part b medicare costs, which means you may have to pay for the rest. that's where medicare supplement insurance comes in: to help pay for some of what medicare doesn't.

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cme group now and rick santelli for the santelli exchange. >> good morning. thank you. we had gdp out, another look at fourth quarter when you consider the partial government shutdown, all the numbers have been late, it is an old number still lessons to be learned. we all know steve liesman highlighted it, the first quarter has anomalies, gdp when you cross into a new year isn't necessarily equitable in how it deals outgrowth. the back half is usually deeper, the front half usually lighter having said all that, i had professor philip swagel on, and he rightly pointed out some reasons gdp was down, and there are a lot of reasons, maybe partially for the first quarter, are the notion of trade disruption no matter how you look at this administration and no matter how it turns out, it may be something where we enhance

growth for many, many years down the road versus watch it deteriorate based on any change in agreement what i'm talking about basically is status quo versus global disruptions. for multinationals, look at the google, apple, microsoft when corporations disrupt, they get accolades, they get investor money chasing after them if you think about the word disrupter in the last decade, it is a word on the corporate side, on the multinational side, with streamline efficiency, ingenuity, design uniqueness when it comes to governments, the same test doesn't apply. whether you talk trade or brexit, upsetting the apple cart of short term for government and agencies is usually a big no-no. when reveryone is looking at portfolios hour to hour, week to week, month to month, quarter to

quarter, it gives uncertainty. it is a no-no. in the macro picture we need to all settle down a bit. if you look at some of the issues, especially with brexit, maybe they should have hard brexited tomorrow would be the day. in the end, the people have spoken governments don't like to react. finally, the agencies aren't much better. ours more fortunate than many. subsidy addiction is the last topic and it is a biggie what we have in the world now is a calibration problem. our central bank can only do so much before other central banks distort our policies and cause policy reversals we are holding close to 240 level in tens. a little balance in trade today seems to be going a long way, even though the dow dipped a bit into negative territory. "squawk alley" gang, back to you. >> rick santelli, thank you. the dow is indeed lower,

down 32 points now up next, the outgoing taxi and limousine commissioner talks about uber, lyft and the traditional taxi industry. and tomorrow, the co-founders of lyft ahead of the company's ipo in a first on cnbc interview. resqwkll" tea quick break. the biggest week in television is almost here.

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drivers to thin out traffic as we await lyft's public debut, worth asking what impact such congestion pricing could have on the ride hailing sector. a lot of other questions too in new york, 80,000 ride hailing drivers make more than 17 million trips a month. joining us at post 9, outgoing head of new york city taxi and limousine commission, meera joshi. your last day was friday >> yes i am wild on the streets now, no longer a government employee. >> still engaged in these issues broadly, i want your take. lyft and uber lowered the price of people expecting to pay for rides, adding a different level of convenience but the business models aren't clear yet even for those businesses, even though they're valued huge. what's the end game, how does it play out >> as they go public, one of the things if you look at lyft's

public offering documents, how are they going to adapt to regulation regulation is well formed in new york and a lot of things that happened in new york are taking, they're getting gravity in other places like they will have an effect on the expenses so if you have to pay your drivers a certain amount of money, you have to work that into your business strategy. i think the end game here is how are these companies going to be able to be adapt to regulation they have to take on things like an added expense of paying drivers a living wage in new york and probably elsewhere over time and how they decide to adapt their business model to make those changes is going to dictate who is the successor and who is not. >> are prices going up >> prices will be going up one, because you've got to the pay drivers the right amount, two, because congestion surcharge added in the core of

manhattan, $2.75 on every uber trip they may go up primarily because in new york city, there's sort of cap on vehicles now so. >> what is the cap. >> the cap is a local law passed in 201 it basically said that the agency which never had its own power to stop the influx of vehicles had to close the doors. no more vehicle licenses can be issued unless it's for an accessible vehicle those cost more to maintain. another reason why cost coz go up ultimately it was the result of over three years of back and forth, i think you probably all remember in 2015 when council tried this before to sort of stop the philosophy vehicles on the road. >> how many vehicles of have uber and lyft added to the roads right here in manhattan? >> there's now about 200,000 licensed vehicles in new york city four, five years ago ha number was closer to 80,000

uber and lyft alone have about 80,000 drivers working with them that are working in probably over 100,000 vehicles. it's an enormous jump in a short period of time the concentration is where the money is, it's in manhattan. >> i want to go back to this idea of paying drivers a living wage they're independent contractors. it's a contentious issues. uber and lyft but other companies can like fedex, as well over the years. when you talking about wages and what that would mean in a city like new york, what would that look like? >> they're primarily considered independent contractors. people all over country are struggling with what do you do to help this workforce out since they don't have the protection of employer, employee. ultimately in new york was we priced the minute and the mile you can't pay them less than a certain minute and mile. over the course of an hour it, works out to be a minimum wage

but it's not a one for one comparison. >> inordinate amount of power being the sized city that it is. it used to be all about yellow cabs now it seems like what we used to call gypsy cabs taken over. all the people are driving uber and lyft who would have been doing that what is new york aiming to do longer term that's going to affect the entire raid hailing industry when it comes to workers' rights and wages >> i think we've done the big work which is established pay protection established a floor. you can't pay them less. you see this happening all over the country. in l. a., there were strikes the other day. drivers all over the country are reacting to unilateral pay cuts ha may help the business pod del but cannot helping the people that provide the service one day there will be automation but it's not around the corner.

>> you mentioned congestion surcharge but there is most likely going to be congestion pricing here, as well first time i believe in the country in manhattan. is that going to minimize the usage of services when the prices to continue to move up? >> it may have a positive effect on the services. i do think congestion pricing is coming when there is a larger cost of bringing your personal car in, even if the cost of an uber goes up, it still might be more economical to take that uber rather than to bring your personal car in. that's ultimately the goal of congestion policy is to have cars efficiently and the professional drivers doing that work. >> supply constraints are coming meera joshi, thanks. >> do not miss our special coverage of lyft's public debut owarting at 9:00 a.m. tomorr. >> more "squawk alley" in less than three minutes don't go away.