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tv   Bloomberg Technology  Bloomberg  November 3, 2016 11:00pm-12:00am EDT

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mark: i am mark crumpton, you are watching "bloomberg technology." president obama campaign for hillary clinton today at a get out the vote rally in miami. he urged her supporters to take the opportunity to vote before election day. president obama: all the progress we made goes out the window if we do not win this election. work our hearts out this week. like our future depends on it, because it actually depends on it. trailalso on the campaign in florida, donald trump hit back. chung: he will not be there
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very long, thing goodness, but he ought to be back in the office, working. carolina, friends and family of walter scott, an unarmed man shot by a police officer last year, there was the trial. officershows the police shooting him in the back as he ran from the car after being pulled over. syrian troops will allow rebels to leave aleppo after a temporary break infighting, declared by moscow. the russian military say it will stay open friday after a humanitarian pause. "bloomberg technology" is next. ♪
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brad: i am brad stone in for emily chang. this is "bloomberg technology." gopro nosedives over 20% after a disappointing third-quarter snapshot. we will break down the numbers. plus, escalating cyber threats with the u.s. election just days away. we will catch up with crowd strikes ceo. and, fox hits a homerun run with the most-watched world series game in 25 years, but the nfl suddenly appears to have a ratings problem. first, to our lead. gopro shares plummeting as much as 25% in extended trading. it has become the latest hardware maker to fade in the holiday season. they lowered the forecast, missing analyst estimates. gopro also missed the estimates for third-quarter sales, down 40% year-over-year. that loss is $104 million.
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down more than 650% from the same quarter last your. the ceo told investors on the earnings call that production issues were to blame for the weak results. >> as a consequence of our compromise production ramp, we were unable to restock channels that have been cleared of legacy product in the third quarter. furthermore, we anticipate difficulty catching up to match forecaster demand during the fourth quarter. brad: joining us now, from bloomberg intelligence and bloomberg technology reporter selina wang. gopro's stock tumbling. like a drone of that hit a power line. after thinking that it would scale to the skies. what is ailing gopro? jitendra: they are blaming production issues for not being able to meet targets. but this is really a bad execution story.
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there was no refresh, there was quite a lot of time. they finally fixed the ease of user issues people had. thatake that and marry with production issues. brad: getting into the drone business was supposed to provide a next act for gopro. when you look at this balance sheet and the way that wall street has reacted, are there any bright spots? selina: he was very coy about it. he did say in the fourth quarter it would be a small amount of revenue compared to the camera. the biggest thing they have going for them is their brand at this point. they have been in this business for 10 years, they have excellent features better , sensors, technology. the price point is similar. from a pure tax standpoint, dgi wins out. there are other startups getting into this as well.
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the brand is the only bright spot because more people in the u.s. know about gopro. brad: dgi, the shenzhen-based drone maker has been in the business for years. was gopro surprised by dgi's competitive response to the drone camera? it was kind of expected. what is interesting is like the supply chain issues across the drone industry appears to be similar. dgi is having some shipping issues. what gopro is saying is their expectations of more than 20%. we do not know what that really means. looking at the execution that they have shown so far, we are concerned about, like, are they able to pull off the opportunity that they have in drones. brad: when you say supply chain issues, what does that mean?
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can you order a new drone for the holiday season? jitendra: you can order it and they will take your money but you can't get it. brad: will it get here for christmas? jitendra: they are saying december 4. beyond that, people were really hoping they could leverage the massive brand they have in terms of up selling to the 10 million plus customers. the interest was pretty high. if these guys were not able to resolve these production issues. that is raising a lot of execution risks. brad: selena, you wrote a story that highlighted problems and other hardware maker, fitbit. we have drawn some connections between these two companies and their core performance. are they related? is there a secular problem among all these hardware companies as we head into the holiday season? there is a fastening
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correlation between the companies they are both young , companies who have recently ipo'd. they really haven't been up to their expectations. i think taking a step back and looking at these companies, though their products have little overlap, they are both in markets that aren't quite proven yet. i think that the question investors are asking is if you can turn a fad into a long-term sustainable company. gopro is now trying to do drones. the question, does everybody need a tiny little camera in addition to their smartphone? you heard analysts on the call asking what the grand vision for the company is. you talked about making it a media company. he said, we see ourselves at the epicenter of social and capturing images and sharing that. but there are so many companies at the epicenter of that. we look at snap, they are now calling themselves the camera company, and they will probably make it even easier to upload to
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the web and share it. brad: what is the next move for gopro? they hired a designer from apple and stock bounced. have we seen the results and what is their next act? alina: i do think they solved lot of the core problems with the software. just a year ago, it was hard to operate the camera. they had all these buttons, consumers complained about how difficult it was to use, you had to stitch together different editing software. it took a very long time for all of that to work together. now i have made some acquisitions, really invested in their hardware and software. it is much easier to do. their next move is making that even easier, even more shareable, trying to expand their sales in drones. this whole media content strategy is, i think, way down the line. brad: what should his next move be? jitendra: focus on the execution.
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it is not acceptable, especially when you had such a big gap in terms of your product cycle. taking the right steps that they have done with respect to they have the opportunity but they have to move quickly or they will lose it. brad: bloomberg technology reporter selina wang in new york and jitendra of bloomberg intelligence. thank you. still to come, the cyber firm that first pointed the finger at russia for the dnc hack is back. this is bloomberg. ♪ brad: one stock we are
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watching, symantec shares are lower after forecasting earnings for the current quarter that missed some estimates. symantec is the biggest maker of cyber security software and it has struggled as the pc market declines and hackers develop more sophisticated techniques. rival fireeye shares are surging. they said their losses will not be as bad as predicted in august. the company has forecast a loss of $1.50 per share and without that it will be more than one dollar per share. cyber security has been a top talking point on the campaign trail, thanks to an extraordinary series of events from hillary clinton's use of a private e-mail server to ones like this one -- mr. trump: russia, if you are listening, i hope you're able to find the 30,000 emails that are missing. i think you will be rewarded
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mightily by our press. brad: we also have the dnc hack this year and countless claims by donald trump that this election is rigged. the cyber security firm that first identified the russian involvement in the dnc hack -- their ceo joins us for more on the unprecedented role in cyber threats in this election. thank you for joining us. i don't know what is more 10thty last night in the inning of the world series or , this next week leading up to the election. do you think there will be smooth sailing over the next six days? >> if the past is any indication it seems like there is some new , event that happens almost on a daily basis. the -- emailsn found on some of these servers or new emails that are linked. i think it will be an interesting run-up to the election. brad: david sanger had a piece in the new york times highlighting the possibilities of next week. one of your colleagues said he
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thought the ultimate intent of hackers was not to change the discredit it and throw a question mark over the results. george: i think when you look at what has transpired from a we have done and how the government has come out and named russia as one of the actors, i think this is one of the same things as the past. cyber is a new medium. in the past, whether it was in the 1950's, 1960's, 1970's, it was a similar methodology of trying to introduce chaos where you can. this is just another way to do this, through cyber. i think if we look at the election and what we have done so far, people are asking questions. what does it all mean, are the elections going to be hacked? talking point that helps to destabilize what is going on. brad: has russia done this in the past?
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allegations that maybe they got involved in the ukrainian election with similar tactics. cannot give us a guidepost for the next week? george: they are a very capable adversary, certainly very good on the cyber side, which is things we see over time in these sorts of activities. their method of operation hasn't necessarily changed. the medium has changed. they are more focused on cyber because they don't have to leave the comfort of their chair. when you look at the message, whether a piece of malware or a attack it is all , available on the internet. and they take advantage of the data. brad: if it's simple enough to say that they are trying to support the candidacy of donald trump? or are they trying to throw the u.s. election system itself into chaos? george: like most governments, they collected a lot of information. if you look at all the e-mails, classified or not classified things like collecting what is happening behind the scenes
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and understanding where the wind is blowing is important to them. that collection mechanism is not unique. what has been unique in this case is the fact that it ended up on the internet and people are free to look at it. does that influence the election one way or another? we will see. brad: every american voter who turns out next tuesday and goes to an electronic voting machine is going to wonder, is this voting machine safe? is that unequivocally a yes right now are there still some question, in your mind? george: the question is, is the voting process safe? there are electronic voting systems which are susceptible to attack. in general, it is so manual that statistically, the voting system is not necessarily going to be impacted by hacking to change the election. brad: how about voter rolls? is there a possibility a voter turns out who is not registered to vote or they turn up at the wrong place because of some tinkering from outside the country?
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george: that is always a possibility. when you look at how easy it is to break into these systems and the sort of lack of security that exists in the environment today. it is very easy to get in. could they manipulate this? absolutely. will it happen or make a meaningful difference? don't know. brad: in the political process or business world, many have been slightly traumatized by this election. not only hillary clinton's e-mails made public, but companies like salesforce whose internal communications were made public as part of the colin powell hacks. what have the lessons been of this election cycle? have we learned something that future candidates are companies from?can take a lesson george: whether a candidate or company, they all face similar threats. most organizations have been compromised in some fashion.
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it is important to understand if there has been a compromise in the environment. number two is that the technologies that are put in place to try to defend against these hacks are inadequate. whether it is malware, our technologies can't keep up. then, having the ability to find them very quickly before the data is stolen will be very important moving forward. it is easy to get in with a spear fish and all the data is being dumped because it is not encrypted. brad: a spear fish is basically user error. they clicked on a link and either give out a username and password or downloaded some malware that wasn't captured by their legacy antivirus technology. brad: do you think all these traumas, going back to the sony, have undermined our use of the email? -- are future capitalists
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and ceos thinking twice before clicking to hit the send button? george: i'm guessing there are going to be a lot of venture capitalists who invest in e-mail security companies that focus on locking down the e-mail service. brad: the department of homeland security what is different about , the precautions they are taking for next tuesday or even how they are spending the day, than it was four years ago? george: you see how it has been influenced by cyber attacks in the past. there's certainly a heightened visibility into what is next. just think about the denial of service attack that took place a couple of weeks ago. something like that, could it take out social media systems , design to collect information? think about the impact on social media if it was down during the election day. brad: you think we will see a couple of weeks ago. denial of service attack next week? george: i hope not. brad: thank you, brad kurtz. investors concern over facebook add load census shares plummeting. where other revenues revenue growth?
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♪ brad: facebook shares
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plummeting over 5.5% on thursday. executives suggest that the company probably won't be able to keep up its explosive pace of growth much longer.
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-- michael wolff spoke about it. i think that they are hitting the upper limits of how many ads they can show you. i think also, a lot of their growth this year has come from political advertising which of course won't be here next year. they now are in a position where they can't get more revenue out of the internet. historically, a lot of their revenue growth has been taking away money out of smaller websites. going forward, they will grow fast, but it is not likely to be anything unless they invent new parts of their business. that is likely to come from their messaging facebook , messenger and also whatsapp, which are massive. >> why are people so preoccupied about the advertising revenue? they have been making moves,
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acquiring anyone of interest. why shouldn't growth come from there in the future? >> that's the only place they are getting revenue. the other deals that they have done, whatsapp is really not delivering any revenue. the average revenue per user is zero. the vr business is also not good. there is revenue way off in the future. they are basically google they , are an advertising-based company and they are going to grow to the extent to which money moves to the internet and to the extent to which they can capture it. >> for the whole industry, it will be harder for the ad supported content companies, the likes of google, facebook, apple, amazon, microsoft. they will benefit. >> each of those companies is in a different position. in the case of facebook and google, they are controlling over half of all digital advertising.
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when you look at others, there is always an upstart, someone who comes out of nowhere. here we have snapchat, which is capturing a lot of time and attention, especially from millennials. they are coming onboard this holiday season and they will have a lot of new advertising products. amazon is really in the e-commerce business and they are nowhere close to this. and apple competes with facebook primarily now on its messaging product. >> is this repricing a good thing for facebook, maybe putting it more in line with what it should be valued as? or what do you make of the evaluation 29 times the estimated? >> facebook is a control company. mark zuckerberg controls the company. he is going to be less worried about what the near-term stock price is versus his ability to grow long-term. the main reason he will be
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worried about the stock prices is their ability to give options to their employees and have increasing growth to the earnings of their employees. versus what happens for shareholders. brad: that was activate ceo michael wolf. in this edition of out of this world, looking for a new supplier to launch its in-flight wi-fi satellite into orbit. it bought two launches from spacex. after a september 1 explosion destroyed the rocket and the satellite it was holding inmarsat's order was delayed. , companies are planning launches sooner than spacex. they will relaunch the project with spacex at a later date. coming up, the chicago cubs break a 108 year curse with an historic world series win.
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and, if you like bloomberg news, check us out on the radio. you can now listen on our bloomberg radio app. ♪ >> egypt has taken dramatic
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steps to secure a $12 billion loan. bank announced it will abandon currency controls and raise interest rates to the highest level in more than a decade, sending the pound tumbling. government also revealed plans to raise the price of gasoline and diesel as much as of, leading to long lines cars and gas stations in cairo. shares have been halted in hong kong as the investment bank said it is set to announce a very substantial acquisition. in july, they said they were in preliminary talks about is this
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opportunities. has bot -- cicc brought some of the biggest estate-owned acquisitions. they have warned china's may send visitors to macau. visitors --mainland chinese authorities detained 18 crown resort staff last month, in the toughest crackdown on gambling in more than a year. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. >> checking the markets, you can see from this picture of the regional index, it has arisen. , followinghe red
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that week lead from wall street. japan coming back online after the lunch break, extending the ceiling down 1.7%. we are seeing a little fluctuation in the yen. remember japan was close thursday. investors playing a little catch up compared to what we have seen during thursday's session. 8%, exporters being hurt today. going on the lunch break, it has been outperforming the rest of the market today. fluctuatings been in and out of negative and positive territory. china, its parent company coming through with pretty good numbers , in part thanks to the macau casino. down .8%, earnings coming from
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arco. new zealand is not had a great week at all. entering into correction territory, another .8%. holding onto former lows. ♪ brad: this is "bloomberg technology." i am brad stone, in for emily chang. the chicago cubs had an epic win in game seven of the world series to end their 108 year drought. the team wasn't the only one who hit a home run. fox sports says chicago's game -- 8-7 win over the cleveland indians was the most-watched world series game in 25 years. it gave u.s. major league baseball a much-needed ratings boost. it turns out baseball isn't the only major sport that has been needing a pick me up. for more on this, i want to
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bring in longtime media exec patrick kane as well as sarah from bloomberg. patrick, i am a little depressed today because my cleveland indians were defeated in an epic game, but it is great for chicago and it is great for major league baseball. why was this ratings turn out such a big win for the league? >> absolutely huge one for the league. this was the highest rating in 25 years for major league baseball. let me repeat, 25 years. to have 40 million viewers nationally watching the game is pretty extraordinary. i know we will get into it in a little bit, but this is just bad news for 280 park avenue. just another example of the national football league, and that is their headquarters, being hit by get yet another league that is starting to grow share. brad: let's talk about that. it is on the cover of this week's "business week." do you think it is a fair juxtaposition? game seven of the world series
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versus the week to week performance of the nfl in an election season? patrick: i think it is because your average world series game often is not going to see anywhere near the ratings of even an average primetime nfl game. that is just how dominant the national football league has been over the past many, many years. this goes back to 2006, the first time they had a thursday night game. that is just howthis drop in rat has just been an absolute shock. brad: in the story, felix runs through all the things that might be ailing the nfl. bad officiating, too many games, no stars. is there one thing that you highlight? patrick: i don't know if it is necessarily too many games. they have had that 2006 package for 10 years now. they have had monday night games, sunday night games for six years now. even a london game. i think the quality of the product on the field has been a challenge. i am hearing from the millennials i know that they are turning off nfl games for the first time in their lives.
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i think the quality of the product on the field is a real issue. i think one of the nfl's best products, it's red zone channel where you're able to watch at the same time several games in scoring positions at once. product il a great , think it has become very cannibalistic to existing ratings during in game shows. brad: one culprit might be the internet, right? the nfl is streaming games on yahoo!, twitter. could that be eating into the core audience? >> absolutely. these are companies that are almost betting on nfl needing another way to find audience. twitter this year had a deal with the nfl to stream 10 thursday night football games. that is sort of at the cornerstone of their media strategy for the future of twitter. they want to do that with baseball and hockey and basketball as well. absolutely, i think that these are new channels for the nfl to explore that we really don't have great ways to measure yet.
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brad: i want to play a quick clip from an analyst who actually kind of blames nielsen and their inability to track some of these new channels. >> mobile is not reliable. many measurement services are not reliable. advertisers don't believe them. they do not by the numbers. nielsen has been the industry standard for 50 years and nobody believes nielsen. brad: can't nielsen do a better job monitoring these online channels? sara: absolutely. felix mentioned in his story that they are already working to refine their ratings. they absolutely need to do more with the social networks, with the online streaming sites to try to get a better sense of how many people are watching when they are watching and what the engagement is like. twitter, their first thursday night nfl football game, they told everyone that 2.3 million
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people watched it. we don't know what that means. did they watch it for the whole time turn it on for a second, , retweet a tweet? i don't know what that 2.3 million means and i think nielsen would be one of the places to tell us. brad: are we shooting the messenger by blaming nielsen? patrick: nielsen has been in this business for 50 years. i will take a devil's advocate to the twitter being cannibalistic. i don't think it necessarily is. i think what is an issue is there are so many sources to find scores, so many sources to get instant results and instant highlights. that could be somewhat of an issue. i don't think you will ever see the nfl surrendering a sunday night game or a monday night game. there is a reason they are giving thursday night game access and i see it as purely additive. not cannibalistic at all. brad: does the nfl learn anything from last night from
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this amazing world series? patrick: you would hope so. i think that the nfl still is an incredibly powerful sport but i worry that, over time, it could go the way of some other sports. those were if you look at , boxing, horse racing, baseball. i just hope that the nfl doesn't fall to the same fate as boxing in the world. that is a big challenge for the league. brad: and hopefully the cleveland indians will get them next year. thank you both. coming up, a ceo joining to discuss a $141 million fund-raising round. ♪ brad: turning now to the on
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demand delivery space. one company making its mark the , san francisco delivery service recently closed a $141 million funding round. the influx of cash comes despite a slowdown in funding. joining us now, postmate's ceo. congratulations on the funding. we were talking about this for a long time. how difficult was it did you , bleed a little bit to raise this money? >> i wouldn't say we bled, but the funding environment definitely cooled down. on top of that, we are operating in a space that is a little bit underappreciated right now. we had a little bit of a bearish outlook this year. brad: that valuation was the same as your previous valuation.
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usually a sign of investor caution. what should we take from that? >> we would have loved it to be a little higher. i also think it is fair to look at last year. you probably have a year where the prices were a little bit inflated. the market corrected itself, $140 million. brad: let me put you on the hot seat. you have been in your coverage of postmates a little skeptical of not only the delivery service but the food startups like munchery and doordash. did the postmates funding round surprise you? >> it is a super competitive space. certainly investor sentiment has turned against it somewhat. they're close competitor had a round with a share price lower than a previous round.
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we have seen already sort of signs of trouble in the space. there is still a lot of investment going in. delivery just raised a bunch of money and uber's delivery services -- we do not have exact numbers. they are investing very heavily. i saw some of them in mexico city recently. food space, there is a lot of investment being made. but we have seen an increase in skepticism. brad: i read a little bit about how you had to structure the round, or anything you had to offer investors to get to that $600 million valuation. anything you can tell us about getting to the finish line? bastian: i read a lot about it, too. when we look at the term sheet and when you look at the offer that we had, we believe it is a very fair deal. as far as i can tell, there is
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nothing unusual in the structure of this round. about uber and say they do kind of a death star thing, they weaponize their balance sheet. what did you mean by that? how are they using their capital advantage? bastian: i think they brought something to the valley we have not seen before. you would fight the war with excellent products and innovation. but i think it has been unusual that you would use your balance sheet. brad: isn't that a time-honored amazon tactic or retail tactic? >> in the way it has been done, it is unique. eric: i thought one of the most interesting things you said in my conversation with you is that many of the smaller players, you can imagine teaming up. what would that look like?
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bastian: i think it is important to look at the total companies. s foughte -- postmate hard, and we are proud of that. there is a sentiment that we are here because and amazon or taken over, that is baloney. we are here because we deserve to be here, because we have grown extremely fast. if you want to think beyond the next couple of years and create a truly large company, you have two ways to do that. one is to go ahead and compete with amazon and uber. you can try that as a startup. there are ways to success. another alternative is that you can find ways to create a large company by teaming up with other players, international players or players on a national scale. brad: amazon, with amazon restaurants, it basically makes
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deliveries free for prime members. they have got to be losing a bunch of money with that. now that they are focused on the restaurant space, what is that mean for postmates? bastian: we have not seen the efforts from amazon. and as far as i am concerned, we have not seen effort from uber in that space. despite all this, i think uber and amazon are interested in this space because it is lucrative. this brings up a little bit back to a situation that often perplexes me, when people thinks it is impossible to make money in that space. it is a space that is interesting to a lot of players. we hold a large share in that market. we have a product that is virtually free if you sign up for our subscription service. $9.99 a month, unlimited free deliveries over $25. a very attractive product, our customers love it. we were very well prepared for the competition ahead. especially given the fact that
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we cocreated the space. in 2011, postmates was the first company to bring on demand delivery to the minds of customers. we are not stepping aside because the competition heats up a little bit. eric: one of the things that i think most people think about is that you can get anything. any type of food you want or maybe someday anything you want. at the same time, to make the business model work, you have acknowledged that you have to have some restaurants that are cheaper and the everything set of restaurants that are going to be much more expensive. am i getting that right? how do you think about those categories? the truth is, we are executing against the same plan when we started the company. we wrote it down in details and actually openly talked about it. we launched a premium product first that a lot of people who can afford it to get access to goods they wanted in a short period of time.
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that product financed other products. the latest iteration of that is our plus product which integrates merchants. we receive a kickback from these merchants. on top of that, we have a subscription service. it is not like tesla, but it is like tesla's plan to start in a premium segment and bring the price down significantly. we have done that. brad: your first international market, is going to be london? bastian: we're still thinking about it. i have tried it before, i do not want to be off with the predictions. brad: bastion lehman from postmates. founder and ceo, and bloomberg's eric. tomorrow on bloomberg television and radio, join us for full coverage and analysis of the latest u.s. jobs report. tom keene at 8:30 a.m. in new york. coming up, chinese internet giant baidu just joined an alliance with a major television -- telecommunications company. ♪
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brad: chinese wireless carrier unicom and baidu are teaming up. with of the blessing of the chinese government, they will partner with artificial intelligence and other plans for ownership reform of state owned enterprises. joining us now, a bloomberg reporter from tokyo, and gordon chang, author, reporter. he lived and worked in china for almost two decades. gordon, i'll get to you in a minute. peter, you have covered these two companies for a long time. what does this alliance mean to you? peter: it is an important step for both companies at this point. the chinese government has been looking for ways to improve the efficiency of the state-owned enterprises throughout the economy. the oil companies, railroad companies, telecoms. the telecom sector is really
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dominated by these three companies. with china unicom in particular, they want to increase the efficiency of some of these operations. they are hoping that baidu can bring some of the private sector innovation and efficiency to the state-owned company. brad: gordon, that is going to be unusual for a lot of our viewers. why does the chinese government have anything to do with the partnership of these two companies? why would they have any interest in seeing them get together on these areas? gordon: the premiere of china a year ago announced his internet strategy. the idea was that the internet was going to revitalize chinese industry, including state-owned enterprises. they are looking at the telecom companies like unicom, china telecom, and they were thinking of merging them but they realize -- realized that would not do any good.
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they thought, why don't we spice one of them up with baidu. for baidu, this makes sense in the way that you put the search function on the 3g handsets of unicom. if you are talking about mixed ownership, they are buying into a company with very low growth potential. brad: what does it do for baidu? they only have distribution -- theyare ready already have distribution agreements with the large mobile carriers. gordon: i don't think it does very much. baidu as a partnership with china telecom from last may. they are really able to put its products onto the telecom services. i don't know what this does for baidu. i know what this does for unicom. when they announced on october 22 that they were thinking of this mixed ownership scheme, participating in it, china unicom stock really soared in hong kong. for baidu, it doesn't do them any good.
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baidu is a company in trouble. they had a really bad quarter, the first quarterly drop in revenue since 2005. nonetheless, i don't see how this would help. brad: our colleague wrote an interesting gadfly column today. describes the almost as a romance and talked about the possible offspring of unicom and baidu. what did you think of that analysis? is this a merger or union? peter: i think it is the beginning of a potential romance to stick with that potential analogy. the two companies are trying each other out. this is a relatively low investment form of cooperation at this point. as mentioned before, baidu is a struggling. baidu has fallen behind the other leading internet players in china, alibaba and 10 sent in particular. they tried a number of strategies including this online to off-line strategy.
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they have been investing in artificial intelligence. this is an experiment. perhaps it goes someplace, perhaps it doesn't. brad: gordon, i will let you have the last word. if this is a manifestation of the reform effort what may come , next? will we see similar partnerships with other companies? gordon: we have seen them combine former state enterprises into monopolies. we are starting to see combinations here. this is not going to help. the japanese tried doing this in the 1980's and everyone liked it at the time, this convoy system. but ultimately, it didn't work out. i don't think it is going to work out for china either. what plagued the japanese is going to plague the chinese as well. brad: we will have to leave it there. thank you for joining us. that does it for this edition of "bloomberg technology." remember, all episodes of "bloomberg technology" are now live streaming on twitter. check us out weekdays at 6 p.m. in new york.
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♪ >> it is noon here in hong kong. i am shery ahn with an update of the top stories. the south korean president is willing to be questioned over her role about the peddling scandal. she apologized in a televised address. this week, her friend was arrested. shares have been halted in hong kong as an investment bank is set to announce a substantial acquisition. talk with china investment securities about investment opportunities. it

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