tv Best of Bloomberg Technology Bloomberg January 22, 2017 3:00pm-4:01pm EST
♪ caroline: i am caroline hyde. this is the "best of bloomberg technology". we bring you all the top interviews from this week in tech. coming up, netflix's crown jewels come out with a huge beat this week. we will break down the case against qualcomm as the fight over licensing heads to court. and why a judge decided not to arrest samsung's heir apparent.
and what is next for south korea's most viable company. but first, netflix reports the biggest quarter ever this week. the stocks fall on the news that netflix added more than 7 million subscribers globally to finish with 94 million members, beating analysts estimates. on the domestic and international level. the company credits the popularity of original content. including "the crown" and more seasons of "gilmore girls" and "black mirror." bloomberg editor at large cory johnson joined us to break down the numbers. cory: not too long ago it was a company that rented out dvds and then movies with a little original content. now most of their spending is going towards original content. including things like "luke cage" where they have a master plan and they will have their own "avengers" they will call them "defenders." they will build a mountain of original content.
they have spent a fortune on marketing. the biggest spend they have ever had in the world of marketing. the numbers in terms of marketing spend were greater than ever before and even show an increase. 11.5% of revenue, and the number seemed to be coming down. remember they just raised a bunch of money in the debt market so they can raise more marketing. what they are doing with a lot of that money is plowing it into marketing. not only great success in buying subscribers internationally, but also buying subscribers domestically. they actually saw a check up in the number of domestic subscribers, which looked like that market was completely saturated and growing less than a single percentage point in every quarter. this last quarter, they grew at 4%, which i found positive for the company, but that is merely a function of how much you spend. what we really want to see is how long subscribers stick
around. caroline: sales up 36%, bang in line. you are seeing earnings despite the market spend still beating, up 50%, it looks as though the market is liking it from a share reaction point of view, but the cost of this, $6 billion being promised to spend on the original content or content in general next year. is this going to ring alarm bells in the long term? corey: i suggest people look at gross margins is where to see the cost of content. netflix said in the press release and i think a lot of analysts who look at gross margins are foolish, gross margins does not show you what the cost of the movies are. this is hollywood. it shows whatever cost they want to show. they said in the press release that what was going on with this thing was the recognition of content cost, not the actual content costs. there was one number and you can see the stock trading up after hours, a friend of the show just tweeted out and was doing some math using my numbers and other numbers that they spent about
$100 for every new subscriber they got this quarter which means they need to keep those subscribers on a profit basis for 35 years to break even. that is not feasible. something has got to give. content costs have to come down, the cost of subscribers have to come down. you do not see it in these numbers. john: they can still make -- caroine: they can still make inroads -- if you look at the u.s., the percent of broadband homes, that is less and the united kingdom. there is room to grow here. cory: that 4% increase, any increase in a saturated market was interesting. i think that you can sell a dollar for $.50 for only so long. when is the free cash going to show up for this company? the free cash flow numbers was stunningly bad. they've got to have a go up in order to pay for this content. with that big raise, look at this number, $618 million in 13
weeks, $7 million a day. how do you do that? caroline: it's spending on "the queen." cory: and all this other marketing and content. they cannot do this forever. there is cash flowing out the door. they are hoping they can outlast their competitors, maybe amazon prime, hbo, showtime, i don't know what the plan is, but as marketing costs go up and content costs and they are burning through this cash flow coming to be a real problem in this business. eventually the piper will have to be paid. caroline: we will see how shares trade up tomorrow. if indeed they hang onto these. another -- always great to get your opinion. staying with netflix, it has been 10 years since the company made its most important strategic shift away from dvds
into streaming. bloombergs caitlin meehan looks back at the evolution. caitlin: in january 2007, netflix announced the departure from its core dvd rental business. watch instantly allowed netflix users to stream a library of about 1000 movies and tv shows over the internet. back then, ceo reed hastings explain the move saying mainstream consumer adoption of online movie watching will take a number of years. the time is right for netflix to take the first step. analysts were skeptical, just as many holds as buy ratings, but consumers saw something different and signed on in droves. by the end of 2010, subscribers grew from 6 million to 20 million. at the same time, in-store rental giant, blockbuster filed for bankruptcy. netflix next set its sights on a new venture in 2013, original content, watching what become an arms race among rivals. netflix spent an estimated $100
million of two seasons of the first original series "house of cards." original hits do not come cheap. by 2016, netflix had produced more than 600 hours of original content at a cost of over $500 million. it plans to shell out another $6 million this year, nearly double the programming budget for all of 2014. netflix has not posted positive free cash flow in two years and is on the hook for $14 billion, in future payments, but cash flow concerns aside, it does appear reed hastings' 2007 bet on streaming video is paying off. netflix now has over 90 million global subscribers and makes 94% of its revenue on streaming video. caroline: another story we are watching, facebook ceo mark zuckerberg takes a stand in a dallas courtroom to defend his
company against claims that its virtual-reality unit, oculus, stole the technology behind the rift. zenimax alleges that oculus poached one of its star designers. it also said facebook completed its acquisition of oculus with -- in 2014 with "full awareness" that its tech was misappropriated. if the cinemax -- zenimax wins, it could rewrite the story of how facebook has emerged at the forefront of virtual-reality. still to come, we had to the economic forum in davos, switzerland, qualcomm's chairman talks about the trump administration. this is bloomberg. ♪
u.s. regulators have filed a lawsuit against qualcomm for allegedly using unfair practices to license its technology. digging into the details, the federal trade commission says qualcomm forced apple to use its baseband processors in return for lowering the patent rate of the royalties it charges. in 2014, it was disclosed that its licensing methods were under investigation by the ftc and the major fine was responsible. qualcomm responded setting -- saying it never threatened to withhold or withheld chips. shares tumbled on the news. now bloomberg technology's ian king broke the story and joined us with bloomberg editor at large cory johnson. >> that is the bombshell today. we have had general accusations against them, ups your legalistic accusations, but this is specifically saying no, qualcomm, you used your position to basically force apple to take
your chips and that hurt competition. caroline: we are seeing a share price reaction, but this is and ongoing themes. south korea last month seem to be fined to the tune of $1 billion. what money is at stake here? corey: a gets to the heart of the business model. fundamentally, the model for qualcomm is to license those chips and create chips that are great. they gained influence by having a standard specifically written for qualcomm chips, so this gets to the heart of their model, the relationships they have with the company that make the phone, and there is no one bigger single phone maker than apple. caroline: it is a special model that qualcomm has developed here. how much do you think they can fight this in the courts? >> the record is almost flawless. never lose. they when you look at the headlines in the trouble they have had, they have only really
lost one case against broadcom. everything else gets overturned on appeal and years later they do a deal and they are very successful. to pick up on what corey said, what they license is actually the fundamentals that go into mobile phone technology. what happens with the chip in the chip design is another business. what they have tried to establish today for the first time is a link between those two things and that is the biggest threat to the business so far. caroline: if we are thinking of losers and winners, the fact may be they do end up being thought as guilty, rather it might seem to occur, who does this win out for? do smartphones get cheaper? cory: if phone makers could shop around for baseband chips, it is one of the most expensive component in the phone. if they could shop around, they might end up with lower pricing, and that is what fundamentally that gets down to it was a vendor able to go out and find the cheapest and best chips they
could get for connecting the phones to the networks or were they compelled to go to qualcomm because of the market they have in the marketplace. caroline: what is fascinating here is who is doing the talking? is apple or executives they're coming to the ftc and saying we feel what we have been hardly done by? >> for anybody interested, if you read page 25 of the filing, there is a lot of specifics about agreements between the two companies, deals that were signed, renegotiated, re-signed, hard to imagine that came to the ftc in a dream and they did not get that information from somewhere. cory: and apple has everything to gain. apple would like to play the providers against each other. they've been unable to do that. caroline: the providers who could be winning out, do we see share reaction? >> intel has managed to take -- some of those orders away from qualcomm for the first time in
the history. cory: in the apple phones. >> in the apple phones, right. a clear beneficiary there. a lot of other companies have tried to go against qualcomm and really have just faded away. caroline: give us a time frame here? is this something they will talk about over the course of weeks and months and years? >> years, i think. first of all, it is a court case. it's not going to a judge and saying, give me a judgment. this will actually go to court. so you have all of what that entails and qualcomm cannot afford to let this go. they will have to appeal this as far as they possibly can go against it. caroline: before the news broke about that u.s. antitrust suit, against qualcomm, erik schatzker caught up with the qualcomm chairman and longtime democrat paul jacobs at the world economic forum in davos, switzerland. erik asked him how he's reconciling with the views of the incoming administration.
>> there are democrats and republicans, but we are all americans and want to see the administration succeed. in a democracy, you have different points of view, but there are a lot of places where we are very in line. we want more jobs. we want great trade agreements. we were really happened when the president tweeted about our one web satellite system. there are a lot of areas where we see alignment and where there is alignment, we will work hard together. when there is disagreement, we will also express our points of view. erik: where do you disagree right now? >> immigration is one where we worry about it. i would not say i know about it to say we disagree. i think the american dream has -- and the idea of the melting pot has caused the best and brightest to come to the united states, and that is a competitive advantage for the country. that is one i would single out. erik: anything else the president-elect has said that concerns you professionally or personally? >> nobody wants a trade war, so
we want to make sure that in the cases, for example, in china, where we have gotten through our difficulties there, we are trying to be a liaison and add to helping the situation out, helping to promote understanding, so that is an opportunity for us. erik: who'd you reach out to specifically in the incoming administration to help, to give qualcomm a voice where you think you can be helpful? >> there is a broad range. erik: wilbur ross? >> no, it is a broad range of people within the transition team and new administration, but you look at her when -- erwin and i as democrats, but we have plenty of republicans in qualcomm as well. the team is mixed on that. and so there are relationships that have been there. we have been working with conservative organizations for a long time, and are happy to see the focus on innovation and on intellectual property.
these kinds of things are important. erik: is silicon valley well represented with peter thiel as the trump whisperer? >> we are from san diego, so we are not a silicon valley company. whether tech is represented, i think there were concerns in the beginning of many people in the tech community as to whether they were represented. i don't personally have a relationship with peter thiel. it is good to have somebody on the inside that understands tech. erik: he says there is no room left for innovation and smartphones. what do you say? >> i completely disagree with that. we just showed off a new chipset that has great processing capabilities. coming down to the size of your pocket and they do virtual reality and you don't have to have extra stuff. it uses a camera to figure out the environment and you can walk around and experience virtual reality right away. erik: what might have motivated him to say that if you are so confident that we will be able
to do more with that magical computer in our pockets? >> people have seen things slowed down and certain companies, whether they are innovating as fast or not, people like to handicap that. people like to say this is happening and this is not happening, but really what is going on behind the scenes is a lot of new technologies being created and 5g is a great example of it. we will build new technologies that are not just faster, but ready for mission-critical applications like health care or automotive. they will be ready for internet of things applications, like going into industrial uses or going into agriculture. can we make a tag that is cheap enough that in the developing world can they have tags on all of their cattle? erik: you alluded to some of the regulatory heat qualcomm has been facing. how smooth of an approval process can you expect for nxp's $39 billion acquisition, biggest ever, with the regulatory pressure you are under in a number of localities around the world? >> we think that is a complementary thing.
we did not build the deal off of a lot of synergies. obviously, people get concerned when they see synergies from a regulatory standpoint and get concerned to see if you are getting too vertical or getting too into the market and having too big of a stake in a market. in this case, it is very complementary. erik: if asked, would you spin off the manufacturing facilities? >> that's not our first thought. i am not sure why somebody would ask us to do that, but we will listen to what the regulators have to say for sure. caroline: coming up, a south korean court rejected the arrest warrant for samsung's heir apparent, so does that mean jay y. lee is off the hook for -- from accusations of bribery? we will discuss the implications. this is bloomberg. ♪
the investigation completely over? we spoke with the senior director of the korean economic institute of america from washington along with geoffrey cain. >> for south koreans, this would not be something out of line. many south korean business leaders in the past, including jay lee's father, have been convicted of white-collar crimes. the samsung chairman was convicted twice of white-collar crime, and because of his economic benefit for the nation, he was given two separate pardons by two separate presidents. he continues his chairmanship throughout his life. he is now incapacitated from a heart attack and his son is preparing to take that chairmanship most likely. he is now the vice-chairman, so technically the second in command of the empire even though he is meeting staff. caroline: elaborate, even if
this is not that much of a surprise to those in south korea, how much should international investors and consumers brace themselves on the back of this investigation? >> initially, you won't see much change at samsung. this is a company the family has controlled for a long time. they have a plan and even if he were to face continued legal issues, that plan will continue. broadly the question for investors will be are the prosecutors able to tie samsung to the government in taking and our sing it to vote for the merger of the national pension fund, and that will be the key for investors going forward. caroline: how do you react to that if that is the key question? how more broadly does this affect conglomerates within south korea? are we going to see a changing of the relationship between the government and these huge conglomerates? >> that actually is very traditional in south korea for businesses to give donations and sometimes even bribes to
government officials. this is something that goes back decades into the country's authoritarianism in the past. businesses give favors to the government and the government gives favors to these businesses. that is how the south korean nation was built originally with the nexus of business and politics. with these allegations, we are seeing this question of whether samsung was coerced into giving a donation to this crony or whether samsung willfully went into this trying to get benefits for this merger that was going to happen, trying to get the national pension service to vote for that 2015 merger that got jay y. lee more power. caroline: having read through your notes, you feel that perhaps this isn't the particular leader to be bashing right now, because as it goes, jay y. lee is relatively progressive compared to many within the conglomerates in south korea. what will change if he is ousted? >> that is the interesting thing
about this story. if you look at samsung and what he has done since he came into power, he essentially made it more progressive. he has taken and allowed employees to not necessarily address them by title. he asked his own guards do not bow to him. he is trying to loosen the company up and move it towards international standards. there is still more to do, but it is something he has pushed for. if you compare him to the incident last year, he is a much more humble and laid-back individual. if he were brought down by something that was an old-school korean type of scandal, i think it would be detrimental because the question becomes how would these reforms stay at samsung and because of samsung's importance to the economy, so -- it should be a symbol of the way other tables should go. will that take and hold back other reforms as well? caroline: how much do you think this will change rivals?
will samsung be as important to the economy going forward? >> i think samsung will be. it does make up a huge slice of the south korean economy and exports. even without jay y. lee, the company has a strong reputation in the electronics industry for making great hardware, being reliable. if you are apple or some other type of company and need to put in an order for parts for displays for semi conductors, samsung is often one of the first choices because they can make it faster than other companies and make it at very high quality. in hardware, they often get this reputation as a fast follower, but they are often the leading edge. caroline: coming up, one of yahoos earliest executives opens up about the company's future and the $4.8 billion verizon deal. our exclusive with susan decker, former yahoo! president next.
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only xfinity gives you more to stream to any screen. download the xfinity tv app today. ♪ caroline: welcome back to the best of "bloomberg technology." i'm caroline hyde. donald trump was sworn in friday at the 45th president of the united states. we have been asking our guests about the issues impacting the future of washington's relationship with silicon valley. susan decker, former ceo of -- president of yahoo!, joined me for a lengthy conversation ahead of the inauguration. i asked her about president trump's approach to technology and the changes that will come with this new administration. susan: the relationship between silicon valley and washington is a very good question and one that was due for some
conversation this year regardless of whether hillary had won or trump won. i think that is true because there are broader economic factors out there. we are a generation today where our children at the age of 30, theater that half of -- fewer than half of them them are likely to be making more than their parents. that is different from the trend where each sets of parents wanted them to have better. there are many reasons for that. tech does play a role in the tech does play a role in the sense that the great innovations that have added so much to this economy in the bay area and other economies have not necessarily been shared by all of america.
the anxiety around that has been caroline: and so how can silicon valley step up to their responsibility to ensure that globalization works for the many and not just for the few? is it about skills they can provide? how can they make sure they are more inclusive? susan: skills is a really good one. ultimately, there has to be some transfer of some of the wealth that is created here and displaces workers elsewhere. how that transfer happens is not necessarily the responsibility
of silicon valley, but they can certainly do things like try to educate people in certain regions that may be losing jobs. there are definitely things silicon valley can do. they may also find themselves in a more regulated position or taxed in certain ways to help transfer some of that wealth. the core issue where it would be done right if nothing in washington ends up restricting the free flow of labor and capital that is what is creating this innovation. if tariffs or regulations that try to keep jobs here instead of allowing foreign, talented workers to stay here and keep the cost of producing low, i think that would be a bad outcome. if we could keep free capital and labor and innovation going here, and then with the benefits of that, figure out how to help
the people who are displaced from self driving cars, etc., i think that would be important and silicon valley needs to look for ways they can help. caroline: people feel that donald trump would bring in less business regulation. we have to ask you about the yahoo!/verizon deal. you were very senior at yahoo!. do you think this is the right way yahoo! is going? susan: based on where yahoo! was in last year, it was an inevitable outcome that it was to be sold. the fact that it was sold to verizon, in some ways, is very logical. they own aol, and there is probably a good consolidation opportunity to look at the properties aol and yahoo! has and which ones overlap.
i can see the business logic behind it. caroline: why was an inevitable? susan: the core issue at yahoo! was that no administration that has been running it, including when jerry and i was in place, has been able to solve the core distinction is in the consumer's mind of what makes yahoo! great, and in my mind it was all about content. yahoo! is struggling what their core identity is because they did not give really great in the thing they had a core identity in and got mediocre in everything because they were spread so broadly. by the time the last year came along, it needed to be sold. i sort of wish it had been sold to a company that was -- i don't know what verizon will do. i hope they revitalize the key spirit. caroline: was it a perfect buyer from your point of view?
susan: it needed to become private or semi private. even though verizon is a public company, it is a small part. they will be able to take the steps that are hard and long term in nature that could not have been taken when it was a public company because of all the media scrutiny. whether it was a private buyer or it becomes a subsidiary, i think it is a good home where they could make tough decisions and revitalize it. caroline: was some of the media scrutiny unfair on marissa mayer? susan: i think she was dealt a susan: i think she was dealt a tough hand. some of the challenges of yahoo! was early in its years. when you inherit a company operating in certain ways, it is not easy to change it. i think there is certain things she wishes she did differently. just like all of us wish we did things differently. i think she did the best she could.
unfortunately, it was not enough. caroline: what about the hack? the disclosures that came much later in the day than they actually occurred. how much do you think that might affect the price point of verizon? how much do you think people at the home of yahoo! should be taking responsibility? susan: i don't now how it will affect the price, if at all. there could be a renegotiation to some degree. i don't think it will stop the deal from going through. sure, i think leadership of the company should always take responsibility when something goes awry on their watch. even if whatever happened had seeds in the previous administration. i don't know anything about the background of that. it is the right thing to do to step up when you are leading a company. caroline: when you look back on where yahoo! went, do you think they were correct in getting into alibaba, a chinese company? susan: i do.
if you look at the original stake in alibaba that we struck in 2005, that would be worth $70 per yahoo! share today. it was sold over the years in pieces. today, it is worth considerably less than that. but still, it was the single biggest value creator in yahoo!'s history. it is a sad sunset for this company. it makes me -- we all had a great love for yahoo!. we wish it were different. but i think it did innovate in many ways and create great value and there are wonderful leaders all over the valley now got to cut their chops there. caroline: any other companies out there at the moment that you think are excelling in looking at their strategy in the valley? susan: we are in an unusual
situation for silicon valley. we touched on it earlier. you have companies like apple, google, facebook, amazon, microsoft in the top 10 in market cap in the world. when you think about top companies in the s&p 500, silicon valley and northern seattle are a big part of that. so, it is very important that this relationship with washington gets resolved in an effective way. caroline: a man who has spoke about the way the pie is divided is warren buffett. they seem to be sitting on a big cash load at the moment. will that be returned to investors? susan: it is possible.
one of the things that is so remarkable about berkshire hathaway is it is a collection of businesses that generate a lot of cash. many of them generate more than they need. and others are quite capital intensive, like the railroad businesses. so you have insurance and other consumer businesses that lot of cash. generate cash and a way to redistribute that to businesses that need them. it is not a model that is even every year. a major acquisition could come up and it is good to have the resources on the balance sheet to be ready for that kind of acquisition coming up. as long as the core capital allocation proposition is working for investors, taking resources on the balance sheet capital that is not productive and putting it into highly productive uses, i think investors will be tolerant of short periods of time before the next big deal. caroline: coming up, we speak to
♪ caroline: facebook has just revealed a massive survey. they unveiled the 2017 business survey partnership with the world bank and the ucb. we caught up with the vice president of operations and asked about the major takeaways from the survey. take a listen. >> we have found that feeling -- businesses are feeling pretty confident about where businesses are right now. what is interesting is the outlook six months on.
you can going to the survey and really have a look about different countries and how they are feeling. one of the things that struck out to me was the uk's small businesses were feeling much more confident than the rest of europe about the outlook for you can going to the survey and their businesses. when you start to look further into the survey, you can see businesses that are really embracing online tools are businesses that are more likely their businesses. differently in mobile technology. when i was growing up, and my parents had a small business and my grandparents had a small business, they could only sell in their geographical industry. you can sell anywhere in the world. the survey shows some of the challenges businesses are facing in that respect. to be working internationally, and to be selling around the world. that is something we have seen nuances coming up post-brexit vote, postelection of donald caroline: do you see any of the trump in the united states? could you see that coming from u.s. and u.k. businesses?
>> we did see in post-brexit that was reflected in confidence. one of the things that stuck out one of the things that stuck out to me with the research was how women and how female business owners are feeling at the moment when it comes to their businesses. businesses. a lot of that is contrary to what we think conventional wisdom might say at the moment. why that matters and why that is important is because they are the businesses more likely to be traded internationally. they are the businesses that are looking to expand and looking to employ more people in the not-too-distant future.
we are seeing a strong correlation between job growth coming from the digital economy. caroline: what is the role of facebook within the related -- role of business going forward? it is called the future of business survey. where do you see yourself within it? is it because you want to be more enterprise-focused? >> we take our responsibility in the way we work with our partners around the world very seriously. the facebook workplace where that came from was from different organizations coming to us and saying, tell us about how you run facebook as a business? the way we run facebook is through workplace. we use facebook. we use the groups. we use messages to be able to connect around the world and work in a very efficient way together. that is where it came from. it came from our partners saying, tell us how you do it? we have expanded it out of have thousands of companies around the world utilizing workplace as a way of bridging the gap. we are seeing businesses of all
different sizes are really embracing it because it allows them to be much closer to the people who work with them, and it can allow really great efficiency between the ceo and the different people within the organization. caroline: it has been a challenging few months for salesforce.com. the company has seen a strong start in 2017. shares are up more than 7% year to date. the company is forecasting shares to jump from 2017 the 2018. ceo marc benioff discusses the company's growth and competition. marc: we had to connect with our customers and help them connect with their customers in a whole new way. that is what is so exciting about what salesforce does today. that is why so many companies in davos are using salesforce.
there is this sea change going on. we are working hard to develop customer intimacy. >> you got a lot of competition. had you compete with the other pretenders of what you invented? marc: amazon is a great partner of ours. amazon uses salesforce to connect its customers in sales and marketing. on the other side, we also work with a lot of amazing retailers like louis vuitton. tom: why do you think -- marc: i have a feeling -- here is the thing, those guys, those next 10 retailers -- those next generation retailers are getting slaughtered in need salesforce to connect. have a feeling -- these are exciting times. tom: they are exciting times and i think everybody is making money, but you have your critics. how are you going to position salesforce within the new technology?
you are one of the few technology guys in happy valley here. how are you going to reposition not for the next 12 months before the next five years? i cannot imagine where my iphone 7 is in five years. marc: the thing that is amazing, we started our business in 1999, crm or customer management was a small market. but it will be the largest segment of enterprise software in 2020. we are number one in the segment and continuing to innovate and look for ways that we can help our customers become more successful. tom: in your world, we are going to go through a phone. how does salesforce.com and your competitors handle the cloud to two whichever phone we have in our hand, business or personal? marc: that is fascinating about how you think of computing today. you just made a huge shift in your mind with where we started with personal computers to the mobile phone.
now they are making them for $20 so everyone can have them. far more powerful than the most powerful macintosh or you mentioned the lisa before the lisa was lisa. that was something now in your pocket that is way beyond that capability, but now computers are going to disappear because we see voice taking over. we see things like alexa from amazon or google home and others where we are talking to our computers and walking into a room, or talking to our watch. that is incredible next generation computing. caroline: coming up, how will snapchat's parent company transfer to a public company? we will look at the road to its highly anticipated ipo. this is bloomberg. ♪
concerns. they are gearing up for an ipo ahead. snapchat culture is coming into focus. the ceo's leadership style is getting tested. executives have been reluctant to release any details they are not legally required to diebold. we caught up with our reporters. take a listen. >> they are a secretive company and they are really young. you are going to need to see visibility into the future. they are on file confidentially. there is financial information filed with the sec that some people have been able to get their hands on, but until we see the file, we will not have income statements, alan sheets, things like that. it plays into this really close to the vest culture that evan spiegel has maintained. look, we think about this offer, it is a social media company.
the last one to go out was twitter. there was an overhang because twitter did not lay out a huge strategy when it went public. that came back to bite them later. you have to expect that when investors are considering whether to buy an ipo and hold onto the stock, they will need more strategy wise. caroline: this is something you have been running up against for several years. evan spiegel not notably divulging too much to his own team. several years. evan spiegel not notably >> not really. being an employee for snapchat is like being someone outside of snapchat in terms of what you get to know. the employees did not get a heads-up on what products people are working on. they don't get to use their phones. there are little things that the offices are not in some sort of corporate campus. they are scattered across venice, california in there is -- various office buildings.
there are no all hands meetings, which is a staple of silicon valley. a lot of people are just kind of in the dark within snapchat about where the company is headed. evan spiegel is going to have to tell investors on a roadshow not just where the company has been aware it is headed. this is the time to explain the long-term vision for what snap can be. caroline: certainly, alex, investors will need some soothing if they are not going to gain much control of the overall company. we see facebook copies snap. maybe evan spiegel is copying mark zuckerberg here? >> there is a lot of trust that has to be put into evan spiegel. he is seen as this visionary ceo. trust him.
he has won the millennial cohort over. they are going to have to. with this striated employee base and no all hands meeting, evan is the guy in control. he is the one who sees the full picture of what is going on. it is a big ask. he also is going to be the one to trust to control the information flow. we have already see that come out in the ipo process. this coming out party for the company. the company scolding bankers. a lot of onus is going to be put on evan. after twitter has gone out, after some of these missteps with these other very big founder led companies, it is a big ask. ipo may go well. it is the first tech company and a long time. the long-term investors you really want to buy into these public offerings, they will be the ones that will need to convince that this would be the
company to buy into not for the ipo for the next year, but the next five to 10 years. to do that, it has to be a bet on speigel. caroline: sarah, what are you hearing about how will you think the culture change will progress with evan spiegel? do you think he really understands how much more disclosure he will have to give? >> i think he is still, in the nature of the company, probably get as little information as he can because for evan, the things that are really worth it to him to expound more on what snapchat is going to plan to do given the threats from facebook. facebook has copied snapchat over and over. caroline: that does it for this edition of best of "bloomberg technology." we will bring you all the latest in technology throughout the week. be sure to tune in on thursday for a slew of big earnings from alphabet to microsoft. remember, all episodes of
♪ carol: welcome to "bloomberg businessweek." i'm carol massar. in this week's issue, the d.c. lobbyist selling access to the white house. oliver: the hacker that promises to deliver technology to third world countries comes crashing down. carol: deception at europe's most important bank. oliver: all that ahead on "bloomberg businessweek." ♪ carol: we are with the assistant