Skip to main content

tv   Bloomberg Technology  Bloomberg  March 3, 2017 12:00am-1:01am EST

12:00 am
>> in his 1:00 p.m. in hong kong and i'm ramy inocencio. stepping downis from any inquiries to russian influence in your politics after the justice department said he met moscow's investigator twice moscow's ambassador twice. president trump said he has total confidence in his attorney general. japan's core inflation rose in january for the first time in 14 months. household spending fell 1.2% from one year earlier. that is three times a forecast drop. hyperinflation is that the heart of japan's economic revival efforts with hopes. on higher oil prices and a weaker yen. nintendo shares gained on the
12:01 am
day as the new gaming consul went on sale in tokyo. the switch is the biggest bet in new arrival tos smartphone games and the flop of its we you -- its wii-u council. news, 24 hours a day, powered by more than 2600 joyous alice in more than 120 countries. let us take a look at the market right now because afternoon trading is getting underway in hong kong as well as china. the hang seng is down 7/10 of a percent right now. shanghai composite is down .4% after china's pmi composite came in better than expected. ♪
12:02 am
caroline: i am caroline hyde. this is "bloomberg technology." coming up, snap, the big picture. we'll get you up to speed on the trading day debut aztec rushes as tech rushest in its first ipo of the year. plus, early believers, the first two that bet on snapchat. you hear from the partner. and the $5 billion club. how the monster ipo changed the fortune of the snap founders. first to our lead. snap wraps up its first day of trading on the new york stock exchange shares closing up 44% , from the listing price. they reached a high of over $26. at $24.48, the maker of the disappearing photo cap ended a long-term ipo drought. what will be in the pipeline for other companies? joining us, sarah frier, who
12:03 am
covers a snap for us. alex, your iq know how. how do they manage expectations. is 24% a little bit too much? alex a typical ipo you would : like to see 20%-30%. this will have a little bit more buzz based in. if you look at twitter it was 70% or more on day one. somewhere in between seems like they hit the sweet spot. when i look at trading and how the stock kind of slithered day, ithat $25 mark all was pretty stable, not a lot of swinging going on. we sought to walk toward the end of the day down to the closing price. it seemed like a decent way to go out in your debut. no one is quite complaining about the return for investors. caroline: looking at the ipo you look at facebook, up now almost triple its initial ipo value. after a year it was down 31%. , twitter on its debut opened up more than 78%, then it was down
12:04 am
10%, now it is down 65%. it is worth remembering whatever happens on the first day of ipo, does not always remain. talk us through the managing of expectations and perhaps where the roadshow was not all smooth, there were some bumps they had to iron over. many questioning the user growth. sarah: absolutely. this is a company that is trying as hard as it can to not set up those comparisons to the companies you just compared it to, facebook and twitter. this is a company that does not want to be judged on its user growth, but it is going to be judged on its user growth. that is a metric that slowed in the fourth quarter. and if you do not have the users, you cannot make the money off the ads. snap's argument is that the user engagement on its app is so immersive and so frequent that a kind of does not matter the quantity so much as the quality. caroline: yeah, we are 18 times
12:05 am
being logged into the every day. those are amazing statistics. we were down on the new york stock exchange. it was a frenzy. goldman sachs had a role cut out for them. they were doing stabilization for the entire trade. and they took their time. >> they did. they did take their time. that is what they are known for. what i can tell you now is that you saw bobby and evan ring the bell. we were both there for that. i disappeared a little bit, chasing them down because they went over to goldman to watch the first trade happen. they had to get there and work through that. the shares finally started trading at, what $11.19. ,you can see the gap between the 9:30 open there. it was so important for them to find the sweet spot where they saw that the shares were there. you saw them priced at $17 a share even though our sources say the deal with 10 times oversubscribed. there is some kind of reason that they could have priced in a little higher, but if you think about the company's impetus for pricing in at $17 instead of
12:06 am
making, let's say, $200 million more at $18 a share, doing that kind of reward to shareholders who are willing to take a bet on them at the listing day and say "look, we will give you a little bit extra wiggle room for your returns, we can kind of ease our way through that in trading going forward." caroline: sarah, you are out there in silicon valley. so much hope was riding on this ipo and what it does in the next days, weeks, months, and years. there is plenty of other companies sat there waiting to enter the public market. how do you think it has been digested in silicon valley by the base and other startups? sarah: this is a high-stakes ipo. there are so many private companies that have ballooned in valuations into the billions. in some cases, tens of billions like companies companies like uber. people have been waiting for these companies to go public. it has not been necessary because there's so much capital
12:07 am
available to them on the private market and also, the markets were a little bit volatile. we are looking at the snap ipo, this is a big company, the biggest social media ipo since twitter. they are saying, if they can do it, that shows there is an appetite on the market for these kinds of deals. and maybe for highly valued stock. caroline: alex, you're talking to sources already. what are they saying? are they lining up? who should we be talking to next? alex: basically, yes. the average private company is now staying private for nine years. snapchat is younger than that. that used to be the mo for companies going public. they would go public when they were less mature. that has not been the case these days. snap is going against the grain by going out as early as it was. you know, there have been these arguments in the past year where the buy side in equity markets has been very risk off. they want to see more profitability. they want to see more stability.
12:08 am
but snap is here, coming out with an unprofitable company whose business model is six quarters old. and the deal itself did well. marks still question about the long-term returns, where the stock goes, how the company fares. this is a bit of a proof point, maybe saying that staying private forever is not necessarily the best thing, maybe having your judgment day in the public markets is just as good as doing a privately with basically the same investors. these big crossover names. caroline: uber, airbnb. hint, hint, nudge, nudge, wink, wink. you also cover facebook. the questions that are being spelled out there is can they do with facebook has been doing and have a bigger user base? andh: absolutely, they can they have. instagram in august copies one of snap's most popular features, it's story future, where people
12:09 am
can create reality tv shows of their life. this is a product people are using on instagram now almost as much as they are using on snapchat, or maybe even more at this point. this will continue to happen. facebook's app whatsapp with , more than one billion users in the world had a similar feature added earlier this year. facebook is considering doing it too. this is a constant way of copying snap's way of doing things. yes, it does harm the potential. we will never know how much faster they could've grown if it were not for that. the company does not attribute their loss of growth to instagram, but it certainly is interesting. but one positive side of that, i do want to point out, is that advertisers say it is a little counterintuitive. advertisers say they can justify buying snap's ads because the format is now the same as as
12:10 am
they can buy on instagram. caroline: it vindicates the business model to a certain extent. great reporting for both of you throughout the day. alex down on the stock exchange with me throughout the day, and of course sarah frier from san francisco. we will be coming back to you many times about snap going forward. coming up, we continue to date into snap's first day of trading. just how much of a paycheck are they bringing home? we will hear from the bloomberg billionaires team. that is next. and our one-on-one conversation with new york stock exchange president tom farley. when he had to say about snap trading debut. this is bloomberg. tom i take great comfort that : the stock opened that 24 and is trading smoothly at that number. that is exactly what you want on the first day, especially of a large ipo. ♪
12:11 am
12:12 am
caroline: now more in-depth
12:13 am
, coverage of snap's first trading day. they added $1.5 billion to the founders' fortunes. propelled the founders of more than 150 places on the bloomberg billionaire index. joining us is tom metcalf of bloomberg news. a busy day for you. spiegel, 280. bob murphy, 281. they have $5 billion. how is it being broken down? >> it is an incredible rocketship they are riding on snap. today they added 1.6 or $1.7 billion to their individual fortunes. that is just when it was listed at $17 yesterday. their fortunes were nowhere in 2012. all of a sudden, 2014, you get this $10 billion valuation of snap. closer $28 billion today. , one of the all-time fantastic growth stories. it is just whether it is going to continue or not.
12:14 am
caroline: we'll see how much they start spending. how does rank in comparison to the rest of the tech billionaires out there? >> definitely up there. the classic names to compare might be jack dorsey from twitter, he only has $1.5 billion. caroline: poor guy. >> i know, you have to feel sorry for him. and then along with the other startups, unicorn head honchos, and in the airbnb three founders. and then just behind travis and garrett camp of uber. obviously, they are way behind jeff bezoses, mark zuckerbergs, and bill gates' who are around 50, and 90 billion. caroline: talk us through it. not just the founders that made a lot of money, but the venture capitalists who made a big bet in the early days. >> yeah, exactly. benchmarks today made $900 million. a $2 billion position. lightspeed ventures is a great
12:15 am
story about how evan spiegel decided after dealing with lightspeed ventures that he would make sure he had voting control of snap. and they have got a $600 million gain this year. caroline: look at that. $613 million. we are to be looking at my conversation with jeremy liew. one of the first investors at lightspeed ventures. what about the balance we tend to see on the first day? we know it is up 44% today. twitter was up 73% on its first day of trading. these are not always stable. >> it does not point toward what is going to be happening in the next year. twitter was up, but now it is down about 30. facebook was pretty flat, and now it is up since its ipo. 260%. caroline: zuckerberg as well. how is evan spiegel and bobby murphy's fortunes changed in the founding of this company in particular? you are saying it was like a
12:16 am
rocket ship it all set up so quickly. is this now the point where they actually cash out? a lot of it will be locked in for the perceivable future. >> yeah, so they both 6 million shares in the offering. they took home $272 million. you get tax on that, but they are looking at a banking out of about $180 million. as far as the flat shares there , are restrictions on where they can start selling. it is each about 20% each. you would assume the value would drop down, but no one can feel start for them. they have done very well. i'm sure they will be celebrating nla tonight. caroline: i hope they will be. in sure there will be champaign going around for all those down in the new york stock exchange today and flying back to l.a.. i urge you all to get onto rich thank you. apple is suing qualcomm for the second time this year. the suits were filed in the u.k. courts on thursday.
12:17 am
it alleges qualcomm charges royalty to companies. -- to technology covered under apple patents. apple is suing qualcomm in california. a $1 billion rebate for licensing fees. apple alleges qualcomm is hoping holding back the money as punishment for cooperating with korean regulators. qualcomm says it will fight the charges. now, we will have plenty more on snap this hour, including interviews with two early investors. next, we'll hear from a general says yout partner who should invest in combined like snap. later, a member of lightspeed ventures who wrote the first check to snap's ceo evan , spiegel. and a reminder that we have an interactive tv function, tv on the bloomberg. you will not only be able to watch us live, but also be able to see previous interviews and dive into any of the bloomberg functions we talk about.
12:18 am
anything related to us this is , for bloomberg subscribers only, i'm afraid. check it out at tv . this is bloomberg. ♪
12:19 am
12:20 am
caroline: now all day long we , have been bringing you interviews from snap investors who were there from the very beginning. earlier on bloomberg markets, my colleagues scarlet fu and allergan are -- and oliver renick interviewed a managing director. he gave his thoughts on the company's first day of trading. >> it is a reflection of two things. one is how popular the product is and how well the company has executed over the last two years. the second, frankly, is also that there have not been a lot of tech ipo's and there is a strong investor demand to invest in companies like snap. it is great to see. >> it is great to see and you look at how the stock is trading right now, $25 and change, around $26. where do you see it closing and where do you see it trading in a quarter from now?
12:21 am
>> i cannot see the future. comment on, the company has done a good job setting expectations at the right level. you are seeing strong investor sentiment behind the company. every decision they are making is for long-term. you know what happens in the , next few days is hard for me to predict, but but so far, so good. >> so far, so good. the reason i asked that is because you can go the way of facebook we do not have a great debut, but the stock can do very well. or twitter which did better, but then fell below the ipo price. that was a year-and-a-half into existence as a publicly traded company. what is your confidence that evan spiegel and bobby murphy can guide snap to avoid going the way of twitter? >> yeah, so i think this is the key question that everybody talked about here in silicon valley as well. the reality is that every company is very different from each other. twitter is still the 140 character function. it is very different from what snap does which is communication
12:22 am
, in everyday life. there are hundreds of millions of people that use it multiple times from 10-20 times a day. i would say i look at evan spiegel and bobby murphy and how they executed over the past two years. how many interesting projects they have launched and that is a testament to how different the company is from twitter and facebook. when they went public it was one use case. snap has launched a great mitigation app to redefine how to watch television on mobile. they have actually created really interesting branding content that is interesting to advertisers. a lot of interesting innovations that come up of the company over the past few years. anchor: people were starting to question that ubiquity and lifespan of facebook's original basic product going on the social media network. the company has started to demonstrate that it was going to create value through m&a and acquire growth in many ways and
12:23 am
expand into different areas. when you look at the future for snap, along the lines of what we were talking about, do you see the product changing a great deal, or do you see them tacking on different businesses or different lines of products from where the app is now? >> snap is a product first company. they have continued to innovate. i expect them to keep doing that in the future. you know they have described , themselves as a camera company and focused on investing the next camera metaphor. you know, form factors for camera have not changed for a long time. they do acquisitions. hard for me to say. they have done small acquisitions in the past to bolster their team and product capabilities. but i can tell you everything , they have described themselves as have the time is spent on product. i see that my nine call -- that maniacal focus continuing in the future as well. anchor: a colleague said it is a three-time leveraged short old
12:24 am
people etf, and that is a funny way to look at it but when , you look at the audience is focused on, fickle millennial's, the market capital is now above deutsche bank and others. does the company like snap need now that it is a publicly traded entity need to move beyond millennials to a bigger audience, for instance, their parents? >> well snap is a company that about much thinks building mainstream products. they have certainly launched products that have started with the millennials but have been designed to be mainstream. if you look at the number of -- half of their users are over 25 here and if you look at people over 25 that use the products, it is a very high-frequency. it is over 10 times a day. that is not a product you would say is a millennial-only product, is very much mainstream from the way i think about it. anchor: how long will you hold onto snap if it is not a profitable company? >> that is a difficult question.
12:25 am
we do not -- we have sort of in general had a very set methodology for how we exit companies that have gone public. we distribute them over a certain amount of time. we will stick with that strategy or it it has less to do with how the company itself is performing up or down. it is about the work and how we handle getting them back their returns, if you will. anchor: you buy your stake in june of 2013. you have years of experience of dealing with evan spiegel. what is your confidence that the two of them controlling more than 90% of snap's voting shares, that will not hurt the company as a publicly traded entity? >> well i admire them are being , transparent about their long-term views about the company. you know we invested and then we , backed them because we think they are brilliant. they have certainly proven to be so, so we have a high degree of confidence in the way they have , you know made decisions and
12:26 am
, hopefully they will continue to innovate the way they had done in the past. caroline: that was managing director. an update from amazon. after an internet outage in the u.s. this week. the company says it was human error at its cloud business caused the sweeping internet outage that lasted hours on tuesday. anzon says and employee -- employee accidentally switched off more service than intended. it caused errors that cascaded through the service. the service is used to have data, manage apps, software downloads for more than one -- 150,000 sites. the company, snap has to address slower user growth. we will address the metrics next. from new york this is bloomberg. , ♪
12:27 am
12:28 am
12:29 am
12:30 am
>> it is 1:30 p.m. in hong kong. ma mean in a sense you with an update of the top stories. sessions recused himself from a greek into russian influence in your politics after the justice department said he bough met twice last year. president trump says he retains total confidence in his attorney general. >> i never had meetings with russian operatives or russian intermediaries about the trump campaign. and the idea that i was part of a "continuing exchange of information during the campaign between trump surrogates and
12:31 am
intermediaries for the russian government" is totally false. enjoyed achat parent dream debut, surging 44% and valuing the company at $20 billion. that makes it twice as expensive as facebook and four times more costly than twitter. snap closed at $24.48 a share, well above the ipo price of $17. it's two cofounders finished the end of the day with more than $3 billion. china ordered travel agencies to stop selling packages to south korea. the instruction is seen as seoul'sion for deployment. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. let us check on the markets that have been trading in the
12:32 am
asia-pacific today. here is juliette saly. juliette: not very good to round out the final trading day of the week, but we have the rally across equity markets and it is a wait and see game. we are seeing the yen of course snapping that recent session of losses against the dollar. that is weighing on it for companies in japan through the nikkei off by .8% in late trade this bite the fact we thought core cpi coming in better than expected. you have seen iron ore, gold, which have weighed heavily on the australian market. weakness coming through from these property stocks in hong kong that have been on quite of a tear. ahead of the ncc in beijing, you are seeing the shanghai composite off by .6% today, so extending those losses and of course some property stocks coming in to pressure. as you mentioned, we are seeing travel related talks hit very hard. excuse me, in south korea, so it
12:33 am
is off by 1.2 percent in late trade. having a look at the yen, it is the dollar.ainst one hundred 14.11. london at the top of the hour, this is bloomberg. 4.11. london at the top of the hour, this is bloomberg. caroline: this is "bloomberg technology." i am caroline hyde. back to the top story of the day. it is snap's first day of trading at the new york stock exchange. it opened at 41% above the $17 initial public offering price. yet, the company still has some things to prove. one concern is the slowing user growth. snaps ipo showed the company told investors much of the problem was due to an issue with the android product. some were skeptical of that. here to dive into snap's user growth is bloomberg editor at large cory johnson and another jitendra waral.
12:34 am
corey, you have harnessed some of this analysis. it is something they will be measured against as time goes forward. this is fundamentally for business to grow into valuations, it is going to have to be a better business. you know, it is priced as if a lot of things are going to work, but when i look through the sec f1ings, the amended statement, one of the biggest issues was this rapid decline in user growth. we discussed it a little bit. cory: you know, they certainly acquired a lot of users. even rabid users. you can talk about the engagement and how much time users spend on the service. the size of the user base is not actually huge yet. half of twitters and a fraction , of what facebook is looking at. more importantly, the growth has slowed down dramatically. only 5 million users in the fourth quarter of last year and even the quarter before, the user growth was quite slow compared to historical numbers.
12:35 am
in fact, going to the few quarters before, there was an acceleration in growth rate, then it -- dramatically. it coincides with the launch of instagram stories. that is the most disconcerting thing. the suggestion is that despite the really cool filters and other unique snapchat things, instagram is eating their lunch when it comes to doing the sort of storytelling on a mobile app. you can see it, i think, in the user growth numbers. caroline: the copycat is the key concern. looking at the bloomberg and diving into the analyst recommendations we have on the bloomberg for snap we have only , three. two of them is a sell and one of them is a cold, and not a single buy. the share could drop all the way to $10. give us what the opportunities are to scale. you have highlighted that analysts have seen the revenue
12:36 am
perhaps grow, but there is potential for it to exceed its current form. jitendra: so, if you actually look at their user growth issue they are blaming it on the , android performance issues and but if you split it by geography, you will notice the rest of the world, not europe or north america is where it showed that slowdown. they have to show over the next two quarters that they can be resilient in the face of increasing competition from instagram. if they meet those numbers, there is a serious problem here. caroline: do you think there will be more than one opportunity for growth outside of the age range? ,en ask, millennial's -- gen x , will they look outside of the current age group? jitendra: i don't think so. this is a millennial focused platform. if you look at their strategy of the last couple of years it has
12:37 am
been very millennial-focused. they get this audience better than most social networks that are out there. sticking to the strength is a good thing. if you look at the last couple of months, you see the uptick in 35 plus audience. that is interesting. so, maybe bringing in celebrities and followers that they have to get onto the platform can be one of the strategies. mean, they are already celebrities in their own way. we are looking at the demographic breakdown here is interesting is that we are already hitting saturation point when it comes to the united states. other saying, look at the rest of the developed world for them to expand. they have been looking at their international reach. cory: yeah, so, internationally, it has been growing. it appears that the service has become suddenly expensive to provide for u.s. users, or the international users just cost a lot more for them to provide for, so while the international growth might offer opportunity,
12:38 am
it is also coming out a great expense. this is a business that had negative growth margins for the quarter of its existence for the last six months. as i mentioned earlier, there are 552 stocks with over $10 market cap. only snapchat and another company have negative gross margins. that is not a business. of know, the very essence any business, whether you are making oil wells, making widgets, or making snapchat is that you have to sell something for more than it costs. these guys are not doing that. caroline: when you look at the analysis, you are looking at the market capitalization in terms of the ratio of the users that they have. they say the market cap value is significantly less than facebook or twitter was. jitendra: yes. that is one way of looking at it, but actually if you look at , the big picture and compared to all the key ipo's that happened over the last decade, snapchat is coming up at the top of most of them.
12:39 am
and with those outsized valuations come outsized expectations. growth should not be a worry they justst because started monetizing it, but user growth if they show any weakness ,, especially given instagram's run, that would be bad news for the company. is interesting. we just had sarah frier on saying it is a bit like when apple went into music streaming. spot a fine -- spotify's business model was vindicated. do you think that facebook is doing everything they can to copy snap because they could not buy it? does that was vindicated to advertisers that this is where you want to be? jitendra: yeah, see that is why , it is a wait-and-see story. initially you have the budget everybody distributive to snapchat as well, and that is where the revenue growth would come from but longer-term if they prove , they can hold the engagement among the group that they have
12:40 am
and they continue to make it easier for marketers to advertise on a platform, then they could get it. it is really a show me story at this caroline: the shareholders point. do not wait. it was a very good day, the second best ipo we have seen in the last five years. bloombergs cory johnson, fantastic analysis. in a while, jitendra waral, check them out on the terminal. now, a story we are watching. itr want to reintroduce driving cars in california legally this time. uber's pilot program was pull up the street in san francisco. it failed to properly register with the state department. uber wants to play by the rules this time after expanding its program from pittsburgh to tempe, to arizona last week. coming up, we speak to the first snap investor. that was jeremy liew on what made invest on snap and his complicated relationship with
12:41 am
the company's founders. that is next. we have been hearing from a variety of voices on snap's trading debut. to numerousm farley investors throughout the day as well. another voice, sean, who thinks while snap will continue to lead in trends, copycats. check it out. this is bloomberg. >> snap is the innovator. they are coming out with the newest technology that is being copied. we believe snapchat, as phones become more center oriented and more 3-d oriented, it will be in strong position as we are going to the next phase. ♪
12:42 am
12:43 am
caroline: a story we are watching for you. alibaba is stepping up the competition. the online retailer is selling their finance arm for $2.1 billion in cash.
12:44 am
they will retain a share of future profits. alibaba has spun off its own finance unit. financial jd.com is backed by walmart. now snap's strong showing can company's ability to the village -- to fulfill its promise. a guest whoow is put a sell on snap. great to have you with us. i was just looking at the recommendation. you have a $10 price target, why so low? >> now well, that is where it shakes out. i consider myself cautiously optimistic about the business. but, you know, when you hold out a model that tries to get you about $7 billion of revenue by the year 2023, i assume a 30% adjustment on margin, which turns into about $2 billion takeoff.
12:45 am
takeoff some acquisitions and bring it back to the present using discount rates that are similar to what we might use for facebook, which arguably is a little generous, add a little bit of extra risk and some carryforwards, and cash on a balance sheet, you get to $16 billion. one thing a lot of people probably are not fully considering is the right numbers are probably closer to 1.6 billion for this year, not that 1.4 billion1.2, or that i am seeing. you end up with $10 a share. caroline: there are far more shares out there that can be converted. what about the future opportunity of growth they have been looking at? they looking at hardware and international growth. what makes you think it will be $7 billion that will be raking in by 2023? brian: well, i'm in, i guess it could be two or it could be 12. they could go down a lot of different paths, but i'm working under the presumption, and there are a lot
12:46 am
of presumptions to be cleared to get there, that they can increase some mix of users with time spent on the platform and their monetization will relatively underperform versus facebook based on how we know that advertising sales work. which is to say that the biggest players tend to get a disproportionate share of the revenue. assumptionsumber of around how the advertising business plays out, we can assume they get to the numbers they have assumed and make another assumption around international growth that under paces domestic growth. now, to the point on non-advertising businesses, i mean, it if we saw a very clearly outlined business plan a , lot of signs indicating meaningful investments toward s those other business initiatives, and they look significant, then we can imagine modeling it out, but even for facebook and oculus, it is nice to imagine what that business is. it is not clear it is ever going to be material to facebook, so snap has spectacles, it does not
12:47 am
that they can -- it is not necessarily a business worth accounting for at this point in time. caroline: wow, but what about the ongoing competition we are seeing from facebook? is that something you are baking into your overall outlook on the business the fact that so far it has pinched some of the ideas and then it rather well? brian: absolutely. instagram is bigger than snapchat among younger audiences. the ad products are sufficiently similar. and you have superior targeting not to mention established , relationships between facebook and basically every advertiser on the planet. that is not true for snap at this time. now that does not mean that snap , cannot generate ad revenue and meaningful ad revenue. but it will be easier for instagram to do this. caroline: $10, your price target. when do you see a moving? do you feel in your heart of hearts that the market will
12:48 am
follow you within the 12 month directory? brian: i'm trying to assess what i think the value of the stock is. what happens from a trading perspective, you know i'm not , focused on the day-to-day. it has been so fantastic having you on the show, to come out and speak to us as you put your analyst recommendation out on snap. hopefully, we will be able to speak to you in the future. brian wieser. coming up, we speak to the first liew, whotor, jeremy made a bet on snap. and what made his offer a complicated relationship with the company's founders. that is next. this is bloomberg. ♪
12:49 am
12:50 am
caroline: now a number of , venture capital forms will make a small fortune from their investment in snap. lightspeed venture partners is one of the largest outside investors. we caught up with one of the very first investors in the
12:51 am
company, lightspeed jeremy liew, and asked what made snap such an attractive investment. take a listen. >> when we met evan and bobby and we heard about their vision, they talk about how social media had become almost like a highlight reel for your life. it was creating a performance anxiety for people. unless they were looking for perfect they were not , putting themselves on social media. that meant that instead of people getting to see the full 360 degrees of someone's life, they were just getting a tiny little sliver. what snapchat did by making a default was to bring back the spontaneity and emotion and authenticity people always had with their close friends. >> it is quite amazing, that you hat you committed to two subsequent rounds. now the market is questioning. you still see growth? jeremy: when we first met the
12:52 am
company, they had less than 100,000 daily active users. to 158cently, it is up million daily active users. it is grown a great deal. we saw at the time amazing engagement. people were using the apps many days a week, and many times a day, and i continued to be the case. today people open the app 18 , times a day. when you see that, it has become a daily habit for people. when you have a habit like that, you can build an interesting and powerful company. >> many are feeling the growth has fallen below 50% in the quarter last year. is that something you think will be accelerate -- will re-accelerate? jeremy: the use of a started with mostly young women when we invested, mostly teenage girls. today you see that has been , spreading to people in their 20's, 30's, and beyond. and as you see that broadening,
12:53 am
you gain a lot of confidence. >> what about geographically speaking? they have committed to the developed world only. they say you need high-speed, powerful funds. we are allother -- reaching saturation point in the u.s.. is the more room to grow in the united states? where else geographically? jeremy: if you look at the places with high speed internet connections today, it is the u.s., north america, which has about 70 million of the daily active users. europe is also very big. the rest the world encompasses some of the parts of asia that have more developed telecom platforms and parts of the middle east as well. >> do need to expand past gen x , millennials, do they need to lure the parents of snap chatters? jeremy: back in the fall of 2012
12:54 am
snapchat hit the top three in , the app store in norway. that was the one place they got big faster than the u.s. there, you see it being used by people all across the spectrum. in terms of age, gender, and it has really become embedded in society. that gives you confidence that there is proof that this can be something that becomes used broadly by everybody. >> what about hardware? how much does that become an important factor for business? jeremy: the spectacles are fun. i was wearing them this weekend. i went skiing with my kids and it was a perfect way to be in the moment and to capture some of those memories without having it be intermediated with a phone between you and the experience you are having, so it has been a terrific experience. i have to ask you, because it has been a lot reported about your relationship with evan spiegel and bobby murphy. how is your relationship with them? what about the lack of shareholder control of snap? was it in part because of some
12:55 am
arduous, onerous points put on as investment? do you agree with that? jeremy: over the course of five years, there will be points of friction in any relationship. what is more important than that if you can work through it amicably and find a common solution that everybody feels good about that you can work towards a common goal. we did that with snapchat. today, even though ipo is certainly not the end goal, it is an important milestone for the company, and when i think we are celebrating. >> do you think the restrictions you put in place, as part of being an investor when you are a venture capitalist? jeremy: we were clear with the company at first that we were interested in what they were doing and would like to continue to invest in the company in the future. that is been what we do have been able to do. >> you talk about the ipo not being the be all and end all , but a very key milestone. i have to say, looking at the
12:56 am
companies you invested in, you are an outside dynamic. you already had another one mind up at the moment. are we going to see more and more companies, from your own portfolio that are going to list , in 2017? that has treated very well since then. interesting thing is that a lot of these investments were made a long time ago. apt dynamics.for eight years ago for eugenics. -- to utanics. five years ago for snapchat. this is the result of hard work. it is all coming to fruition now. it is a result of work at the time. caroline: our conversation with the lightspeed ventures partner. jeremy liew. that does it for this edition of "bloomberg technology." live, from new york. tomorrow, i will be speaking with the european competition commissioner. that will be live on "daybreak america."
12:57 am
do not miss it. she will be discussing all the regulation out of europe as well as the big apple case. this is bloomberg. ♪
12:58 am
12:59 am
1:00 am
clues seeking food from our type. manus: more than 60 french politicians say they can no longer support the presidential candidate at the investment scandal engulfed his campaign. chinaawmakers from across to send on beijing. ♪ anna:

26 Views

info Stream Only

Uploaded by TV Archive on