tv Best of Bloomberg Technology Bloomberg April 8, 2017 11:00am-12:01pm EDT
♪ caroline: i am caroline hyde. this is the "best of bloomberg technology." we bring you our top interviews this week in tech. president trump hosts president xi jinping. we will dive into the top issues impacting major tech players and startups. plus, trump's administration cracks down on one of silicon valley's beloved visa programs. visa restrictions may drive top
tech talent to other countries like india. we will dive into how the country might be the benefits. first, to our lead. this week, president trump hosted president xi jinping in florida. trump blame china for stealing jobs and intellectual capital. but the countries remain very reliant on one another. nearly half of imports come from china, and multinationals have $228 billion in investment at stake if trade war breaks out. we got the latest from ramy inocencio in florida. >> it strikes me as interesting that this billionaire businessman and novice politician is meeting someone who is quite the opposite, a very seasoned politician pushing back against luxury in china.
what ties them together is money. one of the big issues is jobs. donald trump has been saying china has been stealing american jobs and taking them to china. another interesting topic is currency manipulation. china has been trying to figure out where it stands in terms of a basket of currencies and the dollar. president trump says it is potentially a currency manipulator. one final topic is the u.s. trade deficit, or the chinese trade surplus. 347 billion dollars in 2016 was the amount of money in terms of deficit. donald trump has been saying that has been very unfair and said he will do something about it. we will be looking at jobs, the currency, and trade.
caroline: thank you very much. great to have you on the show. our next guests says the diplomatic relationship between president xi jinping and president trump is considered to be one of the most important in the world. this will be the biggest test so far for the president. thank you for your time today. it is amazing the significance of the relationship. i'm going to the bloomberg terminal, looking at a particular graph at the moment that shows u.s. total trade in china, 17% of all world trade is coming from china. this is crucial. how worrying isn't that trump has talked so tough on trade -- how worrying is it? >> what is interesting is that you have heard tough rhetoric around trade, but there does appear to be two different
camps in the trump administration right now. you have certain folks in the administration, in particular his son-in-law jared kushner, perhaps rex tillerson, who have a business background and probably have a much more pragmatic, business-oriented approach. how can we create jobs, build the economy? they recognize that involves doing trade and doing business with china. , whatis a different camp you saw on the campaign trail, including peter navarro, who has been clear trade with china is unfair for america and ripping jobs away. it will be interesting to see if the trump administration is able to find a middle ground. are they veering more toward one of the other? do they have a more coherent approach on what their economic and trade strategy will be with regards to china.
caroline: i'm going to check in the significance on trade, 17% reliance on china. it is amazing when you are thinking of certain technology industries, state backed chip industries is one that wilbur ross has commented on. other non-tech industries are set to benefit in this meeting. do you think there will be concessions on both sides of the meeting here? >> i'm not sure how much you will see real deliverables out of this meeting. i think more than anything you , will see both leaders try to lay the foundation, set the baseline, make clear what their priorities are, which industries they care about, where they would like to see things done, and from the trump
administration where they would like to see china set a level playing field. i think what they are aiming for is to lay a foundation and we will see what comes out of that in the months ahead. caroline: asian infrastructure investment bank, potentially an invitation to join that coming from china. do you think that could benefit the relationship with the u.s., including other hubs in the area, singapore, vietnam, taiwan? >> infrastructure is a huge priority. there are tremendous needs. i think there is a recognition the this president has talked about his desire to see infrastructure investment in the united states, so perhaps infrastructure is an area where this administration can find common cause in common ground
with administrations in the region. i think there would be great interest at looking at how the united states can play a greater role cooperatively in infrastructure. whether that means the united states joins the aib, that gets into broader strategic issues, but there will be an ask and push and they will consider it. cory: may be quid pro quo is you come into the aiib, and maybe tentatively china might be able to invest more in u.s. infrastructure. we are seeing chinese money flow into startups in the united states. lyft, snapchat, how important is the flow and how much is it at risk? >> it is tremendously important.
what will be interesting to watch in the coming months and years is that there will be a closer eye in some camps on these investments in industry that some people in the own and -- in the united states consider sensitive, where china is investing, and no doubt that is getting into u.s. technology, so that will be a double-edged sword. on one hand, companies are reaping the benefits of widespread chinese investment and money they can't get elsewhere. on the other hand, there will be greater sensitivity to where and how the chinese are investing. caroline: now to germany, where chancellor angela merkel's
legislation -- is backing legislation threatening facebook. it could find tech companies if they fail to remove content. if passed, they would be the toughest regulations facebook would face in any country where they operate. coming up, increased scrutiny when applying for jobs in the u.s. and later, a chinese conglomerate with grand plans to be the next tesla, netflix, and apple all-in-one, but it is facing a serious cash crunch. this is bloomberg. ♪
to the u.s. has open. h1-b visas are used to secure the best and brightest talent from around the world, but critics of the program say the visas allow companies to bring in lower paid workers. the u.s. citizenship and immigration services introduced new guidelines late last week that require new information for programmers applying. last month, the department suspended a program that fast tracked these of programming for certain applicants. we spoke with the author of driver in the driverless car. he has written extensively on h1-b visas. >> they are doing the same stupid thing they did with the muslim ban. now they are haphazardly last-minute applying it. it doesn't make sense. it means my students can no longer get jobs here.
why do we want to lose these brilliant kids? it will hurt us. it will benefit the rest of the world. caroline: the average his salary for these high demand h1-b visas is $72,000. maybe this is what many believe needs to be driven up higher? would you agree the h1-b could be changed? how would you advocate a change? >> the problem is the green card. when people apply for permanent resident visas, they are stuck in the h1-b visa loop. the issue about declining salaries is too untethered the visa from a company.
if they get someone offering a higher salary, they can leave and continue over there. that would fix the problem in one fell swoop. why don't we do that? this way there is no cheap labor anymore. caroline: it is more about the green card that needs to be fixed. you have written extensively about this. that was at the heart of this, the fact people come to the united states, educate themselves, and then are driven back home. where is benefiting from the potential brain drain going on? >> one way to measure this is look at the number of unicorns. these billion-dollar companies we get excited about. years, the only ones that existed were in america, more or less. now you have about 100 of them in china and india. we have 80 in the united states.
basically, we are losing our advantage, our ability to build innovative companies because we are losing the talent. it is a brain-dead strategy frankly. caroline: have you done the research to show those being built in china and and india are ring built by educated talent. perhaps they see what silicon valley has built and they want to do it too. >> practically every company has returnees on their management team. we educated them, trained them and told them to go bye-bye and they compete with us. china has more innovative technology companies than the u.s. does. baidu's building better technology than apple does. apple is copying the designs of some of the social media apps in china, phones in china, because china is innovating beyond what even apple can do. apple is considered to be our most innovative company. it has to steal from china.
caroline: sad, changeable, how can we see tech talent fostered in the united states for those who indeed grew up from the beginning in the united states? >> us immigrants want to come to america. we love america. this is the place to be. they would make americans compete, but as long as there is not a salary disadvantage, competition is good for the country. the problem was when you have cheap labor, indentured servitude, when people are tethered to their companies that , is when the problems occur. fix the problem and we fix the entire range of problems. caroline: it is not cheap labor that many people fuel has undone manufacturing. a lot of people feel it is automation.
this is something you have written an awful lot about and put a lot of thought into. what about the answers to that? educating to ensure everyone can have a utopian view of the world rather than a dystopian view? >> that is why i discuss extensively that amazing things are becoming possible. technology is allowing us to solve the grand challenges of humanity. the fact is we could benefit from this if we led the innovation and now start training our workforce. we have to train americans in using robotics, because manufacturing is coming back to the united states, highly automated robotic manufacturing.
we should the implementing them, and for that you need the best and brightest in the world. caroline: you said policymakers, educators, and corporate leaders need to listen to this. are they? >> corporate leaders get it. they see the need for immigrants and new technology. policy makers getting dumber by the day. it is sad to see what has happened to america. the iq level of capitol hill is decreasing every election it seems. this is a loss for the united states. the people get it. there is a big gap between the haves and the have-nots, not only money, but knowledge and education, experience in social values. we are building two americas. people who are left out and are getting angry and people who are now participating in the innovation. your viewers are tech savvy.
they get it. mar-a-lago, this has become trump territory and people don't want to listen. they are feeling left out and disenfranchised. we need to figure out how to equalize and offer the same technologies to everyone to educate, inspire, and motivate them to be part of this whole thing. then we want to make sure that we balance the dangers of technology with the good things they can do. with robots, it is good. when they take our jobs away, that's bad. this is what we have to learn. caroline: do you advocate things such as universal basic income, taxing robots, to provide a safety net for those who do not want to be retrained? >> the universal basic income is a critical ingredient. taxing robots does not make sense. they are going to tax my dish washer?
we need to have enlightened policies. the jobless future is coming. whether we are ready or not, jobs will be eliminated. caroline: the entertainment industry is getting in on the vr craze. we take you to china, where one of the country's biggest filmmakers has plans for the technology. add cash crunch to economic pain, the chinese conglomerates long list of problems. this is bloomberg. ♪
caroline: virtual reality is catching on in china, so much so the country is opening its first vr theme park. stephen engle geared up or an exclusive first-hand experience from beijing. >> watch your back all the time. >> it is virtually impossible not to see the potential for virtual reality. >> it is like a combination of a
movie and a game. >> all you are really doing is walking around a barren, foam padded basement. this is freaky. the so real vr venture is cofounded by one of china's most innovative film engineers who may transform some of his iconic silver screen work into the are -- into vr. >> for me, as a movie director, this technology is significant. it is not flat. you can see color and 360 degrees. you can interact with it. it opens up a whole new world. >> so real wants to open up a vr theme park around china. this shopping all is a pilot project to a larger impart to be built this year. >> so real wants to become the universal studios of china. why universal studios? it is backed by a wealth of intellectual property.
units says chinese vr should multiply sixfold this year, surpassing the u.s. by 2019 as many chinese smartphone makers roll out their own devices. this year is pivotal. venture capital ships to content providers away from the initial equipment makers. >> wow. that is a whole other world, down the rabbit hole. a beijing startup is developing its own games and plans to have 10,000 the are -- 10,000 vr arcades across china. >> the big challenge is we don't have good enough content to get repeat customers. people play our games for 10-20 minute tops. >> vr right now is best suited
for b2b applications for companies that can afford it. >> when this technology becomes more mature and there are a lot of applications out there. >> the vr industry is ready for a breakthrough, but those who left because of the bottlenecks will all swarm back. >> unless the virtual space zombies get them first. caroline: a cash crunch at leeco continues. according to people familiar with the matter, month, the latest sign the billionaire may have over reached his plan to create a u.s. foothold for the internet-mediate empire. selina wang was the first report the story. >> this is a fascinating company to track.
i attended their grand unveiling just in october about their huge u.s. strategy. they bought this enormous plot of land in silicon valley and said they would hire 10,000 employees. we have seen a cash crunch, suppliers alleged they miss payments, stripped of broadcast rights. this is the story of a company that went too far too fast and sources have been telling me this has stoked frustrations with u.s. employees. there were a lot of promises that were not actually given, and delaying payrolls is a bad sign. though the company told employees this was due to troubles getting money out of china, a lot of sources say they believe there are other issues involved as well. caroline: the company has responded, saying the payment wasn't missed, but you know differently. what therefore do we think in terms of the higher level employees they have managed to lure over?
now they seem to be looking for the exit. >> definitely. they hired a number of high profile executives from qualcomm and samsung. he has this other division, another big venture in electric vehicles, and that company has seen significant turnover, especially their u.s. finance team. most left at the end of last year. they started to rehire some folks to that team, but sources tell me it was frustrating because they told the ceo that we can't keep spending and spending. he said keep on going, the money will keep on coming, and obviously it didn't. that stoked frustration and caused turnovers. caroline: still ahead, details on the technology being used to build the hyperloop. we will hear from rob lloyd.
"best of bloomberg technology." hyperloop one was in washington hoping to win support from policymakers. this is one of two companies trying to create the future trends of system. the company revealed routes across 35 cities, joining 24 proposals around the world. the ceo spoke to us about his company's plans in the u.s.
>> this is american-made technology. our reputation innovating has been world leading, but inground transportation and high-speed rail, there is no real american technology. it is an la-based company that has grown from a garage to 260 employees in less than 27 months. we are demonstrating we can build something new, something different, by bringing the greatest minds together. we can do this in the united states if we collaborate and get support from regulators so we can dovetail with existing transportation programs and write a few new rules for hyperloop. those of the conversations we
are having on capitol hill. caroline: three winners, what happens to those projects? you said you want to aim to have hyperloop a reality by 2021. >> we have 35 semi finalists, 11 from the united states. we will bring that to a dozen, then we have to do more work, detailed engineering studies, get to the next level of specific route analysis, economic analysis, because we are doing this to transform economies and drive economic growth. there is more work to do with those 12 finalists, but when we find governments that are supportive and we have a route that makes sense to build that first system, we will finance that and deliver the value our team is bringing in working with regulators and governments and designing the technology to
solve real-world transportation problems am a so we are going to try to pick a route that makes sense, that can be financed, and can be built quickly. that will get us to production in 2020 220 21, and we are encouraged and hopeful that one-to could be in the u.s. caroline: how close is the technology? we're talking routes of up to 1000 miles. how quickly can you prove the technology works? >> the company's guiding mission and the thing that has created so much excitement in this country is to build a full-scale prototype. we are near completion of a full-scale prototype, although
five hundred meters, it combines all the innovations we have developed since the company was founded, custom-designed propulsion system, the pods that kerry cargo and people, the control system that allows us to manage high-frequency pods. we will accelerate quickly inside that 500 meters. that's not what you and i will experience, but i will be transparent, this is a full-scale architectural system. taking that architecture, to plumbing it in a production environment is only the next step, so we are excited that within the next couple of months, we will show the world that hyperloop is real and we are getting close and we are excited that that has been the single most important milestone for our company.
caroline: can it be real in a highly populated areas such as the northeast corridor? >> the beauty of hyperloop is we require much less land. above land or beneath grade and a tunnel because of the factors in our architecture, by reducing pressure, you reduce the size of a tunnel that could come into a city center. we need less land, two thirds the cost of high-speed rail, and our analysis and what we have been sharing today with experts from around the world, we can deliver two to three times the economic benefit of any other mode of transportation on the efficiency of economy, to create large labor pools in major cities, so we can go in places that other modes of
transportation find difficult, and the northeast corridor is one of those where hyperloop will make sense and we have more to do there. caroline: hyperloop one ceo rob lloyd. we had a chance to catch up with the company's executive chairman and ask about how this project is being funded. >> we've raised $160 million in funding in our 2.5 year history of founding, so as we talk about this ability to do moon shots, it is pretty spectacular. we have great investors, present and future, who will be part of what we are building, so it is flowing quite well. we will have more to say in the near future.
caroline: such exciting projects like these are not often without controversy. one has been between you and the original cto. >> we are 250 people, incredible talent, building this, everything is looking really great. there hasn't been any slowdown in our progress to make the hyperloop a reality. caroline: coming up, future visa restrictions could drive tech talent to india. we will look at how it could benefit from u.s. visa reform. the return of mcafee, reemerging as a standalone company after being scooped up by intel. we will speak about the private equity landscape. that is next. this is bloomberg. ♪ caroline: a startup is about to
conclude a $60 billion round of funding, seeking to improve highway safety, hoping to generate huge savings for the trucking industry. the technology makes it less dangerous for trucks to travel in close proximity. president trump's h1-b visa policy have gone largely unchanged, and while wholesale changes make wait another year, president trump remains an advocate to reform the h1-b visa program. other countries could reap the benefit, one of them india. we spoke with the nexus
cofounder. >> benefiting greatly from reverse brain drain. now we are seeing a big out the of talent. the top end of the talent is greatly beneficial to india. caroline: are they largely indian born who come here to be educated? are we looking at u.s. born looking at other tech hubs? >> maybe they worked in the u.s. for a few years, then want to go back to india and the opportunity might be better for them. we don't see too many people born in the u.s. go to india, but i think that would change in the next 5-10 years.
caroline: what about putting off those who are coming here to be educated? you came over to be educated at california, stanford and the like. did you think this could stop people from coming to the united states? >> what is stopping people are two things, opportunities in india after school in india, and secondly, the negative feeling being created about immigrants and the u.s. caroline: the pr is already hurting? >> it is hurting big-time. caroline: perhaps these clouds of bad pr and concerns about immigration, where are the opportunities? which sectors are hot in india? >> technology, if you look at
silicon valley startups, 30% of startups have indian founders. if you're based in silicon valley, mumbai, or beijing, there is really not much difference in what you are able to do. how does it really matter? you are distributing globally in any case. the entrepreneurs are mobile. they can do anything, anywhere. caroline: are you starting to see perhaps -- i spoke with the adobe chief executive, and he said we will go where the talent is. will we see more and more satellites set up in india and china to harness the right tech
talent? >> they are doing that already in a major way. microsoft has 10,000 employees, ibm has more employees in india than anywhere else except the u.s. it is the right thing for companies to do. i think we are able, financing here, infrastructure here, culture here that can promote technology in a big way. if we lose the lead, the world will be a loser, so it is incumbent on us to keep the u.s. in the forefront. caroline: we have seen some deep pockets in china going into india. are you seeing more competition, not only u.s. vcs, but china? >> yes.
competition is good for us. they are our partners and competitors, so net-net, it is positive. caroline: facebook now reports 170 million users in the region, up 42% jump from 2015. facebook has been working on increasing its presence by laying down 500 miles of fiber cable and uganda and creating wi-fi hotspots in nigeria and kenya. mcafee is making a comeback after intel bought it, and now the two are parting ways. mcafee will be a standalone company. jason kelly set down with brian taylor. >> cybersecurity is one of these
existential threats to our digital lives. it threatens our institutions. mcafee is one of those businesses that is there to protect us. it is the mission of the company. we think it is an important mission. we are thrilled to be part of it. >> it was part of intel. now it is a standalone company. what gives it the advantage there? >> intel were not the natural honor for a $2 billion cyber software company. we caught them in a moment where they were reflecting whether they want to double down and reinvest or sell. we gave them an alternative, a partnership, but we refocused on the core business. >> what does the private equity playbook look like here? what are the levers you can
pull? >> we had 16 months from when we started this deal to win a close yesterday, and we had a strategy that is our strategy, keep pushing forward the product set. it is a great set of products, and there making it better every day. second, we have deep relationships with great customers, but it is broadening that with our customers. there is a landscape of cyber security software companies we can buy and put through the distribution channel to deliver value for our customers. >> you think you can build this organically and maybe some buys out there. >> we think we have the platform to buy those features sets and deliver value to customers.
>> you have oversight of software and technology at tpg, and not just buyouts, but growth capital. what you see in terms of themes beyond cybersecurity? >> you are correct. we do large-scale capital deals and smaller growth deals, $15 million to $1.5 billion, and we see the whole landscape. we have been working together for over a decade, and at any time we have 8-10 themes we are pursuing in the marketplace. our strategy is to pursue proactive themes, build proprietary relationships around those themes, and we find it creates interesting opportunities. >> what is the one you are most excited about beyond cyber? >> health care. they are retooling their back
office and there are import and software business is being built to deliver on that promise and we have been pursuing that for a number of years and we have just closed her first major investment and we have others in the works now. >> competitively, who do you run into most in the market? >> today, every private equity firm says they have a software practice. we have been together as a team for 10 years, and if we are proactive and thematic and how we perceive the market, we are not facing a lot of competition. there is a big enough market where it is just us and the seller trying to build a partnership instead of a transaction. >> when you look around here, and beyond around the world, how
do you feel about valuations? >> in 2003, we hit $3 billion in software buyouts. last year, it was 55% of the overall equity industry. people have come to appreciate these businesses, and that is reflected in values. i am confident software will penetrate the enterprise and revolutionize how we will do business. >> on the exit side, the ipo window, active buyers out there? is it open? >> it comes and goes. our strategy is not predicated on the ipo exit. it was the right moment in the right buyer at the right time. we focus on great businesses and let the exit focus on itself. i don't focus on the macro. i focus on the micro.
field, one company's core the rights to stream thursday night football. it is a huge win for amazon. amazon will pay $50 million for 10 games, a significant increase from the $10 million twitter paid for the same number of games last season. amazon will offer the games for free to its amazon prime subscribers worldwide. the games aren't completely free cents prime membership costs $99 a year. twitter offered thursday night games to everyone for no cost. part of twitter's appeal was having a social element while watching it on the same screen. twitter has lost key executives, cut staff, and explored a sale. tv broadcast averaged 15.8
million viewers, so amazon has a lot to prove. it is its first major push into live streaming and sports. the e-commerce giant may just be getting into the game, but for now, amazon can take a victory lap. caroline: also, verizon will announce a new division called oath that coincides with the merger of its aol unit with its yahoo! asset. tim armstrong said the unit will oversee 20 brands and reach one billion users. >> we have a brand that allows us to promote yahoo!, aol, techcrunch, and movie phone. some of the reaction is short-term thinking and we are a
long-term company. we are egg believers in brand and believers and a long-term commitment to talent. >> when you get this much attention -- people have been saying, how much did they spend on this? >> we developed the brand and house. we got $50 million of brand marketing for it. >> apart from the branding and marketing, how is it going? how will this merger work? and can you run up against your old shop of google and facebook? >> first, let me start with verizon. verizon has a long-term strategy in the media space. we will touch over one billion consumers. we are in a good position to
launch the largest house of trusted brands in the space. we are focused on a business model, brand advertising. i see an open lane and space. >> is marissa mayer going with you? >> we are planning the executive outcomes in terms of leadership, which we will announce in q2. marissa will stay through the next phase. caroline: that does it for this edition of "best of bloomberg technology." we will bring you the latest in tech throughout the week. tune in each day. all episodes of bloomberg technology are live streaming on twitter. check us out at @bloombergtechtv weekdays. that is all for now. this is bloomberg. ♪
>> coming up on "bloomberg best" the stories that shaped the week around the world. candidates in france face-off, in the u.s., tougher these are rules, and jamie dimon's letter to shareholders. >> the bank is preparing for a hard brexit. >> we will find a way to improve and increase our commercial relations. >> jack lew speaks his mind and another exclusive. >> i think it would be a big mistake to do an expensive tax cut.