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tv   Bloomberg Technology  Bloomberg  May 24, 2017 11:00pm-12:01am EDT

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alisa: you are watching "bloomberg technology" let's start with a check of your first word news. the president, the congressional budget office has released its estimate of the impact of the gop's obamacare replacement bill. it will reduce the deficit over the next 10 years by $110 billion. but the cbo says 23 million people plan to lose coverage -- stands to lose coverage after 10 years. the father and brother of suspected suicide bomber salman abedi have been arrested in libya. police also detained a fifth person in connection with monday's deadly attack. meantime, british soldiers are providing additional security at
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major public events and potential soft targets. president trump has not decided if the u.s. will remain a part of the paris climate accords . that is according to the secretary of state rex tillerson. this as pressure mounts from pope francis, european leaders, and democratic lawmakers to remain in the pact. president trump will spend the night at u.s. ambassador's residence in brussels. that is after meeting with the belgian prime minister. trump is on a five leg journey, but his first official trip overseas. global news 24 hours a day, powered by more than 2600 journalists in 120 countries. from washington, i'm alisa parenti. this is bloomberg. "bloomberg technology" is next.
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caroline: i'm caroline hyde. this is "bloomberg technology." coming up, the manchester terror attack brings the battle over encryption front and center. we will examine tech's role and responsibility limiting terrorism. plus, a snapchat snapshot. why muddy waters founder says snap may be a short. and softbank's $4 billion bet on nvidia. we will dig into the investment in the biggest tech fund. and the chip makers successful entry into the automotive market. first, let's get some fresh news straight out of washington. the congressional budget office is just out to clear a revised a revised plan to repeal and replace part of the affordable care act. it reportedly reduced the federal deficit over the next 10 years at $119 billion, and that is 32 billion less than an
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earlier version of the legislation. let's head to the white house with a reporter. shannon, remind us how this particular legislation, the undoing of obamacare was different from the original. shannon: people may remember we did have a congressional budget office report for a previous bill. then there were some amendments made. the most significant amendment is that it would allow states to opt out of providing certain essential benefits and change the way they charged people premiums. with that change, as you mentioned, it still has a $119 billion reduction to the deficit but that is 32 billion less than an earlier version and it would leave 23 million people expected to lose their health insurance by 2026. that would be about 1 million fewer than the previous bill. they also mentioned in this report that these changes to the amendment made would destabilize
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the insurance market in some places by allowing these waivers and allowing states to opt out of benefits. what it would do to destabilize the market. so, that about 1/6 of the population could be living in places where the market would actually become more destabilized, which is already an issue that republicans have been talking about currently. the concerns about stability in the insurance market. caroline: this is quite shocking to be leaving 23 million stranded without insurance coverage in 10 years. how does this bode for the political process going forward, for it getting ratification to hrough the rest of the houses? shannon: i think everybody in congress in the house knew this bill was going to leave millions of people uninsured, but would go to reducing the deficit. the senate is not willing to let this many people go uninsured. that is one of the issues they
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have been grappling with, trying to come up with a system where they do not have so many people losing insurance coverage. that's going to be difficult to do because whatever the senate passes is going to have to go back through the house and they are going to have to mesh those two. paul ryan, the architect behind his bill, put out a statement basically touting the benefits this bill provides as reducing the deficit. as a physical conservative, that is something he is concerned about. he also reiterated a point which he keeps repeating that the obamacare marketplaces are not sustainable, they are not working for people. and so they have to do something. but as the republicans always leave out here is that they have done everything they could to really destabilize the obamacare markets. and cause insurers to want to pull out because of all of the risk and uncertainty about what the system is going to look like a few years from now. while there have been fundamental problems going on with the obamacare marketplace, republicans have been exacerbating them and they use
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that as a talking point for why then you need to agree to their plan. caroline: the battle continues. from the white house with that analysis. thank you very much, indeed. now let's turn our attention back to technology. carlton block raises concern about snapchat. in an interview with erik schatzker, he had this to say about snap. >> we are not short snap at present. we might be short in the future. caroline: block has three areas of concern, including governance issues, company ethics, and the strength of snap's business model. joining us in san francisco is a communications analyst and cory johnson. it has been too long, great to see you both. let's kick it off. carson block, i am looking at the bloomberg function. 35 million is the short interest
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out of snap, 14% of the equity float. much more than facebook but twitter has got double that, 63 million. let's face it. carson block would not be the only one with a short interest in the stock. what do you think? cory: i think that, first of all, the size of the short, 15% is a lot but let's keep in mind the stock has come off quite a bit. a lot of people may have been short the stock earlier in taken r and might have taken their money and run. i think that carson's right to look at some sort of fundamental problems in the business model of snap, some things that were looking like they're getting better leading to the ipo and allowed optimistic business analysts to look at the model and say, things are getting better. their first quarter got worse and that is disconcerting. it is not just the user numbers. the user number growth has been really anemic since the introduction of the competition from facebook, both in instagram stories and facebook stories.
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but if you look at the user growth numbers, what you see as the numbers are not growing that much anymore. they had been growing in double digits and those numbers now -- in the bloomberg terminal, 166 million users at the end of the last quarter. while that was a 5% increase, it had been growing at double-digit rates before the introduction of stories. there's a fundamental problem there with adding new users in the face of bigger user base that facebook and whats app and so on. caroline: they talked up a lot that it was not about the amount of users they had but it was the level of addiction, the use of this particular app. how does that fit into the story? >> well, that's what the bulls are banking on. the engagement growth spurred by innovation, by these tv shows, exclusive content, that part of the audience is becoming harder to address. if you look at the tv viewership it is been on the decline.
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look, this is an audience that is difficult to get. we have it on a platform so we may be able to convince advertisers longer-term. what cory mentioned about user growth, that is a big concern. either they have to shift investor focus to provide better engagement metrics on a consistent basis so that at least investors can see -- it is still a show me story. caroline: still a show me story, the addressable market. b.i. they have done some great charts showing that actually if you look at the age range that snap targets, you go worldwide and they will never become a one billion player in the same way that facebook is and maybe once upon a time twitter aimed to be. tell us about how user growth in the story -- and the story
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differs from those two big players. cory: the focus on it young users limits the size of the audience. the real problem is not necessarily the audience or the size of the audience, but the ability to monetize that. we have this amazing thing that this company has a six valuation. negative margins but not negative operating margins. the actual product itself, which should be really cheap to provide, costs more than the revenues they are taking in. the gross margins, they are losing money with every single sale. just the gross margins are negative. while those are getting better leading into the ipo, they got a lot worse afterwards. it starts to suggest this company cannot actually control their gross margin issues. there was some commentary in the perspectus about the cost of what they are playing to google for cloud hosting and amazon and the long-term contracts they have there. if you look at those costs, you see those negative gross margins, it is disconcerting because it is expensive to provide all of those really
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valuable bunny ears filters and rainbows. it is expensive stuff. caroline: we will see if that becomes a reality with carson block. thank you very much. bloombergon, editor. hp shares popping an extended trading as much as 9%. the company reported earnings that showed accelerating sales momentum in the second quarter as pcs delivered growth for the first summit half a decade. revenues rose to $12.5 billion. and it forecast third quarter profits that may exceed projections. coming up, automotive tech is in the midst of a gold rush as companies go all in on cars. nvidia is a standout. we will hear from an nvidia exec next.
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check us out. we days, 11:00 p.m. in new york. this is bloomberg. ♪
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caroline: softbank has amassed a $4 billion stake in nvidia. making it the fourth largest chipmaker. this, according to people familiar with the situation. , it disclosed it owned an unspecified stake in california's nvidia. the chip maker's stock is up 30% this year. given the company a market value of $80 billion. and much of nvidia's games are being driven by expanding into new markets such as automotives. in the last quarter, nvidia's
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revenue from that unit dropped 24% from the same period a year ago. but competition is growing from other tech giants and the automakers. ginny schapiro joins us from san francisco. wonderful to have you join us. revenue growth, 24% is an attractive part of the business. what about the partnerships? you just joined forces with toyota. revenue does the partnerships bring to you? >> we have been working with the many different automakers, mapping companies in many startups. in fact, creating a self driving car is a very complex problem. our technology, our hardware and software, is the foundation upon which many automakers and other partners are developing self driving vehicles, cars, tracks and shuttles. caroline: so, it is all about the autonomous vehicle, and before it just seemed to be the entertainment of a car that you guys dine out on, but is this going to be your revenue,
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autonomous driving? >> absolutely. i think what you're seeing over the years, which is over a decade now, is driving those touchscreens and cars like the tesla. the audis and hondas. so, we bring a lot of computing horsepower into the vehicle, originally for graphics but now to process all the information coming into the car. so an autonomous vehicle will have a lot of sensors coming in. where working with volvo and mercedes-benz and tesla. as well as toyota. developing being -- company used by companies like baidu in china for mapping. the technology we have developed is enabling a whole new revolution in transportation for processing all of the data from cameras, from radar. that all has to be understood much like a human would understand that information but we are doing that inside a
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ai supercomputer. caroline: what is amazing is, of course, the spectrum of companies you're working with but also the competition is heating up, mobilized by intel. how does this make it a more crowded space? does it make it a little harder for you? >> this is a brand-new industry, really. the whole self driving space is wide open. we have been focused on taking supercomputing technology, our processors, our hardware and software, like google and amazon and facebook for really high performance computing. now we are taking that. we're bringing that into the car. nobody else really has the technology the hardware or , software from the auto industry to do that. it is coming from outside. and we are partnering with the automakers to bring this to market. caroline: i think what is fascinating is also the simulations you are doing. they're much spoken by waymo, the miles they have gotten on the road with these self driving companies. a lot of companies are using this to simulate this sort of data. can you tell us how it works and
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whether the regulators are going to like it? >> i think they will. basically to train a car how to drive like a human you need to give it a lot of data. and that comes in the form of video from cars driving around, mapping data is used in this process. but the reality is we need to simulate all these different possible scenarios what could happen while cars are driving. so, we're going to use the combination of actually driven miles and using deep learning, we are training these neural nets to understand how to react in hazardous situations. we don't always see hazards while we are driving but we can simulate those hazards using our graphics technology, we can produce potentially dangerous scenarios. kids walking in front of vehicles. somebody running a red light, somebody driving recklessly. all that can be done inside the computer and we can iterate and simulate much faster than real-time.
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we can simulate millions and millions of miles of driving in just one day. caroline: danny, therefore, is your business ready and able and where it needs to be to take on this mammoth task? have you have got the talent in-house, are you struggling to bring yet more in? what about research and develop ment and the like? >> great questions. the reality is nvidia is an a.i. company. whether it is automotive or even finance, our hardware and software, our deep learning expertise has revolutionized all of these types of industries. so we have a lot of a.i. talent in-house. we are always hiring more. what we are also doing is helping to train others. we run a deep learning incident. -- institute. we work with many universities who are changing their curriculum to train a whole new wave of engineers and data scientists who understand deep learning, understand artificial intelligence and how the gpu, our graphics processing units, are really helping to revolutionize all these industries.
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caroline: we look forward to hearing how the revolution continues. coming up the u.k. is on its , highest level of alert in the wake of a terror attack in manchester. a potential conflict is brewing between tech giants and authorities who want to access encrypted data. feature, our new interactive tv fountain. you will find it on tv go. if you miss an interview, you can go back to it and send out a message. check it out. tv . this is bloomberg. ♪
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caroline: the u.s. government has given an update on expanding its current laptop ban on flights. the department homeland security has, for the time being, decided not to widen the ban in airline cabins to flights leaving the
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u.s. for other countries or on domestic legs. however, the agency has not made a decision about incoming flights from europe. meanwhile, the u.s. airline travelers will face more scrutiny of electronics larger than mobile phones in a dozen domestic airports. the tsa says passengers be asked to send large electronics including tablets through x-ray screenings separately from their carry-on bags. the agency says it stepped up screening. it may be extended nationwide. meanwhile, there's continued fallout from the worst terror attack in the united kingdom in a decade. the government has raised the threat level to its highest level. ministers reinforced their demand to allow access to encrypted messages as part of its investigation, urging social media companies such as facebook and twitter to go after terror posts on their sites. early we spoke with jeremy kahn about the next step.
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jeremy: they have said two things. they would like to social media one is companies to do a much better job of trying to police content on their sites, taking down posts from terrorists or terrorist sympathizers, those who would be encouraging extremism. they really want the social media companies to close down those accounts. to delete this content, remove users who are repeatedly reposting any content that would praise these attacks. the other thing is that the home secretary has said she would like companies to end end to end encryption. this is a messaging service like whatsapp, that are encrypted across the communication chain so the government cannot access them. what she has said is she would like these companies to be responsive in particular requests where they want access to this information that the government begin at access. the companies always say they cannot do this but she is asking them to come up with a way where they can meet these requests. caroline: this feels like déjà vu. we think of san bernardino and
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the u.s. and apple taking on the u.s. government. what argument are we likely to hear from those who have the end to end encryption, what are we going to hear and respond? jeremy: they themselves do not have access to this information. in order to meet this request, they would have to build a back door. that is what you saw tim cook saying in the apple case, what the fbi was asking for was a back door. if they do that, they say it is not just government that can use this. this could fall into the hands of someone else. and you could end up with hackers having access. we just had this ransom are -- ware attack that use and exploit the national security agency had come up with. you will see something social media companies saying if we do this, you're opening up a can of worms and allow a criminal element to use this as well potentially. caroline: yet, have we heard much of a response from technology companies?
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obviously they can likely , highlight the efforts they have had to try to take down terrorist activity. and the misuse of their social media outlets. jeremy: they have not yet. we haven't seen them say very much tonight. i think they very well may. ruddpends how much amber repeats this. if this becomes a talking point for amber rudd or for the government come i think you will have to see response from the tech companies. caroline: that was some of my conversation with our bloomberg technology reporter. coming up, a short seller carson block is raising concerns about snapchat's parent company. we will dig into his research on snap. if you like bloomberg news, check us out on radio. you can listen on the bloomberg radio app and on sirius xm. this is bloomberg. ♪
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11:29 in hong kong. indicatet fed minutes a fed rate hike. the minute show most ifticipants favor hike i economic indicators remain in line. officials look to shrink the $4.5 trillion balance sheet. the bank of korea has kept rates on hold. wasdecision, which expected, comes amid surging
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household that. s predict no change for the rest of the year. philippines president duerte says he may place the whole country under martial law. he says that the so-called islamic state is seen as expanding influence, he might make the order. global news, 24 hours a day. this is bloomberg. the market.ecking look at the green on the screen. a solid session across asia. oil rising ahead of the opec meeting. certainly, ignoring what we saw
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yesterday in terms of the sheet. we did see china stocks turnaround in the last couple hours of trade. off.sia's ftse, -- up. mentioning the bank of korea leaving the cash rate. hong kong stocks, holding at the highest levels we have seen. the hang seng index up. you are seeing a lot of strength coming through in the oil producers. fedar lower after the meeting. we are likely to see further tightening. a lot of the asian currencies rising against the u.s. dollar. having a look at the oil contracts ahead of the meeting in vienna. 1.27%. 52 dollarsse to the
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a barrel mark. energy stocks are among the runners, a third of 1%. a very good session for asian markets this thursday. that is the state of play midsession in hong kong. caroline: this is "bloomberg technology." i'm caroline hyde in london. our top story this carson hour. block's new search into snapchat. the short-sellers do not have a position investing against the company but it has areas of concern. let's take a look at the bloomberg. type in g#btv. you get to our charts. type in 6944 and we bring you this chart. what we are analyzing his is analyst target prices. currently the mean -- we're starting to see shares of snapchat in the yellow basically gather around the median price target of analysts which is
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a roundabout 22. i also like this in this chart, the vast difference in viewpoints. check out the bottom redline. the lowest price target is just $9.00. we are currently trading at about $20 per share. on the upside, looking pretty optimistic that we will reach somewhere in the line of $31. clearly, a huge disparity but we are seeing a gathering around the median overall price target. but now let's get to erik schatzker -- who said that with carson block and asked him about his new search into snap. >> we have done a decent amount of work on snap. as you said, we're not short snap at present. we might be short in the future. but we have really three categories of concerns. so, corporate -- erik: we should remind everyone that this is the owner of snapchat. carson: yes, exactly. we have corporate governance concerns and some of those are
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well-known but they are also, say, real questions about the ethics of the company and that is something that's not well known. but also, and this is the area where we're really trying to form a view, questions about the business model and strategy. coupled with the fact that it effectively has a lot of debt in the form of commitments to amazon web services and google for cloud hosting. erik: let's take them one by one. you say some of the corporate governance concerns are well-known. they might be known to many people but not all people. one thing some people who may own the stock are looking at the stock may not know about is the fact there are no voting rights in the shares. first company i've ever seen that has no voting rights. on the surface, that strikes me as a corporate governance concern. is that what chiefly concerns you? is there more than that? carson: that is not the chief
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concern but that is definitely a concern because the ceo evan spiegel, he strikes me as one of the founders who you don't necessarily want around to run a mature company. erik: why? carson: at this point, this gets to the ethics concerns we have. ok, getting the other well-known corporate governance concern is that he got an $800 million stock bonus on ipo. -- few to no strings attached to it. he can leave the company now and he will still receive stock. partly, that is to more than replace the almost $300 million he sold on it ipo. -- the ipo. so, that is really -- erik: that is a red flag? carson: you normally do not want to see that conflict of interest or that outright money gap. -- grab. but beyond that, the actual ethics concerns, there is a whistleblower lawsuit that has been recently filed by a former
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employee who is hired to lead their growth team. he was hired in late 2015. he was only with the company for three weeks before he was fired. and in his lawsuit, he is alleging that at the time that snap was telling investors and advertisers they hit 100 million users it was about 80. and there are other issues. at the time, they were apparently telling everybody they were growing double digits, month on month, in terms of daily active users. he said it was really quarterly low to mid single digits which is what we see now with the first quarter as a public of a. -- company. erik: let's say he is right. who is to say that evan spiegel , who is in his mid-20's is not going to "grow out of this" well, andw up, if you
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start running snap like, you know, the public company? carson: one thing i do want to emphasize before answering that question and that is that is a key question, we have actually diligenced the whistleblower. his name is anthony pampliano. we have had one of our investigators do a lot of diligence. everything that has come back indicates that he is a very stand up guy, very honest. erik: he checks out. carson: at this point, i would say it is probable what he is saying is correct. now, in terms of that question of can a zebra change its stripes? let's say spiegel was problematic, can he straighten out? here is the real problem i have with that. he has just been massively rewarded for this unethical, problematic behavior. so, people who are positively rewarded or positively sanctioned for that really do
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--, i really don't see them all of a suddeni having this moment where they say, you know what? that was great back then but now is the time for me to really tow the line. erik: the incentives are not lined up in the right direction? carson: people like that have to have something bad happen before they correct the behavior. erik: a 26% dropping the stock price is something bad. i'm not sure whether it is quite bad enough. before we run out of time, let's get to the business model and strategy issues because it sounds as though they might even be more important than the ethics and corporate governance issues. carson: for us, we do not do a lot of forward-looking analysis so this is the piece we really , want to work on more to come to a view. now, there is this, so -- erik: you know about some of the is stuff. everything snapchat does, facebook seems to replicate. carson: there are some important differences. one of the qualities on snap is the younger generation, they think of facebook as we thought of oldsmobile.
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we are not interested in it. they are not going to go to facebook. the counterpoint to that, which i actually think is a very salient powerpoint is that snap is great when you are a teenager in high school and you have your cliques. you are trying to hide things from your parents. but as you get to college and start thinking about applying for jobs, that is when you want to embrace the wider world and snap with its focus on much tighter social networks as opposed to, say, the whole world like facebook is not well-suited for that. so, the counterpoint to the piece on snap is that today's teenagers will become tomorrow's prime, they will use facebook as their primary social network going forward. so, it is not that we see a real generational difference. caroline: carson block, the founder of muddy waters capital with erik schatzker. now, coming up, we dive into the european tech landscape.
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why one v.c. firm believes that europe is the most important international stop on the way to an ipo. this is bloomberg. ♪
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caroline: now there are a lot of factors that u.s. based tech companies weigh before taking the ipo plunge. one of them is if they are ready for international expansion. that is according to a new report. the report provided a guide to overseas expansion and found that at least 30% of revenue among top u.s. tech companies comes from international markets, led by europe. joining us is the index ventures partner. the great piece of work. all about expanding into europe, it seems to be a guide to u.s. startups and how to make. their
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presence felt on the side of the atlantic. talk to us about the data point here that u.s. tech companies have 30% of their revenue internationally. how crucial is that? >> thanks for having me. it's a really interesting data point. we find it is pretty critical, a good indicator that you have reached global scale or you are on your way to reaching global scale. it shows the diversity of business. it means your business has more customers that diversify the base. it's frankly something we've empirically found across a number of companies. really, it is kind of a lower threshold. companies like facebook or linkedin when they went public, facebook was 44%. linkedin was 46%. shouldthat 30% number indicate to a company that they are about to hit the global scale and they should expand. europe is their first destination. caroline: snapchat did not have that much international
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presence. we have been talking about this country old day. carson block has said potentially this would be a short. they were 13% presence in europe, 8% rest of the world. they are outliers when they have werethey are outliers when they have less international presence that still can come to the market and ipo successfully? ilya: they fast followed with opening an office in london which i thought was a great move. overall has been a good story. lots of it in the news but still a very strong performance. so, i think you will see companies like that that have more potential to try to catch up quickly. caroline: what is interesting is you are saying, go to europe. this is where you are seeing the statistics weigh out, their dominant revenue stream comes from europe. why not asia? why not the growth oriented part of the world? ilya: asia is an amazing market. lots of big companies there. we think asia is a great destination. but what we found is that if you
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are company that started in, say, north america and you want to have your first step to global expansion, europe is really the best place to go. there are a few factors to the first is the similarity of customers, whether it is consumers for social kinds of businesses or enterprises for b to b companies. they are very similar to the ones you find in north america. their buying behavior, the way they think about infrastructure, it is easy to go to europe from the u.s. you can then take the learnings from the way you have expanded and take that to asia. but sometimes asia is a little bit harder. if you look at a company like to set up aey had separate infrastructure in asia and set up a joint venture. infrastructure and business complexity, it is a little bit harder. we've also seen companies that have tried to go to both geos at the same time and sometimes they succeeded and sometimes they failed. we see copies like google that have not made it there yet. caroline: when you are talking to your portfolio companies
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, potentially on eyeing up the to landscape and deciding come to europe, where are they looking to lock down? london is the biggest tech hub. but there is a concern, there is brexit. are you saying, go to berlin? where is the key city they should reside? ilya: for example, when we expanded drop box, we had a great opportunity because we had a lot of customers in europe. we want to support those customers. and customer support was really the key driver. so, based on that we went with dublin. other companies may use london because it is great for financial services, enterprise companies. and really, just a great talent hub. we see berlin and amsterdam's as as great destinations and paris as well. caroline: i've got a great question from a viewer and they are asking about valuations. we're looking at technology valuations on the s&p 500 being
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at elevated levels, the highest spread versus the rest of the s&p since 2008. 4 times2 price-to-earnings. does that mean is it a great time to start an ipo? ilya: we are pretty bullish on this window. if you look at the recent huge popsyou see after these companies went public. that is a lot of pent-up consumer demand and demand for tech. we think tech's never been stronger and will continue to increase. we are quite bullish on encouraging our companies to go out. everything it takes if they have and obviously having a presence in europe is a big part of that. caroline: we wish you well with all of that. portfolio companies based in the u.s. thank you very much for joining us. still to come, the world's leading maker of drones is out with a new device that will take off from the palm of your hand.
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a look at this dji spark next. this is bloomberg. ♪
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caroline: now surveymonkey has just added a major hitter. tennis champion serena williams will join the board of the online poll provider where she is expected to advocate for diversity throughout silicon valley. joining williams will be brad smith. they replace meg whitman and the chairman. williams says she will use the role to foster a more inclusive environment in the technology industry. of surveymonkey's 650 employees, minorities make up 14% of staff.
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meanwhile, the world's leading maker of drones is betting on a new unit so small that fits in the palm of your hand. dji unveiled at smallest camera drone in new york. it is looking to win the consumer market. bloomberg technology selina wang attended the event and took the new drone for a spin. reporter: i am here at grand central terminal for the chinese dji's unveiling of its smallest and lightest drone yet. i have it right here in my hand. it weighs less than a can of soda. it's only $499. dji is hoping to step into a new ballgame, hoping to reach the masses. with this very easy-to-use drone. it actually takes off and flies directly from your hand. i am here with the head of strategic partnerships. in my hand, i am holding the drone that was launched last fall. the newest one, the spark from
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today. this tiny thing has a ton of technology and a lot of same features. in the larger drones. how did you get it so small? michael: you know, overtime, our first product is about this big. it was just the brains, the chip happening inside here. over time, we have been able to make it smaller and smaller and make it more energy efficient. adding new features like avoiding obstacles. we have done a lot of work to shrink this down and provide a powerful system that anybody can use. reporter: do think this is going to drastically expand the total market of dji? michael: we think that when looking at the overall market for dji, consumers have a few barriers. the first is price. we feel like at $499, you have a lot of technology. we also have ease of use.
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can i use it? everyone can move their head around and tap buttons on their smart phone to use the system. finally, it is about relevance. we made this as easy as possible to get up in the air and tell great stories. reporter: we are standing here at grand central terminal for a reason. what does the u.s. market mean for dji? how important is it moving forward? as you grow the consumer segment? michael: the u.s. remains the largest market in the world. what we have seen here is a lot of interest in drone technology. 46% of the customers that we hold are interested in buying a drone this year. so we feel like this system overcomes a lot of the various -- barriers that allows them to get into the market. reporter: let's talk about competition. the chinese upstarts have flooded the market. where do you think this stands? michael: we want this drone to be people's first experience with a drone.
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when you look at online reviews and try out the technology consumers might be interested . but then they dropout because they feel like it is too hard to use. we put a lot of intelligence in the system. so it can be simple. anybody can get it up in the air. we've found that by having better technology, consumers have a lot more confidence. there more willing to give it a -- they are more willing to give it a shot. reporter: can you show me how it works? let's do it. do i let go? ok. michael: there we go. now it's just hovering. reporter: ok. oh. amazing. how do i bring it back? michael: raise your arms and go like this. reporter: it is coming back. michael: bring your head to your chest. walk to it and put your hand underneath. just like that. there you go. reporter: now, dji is operating in a very competitive space
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the drone market is still very small but it is expected to grow very quickly to more than $11 billion in revenue by 2020. dji is betting that with this tiny, lightweight drone, it can get masses to want to take a personal drone wherever they go. time will tell if dji's going to be able to reach the masses it hopes it will. caroline: very cool. that was selina wang. that does it for this edition of "bloomberg technology." on thursday's show, the partner will join us as a guest host for the hour. and bloomberg technology is live streaming on twitter. do check us out @bloombergtech tv. at 5 p.m. in new york and 2 p.m. in san francisco. 10:00 p.m. in london. that is all for now. this is bloomberg. ♪
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