tv Bloomberg Technology Bloomberg May 3, 2019 11:00pm-12:00am EDT
♪ emily: i'm emily chang in san francisco. this is "bloomberg technology." coming up in the next hour, eyes for amazon. warren buffett taking shares of the tech giant after underestimating it. why the oracle of omaha is changing his tune. overtaking apple in the global smartphone market. we take a look at the big picture. how the company behind wework exploded the industry.
we speak to the chief technology officer. first, berkshire hathaway has acquired a stake in amazon. warren buffett said he underestimated the online e-commerce giant. he has called himself an idiot for not purchasing shares. he has avoided tech stocks in the past. one exception was ibm. he invested $10 billion in the computer giant in 2011 but it did not pan out so well. he sold nearly all of his shares in 2018. joining us to discuss this is our reporter. any details on why amazon would be one of the few tech stocks he backs? >> i think this investment is mostly about berkshire hathaway changing. over the last few years, warren buffett has prepared for a life when he is no longer around and
he has hired two stockpicking deputies. what they like may not be in what is histraditional wheelhouse -- in the value stocks that do not tend to be in the technology sector which warren buffett has long said he does not understand and he has avoided it in part because the valuations of the shares are high. emily: i wonder if going forward it will be harder to say -- i am not investing in tech when every company is aspiring to be a tech company and technology is changing the structure of many companies. >> you can see that in his investment in apple. his firm, berkshire hathaway, in 2016 began to purchase shares of apple and he said then that it was not him that made that investment but it was one of the
stock picking lieutenants but they convinced him of the merits of apple not as a technology company but as a financially predictable and profitable consumer products company which is something that he does understand. and so the firm, warren buffett, and his lieutenants purchased more and more apple shares. they are one of the larger shareholders. emily: amazon and apple, these are pretty conventional names. do you think we will see warren buffett and his investing team expanding their bets on tech? shira: all bets are off. these stockpicking colleagues at berkshire hathaway have wide latitude. they have invested in media tech companies like oracle. i do not think that investments that have typically been outside
of his wheelhouse -- i do not think those are off base anymore. it will be interesting to see what they do going forward as he hands over more and more power. emily: amazon is also threatening another tech giant and that is alphabet which reported results this week. it significantly missed its estimated numbers. we talked about the threat of amazon in particular given that more folks are starting their searches on amazon directly. i was told that they continue to invest in a wide variety of technology including shopping. we have ongoing opportunities. nearly half of the ad dollars in the u.s. are still spent off-line. and we are focused on digital playing a big role in that. what do you make of porat and the explanation from alphabet?
>> the revenue slow down -- they did not do a good job of explaining it. they were very cagey. it was a timing issue. i am inclined to believe it is not the amazon affect. it is not that so much money is shifting, ad money is shifting. the funny thing about google is that it is such a huge company that even if they make a tiny tweak in ads that show up on 10% of mobile devices around the world, that can have a huge affect at google's scale. alphabet is not inclined as a company to be transparent about what they did -- again, big or small, to make the revenue growth slow down and i think that is what freaked out investors, the lack of explanation.
emily: when i asked porat about the myth, she talked about currency headwinds and about a strong 2018. what do you make of that? shira: they did have a strong year last year, every company did but that does not mean that google has been posting consistent 20% plus revenue growth numbers and that changed it for the first quarter. it is reasonable to think the explanation for this -- they did not have an answer. emily: always good to have you with us. thank you for stopping by. coming up, still sizzling, fresh off cooking up an ipo. we will talk to an early investor and we cannot get enough of the intended puns.
emily: congratulations. when a company rises this much out of the gate, is that good or bad for the company because it could have raised a lot more before coming out of the gate, right? >> when people look at it that way, sometimes. i look at it as this is a consumer play and we are going after a very big market in plant protein replacements that are sweeping over the world. the beyond meat ipo is historic and will be great for the company. as an investor i am so happy. what makes us different is that we are not just a traditional venture fund.
in our crowd, we allow individuals to get in. you have a dentist from peoria putting 10 grand in along with people like bill gates which is democratic and that is something to celebrate as well. emily: you got in when? >> about six month ago. emily: you still hold shares? >> absolutely. emily: that is good for you. >> we are ecstatic. you have to hold on to the lockout. there is always a lockout in these things. you can choose to hold on longer but i think this is an extraordinary company that is well-managed at all levels and an incredible strategy. the products -- personally, i introduced it to myself and my family. we tried it in the middle of barbecuing in jackson hole. we went from real meat to this and we love it.
emily: what is next? >> this company -- it will start expanding into other meat categories like steak and bacon. and for me, i keep kosher. it is not just great tasting and healthy and believe me i need it because i am always working on my weight. but it is incredible that i can eat cheeseburgers now. we are excited about the investment and the company and the big opportunity and we are looking forward to our next ipo which is a small company called uber. emily: you were also an investor in jump bike which uber also invested in. >> now, you see them all over san francisco. the bright red bikes in other cities as well.
we have a fairly good stake in uber. and now we are representing all of the small investors who are not only able to read the articles about other billionaires getting wealthy but they are able to participate in these rounds before they go public. that is what is really missing from the marketplace. with all of this enthusiasm about ipo's which is well-placed with companies like an uber or beyond, the problem is the people making most of the money is a very small circle. mostly within a small radius of this studio right now and those are the guys that really make the bucks and the rest of the people get to join at the ipo. what we are doing at our crowd is give them access to these deals as early as possible. before they go public. so the individual, an accredited investor of which there are 14 million households in the u.s.
alone and now they get a chance to participate. emily: you are based in israel. can anyone participate? >> if you are an american, you can do that. we have investors from 182 countries. each country sets regulations but we work with qualified investors. we are not fully retail. emily: how do you get into an in demand private company? >> isn't that funny? it turns out you have to add value today. the best companies can get money from all over but they choose investors that can actually help them. a group like our crowd that represents 30,000 accredited investors all over can help like mad. we get them connections to customers, to hires, to potential media coverage and they want our crowd involvement and that is why they are coming
to us. emily: you have done a lot of deals. >> the last couple of weeks, we announced two deals together with softbank. we participated in a $300 million round with lemonade which is the cool company. we participated in a round with the chinese unicorn in the travel space. and we have participated in a round with a company doing next-generation climate prediction software. we have companies like zebra medical interpreting medical images with ai. we were with them this last week at a conference. they are doing surgery. on our site, every week we have a new deal. emily: does this impact you? >> we love that idea. first of all, you have to give these guys credit. they are trying to think outside of the box.
mazda is brilliant. the guys there are smart. what they are trying to do is address very much the problem that we are talking about. they want to give mom and pop investors exposure to this through division funding. if the rumors are true. the reality is i think in general opening this up to a broader range of investors is what the market needs. whether it is platforms that are smaller than softbank like our crowd or softbank, it is a good idea. emily: we will be watching for uber as well. we cover it here every day. thursday expedia reported first-quarter numbers that missed analysts' expectations. $2.6 billion while revenue growth slowed to 14.2%. this company struggles to keep
up with rivals like airbnb in the rental market. we spoke about the results. take a listen. >> we had broad strength in our core ota business. adjusted earnings per share improved by 41%. we were talking about how our verbo division slowed a little as we transition the business towards a global brand oriented towards the huge opportunity ahead of us. expectations were a little bit higher. we are confident in the direction and feel good about the trajectory and how we started 2019. >> let me push you a little on that. is there a concern that the strategy is too towards the short rental business? marriott is entering in a big way. there are other companies entering.
the amount of listings you have is much smaller than the likes of airbnb or bookings. what is your strategy? >> expedia group has the strategy like alternative accommodations. an important piece though small. one piece of what is a massive industry. travel is a $1.7 trillion industry and we want to be the place across all of our brands where people can come whether they are corporate or leisure -- and find that at an expedia group brand. the alternative accommodations is in the early stages. it is well over a $100 billion market. it is in the early days of going online. we see it as a huge opportunity for us. and we are just getting started in the space but we think we bring something super unique to
the table. we are excited about verbo's progress but it is only a part of the story. guy: is airbnb a different company in the public market? is it a different competitor once it goes public? >> that is the question. we have seen some very well-funded private companies exist for a very long time and oftentimes, they play by different roles once you get into the spotlight of investors and analysts and quarterly earnings. sometimes, people behave differently. we are interested to see, if they go public later this year or next year, how that will change their behavior. guy: are you going to have a deal with united come october? >> that is a good question and we would be bewildered if we did not have one by october. the world has changed a lot in the last 20 years. expedia group has gotten a lot
bigger and more sophisticated in the way that our strategic partners are taking advantage of the -- that we bring. we hope united makes the journey with us and can start to explore the many ways that we can create value together above and beyond what we do today. that is a dialogue we want to have but at the end of the day, they are a unique business and we have a diverse set of partners and we will be ok either way. we do want to get to the table with them and talk about the way that we can create more value together. expanding the pie. emily: the expedia ceo there. demand in the global smartphone market may be slowing down but that has not slowed down competition for the top spot. we will tell you who is unseating apple for that spot when we return. this is bloomberg. ♪
♪ emily: huawei has overtaken apple to claim the number two spot in the global smartphone market and is moving a step closer to replacing samsung. despite the barrage of accusations that it aids chinese espionage allegations it has repeatedly denied. joining us to discuss is mark bourbon. how does huawei do this in the middle of all of the accusations? mark: it comes down to chinese consumers not purchasing iphones in the number that they used to. when you look at their shipments, apple is down 30% year over year according to estimates. we already knew that apple struggled in china during the holiday quarter.
the news is that huawei is continuing to perform well. 4% away from being the market leader. at a time when there is much discussion about the chinese government's involvement with huawei devices. emily: samsung is having challenges of its own. the big phone debut -- the launch has had to be postponed because of potential defects. is the overtaking of samsung by huawei realistic? mark: extremely realistic. unless there is a catastrophe, i really do not think there is any slowing down huawei in the near term. samsung has problems. it is not just apple that is not selling well.
samsung is also down about 8.5% or 9% year-over-year. samsung is still down. whereas huawei and one of their competitors are the only ones up. emily: do we have any regional bans on huawei? we know it is banned in the u.s., australia, new zealand and on the verge of some restrictions in the u.k. -- how is it doing in other markets? are the accusations of espionage or distrust in the company impacting them anywhere else? mark: china is its bread and butter but they do make lower-cost phones and these are really well-received in parts of africa, the middle east, eastern europe, india and other parts of asia and the huawei brand is extremely strong outside of the u.s. even though they are banned in the u.s., there are ways to purchase these phones like on amazon and other non-name retailers.
the part that people are really concerned about with chinese -- related to huawei is the telecommunications equipment. that equipment allows you to make phone calls. it is not exactly the handsets themselves but it is all the same brand so that is why you are seeing the impact. emily: two big parts of the company. if you could predict in two years, who are the top three and in what order? i'm going to hold you to it. mark: please don't hold me to it but i would go with huawei, one, samsung, two, and apple three. emily: coming up, wework going public.
♪ emily: this is "bloomberg technology." i'm emily chang in san francisco. the world's biggest co-working company wework, owned by the we company. one of a slew of startups coming to the public market. it is expected to be one of the biggest ipo's this year. it is at the helm of the collaborative workspace industry with hundreds of locations in 100 cities. since 2010, it has raised over $2 billion in funding, mostly from softbank, and will lease office space to track and optimize office space. joining us to discuss is the chief technology officer, shiva rajaraman.
thank you for stopping by. so, wework did grow so big so fast. i imagine there is a lot of technological challenges behind that. how did you do it? shiva: three capabilities when we think about wework. one is how do we think about space as a service? are you looking for what location do you need? where do you need it? how long do you need it and are there different pricing models? we have effectively taken all of this space, put it into a big database and we save it based on what we see on the market. some of it is just pricing. some of it is how do we automate the supply chain. we open 15 to 20 buildings a month. anything we can do to automate or augment through machine learning, we are taking that data and creating an engine around that. that is key to successful scaling today. emily: technically, what is the hardest part?
it is such a massive, physical endeavor. shiva: i would say the biggest technically challenging thing about this whole thing is the operational scale. if you step back, you don't want a lot of variability. you want to step back and say can i deliver this building on time, at quality as people need it? that is where you need operational technology that works in a way that construction normally does not in the past. emily: how do you work in different global markets? shiva: the key thing is figuring out what is local and what is global. we look at the global data and we step back and say what are we learning from that at a global level? there are certain things like procurement and materials that are hyper local. emily: where will you expand geographically? shiva: anywhere there is demand for large enterprises. we are 35% large enterprise right now. emily: any countries particularly in need? shiva: europe, asia, latin
america is a place you could keep an eye on. emily: how about strategically in terms of growth? the we company, you are expanding the business model to include this data part of it. shiva: one of the key things on the strategy side is we need to look at -- we see this demand and we start to get critical mass into different areas. can we disrupt the business model a little bit? if you take someone like health and soul, we redesigned that and use it in a more flexible way. we created a new membership called the city pass that gives all of the employees access to wework. they can go to where they are more productive. one of the key things we're looking at is what is a density that translates to interesting membership. emily: softbank is planning to spin off division funds or take it public.
does it impact you? shiva: no. we are focused on how do we grow, how do we scale that profitably, and can we reinvest to get more and more coverage of the world so we can offer people interesting products. emily: what does it mean with the relationship with softbank as an investor? shiva: no changes. emily: where should we expect you to do more? shiva: let's talk about the m&a that is created that we can offer to enterprises. when we think about enterprises, step back and say what are our google analytics for commercial space? can we create a good workplace experience all the way to understand how they use space so they can use wework on demand if they need it. or we can help them grow in the future if they are looking to new markets. emily: two companies recently. team, euclid. shiva: team sets building rooms more effectively and using them well. can people actually check in or not?
are only three people in the room versus 10? can we load balance that effectively for you? euclid, what about the broader space? can we use wi-fi to understand, hey, your common spaces are underused or used. can we create a better mix how people get a productive workplace? emily: concerns about privacy security at an all-time high. we have seen many threats. facebook pivoting to a more private so-called future. how do you protect the privacy of the people that are working in your spaces given they are all from different places? some of them are individuals, freelancers. that must be a challenge. shiva: from our perspective, one is we care about the aggregate of the end of the day. we don't care about the individual. we take this data and we don't want to preserve any of that personal information. we care much more so -- on
average, are people using rooms in this way? it allows us to do a layout. our business model is aligned is that the membership is really not about having advertisers at the individual level. it is much more about optimizing an aggregate so we create a better environment for the whole. we definitely feel like there are fundamental rights on the privacy side. you should be able to opt out as an employee. we should look at this data and create a good seating map. we don't care about the individuals. emily: there are other co-working space companies. companies that taylor themselves to when and, for example. who do you think of as competition and how you compete with -- obviously, you have scale -- but how do you compete with smaller players? shiva: from our perspective, the global network allows us to do things very creatively, also on the local network. members can opt in, tell us what
they are interested in or what skills they are looking to improve. that turns into a dashboard that our community teams can look at an program for those buildings. if a building goes in one direction and you see an interest trending -- in brooklyn, urban gardening is a thing. we did an incredible event and it got people engaged. now, as we look at the broader network, it is one of those similar interests spike, the community teams get recommendations on the best events to throw. that is an example of how we can be hyper local. we are doing the same thing for ask for help. let's say you are a woman founder and you want to find someone who was an equivalent peer you can have lunch with and trade ideas. you can ask for help, find a person in the network and book a room you can meet. we are interested in reflecting the local community but with a
global network of fact. emily: well, we have reported that the we company has filed to go public. please tell us anything you can. shiva: we are excited about scaling. more locations at the end of the day. we are super excited about automating that, collecting the data so we can streamline these operations. ultimately, great community. that is what we are focused on. emily: the ipo is looking pretty good, right? [laughter] shiva: thank you. emily: shiva, thank you so much for joining us. sinclair broadcast group has agreed to buy 21 sports networks from disney for $9.6 billion. disney previously agreed to sell the network as part of its acquisition of 21st century fox after regulators voice concerns about its control of sports television. it is a big push for sinclair which is primarily focused on local channels. the company plans to acquire the network through diamond sports group.
♪ emily: in march, the european union hit google with a $1.7 billion antitrust fine for abusing its dominant position in the ad market. the third fine against the tech giant, an open probe on the company, but the eu competition commissioner says the antitrust crackdown on big tech is not done yet. she sat down for an exclusive interview. take a listen. margrethe: if you want to say we are fine with the loss of competition, higher prices, less
innovation, then you should also say who is going to pay? that is also always the tricky point because if you lose competition, of course, there is a bill to be paid. maria: would you see the standards almost be brought down that some countries have suggested, what does that mean for the independence of the european situation? margrethe: the european union is a union built on the rule of law. i think even though sometimes our processes, we ask a lot of questions. a lot of information is exchanged, but every business knows it is the same for their competitor. it is the same upstream for those who give input. same downstream for those who buy the products. i think that certainty, that is really a treasure because it knows you can predict what will
authorities do here. you can make analysis, take advice. you know what to do. i think for the business community, that kind of predictability and certainty, that is part of a good business environment. maria: another big area for you is american tech. i want to ask you two questions. in terms of the investigations, are we done with that or can we see more probes? in terms of fines, i hear the counterargument that ultimately these companies do not really care because they can pay it. should you may be go into restricting the access to the market as a way to make sure they behave accordingly? margrethe: on your first question, no, we are definitely not done yet. we have a probe into the amazon user data because they host a lot of businesses but also compete against the businesses themselves. we want to figure out is this a fair use of data? we are looking into the question
of jobs within sort of the google universe. we are looking into locals into the google universe. we still have investigations that we are working on. emily: that was the eu competition commissioner. i want to bring in "bloomberg tech's" global executive editor tom giles to break it down. she says she is not done yet. what is next? tom: she is never done. her term is done in october but she is not done. she will use every minute she has in that position and possibly later. look, she has already gotten 8.2 billion euros in fines from google in three separate decisions, most recently a couple of months ago. now, she is saying we will look at the way they do job listings. is there a lack of opposition for places like linkedin? what about local services. the kinds of things that competes with a company like yelp. she's already hit google hard and she is not done.
there are at least a couple of other areas she is looking at. emily: what about facebook, amazon? what about apple? tom: yes to all of those. on amazon, they have begun a preliminary look into the way it serves as a platform for this marketplace, but also uses data on those companies and what they sell on amazon to figure out its own white label businesses. amazon is definitely in her crosshairs. apple is in her crosshairs with regard to the spotify complaint. spotify is complaining about how apple makes its marketplace unfair with these ever-changing rules, this tax on using the app. they have had to raise prices in order to stay competitive, to pay the fees apple charges it. apple is not safe. google is not safe. facebook certainly -- we are just at the beginning stages of facebook's, the anti-competitive
landscape. emily: let's talk about her legacy. her term is up in october. who might come after her? will they continue that legacy? tom: right now, she is lobbying hard for becoming the european commissioner head. she is not coming right out and saying it, but she is talking about they never had a woman before. that is her way of saying give me the job. she has been very effective. she is very charismatic. people like flock around her to take selfies with her. she has been very effective. emily: she is also very open with the press. we have had a lot of access with her. she always explains where she is coming from. tom: she knows how to use the press to her advantage. very charismatic, very effective. those things work to her advantage. it is the spirit of coming against anti-competitive
behavior, allegedly, prevails in europe, that is a great forum for her. she has established herself as a leader in this area and has done things no one else has been able to do and gone after these big companies in a way no one else -- certainly not in the u.s., not to the extent they are doing in europe. emily: will that continue when she leaves? tom: if she becomes the head of the ec, that gives her a platform, continuing to leave her stamp. a lot of these investigations are underway. the next head of competition will depend on who that is. i don't know who that will be. she has a lot of things in motion. someone will have to come in and justify why they have suddenly dropped them and i don't see that tone changing. emily: the big question seems to remain will what she has done in europe have a lasting impact on the u.s. and regulation in the u.s.? we had lawmakers talk about it. ceo's being called to testify, but there are no new laws yet.
laws are being written, ideas are being debated, but will the regulation in europe actually impact the regulation of these companies on home turf? tom: the tale does not lack the dog on that regard, but what we do see is increasingly more than ever before as these companies have become so big, so powerful, and every passing day almost, there is another revelation about the way our data is being misused or the way we are being fed misinformation or the fed harmful content, right? we talk a lot about the stuff you see on youtube and facebook, etc. there is much more of a willingness among politicians to talk about ways to rein in big tech in the u.s. i think the 2020 election will be a big litmus test. liz warren talking about breaking up apple, amazon. there is a lot more crossover between the rhetoric we here in europe and what we here in the u.s. when it comes to certain
candidates like liz warren. she is really leading that discussion, being out there on the bleeding edge of it. is everyone else going to go in that direction? no, but she has at least started the conversation and pushing other people to take a stand. emily: and she has gotten some support on both sides of the aisle for her bleeding edge proposals. tom giles, our executive editor, thank you. still ahead, the peloton ceo tells us why he considers the exercise company to be a tech company first. that is next. this is bloomberg. ♪
a planned ipo. ceo john foley sat down with bloomberg. take a listen. john: it is called peloton homecoming 2019. it was born out of an event the community self organized. we found out there were hundreds of people from around the country who self organized on social, facebook or twitter, come together. they decided to descend on new york, had a weekend, celebrate fitness. this year, it has grown to over 3000 people. we now host it. we collaborate with the community. it is a fun weekend where they can enjoy new york, fitness, and each other. >> that is such an important point. fitness magazine has talked about, when you have a community aspect to it, getting the support, that is a big part of a successful business model. john: absolutely.
we are seeing it in intense ways. just walking over here, i met two african-american women who are so excited to be here. one was a policewoman from louisiana. one was a firefighter from new york city. they had lost a bunch of weight on the bike and they acted like sisters. they said they met a couple of years ago via the biking platform, peloton. they are fantastic friends. they are celebrating each other and their friendship. wow, we are bringing people together. that community element is something i did not anticipate, but it is so fun and big part of this weekend. >> the story of you building this company is amazing. we are both pretty familiar with it. it has come very far in just eight or so years. one of the most interesting elements, i think, to all of this is the bike. we have some in the background. the app has been so successful it feels like of late. talk about that part of the business model. john: we talk about the democratization of great
business practices. we are trying to bring great fitness to everyone. if you have $2000 in your checkbook, you can buy a peloton. you can now finance the bike. if you have your own bike or treadmill, or you like yoga or outdoor running, you can download the app and pay under $20 a month without any hardware and take these fantastic classes. we think there are 23 million americans with treadmills in their homes today. they can tomorrow transform their own existing hardware into a peloton boot camp experience and throw that on their television in their home gym and be consuming our classes and joining the community. it is a big part of our growth. jason: that has to be important part of the financial model. full transparency, we both have a peloton. it is a beautiful device.
it is appealing to a much wider audience. john: we are platform agnostic with our content. wherever you want to consume peloton fitness -- go to the gym and bring your iphone, you can get on the gym bike. or you can go on an outdoor run. you can have our instructors via your android device, iphone. anyway you want to consume and get led by an instructor via the peloton platform, we are there for you. jason: what is the next modality you may go after, because the bike -- we went to the treadmill, yoga, we got strength. where might you go next? john: good question. we do consider ourselves an innovation and technology shop first. we have some pretty sexy, cool stuff on the horizon. we are tasting the dog food as we are building it. it is pretty exciting stuff. carol: a lot of places you can go elsewhere.
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