tv Best of Bloomberg Technology Bloomberg February 11, 2017 6:00am-7:01am EST
♪ >> by am caroline hyde. this is the "best of bloomberg technology", where we bring you our top interviews from this week in tech. up, one hundred 20 tech companies take a stand as san francisco becomes ground zero in the fight against president trump's travel ban. no trump bump for twitter, plunging after earnings as the u.s. user base remains flat. details ahead. 's $7 billion chip, why
the that on arizona is not as fresh as it may seem. the epicenter for the international debate on donald trump's immigration policy here in san francisco. 100 20 companies from apple, facebook, google filed a legal brief condemning it. sector from the tech were among the first and most outspoken critics. why? perhaps many of the companies that defined tech today would not exist without immigrants. ♪ here is a quick recap. ♪
to twitter. you look at the history of some of the most famous tech companies, and there is a lock to in terms of the data historically, but today in silicon valley, 58% of workers are immigrants, so when you step ,ack and look at our labor pool it has been bred by openness and open immigration policy. the notion of non-comprehensive immigration reform, more h-1b visas will keep the people across the border illegally out. let's let the people we want in. let's keep the other ones out. course, it is easy to say that in theory, but in practice,
these are broad brush strokes. there is little data to say u.s. terrorism has been influenced by the countries kept out. the 9/11 bombers were from other countries -- >> if you look at more recent terrorist acts, people born in the nine states, homegrown terrorists, so if you look at solving terrorism on the one hand and a broad brush swath that says immigration has to be stopped from the seven countries, and by the way, innovation won't happen from anybody who comes from the seven countries, it is ludicrous to suggest that keeping these countries out will keep america safe. when you create broad policies that keep out innovation, the brightest people in the world willing to calm and build companies here on which the economy will prosper, there is
an argument in favor. -- saying for at least 15 years, we should staple a green card to every single degree coming out of stamford. we want them to start their companies here. absolutely, one of the ironies is donald trump talked about being pro-business and making america great again. the economyake great again is to have companies started here, not in china, not in canada, but if you want to have a robust economy, it starts with fostering innovation here. that starts with an open immigration policy. cory: h-1b visas, but in practice, the program has been, abuse is too strong, but there has been a lot of people complaining that those people can find other jobs because their ability to live in this
country is stapled to their id card where they can go somewhere else and pursue gainful employment elsewhere. i wonder if you look at the program is necessary or needs reform? the h-1b visa program is absolutely necessary. i happen to be one of those immigrants who started my company based on the fact that i got an h-1b. that allowed me to leave the company who brought me here and start my own company. companies large and small, my company is smaller and benefits from h-1b's. let's put it this way, it allows you to find a way here. as an open critic of the trump administration, aol cofounder has voiced disapproval yet he alsoan, discussed some of the changes we need to see here within the u.s. regardless of any change in policy. take a listen. >> one of the reasons president won is that people
aren't seeing the benefits of innovation, including the benefits of job creation, and the reason is that 85% of the venture capital went to the him onthat clinton won the 15% went to the states that trump won, only 30 states in got 15%, so the venture capital funding to the disruptive companies, but were not backing that in the middle the country so they can great a company that create jobs in pennsylvania, ohio, and pennsylvania. that has to change. we need more capital flowing to more entrepreneurs in more places and level the playing fields so everybody everywhere has a shot at the american dream. caroline: that was the aol cofounder steve case. president trump's immigration policy continues to make waves in the u.s. and abroad, yet our
next guest says that bad would be fantastic news for china and another u.s. tech competitor. our bloomberg gadfly, columnist joins us right here and right now. why is this fantastic for china? >> if you think about it, tim cook's job, all the big leaders, hired the best people from around the world. they will not limit themselves to the u.s. if they can't those people to come here and work, they will have to get them somewhere else. ,hat these is take a long time and i know for a fact that apple has had people sit in other places like japan waiting for visas, so they sit there and work away and do what they are supposed to do before they get to cupertino and work here. if the u.s. government is going to stop more people from coming income at some point leaders in the u.s. tech countries will say let's just put more people overseas where we don't face that problem. one of the places will be china.
apple has set up in our indie center in southern china, r&d centers elsewhere around the world, and if they're going to problems they can't plan, they will say let's go somewhere else and work there. that is bad for the u.s.. local hires will learn from these people employed by u.s. companies and work alongside tom and take that knowledge other companies in china and japan, and that will not be good for the u.s.. hearing from you the companies and leaders you are talking to that they're thinking of expanding microsoft canadian r&d centers? are you expecting some of this talent to remain abroad? >> it is early for that kind of tim is move, but i think expressing a legitimate set of concerns that many of us have about what could happen to the tech industry if these
immigration attitudes continue to get more and more restrict it , because that is what it is all about, and companies generally, and tech companies in particular, benefit from more open immigration. in fact, there is an article today in the new york times about how the entire economy's growth would be genetically increased if we had more immigration broadly, and immigration and migration is generally believed by economists to be an almost unmitigated positive for economic growth. still ahead, despite president trump's being a big fan, twitter still finds itself stuck in neutral. sales growth was pantry, user growth also missing. more from thursday's earnings report next. nasa veteran is leaving the agency for silicon valley. alphabet?ha nope. it is uber and flying taxis. we will explain. this is bloomberg.
isoline: twitter's says it getting tough on harassment with the latest up-to-date. the network rolling out new changes to combat bowling i hiding content and preventing banned users from setting up new accounts. twitter, shares tumbled this week after reporting quarterly revenue and profit outlook that missed analysts estimates. the social network are having delivering advertisers and users to the platform. this deceleration in user growth is causing advertising sales to sag. adds represent 90% of twitter's revenue, and despite the media attention over president trump's frequent tweets, trump's impact on twitter, the cfo acknowledged
they have not capitalized on the attention. impactannot quantify any at this time to will continue to quantify through 21. -- q1. caroline: cory johnson for more. daily actives are improving and they are getting better engagement from those users on their platform, but it the end of the day, twitter needs to decide what it is and what it isn't. they are trying to continue this ma you grow story, but it is not happening. when you are going through big world events with donald trump and the trump administration utilizing it as their primary communication tool to the world, and still not seeing any in krugman's in the conversion rates, because what we do know least 2are getting at million new visitors coming to their site every single day in some capacity, and they are not
able to convert those users, and ultimately i think the rocky road ahead is just about to get even rockier. caroline: even rockier, cory. dig into some of the key issues you have been seeing here you have been doing your own analysis, pathetically on some of the dilution in terms of shares. cory: in the midst of this inability to grow users, grow per user wasnue better. they are giving a lot of stock options out. it is a different business from an income statement point because they are giving away the stock options. the stock compensation is at massive levels, and the result is you have gone from 360 700 14 millionto shares, and continues to have this massive stock compensation expense was such that if it were not for the stock compensation, the company would be profitable. there is a valid argument that this is a non-cash expense.
the result is there are so many shares hitting the market and you've seen this company becoming enriched, whether selling businesses to twitter or insiders getting more shares with every knock down in price, is floodinglt is it the market with shares even as investors are stuck holding the bag. caroline: is that something making investors bristle? >> of course. you are seeing all the tech peers moving away from a kind of non-cap measures to more of a kosher gap reporting basis, which includes the stock-based compensation expense, so that is something to scrutinize, considering 20% of expenses am a revenue, is in the form of this compensation, so it is something that does involve -- cory: let me back up. it is my take that when a
company has an ipo, you expect to see a lot of stock comps in the initial statements, but that should drop off because the shares before the ipo are not being expensed, but these guys are still issuing shares. >> nobody is putting their money where their mouth is. you go through the conference call and there seems to be so much confidence in the metrics of the reporting and believe in daily turnaround active users will drive a bigger turnaround story for the company. i don't know where that confidence is coming from, and it would be good to put their money where the mouth is and buy back some stock, or as jack dorsey says, i believe in it today. i will buy my shares today. we are not seeing that. there is a lot of rhetoric. the results aren't matching. what they need to do is look in the mirror, what do we want to be? who do we want to serve?
how do we want to do it? and answer those questions. caroline: they are striking more partnerships, live video, in particular, can they manage to get that target to profitability by this year? >> video is a double-edged of thing. i am so exhausted from giving them the benefit of the doubt to twitter. look, with video, every incremental dollar of video you get comes with a higher cost associated with it because you have to acquire and license that content, and if they move into premium categories, their cost structure could change from the one people believed in at the time of the ipo, and at the same time, who else is going after video? snapchat, youtube going after video, and twitter with his tree hundred 19 million users, good luck. that, of the 600
hours of video they have in the fourth quarter, only 31 million users, unique viewers, watch that content. come on. caroline: and we here at bloomberg technology exclude the dynamic between twitter and the twitter president, what do his user numbers tell us since the u.s. election? ♪ trump's use donald of twitter is unprecedented for a world leader. consider his audience. the president's personal count -- account has roughly 24 million followers. compare that to his neighboring leaders, the mexican president has 6 million, and the canadian prime minister justin trudeau with less than 3 million. barack obama's personal count has four times as many followers as trump, but half as many actual tweets. trump built his campaign around the idea of speaking frankly and directly to people, and twitter provides the ideal platform for
this. he tweeted more than 240 time since inauguration day, often directing that news flow in 140 characters or less. share histimes to schedule. sometimes to discuss foreign affairs, and sometimes none of the above. but with all of the added attention the president has brought to twitter of the past few months, is the country -- company attracting new users? not according to calm score. reported mobile apps users fell 6%, and 5% again in december 2 45 million unique users. the context, snapchat has 82 million in the same month, facebook twice that. on twittertlight has not helped investor sentiment. on the days trump tweeted something particularly engaging, twitter is not usually rewarded with a bump in the stock price. for example, his most popular tweet i like send retweets last
month was this one on sunday generally 22nd. like by 400,000 users and we retreated, but shares close nearly flat. digital research downgraded twitter from buy to hold last month, citing among other things, muted growth among monthly average users. notf twitter the company is benefiting from superuser president, who is? or how to democracy? -- perhaps democracy. ahead, uber is actually researching floating taxis. we will talk to the man who literally wrote the book on uber's flying cars. we had to the 2017 makers conference and catch up with aol ceo tim armstrong. this is bloomberg. ♪
caroline: tired of that morning commute? uber may have a solution in the works. , to has hired mike moore develop flying cars. cory johnson set down with brad stone for more. a science fiction fan, the idea of a flying car her a small aircraft that takes off and lands vertically that is one-day automate issues cool. a little background, mike moore at nasa road a paper about the feasibility about a stanford
professor talking to larry page and spawned two companies. kitty hawk. cory: kitty hawk. >> of course. the wright brothers. we wrote about these two car companies working on flying cars. uber wrote a paper saying they wanted to play a new role in the ecosystem, not necessary build a flying car themselves, but a role to play in regulations, negotiating with the suppliers, creating new battery technology. from langley guy mark moore who wrote the paper in 2010, so adding firepower. this is real. silicon valley is working on it. you will be soaring to the air one-day to your job, but maybe not soon. cory: or not. i do think it is interesting that uber is a company that could have been all cloud.
i mean a company that takes advantage of other people's hardware. instead, they are doing things they could have left to others. still sinking a lot of money into the development of actual hardware. x for nations,o one positive, one cynical. they are where this will happen without them, that google would develop a driverless car or boeing would develop a flying car, and they don't need a uber, so uber needs to be involved in some way or they risk being left behind. hand, you invest in the future you want to see. it is the same reason amazon developed the alexa, the kindle. if you want to solve real problems in cities around
transportation, then you have to be involved in advocating for, and uber has the resources to do that. cory: the ai robotics engineers out of carnegie mellon, it is interesting that cherry picking of academia. >> absolutely. it is funny because google got a lot of criticism about big bets. the driverless car is actually o division and central to google's plans. decided tocar they do outside of the company, and now uber is doing some capability in-house. caroline: that was cory johnson and brad stone to be sure to check out brad's new book, the upstarts, how kluber, airbnb, killer companies of silicon valley are changing the world. coming up, talking up its grand ambitions with president trump, but is it a case of déjà vu. we will have the details next.
to thee: welcome back "best of bloomberg technology". i am caroline hyde. intel says it will spend $7 billion on a production facility in arizona. 'se investment expands intel presence in arizona and creates 3000 jobs, and yet it was already included in intel's spending forecast and the planned construction already started, so why the announcement now? cory johnson caught up with stacy smith and asked why the company is focused on building in the u.s.. >> if you think about our
footprint has a company, we tend among 1, 2, three in the world in terms of our capital spending or rmb every year, so we are huge. the majority of that investment is in the u.s.. the reason that we invest in the u.s.'s first and foremost because we can hire great people here. goodve really infrastructure, and we have access to worldwide markets, so while we build capacity in the u.s., 80% of sales are outside of u.s., so that is important to us. , the u.s. hasinst among the highest tax rates in the world, so we are actually disadvantaged relative to our competitors in korea and taiwan, and that is where we are working closely with the administration to try to get more pro-investment policy such that it makes more sense for us to continue to make these investments here.
the price8 billion tack on a top-of-the-line fab four intel. .> we are starting on the shell we still have work on the shell, then we get it outfitted and underproduction, another $7 billion. if we were starting from a use of land, you are in excess of $10 billion to build one of these factories. time horizon. that is amazing. i visited hillsboro years ago, and it is jaw-dropping. time it takes, they have the shell, but if again you were to start with vacant land to completing this kind of fabric, how long does it take? start tokind of from finish, depending on where you are whether you have a shell or not, 3-4 years. to put it into perspective, in addition to the direct , these arefor intel
among the largest construction projects on the planet. we will still have 3000 construction employees getting this thing ready for production. they are just in or miss, and the impact on communities is also in norm us. cory: there is some irony perhaps, here you have intel where andy grove, refugee and founder of intel, and at the same time the federal district court in san francisco is debating this immigration ban, then brian kucinich at the ceo today with president trump, and i wonder how much does intel need immigrant labor and labor from refugees around the world? how important is it today? it is very important for us to hard the best talent around the world. the research and development we do is some of the most complex problems on the planet. to put this in perspective,
is not political. we engage with democratic administrations come republican administrations, and pending on the issue, some places we agree, so we are in agreement around what they are trying to do around the tax and investment policy. in other places, we disagree, issues around immigration and being able to hire the best talent, and we have made that clear to the administration as well, so we engage on issues and not necessarily down political lines, and our issues are investment, hiring the best talent, being able to build in the u.s. and export around the world and make the kind of investments the make us rate company. rbnz talk to me about intel's use of h-1b visas and if that could be simpler than it has been in the past. to that simplek concept of we need to be able to hire the best talent in the world, and as you know, the phd's, people who come in from
overseas to get phd's in math and science areas, and those are the people who come in and make intel a great company, so what we would like to see and the h-1b space is a higher proportion of those visas being skilled the most high technical people, and it is one the places i know that brian is engaging with the administration to make a point of view known. caroline: that was david kirkpatrick and cory johnson. a story we are following, apple requestagain sent in a to sell used iphones in india. this as the tech giant negotiates with india to start production in the country. the last attempt to get this license was met resistance. the government ministry thinks it could undermine manufacturing. apple is exerting its brand influence. its pre-owned devices will be cheaper and target a price-sensitive market.
palos verdes, california, where makers kicked off its women's conference. aol ceo tim armstrong announced a goal to have women represent 50% of the organizations leadership by 2020. he is also targeting equal pay in the same timeframe. aol joins a push to make top ranks of executive more accurately reflect the population. >> this journey started six when we cofounded makers as a brand. want to not just be an investor in the media side of makers and the 4500 stories, the largest catalog online. we also want to lead as a company in the space, and what is clear to us in meeting with our executives and up-and-coming women executives, and i asked if there was one thing that we could do at the company and send a message and would be great for the company, they said could we get 50-50 gender diversity in
the top thousand positions in the company, so we discussed it and made a commitment to it. we said it on stage about an hour ago. we are in the process of getting the company reestablished, recruiting internal employee development, and the future, so by 2020, we want to be 50-50 across-the-board in our executive team in the top management of the company. it is a bold goal, but we will figure out how to do it. caroline: and equal pay by 2020. an entrepreneur watching, a business leader, give us the step-by-step approaches you need to achieve that. >> we have diagnosed the issues we have around it, and it starts outside the company with what i gettingls, where we are the talent from, different talent pools, so we need to reconnect our recruiting into broader pools, and in some polls we are not in. if we want to be 50-50 by 2020, and i said get going and let's
go faster, we would go to the same pools. we have to change what we are doing. you come into interview, we have to represent what you think the company is in the space of what we will be doing, so it you are a female executive coming in, part of the interview process should meet with female executives and getting that side of it in terms of why you want to calm. internalpiece is the employee development process, which is if you are diverse talent, female executive and you want to move your career along in general, we have to put the fundamental steps in place in which we have been doing, so our plan over the next 2-3 years, just like when we bought the huffington post or the techcrunch deal, we will do a deal around this issue, and that is what we announced on stage today. we are serious about it, just like any other started come and we will figure out how to do it and our employees are engaged in it and excited about it. caroline: talk to me about the
other deal, how optimistic, pessimistic, frustrated are you by the timeline? >> let me start with the yahoo! brand in the yahoo! talent. the yahoo! brand remains a brand we care about, and many, many people care about it in the world. the talent, we have had great experience with them caroline: in the integration process. the is still going well? >> integration process is still on track. where the deal sits right now is we are waiting for information to come back on the second data breach and to figure out if there are any changes in value. caroline: timeline on that? >> it is ongoing right now. i would not want to give a timeline, but i assume during q1 we will have a lot more information from them, and once we have that, we can sit down and discuss with them in a coherent way next steps in terms of what the outcome should be come and it is too early to have that discussion. i am hopeful the deal, we have a higher appreciation for yahoo!, figure out to
if there's a value change based on breaches. tooline: to be a powerhouse become the number three player when it comes to the advertising space, how are you going to be the number three player? >> we bring some the unique to the table. first of all, google and facebook are cold metal athletes. they are performing well, executing well. you saw the recent numbers. they have done a good job and continue to do a good job, but the one space we want to be an olympic athlete in is the brand space, in the same way google cares about search, facebook cares about social, we care about brand. on social networks with fake news and things like that, and in the search space where it is more ai then user directed search, brands become a really important role, so we want to be owners and partners and content brandon have a brand advertising system which really helps find
new consumers for customers and push them all the way through the conversion funnel. if i said you simply facebook's social, google's search, we will we dond, everything as a company's around brand and we are excited about the future of advertising. we are probably one of the first two or three companies on it. was the aol ceo tim armstrong. at the makers conference, we caught up with the former u.s. chief executive technology officer for president obama. we asked about h-1b visas and what they mean for during talent to the united states. >> we need to keep the pressure on and work on great talents to our shores all the time like we always have to history. it is critically important. and really our opportunity is here. it is technology. we did theime artificial intelligence work for the president, so it is becoming
automation and we need everybody, the training and the extruded new work happening. -- what are we doing to get american talent. we get a huge work around that. nine out of 10 parents want coding taught at school. some of the governors, very bipartisan, and continue to work on the talent. lift all americans and bring everybody and pay attention and a smart way to how we are reviewing and how homeland has tremendous programs. we review those companies and away, they are really capable. we just need to continue to announce as we do that, not ban people. some now switching to potentially executive orders on visas, but concerns about the way those visas are deployed. >> one of my favorite, we have
been working on a modernized entrepreneur visa. many countries have that. you see that in canada and other places. we need to do that. we need to have entrepreneurs making jobs here. the department of labor, which we should call labor as talent, they did a great program were $135 million of fees from those visas was used for grantmaking to help accelerate albuquerque. four counties represent half the population in new mexico. they are accelerating veterans, people at prison, foster care or into the tech sector. you see people go from $10 an year.o $60,000 $85,000 a that is a real thing and exciting to see. seven different regions making the system work with employers training and bringing people who , well sure you do.
we have to do that because we need to get ready. caroline: that was the former u.s. chief technology officer. facebook made some announcements at the conference. the company is expanding paid leave for its employees. sheryl sandberg spoke about why. >> this is personal for me. i lost my husband suddenly two years ago. facebook provided leave and the flexibility i needed, now we are doing more. new brief meant policy will allow up to 20 days in the case of an immediate family members death, and that days for extended family. caroline: this is bloomberg. ♪
areline: a story we watching, pinterest unveils what it is calling the lens technology, feature that let's users search for products using their smart phone camera. it will i didn't the by objects in pictures and pull up related content. they also announced other features that allow users to find more products. verdes,k to palos california, where makers kicked off its women's conference. we spoke with bpg ventures president before launching pbg ventures, she was ceo of aol's brand group. take a listen. news here is that women are starting companies at an extraordinary rate. withve seen 1400 companies a female founder since we g g ventures to an
a half years ago. this is a very fertile arena right now. the legacy is that venture capital world still does not have the networks that reach into this female entrepreneur base, so women are still getting only 10% of the venture capital that goes to startups in this country. we've looked at that instant that is an opportunity. if women are the dominant consumers and there are more and more women who are coming out of not just engineering schools, but companies that have real vertical expertise, we should be backing the best of these because they understand that end-user. caroline: what will be the tipping point for bc's to start seeing the talent coming into their own hemisphere. the data already proves that if
you are in s&p 500 company, it is outperforming. what is the data not showing to the typical bc right now? >> it is less about what the data shows because a lot of these companies are still very early stage. it takes 5-8 years for a company to really show what he can become. but, i think what you are seeing least athere is at recognition that they need to open up their partnerships, and several of the most storied 's, sukhoi it just brought in their first female partner. caroline: what just took so long? >> it is understandable on a certain level, most of the early startups were enterprise plays,
and so being able to talk to those guys at those companies was important, but as the world changes and technology becomes a part of every company, there is just a bigger world out there and a bigger opportunity. have seen a lot particular in silicon valley, key startups that by immigrants as well. how are you seeing the trump travel ban come into play? how is that affecting female immigrants as well? well, we only invest in companies that are u.s. based, but there are certainly plenty of founders who have come to this country to go to university really and stayed, and they are starting companies now, so there is no question that this particular sector, the startup world, technology startups,
would be impacted dramatically by this band. n. caroline: you spoke throughout the election cycle that perhaps there was an echo chamber as has been voiced by many within social media. you now see social media attack this problem. >> i think that everyone, whether they wanted to take responsibility for the outcome of the election or not, i know for a fact that every company what theired hard at current policies were, how they could make sure that the echo chambers were opened up if that of themoblem, and all have gone after the fake news problem as well, so i think that nobody is being cavalier about this. it is a problem that everybody recognized, and i think they are
all doing a pretty good job of trying to find solutions for it. hear the music, the shouting behind us, more than 500 women, it is all about leadership and storytelling within that. are you optimistic about the talent pools? subjects being adopted by u.s. youth of the moment? i am optimistic about a lot of things. i am very optimistic about this conference. everybody talked about it coming in as the meeting after the march, and if you were in washington, d.c., it was such a spectacular day. days that of those reminds you of how much progress has been made, and what a unified group women in the united states are, and next to
women around the world right now. and the message was very simple, we are not going back, right? so i think what an event like this is great for is to get people really thinking about what does that mean in practice, what are the things we need to do going forward to make sure that our daughters have even and opportunities, certainly in this area of entrepreneurship, where you can create your own company, that is key. we need morea that women in. probleme natural solvers, so you take any consumer problem out there, and there is a woman, i promise you, who is working on a solution for it. ways forable to find more women to understand how to use technology in order to solve problems, and then getting more 's, more investors interested
in supporting this next generation women, to do that is great. bbb g-v: that was the ventures president susan lyne. and, oh, snap, literally comes to mind in this case. this week, investors sent shares of a little known startup snap interactive searching 100 64% in four days since snap inc. filed for a $3 billion ipo. a mobile dating app, and find started to rise. that does it for this edition of the "best of bloomberg technology". we will bring you all the latest in tech throughout the week. we will hear from jack robbins once cisco reports earnings. tune in h day at 5:00 p.m. new
carol: welcome to "bloomberg businessweek". i am carol massar. oliver: i am oliver renick. plus, the algorithm that could help police catch serial killers. carol: a lucrative second career for steve young. oliver: all the ahead on "bloomberg businessweek". ♪ carol: we are here with assistant managing editor jim alice. ankaguys look at iv
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