'Bloomberg Technology' Full Show (06/20/2019)



I'm Emily Jenkins San Francisco and this is Bloomberg technology coming up in the next hour slack attack the popular messaging software maker spikes well above its reference price on its first day as a public company plus trade war woes Apple makes a plea to the White House saying new tariffs will dent in the company's contribution to the US economy and Facebook's splashy reveal of its digital coin has sparked regulators and lawmakers in Washington to take action will hear from the senator who spoke out first but first to our top story another unicorn hits the public market workplace messenger slacks soaring in its trading debut after forgoing the traditional IPO for a direct listing the company shares opened at 38 to 5850 48 percent above its reference pricing at one point climbed as high as 42 dollars a share it came back down closing the day with a market cap of 19 and a half billion dollars more than double its last valuation on the private markets slacks listing makes it one of the most valuable companies to hit the US market this year but will it be able to avoid this slump that's plagued uber and lyft both trading below their IPO prices joining us to discuss entries and Horowitz board partner Steven Sinofsky and Bloomberg's LM Hewitt andreessen horowitz is an investor in slack and Steven you worked at Microsoft for more than two decades which of course is a slack competitor and one of SEC's biggest competitors with deep pockets and a ton of users so can't slack fend off the big guys well this one might be more of a question of can Microsoft fend off slack you know right now in the the way that the industry leaders have talked about slack is generally viewed as the leader certainly by by a bunch of the measures and you know 10 million daily active user or monthly active users and and so on so I think they're in a really great position the industry is undergoing a phenomenal amount of change in terms of the way people work people are looking for alternatives to email things that work faster smoother things that integrate more software and I think slack does a fantastic job of doing that now Ellen in terms of the mechanics today we had a lot of questions about why they chose a direct listing you talked to Stuart I talked to Stuart the CEO Stewart Butterfield do you think we got an answer I think so he was finally now the quiet periods over able to explain that the main reason slack was looking to do a direct listing was because they just didn't want to dilute their shares any further they have a lot of cash they feel confident that they don't need to raise any more money in the length of their their lifetime as a company and doing a direct listing allows you to do that just allows you to go public put your shares on the market and not dilute by issuing new shares to sell so then why did they raise so much money up to this point I mean he has said it sittings in the past we have more money that we'll ever need we've got money for a rainy day and whatever 50 years so why it must have felt worth it to him at the time he said to me earlier this morning you know we were always getting a really fair valuation we found that capital was really available and it's true slack has always been sort of darling of the venture capital world and I can imagine they were really able to probably negotiate the deals that they felt were really good for them in the private market and just don't feel a need to raise more I have a chart here in the Bloomberg which just shows how US IPOs and US tech IPOs have been performing so far this year so you know Steven you ran office you ran Windows and one of the big questions about slack is is it just a nice to have you know what if companies are gonna cut budgets if there's an economic dam to downturn and there is a lot of macro economic uncertainty why would they pay for slack and not cut office or why would they pay for slack and cut office you know what I mean yeah well I think you know the thing about the workplace and even during bad times it turns out that the companies think about information technology is a way to to invest in order to make it through the bad time so your company becomes more efficient you communicate better you get more done you serve your customers better and that actually reduces the impact of economic cycles and we've seen that for Cades in terms of the way that technology investing looks and i think in this case slack isn't really a nice to have it's it's fundamentally rethinking the the way that that companies really approach the sharing of information and collaboration and work and making it much more modern moving from silos of email to an open communication platform well you know how corporate corporate America can be and slack is cool it's hip and it's easy to use and all of those things are great but do you think more traditional companies will really see the value in it well they already do you know slack has hundreds of paying customers with with very large deal sizes and they're already traditional companies that see the value in all of this whether it's a target or even an IBM the sort of the most traditional of traditional companies and so I don't think it's as much about seeing the value as much as the company embracing this idea of like wow we can really do better as a company and that the tools that we use as a company or what can differentiate us to our customers or to our employees it's a super competitive labor market and we're raising this generation of employees now that are entering a workforce that are used to instant messaging that are used to lightweight communication and they're also used to openness and those are all the characteristics of slack not the characteristics of email right and in some cases workers are much more responsive on slack than they are on their corporate messaging services Ellen what are the risks what are the challenges that lie ahead well we've already seen that slack's revenue growth has slowed over the last couple years down from about 110 percent a couple years ago to projected 50 percent or so this year so I think there are questions of what's going to help bolster that revenue going forward you know I had it explained to me that that slowing is just you know the law of large numbers the bigger that slack gets the harder it is to double its size every year and that makes sense but I think that's an ongoing question for the company another thing is and Stewart the CEO has talked about this himself trying to explain what slack is to people who don't use it it's a kind of a different category it's not easily comparable to something that we've seen before so not just messaging it's not just yeah I'll kill her you can share files yeah I do calls and and that's something that they just need to keep working on so it's easy once you get someone to use it but it's a little hard to make that first pitch when someone just thinks of it as something other people use all right Bloomberg's Alan Hewitt Steven Sinofsky at for partner and andreessen horowitz we're gonna listen to how they tell their story I spoke with slack CEO Stewart Butterfield and the CFO Allen Shem after the opening bell and asked how confident Stewart felt about the choice to list directly take a listen we'll see but I think at this point it has been working exactly the way it was supposed to work and ultimately will open will have a high and a low today will close and then the same thing is gonna happen tomorrow and the next day and the next day and we are very much focused on the long term now you're still paying large fees to bankers you still raised a lot of money on the private market so what problem are you really solving Stewart by doing a direct listing versus the traditional IPO well the the first one is that no need to raise primary capital we came into this process with over 800 million dollars on the balance sheet so the dilution to existing shareholders would have been tough I think we did get a little bit more freedom and how we tell the story so in addition to a roadshow but instead of only having a roadshow in private rooms with the investors we were able to do an investor day livestream it and make the video available to everyone and that I think is a tradition in a better position now Alan slack is still unprofitable and the markets have rewarded profits even if they're slim profits how far out is profitability or primary focus right now is to invest in growth as we continue to build on what we think is a new category that's gonna be our focus for a long time we've also said to investors that our near-term priority is to drive towards cash flow breakeven we have high confidence in the strong uneconomic of our business that we can still invest very aggressively while driving towards that near-term ability so then Stuart how much of a priority would you say that profitability actually is I think I don't wanna get too technical about it in SAS there's a lot of deferred refuse so accounting profitability isn't that much of a priority as Allen was saying bringing in more cash than we put out on an ongoing basis is a priority because it allows us to control our own destiny the ideal for us though is that we continually find new ways and new opportunities to invest to further grow the business and we don't need a lot of free cash flow but just a little bit now Allen revenue growth is slowing what are some new sources of revenue you're expecting to tap well we're very pleased with the revenue growth I think what you're seeing is also for making great traction with customers and we've got over 95,000 pay customers today our enterprise customers are also growing even faster so we have 645 customers over 100k in revenue and I think we were seeing as we're scaling so at the pace of revenue that right now some of the revenue growth just mathematically will come down but we're very optimistic about the opportunity we believe there's a huge new category to be built and invested behind so we're focused on that now Stuart we've charted her progress from the very beginning I went back into our archives the first interview I did with you was in 2011 when you were CEO of tiny speck and you were making a game called glitch which sort of became slack in 2015 Jared Leto crashed our interview I will never forget that your employees your users really loved the sort of quirkiness of slack which is an ethos very much inspired by you that said you are becoming a public company you're gonna be doing earnings calls every quarter how do you manage that transition with public investors holding your feet to the fire I think both al and I have been committed and this is not a recent thing but over the course of many years I'm building the kind of internal controls and systems that would allow us to operate as a public company so you know the financial business operations side that again a long time ago and we've been working with the whole company to kind of transition in the limited number of ways that we do I mean the we believe we can keep the same culture we can believe we can keep the same approach to serving customers if you think about our mission to make people's working life simpler more pleasant and more productive there's a nice humility to it because you do want to be of service so there's also a huge ambition and I think the challenge for us or you know Lakotas oh well we're gonna have to pull off is bringing investors along on that ride and help them understand what the long-term vision is and what we can truly do to support companies all over the world now you're entering the volatile market we're in the midst of a trade war with China you could imagine in an economic downturn that businesses are going to cut budget they might not cut email they might not cut Microsoft Office they might cut the nice-to-haves and they might think that slack falls into that category Stewart how big a risk is that I don't see any real risk in that we have exceptional retention so industry-leading on both the enterprise side and the SMB side our customers tell us luck is the kind of thing that they didn't know they needed but once they have it can't live without it and if you can't live without seven it's not gonna be one of the the items that are cut on a discretionary basis so Allen would you say you know how much do these market fluctuations how much are you following what's happening in the global economy but it doesn't necessarily affect the way we run our business we're building a new category we have so many things to focus on supporting our customers and building this ambition of a new way of working so we control we can control and the markets do what they need to do now Stewart analysts say that chat apps are a dime of dozen you've got huge competitors like Microsoft like Facebook with deep pockets and billions of users over the longer term how do you differentiate yourself how do you compete when even you say in your own risk factors you haven't figured out the optimal price because it depends often on what your competitors are doing at SLAC we say we are competitor aware but customer obsessed I know it's hard for me to imagine anything that any competitor would do that would cause us to change our plans when those plans are all oriented around creating value for our customers so one of the things you want to do is put ourselves in the position such that slack the company becomes more valuable as the world uses more software because slack the product becomes more valuable for each of our customers as they use more software because of the platform because of the integrations you know there's a whole world out there other software the number of categories continues to proliferate the number of dollars that companies invest in software every year continues to go up so in that kind of market and in a world where we have 10 million daily active users out of the 200 million Plus that we believe would benefit from stock it's just wide open all right shares now indicated to open 32 to 34 dollars a share so we're getting a little bit higher this means that you know investors employees can sell their shares immediately Alan should we be worried about a brain drain should we be worried about a talent exodus once employees can sell with no lockup I think employees like investors they're appreciating how big of a category an opportunity this is we estimate this addressable market to be twenty eight billion dollars and we're just getting started here one where a category and a product and a pub that values adoption user engagement you know customer experience as well as the pop one I sort of alluded to which we think is going to transform the way people work in the future now Stewart last quick question for you you've been very focused on building a diverse team slack punches above its way on women and minorities though I know even you've admit that that you still have work to do unfortunately other CEOs still don't think diversity is a priority how has having a diverse team having more voices in the room helped you get to this moment helped you improve the bottom line well I think that there's a bit of an increasing return dynamic so the the better job we do the easier it is to take the next step and so there's a lot of early employees I think who made really important contributions to the slack culture opened it up and brought in people from their network and that has allowed us to kind of continue which reduces some of the resistance because it can be very difficult if a company gets too big so it's something that we're we're proud of but you know you said we have more work to do it's that doesn't end we're part of the larger culture in the larger society and we do what we can my hope is that there are you know group with people who graduate from slack and go on to start other companies can have careers at other companies and kind of spread that way of working my interview there was slack CTO Stewart Butterfield and CFO Alan Shem and if you didn't see it when it happened here is a picture of Jared Leto cook the actor crashing our live interview with Stewart in 2015 me and Brad Stone they're a pretty epic moment and we recognized him with the sunglasses and the pink hair and just a reminder Bloomberg later the venture capital arm of Bloomberg LP is an investor in slack coming up Apple is pleading with the Trump administration to not proceed with tariffs on the iPhone details on the tech giant's letter to the US government next this is Bloomberg you Apple is urging the Trump administration not to move forward with new tariffs of as much as 25% on a new slate of products imported from China the tech giant says the move would reduce the company's contribution to the US economy and hurt its global competitiveness the proposed tariffs would affect nearly all major Apple products including the iPhone joining us to discuss Bloomberg texmarq gurmann and at Washington Bloomberg Sarah McGregor who covers trade for us so mark we'll start with you this is the first time Apple specifically mentioned the iPhone in a plea to the US government but are they asking for special treatment here yeah you're right this is the first time they're mentioning the iPhone why that is so critical is because the phone represents two-thirds of Apple sales in the baseline plus pretty much the rest of their sales because people buy the other products because they buy the iPhone are they asking for special treatment sort of basically Apple is the most significant phone maker coming out of the u.s. it is pretty much the only company in this unique position of being such a global conglomerate that has such a strong hold on this market while also being an American company that produces pretty much everything in China so in a way they're asking for special treatment but I think if this was pass was granted to other phone makers there's much smaller ones you know they wouldn't be too upset about it we know Sarah that Tim Cook the CEO of Apple has been to Washington a number of times he's met with President Trump several times certainly made an effort to keep the conversation going but if the administration does slap these new tariffs on this new slate of products would Apple be an exception so exactly Tim Cook was in Washington as early as last week meeting with Trump talking about trade among other issues like immigration so we do know that he does have the ear of Trump he is able to get an audience with Trump we also know that in previous round of tariffs the you know the draft list that was put together Apple was able to get a couple of its products off it so you know there is sway obviously that comes other companies have gotten other items taken off dress drop lists companies can ply it can apply for exemptions so there are you a whole suite of options at Apple's sort of behest or any other company to try and avoid these tariffs that being said I think you know the Trump administration really wants to hit hard once to make an impact with the 300 billion if it did move forward with them so it's really hard to tell how much flexibility they're gonna have now mark Apple comes up in almost every conversation we have about tariffs but correct me if I'm wrong they really haven't been impacted by tariffs on any products yet at all right first of all I wouldn't correct you if you're wrong but you are not wrong they they have not really been impacted by tariffs at a significant level there's been some accessories some wireless routers that they don't even sell anymore some old versions about computers that they don't sell anymore but the iPhone is really Apple's bread-and-butter and it's really with the core of this debate we've been talking about is the iPhone gonna be impacted for a year and this letter is so significant because this is the first time where Apple's coming out and saying hey you know what please US government don't do this to us right basically they're saying that this is going to hurt that you know their contributions to the US economy but what it's actually gonna hurt truth be told are they're very high industry-leading margins for these types of products and they don't want to sacrifice that so which way is the wind blowing at the White House today I mean what have what is light Heiser been saying what is the president been saying what will be the result of the president's meeting with President Xi at the g20 well I think there's probably two ways that things could go right now one President Xi and President Trump are they both say scheduled to meet at the g20 you know best case scenario they chart a path forward for talks to continue you know the talks have essentially broken down the sides are not speaking to each other right now about a trade deal the other path I suppose is for the Trump and XI to not come to any sort of agreement and if that happens Trump has said he intends to move forward with these tariffs on 300 billion dollars of additional Chinese goods and you know light hyzer the US Trade Representative was at a hearing on Capitol Hill this week a few of them and he spoke for hours and you know one of the comments that that he said that really struck me was that he said you know there is going to be discomfort to get a deal with China and and that's gonna happen right here in the US the Trump administration doesn't think that the tariffs so far have had a big economic impact a really negative one either in the US or around the world but it does always you know it does sound like they do think that there it might be worth trying to back China into a corner with these tariffs they believe that China pays the tariffs US companies are saying and that's what Apple's saying that they pay the tariffs and that's going to be passed on to consumers right and Apple is just one of many many US companies all right Bloomberg Sarah McGregor and Mark Berman for us thank you both coming up wham-o is partnering up with the world's largest automotive alliance to explore more opportunities and driverless cars details on that you on Thursday Apple recalled some of its MacBook Pro laptops sold between September 2015 in February 2017 the recall is due to batteries that might overheat and could pose a safety risk this problem affects the 15-inch version of the older MacBook Pro Apple said it will replace the batteries in these models at no charge wham-o has agreed to explore driverless services with Renault Nissan and Mitsubishi the car makers and alphabets autonomous vehicle unit will study market opportunities and research legal and safety issues related to driverless transportation services in France and Japan and the City of Austin Texas is looking better and better for tech workers the cost of living is lower than in bigger cities and certainly much lower than San Francisco and paychecks are getting fatter tech salaries in Austin grew faster than other major US cities they rose 15% over a three-year period to an average of about $125,000 that's according to the reporting platform higher coming up in the public eye and we look at why cloud companies like slack seem to be so beloved by Wall Street we'll talk to one early investor who saw the cloud coming more than a decade ago that's next and later Facebook is creating its own cryptocurrency but a senator says not so fast we're gonna hear from senator sherrod Brown of Ohio who's been speaking out this is Bloomberg you this is bloomer technology I'm Emily Chang in San Francisco back to our top story slack soaring public debut the workplace software maker now has a market cap of 19 and a half billion dollars bringing new meaning to that old saying that every cloud has a silver lining maybe in this case it's gold ten years ago the market cap of public cloud companies was around a hundred billion dollars now it's closer to one trillion dollars our next guest is no stranger to investing in the cloud he's back Twilio Box DocuSign and more byron dieter is a partner at Bessemer Venture Partners and joins us now and you did not invest in flax oh you are a fortunately correct objective outsider for which I like so what chances do they have in a market where you're competing with Microsoft's Facebook and you know Enterprise juggernauts fun times in tech land great to be back and it's a fantastic company so huge kudos to the team and the investor base for today has a milestone event and investors are reacting with greed appropriately for this business they're paying 50 times run rate revenue for a quality business and so the only hole you can shoot in it is what is fair value but it's a heck of a company and well deserved so look I view slack for free and multiple different situations and work situations non work situations never paid for it the company never paid for it you often have teams sort of going rogue and using slack so can they get people to pay up when you can get a lot of it for free so part of the beauty of these cloud models is that free becomes marketing they don't need to have aggressive sales and marketing teams to go out in the wild when four very low marginal costs they can entice users through this freemium offering and walk them through a conversion funnel in a very compelling way a number of the cloud companies and the early IPOs ranging from Dropbox to Twilio have undertaken this method and it works really well if you have strong product that gets that upsell dynamic building and they have a hundred and forty percent net upsells which shows the models working how do they stand out or fit in to the cloud IPO market right now so a lot of people have been looking at this for a number of reasons certainly there a scale business which puts them on a short list with the with the stripes with the pro Kors zoom which recently went public and there'd been this class of companies that people were watching quit closely and also the way in which they went public I think that this will change some of the mindsets in terms of the direct listing and whether that's a viable alternative but there's still 55 companies behind them on the private side valued at over a billion dollars today in cloud alone and so there's a long list that the public investors are now looking at hoping that they're to come shortly what's the direct listing a right call like would their market cap be higher if they did a traditional IPO or lower I think it was an absolute home run for them and huge credit I love financial innovation in general but the fact that they got the perception of the pop with this reference price and then the actual opening price and yet they captured full value for shareholders right choice to actually leave money on the table we should be clear about that absolutely they that half billion dollar spread between the the reference price and the actual first trade was captured by employees and investors that were the selling shareholders into this listing and so very few companies have attempted this and it's a small class of companies that can pull it off in the current construct but I think it suggests very good things for trying to do more of a market match for these IPOs as opposed to the pops that have happened for the other companies that one public this course so do you think we'll see more companies tech companies do that would you advise your companies to do it it's provocative and yes we were the largest investor in Pinterest which was one of the big IPOs a few weeks ago pager Duty Fiverr we've had five IPOs at bessemer this quarter alone I think a number of them could have considered this and looking ahead I look at companies like Airbnb I look at stripe and I've got to imagine that their boards are sitting around right now thinking is this for us and can we get the best of both worlds there okay so ten years ago you saw the cloud coming and you wrote something called ten laws of the cloud this was in 2008 and that was advice for founders about how to start a cloud company and obviously the cloud industry has exploded since then and is still exploding so what are the laws today so I was an early cloud CEO and worked with Bessemer Venture Partners with some of our early investments and it was a small group of companies in 15 public companies in the entire cloud ecosystem that were public and only a few hundred of any scale on the private side you fast forward today and there are 50-plus public cloud companies worth almost a trillion and market cap hundreds below them private side that about to flip over and what we've seen is that it's a much more nuanced world where they're getting much more sophisticated about product our earlier discussion about slack you see product led companies now for the first time we're the best product is winning and you see very thoughtful metrics to unlock this high gross margin very predictable revenue stream that investors love you get the best of both of these companies you get the high growth because of this generational shift in technology and you get very predictable business models because of the subscription dynamics underneath the core customer relationship now the cloud sounds like a great idea and obviously in many ways it is it's the only way it also increases vulnerability I imagine in a world where there's you know cyber attacks threats are on every front and so what is the biggest risk to the cloud that you see today so I would dispute the relative vulnerability I accept the notion that cyber attacks absolutely are threat to software and businesses in general however absolutely what you see is that a purpose-built application company that knows the attacked vectors on their software is much better position to defend it than a corporation with on-premise software installed running thousands of applications with all sorts of different attack vectors that they don't know how to protect against and I absolutely would bet on salesforce.com or Atlassian or Twilio to defend their software suite then a fortune 2000 company protecting 2,000 plus applications trying to do a similar job so the we just published the 10th anniversary edition which is really fun we've worked with now over 200 cloud companies and it's really those CEOs that have informed our thinking so it is live on our website at be VP comm now actually today byron dieter of Bessemer Venture Partners thanks so much for stopping by stick in the cut with the slack conversation ilya fishmen partner at Kleiner Perkins helped lead the first three investment rounds for slack he spoke to Bloomberg earlier today first of all slack is just an amazing company and brand that has a lot of recognition the company is 10 million daily active users so you can imagine that many people just her and know of slack right the company also has a lot of capital that it's raised in the private markets and so it didn't need to go out and raise incremental additional capital in the public markets and for those types of companies it's the direct listing is actually quite interesting because it allows you to transact very quickly it allows you to set the right price and it's a highly effective well we know that they don't need to raise cash but there is always a question with these tech companies about the path to profitability as an investor what would you like to see from slack with regards to their path to profitability well I can't really comment on the future but if you look at the category that slack is in software as a service these companies typically have to make significant upfront investments in their product and customer acquisition and then I can reap the benefits of that over time so for example slack on average has a net revenue expansion of 138 percent annually so that means that the revenue actually expands and grows organically within its customers when you're at a scale of half a billion annualized revenue run rate that's quite impressive so just in terms of how it came to market Ilia maybe a bit of a chill for investment banks here if this is a trend are there certain in your view types of markets or time in the market when a direct listing would work and others when it might not I think it's really hard to speculate on that I do think it really depends on the company again really well recognized brands that have a lot of investor interest they can go direct they don't need to be communicated or you know sort of put in front of investors they're really well known they don't need to raise a specific amount of capital they really wanted to just get access to the public markets and transact those types of companies I think in fair about quite well we have seen and in fact I don't if we can show it or not but there's a really great comparison of the Fang stocks versus the companies that have listed publicly this year most of them of course in IPOs not direct listings but the IPO market has just outperformed in a massive way even those big tech names do you expect that to continue is this there's such hunger for these kinds of the unicorn names out there I think it's really exciting times in tech you see companies like slack obviously perform well today in our portfolio company beyond meat that's done quite well I think what's happening is is real interest from investors to get exposure to tech to get exposure to high growth opportunities and again the brands and the names that are recognized will get a lot of attention and it's really obviously great for investors it's great for companies that's great for tech workers it's great for everyone that the IPO is a window is so open right now Ilia freshmen their partner at Kleiner Perkins and a reminder Bloomberg beta the venture capital arm of Bloomberg LP is an investor in slack coming up regulators are already tripping over themselves to regulate Facebook's Libre but the cryptocurrency isn't even launched yet we'll discuss this is you this week you couldn't have missed it fakes book unveiled its Libra crypto project which may launch as soon as next year partners include payment giants like Visa and MasterCard as well as PayPal but chatter and questions abound about regulation here's a look we welcome open conversations with regulators to figure out how to drive accountability and transparency for the Libra Association we know we have a lot of people to work with we know this is a heavily regulated space cryptocurrencies are still a very new and emerging technology that's why it's important that we scrutinize them in the Congress and there are financial regulatory agencies a lot of it is getting the legislation right has been the real drawback the real slowdown not necessarily opposition from any one particular company we will wind up having quite high expectations from a sort of safety and soundness and regulatory standpoint if they do decide to go forward with something senator sherrod Brown of Ohio jumped into the fray almost immediately saying there has to be oversight he joined Bloomberg's David Westin earlier Facebook is is too too big and too powerful I don't know that people would have said that two or three or five years ago but the public increasingly believes they're too big and too powerful particularly to engage in a risky Cyprus or a risky cryptocurrency out of working running a cryptocurrency system out of a Swiss bank is a big concern to people so we want to first of all no more second we want some rules around this we know what happened to our banking system 10 years ago and there's this collective amnesia in Washington about what Wall Street did and we also know that the Trump regulators I mean the White House looks like a retreat for Wall Street executives we know that Trump regulators are never is aggressive aimed at at big companies whether they're Wall Street banks or whether they're Silicon Valley is they should be so we want to shine light on this first of all and then figure out what what Facebook's trying to do and then begin to move with the regulators to protect the public's protect the financial system and the protect of the economy especially in the invade the attacks on privacy that we know Facebook is so well known for its Facebook of it up visiting you yet we've heard that they've been talking I guess the Fed that's what chairman Powell said yesterday Sheryl Sandberg said they're talking to people are they up on Capitol Hill have you had a chance to ask any questions they're they have lots of lobbyists lots of lots of lots of people I mean they're they're a very powerful organization by any stretch in the economic marketplace in the political marketplace far too much power with the White House they've got to kind of get in line with Wall Street and others and the tobacco companies and gun lobby at the White House but but it's a concern and I think the public the public already has such skepticism about Facebook when it comes to protecting their privacy because Facebook has shown interest in one thing that's two things market being a bigger player in the market and making more money maybe three things and being powerful in the political system too but we've got to make sure that people's privacy first and foremost is protected and in there there's not much move in Congress to do that yeah the senator as you say there's a lot of questions to ask a lot of information to be garnered but initially do you have any thoughts about who what is the best regulatory scheme for this because sometimes in Washington's you know I've seen you can have multiple agencies and you think you get more regulation that sometimes companies can slip in between the cracks is this a banking issue for the Fed is this a securities issue for the SEC is a competition issue of the FTC who do you think should have primary lead and the regulation oversight here I don't I don't know yet because I don't know enough about what they're trying to do to run their cryptocurrency operation out of the Swiss bank account but I do know that that there is sceptile sceptile of the regulator's because we've seen regulators already weaken the Trump regulators already at the OCC and the Fed and the FDIC and the SEC SEC they've already moved towards weakening rules to keep banks honest particularly the big Wall Street banks so we've got a shred of careful path here we want to first of all I I think the role the media is really important here because all of you I mean to comfort the afflicted and afflict the comfortable all of you shine a light on what Facebook is up to most of the American public doesn't know what running a cryptocurrency operation out of the out of a Swiss bank account means to Americans or means to a financial system or means to the to your the your use of credit card or cash in an American store I mean we we need to know so much more so there all the media it's one of the reasons these hearings that Senator Crapo and I are calling on Facebook to appear at in July are so important so the public really does learn what this is all about and what what threat that this company that never can be it never seems to be big enough never seems to be powerful enough never seems to be rich enough is is up to senator sherrod Brown Facebook has clearly jump-started the crypto regulation debate with the announcement of its digital coin here with more bloomix Naomi Nicks in Washington and why is Washington suddenly kicking and screaming now Naomi when Bitcoin and crypto have been around for years and screaming for regulation that's true it's a good point I think what it indicates is you know Facebook is a powerful company and if they say they're going to do something then I think Washington is going to pay attention to that and unfortunately you know at this time lawmakers have a lot of concerns about Facebook and its operations they're concerned you know they're asking questions about whether you know the American public can really trust Facebook to embark on a project like that given a lot of the data scandals and private see lapses we've seen over the last year meantime representative David Cicilline is one of the folks who has spearheaded this investigation into the tech industry of course this anti trust debate is and it is the house that has officially launched the first investigation what have we learned about what the investigation will focus on in fact representative Sicily made a speech about that investigation just today where he you know said we're really going to look at you know a are these companies being anti-competitive in their conduct are they squash you know are they acquiring their rivals and squashing out the competition and are they doing it at the same time while hurting consumers privacy are they taking you know the proper control of users personal information and he took a really hard tone against Facebook he said you know I Facebook repeatedly makes mistakes and then they the CEO will go on an apology tour he said and then they continue to engage in bad behavior and so we can definitely expect that Facebook whether it's this cryptocurrency or its other activities will be the subject of this investigation well you know the house investigation will yield something very different than whatever the DOJ or the FTC investigates if they actually launch formal investigations what is Cicilline actually expect his investigation to produce so Cicilline is looking you know at a lot of things one of the options on the table is that lawmakers might rewrite antitrust laws one of the things they're concerned about is you know are the laws that we have on the books to protect competition strong enough for enforcers to you know push forward and protect competition all right Naomi Nix for us in Washington Naomi lots more on this debate to come I know you'll be covering it thank you still ahead coming up we will speak to a discount grocer that could hold some competition for Amazon after a splashy public debut another one this is you while slack wasn't the only company to go public today california-based grossly outlet Grocery Outlet jumps as much as 43% after raising close to four hundred million dollars in an above range IPO the discount grocery to Bloomberg sama Chandra about competing with the likes of Walmart and Amazon as well as its plans to grow from three hundred regional stores to forty eight hundred nationally it's been primarily a West Coast story about 320 stores west coast we have a an outpost in Pennsylvania we're really hard-pressed to look across the US and see a town that couldn't support a grocery outlet when you think about the values we offer the service that we have it's delivered through the independent operator model you know we just want to keep growing but it's metered measured about ten percent growth per year is what we're planning and it'll take us a long time to get to that max potential forty eight hundred but it's easy to see and look out that one day this could be a national story now you're saying that there is plenty of room for Grocery Outlet but of course you are going public just as the grocery wars intensified we're talking about the likes of Walmart the likes of Amazon they're the big players there but also a number of other established grocers are you concerned at all about where you will fit in especially if you become national yeah no we're not really worried about where we're gonna fit in we know exactly where we are we're a niche player we plan to stay in the lane that we're in right now you know we've been in the business for a long time and it's been very very competitive Walmart got in Costco came in all the dollar stores all the it's it's very competitive you're right I don't see it as any more competitive than it's been the last sort of five or ten years and our model of savings the way we buy the way we sell is very differentiated from any other retailers so we see a lot of upside for for grocery Alan to continue to add stores now you say your niche is discount you really are very much focused as a discount grocer and but are you concerned at all by the likes of the competition trying to move into that space we know Walmart especially extremely focused on price also Amazon going that way and others we've been seeing prices for a number of grocery items for all so a number of these companies are really trying to push the envelope when it comes to convenience trying to ensure that their customers just go to them for everything and then actually there for customers will not shop around in many different grocers anymore and that could be bad for you yeah you know we think it's really hard to be all things to all people we think it's very hard to offer service selection price convenience all those things at once I think that's a really hard proposition so we'll stay and watch and see how they do but we're gonna be really focused on delivering the values that we have in the stores today the customer service that we have delivered in small convenient to shop boxes and you know really stay focused on on the business that we know and the business that we deliver talk to me about how you might be incorporating technology I've talked to a number of executives that the likes of Walmart are the likes of Kroger and various other grocers and they're all investing in technology to help improve the back office and drive efficiency Grocery Outlet by comparison seems to be rather low tech yeah well I would say we're not showing you all the tech that we're employing we're using all the most modern tools that I think anyone else is because we're small and we're not quite at scale of Walmart we're not investing the billions that they are but we have adequate technology we have really good business insights we're providing all the merchants out in our stores with a lot of data about how they can order better make better decisions we're tracking all the product through the supply chain from start to finish and then lastly I'd say on the digital front we're quite modern in and how we're employing being able to talk to the customers on a one-on-one basis about deals that they care about and things that they want to hear about so you know we're really happy with the technology we've got I'm sure it does not compare to the likes of Walmart but it works really well for grocery outlets you said you're not using machine learning or AI now when it comes to data do you see that as being something that you will move towards as you grow I think the whole world is moving towards it so we will were not fast followers when it comes to technology we watch and see where we're sort of things settle out so I would say yes just no plans to do it right now Eric Limburg their grocery outlets CEO with our own EMA Chandra and that does it for this edition of Bloomberg technology as always you can find us on Twitter you can check us out at technology I'm be sure to follow our global breaking news network tick-tock on Twitter this is Bloomberg you

6 Comments

  1. J M said:

    Just had to throw in the BS diversity virtue signal there didn't you? And instantly I'm reminded its Bloomberg with an agenda.

    June 28, 2019
    Reply
  2. crypto-world said:

    regulamentation to protect the ppl??? hipocrit "!! protect bancks and fiat color papers …lololol..centralize cryptos?? good luck !!!

    June 28, 2019
    Reply
  3. Arturo A said:

    Emily please resign and go work for a Chienes company please. China is not wellcome in america anymore

    June 28, 2019
    Reply
  4. Haseeb Electronics Chowk Azam said:

    Very excellent video.

    June 28, 2019
    Reply
  5. Lily Grozeva said:

    For the love of God, who cares for news about last week! If you are uploading this – upload on time. Is this some new Youtube/social media publishing calendar or strategy, or other non sense! Upload on time or don't upload at all.

    June 28, 2019
    Reply
  6. Sunita pk said:

    Good
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    ✌️✌️👍
    👌👌👌

    June 28, 2019
    Reply

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