Adaptation. Imate bill gates wants to help invest nearly 2 trillion to help the world become more resilient. His thoughts on and dental solutions for Climate Change potential solutions for Climate Change. Wework was the roadshow that wasnt. Of the most anticipated debuts of the year is postponed until october. Theyre looking for time to calm investor doubts about its dropping valuation, governance problems and financials. Point, this was supposed to be a 47 billion company. That number is now 15 billion and could be even smaller. Joining me to discuss this was the cofounder and chief revenue en,icer at equity is an z a marketplace for preipo shares. Lot to address before they can go out to the investors and ask them for their they were looking for 47 billion and now we are hearing it could be as low as 12 billion to 15 billion. They have made a lot of changes to corporate governance, but investors are looking at valuations, whether they will improve financials, and whether more is needed for them to be convinced about the valuation they want to get. Taylor this morning, they spoke with the cofounder of loop ventures. I had a comments as it related to the valuation. Take a listen. The valuation is really a wakeup call to private investors that the Public Markets are holding them accountable. The specific reason i think this report reflected that was the aount of cash burn, what is consistent theme and your setup addressed this. Companies are losing a lot of money and are being held to lower valuations. In the case of a we work, it is even more than what tesla lost to put that in perspective. Taylor react to these comments on valuation. Phil i would say wework is kind of in a space of its own. Having lost 2 billion in 2018 i think a mix of lyft, uber, and wework planning to come public in 2019, i think we are seeing the most losing companies. Amongst these types of groups of companies, we also see plenty of companies that are burning only 100 million, 200 million in cash. We work is an exception to the norm, but writing off 37 billion of value over a period of 34 weeks will catch the attention of a lot of capital and venture investors. Taylor we can joke about how you Value Company using a discounted cash flow to evaluate a company that does not have cash flows. But on a serious note, how you value this company . Sure. The first thing we started by looking at is multiples of revenue. The first thing we found, they were trading at one or 1. 5 times revenue. We work earned revenue in 2018, such come out at that evaluation so to come out at that evaluation seemed ludicrous. I think the biggest thing for wework is trying to explain itself as a Technology Company when it is really a Real Estate Company that has some technology bells and whistles. So i think this is a big wakeup call to recalibrate those expectations. Taylor talk to me more about that valuation. What did the private market see that the Public Markets are missing . Was thating we saw there actually wasnt that much interest for wework, particularly at the valuations it had obtained. We saw much healthier markets for companies that went public recently, Companies Like docusign, slack, that were little bit more popular with investors. We would have expected to see something similar for we work because the brand is so ubiquitous. However, there was hesitation. If you get north of 20 billion in valuation, you are not talking about hundreds of unicorns anymore. Decacorns drops precipitously and when you have that valuation coupled with losses, it was kind of a recipe for disaster. We have been in very much a bull market not only in public stocks but in private companies and that has led to founderfriendly terms on how they raise capital. At some point, you are going to have the pendulum swing. I think when you have this kind of headline, a cut in valuation will shift those numbers over to investors that will ask for more corporate governance, reasonable valuations, and other parts within the cap structure that they feel more comfortable with. Taylor when we were talking about bondholders, you mentioned that 6 billion financing was contingent upon raising 3 billion in that ipo. Assuming that doesnt happen, when does we work get more cash and where . Crystal i think the simple answer is they always need to get more cash as soon as possible. If the ipo does not happen by the end of the year, they may look into tapping into softbank to get more funding. There were some talks about softbank being willing to put in another couple hundred Million Dollars into the country. But that would not move the needle. They definitely want to do an ipo to recapitalize. Taylor quickly, any ideas on when is the drop dead deadline for raising more cash . Phil i have to think they want to push this over to 2020 but with only about 3 billion of cash available to them, things could get really messy starting in q1 of 2020. 2021. Rly with particularly with some lenders have promised capital if they raise their ipo before 2019. If i were them, i would spend the next quarter really tightening the belt, trying to overhaul spending, negotiate with some of the banks. Taylor that was phil haslett tse. Loombergs crystal in luxembourg, and apple lawyer says that the company is the Worlds Largest taxpayer. They are urging the General Court to overturn an order from the European Commission that it pay a record of 13 billion in back taxes to ireland. Maria tadeo filed this report from luxembourg. Apple is coming facetoface with european regulators and the in the biggest tax case in the world. The company has appealed a 13 billion euro fine imposed in 2016. The idea behind it according to the europeans is that apple received special tax treatment from the Irish Government which allowed the company to pay artificially low taxes. Apple says this is not the case and has appealed. If you are hoping to get a sorry moment from the company, that was certainly not the case. Apple said they pay the most tax in the world and claimed the decision from the europeans lacked any logic or sense, and they believe that the numbers were tweaked in a way that presented apple in a bad light. Essentially, the goal was to portray the company adds paying as paying no taxes. If you look at the european side, they tell you that they still believe they are right, that it is pretty obvious that apple has set out a tech structure in europe to pay the least amount possible. They do believe, if the arguments are validated or vindicated by the courts, they can continue to get tough on American Tech Companies to make them pay more in europe. Of course, these cases are happening as tensions continue to play out between the United States and europe over big american tech. The president of the United States donald trump has said many times that this is only happen because they cannot compete on the innovation, so they must compete on the taxation. What comes to the year, they deny this is the case. They just want everyone to pay their fair share. Taylor coming up, part of our exclusive interview with ibm ceo ibms ceo. Why she thinks blockchain is all about trust. And if you like bloomberg news, check us out on the radio, on the app, or in the u. S. On sirius xm. This is bloomberg. Taylor ibm announced wednesday it would open the First QuantumComputation Center in an effort to expand its fleet of Quantum Computers and fully realize the business potential of the technology. The realworld application is something that Caroline Hyde covered when she spoke down with ibm ceo ginni rometty. Ginni why look at the future, technology is coming. Were all about applying them to business but we build some of the worlds leading technologies here. Cloud and ai, everyone talks about that. To be done, but we will park those for a minute. The next two blockchain and quantum. Thele overestimate them in beginning and then underestimate them in the long term. Asked mechain, if you one word i would associate with blockchain, i would say trust. Crypto is a use for that aside. A use, put that aside. Blockchain come it should put trust between parties who dont even know each other. And it would do what the internet did for communication between lots of parties. So a great example on trust, what it allows you to do is you and i can share a transaction together. I dont have see anything you dont want me to see. And once the transaction is completed, it cannot be erased. Why do we each keep our own checking accounts . The old days, we would each balance our checkbooks and the like. If i said to you a hundred dollars i would check my own notes. So is the same idea. It is the same idea. Big application is sickness. Food safety. Getle all over the world sick from food safety, its a big problem. We started something called food trust. Think about this on walmart, carrefour, competitors all being willing to join. , what, unilever, driscoll they are saying is we will all put our data on here about what row on the farm this came from. ,o that when there is an issue and my goodness, we have done millions of transactions through this, i can pinpoint where the bad spinach is versus call all of it back. Because a third of food is wasted in this world. To me, that is one. And quantum, jumping over. Think about the word trust, quantum will solve problems that traditional computers today, no matter how fast they are, caps off. Caps off. Cannot solve. Quantum bits have infinite states. They are for the kinds of problems that come up today, you could never model it. It would run forever. I am exaggerating a little bit. Theres a reason there are wetlands in biology. It is an approximation. They cant get an exact simulation done. What quantum will do is things like Drug Discovery and material sciences. Risk management, logistics. A truewere to watch model of caffeine, you need a computer a 10th the size of this planet. If you wanted an actual simulation. So we are ready with our quantum systems. We have made commercial ones available through the cloud. Daimler working on new materials like batteries in cars. Jpmorgan is working on things like pricing different options and risk. Drug discovery. We have got a huge network of clients and now is the time to get used to it. Side,d add one other there is a dark side. One dark side is that quantum can break traditional encryption that has protected most of the world. We announced some new systems last night that are prepared for quantum already. Security thatur runs all of those missioncritical systems are quantumsafe. So we have been building something called lattice kind ofphy, a encryption that quantum cannot break. If im going to build a tool that is that powerful, i o it to society to make sure that i also address the downside. So we put effort into preventing it from being that powerful. Taylor that was part of bloombergs exclusive interview with ibm ceo ginni rometty. And coming up, listening in. Facebook confirms it will resume collecting and transcribing user audio clips from its inhome video devices. We hear from facebooks Vice President for augmented reality. And later, corporate ventures Data Analytics company slumps. We get details with the ceo. This is bloomberg. Taylor facebook confirmed it will resume collecting and subscribing transcribing audio clips. I spoke to the Vice President for augmented and Virtual Reality at the launch of a new generation of portal bull portable devices. Take a listen. We are so excited about our new products. Screens oriented towards connecting people with the ones they love the most through video calling. To look likesigned picture frames, so they can fit in as naturally as if they were picture frames. Taylor another cool thing you are launching is the tv portal. Tell me about that. Ofportal tv takes advantage the biggest screen and peoples homes and turns it into an immersive video calling device. Taylor one thing that stuck out to me was the price point which feels like you are really trying to push into a competitive space. Ow do you stand out all of these devices are focused on connecting you content of which is great and useful. What comes to connecting with the people you care about, that is what was missing. With portal, you can use toebook messenger, whatsapp connect in a rich, immersive way with cameras the folly around the world and our handsfree that follow you around the room and our handsfree. Taylor you mentioned cameras. I have to mention there was that button where you could turn the camera off. Privacy has been a huge concern. Was that the focal point . Yeah, when you are introducing new devices, people have never experienced anything like portal. We wanted to make sure they were comfortable. So these generations dont have controls, they have integrated shutters that cover the camera see that it is not seeing you. Taylor what about the microphones . They have a light when disabled so that you know they are disabled. Alternatively, you can leave it on if you want to use assistance like alexa. Taylor if i say, hey, portal, and i being reported . It sends a reporting or voice clip up to the servers to get an answer back to you. If you have it enabled, we may renew the voice recordings to improve the quality. It sends a reportingbut you cae on the device itself or your facebook activity log. Taylor privacy data has been a big focal point of facebook. Is now the right time to be launching new products where there is a camera or microphone when there is so much of scrutiny and arguably the least amount of trust and facebook . In facebook . It is the right time. Essence ofis the what facebook does and thats what these devices are centered around. We have taken every precaution we can to make sure people feel comfortable with the devices in their homes. When they have that experience of connecting with somebody that they care about who does not live nearby, they will experience something special. Time when comes at a antitrust scrutiny is at the highest. When you think of facebook, a lot of people think of apps and software. Is now the right time to expand and go into tech, homes, and tv . This category is so new. Smart displays have only been in the market for two or three years. It is early and Everyone Wants to experiment. It is not very big, but it is growing yearoveryear. If people decided they are excited about video calling, and we think they will be, portal will be a great fit for them. Taylor joining me to discuss further is kurt wagner who covers facebook. I wanted to talk about the privacy issues that are going on. Frankly, that opt out button is not an opt in. Does that go far enough to quell our concerns . The big issue we have seen so far with the transcription happenings is that people just did not know about it. People were not aware of the audio was being transcribed at all. At the very least, facebook is at least acknowledging this. They made it part of the presentation with the press so while it is not necessarily important, you think they might make this the default. At the same time, they are technology and in a way that none of these companies were doing. Taylor what do you make of launching in your living room cameras and microphones when a trust in the company is at an alltime low . You asked about this, i asked them this, it seems crazy. Are not only adding a device to your home, but one that had a camera or microphone on it. At the same time, when is the right time . A year ago certainly would not have been any better, is a year from now any better . I understand why they are pushing forward his you dont know when will be the quote right time. But more than any other company than they have been dealing with this privacy and trust issue. It is hard to get into someones living room when people dont trust you. Taylor this is a competitive space. You have comcast making an announcement and Companies Like roku, name it. This is very competitive. How does facebook differentiate themselves . They were clear, they set the they were clear, they set the differentiator is the video call. This a portal might be used for a facetime call, but through their hardware. And in some cases, through the tv set. They think that differentiates them from all of the others. They kind of said, listen, there is a ton of places to go to do that stuff. The differentiator is at the video camera. I think it would make sense if they had both but that is what they are leaning into. Taylor when would we see facebook come out with a version of google home or alexa . To the salon. Alk you can either talk through alexa or you can say hey, portal , waking it up for basic commands or requests. Those are the things they are collecting and transcribing. But the bigger question is when will they have their own assistant . Something that would give you a bunch of different options. Right now, they dont have any plans to remove alexa. But clearly, they are Getting Started on that. Up, what does a 17 billion Data Analytics company thats next. And we are Live Streaming on twitter. Check us out on technology and follow our global breaking news network at tictoc on twitter. This is bloomberg. Best ofme back to the bloomberg technology. I am taylor riggs. Companies may have flashed wednesday as they entered the Venture Capital world. The first is 100 million. It is an innovation fund, while the other is 50 million and it is a social impact fund. Doug merritt touted the move. Corporate classic fun. We are super passionate about data and the power that data can bring to solve the worlds problems. Those two funds are constructed to help invest in companies that have more of a commercial purpose on using data to solve different issues from health care to consumer issues to privacy issues. Leveraging this platform, we are opening to investing outside. The other one is a social fun. The transformation from an industrial economy to another is dislocating. Aree are organizations that trying to help from reskilling the population all the way through to different beneficial programs and areas of Human Trafficking that would