Augmented and virtual reality. And rapid climate adaptation. Billionaire bill gates wants to help invest nearly 2 trillion over the next decade to help the world become more resilient. His thoughts on and potential solutions for Climate Change. For wework, it was the roadshow that wasnt this week. One of the most anticipated public debuts of the year, it is now postponed until october. The shared Office Space Provider is looking for time to calm investor doubts about its dropping valuation, governance problems, and financials. Remember that, at one point, this was supposed to be a 47 billion company. That number is now 15 billion and could be perhaps even smaller. Joining me to discuss this all was phil haslett, cofounder and chief revenue officer at equityzen, a secondary marketplace for preipo shares and bloombergs crystal tse. Crystal they have a lot to address before they can go out to the investors and ask them for their money. Like you said, they were looking for a 47 billion valuation, and now we are hearing it could be as low as 12 billion to 15 billion. You know, they have actually made a lot of changes to Corporate Governance, but investors are really looking at valuations, whether they will performance, financials, and whether more changes are needed to the Corporate Governance structure for them to be convinced about the valuation they want to get. Taylor phil, this morning on the open, they spoke with gene munster, who cofounded loup ventures. He had some comments as related to the valuation part of wework. Take a listen. The valuation is really a wakeup call to private investors that the Public Markets are holding them accountable. And the specific reason i think this report reflected that was the amount of cash burn what is a consistent theme and your setup here addressed this companies that are losing a lot of money, not surprising, are being held to lower valuations. In the case of wework, it is 1. 5 billion over the last year, more than what tesla lost, to put that in perspective. Taylor phil, react to those 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 of a mix of lyft, uber, and wework planning to come public in 2019, i think we have seen really the largest losing companies coming out of the preipo tech space. At equityzen, these types of groups of companies, we also see plenty of companies that are burning only 100 million, 200 million in cash. Wework is an exception to the norm, but writing off 37 billion of value over a period of three to four weeks will certainly catch the attention of a lot of Capital Venture investors and a lot of Public Market investors. Taylor we can joke all day long 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 do you value this company . Phil sure. With wework, the first thing we theed at is trying to find multiples of revenue. The first thing we found, some of their competitors were trading at 1 or 1. 5 times their revenue. We work earned 2 billion in revenue in 2018, so to come out at that evaluation seemed ludicrous. The toughest thing for wework is trying to explain and defend itself as a Technology Company where in reality it is really a Real Estate Company that happens to have some technology bells and whistles. So i think this is really a big wakeup call for them to recalibrate those expectations maybe in q4 or may be in 2020. Maybe a little bit later in 2020. Taylor talk to me more about that valuation. What did the private market see that the Public Markets are missing . Phil one of the interesting things we saw at equityzen, where we see a lot of preipo secondary flow before companies go public, is there actually was not that much interest for wework, particularly at the valuations that had obtained from softbank and other investors in primary capital raises. We saw much healthier markets for companies that went public recently in 2018 and 2019, Companies Like docusign, slack, that were little bit more popular with investors. We would have expected to see something similar for a company like wework because the brand is so ubiquitous. However, there was a little bit of hesitation from those investors at that lofty valuation. When you get north of 20 billion in valuation, you are not talking about hundreds of unicorns anymore. The number of decacorns or whatever unit you want to call it drops precipitously. In particular, when you have that kind of valuation coupled with losses north of 2 billion, it was kind of a recipe for disaster here. One thing i think about is we have been in very much a bull market not only in public stocks but also 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. And i think, when you have this type of headline, a cut in valuation will really start to shift those types of numbers over to investors that are going to start to ask for more Corporate Governance, more reasonable valuations, and other parts within the cap structure that they will get more comfortable with. Taylor crystal, when we were talking about bondholders, you mentioned that a 6 billion financing was contingent upon raising 3 billion in that ipo. Assuming that doesnt happen, when does wework need to get more cash and where do they get it . Crystal i think the very simple answer to that question is that always need to get more cash as soon as possible. If, say, the ipo does not happen by the end of the year, they may look into tapping through softbank to get more funding. There were some talks about softbank being willing to put in another couple hundred Million Dollars into the company, but that would not move the needle. They definitely want to do an ipo to recapitalize. Taylor phil, quickly here, 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 or 3. 5 billion of cash available to them, things could get really messy here, starting in q1 of 2020. Particularly if lenders have promised to provide them capital if they raise their ipo before 2019. They will put them in this tight bind. If i were them, i would spend the next quarter really tightening the belt, trying to overhaul spending, show great numbers after q4, try to renegotiate with some of the banks and list in q1. Taylor that was phil haslett, cofounder and chief revenue officer at equityzen and bloombergs crystal tse. Apple told the European Union court this week it was unfairly painted as a tax dodger. In luxembourg, an apple lawyer says that in fact, that the company is the Worlds Largest taxpayer. Apple is urging the e. U. General court to overturn an order from the European Commission that it pay a record 14 billion in back taxes to ireland. Bloombergs maria tadeo filed this report from luxembourg. Maria apple is coming facetoface with european regulators in the biggest tax case in the world. The company has appealed a 13 billion euro fine dictated by the European Commission 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 was not the case and has appealed that decision. And if you were hoping to get a sorry moment from the company, that was certainly not the case. Apple said it is the company that pays the most taxes in the world. The actually claimed the decision from the europeans lacked any logic or sense, and they also believe the numbers here were tweaked in a way that presented apple in a bad light in front of the public. Essentially, the goal was to portray the company as paying no taxes. When you look at the european side to the story, they will tell you they still believe they are right. They still believe it is pretty obvious by now that apple has set out a tax structure in europe to pay the least amount possible. And they do believe that if the arguments are validated and they are vindicated by the court, they can continue to get tough on American Tech Companies to make them pay more in europe. Of course, those tax cases happening as tensions continue to play out between the United States of america and europe over big american tech. The president of the United States of america, donald trump, has said many times that this is only happening because europeans cannot compete on the innovation so they compete on the taxation. When it comes to the e. U. , they deny this is the case. They just want everyone to pay their fair share. Taylor that was maria tadeo from luxembourg. Coming up, part of our exclusive interview with ibm ceo Ginni Rometty. Why she thinks blockchain is all about trust. And if you like bloomberg news, check us out on the radio. You can listen on the bloomberg app, bloomberg. Com, and 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 further realize the business potential of the next generation technology. The realworld application of quantum and blockchain is something that bloombergs Caroline Hyde covered when she sat down with ibm ceo Ginni Rometty in this exclusive interview. Ginni we look at the future, technology is coming. Were all about applying them to business, but we build some of the worlds leading technologies together here. Yes, cloud and ai, everyone talks about that today. Artificial intelligence and cloud. Much more to still be done there, by the way, but we will park those for a minute. The next two blockchain and quantum. Now, as often is the case with new technologies, people overestimate them in the beginning and then underestimate them in the long term, as it is said. But blockchain if you said, ginni, what is one word you would associate with blockchain . I would say trust. Crypto that is a use. Put that aside. It even have to use the right d of blockchain, which today. What blockchain should do it will put trust between parties who dont even know each other. It would make trusted transactions. And it will do what the internet did for communication between lots of parties. And so a great example, if i can, on trust and blockchain because 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. So think of a ledger, right . So why do we each keep our own checking accounts . Do we trust what the bank says . Today, we probably do. In the old days, we would each balance our checkbooks and the like. If i said to you hate, you have 100, you would say hey, ill check my own notes here. So it is the same idea. And a big application is food safety. One out of ten people get sick 600 Million People all over the world get sick from food safety, its a big problem. And it costs a lot of money. You have seen it with recalls on the spinach and the like. We started something called food trust. Think about this on walmart, carrefour these are competitors out in the world all being willing to join on. Nestle, unilever, driscoll strawberries and the like what they are doing is saying no, no, we will all put our data on here about what row on the farm this came from. So from farm to fork. So when there is an issue, and my goodness, we have done millions and millions of transactions already through this, i can pinpoint where the bad spinach is versus call it all back. Because a third of food is wasted in this world. Can you believe it . And so that, to me, is one. And quantum. To jump over to quantum. Just like with blockchain, i said think about the word trust, quantum will solve problems today that traditional computers, no matter how fast they are, cannot solve. Because traditional computers are 1s and 0s. We all learned about that, a bit in a computer. Quantum bits have infinite states. They are for the kinds of problems that today, even if you have the best supercomputer, you could never model it. It would run forever. I am exaggerating a little bit on that. So lets take wetlands in biology as an example. It is an approximation. Why do they still do live they cant get an exact simulation done. Quantum will do is things like the very first things will be drug discovery, material sciences. Risk management, logistics. These are incredibly different. If you were to want to truly model a molecule of caffeine, you would need a computer a 10th the size of this planet. If you actually wanted the actual simulation. So we are ready with our quantum systems. We have made commercial ones available through the cloud. Because they operate at colder than outer space, that is what quantum is. Things like youve got daimler working on new materials like batteries and cars. Jpmorgan is working on things like how to price different kinds of options. How to look at risk differently. And drug discovery. So we have got a huge network of clients, because now is the time to start to get used to it. Now you say the word trust. I would add only one other side of quantum. There is a dark side. One dark side of it is that quantum can break traditional encryption that has protected most of the world. We announced to some new systems announced some new systems last night that are prepared for quantum already. And already, our security that is in them, to secure what is inside our systems and run all of those missioncritical systems are quantumsafe. And so we have been equally building something called lata sonography, which is lattice the talk murphy oftice photography, a kind encryption that quantum cannot break. In this, to me, goes back to responsible stewardship. If im going to build a tool that is that powerful, i owe it to society to make sure that i also address the downside. So we put as much effort into that to then prevent that thing from being that powerful. Both sides. 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 some user audio clips from its inhome video device portal. We hear from facebooks Vice President for augmented and virtual reality, andrew bosworth. And later, corporate ventures Data Analytics company splunk. Officially enters the vc world. We will get details with ceo doug merritt. This is bloomberg. Taylor facebook confirmed this week it will resume collecting and transcribing some user audio clips from its inhome video device portal. I spoke to facebooks Vice President for augmented and virtual reality, andrew bosworth, at the launch of a new generation of portal devices. Bosworth overseas hardware and devices that facebook. Take a listen. Andrew we are so excited about our new products. We have a 10 inch and an eight inch hd screen, and they are really oriented towards connecting people with the ones they love the most who are not nearby through video calling. These were designed to look like picture frames, so they can fit into anyones home as naturally as if they were picture frames. They will even show pictures when they are not in use. Taylor and another really cool thing that you guys are launching is the tv portal as well. Tell me about that. Andrew yeah. Portal tv takes advantage of the biggest screen in most people s homes, the tv, and turns it into a really immersive video calling device. Taylor one thing that really stuck out to me was the price point, which at about 149, feels like youre really trying to push into what is already a competitive space. You have roku, appletv. How do you stand out . Andrew we think the most important thing people do is connect with each other. All of these devices are not focused on that. They are focused on connecting you to content, which is great and useful. But when it comes to connecting with the people you care about, that is what was missing. So with portal, you can use facebook, you can use messenger, you can use whatsapp to connect with the people you care most about in a rich, immersive way with cameras that follow you around the room and are handsfree, and you and your kids can connect with your grandparents or your friends without having to worry about holding a phone and your arm getting tired and trying to fit everyone into the shot. Taylor you mentioned cameras. I have to bring up, on the portal, there was that button where you could turn the camera off. Privacy has been a huge concern. Was that the focal point of making sure it was very easy for me to turn the camera on and off . Andrew yeah. When you are introducing new devices for peoples homes people have never experienced anything like portal. It has a camera and a microphone. We wanted to make sure everyone felt really comfortable and in control of that experience. So these generation of portals do not just have controls to turn on and off the camera and microphone, they have integrated shutters that cover the camera so you can see that it is not seeing you. Taylor what about the microphones . Andrew the microphones have an active light when they are disabled so you know they are disabled. Alternatively, you can leave it on if you want to use assistance like alexa or hey, portal. Taylor so if i say, hey, portal, am i still being recorded . Andrew if the device heres the wake word hey, portal, it sends the recording of the voice clip up to the servers to get an answer back to you. And if you have storage enabled, which is the default, we may review the voice recordings to improve the quality over time. But you can also disable those on the device itself or your facebook activity log. Taylor you know, privacy, data, all of that has been a big focal point of facebook. Is now the right time to be launching new products where there is a camera, where there is a microphone . Because right now there is so much scrutiny and arguably the least amount of trust in facebook.