Speak with the ceo. Ebays ceo steps down from his role. Who will help invigorate the floundering company . We begin with what was a historic week in washington. On tuesday, nancy pelosi formally opened an impeachment inquiry on President Trump. The investigation focuses on a phone call President Trump had with the president of ukraine and whether he betrayed the nations security is seeking to enlist a foreign power to tarnish a rival for his own political gain. In this case, the son of former Vice President joe biden. ,hile not tech related per se an Interesting Company did show up in the partial transcript of the call. That company, crowd strike. I spoke with the ceo about the mention of his company in that president ial phone call. The only reaction i have is that in 2016, we actually. Erformed this investigation we worked closely with the fbi and turned over all the forensic data, and we stand by the conclusions we have and they were backed up by the intelligence community. I think a lot of what we have done has already been said, and after that, you know, i do not understand where we are with things. Taylor fold this forward, then, into broader comments about where you think your company fits into general election security. We are approaching 2020. George election security, i think, is an important topic. If we think about how electronically connected we are with Voting Machines and we are past the hanging chads of yesteryear, i hope, but when we so when we think about the ability to protect those systems, it is incredibly important for our democracy as well as the integrity of the election itself, so its a big topic. Taylor what is your role in working with, lets say, federal agencies like the fbi, or with the dnc or the rnc . Where do you see yourself playing a role . We are certainly not partisan, so we help all sides of the aisle and work closely with a lot of state, local, and federal Government Agencies to make sure they have the best security in place going forward. Taylor i could do Financial Analysis all day long, so lets dig into some of the earnings and what we can expect from you. Lets go through the income statement. Talk to me about topline growth. Im looking here, really solid, triple digits. Expected to slow maybe a little bit in the coming years. Where do you see sources of future growth . One of the things when you look at crowdstrike is its ability to cross sell modules. That is a key element of our success. When we started the company, we looked at Companies Like salesforce and thought there should be a pillar of Cloud Computing for cybersecurity. The security cloud had not been done before. Part of our success is being able to collect data, security telemetry at scale and be able to create new modules and be able to cross sell that into our Customer Base. If you look into our most recent earnings report, about 50 of our customers have four or more of these modules. We have 10 of them today. That has worked out in our favor in terms of being able to go back to our Customer Base in addition to getting new customers. Taylor has this shift to the cloud provided a lot of future opportunities . Absolutely. I think thats one of the areas where we have seen a model we have created as a true native architecture be embraced. Its one of the reasons we have been so successful. Oint011, and point end p security delivered from the cloud was so popular. It is not just about endpoints and laptops and servers. It is really about protecting workloads, and those could be on premise or in a cloud like amazon or the google cloud, and that is really important. You have to be able to protect these wherever they are at. Taylor when we look at the bottom line, not profitable yet, but losses are slowing. What is the pressure to be profitable . The way we look at it is first, what are the Unit Economics . We have really good Unit Economics, and as some of the legacy i call them fossilized vendors get acquired, change their business model, try to move to the cloud, which is difficult for them to do, we think it is a great opportunity to go out and get new customers. We added 730 net new customers last quarter, which is over double from the year before. As long as we continue to increase the rate of adoption of our technology, we will continue to invest there, but the amount of money we spend on sales and marketing from a unit Economic Perspective is right where we want it to be. In fact, it is on the upward end up being very efficient. If you look across the companies in general. Taylor there has been a lot of market consolidation. Does consolidation help or hurt you . I think it is a net positive for us and a Natural Evolution of this market. If you look at what happened in salesforce automation, the natural comment around that is the fact that it was hard to shift from a perpetual model of legacy architecture into something that is cloudbased and truly subscriptionbased. A lot of the companies you talked about were having a hard time making the transition in the cloud architecture as well as their overall revenue model and had these mixed subscription models, which is very difficult. Taylor you ipoed in june. It has been a tough year for some companies that maybe are not profitable, valuations still too high. Any advice you can give on how to ride the wave . First, you have to start with a Great Company. I think the elements of a Great Company to ride that wave is that they have something to do with the cloud. They have a subscription revenue model. Higher retention rates with a continue adding new modules or bits. And i think those are elements that make you successful. I think the market is smart enough to figure out what companies have great earnings potential in the future, and those are the requisite characteristics we have seen, and we are fortunate enough to fall into that category. Taylor that was crowd strike ceo george kurtz. Coming up, a tough ride for pellet gun peloton. On the nasdaq nearly 7 below the ipo price. We hear from the cfo. And if you like bloomberg news, check us out on the radio. This is bloomberg. Taylor tech ipos were in the news this week. Nasdaq,debuted at dropping nearly 7 after raising 1. 6 billion. Kelly sat down with ceo john foley shortly after its debut. We are playing the long game. We see this as literally building millions and millions of subscribers around the globe in the coming years. Now we have the money to do that. We are fully funded after todays primary, so we are feeling confident. When you think about the last couple of days and weeks, you mentioned the market. I mean, we work is on everybodys mind. It is a tricky ipo market, to say the least. Do you have a sense of where the miscalculation was . If there was one . I tell you, jason, this is my eighth fundraiser for peloton. People either see it or they dont. There are believers and nonbelievers. Those who believe, who have invested in peloton, they have been very, very happy, and they and we will continue to delight the Capital Partners who invest in us. You mention fully funded. What will you do with that money . What does expansion look like . We are building a 50 million streaming Television Studio in new york city, another in london, where we will hire Foreign Language instructors to stream to our german market, which we open in 60 days. We are investing in new content, new verticals, the treadmill market, u. K. , germany. We are in investment mode. Someone earlier today was saying you are losing money. It is semantics, we are investing money and feel good about what we are doing. How do you feel about the Consumer Market . You sell a very highend product. There is some volatility we are expensing. What do you hear back from your customers, and more importantly, your potential customers about their willingness to write a big check or charge something pretty big on the credit card . One of the most important things we think about at peloton is affordability. If you have a bike and you and your partner ride it, it is insane value visavis anything else. Interestingly, you wrote the book on fitness, so you know this, but fitness has been a recessionproof category for the last 15 years. More dollars went into fitness in 2008 and 2009, so there has been secular growth for the last 15 years and if we crate the create the best value in fitness, on average, our bikes are ridden 12 to 14 times a month, divided by 39, a couple of dollars for a workout, it is obviously orders of magnitude better than going to the boutique fitness world, and we will show over time it is better value than going to the gym. You have described the company in the s1 and the roadshow as all sorts of things, a technology company, media company, it obviously does a lot more. Where will you be primarily spending money . Is this a content push coming . I would say that at our core, we cannot Hire Software engineers fast enough. We are a software company, tech company at our core. We had to learn our way into media, now we have 13 Emmy Awardwinning producers. We just hired this fantastic new content operator. Mostill build one of the special media divisions in any category. But to your question, the investment will go into technology. We will open retail stores, logistics, more markets, but certainly, Software Engineering is at our core. Taylor that was the peloton ceo john foley. With bloombergs jason kelly. This week brought pretty of turbulence to wework. Cofounder adam neumann stepped down from his role on tuesday to salvage the planned ipo. The copresident and chief Financial Officer and sebastian cunningham, the vicechairman, were named coceos. Shakeup. Ed the i think the writing was on the wall. This is where the momentum was. My reaction is to think of this in three chapters. There is the past and things that were very good and things around the leadership that were not good. The leadership had a lot of the power that built the company. And ihere is the present have to applaud everybody involved in how smooth this is going. It was just a few weeks ago this started and they already have some replacements, temporary or permanent. Adam, the way he stepped aside, was respectable. So i credit the company for that. Movers erent from ubers. Then there is the question about the future. To circle back and talk about the timing, i think it is unlikely that anything happens in that october frame. Want the Senior Management to have a handle on the business and that simply takes time. Guess, itoing to would probably be early next year they want to maximize the valuation. They could do something more quickly, but Equity Investors would factor that in with an even lower valuation. Move but we are still a ways away from an idea an ipo. Taylor i could arguably give you a victory lap. Wroted i spoke after you a smart but scathing report about their financials. What changed for you today . What we found ourselves saying about the situation is wework suffered from things that are not good news from a company. Losses, thenificant second is opacity making it difficult to analyze. The third is arrogance. There are a lot of things to put in the bucket of arrogance, the 20 votes per share, the related transactions, a number of things. The only thing that changed today is possibly the third bucket, arrogance. But losses and opacity remain. Watch this play out over the last couple of weeks, among our customer group, a month ago i was not hearing anyone saying adam is the problem. Even a week ago, i was not hearing that. Buthis is a new solution im not sure it addresses some of the problems people have had most significantly about handing over three or 4 billion to this company. In jean, i fully back fold you back in as an analyst. A Corporate Governance change does not change the top or bottom line fundamentals. Is that still the biggest concern . And i know that is not consensus thinking. It is a concern if investors dont know that. They understand this Business Needs a bunch of cash. The leadership is really critical here. It sets the tone. Think about all the leaders of these tech companies. It is almost like the performance is embodied in of the leader. I think it is critical. I dont think the cash burn is the critical issue for investors, i think they understand that. If you want to think about upsides to the story longerterm , how they spend money will be important and how they scale the business. But this is a little more meaningful. If they can really change some of the. That. Talk about the change at the top, that is a really hard thing to do. To change the culture of the business to be more judicious. That is why i think it will take longer to get public. There will be some teething and departures around this before they are responsible. Talk to me about the big risk of removing that visionary leader. We talked about elon musk, who is associated with tesla. Mark zuckerberg is associated with facebook. And theirbout uber leadership changes. What is the risk you move and the risk of goes with it . It is probably the biggest risk. Thats the catch22, there needed to be change. But to answer if it is a material risk, culture is critical. As an equity analyst, i always focus on balance sheets. As a private investor and venture capitalist, i realize with public companies, culture is absolutely critical and cannot be overstated enough. If i had the hefty responsibility of stepping in and in some capacity, that would be my number one concern, not to lose the vision. Up, amazoning focuses on Alexa Privacy as it unveils new gadgets in seattle. We have the details of their newest product lineup next. This is bloomberg. Taylor on wednesday, amazon introduced to the echo studio, a high and speaker to rival the apple home pod and googles home of max. It looks similar to the home pod , making it noticeably larger than any existing echo. And is available for preorder. I caught up with the Vice President of devices and services to ask about the changes. We have taken a different take on how audio is developed. Inhave five speakers built that gives a sense of music surrounding you kind of how the artist wants the music to be portrayed, and we think that is an industry first, and we are looking forward to seeing how customers like it. Taylor you are taking on big rivals. Sonos, apple, google. Are you happy with your penetration rate . David we think this isnt a winnertakeall game, first of all. You mentioned one of those companies who is a great partner of ours in sonos. They are great partners. We think customers want selection. That has always been the case with amazon. We offer lots of selection and choice. We want to get that same choice, whether it is sonos or our products, and we are looking forward to seeing what customers think and whether they like it. Taylor the pricing is interesting to me. 199 versus the homepod at 299. It feels like everyone is really trying to be competitive here on pricing. Are you worried that it is a race to zero . Dave i dont think so. We try to price our products with as much value as we possibly can. We have always had the philosophy to price our products since the first day with kindle as to price our products in a way that we want to make money as amazon in the device and Services Business and customers use the products, not when they buy them. If we give them good value and the service behind it is really compelling to the customer, they will use it for years and years. We think the price points we are at now are great. Taylor i was chuckling a little bit when the headline cross that said alexa will now tell when im frustrated with her. How will she be able to tell that, and then what does she do . Dave we built a pretty deep machinelearning model to be able to recognize when customers are frustrated, and it is important to realize we are not checking whether you are frustrated with the world around you or detecting that or somebody in your family. We are only detecting when you are frustrated with alexa herself. And when that happens, we want to try to teach alexa to autocorrect herself. The example i showed was a music example. I asked to play one track. She misunderstood. I got frustrated. She corrected herself. We think it will be valuable on the path as these digital systems, alexa specifically, become more conversational over time. Taylor when it comes to privacy controls, what new privacy controls have you added with these devices . Dave we did a lot on privacy today. We added new utterances that allow you to ask alexa, tell me what you heard, so she can clarify that. You can ask alexa in coming months, tell me why did you do that, so if she does something that you did not think was right, you can understand the context of that. And we added a new feature at our privacy hub that gives customers the ability to autodelete their voice utterances on a rolling window. 3 a rolling three and 18 month window. We think customers will like that as well. Taylor in between that rolling three or 18month window, confirm for me if there is audio listening, transcribing, recording before i delete those. Dave we have a different setting, and i think we are first in the industry to allow customers to opt out of human beings annotating any voice recording that we might have. You can also turn that off if you want, but some of the personalization of the service and some of the capabilities of the service will get worse if you do that, but if a customer wants to, we want to give them that option. And we have also had, from the very beginning, the ability for customers to delete any single utterance, any group of utterances, or all utterances with the click of a button, and those are in the Alexa Privacy hub. The key for us is to give customers lots of options, and they can balance the level of personalization with the level of privacy they want. Taylor why is it opt out instead of opt in . Dave like i said, a lot of the capabilities we get from those voice recordings makes the service mor