States, and even some states already taking measures, minnesota and texas, to ease restrictions. What thisget a lay of meanings for the tech economy. Joining us now, our own tom giles, our editor in san francisco. The president is planning a phasing reopening of the economy but this depends on what governors want to do. For states like california and washington, what does that mean . The thing that you have to remember about the Big Tech Companies in those two states is that in terms of keeping operations going, in terms of employees showing up to work, getting, working on their projects, delivering software weve seen companies in these states have been performing fairly well. Engineer working at google, if you are in the main office at amazon, those people are able to do their jobs by and large from home. There hasnt been the same kind of disruption. As you get into the physical space with the people who are in amazon warehouses, doing the deliveries, the people who are working apple stores, that is where you see it hit a lot harder. In the sense of people who are out in the physical economy, work, asget back to you kind of get the economy going, that is going to make a real difference for people like apple. Tom, youy in the meantime, are in san francisco. Officials are going to require folks to where face masks when they go out in public. This is certainly a rapidly evolving situation. Through company by company. You have a company like google, facebook, based in the bay area, that depend on advertising. Google says they are going to slow hiring. We wonder what facebook is going to do. If a company as healthy as google is making tough decisions, we can assume things are going to be tight even for the Healthiest Companies in the world. What are you looking for when it comes to corporate earnings . Tom google and facebook are a great example of companies that have a big impact when it comes to advertising revenue. You are seeing a lot of people using google, using facebook to stay in touch, to communicate with each other. On the other hand, the businesses that advertise and remember, advertising is the lions share of these Companies Revenue base weve been reporting on how company after theiry is really slashing marketing budget, their advertising budget, and that hurts google and facebook. On the one hand, youve seen this surge in demand from google and facebook, especially as concerns of delivery of information and news and helping people stay in touch with each other, which we all desperately want when we are sheltering in place. On the other hand, businesses arent advertising. That is going to hurt their revenue. We are going to be looking at the revenue and the advertising. Giles all right, tom digging deep there. We are going to be covering tech earnings as they roll out over the next few weeks, from facebook to google and amazon and apple. We are going to bring you my exclusive conversation with kevin. He has been doing detailed modeling of the coronavirus outbreak and hes launching a new website that focuses on u. S. Infections. We will be right back. This is bloomberg. Bloomberg technology instagram,ing now to whose growth has soared over the last several years. Kevin systrom sold the company to facebook in 2012 for 1 billion. Now hes on to his next act. Modeling the coronavirus. Today he launched a new website that will update u. S. Infection rates live. Listen to my exclusive conversation with Kevin Systrom earlier today. Kevin the whole idea is that theres this number called the effective reproduction rate. It means how many people get infected per person who is currently infected. One,at number is less than infections are under control. Over one, it is out of control. We are trying to take a complex topic and boil it down to a simple number. That is our hope, to make it simple for everyone. Emily instagrams growth was the epitome of viral in the online sense. What are you applying that you learned from instagram . Modeles that apply to the that we are seeing . This website is simply , if i cantionization call it that, of a notebook and a model that i published. You can access it without having to press refresh every day on the model. The viral growth that isolate instagram compares to the science of viral growth in general. They use similar math. , you can come to some really interesting conclusions. Emily how much worse is this going to get, and how much worse will it get before it gets better . Kevin heres the really interesting part about that question. You cant answer that question in general. You will try to find a broad summary at the highest level across a region or a country, but it turns out that this virus is very local. Louisiana may be doing far better than massachusetts, might be doing better than maine. You have to ask what is happening locally. We are basically breaking that down on a state level so you can see what is happening around you. I cant answer specifically, but what i can do is give you effective radar and see how it is going currently. Emily you do get really granular statebystate. Lets take new york and california. States,ook at those two which have had vastly different kinds of outbreaks and different responses, what do you see . Kevin what is super interesting is that, number one, theyve gone through a transformation in lockdown. Like used to be something two or three, meaning for every person that got sick, they would make two or three other people sick. And after the lockdown, you see the number come down. It comes down as we begin to social distance, stop going to school, stop going to the workplace, start wearing masks. The r number comes down. But what is super interesting we as we become more lax, as begin to open certain sectors of the economy, what happens to that number . I think that is why this is so important. It gives you a live insight into the effects of the choices we all make. I dont know exactly what is going to happen, but i will be watching just as closely as you. Emily you correctly predicted that the u. S. Would have 10,000 cases by march 19. You also point out you are not an epidemiologist. Who have you shown this to . How have they responded . Has anyone from the white house reached out . Kevin i have sent it out broadly because i hope people take the concepts largely into the work they are doing. Not necessarily the conclusions im making. Is specifict i run on the data im using. But the idea that we can manage our country or a state on this idea, basically that is the thing i want people to understand. If you watched Governor Cuomo yesterday, he got deep into the thatof this and the idea we can watch and as new york starts to open up again, it can be that gauge that allows us to decide what to do. Angela merkel spent all of yesterday talking about the effective reproduction numbers. Vernacularto build a around this concept. I truly believe this is the most effective way to manage coming out of this lockdown. Balancee are trying to Economic Prosperity with public safety. President trump outlining plans to reopen the economy. Nowrs say we need this because the Economic Impact has been so dire. If you could say one thing to president trump, what would that be . Kevin that it is customized. You have to look locally and give power to local governments. If you look what he and his team realizee, they said, we this infection and this virus is a local epidemic as much as a Global Pandemic, and all of us have varying needs and varying levels of infection. So to give one medicine to every patient doesnt make sense. Givewe need to do is customized guidelines and a framework to each local government and allow them to follow the best practices. Emily is there something that scares you most about this in terms of people feeling or not being concerned enough . Kevin at the beginning i felt strongly that people werent concerned enough, and very quickly after california shut down, all the other states started following suit. That doesnt mean we are out of the woods. The concern i have now is that people think we are past the peak. And all the models that we read are just as complicated, if not more complicated than mine. And no one really understands where we are. So instead of trying to predict the future, what we are trying to do is understand where we currently are. Because the second we start opening up, it might go up, but it might not. Depending on where you live, it could go a bunch of different directions. The most important thing we can do is effectively have this radar to know where we are headed. That is what we are trying to do. Kevin systrom, cofounder of instagram, more of that conversation coming later in the show. We talked about what he things of instagram today, how he thinks facebook is handling the coronavirus crisis, as well as his relationship with Mark Zuckerberg. Some companies have found a way to conserve cash while keeping employees happy. This is bloomberg. Emily as the Tech Industry reels and uncertainty mounts, some startups have found ways to conserve cash and keep employees happy. That comes with offering stock instead of an increase in salary. Joining us now to discuss, shelley, who has been looking into this. You profile a gaming startup where activity is actually booming because we are shot in, but even these employees have had to take pay cuts and they are getting offered equity instead. Tell us more. This is one of the companies that has been doing well during the coronavirus outbreak as people are gaining more. They were in the middle of raising funding and they said, we dont know when that is ever going to happen, because funding is likely to dry up and people are worried about the risk out there. The cofounder that i spoke to said, we need to conserve cash. The way they did that was, they asked everybody if they wanted to take a pay cut and in return stock units. Emily tell us a little more about how broadly you anticipate this will be. We are hearing from investors, from operators that the advice that is being given is, if you have to make cuts, do it now and cut deeper than you think you will need to cut. Do you think that we are going to see a lot more companies employing this strategy . There is not a day that has gone by that a startup has not come out with layoffs. That is certainly the easiest, fastest, and most direct way to conserve cash. Wey are trying to say, believe in our business. Lets see if we can offer them future earnings by cutting back their salary now. As they are alluding to, it is a big if. They are like, if everything goes well what if everything doesnt go well . Emily of course there is a big downside. If these companies dont do well, as most startups dont do as well as they might expect, then what happens . Whove got even more people are out on the sidewalk. Exactly right. You are basically saying, take less pay and hope for the best. This only works for an employee who believes in the company and the future. Company that has done well and is growing users quickly, it makes sense. , it might not bode as well. But there are those that i spoke to that said, try cutting your rent, try cutting back on contracts and software. Really in this kind of environment, the thinking goes, you dont need to persuade people, but if they have a job and they are getting a paycheck, these days it is a pretty good deal. Emily shelley, you moved back to the u. S. After covering the chinese for a really long time. How are they coming out of this outbreak . What does the tech economy look like . Is it significantly weaker or not . I think it is varied across different ecosystems. Funding has evaporated. While it is Holding Steady in the u. S. , spending for new companies in china, raising funding has also really dropped. That tells you about the pipeline that is coming out. , some ofig companies them have been able to expand their reach and consolidate their power. Companya food delivery really expand its customer base. Restaurants were shut down. These people still kept going. I expect the same thing to happen. When you see Companies Like amazon that seem to be gaining exactly whatis happens with alibaba and tencent and the bigger companies. That is there anything Silicon Valley can learn from chinese tech and how they have weathered this . Think a really interesting thing that we are seeing in the u. S. Is that the chinese tech rose tos definitely this idea that everybody is reliant on us right now. , workplace,ncing cloud services, those things help all sorts of Companies Stay alive. We are seeing some of that happen in the u. S. As well. , continueis idea of to provide things, will use this as an opportunity to show new customers what you do have to offer, and maybe they will stick with you. Right, shelley reporting for us, thanks for bringing those insights there. Coming up, more of my exclusive conversation with instagram cofounder Kevin Systrom. He has been tracking the coronavirus outbreak especially across the united states. We also got his thoughts on instagram today. How the company and facebook are battling the virus on their site , as well as his relationship with Mark Zuckerberg. Also, we will take you to the white house. We are monitoring the White House Press briefing scheduled to start at the top of the hour. We will have headlines on the bloomberg as that begins. We will be right back. This is bloomberg. Emily welcome back to bloomberg technology. We turn now to my exclusive conversation with instagram cofounder and former ceo Kevin Systrom who left the Company Abruptly in 2018. We talk about the state of his relationship with Mark Zuckerberg. We talk about why he has not posted on instagram in almost two years. We also talk about why he believes how he believes facebook is handling this information about the coronavirus and more. Kevin knowing the people that work there, i think everyone has the best of intentions. And, if you could have planned for this and created a contingency plan for a Global Pandemic that would shut the business down, i think that would have been great. Lets be honest, very few businesses, if any, did. What we are seeing now are the effects of effectively a very rare event. I dont put the blame or onus on anyone of these Tech Companies for not having seen this because it is such a rare event. The question is how you respond to it. I think what you are beginning marke is that leaders like and others have stepped up. Not only are they going live with doctors from the cdc, they are trying to get the word out. They are setting great examples for employees by keeping them home at this time. While it is challenging and the response has been variable, i think they are doing their best and we will see they continue to do that going forward. Emily that said, you left facebook in 2018 and i think it was pretty clear back that that you are not pleased with how Mark Zuckerberg was running things. Zooming out a little bit, misinformation is one thing. Redirecting folks from instagram back to facebook. What are your biggest concerns about instagrams future right now . This is your baby, this is your creation. Kevin first, i will say the team that runs it now, i think they have been doing their best to grow what is a fantastic platform. You are right, it is my baby. Mike, by cofounder, feels the same way. But how proudly we feel when we go on instagram during a crisis like this and you see people that are not able to connect physically and connecting digitally. You look at John Krasinskis some good news. The way he is sharing positive news through all of this through his followers and fans. You see people, artists going live whether it is djs or musicians, and serenading their fans in a moment of darkness. The creativity that comes out online on a platform like instagram is really inspiring. Whether i run it or not is a complete lease separate question, but i am very proud of him as a parent from a far seeing what the platform has become. Emily my colleague sarah frier came out with a book about instagram called no filter. He conclusion is that facebook is under investing in instagram specific problems. I wonder if you agree with that. So, does that concern you about whether instagrams growth will falter . Instagram for investors is one of the great hopes of facebooks overall growth. Should they be concerned that instagram will grow wont grow like it did . Kevin i have not read the book. I did live the history. I saw places where i thought we invested appropriately and places where i wish we invested more. But the truth of it is we grew the platforms over one billion people and you dont do that with nobody. You dont do that with no resources. Knowbeing said, i dont whats happening on the inside. For me to speculate what investment have or have not been made is very difficult to do from the outside. But, if i were in charge of facebook and i saw Something Like instagram, id obviously invest in a lot into it to make sure that it becomes another pillar of the many products that we have as a company. I think that is the logical argument to make and the logical thing to do and i think mark is a very logical person. And hopefully he is following that. Emily have you had any contact with him since you left . What is your relationship like . Kevin we have seen each other a handful of times. It is amicable, i think. The most important thing to keep in mind is Silicon Valley is a very small place. We are all very young. Im 36. My career does not end last year or the year before. Were going to be around for a while and we will be crossing paths. I think it is really important to keep that in mind as you build relationships going forward. Emily that said i know we dont want to get into the policy changes, but you have not used instagram since may of 2018. Kevin no, that is not true at all. Emily why not . Kevin posting is very different than using. It is the first thing i check when i get up in the morning. I wouldnt know about the examples i just gave you about instagram being used if i did not check it incessantly. Emily you have not posted i should rephrase. Kevin to be fair, over the last two weeks, i have posted a bunch of my story about the work ive been doing with modeling. Part of this is a personal choice of deciding when you leave something, leave quietly and have some introspective time on what matters to you. And, part of it is just wanting so