Ahead of remarks from fed chair jay powell on thursday. Investors are interested in the path forward. It is day two of the public and national convention. And mike pompeo on the list to speak tonight. Abigail doolittle has been watching the back and forth. Lots of earnings after the bell, new record highs. What are you drinking . You tracking. Abigail those earnings, right in the hub of technology. Hewlettpackard up 6 . Seeceo is saying that they robust demand driven by big data. Down 2. 8 . E company this may have something to do with the subscription model. We will have to look at that as more information comes out. Right now, a little bit of a decline in after hours. T also up sharply, up five point 6 . They beat the earnings estimate and revenue nearly doubled yearoveryear. Some of these tech companies, the stories of the haves and havenots. You were mentioning record highs during the day. That was the case. It was a mixed close even with those record highs. Index of the Mega Cap Companies apple, alphabet all closing at record highs. The dow down slightly. Apple had its first down day in six days. Investors, interestingly, since value is not created out of stock splits, a little bit less interested in apple on the day. Emily some breaking news across the terminal. Left ear has officially filed for a direct palantir has officially filed for a direct listing. This is something we were waiting for. Company is the data that works closely with governments, known as a very secretive company. Also talking about that dow reshuffle. We have got salesforce earnings out. What are you seeing . Abigail palantir, such an interesting environment to be coming to the market right now. Some are saying that these gains will continue going up. One of our guests this afternoon was saying that this could be the top. Salesforce earnings, this is the clear after hours winner. They put up a huge quarter. Secondquarter revenue beating. They raised the fiscal year view. On the year, this has been the story as well. S p 500 up about 40 on the year. Not quite as much as some of those other mega cap stocks. But, something that is positive. One form of their revenue, the remaining group, a bit of a forward look. It looks like salesforce in terms of the subscription model, their footstep in the cloud really benefiting them. Outlook infull year this environment really kind of incredible. Emily abigail doolittle, thank you so much. Palantirecap, officially filing to have a direct listing on the New York Stock Exchange under the listing pltr. Of common34 classes stock. This is a company that is losing money. We will talk a little bit more about the ipo, going public pipeline a little bit later in the show. First, to salesforce. I want to bring in the ceo of groove, joining us to discuss salesforce results. Your take away from the overall salesforce results . It is a company that has been benefiting in the midst of a pandemic as you see other companies scrambling to make the Digital Transformation necessary to survive in this world. Chris their earnings, they performed very well again. Solid yearoveryear growth. I think that is because they made this big transition to a highly diversified company that will do very well in this environment when Many Organizations are going through Digital Transformation and are looking to align with a vendor that is cloud first. Salesforces market cap is now bigger than oracles. Benioffa young marc never would have imagined. Is this a rising tide lifts all boats phenomenon or is salesforce capitalizing on these trends better than the competition . I think they have a few things going for them. They really built for their ecosystem. When a customer or potential customer decides to build a solution and enterprise, they usually want to find something that is future proof. That puts them in a really nice position. Theuly, they did take over market cap of oracle even though early they barely took them seriously. Now, i think they are really leading this transition to this Digital Transformation that many of these openings are going through. Emily that said, could salesforce see a retraction in business as life returns to normal . Chris i think there is always that possibility. Their earnings tend to be predictable just because their average contract is 1236 months. So we will take so it will take a period of time for you see that. I do believe we will see that more in the smaller business segment, where there is probably more organizations impacted. They also have more competition. Emily what are the Biggest Challenges salesforce faces . What are the biggest competitive threats . Largest think the competitive threat is probably microsoft. When microsoft made the acquisition of linkedin, that really changed the game. They have not been able to fully take advantage of that. If you look at market share, salesforce continues to take more and more. The second thing, they could be disrupted with a newer competitor that comes from a very different angle. Likeaw an organization zoom info went public. There might be other solutions in the ai space that will try to go after salesforce from a different angle, but microsoft is the most concerning. Coursemicrosoft of bought linkedin back in the day. Tableau,e buying velocity software. Are you expecting salesforce to do more big buys in order to expand its reach . Chris i definitely think so. I think those acquisitions are working out and they have transitioned to a highly diversified cloud company, selling to every department in a really nice way and they can kind of leverage their strength and continue to become more and more important for each of their customers. I think the velocity in particular is very interesting to show where they are going. Rothstein, the ceo of groove, thank you so much. Coming up, back to that breaking news. Listing onling for a the New York Stock Exchange. Well talk about all of that with finance professor from the university of florida, known as mr. Ipo. This is bloomberg. Emily back to our top story. Palantir filing for a direct listing. Our next guest thoughts that palantir would go the direct listing route. It is on track to be the largest Silicon Valley tech listing since uber. Us, also known as mr. Ipo. Scholar at the university of florida. Thank you for joining us as always. You called it. What is your take on this palantir news . Jay it is not a surprise to me. The company has been close to cash flow breakeven. It is a company that can afford to be listed without raising money. Stock,more, as a tech doing a traditional ipo put it in danger of leaving a lot of money on the table. It is ahat said, company that is losing money. How enthusiastic do you think investors are going to be about this company which has historically been secretive . Does notsecretiveness bother me much. There are other companies which have military business that dont go into a great deal of detail about the exact technology they use. Palantir has a lot of commercial business as well. They have great technology. The fact that they are not profitable 16 years after being founded is a bit worrisome, however. Situation is better than their profitability for two reasons. One reason is a lot of their contract. Customers are paying upfront. That certainly helps their finances. Given a, they have been lot of stockbased compensation. That results in less cash flow. But on the other hand, shareholders are constantly being diluted. Ofly what do you make palantir choosing a direct listing when another huge company, airbnb, we report that they were considering a direct listing but ultimately they are going the ipo route . What are the benefits and drawbacks of a direct listing versus ipo . Jay airbnb, they are probably pursuing a triple track strategy. Perhaps a merger, perhaps doing a direct listing, very possibly doing an ipo. Having the possibility of doing a merger with the staff or a direct listing, that gives them a little bit better bargaining position for a traditional ipo. For Companies Like palantir and airbnb, which are successful albeit not particularly profitable companies, they will get a lot of investor attention and they can afford to do a direct listing because they dont have to worry about analyst coverage. With a company doing a direct listing, they are not paying as much to underwriters. Ipo, thereaditional is a danger of being underpriced by a lot. Yearverage tech ipo this has had a firstday return of 71 . The highest since the internet bubble 20 years ago. That is leaving a lot of money on the table. I think that is one of the others why palantir, companies are planning on doing direct listings. Emily what do you make of the valuations, especially given that a lot of these companies have suffered because of covid. Palantir is a bit more of a black box. Jay since they are mainly businesstobusiness, i dont think they have been affected by covid. Airbnb has. Even though it has been around rapidlyears, it is growing. It looks like they will be heading 1 billion of revenue this year. Got upside potential. But if we are talking about a 20 billion valuation, we have got to have at least a billion dollars of profits for year in the foreseeable future. That might be a little bit of a stretch. Unlike some other tech companies, they dont have as much scalability. They have relatively high cost for customers as they tailor their software for that customer. I think that is one of the reasons i would have a concern about the valuation. It is a Great Company but at to high a price that does not mean it will be a great investment. Emily palantir perhaps best ,nown for its billionaire chair peter thiel. The cofounder of the company. It does work with the u. S. Government, the defense department, homeland security. You mentioned snowflake, unity, doordash. Which ones are you tracking . And could potentially bring us some surprises . Airbnb will get the most attention. Millions and millions of consumers have used it. Some of these other companies are not exactly household names. Obviously, when you are in the 2b business, you dont have that same of brand name recognition among the general public. Snowflake is younger. It has got some substantial losses. Volunteer with palantir, losses are not growing faster than revenue. Airbnb owns its space. Snowflake, which are likely to be going public at very high price to sales ratios, are setting themselves up for disappointment if they dont deliver on those optimistic growth expectations. Emily jay ritter of the university of florida, great to have you on this late, breaking news. We will continue to follow the story and bring you highlights as we get them. With, apple and its battle epic games. Why the iphone maker does not have to immediately reinstate them on the platform. This is bloomberg. Won an earlyhas Court Victory in a fight with epic games. A judge spared apple of having to immediately reinstate. But they also blocked apple from provide the ability to graphics from other apps. On one hand, a win, on the other, a loss. What is your take . The thingjudge did that most people online or twitter are saying was the fair move. She is saying that apple does not have to be forced to put fortnite back on the app store in a form that it violates agreements. But she definitely criticized things and said that the ability to block unreal graphics, they cannot do. But they are not forcing apple to put fortnite back on the app store. Emily so if you want to play fortnite right now on your iphone, what do you do . Mark if you already have the game on the phone, you can keep using what is known as the current season, Different Levels and progress and such. There is people i have seen selling iphones and ipads with the mark on there for upwards of 10,000 on ebay. , if you donte have it on your phone already, you will not be able to get it on your iphone. Emily that is some dedication, 10,000. So, what is next . Mark i think each side is looking to see who is going to bite first. If i was apple, i would probably be holding out another few weeks for the next hearing. We got what we wanted, we made a big stink, and apple is not going to block unreal engine, we will put the app back to where it was before because we are losing a ton of money by not having it on the store. On the other hand, apple could say, are we going to start losing iphone sales because people cant get fortnite . They will really come down to bites first. Emily how long and drawn out do you think this process will be . The judge said this is not a slamdunk for either side. Mark i watched the first hearing yesterday. The judge and lawyers were talking about an actual trial taking place in the spring. I really think apple can probably be ok for the next six months without fortnite being purchasable on the iphone. But i cant imagine the inability to sell it on over a billion devices for the next six or seven months is something they will be able to handle financially. How could this potentially lay the groundwork apps . Her could what is decided here impact on how other apps decide to run their business, mounting a challenge against apple, or perhaps conceding . Mark i think this will scare other developers into doing similar things to what epic games did. What apple has proven is that they are going to really enforce these rules. No matter who you are as a developer, if you are going to break these rules, they will meet you in court. They are saying this is not a fight they want to but this is a fight they will defend themselves on. On the other side, the judge made some comments about apples businesses. Emily ok, mark gurman. Thank you so much. Coming up, we will be talking about which startups stood out on this years y combinator demo day. This is bloomberg. Experience the ultimate sports hub. Where you can find games, news and highlights. All in one place, right on your tv. The xfinity sports zone. Use your voice to search every stat and score. Follow the teams you love. And, even get notifications with breaking news alerts and more. With the xfinity sports zone everybody wins. Now thats simple, easy, awesome. Say xfinity sports zone into your voice remote today. Emily this is bloomberg technology. One of the worlds most prestigious technique inventors, y combinator, is wrapping at summer demo day fully online its this year. They come to seek funding at the biannual event. Some of the Biggest Companies include dropbox, airbnb, doordash and twitch. Joining us to discuss the most Promising Companies this year and how it all went, y combinator partner dalton caldwell. Good to have you back on the show. So, theres always a huge demand for demo day, but this was your first fully remote demo day. How does it compare to years past . Dalton demo day was always very person event and it was hard to imagine what an online equivalent would be. So we spent the past six months writing custom software, testing out zoom, load testing it to translate the whole thing. And obvious and honestly it went to than we expected. We had 1500 investors participate, and over 2500 introductions. As far as we can tell, thats about as good as we could hope for. It was good. 200 companies from 26 different countries. What, in terms of the trends, in terms of the kinds of companies being started right now, obviously we are at an unprecedented time in world history. What stood out to you . Dalton there is a lot about the future of work in terms of working remotely or collaborating remotely. A lot about education and how we educate people remotely. Theres a lot happening in commerce. It is going to be hard to fathom how many changes to our daily life are going to happen because of covid. What we saw, with the big trends were to contemplate what does life look like in a postcovid world. As far as i can tell what life will look like, a lot of video calls just like this one. But it is super exciting to see. Emily how would you characterize the challenges facing startups right now . Not being able to do in person meetings, a tech landscape that is shifting dramatically. A lot of more established companies seeing layoffs. Companies that maybe could have been great, not having a chance to grow because it cannot get additional funding. Dalton i think the kind of mosters that we see the thrive are able to be flexible and deal with change, and they react to immediate market reactions quickly. They had be a we have seen them have to change their market on a dime. The people who are the most optimistic and able to quickly change their business, the ones that are doing the best, and frankly, the investing environment that we have seen at the current demo day is much higher than i would have expected. You know what is going on in the stock market right now . Theres a little bit of that that seems to be happening here, where we are not exactly sure why, but there is quite a bit of money out there right now. Emily we are talking about it every day. Dalton it is wild. Emily despite these extremely grave condition. We are in the middle of a recession, rise in joblessness, but investors are still optimistic. Million before6 demo day, they decided not to purchase a paid. Will that be a broader trend, is that a oneoff . What does that signal to you . Dalton i do not know the details on that one, but i would definitely tell you just like i saw the last batch and every companiesetimes capture the imagination of investors and Everyone Wants to invest in them. This stuff happens every batch. I do not know about that specific case, but that is not like everyone went home. Just like what happened in the stock market. If you capture the imagination of investors and get them excited, it is amazing what can happen. I would not say that is normal and standard for everyone, but we are definitely seeing it happen this batch. Emily y combinator has evolved so much over the years. I have interviewed so many y team partners, the cofounders back in the day. More recently, there has been criticism that it has gotten too attached tompanies the brand are overhyped and did not necessarily deserve it. Theres concern they are looking at too many companies, and it doesnt matter as much to have that stamp. How do you respond to that criticism . Dalton the quality of the recent batches has remained really quiet. If you look at the number of billion Dollar Companies that have come out in recent years, Companies Like corp rhodium, ironclad, i could pull up a whole rest of recent vintage. The quality is there. We take a lot of pride in the fact that there are always fantastic companies to fund, and that is why the batches are getting bigger. If anything it is much higher to get into yc than ever has been. We see no reason to change that. Telling people we are not going to try to fund them to try and make it feel m