Shares how the biggest manufacturers turned to big data and won. Bloomberg exclusive interview. First, snap filed its longawaited ipo with an initial price of 3 billion, planning to raise 4 billion for a market value of 25 billion. The Parent Company of snapchat is the first u. S. Social Media Company to go public since twitter. The ipo is the first opportunity for outsiders to get a close look into the company known for its culture of secrecy. Bloombergup with the technology reporter. I was looking at revenue of 404 million last year, and an net loss of 514 million. You can see how much cash this company is burning. I bring that up because we have seen the headline daily active users, the revenue number, but we did not have a sense for how much they are having to spend to get there. This is the first glimpse that investors have to take into account. Can i balance the amount they are spending with the opportunities they are pitching when im trying to get to that 25 billion market valuation. When you are looking at the Business Model in general, we are seeing a Secretive Company having to disclose significant losses, but that valuation . The thing i started looking at intently were the risk factors. There are familiar things. There is the competitive landscape. It keeps getting copied by facebook and instagram, companies with more resources and reach. There are issues like founder control. We will have to see if we want to bet on this company longterm. The founders retain the majority of voting control. The user growth, after twitters ipo, that is what people are talking about. User growth at snapchat is 158 million daily users, more than twitter has, but a little bit more than instagram has for the product that copies snapchat. So when you are comparing right. Instagram has 400 million overall. We have a fascinating approach from you, the cofounder of evernote. Also in your role as a vc. General catalyst is an investor in snap. What makes this attractive . Too much of the company has not been revealed. We are super excited about snap. Very few companies change Consumer Behavior as they did. Maybe three or four over the last decade. They are an extremely good company, a consequential product, and amazing execution. The enthusiasm for the ipo bodes well for the rest of 2017. Caroline we have a company exiting, investors how excited and willing have they been . This is a down time for tech ipos. There has not been a lot of new issuance out there. That does bode well for the snapchat listing, and they have not been able to make a big bet with a lot of shares offered that promises returns and big growth, which is what snap is pitching here. As they cycled through, looking at the first few pages, we do see a lot of looking back on the past development. We dont see a lot of roadmapping going forward. There is strategic vision, but when you look at the information that investors will digest, you have the numbers, and you have to believe the story management is pitching throughout the roadshow. Caroline you didnt go public. What are the trepidations as a founder when looking to go to the market . Why is there not as much meat to the bone as the potential of snap . I think it is always a tradeoff between access to capital and how much distraction there is. You pick the best combination of that. Where we were at at a smaller scale, it was easy to have as much access as we needed on the private markets, and going public is a lot of work and kind of a distraction because you have to be open and match wall street time estimates. Snap is doing amazing innovation, augmented reality, wearables. They probably have more stuff that is in a longer timeframe then quarter to quarter. Snap said its performance will be lumpy. They would have to make fits and starts of investment in new products, and their Revenue Growth may not be predictable. Caroline we are looking at 158 million daily active users, they are going back every hour, minute. Right. They are so engaged. The engagement is the behavior change. This is why it is a good time for snap to go public because they have done something to transform the way people live their lives. It is great to give everyone who wants to be part of that opportunity a chance to do it. Caroline how does the app make money . Dont know how an app that since disappearing pictures makes money . You are not alone. Snapchat is not just selfies. Now they are pitching themselves to investors as a camera company. Snap is not just about ads. Core to their concept is creating content. That is what the revenue generators are all about. Thats what lenses, geo filters are all about. Lenses, you are straight into the camera. Brands can pay for filters that you can overlay on photos and videos and send them to a friend or group. Geofilters overlay the where and when businesses are people businesses or people can pay to include a app. I can also send my snap to a feed which my friends can see. Which brings us to our third revenue generator. Our story. Our story is a group of feed that snap goes through and grabs publicly posted snaps and puts it into one video feed. We have seen this around in events like the womens march or Donald Trumps inauguration. Discover, starting in 2015 , brands started uploading mobile magazines that create stories in a more millennialfriendly version. With ads slotted in between, of course. You cant forget the spectacles. You can grab these for 130 at popup vending machines around major cities. You take a 10 second videos and it goes straight to your snapchat app. Advertisers for a while have been wary about using snapchat , because they are insistent on vertical video ads, when advertisers are used to the horizontal shape of tv. They are warming up to it. The true test will come in the years after snap goes public , because the revenue model is only a couple of years old. Caroline coming up, fitbit struggling to maintain momentum. The stock taking a hit this week. More details ahead. Plus, we dive into apple earnings. Ceo tim cook a said the Companys Services business will be the size of a fortune 100 businesses in 2017. Here he is with more. It was our best quarter ever for services. Almost seven point 2 billion in revenue 7. 2 billion in revenue. App store customers broke alltime records during the holiday, including 3 billion in purchases in december alone, making it the app stores single best month ever. Caroline fitbit had a rough week, plunging 16 . The company is eliminating 6 of because of falling demand. The fitness tracker is forecasting fullyear revenue grew 17 , down from a previous forecast of 26 . Apple shares popped after reporting firstquarter revenue 78. 5 billion. Up 3 . A beat on iphone unit sales, 78 Million Units in the quarter due to Strong Demand for the iphone 7, and its Services Business saw 18 Revenue Growth. A principal analyst with Forrester Research joins us with more. Iphone sales make up the majority of apples revenue at this time. While the we look at global smart phone subscribers, that will grow 50 over the next five years, but apple makes a lot of money selling phones. Unlike some of their competitors. If we look at the markets they are pursuing, middleclass and upperclass, that growth will not be as high. When we take that into account, it is doubly impressive, the numbers for 2016. Caroline what was coming across was they are doubling down on the services area, doubling the size of this unit, which is as big as a fortune 100 company, doubling that over the next four years. How much is services the right bet for apple . It is absolutely the right bet, until they start selling other appliances like refrigerators and cars, there are only so many smart phones and tvs you can sell. I think there are some areas like apple pay where there is low consumer adoption, a love and percent in the u. S. , but a lot of upside. Caroline when you look at the other products they sell, the cfo saying this is ipods, apple tv, but do they need a lot of products . The watch looks like it is selling relatively well record , a Fourth Quarter . I dont know if they need another product. Smart watches are only a fraction of total wearables, but they will be 40 in five years, so there is a lot of upside as we move from 18 of u. S. Adults owning a wearable to 29 in four years. Caroline what struck me was the lack of mention of china. Brazil is going well, turkey going well, but china seems to be a slow down area. Are they right to focus on china or switch to india . Apple makes a lot of money selling phones. They are profitable. They want to cell phones they sell phones profitably. You have to look at the markets where there is the most upside. China is a tougher market, but they have done well. Not where their biggest growth will come from. Caroline the right sort of country given the average earnings power in india is less than china. Do they have as much of an opportunity in that country, do you think . If we look at the growth of smartphone adoption in china, 50 over the next five years, but in india, that will almost double. If you look at each market, about one billion people, the middleclass and upperclass are very large markets, even bigger than the United States. A lot of upside. Caroline staying with apple, a bloomberg scoop. The company is designing a new chip for mac laptops. Take on chips would more functionality currently handled by intel processors. They are already used in the latest macbook pro. Facebook earnings out this week, and mobile ads continue to dominate the companys revenue. We will break down all the numbers next. Caroline now to facebook earnings, a 51 jump in sales to 8. 8 billion topping , projections. Advertisers continue to push to reach consumers on mobile phones. The social Networks User base is continuing to grow, 2 billion monthly active users. This move solidifies facebooks position behind google. I am sure there are some people who would be upset that the numbers arent even better than they are, but come on, analysts were expecting incredible results, and pretty much everything beat it. We have 25 of the worlds population using the platform on a monthly basis. I cannot see any clouds there. Caroline three times the u. S. Population. David, dig into the growth of drivers. When i was speaking to the cfo, he was trying to point out that its business is mobile, now 5 million instagram. That is growth. They are doing superbly on mobile. When i look at Growth Drivers and think about where they are real prospects are going forward, it is the truly Global Nature of their business. If you look at the growth in asia and the rest of the world, africa, latin america, they are doing surprisingly well, and this is where ive thought there ir longterm potential was, because they make 10 times more per user in the United States than they do in asia, and yet, the opportunity down the road to build those numbers more to parity is real, so they are getting faster user growth in those regions and making more money per user. Start there. Their asian revenue was up 59 . And the rest of the world, 52 , so even though the numbers are small compared to the u. S. And europe, there is opportunity longterm. Caroline the potential needs feeding. We are hearing the cfo saying they need to spend aggressively. It seemed to be the head count, 34 ramping up in the Fourth Quarter, and they will accelerate that more in 2017. Are they spending wisely . I think so. To achieve innovation, whether ad products or expansion, you have to have the resources. If you have the cash, that is where to spend it. The idea of ad product animation goes hand in hand with feature set innovation goes hand with feature set innovation. That will change as they cloak Global Markets as well. The expectations in asia are different than the u. S. , the u. K. , and europe, so you have to invest smartly and get the best engineers to do it. I do think it is smart. Caroline david, what about the move to video . Video is what Sheryl Sandberg and Mark Zuckerberg have been bringing up. There is a wall street journal piece out saying they may be developing a tv app. Is video still hot . Thats where they can compensate for this problem where they have saturated our news feeds, particularly mobile, with as many ads as we could handle. So, they have to charge more per ad or grow their user base, or find other kinds of ads that make more money, and video ads can do that. I thought the journal piece suggesting a settop box, a tv app, but my guess is they would like to have some kind of app that allows you to watch tv and still be on facebook on tv. They have tried various versions of this in the past, but it has not worked. Wey can show us at well watch tv, and they can continue raking in more dough. Caroline Mark Zuckerberg saying he will seek original content deals and is still putting video first. Melissa, i will find a cloud in the silver lining. Facebook did lose out in court, oculus intentionally built on stolen technology. 500 million, the damages they will have to pay. That is a portion of the price tag of what they bought it for in 2014. Is this of particular concern . Oh, gosh, i dont know. Of course it is a concern. It is a court ruling that will hit the pocket book. That is always a concern. I do not want to minimize that. Oculus being an engine for innovation, anything that questions its source code is going to be of concern, but 500 million is something that will continue to be litigated for a while, versus the growth for the core platform. I am sure it is a concern. Is it a dealbreaker . I cant see it as being that. Caroline david, what about fake news and how much zuckerberg has been trying to respond to this, potentially awkwardly to begin with, but now with some fervor and perhaps chose to orchestrate how he interacts with his own user base. It is a concern to the intelligentsia. It is not a concern to the average facebook user. Mostly they want to be entertained and diverted, and they are. I do think facebook is taking the issue seriously. I think you will see them taking more measures to avoid seeming to compound the partisanship that is so big a problem and so cash a big problem in so many societies around the world. The problem is they are so global and operating in so many languages that this problem is global, even the russian interference in the media, so it will not be easy to get a grip on this right away. I think they will over time. On oculus, i think oculus is looking like something they overpaid for. Unlike instagram on which they got a spectacular deal. Palmer may take some of the blame for this lawsuit loss, also some embarrassing behavior around politics. Maybe they are regretting their association with him. They have brought hugo barra in to take over oculus. I think he will be a great leader for that part of the company. Caroline coming up, tech mobilizes against the travel ban. We cut through the confusion and analyze the opposition out of Silicon Valley. A reminder, all episodes are now Live Streaming on twitter. Check us out at bloombergtechtv weekdays at 5 00 p. M. In new york, 2 00 p. M. In san francisco. This is bloomberg. Caroline welcome back to the best of Bloomberg Technology. I am caroline hyde. Silicon valley finds its voice as President Trumps immigration ban fuels outrage across the tech sector. Trumps next order on immigration may even be a greater blow, targeting work releases that google and apple used to recruit talent overseas. On monday, sean spicer address the reform effort. You have already seen a lot of action on immigration. Whether it is that or spousal visas, there is a need overall to look at all of these programs, and you will see executive measures and comprehensive measures to address the problem. This h1b order is a much bigger threat to Silicon Valley than the order that trump issued on friday, although i think this h1b visa order could be more popular among average americans than the immigration order on friday. Especially in congress, republicans and democrats, there has been concern that Tech Companies have abuse the h1b process to recruit overseas engineers at the expense of american ones, and used it to suppress salaries for tech workers in the u. S. Caroline we have just seen pictures of the protest that occurred over the weekend. There has been fighting talk coming back from President Trump about the reasoning behind these particular demonstrations, perhaps the chaos we saw in the airports. For sure, he says this order was entirely aimed at making the u. S. Safer. He has compared it to a review of iraqi refugee, the flow of iraqi refugees from that country in 2011 by president obama, but there are key differences. In 2011, the Obama Administration said they had specific, credible evidence that iraqi nationals might be planning terrorist attacks in the u. S. 2 iraqi refugees were arrested in kentucky shortly before obama issued that order. In this case the administration has not offered any evidence of a credible threat to the United States. There simply imposed the order and claimed it has to be in place for security reasons. Caroline thank you. U. S. Tech leaders came together in unified anger over the weekend in response to President Trumps order. Bloomberg has this recap of who said what so far. Mark zuckerberg was one of the first to speak out. In a post he wrote like many of you, i am concerned about the impact of the recent executive order signed by President Trump. We need to keep this country safe, but we need to do that by focusing on people who actually pose a threat. Tflix ceo wrote the next day trumps actions are hurting netflix employees around the world, and so unamerican it pains us all. Uber statements grew over the weekend after early backlash over surge pricing. The ceo tweeted the travel ban is against everything uber stands for. Any driver who cannot work because of the ban will