South korean conglomerate. It has come within striking distance of apples top spot. Amazon shares dipped thursday after they reported disappointing financial guidance, especially a potential loss in the third quarter. The second order earnings per share missed the low analyst estimates. Amazon is preparing to step up competition with walmart and Cloud Computing challengers. We broke down the numbers. This is a company that is investing. There is a cost to all that free video that amazon is lavishing on its prime customers. Emily where are the expenses . They dont specify. Its video. They are building Fulfillment Centers closer to cities. They are making all these great shows like transparent and man in the high castle, that costs money. The stock is down 2 . This is an unflappable shareholder base. There is a halo over the company. Emily shares are down 3 . This is why bezos is number one or now he isnt. The point is, they are able to take longterm investments in infrastructure and turn that into profits. Aws was the first example. As they build up these warehouses, technologies for stores without the people in them, they will be able to license these things. They will be able to turn them into products. That is a smart longterm perspective. Thats what people are buying into. Emily what about whole foods . Are we getting any more clarity on how this acquisition will play out . How will this be integrated into the empire . The answer is no. The deal has not closed yet. They were asked about it on the media call. The cfo declined to comment on it. It has not gotten past antitrust regulatory review. We are not even sure if there will be regulatory scrutiny. They are not talking about that. Beenn see that grocery has a major avenue for amazon, not just the whole foods purchase but they just entered singapore with prime now. Amazon fresh they are expanding. Hopefully in the coming weeks and months we will no more. Emily im interested in how the dynamics between brands are changing. Nike and sears selling directly to amazon. What youre seeing is them building this infrastructure capability to deliver goods in another way. They are becoming a Logistics Company as well. They are building the logistics they need to do groceries. Nobody has really solve yet. Bezos loves solving problems. They are building the infrastructure to deliver other kinds of products. They are going to take that ability and take those skills, license them, and figure out ways to make money for themselves and for other people as well. Emily we will see how investors respond. Is the confidence in jeff bezos deserved . Yeah. You look at a 20 year history of a public company. He called his shot at how he was going to run the company. Investing for the longterm. Signaled periodically they are entering into investment cycles were they will spend a lot of money on things like Fulfillment Centers. They operate the company with a lot of discipline. They give you these broad estimates, but they always had hit those estimates. If you do that enough times, Investors Trust you. He has earned the trust. Emily will this deal accrue any antitrust scrutiny . How big is too big . Thats a fair question. They have a larger influence than even what they are selling themselves. In the current environment with his ownership of the Washington Post and the way donald trump views that, there is an incentive to say maybe we should look a little that direction. Emily they sat next to each other at that meeting at the white house. They are not best friends. No. Look at the president s tweets. By any rational measure, this should pass scrutiny. Whole foods is a small player. Amazon has no presence in grocery. We are in a topsyturvy political environment. This could get scrutiny just because jeff bezos is not the most popular guy in washington. Emily there is speculation about amazons next big bet. Any ideas . Lets not forget what they are doing with alexa and voicebased computing. Small for now, but a very interesting play when we look at they were never able to do something from an operating perspective. They wanted to compete against google and apple. Now they are coming in from the side with this voicebased computing thing. This opens up lots of different avenues. By the way, the beauty of it is, across all of those platforms. That is the one to watch. Emily they are the leader on the cloud. We some progress at google, microsoft. The pie is getting bigger. Do they have to worry about the competitive threat . The pie is getting so much larger. It is lifting all boats. The challenge is when they enter into the price wars and it depresses the profitability. That goes on and off. Right now, we are not seeing that and the businesses looking healthy. They are hiring a lot of people. This is a very hotly contested space. Emily amazon shares, good for your portfolio . In the long run, i think so. Emily in other earnings news, twitter failed to attract more users in the Second Quarter. They had been looking for evidence they are on a path of sustainable longterm growth. Revenue fell 4. 7 and the net loss widened, affected by a 55 million writedown in the Music Streaming Service soundcloud. Facebook churned out cashes in expected growth fueled by strengthen mobile video ads. The social network now has over 2 billion monthly active users and is steadily driving revenue at a faster pace than other tech giants. They are investing in original content. The first shows will come online in august. We are seeing a lot of content engagement shifting to mobile. Our goal is to be a platform for content providers to find their audience and monetize. We are doing some early investing. We are kickstarting the ecosystem. We are giving more episodic viewing on facebook. We have a lot of video views on facebook, but not that kind. We think that is important. We are making that investment. We have content providers creating that content and finding their audience. Emily alphabet was out with earnings this week. Revenue for the search giant came in at 26 billion, up 21 year over year. Aggregate costs per click dropped 23 . It includes a fine from the European Competition commission. I spoke with the cfo about this. She told me it is so early in our analysis that its an ongoing legal matter. They have not decided if they will appeal. We discussed this with an analyst and cory johnson. I think the reason the stock is down is because of the traffic acquisition costs. The company has been warning us that as they shift away from the advertisements on a website to the mobile device and programs and ads on youtube, they are on not youtube, the programmatic , on an apple iphone and we see ads within an app, those may be served through apple by google. They are making sales calls, bringing in those ads. They are selling them to apple. It is more expensive to acquire that traffic. Traffic acquisition costs for google have been rising. Emily this is more about traffic acquisition costs . I think thats what it is. They warned this is a big change in their business. They are going to be mobile mobile andmore warbl dramatic. Its going to cost more. Emily what is your take . You really singled out the strength in mobile search as well as youtube in terms of driving momentum. Mobile is the big driver here. Thats the headline. Thats why you see increases in clicks and decreases in costs per click. Thats been a big driver in the big storyline for google for some time. Emily what about whats going on with youtube . We talked about adpocalypse. The times did an investigation into extremist content. That was shown next to prominent advertisement. A lot of advertisers pulled their campaigns. It seems like those advertisers have returned. They reiterated that across the site, that benefited mobile search and youtube are in it they take seriously the issue and we are protecting ecosystem. A lot of this has been a lot of noise. They like the advertising. They like the traffic google is giving them in terms of clicks. The google ad is like nothing else in the history of advertising. You can actually see the result as it runs. Advertisers like that. To the extent that advertisers actually pulled ads a year ago, nine months ago, it was good news for google because they have fixed the problems that may have been there. I dont know how big these at advertisement problems really were. It looks like they are back. None of them stayed away for good. It might make them look better for google. Emily the ongoing investigations in the eu, we had this big fine. Google is trying to decide if they are going to appeal. How concerned are you about future investigations . From an advertiser perspective, there is a lot of concern. Obviously the youtube scandal earlier in the year and now the ruling from the eu from the Competitive Commission does not help an advertisers stomach when going to investing on google. How do you know that youre in ad is not going to get played someplace you dont want to be seen . How is that not being skewed against you . There are some issues. I agree with corey that this is a good thing for google in the long run. Google has been able to identify what they need to do Going Forward and what they need to work on to build trust with our advertising partners. Emily later on, the war of words between two tech billionaires. We will dig into the and barbs between Mark Zuckerberg and elon musk over Artificial Intelligence. Meg whitman is off the board at hp ink. For tenure atals Hp Enterprise next. This is bloomberg. Emily donald trump announced that foxconn will build a factory in the state of wisconsin. The 10 billion factory which is expected to produce lcd monitors will initially employ 3000 people. That could swell to 13,000. The move fulfilled a promised by the foxconn president to invest in the united states. Why do it here . Television was invented in america. Yet, america does not have an lcd plant to produce a complicated system. We are going to change that. It starts today with this investment in wisconsin. Emily meg whitman is stepping down from the board of hp ink. She will be replaced and remain the ceo of Hp Enterprise. The news comes on the heels of our report that she is on the shortlist of candidates to fill the ceo spot at uber. They will name a new ceo by september and has narrowed their search to fewer than six contenders. We discussed this with Eric Newcomer who covers uber. She has long been someone i thought was a possible candidate. I have been asking about it all the time. Shes been advising travis. She is close to ryan graves. Emily shes an early investor. She has been in the mix. Statas the state spent reputation, the experience running a tech company. Its not a guarantee that she is going to become the ceo, she is in the mix. One of five or fewer candidates. The hope is to get it together before labor day. Emily david, what do you think of meg whitman . I was just thinking there is an interesting analogy between what she really did wonderfully well, which was run ebay and uber. They are both marketplaces. They are both places where you bring buyers and sellers together. I think it is actually the kind of company she could run better than she has been able to run hp. You might say she is generationally too old for this sort of thing. She is a Silicon Valley veteran. She brings a lot of the right characteristics to the job. I am relatively optimistic that she would be a strong candidate at a minimum. Emily she is unlikely to take the job and may not be a top contender. What is your reaction . She is a top contender. The statement to us was that she is going to be here until the job is done, which is super vague. I dont know. We disagree on this one. Emily coming up, Capital Funds keep getting bigger. We will chat about the recordsetting latest bond. Fund. The competition in the augmented reality space heats up. How they plan to carve out a place of the increasingly crowded field. This is bloomberg. Emily in funding news, Canaan Partners closed their latest fund at 800 million. Its the largest in their 30 year history. The surplus of cash gives money that would otherwise be raised on the public market. We spoke with the general partner. Maha our firm is a diversified fund. About 40 of what we do is health care and 60 is tech. On the health care side, we have had an incredible run of exits because we have been disciplined in certain areas. The same goes for technology. We feel like there are a lot of areas. Emily you have been at canaan for more than a decade area what do you think of these comparisons to dotcom times . Maha we are in heady times right now. There are so Many Companies amassing an incredible amount of revenue traction. I dont see that ending. I dont see a cliff like we saw in 2000. There is a ton of momentum and money flowing into the system. Emily on one hand you have Companies Staying Private longer. On the other hand, you had 30 exits in the last three years, which is three times the average. How is that possible . Maha in addition to that, some of our companies have been exiting faster than normal. Our average time to exit has been less than four years. We think its because we pick a franchise and go toward investing. There are areas we go very deep in and we mine them in terms of networking. That is the secret sauce. Emily do you get the sense a company would take 10 years to go public or exit, would you stay away from that . Maha no. We believe we are Building Companies for the longterm. Because we are taking this thesis driven approach, we are on the pulse of what they want and are thinking about. That causes companies to exit faster than they otherwise would. Some take 15 years and thats fine, too. Emily what areas are there big opportunities . Maha fintech is still very hot for us. We spend a lot of time there and real estate and insurance. We spend a lot of time in cloud. You will see us do a few gaming deals. Its very disciplined, our approach as opposed to taking and index funds. Emily canaan is celebrating 30 years as a vc. You have three female general partners. Im curious how that changes the environment inside the firm. Andy investments you make. And the investments you make. Maha it has been such an incredible, i am incredibly fortunate to be at the table. Our eight general partners, three of them being women, the conversations we feel are a lot more inclusive. We feel we are reflective of what the true entrepreneurial pool looks like. If a woman or immigrant comes in the door, they are surrounded by people with similar experiences. They are much more comfortable. Emily i know youve been following the Sexual Harassment story. Vcs have resigned, lost their jobs. There is an investigation at uber. Are you surprised by this . Maha im not surprised. Im surprised at the horrific nature of it, but im not surprised its happening. The problem is if there is a positive spin on this, the Sexual Harassment has happened. Im sure there are more cards to fall. But it has woken people up to the need of diversity inclusion. Both that the venture and senior amonging table, and entrepreneurs. We need to be bringing up women entrepreneurs, people with diverse backgrounds into the investing world so they feel welcome. Emily when you say more cards to fall. I know everybody is calling everybody. What kind of calls are you getting . Maha im getting a lot of calls and spending an hour or two a day either talking with entrepreneurs, i am on the board that is taking a very serious look at whats going on and thinking about how to approach the topic in a holistic way. We are talking with partners of ours. It is top of mind. Emily talking about what . Maha we are talking about the fact that it is happening, what we can do, can we put notions into term sheets, can we get a more diverse pool of investing specials around the table . There are many notions being talked about right now. My hope is we can come together as groups and make this a more inclusive environment for venture and spilling over to the entrepreneurial pool. Emily i know that entrepreneurs come to you. Have you ever found where you are a coinvestor where there is bad behavior alleged against that person . Maha i have been very fortunate for that to not be the case. I see female entrepreneurs on a daily basis. To a person, each of them have told me a bad story. This is been happening for 17 years. By no means is this a new thing, but weve got to put effort into making it stop. Emily what are those efforts . Signing a decency pledge is great in theory, but shouldnt everyone just be decent . Maha thats an incredibly low bar. We shouldnt need to sign something. I have said this before, i believe that a huge part of this bad behavior stops when you have females and minorities at the investing table. And in senior investing roles. Stuff like that will not happen. Behavior will be checked. From a social psychology standpoint, i want to invest in people that look like me. At my firm, we have three investing professionals out of gp role,m sorry, the 40 at my firm are female. Thats not an accident. It is not something we did purposefully. It just happened. Emily the average is more like 6 . Maha we have reached a tipping point. As an industry, if we have reached a tipping point, we have won. Emily she is the general partner at Canaan Partners. We speak with tom and dive into the earnings report. This is bloomberg. Emiliy welcome back to best of Bloomberg Technology. Im emily chang. A cloud Delivery Platform reported better than inspected Second Quarter revenue. The company boosted its top line by a 6 yearoveryear increase. The forecasts missed estimates and the companys stock sank to its lowest level in at least a year. The ceo tom leighton joined us in studio for an exquisite exclusive interview. Tom the important thing to realize is traffic is growing at a rapid pace. We have lost some share to doityourself efforts. Outside of that, hour traffic growth is bigger than the internet as a whole. You can infer from that that we are gaining share. I think the important thing to take away from the q2 result is our performance and security business, our web division customers, the majority of our revenue. A very profitable business gr