Created after the death of Antonin Scalia a. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. I am alisa parenti. This is bloomberg. Caroline this is bloomberg technology. , one mant samsung behind bars as bribery investigations unfold. And investors, looking at the offeringn of snapchat, 3. 2 billion in nonvoting shares. And elon musks new company. The tunnel vision that could change your morning commute. We will explain. In theanother twist legal drama unfolding of the top of south koreas company, samsung. The de facto leader arrested for allegations of bribery, perjury and in bozeman. A request of was denied last month. Investigators looking at whether lee was involved in providing millions of dollars to benefit a close friend of the south korean president. And in exchange for government the succession plan. Simpson denies allegations samsung denies allegations. Jeffrey caine is joining us and working on an upcoming book from on samsung. And straight to jeffrey in seoul, can you put this into context . It looks like the trial could take 18 months. Rest,he warns and the will he remain behind bars . It is not clear if he will remain behind bars throughout that time. It depends on what the south korean legal system decide, but what is unusual is a that lee had an arrest warrant issued against him and his father was involved in a similar scandal 10 years ago. And he never had an arrest warrant issued, so that says the government is down to business, this they are really going after one of the most powerful companies anyway that we have not seen. Caroline it is interesting, david, the share price does not seem to be affected by this scandal. It is incredible how the mighty fall, how much do you think this will affect business . It pours,n it rains, they are still recovering, not fully recovered at all from the exploding phone problem they had. It is a company that has been in a lot of sort of, in suspension with his father, who is really the ceo, so ill, nobody knows who is in charge. Lee now under arrest, because his father, they cannot get rid of, he has been so ill. It is not a good situation at a time when they are facing a massive challenge that they had faced with these phones. It is a daunting development. And it goes to show how negative sentiment is becoming globally against the powerful, i think it dovetails with other developments. What is happening with the impeachment in korea, it is a difficult time. Caroline yes, if you could paint what is going on in south korea in general and this is the second time they have try to get this arrest warrant. Why was it successful the second time . This judge had more of a reputation for not being probusiness. The previous judge that rejected the warrant, we do not know what happened in court, there is no transcript published. We know the previous judge did have a stronger probusiness reak, and that could have explained why the warmth was not issued. It is common for prosecutors ivee and others, to wa criminal charges against leaders. It has happened to others. It is the korean discount, shares undervalued because there is not much confidence in these business leaders. It is common for them to face corruption scandals and to be accused of influence peddling. It is not surprising to south korea. Caroline and again, does samsung become in disarray because the de facto leader is in jail . This is not first time the leader of the business has been painted with scandal and it seems like the business is directed by that very for very person. I have been in contact with them and they have consistently said that when the chairman is gone, Business Activities are not affected. Despite what is happening and the poor governance, they have a lot of the world most talented designers and engineers and they make good hardware and ive never heard of the actual business being interrupted. And that is something that samsung must deal with, something to grapple with, because they built the empire over the past years that spans across so many affiliates. Chips,ake ships, smartphones, all of the parts, and a single leader could be intelligent or a great diplomat for the company, but he is not somebody that can run every single business. They rely on their staff of engineers and managers to get things done. Caroline ok. Is amazing. Geoffrey with that inside. Thank you. David will be sticking with us. The maker of snapchat wants to raise 3. 2 billion in the ipo, according to the latest. That brings shares to around 14 16. And it is expected to come to the market close on march 3. It would give snapchat a value of 18. 5 billion. And we also learned that the cofounders could take home as much as 256 million. So david kirkpatrick, and cory johnson, it is an interesting one. They look expensive compared to peers, compared to when twitter came to the market. Is not as muchit as they originally were looking to get. Cory they were around 24 billion and for groupon, that never came to be. What becomes of this, i do not know. It is high. On the positive side, they have big growth numbers. And we know the story of how hard the consumers are two reach and how valuable they are. But this is a high price for any company of any kind with any kind of growth metrics. But for one has negative margins, one with growth as small, where there where the questions raised. This will be interesting. There are very strange things in the filing, not the least of which is unsteady growth rate. There was a quarter, the First Quarter of this year, only 14 growth sequentially and then he turned it around. So what happened . These are things that will come up on the roadshow. Caroline david, what do you think . How much is riding on snap and the founders and how much they take him, but how much is riding on the rest of the Tech Community . They need to get a price right. David it is one of the biggest ipos in recent years. I think that the industry is watching this with fascination, because this company does rise above the rest right now in that it is sometimes, more or less legitimately compared to Companies Like facebook, twitter and google. It is smaller, but it does have the potential to really be a fundamentally new kind of communication, given the passion that young people have developed for it. I think it sort of symbolizes what people think are the next phases of technology, driven by video. And on the other hand, from the is symbolizes a kind of distorted financial mindset where they are not giving the shareholders any power whatsoever. And the idea that facebook pioneered, creating two classes of stock has been taken to the extreme and now every tech Company Thinks the founders should have complete control, which is where they have here. I think that is something the industry is watching with ambivalence. Caroline yes. Rights,e lack of voting according to the filing, it is the first u. S. Company to really level this, to have no Voting Rights going into the ipo. Do you think they are being more cautious with a price tag . Less the company is worth to the shareholders for many reasons. It is not growth profit. Freehen it is not have cash flow and it is not the voters or the owners of the shares have rights, so there are many things snapchat is doing that will give it a lower valuation. Whether it is beyond the pale, it is hard to say. Not having Voting Rights does not bother anybody when the country is run as well as facebook. When you look at Companies Like groupon, it is not bother hathaway, when you have those lower Voting Rights. But it would bother them at yahoo , when they are trying to save the company from itself. So we have seen with these companies when they face plant, others can come in and make the situation better. And they say this will never happen for snapchat. Caroline david, you are a man that knows the inner workings of facebook well. Even as we see perhaps snap taking something out of the book in terms of control, we also see facebook again trying to copy what snapchat has been doing. Can snapchat change the way in which the world works . Formal facebook dine out on it . David i do not think they are copying snapchat, i think there are things they have borrowed. And it has been acknowledged by instagram and others. I think the comparison between the two companies goes only so far. Facebook when it went public had the potential to become a world altering service used by almost literally everyone. Unless you believe that is true of snapchat, you cannot justify this kind of valuation. I do not think you can justify that kind of talk about snapchat. It does not have, in my opinion it is in its current design, the appeal to our parents, children of all ages, ordinary, working people. It does not have that capability. It is not a true comparison. Cory when you talk about the Voting Rights issues, there are issues you see right now in this company where it careful steward of money might say, why are we spending this money on personal security for the ceo . And investors might say, i would like a vote on these things. You are taking it away. Caroline we will see how the roadshow plays out and how they really try to push the fact that those using the app are addicted. Great insight from cory johnson and david kirkpatrick. Sticking with us. And now the Company Social finance known as sofi is close to raising half 1 billion, led by silver lake partners. And they said around could come next week. It livable for bolster financial services. Is it includes several asian investors, who will take an equity stake. Coming up, elon musk looking at the larger than life business ambitions and calling his latest venture boring. We will dig into the cover story, next. This is bloomberg. Musk taking his talents underground, and advocate for clean energy, he is not trying the boring. At least that is what he is calling this project. The bourne company, the independent company is changing traffic forever by doing none other than digging holes and making tunnels. The company does not have fulltime employees, but it is a story big enough to be the cover of the latest Bloomberg Businessweek. And still with us, david kirkpatrick. Matt, great story. You spoke with elon musk and you said he was sleep deprived. Tell us about the boring company. I saw him the same day he met with donald trump as part of the strategy and policy forum that became so controversial, and he seemed relieved to have made it through the week. There was criticism of him and some other ceos. Max his plan is simple, he will start digging holes in the ground and turn them into a vast network of underground tunnels that will change transportation forever. At least, that is the plan. And elon is one of these people that is probably the best at taking these kinds of way out their ideas and getting them to a place where people are able to buy into them. Caroline david, do you buy into it . He gets the gold medal for audacity in business. You have to love that he is willing to take a flyer on these big ideas. Exactly why he wants to dig the tunnels, i am not sure. Is as terrific as you said, but it did not answer the question as to why. So peoplemean, he as know, he has been talking about this plan to create a highspeed rail system. The open source the plans and has been encouraging other people to create hyperloop pods. My read on it is the tunnel thing is an outgrowth of that. The hyperloop, if it does happen, it is a highspeed rail system and would require a lot of tunnels, because once the train is going 500 miles per hour, it cannot make a lot of turns. Thereforeunnels and somebody must do those, so why not elon musk . Another reason for why is there is an opportunity with respect to just general sort of lack of innovation and construction and tunneling. One of his strengths is taking existing technologies and figuring out how to do them cheaper and more efficiently, with great branding. Take a look at the innovation at tesla and spacex, but the core of it was not creating technology, but integrating technology and marketing it in a smart way. David if i could ask, max, of course there is a lot of reasons why we would want more tunnels. We do have an infrastructure boom because of donald trump, maybe. And hyperlinks, fascinating hyperloops, fascinating. It has been developed by others. What will you do differently with the tunnels . He is purchasing an old machine. Where is the innovation coming . Max i spoke with experts on this and kind of the upshot is, i expected they would laugh and they are not laughing, they are taking it seriously. It could be because he is a billionaire and maybe they sort of, it is to their advantage to take it seriously, but what they said is basically there has been very little innovation here. For instance, in seattle there was a big machine called big bertha that was stuck in the ground for maybe two years. And it broke down and they were not able to repair it. They had to dig it out and lift it with cranes and it was a delay. So a telling expert said, you could go faster if you had enough spare parts on hand and you did some things in smart ways. I think you can make a similar critique about aerospace when elon musk got into it. The other thing we cannot ignore inthat we are at a moment the Political Climate where the Infrastructure Investment has gotten more palatable. I think he is looking at the opportunity, obviously. Caroline max, great piece. And the lead on the Bloomberg Businessweek issue this week. David, you are sticking with us. And of course, you can get more on this particular magazine over the weekend on saturday and sunday. Coming up, why with a single one of the largest funds in europe. We talk to the ceo, next. This is bloomberg. Caroline on the latest tech funding, londons atomico just close the fund to invest in European Tech startups. It comes at a time where geological where geopolitical headwinds are happening. We asked whether it was difficult to have a eurocentric fund where most of the startups are in the u. S. . That is typically the view that people have, Silicon Valley and china as the giant tech companies, but if you look at opportunities in europe, it has been remarkable where we have gotten to in the last 10 years. There has been 40 billion companies in europe. And with artificial intelligence, europe and the u. K. Have some of the leading companies. Niklas we believe there are opportunities here and at the same time there is an undercapitalized market, so we think that the data tells us that the valuations in europe are lower than the u. S. And china, so the opportunities are pretty good. Caroline that was niklas zennstrom. And in the united kingdom, microsoft has hiked to the price of products there, because of the decline in the pound. And the company says it is increasing prices on software and laptops. For one laptop is now 12 more expensive. Caroline in this edition of out of this world, billing and spacex will not be certified to be sending astronauts into space. A report says certification could be delayed until 2019, because of safety hazards. Since the Space Shuttle program ended, the american astronauts have relied on the Russian Space agency for rise to the International Space station. Spacex willing and be working on space capabilities, the first manned thant is set for no later 2018. Apple tv has vowed to revolutionize your television, but has not done that. You look at what they have in store for television operations, that is next. This is bloomberg. You are watching bloomberg technology. Alisa we have a check of first word news. Vladimir putin calling for a dialogue with u. S. Intelligence services and other nato members. Speaking to officials of the russian fsb, he said it was in the general interest to reopen communications, adding cooperation will bring stronger results in the fight against terror. The secretary of state met with his russian counterpart today in germany, and the highest level facetoface contact between the u. S. And russia since donald trump took office. They are there for a group of 20 conference. And hamas reacting to the announcement that donald have is not committed to a solution. Palestinianhe authorities should give up the illusion of cooperation. He says it marks the end of the peace process. Iraq says the dental from a car bomb in baghdad is up to 47, nearly 50 other people are wounded. Officials say the bomb was targeting Car Dealerships and the Islamic State has claimed responsibility. Malaysia arresting two more people linked to the death of the halfbrother of north koreas leader. They arrested a native said to be the boyfriend of the second suspect. Police say he provided information leading to the rest of a female has four older. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. I am alisa parenti. It is just after 5 30 p. M. In your, 6 30 a. M. Thursday in hong kong, i have a look the markets from Stephen Engle. Stocks facing down arrows early on after wall streets mixed session. Looking at the main index for new zealand, down by 2 10 of a percent. And sydney futures are down, fairly flat, trading lower after yesterday. This was after a seesaw day that saw those Health Shares fell the most in six years. Futures down in the early going. The big story is a developing one, a south korean court approving the special requests for the everest warrant of samsungs lee, who has been taken to prison and is awaiting formal charges and a trial that could be as long as 18 months away. Executors say he was involved in bribery, and embezzlement, as he sought to take over south koreas most powerful conglomerate from his father. Im Stephen Engle in hong kong. More coming up right now. This is bloomberg technology. Im caroline hyde. Back to snapchat, setting out on their roadshow and they will be pitching to investors a more expensive valuation than any other Media Company we have seen before. Alex reports. When deciding whether or not to put money into snapchat, investors will compare it to peers, twitter and facebook. So what is snapchat hoping you will equip them to . My sources say that they want you to think of them as amazon. There is a method to the madness, because it is a secretive company, investors must decide whether they trust