Transcripts For BLOOMBERG Bloomberg Technology 20170314 : vi

The latest attempts by American Indian tribes to stop the Dakota Access pipeline. Oil could begin flowing next week here global news 24 hours a day, powered by more than 2600 journalists in more than 120 countries. Im alisa parenti. This is bloomberg. Caroline im caroline hyde. Bloomberg technology. Coming up, a steady stream of Software Startups take a punch on the public market. Lets not ipo a help or hindrance to the rest of the tech unicorn . Plus, microsoft takes on slack chat software for office 365 customers. Netflix tries to outshine movie theaters can hollywood. Help the streaming Company Industry . E film first to the lead. A handful of tech ipos emerged in the aftermath of a volatile debut for snap. Although they are not household names, they are all Software Companies capitalizing on the expanding market. Real soft planning to the public as soon as friday, just listed the target share price range. Last week we reported that does this signal a boom in tech ipos are is the market right for Software Giants . Group joins us. Jam he was one of the comanagers on snap debut. Also with us, Forrester Research Vice President julie. You have written a piece saying you didnt get a market that is better than right now. Why is a good right now . I say the ipo market doesnt have the demand problem, it has a supply problem. The market has been open. It has all the makings of a great ipo market. We just havent seen companies coming to market. Snap hopefully is a bit of a coattail event for other technology companies, and other Companies Going public in general. If you look at the average ipo up 36 . So far the average ipo is up 14 . A great performance by almost every deal that has come public. Good Companies Come in public. The markets overall are up. Volatility is very low. Its a historic low. You really got all the ingredients for what normally would be a much more robust ipo market. Beenine we have just showing charts of how 2016 was slower than 2015 fisher, but still tech was leading the way. I want to ask about the sweet spot. The ones we are talking about are in the 100 million range, not 3 billion that we saw come from snap. Are we going to see big ones like cloudera start to come out . I would say why not . Exactly what you say, there is a supply problem, not demand. The other point i agree with is that the market and economy has been very strong the past seven or eight years, and it is hard to say how long it is going to last. If i were the head of a strong small, young company, i would wonder how long the window would be opening. Caroline that is fascinating, we heard yesterday from the airbnb ceo saying they are halfway through the twoyear ipo lineup. In two years, rates will have come a little higher. You said before the private markets have tapped out, but then we saw airbnb raise 1 billion. Nuanced. A bit more a company like airbnb can continue to raise money in the private market. Its a real bellwether. It also can probably go public at any time no matter the ipo market. They are going to dictate their own timing. I think for the broader universe of unicorns are Companies Getting high valuation in the private markets, i think we are at the end stages of that. We can especially see with big Public Mutual funds Like Fidelity that have been investing in late stage privates, i think they are taking a bit of a positive. Pause. They have a lot of private companies they have invested in, but i think they want to see returns on and get public. And just in general want to see more evidence that those valuations are supportable in the public market. Is forrester bracing itself for dropbox or some other not quite so airbnb, some other private companies to come public . I would echo what you just said. The other part of it is companiesa lot of going public with evaluations that are based on a lot of optimism about how much companies are going to spend on marketing or advertising or mobile, and isnt a Strong Base Business case for revenue to justify the valuations. Interestingly, you werent only on snap, you are app dynamics. On we have seen that interesting element occur, but also the voting power with snap being taken away from shareholders. A lot of control being held by these companies. Is that what we are going to see as well . Only a few companies can pull that off. Snap was going to have the demand for their deal whether they had full Voting Rights are not. Snapnk that is unique for and a few others. When facebook went public, they had shares as well. I dont think that will be a trend. Caroline or swooping in at the last minute. Could be. About to launch what would have been a very successful ipo. It was well oversubscribed. They were at the pricing table for their ipo when cisco came in and paid a price that was double what the ipo price would have been. The Bigger Companies need to get growth, and buying at dynamics for cisco was a way to do that. Caroline thank you very much. Group, and of jmp julie from Forrester Research is sticking with us this hour. A story we are watching. Germany is threatening to find social Networks Like facebook more than 15 million if they dont give you the option to complain about hate speech. This is also if the company refuses to remove illegal content. The first act of the legislation was presented tuesday. If passed, it would be the steepest fines. Merkels government is under pressure to curb the spread of take news. We just covered how Market Conditions impact the ipo market. Next we dig into the hike cycle of low volatility is impacting the biggest public tech companies. A reminder that all episodes of bloomberg technology, our Live Streaming on twitter. Check us out at 5 p. M. In new york, 2 p. M. Here in san francisco. This is bloomberg. Caroline ad markets in the u. S. Will grow by 16 this year. Ads willrom digital increase 15 for google and 32 for facebook. The furious growth is also forting to shrink the gap google. What about the newest Public Company jockeying for advertising dollars . Snap will boost ad revenue by 158 , to 700 70 million in the u. S. This year and could reach over 2 billion in 2019. With a relatively downbeat day for u. S. Stocks, with the tech heavy nasdaq falling three quarters of 1 , lets good Abigail Doolittle in new york. What is behind a little bit of the selloff . We do have a big fat decision tomorrow, perhaps investors are taking a pause. At one point the nasdaq was down far more than the dow and s p 4 500. P the declines were being led by the chip stocks including intel. They have been down more than 1 following the decline a day earlier on the mobilized acquisition. Intel recovered, but left broadcom and amd in its wake. Paypal was down more than 1 having its worst day since the end of february after google said that there is a gmail app code will allow users to send money. A bit of competition. On the year, it is a different story. When we hop into the bloomberg on the top ink, white that is the s p 500 Technology Sector up about 11 on the year. In orange on the bottom, down 9 . Tech is the top sector this year have being helped out by a big tech names. Caroline what is fascinating is the volatility. Volatility is so low across the board. How is that playing into some of this tech rampup . It is amazing, the lack of volatility. The vix at record lows, but the nasdaq is even lower. It is the had a record low. We have another bloomberg chart. Vix, andhe nasdaq 100 the s p 500 bigs vix. Not a lot of volatility for technology stocks. You could even say complacency. The nasa 100 is up about 11 on the year s p 500 6 . ,the big tech stocks are outperforming. You are telling us how intel and paypal were down on the day. Who are the out performers on the year . All the Big Technology names including apple, amazon, facebook, and google. Those are some of the top tech stocks. One less chart on the bloomberg. Last chart on the bloomberg. In pink on the bottom of the uprt, that is the s p 500, about 5. 5 on the year. Facebook. Up 25 , the big interest internet stocks are trading higher. This has to do with expectations about the president s potential tax cuts. It will be interesting to see how it plays out. Caroline i was checking out has been overbought for at least a couple of months. Thats another one of my favorites Abigail Doolittle. Bloomberg news markets reporr. Coming up, corporate email traffic is moving to chat, and microsoft once in. Wants in. This is bloomberg. Caroline microsoft is officially joining the chat world. On tuesday, the company rolled out the work pause collaboration Workplace Collaboration software. It is now widely available in 181 markets, and already has 50,000 office 365 customers trying it. Microsoft is counting on integration to challenge the likes of slack and Google Hangouts for big, corporate customers. Joining us from washingtons brian good, the general manager of Microsoft Office 365. You are senior develop director of modern collaboration. Talk to me about the collaboration i can do that using team. Wewe are excited about what introduced. It is a test phase workspace in office 365, and it brings together the people, content, conversations teams need to get work done. We are excited about it. Organizations already using it, can you give us numbers . Where internationally is it being rolled out . Great question. We have 50,000 organizations using it since we announced the preview in november. That really runs the gamut, from the small customer to the very large. We have customers across the europe, as well as into and even into africa and asia. We are impressed by the demand we have seen so far. I would say that some of the customers that have given us great feedback on it include people like accenture, alaska airlines, expedia, sage software, and a number of others. The customer demand and response has caroline . Impressive you mentioned expedia. We spoke to the senior director of i. T. For that business. He says they are using it, but rivalsing rivals like that do not seem to be phased out. Do you think teams will push them out . Today marks the general availability of team. Many customers are looking at that to migrate employees from teams. Tform onto this is a big moment for us. I will tell you what customers think they like about it is the deep application with office. Integration with word, excel, powerpoint is a hub for teamwork. Theres also a lot of compatibility with microsoft. We are excited about what we bring to the table and we think we have a compelling offer for customers. Caroline is that how you win out . Is that the usp that you have such deeply integrated projects that they will go with what they know . I think customers are looking for one less app, one less window, wherever they can get away with it. We are looking for things that work together. That is both for the people using these applications as well as i. T. We think we have a great Value Proposition with office 365, really designed to be a universal toolkit for customers and address a broad range of needs they have across their company. Caroline do you think slack will exist in the next couple of years . I dont know. Thats a good question. I do feel really good about what we have to offer and what we bring to the table. As iustomer response, said, has been really remarkable. It surpassed even my expectations. Im excited for what the future holds with teams and office 365. Caroline you are working to integrate other businesses and companies that help with the employment element, like zenefits. Is this about being an openended structure at the end of the day . Absolutely. We are working with over 150 partners. What our customers expect is not just integration with microsoft, which is certainly important, but also being an open platform. That is why we had invested deeply, giving people the ability to customize their thatonment in teams here means working with a variety of people outside microsoft. Did it take a slack to show the market was where it was that, to show the way in which microsoft needed to copy, or did you always have this in your mind . We have been working on Microsoft Teams now for several years. It is a response to customer demand. Clearers told us loud and they were looking for a hub for teamwork. A place to come together, stay on the same page, and that is what we have delivered. Its not in response to any competitor, but it is demand from customers. Greatit is a greet complement email. Stilldern Company Requires emails. You still have to receive email from people in the organization and out id. As aok at Microsoft Teams complement to that, and the other tools to get work done. Thank you so much for joining us on a very busy rollout day. Now there are a lot of Workplace Collaboration tools, and one in particular has received a lot of hype. Both Microsoft Teams and slack allowed companies to build, but they are slow to adopt them. Why . Host whoto our guest has done digging and great analysis. Give us the stats. Very few companies are adopting chatbots. Is a lot of hype and numbers thrown around like 50,000 on Facebook Messenger already. But when you look at fortune 500 companies targeting consumers, only about 4 of those have chatbot, and only 13 are using that to have conversations with their customers. Chatbots are what seems to be a person on the other end, but actually a computer able to respond in and immediately. What do you think was putting off Companies Adopting in the right manner and at the speed the hype might have dictated . It is hard. If you look at chatbots that are successful, they do very simple things. For example, if you look at dominos pizza, it allows me to check the status and order, order the same thing i ordered the last time. It doesnt let me flip through the menu and build a pizza. And lets me do something very simple. Most of the chatbots ucr what we call forms the chatbots that you see are what we call forms. It is a very narrow conversation window. Caroline the common mistake is potentially companies being a bit too ambitious . A little bit too ambitious, and to optimistic about what the technology can do. We have the chatbot line. The stuff on the righthand side that you can do today is easy and simple, and the stuff on the other side is harder to do. Technologies will have to evolve. At the end of the day, you cant anticipate everything im going to say or how you are going to respond, so you have to teach machines how to learn and respond to humans. It is very hard to do. Caroline i may chief marketing officer if im a trace marketing officer at one of do i companies, where start grabbing the low hanging fruit if i wanted to get rolling on chatbots . The first thing to do is start. Thats the first thing. You have to start. You can throw money at the problem and catch up in a few months with a few hundred thousand dollars. It will not be as easy to catch up here, because your firm has to teach the company how to learn and respond to consumers. That is the first thing. Then i would look at consumers. Are they even on the platforms . . Oes it make sense the next thing i would do is look at call logs and Customer Service and say, where is the low hanging fruit . What are the easily repeatable questions that consumers tend to ask . Like what is my bank balance, what time is my flight going . Those are simple to execute on. Caroline that was great analysis, Forrester Research Vice President speaking with us. Coming up, a bevy of startups to take the the public market. But could the companies looked alternate routes instead . This is bloomberg. Reporter im alisa parenti. The netherlands hits the polls tomorrow for parliamentary elections being considered a bellwether for the future of populism. The far right candidate is running just behind the incumbent twotime Prime Minister. Elections, head of polls in france and germany over the next six months. British Prime Minister theresa may says the u. K. Is on track to exit the eu on the timetable seat she set out. She addressed the house of commons saying she will formally trigger article 50 to begin the exit. The meantime, british and scottish leaders traded barbs over scotlands desire to hold a second referendum on independence. The scottish minister Nicola Sturgeon says she intends to ask voters in 2018 or early 2019 if they want to leave the u. K. French president ial candidate into anas been charged investigation for taxpayerfunded jobs for his family. The chart has damaged his chances at winning the president ial election. Thousands of public doctors in kenya have agreed to and a 100 a strike for better pay and overtime compensation. The strike has been blamed for dozens of deaths in the african nation. Doctors and medical practitioners are expected to resume work on friday. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. Im alisa parenti. This is bloomberg. It is just after 5 30 p. M. Tuesday in new york, 8 30 a. M. Wednesday morning in sydney. Im joined by paul allen with a look at the markets. Good morning. Reporter good morning. Lets take a look at new zealand, the only market currently open. It is up a little right now, down a bit more than 1 10 of 1 . We are spending a week on the afx features posting a decline of 2 10 of 1 . We are keeping a close watch on the Energy Sector for a couple of reasons. Energy stocks getting hammered again on wa