tv Bloomberg Real Yield Bloomberg June 23, 2019 1:00am-1:31am EDT
sandberg response to the controversy in facebook two years of bad news. first, the top story, slack makes its public debut but not by the usual path. slack makes its public debut the at a direct listing on the new york stock exchange, opening 48% above its reference price. valuing the software messenger at more than $20 billion, a big increase from the last private valuation. they raised money at a 7.1 billion dollar valuation. i caught up with slack right before shares began trading. >> at this point it has been working exactly the way it is supposed to work and ultimately, we will open and have a high and low. the same thing will happen tomorrow and we are very much focused on the long-term. emily: you are still paying large fees to bankers. you raise a lot of money. so what problem are you really solving by doing a direct
listing versus a traditional ipo? >> the first is there is no need to raise primary capital. we came into the process with $300 million on the balance sheet. dilution to existing shareholders would have been tough. we did get a little more freedom with how we tell the story. instead of only having a roadshow and private rooms with investors, we were able to do an investor day, livestream it and make it available to everyone. i think that has put us in a better position. emily: slack is still unprofitable. and of the markets have reported profits, even if slim. how far out of is profitability? >> our focus is on growth and will be for a long time. we have told investors that our near-term priority is cash flow breakeven. we have confidence that we can still invest aggressively while driving towards that near-term
profitability. emily: how much of a priority would you say profitability actually is? >> i don't want to get too technical about it. there's a lot of deferred revenue. accounting profitability is not that much of a priority. bringing more cash than we put out is a priority because it allows us to control our own destiny. the ideal for us is that we continually find new ways or opportunities to invest in -- to further growth the business. we don't need a lot, just a little bit. emily: revenue growth is a slowing. what are some new sources you are expecting to cap -- tap? >> we are very pleased with revenue growth and we have gotten over 95,000 customers today. enterprise customers are growing even faster, 645 customers, over
100k in revenue. we are scaling. so at the pace we are on now, it will come down, but we are very optimistic about the opportunity and believe there is a huge new category to be built and invested behind, so we are focused on that. emily: we have charted your progress from the very beginning. i went back into the archives and saw the first interview i did was in 2011 and you were making a game called glitch which sort of became slack. in 2015, the jared leto crashed our interview, i will never forget that. your users really love the quirkiness of slack, which was very much inspired by you. that said, you're becoming a public company. you will do earnings calls every quarter. how do you manage that transition with public investors holding your feet to a fire? >> both allen and i have been committed, not a recent thing, but over the course of many years, building an internal
controls that allows us to operate. on the financial side, that the game a long time ago. we working to transition in the limited number of ways we do. we believe we can keep the same culture and keep the same approach to serving customers. and our mission to make lives simpler and more productive, there is a nice humility. but there is also a huge ambition and i think the challenge for us, what we will have to pull off is bringing investors along on that ride and help them understand what the long-term vision is and what we can truly do to support companies all over the world. emily: you are entering a volatile market in the midst of a trade war with china. you can imagine that in an economic downturn, businesses will cut budgets. they might not cut email, mark soft office, they might cut the nice to haves, they might cut slack. how risky is that? >> i don't think there is much. customers tell us slack was not the kind of thing they knew they
needed, but once they have it, they can't live without it. and if you can't live without it, it will not be cut on a discretionary basis. emily: how much do these market fluctuations, how much are you following what is happening in the global economy? [laughter] >> we watch it like everybody else, but it does not necessarily affect the way we run our business. we have a new category and focus on our customers. we control what we control and the markets do what they need to do. emily: analysts say that chat apps are a dime a dozen. you have huge competitors like microsoft and facebook with deep pockets and billions of users. how do you differentiate yourselves? how do you compete?
you say you have not figured out the optimal price because it depends on what your competitors are doing. >> at slack, we say we are competitor-aware. it is hard for me to imagine anything a competitor would do that would change our plans when our plans are around creating value for our customers. one of the things he wants to do is put ourselves in a position such as slack. the product becomes more valuable for each of our customers as they use more software because of the platform and integration. there's a whole world out there of other software, the number of categories continues to proliferate, the number of dollars continues to go up. in that kind of market, in a world where we have 10 million daily active users, it is just wide-open. emily: that was slack ceo stewart butterfield and cfo alan shim. we spoke to an investor in slack
and bloomberg's ellen huet. >> this might be a question of if microsoft can fend off slack. right now, the way leaders have talked about it, slack is seen as a leader in the 10 million daily active users and so on. i think they are in a great position. the industry is undergoing a phenomenal amount of change. people are looking for in alternative the mail and i think slack does a fantastic job. emily: in terms of the mechanics, we had a lot of questions about why they chose a direct listing. you talk to stewart, i talked to stewart, did we get an answer? >> i think so. he was able to explain that the main reason slack was looking to do i direct listing was because they do not want to dilute any
further. to have a lot of cash, they feel confident they don't need to raise any more money and doing a direct listing allows you to do that. it allows u to go public and not dilute. emily: why did they raise as much as they did? they have said they have as much money as they need, money for a rainy day. so why? >> it must have felt worth it at the time. he said we were always getting a fair valuation, capital was available. and it is true, slack has always been a darling of the venture capital world and i can imagine they were able to negotiate the deals they were really good for them in the private market and don't feel the need to raise more. emily: i have a chart that shows how the u.s. ipos and u.s. tech ipos have been performing so far this year.
you know, stephen, you ran office, you ran windows. one of the big questions about slack, is it nice to have? if companies will cut budgets, if there is an economic downturn, and there is a lot of uncertainty, why would they pay for slack and not cut office? >> the thing about the workplace, even during bad times, it turns out that companies think of information technology as a way to invest to make it through the bad times. you become more efficient, you communicate better, get more done, serve customers better and that reduces the impact of these economic cycles. we have seen that for decades in the way that technology investing looks. slack is not just a nice to have, it is fundamentally rethinking companies really approach the sharing information and making it much more modern.
moving from silos of email to an open communication platform. emily: steven and bloombergs ellen huet. we should note that bloomberg's investment arm is an investor in slack. up next, our conversation with sheryl sandberg and what she has to say about the new cryptocurrency already facing blowback on capitol hill. and if you like bloomberg news, check us out on the radio and on sirius xm. this is bloomberg. ♪
emily: facebook unveils plans for a new cryptocurrency called libra that will soon launch next year. the former paypal ceo spoke to bloomberg about the goals of the new project. he will now lead the new organization that will help to oversee libra. >> we went to the blockchain about because, by design, we launched 100 different global organizations that will
participate in the governance of this new network. 27 organizations. we need a way to decentralize governments does no one company should control a network that is basically a protocol for value on the internet. emily: still, lawmakers are calling for them -- the social network to stop developing until lawmakers weigh in. facebook coo sheryl sandberg says a lot of details need to be worked out and also spoke about the m and a strategy. >> if you see something that is targeted to you and you think it has violated your privacy to get there, it's really crazy and scary and a lot of people believe that. if you understand the truth, which is we have not given any individual information, but we have just taken that ad and shown it, all of a sudden, it is a better experience. we have to do a much better job explaining our business model
and explaining why targeted advertising is so important to small businesses around the world so that people feel more comfortable because it is a great service. caroline: in a one-on-one message, you would still see that ad, but it would not feel creepy because it is a one-on-one message? sheryl: we are working on it. but again, if you believe no one is reading your messages, and let's be clear, no one is reading your messages -- that is a good experience. if it is targeted to you and you are worried about how that happens, you are less comfortable, and that's why we need to make the case in a clearer way. caroline: i like that you brought up this has become a focus point, privacy, and we have heard moments of market saying, "i realize i did not get it quick enough. i made a mistake here." do you think facebook -- have you come to understand the way in which the consumer is viewing privacy and how you are building
that into your culture and the -- your business model? sheryl: there is a growing understanding of how important privacy is and how we have to protect it. if you look at the early iterations of facebook, we were allowing people to share too much data early on before 2014. if i used an app, i would share my information and i could share my friends' information. it's really hard to remember. and this is not an excuse, because i think we could have -- should have done better. but the real concern data was that we were hoarding data. people were very concerned that we were a walled garden and we could not share. we had this vision that we would enable you to make your apps more social. you have a playlist, we are friends, i want to hear your playlist. my friend has a birthday, i want to import that to my calendar. those are great experiences.
what we have learned over the years is we need to share the minimal amount of data in ways people really understand it and have full control so we can create those experiences, and i think we are doing that now. we are also looking for the best models around the world. we are in europe, gdpr is the most far-reaching privacy legislation that has been passed. it did not pass anywhere else in the world, but we took those same controls and made them available everywhere because we know people care about their privacy and we know we need to give them the tools to understand this. it is your information. you choose to share it with your friends on facebook. you can choose to share it with businesses or not. that is up to you and we need to make it clearer how that works. caroline: do you think the anger that you saw, that you witnessed was justified? how did you take it personally? sheryl: this has been hard, you know? as anyone who kind of wakes up in the morning and is working hard and trying to do the very best i can, being attacked personally not something i've experienced before and definitely hard, but i think it
should be hard because mark and i and the other facebook leaders and even our employees, we have a really big responsibility. i have a really big responsibility. there are things we missed. we wish we had understood the russian interference in the u.s. election. we didn't, we missed it. we have worked hard to get ahead of it and i think we have done much better in the eu elections, the u.s. midterms, but the fact that this is hard is important because we have a responsibility to people around the world who are using our services. we have a responsibility and i have a responsibility to protect them. caroline: it is really nice to hear you say that. thank you. also, what i really like you bring up is gdpr, eu elections. we are already talking about the 2020 elections in the u.s. are the right safeguards in place, do you think? sheryl: we are definitely working at building them. if you think about what happened with election interference in our platform, if you go back to 2016, we were worried about
foreign actors interfering, but what that meant at the time was primarily hacking into data. that is what foreign actors did. we built a consensus there. i think we had a really good track record. what we really did not foresee at all -- we missed it, everyone missed it, but that is on us -- a new, more insidious threat where people did not hack in and take stuff but they wrote fake stuff. once that happened and we understood it, we knew we needed to put serious engineering, serious money behind it. we have put billions of dollars into protecting our platform, but we also need a better relationship. the u.s. department of homeland security has a task force on it now. they did not have that then. we work with them very closely. in the eu, we had a very local approach. we took everything we learned in the u.s. but worked with experts from 28 countries and had a local operations center here, and we were able to systematically find and take things down. we are now taking down one
million fake accounts a day, almost all we take down before anyone has seen them. i am never, ever going to say to you or anyone else we know everything that is happening on facebook. we don't. but here's what we know -- we know we can come together with governments around the world and other companies to do better. we know that we are doing better. we have seen it in the eu, we have seen that we can take down these coordinated behaviors now. we know that new threats have not been invented and we have to be really vigilant to prevent against them, and that is what we are doing. you saw it in the eu, in the u.s. midterms, and we are going into elections around the world and the u.s. 2020 elections, we are going to be as prepared as we possibly can. emily: that was facebook coo sheryl sandberg with our own caroline hyde. in the meantime, lawmakers have been skewering facebook's plans. sherrod brown of ohio responded immediately, saying facebook is already too big to dominate another industry without oversight. he joins david westin thursday. >> facebook is too big and too
powerful. i don't know that people would have said that three or five years ago, but the public increasingly believes that they are too big and too powerful to engage in a risky cryptocurrency, running a cryptocurrency system out of a swiss bank is a big concern. we, first of all, wants to know more, second want rules about this. we know about what happened to our banking system and there is this collective amnesia about what wall street did. and trump regulators, the white house looks like a retreat for wall street executives. we know that regulators are never as aggressively aimed at big companies, whether they are wall street banks or silicon valley. so we want to shine light on this and figure out what facebook is trying to do and begin to move with the regulators to protect the
public, protect the financial system, and the economy. especially the attacks on privacy we know facebook is so well known for. emily: that a senator sherrod brown -- was senator sherrod brown. it is one of the busiest times of the year for travelers, but is market volatility impacting them? our conversation with expedia's ceo next. this is bloomberg. ♪
emily: last week, we learned airbnb is expanding its experience business and doubling down on tourism. this is as they brought in its business in advance of an ipo, likely next year. just one of the many travel players trying to be a one-stop shop for all vacation needs. so how are traditional travel sites gearing up to compete? expedia's ceo joined us to weigh in. >> with have always been at the
forefront of travel. one thing that has been consistent is this is an incredibly competitive industry. despite the competitive forces, expedia last year did $100 billion of bookings, multiples of the size of airbnb and many of these players out there. we have thousands and thousands of the top engineers, data scientists, and product minds in the world focused on travel, and that is how we stay ahead. emily: let's talk about the venture business and go bigger picture. you recently rebranded. >> you will get used to it. emily: why? why not consolidate homeaway? why not make it just one experience? mark: vrbo has been around for a long time. if you go back in time, people
used to talk about getting a vrbo for the weekend, it was the noun. as we went through and did a ton of research and internationally about all the different names that we could call the new vrbo, vrbo was the one that resonated the most. so we decided to put all of our effort behind that brand. we are pretty excited about rolling it out globally. emily: will we be seeing you make acquisitions and investment in this phase? >> m&a is always part of our playbook, so i would never say never. we are pretty excited about all of our efforts behind vrbo. emily: let's talk about macroeconomic issues. obviously, it is june, peak travel season. and yet we have a u.s.-china trade war, market volatility, and incredible amounts of lyrical uncertainty around the world. how is that impacting traffic? mark: so far, so good.
it looks like a healthy travel environment to us. here in the u.s. 85% of people are planning on taking a trip this summer. 15% was for budget constraint. and this is broadly consistent with what we have seen. americans are traveling, and global travel industry looks pretty healthy. so far, so good. emily: are you thinking about it? do you have a plan b for if things go south? which, you know, who knows in this administration? mark: we are fortunate that we are a global business. in good times and bad times, we definitely see shifts in travel patterns. but people often take their trip as the last thing that they cut. maybe they will take a trip closer to home, maybe they won't take a trip overseas, but they travel. if you look at our results from 2008-2009 those were some of our strongest years. emily: coming up, on top of facebook's digital currency news, money gram and ripple have
emily: welcome back to the "best of bloomberg technology." i am emily chang. ripple announced a partnership with global payments provider moneygram which will let ripple serve as a payment of foreign exchange option for moneygram users. the ceo of ripple joined us. >> it is a big step for ripple and a bigger step for the overall industry. there has been excitement around blockchain and digital assets and what crypto can mean for the industry and the recent players like facebook are diving in. we have not seen much