Skip to main content

tv   Best of Bloomberg Technology  Bloomberg  March 13, 2017 1:00am-2:01am EDT

1:00 am
anchor: it is 1:00 p.m. in hong kong. i have an update of the top stories. ask tucker is to step down ceo and president of hsbc. he will take up his new role on october the first. one of his first tasks will be to find a current successor to the current ceo. he is being replaced by another person. signs ofconomy shows improvement. the national bureau of statistics said investor or output in january and february group more than 6% and there is little risk of a hard landing. a different story in japan, where factory activity showed
1:01 am
more weakness. theresa may faces a rebellion inside the conservative party ahead of a vote later on monday that could trigger the brexit process. some tories want lawmakers to vote on what would happen if beat you talks and without agreements. the prime minister wants brexit on tuesday if she wins the vote. this is bloomberg. let us take a look at the markets. afternoon trading getting underway in hong kong and china. the hang seng index is up about 1%. shanghai composite is up almost .5%. the nikkei 225, nearly unchanged. ♪ caroline: i'm caroline hyde and
1:02 am
this is the "best of bloomberg bring you," where we the top interviews from this week in tech. the wiki leaks data trove. thousands of documents reportedly from the cyber espionage playbook of the cia. plus, the future of h-1b. the trump administration slams the brakes on one of tags most most criticalh's overseas talent. google steps up its cloud business. all the highlights from this week's google next conference. to our lead. wikileaks published thousands of documents reportedly taken from the cia that exposed a massive toolkit of techniques. the ability to access information from what we believed to be secure messaging apps including whatsapp, telegram, and sigma. they can reportedly run malware
1:03 am
on microsoft, windows. how wikileaks got its hands on the materials. according to cnn, criminal investigation has been opened. julian assange said he will work with technology companies to close the gaps identified. >> hearing the calls from some of the manufacturers, we have decided to work with them to give them some exclusive access to the additional technical details we have so it fixes -- so that fixes can be developed and pushed out so people can be secured. to say thee went on disclosures show the cia has "lost control of its entire arsenal. we have a developing story on bloomberg technology. take a listen. been getting statements. today, they took a stab at julian assange, saying "he is not known as a bastion of integrity."
1:04 am
so that was pretty interesting. we have also heard from them saying that the american public should he deeply troubled by any kind of leaks that wikileaks may be putting out there that could compromise u.s. intelligence and protect the american people, so while they have not quite, you know, confirmed anything with the leaks or these disclosures, they have come out publicly to us, telling us directly that, you know, they do not stand for any kind of, you know, anything that would compromise u.s.'s ability to gather information, but they have also tried to make clear that they are not allowed to do electronics surveillance on u.s. soil, so you see them pushing back at some of the accusations we have been hearing from some of these disclosures over the last couple of days. caroline: julian assange himself weighed in more on the webcast. a trojan he felt was
1:05 am
horse from the cia. julian assange: the cia developed a giant arsenal, what appears to be the largest arsenal of trojans and viruses in the world, that attacks most systems that journalists, people in government, politicians, ceo's, and average people use. did not secure it. lost control of it, and then it appears to have covered up that fact. accused of losing control and then covering up the facts. how dangerous could it be if the cia did indeed leave these leave abilities other -- these vulnerabilities find as well? >> the real name for these things is weapons. it is one thing to release the tools when you are wikileaks, but when you release the actual vulnerabilities, those can be weaponize. -- weaponized.
1:06 am
when it is spread massively around the world, attackers will use that one ability and 99 -- vulnerability and 99% of breaches happen because of an unpatched vulnerability. if wikileaks wants to be responsible for once, they need to take great care in how they release these vulnerabilities. caroline: the fbi are looking into how the fbi came into this information. >> wikileaks told us that this trove of code and malware and viruses or security vulnerabilities was circulating for a long time and they say that one of those people handed that content over to wiki, so the question is, who could have -- who would that have been? if the fbi and internally, cia, is going to be making lists of
1:07 am
that ise people are, something we are going to have to wait and see if this is going to be happening, kind of investigations into this. caroline: this is a strained relationship we have seen between the text giants and washington at times. i mean, our minds go back to san bernardino shootings and the fact that they do not allow backdoors into their encryption. how does this put the onus on the relationship going forward? >> i think government needs to make some very strong national security decisions about what they need to provide to tech companies. here, if indeed, the cia did lose this information and they knew it would proliferate it and certain hackers were using it, i would have liked to see earlier disclosure and maybe work with tech companies to help strengthen our defense because that is security. protecting the people in the u.s.'s national security, especially something so important as a cell phone and our data, which is where we put
1:08 am
everything we do and say these days. caroline: still ahead, alphabet ups its club game, adding new customers and partners. will it be enough to catch up to cloud leaders out of microsoft? reusable origins' rocket is expected to debut before the end of the decade. executive jeff bezos expands on that. >> the long-term vision is millions of people living and working in space. we need a spacefaring civilization for a whole bunch of reasons, and that is the vision. ♪
1:09 am
1:10 am
isoline: disney's ceo staying put on a panel of ceo's to advise president trump on economic matters. sayingvist requested -- his participation suggests he supports trump's policies. take a listen. >> i did not believe nor do i believe that my mi membership in that group endorses any specific policy of the president or his administration. i do believe it is a privileged opportunity to have a voice in the room. caroline: speaking of president trump, he met with lorraine powell jobs at the white house wednesday to discuss immigration policy. she is the widow of steve jobs. critics of trump's immigration
1:11 am
policies have often cited steve jobs of an example of how the u.s. has benefited from welcoming foreigners. his biological father was a syrian immigrant. immigrants anded refugees affected by trump's executive orders. now, to google. it seems reliability has a competitive advantage over cloud computing, which suffered an outage last week. google clouds chief cited data from clout harmony that ranked google ahead of those companies as the most reliable cloud company in 2016. google cloud is also attracting clients such as ebay and verizon to a broad portfolio of products focused on security. the ceo said he sees cloud computing evolving it into one of the company's core products. cloud is aoogle
1:12 am
natural extension of our mission to make information access useful. we are doing it for business. it needs increasing availability and lowering the cost of data storage and computing resources. caroline: we also sat down with the chief scientist of artificial intelligence at google cloud, asking her about the transformation of the machine -- of machine learning. >> i think it is going to be tremendous. i think it is not only just cost saving because of machine intelligence and data and analytics. it is going to open up -- in financial services, suddenly, we can have better service in terms of thinking, personalized thinking, more in retail -- banking, personalized banking, more in retail, delivering products to customers. machine learning is huge. i deeply believe it is the
1:13 am
driving force of a transformative time for our industry and enterprises. caroline: is this why you went into business? you left academia to go into google? what attracted you to alphabet in particular? leave academia. it is a sabbatical. i think you are totally right. i have been a technologist for over 20 years and i have been working the field of ai and machine learning and i want to fuel growth from a niche academic field into this major force of our society in the of our business. i want to participate and contribute in the transformation, and i thought hard about what can ai and machine learning to contribute, -- machine learning contribute?
1:14 am
i don't want technology to be in the hands of only a privileged few. fei-fei: cloud is the best way to democratize ai. it is for so many people and some of businesses. caroline: the question of ethics comes in to machine learning as well. is that something you think businesses and academia is keeping the pace of -- apace of? julian assange: i think -- is ani: i think this important topic that we should invite the whole society to participate. every time there is a new technology transformation in our human civilization, that technology becomes a force of change in the way that we live, we work, we conduct our doinesses, we regulations, we create policy. this is an inevitable. the important thing is that all parts of society participate in ass discussion, and whether
1:15 am
the educator or as a technologist, i care deeply about this. caroline: you talk of zation.tiz are the price is going to continue to drop, do you think? particulartinue that trajectory? fei-fei: i don't think i have many things sensible to say. what i want to talk about is that competition is going to be what we can give to the customers that they need, and i know and we know the customers are going to need powerful, easy to use ai and machine learning tools and that is what i will be focusing on. caroline: how do you think google cloud and the ai machine learning elements are better than the rest? julian assange: -- fei-fei: we
1:16 am
need to look at google as a company. google as a company has a deeper andn terms of ai talent technology. before i joined google, i was in academia and i know that some of my best students go to google, and i know that my google , engineers, researchers, produced some of the most phenomenal work in machine learning and ai. if you look at what google brain library's some of the work they have been doing in health care, winning challenges in ai competitions, look at our colleagues, and many things. is unmatchedogle in its ability of ai technology and machine learning technology. caroline: that clearly continues
1:17 am
to attract people such as yourself. i have to ask you about the ribbon you are wearing right now. it is international women's day. i look around and it is not a particularly -- not particularly filled with females. you talked about ai being a sea of dudes. is that still the case? fei-fei: it is. we should acknowledge the diversity issue in ai and stem continues to be an issue. it is not just gender diversity. there is other diversity. coming up, wikileaks exposes alleged cia spying techniques. more on the south korean giant's latest debacle. space colonization dreams gets its first customer. this is bloomberg. ♪
1:18 am
1:19 am
caroline: the company has revealed the first images of the -- the first false tale -- the first full-scale test run in the avada desert using it as proof of concept to prepare for the construction of its first installation. it will work on transporting goods.
1:20 am
saw a lot of action this week. on monday, the founder tweeted out pictures of the first of seven engines for the giant reusable rocket. they announced the first paying customer. blue origin has signed a client. this is a company which prepares to launch more powerful rockets in the next decade. they announced the partnership. few months ago, we started approaching customers and, you they were very interested right away, and it is really a great partnership because they have done so many new vehicles in the past, and so we could not hope for a better first burner because they are going to be able to help. caroline:. hall was at the
1:21 am
satellite 2017 conference and joined us from washington. >> it is a huge step for the company. explorationace company that has lived on jeff bezos' dream and they have a paying customer. this is the satellite industry's premier networking and conference event, so this is probably the first of what will likely be more paying clients in the future. caroline: they have already been a customer of spacex. how does spacex compared to where blue origin is right now? the: what we are seeing is continual development and improvement of new and more powerful rockets that are capable of launching satellites to geostationary orbit, which is, you know, very far away, and the rocket blue origin is working on and they say 2021,contract is for
1:22 am
but knew glenn is going to be a powerful rocket on the scope of which we have not seen in this country for quite some time and i think you are seeing bezos expand to commercial paying customers. there is a great story on the bloomberg saying about taxpayers and how much they might be on the hook the next time a space mission by spacex or private companies actually fail. is this something known by the general public or something they should be looking to themselves? dana: i think the launch industry is very familiar with mishaps so whenever a rocket pa thats on a launch[a is a setbackd because image -- on a launch pad a setback because images of burning rockets do no one any good.
1:23 am
occasionally, the way the insurance deals are structured has to be different for each provider, but what you are going to see going forward is bigger, heavier, more powerful rockets capable of launching heavier and grander payloads, and come you know, if you are a satellite company, you have more options. you can go on spacex, blue origin, and so for the satellite industry, this is great for them because they have more options and there is more competition, which ultimately will lower the cost for everyone. great for satellite. what about great for the consumer who is desperate to get into space? do you have any timeframe for what blue origin is promising? dana: they are talking about taking tourists to the edge of space for a few minutes of weightlessness and bringing them back. i don't know what the timeline for that is, but i think it is within the next couple of years. they have leaned on what they have learned from the test flight of me shepherd to help develop new glenn, -- new
1:24 am
shepherd to help develop new glenn. that elon muskow is a visionary who potentially looks at us living outside in space. what does jeff bezos hope to achieve? dana: they are similar guys in that they are both tech billionaires who made their fortunes in the internet and then immediately plowed those fortunes into private space companies. s startedtarted -- bezo blue origin 15 years ago with the income he earned as amazon's his vision is similar in that he wants people living and working in space. caroline: that was bloombergs dana hull in washington. more headaches for samsung. according to documents released by wikileaks, samsung smart tvs could be used to spy on their users. the claim is that samsung smart tvs have a microphone designed to take voice commands which can pick up information while the device appears to be switched off. samsung says it is aware of the
1:25 am
wikileaks reports and is urgently looking into the matter. the south korean tech giant is already hurting from other recent debacles which has jay y. lee preparing to stand charges for embezzlement. computingere many devices that were mentioned in that report from wikileaks from apple phones to android phones. of the last things amps up needs right now. they are trying to get back on track after the troubles with the note 7 smartphone that was bursting into flame last year. they are poised to introduce the next smartphone so they don't need any more hits to their brand-name. the wikileaks document shows the cia had been using weeping angel to convert smart tvs into something that could look like it was turned off but would actually be monitoring what was going on in the room, so not a good thing for them. caroline: not a good thing when it is a product element and
1:26 am
meanwhile, at the helm of the company, jay y. lee going in to face court once again. to us how much the investigation into the executives of samsung out. to have broadened peter: these will be the preliminary hearings for the trial. it is not clear at this point whether jay y. lee himself is going to appear but the attorneys from both sides will appear and layout the timeframe for the trial. one thing that is striking is how quickly it is moving at this point. the special prosecutor was set up, tasked with investigating these allegations of trading favors at the highest level of government and business and only given about 90 days to do that, which is very quick by international standards when you look at the big scandals in the u.s.. he asked for a 30 day sametigation and the administration of the president who has been impeached denied him the extra 30 days to keep digging.
1:27 am
they will not let him in to the be ablet's residence to to continue the investigation so he's playing a quick game right now. the trial will begin and move pretty quickly. caroline: how is asia responding? the investor base does not seem to be. we see samsung at all-time highs when you are looking at the share prices, but is there concerned that jay y. lee could end up in prison? what does that mean for the business? high hurdle to prove he personally was involved in some of these payments. samsung has denied wrongdoing here. they said they did give tens of millions of dollars in payments to the confidant of the president park, but they said that was not an exchange for payment. there is a high hurdle for the prosecutor to be able to prove jay y. lee himself was involved in this. samsung business has been continuing quite strong. the shares are near an all-time high at this point.
1:28 am
the chips business and display businesses in particular have been doing quite well, so that have bolstered them and they will come out with a new smartphone at the end of the month. we'll see how that plays out. caroline: that was your all was peter int tokyo. president trump latest executive order puts the brakes on h-1b visas. what does this mean for silicon valley attracting the top tech talent? all episodes of bloomberg technology are live streaming on twitter. check us out at bloomberg tech tv, weekdays at 5:00 p.m. in new york and 2:00 p.m. in san francisco. this is bloomberg. ♪
1:29 am
1:30 am
>> it is 1:30 p.m. in hong kong. china's economy showed signs of improvement in the first two months of the year. the national bureau of statistics said industrial outfit in january and february grew more than 6% and there is little risk of a hard landing. a different story in japan where factory activity showed more weakness. a group of former u.s. officials want informal talks with north korea amid rising tensions. specialistence helped broker the 2005 deal with their nuclear program and hopes to arrange a meeting.
1:31 am
the australian treasurer says his biggest worry about the economy is low-wage growth. he was speaking exclusively to bloomberg markets: asia. the biggest challenge we have --to ensure what a story of australians are earning is increasing. it has been flat for. -- for a period of time now. --t else trillions are australians earn is the big challenge now. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. let's get a check on how markets and asia-pacific have been trading. here is juliet. >> it is looking pretty good, particularly on the south korean index, up over 1% and holding at a tie is level since may of 2015. very solid gains after the court
1:32 am
upheld the impeachment of the president. the other market is also doing very well and holding. overang seng is over -- up 1% geared we had the upgrade from goldman on chinese equities. a lot of bonds are higher come as well. the australian note is showing weakness. i want to have a look at some of the stocks in the region. hsbc in hong kong, doing quite well on the management overhaul. they have a new chairman. there is a little bit of downward pressure for aia shares, off about 3%. to sheila up -- to sheila about three -- 3.46%.
1:33 am
a little upside on the aussie dollar. we are live from london at the top of the hour here on bloomberg television. this is bloomberg. ♪ caroline: welcome back to the "best of bloomberg technology." i'm caroline hyde. this week, president trump took a second crack at his controversial travel ban. the new executive order replaces the original and restricts entry into the u.s. to people from six predominantly muslim countries. iraq was removed from the first list, and the language was amended to make clear that visa, green cardholders in dual citizens will not be denied entry. it is more onerous in certain areas though, with the suspension of the 15-day premium processing program to pass track -- fasttrack applicants for h-1b visas, a process that silicon valley tech firms used to find the best and brightest talent. we caught up with michael solomon.
1:34 am
he is founder of 10 next management, a recruitment firm. >> i believe what we are looking for right now is the beginning of the dismantling of this program, and i think that will work counter to the administration's goals, which is unfortunate. caroline: we discussed h-1b visa last time you were here. beenow sometimes it has misused by certain companies. how could it be improved rather than dismantled, as you are currently worried about? >> i believe one of the things we talked about the last time i was here is the idea that we can increase the threshold for hiring, so rather than a $60,000 minimum, move that to $120,000. the companies who need to bring in foreign talent because they can't get people here can easily afford to pay twice what they are paying now. they can afford to pay much higher expedited fees. that is good for the government. that is good for the economy. it will not take away jobs from
1:35 am
people here, because if people here are qualified for those jobs at lower prices, they will take them. the problem with what is being proposed now is that you reduce the number of tech talent that come in, all you would do is increase the pricing for those here. it will not create new jobs. caroline: how have your clients been reacting to this? have they been trying to find talent ahead of any sort of cutback? we know it starts in april and they are allowed their new allotment of people coming in on h-1b visas, but how are they trying to maneuver? >> i think everybody is sort of frozen right now. we have seen this administration make a lot of very bold moves, then retracting from them, and i believe what we are observing right now is everyone trying to understand the changes, how quickly they will rollout, and how it will impact them. the announcements just made are being digested as we speak, and i think we will see what the tactics are. the truth is that for a lot of
1:36 am
companies relying on those expedited visas, they will have a shortfall and have to deal with the fact they will have to find local talent, and it may not be the right talent for a period of time, but maybe worse, they move those roles offshore completely, in which case we all lose out. caroline: are you starting to see that or hear that voiced by clients? >> it is sort of a simple equation. when you have a job that needs to get done and you can't find people here to do it and can't bring people here to do it, you will go somewhere else. caroline: what are the most likely areas? think aretries do you being looked at the most? >> india comes to mind first because they have a very large population of educated people, but i hear especially as you look in the data science realm and machine learning, more about eastern europe, and russia in
1:37 am
particular, but there are other places in eastern europe that have large swaths of tech talent, and we are just going to see these jobs and the tax base go other places because somebody has to do the work. caroline: have you seen openings piling up? is the talent crunch already upon us? you said at the moment we have sort of a freeze going on, but are you seeing it being demonstrated? >> i believe the talent crunch has existed for years and will continue to exist for years. i have not seen something happen in the last few months that makes it much worse, but i do think we are going to see as this policy and the effects of this policy come into play, we are going to see rising prices. that is the first thing we'll see, that companies will pay more for jobs that they were paying less for prior. caroline: the cost base going higher. michael solomon, do stick with
1:38 am
us, uber employs are starting to explore exits from the company. that is according to a report by "the financial times." last week, two executives resign from the ride hailing app, and the company draws scrutiny of its every move. how does being under such a microscope impact employees? michael solomon, let's bring you back, founder of 10x management. i want your take on this, because is there an uber exit -- exodus going on at the moment? are you seeing a pool of talent coming from that business? >> i think we will see some big changes as result of what is going on at uber. there are a couple of things you have to note. when a company has a misstep, everybody can be forgiving, everybody can knowledge -- acknowledge that all companies and management make mistakes. when you have a second misstep, more people question whether this was a one-time anomaly, a trend, a failing of management? when you have a third and fourth misstep within a two week period, you will see fallout from that. you will see people leaving.
1:39 am
you will see lots of discussion about management and culture changes, and you will see people ready to go, because there is no shortage of jobs for these people. caroline: does it still look like a good place to have worked , do you think? are people putting off applying for jobs there? when people are leaving, do they want to brag they are there? >> funny you should ask that. we have a returning client to us who has uber in his experience, somebody he has done work for in the past, and we had a long discussion about whether that is something we should list right now. i will say that when we started the discussion two weeks ago, it was an absolute yes, with me saying very clearly that this is a big, strong company and the fact you have done work for them was a good thing and no one will hold you responsible for mistakes management made, but as the stories of the last two weeks have continued to unfold
1:40 am
and it seems like foible after foible, you start to question that. i still think it is worthwhile to list it as a company. it is an amazing platform and amazing piece of technology, but from a cultural and management standpoint, i think that is a hard line to walk. caroline: coming up, our exclusive conversation with udacity and google x founder sebastian thrun and his take on automated driving. and we speak to one of the biggest peer-to-peer lenders in the united kingdom, how the company is faring after brexit and what is ahead for the u.s. business. that is next. this is bloomberg. ♪
1:41 am
caroline: now sebastian thrun is known to be one of the most innovative minds in silicon valley. a research professor at stanford university, and founder of google x. now he has moved on to found udacity, the online education
1:42 am
start up that offers skills for specialized jobs like automated cars. the company just announced two new nano degree programs along with 19 new hiring partnerships. we caught up with sebastian thrun and asked how partnerships will help students land jobs at companies like facebook and google in the future. >> we have companies as far ranging from google x and irobot, companies that want the latest and best talent. there is a huge gap between the talent that exists today and the talent companies want. udacity gives every person a chance to upscale themselves and get the right talents so they can find the right job. caroline: the timing is fascinating. it was just yesterday we were discussing the executive order put in by donald trump making it harder to get h-1b visas. this is something that is depended on by silicon valley in particular to get the right talent.
1:43 am
can talent be fostered within the united states? >> absolutely, yes. we have amazing talent in this country. we have some of the world's best universities but it is not available for everybody. udacity makes education accessible and gives people skills that are brand-new, leading edge. we have a self driving car degree. udacity he trains more self driving car engineers than all universities combined at this point. we have companies like mercedes, waymo, and tesla will end up hiring them. caroline: how much has there been a worry, concern that these technology degrees and technology schools haven't always had the employee and indeed the amount of employment that many had hoped? has that tarnished udacity? or do you think people understand the rates at which you can get people into the workforce and quickly?
1:44 am
>> again, i believe our students trust us. we are working really, really hard to keep costs down and get people jobs. that's why we make things like money back guarantees and so on. we promise students tuition back if they cannot find a job. the difference between us and else, we go to top companies like amazon and facebook and ask them what would it take for you to hire a person, then they say they need to prove proficiency. that becomes our curriculum. caroline: talk to me about the rest of the world. before we have seen tech talent coming to silicon valley, particularly from india, china and other parts of the world, and europe. are those people going to remain and create jobs at home now if the visa applications become harder, if moving to the united states becomes less palatable? >> i can tell you, the same
1:45 am
talent is needed around the world. every company now is a mobile company because of android and ios. every company is a machine learning and big data company. there is so much data out there and companies realize they have to use the data. our students find jobs in many places. we are proud of this. we opened up in saudi arabia. and saudi arabia, women aren't allowed to drive, so they are all online and speak english, and we can empower women in saudi arabia in a way that has not happened before. caroline: you're talking about saudi arabia, but are there other areas of the globe where you want to be? >> i want to be in every household and i would love to make it free if i could. i would love to give more scholarships. the reason is that there is a huge inequality in the world. she takes a -- if you take, say
1:46 am
africa, middle east, indonesia, india, south america, you have more than half the world's population and you won't find a single top talent university. that does not mean those people are dumb and don't deserve education. it just means they don't get it. we are bringing great education to all those people. caroline: you have had interesting competitions, and china in particular. where do you think silicon valley needs to be worried right now in terms of competition and the talent of technologists and indeed technology companies? >> china has done an extraordinary job in tech. if you look at the big tech companies, four out of 10 are chinese at this point. none are european. i think silicon valley will remain this source of crazy, disruptive innovation. i think the people who think new things and build something completely out of the box tend to eventually come here and work with us and others. i think china is doing great job in part because china is very large.
1:47 am
it is four times as big as the united states. the market is very large. that is why there are so many great chinese companies. caroline: will the u.s. always be the number one market for you? >> i wish i had a prophet in my family to know where the world is going, but i love the united states. i love what we do here. you can be an entrepreneur and invent new things here and get away with it, which is great. we are in some sense the university of silicon valley now. we are reinventing what the university should be. caroline: do you think that is a risk under the new administration? >> i am still in my wait and see mode. obviously there are many things to be said on both sides, but i think everybody, including the president, has the good of this country at heart, and everybody
1:48 am
i talked to, i spent half the day with governor kasich, for , really worry about how can we take the great american workers and make them fit for 21st-century technology. so actually i think udacity is silicon valley's response in part to this nation, to take everybody along and leave nobody behind. caroline: that was udacity founder sebastian thrun. this week, we have been focusing on the future of digital lending with the peer-to-peer lending picking up steam globally. we kicked things off on monday with some of china's regulatory hurdles, then turned to the u.k. and u.s. funding circle, the london-based peer-to-peer lending operates in four countries. funding circle cofounder sam hodges joined us for more. >> there are some big differences between the u.s. and u.k. markets. the starting point is the end borrower, the customer we are trying to service similar. it is an established small business owner looking for capital. the u.s. market is bigger and
1:49 am
more fragmented, but over all a lot of the principles also apply well in the states. caroline: what about the growth targets for origination of loans here in the united states? can you paint us a picture of where it goes? >> absolutely. we have grown the business precipitously in the last few years, and this year anticipate growing between 75% and 85% based on strong performance in 2016. we continue to see a huge opportunity to serve small business customers across the states and are focused on delivering a high quality experience for all of them. caroline: what about the credit problems in the loan book that struck funding circle in the u.s. in 2016? you had to stop making new loans. how has the credit scoring changed? >> we actually grew our business through 2016. certainly there were pockets of 2015 loans that underperformed our expectations, but going into 2016 and now in 2017, we feel positive about the overall
1:50 am
credit performance. our 2016 book is holding up well from a delinquency perspective, and i think our institutional and individual investors are happy with the yields they are getting on the marketplace. caroline: you talked about institutional investors there, are we seeing a heavier weighting or similar waiting of institutional investors wanting to buy up the loans in the u.s. vis-a-vis the united kingdom? >> we form capital in three different ways globally. here in the states, we have a number of large institutional players. most recently, last week, we announced another $100 million commitment from community investment management, which is an institution focused on social impact. we are excited about that. beyond that, we have a fractional marketplace with credit investors. we also have a set of our own funds. over time, what i anticipate is you see that reasonably balanced across those three legs of liquidity. caroline: would you ever get a banking license? would you want to make loans on your own balance sheet? >> we are licensed in the u.s. the way we have approached our
1:51 am
regulatory framework is on a state-by-state basis. we hold licenses in 13 states, and in other states, you don't have to be licensed or passport licensing from other areas, so we don't necessarily see a need to get a banking license in the united states. we have a framework that works very well as it is. caroline: still ahead, the company that is looking to be the netflix of fitness classes. we focus on the technology of peloton next. if you like bloomberg news, check us out on the radio. you can listen on the bloomberg app,, or sirius xm. this is bloomberg. ♪
1:52 am
1:53 am
caroline: peloton is one company taking advantage of the demand for on demand everything with proprietary bicycles and tablets that let users tap into classes from home. convenience comes at a cost. carol massar has the story. >> this may look like your average cycling class, but it is not, and what you can't see in the studio are the hundreds of riders joining in from home. >> last one. i need you to be magical. >> peloton is one of many companies disrupting the fitness industry. from daily burn to crossfit, fitness is becoming more about on demand and all access. there is an increasing number of workout companies using technology to offer members unlimited streaming workouts that lets users take classes from different locations or in the convenience and privacy of their home. peloton cofounder and ceo john foley likened it to people wanting in on their terms, their
1:54 am
time, and more convenience. >> going back to when we grew up, at 8:00 you had to be there for magnum pi. now with netflix and streaming, you can watch content and consume content where you are, when you want, so i think fitness is the next frontier of that, and i think peloton will help to pioneer it. >> today, some $26 billion is spent annually in the u.s. on fitness. digital workouts are taking a chunk out of that number. on demand fitness services jump to nearly 8% of total spending on workouts last year, up from nearly 5% in 2014. at peloton alone, sales doubled from 2015 to 2016. the company made $170 million in revenue last year, nearly three times as much as the year before. foley, who founded peloton, hopes 2017 will be the company's first profitable year.
1:55 am
how do you see yourself? is it an application? is it fitness equipment? >> at our core, and innovation and technology company. >> health and fitness? >> we are in the fitness category in the first hard court technology company to enter the category. >> peloton has its own stationary bike that lets users tap into classes or a library of workout offerings at any time of the day in the privacy of their own homes. how many bike owners do you have? >> so we are approaching 100,000 bikes in the market. >> ok. is that globally? >> it is effectively globally. we sell domestically, but people have taken them to 26 countries, so we have bicycles all over the world. right now we are focused on selling the bikes in the states. >> there are rides where you can be in europe riding or part of a
1:56 am
live class or download a menu of different types of classes. i'm just curious, what gets the most use? >> interestingly, only 20% of the rights taken our life -- are live. i think the live experience is so much more fun because of the energy of live music. you are there. they can give you a shout out, break the fourth wall, look into the camera, and say you will pull us up the next hill, and it is very immersive. you are part of the theatrics and entertainment for a live class. on demand is 80% of the rides, and what it tells you is that people care about their instructor, their time, controlling that environment versus being driven by our schedule. >> have your own stationary bike and still want access to classes at home? there is a peloton app for that. you mentioned technology innovation companies. who do you see as your competition? >> we are rooting for the category.
1:57 am
we love soul cycle, flywheel, yoga. we are trying to be good in the fitness category. so to your question, what keeps me up at night is if apple, google, or amazon were to enter our category. those are the only three companies that have the tech resources and tech chops that could give us a run for our money. >> ipo this year? >> no. >> because? >> we are looking to do a fund raise in the next couple of months that would allow us to be as aggressive as we want and take our time considering the public markets. >> next year maybe? >> maybe. >> maybe. i read something about a $10 billion valuation in five years? is that real? >> i would be disappointed if it weren't real. i think that certainly starts to be in the order of magnitude as what we are seeing as the opportunity here. i think that is on the low side of where we see the business
1:58 am
going in the next 5-10 years. >> this april, the monthly subscription service which grants users access to classes plans on rolling out its own video on demand feature, joining daily burn and beach body on demand, which have been offering streaming since 2015. while currently only 15% of fitness consumers are working out on demand, it's not expected to stay that way. >> in five or 10 years, we will see the digital fitness trend grow. i think the new entrants to the market will be more in tune with new technologies, including augmented and virtual reality. >> i think americans are living busier lives, so they want things to work into their schedules and work into their locations versus having to go somewhere. i think that is a dated concept. caroline: that does it for this edition of "best of bloomberg technology." we will bring you the latest in tech throughout the week. be sure to tune in wednesday.
1:59 am
remember, all episodes of bloomberg technology are now live streaming on twitter. check us out at @bloombergtechtv weekdays. that is all for now. this is bloomberg.
2:00 am
>> quelling the rebellion. theresa may prepares for potential backlash and her own party as you can lawmakers vote on the brexit bill. spat with thec netherlands can -- intensifies. could it spark a fight to the right? hsbc names a new chairman. the shares jumped the most since december. ♪


info Stream Only

Uploaded by TV Archive on