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Speaker 1: He's a Bloomberg business plan from Bloomberg World Headquarters. I'm
Speaker 1: Charlie Pellett's stocks have halted a three days slide. Volatility
Speaker 1: is easing. The Dow, the SMP, NEZDAK. They are all advancing.
Speaker 1: SMP up eight now to twenty four or forty six,
Speaker 1: that is a gain of three tenths of one percent. Down.
Speaker 1: Industrial is up fifty three to twenty one thousand, eight
Speaker 1: hundred ninety seven, up two tenths of one percent, and
Speaker 1: stack up forty eight up by eight tenths of one percent.
Speaker 1: Ten you're up one thirty second. The yield there two
Speaker 1: point one nine percent. Cold up three ninety beans to
Speaker 1: twelve ninety, up three tenths of one percent. West Texas
Speaker 1: ENEMYEDIAC crued up twenty five cents of barrel to eighty four,
Speaker 1: a game ere of five tenths of one percent. I'm
Speaker 1: Charlie Pelloton. That's a Bloomberg business flash. Thank you for much,
Speaker 1: Charlie Pellet. You are listening to Bloomberg Markets on Bloomberg Radio.
Speaker 1: Influence snapchats in trouble. You might think that big the
Speaker 1: stock price. Stock prices down big time today, big time
Speaker 1: from its high trades of the i fo it got
Speaker 1: up up over the second to the IDEO it got
Speaker 1: up over twenty dollars a share, look shares a Snap
Speaker 1: today stocks trading at twelve dollars and twelve cents, down
Speaker 1: twelve percent for the day. All those unlucky twelve gere
Speaker 1: tender we're all bloom were intelligence global Internet analysts, and
Speaker 1: there tender. Flying hot dogs aren't enough for these guys.
Speaker 1: Dancing hot dogs, I should say dancing hot dogs. Well,
Speaker 1: basically they're not growing users as fast as expected. Same
Speaker 1: thing with sales and this quota particularly, they had the
Speaker 1: increasing revenue coming from the self self platform, which is
Speaker 1: great for long term revenue scaling, but it hammers pricing.
Speaker 1: So basically, you know, the business revenues and the expectations
Speaker 1: for a second half because of that is going to
Speaker 1: be muted. Well yeah, so you're talking abou analysts expectations. Yes,
Speaker 1: people like you who cares what you think? No, No,
Speaker 1: I care problem, no, no it seriously, But the problem
Speaker 1: with business is what's even more important to me as
Speaker 1: much as I care about you. Okay, Yeah, like you mentioned,
Speaker 1: you know, the bigger problem here is a mismatch between
Speaker 1: expectations and what stage of monetization the company is right now.
Speaker 1: And those expectations come from valuation. I mean, we saw
Speaker 1: that the valuation was significantly high and it came to
Speaker 1: the market. Even now it's training higher than Facebook um
Speaker 1: on on some multiples if you actually look at you know,
Speaker 1: the fully deluded basis. So with those high evaluation comes
Speaker 1: high expectations and written lack of transparency into exactly when
Speaker 1: some of these monetization avenue is gonna kick in, when
Speaker 1: are they going to accelerate. It just becomes difficult, and
Speaker 1: that's why you see all this volatility. Yeah, and it
Speaker 1: is interesting to see this because you know, one of
Speaker 1: the parts of this is that the business tell me,
Speaker 1: if I'm wrong with this, that the notion was, uh,
Speaker 1: Snapchat has a bunch of users and they spend a
Speaker 1: lot of time on their phones on on Snapchat, but
Speaker 1: they're not seeing a lot of ads now, so like
Speaker 1: it just throws some ads in front of people that
Speaker 1: are already there and and the little a lot more revenue, yes,
Speaker 1: but how they're throwing those ads is what's sort of
Speaker 1: changing right now. It's much more automated and it's only
Speaker 1: going to increase. And one of the problems with that
Speaker 1: is or side effects of that, is pricing. Uh So
Speaker 1: until the pricing normalizes, it becomes difficult to gauge like
Speaker 1: if the revenue growth will meet expectations or not. You know,
Speaker 1: one thing that's really working for them though, is the
Speaker 1: TV show pivot that they're doing. They're trying to pitch
Speaker 1: these exclusive millennial focus TV shows with partners. They're getting
Speaker 1: good traction. I think that's uh that's something unique that
Speaker 1: they can double down on. Well, and let's talk a
Speaker 1: little bit more about that. So you know, it sounds
Speaker 1: like what you were saying, is that the typical ad
Speaker 1: campaign for for Pinterest. Well, it might have been had
Speaker 1: a lot a lot of revenue was custom created where
Speaker 1: the the images or whatever the ad was had to
Speaker 1: be custom created for the size of the screen and
Speaker 1: to a certain kind of user, and it wasn't a
Speaker 1: program like if they go to website. Quite often there's
Speaker 1: a similar design between different websites and there's a little
Speaker 1: the web banner on the top and there's a little
Speaker 1: square on the upper right hand corner, and those are
Speaker 1: standard size, so the advertisers can program ads to show
Speaker 1: up where they want. And Pinterest meanwhile has to have
Speaker 1: every ad has to be customers that they're limiting how
Speaker 1: much volume they can accept the ads. Yeah. So interestingly,
Speaker 1: like now basically they're making it easier for advertisers to
Speaker 1: advertise on the platform, so you can log in and
Speaker 1: advertise to Mortel versus. Before it was more salesforce driven model,
Speaker 1: if you may, while they were building these tools. I
Speaker 1: think the bigger question we're here is buil the volume
Speaker 1: of ads can overcome the pricing in the near term,
Speaker 1: because you know, we're seeing that with the sales miss
Speaker 1: that they have in second quarter. Technically they have incremental
Speaker 1: sales coming from this new avenue, but still you missed expectations,
Speaker 1: which you know weren't that high to be honest. So
Speaker 1: having some guidance into like exactly how this trajectory is
Speaker 1: going to move for this year until you have that
Speaker 1: this is this volatility is going to continue. Yeah, it's
Speaker 1: it's interesting too with these guys, what are the issues
Speaker 1: around the Android phones. I didn't understand that as I
Speaker 1: mentioned the conference call saying that they didn't expect the
Speaker 1: issues to go away until two thousand eighteen, and I thought, yes,
Speaker 1: second quarter of two eighteen, And that's that's kind of important.
Speaker 1: That is, like most phones, that is very important. You
Speaker 1: see the growth, the user growth that we're seeing, the
Speaker 1: slowdown and user growth that we're slaying seeing it as Snap.
Speaker 1: You know this is this is not going to change
Speaker 1: anytime soon, really because Instagram and Facebook has a much
Speaker 1: larger president presence outside of the US versus Snap, and
Speaker 1: they're taking all these features and getting great traction there,
Speaker 1: and androids penetration is higher in some of these areas,
Speaker 1: and basically users who are using an androids are facing
Speaker 1: performances shoes in terms of like how free flowing the
Speaker 1: app is versus iOS, and that's what they're they're struggling with.
Speaker 1: It baffles me why it's taking them so long to
Speaker 1: to actually fix those issues. But having those uh, that
Speaker 1: timeline of two q eighteen actually works against the theory
Speaker 1: that user growth could recover well. And although it also
Speaker 1: says to me that what they're doing is actually really hard.
Speaker 1: That I can mock the dancing hot dogs and I'll
Speaker 1: send you a picture of my daughter with the video
Speaker 1: with the dancing hot dogs, My ten year old. She
Speaker 1: loves it. Me. I'll put it on the Instagram, on
Speaker 1: the Twitter. Um, but uh, you know, dancing hot dogs. Actually,
Speaker 1: it looks like it's really hard to do, and you
Speaker 1: can see it in the numbers. You can see the
Speaker 1: the big expenses that they've got. You can see the
Speaker 1: cost for hosting due to the technological problems are having
Speaker 1: the Android. As to me, what they're doing technologically might
Speaker 1: be stupid, but it's really hard. It is it is.
Speaker 1: It is hard. That is true. But you look at
Speaker 1: the pace of innovation of competition to write like how
Speaker 1: quickly they're catching up. In one quarter you almost get
Speaker 1: as much as the audience that Snapchat has by coving
Speaker 1: the features and things like that. So you have copy
Speaker 1: the hot dog or the puppy dog with the top.
Speaker 1: It's so cute. Remember the emoji couch? I ever show
Speaker 1: that video? Yeah? Yeah, so that's so that's the exclusive
Speaker 1: content pitch right. I think you know, that's what could
Speaker 1: differentiate them. They're better off becoming TV for millennials, uh
Speaker 1: than just becoming a full flat social network and being
Speaker 1: identified as you know, direct competition to Facebook. Or um
Speaker 1: or Instagram particularly and things like that's a differentiation on
Speaker 1: that front, and increasing monetization on that front is the
Speaker 1: same in grace here the general Wall I do care
Speaker 1: about you think? Uh mud Wall from Bloomed Intelligence joining
Speaker 1: us from our ninety six supposed todios in San Francisco.
Speaker 1: You're listening Bloomberg Markets on Bloomer Radio snapschairs as I mentioned,
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Speaker 1: she's off. But you know, we tell you what time
Speaker 1: it is, we tell you what the weather is, we
Speaker 1: tell you what the traffic is. But where to park.
Speaker 1: The fascinating story about the parable of parking, presented by
Speaker 1: Lift the first, some business news headlines. Charlie, tell it
Speaker 1: and we'll tell you what's going on with oil right now,
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Speaker 1: West Texas Eni Media Crude up four tenths of one
Speaker 1: percent of A, eighteen cents of arrel forty eight seventy
Speaker 1: six on W E, T I, U S. Equities higher
Speaker 1: across the board, stocks halting a three days slide. Volatility
Speaker 1: is easing, Treasuries slipping as markets begin to stabilize After
Speaker 1: a week of verbal sparring between the United States and
Speaker 1: North Korea. The dollar fell after American inflation remains subdued.
Speaker 1: Jim Paulson is chief investment strategist at luth Old Wheeden
Speaker 1: Capital Management. He says, consumers are doing well right now.
Speaker 1: There could be you know, a couple of rough months here,
Speaker 1: who knows. Um, I think we might end the year higher,
Speaker 1: and uh, I think that's more important to keep keep
Speaker 1: focused on. And right now we do have the S
Speaker 1: and P up six at twenty four or forty four,
Speaker 1: a gain there of three tenths of one percent, as
Speaker 1: stack up forty three, up seven tenths of one percent,
Speaker 1: and the Dow Jones Industrial average up thirty seven points,
Speaker 1: again there of two tenths of one percent. Some big
Speaker 1: investors have been warning now would be a good time
Speaker 1: to reduce levels of risk in portfolios. Ray Dalio, who
Speaker 1: leads the world's Are Just Hedge fund at Bridgewater Associates,
Speaker 1: recommends investors consider placing five to ten percent of their
Speaker 1: assets in gold as a hedge against current political and
Speaker 1: economic risks. Right now, we've got gold up three tenths
Speaker 1: of one percent to twelve ninety the ounce are by
Speaker 1: four dollars and twenty cents. J C. Petty reported earnings
Speaker 1: this morning, shares plunging now by sixteen point eight percent.
Speaker 1: I'm Charlie Pellett, and that's a Bloomberg business flash. Thank
Speaker 1: you very much, Charlie Pelly listening to Boomer Markets on
Speaker 1: Bloomberg Radio. Parking for parking to dance for what about
Speaker 1: parking for a lift? For uber and the like? And
Speaker 1: what does it mean? What is the what are the
Speaker 1: lessons to be learned from these companies that consider everything
Speaker 1: that affects their business model. Bloomberg News, Bloomer, I should say.
Speaker 1: Business Week technology writer Joshua Burstein joined us right now
Speaker 1: and uh with this wonderful story in Business Week, the
Speaker 1: peculiar horrable of the lift lot. What is the lift lot?
Speaker 1: So the lift lot is just the parking lot that
Speaker 1: the that lift inherited when they moved into a new
Speaker 1: building in the Mission District, in Mission District in San Francis,
Speaker 1: in San Francisco. Yeah, which is which is which is
Speaker 1: sort of their first real big headquarters as a business
Speaker 1: is getting started. And the Mission District as a peculiar
Speaker 1: part of all parts of San Francisco are peculiar, but
Speaker 1: it is a place, among other things, it's noted for
Speaker 1: its distinct lack of parking. Absolutely, and so they had
Speaker 1: a lot that had fifty three spots in it, and
Speaker 1: this seemed like just such a great boon at first.
Speaker 1: I don't know where their offices are in the mission,
Speaker 1: but fifty three spots in the mission is a ton. Yeah,
Speaker 1: it was. It was a lot, and it was a
Speaker 1: surprise for them. Have a friend whose restaurant was next
Speaker 1: to a funeral home and that was like the it
Speaker 1: was slanted door. One of the one of the great
Speaker 1: restaurants in San Francisco got off the ground in part
Speaker 1: because they had access to the mortuary is parking lot
Speaker 1: around the corner, so people could actually drive into park there,
Speaker 1: and they could charge more money for food because they
Speaker 1: can get a higher income client. Element completely changed the
Speaker 1: trajectory of his right business. That's amazing soft spots, so
Speaker 1: fifty three spots um And what happened was everyone started driving,
Speaker 1: even people who hadn't been driving before decided, well, if
Speaker 1: there's a chance i'll get a spot, then I'll come in.
Speaker 1: And uh. People at the company realized that they wanted
Speaker 1: to try to do something about this. And at first
Speaker 1: they were giving the spots away for free. It was,
Speaker 1: you know, it was a company benefit. And so a
Speaker 1: couple of employees came up with the idea to start
Speaker 1: charging the market rate for parking, the market being whatever
Speaker 1: lift employees would be willing to pay. And the idea
Speaker 1: was that this would discourage people from driving as much.
Speaker 1: And then they take to create an auction within the company.
Speaker 1: Yeah pretty much, And and then the money that they
Speaker 1: made would be used to help fund alternative commuting benefits,
Speaker 1: so you know, lift credits, uh, credits to take the
Speaker 1: bart or so on. What happened, Well, at first people
Speaker 1: were angry. No one likes to lose their free parking,
Speaker 1: and there were some concerns that for instance, yeah, exactly
Speaker 1: and and so Uh. People were concerned that oh if
Speaker 1: I was you know, that only only the highest paid
Speaker 1: employees would be able to afford afford the parking and
Speaker 1: so on. Um. But after a little bit, people really
Speaker 1: warmed up to the idea. It created predictability. Um. People
Speaker 1: who paid for spots knew they would have them, and
Speaker 1: people who didn't pay for spots, you know, we're getting
Speaker 1: something extra on the side. Uh. There was also a
Speaker 1: secondary market that actually arose where people would sell off
Speaker 1: a day's worth of their pump monthly spot if they
Speaker 1: didn't need to drive in the scalping it lift it was.
Speaker 1: There was actually a it wasn't a set formally set price,
Speaker 1: but it was socially unacceptable to charge more than ten
Speaker 1: dollars per day, but it was. But there was literally
Speaker 1: scalping of your You could have a secondary market for
Speaker 1: your parking passy to acquire through a bidding process exactly.
Speaker 1: It was like a stub hub for parking spots, but
Speaker 1: only for LIFT employees. I know a guy in college
Speaker 1: who was it would sell his career as a ticket scalper,
Speaker 1: began his scalping tickets to the the high holidays of his
Speaker 1: synagogue back home. You get that experience that didn't happen
Speaker 1: to LIFT, and so, so what's the status of a hunt?
Speaker 1: So interestingly, UM, the people who started the program got
Speaker 1: very excited and thought everyone will adopt this. It's working
Speaker 1: so well for us UM and they went to other
Speaker 1: tech companies who they knew had bad parking situations, and
Speaker 1: everyone said, yeah, there's no way we're doing that. We're
Speaker 1: not taking away a benefit. No matter what the benefit is,
Speaker 1: people will leave and they'll go, you know, from Facebook
Speaker 1: to Google or whatever. If we take away their parking.
Speaker 1: You mean the Affordable Care Act, the same deal wasn't
Speaker 1: benefit once given does not get carder to take away.
Speaker 1: That's really interesting that also this sort of market approach
Speaker 1: is coming from from Lift, which is seen as the kinder,
Speaker 1: gentler uber. Yeah. Absolutely. The funny thing is that this park,
Speaker 1: this idea to parking is seen um within sort of
Speaker 1: transportation nerds. This is like one of the fantasies to
Speaker 1: be able to charge market rate for parking because right
Speaker 1: now cities generally have a lot of free street parking,
Speaker 1: and there's a thought that this contributes to a lot
Speaker 1: of the traffic problems because everyone just circles looking for
Speaker 1: spots and people aren't really paying what they what it
Speaker 1: should cost them to drive. But maybe, you know, market
Speaker 1: rates for everything isn't the best way to solve It
Speaker 1: does not It does not provide sort of equality from
Speaker 1: our government to all people that really know more benefits
Speaker 1: accrue to the rich when you charge for everything. Yeah,
Speaker 1: and absolutely that's a good point as well. Um, fascinating
Speaker 1: story from left and so. So these employees try to
Speaker 1: create a start they're always parking startups in in technology
Speaker 1: as well. Yeah. So the last um, the last I
Speaker 1: talked to them, both of both of the guys who
Speaker 1: started have left the company. Uh, they're both interested in
Speaker 1: something along these lines, but haven't hit on exactly the
Speaker 1: way that they would do it. So you know, TVD
Speaker 1: start off, watch this space start up to come ever,
Speaker 1: the story of Silicon Valley, great story again. The story
Speaker 1: in Bloomberg business Week, it's called the Parable. The particular
Speaker 1: peculiar parable of the lift Loop. Fantastic stuff. Joshua Brusting,
Speaker 1: the author of this illustrated piece. Even it's like a
Speaker 1: graphic novel in two pages. Um, maybe all of business
Speaker 1: weeks should be a graphic novels some issue. I think
Speaker 1: that's the next plan. Are right? Listen to Bloomer Markets
Speaker 1: on Bloomberg Radio Nathan Hagar Right now he's gonna look
Speaker 1: a world of national news headlines for many nine ones
Speaker 1: studios in Washington, d C. Thanks Scory. First, President Trump
Speaker 1: warned to fire and fury. Now he has tweeted that
Speaker 1: military options are locked and loaded should North Korea act unwisely.
Speaker 1: The rhetoric is ramping up, but Bloomberg National Security Team
Speaker 1: leader Bill Ferries notes the military posture doesn't appear to
Speaker 1: be doing the same. Secretary of Defense James Maddis has
Speaker 1: been on a tour of the West Coast. He visited
Speaker 1: Amazon's headquarters, He's visiting Google today. I would I would
Speaker 1: think that if if US military act and we're more eminent, Uh,
Speaker 1: you'd expect the Secretary of Defense to be jumping on
Speaker 1: a plane and heading back to Washington. So far, that's
Speaker 1: not what we're saying. The President does plan to get
Speaker 1: a briefing today from Secretary of State Rex Tillerson and
Speaker 1: UN Ambassador Nicky Haley about Tillerson's recent trip to Southeast Asia.
Speaker 1: A train crash in Alexandria, Egypt, has left at least
Speaker 1: thirty six people dead more than a hundred others hurt.
Speaker 1: The head of ambulance services in Egypt says the train
Speaker 1: coming from Cairo hit another one that was arriving from
Speaker 1: port said they're still lifting wreckage to save people trapped inside.
Speaker 1: Deadly train crashes are relatively common in Egypt, mainly due
Speaker 1: to decades of poorly maintained equipment and bad management. A
Speaker 1: handful of Democratic lawmakers is renewing it push for an
Speaker 1: investigation into Deutsche banks loans to President Trump and its
Speaker 1: role in helping Russians shift billions of dollars to the West.
Speaker 1: House Financial Services ranking member Maxine Waters has written to
Speaker 1: Chairman Jeb Penzeling, urging him to issue subpoenas to Deutsche.
Speaker 1: This is waters fourth attempt to force an investigation. Checking
Speaker 1: the leaderboard of the PGA Championship and sharp that North
Speaker 1: Carolina Kevin Kissner remains alone at the top eight under
Speaker 1: through two rounds. The one thirty four global news twenty
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