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tv   Best of Bloomberg Technology  Bloomberg  July 14, 2019 1:00am-2:00am EDT

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♪ emily: i'm emily chang. and this is "best of bloomberg technology," where we bring you all our top interviews from this week in tech. coming up, little love for libra on capitol hill. fed chair jay powell says he has "serious concerns" about facebook's proposed cryptocurrency. plus ibm closes its $34 billion deal with red hat. our conversation with the ceo's of both companies on the second-largest tech deal ever. plus you will hear from the social network's global chief diversity officer. she tells us how facebook plans to double the number of female employees globally over the next
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five years, and why the company is setting such an ambitious target in the middle of a media firestorm. but first to our top story. facebook's plans to create its own cryptocurrency, libra, is not getting love from lawmakers. and you can add fed chair jerome powell to the list. take a listen to what he told the house financial services committee on wednesday. >> while the project sponsors public benefits including improved financial access for consumers, libra raises many serious concerns regarding privacy, money laundering, consumer protection and financial stability. these are concerns that should be thoroughly and publicly addressed before proceeding. facebook has a couple billion plus users so you have for the first time the possibility of a very broad adoption. if there were problems there associated with money laundering, terrorist financing, any of the things that we are
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all focused on, including the company, they would rise to systemically important levels just because of the mere size of the facebook network. it cannot go forward without there being broad satisfaction with the way the company has addressed money laundering, all of those things. the number of concerns i listed at the beginning -- data protection, consumer privacy, all those things will need to be addressed very thoroughly and carefully and again in a deliberate process that will not be a sprint to implementation. emily: we discussed the future of the digital money with joe weisenthal, the bloomberg cohost of ""what'd you miss?" and bloomberg businessweek's max chafkin. max: this skepticism gets to the general skepticism about crypto, which you heard jay powell's two cents on that, plus the fact that facebook has so much power. that is something we have been reckoning with over the last basically couple of years, where they have this huge user base, they are able to push people into new projects, and you can imagine if we aggressively tried
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to push people to this new cryptocurrency, that could create a whole bunch of issues. emily: joe, powell is talking about libra posing a threat to the global financial system and at the scale of facebook's size, any problems would be magnified. is he right to be concerned? joe: you know, listening to chairman powell, i was struck by -- this is something that is on his mind a lot. as you mentioned, a lot of the lawmakers asking him about it. i think in the past when it came to cryptocurrencies or blockchains or other endeavors like this, you got the impression that this was something, we are watching. this is more than that. there are a lot of efforts on the part of the fed to really understand what they are doing and seeing if it passes muster. i think it are reasons for them to be legitimately concerned beyond the systemic nature of this. it does raise questions of, if this is going to be a much more efficient way to transfer money
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from person a to person b anywhere around the world, how can you really do that, and also remain consistent with banking and payment regulations in all these countries? i think there is pretty legitimate reasons to want to take a go slow approach to make sure this isn't some sort of regulatory arbitrage to get around the existing rules of payment. emily: even though jay powell and the fed are taking their time in examining facebook's plans and cryptocurrency in general, it seems not all lawmakers understood exactly what they were asking about. exactly what they were asking about. this was an exchange between congressman david scott and the fed chair. take a listen. rep. scott: this libra business is really disturbing. i think we all know, libra is the london interbank offered rate. very critical. it is apparent that libra is going to leave us or be removed.
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the potential ramifications of the end of libra, as the libra schedule end nears. jay: i think you said it very well. i think there are $300 trillion plus referencing libor in different currencies. emily: [laughter] looks like congressman scott laughing at himself, getting libra and libor confused. can we trust lawmakers understand what they are supposed to be regulating here? max: this kind of came up during mark zuckerberg's testimony. where you had these super cuts, silly or adolescent -- out of left field questions. i think facebook is going to try to use that answer and say, well, dc doesn't know what they are doing. on the other hand, the fact that people are confused by this and it does affect potentially billions of people, suggests we should all be educating ourselves more closely. emily: i have to know what your reaction to that moment was. joe: it was a funny moment.
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the question about libor and the replacement is interesting. but you know, i have a lot of sympathy for the politicians. especially on this -- think about it. how many people have you and i interviewed who are in tech or maybe even would describe themselves in blockchain, or in crypto, or in bitcoin that cannot articulate what makes the technology compelling? it should be worrisome. i do think it is a case for slowing down. again these tech companies think they're going to reinvent the financial system while lawmakers are still struggling to wrap their heads around what it is, that these kinds of exchanges say like, you know, slow down. emily: speaking of regulating, who actually does have the authority to regulate cryptocurrency? to regulate what facebook is at least trying to do and launch this thing in the next year? is it the the fed? it is obviously not only u.s.
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regulators that will be concerned. joe: there is a real morass in terms of crypto regulation in the u.s. the fed is definitely going to have a role in this because libra will interface with the banking system. unlike most cryptocurrencies, there is going to be fiat money and government yielding bonds held in regulated financial institutions that back libra so there is no doubt that the fed will have a role. to your point, if it is going to be global currency, at some level, they will have to deal with regulators in every country in which they want to operate, which is why i think part of the appeal may be regulatory arbitrage. if they were going to just set up banks in all of these countries, that would be a major headache. and you have to wonder if the crypto approach is sort of a shortcut around that, and if so, it is a pretty good reason for people to be concerned. emily: max chafkin and joe weisenthal. coming up, the president holds what he calls the social media summit, only it was missing the social media companies. but tennessee senator marsha blackburn did attend. we are going to hear from her
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next. if you like bloomberg news, check us out on the radio, the bloomberg app, bloomberg.com and in the u.s. on sirius xm. this is bloomberg. ♪
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emily: a federal appeals court said tuesday that president trump cannot block his critics on twitter. the decision upholds an earlier ruling he violated the first amendment when he blocked users who were critical of his policies. trump wasn't the only politician affected by the ruling. after the judge released his verdict, congresswoman alexandria ocasio cortez was sued by two people she blocked on twitter. and sticking with social media platforms, the trump administration hosted a closed door social media summit at the white house thursday. billed as a gathering to bring together leaders for a robust opportunity to work on the challenges in today's social environment, but here's the catch. google, facebook, twitter were not invited. instead it was a guest list of various conservative lawmakers, internet personalities, many of
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whom echo trump's complaints about social media sinuses -- silences conservative voices. we discussed the event with one of its attendees, senator marsha blackburn of tennessee, who joined us on thursday. sen. blackburn: my biggest take away from the meeting is, you have a lot of people who utilize social media to get their message out and to communicate their stories. what they are tired of is seeing social media pick and choose what they want to promote, what they want to prioritize. i feel like this should be unusual platform, and they are looking forward to have congress do some more work on this. they are also looking forward to the white house turning more attention to the issue of big tech and fairness on these platforms. emily: now facebook, twitter, the social media companies were not invited. how can you have a productive
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meeting without the companies in the room? sen. blackburn: actually, they are going to be included later. what the president did today was to hear from people who utilize social media. you know, emily, one of the things i think is so important right now is that individuals do not sit down every day and watch the news at 6:00 and 10:00. what they do is to build their own network of different sources and channels, and sometimes they are streaming it, sometimes they are watching cable, sometimes they are getting notifications and alerts on their mobile device, and they have built their own network. what they want is fairness. they don't want one of the search engines going in and prioritizing everything that is in that feed. they want to have access to fair news. they want -- they don't want opinion journalism. they want facts.
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so when you have individuals who are creating that content, it is important to hear from them. now, i do understand, and as the president said today, he is going to invite these social media companies to come in and to have a meeting. and that is something that is taking place in the next few weeks. white house will have the date out soon, i am sure. and they will have the opportunity to talk about what they are doing. one of the things that has been of concern to us is how some of these companies manipulate their algorithms. and that pushes forward certain content, then diminishes other, and is the exercise of a form of bias. emily: so, do you think that the
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suppressing of "conservative views," which is what you and other lawmakers in that room have been complaining about, do you think that is deliberate or do you think it is inadvertent? do you think it is an accident? sen. blackburn: when mark zuckerberg was before us, when i was in the house, this was just about a year ago, i asked him the question, do you subjectively manipulate your algorithms? his response to me was, contained the information -- well, people live in northern california that work with us and they bring their worldview to work. and what, as we move toward a.i. and machine learning, the biasing of these algorithms is something that is of concern to us, not only when you are talking about opinion, but also when you are looking at how machine learning will be self replicating. emily: now some of the folks in that room have been accused of posting racist remarks, anti-semitic remarks, spinning
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up conspiracy theories on social media. is that the kind of thing you think should be left up on social media platforms? sen. blackburn: of course not. there is no place in the civil society for that conduct. just as, there is no place in a civil society for some of the postings that take place that are offensive or suggestive or harmful to children. and all of these components for social media is speaking specifically to the reason why we need to put some guardrails in place for social media. emily: speaking of that, you have been calling on snap to take action to prevent, as you wrote in a letter to them, more children from being exposed to sexual predators and explicit adult content while using snapchat. saying the fact that messages on snapchat disappear actually --
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it is a child predator's dream, is the way you put it. what your main concerns about snapchat in particular? sen. blackburn: main concern for snapchat, number one is their ratings, being there for 12-year-olds, the auto delete feature on those videos. there are cases where predators -- child predators, pedophiles, have been arrested, convicted. they have used snap to coerce and ensnare children, threatening to put their video on social media unless they send more videos. this is something that parents need to have the tool to turn this off. there need to be explicit instructions for parents how to handle this. emily: that was tennessee senator marsha blackburn. coming up, ibm closes its $34 billion deal with red hat.
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our conversation with the ceo's of both companies on the second largest tech deal ever. and later in the show, facebook is attempting to drastically increase minority representation in its workforce. how the social media company is tackling its diversity problem. this is bloomberg. ♪
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emily: ibm has closed its $34 billion purchase of red hat, finalizing the world's second-largest tech deal ever. ibm was once synonymous with mainframe computing, but it has been struggling to adapt in a cloud first world. the company is playing catch up to amazon and microsoft in offering software and services over the internet. bloomberg's david westin spoke with the ceo's of both ibm and red hat on tuesday. >> it is important to our clients. it is the destination for the
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cloud. you know david, i think a lot of times people think everything will move to one public cloud. that is not what we see clients need, want, and are even targeted to. it is this idea that, i have got an existing estate like a house. i am going to modernize it, and i have five to 15 private clouds already and if i modernize an app, i will put it where i want and then i have to manage and secure all that. that is the destination. for the next generation, we now give them a platform between red hat and ibm that runs on any public cloud, that runs private, that runs traditional, and they can write an app once, run it anywhere, secure it and manage it. that is a distinct and unique capability. and that is what i mean by the hybrid cloud, and it makes us a leader in that. others talk it, but they may have just a connection between public and private cloud. this now allows us to be multi-cloud everywhere. david: as ginni says, jim, you have other competitors out there in the cloud that are pretty big, like amazon and google.
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how is this going to help you catch up to them? or is that even the goal? jim: i will start for the red hat component. look, our goal is to be an even better partner with clouds. they are great partners. our software runs on those clouds, it runs on premise, it runs on ibm's cloud. so they will continue to be great partners for us. as we are capable of moving many more workloads onto our software platform, that is more workloads that those clouds can actually go and address and run. my conversations with the major clouds have been very positive because of these the this is an opportunity to get more workloads out of datacenters running on their clouds. ginni: that is an important reason to do this. our clients want us to be a -- want us to be able to take our platform and run it anywhere. we cooperate with our partners and we are in competition on the other side. david: ginni, you have ramped up ibm percentage of revenue from the cloud dramatically, 4% to
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25% in a reasonably short period of time. what is the ultimate goal? where will this get you to? ginni: there is not an ultimate goal. as you think about the clients moving their work, 80% of work will move to the hybrid cloud. this will continue on, and when we look at our revenues, it transcends everything from our public cloud, now these platforms will be on other clouds included in the services revenue. the goal is to move with the same journey our clients need it to move with. david: what about moving, ginni, what about moving with the overall size of the cloud expanding? how much of this will just be riding with the cloud up and how much of it be taking market share from other providers? ginni: look. for ibm itself, one way to think about this is 200 basis points of revenue growth over a five-year period. and so this is what jim just said a minute ago, the important part to think of it is of our own cloud, ibm public and private together, should be the very best for mission-critical work. we also want to have our
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platform running everywhere else. growth anywhere is going to be good for ibm then. jim: to emphasize that, this is all about helping clients provide more value to customers. when a client builds a new application, a new website, a new mobile application, opportunities for us to participate, whether it is helping them building the application, helping them integrate that with data, having it run it on our platform, having it run on ibm's cloud, any of these components are areas of incremental value we can participate in as our customers create more value for their customers. emily: that was ginni, the ceo of ibm, and jim whitehurst, ceo of red hat. we continued our discussion of the mega deal with bloomberg's olivia carville on tuesday. >> think about ibm. we have an 108-year-old american icon that has largely been known for its mainframe cycles.
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in the last couple years they have been trying to reinvent themselves. this acquisition of red hat is essentially ibm trying to reenter the cloud space as a totally different company. it is trying to transform what it has been providing so far. and change the game. we have heard the ibm ceo ginni earlier call this a game changer for ibm. it is important to think about why this is going to be so significant for not only ibm but also for the wider cloud space and also for the other cloud providers like amazon, microsoft and google, who will now be seen as partners to ibm rather than rivals. emily: interesting. what are some of the risks to this new strategy, and what can go wrong? olivia: i think that one of the biggest risks here is whether or not red hat will really be able to fold into ibm. this company is known to have a staunch and old-school corporate work culture. so will this open-source linux-
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providing company called red hat, which has been known to be a renegade and revolutionary in the space, really be able to come into the ibm family? we have heard ginni and jim, the ceo of red hat, talking about how within the acquisition, red hat and remain independent. it will remain a distinct unit, within ibm. it will have its own consulting services, its own sales, its own terms and conditions. the red hat leadership team including jim whitehurst the ceo will remain within red hat and they will be able to talk to their own clients rather than through ibm. they are hoping that in order to maintain red hat's independence, that this integration will be a -- will really work seamlessly. emily: we heard ginni rometty use these words "hybrid cloud" before, in fact talking about it for the last several years as they have tried to navigate the transition. how is ibm different from what microsoft and amazon and what they do in their clouds?
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olivia: amazon, google, they all provide different public cloud networks that have particular strengths. like amazon's strength for example is its infrastructure services. or salesforce cloud streams as a customer relations and management platform. you see companies that are kind of buying into these services and using these clouds for different types of reasons. and what ibm is attempting to do is to become the glue that will stick together or connect all those different clouds onto one platform. so you may be a company that needs to use salesforce for a particular reason and needs to use amazon for a different reason. that means you may end up with up to 15 different cloud providers who all operate independently in different silos. you have no way to actually
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bring them together. ibm is hoping it will be able to become the connective tissue that in essence aligns all the different clouds under one platform. and one of the really interesting things here is this idea, this kind of strategic move to become partners with some of these former competitors like amazon, microsoft, or google is what ibm actually did back in the 1990's regarding its global business services that form. it became -- it kind of partnered up with software providers and said to them, we will allow you to run your applications smoothly on our hardware. we will partner with you rather than compete against you, and that is what saved the company. so they are trying to do the same thing again. emily: that was bloomberg tech's olivia carville in new york. coming up, facebook has ambitious plans to improve diversity. but are they realistic? facebook's global chief diversity officer tells us how they are planning to boost numbers, next. ♪
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emily: welcome back to "best of bloomberg technology," i'm emily chang. facebook has set big goals to boost workforce diversity. in its annual diversity report, the social company announced plans to double the number of female employees globally over the next five years as well as a -- the number of black and hispanic employees in the united states. the company also said it wants half of the u.s. workforce to be from underrepresented groups by 2024. we sat down with their global chief diversity officer, maxine williams, on wednesday and asked why they are setting these goals now. maxine: there has been research done by very credible institutions to say that having goals is one of the ways in which you drive change. ford foundation has done a lot of work, a big study on why people believe technology and
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they have seen that having goals makes a difference. it is one of the five things you should be doing, and we want to do what is best practice. we have been building for the last six years, the machinery, strategy, models, testing things. some things have worked in -- and others have not. we feel like we are in a place now where we have that muscle to release these goals on top of it and boost even further. emily: you are looking to change numbers, you are looking to get to 50-50 globally, when it comes to men and women. do you have secret innovative plans that we do not know about that is going to make this happen? maxine: i wish. i wish. then i would market that and never work again! we do not have a secret plan. none of this is some sort of magic. this is hard work, consistent attention every day being deliberate. in equity doesn't come about through some organic weird thing. it was designed. we're hoping we can also design deliberate interventions. it is getting better, and what we now know after five or six years of trials does work.
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with these goals, we hope -- it is going to be hard, let me be clear. those goals are stretched goals. i am not saying that any stretch of the imagination that we are going to hit that. no, but everywhere in the business, we say 50-50 goals -- 50% we will head to come percent -- 50% chance we will hit, 50% chance that we will not. we will push on this to get as far as we can. emily: facebook numbers are average compared to the tech industry. i get asked a lot, even with sheryl sandberg's leadership, a leader on women's issues in the world, why can't even facebook do better? why hasn't even facebook done better? maxine: i think it is about -- there are a couple of things. one is that there is a lot of stuff that we do own, and we have doubled down to adjust that. is there bias in the workplace? how do you evaluate people? is there fairness there? how are you considering promotions? all of that, we are working on. emily: so you are saying that there is bias? there is unfairness? maxine: everywhere. everywhere. what you need to do -- this is why i say humility is important for every company, every group
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of people to recognize that we are not special. there is no fairy dust we sprinkle on people when they walk through the doors at facebook. they are those same people when they woke up in the morning in their communities. everybody has bias. you address that. on the other hand, having a leader that does model it helps us tremendously. so that seeing that you could, there is this expression, you can't be what you don't see. seeing a woman who represents what we hope for, which is leadership, influence, success -- has been useful, and that is why we have seen our women in leadership numbers has been most -- have been the most improved of all. emily: you also report the number of women and minorities in technical roles because those are important prime decision-making roles, decisions about the product that is used by 2 billion plus people around the world who come from all backgrounds. if you look at those numbers, women hold only 23% of those prime technical roles, blacks
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and hispanics 5%. could another goal be getting to 50-50 in those roles? maxine: so this is where -- remember when i said that there is stuff we control and stuff we don't control, right? we are 100% focused on our what is our environment, what are the opportunities, how we train. we have expanded internships by many factors in order to get more in. but when you are pushing against a situation where only 18% of the people graduating with computer science degrees in the united states are women, how do you get to 50%? emily: that sounds like a pipeline problem which many people like to say is a myth. there is it just -- maxine: there isn't. that is why i like to say, this is stuff we own. we need to make sure we deal with the stuff we own. are we being fair in promotions, are we creating opportunities, are we -- but when you say, can you get to 50%? we have increased from 15% five years ago to 23% women in technical roles. we have surpassed what would be an obvious market unavailability -- availability number with an
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18% graduate rate. how much more can you do? could you get to 50%? to get to 50%, we need to have a lot of comprehensive work, and we do some of that work investing in the long term as well to get market from underrepresented backgrounds doing technical subjects, studying computer science and computer engineering, data structures, algorithms. and so we work with universities, we build tools that people can put in their something called tech prep. see where you can get training in your neighborhood. get to that 50. emily: i have made the argument that digital privacy is a women's issue. it is not a women's only issue, but it is an issue, like health care, that women have a unique view on. if you look at the studies, women are more likely to keep profiles private, perceive more risk online than men. it is pretty obvious that most of the product decisions that -- decisions at facebook for many, many years were made by mostly men. do you think facebook would have issues around privacy in particular, so many issues, if
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there had been more women at the table from the beginning? maxine: i think you don't know what you don't know. so always our key thing is have more diverse perspectives, having more cognitive diversity on every team is going to produce better results. and we have seen examples already now that we are increasing diversity of workforce, of how decisions are changing and how products are improving because we have those people there. i will say, baseline, yes, everything will be better if we have more diversity. emily: we interviewed a former facebook employee last year who said african-americans said that facebook has a black people problem. and it doesn't just affect black employees, it affects black users. the naacp last year called for a boycott of facebook when it was discovered that russians used facebook to target african-americans specifically in the 2016 elections. what is your response to that? maxine: my response is that there will be a distribution of experiences and responses to
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everything. my response is also in people issues, there will always be a complexity. what is required of you as a company is to look at them head on and to be trying to improve and take responsibility for the things you can change. there are many people who would stand up and say, i have an amazing experience that facebook. that doesn't mean that the person who says they didn't is wrong. it means that there is a range. what we are responsible for is getting to consistent execution to have the best we can get. i think that is what we need to deliver. emily: and will you admit this impacts the product, impacts the decisions that are made? maxine: absolutely. that is why we are doing this. we are not doing this because of some beauty competition, numbers versus someone else. we are doing it because it absolutely impacts every decision. when you are trying to solve complex decisions, the more diversity you have, the better solutions you will develop. everything we do is complex. if you think of the scale we operate at, and the meaning it has in people's lives to connect to other human beings, it matters to them.
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and we want that experience to be as good as it can be. emily: this goal is exciting. it really does put another target on facebook's back. just today, the fed chair criticizing libra, lawmakers skewering your cryptocurrency plans. you have got fake news misinformation issues, hate speech, you're dealing with pending fines from the ftc, pending antitrust investigation. why put another target on facebook back when, 50-50, you succeed, 50-50 you don't? maxine: because i want to succeed. i don't know if you achieve much if you risk nothing. if there is criticism to come, i will be proud to take that, if it was in the interest of us getting to the excellence we want. emily: that was facebook's global chief diversity maxine officer williams. coming up, shooting for the stars. our conversation with richard branson and also the social capital ceo on their plans to list virgin galactic on the public market.
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what it means for the race to space, next. this is bloomberg. ♪
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emily: houston, we have a listing. billionaire richard branson's virgin galactic will become the first ever space tourism venture to hit public markets, this after receiving an $800 million investment from social capital head of severe, a publicly traded shell company initially set up to some day merge with a private company in order to take it public, an alternative to a traditional listing. branson and social capital founder chamath joined bloomberg tuesday. >> when we sadly could not go ahead with the saudis, i decided i would fund galactic to profitability myself through the virgin group, and then i got a call from chamath, who said he was keen to have a look.
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and he went to see our space people, spent some months looking into it. why don't you carry on from there? chamath: i sort of admire the business from afar. and then we had a bunch of mutual friends who were good customers. so i was always wondering, what was really under the hood. when i got to see the business, i was really floored by what they had built, and the quality of the business it would become. it took us nine months, but we got here. emily: you were going to be chairman. so richard, did you talk with other funds, look for other backers in asia for example, or in the middle east? richard: no. as i said, we did have the deal from the saudis, but that was not possible. if we were to actually take this public ourselves, it would take a long time. i think chamath's approach seemed to work well.
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>> was this the last roll of the dice for you? my understanding is the fund would have had to return investment money in september. nine months in gestation, you were cutting it a bit fine, weren't you? chamath: i don't think so. we met more than 200 companies over many, many countries in the last three years. it did take us nine months to do the diligence required to really get under the hood and understand what they had built and to feel comfortable across all aspects of the business. could we have done another one? sure. could we have invested in something else? yes. but i think that we found the absolute best company, something that will thrive in the public markets, and frankly, something that will capture an enormous amount of consumer interest, giving the average person a chance to own a bit of space, and i think there is nothing more exciting than that. >> the average person is going
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to own a bit of space. when is the first flight be? let's try to narrow that down. richard: now that we are public, i will have to be very circumspect in what i say. so what is happening at the moment is we are moving the whole operation to new mexico. that is where the space force -- port is. we are moving our rockets there, we are moving our spaceships there, we are moving our motherships there. then we will do it for you -- a few final test flights from new mexico, and the new situation and i will go up and the public will go up. i will not give a specific date. i am told i am not allowed. but you know, we have had two very successful flight into space recently. we have made five astronauts, the first five astronauts to be made in america since 2009. so we are up to 14 years of hard work getting this far, and we feel that we are on the verge of something very special.
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vonnie: that is very exciting because you specialize in suborbital flights, slightly different from jeff bezos and also elon musk, looking at other segments of space. 56 miles above the earth and three times the speed of sound, which you have now hit. you did say that you will go up in 2019. will you? richard: if our brave test pilots are ready to say to me they have now tested the craft through and through, i will go up when they tell me to go up. whether it is by the end of this year or slips into next year, we will see. vonnie: how many customers have paid, what, a quarter million dollars? what is it up to now? richard: we closed out looking people five years ago because we had 600 customers. we got $80 million on deposits. since the test flight, we have had 2.5 thousand more people saying they want to come in. our research indicates there is
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a large number of people. chamath: this is an incredibly capacity constrained market, the -- just servicing the customers we have will take 2.5 years, -- years. once you convert the 2500 people, the first three years of operation is already mostly spoken for. emily: that was richard branson, virgin group founder, and social capital cofounder and ceo. we continued to look at branson's interstellar plans with "bloomberg businessweek"'s max chafkin. max: social capital raised money from investors to basically acquire a private company and in doing so take it public. and the pitch we heard from chamath was basically, this would be a much more efficient way to go public. when he started talking about this a couple of years ago, he was saying that the ipo process is broken. it takes too long, there is too much regulatory oversight, so this would be a thing he could offer private companies.
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it makes sense for virgin galactic virgin galactic, you. are talking extremely high potential. this could revolutionize air travel. it could be the new disney world. you know, we could all own a piece of space. on the other hand, it is super speculative, the kind of thing that is potentially hard to value, which is why it makes sense to go public this way. emily: on the other hand, they could never happen or happen in 100 years. how big of the milestone is this that a space company which has never taken a person into space is going to very soon be a publicly traded company? max: when branson and his partner started talking about this 15 years ago, and they had their first test flight, i think it was in 2004, the idea that private space was going to be a big industry was a joke. there were a few people, i think elon musk was just at the beginning of spacex. this was going on, but it was very niche. having that happen, having a privately held space company go public, it is a big deal. we should also say that virgin
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galactic has had test pilots in space. it is not like they have had no humans there, which is different from the jeff bezos and elon musk companies. to be said though, the kind of travel we are talking about is not like going to the moon. it is like going to space for a few minutes. you are going just to the edge of space, experiencing weightlessness and coming down. it is sort of in between a trip on the soyuz, which is currently the main option for private space travel, and the idea that you take a 747 and they sort of dive bomb for 60 minutes. emily: or the tower of terror at disneyland. now how -- does this give them advantage over space explorer -- spacex or blue origin? does it give them more flexibility, more visibility? max: i don't think especially. spacex has a huge valuation, it is much higher. it is a private valuation, so that is different, but i think it is somewhere around $30 billion. they have billions and billions
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of dollars in government contracts. the company is well positioned. blue origin obviously has the pocketbook of one of the world's richest people or the world's richest man. so those companies have nothing to worry about. that said, branson, obviously, is a wonderful marketer. being public and having that additional outlet for his, sort of doing his thing, will probably help the company. emily: bloomberg businessweek's max chafkin. still ahead, a sky full of satellites. companies already filling our orbit with plans to launch thousands more satellites to bring internet to everyone. but how will they clean up after them? that is next. this is bloomberg. ♪
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emily: you think in today's day and age, everyone would be online. but that is just not the case. according to the u.n., 4 billion
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people worldwide lack reliable internet access. and companies like amazon and spacex are trying to remedy that by launching thousands of low orbiting satellites to try to get everyone on line. but as astronomers see it, it is not all clear skies. star light, star bright. wait, is that even a star i see tonight? high over the netherlands in late may, objects in a train-like formation trail the night sky. not stars, not planes, but satellites. you can expect more scenes like this one, which had sky watchers head scratching, as the satellite race heats up with more launch is on the horizon. elon musk's star link program plans to propel 12,000 into orbit. jeff bezos' project kuiper has asked the fcc's to approve 3200. and another company, oneweb wants to launch a month by -- launch 30 satellites a month by september.
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the goal is to bring broadband access to the roughly 4 billion people on earth who don't yet have it. >> i think you can see going forward, internet to -- access to broadband is going to be close to being a fundamental human need. emily: while that goal may seem noble, these satellites are designed to fly lower, living astronomers concerned it will interfere with the observation of distant galaxies. then there is the cost. the first string of satellites cost $1 million each to produce, they cost as much as $16.5 million just for spacex to launch 60 satellites into orbit. still, investors are rocketing forward. $1.7 billion was invested into space companies in this year's first quarter alone, according to the vc firm space angels. that is double the amount invested a quarter earlier. with satellites, the space economy, so to speak, appears ready for takeoff. we continue our look at how these new waves of satellites
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can bring more people online, with one of the companies you just heard about. my next guest is andrew stockel, ceo of oneweb. the company has raised $3.5 billion to date and is backed by softbank, airbus and the virgin group. he joined us wednesday. >> we are launching satellites starting in december, 30 satellites a month, 34 per month, sometimes 36. we will have our first phase of our system giving global coverage by the third quarter of 2021, and we will be getting service in some places in 2020. our service goal is low latency service and global coverage, one of the things that happens with satellites now is that people get really clunky service because of the high latency. it is physics. the geo satellites are 36,000 kilometers away. ours are 1200 kilometers. and you really, everybody in the world deserves the best internet
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service whether you are in the middle of africa, asia, latin america or the heartland of the united states. emily: what about the cost? it has been difficult to calculate the cost of the spacex satellite launches for example. how much does it cost now to launch a single satellite, and how much will that cost come down in the future? adrian: one of the things that has been very exciting recently is launch cost has come way down. we locked in our 22 launches a couple years ago, and we know that from then to now, launch costs have come down 30%. the rockets are getting bigger. that means they can carry more satellites and they are more secure. we are looking for that trend to continue, and that enables a lot more satellites to launch. also you are seeing cubesats are going up. ours are not cubesats, ours are the size of refrigerators. about 150 kilograms.
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the spacex ones are about 220. people focus on a satellite. a satellite is not a unit of measure. it is like a base station. it can be bigger or smaller with more or less capabilities. in your segment, you talked about us bringing down the satellite cost to $1 million for satellite -- you have to remember, it used to be that satellites would cost about $150 million to $200 million. and be these big things. what we've done is taking advantage of all the advances in electronics, from smartphones and miniaturization and applied an industrial approach. which is to say that we are doing this on an assembly line. we have factories opening in cape canaveral, july 22. so that is coming down to $1 million per satellite is a big, big deal. emily: elon musk has said, people see the satellite 0% of the time approximately. that said, what about the concerns from astronomers about space pollution?
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adrian: the most important thing is collisions and being responsible in space. i think one aspect is the visibility. our satellites are at a higher altitude, they are at 1200 kilometers versus their satellites are at 550. so ours are not visible. and then the other thing you really have to pay attention to when working with governments, we are very much thought leaders on this, is making sure that the satellites disintegrate when they come back into the atmosphere so you don't harm anybody. and then if you and i get into a collision on the street with our car, we walk away from that. if you get two satellites collide up there, they will fragment and then they sort of pollute the area. so it is really very important to be responsible up there in space. emily: oneweb ceo adrian steckel. that does it for this edition of "best of bloomberg technology." we will bring you all the latest in tech throughout the week. tune in every day.
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5:00 p.m. in new york, 2:00 p.m. in san francisco, and we are livestreaming on twitter. check us out @technology and be sure to follow our global breaking news network on twitter. this is bloomberg. ♪
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>> tanker trouble, iran denies it and president trump ramps up tough talk. and this could be the beginning as oversupply is cited in weaker global growth for chem supply. and we sit down with jordan gasper, to see what this means for alternatives to investing. ♪ a

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