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A SPOTLIGHT ON MEDIA Katzenberg on Weinstein AND TECHNOLOGY The Hollywood icon also talks about his plan to revolutionize TV Some of the biggest names in media and technology as- sembled in Laguna Beach, Calif., last week for The Wall Street Journal’s fourth annual WSJ D.Live conference. The event kicked off with Arianna Huffington, founder of the Huffington Post and Thrive Global, discussing corporate cul- ture issues at Uber Technologies, where she is a director. ‘The problem is Jeffrey Katzenberg, DreamWorks co-founder and partner at there’s a pack of WndrCo, spoke about Hollywood’s “casting couch” problems in the wake of Harvey Weinstein’s downfall. wolves. He is not a Other highlights included Barry Diller, chairman of IAC/ lone actor in this.’ InterActiveCorp, discussing the likelihood of more regulation for tech giants; Marc Lore, Wal-Mart Stores Inc.’s U.S. e- commerce chief, explaining its acquisition strategy; and Peggy Johnson, Microsoft Corp.’s executive vice president of business development, and Jennifer Nason, J.P. Morgan Chase & Co. global chairman of investment banking, talking about the outlook for tech M&A. A trio of venture capitalists—GGV Capital’s Jenny Lee, Y Combinator’s Sam Altman and Section 32’s Bill Maris—fore- shadowed the future of tech investing, and executives in- cluding Corp. Chief Executive Brian Krzanich and Baidu Inc. CEO Robin Li discussed the importance of artificial intel- ligence. Plus there were interviews with BuzzFeed founder Jonah Peretti, Oracle Corp. CEO Mark Hurd, Executive Vice Chairman Joe Tsai, and Pershing Square Cap- ital Management head William Ackman. Here are selected excerpts. —Jason Dean NIKKI RITCHER/DOW JONES (2)

It has been a difficult period with a topic that’s on every- Harvey Weinstein—my office, beginning of Hollywood. The women and people? The an- companies generally, but in for Hollywood, as the Harvey body’s mind, what happened his office, on sets, on loca- casting couch has been in Hol- swer is no. Is that because Hollywood perhaps in particu- Weinstein scandal has focused with Harvey Weinstein. Now tions, the south of France, the lywood from the beginning. there was never a forum, that lar. attention on an uncomfortable you, Jeffrey, last week in a Sundance Festival, the Penin- The complicity around the ac- I never opened myself to MR. KATZENBERG: That’s a issue for the entertainment very powerful statement spoke sula Hotel. And literally not a ceptance of it and the silence somebody to be able to have long-term solution. I’m talking business: ongoing sexual out in response to a direct single time had Harvey been about it is the crime. that conversation? Guilty. But about something that has to abuse. communication from Harvey abusive to somebody in my Harvey Weinstein, make no I’m not going to do it again. I bring this to a stop immedi- Wall Street Journal Editor Weinstein asking for you to presence, other than, “Why’s mistake about it, he is a mon- don’t think our industry is. I ately. in Chief Gerard Baker spoke support him. You responded to the car not here?” “I thought ster. The problem is there’s a think you will see in these In movies, in television, in with industry giant and former him in no uncertain terms. You that script was supposed—.” pack of wolves, he is not a coming weeks and months real live entertainment, in Las Ve- colleague of Mr. Weinstein, said he had done terrible You know, that’s not abusive lone actor in this. That’s the action. We cannot go on this gas, on Broadway shows, in Jeffrey Katzenberg. Mr. things to women, and you behavior. That’s why I said challenge that I think all of us way. the news industry, actors and Katzenberg, a former chair- went on to say there appear to there are two Harveys, be- now really have to find a way actresses, men and women, man of Walt Disney Studios, be two Harvey Weinsteins: one cause somehow or another to deal with. MR. BAKER: One thing that must audition on an ongoing, co-founder of DreamWorks that I’ve known well, appreci- this behavior was masked would clearly, presumably regular basis for their work. and now partner at WndrCo, ated and admired, and an- from me by him, but more im- MR. BAKER: You say in all your change the culture would be if So the question is: How do we spoke about the crisis and other that I’ve not known at portant, that these women encounters with Mr. Weinstein there were a lot more women address that moment and add what it means for Hollywood, all. masked it from all of us too, directly, you’ve never seen be- in senior positions in media Pleaseturntothenextpage as well as his own efforts to How on Earth could power- because they were intimi- havior like this. But you must explore new territory in short- ful people, yourself included, dated, they were scared, they have heard about it? form television. Here are ed- not have known that he was were humiliated. MR. KATZENBERG: Unfortu- ited excerpts of the conversa- behaving like this? And it literally took the nately, the answer is no. From FULL WSJ D.LIVE COVERAGE tion. MR. KATZENBERG: Idoalotof New York Times and the 1994 on, I had no business en- soul searching about it. I don’t bravery of these women to gagements or dealings with WSJ See videos and complete coverage of the The abuse question have a good answer. I’ve had speak out about something him whatsoever. Did I hear .COM WSJ D.Live conference at wsj.com/wsjdlive. MR. BAKER: I want to start hundreds of meetings with that has been around from the stories about Harvey abusing

It’s Time to End the Culture of Stress and Burnout Arianna Huffington says that Uber could have been as successful without its ‘brilliant jerks’ ‘We are recognizing Arianna Huffington, founder of MS. HUFFINGTON: I think there including being unflappable, the Huffington Post and Thrive was a moment when I said, which I consider the greatest that what’s happening Global, spoke with Dennis K. “We need to do something trait of leadership. Berman, financial editor of about this culture.” in the culture has The Wall Street Journal, about We produced a series of MR. BERMAN: Could Uber have direct consequences a range of topics, from her ex- workshops to help everybody been what it became without, perience as an Uber board understand that even though to use a term I know you like, to the bottom line.’ member to the perils of an we claim to be in a data- a bunch of brilliant jerks? economy driven by social-me- driven culture, we are forget- MS. HUFFINGTON: Oh, yes. One dia platforms. Edited excerpts ting the data—which is that of the things I said in my first follow. when you are operating in a all-hands when I spoke to the culture of burnout and con- employees was that with Importance of culture stant stress there are going to growth forward we would end MR. BERMAN: Take us back to be consequences. Burned-out the cult of the top performer. your arrival on the Uber board people act out again and This is not just a Silicon in April 2016. What was going again. They make mistakes. Valley cult. Why did Harvey on? What did you see? Weinstein last that long? The MS. HUFFINGTON: The growth MR. BERMAN: So is there a mo- cult of somebody who delivers was the most amazing thing. ment now, where you have results. When you deliver re- Then, though, what I began to various board members in liti- sults, somehow a lot is for- see is that the growth was gation with other board mem- given. And that is particularly also achieved at the expense bers, alliances being struck, prevalent in the Valley. So I of an incredible burnout in the chaos reigning, where you say, called the top performers bril- company. Working hard is “This is crazy”? liant jerks and I said, “We’re great, but the data is very MS. HUFFINGTON: No.Wehave going to have zero tolerance right now, in the world of so- view as the moral responsibil- berg said last week, not to al- clear that working longer and a great CEO. I chaired the for them.” cial media, companies can no ity of Facebook, , Twit- low foreign powers to come in working smarter contradict search committee and I’m We are recognizing that longer hide behind expensive ter, YouTube, social-media and use fake names and be each other. very, very thrilled with the re- what’s happening in the cul- ads what’s happening in the platforms, to the people and able to infiltrate the platform. sults. Dara Khosrowshahi is ture has direct consequences company. the countries that they serve? She said if these were from MR. BERMAN: Was there a mo- really somebody who has the to the bottom line. A culture is MS. HUFFINGTON: I think there real accounts, as opposed to ment where you said, “This is perfect combination of talents not nice to have, it’s abso- On social media is a moral responsibility, as fake accounts, they would only crazy”? for this time in Uber’s history, lutely essential. Especially MR. BERMAN: What do you [Facebook COO] Sheryl Sand- Pleaseturntothenextpage

INSIDE

Wal-Mart Takes Aim at GM’s Strategy for the Autonomous Car In Defense of an Ad Model Facebook Opens Up on Messenger Marc Lore, Wal-Mart’s U.S. e-commerce President Dan Ammann on the company’s BuzzFeed’s Jonah Peretti talks about social VP of messaging products David Marcus on chief, explains its acquisition strategy, R2 role, what the timetable is, and what the media, algorithms and fake news, R9 how the company’s new channel for advertis- driverless car means for the industry, R6 ers works, R14 Baidu Sees AI as Key to Its Future Where the Money Will Come From CEO Robin Li on the company’s tech The Outlook for Tech M&A Sam Altman, Jenny Lee and Bill Maris on PLUS: Voices From the Conference expertise, autonomous cars, and the battle Peggy Johnson and Jennifer Nason talk startup funding, the most exciting against fake information, R4 about the prospect for big deals, R7 technologies, and increased regulation, R11 Affirm’s Max Levchin on the dangers lenders face, R2 The Thinking Behind Alibaba’s Expansion The View of an Activist Investor Where Wearable Tech Is Headed Executive Vice Chairman Joseph Tsai says Pershing Square founder William Ackman Chip Bergh, Levi Strauss’s CEO, says the CrowdStrike’s George Kurtz pleads for better the company can compete with all the tech explains why he’s battling with ADP, R8 possibilities are endless, R12 password practices, R4 giants, R4 Self-Flying Plane Wins Startup Showcase Qualcomm’s Game Plan Paradigm’s Joelle Emerson on tech’s meri- Is Regulation Ahead for Titans of Tech? Israel-based Eviation was the audience CEO Steven Mollenkopf on smart cars and tocracy problem, R5 Barry Diller says it’s inevitable. He also thinks favorite at the WSJ D.Live conference, R8 technology, R12 unicorn valuations are absurd, R5 Uncharted Play’s Jessica O. Matthews on Companies Must Use AI—Or Else The Big Benefits of Smart Cities Africa’s tech rush, R10 At Oracle, It’s All About the Cloud Intel CEO Brian Krzanich says companies Cisco CEO Chuck Robbins says cities can CEO Mark Hurd says moving to the cloud is that don’t use will be no longer do things the way they always Samsung’s David Eun on the integration in customers’ best interest, R6 left behind, R9 have, R13 between hardware and software, R13 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com R2 | Tuesday, October 24, 2017 THE WALL STREET JOURNAL. JOURNAL REPORT | WSJ D.LIVE Wal-Mart Takes Aim at Amazon Marc Lore, the company’s U.S. e-commerce chief, explains its ‘We get to combine acquisition strategy the scale of both .com and Wal-Mart Stores Inc. has “Just keep doing what you’re Jet together on a been on a buying spree over doing.” Instead we told them, the past year, seeking to better “We want you to run and man- common position itself for an intensify- age this category.” It’s worked infrastructure.’ ing e-commerce battle with out really well. Amazon.com Inc. Leading the effort is Marc MR. ANDERS: Are these types Lore, who became Wal-Mart’s of brands helping to elevate U.S. e-commerce chief last Wal-Mart overall, make it year after the Bentonville, cooler? Ark.-based retailer acquired MR. LORE: It’s about bringing his startup, Jet.com, for $3.3 in a better, more unique, spe- billion. cialist assortment to the site. Mr. Lore sat down with The We’re working on a couple of Wall Street Journal’s Jason partnerships now that will be Anders to discuss the megare- announced in the next few tailer’s plans for e-commerce. months to help bring an even Edited excerpts follow: more premium assortment onto the site. We’re also rede-

Elevating the brand signing the website, investing NIKKI RITCHER/DOW JONES (2) MR. ANDERS: Wal-Mart re- heavily in vertical experiences cently acquired ShoeBuy, in both home and fashion, to Bonobos, ModCloth, Moosejaw make it less about transaction Chasing Amazon and delivery company Parcel. and more about browse and In an e-commerce market projected to grow by nearly 50% over the next four years, Wal-Mart is chasing market leader Amazon But you aren’t done shopping, discovery. So yes, we’re defi- right? There’s more to come? nitely making a push to ele- Leading e-commerce retailers in the Unique monthly visitors to the most popular retail websites Projected retail e-commerce sales MR. LORE: That’s right. We’re vate the brand. U.S. in 2016, in billions of dollars in the U.S. as of March 2017, in millions in the U.S., in billions of dollars looking at a lot of different Amazon 200 $700 things right now. Everything Importance of scale $46.66 in every sector—technology, MR. ANDERS: Wal-Mart is fa- 150 600 retailers, digitally native mous for paying attention to Wal-Mart brands. We’re looking a lot. the bottom line. Jet.com came $12.73 100 up not having that same sort Apple 500 MR. ANDERS: The brands you of restraint. Can you do this in $6.11 50 bought are all established, a way on Jet.com that is ulti- 400 well-known names. What’s the mately profitable? Home Depot overall strategy? Do you plan MR. LORE: Absolutely. E-com- $5.37 0 to integrate these things merce is a scale game. And the 300 Liberty Interactive Amazon eBay Wal- Apple Target Home Etsy Kohl’s Best Wish closely into Walmart.com or great thing here is that we get $4.89 sites Mart sites Depot Buy 2017’18 ’19 ’20 ’21 keep them as their own to combine the scale of both brands? Walmart.com and Jet together Source: Statista THE WALL STREET JOURNAL. MR. LORE: There are two dif- on a common infrastructure. ferent strategies that we are So it isn’t looking at each of MR. LORE: It will be interesting pick up online orders] of fresh done. We have forward-de- of a second-mover advantage. pursuing simultaneously. The them in isolation. We actually to ask that question 50 years grocery at 1,000 stores. We’re ployed inventory, full truck- We were able to build a logis- retail specialists such as Shoe- get the ability of each one to from now, or 20, because Wal- rolling that out to over 2,000 loads, warehouses making tics network from scratch. Buy and Moosejaw—we leverage from the other. Mart has some really unique stores next year. And from money. We have pickup capa- We’ve got the warehouses in bought those companies to re- assets that no one else has. To each of those stores, we will bility for online orders at place at the right size, with ally help us accelerate in the MR. ANDERS: When do you date, we haven’t fully lever- have the ability to deliver. We 1,000 stores, which will be the right amount of automa- long tail. They have an amaz- think Jet.com will become aged the scale of Wal-Mart, are testing grocery deliveries 2,000 stores by the end of tion. And today, we can hit ing assortment, amazing rela- profitable? specifically its 4,600 stores now in 22 stores, using a com- next year and eventually 3,000 87% of the country overnight tionships with brands. The MR. LORE: I haven’t talked within 10 miles of 90% of the bination of our own associ- and 4,000 stores. Now, it’s just and 99% in two days, via teams are great, product con- about profitability, although at population. Fresh, frozen, over ates, Uber drivers, Deliv, and a about that last-mile delivery ground shipping. tent is much better than what the analysts’ meeting last 100,000 general-merchandise bunch of other players. piece, and there are plenty of Over the next two years, we had before. So being able week, I did say that this year skews are in that proximity. partners we can work with to you’ll start to see dramatic im- to take that product content would be the peak in losses. That product gets there in MR. ANDERS: There is a big do that. provements. You’ll see the new and those relationships and We expect a slight reduction full truckloads—not cases and arms race under way right design rollout at Walmart.com. bring that to Walmart.com and of losses next year. pallets—and those 4,600 now with groceries. Certainly, MR. ANDERS: Amazon has You’ll start to see more same- Jet is really the reason to do warehouses are profitable. Amazon and Whole Foods are plowed a ton of money into day and two-hour delivery. it. MR. ANDERS: When we polled They’re already covering their getting a lot of attention. Up the logistics side. Are you say- You’re going to see a lot of We’ve also empowered the audience members about entire fixed expense. So each to now, Wal-Mart has been ing that Wal-Mart can go changes. leaders of these companies to which company they think is marginal dollar that ships out banking heavily on its vast head-to-head with Amazon And I think two years from basically run the category going to dominate e-commerce of there comes out at an in- physical store network and and offer the exact same ser- now, it will be interesting to across the entire entity. We in five years, they didn’t pick credible profit. making that better. vices that they’re offering? ask the same question to see didn’t just buy them and say, Wal-Mart. Already, [customers can MR. LORE: The hard part is MR. LORE: We have a little bit how people think.

Katzenberg on Weinstein Ending Stress and Burnout Continuedfromthepriorpage to be professionally produced lowed a different consump- Continuedfromthepriorpage spend as much time as I really reconnecting with ourselves. a level of protection for what content there, some of it in- tion habit, which is if you had have taken them down if the want on this,” think again. is an imperative part of the credibly imaginative, very 10 minutes you could read a language was violent or hate- Gender issues creative process? compelling. chapterortwo.Ifyouhadan filled. Otherwise, they, on the MR. BERMAN: In your testing, MR. BERMAN: Based on your hour you could read five or grounds of free speech, would what is the average social-me- experience on the Uber board, The short-form future MR. BAKER: Without being too six. have kept them up. So that’s dia consumption? what are some practical MR. BAKER: Let’s move on to a flippant, isn’t it all skate- the question that we need to MS. HUFFINGTON: Stunning. things that a company should happier topic, which is the fu- boarding, ducks and puppies, MR. BAKER: Give us a sense of discuss, in terms of platforms. There are people who are to- be thinking about as it relates ture of TV. You’ve got a plan falling down stairs, and all how it’s going. For me, the more signifi- tally addicted and they spend to gender in the workplace? to revolutionize TV, WndrCo. this kind of stuff? MR. KATZENBERG: This is as cant question has to do with over 10 hours [a day]. But MS. HUFFINGTON: When work- Tell us why there’s space for MR. KATZENBERG: No. It’s hard as anything I’ve ever what’s happening with the hi normal people, who are not places are fueled by this cul- another major initiative in the what people can afford to done for many reasons, not jacking of people’s attention. I completely addicted, may ture of burnout, where people TV field. make. I believe that if you the least of which is that any- think in the attention econ- spend seven hours on Insta- wear this like a badge of MR. KATZENBERG: We’ve hit a create short-form content time anybody has started a omy, companies like Facebook gram or Facebook a week. honor, it disproportionately moment in time in which that can be consumed in these new media platform, at its or YouTube, especially, the affects women. there’s a fantastic opportunity chapters of under 10 minutes, foundation was library con- part of Alphabet that is di- MR. BERMAN: Should a 12- First of all, women inter- to innovate storytelling and to it will revolutionize the story- tent. The challenge for new rectly about people’s atten- year-old have a smartphone? nalize stress differently. The evolve it. telling opportunity. TV is there isn’t any. Every- tion, the goal is to get as MS. HUFFINGTON: The closer numbers show that women in Ten years ago, two things I’ll point to another me- thing has to be created from much of your attention as you get to the Valley, to peo- stressful jobs have a 40% happened. One, everybody dium where somebody capi- scratch, because you cannot possible through an enormous ple who are part of these greater risk of diabetes and a now has a television with talized on this. Traditionally, take an episode of “Game of amount of persuasive tech- companies and actually pro- 60% greater risk of heart dis- them all the time. At the same a chapter in a novel is 20 to Thrones” and cut it up into niques. ducing this product, the later ease. So that’s something we time, a little earlier than that, 40 pages long. Fifteen years six 10-minute pieces. If you look at the “like,” it’s the kids get the phones and need to be working on our- there was a platform called ago, two great authors came It’s a Catch-22. For people a way to keep you hooked, to the stricter they are about selves. Also, there’s more sex- YouTube. And out of YouTube along and realized that as a to pay for a subscription ser- keep you returning to see how how much time they allow ist behavior when people are came this amazing new form society and a world we’re vice, there needs to be not many likes the picture of your them on their phones. Over burned out. They act out. We and format. Short form, under ADD. James Patterson and just supreme quality but there salad got. And among teenag- 70% of people sleep with their all know that when we are 10 minutes. Dan Brown changed the archi- also needs to be quantity. You ers especially, and college phones. With the best will running on empty, when we’re And in a very short period tecture, the formatting, of the have to deliver on both of kids, this has become a sym- power, if you wake up in the exhausted, we operate at our of time, that platform gets a way in which they told a those. bol of validation. middle of the night and you worst. size and a scale that is un- story. So “The Da Vinci Code” So I have spent the last It cannot be in our interest can’t go right back to sleep, precedented as a media plat- was 464 pages long, 105 chap- year in conversations with all to have persuasive techniques you are going to be tempted MR. BERMAN: If you were to form. And Google comes ters. of the major suppliers of tele- hijacking our attention in to look at your phone, to look give mindfulness training in along, buys it, does a fantastic Now the quality of that vision and created a business such a way. And I think that’s at texts. And then your whole the White House, what would job investing in the platform story, the arc of the story, the model, a licensing model. I’ve going to be the big, existential sleep cycle is interrupted. be your prescription? itself and the creators in it, quality of the characters, the talked with many of the best issue we need to discuss. None of us would be here MS. HUFFINGTON: To take the creates a business model for richness of it, the excitement show runners to talk about And if you think, “Oh, don’t without all that technology president’s phone away at monetization. Out of that, the of it, it was one of the great creatively how they’re going worry, I have incredible will has brought us. It’s basically night. That might change the platform evolves. There starts reads. What he did is, he al- to interpret this. power and I’m only going to about setting boundaries and course of world history.

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IBM and its logo, ibm.com and Watson are trademarks of International Business Machines Corp., registered in many jurisdictions worldwide. See current list at ibm.com/trademark. Other product and service names might be trademarks of IBM or other companies. ©International Business Machines Corp. 2017. For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com R4 | Tuesday, October 24, 2017 THE WALL STREET JOURNAL. JOURNAL REPORT | WSJ D.LIVE

Baidu Sees AI as ‘We’re going to deliver a fully autonomous bus by the end Key to Its Future of next year.’ CEO Robin Li on the company’s technology expertise, its autonomous-driving program and the battle against fake information

Baidu is the search titan in I think we are good at that, MR. DEAN: Where would you China, but with its mobile ef- and there are a lot of new op- say your technology ranks in forts, it stumbled relative to portunities for AI. If you think autonomous driving against the competition. about search, it’s the most [the driverless-car di- The Wall Street Journal’s natural AI application. When vision of Google parent Alpha- global technology editor, Ja- you type in a keyword or bet Inc.]? son Dean, spoke with the co- query, we will try to guess MR. LI: It’s a question of open founder, chairman and chief what you mean and provide versus closed. Apollo [Baidu’s

executive of Baidu, Robin Li, the best answer for that query. autonomous-car software sys- NIKKI RITCHER/DOW JONES (3) about the company’s plans for That’s pretty much the defini- tem] is a very open system, reclaiming its advantage, as tion of AI. Let computers un- and the first day, we had ogy, and we can provide you There’s no fact checking. well as its push into autono- derstand humans and provide about 50 partners join us, in- data too. Growing Smartly There’s no editorial control. mous vehicles. Here are edited answers or provide services. cluding companies like Ford Projected growth of the artificial- We recently set up a plat- excerpts. and Daimler, Bosch, Continen- MR. DEAN: How are you going intelligence market form to clarify a lot of things MR. DEAN: A big part of what tal and many in China. I think to make money on this open- in collaboration with the gov- $60 billion The search future you’re doing related to your AI history has also proved that source autonomous-driving ernment and quite a few other MR. DEAN: You’re placing a is your autonomous-driving an open system has better mo- platform? 50 companies. We also integrated huge bet on artificial intelli- program. You just announced mentum. MR. LI: We can sell simulation in our existing products fea- gence. Why do you think that a new deal with BAIC, which is We published Apollo 1.0 in systems, and we can sell data. 40 tures like Baidu Encyclopedia. could help you regain your one of the biggest Chinese July, and we published 1.5 in We can sell high-definition It’s one of the most authorita- edge? state-owned auto makers in September on GitHub. If you maps. We can even in the fu- 30 tive information sources in MR. LI: First, every company Beijing. Tell us about that go there and check it out, it’s a ture write insurance policies. Chinese. has its own DNA. Baidu is a deal. very active community. Lots of There are lots of things you 20 From time to time, there technology company. During MR. LI: We have a very solid people are contributing to the can do. It’s a very large mar- are things that are unverified. the desktop age, in order to plan. The plan is to mass pro- Apollo technology, because the ket. I think auto represents 10 People are curious about the serve the users better, you just duce level-three cars by 2019 world believes we will be mov- about one-sixth of the total authoritative explanation of needed to come out with the and mass produce level-four ing into an autonomous-driv- Chinese GDP, and it’s growing 0 those kind of topics. We use best technology to rank con- cars by 2021. ing society. fast, too. 2017 ’18 ’19 ’20 ’21 ’22 ’23 ’24 ’25 our technology to extract the tents on the internet. I think I think a lot of people are Source: Statista main topics from every article that’s what we are good at. Asleep at the wheel participating, and they are Getting there first THE WALL STREET JOURNAL. and provide a Baidu Encyclo- But when the world moved MR. DEAN: Level-four autono- providing signals to us. They MR. DEAN: The BAIC deal, is pedia entry right after the into mobile, the landscape mous is where the person are providing data to us. They the goal to be first with the cently took some measures to news text. changed. The market involve- doesn’t need to be awake, ba- are providing requests or de- level-four autonomous car? Do address them that stirred ment changed. For mobile, you sically, and the car drives it- mands for us. We know more you think you’ll beat the com- some controversy. How do you MR. DEAN: The concern in need to build your own eco- self. What is your involvement about the real market demand. petition to delivering that to see the role and responsibility China is that partly what is system. You need to enable in this? Thatgivesusanedge. market? of big internet companies like fake news can be dictated by people to create content for MR. LI: We don’t manufacture MR. LI: That’s not the first yourself in balancing the need the government. How do you you, and we don’t have access cars. They do. We provide MR. DEAN: So if I’m a potential level-four vehicle we’re work- to safeguard against bad in- balance that into your equa- to that content anymore. technologies so that they can partner to you, and then ing on. We issued another an- formation versus the risk of tion? We’re still dominating in drive automatically. We also Waymo’s coming over and nouncement with King Long, censorship? MR. LI: The government cares mobile search, but we need to provide technology and con- they want to talk to me, why which is one of the larger bus MR. LI: We want to provide the more about politically sensi- figure out what’s next. Luckily, tent for people to be enter- would I go with Baidu over manufacturers in China. We’re best way for people to find in- tive content. But we, as a gen- we have entered the age of AI, tained in the car. When a pas- them? going to deliver a fully autono- formation, and that means we eral information provider, and technology is important senger gets into the car, our MR. LI: Because you will have mous bus by the end of next need certain kinds of control need to do a lot more with ru- again. You need to have the vision is that you will never much better control over your year. It’s going to be run in over information so that we mors about scientific issues, best natural-language process- need to touch your phone any- destiny. designated areas, but it’s go- provide people with true in- rumors about entertainment, ing technology, the best voice- more. The car can provide all Apollo is open, and you can ing to be fully autonomous. formation instead of fake in- all kinds of things. recognition technology, the the things—the screen, the see everything, and you can formation or fake news. The We need to do a lot more best image or computer-vision songs, the microphone. Every- contribute data to us, and we MR. DEAN: Fake news has been fake-news issue became more work, and we’re doing that, technology. You need to ana- thing can be better than the can provide you simulation a big issue in the U.S. It’s been and more serious as social me- using technology, using edito- lyze a lot of data. mobile experience. technology, security technol- an issue in China, too. You re- dia became more popular. rial control.

The Thinking Behind Alibaba’s Expansion Executive Vice Chairman Joseph Tsai says the The push for AI ment as we see the future. data. If you lose that trust, MR. DEAN: In that world, you With this effort we’re going why would anybody want to company can compete with all the tech giants have to be going up against to be focused a lot on very ad- use your service the next day? them head-to-head, at least in vanced areas like quantum That’s the basic principle some cases. And you’re target- computing, machine learning, there. It’s very, very important ing multinationals as well, computer vision, voice recog- that those that preside over you’re advertising in the U.S. nition, natural-language pro- these large troves of data, the ‘Our international What’s your competitive ad- cessing. companies, are very mindful of expansion really vantage against Amazon when that consumer trust, the dif- you go head-to-head with MR. DEAN: Several of those ference between the trust and focuses on our them? categories that you mentioned nontrust is a very thin wall. customers, who are MR. TSAI: In the cloud you re- fall under the rubric of artifi- So, we feel like we’re treading ally compete on technology cial intelligence. It’s hard to on thin ice all the time. doing business in and products. And we have ar- separate the hype from the re- China, as they expand eas we feel we are excellent in. ality. Where do you have an MR. DEAN: Alibaba founder abroad.’ We’re very good in database, advantage in AI technology? Jack Ma told President Trump we’re very good in middleware MR. TSAI: I have a cigar theory in January that Alibaba would as well as security. We’re not on AI; you look at Cuba, C-U- create a million jobs in the just competing with Amazon, B-A. Those are the four impor- U.S. over five years. That we’re competing with Google, tant elements. C stands for pledge was met with some we’re competing with Micro- cloud computing, which means skepticism. Can you tell us soft, great, great technology low-cost computing to train what you’re doing to make companies. But we feel like we the machines and manage that a reality? have both the wherewithal and massive amounts of data. U MR. TSAI: We take our China the technology and the people means use case. We serve hun- experience. There are over 10 to compete. dreds of millions of consumers million small merchants that every day. We’re seeing their are selling on our platform. MR. DEAN: You announced last behavior. We have fresh data Whenever you try to help a week you’re ramping up R&D every day. B means big data. A merchant to sell more, grow spending to a total of $15 bil- is algorithm. You need to have their business, it creates jobs. China’s Alibaba has grown consumers. from investment and exports lion over the next three years. smart people, the scientists, We have studies that show into one of the world’s biggest Today, we run the largest to consumption. What’s driving that? the mathematicians, to de- that the Alibaba platform has tech giants. As it has grown, it retail platform in China. There If you look at China today, MR. TSAI: As a percentage of velop the good algorithms. created over 30 million jobs in has spread into many different are over 500 million consum- it exhibits a lot of the develop- revenue, historically, we’ve We are one of the top com- China just from merchants hir- areas of tech and has begun to ers on that platform. And ing-economy characteristics, been spending roughly panies that have all those ele- ing people. The logistics in- bump against U.S. tech giants most of them are mobile. So whereas Amazon is in a very around 10%, 11% of our reve- ments in place. dustry is hiring a lot of peo- like Amazon and Google. whenever we think about ex- well-developed economy. E- nues on R&D. So with this ef- ple. The Wall Street Journal’s panding into a new space, we commerce is actually very, fort, $15 billion over three A question of trust We believe that we can global technology editor, Ja- ask ourselves, “Is that consis- very tough. It’s not about just years, roughly on average MR. DEAN: You and Google and bring the same idea, create a son Dean, discussed Alibaba’s tent with our mission? Are we doing an app or launching a about $5 billion a year, you’re Facebook have an enormous platform here to let American strategy with Joseph Tsai, the staying true to that mission?” website. It’s about figuring out looking at midteens revenue amount of data on people. companies, especially small company’s executive vice the entire supply chain. We percentage spending. I don’t Why should people trust the businesses, sell to Chinese chairman. Here are edited ex- MR. DEAN: You’ve been called have to worry about putting think that’s a huge stretch. big tech companies to treat consumers. cerpts. the Amazon of China. You’ve merchants together. We have This just shows our com- that data responsibly? Remember, we have access competed in China against to worry about logistics. We mitment to put more re- MR. TSAI: It’s because it’s good to 500 million consumers in What now, what next? them and won. But increas- have to worry about payment. sources into the talent as well for business to be a responsi- China. That is a huge job-cre- MR. DEAN: Let’s talk about ingly, you’re competing head- There is going to be some as the technology develop- ble custodian of consumer ation opportunity. your ambition. You started off to-head globally, particularly competition at the fringe. But in e-commerce. You’re now di- in the cloud business. What is in China today, the cloud mar- rectly or indirectly in cloud the strategy there? Are you ket is probably what the U.S. computing, media and enter- trying to take them on outside was like maybe seven, eight VOICES FROM THE CONFERENCE tainment, logistics, payments China, as well as Microsoft years ago. It’s about to take and others as well. Your vision and Google in the cloud? off. We’re very excited by it. is that customers will meet, MR. TSAI: If you look at Ama- We’re very happy to con- “We’re still dealing with crappy passwords work and live at Alibaba, zon and Alibaba, the two com- tinue to grow our business in over the last 25 years. Literally every con- which is pretty much every- panies grew up in very differ- China. Our international ex- ference, we talk about all this crazy security thing. Where does the ambi- ent environments. We grew up pansion really focuses on our and big-data analytics, and we still can’t tion end, and what’s the unify- in China. Amazon grew up in customers, who are doing ing vision? the United States. We started business in China, as they ex- get the passwords right. So, as a consumer MR. TSAI: Since 1999, we as e-commerce companies. You pand abroad. We help them one of the biggest things that seems sim- started the company with a can say that we’re from the expand. ple is at least have a different password for mission to make it easy to do same genus but grew up as We also have an effort in, each site.” business anywhere. We want two different species because for example, Southeast Asia, to make sure we help busi- we have our own environment. outside of China, where a lot George Kurtz, nesses, companies, especially China is a developing econ- of Southeast Asian companies Co-Founder and CEO, CrowdStrike small companies, to be able to omy. It’s an environment are looking at cloud solutions. reach their markets and reach where the economy is shifting So that’s where we are. For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com THE WALL STREET JOURNAL. Tuesday, October 24, 2017 | R5 JOURNAL REPORT | WSJ D.LIVE

Is Regulation Ahead ‘Google is the true monopolist in terms of For Giants of Tech? advertising.’ Barry Diller says it’s inevitable. Also: He talks about the absurd valuations put on ‘unicorns.’

Barry Diller, after a long and You’re in a false environment.” MR. BAKER: But they are con- successful career in traditional It occurred to me that compa- fronting all of those challenges entertainment, has reinvented nies, once they got up to being public companies face: tougher himself as chairman of IAC/ a substantial business, should regulation and scrutiny and InterActiveCorp, owner of not rely on a corporate for reporting requirements. What such popular digital properties capital or for telling them would your advice be to an as Angie’s List and Expedia. what’s right or wrong. Uber or an Airbnb as they go Wall Street Journal Editor in So we started spitting these through this process? Chief Gerard Baker spoke with companies out. I believe that MR. DILLER: If you don’t have Mr. Diller about the fierce companies that have multiple to, don’t do it. Meaning the

competition and harsh reali- and disparate operating divi- reason that you would take a NIKKI RITCHER/DOW JONES (2) ties in today’s digital business sions are really suboptimal. company public is liquidity, for world. Edited excerpts follow. all the obvious reasons. How- magical valuation? MR. BAKER: Really? zon, interestingly, with two MR. BAKER: What was the ever, unless you need capital, MR. DILLER: Well, yeah. A com- MR. DILLER: It isn’t possible. different business models. The MR. BAKER: You’ve created tre- threshold at which you— there’s utterly no purpose so pany isn’t dealing with basics There’s no pricing power. You Netflix model is very clear. mendous value for sharehold- MR. DILLER: There is none. long as you can provide some when VCs in a room with have two monopolists. One, re- They have 100 million sub- ers by acquiring or developing liquidity to people who need three or four people make up ally. Google is the true monop- scribers. Their next closest internet businesses and then MR. BAKER: There is none? it. I’ve never sold a share of a valuation when they do addi- olist in terms of advertising. competitor has 35 million or spinning them off. Tell us how MR. DILLER: No. It’s feel. Every my company. tional rounds of financing. No one is going to enter it and 40 million. They are so far that model works. one worked better when they By the way, I think that the It has no reality. It’s just a take share away from that. It’s ahead of everyone else, it’s im- MR. DILLER: How it happened were independent. If you really pressure of venture capital to bunch of guys saying, “Oh, we just not possible. Not that possible at a mass communi- originally was we owned Tick- want a company to continue to force companies to go public were worth $300 million. Oh, there won’t be other forms of cation scale to compete with etmaster, and one day the guy innovate, they’ve got to be on because they’ve got to return let’s make it $700 million.” advertising channels. them. And it’s unlikely they’re who ran Ticketmaster came in their own melting ice cube. money to shareholders isn’t a And if they get enough people going to lose it, because and said he would like to make very good process. to buy it, “Let’s make it $5 bil- MR. BAKER: So you don’t think they’re overprogramming way a greater investment the next MR. BAKER: What do you think lion.” Or in Uber’s extreme anything can be done about beyond the water line. year. And therefore, he would of the virtues of going public MR. BAKER: These valuations case, “Let’s make it $65 bil- the duopoly or the monopoly The other model, which is take his earnings way down. versus going private? You’ve for so-called unicorns, do you lion.” as you call it? completely weird if you’re in Andhesaid,“SocanIdoit?” spun off a lot of companies think that the aura of being a MR. DILLER: Eventually. the program business, or en- And I said, “So you’re, like, that are now public. tech company somehow be- MR. BAKER: How do we do tertainment, is Amazon, be- coming to Daddy to ask? MR. DILLER: They’re all public. stows on them some kind of that? Can you give us a clue? MR. BAKER: You think regula- cause Amazon isn’t particu- MR. DILLER: Let me tell you, tors are going to tackle it? larly in the business of saying, it’s very easy. You and I sit in MR. DILLER: As we now see “We’d like you to like our pro- a room and say, “We’re going these companies, these four or gramming for its sake.” Mean- VOICES FROM THE CONFERENCE to get this dope over here to five, having more hegemony ing, to the degree that people put some money in. Let’s just over more areas, inevitably, it watch it, you do well. Amazon make up a good figure and if has to bring regulation. The is doing it to build Prime, be- “We know that bias prevents us from being he’s going to buy it, fine with track is so clear. This is a dif- cause they want to sell you a meritocracy, but research shows that us.” These valuations don’t ferent situation than the stan- more things. That’s a business when you say you’re a meritocracy, when bear reality. dard fear that down the street, model entertainment has you design an organization and you say in a garage somewhere, will be never had to compete with. MR. BAKER: Being dependent your competitor that will de- From the beginning of time, that it is meritocratic, it leads to spikes in on advertising in the current stroy you. These main tracks incumbents never invent any- bias. It leads you to be more biased. Be- environment, unless your have been laid now. And the thing new. Incumbents protect cause basically it frees people up from name is Google or Facebook, dominant companies in them their ground. Other people thinking that they have to try hard to be is pretty challenging, right? do not really have fundamen- come in with new ideas. And MR. DILLER: There’s no hope. tal competition. up until the last couple of fair in their decision making.…And I think years, the methodology was that’s one thing we’re seeing going on in MR. BAKER: No hope? MR. BAKER: What about video? that HBO would be created by tech.” MR. DILLER: If you’re going to MR. DILLER: Everybody and Time Inc., a publisher, and Joelle Emerson, build a business based upon their mother is trying to do would eventually be bought. advertising, purely advertising video. Mostly, defensively. Guess what? They are not Founder and CEO, Paradigm is your sole source of revenue, Two companies are doing it buying Amazon and they’re I would say go home. offensively, Netflix and Ama- not buying Netflix.

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At Oracle, It’s All ‘There is a possibility that all of development testing, which is a third of the IT market, will About the Cloud be done in the cloud.’ Chief Executive Officer Mark Hurd says the move is in the customers’ best interest

Business software giant Ora- This will be a 10- to 15-year maintain, and frankly, it’s re- cle Corp. is in the midst of a run to get there. And what’s ally hard to secure. All of this massive transition, taking on happened over the last 20 to is going to move toward a Amazon.com Inc. and others 25 years in tech is all being simpler, more flexible, more in selling cloud-computing ser- challenged now. So for us, variable market. vices. Helping lead the shift is we’re cannibalizing ourselves. Mark Hurd, the company’s MR. BERMAN: Is the future re- chief executive officer. MR. BERMAN: Was there a mo- ally a fully vertically inte- In an interview with Wall ment inside when you were grated IBM of the 21st cen- Street Journal Financial Editor like, “We’ve just got to do this tury? Dennis K. Berman, Mr. Hurd differently? We have to make MR. HURD: That’s a great ques-

discussed Oracle’s strategy a change?” tion. If you went back into the NIKKI RITCHER/DOW JONES (2) and why shifting software op- MR. HURD: No. Nothing like ‘80s, there was a rebellion erations to the cloud is in that. It took us a bit to figure against exactly that model, that fixes another piece of issues with everything in the formation. companies’ best interest. out where the market is which was, “We want to pro- code. We would fix it immedi- cloud, having all of that valu- To be able to fight every Edited excerpts follow. headed. So we started with, cure our way to more leverage ately in our cloud. But by the able data in one place? day, you need the best to fight “Here’s where this thing is go- with all of these vendors.” I time it rippled its way through MR. HURD: I don’t think so. for you. We do things that Generational change ing to land.” And if we are think what has happened is our on-premise customers, it Equifax to me was an abso- other people can’t do. Simple MR. BERMAN: Let’s talk about right, there’s a possibility that you’ve gotten a lot of that, and would be one year. lutely perfect target. I don’t things, like all of your data, if year-end compensation, about there isn’t a data center that a what you’ve gotten in return is This is now becoming an is- mean this to be derogatory to- it was in our cloud, would be how you are being incentiv- company owns in 2025. There a very complicated, very diffi- sue for CEOs, for boards. ward them, but they’re a rela- encrypted. We wouldn’t even ized. That has changed at Ora- is a possibility that all of de- cult environment out there. I tively small company, their re- have your data. So if anyone cle, and I think that says a lot velopment testing, which is a think you’ll see a rotation to a ‘Really flipping hard’ sources are aligned to the size got through, what they would about the company. third of the IT market, will be degree back to more optimiza- MR. BERMAN: Have we sort of of company, and they have an get would be a set of en- MR. HURD: The compensation done in the cloud. These num- tion, more integration. The gotten over that psychological incredible treasure trove of in- crypted files. has always been about stock bers are gargantuan. cloud is a lot of that. barrier where a CEO says, “I’m options, and people would If you don’t prepare for that willing to risk myself and my only make money if the com- now, you won’t get there. You MR. BERMAN: Isn’t there sort reputation and my company Getting Cloudier pany was performing. have to internalize that and of a great kind of Greek myth- by doing all this work in the Projected global public cloud services market The problem with that say, “I can kick this can down ological irony that the IBM de- cloud”? methodology—low salaries, the road for a couple of years stroyer becomes IBM in the MR. HURD: Do you want to be $500 billion low bonuses, lots of stock op- or I can go do what we de- end? in front of the U.S. Congress Management and tions—has always been that cided to do.” MR. HURD: I’m going to stay and say, “Listen, I put all this 450 security services when you do a Black-Scholes out of mythology. But the en- software and my IT staff 400 Application model against that, it gets you MR. BERMAN: Right now, vironment in IT today isn’t missed a patch”? Or do you infrastructure to crazy numbers, but you you’re doing a blend of cloud sustainable. Forget anything to want to say, “I did exactly services (PaaS) don’t get anything unless the services, on-premise systems, do with IT’s performance. The what Oracle said.” 350 stock performs. What we have all kinds of custom brew for simple risk from a security If I’m a CEO, not Oracle’s Business process 300 done is tried to evolve that. customers. What will that look perspective has to change. It CEO, I like the second talk services (BPaaS) We’re sticking with the men- like in 2020? isn’t sustainable. track. I’d much rather say, System 250 tality of options-related comp, MR. HURD: Right now, Silicon “Listen, I got the best guys in infrastructure MR. BERMAN: services (IaaS) but aligning it to performance Valley does a good job of pro- What do you the world doing this for me” 200 incentives, some of which are viding a bunch of individual mean by that? as opposed to, “I tried to do it Application around our transition to the parts—servers, operating sys- MR. HURD: Let’s pretend we myself.” 150 cloud. It’s a big deal. tems, databases—all of this got attacked. Oracle would see This patching thing, while it services (SaaS) stuff. You send it all to the something today in the mar- may sound trivial, when you 100 MR. BERMAN: So the way you customer basically a la carte. ketplace that would try to have tons of configurations, Advertising are paid is changing simply The customer creates a huge penetrate something. We tons of operating systems and 50 because you need to push the IT staff and then tries to put it would create a piece of soft- tons of databases, this is re- company to the cloud? together like a Lego set. The ware to fix that. That’s called ally, really flipping hard. 0 MR. HURD: Yeah. Our industry stuff that they put together a patch. You’ll hear this term is going through a secular like a Lego set is really hard to “patch” used a lot. A patch is AUDIENCE MEMBER: Aren’t 2017 2018 2019 2020 2021 change that’s generational. upgrade, it’s really hard to simply a new piece of code there a lot of serious security Source: Gartner THE WALL STREET JOURNAL.

GM’s Strategy for the Autonomous Car President Dan Ammann on what the company in lower Manhattan. environments, which are the MR. AMMANN: It’s still being MR. AMMANN: We’re currently same environments in which formulated, but I think the is doing—and what the timetable is testing in San Francisco, in we ultimately think the tech- promise of what the technol- Scottsdale, Ariz., and in Michi- nology should be deployed, we ogy can do will help from a gan. There’s a different rate of won’t get the level of perfor- regulatory perspective. Every learning and a different expe- mance that we need. year 40,000 people are killed ‘I think the rience operating in each of in traffic accidents in the U.S. these environments. Attracting talent Regulators will tell you 95% of promise of what As you would expect, down- MS. HELLER: A lot of people those fatalities are caused by town San Francisco is a signif- here talk about competing for human error. the technology icantly more complex environ- talent. How are you attracting So if we can make a signifi- can do will help ment than Scottsdale, for the people you need to GM? cant impact by replacing the example. As a rule of thumb, MR. AMMANN: When we began human driver with a better from a regulatory our cars experience about as to see the change in the trans- driver, then it almost becomes perspective.’ much in one minute of San portation landscape a few an obligation to deploy this Francisco driving as they do in years ago, we saw we were technology for the betterment one hour of Scottsdale driving, missing some of the specific of society. just given the number of inter- software-engineering capabil- actions with other players, be- ity that we needed, particu- Industry impact tween pedestrians, cyclists, larly in the self-driving area. MS. HELLER: Let’s say you suc- other vehicles, and things go- So we learned what was out ceed and we’re all getting ing on. there, and we ended up ac- driven around by robots. Is In the more complex envi- quiring a company called this going to be good or bad ronment, our cars can learn Cruise Automation, which was for the car industry long term? more quickly, and we learn a very small but very talented Will we just need fewer cars? more quickly about the prob- engineering team. MR. AMMANN: We think by lems we need to solve. Now And with that team we not making transportation more we’re taking that a step fur- only bought capability at the accessible, lower cost, safer, we ther, to Manhattan, which time, but we bought the abil- actually create the opportunity most of us would agree is the ity to recruit more talent. Peo- for more vehicle miles to be most complex and difficult ple see what we’re doing, and traveled. We think transporta- driving environment in the U.S. often reach the conclusion tion becomes more readily Will auto makers or tech com- nology to move to a point once we believe we’re ready to that if you want to come to available in general to people. panies lead the way to the era where it can be deployed in do that. MS. HELLER: Is that just a tech- the place where your technical So total vehicle miles traveled of the autonomous car? commercial scale. That all lets us think about nical thing, or is there also a contribution will actually be or total passenger miles trav- Dan Ammann is helping this as one big integrated sys- messaging and branding ele- commercialized in large scale, eled probably goes up. chart General Motors Co.’s MS. HELLER: So it’s a technol- tem, rather than just working ment in taking it to New York, then this is the place to come. While autonomous cars are course. The company’s presi- ogy play, and Google’s been on one piece of it or another. where Wall Street is? seen out on the road in test- dent for nearly four years, he out there with Waymo, and So we can move quickly and it- MR. AMMANN: It’s all about MS. HELLER: What’s happening ing, what we still haven’t seen spoke with Jamie Heller, The has logged many more hours erate the entire system contin- getting the technology ready on the regulatory front? How is what we’re aiming to Wall Street Journal’s business of test-driving on public roads uously through development. as fast as we can. Until we’re much of an impediment or achieve, which is a truly driv- editor, about the company’s than GM. Why do you think testing in the most complex help is that going to be? erless car deployed in large strategy of developing the you can succeed as the leader? MS. HELLER: You played with commercial scale. But once whole autonomous-car ecosys- MR. AMMANN: A demonstra- some partnerships, and there you’ve deployed, the technol- tem and whether the new era tion-level capability or small- seem to be a lot of frenemy re- Speedy Growth ogy will only continue to im- will benefit auto makers. Here scale deployment doesn’t have lationships between Detroit Forecast size of the market for self-driving cars Share of global prove. So we view that on-off are edited excerpts of their the impact on the world that and Silicon Valley. Is the new market in 2024 switch of the beginning of $20 billion conversation. we think this technology can. message “We got this”? t commercial deployment as just Our goal is to get to the point MR. AMMANN: The message is the beginning of a really inter- Ready to scale where we can launch a truly that this technology will esting journey, and changing MS. HELLER: About a decade driverless car, with all of the change the world for the bet- North America that total customer experience. ago, GM’s CEO was talking safety validation and every- ter in a really significant way. 15 Asia-Pacific 40.8% about leading the way in au- thing that needs to go with It will have a huge impact on Europe MS. HELLER: The big question tonomous cars. And history in- that, at large commercial scale. safety and our roads. It will is when that on-off switch gets tervened—the financial crisis, We’re making sure we have have a huge impact on the Rest of world flipped. GM’s struggles. Why should we control of all of the capabili- consumer experience. It will 10 MR. AMMANN: We and others believe now is the time for GM ties necessary to do that, from create time for people. are working on this as fast as to succeed in robot cars? the advanced software-engi- So we think therefore we 29.7% we possibly can. MR. AMMANN: No. 1, the tech- neering capability for the self- have an obligation to work as nology is here today to enable driving brain of the car, all the fast as we can, to bring it to 5 MS. HELLER: You said the last this to happen. No. 2, we think way through the integration of commercial reality as quickly prediction was five years from that with the advent of trans- that into all of the sensors on and as safely as we can. So 2016. Are we still in that time- portation as a service, and the the vehicle, the electrical ar- that’s what we’re working on. 27.3% table? change in consumer behavior chitecture, the automotive- MR. AMMANN: I think inside of that we’re seeing with ride grade safety validation, and MS. HELLER: You just said in 0 2.2% that time frame we will see sharing and so on, that now is then the ability to reliably The Wall Street Journal that 2017’18 ’19 ’20 ’21 ’22 ’23 ’24 some pretty interesting devel- the time for autonomous tech- build these cars at large scale you’re now going to be testing Source: Variant Market Research THE WALL STREET JOURNAL. opments. For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com THE WALL STREET JOURNAL. Tuesday, October 24, 2017 | R7 JOURNAL REPORT | WSJ D.LIVE The Outlook for TechM&A Peggy Johnson and Jennifer Nason talk about past deals and the prospect for more deals

Tech companies aren’t sticking a multitude of personal to their bread and butter when agents, and could ours talk to it comes to acquisitions. In each other? 2016, Microsoft Corp. sur- When it was handed off to prised the market with its $26 the engineering teams, then billion acquisition of LinkedIn. the hard work began. They fig- And this year, Amazon.com ured out how you can have a Inc. purchased Whole Foods seamless experience between for more than $13 billion. Wall your two devices. I think you’ll Street Journal Senior Editor see more of that going forward. Yun-Hee Kim talked about mergers and acquisitions and MS. KIM: Are you open to strategic investments with working with companies like Peggy Johnson, Microsoft’s ex- Apple and Google in the AI ecutive vice president of busi- space as well? ness development, and Jenni- MS. JOHNSON: We are. We try fer Nason, global chairman, not to look at everything investment banking at J.P. through a competitive lens. Is Morgan Chase & Co. Edited there some shared value that excerpts follow. together we can build more Jennifer Nason (left) and Peggy Johnson

for our joint customers? NIKKI RITCHER/DOW JONES MS. KIM: What is the outlook Rather than fighting over a for big acquisitions? piece of the pie, can we grow MS. NASON: Yes, there are women talking to other MS. NASON: I am bullish about the pie, is really our model. many examples. But the big It's a Deal women about how to fix it. I 2018 for activity. Money is still hardware of the future is go- Merger, acquisition and buyout activity involving venture-backed think that’s been a big tactical virtually free. The equity mar- MS. KIM: This partnership is an ing to be the autonomous ve- information-technology companies headquartered in the U.S. mistake on our part to talk to ket has been very responsive example of a potential expan- hicle, and the networks that each other, rather than to in- to M&A. Prices are still high, sion in the AI space? are going to those vehicles, Number of deals Total amount paid volve the men, and particu- so we’re seeing very high valu- MS. JOHNSON: Yes,AIisabig the software, all the technol- 300 $40 billon larly the men who are typi- ations. That is tough. But in- area for a lot of people right ogy, the content. cally in power at a lot of these 35 creasingly companies are look- now. If we can take out some 250 organizations. ing at assets and saying, “This of the friction in the develop- MS. KIM: Which companies are 30 MS. JOHNSON: I’m an electrical 200 is just strategic for me. I need ment process, I think we’ll in best position? 25 engineer, and when I first to make a move.” start to see some of the out- MS. NASON: I would never un- started out, there was nobody comes that we’ve all been talk- derestimate the big OEMs 150 20 who looked like me out there. MS. KIM: Peggy, one of your ing about and envisioning. [original equipment manufac- 15 I worked at Qualcomm, and I partnerships came as a sur- turers], so Ford and General 100 remember coming into meet- 10 prise this year: the partnership MS. KIM: Jennifer, a lot of ri- Motors. We know there’s a lot ing rooms, and I could never 50 with Amazon on digital assis- vals in tech are partnering and going on there. Thousands of 5 get the floor. I could never get tants. You have Cortana and working on emerging technolo- companies are trying to raise 0 0 my opinion across. And I Alexa working together. gies. Will this be a trend? private equity for elements of thought at one point, “I’m just 2008 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17* 2008 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17* MS. JOHNSON: They’re talking MS. NASON: It’s certainly more the autonomous vehicle. goingtodropout.” to each other. capital efficient. Sometimes *2017 figures are for first three quarters of the year My manager at the time you just can’t go out and buy MS. KIM: What is Microsoft do- Source: Dow Jones VentureSource THE WALL STREET JOURNAL. said, “Don’t do that. How can MS. KIM: What was the logic everything. M&A is hard, time- ing in this space? we fix things?” And I said, behind that deal? consuming, and it doesn’t al- MS. JOHNSON: We’re enabling MS. KIM: What is Microsoft’s male senior leaders in your in- “Well, just throw me the ball. MS. JOHNSON: It started with a ways work. So some of these that space. We’ve come out next big growth opportunity? dustries. What can companies I have something to say, but conversation that Jeff Bezos partnerships can be a good with our connected-vehicle MS. JOHNSON: We have a big do to promote more women it’s hard to interject.” And he and Satya Nadella had at our way to have a bet in a certain platform, which takes care of a focus in AI. Just over a year into senior roles? started doing that. That’s CEO Summit about how we’re area and see how it plays out. lot of the plumbing, if you ago we announced a reorgani- MS. NASON: Well, if they could when my career really took really operating in different will, that the car needs to go zation. We’ve had AI on our just send an email out tomor- off. So I’ve tried to do that spaces. MS. KIM: We’re seeing a lot of through; the aggregation of campus for about 25 years, so row, and promote a bunch of over and over, you know, go- Jeff’s all about shopping, software companies going af- data from all of the different we’ve put a lot energy into people. (LAUGHTER) I hope ing forward with any team or and that experience. We’re all ter hardware, and hardware sensors, off-loading it, and an- that, and this reorganization Jamie Dimon is listening. group of people, make sure ev- about productivity and that companies going after soft- alyzing it in the cloud. We’ve will help refocus even more. I’ve invested more time and erybody is heard. It’s very im- experience. I think there was a ware. Jennifer, will that trend looked at a set of tools that effort in diversity committees portant, whether you’re a recognition that there will be continue in the industry? can enable OEMs in the space. MS. KIM: You are both rare fe- and panels, and generally it’s quiet man, or a quiet woman.

We’re taught in school, “If you listen,your patient will tell you what they need.” The truth is, patients share a lot of valuable information that cannot be captured. That’s why I’m collaborating with health and technology leaders to make meaningful patient data accessible and actionable. Our patients are still telling us what they need, but in the future, technology will help us hear them even better.

Join the AMA in unleashing a new era of better, more effective patient care through the Integrated Health Model Initiative at ama-assn.org/ihmi For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com R8 | Tuesday, October 24, 2017 THE WALL STREET JOURNAL. JOURNAL REPORT | WSJ D.LIVE The View of An Activist Investor William Ackman explains why he’s battling with ADP

In fact I think it is danger- perspectives on a board, none ous not to have opposing of Pershing Square’s nominees points of view in a board had the “relevant technology” room. ADP is operating in a experience or skills to “be ad- ‘Once the owner world that has changed dra- ditive” to ADP’s board. It also is gone, there is a matically in the last five or six said the company had transi- years because of technology, tioned 83% of clients to the real risk that a because of cloud-based soft- cloud and was delivering long- company will lose ware. And they’ve missed the term value for shareholders.] market as a result. its innovation.’ MS. HELLER: Does this mean Risk of disruption we’re going to see more of Bill MS. HELLER: You recently said Ackman in tech? that as an investor, you need MR. ACKMAN: The reason we to be looking at what the ven- haven’t been an investor in ture capitalists are looking at, technology generally is that and what the startups are do- most true technology compa- ing because you never know nies are so dynamic that it’s who is going to come in and hard to predict the future. If a blow up your business. Yet business is dynamic and sub- you’re investing in a business ject to so much change, I can’t that seems to be on the defen- predict what it’s worth. And if sive from rivals like Workday I can’t predict what it’s worth, and Paychex. How did you de- I’m not going to be an investor cide to make that leap? in the company. MR. ACKMAN: I’m a pretty ac- ADP’s business model is a tive small investor in venture little bit different. It’s really a capital personally. It helps me business service company. It think about the risk of disrup- tends to have very long-term tion. The most important relationships with its custom- thing a long-term investor ers, as switching costs are

NIKKI RITCHER/DOW JONESneeds (2) to think about is the very high. risk of someone in a garage Activist investor William Ack- MR. ACKMAN: I think a lot of very focused on the short bought a share of stock. coming out with the next new MS. HELLER: Let’s go back to man, the founder of Pershing companies make the mistake term. If you don’t, you’re go- Owners are willing to make thing. this idea that more companies Square Capital Management, of giving guidance to their ing to attract investors who bold decisions. Once the ADP has some of those in Silicon Valley are moving has spent the past few months shareholders on earnings. take a longer-term view. ownerisgone,thereisareal kinds of risks. But we think as away from one vote, one locked in battle with Auto- When you have companies risk that a company will lose long as ADP is open to change, share. Is that a good trend? matic Data Processing after very focused on meeting num- MS. HELLER: You haven’t done its innovation. So activism is it still has a strong enough MR. ACKMAN: I think super taking a stake in the human- bers, it causes them to miss that much investing in tech, so sort of a replacement for the market position, a strong voting is dangerous unless it’s resources software firm and opportunities. how did you pick ADP? founders. Because we own 8% enough balance sheet, enor- in the hands of an incredibly having his request for board ADP is the classic example MR. ACKMAN: ADP is sort of of the company, we’re seeking mous resources, that it can talented entrepreneur. Look at seats rebuffed. of a company that has met its the classic example of a com- representation on the board. mitigate competitive threats. what Uber Technologies is In an interview with The numbers but missed the mar- pany started by a founder, Once we’re there, we can think What’s fascinating is, ADP going through now, where Tra- Wall Street Journal’s business ket. We’ve heard stories from built up over decades to be- like an owner. We can help has a $50 billion market cap. vis Kalanick was the greatest editor, Jamie Heller, Mr. Ack- former employees that ADP come the dominant company make decisions like an owner. It spends $860 million a year CEO of all time, and then all of man laid out his case for had an opportunity to build a in payroll processing. It was on systems development and a sudden the board soured on board changes at ADP and for competitive product to Work- an innovative company that MS. HELLER: One of the criti- R&D. They have 9,000 devel- him. But by virtue of owner- shareholder activism in gen- day, but there just wasn’t helped with an important task. cisms of your ADP campaign is opers, technologists, working ship, he’s got enormous influ- eral. Edited excerpts follow. room in the budget for it. Then, the founder dies and that there aren’t specifics. Its forthecompany.Theyspend ence and ability to elect peo- They couldn’t make the num- the stock gets disseminated just “let’s improve margins.” more than the entire industry ple to the board. Replacing the founders bers if they had to make a big out to children, and estates, What’s your response to that? does developing products and Fundamentally I prefer one MS. HELLER: What do you think capital expense on a new pro- and foundations, and then to MR. ACKMAN: What companies software. And much smaller vote, one share. But if it’s about this new proposal out of gram. That decision has cost the market, to the government do when they want to defend competitors, with a fraction of Steve Jobs, you can probably Silicon Valley for a new U.S. them tens of billions of dol- to pay taxes. And then the against activists, and they the resources, have better give him control. The risk is stock exchange, where the lon- lars, and created competitors. board becomes comprised of don’t have a good response, is products than ADP. really in the next generation. ger you hold a stock, the more You get the shareholders what I call professional direc- they will attack the activist. [In response to Mr. Ack- If a company goes public with voting rights you get? And no you deserve. If you have earn- tors. If you look at the board They say that bringing the ac- man’s comments, ADP said in supervoting stock, after the earnings guidance. Is that a ings guidance, you’re going to of ADP today, only one direc- tivist on the board is ex- a statement that while it un- founder retires, it should con- world you would welcome? have shareholders who are tor in the last 14 years has tremely risky. derstands the value of diverse vert to one vote, one share.

Self-Flying Plane Wins Startup Showcase Eviation was the audience choice, while the judges favored a comedy-streaming service

The Wall Street Journal would like to thank the sponsors of D.LIVE Laguna 2017 for their generous support.

Eviation co-founder and CEO Omer Bar-Yohay at The Wall Street Journal’s D.Live conference

EVIATION, A STARTUP devel- at venture-capital firm GGV Eviation describes oping self-flying, electric pas- Capital. senger planes, was crowned Sitting on director’s chairs its vision as ‘Uber the audience choice for the on an outdoor stage overlook- meets Tesla in the most promising startup at The ing the Pacific Ocean, the Wall Street Journal’s D.Live judges peppered the founders sky’ technology conference. with questions on their busi- The Israel-based startup is ness models. hoping to build a company it describes as “Uber meets Judges choose Laughly Other contenders Tesla in the sky,” using self-pi- In the end, the judges unan- Others in the Startup Show- loting, lightweight aircraft imously went with a different case included: that can whisk up to nine pas- choice than Eviation, all three KinTrans, a sign-language sengers each at 280 miles an favoring Laughly, a comedy- translator that aims to read hour on demand. streaming service that claims sign language made by a hu- With the aircraft still in 30,000 monthly active users man, transcribe it, and play it planning, it is an ambitious vi- who pay for something akin to back with voice. sion that would require rapid a Netflix of stand-up comedy. Hurdl, which makes low- changes to U.S. aviation, a But Eviation, helmed by cost, wirelessly connected LED highly regulated and crowded Omer Bar-Yohay, won over the wristbands meant for concerts industry where self-flying and crowd. and other live events, aimed at electric planes are still Mr. Bar-Yohay spoke about allowing more ways for musi- thought by many to be far off. the plane in epoch-shifting cians to interact with the audi- Eviation won out in the au- terms, comparing it to the ence. dience choice over five other shift from horses to highways. Bounce Imaging,acom- young companies that made Highways, he said in a slide pany that makes throwable For more information, please visit DLIVE.wsj.com. up the Startup Showcase at presentation “gave us traffic, cameras for law enforcement the conference. and they gave us the sub- to see into rooms or around Founders from each of the urbs…is this the last paradigm corners. startups faced off in pitches shift?” My Jomo, which makes before three judges—Levi Eviation’s planned aircraft, small, round digital screens Strauss & Co. Chief Executive shaped similar to many mili- worn by retail salespeople that

©2017DowJones&Co.Inc.Allrightsreserved.3DJ6029 Chip Bergh; Philip Krim, CEO tary drones, is designed to be can flash discount promotions of mattress seller Casper; and about 36 feet long, and very or a person’s name to help Jenny Lee, managing partner low-cost, Mr. Bar-Yohay said. draw in consumers. For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com THE WALL STREET JOURNAL. Tuesday, October 24, 2017 | R9 JOURNAL REPORT | WSJ D.LIVE

Companies Must ‘Now that we have enough data, we can start to think about artificial Use AI—or Else intelligence.’ If a company isn’t using artificial intelligence, says Intel CEO Brian Krzanich, it is going to be outpaced by another company that is

Artificial intelligence is the lat- earlier than what humans can see what you put in your bas- est Holy Grail for the tech in- detect. So imagine the trans- ket and then don’t buy. They dustry. What is the potential formation if Alzheimer’s, understand what colors you for this technology? And how which can be slowed down by choose. All of that data is then close are companies to achiev- drugs, could be detected five, tuned to what they send to ing it? 10 years earlier. you. Brick and mortar should To get a report on the state be doing that same thing. of play, The Wall Street Jour- MR. ANDERS: To be able to do They have cameras in there al- nal’s chief news editor, Jason that, you have to be a com- ready, they can put in small Anders, spoke with Intel Chief pany that has both the AI tech, [radio-frequency identification Executive Brian Krzanich. but also access to the MRIs? tracking tags]. Here are edited excerpts of MR. KRZANICH: You’d be sur- We did a project with their conversation. prised at how many companies Levi’s. They can now track actually have access to data what goes into the changing The smart revolution but don’t put the investment room and never comes out, MR. ANDERS: AI is everywhere. in place. never goes out of their store. You’ve had a front-row seat to IwenttotheNational Re- Do you pick up red things, but some of the biggest innova- tail Federation in January. I you only buy white things. All

tions in computing. How big is talked about how brick and of that data could really trans- NIKKI RITCHER/DOW JONES (2) this moment? mortar needs to think about form brick-and-mortar retail MR. KRZANICH: We’re just at one of the differences between as well. inside there? And you can look their large access to data, are ers in the world. We produce the beginning of a transforma- brick and mortar and online at those speeds. really helping drive. They’ve about a million chips a day, tion. Artificial intelligence is shopping. Online shopping has MR. ANDERS: You have a new What we’re talking about been great partners back to roughly. For each one of those going to be similar to what the all the data about you. They Nervana platform, a different here is being able to do those us, saying this is the kind of million chips we take about 1.6 internet was back in the ’90s. see what you searched, they way of designing chips. What much faster, but it isn’t only engine that we need. million pictures as it pro- You remember back in the is different about this? about speed. It’s going to be Nervana’s a good example. gresses through the produc- ’90s everybody said, “If you’re MR. KRZANICH: In industry, the amount of data that we We’re partnering with compa- tion line. not going to be an internet What's It Good For? five, seven years ago, people can look at. nies like Facebook. They’re Why didn’t this chip work? company, you’re not going to Some of the ways surveyed started saying, artificial intel- Look at things like weather one of the people who are Well, we have to go back be around.” companies are using or plan to ligence is going to take off, re- prediction. One of the biggest starting to take a look at it in through the 1.6 million photos The same thing is going to use artificial-intelligence ally it’s the advent of the things that limits accuracy is its early phase and saying, in order to try and find where be true. Almost every com- technology cloud. The cloud allowed ag- the amount of data that can be “Hey, this really could change the defect is. We now use arti- pany you can think of, every gregation of data. Now that absorbed into the system the way we think about artifi- ficial intelligence to compare 37% application, it’s going to be af- | Improve efficiencies in IT we have enough data, we can when you look at all of the cial intelligence, and help us against known images, and fected by artificial intelligence. operations start to think about artificial temperature measurements steer how we develop the soft- what that image really is, to You’re going to be using artifi- 34% intelligence. and wind speeds and all. What ware and the hardware.” go through those 1.6 million cial intelligence, or you’re go- | Improve data, analytics We started to think about we’ll do is massively expand images. What used to take ing to be outpaced by people or insights platforms what we call neural process- the amount of data that can be MR. ANDERS: Any company you three weeks, now takes a cou- who are. ing, which is that you’re start- used by these systems. talk to, any startup you talk ple of hours. And so our abil- 33% | Improve business ing to look at very large data to, any established company ity to shift how fast we can automation MR. ANDERS: What are the real sets with a very different ar- The big players you talk to, they’re all an AI solve issues. MR. ANDERS: applications that you’re most 33% | Mitigate security risk chitecture that allows for Who besides Intel company. How do we tell I think when you ask a com- excited about today? much larger data sets to be is doing things that you find who’s really doing stuff, ver- pany, are you an artificial-in- MR. KRZANICH: Today I think 32% | Test new products worked on at one time. absolutely are just blowing sus who’s just talking about telligence company, you have you already see it in some ap- We have a goal by 2020 to you away? doing stuff? to ask them, what’s your use? plications and social media, 31% | Gain better customer be 100 times better than the MR. KRZANICH: The place MR. KRZANICH: I think it comes What have you shifted? What where your news feeds, or insights best artificial-intelligence sys- where we see probably the down to, can you show a case have you changed? What have what you’re shopping for, or if tems out there today using most innovation is with the that is genuinely shifting how you improved? What’s running you listen to one of the music 30% | Innovate product design this neural processing. cloud-service providers. That’s that company does something. more efficiently? Or, what are systems, they’ll send you and development the , the Facebooks, Let me give you a real-life you delivering to the customer weekly suggestions. MR. ANDERS: How do you mea- the Amazons, the Alibabas. example within Intel. Intel’s that shifts what makes their What they look at is things 30% | Create and deliver a sure 20 times better than the Those companies, because of one of the largest manufactur- life better? like what you listen to, what better customer experience best artificial intelligence, or are the word patterns, things 100 times better? What’s the 30% like that. But where you’re | Improve efficiencies in metric? starting to see it break business operations MR. KRZANICH: There are algo- through that’s really exciting Source: Responses from 1,476 data and rithms that you can test are things like health care. analytics decision makers whose firms are against. So you show it a set There’s already data that sug- planning to use or currently use AI of pictures, or a set of data technologies, surveyed in Forrester's Global gests that using machine Business Technographics Data and Analytics sets that are large, and you learning, looking at MRIs, they Survey, 2017 say, how long does it take to can detect Alzheimer’s years THE WALL STREET JOURNAL. find the five patterns that are

‘We try to not think too much about the algorithm. We’re always looking at, what is the actual job the content’s doing?’

In Defense of an Ad Model Jonah Peretti of BuzzFeed talks about social media, algorithms and fake news The world of online news is in MR. PERETTI: If you’re reaching launched yet. We were trying flux, facing any number of a really large audience, adver- to understand, “What does it questions. Where’s the money tising is a good model. We mean for content to become going to come from? How do reach more than half of the social?” We didn’t realize you attract readers who have millennials in the U.S. I agree these platforms were going to so many options? And how that diversification of revenue getsohuge. can you keep inaccurate news is also important. We, like a We saw these three trends from taking hold? For insight lot of media companies, have come together: digital video, into these issues, The Wall expanded into areas like mer- mobile and social. That has Street Journal’s deputy tech- chandise, show development, created the largest audience nology editor, Christina Pas- commerce, a bunch of other that the world has ever seen. sariello, spoke with the areas. You’re able to reach literally founder and chief executive of billions of people. BuzzFeed, Jonah Peretti. Here MS. PASSARIELLO: You’re very We feel like we’ll be able to are edited excerpts. dependent on social-media build on top of these plat- platforms. Do you see it as a forms and reach many more Who pays for it? crutch to be so reliant on plat- people and build a great busi- MS. PASSARIELLO: Barry Diller forms that can change their ness by reaching people where said that anybody who was strategy? they’re consuming media to- building an ad-based business MR. PERETTI: When BuzzFeed day. should go home. What are you started, Facebook was how doing to make BuzzFeed less you hooked up with friends to MS. PASSARIELLO: Does it give reliant on ads? go places. The iPhone hadn’t Please see PERETTI page R10 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com R10 | Tuesday, October 24, 2017 THE WALL STREET JOURNAL. JOURNAL REPORT | WSJ D.LIVE

tion and ability to switch plat- user engagement, get people VOICES FROM THE CONFERENCE Peretti forms and to connect with au- to spend more time on the diences in a deeper way. platforms. But the algorithms Continuedfromthepriorpage are always flawed, and they’re “I think what’s going to define Africa’s tech you whiplash when one of Meeting the audience always changing. If you are a rush is whether or not it is controlled by these platforms suddenly MS. PASSARIELLO: How do you company that’s trying to fig- the people of Africa or it’s simply happen- changes, like away from live tweak your content based on ure out the algorithm or game ing to the people of Africa. Ultimately, video news content to focus on changes to the algorithms on the algorithm, you’re going to something else? Facebook or Google that have whiplash, as you said what’s going to yield the most synergy is if MR. PERETTI: BuzzFeed started change how content appears earlier. The best thing is to we’re taking advantage of all the resources as a lab. We’re continually in- in search or the news feed? not think that way, to think and the untapped opportunities of the con- novating. The more change MR. PERETTI: We try to not about the user and consumer. tinent, which includes the individuals on the there is in the media industry, think too much about the algo- thebetteritisforus.Iworry rithm. We’re always looking MS. PASSARIELLO: What is your ground as well. And the way that they’re about the opposite, which at, what is the actual job the prediction of what’s going to thinking about building businesses there would be if Facebook and content’s doing? How do we be performing well six months and building businesses that not only ad- Google became the only two make content that actually is from now? MR. PERETTI: dress the needs of the continent, but the platforms, and they decided to serving a job in someone’s life I think that all stop innovating and they lost in a deep and meaningful way, great companies go back to global diaspora and I think, honestly, hu- their paranoid fear of other and gives them a reason to the customer or the consumer manity in general.” people taking share from connect with other people? or the audience and they try Jessica O. Matthews, them, and they just did the Facebook or Google or who- to understand them in a deep Founder and CEO, Uncharted Play same, boring thing. Then ever is building these algo- way. Facebook had a program NIKKI RITCHER/DOW JONES BuzzFeed would get less of a rithms, they’re trying to sur- where they had people look at benefit from all of our innova- face great content, get more their news feed and then an- swer survey questions, and then they could use that data to improve the algorithm. There are a lot of weird things. For example, we do D.I.Y. content. We have a brand called Nifty, all about hacks and things you can build. Peo- ple will see a Nifty video, then a large chunk of them will spend their entire weekend building a project. Or with Tasty, a food brand that we created. People will watch, make the thing and post their version of it. Then we’ll post something that maybe is a fun piece of entertainment that gets the same number of views, but people see it and then they forget about it. It doesn’t have a longer impact. The algorithm might see the same number of shares, the same amount of engagement, but not be able to tell that someone did a project with their kids or cooked a meal with their fam- ily. There’s a lot of things that are hard to measure. When we see those signals, of people actually posting re- sponses of them making or cooking it, we know we’re on to something and we know that’s a deeper, more meaning- ful thing. We know that will drive brand affinity, so people will start to associate the brand with things that really matter in their life, which will cause more page likes, and start to show up in the met- rics. Even if the algorithm can’t measure it, we stay on it and keep pushing toward it. The fake-news problem MS. PASSARIELLO: You’re com- peting against fake news, so how do you approach that? MR. PERETTI: The dystopian view is that The Wall Street Journal and and will prioritize subscrip- tions and move behind a pay- wall. A very small percentage of elites will get the quality journalism that those organi- zations produce. If you’re thinking about an electorate and people being in- formed, the subscription model in media doesn’t help inform the public. If Facebook can’t find ways to support quality content in their news feed, that would be bad for de- mocracy. Facebook is going to find more ways to allow pub- lishers to generate revenue on their platform. It’s a huge question for so- ciety and democracy. If Google and Facebook take all of the revenue but don’t want to pay for the fact checking, report- ing, more-intensive investiga- tions, who does that work? If it’s only subscription services, that’s a big challenge. Google and Facebook are going to have to fix that. It isn’t tena- ble that the only people get- ting quality news will be 2% or 5% or even 20% of the public.

MS. PASSARIELLO: Is there a way that tech platforms should be solving fake news more aggressively with algo- rithms? MR. PERETTI: The challenge with the big tech platforms is they’re places where people are getting news and enter- tainment. And they’re kind of the telephone company, where people communicate with their friends. It’s hard to do both. We don’t want the tele- phone company interrupting a phone call when someone says something fake or incorrect on the phone. Speech should be open. Big tech platforms need to lean more on organizations where we have brands that we stand behind. They’re going to need more help from media partners to say, “OK, different media sources can vouch for the information that’s circulat- ing.” They’re not necessarily going to be able to do that themselves. For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com THE WALL STREET JOURNAL. Tuesday, October 24, 2017 | R11 JOURNAL REPORT | WSJ D.LIVE

Sam Altman Jenny Lee Bill Maris NIKKI RITCHER/DOW JONES (3) Where the Money Will Come From We have to have partners who They’re hoarding our per- MR. WINKLER: SoftBank Group Sam Altman, Jenny Lee and Bill Maris offer their know how to identify, have the sonal information and using it Corp. is an 800-pound gorilla. right skill sets, and the re- for profit, and so forth. And I Bill, what impact is it having? thoughts on startup funding, the most exciting sources and tools to go hunt think the tide, the populism MR. MARIS: Turbulence. I think them down and then help that sort of helped get Trump it’s unprecedented to have a technologies and increased regulation them to grow. elected, may be turning fund that size [the tech-fo- MR. ALTMAN: There is some against the concentration of cused Vision Fund has close to Ideas about investing and poli- MR. ALTMAN: A lot of people MR. WINKLER: That’s a lot. limit of how many good com- wealth that’s happening in Sil- $100 billion]. It creates some tics were bubbling as Wall have suggested that I run. But MR. ALTMAN: It worked really panies there are to fund. We’re icon Valley in a similar way. turbulence and probably com- Street Journal reporter Rolfe I love my current job. The well. We used our alumni to not anywhere close to that. presses returns over time be- Winkler met with Sam Altman, state is extremely, badly bro- advise them. We had compa- And until we get there, I’d MR. WINKLER: Do you guys see cause you have a large fund president of the accelerator ken and it would be good to nies all around the world, we rather figure out how to struc- a coming wave of regulation that needs to do large deals at and seed-money investor Y try some new ideas. But there had meetups all around the ture our organization so that that’s going to break up these high prices to deploy capital. Combinator, Jenny Lee, man- are so many important things world. It worked so well that we’re not spread too thin. big tech companies? aging partner at GGV Capital, to do right now on my list that we’re going to expand that. MR. MARIS: I wouldn’t be sur- MR. WINKLER: Why did you and Bill Maris, founder of the are higher than that, I am not MR. WINKLER: What are the prised. These companies are leave Google Ventures so venture fund Section 32, and going to do it. MR. WINKLER: Is it too many? best companies right now? The more powerful than AT&T abruptly? the founder and former CEO of How do you sort through all of technologies you’re most ex- ever was. If you think the sys- MR. MARIS: It wasn’t abrupt Google Ventures. Edited ex- MR. WINKLER: Let’s talk about these companies? cited about? tem is broken, the people with from my point of view. I went cerpts follow. Y Combinator: Is it now 250 MR. MARIS: I don’t think it’s MS. LEE: We think technology power and money are the ones in there kind of voluntarily to companies a year that you in- too many. We can’t invest in is going to come back around people will look to to say, “We do an experiment for a year. MR. WINKLER: Sam, are you vest seed money in? everything. Sam has a differ- and bring with it new inven- need to disrupt that. This isn’t And by the time I got to al- considering running for gover- MR. ALTMAN: In our main pro- ent mission and job, which is tions in the form of new prod- working for us.” most 10 years, it felt like it nor of California next year? gram, it’s probably about 280. coming at this startup ecosys- ucts, new planes, new autono- MS. LEE: I have a different was time to go do something MR. ALTMAN: No. But we started this online ver- tem from a different place. I’m mous cars, hardware. perspective. Entrepreneurs out new, learn something new. sion. We did 3,000 companies. looking for 15 to 20 companies MR. MARIS: It wouldn’t sur- there, don’t focus on the poli- MR. WINKLER: Willie Brown, We did an online version of Y ayearthatIfeellikeIormy prise me if the sun is setting tics. Your world should be MR. WINKLER: Were you trying the former California Assem- Combinator that we called network can help grow. on the golden age of Silicon consumed with trying to fig- to raise money for Section 32, blyman and San Francisco Startup School this spring. Up MS. LEE: I spend time talking Valley. I mean, the companies ure out a way to deliver value your new venture-capital fund, mayor, wrote back in May [in to that date, Y Combinator to a lot of companies. But the that used to be fun and dis- and services to your target au- while you were still at GV? the San Francisco Chronicle] had funded, let’s say, 1,700 or way we play is, if you are a ruptive and interesting and dience. It could be consumers, MR. MARIS: No. I left GV think- that you are “looking at run- 1,800 companies ever, and ad- hunter who’s looking for ele- benevolent, that were largely it could be enterprises. And ing I was going to become a ning for governor in 2018.” vised that many too. We ad- phants, you have to have the viewed that way, now we’re that world doesn’t have to be magician. I didn’t know what I What did you and Willie vised 3,000 companies at once skill set to identify, “Is this an concerned that they’re dis- in the U.S. If it isn’t going to wanted to do. I was really just Brown talk about? in this one thing. elephant, or is this a zebra?” rupting our elections. work here, look elsewhere. enjoying taking a break. For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com R12 | Tuesday, October 24, 2017 THE WALL STREET JOURNAL. JOURNAL REPORT | WSJ D.LIVE Where Wearable TechIs Headed something that we’re going to there’s no such thing as a real about how Levi sells. Do you Chip Bergh, Levi Strauss’s CEO, says the be able to build in from a failure. It’s just an opportunity get access to that data? functionality standpoint. to learn. MR. BERGH: Some of it. I’m company wants to see what new functions sure we don’t get all of it. But Learning from Google Working with Amazon we try to have a productive consumers want. But the possibilities are endless. MS. PASSARIELLO: Tell us MS. PASSARIELLO: You’ve had working relationship, and not about working with Google. an official supplier relation- just with Amazon here in the Different cultures. What’s it ship between Levi’s and Ama- U.S. I met with Alibaba this like to go through this innova- zon for several years. What do morning. We’re working with tion process with them? you gain from having Amazon Wal-Mart as well. All of these ‘Anything that’s a MR. BERGH: We’re perfection- as an official supplier? e-commerce players are col- fabric will be able ists. Everything we sell has MR. BERGH: They’ve got enor- lecting a lot of data, and I got to have quality embedded mous scale in the online space. think we can partner together to have conductive in it. It’s got to be perfect be- They attract the most eyeballs to do a better job of targeting fiber in it that can fore we launch something. for consumers who are shop- consumers. When we launch a new fit, the ping. do just about team travels around the world We do have our own web- MS. PASSARIELLO: Amazon has anything.’ to make sure it fits all the dif- site. We do work with our launched a lot of its own lines ferent body types around the other wholesale customers like to compete with others, and world. Macy’s, like J.C. Penney, like now they have all this data We really focus on perfec- Kohl’s on their e-commerce about how well they sell your tion and really failure is not sites. product. When do you expect an option. Google embraces We’re trying to innovate in them to go head-to-head with mistakes. the e-commerce space, so we you with their own denim line? We had one instance where just launched a chat bot that MR. BERGH: I would be the the sleeve actually caught fire. is a virtual stylist. If you go to first to argue that they That’s not a good thing for a levi.com, you can experience shouldn’t go there, but a lot of consumer, right? But they that. our customers have their own loved it. They were like, “That As we develop these capa- private label and we’ve been gives us a problem to solve.” bilities and prove them out, dealing with this for 30 years. And so it was two very, very we’re willing to share them I don’t want to say it’s inevita- different cultures coming to- with all of our online partners. ble, because they’re really

NIKKI RITCHER/DOW JONESgether (2) trying to solve a com- But Amazon’s one of our big- happy with our business and mon problem. And I think we gest customers globally. they’ve got other brands as Levi Strauss & Co. has 164 jacket that you’re wearing. in our bed at home, and any- learned a lot from it. We’re They’re one of our fastest- well. But if they launch a pri- years of history behind it—and How are consumers starting to thing that’s a fabric will be now embracing failure a lot growing customers. vate label, competition’s a the challenge of remaining use it? able to have conductive fiber more readily, willing to fail good thing. It will make us competitive in the digital age MR. BERGH: We have a line of in it that can do just about fast, fail early, but just keep MS. PASSARIELLO: Amazon take our game up to the next ahead of it. The company is product called Commuter, anything. moving forward because gathers a lot of information level. addressing that challenge in which really is for bike riders. part by using big data to bet- It’s a little bit niche, but get- MS. PASSARIELLO: Do you plan ter understand its customers ting more mainstream. So we to roll this fabric out across and cater to them. But it’s also decided to use the Commuter many other products in your taking a higher-profile tack line. This allows cyclists to get lineup? with cutting-edge wearable directions, listen to their mu- MR. BERGH: Yeah. We have a technology, an internet-con- sic, change their playlist with- lot to learn from the con- Qualcomm’s Game Plan nected jacket it developed with out ever needing to look at sumer. What other kinds of Alphabet Inc.’s Google unit. their phone. functionality do they want The Wall Street Journal’s built into this? And then we’ll CEO Steven Mollenkopf talks about smart cars deputy technology editor, MS. PASSARIELLO: How do you go there. We’re already work- Christina Passariello, sat down see the use of the product ing with Google on 2.0. and 5G technology with Chip Bergh, Levi’s presi- evolving? dent and chief executive, to MR. BERGH: Where this specific MS. PASSARIELLO: What do you discuss high-tech clothing, the product goes and how much have in mind already for 2.0? blending of Levi’s and Google’s more functionality we build MR. BERGH: If you think about work cultures, and the pros into this is one question. The all the different ways or times ‘All of the things and cons of working with Am- other big question is where you need to take your phone thathavetobe azon.com Inc. Edited excerpts does wearable technology go? out to use an app, imagine re- follow. Right now devices kind of placing more of that. Scroll done to support control our life, and the pic- through your phone and look 5G products in Wearing the internet ture for the future is that at the apps and say, “Do I re- MS. PASSARIELLO: Levi’s just technology is embedded in our ally need to look at the screen 2019 are unveiled its first connected life, into the clothing that we for this?” And if not, if I can happening.’ item of clothing, this $350 wear, perhaps into the sheets control it with a swipe, it’s

Qualcomm Inc. isn’t a big con- to the automobile industry— Qualcomm and Apple are sumer name, but it’s one of the which may seem unusual at locked in an epic battle right WEDNESDAY, DECEMBER 13, NEW YORK companies most responsible first glance, but in reality, if now. You’ve both sued each for what consumers can do you think about the connected other, and lots of allegations with their smartphones and in- car and all its implications it’s are flying around. Can this re- creasingly smart cars. immense. lationship be saved? The company’s chief execu- MR. MOLLENKOPF: This is fun- tive, Steven Mollenkopf, spoke MR. ANDERS: NXP is in a lot of damentally a discussion about with Jason Anders, The Wall the parts of the car, and a lot pricing over the fundamental Street Journal’s chief news ed- is not about autonomous driv- technology that makes the itor, about what’s around the ing—it’s in a lot of core tech phone the phone. We have a corner for Qualcomm and con- systems that make cars high- long history of providing value sumers as technology contin- tech today in ways most of us and settling these issues. ues to shake things up. Here don’t fully appreciate. Sometimes they get more pub- are edited excerpts. MR. MOLLENKOPF: Our portfo- licity than others, but I think lio, independent of NXP, is al- we’ll get through it. We have a Join WSJ Pro journalists and cybersecurity experts for an exclusive event MR. ANDERS: Last fall you an- ready pretty strong. If you very strong product relation- on cyber risks. Tailored to the needs of senior managers, the Cybersecurity nounced one of your biggest look at our position in tele- ship with them. deals, to buy NXP Semicon- matics, in infotainment, we’ve Executive Forum will help you navigate the ever-evolving cybersecurity ductors, a Dutch company, for shipped hundreds of millions MR. ANDERS: Let’s talk about landscape, from protecting data and staying compliant with major laws to something like $39 billion plus of devices into cars in the past 5G. You had a bit of a mile- a fair amount of debt. This 15 years. Now, what’s happen- stone yesterday [Oct. 16] on defending your business and how to respond should a crisis emerge. would be not only a huge deal ing in the car space is that this front, which was the first for Qualcomm, but also a re- there’s a big change in the ar- call. You made the first call? ally big push deeper into auto- chitecture of the car. MR. MOLLENKOPF: We had an SPEAKERS INCLUDE motive technology. How’s that The car is getting smarter, event in Hong Kong where we going? Regulators are still so all of these distributed made the first call on a real looking at it, right? smarts in the car, it’s essen- chip. Not a prototype, but a MR. MOLLENKOPF: We’re on tially consolidating into a num- real chip. Ajay Arora John P. Carlin track to close this year. I think ber of smarter subsystems that it’s the second-largest tech are all connected in a coherent MR. ANDERS: Who did you deal in history. NXP has a way. And they’re all being con- call? CEO and Co-Founder, Chair, Global Risk and strong footprint in Europe and nected to the internet. And so MR. MOLLENKOPF: It was a Vera Crisis Management Team, Morrison & Foerster other places, so it’s natural our goal—and we’ll be able to data connection—everything’s that people ask a lot of ques- do this quite well with NXP—is in data these days. But it’s a tions. But nothing unusual. to have a piece of all of those milestone. All of the things subsystems. that have to be done to sup- MR. ANDERS: How will this If you look at the combina- port 5G products in 2019 are Theresa Payton Stephen Schmidt deal change Qualcomm? What tion of those two portfolios— happening. will you be able to do that you the computing power and con- can’t do right now? And does nectivity from Qualcomm with MR. ANDERS: What exactly will Fortalice Solutions CEO, ; VP, Security Engineering it fundamentally change the all of the other parts of the car I be able to get in 2019? The White House CIO, and Chief Information mission of the company? coming from NXP—we’re in a MR. MOLLENKOPF: You will get (2006–2008) Security Officer, Amazon MR. MOLLENKOPF: Web Services The mission pretty strong position. a device, a phone in your of the company has always pocket, that will access 5G been to take technology, invest MR. ANDERS: Do you see Qual- networks, in addition to de- in it ahead of the industry, and comm being a major player in vices that I think you’re going then put it in a way that it can self-driving cars? to start seeing in the home Wednesday, December 13, 2017 be used at scale. And for the MR. MOLLENKOPF: We do. First and in cars that get access to a past 30 years, we’ve been do- of all, it’s probably a 30-year tremendous amount of data at The Grand Hyatt ing that in the cellphone next wave. If you look at lower latency. space. That’ll continue—you where the car is going, we are You’re also going to see tre- 109 E 42nd St, New York, NY 10017 have 5G [wireless technology] just starting to scratch the mendous capacity for the dis- on the horizon. surface. My guess is the indus- tribution of video. Part of that The NXP deal accelerates try isn’t thinking far enough is coming from 5G. Part of that Request your invitation today: our strategy of driving the ahead in terms of the implica- is coming from access to new cyber.wsj.com mobile road map into new in- tions to transportation, of spectrum. And I think that’s dustries at the time when the having the car connected and going to be disruptive not only industry is being disrupted by smart. to the cellular industry, but to

©2017 Dow Jones & Co., Inc. All rights reserved. 3DJ5980 those new technologies. Esti- how the cable industry deliv- mates are that 20% of the eco- MR. ANDERS: Let’s change ersdataoverthetoporhowit nomic value of 5G will accrue gears and talk about Apple. is delivered. For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com THE WALL STREET JOURNAL. Tuesday, October 24, 2017 | R13 JOURNAL REPORT | WSJ D.LIVE

The Big Benefits ‘Lower cost should result in lower taxesoratleast more efficient use Of Smart Cities of your taxes or Cities have long been doing things the same way. greater services.’ No longer, says Chuck Robbins, CEO of Cisco.

The big push at networking gi- tunities. MR. ANDERS: What are some of ant Cisco Systems Inc. these the big cities that you’re in- days is to create “smart cit- MR. ANDERS: Where exactly do volved in? ies,” where wireless networks you come in? How does this MR. ROBBINS: We’re involved with enough sensors and com- get off the ground? in 120 around the world today. puters to process the data will MR. ROBBINS: It does require Hamburg has gone all in, par- attempt to make services more infrastructure. Security has to ticularly in the port. Collabo- efficient and lower costs. Cisco be dealt with up front. The ration between their employ- Chief Executive Chuck Robbins partnerships required to actu- ees running the dock, spoke with Jason Anders, chief ally make this work are pretty communicating to vehicles news editor of The Wall Street significant. that are waiting, managing the Journal, about how it’s going. traffic congestion—every- Edited excerpts follow. MR. ANDERS: Some of this isn’t thing’s connected, all the sen- quite Jetsons-level stuff. Gar- sors, so that they can actually MR. ANDERS: Why do we need bage pickup doesn’t sound make that seamless.

smarter cities? that high tech. But what’s the They’ve increased the pro- NIKKI RITCHER/DOW JONES (2) MR. ROBBINS: Some statistics future of waste management? ductivity of the port and im- say that 30% of traffic is cre- MR. ROBBINS: We’ve done proved the efficiency by 20% MR. ANDERS: Cities are ulti- efficiently, to engage in differ- one to access. ated by people looking for things the same way forever. just by implementing this mately businesses, and some ent conversations about MR. ROBBINS: It is a pressing parking, so that’s a problem Waste-management vehicles technology. aren’t well run. I assume the what’s going on locally. And issue. We’re moving to this that technology can solve and leave, they have a route. They Every city has different pitch is the technology is good that can extend to social is- massively distributed virtual- is solving. We have 70% of the pick up receptacles, and they things going on. In 2016, I was not only for society but for the sues, social opportunities. ized world of technology as- world’s energy usage in cities; empty receptacles even if in Davos and the party secre- bottom line and budget. But at sets. The network has to actu- 20% of global energy usage is they’re empty. The ability to tary of Guangzhou, China, the end of the day, someone MR. ANDERS: Is the primary ally play a very deep, lighting, so connect to LED put sensors inside those— said, “I’d like Cisco to come has to write the check. goal of a smarter city to em- defensive role. So we’ve been lighting and leverage technol- there are applications that partner with us to build a MR. ROBBINS: Yeah. I was in a power me as the citizen or to investing in new technologies. ogy to actually make them have been written now that smart city in Guangzhou.” And major city last week talking to more closely manage and con- We’ve created technology that more efficient. You can cut actually understand where 15 months later, we had shov- the mayor, and the discussion trol and observe me as a cus- can determine when malware 50% to 75% out of it. There are that needs to occur. You can els, shoveling dirt for the quickly got to, “The first-use tomer of city services? is present in encrypted traffic environmental opportunities. actually put sensors in that Cisco Guangzhou Smart City case has to really create hard MR. ROBBINS: In general, I without decrypting it, then There are efficiency and citi- measure the presence of toxic Project. We’re building innova- dollar savings so that we can think it’s the former, because you can quarantine it. We have zen-service opportunities. materials so safety issues can tion centers. We’re partnered then invest those in some of lower cost should result in to build more of those applica- There are lots of great oppor- be addressed. with universities. the other things going on. But lower taxes or at least more tions, I think, for this to come we need to create money and efficient use of your taxes or to life. But it’s very much a then show people.” greater services. forefront ambition. So investing in, perhaps, re- Guangzhou obviously VOICES FROM THE CONFERENCE duction of lighting cost to moved people out of this loca- MR. ANDERS: Do you worry then fund the fundamental tion when they created this that you’re creating targets? change in how citizen services spot for us to go in with some MR. ROBBINS: Every day we “What you need in the future to continue are delivered is how they tend Chinese partners and build are. But the way we operate to grow and to thrive as a company is to think about these things. this smart city. But one of the with mobile phones in the en- what we call a thoughtful integration be- commitments they made to terprise today says that we, as MR. ANDERS: tween hardware and software. In the fu- How does tech- the citizens was that we were a society, will take the benefit nology bring the city together? going to move them back to of the technology at a pretty ture, what we will have to do is really think MR. ROBBINS: Chicago’s an- this city afterward and they significant risk. The benefits about creating the best experiences possi- other example where they’ve were going to have a better and the productivity enhance- ble, and that includes working with part- aggregated lots of data life as a result of it. ments from that technology ners like Google and Facebook. They’re sources, and they bring that were so great that we just data together and they’re en- MR. ANDERS: This is a hacker’s kind of tried to operate incredibly important partners of ours.” couraging these hyperlocal ap- dream. Now, everything from around that and build and David Eun, plications. We create opportu- my garbage can to my Wi-Fi work around. I think we’re go- nities for people to live more to literally the way I’m driving ing to build defenses here, and President, Samsung NEXT efficiently, to get to where my kids to school is in a data- then, we’re going to quickly they’re trying to get to more base somewhere and for some- adapt as we see things. © 2017 Optum,®Inc. All rights reserved.

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DataandAnalytics|PharmacyCareServices|PopulationHealthManagement|HealthCareDelivery|HealthCareOperations For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com R14 | Tuesday, October 24, 2017 THE WALL STREET JOURNAL. JOURNAL REPORT | WSJ D.LIVE Facebook Opens Up on Messenger David Marcus on how the company’s new channel for advertisers works, and why he ‘We never want to thinks consumers won’t be put off by it getinthewayof people getting to David Marcus, vice president someone to respond, because what they want to do. Messag- their messages.’ of messaging products for they’ll hang up on you. And it ing is very transactional. Facebook, is head of Messen- basically doesn’t preserve con- ger, one of the company’s two text of all past interactions. MS. PASSARIELLO: Have you messaging products. He spoke Messaging [in Messenger] had any feedback from users with Wall Street Journal Dep- has those two abilities. It’s in- who are resisting seeing ads in uty Technology Editor Chris- stant and preserves the con- Messenger yet? tina Passariello about the in- text of all past interactions. MR. MARCUS: The way we mea- troduction of ads in Messenger We talked about customer sure this is by measuring en- that offer the advertisers a care, but if you expand into gagement. We’ve rolled out channel for direct communica- customer acquisition, lead ads inside of Messenger in a tion with consumers. He also generation, businesses that number of countries and cer- talked about Russian use of build a really great experience tain percentages of people. Facebook accounts to influ- inside of Messenger are seeing And what we’re trying to track ence U.S. elections. Edited ex- massive uplift if they redirect is where there are any drops cerpts follow. people from an ad on News in engagement, as in people Feed, on Instagram, and now not going to Messenger as of- MS. PASSARIELLO: Messenger more and more on Messenger, ten, not messaging as often, et recently introduced advertis- into a conversation, versus a cetera. And so far, so good. NIKKI RITCHER/DOW JONES ing. What did you test in terms mobile website. of monetization that didn’t And the reason for that is MS. PASSARIELLO: How are you thing, but we’ll see. The We’ve been able to use Safety People have to message you. work before you settled on ad- basically that the conversation sharing best practices in mon- WhatsApp team is really start- Check that we activated 600 We’re collaborating with the vertising? remains forever, and you have etization with WhatsApp? ing to enable businesses to be times since we launched it, special counsel and Congress. MR. MARCUS: It isn’t like we the context of all your past in- MR. MARCUS: We both have 1.3 on the platform, and they’re and sent one billion notifica- And we’ll figure out what hap- tested a lot of things, but we teractions, and you can retar- billion monthly active users: doing it in a very deliberate, tions around the world to let pened, we’ll get to the bottom thought about a lot of things. get and re-engage because we 1.3 billion people using Mes- thoughtful way. people know that people are of it, we’ll learn from it, and If you turn to Asia and you have ad products that enable senger, 1.3 billion people using safe. And I could go on and on. we’ll make sure that we build look at different messaging youtodothatifyou’reanad- WhatsApp. But it’s generally MS. PASSARIELLO: Russian en- Clearly when you design a systems to prevent what hap- platforms that are thriving, vertiser. very different people. If you tities have used Facebook and platform that reaches two bil- pened from happening again. they tend to use a completely look at North America, it’s Facebook platforms to try to lion people every month, different approach to moneti- MS. PASSARIELLO: Isn’t there a mainly Messenger. Western influence the American elector- sometimes bad things happen. MS. PASSARIELLO: On the 470 zation. They use sticker-pack- risk that we are so inundated Europe is kind of split. All of ate during the election. What And we shouldn’t tolerate accounts that Facebook has age sales, game monetization. with advertising in all of our Latin America and India is is your best understanding those things, and they already identified, how many All kinds of different things. different feeds that consumers mostly WhatsApp. The mar- about how Messenger was shouldn’t happen. Mark Zuck- have also been using Messen- We decided that we wanted don’t want to see it anymore? kets and when the markets got used by these Russian actors? erberg and Sheryl Sandberg ger to communicate? to take a completely different MR. MARCUS: Well, I think that to free unlimited texting has MR. MARCUS: The narrative outlined a clear plan about MR. MARCUS: My understand- stance, because the setup, no- it’s different. First, you cannot determined whether you’re us- about Facebook as of late has how we’re going to ensure ing at this stage is it’s a small tably in places where Messen- get contacted by a business. ing WhatsApp or Messenger not been super positive. The that this isn’t going to happen number. ger is the preferred messaging You have to start conversa- as the preferred platform. impact Facebook has in the again, and we’re going to hire app, is really different. You tions. We have plug-ins that What we’re trying to do world, we don’t talk about it thousands of people, we are, MS. PASSARIELLO: Facebook’s have apps for almost every- enable businesses to get you right now is really demon- anymore. It’s completely over- actually, hiring thousands of approach often has been to be thing you do daily, and we inaconversation.Wehave strate that there’s a playbook shadowed by all of this. people to review ads and re- reactive to these kinds of ways needed to find what problem m.me/your-business-brand for monetizing messaging If you look at the impact view all activities around, no- that people are using its prod- we could actually fix for busi- URLs that you can deploy in platforms in the West. we’re having every day, like tably, elections around the ucts in malicious ways. Does nesses and people alike to ac- emails and everywhere. We WhatsApp is testing differ- when you see people who have world. We tend to do well at Facebook need to be more pro- tually generate a decent reve- have click-to-Messenger ads. If ent things as well, enabling an orphan disease and they those things. We tend to actu- active in anticipating these nue stream for Facebook. you’re buying advertising on smaller businesses to start ex- can’t find other people to talk ally take those things very se- kinds of uses? We started trying to figure Facebook now you can buy, ba- perimenting with messaging to, even their family can’t re- riously and execute plans MR. MARCUS: Now that we out how we could completely sically, conversations as an ob- on WhatsApp. We’ll see late to what they’re living ruthlessly and get to really know that we have a lot of ac- reinvent interactions between jective, messages. And now whether the paths converge through, on Facebook you can good outcomes. So I’m actu- tors that are trying to do people and businesses. Sixty- we’re testing ads inside of over time or not. find other people from the ally confident that we’re going things, we need to continue to five percent of the interactions Messenger. But we’re doing it other side of the world that to be able to deal with this. be more thoughtful when we we have with companies are in a way that’s the least possi- MS. PASSARIELLO: Have you are living the exact same thing The way the platform was build new product experi- over the phone, which is a ble disruptive path for people, shared your experiences with and groups that are so mean- used is still being investigated. ences, new ad products, to try thing I never want to do. You because we never want to get the new rollout of advertising ingful for people. We’ve raised But traditionally if you’re a to overthink how it can be can’t put the phone down, go in the way of people getting to on Messenger with WhatsApp? more than $17 million on the [Facebook] page, for instance, used in ways that the platform about your life and wait for their messages and doing MR. MARCUS: We share every- platform for Harvey victims. you cannot message people. wasn’t designed for.

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