Electronics, all that ahead on bloomberg west. First, u. S. Defense secretary says he has a lot to learn from Silicon Valley. Hes trying to build a stronger relationship with the tech community. Emily chang sat down with him. Emily joins us from mountain view, california. Emily, tell us all about the event. Mily the u. S. Defense secretary is meeting with a number of different Cyber Security c. E. O. S. And the real thing that he is trying to accomplish here is to rebuild the relationship between the pentagon and Silicon Valley to recruit engineers who want to work for the government to change this perception that Silicon Valley leaders have, that they have to protect their users from the u. S. Government given this is the postsnowden revelation era. Hes scouting new technology. He talked about google and drones and things that facebook is working on. This is a secretary that only has 16 months left in this administration. Why should these leaders commit to him now . What will be tangible proof that his efforts are working . Take a listen. Well be making partnerships and direct investments as we have for decades going back to the era of jet engines right up integrated et and circuits. We can be a Technology Leader if we partner. Emily you understand this stuff. What are some key technologies and assets that you can get from Silicon Valley that youre not getting from current contractors . Ashton a lot of the cutting edge stuff we do get. But the Defense Department has gotten too bureaucratic, a little too slow for the pace of people out here. So both on the people level, some of them arent acquainted with us. And some of other people havent understood the technology community. We need to get them to understand each other. In the Technology Department we have so much to learn from the cutting edge out here. Remember, we dont build anything in the pentagon. Upon nt in this country private industry and technology that next to the military, technology is what made us great and we need that technology. Emily so google has been buying number of robotics company, a humanoid. What when are we going to sew robots on a mass scale . Ashton i think youll see them soon. We have hell comenters, undersea vehicles. True autonomy never step forward i just came from a briefing a group of people that have the question of autonomous vehicles. Youll see them driving under water and patrolling Cyber Networks to defend them. All of those things will be done autonomously or in very creative man machine combinations in the future. We need to be part of that revolution. Much of it occurs right here and thats another reason for my visit. Emily do you see a future of robot army . Ashton i think it will be a long time before humans are entirely removed from conflict and, of course, were always going to want human decisionmaking and human responsibility when i comes to the use of force. Emily what about drones . You have amazon, facebook, google making their own drones. Ashton we learn a lot. Theyre learning things about how for example to do logistics. We do a lot of logistics. That might seem mundane but if youre fighting in afghanistan, iraq or syria were getting forces and equipment in is vital we learned something. We learned somethng in areas like warehousing and Inventory Management that may sound mundane but were spending the taxpayers money. We learn about efficient tech necks techniques. Emily give us a sense of the severity of the hacking unclassified system of the joint chiefs of staff. And to what extent has that prompted you asking Silicon Valley for help. Ashton it is a sign that were not where we need to be. Weve known for decades that Information Technology was going to be critical for the military edge. So we have a lot to learn. Clearly our joint chiefs of staff network. It wasnt exploited in a dangerous way and it resulted actual from a simple failure. Somebody opened the email. In all companies we are warned against doing that. So it was fairly mundane but something that mundane could affect that Important Network shows that were not where we need to be. We need to be on the cutting edge of Cyber Defense and this is the place with the cutting edge of Cyber Defense is defined if were going to be there as we need to be, we need to do that in partnership. Emily tim cook has said he doesnt want his use irs to choose between security and privacy. What do you want from Mark Zuckerberg or tim cook . Ashton im with them 100 . Were trying to find a solution that allows ordinary people and good people ever where and companies everywhere to make use of this new technology in a way that is good for human kind and at the same time we do need protect ourselves against terrorists, against child pornographers, criminal network, drug runners and on and on. There has b to be a certain amount of public order and i dont think we can strike that in washington. Think we can only strike it through having the greatest leaders in minds. Emily youre wourk working on the budget. What needs more money . What needs less money . Should there be a Cyber Security arm of the military . Cyber does need new money. We will provide new money. Even when theres a lot of budget turmoil, which is a terrible thing, a whole other subject, we need to invest in cyber. Emily how much more. Ashton in cyber investments as any company out here will tell you isnt so much the money, its the people. Its finding good people that is challenging for us as we try to do Cyber Defense. And so hiring those people training them, deciding what mix of uniform people Government People industry people we should have in our cyber force, thats re challenging even than the dollars. Emily on that issue of crecruting secretary carter is going on to link in after his meeting at the nasa Research Center to get people to want to work for the government. The n. S. A. , the director of the n. S. A. Was also out here. The f. B. It. I was out here. Tt i would assume they were the hacker conference. That would be a great place to recruit. Emily federal agents were banned from the hacker conference that youre mentioning. Theyve allowed more federal agents back in. But i think its going to be a long time before the trust is restored between the security and the government. Matt thanks very much. Awesome job out of San Francisco out of the west coast, i should say. Time for a status update on the Ashley Madison story. The c. E. O. Stepping down more than a month after hackers stole and published information about 30 million accounts. Details are emerging about website. Isons very few women were actually using the site. So let that be a lesson to you. Up next, one of the hottest Cyber Security startups in Silicon Valley tanium dishes on the blooming evaluation in his industry. And well check out how after the break. Matt this is bloomberg west. Im matt miller. We just heard from emily chang speaking to the u. S. Defense secretary. Lets go back to Silicon Valley with emily is standing by with more. Emily hes meeting with tech leaders including c. T. O. And cofounder of a Company Called tanium. Hwandawi eman orion has met with secretary carter four times that shows how much effort hes trying to do rebuilding these bridges. Tanium reported to have 3 billion valuation, a company that does a lot of work with the government. I asked him just what is that like. Orion the government is the biggest by far to have really interesting problems. We do work with 50 of the fortune 100. Many of them have very interesting problems. But what you see from the government from a separation standpoint is really about as interesting as it gets. Emily another part of secretary carters agenda is to rebuild trust. Theres a lot of suspicion about the government. How difficult is that going to be to do . We hire many of our people based on the idea that we can help d. O. D. And the intelligence, the people secretary carter cares deeply about. Many of the engineers want to help on the field to be more active and effective. I think there is some trust that needs to be rebuilt around the n. S. A. And what theyve done. Theres a lot of good will and i think we need to capitalize on hat to help. Emily you worked on the technology before you started selling it. Theres this myth that you can build this minimum viable product and you can sell it. But you really have to get it right the first time. We spent years with engineers building it working with customers in labs and in production to make sure it was working on hundreds of thousands of commuters before we took it to market. Thats what allowed us to go from zero zoll lars up to 20 million is the Technology Just works. Hat takes a long time to get working. They dont even know how many commuters they have much less what theyre doing or where theyre data is. Ive talked to c. E. O. s who told me they had 200 or 400 computers. You have no number of computers you have no prayer. You can start analyzing against all the things you want to make sure that are true. Ullnerblets are vulnerabilities are closed. We have 98 compliance because we can tell them what they have and what it is. Does. What tanium emily what trends are you seeing . Valuations are getting very high. A lot of companys that are raising money on an idea and never executing and ironically raising more money on the fact that they havent executed but might be able do do that later theres so much interest in that area that any good idea is being funded to the point where it can keep on zombiing forever. Thats going to have to change. There Many Companies where theyre cost of sell is higher than what theyre getting. They have no idea. They should reincorporate as nonprofits if thats the way theyre going to run their business. Theres going to be a real consolidation in our space. I think theres going to be a change in funding because i think the Venture Community is going to recognize that theres a pattern that they dont want to continually promote. Thats going to be really good for our customers because many of them are struggling to find not. Ats real or they dont have Much Technology behind them. Would you say were in Cyber Security bubble . I think theres a lot of companys that dont deserve to exist. Theyre going to shake out. In aggregate we may not be in a bubble because there are going to be some companies and we hope to be one of them that will break out and become 20 or 30 billion company in the next few years. But a lot of the companies being funded today arent worth being funded. You guys are raisings raising money. Whats the real story . I can say that the reports are not accurate. But in the coming days or weeks or montanas you guys will get the story. So youre not raising money right now or the 3 billion valuation is not correct . One of those. Emily there have been warnings from bill gurley. How are you prioritizing versus profitability. Weve been growing 300 . And weve been profitable during that process. I will say very clearly, i think that being profitable as a startup is hard but its absolutely worth it because it forces discipline. Many of these companies are throwing things against the wall and sighing if they stick. We think through everything were doing and the company is better for it. Tanium. Ion founder of mark benny off theyre going to be a loft dead unicorns out there in this case Cyber Security unicorns. Ly be the interesting to watch, matt. Matt emily, thanks very much for that. Now, facebook beefing up its tools to spot pirated videos have become an issue for content creators. Facebook is piloting a video matching that will spot copy content quickly on top of audio magic to find videos that shouldnt have been uploaded. Facebook warns it could take time before its all in place. Next apple, h. P. And boeing team up with the pentagon. Well talk to the director on bloomberg west. We leave you with footage of boeings drone killing laser. It can shoot down drones mid flight and will supplement Missile Defense systems. Matt time now for daily bite. One number that tell as whole lot today. Today the number is 767. Thats how much money the Swedish Company has raised. The participation from intel capital and zook capital. Izettle works with apple and google wallet. The latest funding gives izettle a 500 million valuation and is being funded to expand in urope. The hub is made up of 162 Companies Like apple, h. P. And qualcomm. They will receive 71 million including 75 from the Defense Department itself. Emily with dr. Malcolm thompson. Emily thanks so much. Thompson. Creo of the former xerox. Dr. Thompson thats right. Emily give us us some real examples where youre working with military applications. Imagine putting a very thin film of electronics all over an aircraft wing, ok . You stick it to the outside of the aircraft wing and it measures stresses in the wing. Now, you look at the plane when youre on the plane, the wing flaps. So it better be flexible. Emily so when might we see Something Like that. Very soon in the next year or two. There are some examples we saw in the announcement where the air force brought some wings with some of that stuff on it already. Emily they talked about incorporating sensors into military uniforms for example. A company like apple is part of this partnership. What is a company like apple contribute to this . You know, every company contributes different things. What it helps to understand is what their customers are wanting and what they they dont tell us everything about what theyre going to do and what their next product is. But what they will do is to say, hey, i this is not an apple its just an example, right . Emily give me an apple example. I want something thats stretchable. I want Stretchable Electronics. You ever try to put a bandage over your elbow . It better be stretchable. Theres an example of something where, you know, in medicine you want to measure you want to find out how youre healing and you want to basically see if this has grossly affect and you want it continually monitored. Were working on Stretchable Electronics as well as especially when its connected to the human body. This is 170 million partnership. What are your deliverables . Deliverables is to create a road map of technology and find out where all the gaps are this preventing things being manufactured. We go out and put out a proposal. We get all these Companies Working on those gaps in the technology. So eventually two to three years from now there will be a much more complete ecosystem and people be manufacturing these things in much my higher volume. Emily dr. Malcolm thompson head well con tech continue to follow the secretary going on to linked in after this as he continues to rebuild this bridge between the pentagon and Silicon Valley. Matt what an incredible military edition of bloomberg west. That does it for this edition. On monday dont miss emilys full conversation with marc andrieseen. Im lizy oleary. And im john himeman. Carly fi orrinnas car killed a deer today. We thought it was deer and sheep hat had you freaked out today. John lizy oleary is guest hosting todays sports fans in our school tonight. Great in the economy. Lindsey graham lectures and trumpanomics 101. The political