Transcripts For BLOOMBERG Bloomberg West 20140419

Bloomberg is standing by its story. I spoke with david jiminy and Jordan Robertson about these developments, asked, do they believe the nsa . The nsa denies the gevo but they stand behind the story. What this illustrates is that this is a serious issue. Heartbleed is a serious issue in internet encryption. We know that the nsa has been trying many different twice compromise internet encryption. It is almost irrelevant whether this was the heart lead bug or something else. Bloomberg is standing behind the story. I think the nsa will say what they need to. Their whole purpose is to be a spy agency. Their whole purpose is to really go and actively export these types of laws prevented not have to disclose whether or not they discover this previously or not. That is part of the National Security thing that they say basically that they had no idea that happened even though they could have been exploiting it for years. They have all of these types of things in their arsenal. They have hundreds if not thousands of different exploits o use everyday to infiltrate different governments, there is a lot of money to be made in both the commercial and news. Would you say theyre in the business of exploiting the bugs and vulnerability in the system . That is what they do . The nsa buys security vulnerabilities. They dont disclose them to companies. If the Obama Administration says now they are going to require the nsa to disclose vulnerabilities that they find, there is a loophole in the statement which ramsey advocates told me this weekend is so big you could drive a truck through. What qualifies as National Security interest . Hat qualifies as Law Enforcement interest . There is no clarity on what they would disclose what they would not disclose. Theyre not in the business of buying bugs and giving them away. That contradicts their mission. Then what do you make of this statement from the white house . Is this ever going to actually happen . Is this trying to appease the masses and put something out there . If you look at what happened with a lot of the snowden documents that were released, you have a lot of the organizations that specifically look for these flaws, but also go into different Government Agencies and do surveillance. I think this is to appease the masses. They are not going to disclose their techniques and what they are actively going after. It is going to take Something Like a snowden released for us to see what is going on behind the. I came from that realm. For me it was a different ballgame back in the early 2000, 2005. We did not have this huge cyber movement. There were very little laws or regulation around what they can actually do what they could not do. After this has been made public, i do not think it is as uch. A number of Social Security numbers were stolen. You have a story out today about how business are having trouble getting rid of this thing even though there are patches out there. Are we going to hear more stories like this . The bug was quite slim or give you push the button, do a few other things, minor technical adjustments, and within a couple of hours you could take your system. Most companies did this early last week and what is less known is that there were Ripple Effect from that. If your internet hosting provider does not patch the system, or there are problems with them, we talked to a company that does the youth sports fan sites. They patched their site, they didnt either way, and their internet hosting provider also did but there were glitches and problems. Photos were the big dislike kobe cannot upload photos communicative view photos, and you cannot do anything. It took the entire 43person company all week. What is your view on how serious heartbleed it is . Is this getting overhyped at all . I do not think so. Think it is a lot larger than people realize. Facebook was impacted, and people were able to extract passwords that encrypted data. There are a lot more along behindthescenes that vendors have to do. Your passwords could happen have been compromised, information could have been stolen, so there are a lot more ramifications to than the just fixing the website. It is one of the largest exposures we have ever seen in the past 10 years that i can remember. It will be a long time before all of the issues are fixed because it does require a lot more than just running a patch or going in and fixing a system. There will be a lot of issues in common, and the major problem is detection. Prior to it being released there was no way of detecting it, whether it was exploited prior to the patch data. We a lot of companies will no idea if they were hacked. Excel partners is known for taking early bets on Companies Like facebook, dropbox, spotify. With rich ll speak wong about their vems in mobile. Welcome back to the best of bloomberg west. Im emily chang. Google made google glass for sale to the general public this eek, but for one day only. It cost 1,500 plus tax for access to the program. I sat down with rich wong, a partner and started by asking him if google glass could go mainstream. Google glass is still in beta at this point of and we talk about a 1500 price point it is still very much intended toward developers to experiment on applications. The reality is if you try the product and read the reviews, its probably going to be a while before becomes a massmarket hit. It is perhaps interesting to those of us who live here in the valley, we welcome new technology, but it will be a while before mainstream advice this in a broadscale way. I was told zero chance of having it going mainstream . Is that too extreme . It is too early to predict that. I would not make that prediction myself. When google bought android in they would ght be putting the operating system and everything of and without they were not spread into that google has executed incredibly well, so i would not count google out at this point. In terms of wearables in general, how closely are you looking at wearables . Fitbite not investors in or nike, but we are believers in that trend. My fitness pal aggregates a lot of the fitness and nutrition data, and we think that is a real trend. The fitness aspect of wearables is extremely real, and is accelerating even if the glass aspects are probably still in beta. What about the idea that people just do not want a measured life . To measure their life completely . I have plenty of wristbands that i dont wear. I havent been compelled to wear them every day. My wife is a very serious user and has gotten a lot of motivation from with the idea that youre able to compete with your friends across the country in a part of the world is a very motivating behavior. The trend in wearables are on the fitness basis of very genuine trend. When youre looking at mobile right now, what is hot hot . What is the hottest thing out there . In the context of i think the last five years is that about ubiquity, and the next five or about richness. Android was purchased by google in 2005, iphone in 2007, and now were about one billion smartphones shipped this year and 250 million tablets. Getting to mass ubiquity has happened. Mass consumer adoption today. The fact that we have the smartphones, but apps are still integrated to ly the information on those phones, the idea these pplications become smart and predictive is one of the major areas of what is new. Youre talking to the founder of the app secret. They are very controversial. Some investors are very bullish and others think they are fascinating services. I would we doubt that the idea of anonymity on the internet is not a new idea. Going back to blackboard and chat rooms, the set of behaviors that people are concerned about, plus sharing ideas anonymously has been around for a substantial period of time. Now that it is on a mobile device and being able to share that way is not better or worse than previous iterations. You need to put the right amount of moderation and monitoring in place. They will do that as a part of making those communities robust. What about snapchat . I think snapchat is a little bit different. Snapchat is a thumb rule service as opposed to anonymous. And it is here to stay . I think snapchat has passed the Tipping Point where it is clearly a service that people use as a daytoday communication tool. What about Big Tech Companies in mobile . We saw google buying a drum company. Facebook has been buying in that area as well. When you think of all of that going on, given that drones are not bringing broadband to remote parts of the world yet . The Drone Companies are pretty early. The reality is sometimes you buy for the core team. We talked about android and how google made that a huge success. Sometimes it is all about the team. Im hearing the same reports that your cover that theres a view that drones could be applied for mapping technology, photographs for navigation or could be applied for broadband nternet service. It is pretty early early for those technologies. There has been so much activity in the tech space, facebook buying whats that for 19 billion, oculus for 2 billion, megarounds of funding being raised. 11 digit rounds happening. Multiple rounds like that so far just this year. What is going on right now . Are things getting too hot . There are a number of major revolutions going on in technology. Desktop to mobile we talked about many times before. There is this rise of big data, and the move from the social internet to new forms of the social internet. If youre an incumbent Technology Company and youre not riding one of these key trends you can get pretty scary. You can get left behind if youre not one of the key players in one of these three ajor shifts. On the flipside of if youre one of the startup or growing companies that is the personification of one of those shifts, you represent the personification of that trend and you can be strategically valuable to a lot of people. Intel did a large investment just a few months ago as an example of that. Ive been asking pretty much everyone on the show do you think we are in a bubble . I spoke with trite, and i want you to listen to what he had to say. To me, it has been a steady sequence of very large rounds. That means were in bubble territory. Youre the first person who has come out and said it. No one wants to say it because no one wants to break it. Everyone wants to cash out before it is over. Are we in bubble territory . We are not dramatically not, the majority of companies being fun is had real cash flows which is quite different from the 2001 ime. The multiples are getting up there, the multiples in revenue and cash flow are getting higher. I think the 10 pullback that weve seen in the nasdaq this far is likely to have some impact on the late stage round and it is likely that we will see some moderation because of that. Broadly defined as a bubble chasing company that has no Business Model are things or proposition that is not accurate. Do you think the growth we are seeing a sustainable . The funding round, is that not sustainable . That is not going to last . I think the evaluations of the companies are sustainable, but it do not know if they will continue to accelerate at the same pace they have. In many cases investors are looking ahead at next years revenues and pricing some of their investments off of that. That growth rate has to be there in order to support those valuations. I do not think it will double again or triple again in some of these cases in the following 12 to 18 months. That in some cases we have seen in the private markets. My interview with excel partners, rich wong. With c. S. I. And pirates of the caribbean to his credit, he is one of hollywoods biggest producers, we speak with Jerry Bruckheimer and talk about his remake one of his classics. Plans to top gun. Welcome back. Im emily chang. This is the best of bloomberg west. Hollywood heavyweight Jerry Bruckheimer is betting big on sequels. He producer recently teamed up with Paramount Pictures is top gun andnew films Beverly Hills ranchises. In the book there is a conversation around design with Companies Like apple, we know where they are going with design. What about design for you in your films, and television, what does Jerry Bruckheimer design . You know what it is . It is not radio. It is film. You look at it. It has to look good. We try to put a little special, a little different into everything we do. That is a little different and nusual for us. You have this new first look deal with paramount. You have talked about words as disney is focused on its movies and where your focus on your movies, disney doing a lot of superhero movies. Theyre not the only studio doing that right now. Is there superhero fatigue at some point . I just saw the latest captain america and thought it was great. He whole place was full of and everyone was cheering and laughing, and it was a great experience. That is what the movies are all about. The first film that you highlighted as a part of this new deal with paramount is that youre working on another Beverly Hills cop. What can you tell us about it right. And where things are at right now . We are in the process of getting the script finished. Paramount is very excited about making it. Eddie is excited. I think were moving forward. Im going to take eddie back to detroit. He is going to be in beverley and detroit. He is really excited about doing it. And the other film that everyone has been talking about is the next top gun which you have been working on it, but this is a long process for you and for tom cruise. You made some headlines recently setting the stage of cruise versus the drones. Can you elaborate a little bit . Technology has changed since we made the first one, so were going to take advantage of what the world is like today. The drones really taking over in a lot of our wars. Is the pilot obsolete . Are those jet jockeys gone . I do not think so. I think they are going to be around for quite a while. You still have to make quick decisions and the pilots are the ones to do that. Hopefully we can highlight both worlds. What is the timeline on that one . We have been working on it for over 30 years, so i wish i could tell you how long it will take us to get there. It is a lot of fun working with tom, and unfortunately tony scott who came up with the idea, has passed away and that is very sad for us. I think David Ellison is a financing partner. A lot of able talk about that family, megan is getting a lot of attention during award season recently. What can you tell us about David Ellison . He is a pilot. That helps us a lot. E has great taste. The movies that he has made have been very successful. He continues to make successful movies. He understands the business better than anybody. For a guy so young to understand the deals and what actors work and what directors work and what writers work, he has really done his homework. Im very proud of what he brings to the project. Despite the fact that you have the new deal with paramount you still have ties to disney and there are projects that that youre involved with that have ties to disney. Pirates of the caribbean, the latest installment as ones that people continue to ask questions about. We are working on number five, hopefully we will get that going this fall or maybe even within the next year. If everything lines up properly. Is there a fifth and a sixth . Everyone likes to talk about these movies online. We make them one at a time. So johnny will be back . Will Keith Richards be back . Would love to have him back. You have had huge success in film and television, and you go through the long list. Csi is on that list. A lot of people are talking about this as the golden age of television. Financially for you, what does that mean . Is there literally a pile of gold . Has this been the most financially successful time for you since all of these storylines have been in tv right now . What is been great for me and all of the shows we are putting on the air and even though they may not be on network, but maybe on netflix, the writing is so good. If you look at what the other channels and networks are cbs, nbc, someo, of the series, they have their Amazing Stories that are told great actors. Is that something you have been thinking about . Absolutely. We have not had the click yet, but hopefully we will. How long can csi stay on the air . It seems like a long time still. It is going on 15 seasons. It would not be on 15 years if the writing and acting was not great and of course we have wonderful directors who direct those actors and bring the words to life. It is all about entertaining audiences. That is what we do. On that point about the csi spinoff, you seem quite nterested these days and how technology is influencing society and bringing that to the small screen then. Absolutely. There are so many things that have changed. You can imagine what has changed in 15 years. Things change. Jon erlichman with Jerry Bruckheimer. It has been one year since the Boston Marathon bombings. Up neeks, were going to look at highway the city of boston is using technology to boost its security. You are watching the best of bloomberg west. Im emily chang. The Boston Marathon bombings, we are looking at the technology that is helping to prevent crimes like this from happening in the future. Cameras,udes hightech Artificial Intelligence and social media. Social Media Analytics company can help this process. I spoke with the ceo tim jones about his companys involvement in last years investigation and how theyre helping Law Enforcement agencies across the country today. Predates theement events of last year by two years. Wasboston please department starting to actively monitor networks to fight crime. Being prescient of the use of technology and crime, he reached out to us. In 2011 we started a pro bono relationship where we offered our application free to the Boston Police department. We were on the scene when things in boston occurred last year. After the bombings, days went by when it seemed like police had no idea who did this. It was a critical moment where they released Surveillance Video of the suspect. How critical do you think social media was in solving the boston bombings and in finding who did this . We as an application provider were not a part of the weestigating team, because are not Law Enforcement officials. There were clearly efforts to datafor patterns in past and in ongoing new social media that was being shared. Populatione general volunteered information from that werend photos being shared. Our application was one of multiple tools that were available to Law Enforcement. Uring that time period ultimately, this was solved by good oldfashioned leasing. Unfortunately, it also included the loss of life. Buzzy was part of the overall information envelope that was used. Agenciesod are these at talking to each other . I would say there is already a pretty significant effort before the events of last year. There is a term you may hear open source intelligence. What has happened postboston this that you have had agencies get more active. The International Association of chiefs of police have gotten quite social. They are also a big user of various tools. I think in the last year there has been an awareness and a realization that social media is much like email was 10odd years ago. It is a new form of communication, a new channel of gathering information. It cannot be avoided in conduct in an investigation. Ideally, in trying to prevent or avert a disaster. Intel is giving insight into its mobile business as part of its earnings report. To ceo stacy smith joins us tell us all about it. Welcome back to the best of bloomberg west. Im emily chang. Intels transition from pc to mobile is a sign of progress. The Worlds Largest chipmaker reported a one percent rise in revenue. It is really how we think about our business and it is how we have organized the company. What is different about our Business Today is that we shipped into a broad range of devices. We have a Healthy Business in the pc, but we did 5 million tablets in the first quarter. We are fighting to win designs in phones. Everybody is talking about the internet of things right now. Wristbandought a Health Tracking device. How big do you think these things are going to be . I have worn a wristband. I try not to do that on tv. The internet of things business is a broad business. It ranges from infotainment devices in your house to devices in factories. Then there is a new category of wearables that is emerging. Business that is well over 2 billion. We are off working with customers in the wearables space. Were doing a lot in experimentation. We are making investments. I dont know how it will play out or whos going to win, but we are there early and our intent is to be right there with the winners as their Technology Provider of choice. Can you give us an idea of the most exciting thing you have seen so far . I would say generally the most exciting thing is the level of innovation going in. It is a hot area. There are all kinds of interesting things that range from biosensors to visual computing solutions, two things i can interpret your voice and provide information back to you. , and an exciting space requirements are around having great computing ability at low power. It is readymade for us because of our manufacturing leadership. Every chipmaker says the internet of things is a big opportunity. Lots of them are using arm designs. What will compel them to use intel . For us it is not a plan to win a marketplace. Our Business Results show that we are if not the leader then one of the leaders in the field already. I think the reason that we are so successful in this business is because of our manufacturing lead. In transiting back, it means we can provide more performance in these very lowpower envelopes. That is our competitive advantage and that will allow us to win in the market. You getan how do to 40 million tablets shipped by the end of the year . Marketmber, the tablet is a consumer driven market. Volumeans a lot more that tends to sit in the back half of the year. As being right on track in terms of the engagements with customers out there, the design wins we know we have one and customer expectations. I feel pretty good about where we are at. Theres a lot of work to do, but we are off to a really good start. With intels cfo stacy smith. The Online Travel agency also competes with google. We will talk to Priceline Group ceo next. Welcome back to the best of bloomberg west. Online travel is a crowded, competitive space. It is pricelines revenue that makes it the world. I spoke with pricelines group ceo darren huston. We are investing very heavily in mobile. Just to give you an example, we did 1 billion a lookings on mobile. 2012, 3 billion. It is a very important channel for us in terms of acquiring new customers. It is also a critical part of the end to end experience. Now that people are using tablets, mobile phones and other Electronic Devices along the whole journey, is giving us a great opportunity to enhance our product for our users. Are you specifying for specific mobiles or apps . All five companies have apps for the ios platform as well as for android. We continue to evolve those products. They all have very high ratings from consumers. We have a ton of traction. Mobile is not just about apps, it is also about web. We have very competitive mobile tabletducts both on the and the phone. We are excited about where we are. Speaking of speaking of the web, you spent 1. 8 alien dollars on web marketing. Most of it went to google. Is that a strategy you expect to we have great websites and they convert tremendously well. We continue to look to google as well as two other source of is kayak orher it trip advisor. There are other places where we go and buy our demand. We continue to buy from most channels as long as the returns are there. We are seeing that our returns on all the channels are great. The day we would love our customers to be more direct. We use google and other sources of demand to find customers and show them how wonderful our products are. Google is making more aggressive moves in your territory. Obviously, they bought ita. How big a competitor g you expect them to be Going Forward . As angle respects us advertiser. They rely to get more of my money. Codeecent acquisition of from room 77, that is not the biggest thing that has happened. Google has been working on hotel price as for years. They want to continue to make that better. I think the Biggest Issue we face competitively is not google, it is whether or not we as a company can maintain the hunger and humility to continue to have the success we have been having in the past. Will you ever be adding bnp andom an air airbnb or a home away . We have been increasing our portfolio of accommodations. Last year, we went from 290,000 to over 400,000 properties on the booking. Com site. We are going to continue to look at that. Aipanies like home away and rbnb work on things that are in not even legal. Were looking at any kind of legitimate form of accommodation to add to our website in the future. The Parent Company of travelocity is coming up, how do you view them as a competitor . I think sabr operates in its theirace now that most of bookings get done by the expedia group. It is not high on my radar. We have good relationships there. I spoke mostly on things we could control which our execution and operational discipline that we need every day to continue the success we have had is a group. Acquisitions are not something you can control. You bought kayak for 1. 8 alien dollars. What kind of acquisitions are you looking for . Has madeiceline group some amazing acquisitions over the years. Is probably the most successful acquisition in the history of the internet. Our acquisitions are not that frequent. We take a lot of time to think through the companies we want to be part of the group. Most of our focus is on again it growth. Growth. Ganic managing from a datadriven perspective the way that we bring demand to the platform. That continues to be a majority of our focus. There always poking around space, but we have a pretty high bar on what it would be to be a great acquisition to become part of the group. You mentioned booking. Com where a majority of your revenue comes from. Inhave also seen williams at the ad campaign. I wonder how much does a value how much value does a guy like shatner bring you . Amazing been an spokesperson for the priceline brand over the years. Priceline is still a very significant part of our business very just and a great job us to more of a retail model with express deals, etc. We love williams at it. He has done some great things. Priceline itself with the katie, that of brings an extras post spokesperson into priceline. Priceline group ceo darren huston. We will introduce you to winston, it a cartoon that actually interacts with kids. That is next on the best of bloomberg west. Im emily chang. This is the best of bloomberg west. Streaming on your phone, your tablet, bloomberg. Com. Imagine a cartoon that actually engages in conversation. That is the innovation entertainment that our talk is created. It can listen and even talk back. I caught up with orrin jacob. Tory talk works by building up a conversation between you and your family. We try to create characters by talking to. The characters will react to what you say the matter what you say . The characters will roleplay with you and make a leave. In that circumstance, yeah, you can imagine what it is like to be an alien for real. Show me how it works. Lets talk to a bird. What am i supposed to do . I think he should jump out and flap your wings. Ok, thats insane. What kind of parent are you . Can you even hear yourself . Come on, what is so great about flying, anyway . What if you told her to jump out and not flap its wings . It would take your response back and engage you. How do you do that . We take what you say in the microphone. And goes over a microphone into the cloud. You are also storing kids voices, right . Develop better Recognition Technology for children. How challenging is that for the voice actors . We have to get them to record answers andpositive negative answers, quizzical responses. Get professional actors to do that and perform it in a booth, away from an audience. It is like doing half of a live improv show. You have an ipad showed now. What are your goals . To open up the idea of conversation is entertainment. You worked at pixar 20 years. What are your views on children watching movies . Children watching cartoons . Think the stories arent important part of what it means to be a family. Funny, i have an 18monthold son now. Im constantly questioning how much screen time to give him. What is your approach . My wife and i talk about that with our three kids. It is a constant conversation. Homework always comes first in our house. Is or something more than just watching tv, essentially . And attaining through conversation is primarily entertainment. Vocally, which kids are doing an Elementary School ages, is important as well. Takent is it you have from pixar to what youre doing with tory talk . With tory talk with to ytalk . In an hourlong meeting, he would speak for two meetings for two minutes and he could get the message across sosa simply, i have never seen anybody do that before. What was his relationship . Ike with John Lasseter how much did John Lasseter listen to what steve jobs had to say . I think you should ask him that question. Steve was a major influence on pixar. Interview with tory talk jacob. Er and ceo oren that does it for the best of bloomberg west. We will see you next week. The following is a paid buy gregion rock to tool company. This. There is the craig jake. It makes it easy to build your own projects. Can build, you storage for your laundry room or your garage