Transcripts For BLOOMBERG Bloomberg West 20140517

Stephen engle attended the Product Launch and started by asking about the infamous reaction in the room when the ceo walked into the room, unveiling this new tablet. You can imagine the kind of reception he got. You know what . When the faithful were there in full force in their red tshirts packing the Convention Center hall beyond capacity, cheering every new Product Launch, from a new hdtv, a new router, and of course the new product was the new mipad. He hates to be compared to steve jobs, but he is clearly taking a page from apple in leveraging its growing phone user base to sell tablets. Already, it sells more phones in china than apple. I caught up with the man who is in charge of the International Push for xiaomi, that is hugo barra. Were going to start probably in southeast asia, and then take it to the other markets we are exploring like india, latin america, and so on. Will you see how it does in the china market . Timeframe is determined by our manufacturing capacity. We have to see how quickly we can ramp. Hopefully we can do that this year. The tablet market is pretty much dominated by one if not two players, apple and samsung. Can you get to be global number three . What are your ambitions . Definitely take the high bar in this market. We have spent four years working to the point where we thought we had the right hardware design and also Software Capabilities to build a worldclass tablet. We think were there finally. We will help change this market without a doubt. How important is it for your portfolio to go international, to have a tablet, and also this new television. The whole portfolio, not just phones, for the International Market . We have taken a different path that most people have expected. We did a phone, a tv, and then a tablet. When to the united states, and what you have to do to get to that point where you can be competitive in the u. S. Market . The u. S. Is not in our plans for this year. It is an insanely competitive market. Getting there requires working very hard and being ready. We work up to that. We dont know when that is going to be, but certainly that is the goal. Emily, 90 of the phones are sold in china, three percent overseas. They are now nearing 10 million in International Markets. A big coup for xiaomi. I want to know, from the chinese consumers perspective, how do you see the mipad competing with the ipad and other options . Is this something that consumers there really want . When you go to events like this you get the faithful. Of course theyre going to say they will smash apple. They are expecting 100 million users by the end of this sale. This is a pretty good launching point for this tablet. They would not bite when asked them for sales projections. I did talk with one of the lead investors, jgb capitals hans he said they would be happy if they sold 45,000,000 mipads in the first year. Loyal customers, emily. They will want to migrate from their home miphone to a mipad as well. It is about half the price of the mini ipad from apple. About 60 cheaper if you go to the 64 gigabyte version. They will have a 128 gigabytes version heritage and give me a price, but it is probably going to be along the same price frame, about half the price of what apple is offering. Apple doesnt even offer 128. I dont know how cheap it is going to be. That was emily chang speaking with Bloomberg China correspondent stephen engle. We spoke with ben cavender. Emily started by asking him what he thinks of the mipad. I think this is a good evolution for the company. They have done really well in rolling out product. I think the tablet is a really good future step. It has great specs, it competes very well on price with apple. Consumers are not necessarily married to the idea of buying an apple tablet or a samsung tablet. The tablet is usually the second purchase from people after they buy a smartphone. Any market with a pc never existed, a lot of these consumers change the role of the tablet in china . Absolutely. If you look at the demographic that xiaomi is trying to sell to, which is the 1534yearolds. Theyre spending most of the time most of their time of the day on the smartphone. I think xiaomi is really well positioned to cater to this group. How good is the actual product . How does it compare to an iphone or an ipad, or a Samsung Galaxy . I think when xiaomi for started getting exposure in the media, people are looking at the price and thought the quality cannot be that good. The reality is, the hardware is quite nice. It is sturdy and wellmade. They definitely spent time on industrial design. An even bigger secret is that an even bigger secret is that the user interface is really good, too. We spent a lot of time getting feedback from their customers. They updated the operating system every week, which is something that samsung dont really emphasize as much. The overall User Experience is very positive. It doesnt feel like a cheap product. What do think the companys prospects are for going global and even entering the u. S. Market . Theyre not going to get the kind of growth they want to get just out of china. I think the logical next up is the one theyre taking, moving into South East Asia and other emerging markets like brazil or turkey or russia. I think theyre going to do quite well. That was emily chang and ben cavender. Our Small Business is the key to bigtime Revenue Growth for twitter. Up next, we are speaking with twitters global revenue and how Small Companies are using twitter to disrupt all sorts of industries. Still to come on the best of bloomberg west. Welcome back to the best of bloomberg west. Im cory johnson. Twitters user growth slowed down from 30 to 25 in a yearoveryear basis. In an effort to help attract more users, the company is turning to Small Businesses, launching a Small Business guide to help entrepreneurs better use twitter. Emily chang sat down with their president of global revenue and started by asking him how you get more users to sign on and stay engaged on twitter. Its really early days for us. Were just Getting Started in rolling out Small Business tools to a wider audience. We started here in the u. S. And now we are moving from market to market by market. We Just Announced the availability in japan to go along with our activity in the u. K. And in dublin and canada. We are rolling it out across the globe. What we are seeing from consumers is that they not only see and experience content on the platform, but it actually drives them to make a purchase. We did a study last year it shows about 73 of consumers that followed were engaged with a Small Business on twitter, it actually led to some level of purchase activity or lead gen activity. Facebook is also making huge efforts to reach Small Businesses. What does twitter offer that facebook doesnt . In general among what we hear from businesses and people is the only platform that is live, public, conversational and distributed. Those combinations make it really interesting for a business to connect to their potential customers or their current customers, and then also engage and then even sell. When people touch twitter, they are in a different mode here to there in this mode of what is hot, what is new, what is going on in the world or what is happening in my world. We think those questions that they come to twitter with, which is essentially, what up, business can help answer those questions. Do think live tv can play role in this . Sure. They actually look at twitter as a live platform to communicate and connect with their customer base. Some Small Businesses have told us twitter hasnt help me that much, i havent generated sales from it. How do you respond to that . Heres what i can tell you. We are seeing great adoption from businesses using the platform. I will give you a tangible example. A month ago we launched a platform called regeneration lead generation cards. Sometimes theres a button that says submit or request for information third when a consumer touches a button, there email addresses sent to the business for the business to followup. It is an easy way to shrink the distance between discovering your business and getting information or generating a lead for the business. We have a Software Company that is using the platform to really great affect. They saw 3. 5 times lift in the amount of leads it came from the platform. Twitter is now the number one marketing channel, both digitally and physically. Youre the head of revenue. Is a goal to get these businesses to spend money on twitter . Our holistic goal is to get as many businesses on the platform and getting them used to using the platform. Our goal, ultimately come is to allow them to be successful. Once they are great on the platform, the ad tools are amplification tools. We view our roles not at the end, and talking about the paid platform, but also holistically, from the beginning. Getting them on the platform and telling them how to do it in the right way. It is really a consultative part of the business. Does that factor in . Not just a Small Business, but also the Consumer Base as well. What we are trying to do, the best products we roll out, are winwin, both for the Consumer Base and also for the business. Weve seen that as we have rolled out products across the board. So we think about holistically is what is great for the overall audience and the constituents with it. Twitters revenue seems to look spectacular. How do you see that evolving down the line . How to keep up the momentum . It is early days, but you are right. We saw over 119 growth quarter on quarter this past quarter. The ads part of that business was even higher. We are thinking about all the other things that we have got teed up for the rest of the year. We made a huge announcement a couple weeks ago with our acquisition. This is one of the Worlds Largest mobile ad exchange businesses out there. Essentially, it allows us to touch over one billion users for ios and android apps, and bring an added experience to them. We are connecting the dots between the twitter ad platform. For a marketer, we can run a campaign, both on and off twitter. Amplifying your life tv offering is a big art of what you do. How do you see that playing into it with live tv . We have about 70 content partners who are signed up and using twitter amplify. If youre not familiar with amplify, it is our live video experience for renewal broadcast providers. If you have video that appears in tv, you can bring it onto twitter for some special tools we have. We comonetize that experience with you. We have the distribution angle for the network and also a monetization angle as well. Consumers get to see content that they might not have seen overall. We know it is helping drive adoption and also tune in for the broadcast partners as a monetization platform. What is your vision for advertising . How does advertising look different at twitter . We have started planting the seeds around that. We want to touch every single business on the planet. We wont rest until we are done with that. Part of the ad experience for twitter is that content is native and organic to the platform. The ad content itself. It acts and feels like traditional content. You can retweeted promoted tweet. What were trying to do is get businesses to be even better at producing twitter content so that it actually provides value downstream. That was adam bain, twitters president of global ad revenue, speaking with family chang. Next up we talk about beats headphones. Welcome back to the best of bloomberg west. Im cory johnson. Seven years before apples bid, dr. Dre and jimmy iovine created a stylish accessory for audio consumers. They created a sound profile to serve as the baseline for beats bass heavy products. Emily sat down and started by asking how this deal came about. Jimmy was looking for Something Else to do and they wanted to do speakers. I said no, the new speaker is the headphone. People dont listen to speakers anymore because they are so big. He said you are right. Lets do headphones. Thats how it all started. I am an audiophile and wanted to really get into making the best headphone in the world. Crexendo leaf dr. Dre used . 50 in the club as a sounding board. If it doesnt sound good in the club, forget about it. We have some beats headphones with us today. What part of these headphones are you responsible for . First, those are the new ones. We didnt do any of that. The previous studio, we did everything, all the engineering all the sound profile. The real great thing about what we did was get bass sound on headphone. That is what headphones had been missing up until the time we designed headphones. What was it like working with them . It was probably most rewarding time in my career. First of all getting exposed to the music business and to jimmy, who was a marketing genius, and dra who is a music icon. We got to meet all these other cool people. It was fantastic. What you think of this deal . Does it surprise you . Yeah. It is a shock to everybody. I think we had the same questions that everybody else has on what the final outcome is going to be. What we would like to see is that it shines a light on headphones, audio, highquality sound and valuation of what a company could be. How much of the 3. 2 billion are you guys getting . It is, like that. Zero . Zero. I wish you couldve participated more, but we got our own valuation out of it. I think we are getting lots of good press shining a light on our technology and the things that monster is doing now. Before we shot the headphones are working on, do you have any regrets about the deal that you struck with them . You guys parted ways in 2012, and they sold more than half the company to htc. Why do think they did that . Well, jimmy told me once, noel, you build companies to keep them and i built them to sell them. I never took in any extra income for all but 35 years it wouldve been in business. It is really a passion for me. I never thought of selling the company, but maybe youre not at all upset about not getting a cut of those 3 billion . No, it is not about the money for me. It is all about the sound quality and my passion for what is happening in the audio business. I do have some regrets on the lack of recognition that monster has gotten in the past few years after i split with beats. I wish we couldve got more recognition and been on the show. A lot of people dont even know that monster designed all the engineering behind all the beats product. Lets take a look at some of the headphones youre making now. Youre still in the game. These are monster headphones. What is so special about these . We have gone on to a lot of new technologies. What are designed for beats is pretty much five years old now. The new stuff is phenomenal. The sound quality, the impact, the dynamics. We call it pure monster sound. With pure monster sound you get closer to the music. We are reinventing the game again. That is for ladies. This is with our collaboration with James Lindsay on promoting back to the hiphop audience. That is our new technology. Dna pro. How do you view competition in the Headphone Industry . Some people actually dont like beats headphones for much and think there are better options. It is quite a competitive industry. Theres beats, theres monster, there is skullcandy. There are a lot of products that followed. With beats, kids wanted to hear the base. They wanted to hear the punch. That is what i designed. I think some of the critics say it is overhyped. Fine, if you listen to hiphop and you want to be in the club, maybe that is what you want to do. Our pure monster sounds more about clarity and purity. That was monster founder noel lee with emily chang. Next, Richard Branson takes us to talk about space travel. That conversation is next. You are watching the best of bloomberg west. I am cory johnson. Richard branson has been involved in a wide variety of industries. Now he has space travel. He sat down with me for an exclusive interview to talk about his latest plans including bringing private citizens in the space. We are having a lot of fun. It is hard work. We should succeed this year. Virgin galactic will be the umbrella for the rest of the virgin group. Thisll be a fantastic halo affect for the rest of virgin. I was determined not to ask you when. What are the big hurdles to get over to get into orbit . We think they have all been taken now. We are almost there. We have got to put all the pieces together. We need to make sure that it is safe. I would be very disappointed if it does not happen this year. I was there when the spaceship won the prize. You have carried through all of these years. Did you get reenergized at a certain point . I am still fascinated by space. We are this tiny dot. Space is infinite and needs to be explored. There are so many possibilities. What we can do with satellites from space, how that can transform things back on earth. What we can do one day with intercontinental travel. The sky is not the limit. This is not just about space tourism, you see this as a beginning. 80 of people would love to go to space if they can afford it. The market is enormous for space tourists who want to experience space travel. That will help us fund things like pointtopoint travel. It will help fund our satellite program. It will help us fund hotels in space. It will help us fund deep space exploration. There is a lot to do. I went on the zero g flight. It was really cool. Have you done that . I have done it. Just to lie on the bottom of the plane and find yourself lifting up to the ceiling. A theres nothing like it. I think the exciting thing about Virgin Galactic is instead of it in a 10 second wonder, you will be floating around four minutes rather than seconds. Youll be looking out these magnificent windows back to this beautiful earth. I wonder what your take is on Silicon Valley. They have these interesting entrepreneurs. Some of them have been at google and apple and startups. The focus is on the movement of electrons on some level. What is your take on Silicon Valley . It may be the most exciting places in the world. With extraordinary people, with extraordinary ideas. They have the resources to put those ideas into practice. I think a lot of the problems of the world can be solved from Silicon Valley. Whether it is feeding the poor of the world or putting people out of poverty. The world will be a lot better place in 10 years time than it is today. You have been involved in the music industry. Apple made a big investment in beats and their streaming music industry. What do you see the difficulties are . We were very fortunate to sell the Record Company when we did. It was right at the peak of the industry. Largely due to apple, the industry has imploded. Live music still does well. Merchandising of music does well. Artists make little money off the sales of their music. Apples new move may be giving back what they have taken. It would be great if it could succeed. It would be great if artist could make some money out of it. Is there an ipo in the future . It seems like youve been on the edge of that for a while. I am not sure what i am allowed to say. That usually means that something is up. There are rumors of an ipo. It we will see what happens there. We are hoping. We might get the love field decision today. We are hoping that ultimately the right decision gets made. That will be a great day for virgin america. That was a Richard Branson. Bloggers are flocking to social media. Do brands turn the digital channel into sales . That is next on the best of bloomberg west. Welcome back to bloomberg west. I am cory johnson. We are taking a look at how a more connected world is changing the retail industry. Instagram and facebook are visual and social platforms that makeup artists and beauty bloggers have been using to share tips. How did Beauty Brands turn this content into cash . Sephora is taking this on with a is a site called the beauty board. It allows people to tag Beauty Products used to create their looks. We talked with their Senior Vice President about the role and how it came about. Many moons ago, about six years ago, we were launched on all of the social media platforms. We were testing different things. Our clients were clamoring to speak with us. They love the posting about Beauty Products and have two ask questions. It this is a focus for us. We wanted to answer those beauty questions. In the evenings, both myself and my boss would respond to clients. We decided we needed to focus and create an Interactive Digital group and focus on social media. There is Something Special about Beauty Products that make it a subject that people love to talk about. On your beauty board you have people posting pictures of themselves and their makeup and asking questions. Is this in the particular about the Beauty Community . This is sales gold. Makeup has always been a natural conversation for women. They can talk about makeup up in the ladies room or in a bar. They come together and bond over makeup. Especially at sephora, we are such an open environment where women can talk to each other and our experts. How do you translate this into sales . Our clients love creating these beautifu looks and sharing these online. They were doing it on instagram. What we found was the number one question people had was what are all the products that you use . You cant really do that on levels social media platforms. We created the ability for the client to upload her photo and tag every product that she used. That might be 10 products. She can show someone how to create that look for themselves. Can you give us some numbers . Did you see a big bump . Our clients are tagging products. They are tagging six products or more on every photo that they upload. You can only link it to one spot on social media. That is a fabulous way that we have increased the number of products that people can focus on. Mobile has been such an instrument. They have their mobile phone and their photos that they can upload so easily. And now they can tag those products. We have seen over 60 of our views on a mobile and over 45 of the photos are from mobile devices. Any products that do better on social and mobile . Anything that really just pops. I would say the urban decay naked palette three. That is specific. We have some really hot products. Nails and lips are the other two categories that clients can really demonstrate cool nail art or a look on their lips. You are harnessing beauty influencers. There are definitely women out there who have gained a following. It is amazing how many women can create brandnew looks every week and show people how they are doing it. These women have followings. They are coming on a beauty board and showing their look and tagging the products that they use. They love helping other women. That was the Senior Vice President of Interactive Media for sephora with emily chang. Pinterest announced a partnership with advertisers. We will hear from the head of partnership next. Welcome back to the best of bloomberg west. Pinterest is launching its first advertising. They are test promoting pins and certain categories. They can be targeted based on the gender and zip code and what device they are using. We spoke with joanna bradford. They have been testing this for several months. Emily asked what has worked and what hasnt . People have brands that they love to pin. It is a visual discovery tool. Brands have many different ways to tell the story of their brand. If youre banana republic, it might be about dressing for work. If you are kraft it might be about planning a birthday party. They are using the organic platform. Are there any brands in particular that do well on pinterest versus others . That is one of the things we are trying to figure out. What we found is promoted pins work about the same or better than regular pins. We think there are great possibilities for marketers to be able to scale and pin all sorts of different things. If you are lululemon, you might pin fitness food. You might pin travel ideas. How you get these brands on board . How do you choose who to give the opportunity to . I have heard that more brands want in and you have not been ready. We have been in for six months. We have hired a team. They are analytics and data driven. They have to be creative to help marketers figure out how to tell a story. The marketer does three things. First, they put the pin on their site. They build their pin board on pinterest. Those boards should be aligned with their brandspromises. The last thing they do is use the promoted pin products. We picked brands that had started on that journey. They have been using pinterest and using it well. We are trying to help them figure out the best kinds of contact they should put on there and what should be a promoted pin. Everything from aspect ratio to what kind of headline they should put on their. It is a visual discovery tool. The headline also matters. You wanted to look good. We wanted to look good. We want it to be useful. As people use pinterest as a discovery tool, we want them to be able to search and find categories. We think the pinner experience is important. Will i ever see a promoted pin when i log onto my homepage . There is plenty to do within a category. How much does it cost . The price varies. Right now it is based on the full services that we bring forward. Correct price should be in the market. Right now we are using our team to make sure that your hands are working really well. How much money making potential do you see . Do you see this is as when you get up and running is going to be easy to rake it in . We hope that it is a scaled business. That is our goal. We have a big user base. We have 75 of our users are on the mobile devices. We think that is really important for advertisers. We have context. If youre trying to redecorate your house or plan a meal for your family or plan a vacation, i was looking for spring break for my kids and i went to a National Park because i was inspired by a board that i saw. You can do lots of things. We hope the business scales over time. What do you have to offer that facebook and twitter do not . Why should i pay for a pin than a promoted tweet . We are thinking about your future. The things that you are interested in, we will help you decorate your house and plan your trip. We will help you discover things you want and need it right now as well is in the future. That is different than some of the other social networks out there. You have had a long career in tech and media. I am curious about your transition moving over to pinter pinterest as had a partnership. I love the product and the brand. When i met the team, they were very smart and very focused on the experience and the consumer experience. And technology, the best thing you could do is put your consumer first. The Company Thinks about putting the pinner first. We take feedback from our consumers. It was very attractive. I really love to build things. I love the advertising business and the reinvention of the format. I think that is one of the things that we are doing. It is a great combination of many things. What is it like working with Ben Silverman . I wonder if he is different than other ceos you have worked with. He is focused on the experience for the pinners. He also knows what he does not know. He has built a great team of people around them to help with that. I feel lucky to be part of that team. He is a very smart thinker about how the pinner experience comes across. I know you must have a lot of people knocking on your door. Give us an idea of what the appetite is like. Some days i do four or five interviews in a day. Right now we have about 20 open positions. We expect to open more as we grow. It is not necessarily we are looking for the right fit. We are looking for people who know how to use data and have a vision around marketing. We are hiring a lot of people to make sure that our marketers and brands have great partners working with them. That was the head of partnerships of interest with pinterest and emily chang. If you hate Grocery Shopping at youre in luck, in a startup will deliver groceries in as quickly as an hour. Next on the best of bloomberg west. I am cory johnson. There are big and Small Companies angling to disrupt the business of food shopping. Up they want to outsource your trip to the local supermarket. He used to be an engineer and amazon. Now he is going headtohead with amazons grocery business, amazon fresh. He has his own fresh approach. We dont have our own warehouse. We dont have our own trucks. We dont use Services Like ups or fedex for delivery. We do that all in house. The service is simple. Order groceries through the app or website. You get the incoming order on your smart phone and take the groceries to you in as little as an hour. Today, laura is filling out an order. The Shopping List is apples and carbonated water. Online delivery is nothing new. Web van was one of the first dot com bubble. Now it is a punchline. Instacart relies on contractors to pick and deliver orders directly to existing Grocery Stores to keep costs low. This is heading to a local startup. We use it at work pretty regularly. We are getting snacks to the team. We are getting different beverages. We are getting cheese and yogurt. 4 to 15. Drivers can earn up to 25 an hour depending on the workload. It is a very flexible job. It you can choose your own hours. It is more independent. They have raised 11 million from venture firms. They deliver in big cities like san francisco, new york, and los angeles. They have even bigger ambitions. We plan to be in every major city in the united states. How is this for a necessity being the mother of invention . He created the service because he did not have a car. He needed a way to get his own groceries delivered. That does it for the best of bloomberg west. You can watch us during the week. We will see you next week. Its Building Blocks are known worldwide. Its brand is among the globes most admired. It is the fastestgrowing toymaker on the planet. We are at a company that less than a decade ago was losing a Million Dollars a day and is being transformed. It is becoming a case study in how you turn around a company. We are going inside lego. Awesome. Everything is awesome the theme song for the lego movie could be the theme song to the company itself