Ceo john chen says the company is already planning a Second Generation of the phone. But will the passport be enough to turn blackberry around . We hear from the ceo himself. What is next for larry ellison, now that he is not oracle ceo . Could he be the next tech mobile to buy an mba franchise . He has tried before, and might have a new target in the mba hawks. To the lead, the talk of a bubble in Silicon Valley is starting to gain steam again. Some of the most respective voices in Venture Capital are sounding the alarm. They are warning startups are burning through way too much cash as they get round after round of funding, leaving many with multibilliondollar valuations. And reese and Mark Andreessen tweeted when the market turns, we will find out who is been swimming without trunks on. Comedies will vaporize. Companies will vaporize. Valuations can be fixed, you can do a down round, but burn rates are exactly that. Earning cash, losing money, emphasis on the losing. Are they right . Joining me now is cory johnson, josh nine, and paul kedrosky. Paul, do you agree . It is math. It is hard to disagree with math. Fiber and Rate Companies do have a bad tendency to go boom. When the market turns, they will be vaporized. Separate the conversation from high burn Rate Companies. Problem,a perennial bubbles coming go. When people talk about a bubble, they are focused on valuation. I think what mark and bill were focused on his burn rate. Been years that we have doing Venture Capital, one thing we have seen is that a high burn rate 10 impact the companys ability to execute. Whether or not there burn rates are too high on average or not is something up for debate. Some of the things they are burning money on lots of shiny offices, fake weve made it. You see startups moving into being fully offices. The most expensive place in the country right now. Is a beautiful place to be. They want to make it look like they have a beautiful place to work. A startup is like a car. If you are burning a lot of money, you are going really fast. Sometimes you want to go fast if you have a great opportunity ahead of you. When you go fast, it is hard to adjust quickly. It is less time to react, a better chance of a crash. I love his tweets. They are often ridiculous. The notion that it gives an entrepreneur the feeling of success. Hey weve made it, we spent this Venture Capital money on rent. I rememberber the. Com bubble. Hang are playing lot of money. You have to focus on building a real company, and not get distracted. Highd, hybrid rates burn rates are not necessarily indicative of a problem. Was a trajectory where you could see it. You had points at which they could have pulled back. They were spending towards profitability. They werent there yet. Obviously, there is another side of the story. We are hearing from vegetal Venture Capitalists. Is there another side to the story . Sure. You will always hear from people who wish other people would stop spending some much money. Like investor, i kind of capital scarcity. I dont want people to be out there putting so much money in companies. You would like to be b a little bit scarcer. You have to read between the lines. With people who benefit from peoples b scarce. There is this temptation to confuse a financing event with a customer events. The two have very little to do with each other. Certainly not in the short run. More companies have blown up on that point than anything else i can think of. More tweets from him and just a few minutes. Vaporize when market turns, or under invest, starve broke. Dont let the market imploded. Is this a reality for some of these companies . This is the trick. This is why we work with on different viewers entrepreneurs together. Bubble that this talk of is generally overblown. No bubble . Most companies who have high burn rates have high revenue. Bubble, that wasnt the case. Venturer issue is capitalists, im going to blame you. You guys see a binary results. Or blame paul. You guys want a binary results. This thing is going to be huge, or is going to be a zero. When i think of entrepreneurs, and business ideas, they might like to have 10 years to figure out what is going to be. Feel like a lot of Venture Capitalists are pushing for only home runs. Is that fair . We do push hard. I dont think thats due to us, i think its the technology markets. Its winner take most, they move very quickly, competition is fast. You have to invest aggressively. We Push Companies hard. Something else he is talking about is that young founders ane only been around in environment where money is easy to raise, valuations are high. Is the money going to dry up . Is there a bubble that is going to pop . Member mr. Science theater 3000 remember mr. Science theater 3000 . [laughter] i agree. There is a whole generation of have entre for newers who never seen anything but this age of plenty. Money comes to them for free once they are inside of this program. The thing we see about risk capital is that it is intensely cyclical. It will go away as fast as it arrived, or even faster. They will be absolutely shocked. Shame on them for not paying attention. , you just did an old man these kids these days, they dont know how good they have it. I never said you were old. He said that. Thats all right. Saidan greenspan irrational exuberance he said that in that 96. He said that for years before that bubble blew up. It is one thing to spot a bubble, i think entrepreneurs not think seen a crash am a i the current generation has seen a down market. I think it is very important to focus on building a business, not on the vanity metric, not just fundraising, not on just image. Generally you think market reason Mark Andreessen is exaggerating . At the end of the day, we are leaving the matters is cash over profit. Between here and there, there are more things you need to focus on. People need to make sure as they are focusing on growing eyeballs or users, at some point, you have to make profit. Josh stein. Paul kedrosky, thank you. Im sure the debate wont stop, nor will Mark Andreessens tweets. A german startup has been cloning American Companies like ebay and groupon. You can watch a streaming on your tablet, phone, bloomberg. Com, apple tv, and it was on fire tv. Im emily chang. This is bloomberg west. John chen says blackberry is already planning a Second Generation of the passport smartphone after reception was better than he expected. The phone sold out, selling to a new thousand units in the first day of sales. Revenue fell 42 in the second quarter. The loss narrowed to two and at 7 million. 207 million. I asked when they would become profitable. We would be profitable in fiscal year and 16. Im Still Standing by that. Depending on the receptivity of all these phones, and the classic coming out in about two months, our Software Releases in the next six months, im expected to see growth next year. With that, if i could get growth in the top line, i will be able to make it profitable sooner. Likeen also said he would blackberry to return to the consumer market, but it is too soon to do so. Is now doubling the target size of its initial Public Offering to almost 2 billion. Rocket is a german investing company that replicates businesses like groupon and demand due to strong from investors. They plan to close when we got of schedule, and list on october 2. Cory johnson is still with us, as well as paul kedrosky. Aaron, what do you make of all the enthusiasm in the markets about rocket . You have these twin german ipos going out right now. Rocket internet, which we will talk about. This internet startup vehicle controlled by a prominent figure here. Their firstp trading day to october 2, next week. Theres a big ecommerce retailer out here who is very popular in europe from line fashion retailing. They were spun out of rocket some years ago, they start trading october 1. Arron, rocket has gotten a lot of criticism for simply copying u. S. Companies, whether it is amazon or ebay or square. Is that fair, or do they have original ideas . The executives behind this company are three brothers. Oliver is the front man. He is the ceo of rocket, he just spoke for about two hours at a press conference here in fright for it. Frankfurt. He has been at this for a long time. These guys are welleducated young tech savvy germans. 15 years ago, back in 1999, they did a clone of ebay. Within three months, they forced ebay to buy it for some thing like 35 million euros. They were able to fund other startups that imitated u. S. Websites. Sometimes they have been successful in getting the original company to buy their knockoffs, like with groupon. Sometimes they built a business a knockoff ofwith zappos. I became aware of them when they were involved with groupon. Surely that was a learning lesson, what do you make of these guys . Mostly despair. [laughter] ofi dont have a lot patience for these geographic arm strategies that are predicated on fast knockoffs in new geographies of insisting businesses. It tells you how low barrier to entry is in the existing business, or how limited their ip is. It also tells you there is an opportunity to knock it off quickly. You cant continue to play that strategy for long. Develop markets, become developed very quickly, it doesnt last very long. This is a phenomenon that to my mind, has a very natural course. It will run that course quite quickly. It is an offering that i dont have a lot of confidence in. It reminds me of companies from the 90s. Gi, that may be the first reference to them in our history. It was issued stock, and it went to zero. Aaron, you seem to agree that this company has more copycat it u. S. Companies. The ceo has said they want to reinvent themselves through this ipo. Can they do that . I sat across the table with them, and i quizzed them at the press conference here in germany the other day. Intos almost made cloneism his calling card. The guy is very well media trained. Into hisf made that thing in a perverse way. German we are not the auto companies, we are toyota. We want to do it cleaner, we want to do it more efficiently, and cheaper than others have. Invention, ourn talent is execution. In a cloaking it up of something else. But he has become very good at selling that story. Interesting. We will continue to follow rocket internet going public in just a few days. Aaron ricadela , paul kedrosky, thank you both. Amazon prepares for the holidays, next, on bloomberg west. You can watch us streaming on your tablet, phone, bloomberg. Com, apple tv, and amazon fire tv. Welcome back to bloomberg west. Im emily chang. Amazon is hoping that this Holiday Season goes better than last year, which had delays with ups. To make sure packages are delivered on time, amazon built 30 moore film and centers 30 re the filament f ulfilment centers. Expanding amazon supply chain isnt all that jeff bezos has been up to. He has also been strengthening his personal portfolio. A invested in pro. Com, website for local Home Improvement contractors. They raised an additional 14 million in funding, with investors like andreessen horowitz, and read point ventures. Why is he backing a potential competitor to Amazon Local Services . We discussed with brad stone. Whats going on here . The Service Business plumbers, babysitters, interior lastators its the frontier in ecommerce. It is a huge business, may 1 trillion a year. Entrepreneurs have been trying to crack it for a decade. Airbnb, the fact that every professional has a smartphone, its possible for the first time. We are seeing lots of players not just pro. Com, but some tack thumbtack. Amazon may have interest here as well. , itsing in pro. Com optionally in backing some former amazon executives who are innovating in those spaces. These are former amazon executives who are doing this company. Where does this go . Its funny. They are up in seattle. They are taking seattle like approach. It is much like zillow. Data in opaqueer Market Real Estate in a way to enter into the real estate game. Pro. Com is the same thing. You go to the site and you can price out your home project. They are hoping to parlay that into connecting you with professionals. Iu will eventually know went to visit them in seattle. That they are in an old and a prize rentacar office. The we are saving money back is an amazon like thing. Every time the service gets used, they get to gather data. They know what it costs to paint a room of a certain size in the neighborhood around cleveland, ohio. Leg zillow, the data is in perfect right now. A painting job and wanted to do my living room. Me a value, and then i called the professional that they hooked me up with. He thought it would be higher. Early, they are facilitating the actual schedule of professionals. Redstone, thanks so much. We will be back with more bloomberg west. Its 26 minutes after the hour, which means bloomberg is on the markets. Im julie hyman. Take a look at stocks. We are seeing a rebound in shares after the biggest climb for the s p since july for yesterday. We are watching the Ripple Effect from bill gross. We are watching the mexican peso, and that is because gross called the peso a great currency. They said mexicos low levels of debt and stability of its target lending rate, we are seeing selling their today. You are watching bloomberg west, will refocus on innovation, technology, and the future of business. Im emily chang. Starboard values says it wants the web portal to explore accommodation with a well to unlock value. In a letter to the ceo, they said they should cut losses in its display ad business. Stop acquiring other companies, and instead discuss a deal with aol. Star board says a competition with aol to deliver cost cuts, and is much as 1 billion. Netanyahu or aol heavy neither yahoo or aol have responded to quests for comments. How will ali baba spend its pilot cash . There is speculation they will pour that money into advertising tech investments. Cory johnson is still with me. What do you think about that . That is the big question. Why are they seeing advertising results fall quarter after quarter, and is it a Technology Situation . Or maybe the whole thing is being done wrong. Josh stein, i know you have done a lot of at tech investments. What is going on there . Yahoo is a place a lot of people advertise. I dont really understand the technology beneath that. Yahoo has a highclass problem. They have been a Holding Company for alibaba. They have a business that is flat. They have to get that growth going. If you look at the market, you have search just number one and the biggest. Google dominates that. You have social, which is facebook and twitter. And you have brand, brand is big. But it is always underperforming. If you look up brand what do you mean . Display advertising. Things you want click through, the brands are trying to get your engagement and attention. Tv is the big medium for advertisements. The nfl by itself is like 6 billion. You are watching, you feel the residence of the brand. The internet has fallen down in delivering results. More was a publisher of people when i worked there years ago. She used to say it is fundamentally about belief. You have to believe that advertising works. You cant measure it. I agree. We are measuring the wrong things. People are measuring clicks and page views. Thats assuming that all audiences are the same on tv. They have viewers that are paying more attention, that are more engaged. We have a chemical chart beat, that. Is trying to measure chart beat is a company says that most of what we prove this fact in the advertising industry. Brands have gotten sick of banner ads. Manner ads were great if you put them in the right places. If you put them in front of audiences that are engaged in care about the content they are reading we know there is click bait articles. 10 shocking facts, people click on those all the time. But they bounce off. Versus an indepth article that people care about, thats worth something. Chart beat helps you find those audiences and lets you put the ads against that. What does chart beat disprove . My job is delegate capital. What they are showing is that its not that you can do successful brand advertisement, is that the capital has been misallocated. It has been spread like Peanut Butter all over everything. If you allocated correctly, you can create results. You can allocate it to good indepth contents. Thats right. The trick is knowing where people are engaging. They measure the entire audience in realtime it. They have been doing it for 80 of the major publishers on the web, including bloomberg. This is bad news for buzz feed. Its really bad news for demand media. They are getting lots of clicks, but buzz feed is trying to evolve its model to do more indepth. I think that is why. I think you are going to find the brands you not find sites like that very good for building the engagement they are looking for. I think performance advertising might work on the sites. Cola, ifork or you are cocacola, thats not where you want to advertise. I wonder if that changes the valuations of those companies . There is this notorious email that went around the New York Times, saying look at all the clicks buzz feed is getting. The New York Times needs to be more like buzz feed. The nature of journalism is changing to respond to those clicks. You were saying those are lowcalorie, or high calorie low food value sites. They are consuming time but not interests. It is not a zerosum game at. I get in the ads were they are supposed to be, you will see dollars flow from tv into the internet. I think the whole tie is going to grow as a result. It will make the whole time bigger. The top 10 most annoying things about cory johnson. [laughter] what are you talking about . Video . Out streaming i have a selfish interest in knowing how video can capture more brand advertising dollars. It has been historically difficult. People still want to put their money and television, even though that might not be where the ad dollars are. Video has its own unique set of challenges. Often testing video products. It is a different set of technology. Many of the same things hold true. You have to find where people engage, where they pay attention. If the person doesnt really see the ad and engage with the, it is wasted money. Next week there is a big ad conference in new york. Big companies will be there. All the people Walking Around the hallways, what will they be on about . Wrong about . They are continuing to plow their money to search and social. Thats great for driving traffic, but if you are a brand advertiser and in the real world, thats more than half, you want to focus on engagement and attention. Stein, thinks for joining us. We back with more of bloomberg west. Im emily chang. This is bloomberg west. Downote technology to shut cars is giving lenders more confidence. Cory johnson is more has more on this. Theyre called starter interrupt devices. Gps tracking devices that can prevent someone from starting their car if they stop making payments. Theyve sold more than 1. 5 million of these things. The Vice President shows me now joins me now via skype. Joining me also is hudson cook, partner nicole monroe. Talk to me about the legal ramifications of this technology. There are a few legal ramifications. Dont legally address whether or not you can use a starter interrupt device. Whenstates do is address you can repossess, or when you cant repossess. States that do address the use of a starter up device. For example, california and connecticut address whether or not you can use one. These devices are new. Legislatures havent dealt with them. They can be used legally within the confines of state law. Corrine, let me ask how his business . Business has been well. We have seen a change in the market place, we are seeing consumers really excited to have the device on. ,t gives them a better vehicle they are getting a better experience with the lender. They are getting a chance to actually drive a vehicle that they want. The device has become a lot more accepted within the industry as of lately. This also maybe makes them want to pay more. They know any given moment, your car could get shut down. The device has really helped change the way consumers are dealing with the lenders and dealers. It gives them an opportunity to actually work with the lender, and it is a tool for consumers now. It helps them create payment stability to purchase a more reliable vehicle. It often creates a positive step into rebuilding their credit in a positive loan environment. The consumers are excited that they are getting the opportunity to change things that have been difficult for them in the past. Nicole, i know we have seen a huge boom in subprime lending. And more and more luxury automobiles. Is there a particular shift in the industry towards a certain kind of car, or certain price of car for the subprime shut off devices . X the industry has really concentrated on used vehicles. These devices are typically used with respect to new vehicles. In devices can be used vehicles that range from 5000 to 15,000 5,000 to 50,000. They are lowerpriced vehicles then are sold by your typical franchise dealer. We have seen a spike in default rates. Subprime borrowers are not repaying their loans. Less than they were even a year ago. Mean your devices are going off a lot more . That you are digital read boeing repo men are flipping the switch and killing cars all over the place . It provides an opportunity for the consumer to work with the lender. They can call the lender and say they are struggling, can you work with me . Even during default, they can work with the consumer to get extra time to make a smaller payment, or a couple of days late. It allows them to change the way to commit occasion happens. The lender is not having to go out and repossess the vehicle. What they are doing is allowing the consumer to work with them, so that things can change. Them more opportunities to stay in a vehicle, to move things around, and make it a more positive experience for them. I dont know if defaulting on a loan can be a positive experience. We appreciate her time at. Thank you. A quick checkget on other stories miggy headlines right now with the bottom line anchor Mark Crumpton in new york. A fire at an air Traffic Control tower has caused major disruptions to chicago area flights. Flights at both ohare and midway airports were grounded earlier this morning, resulting in hundreds of cancellations area a local official says the fire was apparently intentionally set by an faa contractor. Their jeters derek jeters signoff was the mostwatched game. It received an average of 1. 2 5 million viewers, earning a rating of nearly 12 on the new york market. More new yorkers watch the giants beat the Washington Football Team than they did the baseball game. Larry ellison may be aearing up to buy an nb franchise. He may be a potential bidder for the atlanta hawks. Ellison, who is one the american cup sailing race, is worth an estimate of 42 billion. What is coming up on bottom line . We cover the decision to leave pimco, we would get analysis from dan wiener, ceo of advisor investments. We also examine the world of sports memorabilia. Career comingers to an end, how much will affect the price of items bearing his signature . I will see you at the top of the hour. Mark crumpton, we will see you in a few minutes. How much does it cost per year to charge new iphone . Thats next. You can watch us streaming on your tablet, phone, bloomberg. Com, apple tv, and amazon fire tv. Welcome back to bloomberg west. Charging your iphone will make a dent in your energy bill. . 47 a year to charge or iphone 6, and 50 do cents a year to charge an iphone six plus. Thats according to new research. How did the Company Figure out how much liquor city it takes to power the new iphone . Barry fisher is here with more. Corey is still with us as well. I was thinking that my charged faster, but maybe that was just perception. Study, and we drained the iphone 6 and six plus to 0 , and the we measured how much electricity through a power monitor it took to get to 100 . We extrapolated that for what it would take throughout the course of a year. We multiply that by the average retail price of electricity in the u. S. Thats around . 12 per kilowatt hour. Take . Long does it and how does that compare to the iphone 5 . The iphone 6 took around one hour and 50 minutes. We were using the 12 watt usb power adapter. We found a similarly for charging time for the iphone 5. Takes 2. 5 6 plus hours. It has a larger gas tank. Also makes you think about the Battery Charge for all kinds of stuff around your house. , and imnew house amazed at my power bill. I have a huge solar array in the house, and it is still not enough. I have a couple of tivos in the house, there are tvs all over the place. There are wine fridges. Are we seeing homes consume a lot more electricity, even though we have more energyefficient appliances because of all the tech going into the house . Biggest area of growth in home electricity consumption over the last three decades has been appliances and electronics. Now, as we move to these smaller, superefficient devices, we are seeing a reversal there. Compared to these larger devices that you mentioned, your desktop is using 50 times as much electricity as her iphone 6. One,xbox one, if you have is using 50 times as much electricity per year. And her largescreen tv is using 70 times as much of atrocity per year. Electricity per year. We are offloading a lot of the activity that we used to do on those clunky devices onto a superefficient device like this. Are we . My tv is still on all the time, my xbox is on when matt millers in town. I dont use my computer as much. I do what im doing more complex stuff. But my house is using more power, not less. Maybe your house. What the aggregate data tells us is that the majority of time we spent consuming Digital Media is now happening on mobile devices. A report came out early this year that safety percent of our consumption of Digital Media 60 of our Digital Media consumption was on smart phones rather than desktop devices. That even apple doing of the phone sizes are increasing, the time it takes doesnt change that much . I dont know much about the internal workings of their device. They can increase the Energy Density of the battery, and making the process for the phone more specific. Whatever theyre doing, it is a good thing. It is good for the environment. It is good for consumers. It, itght not realize uses such a small amount electricity. But consumers do want to save energy. Here . There a time shift one of the biggest issues in the power grid is moving to the consumption of lots of energy, to more desperate times of the day. One of the Biggest Challenges faced by Utility Companies is peak electricity demand. Hot summer afternoons. It really puts a lot of stress on the grid for every extra plug load that you are using. What a power has done his work for utilities to encourage consumers to use larger city during offbeat times. Unplug your devices, manager thermostat better, manage your thermostat better. It makes me feel better, when i plug it in a versatile night i just charging this thing all the time it. Barry fischer , thanks for sharing that with us. Ts time for the bwest byte 95 is the number. Thunders woman city kevin durant rating. Thundersahoma city kevin durant rating. We learned last night, when he plays the game, he doesnt play with himself. He plays with lebron james at 99. You play as you . That is kind of arrogance. [laughter] [applause] no, you have to play as you. Who do you play as . Everybody. Just tell me. Ok, lebron. [laughter] so, lebron doesnt get the m. V. P. M. V. P. Does get the playing as him in this very successful game. I love it. Lebron has a lot of other things. Cory johnson, thank you. And thank you for watching this edition of bloomberg west. You can watch us streaming on your tablet, phone, bloomberg. Com, apple tv, and amazon fire tv. From bloomberg World Headquarters in new york, i am Mark Crumpton and this is a boat bottom line. Today, pimco cofounder bill gross leaves the firm were janus capital. The British Parliament approves airstrikes against Islamic State militants. And we will look at the price tag for derek jeter memorabilia. In the United States and those joining us from around the world, welcome. We have full coverage of the stocks and storiesin