Dayal news 24 hours a powered by our 2400 journalists in more than 150 news bureaus around the world. From bloombergs newsroom in new york, im Mark Crumpton. Bloomberg west is next. Cory im cory johnson in for emily chang. Half billion dollar injection into the Saudi Sovereign Wealth Fund the biggest injection ever. But this does this change the Ride Hailing Company for real. And we will take you through mary meekers predictions for internet trends 2016. Mark zuckerberg holds a live q a from space. We will tell you how to nasa achieved stratospheric success in social media. Turned to the middle east for its biggest investment ever, the Company Announcing a 3. 5 ilion dollar raise as part of their most recent funding round, keeping the valuation at 62. 5 billion. The Saudi Wealth Fund managing director will take a seat on the board as part of the deal. Is shocking. Are these guys on a permanent fundraising scheme here . They just keep raising money and keep raising money. Guest it certainly feels like that. Is 11balance sheet billion dollars 9. 5 billion cash on hand. They are flush with money from the private art gets, raising from everyone under the sun from google to tbg and now we have these huge sovereign wealth funds. Uber,ne is investing in it seems. Im going to call the valuation of seemly high. It stays at that even though it is a subsequent round. Whose equity is it selling at that point mark at that point . Guest they were going to raise 2. 1 billion dollars and then said i guess we can get a bunch more money and keep the same valuation, so i think you are right to Pay Attention to that. It certainly shows they are reaching a ceiling when it comes to what people will pay to invest right now. Cory i always say its not a bad sign for that company. Expensiveis an valuation. For any company. Certainly not profitable, trying to be profitable in the United States but competing aggressively with lift. With lyft. Cory a huge story and we are glad to have you on. Tanking after hours on the back of an earnings of 30 yearsales over year. If you believe the adjusted numbers, the problem is billing. Baffled analysts who expected growth of over 20 . Sales force has agreed to buy demand where. Down slightly on the news of the acquisition. Byyre expected to increase 20 billion. Analysts joins us right now to break it down. Likenotion of it seems 300 million should be added to the top line as the projected run rate. I think there are shot there are some right downs and integration risks, but when you think about service marketing, you want to transact and you get the email about the sports jacket. Cory did i show you the lining . Its orange. Like anf you would orange tie to go with it, you can click it and hit transact. We think this is a smart move. Its the largest deal ever. They paid,s of what they have paid higher multiples but its not cheap. Clearly, theres some risk here. Strategically, it fits in. They dont have any overlapping functionality and many of their top Customers Using the platform today are demand where customers. Cory may be the notion this is only going to be 170 million is sandbagging it because if the company is on a 300 million run rate, all of those people selling this thing presumably off the bat, they should get more than 300 million. Guest exactly. The demand acquisition, one thing you can look forward to is salesforce being able to bundle this solution along with the and servicesud cloud. Theres a lot of leverage they can get because they have the best salesforce in the cloud and its going to be much more than 300 million. Deal in terms of expanding into the cloud. I took a whole day off yesterday and i miss a deal. Theres in seven over the last few weeks. This suggests maybe there was not a known Competitive Bidding situation. They just thought if we dont take it someone else will. Look e believe if you from the aspect of of software m a, it has picked up. The ipo window is somewhat shut. Weve only seen one or two deals this far and it wasnt met with a bang. You are seeing the talent of the tech psycho tech cycle. Typically you see a cleanup now they are chasing opportunities and consolidation makes sense. Oracle anden vertically aligned itself this was vertically aligned toward retail, so we think thats going to continue. We expect m a to ramp materially and the multiples have an stepping up. I think everyone was surprised they were bought or five times sales. Cory if you look at the m a numbers, its going out seven or eight times sales. Billion for a moneylosing business doing 300 million in revenues those are unforgiving numbers even though there are a lot of deals happening here. What you arek seeing is once these smaller Cloud Companies are disrupted, they are moving out of the disruptive phase and they are not profitable. They are at a point where the best strategy is to exit out or they have to be profitable, which is unlikely. There is some desperation in terms of exit and they were probably the early ones. Now that demand where has set the bar high, you can expect a higher multiple going forward. Cory it is breathtaking to see. Good to see. Thanks a lot. Softbank has plans to sell 7. 9 billion of its stake in alibaba. That may be the beginning of a bigger shakeup. The softbank president is examining several possible sales to strengthen the balance sheet. Super cell move could value the game maker 5 billion. The plannedports alibaba shares sale could by yahoo japan. They are also talking about a person close to an unidentified investment bank. Playbook, this is the Silicon Valley runs. We will look at what we see in that playbook. Facebook will go to the ends of the earth and beyond to promote live video. A live run cast from the International Space station coming up. Cory russia has rested 50 suspected members of a hacker ring. The countrys biggest ever crackdown on financial hackers according to the interior ministry. They used malware to infect computers to launch 18 targeted attacks. This comes at a time when banks are falling victim to cyber attacks. Now to the anticipated fly deck in Silicon Valley she unveiled her latest internet Trends Report full of insight anemic growth of Internet Users and stalled growth in a smart phone market. She was an analyst at Morgan Stanley but every year, theres more and more important to look at the big takeaways. I love this and i have from the very start. Shes to come to our Industry Standard conference and now shes sharing it of a different crowd. Some of the things they are talking about are very shocking, not the least of which are slow and grow rates on the internet. Guest one of the reasons she points to and one reason to love this report so much is she gets up out of the every day and goes back 20, 30, 40, 50 years and points to the fact that china has been on this massive rolling boom. It has been 21 trillion of Capital Growth in the past that years, more than we have done the previous 30. Theres been a massive runup in china and its starting to taper off and as the results, the numbers are coming down. Cory she basically says developed markets are developed. Guest except for india. It still room for growth. It was the one country that did see some positive tick in internet uses internet usage. Its the second largest market just behind china. Passing the United States. Cory a big part of that is mobile construction and whats happening in mobile. Most of these users will never see a desktop. They are adding numbers but without china, theres not much left sorry, without india it would be flat. One thing to keep in mind indians love that their cheap phones. If you look at the average smart down price in india, its 120. Vendors likehe apple and samsung, china was a much richer market. You were referring about the slowdown in china lets put it into context. Fiveandahalf plus years ago, that was a market growing 120 . The im sorry, and 2015, the unit growth in china was about 1. 5 . Do toseen a rapid flow saturation. All eyes have shifted to india where the unit rose opportunity is high but the revenue opportunity is going to be lower because we are talking about the popularity of those lower price phones. Cory in china when that market was at to take off, apple huge success in china. I think thats fair. They dont really have a lot of 4g networks there, so those 4g networks we love so much, as they begin to get belt out nationwide, they will need 4g phones to leverage the power of those networks and that means paying for a higherpriced zone. Of phones, i got mad at my series today. And my ecowas my best friend. She spent some time talking about that. Guest that was a real highlight , that Voice Recognition is Getting Better and better as accuracy improves and latency decreases, then peoples excitement and willingness to use it accelerates as well. Cory she talked about how many people use Voice Recognition. Guest it is up pretty significantly. That as the components improve and the software voice you seeion gets better, more people using them in the home and in the car and not just , which 20 offun the people interviewed said that, but because its more convenient and accurate and safer when you are driving. My kids use it to hear riddles but im shouting out my Shopping List and going through my empty refrigerator. Much. You very great stuff. Back with we will be the latest developments in the first major summit the big summit in paris. Were going to find out how they are using technology to do it. Cory to a story we have been following microsoft sold nearly 1500 patents to xiaomi. They aim to expand into overseas market. They cover wireless indications and multimedia technology. And epaulets working toward a historic climate agreement and harris, now countries will put their money where their mouth is. They rollout cleantech to make the best use to scale. This is a tech story, i believe. Andes old tech and coal nuclear. Guest its a tech story a nuclear story, its a mix of all those things. Cory part of it is presenting on a letter saying this is here ready to use. Guest one of the overall messages was about the cost of this today. Certainly not everywhere, all the time but in a number of places for thats one of the messages we are trying to perpetuate. Particularly in lesser developed countries. You do renewables once you get to be richer. Cory i do a day learning a daily radio show and there is radiootion that because is older, it is bigger. You dont have to start with one technology and go to the next one. This notion of starting with new technology really changes the game. Think the newer technologies we are seeing have the potential to be revolutionary not just in terms of leaner energy but changing the way we receive the energy. If you have a system on your roof as we do in this building, you have a certain degree of health sufficiency. You are producing your own energy and at its you in the driver seat. Cory what are the newest technologies important to achieving these goals is solar is old . But it isar is old new. You see a lot of excitement around them in the thing that always seems to work is economy of scale. Andave seen it in solar were starting to see it in lithiumion batteries. Economies of scale, im a big believer. Betsnt to take longterm but the things that we see work have then scale. Cory is this a story primarily for develop nations or third world nations. Guest it has to be a story for both of we are going to think about climate change. The growth is coming from lesser developed countries. In a number of cases, the least developed cases pay the most for electricity and thats good news for renewables because that means renewables can be more cost competitive. Puttingm thinking of rooftop panels on homes in tanzania. It is a trip what they are doing their. They are no longer burning kerosene. Guest beyond that, this tradition of solar lanterns. You can do that instead of earning a candle or burning Something Else in your house. Weve tracked about 100 million of these systems that will get distributed in the next year or two. Super small systems. Cory go big or go home or go extra small. Tune in tomorrow for more coverage. On thursday, we will talk to u. S. Energy secretary. Video up next, with will the more important than mobile . If you like bloomberg news, check us out on the radio. You can hear it on the Bloomberg Radio app and on station 119. Bloomberg west next. Bloomberg west continues next. Mark im Mark Crumpton and you are watching bloomberg west. Traffic headed back into the Canadian Oil Sands city of fort make very with residents returning to see what is left. The fire destroyed 2400 structures leading to the evacuation of more than 80,000 residents. Donald trump tops Hillary Clinton on honesty a new National Hole shows 30 of voters find mr. Trump more honest than most politicians compared to 15 for mrs. Clinton. The fda issued new voluntary goals. Reduction the pressure is on restaurants to cut back on sodium and processed foods. The worlds Longest Railway tunnel is officially open. Foreign dignitaries help to inaugurate the 35 mile long tunnel running beneath this with owl. The tunnel is more than one and a half miles underground and the this point. It took 17 years to build at a cost of 12. The tunnel is expected to cut travel time, ease traffic and reduce air pollution. Global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. From bloomberg world headquarters, im mark hampton. It just after 6 30 here in new york. Eight 30 in sydney. Im joined by paul allen with a look at the markets. Paul new zealand the only market open right now and its looking pretty flat. Flat may turn out to be the theme of the day across the asiapacific. A very slight decline forecast on the nikkei. In japan, we will watch for the ongoing impact of and stay positive decision to delay the introduction of a sales sales tax. It really draghi regional index down with a. It was not unexpected that shows a discouraging signal about prospects in japan. We are also keeping an eye on softbank. They sold off a large chunk of their Alibaba Holdings and sources suggest they may not be done just yet. See to get rid of other assets, including gaming assets. Overnightre price dip. We seem big miners declining in the london trade. It might we are expecting retail sales following on from wednesday. Cory quarter after quarter, face book success has created billions in free cash flow. Earlier, the bp of Global Marketing set down with a team at bloomberg go and ask if he shift to a lead a big impact on traditional companies. Guest companies that had been a ang had been around for long time have to either acquire a disruptor to inject that into their system, have a venture fund that in it or invest in a parallel organization or rewire their culture, which is the hardest thing to do. Facebook has an open about its own struggle as the mobile dynamic shifted. How are you using that to do what you are saying there . Convincing companies of the profound cultural change they need to undergo. Guest we live this disruption ourselves. We had no mobile revenue and our mobile app was built on html five and it wasnt particularly good. Handsk held a company all to not only be mobile first mobile best and drove mobile change quickly. Team showed him a desktop mockup and he ended the meeting. Until people came back in with mobile first, there was no meeting to do product reviews. That sent a message quickly and we retrain all of our engineers and we rebuilt our mobile app and now 80 of our revenue is based on mobile. We are continuing to go through transitions. Weve seen visual communications take off which is why we acquired instagram. We acquired whatsapp and pulled messenger out and now have a lien on whatsapp because of the inflow of what we were seeing people communicating on business. We are seeing Consumer Behavior evolving and facebook today looks entirely different than facebook 2012. Next as much as mobile has been a profound disruptor, live video could be even more of a disruptor going forward. Atl us what you are looking in terms of content and where you see video going. Guest we believe video can be even more this rough than mobile. We have had a 40 increase in video consumption over the last months. Telling stories through sight, sound and motion. One product we launched his growing quickly, allowing businesses to communicate their story in everything from three seconds too much longer format. A wonderful piece that lets people have emotional moments in their news feed and perhaps they would need a moment. It was seen by and watched or over two minutes. Typically, mobile is a different consuming factor and consumers will watch shorter forms with sound off. The facebook bp of Global Marketing on bloomberg. My guess is the author of a new he joinshere it is us now. There is this thing in Silicon Valley. You have to have a platform. When you look at Companies Like black, its not just a car healing application. Maybe it is food delivery incident trying to make a platform out of it, how do you explain it in your book . Guest software alone is a commodity. It enough to have a great mobile app. Its about having the underlying Business Model. Theres a Business Model and that is the biggest this rupture in the economic lance and above the 20th century. Your s a disruptor mobile is a disrupt your the thing underlying this disruptions are the platforms. We talk about consumers these days but it is looking at producers and how do you harness is connection between independent third parties driving avalue like car for uber or posting a video to youtube and the platforms that are accelerating that. Apps are important but they are just one piece of the overall transaction. Cory its interesting because not everything can be a platform. An app that calls a problem is a good ring to have. About harnessing the broader ecosystem. To see Companies Like you d 3. 5er which just raise million. Facebook and whatsapp are their own platforms. All the Biggest Tech Companies today experience this biggest model. They have apps and websites and they are investing in vr and other types of hardware, but the underlying model they have is this form Business Model. Cory you called this book modern monopolies. Hought this knucklehead please explain to me why im a knucklehead and why im wrong. Guest i wont hold it against you. As more and more people read the book, they will understand our way of you. Connotations is standard oil, you own the supply chain. All of the assets and allow them to consume from your business. Platforms dont own their own supply chain. They have a network of independent reducers. We try to explain how this Business Model is fundamentally business from linear models and a lot of the old negative connotations associated with monopolies are not applicable anymore. Carolyn was talking about gm getting into mobile and investing in other platform companies. Yfthave seen platforms like l receive investments. They are receiving investments from these linear entities and overtime, people will start to understand is here and is the predominant Business Model of the 20th century of the 21st century. Let me stop you there. For a long time, you cannot have cordless phones because mob bell controlled the technology with its monopoly. Thats one of thousands of examples of things that could not happen because of that monopoly. Doesnt the same notion of rifling innovation happen with monopolies whether it is facebook controlling social media or google controlling the ecommerce experience or increasingly amazon. It keeps innovation from happening. Guest it is a traditional argument at historically monopolies are bad because they stifle innovation over the longterm. The element that you see as you study these norms, these platforms, for them to reach this modern monopoly status, it takes many years to get to that point. Cory does it . To your example of uber, uber has come into existence since we have been doing this show and its not even six years old. Raised 3. 5 billion dollars today but the people the benefit our drivers and customers because the way they are going to work to shut out lyft, they are losing a billion dollars year in china because they are said rising how you. Everyone has to overcome the chicken and egg problem. For the years they are in platform war mode, consumers and users, the users ultimately win. Once they reach the napoli status, what you start to see is there is another evolution of technology. Theres mobile now but there will be vr in the future in these monopolies dont maintain that status for decades. Google searches on the decline now. If they have not figured out android, they would be an much more precarious situation and they are today. Cory far more thoughtful stuff in this book. Check it out. Coming up, we sit down with the founders of a new Venture Capital firm that has no plans to chase down the new Venture Capital unicorn. Cory new Venture Capital firms are a rare sight in new firms try to rise above. But a new Venture Capital firm is trying to bump the narrative and raise 120 million, going small and not targeting the usual unicorns. The founders are joining me now. Glad to have both of you here. What are you trying to do . Guest 120 million. The Million Dollars per partner. We are a very early stage interfund. Because we have 120 million, we can stay the course on the companys. It is unlikely we will start with series b. Cory knowing that you have follow on to come. We do the basic idea is between two and four companies per partner per year. That comes down to about 6 million per average. That allows us to do about 18 companies. It not a high velocity, but we go deep. Cory how long are you going to be in these investments . Plus historically, 60 investments, our average holding time has been three years. You guys started doing your own investments and just thought lets make it a business . Two firms,rked at excellentpital with mentors there. But because we are at the point of origin at the early stage of company creation, we plan for a four to eight year time horizon. Do you feel you have industry expertise in certain areas . Guest its one of the cornerstones of our practice. Weve been founders of companies in the past. We have worked in startups for our adult lives. I was one of the cofounders of road runner and he has founded software companies. Guest i founded a company and chip design and a company that was acquired by cadence. Company, magma, went public in 2001. Two ipos, there were here and i was the founder in two of them. Cory theres a pretty unique focus in Semi Conductor design. Typically what has ended up happening is since 98, ive done 30 venture startups. Like0 are companies groupon and in different areas of software. Cory geographically, you are in the bay area. Why . Home. Its our its one of the great crucibles is anovation and there density of talented and motivated people who want to make a difference. We are quite fortunate. Here imrs are constantly aware on numbered radio and on this show, every theyis coming to us and say we are the Silicon Valley of the northeast or the Silicon Valley of the middle east. Guest we have both invested in israel and india and there are parked it there are pockets of places where they do innovation but nothing comes close to the valley and some of the newer areas like analytics. Our far ahead of the rest of the world. Cory thank you very much. Markg up, houston, put zuckerberg on the line. Facebook and the live stream with the International Space station. How nasa has an out of this world social media reggie. Social media strategy. Cory facebook posts its first control to ground the questionsg were like what do you do for fun and what language do you speak to each other came from facebook users here on earth. It is the real experience of launching in a soyuz rocket and seeing the first orbit of planet earth, seeing the moonrise and run rise. How beautiful the planet is from up here. Nasa has had amazing efforts and successes in social media and any company could take a lesson. You guys have done some powerful stuff in social media that has worked. What have you done and why have you done it . We are justnk sharing whats going on out there. We have these incredible images in this incredible story to tell about how we are exploring and looking at other planets and what going on in the universe and what is going on here on earth. Being able to share that with the public is an incredible story to tell and we are able to connect in a way using social media and that is accessed. The numbers are through the roof with your instagram stuff and facebook stuff, but does it reflect nasa mission from large to small, from single events to hundreds of events to discover what is going on in the universe . Guest right now, social media is giving a voice to the Many Missions overshadowed by some of our other programs. We are in this renaissance where everyone can share the stories with their followers and people can be embedded into the science Team Investigating with the Hubble Telescope or the people building our next great telescope out there. When i was a about kid and the Apollo Missions and watching that the on tv, this is the way media is consumed. We put up some numbers showing that your twitter account has more followers than beyonce or leonardo dicaprio. We are studying stars of a different kind here. Cory come on, really . Guest when i was a kid, we have that wonderment what you want to be when you grow up . An astronaut. To spark that in people who are adults and inspiring the next generation of kids to want to go and explore and be a part of this, that is what social media connects with on a very visceral level, that we have this stunning, visually compelling imagery and why would we not want to connect out there any crowds have responded accordingly. Cory i would imagine there are lessons at every social media manager could take from your approach. This be applied to every business out there . Definitely. Not every business has a rocket ship or astronauts, but you do have fans out there forming a Community Around your product. If you dont tap into that, they are going to talk about you regardless. If we are able to connect in a way that lets the Community Come together and realize they are not alone, that really enables that conversation to happen and for everyone to be a part of it. It might be a product or something going on, being able to bring people together is how you can use social media for maximum effect. Instagram, the final frontier. We appreciate it. Time to find out who is having the rest they ever peter thiel. His lawsuit will not cost him his spot on the facebook board. Sheryl sandberg said heater did what he did on his own, not as a facebook member. We did not know about it. That does it for this it issue of lumber request. Of bloomberge west. Announcer from our studios in new york city, this is charlie rose. We begin this evening with politics and an open letter to state democrats, governor jerry brown of california endorsed Hillary Clinton for president ahead of this state primary. Donald trump held a News Conference to address his pledge donations to veterans groups. Tremendousaised a amount of money, almost 6 billion and more money will come in i believe over the next little while. I have raised him