Transcripts For BLOOMBERG Bloomberg West 20160912

Am mark crumpton. This is bloomberg. Bloomberg west does next. ; this is bloomberg west. Coming up, 22 billion wifes out wipeout samsung us market cap. The company promotes a young leader. And Self Driving Car Technology back in the spotlight. The Biggest Companies are struggling to chart the path to market. Facebook messenger releases new tools round box and businesses. We will hear from the head of messaging about his vision for the service. First to the lead. Tesla shares rising after elon musk reveals updates to the electric cars autopilot feature. It has been under fire after a driver was killed when his car collided with a truck on a florida highway. He was using the autopilot. Eature elon musk says these updates would have saved this drivers life. How so . Are having some technical difficulties. We will get back to her. I want to move onto another story. Lending club has hired a former Washington Mutual cfo to become its new cfo new financial officer. Lending club the founder resigned in may. Weaknesses were revealed in the companys controls. In loans an uptick chargeoff sending shares tumbling. Now back to tesla. Dana hall in the newsroom with us right now. Elon musk says the changes could savedmproved the is this drivers life. How so . Dana what what hesd saying now is the radar is good enough, it should have been able to identify a large object ike the truck that was in the path of the driver that was killed. Emily how does this fit into the future of tesla and what else elon musk wants to do when it comes to economy . Dana more than 90,000 cars are driving every day with autopilot and tesla says it is getting 1,000,000. 5 a million and a half data. Say what you will that musk in beta testing, cars are learning from each other. How are investors digesting these updates, there has been a lot of news coming out of tesla along with the. Erger wit investors how are digesting this . Dana shares rose a little bit because tesla is proving it can make improvements to the technology and they will continue to do so. The fleet learning is an aspect that no one else really has and the [inaudible] they remind us and difference in strategy between elon musk and google which is going after fully economist cars. Ssed when they have tested google said when they have tested self driving features it is too confusing whereas elon musk says the features are the future. Dana everyone, the goal of everyone is full of ptolemy. The difference is strategy, how do you get to market. It is better to roll out these features incrementally over time and continue to improve them than to wait for full autonomy. Tesla maintains that despite the despite the death in florida at the technology is saving lives and helping people to avoid accidents. It is a question of strategy and the time frame but everyone is going for full economy as the endgame. Emily thank you so much for that update. Still ahead, shares of samsung lunging. Wiping out nearly 22 billion of market value. How some son is trying to turn around samsung is trying to turn around its prices. As it down with the head of Facebook Messaging next. I sit down with the head of Facebook Messaging next. Emily Facebook Messenger has over a billion users and 300 million using its audio and video calling features every month. All this is the Company Rolls out a new platform with better tools for box and businesses including easier ways to pay and check out when it comes to ecommerce. The vicen with president of messaging and asked about the expansion of ai and more. We think about this, you can target the right demographic users and we have messengers that intends completion. We plan to build more bridges between those two. With a new release you can do multiple things like you can have automated exchanges or human powered exchanges inside of the thread and as identity, now transactional capabilities you cancan draw ui that use to render the right ui. Be better than enter conversational interfaces. With that were going to have really good experiences. Less ore use sms amazong less. Amazon less. There is so many sellers out there and merchants and visitors to do not have the benefit of the potential that is stored with your identity. For all of the other players out there it is hard to go from intent creation to or or to have people download their app. In france there is match. Com that has a brand there. You have done a asheville tailgating experience inside messenger and they are seeing a 2x conversion. In india there is another bot bill payingare of 10x conversion. Smsy must people still use for messaging. How do you see the balance tipping . What we are seeing is in developed markets and markets where messenger is an app that people use a lot to message like the u. S. And canada, western europe, what were seeing is gradually more people are using textingr and the use west. Just because now they can find almost everyone they want to talk to on messenger they do not need to have a phone number two fine them. A name is enough. You have these great abilities like live video. You can even start streaming without the other person responding. And so you have more capabilities on messenger that makes it more differentiated and better to communicate not only oneonone but also in groups and with businesses and services. Emily you are doing more ecommerce. What point, are we at the point where you are taking a cut of the revenue, is facebook making money . Facebook is making you thet of selling newsfeed that takes you to messenger. It enables advertisers to buy an ad that will get you in a thread with a business in messenger. We are creating more demand and as we build the ecosystem on messenger we will create more supply on messenger. That is later. For now we are focused on creating that ecosystem. Are the business is advertising and we believe if we can help businesses grow their business that is great. That is what we will focus on and there is more value for everyone there. Emily when it comes to bots you have a new way to share with friends. You have any concerns about this turning into a spammy experience . We have clear rules if you are a developer and we have great control for people to block or mute conversations they do not want to get notified. We feel pretty good about that. Emily will there be a bot store . A hotont like to call it store. What we want is fluid conversations and experiences. When we add more Discovery Services to enable brands to get ,heir experience like surface right now we feel that we have the greatest surface on earth discovery which is newsfeed and we are going to leverage that great product to basically bring people to the experience. Emily that was david marcus head of Facebook Messenger. We will have more on the future on the ecommerce agenda. We will hear from the Vice President. Plungings of samsung to the lowest levels in two months wiping out 22 billion of market value in todays. South koreas Largest Company has issued a massive recall of its Flagship Smartphone mother note 72 it due to an issue of the phone catching fire. Samsung has told customers to stop using it. Nominated to the board. Runas been helping to samsung since his father suffered a heart attack two years ago. Me, cory johnson. In charge of the company. His father is very ill. What do you make of this latest move at this point in time . I thinkthis is this is a key move to advance him. He has been running the company in the background. Given this crisis he is out front, he is the public face of the company which is important to calm the ship and give everyone confidence. Samsung canund see this through. Emily he is looked at as a more global leader, he speaks english, he is more out there, tell us more. He is much homer. His father is famous for having smashed a lot of product to tell his employees they need to do better. He is much more calm and focused driven and he will work well with people in the industry. He is known to have good ties with apple. He is the type of leader who will take and steady the ship through the storm and be able to take and find the focus Going Forward. Lets talk about the market reaction. It has not been good for samsung. The future is uncertain as to whether they will be able to manage this recall bit. Ly. Appropriately. Corey the market cap is down 22 billion. You could say this is an overreaction. What is interesting about this thing is you could look at the way the company works. Imagine the problems could spill over. We have reports that airplanes, white attendance are being told to tell people turn your you on an take that note 7 airplane. Do you trust a Flight Attendant to know the difference . Samsunghat about all phones . Have got this agreement, the stuff in the paint, that is selling phones for samsung. The pink stuff is important. It is the profits for the phone business. Even though phones are all of their business it is much of the prophet situation. It is a big issue. While they dominate in terms of that is iphone revenue. You can see that almost all the time my phone revenues are greater than samsung revenues. ,pple is getting more profits although simpson does not release those numbers. We have a company that is highly reliant on their devices, not massively profitable. Andave seen their lead slip that is imperiled by missing the product cycle. What do you see is the best and worst case for samsung . That would be people become an confident not confident they can take their phones on a plane. In salesvenues drop dropped. The best Case Scenario is that essentially this replacement plan they have in place where in a week the phones will be out, the batteries are fixed, everyone regains confidence, they view samsung as a company that had one problem but they worked through it and worked with their customers and compensated them and every one moves on. In terms of broader competition this is an important point for them. They had taken and had a successful launch of the galaxy 7. Essentially a downturn. It is important to maintain constant customer confidence. You could see continued slippage especially with the new iphone seven coming out. The one event as they may have is advantage they may have is headphones. Ug in hurt samsung as they move forward. Every iphone seven will ship with a plug so you can use your headphones as long as you want. , chubb and opening do you think this leaves for apple . Corey that is a great question. Anotherthe switch to company will be easier. They will cell phones and lose money on every sale. Android operating system is not greatly differentiated the risk of people shifting from samsung to Something Else is substantial and it is a bigger worry. That iphone notion switchers can stay on the iphone through multiple generations, that is a big problem. Emily they are accused of great agreeing to not poach each others employees, that has held down wages. Suddenly not unusual. We have heard of google and apple what is your take . Corey it shows you how weak workers are across the world. Is there anything that makes this different than some of the antipoaching agreements we have seen in the past . The only caveat is they look into this, because they are Creative Companies there is this culture of lifetime employment and so a lot of sought samsung employees might not think to cross over to the other side. This might be the one factor that is somewhat different in this case. Emily always great to have you with us. As well as our editor at large cory johnson. Thank you. Still to come, two startups with skyhigh valuations. Ceo joins me later this hour as Fantasy Sports hits peak season. Salesforce ceo joins us for an exclusive interview. Trending Business Venture capital firm was known as innovation works. Saidoke to him and he chinese under printers are like wolves in terms of competition. I asked about the growing trend of investors flowing into the ch companies. te there is a lot of money in china because secondary markets, stock markets and real estate are not such great markets as they used to be. So people who made a lot of money are finding a good place to invest. Secondly the chinese tech valuation is at least 2x the american tech valuation. You take to comparable companies, the Chinese Company will be 2x more expensive. It is natural for investors to say lets go bargainhunting in the u. S. Wanty s innovation they to add to their portfolio. And another story we are unveiling aotera of line of buses capable traveling 50 miles on a single charge. The industry will have to buy 50,000 buses over the next six years as the nations coalfired plants close. Transportation is likely to surpass electricity production as the nations largest source of greenhouse gases. It is already chewing killed when it where it makes up 37 of emissions. Still ahead, pittsburgh get ready. Ubers self driving volvos will hit the street. Google whyite google does not have a pass to market their vehicles. Bloomberg. Hey hows it going, hotcakes . Hotcakes. This place has hotcakes. So why arent they selling like hotcakes . With comcast Business Internet and wifi pro, they could be. Just add a customized message to your wifi pro splash page and youll reach your customers where their eyes are already on their devices. Order up. Its more than just wifi, it can help grow your business. You dont see that every day. Introducing wifi pro, wifi that helps grow your business. Comcast business. Built for business. Mark im mark crumpton. Youre watching bloomberg west. Lets begin with first word news. Donald trump again criticized Hillary Clinton for calling his supporters, quote, a basket of deplorables during a fundraiser last week. Mr. Trump in her lengthy planned remarks, it was perhaps the most significant attack by a major Party President ial nominee. Total disrespect for the people of our country. Trump said such comments should disqualify clinton from seeking the presidency. The white house says president obama plans on vetoing legislation that would allow families of september 11 victims to sue the government of saudi arabia for any potential alleged involvement. The White House Press secretary, josh earnest, says other countries could use the legislation as president precedent. Congress could override the president s veto for the First Time Since hes been in office. That country will review the policy of letting u. S. Troops fight muslim groups on the island of mindanao. The brazilian government has ratified its participation in the Paris Agreement on climate change. Ts a significant step for latin americas biggest polluter that could encourage other nations to do the same. The agreement takes effect once that the five countries representing at least 55 once 55 countries representing at least 55 of the global emissions sign on. Good morning. Paul good morning, mark. What a difference a day makes. Take a look at new zealand, up and running for 30 minutes on tuesday, quite the opposite to what we had yesterday. It was one of the worst selloffs we had seen. This morning, up 6 after that rebound in u. S. Stocks. A mixed picture for the nikkei at the moment, but we are expecting strong gains on the asx futures. A lot of data out of china today. Industrial production is out. To 6. 2expected to rise percent in august. Retail sales expected to hold steady at 10. 2 . It will be worth watching samsung shares in south korea today as well. Shares are off 11 since last friday, when the scandal over the galaxy note 7 again to deepen. The son of the ailing chairman has been nominated to the board. It looks like samsung is seeking to strengthen succession plans. Im paul allen for bloomberg tv in sydney, australia. This is bloomberg west. Im emily chang. It is time to greet the week and dive into the tech stories that are front and center in the dates a days ahead. It could be any day that we see ubers self driving volvo hit the streets of pittsburgh. The pilot comes at a time of uncertainty for googles car unit, one of the earliest efforts in the space. Googles project has seen slow and executive departures. It appears there is a risk of falling behind Companies Like huber and tesla uber and tesla. Joining me our bloomberg reporters who cover self driving cars and technology. Google has lost the head of the that person has now been replaced. Talk to us about the struggles that google is having. One of my sources called it a sevenyear itch thats been going for about seven and a half years. They dont have a major partner to make cars and to put their software in. They dont have a popular ridesharing app, which is another way to get into this. Theres not a lot of sign they are breaking through from a Research Projects project to a business. Have athey dont partner, they dont have a salesforce, they dont have a strategy, at least as far as we know. Chrysler thats a start. Its not actually having an autonomous 8 00 on the road, as uber is doing. Tesla has tens of thousands of vehicles out on the road. I was speaking with someone a few weeks ago. They reckon that tesla was gathering at least one miles of driver data every day one million miles of driver data every day. Google says it has gathered 1. 8 million miles over the lifespan of its project. Such a difference. Emily its still an clear who is going to own the relationship with the customer and how this is going to work. Is it going to be google . Is it going to be Fiat Chrysler . Its really confusing. App is going waze to start a pretty limited ridesharing test in san francisco. That might be the way to do it, but its really only in one or two cities at the moment. One of googles investors the speculation was uber would be the way to go, but uber is doing their own technology now. Emily i wonder how surprising it is for people in the industry that uber post a bunch of engineers from Carnegie Mellon and managed, in a short span of time, to get their first there first. Alistair building a car is very complex, like 30,000 components. Int makes smartphone pale comparison. What these companies are doing, google, uber, even apple eventually the software stuff that goes on top of that, which is perhaps less intensive from a manpower perspective, thats where the value is going to be created, is in the software. The carmakers dont want to let all the value go to these new entrants and they are just left as metal bashers. They dont they have incentive not to let google in and gather that value creation. Few weeks reported a back that apple is struggling with its own car unit. They are closing departments. They are laying people off. Whats going on . People do not know or apple does not quite know how its going to make money from this business. Where are they going to bring the added value . The new head of the project, an apple veteran, as we wrote three or four weeks ago, he is reviewing the project to focus on building a platform a software platform. Autonomous driving, entertainment capabilities, that sort of thing. They think the hardware stuff could be done more easily by other people. Its more of a commodity. Confirmedle has never they are working on a car. We dont even know. Alistair uber is maybe starting a pretty limited service in a few days time, maybe. But you could argue that those types of companies are just about to find out how hard this type of technology is. Google has been doing it for a long time. They dont have a partner, but its a very hard thing to do. Emily right. And its certainly not unlike apple to be last to market. Wait until everybody else makes the mistakes, then make it better than anybody else. Another story we are watching, there may be more regulations on the way for Tech Companies operating in europe. Services like skype and whatsapp may be asked to comply with regulations skype might be told to allow customers to receive calls from regular phones and even allow those customers to keep numbers if they switch to different providers. They have to have Emergency Calling Services as well. How would this work . The European Commission can be a bit of a black box. Theyve managed to get out the information about the regulation of this industry, essentially placing them on the same level as the telco operators. For been a bit of a bugbear these companies. Facebook messenger came to market. That killed a whole revenue stream for the telco companies, namely smss. Emily how big of a bugbear, alistair . Alistair it could be a really big one. The main problem telcos have is, you know, these overthetop Internet Services are acting more and more like regular phone calling services. And yet these Internet Companies dont have to play by the same rules. Its a bit similar to the Net Neutrality debate that we had over here, where google and other companies seemed to fight that as well. Especially in europe, where the telcos are the big businesses in europe and they dont have big Internet Companies, it does not bode well. Emily alastair bear Alistair Bair and alex webb, thank you. A private equity firm has raised billions for its latest round with plans to keep pursuing software and other tech buyouts. This latest fund is more than twice the size of the pool of in 2014. A bravo raised coming up tomorrow, do not miss an interview with the father of google cars. The google founder turned tech pioneer joins us in the 3 00 p. M. The civic hour. Up next, facebook debuts a conference for women. Bloomberg. Emily turning back to facebook. On facebook, they will hold their inaugural women in tech conference. Its no secret that Silicon Valley is maledominated, with women representing less than 20 of the employees in technical roles. Productand other women execs are trying to change that. I sat with liu to discuss why she is launching this effort now. We have hosted different women product managers from selecting valley at dinner every couple of months from Silicon Valley at dinner every couple of months. Women are speaking, recruiting, talking to folks. We said, why isnt there something similar for women in products . At at dinner, we decided why dont we put one on themselves. There are women across multiple companies putting this together. Emily weve been talking about a lack of women in tech and in engineering, specifically. Women in product or people in product dont need to have an engineering background, but what are the unique issues that face women in product roles . Rah a lot of people do have technical degrees, but its not required. If getting into the field, it helps to have a technical degree. Less than 20 of the degrees in engineering are earned by women. Emily facebook, the leadership of sheryl sandberg, very focused on this issue. Women inhas 17 technical roles. Why is it so hard to make the numbers move . Deborah it is everyones responsibility. Everyone at every level. If you look at the numbers of what makes a product better, what makes teams better, its diverse city. But the challenge is its diversity. But the challenge is i was telling someone a story about my daughter. She is seven. She wanted to learn how to code. I took her to a school where they tested her. The teacher says, ok, she is welcome to come to our school, but there are no girls during the week. There are only girls who come to the class during the weekend. At seven years old, girls are already feeling like they dont belong. If this is how it is early on statsok at that the all the way through attrition. Women are leaving tech at the rate of four times that of men. Its hard to retain diverse candidates, especially women. We can change that. There are systematic things people can do. Uggla found out having a woman in the interview process increased google found out having a woman in the interview process increased the likelihood that a woman would join. There are so many great people out there. We just havent found them yet. Our job is to find them and bring them in. Emily what do you think is behind attrition . Deborah a lot of women leave later in their careers, in their 30s, when they start having kids. I have three kids. My const my husband and i are constantly juggling. Having a generous parental leave policy encourages people to come back from parental leave and get more engaged in the work force. If we can find ways to lower attrition by solving some of the really simple problems, the friction that all of us face, then i think that makes it a lot easier for people to stay in the industry. Emily your focus, your product focus is ecommerce. Give us an update on facebooks efforts in ecommerce. This is something facebook has been talking about for a long time, but we have not seen it come to fruition. Deborah we want to connect people to buy and sell. Its another way of connecting people. Messaging is one way. A lot of businesses have pages, but they are also communicating through messenger. They are using whatsapp to close transactions. Facebook, as a whole, is about connecting people, connecting people to engage in commerce is another evolution of how we want to connect the world. Emily whats the latest on the buy button . Deborah theres also a messaging button where you can message sellers. One product we have is allowing people to buy and sell in groups. You can see, for us, its not just a singular product. Its actually figuring out what solve the fundamental problem, connecting buyers and sellers. Emily did the buy button work . It has yet to be deployed on a broad scale. Usorah the buy button is a part of a broad set of tools we have. Instead of clicking a transaction and putting in a credit card, people might do cash on delivery. Sometimes, we are exploring how to use messaging and integrating it more in the commerce space. Emily facebook Vice President of platform and marketplace deb liu. Daily up, peak season for Fantasy Sports play is underway. We check in with draftkings ceo next. This is bloomberg. Emily linkedin cofounder reid hoffman is the latest Silicon Valley heavyweight to get his money involved in politics. Hes offering to donate 5 million to veterans if donald trump releases his tax returns in time for the president ial debate. Challenge by a veteran. The challenge stated that he would donate any of the money raised to a nonprofit that assists veterans if trump releases his returns by the final date of the last debate. If he meets the target, hoffman declared he will match the total amount by five times, up to 5 million. 2016 season just kicked off. That means fantasy site draftkings its been a rocky road for the company. We caught up with the draftkings ceo, jason robins. Jason i think that this year was a little bit of a very pinpoint strategy for us, where we were very focused on driving other apps back to the game. We tapered down the big guaranteed contests. We focused instead on trying to drive volume into the social play. That was up about threex 3x yearoveryear, which was awesome. What we expected and wanted to do, we accomplished in week one. Emily weve talked about the regulatory battles youve been dealing with. Youve also raised 150 million. What was your experience raising funds in this environment, given the other issues youre dealing with . Jason it was helpful for us to have the product weve had on the regulation front this year. Eight different states have passed bills, including new york, which was the state of the initial controversy. That gave investors confidence that this is an industry thats going to move to a regulated state, and there will be some changes. Or have been some changes there have been some changes, but we are equipped to handle it. Emily how did investors respond to this . Raisedorts were that you a lower valuation than was discussed. Is that correct . Jason we are not disclosing valuation. There have been a lot of changes, not just our industry, but to the overall capital market. We dont disclose information on our valuation. Emily what was the Fundraising Climate and response you encountered . Jason everybody was really focused on what the actual quantifiable impacts of regulation for the industry, what do you expect your tax rate to be, do you expect changes to your Conversion Rate or usage because of the new rules that have been put in place. For us, it was important to be able to have some states, particularly big ones like new york and massachusetts, that actually allow people to put rules in place and put some numbers around that. We have to show how we are going transition going to transition to being a regulated Company Without showing any downtick in the numbers. Emily it seems we are seeing less of a focus on the big jackpots, more on the social aspects of fantasy play. Is that right . Jason this was always something we talked about. If you look at the Traditional Energy market, its about 57 million players right now traditional fantasy market, its about 57 million players right now. I wouldnt be surprised if bloomberg had a fantasy site at some point. At first, 5 million, 10 Million People joined. They recruited their friends. The next 40 Million People came in because their friends brought them. Its important for us to follow that evolution, to leverage the millions of people who were brought on, who are huge fantasy fans. For a lot of people, the motivation was playing with their friends. How do you use them in the same way the traditional product idd, to bring in more product did, to bring in more and more people . Thats our focus Going Forward. Emily how big do you see new partnerships, like marketing and advertising, Going Forward . Jason i think they are going to be huge. The partnership side, the sponsorship side, we had our largest free contest ever that was sponsored by paramount kreacher. Nd jack the customer gets to play for 100,000 for free. It develops positive vibes towards that. Its great for the advertiser. It allows us to make money on a big free contest instead of losing money on it. It could end up being a big part of not only what we do to contribute a revenue, but also how we engage customers contribute to revenue, but also how we engage customers. Emily you told us last week, you would not be announcing a deal. Does that mean we will see a deal like that in the future . Jason i never say never to Something Like that, because there are a lot of reasons why it could be beneficial. I think for the last two years ive been pretty consistent when asked about this. I think its an interesting idea and it has to be done in the right way to create a set the kind of longterm shareholder value that could be created. Sometimes these conversations stop and start. There is always a rhythm to it. When the time is right, maybe it will happen. I dont know. Emily both companies have been characterized by soaring violations, unpredictable business model, kill or be killed strategy. It reminds me of uber versus lyft, which we talk a lot about on this show. What do you think of that comparison . Jason i think its a fair comparison. Uber and lift are battling the environment in terms of competition, not just ashuber are battling the environment in terms of competition. Like us, they are engaged in regulatory conversations. Emily that was draftkings ceo jason robins. In todays edition of out of this world, jeff bezos has unveiled plans for the companys most powerful rocket yet, named after john glenn. This rocket, unlike its current prototype, will be capable of orbital flight, meaning it can go faster and farther than before. To do that, it needs to be huge. According to Images Released monday, it will be larger than the closest comparable rockets. They plan to build it at their future manufacturing site at Cape Canaveral and flight it by the end of the decade. And fly it by the end of the decade. Do not miss our lineup tomorrow, including marc benioff and sebastian thrun. This is bloomberg. Announcer from our studios in new york city, this is charlie rose. Charlie we begin with north korea. That country conducted its fifth underground nuclear test on friday. The government confirmed the test after a magnitude 5. 3 earthquake it near the countrys hit your the countrys nuclear site. It suggests the country is moving closer to building a functional Nuclear Warhead and the missiles to carry the warhead. International leaders have condemned pyongyangs actions, which occurred days after the g20 summit in china. President obama expressed