Military discussion around rounds and moving towards what the consumer and commercial prospects are. A lot of discussion this week at facebook attention week interested in buying into this area. First, i want to get to this lead, which is microsoft. So many different moving parts of the company. The incoming ceo starting to make changes to management. The out going ceo speaking at oxford union about many things, including describing microsoft as a two trick pony. Also suggesting it was a bad move to move into hardware late in the game to go along with the software business. Bloomberg news also reporting behind the scenes happenings at microsoft the past few months, including that Steve Ballmer struggle to get the board approval on the 7 billion plus purchase of the handset business. On the development, i want to bring in matt mcewan. Seattlebased Venture Capital firm. You are right there alongside microsoft. Quite know the new ceo well. Starting with what Bloomberg News is reporting. Amazing details over the past few months. They beat us having the easiest time getting the board to sign off initially on the nokia deal. What do you think about that . 7 billion is a big deal. Additionale, the question of is microsoft needing to own handsets in order to win in the mobile business . No doubt they have to have a Winning Strategy and mobile, but i think it is a legitimate question. Going back to what steve did talkas said, he about Tech Companies in terms of the tricks. Microsoft had a couple of tricks, but apple also had a couple of tricks. Listen to it Steve Ballmer had to say. A lot of those misses are forced to do a second trick or you die. If you do not do your second trick, then you should do every trick, but really, the history in businesses, most people do one trick and run with it as long as it works and then fade out. We were fortunate. How do you take microprocessors and push them in and do the back end automation of businesses. I think steve is understating the number of tricks microsoft had. I think the tricky is referring to is the second one is the third one, the ability to win in the enterprise. A 20ave now hoped billion server and tools business over the past 15 years over his watch. For a world of tricks. You have to keep knowing. Where are we going with the future from the shift to pc to mobile . Clearly he wanted to make any the right thing to be doing. Suggestion about the for any incoming ceo along the process. I think it is hard for Technologies Companies to be successful if they are not ambitious. The one thing that i talked to everyone about was how ambitious they were for microsoft. Ambitious. I love it. This is where i think he is the right choice. Very customer centric. What are some of the ambitious move he could take . Probably not going to take huge ambitious moves initially but look for things whether or not we see Office Coming out as a touchbased solution for android devices. Or, does microsoft try to push into being the shepherd for the journey to the cloud for big enterprises, including how they run things on Amazon Web Services. Microsoftt how many operating services are already on Amazon Web Services being run , and on top of that, if they can help the enterprise, it is an interesting place to be. Look at those ambitious place, maybe they do not see as ambitious as piety and 8 billion company, those are areas he should focus on. That is something that happened before he got there. Going back to repine behind the scenes of what was happening, you got the sense he was not necessarily convinced that that was the right way to go. Obviously he is now on board with that. Get ceo, how do you something behind something you initially were not sure about . I think you have to keep asking the market, where did we get this right, and where do we need to go from here . Now that they own the nokia asset, how do they move or word . Foward . About 20 seconds left. In terms of the Management Changes we will see under satya nadella, how much more change do you anticipate . I think we have seen very logical changes. Tony bates was the logical choice. Not likely to stay. I think the interesting question will be, are there people brought in externally to complement the Leadership Team and when did he make the leadership move . Managing director of madrona venture group. Later today the israeli Prime Minister is visiting Silicon Valley and will be sitting home with tori johnson for an interview. Be sure to tune into the at 5 00on starting eastern on bloomberg television. Lots of discussion this week about drones. Reported interest in the market. We will have full details coming up. I am jon erlichman. There has been an list talk about drones and commercial use of drones from the potential amazon using them to deliver stuff to you to the possibility of facebook by yang died dynoerospac we are joined by the president of the vehiclen for unmanned systems. He joins us from washington. Thank you for joining us. We have become very familiar with the lich uses for drones, but what about the report that facebook is interested by tightened aerospace. What do they make . What they have is an Unmanned Aircraft system that can fly above 55,000 feet. Use itre, what they will for if the deal goes through is allow them to have communications with many different parts of the world. In this particular case, this technology has been demonstrated back in 2010. The department of defense work bircher m called walter that was to fly for five rs at high altar to allow themnd would to have internet in the parts of the world that do not. A drone that can provide internet access. We should think of it like a satellite . Orbiting satellite that has the ability to maneuver within the band they want to to sell for the conductivity of communication. If you look at africa, those that skipped a generation of cell phones. They never put power lines or hard cable lines in the ground. Now they have cell phone coverage. This is the exact same thing they will do with the internet, skip a generation of the internet and now go through lowflying orbital satellites that are called Unmanned Aircraft systems or drones. Would this compare to what google has been focused on . Both of the companies are more interested in more people using internet around the globe. What google is doing is they were looking at balloons that would fly at the higher altitudes that would allow them to again use it as a relay that would allow them to have conductivity to provide Internet Service to places right now that are denied that because there is no infrastructure that would allow that to happen. I think the Titan Aerospace is a better model because it has the ability to maneuver whereas the balloons are flying along in space. Where do governments come into this story tom especially if facebook will be using the drones in parts of africa . Where does the government have a , the airspacea that we exist in, only regulates up to 60,000 feet. These systems would fly above that in the suborbital phase so there would not be regulation. The only thing they have to contend with is getting up to that altitude. Stuff. Resting michael fasano, president of the unmanned vehicle association. Joining us to talk about the commercial side of the drones story. Also a consumer side. One new one called the phantom to vision is becoming quite popular with tech enthusiast. We checked about to find out what people are getting excited about. There is always someone catching waves. Now they are using these to capture the footage. This is the future of what sports videos will look like. Drones high above the surf or anywhere outdoors. Appears to be the drone of choice among tech enthusiasts. Vision isntom to ready to fly. Everything in the box, take it out, but the batteries in and off you go. Take xers by attaching your smartphone to the remote control. It can also fly autopilots using gps. The people using the devices . All kinds of keep all. Hobbyist, professional photographers, result real estate. All kinds of people. Recently flying as device on and i went and went out over the Atlantic Ocean and never came back. It is still you legal for commercial use. Do you ever think about these devices being more in the air and hard not to think about the risks with that . We work very closely with the faa to make sure the devices are very safe. He will not say how many drones they sell but did reject revenue of 130 1 million. Two years ago, they had 200 employees. Now it has been seen hundred. Now it has 1500. Just like that. When we come back, we will talk eli and must elon musk. In washington making a push for military. All the details coming up. Welcome back. I am in. N musk to two capitol hill took to capitol hill to make a push to enter the satellite launch market. Between thely rocket chief . You can certainly say that. , ceo of spacexk on capitol hill making the point he wants to join the military spy launch program the government has. Right now it is dominated by united launch alliance. Sitting said he was next to the Senate Appropriations subcommittee chairman on defense. Xhere he said using space would save the federal government 1 billion for taxpayers every year, and did that while sitting next to his competitor and set the current state of the market is unsustainable. The air force and other agencies are paying too high of a price per launch. Space launch innovations stagnated, competition stifled, and prices have risen to levels that general shelton has called unsustainable. At issue is the air force eel v program. That a 70 billion program is the federal government answer for reducing the cost of military satellite launches. Right now dominated by united pacexh alliance the coast s does not have the approval to do so. Meaning that ula for years has held the monopoly. It is a joint venture between Lockheed Martin and boeing. Said he does not think breaking up the monopoly in the name of competition will really have that big of a payoff. I believe there are in foreign questions about how competitions will be structured to ensure they are fair and open and the competition will the savingse promised. Ultimately the question is whether the savings will be sufficient to offset the cost of duplicating existing capabilities. Luckily a sentiment not shared by the pentagon. They will later this year open up 14 new missions to take a stab at entering the market. Lawmakers today seem to add echo the sentiment as well. Ask any talk about russia today . Thatw he told rachel crane it is embarrassing the u. S. Has to thumb rides to russia. K was sureg mus to point out, united launch alliance, their rocket used in engine that is manufactured in russia. Seizing everything happening right now and on the proposed economic sanctions and all of that. He made the point that to him it is crazy the United States would consider awarding hundreds of millions in contracts to united launch alliance, not opening up for competition when he is able to say everything they produce. S made in the usa one point that he did capitalize on today. Spacex couldbefore join the military Satellite Program . That is still up in the air right now. Encouraged after the meeting. He said a good sign that lawmakers seem to be on board and see things from his point of view that we do need more competition and should lower costs in the long run. Soon now it looks like as as october 1 and the new fiscal year begins him a week of the best opening up. Before that happens, they will need to get certification that it does not yet have. The news last week when the air announced the launch of would count toward one of the three necessary launches to receive this certification. That was a big move in the right direction. The momentum is something he brought with him today. Out, the to point hearing, although it did and a few hours ago, is not quite over just yet because it is a hearing that will keep on giving. Dickhing the durban durbin said is they wanted both ceos to submit 10 questions they want the other ceo to answer. Come insponses will later. It will be added to the record of this mornings testimony. That is something that will be very interesting to look for in the days ahead. No kidding. Also looking at how this affects their overall business. Talking about the success delivering cargo to the International Space station. Thank you. As we had to break, quick programming note. Emily chang will talk to eric schmidt and google ideas ideas erector gary tonight. Jered cohen. The fullo catch conversation tomorrow at 1 00 and 6 00 eastern time. Still ahead, then horowitz on how writing a book has helped him become a better investor. Hour. Inutes after the am alix steel. The s p slipping into positive territory recently. The dow down a little bit. The market taking up for earlier losses. The a deeply him adp Employment Data coming in light but investors shaking it off. Within the s p, financials in the industrials gaining strength. On the markets again in 30 minutes. You are watching bloomberg west. Erlichman. Getting straight to your Bloomberg Top headlines. New chiefrching for a information officer. The new executive will replace beth jacob. Verizon tops its rivals a Network Performance according to a new study. Sixmonth review of reliability, speed and data and call quality scoring 90 out of a hundred. Facebook stepping up enforcement of post them sales and other regulated items. Facebook says it will delete posts where users declare a willingness to break the law, such as transporting a gun across state lines. If it is a Successful Company in Silicon Valley, chances are Andreessen Horowitz is already an investor. It has invested in pinterest and Ben Johnson Cory johnson said down with him and asked him how the writing process made him a better investor. People feel like they know me before they meet me, and that is a big advantage. Youthey see you come express yourself and put yourself out there. They say i know this guy. I have read your stop. The first time i met my friend i was like hey, i know you, i have listen to your albums by 400 times. Great youe that is know me already. This is helpful in building a relationship. That is why it is important to be real. At is what is really hard and writing. Appreciatehat people itut the blog in the book is is the august side of it. Cover up theng to things i did wrong, i am saying this is what happens. What are the strength and weaknesses . I think because Getting Started is easier. In a lot of ways they are younger, which is a strength and weakness. The strength of being young is you do not have the old paradigm in your head so it is very easy to break it, which is a big deal in technology companies. The disadvantage is here you are. There is a lot of stuff you do not know and wisdom you do not have, and that can lead to doing things that have very dangerous longterm consequences for yourself and the company. I am thinking what specific things are they week at or because they are young . Whatbig weakness is building a company is about and what it means to the people who work there. It is great that you have an idea. But that is not really what it is about. It is about a group of people doing something that is bigger than myself and so forth. If you go out and recruit a bunch of super talented people it cannotrk for you be i tried that, did not work. Or the team that could have worked on a very high paying awesome job of facebook or google is not going to want to work with you again and definitely will not say nice things again and you have created that amount of misery. That is not something you should take so lightly. In the old days we did not have that kind of thing the way it does now. Talk to me about the way you are organized. A change indit for the way Venture Capital works. What do you think are the important things that are different about the way your firm is set up . To me, the most fundamental thing is when i was an entrepreneur, very oriented in finding an invention and then thatbling a team around invention and bringing in an experienced ceo to run the company. Whether that happens or not, they were good at it. That when we came in the idea was that lets assume we want the founder to run the company, then what kind of firm do you need to build to enable ceo andder to become very competent ceo and the structure of the firm and the way we talk about things and the kinds of partners we have are all key or towards enabling a founder to become a ceo. Impacts had the highest in the sense that you see other Venture Capital firms going we will give the founder more run. We may not be set up to help them do it, but we understand the value. An you think this is result in terms of changing the report . To pay for partners is lower. The money is spent on doing other things like what . The structure of the firm is designed for that. If you are the founder, there are two things you lacked. I have never been a ceo but want to be a ceo. One is you do not have the ceo skill set. For the skill set, we require all the partners be founders or ceo. So they actually have some experience to teach you how to do that job. The second thing is then you do not have a network. You do not know all of the best people in the media. You do not know all the best engineers, executives and you do not have access to the Big Companies you might want to do deals with. The way we structure the firms, we paid a much lower general partner salaries and use the money to build out the networks and help you look like a giant ceo, even though you have never met any of those people before. Interviewre from the after this break. I am jon erlichman. This is bloomberg west. We turn back to cory johnson interview with ben horowitz, and the author of a new book the hard thi