morning. to our first guest, jason lempkin is a partner with storm ventures and a person we like to turn to to explain some of the news of the day. jason, i want you to think inside the box. specifically let's start with two companies, wurn called box, filed financial papers for an ipo. one blog says their ipo will be a test for cushy tax stocks. drop box recently announced new services and apparently secured $500 million line of credit. our reporters harry mccracken of "time" and sarah burr of "usa." i hate to start the show with a line of credit. a half billion in credit. what does a small company need that for? >> let's step back for a minute. these companies aren't small companies. box is doing over $200 million in revenue, growing over 100% a year. we don't know about drop box yet. historically drop box grew faster and was bigger than box. i wouldn't be surprised if we're doing three or $400 million. these little companies from a few years ago have all grown up. what's interesting is they're consuming or saving epic amounts of crash. what does drop box need with $500 million in debt right after they raised $400 million in equity? first of all, this is interesting, all fear has gone out of the market. and so a couple years ago you might actually have to go public before you raised a little debt. a few years ago you'd struggle to go public, people would be worried and maybe you'd sell a little more stock and if you were rubbingly, you would raise debt because debt is cheaper than stock. box has less than a year of cash left in the bank. are they speaking like they have fear? no. they're running a marathon, running 3.5 minute miles in the marathon. >> drop box which is one of the two companies with box in its name gets $500 million worth of credit simply because they can. >> because they can. because the banks have no fear if they don't ipo. >> if we need it, we've got it. >> no one is worried that drop box won't ipo with the $10 billion valuation, no one. >> since there's zero percent risk, why not give all the money now. >> so this is actually -- my question is, a lot of these companies are lowering their prices. they may not even be making a profit. so why would somebody say this is no risk? >> well, we could talk about whether they're in a bubble. first of all, they're growing epically fast. the most important thing really happening, is epic amounts of money the company is spending is going to the internet. we're only in about the second inning of that. so everyone that's selling something great to the enterprise over the web today has had a great last four or five quarters. everyone, not just the guys with box in the name. talk to any fast company, enterprise company that's selling to companies at least doing $20 million, $30 million a year, they're all on a rocketship today. some are taking advantage to spend epic amounts of money. i didn't do it. my last company we went profitable with $5 million. if it were me in 2014, i would raise it. >> box has catered to the business customers who are happy paying for stuff. i associate drop box more with consumers that don't like to pay. drop box seems to be making themselves into a business provider as well. >> they're head-to-head now. i think the story behind the $500 million in debt and $400 million in equity is because they are on a collision course. these things that sell to consumers are sort of more fun, right? more folks understand a drop box and a box if they understand either. the problem with selling stuff to consumers, it's hard to sell a billion dollars of software to consumers. >> and drop box is not doing advertising. >> let's look at the math. let's say drop box is five bucks a month for the small percent that pay, just to build a $100 million business, you need 2 million people a month paying you five bucks, two million businesses. to build a billion dollar business, you need 20 million people. you need every american, everyone in the world paying. you need businesses. it's hard to build a billion dollar business without going to the enterprise. that's where drop box and box are colliding. >> if i'm a young entrepreneur, the future is enterprise software. software is the service. despite the startups in san francisco that seem to be doing the opposite. >> two things. maybe as a founder, yes. if you look, the majority have been selling to businesses, not consumers. having said it, what's really happening is the businessy stuff, it's usually about three years behind the consumer. they figure out everything faster. the trends that we saw that fueled twitter and fate book and all these which is everyone on the consumer side moving the the internet, businesses are three to four years behind. that's why it feels like we're in the seventh or eighth inning. >> my dad calls from time to time, wants an explanation. he wants an explanation as to why somebody paid -- was it $19 billion for whatsapp? the gerald r. ford aircraft carrier, the new "nimitz" is $12 billion. it doesn't include planes. for more than the cost of an aircraft carrier they bought whatsapp. explain to someone like my dad, $19 billion. how is that possible? >> we can all chat about this. you can only understand the number if you've been a founder. it wasn't $19 billion. it was 10% of facebook fall you. mark zuckerberg is running this. he has an epic mountain to climb. he's making a bet with himself, if i spent 10% of my company, will it increase my value more than 10%. for him, it probably took about six minutes to make the decision. >> we get a little my opinionic here in the u.s. >> a little bit. >> a lot bit. we focus only on ourselves. when whatsapp was purchased for such a large amount of money, it made the instagram purchase look like nothing. everyone is like, what is this whatsapp? it's a global play, correct? >> it is. last time we were here we chatted at snap chat at $2.9 billion. >> i remember that. talk about inflation. >> whremember in the old days wn $3 billion was a lot of money. >> whatsapp has more computation than snap chat. it has competition in every company and it's hyper competitive. it's not even clear that whatsapp is the market leader. >> they charge a dollar a year after the first year. >> yes. >> can i bet 10% of my company that i can get a return bet thaer than 10%. that's a different way of looking at it that changes the view. >> it's easy. that's why from my understanding, mark zuckerberg didn't talk about his board of directors about instagram and barely spoke to them about whatsapp. he knew it was worth it. even though the numbers, the financial numbers seemed insane, right. >> could facebook could have done that if it was still a private company? or is this a benefit of it being public? >> it's ooh benefit of it being public and having a $200 billion market cap. mark zuckerberg is going big. he's not conservative. if he's got a $200 billion company, how is he going to build a trillion dollar company. >> i always feel better after you've been here because i feel like i understand things a little better. i would like to invite you back six months from now so we can talk about that $60 billion deal that has not been signed for something yet, we can just sit and wonder at that price. thank you for being here this morning. >> thanks everyone. "press here" will be back in just a moment. welcome back to "press here." cities and towns all across the united states have started changing out their street lights from mercury lamps to l.e.d.s. l.e.d.s use far less energy and need replacement less often. it's kind of similar to the model solarcity uses. homeowners able to lease solar panels fundamentally for free because the money saved on the electric bill more than covers the cost of the panels. i always wonder if ceos cringe when i compare them to solar. >> that's always a tough introduction. >> it is. we all know it's because of one particular solar company. >> the name we never use. >> a name we shall not use. but already similarities. that is that you can do things expensive like solyndra did. i'll go ahead and use it. or you can do things cheaply the way the chinese did it. you've got really cool technology going on here. if i'm a chinese manufacturer, can't i do something not quite as good but a hell of a lot cheaper? >> a couple of things. bridge lux is a leading provider of technologies and components that power solid state lighting systems. when you say what are solid state lighting symptoms, it's everything from a basic lamp you'd buy on a shelf in retail ranging to street lights and stadium lighting and those kind of things t. reason i frame that is, within that range of products and applications, there are many, many derivatives within those. i think while there are component pieces, some of the base building blocks, the chips and basic packages, the chinese can have advantages in some of those basic pieces. we believe there are big returns to be at the bleeding edge of the curve of the core technology. it's really what do you do from an application perspective. it's not introducing more energy efficient light. it's the next phase that we're in the first phases of of catalyzing light. ultimately turning what we think is 32 billion nodes in the world. think of a socket as a note. it's a much broader opportunity and we really think of bridge lux and i think the leaders in the space, it's a trojan horse opportunity into what a lot of people think of as iot. >> there is that one unfair comparison. what i was getting at, you're talking about cutting edge stuff. i just want light. there is that danger as some of this technology gets cheaper and cheaper, the cutting edge can be a dangerous place to be. >> i think it is. i think a couple things you need to do, one you have to invest in r&d, there are returns to being a little ahead in the hardware portion of it. companies like bridgelux have been able to achieve that. secondly is business model. it's an adage of don't fight the river. over time, you partner with the guys doing a lot of the more come mod tieses pieces of it. we have partnered with some of the largest foundries in the world. i'm fabulous in terms of my manufacturing. i let them compete in terms of subsidized cost of capital and scale and those things. i'm free to innovate at the application layer. we've seen it in the mobile phone market, in many categories of software, how do i really operate at that application level. >> l.e.d.s have been part of life since the 1970s, how come lighting is still an emerging technology in this century? >> that's absolutely right. l.e.d. technology has been around for quite a while. it's only recently it was powerful enough and cheech enough to be applicable to lighting applications. it's relevant because the cost of core technology has come down so fast. the business model, therefore, makes a ton of sense because you can talk about all these other longer term benefits in terms of control and connectivity. the base economics of energy efficiency make a ton of sense. the paybacks in most applications are down in the two years or less range. i think it makes a lot more sense for lighting than it did historically. >> we're getting into the nitty-gritty details that a lot of people maybe don't even understand the technology. what does this mean for the end consumer? >> i think first of all it means savings. at a basic level, an a-19 bulb, the thing you put -- >> in the node. >> put it in the node. the lamp buy your nightstand to make it really practical. if you buy one today, l.e.d. bulbs can be late more expensive. you'll save relative to an incandescent, $7 to $8 a year. you'll pay that bulb back within 12, 14 months. >> i didn't realize we were already there. that we have passed that magic moment in which the cost of the bulb makes more sense at ten bucks a bulb. can we go to seven bucks a bulb? >> we can. i think that's the big competitive change that the l.e.d. industry has been going through. it has been a relatively parochial industry. the reality is it is a semi conductor-based technology. as these volumes explode. as the 30 to 35 billion sockets or nodes convert to sol it state technology, that's a tremendous amount of volume and that will continue to drive costs down very, very aggressively. a long way to say yes. i think bulbs you'll see them down to the $5 range for call it 40 and 60 watt equivalence and a couple more for 75 and 100. >> at what point does mr. edison's incandescent bulb go away completely? >> i think from a standards perspective, we're sort of on the sale end of that in terms of standards now created in the u.s. and other countries that say lighting sources or products need to hit a certain level of efficiency. and most incandescent bulbs no longer do. i think it's over the next couple years you're going to see a big transition to solid state. >> let me ask you the last question. you replaced bill watkins, chairman of the board. what is it like being the ceo after bill watkins? >> i worked for bill at seagate. there's no harder shoes to fill than bill. venom nam guy and the biggest thing i'd say, bill had the vision around a lot of this. he understood this is a semi conductor game. it's about how do you ultimately get into applications, how do you compete with low-cost partners, you don't fight the river, you partner with them. >> big shoes to fill. bill will be a guest in a couple weeks. enjoy having him on. you never know where he's going to go. >> that's right. >> brad bellington, thanks for being was. integrated technology. why do people talk that way? we'll take a look when "press here" continues. hello! whoo! i got seven words for you. i love integrated multiplatform functionality. whoo! >> welcome back to "press here," a clip from "silicon valley," a show which makes fun of many things, in particular our unusual way of explaining what it is we do. at one point that same character claims to be making the world a better place by constructing elegant hierarchies for maximum code reusability and accessibility. we blame the whole thing on futurist brian solis, a powerful wordsmith who helps shape the way we speak about the world. one of the thing brian says, this is a quote from you, pre commerce is the zero moment of truth. yeah, that was you. >> what's wrong with that? >> i would argue whether pre-commerce was the zero moment of truth if i had any idea what it is you are talking about. to be a bit unfair, you a great book in which you do explain that. i saw the opportunity to make fun of you. >> it's not like i helped kid rock help me launch the book or serving liquid shrimp to everybody at the party. for all intents and purposes, that show, i'll give you my quick review on it, it nails it very well in terms of silicon valley, almost too well that it makes it uncomfortable to watch. i came from that party and i talked to that guy. >> do you think it will be funny to anyone else? it's hilarious to the four of us. >> i wondered the same thing. is anyone else going to actually get the show? >> not that we're better than all those people watching in the midwest, but it's so spot on. >> too spot on. >> that's what makes it funny. if you don't know it's spot on, maybe it's not funny. >> as a kid coming back to silicon valley, there was the internship movie and the steve jobs movie and another one. i think hollywood at least finds us fascinating. >> i got caught on the radio recently talking about that horrible, horrible bravo show. >> the reality show. >> and somebody was like, we own bravo. >> it was still horrible. >> canceled in the middle of it. it was pretty bad. >> maybe what's happening, sometimes it's a bit silly. but we're looking for new language. for goodness sakes, even the words google and ipod and fandango are silly words. maybe we're looking for a new language to describe what it is we're doing in silicon valley. >> at the same time it's a unique culture and also reflective of the unique culture. you have google as a verb, google as an adjective. it's representative of people trying different things to see what sticks. if you're not shipping, you're not doing. that's facebook language. everybody at the table understands what we're talking about. no one outside of this world would know it. >> i think that's why people come here. people come to silicon valley in particular here, this place, because the culture, the minds tend to be drawn here, the creativity. there's so many people that tend to congregate here in this area that it's kind of a special area. that's why there's so much focus on this right now. >> absolutely. one of the reasons why there can't be a silicon valley truly outside of silicon valley. one thing fascinating, great ideas and bad ideas sound equally ridiculous early on. >> that's true. that's absolutely right. whether the story is true or not, i'm going to sell the pez dispensers online at an auction. i also, by the way, thought camera phones were really bad. i couldn't figure out why anybody would need to take a picture of anything and send it over a phone. >> i didn't get twitter when it first came out. >> we had jack dorsey on here. he and sarah lacey got into this discussion about direct messaging. nobody understood what they were talking about. jack was saying, in order to direct message, you have to follow. today we understand, but we had no idea. speaking of language, i like the word friction. i kind of like the word delpa, as the mathematical expression, the most change. are there words that have entered the lexicon or you've used in your books that you think are particularly good? >> it's always open to interpretation. value is in the eye of the beholder. i do think disrupt is an important word. it's a buzzword and i think it's important because it's not an intention to set out to disrupt. it's something that happens because of true innovation. in that case, that's what silicon valley can be really good at, actually disrupting markets. to me it's aspirational and inspirational. any time i use disrupt in silicon valley. >> you get an eye roll. >> i get an eye roll. >> people are disruptive. you look at -- what's the hotel? >> hotel tonight? >> air b&b, absolutely disrupting the rental market as well. >> and in legal trouble for that. people don't like that they're disrupting right now. it's a huge problem. >> renters are losing their places because they're violating their agreements. >> the air b&b and disrupting what we've always had. people are saying, wait a minute, year taking away my revenue. but people are going, we're doing it better. >> at the end of the day, that's why disruptive is so important because it should create a sense of urgency for everything that's going to be disruptive. no surprise the taxi industry is disrupted by uber and the like, or the hospitality industry is disrupted by air b&b and everybody that's following. we're just getting started. if their reaction is get government and regulation and legal involved, they had every opportunity to disrupt their own business. it's called creative disruption. it's going to happen to everything. >> the other flip side to that is there are uber drivers or people feeling like they're getting squeezed. they feel like they're not even making minimum wage. that's the other end of the spectrum, right? we have this class war going on right now. >> we also have the oakland cheerleaders who are not getting paid minimum wage. >> before we talk about oakland cheerleaders, we should have talked about that from the beginning. you have 30 seconds, your new book is "what's the future of business." in five words, what's the future of business? >> shared experiences. >> you can buy the book and that's where you can read about the pre-commerce is the zero moment of truth. i promise you it makes sense. brian solis, thanks for being with us. back in a minute. that's our show for this week. my thanks to my guests. brian solace's new book is called "what's the future of business" or as he likes to call it, wtf. i'm scott mcgrew. thanks for making us part of your sunday morning. . americans, the first to strike gold in sochi. sensational. >> tiger woods, perseveres. >> they score. sunday afternoon in st. louis, missouri, where playoff hockey this spring was sclin. ed three weeks ago, but much has happened since to challenge the mental toughness of alexander steen and the st. louis blues. they lost six of eight, six injured forwards will miss the regular season finale against gustav nyquist and the detroit red wings. playoff participants for a remarkable 23rd consecutive season. to the studio, liam mch m

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