tv Bloomberg West Bloomberg April 3, 2014 1:00pm-2:01pm EDT
♪ alexa live from pier three in san francisco, welcome to "bloomberg west" where we cover innovation, technology and the future of business. tensions rise over income inequality in san francisco. march one planning to twitter and a protester vomited on a yahoo! bus. we will talk more about all these hot and issues. plus what do tech execs think of the upcoming series "silicon
valley?" first, check of the top headlines -- turkey's twitter crackdown is over for a while. the court ruled the ban violated freedom of expression. the news comes after the prime minister's party won elections after a corruption investigation. 90% of media is selling its initial investment in barnes itsble and will abandon seat at barnes & noble. apple says its annual worldwide development conference will take place in june. ticketing will not be first-come first serve. developers will have to read -- will have to enter a random drawing.
first to the lead story of the day -- the debate over income inequality in san francisco and beyond is showing no sign of letting up from protest over of affordablelack housing, inequality has become huge issue. so what is the tech industry's role in finding a solution? cory johnson is here with me also one of our tech editors joins us from the newsroom. know, what is going on with the twitter protests coming up on april 15? why are they doing this? thatitter has this pact was the incentive to keep them in the city and prevented them from moving out of midmarket. it was traditionally a downtrodden area and twitter is now a public company worth many billions of dollars throwing off tons of cash. you are in a city where real estate prices have gone up such
that if you are not in the tech industry, it's really hard to live here. is that twitter is the beneficiary of a tax cut in an area where twitter employees are the last people who need the sort of benefits. you kind of have to connect the dots to get it to make sense, to theyou compare it occupy wall street movement of several years ago, it was a protest against those people. that would probably be the closest analog. claimingotesters are twitter does the city $56 million or something like that. should a multibillion-dollar company get a tax break, but twitter says we would not have state of the city if we didn't. >> i think is the types of tax breaks. san francisco has a particular unique tax on stock options that applies only to the city of san francisco. it only applies to san francisco and doesn't exist in other
places around the bay area. no one knows what their tax styling would look like or what the actual games were for twitter employees on an aggregate level. twitter probably doesn't even know. interesting notion. now that there has been an ipo and a lot more venture capital in twitter, when the tax breaks were decided, with the city voted, twitter was a very different company. it was clear that it was going to be a success. it also is about the risk cities take trying to encourage startups, not just small businesses and the like. protests going on across the bay area in san francisco are continuing to happen now that people have been trying to stop these buses from leaving their posts on a walking around with signs. a drove up in a car decorated like a hearse.
>> i think he gets a lot of attention. they are focused on technology in this issue as a way to go beyond the notion of twitter, tax breaks, developing a blighted part of san francisco. they did not actually have a ton of housing in that area. the choices the city has to make on how they want to develop an economy in who they want to have living in the city. >> what are you hearing from companies of the city about what they're planning to do about this? how aware are they of what is going on in their community and what are they going to change? >> they are very aware of it. they have to acknowledge it's a problem or else they sound as if they are part of the problem. what they are doing completely differs from company to company. i've talked to some companies in the market area working with
to bringprofits trying locals together with the companies and come up with reasonable ideas, whether it's for affordable housing or the issue of where the bus stops can be so that they are less intrusive. they are partaking in the civic discourse to varying degrees. you don't hear a lot of solutions coming out of the company and does not necessarily their job will stop it job civic leaders, they just need to be involved in the discourse and the discourse has not made a ton of progress. >> our bloomberg news tech editor, thank you for the update on what's going on. our next test is an early investor in twitter along with other hot companies including pebble and yammer. he has over 20 years of operating and investing
experience in computing and consumer technology. he is george zachary of charles river adventures -- charles river ventures. do these of sacrifices companies make to stay in the city? should we stay in a city where the talent wants to be or move to the valley or other parts of the bay? >> the talent is pretty spread out from san jose to north of san francisco. the sacrifices the companies make tend to keep a smaller demographic. there are a lot more tech workers in the 30 to 50 zone on the peninsula, so you are self-selecting. that's what i see recurring over and over. >> i feel like there's this adoption of technology in a broader way. it's not just about inventing a aboututer or ship, it's
consumer facing tack. they beat is a different kind of worker? >> if you look at from san jose to san francisco, you will see a stock of what is the internet. chips, systems, enterprise software and consumer applications. you have disk drives at ibm further south and what's in the middle question were >> enterprise software. >> and there's all consumer facing things like what? like twitter? >> that's right. the experience of the internet now is a consumer phenomenon in addition to an infrastructure phenomenon. it's natural it would take place in cities where there's more consumers and people attuned to daily life. >> do you think companies should be doing more? >> that's a very
good question. i don't have a strong opinion. yammer actually did a bunch of work with the community before they were purchased by microsoft. >> there's something about the young tech workers that the city appeals to, they have a different set of skills that are different than pure programming? >> what i hear from as i want to be near other young people because i can bond with these people and date them. are the reason we are having this debate? we were speaking about inequality yesterday and i want you to take a listen to what he had to say. take a listen. >> this is not easy to solve. going to have
income inequality. always. system.apitalist that's the nature of it. but we absolutely cannot have a golf where the barbell is so high over here and so tiny over here. i would call it income equalization. but it is called that you cannot that primarily cannot survive and build a family and have some opportunity. >> is this the conversation store.are having in your hyperne is so frantic and that they're going to miss a great opportunity. >> we're going to talk about that in this next quick break. facebookalk about buying oculus and more. as the dynamic duo behind the
>> i'm emily chang and this is "bloomberg west." recent $2ook's billion purchase of oculus, it appears mark zuckerberg has plans to change the future of our everyday experiences, but the oculus rift has not even shipped to market and something deep acquisition wasn't really worth it. still with us here is george zachary. i want to start with a tweet you sent as soon as this happened -- i believe this deal will have the same impact as yahoo!'s acquisition of geocities in the 90's. basically people get richer, but not the world. what do you mean? >> the oculus rift is the rift between $2 billion and something of value. i worked in a company who coined
the term virtual reality in 1989. set about this? >> he says is not really going to change anything. all of us who worked together at the pl knew there were certain problems unsolved i commercial companies as well as the military. one of them has to do with the fact the human brain has evolved for your eyes and ears to be correlated in motion. motion sickness is when your ears are moving but your -- your years are picking up motion but your eyes are not. there's a single simulator sickness where your eyes are detecting motion but your ears or not. sense ofn can't make what's going on and no one has figured out how to fix it. >> you say our brains are not ready for virtual reality customer >> we're ready for augmented reality were a small images projected on top of a glass display. they are not really ready for this form of entertainment.
>> so why did mark zuckerberg via the customer >> i don't think he knew what he was buying number one. number two, i was thinking he was thinking his current see what the stock and then he was thinking of reinvigorating the gaming franchise. >> remind us about geocities. it was quite a phenomenon. >> it was supposed to transform yahoo! into a next general. no one uses that word any longer. geocities was an early social network but it never amounted to anything. >> it was a pile website. >> it sounded exciting on the front but never materialized into any substantial business. i believe oculus will be the same for facebook. he making all these acquisitions rather than building innovation from within? do you see facebook as an enduring thing? >> i don't believe anything in
life is enduring, but in terms valley,ing silicon facebook will be around for at least 10 years. >> talk more about the notion that mark zuckerberg in particular views the stock as overvalued. is that what you are saying? >> when you start to get near the peak of a shared currency , and thinking about individual stocks. in a bubble, you've got all stocks percolating up to their highs. when people get to that point, people start thinking do i want to use cash or do i want to use stock? when things get tough, cash is still worth something. >> what are you investing in now that you think will be the next big thing? i don't knowis what the next big thing will be
after facebook. almost every company i've ever invested, when i met the founder, had no preconceived notion that it was going to be big. when i met the person within 15 minutes, i just said i had to invest in them within the first 15 minutes. see their andu what do you see now where you're trying to draw lessons for him future investments question were >> with yammer, i was friends with the founder and i was an investor in twitter and we were talking about how twitter was not being well managed at that time. he said do you think i should investor not invest will stop he decided to not invest but ended up the link something called jeannie and welding a tool internal that allowed people to collaborate which looked a lot like twitter. david said there should be a way for engineers to collaborate that's not just based on e-mail. engineers don't like e-mail. they view it as heavyweight.
he built the company out of this idea that there should be a twitter for enterprise which he migrated to being a facebook for enterprise. >> when you look back and try to was aessons out of it, it great and unexpected success for you. when you look back, what are you trying to look for that might sound like that? >> what i look for is something inside that says this is the most exciting thing and i would love to join his people as a cofounder. i don't have investment algorithms or principles. it's just what i join these people to pursue doing this? this will continue conversation after a quick break. i'm going to talk to about wearables and the investment you're making there. more with george zachary, next. ♪
>> welcome back. corymily chang, here with johnson and george zachary. we were speaking about these mega rounds of funding we have seen. alterable three figure rounds so far this year. what does it mean to you? >> to me, has been a steady sequence of large round that means we are in bubble territory. very few people are saying we are in bubble territory. no one wants to say it because no one wants to break it. everyone wants to cash out before it's over. been around bubbles before. with everyone's saying i'm paying too much at the guy you're selling to is paying too little dashers a venture capitalist saying the early rounds are too high and to highly value but public markets are getting a great deal but it sounds like you say we are seeing a drought? >> and expansion of valuation.
>> is their desperation? >> i definitely feel it. death -- desperation to miss out on what is the next big thing. we've talked to a lot of founders and we came to a conclusion that they -- they don't make the world any better. used to much to hayes people at bully kids. don't want saying we to be involved with bullying kids. >> what about wearables? i know you are an investor in pebble. >> pebble is doing fantastic. wearables are a category of things from google glass to the pebble watch, for example, and i don't know of other wearables that are growing, but the watch space is definitely growing quickly. >> at they have not gone mainstream yet. >> not yet. >> will they? >> i don't know and i really
hope they do. >> the introduction of the android development tools change the game, particularly for like bubble. announcement is the only one i've taken seriously. the difficulty is android requires 64 megabytes of memory to operate in. the pebble runs at 128 k of memory. our goal is to be the most high-volume watch supplier, smart watch supplier, and we cannot do it with android. >> you got the battery opportunities and can last for longer. >> we don't want to be limited to having a $250 watch. we want to move down to $50. >> what do you make of the fact apple hasn't come out with a smart watch yet? >> i have heard from people at i've tried tors recruit, then it's difficult to
get a new project accepted at apple. cook era, you've got to put together a spreadsheet that shows how much the business is going to be worth and will it add to apple's revenue? that will come out of someone who has a supply chain background and i don't believe apple is best set up to succeed. >> i love having you on. you are not afraid to say. trying to keep government eyes away from user data. we will tell you what the web company's latest moves. >> it is when six minutes after the hour which means bloomberg tv is on the market. let's take a look at where stocks are trading. we've had the kleins throughout the session and they remain not dig one's coming off the record for the s&p 500.
sexy you are watching "bloomberg west" where we focus on technology in the future of business. yahoo! is taking steps to secure user data from the prying eyes of government surveillance and other possible sleepers. movingog post, traffic is now fully encrypted. yahoo! male in search queries more secure by making encryption the default. speaking of government surveillance and the tech industry, bloomberg tv will have an exclusive interview with defense secretary chuck hagel. you can catch the full interview
on "bloomberg surveillance." today's new hollywood, discovery communications is partnering with ron howard and brian grazer to form a new studio that will make short videos for online viewers. via -- the venture is called new form. to ronichman spoke howard in a bloomberg exclusive. he started by asking why now was the right time to push into the digital game. our core mission is to tell great stories. the way we have been doing it over the years is through our channels. we have more channels in more countries around the world than anyone else. we've been growing market share and have had a hell of a run, at the way people are consuming content is starting to change. it's not just on the tv set. a few years ago, we started on this journey of what's going on on youtube, what is streaming content? we have launched 90 youtube
channels and bought revs three, a leader in nonfiction streaming that does almost half a billion streams a month. business,he streaming how to distribute around the web add monetize it. but as we look at that space, there was no one playing hard and effectively in the scripted area. we looked around and said who are the two best storytellers our generation in scripted? who tells the best stories and finds the best characters and can engage a generation on the big screen and tv? why can't we do that in the streaming space? we reached out to ron and brian and they had also been exploring this area. we said together we can't really make something happen and that's how it got started stop -- we can really make something happen. >> what gets you and brian most excited about something like this? you have had this itch for a
while. >> we have. we experimented with this her teen years ago with a company called pop.com. we were years and years ahead of the curve on that one. but it's a cousin the medium of short form is very tantalizing and enticing and scratches certain creative itch is that you just can't with a television show and a feature film because it's just the way the narratives have to roll and the way the characters can unfold. we've always had a fascination with it. we have not been in it in a long time, but every once in a while i would direct something for funny or die. i've always been intrigued, and then david or brian started talking about it, here's david, they reallyvery -- understand entertainment and have had experience with that. it reignited our interest and belief that we should approach it, but you have to approach it
in a new way. peoplee to reach to the who have been exploring it creatively. it's going to be great to be a part of it and grow a studio around those very specific kinds of tones and ideas. where should we think about where we are going to see this stuff? aol, yahoo!, on facebook or twitter? where does digital contents go? digitalreat thing about content is it goes everywhere. russia, we have 11 channels but we've been there 15 years building is channels. brian can produce a great piece of content and it can be available to everyone all around the world to consume. democracy because the great content moves to the
top. really scale up quite quickly because we can reach everyone. the system like the cable business or broadcast business, we are taking advantage of the worldwide infrastructure. all of those are screens today where people are producing content. we see ourselves on every one of those screens. a great piece of content it's pushed all around the world there's nobody better at created -- creating better content than ron and brian. the greatme of national people to work with, it's a great process. >> i'm excited about the collaboration because i'm out there watching, absorbing and fascinated by it. it's great to have a really compelling reason to get involved, understand it and build upon it. president ofd
>> i'm emily chang and this is "bloomberg west" on bloomberg television streaming on your phone, tablet and on bloomberg.com. we have been talking all week long about education technology and startups changing schools onestartups are the only using technology to improve education. big tech companies are pouring money into devices and
classrooms as well. poured 750mpanies million dollars into president obama effort in february and we've seen the old making investments in renaissance learning, a new -- i knew them well for my investing days. it's interesting to see these moves from the old new companies and old big companies looking at this market. >> news corp. also sees education technology as a big potential business opportunity. in 2011, the company launched amplify, and entire division devoted to tools for the classroom. joel klein joins us now from new york. he's the former chancellor of the new york city department of education. thank you so much for joining us. amplify has both hardware and software. tell us how it works. >> the hardware was something designed right for the school. everything we do is not about technology, it's about teaching and learning. hardware has functionality
the schools want and the teachers want and the kids want. it's not just taking a consumer tablet and saying you can use this in the schools. we come in behind that with a digital curriculum that's unlike anything we have seen. it's the kind of thing when i was school chancellor, i prayed for in new york. rich, immersive, engaging stuff with lots of videos, sequence lessons, games aligned with that. it is a complete new approach to the way we educate our kids and i think for the reasons you alluded to in the introduction, we will see more and more companies jumping into this space in or to play because we are at the beginning of a digital revolution in public education today. >> how many schools are you working with right now? how many tablets are deployed? >> right now, we are in the early phases. we have hundreds and hundreds of tablets deployed and pretty soon we will be rolling out 20,000 in north carolina. company is working
with 3 million kids throughout the united states on a whole range of services. data and analytics to customizing the learning experience, tablets and curriculum -- it is an expanding market and we are in early innings, but it is something very exciting. >> one of the things i've seen with silicon valley startups is there able to make some big pivots, it's a frequently used verb out here. when the initial plan isn't quite right. since you guys launched the company, the ipad has come along to dominate the tablet business. is it time at some point to look at doing software or something ase and getting away from matching specific hardware to compete with the likes of apple? >> i think software is the magic for this thing and the tablet is the vehicle. if it's about the tablet, nobody's going to gain by that. flexible as we move
forward and the kind of thing we have on our tablet is driven by our software. it's also much more rugged, something schools will want. we will see how things develop but the key in this whole thing has always been the functionality we can bring to school. one click guys on the teacher. so when the teacher says we are no longer working on the screen, we are working in that class, we have quick quizzes and polls that are optimized for the classroom. that's the way this thing is going to go. everyone in a startup mode, you got to be flexible and see what the schools want. we are getting constant feedback from our teachers and will continue to learn. i'm convinced this is the beginning of something that even five or seven years ago would have been unimagined. if you look at the amount of investment going into the space, the companies who want to play in it, i think news corp. is uniquely positioned because we don't have any legacy products
to worry about. get-go go it from the and designed specifically for the classroom. the way we see it is the best technology company in education, as long as we can occupy that sweet spot, we will be fine. tweet at usviewer say that his wife is a speech pathologist and has found having more tablets in the classroom makes it more difficult to teach social skills. students are developing social skills later. how do you respond to that? >> my response is that it depends how it's being used. if you sit a kid for hours in front of a tablet, that's not going to work. it's not an engaging educational experience. one of the reasons we put eyes on teachers in our tablet is so that teachers can say incident looking at your tablet, i need to look here or we have a quest we designed one after the other
after the other where kids work together. i was at a pilot program in new orleans last weekend i was amazed these kids to work up and active trying to figure out the -- who itt who was was a killed edgar out though. this class was humming and buzzing. it's not about technology. it's about teaching and learning and can we do these improve thes to kinds of things that speech pathologist is talking about, greater interactivity among kids, more teacher feedback to children. we've got an application that tells the teacher exactly how much feedback she has given to each child so she can look on one screen and say i've noticed emily's got a lot of feedback come a core he hasn't. let's make sure we pay attention to cory. >> that sounds pretty typical. there is a wonderful book called "the flickering mind" that talked about a 100 year
history of trying to introduce new technology into schools. is there something that is different this time that you guys are embracing with the notion that there have been long-standing introductions of technology and long-standing failures in the classroom? >> you are absolutely right. because we always thought we could take consumer technology, whether it's a television or tablet or computer and just shove it in the classroom. that never worked. when i was in new york, i was amazed at how many computers stayed in their boxes because teachers sought no educational value. if we don't focus on the teaching and learning part, the technology won't get us where we need to go. at amplify, everything we do is through the prism of teaching and learning. i have former teachers and principals working hand in glove with our tech and creative people so it's an enriching experience. if teachers don't embrace it, it won't work, i don't care how cool it is or every consumer
might want it. if it isn't enriching the teachers and student experience, it won't work. this is the first time i'm seeing people develop things that the classroom will be improved by the teachers will embrace. when i was in louisiana last week, i was amazed watching these seventh-grade kids trying to figure out in this quest who killed edgar allen poe. it meant they had to work with each other and do a lot of reading together and share their ideas and read like a detective and figured out. it wasn't about the fact that some kid had a tablet in his hand and was searching the internet, it was about the content. abouthave been talking why big technology companies are not more involved in education. is education a lucrative is this? does news corp. expect to make a
lot of money off of it? >> we will only make money if we do it in the way the schools find enabling and empowering. more and more tech companies are moving into this space. google is doing a lot in the space, so i think what you will see is greater and greater convergence across the board from tech and the companies. things in education move slowly. ofare in the beginning something very powerful and exciting. >> ellen to switch gears for a quick second here. you were involved in one of the most important cases and technology, and going after microsoft for antitrust. now that antitrust has come to the forefront with the potential deal between comcast and time warner and the deals about t-mobile and sprint, do you see a change about the way the justice department looks at
technology compared to what was happening 15 or 20 years ago? >> i wouldn't say real change. i think it absent flows. ie current head is someone work closely with. he was with the federal trade commission when i was running the antitrust division. i think his vision would be similar to mind. -- similar to mine. you and to make sure you don't impede innovation and make sure there are no bottlenecks. thats a basic principle animated us and will animate the justice department as it moves forward. the former chancellor of new york city schools and the ceo of amplify. thank you for joining us today as part of this special series here on "liberal bwest." you can check out all of that content on bloomberg.com. hbo is taking on tech with its new series "silicon valley yuriko cory and i got a sneak peek with some special friends. you will see how we all reacted to the show, coming up. ♪
>> welcome back to "bloomberg west." hbo is launching a new series on the tech boom. we got an early copy and watch the first episode with some tech executives. look at what some silicon valley insider start of the show. >> i need you to be thinking about apps, software, websites, this is silicon valley. >> it dead on. >> that really is eric schmidt. >> if you want to live year, you've got to deliver, like steve. >> jobs or wozniak? >> which one? >> jobs. >> jobs was a poser. he didn't even write code. isi think steve jobs amazing. wozniak is the engineer who created the apple. >> i love the steve jobs thing. >> you can totally imagine a couple of engineers having that discussion. >> it was a lot better than that
rob o show. >> that's a fallacy. two hundred thousand dollars. 600,000 for 10% of your company. >> can you imagine zuckerberg saying i will give you eight ilia dollars question are >> the arbitrary nature of the whole thing is totally dead on. -- it's justrs are based on nothing. >> urgency creates either an acquirer or funder. no one is interested until someone else's. >> we were sitting down with barack obama and i said we are making the world a better place. >> changing the world by making enterprise software. >> it's ridiculous. >> i think there are authentic countries right now that make that claim and i think all of us feel a little awkward when that happens. >> at first i was thinking is
this an exaggeration, but it's not. but what companies does it remind you of? major.com, yahoo!, google, facebook. >> here this -- bit soup. like alphabet soup, but ones and zeros instead of letters. , which iss you cringe something judges and brilliant at. the cringe. funny.as pretty >> kudos to mike judge. he had to have had an internship at google. >> who is going to watch episode two? >> i'm all over it will stop >> i'm in. >> it was good. i think it was better than all of us expected. i don't watch much tv. funny and very true, but i thought it also -- i think
it's the kind of thing people in silicon valley like to watch. >> it's time for the bwest byte, where we focus on one number that tells us a whole lot. >> how about the number five? that's the new ticker for google's class a share. the dreaded five letter ticket -- ticker right now. the old ticker is used for a new form of stock. what about the class the shares? those shares don't trade. those shares still get 10 more votes and that's a format for the stock and a lot of new ideas will follow. >> the real eric schmidt who made a cameo in "silicon valley." and we spoke with mike judge and we will be seen at tomorrow. >> this allows the founders to keep more power and give mike
>> this is "bottom line." business andion of economics with a main street perspective. today, they fallout on the supreme court ruling on campaign donations. returns.merica to our viewers in the united states and those of you joining us from around the world, welcome. michael mckee has analysis on the resignation of fed governor re