tv Bloomberg West Bloomberg April 4, 2014 11:00pm-12:01am EDT
>> live from pier 3 in san francisco, welcome to "bloomberg west" where we cover innovation, technology, and the future of business. i am cory johnson. ipo pipeline is in full bloom. the latest 2 companies are grubhub and opower. they take aim. let's check in with top headlines. the so-called twitter of china, a price range of its ipo. the company will sell 20 million shares.
somewhere between $17 and $19. the top end range a would value weibo at $380 million. semantics will hire jpmorgan chase. activist shareholder, according to people familiar. it is a week after the security software fired the ceo, steve bennett. j. lo, jennifer lopez, outbidding her former boyfriend, puff daddy, for fuse. they are buying it for 200 million dollars in cash and a 50% stake. puffy only offered $200 million. it offers english television aimed at the spanish community. our lead story.
a wave of technology ipo's. grubhub and opower. they started trade. the ceo of grubhub joined "market makers." >> the reason we did it was for exposure to communicate to the world it is a massive marketplace. that is $70 billion in the u.s. alone and only 3% as place online. >> it is not just a consumer-based grubhub. other enterprise, opower, has filed to go public. we are seeing a ton of ipo's in technology. >> now, it feels like a good time. investors are really friendly to new technology ipo's. grubhub had a 40% pop today.
and, surprisingly this is the company that is profitable and they had sales of $137 million last year. this company looks a lot like opentable which is another company the market has shown an affinity for. >> there is nothing else quite like it. it is the notion that the market is as big as the restaurant market. they said they penetrated so many more cities. opentable went public only with a handful. >> the opportunity is to deliver anywhere. grubhub, menu pages, they are city phenomenon. people go to restaurants and eat food anywhere in the country and around the world. once they penetrate the suburbs and you are able to order your
domino's and pizza hut to your home, that is a potentially really big market and what investors are seeing. >> there is a question of valuation that shows the appetite if nothing else. we are talking about grubhub. sorry. it is trading about 300 times last year's earnings. yes, it is a profitable company. what does it tell us about where we are in the ipo market? >> you are right. that is optimistic valuation. they are at 2 billion dollar market cap. for a company that is generating revenue, you get a sense of where you expect the numbers to go in the next couple of years. it takes time for the valuation to catch up. when you compare that to what
else is happening in the technology world, $19 billion for whatsapp. investors are kind of having a little trouble weighing the risk versus reward. >> and what apple is getting paid primarily in a stock. all of these ipo's are getting money from investors. in terms of the numbers, you get a sense of the companies you talk to in the bay area, technology companies are at large -- they want to be fat. >> their thirst. the ipo market, not really a viable place maybe five years ago. they felt there is so much venture capital money, let's stay private. that is going away. there is still so much private money available that you see with raising $270 million in a week. there were several more deals like that earlier in the last month. the private market and the public markets are ready.
>> interesting stuff. mark milian of bloomberg news. one of the companies going public is opower which revise cloud-based technology and help customers understand data more efficiently. shares rising and the public debut. joining us from the new york stock exchange is opower's ceo. i had not heard a single thing about the company until reading the prospectus a couple of days ago. you're helping to cut energy prices. >> we work with utilities all around the globe to give them better information about energy use and improve customer satisfaction and help them retain companies in a competitive market. it helps them help their consumers save utility which is counterintuitive that a large part of the industry.
>> the construction of new power plants is so difficult for all sorts of environmental and legal reasons. is that sort of the ultimate poll for your service, the power companies want to increase the power available? >> that is a good way to think about it. what you have seen in the last 80 years, the bulk, the entire electric and gas industry, these utilities counted on demand going up every year so that the build new power plants and make more money by getting a return. that is not an option anymore. nobody was the power play to build in that our city. as a look for new ways to profit, they have worked it out with the regulators as 30 states across the united states and the country, a mechanism when they invest in efficiency programs to help consumers like you and i save energy, they not only get their money back, they get a rate of return that is greater.
it is awesome policy innovation that transforms the way utilities can help people save energy at healthy environment by reducing emissions. >> you introduced your first product in a 2007. what technologically have to change your business and technology? >> a lot has changed. within the utility industry, one a major trend has been excited is smart meters have rolled out increasingly around the globe. the u.s., more than 1/3, that gives us an enormous amount of data to work with our utility clients to serve their customers. we have over 52 million consumers worth of energy data
which we believe is the largest data set of its kind on the planet. for us technologically, and to those data trends, really be impatient around virtualization and the cloud model for software development, big data analytics. we run as our core data platform. these new open source technologies make it easier for us to extract really deep insights about customers than ever before. >> you guys are just an ipo at goldman sachs. i wonder why you decided to go public now. >> yeah, first, going public is a fund raising event. we see this enormous opportunity in front of us. we were cash flow positive last year. >> with all of these companies that need to do it desperately, you do not really need to. >> that is the best time to go public when you really need to, you will not get the value in
the market. for us, why we are doing this is why we do not need to for survival, we see this enormous opportunity and we want to capture as much of the market as we can. we are barely penetrated in this market and we surfed for any of our 4 solutions, 30 million customers. we are less than 5% penetrated in our markets. the exciting thing for us it is not like the consumers that we are not serving or being served by somebody else, it is a blank space. we are raising enough money to go as quickly as we can. >> all right, dan, i will let you get out of there. he is the ceo of opower. microsoft's newest phone has new technology. find out what is behind the name and why it might rival apple.
>> welcome back to "bloomberg west," i am cory johnson. apple's latest acquisition uses speech recognition software. terms were not disclosed as is often the case with apple acquisitions. they are fending off another challenge from microsoft. microsoft unveiled its new phone. windows 8.1. it has a new personal assistant. it said it will give siri a run for her money. the director of bing, i caught up with him earlier and i asked him about this thing. and why the company decided to call it cortana.
>> the engineering team, when they were looking at the different names, they were saying how should it be creative? what is the principle for the character? cortana was capable of figuring out everything he needed to do as he battled the enemy. engineers literally thought of this in their offices. you walked down the hall and unlike what we usually do, we stuck with the name and did not name it microsoft's personal assistant. >> it is asking, cory, where is good barbecue? have you standing there.
the inherent conflict in the company, more searches mean more revenue. did you find that cortana leads to more searches or less? >> for what cortana allows, it is hard to think about searches. is the flight on time? you want me to track it. i do not really know. what we do know is when people are able to trust a device like that when the backing of the entire your web and all the things inside the use the devices more often. >> is there any reason why this could not run on other operating systems it is running on an ios now? >> we have to ask the engineering team. there's a lot that happens in the phone. if you have seen it yet, it is a snappy experience. a lot with the windows device. a lot of the core functionality,
with interesting guys ahead of the show. mike judge, the guy behind "beavis & butthead" and other classics. we caught up with him and his partner. check it out. >> you did spend some time working in a silicon valley the early part of entering the business world. could you describe that experience to us? >> yeah, i worked up here -- part of 1988 -- i guess. i do not know. it was not a great experience for me.
i got a lot of comedy material for things like "office space." i lived in east palo alto and worked in a couple of different places. >> if you were starting out now with the way silicon valley is now, do you think you would've stayed a little longer? >> i think -- yeah. i almost could -- if i had been born 25 years later, i could be doing a startup kind of thing. it's a different kind of world. it is easier to get started smaller with less resources and money and get funded. and so, it is a lower barrier to entry. that sort of thing. >> doing a lot of research. speaking to venture capitalists. what is the take away? what did you learn?
>> i think this is a show where the more research you do, the more you realized there is comedy wise to do with this area. we came in with certain ideas. lesson to a store about this and we started asking key questions -- let's do a story about this, and we start asking key questions and you realized that is funnier and let's to do a different storyline. >> you said if it happens, you might get into some of the bigger issues. people talk about starting a business and innovative products and all of the money you can make. in the valley, they talk about the income gap and women and their place. >> these are things that have come up since we started shooting like the google buses. it is kind of brand new. there is plenty of material out there. hopefully, we do another one. >> speaking of google, the chairman, eric schmidt, has a cameo in a party scene. we got feedback on how authentic
it was. what did he tell you? >> it was very encouraging and you look around and said i have been to this party which was great affirmation for us. >> there are references to steve jobs. >> am i? >> would you have done it without making specific mentions of certain people? >> yeah, everyone has got mac's and pcs. it is everywhere. there are pretend companies, too. they coexist in this. it just seemed right. >> what did you think about your show that will make a
different? >> we did an enormous amount of a research and try to get all the very subtle details as right as we could. you feel like there is nuance in our show. we wanted to make it as funny and enjoyable as possible. hopefully, that is why people watch it, not because it is technologically correct. >> one of the central actors said you told him that you were looking for that character and that sort of penn gillette. i know you have your roots in animation. how specific do you get on how somebody should look like? >> sometimes, i am very specific about how somebody should look like. tj, in the script, sometimes you just put a description. you are just trying to paint a
picture. that was in there and i told tj you do not have to change for this. he said, no, no, i will do it. tj got fat. i did not ask him to. [laughter] >> what has the experience been like for you guys? >> great for me. hbo has been wonderful and supportive. >> amazingly supportive every step of the way where they were so unintrusive, if it is a bomber, if it does not work, it is 100% our fault. it is no way we can blame somebody else. >> that was mike judge and alec berg. more of "bloomberg west" after the break. ♪
>> you are watching "bloomberg west" where we focus on technology and the future of business. i am cory johnson. thanks to the rise in technology, san francisco is the highest gdp per capita in the nation. while the growth has been a big boost to the economy, it is not without controversy. income equality has reared its ugly head. the question is what does it mean? how has san francisco grown to be a vibrant city and what are the lessons to be learned for the rest of the world? those issues are explored by two new reports.
one is a partner of a boston consulting group. they are joining the now. i found the study fascinating not just because of my interest in technology but as a citizen of an urban area. what has a boom in technology given us? >> the amazing thing is since 2007, san francisco has created more jobs in all but three states. we have this little city that has had a tremendous gain in not only technology but non-tech. we see here the tech sector rather than creating jobs in the suburbs and silicon valley has
been migrating to the city to areas of greater density, urban areas which are a tremendous example for other cities that want to try to revise their cities as well. >> why should anyone care about your study? why should anybody outside the bay area care? >> there are two reasons. san francisco is a very large, vibrant tech success story. there are a lot of cities such as new york and other cities like boston and austin, texas that are traveling the same trajectory. to understand how to understand the challenges that a large community -- what kind impact they have on the overall city is instructive. the other and while there has been a lot of press over the past several years are much about the bus, the view is more
nuanced than you read in the paper. >> one of the most interesting things is during the dot com bubble, it was a focus on finance and and it seems to get meted out to the rest of society. we see it spreads to other disciplines and types of jobs. >> there are two separate points. it turned out san francisco was very heavily dependent on the finance sector before. what made the.com bust worse is that there were losses in finance jobs. right now san francisco has a more balanced economy before -- between the sectors that is better set up for the future. you would not see this kind of problem that if the .com bust brought him. when i look at the san francisco economy, i do not see an economy that is fraught with controversy but is creating jobs around a
wide swath. >> tim, the only two states that have done better than san francisco, one is north dakota. and i suspect that has to lead to a lot of spending and other industries in north dakota. are there industries that spread the wealth more greatly than technology? >> new york city along similar lines looking at technology companies and the impact and one of the things of that is interesting about this rise in technology reletive to the .com boom is it is incorporating a larger section of adjacent technologies. it touches retail. these skills are broader as well. >> it is a very important point because it has the potential to spread jobs and growth across a
broader area than people think. >> to the point, what are the government's actions that have aided in this and what could have been done to grow faster? >> i not sure you wanted to grow fast in san francisco. they were very encouraged and welcomed to tech firms. they offered very targeted tax breaks. it was very effective in encouraging the firms that were already thinking about moving to san francisco or staying there to do so. part of the lessons of new york and the san francisco, if the city's administration is focus on attracting firms, that is a very potent force for development. we have seen this in other places like new orleans, if you are prepared to a, do a little
work on tax break but more importantly, build your strategy around the tech company and build around it, you better bring in more growth. >> i would say about all of the controversy -- i am sorry to interrupt. there's been a great controversy in san francisco. one of the things you cited was how twitter has drawn into a blighted neighborhood. and they do not like the changes. one of the thing people like is diversity.
when rich, white people come in, they change it by being there. is there guidance about how these companies cannot slap on top of these communities? >> in the work we did, we surveyed and did interviews of leading technology companies as surveys of the residents. one of the things that was -- that came out clearly in the residential survey was that if people felt very differently about the employees who work in in and lived in san francisco, and they felt differently about people who commuted every day. the area you choose somewhere that is easily reachable by the majority of your employees makes a difference. >> to put in a slightly different way, bloomberg having its headquarters downtown was regarded favorably. -- twitter having its headquarters downtown was regarded favorably. you should think about this as a -- tim's work shows it was not a rejection of tech jobs but more nuanced than that. >> michael mandel and tim nolan. very interesting.
>> this is cory johnson. we continue to look at our special series called wiring the world. we talked about the growing business opportunity in the classroom. what about the opportunity itself, how big it is and who is putting money behind it? ari levy joins me. why ed tech? >> for a very long time, education got a very small look from technology. nobody wanted to sell to a
school district. they are slow at moving. not a business you would see that is all that attractive. now you have all of these devices that you never used to have so you can target consumer and parents. as you know, parents are more willing to spend money on their kids than themselves. if there's an app your kid is looking for that could be help in the classroom, you will buy it. the application is therefore valuable on both ends. >> full disclosure, when i was an investor in stocks, in shorts, it was a company that came out with great fanfare because it was focused on teaching software on macintosh
computers. they did not update so they lost share and teachers were tired and stopped using it. that ability to sell seems like a great hurdle still. >> still a great hurdle. the business is focused on the enterprise sales. there may be great opportunity but the business model has not been well worked out. the ones that have been worked out are the ones that are digital in a focus and they see the audience where a company would be selling in the same way online books are sold. if you can tap into it, the opportunity is bigger. >> earlier, we were talking about ipo's. we had a company that went public this week. and another company focused on bringing textbooks into digital. both got a lot of backing from wall street.
>> what is interesting is that they do different things. 2u help colleges get programs on line. the other is more of a content side, more for campuses. they are folks are higher and. that is a market where you at least know there's a lot of money flowing through the system. trying to tap into those dollars not always easy, it can be difficult. students usually do not walk around with a ton of money. if we see an ipo that is focus on high schools and middle schools, we know we got into a new environment. >> ari levy, thank you very much. what about the students? more than 600 students, we talked about how they use technology in the classroom. and we sat down with the surveymonkey's ceo. which devices are most popular for students?
>> laptop is the most popular device but we see people are using more mobile like tablets and smart phones. they are coming up second although individually, they are not that large. we are starting to see more. technology in the classroom is a slow to change. it is not going to be an overnight thing. >> one thing that was interesting is no device. >> i think -- >> why is that? >> schools cannot afford it. they do not know how to use it. >> a lot of teachers pushing back on technology. what we are teaching is more basic than technology itself. what they want to do in fact, provide education and teachers spoke with us quite a bit. they want to teach.
but there is protectionism around, i think -- i think at the core, it is probably an expense and sort of knowledge gap. what can i do with it that technology into my classroom to help my kids? it is easier to say i do not need it or it will cost a lot of money or a particular teacher might have wanted but they do not have the discretionary fund. >> you did ask the question, how many of you think technology has helped technology - helped in the classroom? >> something there is a distracting quality. more people said it helped improve their grades in high school and college but also people felt it was a distraction. >> as a history of technology in education, thinking a lot about it, it is this vivid scene where it is talked about a classroom
that had results. teachers will spend 11 minutes getting everyone booted up. i want to know how valid that is. >> yeah, it is also historical. if you look back 15 years ago, you could do internet in the classroom and all of a sudden education would improve and that was not the case. there were false hopes. if you were a teacher, people told you it would change things before and it did not. i still think there is a lot of opportunity and we are seeing the very early stages of mobile and education. >> teachers are using the smart boards. but smart boards in high school and college are super popular. rudimentary electronic clickers to respond to the teachers, it is very popular in universities.
you can imagine it will end up on your mobile device. technology is going to change. i think it's going to get it there, but it is slow. people thought it would increase cheating. there are positives and negatives in the survey about technology. >> we learned in l. a., the students were downloading things they were not supposed to so they took them back. what about software? >> it is still early. i think there is great software for elementary school. that is where a lot of the work and effort has gone. not too much of great software for high school and college kids and it came through the survey. we saw that. when you dug down, it looked like it was older stuff. >> that was dave goldberg.
>> welcome back. captain america is marvel's ninth movie. it is the biggest box office draw. "the avengers" brought in more than $600 million. these are some the most popular franchises. we spoke to stan lee. we asked why it has such an enduring popularity. >> i remember when i was a kid, everybody wanted to see "king kong" and "frankenstein." people like things that are bigger than life. they did not make that many
until recently when the producers discovered these superheroes are just the most popular things ever with the public. >> we sometimes ask the question, is there superhero fatigue? we will see "the amazing spiderman" and a second one will be followed by the third one in 2016 and a fourth one in 2018. do you think at a certain point, moviegoers get fatigue? >> think about "james bond," i do not know how long it has been going on but it is still strong. i think it will be the same thing with marvel. >> let's compare spiderman and that is released by sony and x-men to the many felt that is being distributed by disney now. the latest one being "captain american."
some of the numbers suggest that the marvel films under disney are bringing in more bugs than others. -- more boxoffice than others. if that is the case, what does it tell you? >> like anything else, if you have a plethora of characters. eight or 10 characters, some will be a little more popular than others. the amazing thing about these movies is every one of them seem to do well. some may be bigger blockbusters than others. there seems to be at the moment a sensational demand for these types of movies. >> a lot of people are pointing to the next "avengers." because of the global nature and possibly being the biggest film of all time. would that surprise you? >> not at all. >> warner bros. has the d.c. family of characters.
it does not look like they have generated as much at the box office. do you have any thoughts? >> i wish my friend bob crane was still with us. he created "batman." he teased me that batman was a big deal on tv and movies and said marvel had done nothing. i wish he was here so i could return the teasing. a character should be something that the reader or viewer cares about and maybe at marvel, we have put more effort into refining the characteristics of our heroes, maybe a little more effort they have on the other side. >> jon erlichman joining us and
taking a shot at bob kane from the old days. what have you got? >> you mentioned that the great "business week story." 8,000 is our number. marvel has more than 8000 characters. when disney bought marvel, bob iger got a bunch of interns to start reading through the comics and add up all of the characters to see how much of value. they kept counting and came up with these characters. >> that is the best intern job ever. i read almost every one of them. >> jon erlichman.
>> in this week on "political capital," paul ryan breaks down his 2015 plan. mike rogers talks about his plan. and billy packer on the final four. we begin the program with house committee chairman paul ryan. thank you for being here. you put out your budget this week with a divided congress and the president is a democrat. we know it will not be enacted. is it a blueprint for republicans?