tv Bloomberg West Bloomberg April 12, 2014 7:00am-8:01am EDT
>> from pier three in san francisco, welcome to "the best of bloomberg west." i'm emily chang. every weekend we will bring you "the best of west," the top interviews with the power players in global technology and media companies that are reshaping our world. our lead story of the day, major news about cyber security. researchers have discovered a bug that affects open ssl software,
supposedly ensuring that the information stays private. with this, people who know about it can exploit the glitch to get access to private information, your passwords, your credit card information. cory johnson and i spoke with dave chronister, the founder of parameter securities. we asked them what exactly happened here and why it took so long for security researchers to find this bug. >> the first point we should make is that it was found by google researchers and some researchers from a company called codenomicon. while the bug is tremendously powerful and important, there's also a fix available to it. most large websites at this point have pushed out that fix. as you guys were discussing,
this is a flaw in the encryption software used by two thirds of the world's internet sites. it is open-source software, so that means it is community-created and community-developed. the fact that this flaw has been around for two years raises some interesting questions about who knew about it before. >> let me bring you in on this. is this a victory for open source? is it a failure of open source because so many people were using it because it was free? >> you know, i wouldn't even look at either one of those. one of the things we really have to understand is that the problem with these is that they're out there all the time. it doesn't make you better or worse if it takes two years to find it. there are a lot of exploitable sets they haven't found fixes for. however, i would say one of the nice things about the open source is you do have other
people looking at the source code to be able to find this. however, like the previous commenters said, you don't know who else has seen this in the past two years that may have actually exploited it. >> let's talk about what they actually see, jordan. you put together some good visuals of what the information looks like unencrypted. it is not obvious. i can't see my password and's -- in this information. you have to be quite skilled to interpret it, right? >> a researcher from the netherlands did some interesting stuff yesterday as soon as the disclosure came out very he was able to run some tests on popular websites. >> this is what looks like unencrypted. >> yes, this is from yahoo!'s website. yahoo! has since fixed the problem. he was able to say, i can grab usernames and passwords from yahoo! e-mail. yahoo!, here's the problem, you should fix it. and they did.
it looks like gibberish to the untrained eye, but within that is contained some valuable details. >> which companies were vulnerable and when. the biggest tech companies like google, facebook, amazon, seem to have avoided this. it is a great question. we don't really know the answer to it. yahoo! was vulnerable and didn't fix it until yesterday. google and facebook said they are not vulnerable. what we don't know is if they were vulnerable before it was fixed or if they were never vulnerable in the first place. a lot of large organizations like banks were never vulnerable because they don't use opened ssl. there's a wide range of web companies that were either vulnerable before and have been fixed or were never vulnerable in the first place. we just don't know the answer. >> its interesting to me that the most threatening thing of all was the inability to see into any computer's ram. >> right, let me take a step back.
i would not say that banks were not vulnerable, because you have to understand that ssl not only used on websites, but tpn and e-mail. atms, all of these used ssl. the question is, were they using a vulnerable version of that. to say that the fix has been put out, the fix has been put out by the open ssl foundation. in fact, i was on a flight last night. i was compiling at 10 p.m. to get your question, yes, you are actually looking at arbitrary data in the working ram. this is where the temporary data is held. one of the things to understand is this is arbitrary. i can't pick what sort of information i am getting. it is just handing me random data. that is where it gets good and bad. it could be from any program running on that server, but i
can't pick and choose. >> so, jordan, what should we do? should we change our passwords now? how do we know if our information was compromised? >> from this point, it is probably wise to change your password. the interesting part is it is probably less to protect yourself against criminal hackers. we don't have evidence of a new how to do this. it is more to protect yourself against intelligence services. this is been around for two years. the likelihood that intelligence services did not know about this is probably low. it is good internet hygiene to change your passwords. if you know that a site is fixed the bug. you might want to wait until they fix it, otherwise you're still disclosing it semipublic way. it is always good practice to change your passwords. >> that was bloomberg news jordan robertson. still to come, we are digging into how the comcast-time warner cable merger is affecting
proposed comcast time warner cable merger. comcast argued the corporate union was good for business, but is it? our editor-at-large cory johnson and i spoke with visiting professor susan crawford very -- and author of "captive audience." she wrote a piece in bloomberg view entitled "comcast pretends its merger plan is a gift to us." we asked her what she meant by that. >> they say there are semipublic interest benefits in this merger that it has to go through. their job is to create an air of inevitability about this deal. the politics are now drifting against comcast's plan. it is not at all clear that the public interest concessions are claiming to be making are actually in the public interest in the long run. there's a lot of interesting news today about the merger. >> senator franken pointed out that the comcast savings are not going to be passed on to consumers. is that kind of thing typically made in a merger?
concession to consumers that prices will come down? >> they have this obligation to prove to the fcc that this merger is affirmatively in the public interest. what they're saying is, whatever were going to do is not going to add up into lower consumer prices. it is more efficient for them to drive down the pricing of programming and get everything else they buy at much lower prices, but no particular consumer benefit. yes, they have an obligation to show that the public interest is served by this merger. as far as i can tell, they're not making that case for strongly. >> and yet the hearing today showed that they're going to have a tougher sell than potentially they thought they might. what is the case that this doesn't get approved? >> they're going to take this merger extraordinarily seriously. david cohen keeps saying we don't compete in any geographical area. that is like the five families saying we have made peace.
the cable organizations a long time ago divided up the nation among themselves. that gives them enormous gathered power over every other element of the media ecosystem, everything from programming to devices, and particularly for high-speed internet access. it is about even at this point. we'll see a very long series of hearings and meetings going on at the fcc and the department of justice. >> did you just compare the cable companies to the mafia? >> they have clustered their systems, and they never enter each other's footprints. now, comcast uses that as a plus for the merger. no competition will be reduced by the fact that this merger happens. when they merged with nbcu, they said that would be ok because no competition would be reduced because comcast was not in programming.
it is almost as if no possible merger involving comcast could ever harm the consumer interest. >> susan, where do the apples and googles fit into this debate? >> their futures are in many ways dependent on the good graces of the cable companies. for high-speed internet access, the cable companies of america are dominant. for about 77% of americans, their only choice for high-speed internet net access is the cable monopoly. comcast is saying they're afraid of google and apple and facebook and the others. the fact is, they are frenemies at best. they're all working together for constantly higher price. comcast has the wiring into people's home. that is the official gatekeeping function that gives comcast its enormous power. >> susan, in your book you make a pretty convincing argument that monopoly law as it is written does not really understand how these systems work in this new era and that
the geographic comparison does not work. what is the right way to interpret monopoly law as it applies to this, without having to change a lot? >> comcast has such enormous buying power with this merger. it will be buying all the programming it is setting prices for. it will be buying all the devices that consumers have in their homes. that power has not been examined by the antitrust laws as strenuously as horizontal merger rules have heard comcast is going to be shaping entire markets. everyone is going to have to do things their way if this merger goes through. i know the department of justice will be looking at this very closely from that perspective . fcc hasn't even broader interest. they need to find out whether it is affirmatively in the public interest. >> quickly, susan. is there any precedent for this type of merger?
what should we look out for some indication about how this might play out? >> we should really inc. back to the days of ma belle. these cable companies have as much power as the old at&t did over telephony. there being allowed to vertically integrate all kinds of markets. they are absolutely without any oversight or competition. we have a lot of work to do. the company should be on an entirely different trajectory at this point. >> that was susan crawford. biz stone has a new documentary documenting his rise in silicon valley after twitter. that is coming up next. ♪
>> welcome back, i'm emily chang. this is "the best of bloomberg west." bit stone is the founder of twitter and also a cofounder of jelly. he is the author of a new book. the book chronicles his move to silicon valley and offers advice to budding entrepreneurs. i sat down with stone and asked him why he decided to write this book. >> i started over a decade ago. i was invited to teach at what they call a master class at oxford, which is just a fancy term for a lecture. miraculously the invited me back. i started doing that every year. then, the groups started inviting me to lecture at other schools. something pretty amazing happened. i found that everyone from high school students to ceos would come up to me afterwards and say, you know that thing you said about creativity or that thing you said about your
perspective on opportunity really resonated with me. i thought to myself, that is a wide group of people to come up to me afterwards and said he -- say they loved it. someone suggested writing a book recently and i thought well, i'll just turn the lecture into a book and i don't have lecture anymore. but once you read a book than people want you to tell them even more. i wrote it basically because his lecture was honed over a decade. people are finding value in it. i thought it was worthwhile. >> the audience was quite broad, as you said. what do you want people to take away what is the main thing? ,>> well, my view of the world is hallucinogenic lay-up -- very operational. i would like people to take away from this book the hard learned
lessons that i share. if it is only one thing they take away, it is hopefully some of the chapters on creativity and the idea that everyone is creative, not just artists. everyone is creative. we have -- creativity is a renewable resource. i would like people to take away from this fresh perspective on the idea of giving back. so many people just do it wrong. they think they should wait until they are comfortable and older and moneyed and then they should -- really, if you get started early with volunteering and donating five dollars, the impact you have over your lifetime is so much greater. i talk about the compound interest of all truism. just a lot of inspirational aphorisms and funny stories. >> speaking of money, you don't sugarcoat how broke you are in the early days, like living in your mom's basement with your girlfriend. you're living in an apartment somewhere and could not even buy a bed. what drove you then and what i
-- what drives you now that you do have money? >> there was always a belief in my future self. z is going to be smarter and figure things out. i just won't worry about it right now. what drove me really, the work that i was doing, was engaging to me. i always found something that i was really excited about doing, like when i started my first design studio, and that led to learning web design. that led to my first foray into being an entrepreneur with an early social blogging network. i really believed in the idea of democratization of information and was excited to work at blogger. money didn't matter because it was more of a mission. the mission drove me, is the short answer. >> does the mission still drive you?
>> yes, especially with jelly. with jelly, i left twitter on a day-to-day basis a few years ago and that gave me space to kind of look at things from a higher level, get philosophical about this amazingly connected world we are living in now. i asked myself, what is the true promise of a connected society. yes, there is somebody waiting to play letterpress with me right now. i couldn't help but think the true promise of a connected society's people helping one another. in a way, jelly is a platform for doing just that. i feel like i can't go wrong working on this. >> how has it been a few months into being the ceo for the first time? >> it is so great. i have learned so much from being on the sidelines and being
-- what i like to call being an oscar-winning supporting actor to so many great guys. >> now you're the lead. >> yes, and i have such wonderful support from a team. they're also great, and i listen to them. i tend to pick up traits when i like them. it is really a fantastic thing growing into this role, playing a mentor. >> who do you go to for vitamin -- who do you go to for advice when you need it? >> i go to jack dorsey and evan williams. i go to dick costolo. jack is a must been serving as my executive coach at this point. he has grown so much in the last four years, it is unbelievable. we meet every wednesday
socially in between. for specific questions -- very specific questions. i asked him what he would do in this situation. sometimes a specific and sometimes very high-level. it is just a walk and talk. sometimes we just joke around. >> is interesting because nick felton spoke about twitter really questions a lot of the assumptions about the founding of twitter and what we already knew. he says jack is more of a marketing genius. how do you respond to that? >> jack is very talented at marketing. look at square. it is just taking off. >> what about products? >> he's great at product. jack is an artist at heart. he thinks for a abstractly about product. maybe that is where the confusion lies, because when he
first described square to me, and i invested in it, which i am very glad about, he talked about payments. why payments? he said payments are a form of social interaction. we do it every single day. we look another person in the eye and we give them money for coffee. this is a social transaction. i saw the light. he's taking that thing we're been doing for centuries and making it into an experience, and a beautiful experience of a beautiful product. >> you have your own telling in here about the founding of twitter. it's almost like setting the record straight. >> i lived it is what i saw. >> you seem to have done such a great job of maintaining relationships with everyone.
you said one of the problems you saw early on was that maybe evan and jack to not talk enough. do they do more now, are they better now? >> i meet with them all the time. we get the boys together and play and all that stuff to jack and i meet up socially. i forced them to communicate because i had a birthday party and they both had to come. >> that is the glue. >> the thing is, they're so similar. they both are very quiet and soft-spoken and speak when spoken to. without me in the middle, it would just be like two guys. >> we should put you guys in a tv show. my interview with twitter cofounder biz stone. coming up, i speak with dropbox ceo drew houston and find out
>> you are watching "the best of bloomberg west." i am emily chang. announcing a new board member, condoleezza rice, and a new photo app called carousel. the best thing about it, it doesn't take up storage space on your phone because the photos are stored in dropbox. i caught up with him at a recent event and asked him why photo sharing needs a new app. >> carousel is all your photos, your entire life in your pocket wherever you go. it is great to have your photos in your phone, but you don't have the photos from your phone,
what about your computer and all these other places? we bring it all together into this place and organize it for you so you see this timeline of your life. it is completely private. and then there are a couple things i could get into. it is so hard to get all your photos together. so hard to share them. you go on a trip or you go to a wedding. we all but each other to send the photos. it is like cleaning your attic. >> it is easy to share your photos publicly, but privately it is different. >> we don't do it. this is the answer to that question. what if you could make something that is so easy that you could text a thousand photos in the second? that is what carousel does. >> this is part of chapter two of dropbox, as you call it. what all is in chapter two? >> we thought about what people are putting in their dropbox is. well people are putting in the files.
these things used to be in your house, things you would hold. they're your photos, your documents, things in your living room or your coffee table are on your bed. those things are all on servers. they're in your dropbox. that is only going to continue, so what we realize is that we're actually not just building this app, we are building this new home for all the stuff you care about. that is what we are calling it, a home for life. it is your personal stuff, your work stuff. if you have a question about which one it is, it is altogether. >> it is mine. so, you're doing the standalone app strategy to my facebook is doing the same sort of thing. they have had limited success there. paper, which came out with much fanfare, hasn't been doing so well. obviously, dropbox is a phenomenal product and what makes you think you can do other apps, too. >> we always start with what we think is broken. it started with me just looking
through my own photos. it was a late night at the office, i find this folder called 1999. i go in and go oh my gosh, all these pictures from high school. i thought i should share the photos. it was a nightmare. you count the number of steps to assure a bunch of photos. it is like 100 things. i forgot the e-mail addresses. i didn't know how to get a hold of them. it should be one click. so, having a separate app, having carousel be a separate app from dropbox. let's focus on the problem. ironically, it is about focus. i want to build one really great app for photos and other really good stuff for things you do at work. instead of one app that is good at everything, but kind of not, that is the heart of this chapter.
>> you been working on dropbox for business. how is it going? >> really great. the last time we talked about it was in november. we announced that companies and people want their home and work stuff to be separate. you should own your baby photos and all your personal stuff and your company owns your work stuff. we have awesome companies that are started using dropbox for business. really great companies love it. >> historically, what i need is a consumer are different than what a company needs and wants. is the product went to be any different? should be a different? >> it starts out being different for the people who are responsible for administering everything. i.t. and cio. they have different needs. they are responsible for making every
buddy -- everybody more productive, but they have to keep company stuff safe. dropbox is this is all about security, visibility and control. it is about i.t. being able to deploy dropbox in the business and handle a lot of things that employees don't need to think about. >> security is the most important thing for businesses. where are you in terms of how you feel the security is in the product? is it as secure as you want to be? >> we always are doing more on that front. you can never do enough. that is really the big purpose behind having a separate product. we give i.t. administrators all the control and all that security. the average person doesn't think about it, but audit logs and compliance and single sign-on's, are things that make an i.t. administrator really happy because they know that their company stuff is safe.
>> and you hired condoleezza rice. from a security perspective, she must bring a lot to the table. what does she bring? >> she is such an amazing person and an amazing leader. it is so rare to have someone who has had a leadership role in so many different contexts. in government or as a professor at stanford. she has been on public company boards. she can connect all these dots in a way that i have not seen before. we had a chance to get to know her over the past year. it is just so great. we can finally make that happen. >> up next, part two of my interview with drop box ceo drew houston. i asked him if we are in a tech bubble and what it is like to say no to steve jobs. coming up next on the best of bloomberg west. ♪
>> welcome back to "the best of bloomberg west." i'm emily chang. drop box is one of the valley's fastest-growing startups with 275 million users and vcs pouring in money at a $10 billion valuation. in part two of my interview with drew houston, i started off by asking him where the company is seeing the bulk of its users coming from. >> it is all over the world. the majority of our users are outside the u.s. we see a lot of sign-ups from
france and with partners of ours like samsung. you can imagine the growth that comes from something like that. a lot of it is just everyday people telling their friends about dropbox, people sharing folders are doing work with friends. and like carousel give you all kinds of reasons to share with a lot of people. >> box recently filed for an ipo. they're losing money. $14 million a month. how are you guys different? >> fundamentally people started using dropbox at home. we have to think of a much cheaper way of acquiring a business customer. it is also really powerful. there are all kinds of other things you have to do to hire a sales force into marketing. we actually do those things, too.
but when you're drawing from a base of 275 million people who use dropbox, there are no hard works, they love it, they go into the office and start collaborating. we just need the business. it is a lot easier. >> you are not spending nearly as much money as they are marketing? >> we are setting this up for scale. that's always been part of the model. let's just get everybody to fall in love with dropbox. there are a lot of companies that run better because they're on dropbox very let's build an awesome product for them. >> do think about someone getting to the public market first? do you think about that? >> we have already raised a lot of money. we don't really think about it that much. when you leave a gas station, you're not wondering about the next time you go to the gas station. we focus a lot more on what problems people have.
how do we get things like carousel out the door? how do we build an all-new dropbox for people that is an even better product for people. we will get around to all that. right now, i'm just excited about adding people like our ceo and people like condi to our board. and launching products like carousel. >> $10 billion, that is your valuation now. your name comes up in bubble conversations. why do you think can be is fair? >> it is a new world now. back when the internet first started people could tell that , it was going to be a new world. they just didn't know when. they thought it was going to come a little earlier than it did. now it is like, how many companies can have 600 or something people and reach hundreds of millions of people? that happens pretty often now.
what gets us so excited, what gets our investors are excited is that this is a problem that is helping everybody in the world. everyone needs a problem solve. there are 2 billion connected internet users in the world. that will go to five in the next several years. the market is enormous. >> and you're the guy who famously turned down steve jobs, right? how do you feel about that now that google has tried to do this, apple has tried to do this microsoft is trying to do this. , that must be scary. >> we had competitors in the early days. we have competitors now. we have always had a competition along the way. this is nothing new. we've always known that if you're going to solve a big problem, they're going to be other people wanting to do it, too. we focus on how and we build great products and make sure that what we're doing is a little different from what everyone else is.
>> welcome back to "the best of bloomberg west." i'm emily chang. upworthy is on a mission. it is known for its catchy headline and over 50 million users that watch and share its content every month. we sat down with the founders and co-ceos. we asked what they think the most important topics in the world are. and who decides? >> like any other media site, that is something that our readers trust us to figure out. far too much media focuses on
trivial stuff, celebrity news, gossip. it is stuff that doesn't help people be better citizens or understand what is going on. that is when we started up worthy. we really started with a focus on just publishing stuff about that important topic. >> you get attention for your recent headlines. scientists are trying to talk to aliens and it is make interesting. how do you come up with these headlines? is there some written rule of thumb or some certain methodology? >> we just have an excellent team of creators that are really interesting and really creative and really generative. we give them the mission of just try to make stuff interesting. try to figure out why somebody who is very busy and has a thousand other things to do, has 1,500 things in their facebook newsfeed that they could click on, how do you make them care
about this right now? we made this by throwing out the old rules about the proper way to write a headline and the proper way to run a media company and just say how do we do it now for our friends and the people we know, was real and personable and actually connects with people. >> upworthy's traffic has shot up and so has the controversy around the site. what do you say to people who claim you are stealing their content and just changing the headlines? >> we actually get very little feedback like that very the actual feedback we get is from people that put their heart and soul into a video, hosted at youtube and it got a hundred views or 200 views or 500 views. one of these up worthy curators found it, packaged it and shared it with our huge audience and got 500,000 or one million or 5 million views. >> there's been a lot written about you guys lately.
i wonder how you guys would define the phrase click fraud. >> i think click fraud relates to numbers. we try to relay headlines that matter to our readers. that is why the average media site gets about 600 social action shares, up worthy on average per piece posted gets about 31,000, that's how much people actually want to share our content. >> talk to us about your audience, who do you consider your target audience? tell us how fast you are growing. >> i think it is actually in the known universe, the latest that we heard. the way we think of our audience, we have about 8 million core subscribers. we think of them as the upward the community. they have signed to get it every
day. it is a passionate, wonderful group of people who have not totally given up on the world. they in turn share it out to about 50 million people a month. >> what you do to increase the value of them to advertisers? obviously, the number of clicks, people going to the site, seems to be growing. what you do to increase the value over time? >> i think the value really is in tapping into this trend of people who want to do well and do good. they believe in values that go beyond just buying things and want to buy products that are good for the world. as one of the things we found in our recent research was that there is as real concentration among our audience of people who want to be introduced to products and brands that help them make better, more socially conscious buying decisions. >> how do you think you compare to a buzz feed or even the secret apps out there like whisper and secret trade whisper hired a guy from gawker.
they're trying to research potentially viral content as well. >> i think the real differentiating thing about up worthy is that we start from the mission first. we want to draw massive amounts of attention to the topics that matter. on day one we set a goal that we are only going to post things that achieve that mission. a lot of media sites make a general trailer for they're going to have the content that they're proud of them might win them a pulitzer and then they have the content that drives traffic. at upworthy we set out to say let's make the content we're really proud of that really moves the needle forward for society and make that drive the traffic. >> what is the most shared up worthy post of all time? >> i think the most shared with this amazing 20 minute video about a teenager's battle with cancer. this great video got seen over 17 million times. i think it is an amazing thing that we've learned in our
journey just in the last two years. the stuff that you think is going to go viral isn't the stuff that goes insanely viral. a 20 minute video about cancer. it has an inspiring ending, but he loses the battle with cancer. it is a very serious, very real video. it is the number one of all time from our site. >> you guys are launching up worthy in collaboration. what is that and where is the future for you guys? >> upworthy collaborations are a new way for us to work with brands and focus on the thing that we are the best at and i think a lot of brands are trying to do as well, which is start conversations and draw attention to really important topics and brand values and other issues of note. we can work with brands in a number of ways. our number one ways to focus on sponsored cure ration. we work with a brand to figure out whether brand values are, so not just can you sell this product, but what are you trying to evoke in the world.
>> welcome back to "the best of bloomberg west." the fight to dominate original content on the web is heating up. web giants from yahoo! to aol are turning their focus to creating original shows. even microsoft xbox entertainment studios is getting into the game. there are more than a dozen projects in development. jon erlichman got behind the scenes to see where these programs are being made.
>> inside this low-key santa monica office building, microsoft is building its tv future. it is tied to this. xbox entertainment studios is a unit of xbox created for tv shows. xbox studios is developing all sorts of shows. a steven spielberg produced halo series. planned live coverage of the bonnaroo music festival. a reality show on street soccer ahead of the world cup. if you are one of the 48 million members of its online entertainment network, you may be able to stream originals the same way you would watch netflix or play interactive video games. microsoft may also strike partnership deals. shows will also be interactive. if you're up for it, you will be able to do funky stuff gamers
like to do that is different than lying on your couch watching cable. microsoft is doing this to keep xbox loyalists happy, but also to broaden its reach. it is estimated that each xbox sold is worth $1,000 to microsoft. original shows also fit with microsoft's goal of making xbox the center of a total entertainment network. connecting to other microsoft devices. >> traditional tv is placed on the wall. >> adding to that tech office feel, a ping pong table, a well-stocked lunchroom commemorate all of our successes by ringing this belt. >> let the games, make that tv shows, begin. >> that does it for this edition of the best of bloomberg west. you can catch us monday through friday at 1:00 p.m. and 6:00 p.m.
>> we are finding it, we are testing it, we are there as they build it. we are on a quest to show you the most cutting-edge companies on the brink of the future. tonight, i try on electronics that measure concussion. >> ow, i feel bad for the dummy. >> i will meet a paralyzed man who is walking again thanks to ekso-bionics. >> how does it feel to be taking steps right now? >> oh, it is amazing. >> and we will check out a house that will cut your power bill to zero. >> this home comes with a guarantee of 10 years of zero electricity and zero gas payments. >> "bloomberg brink." ♪ companies that break the mold, convention, boundaries.