tv Bloomberg West Bloomberg April 19, 2014 3:00pm-4:01pm EDT
♪ >> from pier 3 in san francisco, welcome to "bloomberg west" where we cover innovation, technology and the future of business. i'm emily chang. every weekend we'll bring you the "best of west," the top interviews with the power players in global technology and media companies that are reshaping our world. president obama says intelligence agencies should reveal internet security flaws to the public, but there are exceptions for a national security of law enforcement need. this comes after bloomberg reported that the agency knew about and exploited the heartbleed security bug for two years before it was revealed,
something the nsa has denied. bloomberg is standing by its story. i spoke with david kennedy and bloomberg news cyber security reporter jordan robertson about these developments. i asked do they believe the nsa? >> the nsa denies but bloomberg is standing behind the story. what this illustrates is that this is a serious issue. heartbleed is a serious issue in internet encryption. we know that the n.s.a. has been trying many different ways to compromise internet encryption. it is almost irrelevant whether this was the heart lead bug or or something bug else. bloomberg is standing behind the story. >> david, what do you think? >> i think the nsa will say what they need to. their whole purpose is to be a spy agency. they have huge cyber warfare capabilities. their whole purpose is to really go and actively export these types of laws prevented not have
to disclose whether or not they discover this previously or not. that is part of the national security thing that they say basically that they had no idea that happened even though they could have been exploiting it for years. they have all of these types of things in their arsenal. they have hundreds if not thousands of different exploits to use everyday to infiltrate different governments, there is a lot of money to be made in both the commercial and private sector. heartbleed oris else, would you say they're in the business of exploiting the bugs and vulnerability in the system? that is what they do? >> correct. the n.s.a. buys security vulnerabilities. they don't disclose them to companies. if the obama administration says now they are going to require the nsa to disclose vulnerabilities that they find, as you pointed out, there is a loophole in the statement which a privacy advocate told me this weekend is so big you could drive a truck through. what qualifies as national security interest? what qualifies as law enforcement interest?
i mean, there is no clarity on what they would disclose versus what they would not disclose. they paid millions of dollars. they're not in the business of buying bugs and giving them away. that contradicts their mission. >> david, then what do you make of this statement from the white house? is this ever going to actually happen? is this trying to appease the masses and put something out there? >> if you look at what happened with a lot of the snowden documents that were released, you have a lot of organizations that specifically look for these flaws and use them actively for intelligence purposes and going into different government agencies and do surveillance. i think this is to appease the masses. they are not going to disclose their techniques and what they are actively going after. it is going to take something like a snowden release for us to see what is going on behind the scenes. i came from that realm. i was in intelligence doing a lot of these things. for me it was a different ballgame back in the early 2000, 2005.
we did not have this huge cyber movement. i think there is very little laws or regulation around what they can actually do what they can't do. after this has been made public, i do not think it is much. >> jordan, the canadian revenue agency, i believe is one organization that has been impacted by heartbleed. a number of social security numbers were stolen. you have a story out today about how business are having trouble getting rid of this thing even though there are patches out there. are we going to hear more stories like this? >> it's intersting. the patch for this bug was quite simple. you push the button, do a few other things, minor technical adjustments, and within a couple of hours you could fix your system. most companies did this early last week and what is less known is that there were ripple effect from that. if you patch your system but your internet hosting provider does not patch the system, or there are problems with them, we talked to a company that does the youth sports fan sites. they patched their site, they
did it right away. their internet host also patched it right away. there were glitches and problems. photos disappeared from the site. you couldn't upload photos. couldn't view photos, and you cannot do anything. i talked to one of their executives and he said it took the entire 43-person company all week. >> david, what is your view on how serious heartbleed it is? is this getting overhyped at all? >> i do not think so. it is a lot larger than people realize. facebook was impacted, and it is not just applying a patch. people were able to extract passwords that encrypted data. there is a lot more behind-the-scenes that vendors have to do. your passwords could have been compromised, information could have been stolen, so there are a lot more ramifications to than the just running a patch and fixing the website. it is one of the largest exposures we have ever seen in the past 10 years that i can remember. it will be a long time before
all of the issues are fixed because it does require a lot more than just running a patch or going in and fixing a system. there will be a lot of issues in common, and the major problem is detection. prior to it being released there was no way of detecting it, whether it was exploited prior to the patch date being released. we a lot of companies had no idea if they were hacked prior to this going live. so that is a big deal. >> that was david kennedy and jordan robertson. excel partners is known for taking early bets on companies like facebook, dropbox, spotify. up next, we'll speak with rich wong about his investments in mobile. ♪
and they sold out. i sat down with rich wong, a partner and started by asking him if google glass could go mainstream. >> google glass is still in beta at this point, and it is still very much intended toward developers to experiment on applications. the reality is if you try the product and read the reviews, it's probably going to be a while before becomes a mass-market hit. it is perhaps interesting to those of us who live here in the valley, we welcome new technology, but it will be a while before mainstream advice this in a broadscale way. >> i was told zero chance of having it going mainstream? is that too extreme? >> it is too early to predict that. i would not make that prediction myself. when google bought android in 2005, we thought -- they would be putting the operating system and everything of and without they were not spread into that
google has executed incredibly well, so i would not count google out at this point. >> in terms of wearables in general, how closely are you looking at wearables? even when it comes to wristbands. those still are not going mainstream. >> we're not investors in fitbit or nike, but we are believers in that trend. my fitness pal aggregates a lot of the fitness and nutrition data that sits on top of those wearables. and we think that is a real trend. the fitness aspect of wearables is extremely real, and is accelerating even if the glass aspects are probably still in beta. >> what about the idea that
people just do not want a measured life? to measure their life completely? i have plenty of wristbands that i don't wear. i haven't been compelled to wear them every day. >> there are a lot of different views. my wife is a very serious user of fitbit and has gotten a lot of motivation from with the idea that you're able to compete with your friends across the country in a part of the world is a very motivating behavior. the trend in wearables are on the fitness basis of very genuine trend. >> when you're looking at mobile right now, what is hot? what is the hottest thing out there? >> in the context of i think the last five years is that about ubiquity, and the next five or about richness. android was purchased by google in 2005, iphone in 2007, and now we're about one billion smartphones shipped this year million tablets. getting to mass ubiquity has happened. mass consumer adoption today.
the fact that we have the smartphones, but apps are still dumb or not fully integrated to the information on those phones, the idea these applications become smart and predictive is one of the major areas of what is new. >> you're talking to the founder of the app secret. they are very controversial. some investors are very bullish and others think they are not good for the world, not good for humanity. what do you think? >> i would we doubt that the idea of anonymity on the internet is not a new idea. going back to blackboard and chat rooms, the set of behaviors that people are concerned about, plus sharing ideas anonymously has been around for a substantial period of time.
now that it is on a mobile device and being able to share that way is not better or worse than previous iterations. i do think that secret and whisper, i have not spoken to them, but you need to put the right amount of moderation and monitoring in place. they will do that as a part of making those communities robust. >> what about snapchat? >> i think snapchat is a little bit different. snapchat is a thumb rule service as opposed to anonymous. >> and it is here to stay? >> i think snapchat has passed the tipping point where it is clearly a service that people use as a day-to-day communication tool. so, yes, i do think it is here to stay. >> what about big tech companies in mobile? we saw google buying a drum -- drone company. facebook has been buying in that area as well. when you think of all of that
going on, given that drones are not bringing broadband to remote parts of the world yet? it is just so early on. >> the drone companies are pretty early. the reality is sometimes you buy for the core team. we talked about android and how google made that a huge success. sometimes it is all about the team. in the case of the drone companies, i am reading the same things you are. i'm hearing the same reports that your cover that there's a view that drones could be applied for mapping technology, photographs for navigation or could be applied for broadband internet service. it is pretty early for those technologies. >> there has been so much activity in the tech space, whatsapp, andg
oculus for $2 billion, mega rounds of funding being raised. 11-digit rounds happening. multiple rounds like that so far just this year. what is going on right now? are things getting too hot? >> there are a number of major revolutions going on in technology. desktop to mobile we talked about many times before. ownership ofstatus the cloud, and there is this rise of big data, and the move from the social internet to new forms of the social internet. if you're an incumbent technology company and you're not riding one of these key trends you can get pretty scary. you can get left behind if you're not one of the key players in one of these three major shifts. on the flipside of if you're one of the startup or growing companies that is the personification of one of those shifts. if you represent the personification of that trend and you can be strategically valuable to a lot of people.
intel did a large investment just a few months ago as an example of that. >> i've been asking pretty much everyone on the show do you think we are in a bubble? we have seen what has been going on with the nasdaq. i spoke with trite, and i want you to listen to what he had to say. >> to me, it has been a steady sequence of very large rounds. that means we're in bubble territory. >> you're the first person who has come out and said it. >> no one wants to say it because no one wants to break it. everyone wants to cash out before it is over. >> are we in bubble territory? >> well, i think it depends on how you define it. we are not dramatically not, the majority of companies being fun is had real cash flows which is quite different from the 2001 time. the multiples are getting up there, the multiples in revenue multiples areings
getting higher. i think the 10% pullback that we've seen in the nasdaq this far is likely to have some impact on the late stage round and it is likely that we will see some moderation because of that. broadly defined as a bubble chasing company that has no business model are things or proposition that is not accurate. in terms of where we are today. >> do you think the growth we are seeing a sustainable? the funding round, is that not sustainable? that is not going to last? >> i think the evaluations of the companies are sustainable, but it do not know if they will continue to accelerate at the same pace they have. in many cases investors are looking ahead at next year's revenues and pricing some of their investments off of that. that growth rate has to be there in order to support those valuations. but i do not think it will double again or triple again in some of these cases in the following 12 to 18 months. that in some cases we have seen in the private markets. >> my interview with excel
♪ >> welcome back. i'm emily chang. this is "the best of bloomberg west." hollywood heavyweight jerry bruckheimer is betting big on sequels. the producer recently teamed up with paramount pictures is working on new films "top gun" and "beverly hills cop" franchises. our senior west coast correspondent caught up with him, and they started talking about design in film.
>> in the book there is a conversation around design with companies like apple, we know where they are going with design. what about design for you in your films, and television, what does jerry bruckheimer design? >> you know what it is? it is not radio. it is film. you look at it. it has to look good. we puyt -- put a lot into making things look interesting. we try to put a little special, a little different into everything we do. that is a little different and unusual for us. >> you have this new first look deal with paramount. you have talked about disney is focused on its movies and where your focus on your movies, disney is doing a lot of superhero movies. they're not the only studio doing that right now. is there superhero fatigue at some point? >> i don't know. i just saw the latest "captain america" and thought it was great. love being in the theater with everybody.
the whole place was full, and everyone was cheering and laughing, and it was a great experience. that is what the movies are all about. >> the first film that you highlighted as a part of this new deal with paramount is that you're working on another beverly hills cop. what can you tell us about it right. and where things are at right now? >> we are in the process of getting the script finished. paramount is very excited about making it. eddie is excited. i think we're moving forward. i'm going to take eddie back to detroit. he is going to be in beverley and detroit. he is really excited about doing it. >> and the other film that everyone has been talking about is the next "top gun," which you have been working on it, but this is a long process for you and for tom cruise. you made some headlines recently setting the stage of cruise versus the drones. can you elaborate a little bit? >> technology has changed since we made the first one, so we're going to take advantage of what the world is like today. the drones really taking over in a lot of our wars. is the pilot obsolete? are those jet jockeys gone?
i do not think so. i think they are going to be around for quite a while. you still have to make quick decisions and the pilots are the ones to do that. hopefully we can highlight both worlds. >> what is the timeline on that one? what should we think about when we ccan -- can see that in theaters? >> we have been working on it for over 30 years, so i wish i could tell you how long it will take us to get there. it is a lot of fun working with tom, and unfortunately tony scott who came up with the idea, has passed away and that is very sad for us. >> i think david ellison is a financing partner. through his sky dance. the family. megan is getting a lot of attention during award season recently. what can you tell us about david ellison? >> he is a pilot. that helps us a lot. he has great taste. the movies that he has made have been very successful.
he continues to make successful movies. he understands the business better than anybody. for a guy so young to understand the deals and what actors work and what directors work and what writers work, he has really done his homework. i'm very proud of what he brings to the project. >> despite the fact that you have the new deal with paramount you still have ties to disney and there are projects that that you're involved with that have ties to disney. "pirates of the caribbean," the latest installment as ones that people continue to ask questions about. what is the latest with number 5? >> we are working on number five, hopefully we will get that going this fall or maybe even within the next year. if everything lines up properly. >> is there a fifth and a sixth? everyone likes to talk about these movies online. >> we make them one at a time. that's how it works.
>> so johnny will be back? will keith richards be back? >> we would love to have him back. >> you have had huge success in film and television, and you go through the long list. "c.s.i." is on that list. a lot of people are talking about this as the golden age of television. financially for you, what does that mean? is there literally a pile of gold? has this been the most financially successful time for you since all of these storylines have been in tv right now? >> what is been great for me and all of the shows we are putting on the air and even though they may not be on network, but maybe on netflix, the writing is so good. if you look at what the other channels and networks are putting out, hbo, cbs, nbc, some of the series, they have their amazing stories that are told great actors. >> is that something you have been thinking about? working with netflix?
>> absolutely. we have not had the click yet, but hopefully we will. >> how long can "c.s.i." stay on the air? it seems like a long time still. >> it is going on 15 seasons. it would not be on 15 years if the writing and acting was not great and of course we have wonderful directors who direct those actors and bring the words to life. we are about to do a spinoff about the dark net, so we are working on that right now. it is all about entertaining audiences. that is what we do. >> on that point about the "csi" spinoff, you seem quite interested these days and how technology is influencing society and bringing that to the small screen then. >> absolutely. there are so many things that have changed. you can imagine what has changed in 15 years.
♪ >> you are watching "the best of bloomberg west." where we focus on technology and the future of business. i'm emily chang. a year after the boston marathon bombings, we are looking at the technology that is helping to prevent crimes like this from happening in the future. this includes high-tech cameras, artificial intelligence and social media. social media analytics company can help this process. froman pull realtime data chatrooms and more.
i spoke with the ceo tim jones about his company's involvement in last year's investigation and how they're helping law enforcement agencies across the country today. >> our involvement predates the tragic events of last year by two years. they reached out to me after the london riots. london, gangsin managed to move throughout the city of london, using social networks to communicate with each other. the boston please department was starting to actively monitor networks to fight crime. being prescient of the use of technology and crime, he reached out to us. in 2011 we started a pro bono relationship where we offered our application free to the boston police department. we were on the scene when things in boston occurred last year.
>> after the bombings, days went by when it seemed like police had no idea who did this. it was a critical moment where they released surveillance video of the suspect. how critical do you think social media was in solving the boston bombings and in finding who did this? >> we as an application provider that provided our services for free, we were not a part of the investigating team, because we are not law enforcement officials. we cannot speak to the classified things. there were clearly efforts to look for patterns in past data and in ongoing new social media that was being shared. frankly, the general population volunteered information from snapchat and photos that were being shared. in near realtime. our application was one of
multiple tools that were available to law enforcement during that time period. ultimately, this was solved by good old fashioned policing. unfortunately, it also included the loss of life. the police officer from my alma mater. buzzy was part of the overall information envelope that was used. >> how good are these agencies at talking to each other? >> i would say there is already a pretty significant effort before the events of last year. there is a term you may hear called osint, open source intelligence. so from the federal side and the federal agencies, there was already a method. what has happened post-boston this that you have had agencies
get more active. the international association of chiefs of police have gotten quite social. both in terms of their outbound communication, but they are a big user of various tools. i think in the last year there has been an awareness and a realization that social media is much like e-mail was 10-odd years ago. it is a new form of communication, a new channel of gathering information. it cannot be avoided in conduct in an investigation. ideally, in trying to prevent or avert a disaster. >> intel is giving insight into its mobile business as part of its earnings report. new ceo stacy smith joins us to tell us all about it. -- the cfo. ♪
♪ >> welcome back to "the best of bloomberg west." i'm emily chang. intel's transition from pc to ofile is showing some signs progress. the world's largest chipmaker reported a one percent rise in revenue. cfo.ke with the >> it is really how we think about our business and it is how we have organized the company. what is different about our business today is that we shipped into a broad range of devices. we have a healthy business in the pc, but we did 5 million tablets in the first quarter. we are fighting to win designs in phones. and then we have this very
healthy internet of things business. >> everybody is talking about the internet of things right now. you just bought a wristband health tracking device. do you wear a wristbrand? how big do you think these things are going to be? >> i have worn a wristband. i try not to do that on tv. the internet of things business is a broad business. as you well know, it ranges from infotainment devices in your house to devices in factories. then there is a new category of wearables that is emerging. we are one of the market leaders in the internet of things. it is a business that is well over $2 billion. we are off working with customers in the wearables space. we're doing a lot in experimentation. --are buying some sompan
companies and buying some i.t. we are making investments. i don't know how it will play out or who's going to win, but we are there early and our intent is to be right there with the winners as their technology provider of choice. >> can you give us an idea of the most exciting thing you have seen so far? >> i would say generally the most exciting thing is the level of innovation going in. it is a hot area. there are all kinds of interesting things that range from biosensors to visual computing solutions, two things i can interpret your voice and provide information back to you. it is an exciting space, and a space where the -- requirements are around having great computing ability at low power. it is ready-made for us because of our manufacturing leadership. >> every chipmaker says the internet of things is a big opportunity. lots of them are using arm designs. what will compel them to use intel?
>> for us it is not a plan to win a marketplace. our business results show that we are if not the leader then one of the leaders in the field already. over $2 billion this year and very profitable. i think the reason that we are so successful in this business is because of our manufacturing lead. it means we can provide more performance in these very low-power envelopes. that is our competitive advantage and that will allow us to win in the market. tablets,o has promised 40 million tablets shipped by the end of the year? >> remember, the tablet market is a consumer driven market.
that means a lot more volume that tends to sit in the back half of the year. we look at it as being right on track in terms of the engagements with customers out there, the design wins we know we have one and customer expectations. of how mucgh -- much volume they will ship in the back part of the year. i feel pretty good about where we are at. there's a lot of work to do, but we are off to a really good start. >> my interview with intel's cfo stacy smith. marketing, mostly dollars going to google, but compete with google. we will talk to priceline group ceo next.
>> welcome back to "the best of bloomberg west." i am emily chang. online travel is a crowded, competitive space. it is priceline's revenue that makes it the largest such company in the world. i spoke with priceline's group ceo darren huston. booking on mobile. >> we are investing very heavily in mobile. just to give you an example, we did $1 billion a looking's on mobile. 2012, $3 billion. billion booking on mobile. it is a very important channel for us in terms of acquiring new customers. it is also a critical part of the end to end experience. now that people are using tablets, mobile phones and other electronic devices along the
whole journey, is giving us a great opportunity to enhance our product for our users. >> are you specifying for mobile apps? >> all five companies have apps for the ios platform as well as for android. we continue to evolve those products. they all have very high ratings from consumers. we have a ton of traction. mobile is not just about apps, it is also about web. we have very competitive mobile web products both on the tablet and the phone. we are excited about where we are. >> speaking of $1.8 billionspent on web marketing. most of it went to google. is that a strategy you expect to continue?
>> we have great websites and they convert tremendously well. we continue to look to google as well as two other source of demand, whether it is kayak or trip advisor. there are other places where we go and buy our demand. we continue to buy from most channels as long as the returns are there. we are seeing that our returns on all the channels are great. at the end of the day we would love our customers to be more direct. we use google and other sources of demand to find customers and show them how wonderful our products are. >> google is making more aggressive moves in your territory. they just did this room 77 deal. obviously, they bought ita. how big a competitor g you expect them to be going forward? >> google respects us as an advertiser. they would like to get more of my money. the recent acquisition of code from room 77, that is not the biggest thing that has happened. google has been working on hotel
price as for years. they want to continue to make that better. i think the biggest issue we face competitively is not google, it is whether or not we as a company can maintain the hunger and humility to continue to have the success we have been having in the past. bookings,g of hotel b&b or aver add air home away? >> we have been increasing our portfolio of accommodations. last year, we went from 290,000 to over 400,000 properties on the booking.com site. we are going to continue to look at that. companies like home away and ai b&b, things that are in
some cases not even legal. we're looking at any kind of legitimate form of accommodation to add to our website in the future. >> the parent company of travelocity is coming up, how do you view them as a competitor? >> i think sabr operates in its own space now that most of their bookings get done by the expedia group. it is not high on my radar. to be honest. we have good relationships there. i focus more on what we can control. operational discipline that we need every day to continue the success we have had is a group. >> acquisitions are not something you can control. you bought kayak for 1.8 alien -- billion. what kind of acquisitions are you looking for? >> the priceline group has made some amazing acquisitions over
the years. booking.com is probably the most successful acquisition in the history of the internet. but also kayak and agoda. our acquisitions are not that frequent. we take a lot of time to think through the companies we want to be part of the group. most of our focus is on again it -- on organic growth. managing from a data-driven perspective the way that we bring demand to the platform. that continues to be a majority of our focus. we are always poking around the space, but we have a pretty high bar on what it would be to be a great acquisition to become part of the group. >> you mentioned booking.com where a majority of your revenue comes from. we have also been seeing william shatner. how much value does a guy like shatner bring you?
>> he is been an amazing spokesperson for the priceline brand over the years. priceline is still a very significant part of our business jobas done a good transitioning us to more of a retail model with express deals, etc. we love williams at it. he has done some great things. priceline itself with the introduction of katie, that brings an extra's post -- spokesperson into priceline. i am super supportive of what our team is doing there. >> priceline group ceo darren huston. we will introduce you to a cartoon that actually interacts with kids. that is next on "the best of bloomberg west." ♪
>> i'm emily chang. this is "the best of bloomberg west." streaming on your phone, your tablet, bloomberg.com. imagine a cartoon that actually engages in conversation. that is the innovation entertainment that our talk is created. it can listen and even talk back. pixar, i caught up with orrin jacob. >> tory talk works by building toytalk works by building up a conversation between you and your family. we try to create characters by talking to. >> the characters will react to what you say the matter what you say? >> the characters will role-play
with you and make a leave. in that circumstance, yeah, you can imagine what it is like to be an alien for real. >> show me how it works. >> let's talk to a bird. >> what am i supposed to do? you can't just throw me out of the nest. what should i do? >> i think he should jump out and flap your wings. >> ok, that's insane. what kind of parent are you? can you even hear yourself? come on, what is so great about flying, anyway? >> what if you told her to jump out and not flap its wings? >> it would take your response back and engage you. we try to write characters that can play both sides. >> how do you do that? >> we take what you say in the microphone. that goes over a microphone and into the cloud. we process the speech, try to figure out what you say.
>> you are also storing kids voices, right? >> we have to do that to develop better recognition technology for children. >> how challenging is that for the voice actors? >> we have to get them to record and perform positive answers and negative answers, quizzical responses. they have to do a large range, and we cast professional actors to do that. and perform it in a booth, away from an audience. it is like doing half of a live improv show. >> you have an ipad showed now. what are your goals? >> to open up the idea of conversation is entertainment. >> you worked at pixar 20 years. what are your views on children watching movies? children watching cartoons? >> i think the stories aren't
intergral part of growing up. part of what it means to be a family. >> it is funny, i have an 18-month-old son now. i'm constantly questioning how much screen time to give him. what is your approach? >> my wife and i talk about that with our three kids. they are 10, 8, 5 1/2. it is a constant conversation. homework always comes first in our house. >> is or something more than just watching tv, essentially? >> and attaining through conversation is primarily entertainment. it is character based and also talking back to us. developing vocally, which kids are doing an elementary school ages, is important as well. >> what is it you have taken from pixar to what you're doing with to ytalk? >> in an hour-long meeting, he would speak for two meetings -- for two minutes and he could get
the message across sosa simply, >> what was your favorite movie? >> "finding nemo." >> whwat was it like with steve jobgs? -- jobs? >> he was great. >> what was his relationship like with john lasseter? how much did john lasseter listen to what steve jobs had to say? >> i think you should ask him that question. steve was a major influence on pixar. so we miss him very much. >> my interview with tory talk cofounder and ceo oren jacob. that does it for "the best of bloomberg west." you can watch every weekday at 1
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