live from pier 3 in san francisco, welcome to the late edition of "bloomberg west," where we cover the global technology and media companies that are reshaping our world. i'm emily chang. our focus is on innovation, technology, and the future of business. we are here all week long in new york with sam grobart. today posh top story, we have been talking about it or hours. been buying a company that makes digital thermostats. >> not bad for a little company.

>> i don't know what is more surprising, google buying it or nest selling? >> one of the cofounders made a ton of money at apple. they were both behind the ipod. these guys do not need the money. that is forgotten sure. darn sure.for teaming up with google gives them some runway that they would not have otherwise. this is a very small company. click a hardware company is a lot more difficult than a software company. they were looking at hundreds of millions of dollars. the deal, i should mention, is the pending regulatory approval. once they are part of google, they will not have to worry about money. scaling is -- >> a much easier opposition. that proposition. always talked about

the greater implications of thermostats. or smoke detectors. they are part of this ongoing move towards the connected home. they have identified object and have never gotten a lot of innovation. if you think about the thermostat on the wall in your house, it looks like the thermostat on the wall in your house when you grew up. thermostat andt i love it. customers are saying, what does fors -- what does this mean me? will google see into my home? what android creep up on the next thermostat? motion detector to know when people are in or out of the house. it is smart about maintaining the temperature. now you get to google, who is are the reading your online e- mail and sending you ads. now they may know that you are at home. what does that mean? some may say, look, we give up a certain amount of data so that we can do things over the

internet, like male and music -- mail and music. we may have to give up a little more information about her whereabouts for these wrought. >> the ceo has said that nasa -- nest will remain nest. your data will remain with them, not with google. >> they always say that at the beginning. i know he is talking about it remaining an independent operation, but google did not buy nest so that they cannot touch it. they want to cross pollinate across the company. when you think about google, they have made some purchases, they have bought some other hardware companies, -- >> they bobbled roll up. >> that may be -- they bought motorola. why did it by this company? they have bought a dozen or so

hardware companies. many of them are robotics companies. we know they are working on driverless cars. they have that secretive lab, google x. where does nest fit in? >> i think it is a talent acquisition as much of anything else. you are getting two men and many others who have been working for them to have an innate understanding of how to produce a design and a consumer friendly product. >> good consumer hardware. crack desirable hardware. >> it is an aspirational product. everything google has worked on has been in the area of research in science then a got to have the product. >> let's talk more about this. they both used to work at apple. 100 of the 300 employees at nest used to work in apple.

it looks and feels like an apple product. >> absolutely. >> why didn't apple buy them? >> there are a lot of stories about the origins of nest. power struggles, personality issues, so you have this group of apple emigres, and they have been working -- they thought, maybe apple will buy it back, but i thought that would never happen given some of the players involved. their ceo is the guy who basically invented the ipad -- excuse me, the ipod. not working on phones, he is working on bigger things fall's top i question is, look at what happened in the last two weeks. samsung came out with a connected phone. andle has bought nest multiple robotics companies. other companies are out there was smart watches and smart tvs. is the pressure heating up on

apple? where is the next big product from apple? >> they will be a victim from their own successful's top -- success. they had a 5-7 year. -- period that was one huge success after the other. we would become accustomed to it. when you think about it, those products were the culmination of's l many different technological trends that were happening at the same time. small displays, wireless capabilities. all of these things could mushroom up. i am not sure we are having that moment again. apple is creating magic. >> you are the guy who talks about this but top you recently sat down with tim cook. you went inside apple. they do not say a lot about the future. they try hard not to say anything.

>> i know everything. i cannot tell you. [laughter] >> tim cook has said multiple times, we are working on incredible things. did you get any feeling of what they are working on? we all think apple has something up its sleeve, but maybe they don't? >> i think they have everything up their sleeve in terms of what they have tried and what they are asked are venting with. it is a question of what they want to let out of theirs we. -- out of their sleeve. starters, i think that the tv business, the panel business, is a terrible business to be in. that's a lot of analysts are saying tv. ofyou get into price wars low-cost operators. it becomes commodified. then they have to negotiate with all the cable companies. that is its own problem. devices, timrable

cook has talked a little bit about it. apple did not create most of the product categories that they moved into. he just created the products that everyone wanted to buy. >> could google come looking really smart here? >> i think it is a smooth move here. it is a big and exciting brand that has a lot of places it could go. , ithey can harness that could be great for google and for entering in particular. whatever data they can collect from it. >> is there a risk with android creeping into the gnostics areas experience?nest a lot of users and consumers said that they did not know. >> entry can be whatever you wanted to be. or it can be in the background. there are any number of players, mobile phone players, who do that. android is nothing more than a means to an end. >> we will see where this goes.

the deal has to have regulatory approval. google is making a bid to buy nest for $3.2 billion. what is higher than $3.2 billion? $5 billion. that is square's latest valuation. we will talk about that coming up on "bloomberg west." ♪

>> welcome back. i'm emily chang. we are here with sam grobart. our bloomberg news editor is also joining us from san francisco.

squares latest valuation is $5 billion. what do you think of that number? >> it is an opportunity for early employees to take a little bit of money off the table. the company had an incredible run. they have been growing in terms of users and total amount of dollars flowing into the system. whether that is a high dollar amount or not, it is hard to say. you have investors willing to buy at that price. market-based economy, it is probably worth that much. >> there is a lot that we probably don't know. making tens of billions of dollars in payments per year. they only use the swipe technology. we do not use the chip and pin technology that we were talking about yesterday. is that a big deal? could that be a square-killer western mark >> i do not know what you are clearing out there

as far as the recent security squares. has square talked about that at all? the security of their system? >> we have not had that come up in the context of what we have been at target or neiman marcus or any of the other retailers. to the extent that it does come up, squares responses effectively, we have not been involved in it. show us an instance where our technology has been compromised and we will respond. to some degree, it is working to their benefit. it is only to their benefit on till it is not. when we see a breach, and at some point we will, there are too many dollars flowing through for the system for it to not happen. it is a start up. there are only so the people they can higher. >> they have been hiring like crazy. on the issue of the chip and pin card, i recently woke about it with respect to international

expansion. as we discussed yesterday, countries around the world are using chip and and. >> not here in the u.s.. >> they are working on it. how far along that is, we do not know. i also talked to him about valuation. is was back in september. square had 3.25 alien dollar valuation. -- the $.25 billion valuation. i am, how does he think about valuation? here's what he had to say. >> fairness. the market decides. we have conversations with investors and we talked about what we would like to see and where we will build. what we think the value of the company is, and they give us feedback. .t is an honest conversation we run a fair deal for both sides.

>> i get the market decides. according to him. >> i'm. as to what is next for the company. they seem to be moving into more of a partnership with other retailers will top i'm. to see where square will go next stop >> what do you think about where square goes next? made big deals of retailers like starbucks and burberry, verrilli square is mostly in small -- mostly is -- it is thesmall lunch truck down the street. >> we will not need to pull out a device, plus a car to make payments. we will still need to do that anymore the aces, but increasingly we will not need to square wants to be the technology that you are using the places that are comfortable with this idea of recognition. you walk into the store or the

-- coffee shop, and we know who you are. you have an account with us. no money needs to change hands. no devices need to be pulled out. if this is where we are headed, and it is still an if, square wants to be that technology. where they have gotten traction so far is with the dongle that allows any small business to attach it to an ipod or an iphone or another smart device. were they really want to go is where nothing changes hands at all. i just walk in and say hi, make a purchase, and i am out of there. >> let's talk about this idea that you may not need to carry a wallet in the future. this dream is just that. you do not need to swipe. it has not happened yet. >> it has been particularly troubled by misbegotten ever since it came about. it requires hardware. it requires retailers to have

the readers for the chip that are in the phones. >> doesn't require the phones have the chance? >> right. apple has its own system which uses its own technology. all mobile devices already have bluetooth. that kind ofquire solution to have a device was six areas. has a dream of pay by name and face. when i walk into starbucks, they should know me, they should know what i want. they should charge the automatically and i get my chai tea latte and i don't have to take anything out of my wallet. it is a seamless experience. we are so far away from that. i believe that this product hasn't really gotten the traction that they were expecting. it is too early for that technology.

>> it is. foursquare, they have a product that is doing tens of billions of dollars in transactions per year. it is only gaining in popularity. in san francisco, i may be part of the bubble, you are part of it as well. it is an incredibly easy-to-use product. the one main reason that people may not be using it is because there is a transaction fee involved. there is a transaction fee involved in accepting credit cards at all. if you are a small business or a new business, the cost of using these square devices is a no- brainer. >> they definitely have the design thing down. the experience is down. all right, ari leiby in san francisco, thank you so much.

most people train their entire lives to become olympians, but could you doing just a year? we are going to talk about that and an olympic hopeful, next. ♪

>> welcome back. i am in new york with sam grobart. the winter olympics are around the bend. ever have an olympic stream of your own? >> i always love the loot. -- the luge. >> i always wanted to be a gymnast. my sister and i used to do routines in the dark after we went to bed. i fed is very nice.

>> i think i would've been pretty good. [laughter] i love this story. it is about venture capitalists -- a venture capitalist who wanted to be an olympian too. he is doing it in a very short amount of time. he became a colombian citizen and he became a part of theirs the team. it is a warm weather country. >> not a lot of competition. smart. >> take a look at this guy. >> hello everybody. in real life, i am a venture capitalist. this year, i decided to go after my biggest childhood dream. i want to make it until the 2014 olympics. -- into the 2014 olympics. i dropped everything. it is really cool to make a team.

luge can be very dangerous. downhill skiing, i got eliminated because ama's quarter and i do not like it. snowboarder,am a and i do not like it. i started skiing in april. toealize that i would have try to become a citizen of a warm nation or a small country. this is a drastic change in my body. . have less like 35 pounds i train 2-4 hours per day. to gain some perspective, when i first started doing this, i could do about an hour. and hitn get out there the final qualification rounds. it comes down to the last minute. i am like the jamaican bobsled team. i am very excited to be part of this. i am enjoying the sun after a

long day of practice. >> good for him. i have an update. he actually got a bad lung infection. he had a high fever and he was mathematically disqualified. he is petitioning them to hopefully change their decision. >> we will see. >> at least he made it. he made it. he has a really interesting story. coming up, more of our special series on artificial intelligence yard robot. -- beyond robots. ♪

when you are watching "bloomberg west." i'm emily chang with your top headlines. a federal appeals court has struck down the fcc net neutrality rule. they sided with verizon and ruled that the fcc did not have the power to force internet providers to treat all traffic equally. with this news, large companies could face new charges for fast connections. it could have particular applications for companies like netflix. time warner cable has rejected the unsolicited takeover offer from charter communications. in a statement, the time warner cable board called the offer grossly inadequate.

they said they are preserving all options going forward. there is another tv battle happening out there between directv and the weather channel. directv remove the weather channel from its lineup due to a dispute. directv said that it is in talks to get the channel at. -- back. the weather channel is urging viewers to switch providers. we are in new york all week with sam grobart. we have a special series this week about artificial intelligence. we are calling it beyond robots. we are taking a look at how ai is changing the way that we communicate and we are looking at retailers, physical retailers, not e-commerce. the ceo ofl smith, euclid analytics. you also are a futurist at intel. what is intel' share in retail ai?

>> we are looking at every part of retail. we are looking at every aspect and every part and how we can make smart connections to improve arts very does. >> are you looking to get ships in cash registers? >> it seems like they want to be in every part of retail. there are more parts to be in. it is not just the cash register. there are sensors, phones. >> i am looking at a time year horizon -- 10 year time verizon. computers are getting so small over time. you can turn anything into a computer. the products will change. environment, the shelf, the primary user interface for 2000 years, can now become smart. we can do it. chips will be small enough and low-power enough. we will just make everything intelligence. >> you guys actually help retailers by giving them data

about what shoppers do and do not like. tell us how it works? to do fortrying physical retailers will google and amazon have done online. we are trying to improve the way out -- the data. we are using wi-fi in the stores to see how many people are walking by, how long are these a -- how long are they saying. let's are there privacy issues at play? >> it is a big issue. we have worked on it since the beginning. we are making sure that it is all anonymous data. we have worked with senator chuck schumer and the f ec -- fcc. >> hattie that the data? >> we install our data on the existing software. we provide a wi-fi signal to smart phones. timee store for a long that people talk about e- commerce. they say that it will eat

physical commerce because there's so much data to collect from a transaction. we know who you are, what browser you are using. the store is a black hole. once you win and, who knew what would happen? now there is so much more data to collect from that location .f >> the data advantage that online retailers have had is diminishing. just like amazon, where you have a seamless shopping at her and, physical retailers can now do much these aim thing. how many people are coming in for five minutes and leading? that indicates that the lines are too long. >> a store can figure out if a red dress or a blue dress in the window attracts more traffic. which is it? please say blue. >> a red dress drive more traffic. >> i were the wrong color. -- i were the wrong color. how is some of the technology that you are working on make my retelling areas different?

i really get to go to physical stores. i am over over what -- i am often overwhelmed because there are so many choices. i am not there often enough to understand how to find what i want. >> it depends on the mode that you are in. if you are on a mission mode, you go to the grocery store and you want to get in and out. letteres we are in a mode, where we want to enjoy the experience. the technology helps in both of those scenarios. in mission mode, imagine you are a family. the kid has peanut allergies. you are on a gluten-free click. as you walked on the grocery aisle, because of the wearable technology on your body, if you have chosen to let it, the shells that have the things that you want to eat, you can go down. it makes it easier to choose an environment o. in an experience-driven environment, you want to take

your time. you have very awesome glasses on. >> thank you very much. that's when you go and buy those glasses, you picture your face and very quickly you absorb all those different classes. you make a choice to narrow it down. >> that is what retailers are starting to do. >> you can try your dressing green and blue, and i'd say that you want to try in yellow. i did click of a button, you can see what you look like. >> i like that. but be realistic here. because of this, it must be enormous. -- the cost of this, it must be enormous. retailers cannot get their websites right. >> it is easy to deploy full top we launched a new product last friday. one of the big misconceptions is that the data requires a phd in statistics. it is complicated and intimidating.

if you actually look at the product, it is very intuitive. retailers can get going in a matter of minutes. aboutwill be talking more artificial intelligence and how it will be changing your shopping area in, coming up. you can watch a streaming on your phone, tablet, and bloomberg.com. ♪

back.welcome i'm emily chang. we are in new york all week with sam grobart. we are talking about artificial intelligence. our series beyond robots. we are discussing how artificial intelligence will change your shopping areas in the future .il at the break, we were talking about apples i beacon. it has gotten mixed reviews.

>> it is pretty quiet. apple had i beacon as a part of iowa's evan. he did not talk about it much josh as part of -- as part of ios seven. they did not talk about it much. it turns your phone into a little beacon to indicate your location. when you start to play around with that information, you can do some interesting things. facts are you optimistic about that? >> there are a whole bunch of technologies that are aimed at location. our friends are good at showing us where we are outdoors. when you go indoors, it is not as good. there are a number of technologies in this area. there are some that are listening to the audio feed on your phone. if you walk into one store, and you stand close to the wall, and you listen to the background sound, --

you can tell and discern. just hear screaming. >> either way we can talk about a proliferation of data. will there be some standardization of all of this? >> there is an explosion of data, whether it is point of ale -- it is enabling all sorts of different things. the ibm is part of it. ibeaconuld be -- the is part of that. why are my lines too long? you may have enough sales associates on the floor? going forth, it will be something that the retailers will act on. that is really exciting full top -- really exciting. using data toeen optimize the backend. that is good and they should keep doing it. you can also use data to improve the rent of the people in the shop. you can get some guidance, some

offers. >> i used to work in retail when i was a kid. you are looking at a sweater, and you say, i have a shirt that would go well with ethel's top now it is something that could happen on a smartphone. applicationssome that we have been showing you today. you may need some guidance on an outfit. you are going to a different part of the world and it will help you put together an outfit -- when you get to the other end, it is packaged and ready to go. >> what about a personal shopper? there is a salesperson to help me, but what about robot? a place inave stores, whether they will be your personal shopper -- we are far away from that. we are the theme deployment of robots and grocery outlets. that people spend

in stores, they are looking to in there there is a gap ?helf these robots glide down the aisle using 3-d camera and they can be if the cornflakes are out and you need to bring more out. >> product restocking. >> that is a start. there is nothing to start the robot from growing from there. it could follow you around, tear your groceries, answer questions. >> give me a time frame. five years out, tenures out. -- 10 years out. >> i think 10 years from now, if you are going to the store, you can ask a fully customized fixed areas. -- experience. you could even expect in that timeframe to go into a store and say, i want that shirt, i wanted in that color and my size, 10 minutes.

we could move to mass customization. we are these the robot seamstresses. where that will go in 10 years, we can have a really next areas. >> 10 years. >> since and i think -- what is really exciting is synthesizing these connections. 10 years ago, you had your line of credit and your local oracles. with data, we can synthesize that trust and that connection. if you can contextualize it as well. you do not know what other kind of data could be relevant. >> absolutely. >> a fascinating discussion and i hope we get there in 10 years. analytics,of euclid and steve, thank you for joining us. >> coming up, we will talk about darts betting on original programming to take on the --

starz betting on original competition -- original programming to take on the competition. you can watch a streaming on bloomberg.com. ♪

>> welcome back to "lumber wes." west."omberg we are talking about original programming in today's hollywood. there is more pressure to compete with hbo and netflix. >> everybody. you are not a cable network in less you have some kind of poet high-profile original content to make a name for yourself. >> here is what starz is hoping to do. they want to get out 65-75 hours of original content by 28.

-- 2015. said thatverman once he would make something a little controversial here, there's too much television. when you think about all the different channels that we have in all of the hours of programming that they have to fail, and there are so many reruns of miami vice and law and order -- i would watch all of them. it is wonderful if you are a creator, -- >> everybody is doing it. there are a million channels on youtube. >> i cannot even watch all the tv i want to want on a night. >> it takes me forever to get the ratio. but when i find a good one, i am out. -- i am helped. -- hooked. it worked out well for netflix with "house of cards" and "orange is the new bladck."

we spoke with ben gilligan who said, if it weren't for netflix, i don't know if we would have been renewed. they gave it new life. i want to talk about what is going on with starz. jon erlichman caught up with their ceo to talk about their strategy. he started off by asking what it takes to create original coming from scratch. >> find a lot of talented people. getting to work on your channel. we have a great year starting off. we have michael k's first television series. it is about pirates. toif to move from pirates curtis johnson, if these -- 50 cent --power is about a new york club owner living a double life. centus about it the -- 50

and his involvement in this. >> if you developed it with an african-american woman writer first lacke is the female writer to create a chauffeur premium television. show for premium television. is, beaker for what you wish for. andcreate a life you want then you have to create yourself as something else. it is not so easy. the people you think are the right ones for you could be totally the wrong ones for you it is a starcrossed love story with lots of action. there is a lot of suspense. it looks great. we are excited about that. curtis is involved all the way through. as you said, he will a one of the recurring roles. down that further road, lebron james is getting into comedy. you guys are working on a show with him.

can it be successful in television production as he is on the basketball court? >> he certainly partnered with some impressive evil. he has joined with some of the him most important television executives in the history of comedy. he and his partner have a company and they are ordered with another man. i am not interested in comedy, but i would love to meet those guys. i set my listen to the idea, and i thought, we will do this one pulls up -- we will do this one. it is loosely based on their own next areas. coming out of the projects. they found success, but at the same time they will as though they had to give back. having a lot of people who want to come along and hits himself to your wife and. -- hitch themselves to your why didn't. -- to your wagon.

you know that you have to protect your future. it is comedy with a conflict that you do not often see. >> pilot season, you throw a bunch of ideas at the board and used you what fixed. is that going away? i first got here, i realized that we could offer something that people could not get elsewhere. it is a direct idea. it is one way that we can entice people. in terms of measuring success, all of these new original programs, what is the way that you measure that wetjen mark is it the number of people -- measure that? look at the show and say, that is what we were trying to make. then you feel as if you had a successful venture. 3 the premium space, you have constituents you have to appeal to. we have to appeal to our distributors, their subscribers,

the people who subscribe to stars, and the third is -- >> most of these shows will be available to starz subscribers. you will make episodes available on different platforms. >>t's absolutely false -- absolutely. we sometimes but 1-2 episodes out elsewhere. that is a good way to introduce a show to a broader audience. we have them help us market the show. we are a premium channel in 20 million homes will top it is a much smaller universe than the 100 million home universe that a lot of other channels have. that's what you think? fiddy? lebron? >> i think there is some collecting of famous names there that does not yield anything. >> reality tv is the same way. it does not matter.

i tend to have a delayed reaction to shows. i let other people decide if they are good. then when they become on demand -- available on demand, i can go back and catch up. the level ofo see quality. when netflix came out with their first original show, lillehammer and "house of cards" people did not know how good they would be. >> but without the card, you knew that there was a desire and an effort to make it -- >> i think you are underestimatingfiddy. we will have to see. as you said, there are so many options out there. we will see what gets our attention. thank you all for joining us for this edition of "lumber quest -- bloomberg west."

it was great to see you. ♪

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>> welcome to "lunch money." i am adam johnson. we take a look at the menu today. here's what we have got. the sports car is back. one of the many new models they have in detroit. we will show them to you. sharing the secrets of his success. separate ways to j.p. morgan and wells fargo. we will talk about that. we will hear from the biggest names in fashion and retail all under one roof. and south korea's latest export. we will kick it off with a story everyone is talking about. handful of companies are making deals.