♪ >> welcome to the late addition of "bloomberg west," where we cover the technology and media companies shaping our world. our focus is innovation and the future of business. let's get straight to the lead. a big week in technology. google, facebook, amazon, yahoo!, all reporting earnings, some very disappointing. google announcing it is selling its motorola handset is missed -- business to lenovo. microsoft getting close to naming satya nadella the ceo. it seems no one can stop talking about comments made by venture capitalist tom perkins, who

wrote a letter to the "wall street journal" comparing the war on the richest one percent in america to be persecution of i germany.z he joined me to apologize for the comparison, but not the message. perhaps the most talked about part of that conversation was his watch. take a listen. >> they got into a conversation about the idiocy of rolex watches. why does any man need a rolex watch? it is a symbol of terrible values, etc. well, i think that is a little silly. this is not a rolex. i could buy a sixpack of rolexes for this, but so what? >> when we did the math, he could have bought a few six rolexes with -- of that watch. joining us now is our contributor. paul, i know you have been

watching this. what do you make of perkins' comments? >> if anything, if possible, i find him more offensive than i did earlier in the week. i thought i found him resoundingly offensive the first time. now it is just cartoonish. he walked back some of his most egregious comments with respect to the direct comparison to the persecution of the jews in nazi germany, but he went off the ranch with all of this other completely adrift commentary. not just socioeconomic stuff, but you asked whether or not he is connected to the economic reality, and got into a conversation about underwater airplanes and six packs of rolexes. either he has no grasp of how to construct a sentence, or he is completely adrift. maybe both. >> i have gotten so much feedback on this interview. the vast majority of people agree with you. some people have come to his defense.

i want you to take a listen to another thing he had to say. an argument that has been made over and over again. just now in this very specific way. take a listen. >> it is absurd to demonize the rich for being rich and poor -- for doing what the rich do, which is get richer by creating opportunity for others. >> does he have a point? >> that is just remarkable stuff, you know? it could go on posters. he has a point, but the problem is it is his incredible willingness to take full ownership of everything that happens in the economic world. a friend of mine was particularly upset with a comment that was related. it said, i have created all these billionaires. that is such complete crap. the reality is, he put some capital toward incredibly skilled people, he and others

who worked to do one of the hardest things in economics, to create an entrepreneurial point and grow it to the point where the founders become wealthy. that is a wonderful thing, but the notion that somehow he is the one doing this, through his intelligence and creative powers, if you can't see the role of luck in all of this, that you were in the right place at the right time, and the element of luck and dependency, then shame on you. i can't imagine being that wrapped up in your own ego that you cannot even imagine there were other things going on than your own skill. >> perkins aside, what do you make of the tensions that have been flaring up in san francisco, the protests against the google buses, burning buses in effigy, throwing rocks at them? rent is going up faster than any other city in the world, in the country. i don't know about world. >> i do not know about the world anymore. some crazy things right now. that i completely understand.

there is at least two levels. one is this incredible disparity, haves and have-nots, the phenomenon of almost a lottery driven society. i am in the right place and the right paper and i -- my neighbor is worth millions because they happened to put money into -- an early employee stake in some small start up. this feels unfair to people. they see different strata of society created as a result. that bothers people. there is also deep societal unease with this idea -- not just that, but the structure of economic middle-class life is changing. the bargain that we work hard and i grow in this country and my labor may no longer be valued. maybe the thing i have been trying to do is no longer relevant. that makes people uneasy. and unease turns into dissent. we are seeing that with these conflagrations in the streets. we should not be surprised that is happening.

>> the ceo of salesforce created a multibillion dollar company, based in san francisco, has done something where he gives one percent of equity, profits, and time to philanthropy. he came out to "the wall street journal," saying he thinks the google buses should be taken off the streets. he says, if you hang out in the mission, they come every five minutes. they have to be massively regulated. we have to get them off our streets. what do you make of that? >> i applaud him. there is far more going on, many of which are not public. a remarkable success, remarkable in terms of supporting philanthropic causes as well as bringing people up to see some level of success in their own economic lives. i agree with him. he is pointing out things that deserve to be pointed out. we need to be careful about the symbolism of the actions you take and what it tells people about the privileges they can

and cannot have, depending on where they got lucky, go to school, and work. really important things to point out. otherwise, people would be oblivious to them. >> google has become the poster child with the buses, but apple and facebook have buses going down to silicon valley. we know the leaders of these companies, the ceo's, give away lots of money. what is the responsibility of the companies, of the employees, to the local community? should google employees or google somehow enable their employees to do more? >> google does, to be fair. google has matching programs. money you donate to other causes you believe in. they are one of the most aggressive donors, directly and indirectly. the question is whether or not these kinds of highly symbolic things, like creating parallel transportation systems -- what

does that tell people about living in san francisco? it is one thing that i know there is someone behind this gate who has an expensive house looking at the golden gate. that does not get rubbed in my face every day. when i see a parallel transportation system that brings people to work, that really bothers me. there has to be some give. certainly you are paying for the bus stops. that has come out. there has to be more. there has to be some blending of this with public services. otherwise, you risk more serious confrontations. >> what do you mean by that? obviously, these buses are a few of many perks employees get to convince them to commute from san francisco to silicon valley. but can this divide be healed? and what should be done to fix it? >> i am not sure the divide can ever be entirely healed.

it is in the nature of this lottery phenomenon, where you have people made fantastically wealthy. we're not going to start handing out stock to everyone who lives in the bay area. that is not going to happen. you'll always have this envy. that said, when you start creating infrastructure, doing things like saying, the existing bus system does not work well, so let us do this -- you could make existing transportation systems good. what about free wi-fi on existing buses? what about enhancing the existing system, so they become a legitimate alternative for people who are not employees of google? i think you will see more blending of these services. google has a history of doing these things, jumping on what is needed, and blending the best into something else. that can happen even in public markets. the expectation is, you will see this bleed over to existing infrastructure, and not get a better version of san francisco public transit, it has that is

-- because that is absurd. >> hopefully some of those responsible are watching bloomberg. stick with us. we are talking microsoft after this quick break. ♪ >> microsoft's board is

preparing to make satya nadella the next ceo, and is discussing replacing bill gates as executive chairman. jon erlichman has been covering this story. what can you tell us about the timing? when might this be announced? >> they are very far along in this process. we know they could announce this as soon as next week. there is a team in seattle, at the super bowl this weekend. we are not sure whether this will complicate or slow things down. they are looking to put in satya

nadella. we do not know whether the person who is leading the search will step into the chair role. >> let's talk about the potential board shakeup. what would gates leaving the chairman position mean, assuming he continues as a director, just not as the chairman? >> right. i think when our story came out, a lot of people wondered whether he would be that much more removed from the day-to-day activities of the company. one would think he could end up consulting on a variety of different product initiatives at microsoft. one area where he has continued to lend his time over the years is, to example, search. there is a possibility that a role without being the chair, maybe you get him sitting down with people like satya nadella,

talking about the product initiatives, and be less caught up in what you have to do as a chairman. >> we will be watching through the weekend, through the super bowl. potentially looking for something on monday. i want to bring in paul, who nadella predicted satya would be back. this is your chance to do a victory lap. december 13 last year, you said, "i think it has to be satya nadella. i know the board wants to show someone from outside, bring in fresh blood. but ultimately it has to be him." why? >> i cannot do a lap with my microphone, or i would run around my chair. it has to be the right combination of someone well-liked inside the company,

which is hugely important. you don't want someone who feels like a hatchet man. it had to be someone who was about the future, not the past. that meant they were coming from cloud and services, not from office or windows. that tips to nadella. and it had to be someone who knew where the bodies were buried. you have to have a notion of what you have to do, and not be frightened by this organization, which has an incredible history and its founder and chairman involved. it felt to me all along the company was angling for an outside candidate, i think the triumph of hope over experience, as oscar wilde said of second marriages. it is, at the end of the day, the best inside candidate. it seems to me this was where we were going to end up. i am pretty pleased.

i think it makes sense. >> a lot of people agree with you. others say it is too safe of a bet. does this guy have the charisma to run a company like microsoft? >> i am speaking from limited data, but that has never let that stop me in the past. by reputation, from my own limited contact i would say , absolutely. that should be the least of the concerns. certainly, he will not be as easily parodied as ballmer was, but i'm not sure that is necessarily an attribute. we will not see monkey boy videos, which breaks cory johnson's heart. for all i know. we will see a much more straightforward leadership. this is the there is future. which is hugely important. there is also not going to be a lot of protection of legacy products. that is not his legacy.

defending why we need to put millions of dollars into office just because we always have. this is going to be much more about the future of the company and where we need to go. you will see the advantages of an external candidate, given his reliance on cloud services, as opposed to bringing in someone from the outside just to say we did. >> we will be waiting for an announcement any day. it sounds like they are close. stick around. we will be talking amazon. do not go anywhere. ♪ >> amazon may raise the price

of its amazon prime number ship, -- membership which currently , costs $79 a year. the service includes endless

video streaming, and free shipping. it may rise $20 to $40 a year. what impact could this have on the bottom line? still with us is our san diego into beating editor and jon erlichman. for people like me, who order many, many things from amazon a day, this is a good deal. but what about all of the other people out there? is amazon going to lose customers because of this? >> no, because they have managed to wipe out the entire retail landscape, so there are no stores anymore. there may be a couple out there. there is basically nowhere else left to buy things. i do not think they are. it would be heartbreaking to me. this is one of those essential utility services, in terms of my own family consumption, in terms of video and other purchases. nevertheless, it always struck me as strange that the price has sat flat since i think 2005, around the launch date, and has not changed despite increases in shipping costs and the

enhancements that have made to the video service, the netflix-like service. the only surprise is that it took so long. i do not think it is going to change anything. but the appeal of the cash that comes with, say, 20 million subscribers, and you add $40 in additional subscription fees -- you are talking a billion dollars incremental revenue. that is hard to turn down. >> what impact could raising this price have on the bottom line, have on the business? >> the explanation they gave was that this helps offset those shipping costs of moving everything around. the amount of stuff you can buy on amazon today, versus when they first rolled out amazon prime. my take away is, now we know why they need those darned drones, you know what i mean? something that is not going to cost you the same you pay to

fill up the tank. that is part of the story. this is a potentially savvy move. >> drones, we know, are years down the line, it ever happened. -- if they ever happen. what are other things amazon can do to offset shipping costs? people talk about them by ups, -- buying ups, fedex, the postal service. but realistically, what else can they do? >> they are trying to move more logistics centers closer to the larger populations of people. they have already done a lot of that, so they are not pushing things as far across the country as the early days. that cuts down on some of their costs. it does swap some fixed costs of storage and inventory for some variable costs of what they spend on shipping. nevertheless, they can adjust their cost structure a little bit that way. i do not look for drones anytime in the near future, but it is at least interesting. it shows they are trying other

stuff. i think an increasing amount of the value people see in amazon will be services. there are services that are not part of prime, but amazon prime is a creditable competitor with netflix. the shipping is free, and i would have to pay for prime, or the other way around. you are getting something for a low price, compared to netflix. it is a pretty incredible bundle. >> what about the video service? they could spin the unit off and make it a separate company. >> they were asked about that yesterday and dodged the question, like all questions. i think it is an important development. say they do it on the lower end so people do not freak out at a $40 increase. $99 or $100. you could separately use the streaming video service for a comparable price to what netflix charges. maybe they go lower.

because that is what amazon is always about. potentially, you could get more people to join prime. they say, you are using our video service for this much more per month. you could come into the prime family. there is a huge opportunity to take business away from netflix in a hurry, if they were to split it out like that. this pricing change totally plays into the idea of netflix. i am sure bezos has netflix and -- on his wall. in his sights, for sure. >> what do you think of that idea? >> i think that is exactly the direction they are going. you are going to see some unbundling of services. amazon has traditionally gone after their top competitor. and gone straight at them with a lower price. the person with the bull's-eye is now on netflix. the shots are going to start coming. >> thank you both. more after this quick break. ♪

>> we focus on technology and the future of business. disney and dish network are close to a deal to settle litigation over dish's ad skipping technology. the deal could include compensation to disney for subscribers who skip commercials. dish is also involved in legal fights with cbs and fox. is sold out to new york city ahead of the olive -- olympics. they are working overtime to add capacity. the supreme court has even

agreed to hear the case. twitter is buying 900 patents from ibm. terms were not disclosed. the deal resolves a patent dispute after ibm warned of possible infringement of at least three patents. twitter had nine patents and 95 pending patents when it went public in november, a low number for a top tech company. online storage company box secretly filed for an ipo, beating larger rival dropbox to he -- the punch. dropbox has raised another $200 million in vc funding. what is next in the battle of the boxes? ari leavy covers technology for bloomberg. and the ceo, aaron levie, was here on bloomberg west a year ago, talking about a potential ipo. the timeframe would fit into what he gave us.

listen to what he had to say. >> we are focused on building an independent long-term sustainable company, an ipo is in that path. >> you told us 2014. are you still on track? >> i have said words like it could happen that year. i would still use those words. >> why now? >> he is much funnier than i am. >> it is hard to compete. >> there is insatiable appetite for next-generation software companies building in the cloud. that is the way people are doing business now. yet the way they have been buying is the old stuff. if you look at workday service -- these are companies that have gone public in the last couple of years with big valuations. price to sales of like 35 times.

beating dropbox , or are they ready? all thatx is not significant in the timing to the public market. they are both playing the big markets. they do compete with very different products. box willave to imagine go public when it is ready. when they have a story they can tell investors. >> how well do we think boxes doing? >> the numbers i hear are somewhere in the $150 million revenue. not numbers we have reported. we have stayed away from reporting, but have heard these types of numbers. not profitable. lots of employees. we have heard a thousand employees. they are clearly scaling themselves, scaling their engineering, for where the market is headed, even though the numbers may not show it yet. >> we mentioned aaron levie is a

funny guy. he is also a prolific tweeter. not all are serious. he was speaking about the potential new ceo. saying satya is a very strong pick for ceo. understands how to build platforms, gets the cloud. i know he is from seattle and followed microsoft a long time. he also has cheeky tweets, like this one. it is funny, because so many ceo's are scared of saying anything, and he is the complete opposite. does that make the company look better? >> i know the investors well and talk to them frequently. what are the risks? aaron does not fall into the top 10. he is an asset they invest in,

one of the reasons the company has been able to capture such a big valuation. he is a magnetic personality and someone investors believe in. his off-the-cuff remarks may be, sometimes -- those may be things he will have to reel in. i am sure the lawyers are all over him. but this is a new environment. the ceo's of yesteryear are not used to this avenue, this ability to express themselves so openly. he is of this generation. >> they founded this company in 2005, four cofounders. they are all still together. that does not happen often. >> a solid relationship. the cfo and aaron went to college together. >> i think high school. they have been together a long time. we will be watching. box reportedly filing for an ipo at some point this year.

thanks so much. we turn to a san francisco startup changing the way game designers bring characters to life. this is a company that has developed software that captures a person's facial moments through a webcam. the movements are projected onto a 3-d character. we spoke about how they make animation easier. >> we were the first ones building machine learning into animation. it has been very time-consuming work for a long time. >> it involves sketching body parts individually. >> it involves a lot of people that tweak every single keyframe of the animation. we tried to move from everything to machine learning to automate characters, like we are doing in front of you. >> you created a 3-d character of me. you took a few pictures. if i raise my eyebrows or smile, you can see it happening.

i am just looking into the webcam. >> exactly. it is taking the video from your face and is able to extract the emotions you are experiencing, and translate those in real time to the character, like i am doing. >> hello. how do you actually do this? >> we use a lot of machine learning technology. we are able to run this in real time, on a game engine. this was a project in collaboration with amd and unity. the software has been optimized to transfer in real time emotion directly on the character. >> mostly game developers using the software right now? >> correct. our main target is game developers, but also people that do independent animated films. >> is it being used in film widely yet, this kind of technology? >> this is really the bleeding edge. they are just coming to the market right now. we are very early on.

we only launched the first version a few months ago. it will take a while before we are able to put it into the pipeline of bigger productions. but it is so much faster, real-time time instead of days or weeks. >> have you had conversations with film studios? you mentioned independent filmmakers. i do not understand why they would not want to use this. what are the drawbacks? >> it depends on the budget. if you have a huge budget and are making the next pixar film, you have the luxury to have hundreds of animators work for you. if you are an independent filmmaker, you do not have those means. we are providing, enabling them, either filmmakers or game developers want to bring more emotion into their game, into their character. we are enabling them to compete with the big giants. >> what does it mean for the gaming injury -- industry? there has been so much tumult in

the game industry lately, laying off 50% of the workforce. how does this impact developers? >> we are going to see more animated films coming out of smaller teams we have never heard of. we have the technology to compete and to bring new, fresh, and crazy ideas to the market. there will be more small teams making an impact into the game market. >> my interview with the miximo ceo. the tribeca film festival is getting tech savvy. like everyone else. we take a look at how, coming up. ♪

>> in today's new hollywood, the tribeca film festival is in april in new york, but this year the festival is going interactive. jon erlichman, what does that mean? >> if you think about film festivals, they are a great place to talk about film and different ways of film making, but also a great place to explore new ways of filmmaking with things like technology. vine competition last year. john patrick, the president and chief operating officer of tribeca enterprises, which is the parent company of a festival. you announced about a music video competition you are going to have this year. using some cool technology. what are you enabling filmmakers to do? >> we have partnered up with a company called interlude, which has interactive filmmaking technology. we are going to allow anyone around the country to create an interactive music film. they can use songs from great recording stars.

they will create short films using this new interactive filmmaking technology. >> we had a segment earlier about cool 3-d animation tools. you think about go pro and the fun technology through something like that, or shutterstock, being able to use stock photos easily. how is this changing the way films are made? >> it is a revolution that is now hitting its full stride. our partner in this new filmmaking competition is lincoln motor company. they had a great project exhibited using the oculus rift , technology. that is an immersive technology. go pro is changing the whole culture of filmmaking. it is the idea that people are being empowered to tell their own stories.

you want to help facilitate that. we are looking forward to april, when we can bring those filmmakers to tribeca and shine a light on them. >> for the film watcher to have a different experience, i think about reading choose your own adventure books as a kid. i wonder how that changes the film viewing experience, if we are not all watching it in the same way. the ending is a little different for all of us. >> it is this blending of game making, filmmaking. where does one start and one end? we have seen how this distinction and hard and that -- hard line between games and films has started to blur. we are really embracing it. we think it is a great opportunity. we think that is where the audience is going. you are finding creators love that flexibility and what these new technologies can do to help them tell stories.

>> let's go from film production to film distribution. that is part of what the tribeca business is about. we have moved from the theater. we're still going to the theater, but on demand. netflix is making its own original movies. are these good, helpful changes for the film industry? >> it is. the pace of change is tremendous. if you look at it three or four years ago, netflix started this incredible revolution. when they launched their streaming service, they give distribution and visibility to a lot of independent films. when they first started out, they were not doing deals with the big studios. independent film was the mainstay. over the last three or four years, they have shifted to original programming. they still have a huge film offering, but they have shifted toward originals and tv. we are seeing this shift in distribution, this constantly shifting landscape. a lot of great opportunities. we believe that brands like

tribeca can help the audience curate and navigate this sea of content. we believe that is the next wave. te content,cura help the viewer find what they're looking for. >> about 10 seconds left. the idea of going to kickstarter to fund films -- when are we going to know this is a model people can lean on? is it based on the success of have these films do? >> i saw a statistic that $5 billion has been raised on kickstarter across all industries. filmbraff brought a finance on kickstart her to sundance. it just sold. you have nicer views, and people like the film. not only is kickstarter a great way to raise money, it is a great way to go to an audience. hopefully, the audience will help identify the projects that should get the financing and visibility. >> cool stuff. john patrick, chief operating officer of tribeca enterprises.

send it back over to you. >> it is not just football on super bowl sunday that grabs viewers. of course, the commercials, which we cannot wait to see, unless you saw them already on youtube. ♪ >> if only i could make this

message go viral. >> ♪ you are doing it darling changing the world one sip at a time she done it. soda stream ♪ >> one of the top three most watched super bowl commercials on youtube so far. more than 70 related spots have been posted to youtube. these teasers or ads have been watched more than 105 million times. joining me is a youtube trend

expert. why, if it costs $4 million for a 30 second spot on television, with a put the commercial up a week early? >> it used to be the next day, watercooler conversation included the ads. now, there is a way to get people excited and engaged in the content, extending the conversation before the game. >> some of these are actual commercials. advertisers are realizing there is value, different strategies online, getting people excited for the big day. >> how do viewership numbers of the super bowl compared to the numbers on youtube? >> as of today, the videos have gotten 105 million views. as of today last year, videos on youtube before the super bowl only had 34 million. >> that compares to 110 million

views for the super bowl on television. so not bad. you are doubling viewership. >> you are doing well. >> let us talk about the top three. number one, my favorite. budweiser. take a listen. >> ♪ you let her go you led her home when you let her go ♪ >> i guess with a little golden retriever puppy, you cannot lose. or labrador puppy, whatever that is. >> they only put that ad up two days ago but are up 24 million views. the song was a breakout on youtube as well. they really understood their audience. >> there was the hyundai commercial, number two. number three, scarlett

johansson. what other trends are you seeing? >> what is interesting is how early some of these brands have gotten online. doritos has been doing a campaign since november last year, getting an early, with lots of different fan-made ads. a lot of consumer goods started taking a bit of a leaf out of the automotive playbook, looking -- putting content online early this year. usually it is something you seek are commercials to >> volkswagen first. did a super commercial. i think it is a teaser. best -- all ine one and. we don't know what they're going to come out with. they still have one of the most memorable super bowl commercials in the last few years, in my opinion, with the little kid who could control the volkswagen. >> stickiness creates great ads.

the fact that we are talking about that years later shows that a digital strategy works well. you can share it with your friends. >> the actual commercial will be something different on sunday? >> we have to wait and see. >> we will be watching. always great to have you here. watch the full budweiser commercial. it is so good. it is time for the bwest byte. what have you got? >> friday. you know i love them. this is something i hope you love. one is our number. as far as i know there is only , one 3-d animated version of emily chang, which you saw. this is cool. the company, miximo. >> it was really cool. they took a few pictures of me and came to the office and showed it to me. we did a little tweaking here and there.

right there, i had a 3-d animated version of me, which is a good question for you -- why aren't the film studios using this kind of technology? it certainly seems like it is pretty easy. >> he made a good point. when they have big budgets, generally they spend more money. but there has been competition for the world that pixar built, having cheaper, more accessible technology. in the meantime before hollywood , uses it in and bigger way, we can in our morning meetings you can join us in your 3-d version. this will rival the cory doll in the office. >> maybe we can get them to make an animated movie of all three of us. the three musketeers. what do you think? >> love it. >> i mean, i would watch it. thank you all for joining us. it is friday. have a wonderful weekend. enjoy the super bowl. we will see you on ♪ monday.

>> this week on "political capital," the former republican chair on the state of the union and american politics. nfl film's premier super bowl analyst predicts the big game. we began the program with counselor to president obama and former bill clinton chief of staff, john podesta. thank you for being here.