♪ 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. microsoft makes it official. the dela is a former head of

microsoft cloud and enterprise business and has been with the company since 1992. here is what he had to say about his plan. >> first thing i want to focus on is ruthlessly remove any obstacle that allows us to innovate. innovation of on things microsoft can uniquely do. >> microsoft also announced bill gates is stepping down as chairman with john thompson taking over that role. stay veryoing to involved with the company as a technology advisor. >> i am thrilled satya nadella up,sking me to step increasing the time i spent at the company. in i will have a third of my time available to meet with product groups and it will be fun to define this next round of products working together. >> we assembled a special roundtable.

diego,drosky from san curt of d.c.. he was president of microsoft's office to vision. well is our editor at large cory johnson and our senior west coast correspondent jon erlichman. started by asking just who is satya nadella. >> i spent a lot of time looking with satya over the years. we spent a lot of time working through what are our relative plans. i think satya is a good choice. rare combination of a very strong technologist as well as someone who has a strong vision, focus, also business focus. i would not think of him as someone who just focuses the -- focuses on the technology. it is how do we transform the business as a result.

working on azure, driving the egg strategy forward, he has a great track record. >> how does he get the job? >> i'm not sure i'm the person to ask. i read what you read in the press, which is due on somebody internally. i think he is a great internal candidate. he knows where it needs to go. stronga very relationship with the other leaders in the organization and yet he is not shy about challenging the status quo. >> you and i were both guessing it was in the dela for a while. the insider the inside track?

>> two things, one that no sane insider was going to take it as long as gates was chairman. this is like having evan jack on your twitter. you either have to make structural changes in the board, you might as well have an internal candidate. he was one of the strongest internal candidates, and someone who is tied to the fastest-growing segment of the business. if you look at its contribution it was huge. it was a natural fit once you made that change. >> having worked with him for , did he stand out as a rising star? was there any indication early on that this could be his destiny? >> i don't know if this being he has been ad

strong leader in the organization for the reasons i said. he is also a person who can bring consensus where there is conflict. if you look at what microsoft is say it for, i would stands out situationally as the guy who has the right mix of talents. >> there are all these famous stories of microsoft fighting against microsoft. satya made some choices about using outside -- even oracle software. can you give us some examples? a piece of it is the strength he has in the technology to begin with. i bring up the discussions we have around what role azure should play internally and if there would be a goal to say it should be everywhere, it should

be the foundation of everything we do. there was a real discussion of what is the right evolution of one that comes online. here's a guy who can work with us, find out what the right answer is, and big that happened. >> given your conversation with your sources, what is it they say makes satya nadella especially echo any good executive should have strong vision, intellectual curiosity, but what makes him special? things, this idea of him being able to stand next to an area of growth where microsoft can say we are making some inroads. connectionbeing his to the world of startups, the world of silicon valley, where technology is going. i go back to the ruthless comment he made, this idea of

shiftingown some walls around the politics of microsoft to get things done, i would say that is a one to three combination. was paul kedrosky, a former microsoft office president, cory johnson, and jon erlichman. disney ceo bob iger joins us next. we get the latest on disney's business.

>> welcome back to the best of west we focus on technology and business's -- and business. jon erlichman sat down with disney ceo bob iger on the disney lot in burbank california . john started by asking him what kind of counterprogramming will appear on abc. >> i think it ends up being a good opportunity for us. abc's lineup on thursday nights is pretty strong, particularly with "gray's anatomy" and "scandal." i don't know what it will be next season, it has not been determined yet. the abc primetime audience tends to skew more female than male.

it is a great opportunity moving the cbs entertainment shows out. they have success on the night really early with the big bang theory. moving that out so it does not compete with our shows. to that will probably help us in some form. i don't know, it is too early to speculate whether there is going to be tremendous counterprogramming. abc's strategy is what it is, regardless of the competition. abc knows what works for them and where their audience is and will continue to go after it. >> we are reminded of a time when there were a few reasons to be watching live tv. there are some marquee events that people are still tuning in to. the grammys are an example, the super bowl is an example. you have the oscars coming up. would you be surprised to see

record ratings on abc for the oscars? >> um, well, i am certain the oscars will do well. a lot of the films in contention were released late in the year so there is more interest in them. yes, live tv is definitely something that is attractive to audiences, but there is a lot of tv and video available to people today, too. the audience is much more fragmented. it is a tougher competitive environment, maybe the toughest it has ever been. the challenge is a lot greater today than it has ever been. >> just a final broadcast question, in the world of late night, jay leno is handing the baton to jimmy fallon. does that open the door for any marketing opportunities with jimmy kimmel, abc, anything you have thought about on that front?

>> i know it opens the door and creates a need for us to aggressively remind audiences that not only is jimmy there already, but that show is really good. you will see more support for the jimmy kimmel show, not just at abc but across a company, because the competition is changing and it is clear that nbc is going to go after the incumbents in a big way, not just nbc but cbs as well. we love the success of jimmy kimmel now that it has been moved to the earlier time slot. >> whether it is broadcast or cable, the willingness of the pay-tv providers to a you for -- to pay you for your content. cable consolidation is a big thing these days. time warner cable and charter, are they coming together? is that good or bad for disney? >> it doesn't have much of an impact as far as we are concerned.

we are abc, espn, disney. for instance, networks that are not only really well branded but in big demand because of their product. so whether it is consolidation or ownership of existing multichannel businesses changes, we are still going to be in demand as we have been. you cannot go after the multichannel subscriber about -- without offering them our product, so it does not mean that much to us. >> disney has rolled out a bunch of apps that are easily accessible on a number of different platforms. you have talked about your strategy of games and how mobile has affected that. maybe you can clarify what we should be thinking about with respect to disney making games and how mobile has changed your strategy. >> it has changed it a lot, because when we entered the game market we entered it a few times, there have been fits and starts. we entered about six or seven

years ago and were more focused on console games which are not mobile in nature. those games not only cost a lot to produce and market and are limiting in terms of people's access to them. we have seen mostly because of the development of smart mobile devices, phones and tablets, a huge increase in the mobile in that space. tremendous increase. it is really where the games market is today where we are concerned. we have shifted our strategy dramatically. that is probably the most obvious. interestingly enough, infinity is a game that is designed both for the fixed platform and for mobile. it is the first game we have rolled out that is playable on multiple devices. >> this is a game that has a variety of disney characters. you can find them pairing up. >> it uses a number of disney -- it uses a number of disney characters, basically toys or

figurines with the tech elegy platform -- with that technology platform. it gives the user ability to mix and match our characters. so jack sparrow from pirates can be in the game with lightning mcqueen from cars, for instance. we think the trend in mobile will only continue. it is where we have to be in the space. television or film entertainment, by the way, is just as important to be there from a mobile perspective. i know we were we are going to the first in the business, but continue to be very aggressive in that regard, not just for tv, but for movies as well. >> john ehrlichman with disney ceo and chairman bob iger. twitter's first earnings reports as a public company did not go so well. we are digging into the numbers

next. ♪

>> welcome back to the best of bloomberg west, i'm emily chang. twitter released its first earnings report is a public company and the news was not so great. net loss: $511 million. revenue also more than doubled since $243 million.

twitter has 240 one million monthly active users in the fourth quarter and twitter usage also apparently declined with 148 billion timeline views. what does all this say about twitter's business? i spoke at a special roundtable with bloomberg contributing editor dave kirkpatrick and others including our editor-at-large cory johnson in our studio. >> if you want to sum that all up, it is user engagement and how much people are using the medium. the numbers don't look very solid. it does not look like the explosive growth of the stock valuation. you and i use twitter that is both worth talking about.

constantly. >> we are power users. >> in this world where twitter looms large, where media and advertising loom large, the rest of the world does not think it is such a big deal. -- as such a big deal. >> i want to take a listen to what dick costolo had to say. he expressed a lot of confidence. he was very emphatic about his confidence that they can tweak and change the product to engage the mainstream user. >> integration of those richer media experiences helps make it more accessible to a broader audience. we have taken steps in that direction with our launch of media forward. we will continue to make twitter a more visually engaging medium. >> they know twitter is not as accessible to as broad an audience as they want to reach. zach, can they do it? >> i think there is no question that there are significant changes coming. >> they have already gone through a pretty big redesign. >> one picture started to show

up, it was a totally different experience. there are a lot of things they can do over the coming months to do more. to bring in the mass-market. >> my mom is still a big facebook user. she still does not quite get twitter. so david, perfect question for you, author of the facebook effect, can twitter be as mainstream as facebook is today. ? >> thank you for saying it because i was going to bring it up myself. that is not to say i am not a huge fan of twitter. i don't use it myself quite a lot, but i think a lot of people fundamentally overestimate the potential of twitter as a business when they fall into the habit of comparing it to

companies like facebook or google. one of the big differences between facebook and twitter is that facebook has astonishingly accurate personal data to base targeting for advertising upon. twitter does not have nearly such assets, not to mention, they have a way smaller community to do it for. the thing i have to throw out there about twitter, i am not a financial analyst, i am sort of a strategy analyst. but the fact that twitter's valuation was by some measure double that of facebook's, which is an astonishing valuation. facebook, which is a very profitable company and also growing 17 times, which is a high valuation, but twitter is , so much more highly valued than any of the other major internet companies, i think it is in precarious territory, considering the scale of its long-term opportunity. >> twitter's user growth is slowing down, but they are making dramatically more revenue per user. as a business, how important is increasing growth in users? >> they need to get more from

those users. user growth over the long-term will slow down. there are only so many people in the world. at that point you want to see them turning on revenues at a faster pace. the fact that they are getting more revenue can only be a positive, but the fact that u.s. user growth sequentially was down to 1.9%. that is the worst growth they have ever had. let's say in the fourth quarter of the last year they got more mainstream press than ever before. we mentions of twitter and the saw tons of tweets and mentions of twitter and the twitter ipo gave them tons of publicity. if they only added less than two percent growth in the u.s. in terms of number of users, that is a bad sign. they did not at those changes and improve user experience. >> most of their users are international.

can they figure out how to monetize the rest of the world that is using twitter? >> i think there are a lot of questions there. i don't think there's any question that there is a lot of low hanging fruit for the twitter business to scoop up. it takes time to build that at is this internationally and they're doing it successfully on a small scale. we have done that in brazil with our company and i think twitter will do some really interesting things with the rest of the world. i do think what we're talking about is very scary. it is early days in these companies and they are not moved they are not smooth sailing straight up to the right. >> value per user last quarter has great disparity. you would think international could come up. >> how does the story play out, david, the next few quarters for twitter? how do they look like? >> i think it will continue

losing money. they have a pro forma non-gap profit. these people are investing in not making money. that is going to continue. everybody was investing is assuming that they will have quarters like facebook has recently had. i don't see that looming in the near term. >> bloomberg contributing editor david kirkpatrick and my partner cory johnson. two of silicon valley's top vcs are leaving to start their own funds. two women are stepping out on their own. ♪

>> this is the best of bloomberg west, i am emily chang. in a field dominated by men, two female venture capitalists are stepping up to start their own firm. cory johnson and i sat down with both of them to talk about why they launched the new firm. >> i think both jennifer and i felt like this is our entrepreneurial thing. it is like when you see a vision and you share it. we thought this is a great time in the market to be focused on seed and early-stage investing around mobility as a theme. to work with somebody that you have known for over two decades.

>> was this a difficult decision for you, jennifer? >> no, i have been in the business for 17 years and it is a great opportunity and time. frankly, if not now, then when? we have been very fortunate in our careers as apprentices initially in the business and then working our into managing partner roles and now we are at the top of our game in our respective firms and we thought this is an opportunity for us to do something different and start a different kind of firm and focus on building companies for the long-term. >> so you're saying now is the time. what is the fundraising is it the time for fundraising? environment like now? >> we are very fortunate to have successful careers and right now

we are founder funding. so we have capital from jennifer and myself. it is more than enough to last for two or three years. we have been heartened that as we started to talk to people we have been getting proactive and -- hand raising from people we have worked with as entrepreneurs or investors wanting to invest. at this point we're excited to be investing our own capital. >> our institutions looking at this as a time to write checks to venture capital? you hope so, obviously. >> we are not fundraising but our colleagues are fundraising and we think it is a great time to put money to work in the venture industry. there is an explosion of opportunity in the mobile phase. we define it much more broadly than we have seen in the press in the past. we think that mobile will infuse and touch every aspect of the software stack. >> it is no secret that the

venture capital industry is dominated by men. only 11% are women. now we have two women founding a firm together. how do you look at the fact that both of you are women? >> well, we are women. [laughter] i think we want to -- those companies happen to be founded by men, so we will equally back men, women and people from all different experiential backgrounds and other aspects. those companies all happen to be founded by men. we will equally back men, women and people from all different experiential backgrounds and other aspects. we find that having a diversity of views in the boardroom when you're trying to tackle tough challenges and the creative, -- and be creative having , different perspectives, whether that is from operating or investor or gender perspectives, there are tons of studies that show that.

>> do think the fact that you are women gives you an advantage because of your different perspective? obviously different from the majority of the industry. >> data shows that having a different perspective in the boardroom, particularly around gender, which is something they have been able to study now both privately and publicly. it increases the chances of success. >> have either of you overlook ed the reaction of male colleagues? >> i have done a lot of investing in the social commerce space. one example would be birch box. it is discovery, subscription commerce.

people wanted to know people would pay $10 a month for things they could get free if they walked down to the department store. over 300,000 people pay $10 a month two years later. >> other less obvious examples from a technological aspect? i wonder if there are things as well. >> from a product perspective, we have seen some companies that have made some seed investments in companies that do multiplatform device approach. they are companies that are taking advantage of your social graph in a unique way to engage consumers. but they are doing it anyway -- that women in general -- in a way women in general very much value word-of-mouth for recommendation for things much more than men do. they make go look online. we're trying to take advantage of that word-of-mouth and how they integrate into their technology. one of the things that is interesting about mobile is that it is very user interface

focused. women are often on the fly, particularly moms who are living off their mobile devices as they drop off kids and run errands. being able to have a simple user interface with sliding mechanisms. it is very critical when you to how women interact with their device. look at opportunities, we take that into consideration. i know one company that was doing it from a hardware perspective. when they did the prototype, they had an all-male team. when a woman engineer was on the team

and she was poking on the phone, she had longer fingernails, they had to redesign. >> what will be your focus with all those trends out there? what are you going to be looking closely at? >> our focus that unifies all the way from enterprise to the consumer application layer is this mobility everywhere theme. whether it is a security software company to it health care where it is an application but they have been very acquisitive in the mobile space because that is where the action is. >> those were the founders of aspect ventures. is tech really responsible for rising rents and housing prices in san francisco? the chief economist from real estate website trulia comes back with us and some surprising results. ♪

>> welcome back to the best of bloomberg west, i'm emily chang. is technology responsible for rising rents and housing prices in the city of san francisco? the answer may surprise you. trulia has reported on prices across the country chief economist joined me for the answer on the question. >> we're definitely seeing rents rise faster in san francisco and other tech hubs than in the rest of the country. it is much less affordable to live in san francisco than pretty much anywhere else. the differences have been here a long time. the affordability gap that separates them from the rest of the country has been here long before you and i were using e-mail. >> so you're saying it is not necessarily technology. >> it is certainly not the whole

story. what we are seeing across these tech hubs is that they were drawn to places that were expensive to begin with, places that had good weather, universities, other industries that were there. most of the gap in home prices we're seeing today between tech hubs and other metros have been in place 25 years ago. >> so you're saying technology industry has nothing to do with the rising rent in san francisco? >> it is a big part of economic growth in the bay area and a big part of demand. housing prices as a result of strong demand and tight supply. certainly the technology industry is helping push up prices and rents. but the other piece of it is supplied. san francisco is an incredibly difficult place to build new housing. other tech hubs around the country like austin and raleigh have much lower home prices and a lot more construction. supply matters to. , too. it is not just the tech industry that is fueling demand for housing. >> so rent and housing is rising because san francisco is san francisco.

we are only so big. it costs so much to build new homes and the regulatory issues surrounding construction are so great. >> what makes it so extreme in terms of housing is the supply, both because of geography. we have the ocean on one side and the bay on the other and hills nearby and also because of regulations. it is difficult for developers to build new housing here. as a result, we see 1/10 of the construction in san francisco that raleigh, north carolina has. it is very hard to have housing be affordable if little new construction is built. >> what is the surprise in this report to you? >> i think one of the surprises to me was how much that cap in -- that cap in that -- that gap in affordability existed tony -- existed 25 years ago. it is hard to get that historical perspective because

they are so focused on what is happening now. most of the gap in housing costs between big tech hubs in other metros was in place in 1990. that was surprising. >> how much bigger has that cap become in the last 15 years? >> it has gotten bigger. home prices have risen more in tech hubs than in other markets. the gap has been growing. and without a lot more construction it will probably continue to grow. many of them have tight supply and that is a recipe for escalating home prices. >> given what you have found, what do you think is the responsibility of tech companies and tech employees in this issue of tension between the haves and have-nots? >> i think it is a bigger issue than just the tech industry, but certainly in san francisco it is an important part of the economy. i think a lot of the story has to do with building more housing. some of that housing needs to be more affordable, but building more housing overall will help slow down the price in rent

increase. >> so you think it is the government? >> i think it is a much bigger issue than just the tech industry. that was the chief economist at trulia. seattle may have won the game but who one the prize when it comes to commercials? we will bring them down. ♪

>> this is the best of bloomberg west. i'm emily chang. the seattle seahawks blew away the broncos for the first ever super bowl victory. what about the commercials? they cost $4 million for just a 30-second spot. so which companies scored and which ones whiffed? >> we saw in the most robust way ever before how companies try to use -- how marketers tried to use

the super bowl ad to get more eyeball time. >> i am sure you can probably read my mind. budweiser's puppy love ad was my favorite. it was so cute. wait, let's watch it again. ♪ #bestbuds. so cute. i'm a sucker for the warm and fuzzy ads. ok, what about you? what did you like? i think what marketers wanted to do was this apple pie,

budweiser type of thing. i thought the bud light ad really showed the problem with so many of the super bowl ads where there was piles of money to be spent because they were going to buy a super bowl ad. i don't know that that told a great story about the brand. i don't think that told a great story about the brand. it was just so contrived. is -- >> was it the ian is up for whatever ad? ♪ what is your name? >> all right, so we disagreed about everything. in the end when arnold schwarzenegger shows up and they are playing table tennis? >> >> i thought that a lot of the ads didn't take the opportunity. there are a couple opportunities to introduce a new brand. i thought one that was really

impressive was the maserati ad which did a terrific job introducing a brand advantage of , making people think of something different and taking a big stage without acknowledging the stage itself. >> we do agree on one thing because i liked that one too. let's take a listen. >> the world is full of giants. they have always been here, lumbering in the schoolyards, limping through the alleys. >> it was like a short film. >> it had me thinking of the david and goliath book. it was that fantasy or notion. i thought that tapped into that really well. again, it took a moment to

introduce a brand in a very big way. >> all right we are not experts. , let's bring in an expert to discuss this. what did you think? >> my favorite was how beats music and go daddy traded in and served ads that were really across the entire demo. >> there was not a lot of sex and cleavage, the staples of a certain kind of ad. we didn't have fiat ads like last year or the go daddy danica patrick stripper thing. >> much to the dismay of -- it was like taking a real person and have her click her dog on the air. >> it was bold and effective.

-- and having her quit her job on the air in the middle of the super bowl. >> it was bold and effective. gwen is a machine engineer from new york. she is a real person. she has a message for her boss ted who is watching right now. >> hi, ted. i quit. >> she just quit her job in front of 100 million people. >> yeah, baby. >> the reality is that women own or run many small and medium size businesses. how do you think super bowl advertising compared this year to years past? no one has been able to top the apple ad from a few years past. no one has been able to top that. >> let's look at the numbers. 100 million people all in one place.

>> trying to get more eyeball time out of your $4 million. the bud light ad tried really hard to do that. indeed, i saw the ad before it went on the air. a lot of people had that experience very moody think with using social media in the best way? >> some of the previews of the ads were the best. i thought the three minute preview was that her than the actual super bowl ad. there are techniques to get a conversation going during the event and before the event. across the board we saw innovations we have never seen before. >> what about j.c. penney and the drunk tweet? >> i knew that would come up. it was not the most profound message possible, but they did something interesting and pushed the limit. >> it wasn't just a matter of throwing was trying to get up twitter addresses, but it was was trying to get people from that tv and get more time with them. does the multiplier work in

advertising? >> i think it does. i was live tweeting and got tweets back from wonderful pistachios and go daddy. >> are people shopping at jcpenney because of the drunk tweets? or are people just talking about j.c. penney? >> it is hard to get attention and i think attention matters. the question is how much it matters. it is hard to know for sure. >> that was the ceo and founder of bright role with cory johnson . facebook turns 10. we look back at the first decade of the social network. ♪

>> facebook turns 10 years old this week. the company founded in a harvard dorm room now averages 750 million users every day. here are some of facebook's most memorable moments over the last decade.

♪ >> the facebook was started in 2004 as a harvard-only social network. by year's end it had a million active users nationwide. its meteoric success inspired its founders to drop out of harvard and head west. there, the facebook became facebook. in 2005 it had grown to support more than 800 college networks and ended the year with 6 million active users. by 2006, facebook opened its doors to anybody with a valid e-mail address. it also launched a news feed, blu-ray -- luring users back on a regular basis. usership shot up to 50 million. in 2008, users nearly tripled to 145 million. in 2009, it was a good year to like facebook where the now infamous button was introduced and mark zuckerberg challenged

himself to wear a tie for the whole year. facebook supersized in 2010. users increased to 608 million. in 2011, facebook introduced timeline and the company was valued at $50 billion. by the end of 2013, facebook servers had saved more than 300 petabytes of data. every petabyte, or one million gigabytes, stores about 10,000 photos -- about 10 million photos. this year, facebook celebrates 10 years and continues to grow with its market cap of more than $150 billion. zuckerberg's next challenge is

making it through the next 10 years. >> that does it for this edition of the best of bloomberg west. remember you can watch a -- watch us streaming on your phone, your tablet and bloomberg.com as well as apple tv as well. see you next week. ♪

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