>> live from pier 3 in san francisco, welcome to "bloomberg west," where we cover the global technology and media companies that are reshaping our world. i'm emily chang. every weekend we will bring you the best of west. microsoft makes it official after a long search.

satya nadella is the former head of microsoft cloud. here is what he had to say about his plans. >> i would say the first thing i want to focus on is to remove any obstacle to innovation. and then focus on innovation of things that microsoft can uniquely do. >> microsoft also stated that bill gates will be stepping down. but gates will stay very involved with the company as a technology advisor. take a listen. >> i will have over one 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 to discuss microsoft's new options.

our editor at large cory johnson and jon erlichman join these microsoft experts. >> i spent a lot of time working with satya over the years. he is a rare combination of a strong technologist as well as

someone who has a strong vision and focus and is in his focus. i wouldn't think of him as somebody who just focuses on technology. it is all about how we bring technology to market and how we actually transform the business as a result. if you look at what he has worked on, i think he has a great track record and he has done a lot for the company and there is a lot more he can give. >> how did he get the job, kurt? >> i am not sure i'm the person to ask. i think he is probably the right person for the role. i think they looked at a bunch of different candidates. he is a great internal candidate. he knows the business super well. he is on board with that. he has a strong relationship with other leaders in the organization. he is not shy about challenging the status quo or it i think he will ask questions. >> you and i were both guessing that it was nadella for a while.

>> this was like having evan jack on your board if you were twitter. if you're going to make changes on the board you might as well have an internal as an external candidate. certainly someone who is tied to the fastest-growing segment of the business, which is cloud services, enterprise services products. his contribution is huge. it was a natural fit once you made that change. >> kurt, let me ask you, having worked with him for two decades, did he stand out as a rising star? was there any indication early on that this could ultimately be his

destiny? >> i think he has always been a strong reorganization man. i think he is a very good team builder and person who can bring good consensus where there is conflict. if you look at what microsoft is looking for, i would say over the last few years he stands out as a guy who has the right mix of talents for the job. >> kurt, give me an example of that. there are all these famous stories about microsoft fighting against microsoft. satya made some really strong choices. how has he been able to navigate those things? could you give any examples? >> i think a piece of it is the strength that he has in that new technology vision to begin with. i guess i would bring up the discussions we have had about what role azure should play. there was a real discussion with satya about the evolution of

that. that brought us closer together. here is a guy who can really work with us and find out what the right answer is and make it happen. i think that is a strong example. >> john, what is it that they say that makes satya nadella a strong ceo? what makes him special? >> a couple of things. first of all this idea of him being able to be standing next to an area of growth, an area where microsoft can say we are making inroads. the second thing being his connection to the world of startups and silicon valley, where technology is going. you put those together with his willingness and i go back to that comment he made -- this idea of being willing to cut

down walls and shift around the politics of microsoft to actually get things done. i would say that is a one, two, three combination that helped him get the job, certainly. >> well, disney ceo bob iger joins us next. we get the latest on disney business. ♪

>> welcome back to the best of west where we focus on technology and the future of business. disney had a strong quarter thanks to its animated hit "frozen." our correspondent jon erlichman sat down with disney ceo bob iger. he 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 had success on the night really early with the big bang theory. moving that out so it does not compete with our shows. 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 is 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 the 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 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 offering them our product, so it does not mean that much to us. >> there are apps that are easily accessible across a number of forms. 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. they 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 characters, basically toys or figurines 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. we are going to 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. ♪

>> welcome back to the best of bloomberg west, i'm emily chang. twitter's earnings report as a

public company were not so great. twitter has 241 million active users. what does all this say about twitters 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 people are using it. the numbers are not solid. it does not look like the explosive growth of the stock valuation. you and i use twitter

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. >> i want to take a listen to what he 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 a 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. can they do it? >> i think there is no question that there are significant changes coming.

>> they have already gone through a big redesign. >> once 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. >> my mom is still a big face -- facebook user. she still does not quite get twitter. 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, not strategy analyst, but the fact that twitters valuation was by some measure double that of facebook's, which is an astonishing valuation. facebook, which is very profitable 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.

>> twitters user engagement 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. 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%, as the worst growth they've ever had. let's say in the fourth quarter of the last year they got more mainstream press than ever before. we saw more 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.

photos be dammed. 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? >> there is a lot of question 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 ad business 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 smooth sailing yet. >> value per user last quarter has great disparity. >> 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-cap traffic. 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 kirk patrick and mike 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 focused on our careers as apprentices 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. it is the the time for fundraising? what is the fundraising environment like now? >> we are very fortunate to have successful careers and right now we are founder funding. we have capital from jennifer and myself. we have more to last three or four years.

we have been heartened that as we started to talk to people we have been getting proactive and 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. >> are institutions -- are they looking at this is 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 industry. there is an explosion of opportunity in the mobile space. 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. >> 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. [applause] [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. we find that having a diversity of views in the boardroom when you're trying to tackle tough

challenges and the 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 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. >> and the less obvious examples? 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 approaches. 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 -- women in general very much value word-of-mouth for recommendation for things much more than men do.

they may go look online. we're trying to take advantage of that word-of-mouth and how they integrated in 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 devices as they drop off kids and run errands. being able to have a simple user interface with sliding mechanisms. when you 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 the woman that was testing it was poking at the phone with her 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 i.t. 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? we come back with 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. 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 then 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 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 supply. san francisco is an incredibly difficult place to build new housing. other places around the country have more room for construction. 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 also because of regulations. it is for 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 gap in

affordability 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 gap 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. >> what you think is the responsibility of tech companies and tech employees in this issue of tensions 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 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 at trulia. ♪

>> this is the best of bloomberg west. the seattle seahawks blew away the broncos for their first ever super bowl victory. what about the commercials? they cost $4 million for just a 30 second spot. which companies scored and which companies whiffed?

>> we saw in the most robust way ever before how companies try to use the super bowl ad. >> i am sure you can probably read my mind. budweiser's puppy love ad was really effective. let's take a look at it again. >> really? ♪ >> really? >> 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 super bowl ad where it was piles of money to be spent because they were going to buy an ad and they thought they had to do something stupendous. i don't think that told a great story about the brand. it was just so contrived -- >> is it the ian is up for whatever ad? in the end arnold schwarzenegger shows up and they're 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 the maserati ad did a terrific job introducing a brand, making people think of something different and taking advantage of 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. >> they have always been here. lumbering in the schoolyards, limping through the -- >> 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. it took a moment to introduce a

brand in a very big way. >> 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 across the 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 quit her job on the air. >> it was bold and effective. >> a machine engineer from new york. she is a real person. >> hi, ted. i quit. >> she just quit her job in front of 100 million people. >> yup. >> 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. >> 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. a lot of people had that experience. who do you think was using social media in the best way? >> some of the previews of the ads were the best. i thought the three minute preview was better than the 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 up twitter, but it was trying to get people from that tv and get more time with them. does the multiplier work in advertising? >> it does. i was live tweeting and got tweets back from wonderful pistachios. >> are people shopping at jcpenney because of the drunk tweets? >> 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 years old this week. the company founded in harvard dorm room now average is 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 years end it had a million active users nationwide. its meteoric success prompted 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, bringing users back on a regular basis. usership shot up to 50 million. in 2008, users nearly trip and

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. this year, facebook celebrates 10 years and continues to grow with its market cap of more than $150 billion.

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

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