"bloomberg west welcome to "bloomberg west" -- welcome to "bloomberg west". the future of bitcoin is in question today. goxamount gox -- mt. exchange went dark overnight. thieves may have made off with millions. we will talk about that later.

and from the nsa prison program to facebook's acquisition of story of but our lead the day, caroline hyde sat down today in chen barcelona. they talked about the value of blackberry's messaging service in light of the whatsapp acquisition. cory johnson is hereto well. one of their biggest assets. >> i was surprised when i started to do more research on whatsapp. m ist of people said bb dominant. u.s., butnot in the wherea strong service people want that business. it is an asset to blackberry. >> in general messaging is such a basic need, it's was

interesting talking to allison rosenthal the acid -- allison rosenthal. in users.aw a spike people want it when they want it. >> what is going to happen, we are going to move away from the carriers for texting, whatever you want to collect, to other applications, over the top. it is very interesting but it does not mean the dollars are going to transfer. one study said $35 billion worth of text messages did not happen. that does not mean it is spent over the top. it went away from the carrier. be value may already intermediated by things like whatsapp. in the enterprise. >> blackberry also unveiled new phones they will be releasing later this year.

john chen is ringing the keyboard back. >> we have heard this before. >> i want to get to that. take a listen to the sit down. people care about security, but they really care about data privacy and personal privacy. that point has not been made well enough in the market. i am a fender of that. when i speak to people about the advantage of blackberry, i say security, collaboration, communication, all of that stuff. i never focus in on privacy. >> what about the focus on messaging? $19 billion being thrown whatsapp's way. unit you could spin off and sell on its own?

running a public company, anything to help our shareholders, i need to take a serious look at. that is a serious point. today i think we need to build up that ace and build up engagement model. we have a very good base, $85 million -- 85 million active users. the engagement time is good. usually 40 minutes. very big time. usually our 85 million are the professionals. the people that are on it for productivity. that is a good thing. we need to build that up. we need to introduce more of our features into enterprise. that is why we talk about enterprise bbm. we already do voice. but we have a secure voice. then we will have other features , we have three or four

different services and capabilities we are working on and over the next wealth months, it will be announced. it will help productivity and collaboration. we are very excited about that. potential in the our enterprise focus, is going to be huge. and until we get to the point we can showcase that potential, it is too early to think about getting our $19 billion. >> you think that is where your competitive edge is, over some of the -- are just points products. nobody has a messaging, secure messaging infrastructure. we are the only ones who have it. itis important we showcase as a differentiator into the

thousands and thousands of customers. >> what about wearable technology? >> everybody asks about that. i think we are too early for that, for us, for blackberry. my hands full with a number of things to do. get the server business growing again. i have to get bbm scaling. to win moreed designs in different verticals. when you talk about m to m, it is not just about cars. it is one people could make money on today. we have a big footprint on that. think we need to win in other verticals, whether it is retail, logistics, if we can start winning, medical.

if we start winning all of those applications, i think we will be much better. wearables, it is too early for me. >> what is your favorite gadget? withoutg you can't be or the one you want to buy that is not blackberry. >> i don't know. i don't know. i am not a gadget person. i am more of a serious user of technology. i think i have everything i need. >> what do you think he means by that? he looked a little stumped. it is interesting, the pace of innovation and the lack of quick innovation in blackberry. john is wrestling with that. he is very big on cars.

today ford decided to go with blackberry over microsoft in cars. he thinks that we are not necessarily owing to be holding a device in the palm of our hand. it is going to be embedded in like ourg we news, closed. sensors will be everywhere. not necessarily going to be -- , one of theognizing things that is interesting is where the apps were before. the turnaround was quite successful. he is bringing a new approach to black berry, maybe the software is a valuable thing. it is selling the devices themselves, might not be the strongest suits, which is a big change here at >> or maybe selling bb -- a big change. >> or maybe selling bmm. all right. john chen in barcelona with caroline hyde. coming up we will talk about facebook buying whatsapp and

what it means for the carriers. intbank wants a stake their competitor. we will talk about that next. ♪

welcome back to "bloomberg west." i am emily chang. t-mobile has reported a loss because subscriber gains resulted in higher cost. rier added 850,000 customers but the discount it is using is costing the company. revenue rose 39% from one year earlier to 6.8 billion dollars. t-mobile, suitors for john leger may or not be talking about such a deal. cory, you know, also talking

about getting a stake in line, a competitor to whatsapp. why would a carrier wants that? lunch of the traditional carriers, to see what the businesses. they are recognizing there is a threat. >> the messaging services have taken a chunk out of the revenue for the carriers. we will talk about that with the boxer ceo. also employee number seven at google. so first of all, why would softbank want this? messaging services are taking over the world. they are becoming something you use half an hour to one hour every day. it is not something that is a particular segment of the population. you use them, your kids use them, your grandparents. to get a platform everyone uses, that give you a lot of leverage

over how people use the service. >> your business is not. via messaging does this. it is a push to talk. am i paraphrasing the business well? is the enterprise case used very different than the consumer? >> what is happening in general, the private or -- the providers of connectivity are doing things like push to talk and there are new companies that are bringing in these companies over the top. including us. it happens to be that most of the messaging providers today are focused on sms replacement, which is about $100 billion a year. has donehere whatsapp well. our focus is to try to reinvent push to talk, which is about $100 per year.

>> the messaging service has eaten the carriers lunch when it comes to revenue, but what about voice? whatsapp will be doing voice calls as well. what does that mean? >> it is along this game line. skype started doing this years ago. initially it was on the desk top. the big change is that it is mobile. mobile telephony is giant. now that everybody has smartphones, the transition to everybody using those applications over the top, and do not use the phone number they were given, that is the transition. >> it is not all bad news for carriers. mark zuckerberg talked about this yesterday. good partnerships with carriers to offer basic services. i want you to take a listen to what he had to say. not. >> i guess we do not have that sound bite. what he talked about was providing basic services.

data plan from the carrier. so people would pay for something, but very basic. theetting this up as carriers having their lunch eaten is inaccurate, i would say. the carriers made a deal to get better devices on the network sent to allow apps in exchange for selling a data plan. they are transitioning their business. they are still in a position where they are a necessary provider for almost every service you are talking about. they are in line, if you look at their market cap, to get a lot of the gains coming out of the ecosystem. the fact other people is adding value is a boon for the carriers. they would not exist without these over the top players. everybody else calls them apps. had they not existed, the data plan revenue would not be there. it is going to explode and surpass what has ever come so far. >> so the carriers are going to

do fine? >> i think that is accurate. everyone is worried they're going to lose their services. name,k it is a terrible they are not dumb pipes. they provide us the internet as we travel around in the mobile environment. it is critical. that and works without the internet. -- nothing works without the internet. for are still charging us voice services, and data plans. >> i will give you an analogy. on the internet, what is happening with companies is that people are specializing. whatsapp took something other people are doing and are specializing to only doing messaging. nothing goes badly if the carriers specialize in deliver quickly. using their customer on boarding to get people into these plans and start doing fewer things, but doing them better.

that is the trend. >> if i were a european carrier targeting $.25 a text, i would er ist is bad when vox going to give them texting. >> $.25 was always extortion. even the carriers would agree. revenue is of it as a mistake. we are providing more services. we provide voice and video services. the photo and video sending. what you're getting now is the data plan. to look at a hundred billion dollar company that made this trade off six years ago, and say they want the good part without the bad parts of other people contributing, that is not a reasonable way to analyze the trade-off. >> what you think of the idea of zero internet? for the carrier sign up this kind of partnership where they give people basic services, messaging, wikipedia? >> there is only one way

forward, the companies providing access to the internet need to keep doing that and charging for it and finding a business model that works for them. those companies like facebook and whatsapp and others that provide cheap or free over-the-top the top services will continue to do that. >> why is this happening now? >> mobile. such a significant trend. smartphones are now computers. one of the biggest pump fakes was for apple to call the iphone the iphone. it is not really a phone. it is one of many applications you have. a internet device. there is no reason why you cannot put a different app associated with your phone number that has a better service. >> we will continue this conversation after a quick break. tom katis and georges harik

talking about messaging apps and what it means for the carriers. we will be right back. ♪

howe're talking about messaging services have changed the way carriers do business. thing betweenhis the messaging services and the carriers play out? and facebook, apparently. >> messaging clients are a big area. doing as many text messages per year as the entire sms market globally. is growing faster. so this is a profound shift. what is interesting is over the next six months or so, maybe one year, the pace of this activity

in the over-the-top space should continue and you should see a lot of consolidation. >> by who? >> i don't know. whatsapp is a major player. >> is voxer for sale? >> we have been working on building voxer seven years. we are very focused on the enterprise 10 trying to build a sustainable business that generates revenue and profitability. rather than taking the path and trying to grow the free user base and get acquired. are interested in delivering services that are not just sms replacement. we have never tried to do an arbitrage of fees. we are trying to have new experiences. we wanted to make voice and video ubiquitous. is what we are aiming for. we are not aiming at a pure

money-saving. we want to bring solution. >> would you sell? >> if someone would make our solutions ubiquitous, probably. >> georges harik, tom katis thank you for joining us today. we will be watching. the second annual design conference will take place in san francisco on march 10. we caught up with some of the speakers, including tobias, the director of product strategy for a design and engineering studio. take a listen to his thoughts. >> wow. what is design? i do not know if i'm going to take a pass at answering that. design is not a discipline. it is an approach. a methodology. in all sortslied of areas we do not think of as designed. y is a creative

design studio. what we do is the result of a unique culture where we intertwine the artist and the engineer. it becomes a very powerful thing to generate innovative ideas the world has never seen before. we have done a lot of commercial work. we have done a lot of work in film. we were involved in the film "gravity." we did the motion control onside. -- on set. build these robots behind me. these are industrial robots that we are constantly asking to do things they were never designed to do. like this isplace

challenging because the focus of your job is to imagine things that are not possible. and then find ways to bring them into reality. ♪

>> you are watching "bloomberg we focus on technology and the future of business. i am emily chang. starting an online service working with itunes in an effort to increase sales of films. the movies can be played on the web and apple devices. users will be able to link to itunes and import films they purchased two new accounts. keep 3000 jobs in new york through the next two years, the agreement with the state calls for the company to restore hundreds of positions rate cut last year. jobcuts have been one of ibm's struggled during a

transition to the cloud. apple is coming out against an arizona bill that critics say would open the door to discrimination against bisexual and transgender people. opponents maintain it is a protection of religious freedom. apple is well known for taken pro lgbt stances and have signed a letter opposing the bill. after nine years at the helm of y combinator, paul graham is stepping away. taking over is sam altman. since then with them very beginning and he joins me now in studio. you cofounded loop, one of the first companies they invested in. we were in the first batch in 2005. >> you have big shoes to fill. >> no kidding. i'm nervous. >> paul said immediately, sam is

in charge. i am not in charge in any way. it is all sam. >> it is a big responsibility. is something i care about. i think it is important for startups. important to do well. >> what is your role going forward? will focus on devising the start of spirit that is what he did when y.c. was small. and i will handle running y.c., organizing our operations, hiring partners, just making the decisions it takes to run day today. it takesmuch incoming, all of your mental cycles and paul will focus on advising startups. click 630 startups you have invested in. network all in the y.c. after they are funded. they never really leave. >> because unlike under a room

-- in a regular firm, where we are with them from the beginning, we tend to have close relationships with the startups we fund and even five or nine years after the fact, we help them whenever they needed it. >> why did paul pick you? >> i do have the state of y.c. in my head. i have watched it from the beginning. i think all of the partners at y.c. are very good and it will be collaborative. >> he thinks highly of you in particular. he put you on a list with steve jobs. >> a lot of other founders that are better than me have not yet was through y.c., but that flattering of him. >> you are being too humble. what is your strategy? why do you think you should be in charge? thate goal for y.c. is there is this shifted to more startups.

startups are the driving force of innovation and hopefully economic growth in the future. can be at the nexus of the new start ups. so our goal is to fund the best to find the best startups and have them be part of the y.c. community. one thing people do not understand about y.c., is how tight the community is. this incredibly forced to have a group of talented people that really care about helping each other. growing that community and making sure we have the best startups and helping them is what we are going to do. his championsd and also its haters, to be honest. have you combat that? >> the haters thing is frustrating, but i ain't any time you try to do -- think any time you tried to do something different, a lot of people are going to be haters. whaley combat that is to keep

funding good startups. as long as we continue to fund the next dropbox, the haters can write mean things online and we will do what we do. i think it is an important mission. the world is better off. >> paul tweeted that the total valuation of all of the y.c. companies was $14.4 billion. >> it is over $20 billion now. >> that is with dropbox? any specifics.on >> what is it without dropbox and air be in the -- b and b? >> those are the biggest. in many portfolios, they are close, the top startup is worth more than the rest combined. the number two was worth more than the rest after that. it does not scare us.

that is the model. one of the things that is cool make y.c. is that we will high-risk bets. we would rather fund something that could be the next airbnb rather than something will be a $10 million exit. >> that is what some of the critics have said. , someve two big hits other companies moving up the ranks, but a lot of companies disappear. >> that is the model. that is what we want. we have something like 17 companies worth more than $100 million. it is not just of these two. morenk there is many priming the ranks ray quickly. a big if we did not have distribution like that, we would be doing something wrong. the start of model is predicated on the outsized big hits and a lot of failures. >> what are you going to do differently? >> i most important job is to

not screw up. i have, there are a lot of places we can grow faster and do more to engage our alumni and encourage more people to start startups. thatfeels like this thing has the momentum of a freight train. my main job is to not let it get off the track. >> biggest mistake founders make? >> there are so many. focus on the wrong thing. there are all of these things that compete for your attention as a founder. usually there is one or two that will really actually make you successful. it is often not what you think. founders like to talk about getting coffee with vcs and if you look at the people that have been successful, they've focus on engaging with users and them. the core users love

the biggest mistake is to focus on anything except that. >> what would you say to the doubters? can do this. >> i think it is fair to have doubt. i would say wait and see. it is reasonable to have doubt. do, but wed thing to have an incredible group of partners and alumni and i think we will be able to do great things. i think we play an important role in starting the business. >> i will wait and see and i enjoy talking to paul graham and now you. sam altman, thanks for joining us here today on "bloomberg west ." eric schmidt weighs in on everything from competition, to whatsapp. that interview is next. ♪

dominatedtech world

by four players? schmidtwhat eric thinks. he spoke about the strengths of these companies in the industry with charlie rose and was joined by jerod cohen, the co-author on his best-selling book "the new digital age." started by asking why microsoft did not make his list. microsoft has is the model was organized around a officey with windows and for products which are now free and used in platforms they do not sell. nokia is busy announcing and entered -- android-based phone. shocking. the power of open source. >> there is also this. you have acknowledged google missed social media. microsoft missed social media and in number of other things. and ass someone as smart

savvy as google missed social media? >> i took responsibility for that. we were busy. we were doing chrome, the number one browser, you should use it. tremendous improvements in search and maps. we were and able to do that one part. we had a good period while we were missing that. i think the company is very happy. , google andyou google plus, which is our entry the last two years, continues to do well. if you take a look at google plus hangouts, phenomenal. there are many reasons. >> what has been the guiding strategy? what you have said about the gang of four is they will be competing with each other. >> that competition has benefited consumers.

the fight between apple and google is producing enormous reductions in the prices of phones. if google were not there, the iphone would be more expensive. consumer value is enhanced by this riddle competition. -- riddle competition. amazon has restructured their what theydepending on do. they have done a phenomenal job. furthermore, amazon is the leader in hosting platform services with google as a challenger. >> many people think it will generate more revenue for them. >> it is clear -- >> let me talk about facebook. there was an interview today with mark zuckerberg about whatsapp. they, $16 billion. it has been reported you are in the bidding and it was $10

million and facebook got it. mark is saying this is the most exciting venture they can have. it will be up to a billion dollars, one billion people using it. >> today there are more than 400 million users of whatsapp. it is primarily used outside of the united states and is an important network they acquired. the question of valuation, which everyone is obsessed with, is what do they do with it? if i gave you 400 million units, how much money could you make from that? moneyould make a lot of or not. if they do not make much money, it is a bad deal. we don't know. >> what about yacht to -- yahoo!? they have a lot of users. they are not on your list. where are they? yahoo! has an excellent ceo. we know her well.

they have to defy and they are part of the strategy. -- to find they are part of the strategy. >> is there going to be one winner? >> i hope the market never goes back to the microsoft dominance. it is bad for competition. i fought it hard. i'm glad there are four well-run companies. i want there to be more. >> will one emerge? >> unlikely. the reason has to do with the internet. the microsoft dominance was possible because the distribution was limited to the way pcs were sold. today there are so many ways of getting your product, like whatsapp, can do a phenomenal job here and no one notices and all of a sudden, oh, my god. instagram was only available on mobile. that was facebook's last acquisition. we will see. >> are they your primarily

challenger? dofacebook continues to well. they have good engineering and quite a few people we know. is crucial.ng >> of course. this is all about inventing the future. schmidt with charlie rose. you can watch that interview tonight at 8:00 p.m. and 10:00 p.m.. coming up, all of the troubles with bitcoin. is it going bust? that is next. ♪

>> welcome back to "bloomberg west." i am emily chang. bitcoin. the problems continuing. has gone off-line. documents say unidentified thieves stole 300 $65 million from the company and the theft went unnoticed. is that possible? >> this is the wild west right now.

mt. gox is the wildest of the wild west exchanges in bitcoin. >> here to discuss this is carter daugherty. two questions, is this the end of mt. gox and the beginning of the end of bitcoin? isit is safe to say mt. gox going to have a difficult time recovering from this. my e-mail inbox fills up every time i write about mt. gox, e-mail us about how many bitcoins they lost. i have to say so far those e-mails have not added up to the 744,000 bitcoin that were pilfered from the website. challenge.a real there was a teaser on their website, which was taken down this morning, that mentioned plans for an acquisition. their intentions at this point. as for bitcoin, i did hear an

interesting observation on this works at george mason university. said that while this is very bad for bitcoin in the short is what may be this closes the door is on the sort of amateur finance types, technology types are tending to be finance types running amateur setups for bitcoin. quickly, does this create more opportunities for the other exchanges out there? it creates opportunity for people that do not exist yet. i got off the phone with barry silver this morning. he is putting $20 million in cash and bitcoin into an operation that will be's runoff of second market. -- be spun off of second market.

>> we have to leave it there. more "bloomberg west" after this break. ♪

>> now it is time for the bwest byte. what do you got? >> how about 4 million.

the number of chinese users linkedin says it has, which is interesting because the website has been banned in china. socialpany says many media networks are banned, but the company said two things that were important, number one they had 4 million users despite the ban, and they were going to launch a chinese language website to get more people, and some of the content would be censored. facebook and twitter are blocked in china. i would there be a problem with linkedin? there's nothing controversial. >> you contribute to linkedin all the time. one leg of the stool is content. content controlled by the chinese government, linkedin says they're going to try to get access to the market. >> it is good to see these companies are not giving up on

china. everybody said facebook will never happen, but whatsapp may give them a better chance of somehow succeeding. >> whatsapp is also banned in china. that does not give them any advantage. you lived in china for a long time. who in china and how in china with a worker productive link in profile? >> a lot of professional people want better jobs. >> can you get a job using linkedin? peoplehere are 4 million on it already. it is all a matter of the network effect. if they can get people to sign up, it becomes more valuable. >> they are using virtual private networks to get around the firewall? >> yes, and many professionals easily.vpn's >> it is interesting, we don't talk about stocks, but the stretch valuation of linkedin assumes a lot of growth that has not happened yet. this could open some doors to some significant growth.

>> right. had somehas interesting saturation challenges. does not seem like they can get enough new users to continue growth. >> although the growth rate has been strong since the ipo, which is impressive when compared to some of the other companies. it is the oldest of all of these businesses. older than twitter. >> it has been interesting to push they are making. they are active about trying to solicit content. i wonder how sustainable that is? what do you think of the content as a business? >> i talked to people who write for linkedin. seems like they are getting a lot of attention, but it is also free content. so the quality is going to be a struggle. >> i do not get paid. >> you do get paid. not by linkedin. you should buy me lunch. >> thank you for watching this

edition of "bloomberg west." see you back here tomorrow. ♪ outlines a plan to boost manufacturing in cities like detroit. u.s. home prices rise in december but at a slower pace. to our viewers here in the united states and to those of you joining us from around the world, welcome. we have full coverage of the stocks and stories making headlines. economics editor michael mckee examines ukraine's financial situation. megan hughes explains why the contractor for maryland's health-care website has