tv Bloomberg West Bloomberg February 25, 2014 11:00pm-12:01am EST
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>> live from pier 3 in san francisco, welcome to "bloomberg west," where our focus is on technology and the future of business. i'm emily chang. the future of bitcoin in question today. thieves may have made off with money of the currency. we will talk about that a little bit later. and the nsa prism program and whatsapp.
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our lead story of the day, caroline hyde sat down with the blackberry ceo. they talked about the value of blackberry's bbm messaging service in light of the whatsapp acquisition. >> i was really surprised when i started doing more research on whatsapp. a lot of studies said that bbm is dominant. it would be typically places outside the u.s. it is a strong service. it is clearly an asset of blackberry. >> messaging is a basic sort of need.
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there is a competing messaging service called message me. they said they saw a spike in users means that people. survey one it when they wanted >> i think will happen whatever you want to call it, two other applications, it is interesting. it does not mean the dollars will transfer. that doesn't mean $35 billion was spent over the top. it doesn't mean it went away from the carrier. we will talk about the way people are using messaging in the enterprise as well as individuals. >> blackberry also unveiled two new phones. one has the keyboard. the other is a touchscreen phone.
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take a listen. >> i think a lot of people might care less about security, but they really care about the data privacy and personal privacy. that point has not really been made well enough in the market. when i speak to people about what is the advantage of blackberry, security and collaboration and communication. all of that good stuff. i never focus on what we do well, which is privacy. >> what about the focus of messaging? does this make you reassess instant messenger? is this an area or unit that you can spin off? >> running a public company,
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anything to help the shareholders, i need to take a very serious look. that is a very serious point. today i think we need to build up that base and build the engagement. we have a good base. about 85 million monthly active users. the engagement time is quite good. it is usually about 40 minutes daily. that is a good engagement time. usually our 85 million are the professionals. people that are on it for productivity and all of that. that is a good thing. we need to do this in more of the features in the enterprise. then we will have other features that i will not preannounce, but we will have more services and capabilities that we are working on.
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in the next 12 months, it will be announced. it will help productivity and collaborations. we are very excited about that. the potential will be huge. until we get to the point that we could showcase the potential, it is too early to think about getting our $19 billion. other players -- no one has secure messaging infrastructure. we are the only ones who have it. it is important that we showcase that and use as a differentiator. >> what about wearable technology?
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>> everyone asks me about wearable. i do not have a plan of that. i think it is too early for us, for blackberry. i have my hands full with a number of things to do. i have got to get the service business going again. i have got to get bbm scaling. i need to win more designs in the verticals. it is not just about a car. it is one that people can make money off of today. we have a big footprint on that. i think we need to win other verticals whether it is retail, logistics, or manufacturing. if we can start winning all of those applications, i think we will be much better.
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wearables, it is too early for me. >> what is your favorite gadget that you have? >> my favorite? >> gadget. the one that you like the most that is on the market. >> i do not know. [laughter] i'm not a gadget person. i think i am more of a serious user of technology. i think i have got everything i need. >> what do you think he means by that? he looks a little stumped there. >> it is interesting the pace of innovation. >> he is very big on cars. ford decided to go with blackberry over microsoft in cars. he thinks we will not
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necessarily be holding a device in the palm of our hands, but embedded in everything we use like cars and our homes. sensors will be everywhere. >> i think he is recognizing where the assets really are. that turnaround was quite successful. he is bringing a new approach to blackberry and recognizing that may be the software is a valuable thing. they are selling the devices themselves may not be a strong suit, which is what the previous manager was trying to do. the whole company has a $5 billion valuation. >> john chen in barcelona with our caroline hyde. coming up, facebook buying whatsapp.
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>> welcome back to "bloomberg west." i am emily chang. t-mobile has announced a third loss for a consecutive quarter. that is because subscriber gains resulted in higher costs. it added over 850,000 customers last quarter, but the discounts it is using to get those customers are costing the company big bucks. revenue rose 39% from a year earlier to $6.8 billion. we have been discussing one of the possible suitors for t-mobile and softbank that owns a part of sprint. john leger may not be talking about such a deal. they are talking about potentially getting a stake in
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line which is a competitor to whatsapp. >> as we have been talking about, they want to see where the business is. they're starting to recognize the great threat there. >> businesses have taken a big chunk out of that revenue for the carriers. we will talk a little bit about that. i know georges harik, employee number seven, right? okay. >> messaging services are becoming something that you use half an hour to an hour every day. it is also ubiquitous. everyone uses them. your kids use them. grandparents use them. to get a platform that everyone uses and a lot per day, that
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gives you a lot of leverage over how people use it. >> your business is not a purely messaging business. it is a push to talk business as well as messaging. focused on the enterprise. am i paraphrasing it? is the enterprise case used differently from the consumer? >> what is happening in general is there are new companies that are bringing services over the top. it happens to be that most of the messaging providers are focused on sms replacement which is a lot of money per year. that is why whatsapp has done very well. our primary focus is to try to reinvent push to talk. it is about $100 billion a year in the market.
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>> messaging has basically eaten the revenue. will it be doing voice calls as well? what does that mean for the carrier? >> skype started doing this years ago. it was initially on the desktop. the big push for mobile. mobile is giant. now that everyone has smartphones. it transitions for people to use applications and go over top and not use the formula given by the carrier. that is a big transition. >> this may not be all bad news. mark zuckerberg spoke about our new partnerships with carriers to offer basic services. what he talked about is providing basic services. thanks to a data plan from the carriers. people would be paying for some things, but the basic things. >> i think setting this up as a carriers getting their lunch eaten a little bit is -- the
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carriers made a deal six or seven years ago to get better devices on their networks and to allow apps to go on the networks. they are still trying to rapidly transition the businesses to do that. they want to get a lot of the games coming out of the app system. the fact that other people are adding value is a bonus to the carriers. everyone else calls them apps. have these guys not existed, the data plan revenue would not be there. the data revenue will explode. i think it will surpass -- >> the carriers will do just fine? >> i think that is accurate. people are worried that they will lose services. no carrier wants to be a dumb pipe. it is a terrible name. they're not dumb pipes.
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they provide us the internet as we travel around in the mobile environment. it is critical. nothing works without the internet. they are still transitioning us from voice services or sms on plans. >> on the internet, what is happening with companies like facebook and whatsapp is that people are specializing. whatsapp took what people are doing and specializing to only doing messaging. nothing goes badly. carriers specialize in delivering ip quickly for voice and video services. they start doing fewer things, but doing them better. that is the trend. >> if i were a european carrier, i would say something is going badly when voxer gets all of my customers voice calls and
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texting and whatsapp -- >> even the carriers would agree with that. >> we are providing more services than before. we provide reliable message delivery, voice and video services, photo and video sending. what you are getting is the data plan. it is a $100 million company. they want the good parts. they want the good parts about the bad parts. that is not a reasonable way to analyze the trade-off. >> what do you think of mark zuckerberg's idea of zero internet? will carriers go for it? just messaging, just wikipedia? >> the carriers providing access to the internet need to keep doing that and charging for it. it is continuing to work around the world. companies like facebook and
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whatsapp will need to provide cheap or free over-the-top services. >> why is this happening now? >> mobile is such a significant trend. smartphones are now computers. apple called the iphone the iphone. it is not really a phone. the phone is one of many applications on your device. it is a mobile computing device with internet access. >> we will continue this conversation after a quick break. we are talking about messaging apps. we will be right back. ♪
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>> welcome back to "bloomberg west." we're talking about message services like whatsapp. we have tom katis and georges harik. >> messaging clients and over-the-top messengers are a big area. whatsapp is doing about as many text messages per year as the entire sms market globally. whatsapp is growing a lot faster than sms. this is a profound shift. what will be interesting is over the next six months or a year,
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the pace of this m&a activity and over-the-top messaging space should be continuing. you should see a lot of consolidation. >> who will buy who? >> i do not know. whatsapp is now part of facebook. >> is voxer for sale? >> everyone is for sale. we are very focused on the enterprise. we're focused on building a sustainable business that generates revenue and profitability rather than taking that path of drill out cheap user base. >> we are very interested in delivering services that are not just sms. we have a lot of work to do. we're working to produce new experiences. we want to make voice and data communications ubiquitous. we want text communication to be ubiquitous. that is what we are aiming for. we're not aiming at a pure money favorite of the carriers.
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we want to work with people to bring the solutions. if we went to someone that would make our solutions ubiquitous, probably. >> thank you both. the second annual design conference will take place here in san francisco. we caught up with some speakers, including tobias for bot & dolly. they specialize in robotics. thoughts.ten to his >> wow. what is design? design is not a discipline to me. it is an approach or methodology. the power of design can be applied in many areas.
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it is a creative design studio. what we do here is the result of a unique culture where we intertwine both the artist and engineer. it becomes a very powerful thing to generate innovative and creative ideas that the world has never seen before. we have done a lot of commercial work and have done a lot of work in film. we were involved in the film "gravity." it was our robots that were responsible for the motion control on the set. we build a lot of things here. we do not build a robust you see behind me. these are manufactured robots that we are constantly asking to do things that they were never designed to do. working at a place like this is inherently challenging.
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>> this is "bloomberg west," where our focus is on technology and the future of business. i'm emily chang with your bloomberg top headlines. disney is starting an online movie service called disney movies everywhere. it will be an effort to increase sales of films. the movies can be played on the web as well as through apple devices. users can link to itunes and import films they have previously purchased. ibm has decided to keep jobs in new york. the agreement with the state calls for the company to restore hundreds of positions that they cut last year.
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job cuts have been one of their tools to maintain profit growth as it struggled during the technology industry's transition to the cloud. apple is coming out against anti-lgbt bill. apple is well known for taking pro-lgbt stances. after nine years at the helm of a company, paul graham is stepping away and his replacement is sam altman. he joins me in the studio. you've got big shoes to fill. >> i'm nervous, but excited. >> i e-mailed paul about this last week. he said that sam is in charge.
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i'm not in charge in any way. it is all sam. >> it is a big responsibility. it is something i care about and believe in. it is an important institution for startups. >> what is your role going forward? and what is paul's role? >> paul is going to advise startups. when i was in yc, there were only eight companies in the whole batch. i was organizing our operations and hiring partners and just making the decisions it takes to run the day-to-day. there is so much incoming at yc. paul will advise startups. >> many startups you guys have
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invested in so far, they are in the yc network after they get funded and never really leave. >> right. unlike a regular venture capital firm, we tend to have extremely close relationships with the startups we fund. even five or nine years after the fact. >> why did paul pick you? i have the state of yc in my head. >> honestly, i think all of the partners are really good and are super collaborative. >> he thinks highly of you in particular. he put you on the list of the five most interesting founders with steve jobs and larry sergei. >> that was very flattering of him. >> what is your strategy? why do you think you should be in charge? >> the goal for yc is that there is the shift to more startups.
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startups are the driving force of innovation and hopefully economic growth in the future. i think we could be the nexus of the new startups. our goal is to fund the best and have them be a part of the community. one of the things people do not understand about us is how tight the community is, our alumni. it is an incredibly powerful force to have this group a really talented people that run startups that really care about helping each other. growing the community and make sure that we have the best startups and helping them, that is what we are going to do. >> yc has had its champions and its haters to be honest. how do you combat that? >> the haters thing is frustrating. any time you try to do something new and different, there are a lot of people that will be haters. the way we combat that is to keep funding good startups.
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as long as we fund the next dropbox, the haters can write mean things online and we will keep doing what we are doing. i think this is a really important mission. >> paul said the total evaluation of all the yc companies funded was $14.4 billion. >> it is over $20 billion now. >> that is with the dropbox new evaluation? >> no comments specifically. >> what is it like without dropbox and bnb? >> those two are the biggest. immense startup portfolios, the
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top startups are worth more than the rest combined. the number two is worth more than the rest after that. that does not scare us. that is a model. what is cool is that we will makes high risk bets. >> that is that some of the critics have said. you have got two big hits. airbnb and dropbox. a lot of companies disappear. >> that is the model though. that is what we want. we have something like 17 companies are worth more than $100 million. it is just not these two. there are many more. again, if we didn't have a big distribution like that, we would be doing something wrong. the startup model is predicated on the outside hits and a lot of failures. >> what will you do differently?
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>> my most important job is to not screw up. [laughter] there are a lot of refinements that can be made around the edges. i think we can grow faster. i think we can do more to engage our alumni. we can encourage more people to start startups. yc feels like it has the momentum of a freight train. my main job is not to pull it off the tracks. >> the biggest mistake that founders make? >> there are so many. it is hard to pick one. the biggest mistake is focusing on the wrong things. there are all of these things that could get your attention. one or two things that really matter that make you successful. it is often something like getting coffee. if you look at the people who are successful, they focus on
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making a great product and engaging with users and making them love them. the biggest mistake is focusing on anything than doing that in the early days. >> what would you say to the doubters? >> i think it is fair to have doubt. i would say, wait and see. it is reasonable to have doubt. it is a hard thing to do. i think we have an incredible group of partners and alumni. i think we will be able to do great things. we played this really important role. >> i will wait and see. i am excited. >> me, too. >> sam altman, thank you for joining us on "bloomberg west." up, eric schmidt weighs in from everything on competition to whatsapp. that interview is next. ♪
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that is what eric schmidt thinks. he talked about the strengths of these four companies with charlie rose and was joined alongside by the google ideas director who is also the co-author on the best-selling book "the new digital age." >> microsoft's model was organized a monopoly position for products that are free of barley used in platforms they do not sell. example, nokia is busy announcing an android-based phone. shocking. an interesting example of the power of open sources. >> but there's also this. you acknowledged that google missed social media. >> we did.
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>> microsoft missed social media and a number of other things. how does someone as smart and savvy as google miss social media? >> i took responsibility. >> a ceo should do that. >> absolutely. we were doing chrome. number one internet browser. android. we were unable to do that one part. we had a good period. >> are you happy with your market value? >> i think the company is happy and the shareholders are happy. [laughter] >> google and google plus continues to do extremely well. if you take a look at google plus hangouts, phenomenal. there are many reasons. >> it is interesting we're talking about this. basically what you have said about the gang of four is that they are competing with each other in a variety of ways. >> the fight between apple and
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google over operating systems is producing enormous reductions in the prices of phones. if google were not there, the iphones will be a lot more expensive. if apple went out there, all of the androids would be more expensive. the consumer value is enhanced by this. take a look at amazon. amazon has completely restructured the way they market and just to be products. they have done a phenomenal job. >> many people believe what will be the big revenue for them -- >> let me talk about facebook. there was an interview with mark zuckerberg about the whatsapp app. >> whatsapp. >> whatsapp, i mean. it has been reported you were in the bidding.
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facebook got it. it is going to be up to $1 1 billion people using it. >> they estimate is that there are more than 400 million users on whatsapp. it is a way of bypassing the sms charges. it is primarily used outside of the u.s. the question of evaluation is a question of what to do with that? if i handed you a 400 million unit network, how much money could you make from that? it depends on how well they execute. they could make a lot of money or not. if they do not make a lot of money off of it, it is a bad deal. >> what about yahoo!? a lot of users. >> of course. >> but they are not on your list. where are they? >> they have an excellent ceo
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that we know very well. they have to define their part of the platform strategy. >> will it be a shared banana? -- bonanza. >> i hope that the market never goes back to the microsoft dominance i lived through 20 years ago. it's bad for competition. i fought it hard. i'm very proud that there are four well-run companies that i'm not identifying. i want there to be more. >> will one emerge as -- >> unlikely. the microsoft dominance was possible because the distribution was limited. it was limited to the way pcs were sold. today there are so many ways to get your product out. you can do a phenomenal job over here. and all of a sudden, oh my god. instagram was only available on mobile. it was facebook's last acquisition. >> is that your primary
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challenger? >> facebook continues to do very well. they have quite a few people that we know. this is all about the future. >> that was eric schmidt with charlie rose. you can watch all of the interview tonight right here on bloomberg television. coming up, we will talk about a company possibly going bust. that is next. ♪
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ipos and what is going on in the markets. we always talk about the businesses. we talked to an important guy when it comes to technology. we talked about the dangers of high valuations present. >> we have seen it in a variety of industries. you are chasing this valuation that wall street will get you if you are a great growth company. it is almost like utilities. they are returning cash and getting rewarded for dividends and buybacks. they can't grow that much. they are reacting in a direct opposite now. i prefer to own those done the ones chasing revenue. >> you guys cover so many companies.
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i wonder when your analysts are covering those companies, are they talking to them about hey, the fed is tightening or china is slowing down. do you want to change the way you plan your business? >> i would think that would be above their pay grade, but if they are starting -- they should not cover that company. the companies we want to cover our companies that have good management and think about their businesses. react to some of that. they need to focus on the customers and the margins. they should be getting guidance. >> some companies -- they put themselves in the stronger financial position. are they recognizing that
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hardware is not selling like it used to? >> i think it is driven more by shareholders and activists. the gravy train of being a board member and a ceo and options is a good gig. i think you listen to the shareholders. that does not mean they are not trying to do the right thing. it is 1% money. they are returning cash for a variety of reasons. >> do you get a sense investors are recognizing the shift in the markets or the fed talking about the commodity prices in the last few months. is that changing the way they're starting to look at some of these big growth companies and think about their investment? >> it feels to me like a supply and demand market and not so much that thoughtful. i'm not saying that there aren't
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thoughtful investments. it seems like the market is being driven by a lot of cash and not enough public names. i think what is happening are the mutual fund manager gets money in and he the work in the money in and he puts it to work in the same names. it is kind of an easier way to manage. clearly a lot of guys do a lot of work. right now what we are seeing the way the market never seems to go down is supply and demand. >> do you think we will see a lot more ipos as a result because of the demand? >> right now does not feel like the bell is close to ringing. what i hope we see is quality ipos and i would love to see some of the jobs market intentions take place for smaller companies to generate cash and they need access to the public market, but cannot spend all the money to be public. i would love to see that smaller company ipo.
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you will see a lot of companies that come out public. i think you seeing that with biotech. i'm not a biotech analyst, but they are taking a lot of companies public. they're easier to put big valuations on. i would love to see good or small companies that cannot afford to spend all of the money with the traditional ipo and raise money in the public markets. they are making acquisitions and building a business, but not growing at 100%. >> are we seeing the deals? >> not yet. i think you are seeing the most high profile, the ones that are the biggest. those are the ones that are going public. what i'm afraid of is that it will result in companies that are related in some way to these
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big companies, but aren't good business models. there is clean tech and the chinese place. i'm fearful that wall street will start to take advantage of that environment. >> that was bryant riley. >> interesting stuff. it is time for the bwest byte. >> one number that tells us the whole lot. bitcoin had 34% market share today it has zero percent. a number of companies jointly announced that it will file for bankruptcy. it looks like 6% theft. >> is this the beginning of the end for bitcoin? yes or no? >> no. >> we will see you back here tomorrow. ♪
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