>> live from pier 3 in san francisco, welcome to "bloomberg west" where we cover innovation, technology, and the future of business. edward snowden speak to the technology community.

your top headlines. 7.1 --l has relief ios apple has released ios 7 .1 with new features including car plate. -- car play. bugddition, the update has fixes. microsoft is gearing up for the release of the new game coming at midnight. the combat the game is available exclusively for xbox 1. they hope it will give a boost to sales which have lagged behind in arrival of sony playstation 4. advertising company, radiumone, is in the final stages of preparing for an ipo. they are planning to use the proceeds for acquisitions and international expansion. other online advertising companies have seen the shares

soar since they went public. studio, with cory johnson and our special guest host roger mcnamee. greater to have you with us, roger. so much to discuss. >> you look lovely and purple. >> i love how you match with me. >> i called ahead. edward snowden. we are hearing from him public for one of the first times. what do you make that he chose sxsw to address? >> i was really surprised. it was cool for sxsw where there has been a lot of snark around it. >> that it does not matter anymore. >> i'm not sure it ever did. it has been an extraordinarily fun place to entertain people. as you know, when the

entertainment industry gets to gather, is hard to tell the difference between work and play. the tech people enjoy being there. a lot dotted on. i do not think it is the kind of place that places like google got started. -- a lot got done. edward snowden piggybacked place , that is huge -- picking that place is huge. >> he knew he was talking to business people. there might be more highlights and twitter coming out of it. he chosen that crowd. >> no matter what you think of snowden, there is something profound about to be point he is making which we have gotten to a point where the security on thes, they are spying senate and the house. manifestly, if you are a citizen, you have to assume that privacy is really in trouble. there is a huge business opportunity which is essentially

the point he is making. if you are google or apple or you cannotosoft, view the government as a passive party in this activity anymore. >> congress cannot either. >> not just our government. clearly, this notion that businesses are viewed effectively as unprotected environments. it makes me uncomfortable. and i know if there is huge hard yet, but there will be. >> he was talking directly to developers, the people building products. i want to bring in how could draw ski. at a listen -- paul contrast the edrosky and take a listen to things he said. the people he called firefighters. >> the nsa is a massive surveillance surveilling not just the u.s. but all countries.

is the future of the internet. now, youe in this room guys are the firefighters. we need you to help us. >> paul, what to do you think of edward snowden putting a burden a responsibility on the people building a companies now to start building secure products first? not just user-friendly but secure? think it is important. the last decade or two decades in technology, you cannot rely on users to figure out how to pick up after themselves when it comes to security. that with these security protocol and logging on that people have to be forced to a. these technologies he's by piece. anytime there's a in the armor adopt to be forced to

these technologies piece by piece at any time there's a armor, you have to train people to be more prudent. >> isn't the other side of the message is there are business opportunities for entrepreneur to create systems more secure on behalf of people who's a real volume is their ability to great software that people like to use. google is doing that. >> yeah -- how hard is it to create a product that's actually user-friendly but also secure? from the very early -- >> it has never been done. that is why it is such a great model. i do not think that from the -- the thing we are talking about is forget our government. let's pick some other country. right?

imagine somebody wants to mess with your stuff. it is not only possible but happening a lot. that says to me the notion of separating the security from the functionality of the app is not a hard problem at all. my recommendation would be somebody create security layers that people build on top of. >> paul, you were about to say something. what was it? >> the headlines are nonstop. look at the bridge that came out over the weekend. millions of accounts breached arough a quote -- and for chinese hacker. you look at the example of the malaysian airline crash. one of the pieces of data that struck me was in the last 18 months, something like 40,000 has poor stolen in thailand stolen inassports thailand alone. we have the data and we have the idea of where the fraud is

coming from. were somebody to my credit card information. you cannot aggregated that. well to wait for the powers to be. to approach it. the right ways the bottom up. there looks like there is a breach. people are canceling their cards. there is the business opportunity to bring people back in. what is the responsibility of the big tech companies today? take a listen to what the snowden had to say. >> for a large company, not that you cannot select any data, you should on the collected data and hold as long as necessary for the operation. whether you are google or facebook, you do it in a responsible way. you still get the value that you need.

without put users at risk. orroger, can we trust google facebook to collect data and get rid of it when they should? think that ist the problem. if they do not do it, they will be displaced by other people. or possibly people will conclude they do not care. it is interesting -- >> of the letter is interesting. >> it is fascinated where people draw the line on personal privacy. it is happening because the standard people expecting are lower than 10-20 years ago. that said if somebody made it totally secure for you, there are whole lot of people who will go there. >> i interviewed eric schmidt last week. if you couldut offer someone lots of things they want like extra time in the , they mightl

willingly make the trade for the privacy. >> inc. about the trade-offs people have made relative to -- relative do you want to see browser adds or not? youomebody says i will pay $100 a year for access to your data, some people will take that. >> i think companies who do need to be honest. i think roger is right. people will have the trade-off. understand it is not really a one-time trade-off. there was a great segment about data brokers. that was made back to the aggregation of all of these giving up a little here and a little here, is grace a composite picture stopped it is much richer. the problem for individuals is they lack the capacity to make consent when it comes to data give up decisions. they think individually were the

people collecting are coming up with composite pictures. that is the problem. ky, thank you so much for weighing in. roger mcnamee will be with us for the rest of the hour. we'll talk about google and the ericview with the ceo, schmidt. and getting deeper into wearable devices. ♪

>> welcome back. i am emily chang. for robots to wearable devices, google is working on it all and they want to get to the success of android. roger mcnamee is back with us. can google repeated that success of android? >> absolutely. exactly how? it remains to be see. what i love about google and i respect larry and sergey for their philosophy.

they understand searcher does not go on forever. they are taking this huge amount of cash and instead of paying it in dividends they are reinvesting of what is coming to next. i don't know if they will be right or wrong about wearables -- >> the commonly held belief is a look at android and send search to google was on mobile devices. >> that was not why android became important all right? >> why are they working on different things? >> they are entitled to change their strategy if they are wrong. i do nothing and return to the way they expect it to. but he wasn't said it was -- >> he once said it was c-r-a-p. to monetize going the hardware business and they repeated the success of windows relative to pcs which was a hell

of an accomplishment. i do know how much it has driven the search business will stop it has given google a massive diversification a way from search. if it helps search, god bless. platform, android is so huge and the notion you might extend into clothes or appliances or cars, those are good bets and they do not cost too much to drive. >> i asked eric schmidt more about robots. tell us about the robotic comedies you are buying. take a listen. >> we are experimenting with what automation can leave it to. that is probably all i should say. in general, robots in one form or another, will be more of a presence in our lives in a good way. it will help us with this and that rep -- and replace a love repetitive activities people are doing. >> i totally agree. we look at the robots.

we have a nice public company and -- in irobot. this is one the places where apple is hurting itself. the last time i checked, they said you cannot power a robot with an ios device. excuse me, why the hell not? if you could, there will be an entire line of robots powered by ios. you could use them for security and to keep an eye on aging parents. they're all of those things you could do with a device that is able to move on its own ago predictably without breaking and has ios to keep an eye on the world. i think eric is completely right. >> sometimes messy with google is doing, a great story in the terminal -- sometimes when i see with google is doing, a great story in the terminal about taxes. i look at some new things -- >> google consumes about 2% of

the power in the u.s. and they are smart to look at it -- >> my point is peter lynch's notion. if these guys about trying a little bit of everything start to not focus on their core business -- >> i would agree with that if i thought search was a perpetual business. i believe search is being slowly thatteadily eroded by apps do narrow search better than general search, google is the example that instead of waiting for the old business to die the way that cable companies and television networks and newspapers have done, ignoring the future -- there is a reason peter lynch is not a portfolio guy anymore. the economy has changed. he was the world's greatest portfolio manager in the 1980's. we have learned some lessons since then. focus is an excuse not to be creative.

it is an excuse not to take risk. focus is the next use for failure. >> i want you trade the state -- to state and the creativity at google versus apple after the break. stay with us. ♪

>> welcome back to "bloomberg west." i am emily chang was gorgeous and roger mcnamee. i want to talk about google versus apple. listen to what eric schmidt had to say about the state of innovation. >> it is a well-rounded company. what ever issues they are facing , they are very smart. i was on the board for a long time. first, a is the

founder run company. you have a commitment to excellence and you do not accept the products that are me too. do you think google is doing so much better than apple right now? >> apple at the moment has an identity crisis. i think innovation is the wrong way to look at the problem. when i bought an iphone 5s that has thumbprint which is problem was innovative feature since the iphone, it is a really big deal. you can imagine in the future you can abide things with your thumb print and insecure. >> i want a longer battery life. >> that is an engineering problem. i think that is what apple's issue is today. they have lost their edge. if you use iphoto or itunes, you

know these products are materially less useful that a few years ago. every update to itunes, it is worse than the prior one. i just think they are behaving like a cable company. i bought a new ipad and i took it on my vacation and tried to use it with apple tv on a cruise ship to watch movies on my tv and of course it would not work. they have this deal where you have to have access to the internet to validate your purchase other thing that is on your ipad that you pay them for. i went on this vacation and cannot use my ipad2 watch movies. exactly. a piece of apple hardware stop it. that does not innovation. all of the issues are on the basis of their engineering teams are no longer crisp. the products are no longer well-defined at the margin.

i'm talking by the old ones. -- copiesnction of are in trouble when the sales guy takes over? are the engineering teams in trouble? a star-based system with huge personalities in charge of each group. you had steve at the top. you had jim -- you had john rubinstein. you had fred anderson as cfo. >> and that was a long time ago. >> that laid the groundwork. 10. was mac os >> is in a leadership think? >> the people in the prompt today are less well suited today than the team that was there 10 years ago was suited to 10 years ago. i am not say if the old team are there now, they would do it better. apple is a huge company with

market share in hundreds of millions of customers. that is a different animal. nobody has been there before. there are new problems to solve. this is hard. apple is a hard thing to do. >> you stayed with some of the guys. >> fred is at my firm. think? to do they >> you have to ask them. the thing i was it just is i look at apple and i am sympathetic with how hard it is to be apple. and the poor guys at google. what did you do after search? when it rolls over, they are going to say they are stupid. i will say you have got to be kidding me. they are planting the seeds. it is too early to write off apple. the stock is so cheap. it is too cheap. >> roger mcnamee, we will

continue after our break. of elevation partners. will be taught by bitcoin and video alleged creator -- we will be talking about bitcoin and the alleged creator, dorian nakamoto . ♪

>> you are watching "bloomberg west" where we focus on technology and the future of business. i am emily chang. still with me as cory johnson and roger mcnamee. i want to get to jon. fans of bitcoin that have donated $28,000 to dorian nakamoto, the man who some say is the creator of bitcoin. he went to temple city to find him. what could he do with this bitcoin? some people are finding sympathy. when we were there, we were trying to find out information about the man himself. you get into these conversations

with neighbors about what is a bitcoin? we decided to find out what the local merchants a sink of bitcoin. here is what we found. of bitcoin. think -- here is what we found. >> ♪ >> do you take bitcoin? you do? the digital currency? do these take bitcoin? >> it takes quarters. >> what if i want to use bitcoin? they are not made to take a dump. >> with one bitcoin i could get as much laundry done as what you are doing. -- >> no, they are not meant to take them.

>> can i use bitcoin here? >> [indiscernible] >> ok, insurance. ok. >> hello. >> welcome to mcdonald's. >> can i pay with bitcoin? >> i do not think so. >> maybe in the future? maybe one day? maybe, there you go. >> ♪ >> what if i were paying with bitcoin? can i pay with bitcoin? currency? maybe in the future? >> maybe. maybe one day. >> ♪ >> all right, the merchants but not so much. we do not fill them all but a

bunch of kids went by and we asked if they knew bitcoin they said yeah. it is gaining some steam in temple city. >> was of the burger good at least? >> carl's junior is always good. [laughter] roger, what do you think of the bitcoin think? >> who cares? it is a phone store to look at. it is investors. not relevant. story to look at. there are really important ideas that develop over time some of which it is hard to get to the right. i think there are a few things hard to get right than currency. >> you think the bitcoin does not matter or who founded it? >> neither. there are at least three problems you have to solve to make any currency work whether digital or not. >> you cannot use it. solved wasone he

they built a global network that was completely independent of the financial system. that was a hard problem to solve. >> and anonymous. >> and the problem of the existing financial system. you do not know who they are. in security problem we described before. the second problem is can you use it to buy things? clearly you cannot. you have to believe in it. gold, itiat, is not a is something fake. trust truly matters. what happened is you have to do the first 2 right. bitcoin never got a chance to do the third. they blew up. the world needs something like that going to work. >> will not be bitcoin? so,he reason why i think bloomberg is in a great position . what of the problems you have to be trusted.

the agency that creates the thing has to be worthy of your trust. >> why do we need this? >> for the same thing about security. we live in a world where size matters more than right or wrong. the people who are largest and have a disproportionate voice in our economy and politics, the biggest people get their way. that is not good for the population as a whole and in the very, very long run. what would be fantastic and incredibly -- if you're going to do more transactions on line, credit cards make less sense. you would like to the native to online that are used for transactions globally by absolutely every body. that would be ideal. something as pervasive as facebook that everybody can use. who could do it? google could do it, facebook to do it. it would be so obvious.

the same thing to facebook. they have not reviewed that as their opportunity. if you became the bank of the internet, that is a business that will last longer than search or social. >> you think bloomberg could do it? >> absolutely because you the relationships with the financials. build trust, you have to be integrated to some degree with aware that people are going to use your currency are. thereo not understand why is a great need for this. we have the u.s. dollar and currencies advantage trade. we are commodities that trade. >> do you believe that the snowden comment we had earlier creates a business opportunity? if you do, currency is one of the opportunities. >> what about the potential for it to be hacked or stolen? isexplained to me how that not happening now.

we have redesigned the $100 bill twice the cut is easy to hack the u.s. dollar. which part do think of hacking is not happening now? just because they are not telling you does not mean it is not happening. >> money printing -- there was cash of $50 billion and all of these illegal money,ve gazillions of what is -- >> what is the word on the street about bitcoin? >> to that point, our own matt miller with around last year trying to live awful bitcoin to see what he could do. there are some examples. he went to a pizzeria in brooklyn and did grocery shopping in brooklyn. and there are indirect ways through certain appss you can use them in a bigger way. i think there's a huge camp and

we know this. there are people who are mass of supporters all what this could potentially be for it to be a big story. what do that through some of the hurdles roger worth talking about. >> what will happen to bitcoin? >> who cares? i am an investor. are an relevant if you investor. people believe in passionately. i do not care. it in our reach a scale in which i care about.edle that is the core point. watching bitcoin is really important. there will be signs to tell you, o my god, this is real. think about the sharing economy. it started with zip car and airbnb and uber. like, ohoint, you're my gosh and is not a one off thing that a giant economic

change. bitcoin, that idea will hit to the point. at least i hope it does. i want to see this happen. i think at the end of the day if you can protect people's assets securely, almost every other security problem goes away. i am much less worried about my data if you cannot mess with my access without >> will be back with more of a after this quick break. a tragic death. a cheating scoundrel. the greatest comeback in history in the americas cup. we'll go to the inside story. ♪

>> welcome back to "bloomberg west." i am emily chang.

oracle's ceo spent hundreds of millions of dollars to win the america cubs for the second time. it was hosted right here in san francisco. it was marred in controversy with a terrible, fatal accident and a cheating scandal and a low participation rate. only 14. >> the biggest comeback. a thrilling race. >> i went to the last race. i got a great video. to win.8-1 how did larry do it? he is not talking to anybody except for one author. you wrote the book before the race. another edition comes out this week. you have a long interview after the race. but you are the interview. >> i met with no one week after the epic comeback. he was depleted.

completely exhausted. he was so personally involved every single day. went wrong and what went right and i chronicled bold. i did a ton of interviews and reporting. this a great story. it is innovation and human great and perseverance. --sensor there were some there was something that went on. i was out there and watch them get their clocks -- even when they were up and ahead, they were so much slower. what were the changes that were made? >> there were incremental changes. changes to the shape of the rutter that would be to techno to get into. >> was larry involved? >> on yes. the curvature of the wing. guy out therehe

checking it out and strategizing? >> he had a great team. the designers and builders and engineers. watching out every day on a chase boat. he would confirm with russell after about what had gone wrong and for many, many races. a lot had gone wrong. they learned. they really studied team new zealand. they had photos and aerial photography. they looked at the curvature of one breakthrough was new zealand it was a 40 degree angle. degrees was at a 30 angle and they said it would create too much drag. they went and reconfigured there on -- their own sail. they went to school on the other team. >> did they cheat? db they cheated? >> it was dom cheating. >> when they met -- it was dumb

cheating. -- >> when they made the combat? >> no. the wrongeights in place. 8-1, noy were down cheating. an amazing story of figure out what they were doing a wrong and looking at the needed to do and it was his human drama and great. do you cave or perform in the clutch? >> back in the day when oracle first went public -- >> i do not know anything about america's cup. i knew larry really well in the early days of oracle. through the 1990 collapse in the company as stock went down to one dollar.

the company was -- it needed financing to stay alive. it got financing and kept going. i watched larry reassemble a new team to leave the company out of the mess. it was one of the bravest and coolest things i've ever seen. i've not talked to larry in 15 years. no matter what anybody tells you about the man, his determination is a seeing of beauty. his willingness to commit himself emotionally and personally to the thing he is working on, if anything, he is accused of overdoing that part. when you are in a situation like this, wow. >> he has been criticized for neglecting his company, oracle, of the original oracle. is that ok? >> and give me a break. how is a keynote going to make any difference?

of people symbolic saying he is not paying enough attention to oracle. >> that is the second. he has spent 10 years trying to win. thisok him 10 years to win trophy and he could lose in the next three days. >> was there one person in oracle world who care? no. the people who made a big issue of it are not people sitting around oracle software for a living. the people running software are not depend on larry ellison. they're depending on the people were underneath to do a great job. seriously -- >> the next race. going to be just as big and expensive at inclusive limiting the number of competitors? >> larry talk to me about this and his vision right now which is not a plan, what he would

like to see. a lot needs to be done. he will idle right now, july for the main event to be, the americas cup and louis vuitton cup to be in hawaii. he was to turn into a global competition. that she wants to turn it into a global competition. it to turn into a global competition. he envisions 12 teams with the finals and main event in hawaii. >> how will he make a less expensive and more attainable for other countries? part of it was the economy had tanked. for a lot of countries that have italy,ed for france and they ended up pulling out because economies were so destabilize in france. >> i spoke to some the teams competing and they said, they

all said it is too expensive. we cannot compete. >> it was $100 million to stage a campaign to run a team for this last americas cup. >> that was the beginning. there were costs above it. >> larry wants $30 million all in for three years and because the balls will be less expensive to build and maintain. you may have eight sailors. his idea is businesses that do not make money are not sustainable and sports franchises that do not make money are hobbies for rich guys. he expected to make money. exactly. >> says a larry ellison. >> he wants to turn it into a sports for the mainstream and also a business that will make sense. willdo know is either it

ever happen. it was thrilling. >> it was so much fun. but you never bet against larry. if he really believed in it. if he really believes, he will pursue relentlessly. it would not be the first thing that he said something like that and change the rules to his own advantage. why? that is how the america's cup is a structured. you get to make the rules. , julianhe author guthrie. thank you so much for joining us. we'll be back after one more quick break. ♪

>> welcome back to "bloomberg west." our guest host is a talented musician.

your band. tell us about it. >> i have been playing music since i was a little kid. moon alice is a serious touring band. we write our own material. i play as a solo performer playing acoustical guitar. the key thing is it is a technology platform. we broadcast every one of our shows over the internet for free. e.com, youto moonalic can watch every show live. you have the byte for us. 389 now which is the number of live performances. it calls less -- it cost less. >> will we get to hear some of it? cory can play, too.

>> ♪ >> i like it. got the key to the highway ♪ ♪ going to leave this town ♪ ♪

>> bravo. ♪

>> welcome to "lunch money" on bloomberg television, where we tie together the best stories, interview, and business in business news. i am adam johnson. mark cuban stars in sxsw. hoops, entrepreneurship, and what is in his wallet. some of the most powerful women in business in honor of the 106th international women's day. the dangerous business of carrying oil by rail. the reluctant bitcoin guru. in eats, chipotle trying to cool