♪ >> live from san francisco, welcome to "bloomberg west," where we cover innovation, technology, and the future of business. the online retailer revealing its plans to go public. the company filed confidentially. the prospectus is public. box indicating it hopes to raise $250 million. we did learn sales doubled in the last year to $124 million.

box still has not turned a profit and is losing more money than it is making. with me is our tech editor ari levy as well as leslie picker in new york. joining us via skype is the director of a financial resource company. francis, what is your take on these numbers? >> i look to a lot of the cloud companies focused on enterprise software. i look at the quarterly earnings, loss, and sales. for the most recent quarter, they had less than $40 million in revenue. their loss was more than $40 million. they are riding the wave of the cloud company hysteria.

i think they want to be dropbox, but i think it is premature. >> i did speak to aaron levie, the ceo of box, about the timing of the ipo. he has always said 2014 is the year. take a listen to a portion of that interview. >> ipo is on the path. >> you told us 2014. are you still on track for that? >> i have said words like it could happen that year. i think i would still use those words. >> he is one of the more colorful ceo's in the tech community. ari, what do you make of the timing? why now? >> they are clearly riding the wave. there is insatiable demand for anything cloud related. the company is growing by leaps and bounds. 100%. they have said they will keep losing money. they will have public market investors subsidize their losses as long as they are willing to

do that. if they can sustain this growth and the market continues to rise, they could be given the benefit of the doubt for some time. >> they're spending more on marketing than they made in the year. is that problematic? >> they're spending more by $50 million more than they generated in revenue. that is an astounding number. that is not a number you see often even among club companies that spend a ton of money on research and marketing. >> is box trying to beat dropbox? do they feel like now is the right time for box alone? >> they are listing them as one of their competitors along with microsoft and google. sources have told me that there is this race in software to be competitive and get the enterprise customers which could be impactful in terms of their pricing and subscription model. box offers one year free subscriptions. after that, they rope in the enterprise customers and have

them pay. there is a lot of competition in the space. box is primarily focused on the enterprise customer. >> what can you tell us about customers in this business? why are they spending so much on marketing? is it because of all the competition? is it because customers turn over? they focus on the enterprise. that is supposed to be a place where there is not as much turn as there is on the consumer side where dropbox is more focused. >> dropbox is also on the enterprise side. they are spending to get the enterprise customers because that is recurring revenue. this reminds me of twitter a bit, except twitter's financials were better. their losses were not more than revenue. i think they want to turn public. if you ask them why, they will probably say because they can. that is kind of the stock answer for companies losing a lot of money. i think what will happen is they will pick up the interest in dropbox.

some institutions will want to own the sector. i would be leery about buying in the aftermarket. twitter is right around $46 now. i don't think this will be a bargain in the aftermarket. cloud companies have come down quite a bit in the last couple of weeks. >> what kind of timeline are we looking at? >> it could be as soon as three weeks away. box filed confidentially which gives it about 21 days before they can start going on the road and marketing to investors. they want that perspective for 21 days to give investors time to look it over before hitting the road. i guess we are looking at the middle of april before we start to see official valuation terms and investor demand intel. >> thank you all.

we will be following box everyday. another big story, disney agreeing to buy the studios for at least $500 million. the online video network has more than 380 million subscribers and 5.5 billion views a month. jon erlichman is in l.a. this could be a billion dollar deal if you count the earn-out. >> the performance target disney has if maker performs gets closer to $1 billion. it used to be disney and other big media companies would buy networks. now you go out and buy youtube networks. that is what maker is. it is a hub built to bring all sorts of youtube content to one place. there are a lot of businesses like this built in los angeles. disney is aware there are a lot of people more comfortable

watching videos on youtube than traditional television. how does that affect the disney business going forward? they are positioning this as a deal that gives them access to technology, smart people building these new businesses. we should highlight, these are still challenged businesses. youtube still takes a big portion of the revenue generated by businesses like maker. you've seen the likes of maker looking to distribute content elsewhere. i think these are still a work in progress type business. for disney, there is opportunity to get in there and buy one of these businesses as they grow. >> give us an idea of the kinds of videos maker makes. why has it been such a sensation? >> the key word they use in the release is millennials. what you have seen with a lot of these hubs. it is a lot of content focused

at the younger demographics, whether it is tied to gaming or pop culture. disney is probably going to view this as a great marketing vehicle for different properties. maybe they can find some new young stars to build up through this network and push out through other properties. >> jon erlichman, thank you so much for that update. coming up, in a rare interview larry page talks about everything from self-driving cars to church. take a listen to that next. ♪

>> welcome back to "bloomberg west." i'm emily chang. worries about apple's music ambitions are sending pandora shares lower. they dived after a recent report said apple could soon introduce itunes for google's operating system. the report says apple is looking at a standalone app for its next mobile os. speaking of apple, the company wants to strike a deal with comcast that would put apple boxes in consumer homes. plus, give apple tv content a faster route into those homes, that is according to a "wall street journal" report. apple tv has equal access to consumers with other internet

companies. with this deal, google could build an apple fast lane into your living room. brian white joins me with more on the potential deal. also with us, jon ehrlichman from l.a. as you understand it, how would this work between the hardware, software, and agreement that needs to get done? >> i think apple would provide the set top box, also could provide some of the cloud services. comcast would offer the pipes. essentially, what the article was alluding to is apple would like to be looked upon as managed services. apple tv would be considered a managed service just like telephone lines and on demand video. it would not get caught up in the buffering on the public internet. >> jon, explain what apple is

asking for and why would comcast give apple what it wants? >> on the issue of having faster service, i think they want the same thing netflix has because a lot of people are using itunes to watch movies. you don't want that experience interrupted. as for whether or not they would be allowed to muscle into the world that is comcast with a box, that is an important question. comcast already has a next-generation box. we don't talk a lot about it because the cable companies are not as fun to talk about as apple. but it would do essentially the same thing. the reason comcast might be willing to do that, is if they felt because apple has a certain kind of customer and certain people would want to use an apple product, maybe that would add comcast customers. but they are only going to go ahead with something like this if comcast still controls the whole experience, cable, broadband, the works.

>> as we understand it, apple wants to control the experience. brian, we are hearing they are just talking but still far apart. what are the hurdles these companies will need to overcome to get to some sort of agreement? how likely is it to happen? >> you hit on one, who controls the customer. the second one would be the revenue share involved. apple would give access to 600 million itune customers. comcast is about 30 million when you include time warner. when i look at cable industry, a lot of younger people are totally cutting the cord or not signing up for cable. i think that is a trend. one way to get around that for comcast is to work with someone like apple. >> there is some precedent for comcast to cut a deal.

i believe they cut something similar to tivo, although there are still major differences. explain how this would differ from the relationship xbox has with comcast. >> at the end of the day, any cable players want to make sure you can access their content on different platforms. that is the bottom line in all of this. comcast wants to make sure if you want to use an xbox or any other device as your primary method of accessing television, that you can still be a comcast subscriber. hypothetically, if there was an apple box you could buy and use in a market where comcast does not currently serve subscribers, maybe this would be a way for them to build their footprint out of the markets they have already got. if you are leaning on the arrangements comcast already has

with broadcasters for content, that part is handled. all of a sudden, you can build this out as an app in somebody else's hardware. this would be more extensive than what we have seen with xbox, the kind of the same thinking. thing. >> we will continue to follow this story. not quite the apple tv unicorn some people were thinking we might see, but a step in that direction. coming up, how does larry page keep google innovative? we will hear from him directly in a rare interview next. >> the more i learn about technology, the more i realize that i do not know. that is because the technological horizon, the more you learn about technology, the more you learn what is possible. ♪

>> welcome back to "bloomberg west." i'm emily chang. google has covered a lot of ground since it started 16 years ago. charlie rose sat down with larry page in vancouver, and started by asking where google is today.

>> our mission we defined a long time ago, is to organize the world's information and make it universally accessible and useful. people always say, is that what you are still doing? i think about that myself and am not quite sure. when i think about search, it is such a deep thing for all of us. to really understand what you want, to understand the world of information. we are still in the early stages of that, which is totally crazy. we have been at it for 15 years already. it is not at all done. >> when it is done, how will it be? >> well, i guess i am thinking about where we are going. why is it not done? a lot of it is that computing is a mess. the computer does not know where you are, what you're doing, it does not know what you know. a lot of what we have tried to

do recently is make your devices work, make them understand your context. google now knows where you are and what you may need. just getting that all to work. there are one billion android devices now. we recently did chromecast. we are starting to work on television. sprint. we just announced wearables this week. getting computing to where it can understand you and the information, we have not found that yet. >> part of where we are going is artificial intelligence. where are we when you look at that? >> for me, this is one of the most exciting things i have seen in a long time. the guy who started the company has a computer science and neuroscience background. he went back to get his phd to study the brain.

we are seeing a lot of exciting work that crosses computer science and neuroscience in terms of understanding what it takes to make something smart. >> let me talk about edward snowden. security and privacy. you have to have been thinking about that. >> absolutely. i saw a picture of sergey with edward snowden yesterday. privacy and security are important things. we think about in terms of both. you cannot have privacy without security. let me talk about security first because you asked about snowden, then i will say little about privacy. for me, it is tremendously disappointing the government secretly did all of this and did not tell us. i don't think we can have a democracy if we are having to

protect you and our users from the government for stuff we have never had a conversation about. we don't have to know what particular terrorist acts they are worried about protecting us from. but we do need to know what the parameters of it is, what kind of surveillance the government will do, and how, and why. we have not had that conversation. the government has done itself a tremendous disservice by doing all of that in secret. >> then there is the privacy side. >> the privacy side, the world is changing. carry a phone, it knows where you are. there is so much more information about you. that is important thing. it makes sense why people are asking difficult questions. we spend a lot of time thinking about this and what the issues are. i think the main thing we need to do is provide people choice,

show them what data is being collected, search history, location data. we are excited about incognito in chrome and doing that in more ways which will give people more choice and awareness of what is going on. >> give me a sense of the philosophy of your own mind. you have this idea of 10x. you don't necessarily want to go in some small, measurable arena. >> i have been amazed. the more i learn about technology, the more i realize i don't know. it is because the technological horizon, the thing you can see to do next, the more you learn about technology, the more you learn what is possible. >> a rare interview. google ceo and cofounder larry page with charlie rose. turkey's government is blocking twitter. how did they do it and is it backfiring? that is next on "bloomberg west." you can watch us streaming on

your tablet and apple tv. ♪

>> you are watching "bloomberg west." we focus on technology, innovation, and the future of business. the turkish government has blocked twitter access across the country and the prime minister defended his actions over the weekend. he also threatened to block facebook and youtube as his administration fights corruption charges. twitter responded by saying they remain committed to defending the privacy of their users in turkey. i am joined now via skype by jim cowie, cto for renesys, and andrew gardner, an amnesty researcher who is on the ground in turkey. andrew, describe the situation

on the ground for us. i know some people are successfully circumventing the difficulties the government has put into place, but what is the latest? >> that's right. twitter was first blocked on thursday evening here. they moved to different type of blocking which is more difficult for people to get around. a lot of people are still tweeting from turkey. the issue is really a polarizing one just like so many other issues in turkey. the prime minister is still talking about the twitter ban, threatening to even ban youtube and facebook, and his supporters seem to be in agreement with him. lots of people in turkey are completely outraged about this attack on freedom of expression. it looks like the situation will go on and there is no end to this twitter ban in sight.

>> jim, you guys are putting out realtime maps of the outage. what is the state of affairs in terms of how far this outage reaches? >> it is unchanged from what we saw early sunday. the blockage is at the ip level which means you cannot reach those particular ip addresses that belong to twitter from inside the country. >> what do you mean by the ip level? i understand it was blocked on thursday and friday, but something different happened. what does that mean and what do you imagine the government's involvement is? >> we makes network performance management tools for the internet. towards that end, we saw a lot of the same things that consumers on the ground would've

seen. initially, it was simply a block of the name "twitter.com." it was not the real twitter.com machine, it was a government machine. as people figured out how to work around it by reconfiguring the devices to use public dns, like google's public dns. something had happened differently and sure enough about 24 hours later, additional blocks were put into place so that even the ip addresses belonging to twitter, the numbers that are used to uniquely identify their servers in california also became unreachable. >> andrew, what are people doing now? are they just using vpns? twitter is more popular days into this block than it was before. >> that's right. the people that are using twitter in turkey, about 10 million users, the twitter traffic has actually increased in the day after the ban.

now there are a lot of people that are using vpns and proxy servers to get around it. a lot of people are being able to do that. that is how i managed to use twitter. i think it is fair to say there are a lot of people who are not able to do that and they have been shut out. >> i know certain countries are more vulnerable to internet outages. where does turkey fall on that list? >> they rank as an intermediate case for us. you have countries that have only one or two network service providers that are allowed to have international connections to the outside world. places like north korea or syria where internet outages are not completely unexpected. turkey ranks as an intermediate case. we worked with many of the providers for many years and they are a very sophisticated

group. there are more than two or three in turkey. the number of companies in turkey that are able to make direct international connections with the outside world is higher. that gives them a certain amount of resilience to a complete network shutdown. a lot of the government intervention tends to be more surgical, tends to be more targeted at specific services, specific ip addresses, specific domain names. >> is this comparable to anything you have seen recently? >> it is consistent with the sequence we have seen as it evolves over time. back in 2011, we saw egypt take the country off the internet with a blunt tool. it has become much more surgical. it is like what you might see in iran before their elections where blocking specific domains was done very tactically.

in venezuela, twitter had some problems becoming reachable. the same thing happens in china on a daily basis in very sophisticated ways. >> andrew, what impact has this blockage had on the political situation? i hear the turkish president has taken to twitter to criticize the latest move by the government to shut twitter down. what can you tell us about that? >> the twitter ban comes less than a week before key local elections in turkey so it is very politically significant. there has been these alleged conversations released where the prime minister is alleged to be speaking about things which substantiate corruption allegations against him. it shows his unfairness in the media and other private business

sectors. really what has happened up until now is questionable whether it has been any advantage for him and his government and his party because the whole world is starting to talk about these corruption allegations, the tapped telephone conversations, and now this outrageous attack on freedom of expression which the twitter ban is. i think this is really just the start. turkey has recently passed a newly restrictive internet law. it seemed very unclear how the government would seek to use these new powers that they have. although they were court ordered for four individual twitter accounts to be taken down, there is no court order for twitter itself to be -- to shut down. the prime minister has said that he personally took this decision so it is very indicative of how

policy is made in turkey and how rights are violated. i think this will have long-term implications. it is really a battle for whether there is internet freedom, whether people can access information, whether social media will continue to be a place were critics of the government can really share their ideas and receive information in a forum which is not -- which is not subject to the same control of the national media. i think this is going to go on and on. it is the start of a really long-term situation in turkey. >> jim, are you seeing other sites being blocked? there were reports about youtube being next. what about facebook? >> nothing at the moment, butwe are going to keep an eye on youtube. they have a long history of being blocked in turkey and that would be no surprise. >> jim cowie and andrew

gardner, amnesty international researcher on the ground in turkey. thank you both. what is the value of design and technology and why are tech titans in silicon valley investing heavily? we are going to talk to apple's first design chief next. ♪

>> welcome back to "bloomberg west." i am emily chang. today we begin a special weeklong series on the role of design in technology in conjunction with bloomberg businessweek's special issue on design. the way a product looks and feels is now as important as its function. great design leads to great user experience and robert brunner is the former head of industrial design at apple. great to have you back here. you left in 1997, how has your design philosophy evolved over the last two decades? >> i have always been around designing things that are simple

an example and accessible but at the same time aspirational. that is what apple continues to do and the way i like to work with companies and create meaningful things for their customers. >> one of the things i found interesting is that you like to jot your thoughts down right away. explain that to me. >> design is very emotional. i like to dive in and see what my reaction is right away. what are the first things in your head and how you react. i put that aside and go through the research process. i like to come back to them. a lot of times i am right. it is that gut reaction of what our products should be, look, or behave. >> you are the creative director at beats by dre. it feels like a product that could be apple's as well. how did you approach that design problem? >> when i first started working with dre, we -- i looked at headphones and they are wearable

things. they are all designed very functionally, very articulated, very mechanical. the goal for me was to streamline all that and make something really beautiful that looks good on the body and your head and neck. it still did what it was supposed to do and especially from an audio perspective. no one really had done that. as much as they are high-performance audio equipment, they become beautiful fashion that people love. >> you are taking a deeper look at wearables. it seems like there are a lot of products out there but none are something i would want to wear every day because of how it looks. >> we are awash in embedding technology and everything which is cool from a design point of view. most people are rushing to connect your appliances up without thinking it through in terms of value. also, what does it say about me?

i like to say that fashion is about the tribe you want to belong to. when you start wearing things, it says things about you. most consumer electronic companies do not understand the emotional aspect of putting something on someone's body. >> what is the secret? >> one is connecting to the emotional aspirations people have. one of the reasons fuel band is successful is that a lot of people want to feel like an athlete. it says i am into athletics seriously. those are the kinds of things you need to key upon. also, integrating into people's lives. a health monitor, if i have to invest a lot in it, i am not going to wear it that much because i cannot do that. >> i know you hired jonathan ive and then you left in 1997. a lot of questions about what is apple working on. some people are having doubts.

maybe they're not working on anything revolutionary. what do you think? >> i am not that close to apple anymore. i have no doubt apple will continue to innovate, especially in design and continue to push forward. they're the type of group and the talent there that they will continue to push. the discussion on whether they lost it, i don't think there is any -- >> you don't think they are coming out with any more category defining products like a watch or tv? >> they will continue to look at the assets they have. they will continue to push outward. it is the constant maturing of technology into people's lives. it is interesting that technology enables but design establishes and that is one reason why apple is good. >> thank you. great to hear your design philosophy and how you approach these problems. vice media started out as a small punk magazine and now it is close to becoming a billion

dollar media business. that is next. ♪

>> welcome back to "bloomberg west." disney has named abc news president ben sherwood as the new cochairman of disney media networks and president of the disney abc television group. he will be taking over for anne sweeney, who will be leaving in january. sherwood, who is staying on at abc news until a replacement is named, will oversee the company's largest division. it includes abc, abc family, and the disney channel. vice media combines punk culture with online journalism, and the strategy is giving traditional media players a run for its money. vice has grown its way to a whopping billion-dollar valuation. jon erlichman met up with the head of vice media. >> we are talking about shane smith who is a really colorful character.

this is a platform through all of the different ways they are reaching people is reaching upwards of 129 million people each month. their latest venture is vice news. i started by asking him how much money they are putting into this new part of the vice empire. >> i will spend about $50 million. we just launched, we are still in beta. it has been a tremendous success with our coverage of the crimea and the riots in venezuela. not only is it driving a lot of traffic but it is also getting kudos from mainstream media who are doing nothing but making fun of us. >> would you have any interest in having your own cable network to sort of be there for people to discover you in that way? >> i would've said no up until recently, but we have been selling so much tv around the world.

whenever we look at something -- we were doing so many parties in london and so many events that we bought a pub. that pub became our are most widely successful venture. we are creating so much ip now that it is smart to own your own platform if you can. we are looking at various opportunities because there is such a destratisfication going on in media right now. we are throwing off a lot of cash that we can look at buying distressed media assets. >> you are a profitable company. what does that mean? does that mean you're a wildly profitable company? >> for what we do, we are wildly profitable. we have been profitable since day one because we came up in a recession and we believe you have to make profit otherwise you don't exist. we have been doubling our top line pretty much every year we have been in existence which gets harder because there are a lot more zeros now.

as we are now licensing to mobile, online and tv around the world, our margins are actually going up. we are running around a 34% margin. we will try to get to 40% next year and then the holy grail of 50% for an online company would be huge for us. >> what do you think your company is worth? >> a lot. i don't know. last year, we got pegged at $1.5 billion, but we have tremendous scale growth. if we hit our numbers, our worth would be exponential. if we are doing $1 billion of topline at a 50% margin with an increasing scale, that will be

worth as much as twitter, i think. >> you are close to generating $1 billion in revenue? >> that is the plan. within the next 12 to 18 months. >> 21st century fox bought a stake, about 5%, in your business which got a lot of people talking about what you are worth. it is said that you and rupert murdoch celebrated by having a beer in brooklyn. >> no. >> thank you for clarifying. >> what happened is that we were discussing some form of deal and we were at his offices and he came in and we talked for a bit. i said, you should come see the shop. he said, let's go now. he came out to brooklyn and we went to my favorite bar and we had a drink. a lot of people saw us and he tweeted and that started a whole rumor on a lot of things. unrelated to that, the deal sort

of took a life of its own and then we ended up doing this deal at around a 5% ownership stake. >> a lot of people wonder about the corporate endgame. you have been asked before, do you want to sell this business? i assume you don't based on what you said in the past or would you consider something like going public? >> we have to look at everything now. it is a great question. one of the reasons why we did the fox deal -- people always ask why. we did it to stay independent. we could run the business the way we want it to run. i vote 95% of the board. it was a great deal for us and it is helping us expand into the world, india, europe, etc. however, i think you have to look at things -- if we hit the numbers that we believe we are going to hit, we are throwing off so much money, our scale is increasing so rapidly.

we would be stupid not to test what the market would bear. there is a lot of money in the system. valuations are high. god knows when the next recession is coming and if we don't take money off the table, we would go -- >> shane smith, the ceo of vice media. >> it is time for the bwest byte, one number that tell a whole lot. what do you have for us? >> we have six. it has been six years since sheryl sandberg was at her old job at google, but there is still some developments tied to that job. there was that big court case about whether technology companies made agreements with each other not to poach each other's talents. new court filings suggest they were actually deals in place not to take other talent. with facebook, they didn't have that kind of deal. >> this coming from a deposition that sheryl sandberg gave. thank you all for watching this

edition of "bloomberg west." we will see you later. ♪

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