♪ >> live from pier three in san francisco, welcome to bloomberg west. we cover the infant -- recover innovation in technology. two companies going public just today. possible --t microsoft's mobile march continues. first a check of your top headlines. ibm has come under increasing

government scrutiny. the reason, the pentagon, the -- government officials want to make sure that lenovo's purchase will give china a backdoor access to u.s. secrets. and the white house is angry with samsung after a use of selfie, taken by david ortiz. the slugger signed an endorsement deal with samsung. the company retweeted the picture in an advertisement with more than 5 million followers. the white house has object and to using the president's likeness for commercial purposes. and google is suspending sales of the anoxic alarm. web --nic feature of the of the nest smoke alarm -- it

could take two to three months to fix this problem. google. them in january. technology ipos are hitting wall street. grubhub and a cloud software company both started trading today. the grubhub ceo joint market makers and had this to say. washe reason we did the ipo to gain exposure for the company, to communicate to the world that this was a massive marketplace. there are $70 billion spent annually. only three percent of that is being placed online in any way. >> it is not just grubhub. the other company, opower. they have filed to go public. seeing a ton of ipos producing technology. >> now feels like a good time for these companies to go public

treated investors are friendly to new technology ipos -- to go public. investors are friendly to new technology ipos. -- is thely this is company that is profitable. they had sales of $137 million last year. this company looks a lot like opentable, which is another company investors have shown an affinity for because it is a dominant player in that space. >> there's nothing else quite like it. there was this notion that the market is as big as the restaurant market. they say they have penetrated in many more cities. these guys are all over the place. >> you opportunity is delivery anywhere. grubhub, seamless, they are very much a city phenomenon. people go to restaurants and eat food anywhere. once they sort of penetrate the -- that is potentially a

big market. i think that is what investors are seeing. >> the shows the appetite -- sorry, i had to do that. my calculations is showing 300 times last year's earnings. yes it is a profitable company but what does it tell us about where we are in the ipo market and the demand for these technology ipos wherever they are? >> they are insanely optimistic valuations. for a company that is already generating revenue you can kind of get a sense of where you expect the numbers to go in the next couple of years. it may take a little bit of time for this valuation to catch up with the realities. when you compare that to what else is happening in the technology world, $19 billion

for what's apt. hatsapp.w i think investors are having trouble waiting the risks versus rewards here. >> i think the differences they were getting paid primarily in stock where as these people, grubhub, are getting cash money from investors. in terms of the numbers of ipos, do you get a sense of the companies you talk to in the bay area -- sense of the companies you talk to in the bay area are approaching the company? >> there is thirst for capital throughout the technology industry. the ipo market, it wasn't a very viable place for technologies that for technology companies to go. capital so much venture money going out there. there is still so much private money available. dealswere several more

earlier last month. the private and public market are ready to throw tons of cash. >> thank you very much. one of the companies going public today revives -- provides software for utility-based companies. shares rising in the public debut. joining us now from the floor of is new york stock exchange dan. i haven't heard a single thing about the company since a few days ago. really interesting, how your business is helping imaging companies cut power usage. >> that's right. and what we do is we work with utilities all over the globe to help them help their end-users get better information on their energy use. it helps them retain customers in competitive markets.

it helps them help their consumers save energy, which is, while counterintuitive, and increasingly huge part of the utility industry. >> it is that the cold for all sorts of environmental and legal reasons. is that the ultimate goal for your service, but the power companies want to increase the power available without building a power plant? >> that's a good way to think about it. what you have seen in the last 80 years, the bulk of the life of utility in the electric industry is that these utilities count on demand going up every year so they can build new power plants, they can make more money by getting a rate of return on that. it is just not an option anymore. nobody wants a car plant built in their city and county. utilities are looking for new ways to profit. what they have worked out with the regulators in 30 states across the u.s. is this mechanism where when they invest in energy efficient programs to

help consumers like you and i save energy they not only get their money back they get bashed their money back, to get a rate of return that is greater than if they had just delivered the energy. they get a rate of return that is greater than if they had just a liver the energy. >> you guys into deuce your first product in 2007. what has changed technologically and if you have been able to change or new business with new technology? >> a lot has changed in within the utility industry, one major trend is that smart meters have rolled out increasingly across the globe. in the u.s. more than one third of homes have smart meters. that gives us an enormous amount of data to work with. over 52 million consumers worth of energy data, which we believe is the largest dataset of the time and the

planet. , what dovetails is the innovation around virtualization and cloud model for software development, rapid developments, big data analyst -- digg data -- big data analytics. these new technologies make it easier for us to extract deep insights about customer data. >> you guys have just done an ipo. i wonder why you decided to go public now. >> going public is a fundraising event. we see this enormous opportunity in front of us. we are cash flow positive this year. >> we see all these companies that need to do it desperately. you don't really need to. to got is the best time

public, when you really need to you're not going to get the value in the market. doing this is because while we don't need to for survival, we see this enormous opportunity and we want to capture as much of the market as we can. we are barely penetrated in this market. we serve across any of our four solutions, 30 million consumers. we took a late 710 million consumers and businesses that we can serve. we are less than five percent penetrated into our and market. the exciting thing for us as it is not like those consumers out there that were not serving -- it is blank space. we are raising this money to go as quickly as we can to build our company. >> i will let you get to it. the ceo of opower. we appreciate it. find out what is behind the name

cortana and why it may rival siri. ♪

>> look him. apple's latest acquisition is a company out of the u.k.. they make speech recognition software and could play a part in improving their virtual assistant. the terms were not disclosed, which is often the case with apple acquisitions. there is a new challenge from microsoft. earlier this week microsoft unwrapped its new os, windows 8.1. it features a new personal assistant called cortana. much of cortana is powered by the bing search engine. the director of being at microsoft -- i caught up with him earlier this week. i asked him on the focus on the assistant and why they decided to call it court,. -- call it cortana.

they thought how this thing should be created, what was the principal of this character. cortana in halo was master chief's assistant. engineers literally thought of this. you saw these dolls everywhere. unlike what we usually do, we actually stuck with that name. >> i thought you were going to name it cory. >> kind of like in seinfeld when kramer was movie phone. >> more searches means more revenue. more searches means the users are finding what they want. do you think this leads to more or fewer searches? >> what katana allows -- what --when i says

something like, is that flight tim? -- on-time? people are able to trust that the vice. they use that device more often. we are a device and services company. >> is there any reason this couldn't run on other os's? >> we have to ask the engineering team on that. certainly a lot of intelligence is in the cloud. it really is a snappy experience. a lot of that is tuned to their windows phone device. bing.com, if you go there and have a court, device -- a cortana device, the thigns you c -- the things you care about

will flow to bing.com. a new hbo series called "silicon valley," we're going to take a look next. ♪

>> hbo has a new series called "silicon valley." show creator is mike judge, the guy behind "office space," "beavis and butthead," and others. we caught up with them at the premier deep in the heart of silicon valley. >> he spent some time working in silicon valley -- you spent some

time working in silicon valley. can you sort of describe that experience to us area -- to us? he >> i worked up here in 1987 as an engineer. it wasn't a great experience for me. i got a lot of comedy material out of it for later, for movies like "office space." alto andn east paolo worked at a couple of different places. >> if you were starting out now the way silicon valley is do you think you would have stayed a little longer? almost have been born 25 years later ash >> -- >> it's a different world now. you can started smaller with

less resources, less money. you have to -- there's a lower barrier of entry to do that kind of thing now. >> what was the take away from that, what did you learn? clock this is one of the shows weren't the more research you do the more you realize how much there is comedy wise to do with this area. we came in with certain ideas about a story about this and a story about that. every time we talked to somebody , practically everything they said you went, that is so much funnier than what we had. you said if that happens -- you may get into some of the bigger issues. if you talk about starting up a business of innovative products

-- they talk about the income gap and women and their role in silicon valley. i get a sense there are deeper aims you want to explore potentially. -- deeper themes you want to explore potentially. >> these came up. there is just plenty of material out there. hopefully we do in other one. >> googles executive chairman has a camera -- has a cameo in a party scene. you did get feedback on how authentic that was. what did he tell you? clock's it was encouraging. he looked around and said -- >> it was encouraging. he looked around and said, i've been to this party. >> there are references to steve jobs. could you have done the show without making references to specific people? was that integral?

>> i suppose. .veryone's got macs and pcs it is so everywhere -- there are pretend companies. they coexist in this. it just seemed right. do you think it is about your show that will make a difference then some of the other temps? >> we did an enormous amount of research and really tried to get all of the subtle details as right as we could. i do feel like there is a nuance to reality that we have gotten in our show. we wanted to make it is funny and enjoyable as possible. >> keep running. why peopley that is watch it, not because it is technically correct but because it is an enjoyable experience. >> actors like tj miller, he

said you told him you were looking for a sort of penn gillette type. i know you have your recent animation. how specific do you get on what someone should look like and what the somebody from silicon valley look like to you? >> i'm very specific sometimes. -- ands in the script sometimes you will put a description when you haven't cast anybody, you are just trying to paint a picture. i told him he didn't have to put on weight for this. he said, no, no, it's cool. tj got fat. i didn't ask him to. >> what has this experience been like for you guys? >> it's been great. hbo has been wonderful and

supportive. >> they were amazingly supportive every step of the way to the point where they were so unintrusive that it is such -- it is sort of a bummer. if the show doesn't work it is 100% our fault. there is no way we can blame anyone else for it. that is sort of a downside. ofwe will have more "bloomberg west,"] the break. "bloomberg west," right after the break. ♪ is 36 past the hour. we are on the markets, i am matt miller. nothing is bad as the nasdaq, up 2.25%. shares of the online brokerage e*trade are declining. it is the third day for e*trade to drop, breaking below its 100 a moving average -- 100 a moving average. this high-frequency training could effect --

years of commercial featuring the air against talking baby, e*trade is hiring an arrogant actor instead, kevin spacey will replace him.

>> you are watching bloomberg johnson --i am cory bloomberg wes. i am cory johnson. san francisco has the highest gdp per capita in the nation. the growth has been a big boost to the economy. it is not without controversy. income equality that income inequality has reared its ugly head. does this mean? how has san francisco chronicle be a vibrant digital city and what are the lessons to be learned for the rest of the world? those issues are explored by two new interesting reports.

mandel is the president of economics at -- i found these studies fascinating. what is a booming technology giving us in this area? , several cisco has created more jobs than all but three states. what we have seen here is that the tech sector, rather than creating jobs out in the suburbs, has been migrating to the city in areas of great , which is a tremendous thatle for other cities

want to try to revive their inner cities as well. >> why should anyone care about your study? i adore it but why should anyone outside the bay area care for it? >> the first is san francisco is a very large and vibrant tech success story. there are other cities that are traveling the same trajectory. to understand how to think about the challenge that a large tech community can actually, what impact they have on the overall city is actually instructive. while there has been a lot of press back-and-forth over the last several months about the corporate buses that go from san francisco down to the valley, the view of the people in san francisco is more nuanced than it might read in a newspaper. i thought one of the most

interesting things was the notion that during the.com , it was focused on finance and did not tend to bleed out the rest of society. we see unemployment when it is around technology spreading a lot of other disciplines and types of jobs. it turned out san francisco was very heavily dependent on the finance sector before. sometimes what made the.com bust worse-- the dot-com bust was the loss in finance jobs. it is actually much better setup for the future. that you are not going to see this sort of problem as last time. when i look at the san francisco economy i don't see an that is fraught with inequality and i see an economy that is generating jobs across a broad

sweep of occupations. >> only two states have done better than the small city of san francisco. one of those is north dakota. i presume that is driven by the boston oil discovery. and i presume that has led to a lot of spending and industries in north the coda. are there industries that spread the wealth more greatly than technology. >> we did some work in new york city along similar lines. one of the things that is interesting about this rise in it islogy is that incorporating a broader set of adjacent industries. isn't just in hard-core technology, it touches retail, it touches car rental services. this has a bigger impact in that way. this is an important point.

what it means is that the tech info boomer has the potential to spread jobs and growth across the broader part of society than people think. what are the government actions that have aided in this and what could have done to help grow them fasters? not really sure you want it to grow faster at this point. they were very encouraging and welcoming to tech firms. they offered some very targeted tax breaks. it is very effective and encouraging firms to do so. i think part of the combined lessons from new york and san francisco is that if the city administration is focused on a tracking tech firms, that is a very potent force for development. we have seen places like new orleans that you can actually do

-- if you're prepared to do a little work on tax break -- but more important, run your strategy around the tech firms instead of focusing on it. you can actually bring in a lot more growth than you think. >> there has been great controversy in san francisco, particularly one of the things you cite in your study was held with her was drawn into a blighted neighborhood. -- was howhat twitter was drawn into a blighted neighborhood. sometimes when rich white people come into these neighborhoods they change them by being there. is there any guidance as to how these companies folded into a community and not slapped on top of it? we did a survey of interviews of leading technology companies and a survey of residents.

one of the things that came out clearly was that if people felt very differently about the employees that worked in technology and lived in san francisco than they did the people who worked in technology and commuted everyday. making the area you choose somewhat that it -- you choose somewhere that is actually reachable why a majority of your employees makes a difference. twitter having their headquarters downtown in san francisco was regarded favorably. it creates jobs. this --ld think about tim's work shows that this is not a rejection of the tech jobs. it was really much more nuanced than that. dr. michael mandel. i will be sure to tweet out a

link to that study. a quick disclaimer, bloomberg p commission these reports. reports are pushing more tech into the class and. it is grating new opportunity for venture capitals and startups. on can watch a streaming your tablet, phone, on bloomberg.com, and apple tv.

>> we continue to look at the special series, wiring the world, focusing this week on technology and education. we talked to some startups about the growing business opportunity in the classroom. what about the opportunity itself? who is putting money behind this kind of thing? >> for a long time education got very little attention from

venture capitalists and tech investors. if you were going to sell a product, you had to sell it to someone and no one wants to sell it to school districts. there is no money there, they are slow moving. have all these devices in consumers hands that you never used to have. you can actually target consumers and target parents. --ents were able to muck parents are able to spend much more money under kids than themselves. if there is an app that looks like it can be helpful in the classroom, that is something you will spend money on. if you look at google investments, there is the .pplication for a student when a publicly traded it was a company that

came up with great fanfare because it was focused on the teaching software for macintosh. they lost market share of it and stopped using it. that ability to sell in necessity seems like a great hurdle still. >> still a great hurdle to sell in the classrooms. the businesses that are focused bethe enterprise, there may great opportunity there and there is investment money going on. but the business models have not been particularly well worked out. the ones that have worked out are the ones that are digital in focus and the ones that see mass audience. if you can tap into that market the options are much greater. >> we are not talking about acknowledgment of the technology. publica company go focusing on online education. both focused on this area, both

getting a lot of backing from wall street. >> it helps get programs online and students get educated online. this was a social networking site for campuses. that's a market where you at least know there is a lot of money for lowing through the system. -- money flowing through the system. >> they like the tuition. focused see a company on high school and middle school we know we will have tapped into a new environment. >> thank you very much. investors are excited about education technology. students? the we asked more than 600 high school and college students about how they use technology in the classroom. surveymonkeyith dave goldberg. we started by asking which

devices are most popular for students? >> laptops is the most popular device. we can see people are using more mobile devices. tablets and smart phones are coming up second. individually they are not that large. education in the classroom is slow to change. it is not going to be an overnight thing. >> the next popular answer was no device. why is that? ?hey are not using them >> they don't know how to use that. >> we have teachers pushing back on technologies, saying what we are teaching is much more basic than technology. while well minded companies want to sell stuff, in fact the most education is not wanting all the stuff.

>> i think there is some protectionism around that. i think at the core it is andably an expense knowledge gap. what can i do with that technology in my classroom? it is easier to say i don't need it and it will cost a lot of money. maybe a particular teacher wants it but they don't have the discretionary budget to go get five ipads. -- how muchof you do you think it has helped technology or the classroom? clock's there was a distracting effect of the technology. -- >> there was a distracting event of the technology. people thought it helped them and improve their grades in high school and college. it'll also felt it was a distraction -- people also felt it was a distraction. visited -- very

vivid scene where -- the teachers would spend 11 minutes getting it to boot up. i am wondering how valid that is today. >> i think it is historical. ago,u look back 15 years there were huge ties. all of a sudden education improved. that proved not to be the case. there were false hopes that if you are a teacher, people torture this will change things. i still think there is a lot of opportunity. we are still seeing the early stages of mobile and education. >> teachers are now using smart boards. >> those in high school and college are super popular. there are rudimentary electronic clickers to respond to the teachers. you can imagine all that stuff will end up on your mobile device.

this technology is going to change. i think it is going to get there, but it is slow. >> people thought it increased cheating. there are positives and negatives in the survey about technology in the classroom. >> we learned out from l.a. that kids were taken the ipads and personalizing them and downloading things they were supposed to be downloading. what about software? >> it is still really early. i think there is some great forware out there elementary school and that is where a lot of work and effort has gone. i think there is not that much great software for high school and college kids. i think it came through in the survey. people said they used software that when you dug down it looked like it was older stuff that has been around for a long time. >> that was ceo dave goldberg. marvel's captain america is powering his way to theaters. we talked to the former chairman

of marvel about the business of superheroes.

>> marvels franchises have been proved to be the biggest hawks office hits. the avengers, iron man, altogether these are some of the most successful franchises. that is the focus of bloomberg businessweek. jon erlichman stand -- erlichman sat down with stan lee. characters, marvel 50 years or older, have such an enduring popularity. >> when i was a kid everybody wanted to see king kong. everybody wanted to see frankenstein. people love the things that were bigger than life.

they didn't make that many until recently when the producers discovered that these superheroes are the most popular things ever with the public. >> i sometimes ask the question if there is superhero fatigue. this year we will see the amazing spiderman. the second one will be followed by the third one in 2016 and a fourth one in 2018. do you think at a certain point people get fatigued? >> i don't know how long james bond has been going on and it is still a big event when a new movie comes out. i think it will be the same thing with these marvel superheroes. >> let's compare spiderman, which is released by sony, and x-men, which is released by fox, to the many films that are being distributed by disney now, the

latest one being the new captain america movie. some of the numbers at the box office would suggest that the marvel films under disney are bringing in even more box office box than the others. if that is the case, what does that tell you? else.s like anything if you have a plethora of characters, each or 10 characters, some are going to be a little more popular than others. the amazing thing about these movies, everyone one of them seems to do well. some may be bigger blockbusters than others. seems toto be -- there be, at the moment, an insatiable demand for these movies. >> a lot of people are pointing to the next avengers. office of the global box , possibly being the biggest film of all time. would that surprise you?

>> not at all. >> warner bros. obviously has the d.c. family of characters. it doesn't seem like they have generated as much at the box office in recent years. the have any thoughts on that? mye i wish mike -- >> i wish friend bob came was with us. he is the fellow who created batman. tease me about how batman was a big deal on television and in movies and we at marvel had done nothing. i wish he was here now so i can return that teasing. a character should be somebody that the reader or viewer really cares about. maybe at marvel we put a little more effort into defining the characteristics and the nature of our heroes may be more than they have on the other side of .he aisle

>> stand taking a shot at bob kane from the old days. 8000 is our bite. 8000l has more than characters. when disney bought marvel for $4 billion, before the deal had ofsed, bob iger. a bunch interns to start reading through the comments -- through the comics to add up the characters. they have come up with all these characters. >> that is the best interns job ever. maybe it wasn't an internship. read probably almost everyone of those. >> it highlights the skepticism that some had initially with some of the big characters tied up with other studios. looks like this deal has worked out pretty well. >> thank you.

you can get the latest headlines at the top of the hour on bloomberg.com/technology. see you monday. ♪

>> from bloomberg world headquarters in new york, i'm mark crumpton, this is bottom line. the intersection of this and economics with a mainstream perspective very we begin with the bloomberg exclusive rate secretary chuck hagel's making his fourth trip in asia since taking over the pentagon last year. the ministrations commitment to focus on the pacific rim. secretary hagel has more than just asia on his radar. peter cook sat down with secretary hagel for an elusive interview. peter joins me now from los angeles. good day. >> good afternoon. secretary hagel faces