>> live from pier three in san francisco, welcome to the early edition of "bloomberg west," where we cover the global technology and media companies that are reshaping our world. president obama says your agency should report security problems. i spoke with david jiminy and jordan robertson about these developments, asked, do they

get essay denies this. we know the nsa has been trying many different ways to compromise. >> what you think, how do you fall on this? class the whole purpose, they have capabilities in the whole purpose is to draw inaccurate flaws.

it is part of a national security, saying, they had no idea this happened. they have always these different things in their arsenal. they use every single day in order to -- different governments, a lot of money to be made in the private sector. >> would you say they're in the business of asked wedding the bugs in the system -- exploiting the bugs in the system? >> the nsa buys security vulnerabilities. if they are now going to require the nsa to disclose vulnerabilities that they find, there is a loophole in the statement which ramsey advocates told me this weekend is so big you could drive a truck through. what qualifies as national security interest? what qualifies as law-enforcement interest, there is no clarity on what they would disclose what they would not

disclose. they're not in the business of buying bugs and giving them away. that contradicts their mission. >> then what do you make of this statement from the white house? is this ever going to actually happen? is this trying to appease the masses and put something out there? >> if you look at happened with a lot of this document that was released, you have a lot of the organizations that specific look for lord -- specifically look for these flaws, but also go into different government agencies and do surveillance. i think this is to appease the masses. they are not going to disclose their techniques and what they

are actually going up there. it is going to take something like a snowden released for us to see what is going on behind the. i came from that realm. for me it was a different ballgame back in the early 2000. we did not have this huge cyber movement. there are were very little laws or regulation abroad what it can actually do what they could not do. after this has been made public, i do not did as much. -- do not think it is as much. >> the number of social security numbers were stolen to be a

story out today about how business are having trouble getting rid of this thing even though there are patches out there. are we going to hear more stories like this? >> the bug was quite slim or give you push the button, do a few other things, minor technical adjustments, and within a couple of hours you could take your system. most companies did this early last week and what is less known is that there were ripple effect from that. if your internet hosting provider does not patch the system, or there are problems with them, we talked to a company that does the youth sports fan sites. they patched their site, they didn't either way, and their internet hosting provider also did but there were glitches and problems. photos were the big dislike kobe cannot upload photos communicative view photos, and you cannot do anything. it took the entire 43% company all week. >> what is your view on how serious heartbleed it is? is this getting overhyped at all? >> i do not think so. i think it is a lot larger than what people think.

facebook was impacted, and people were able to start -- extract passwords that encrypted data. there are a lot more along behind-the-scenes that vendors have to do. your passwords could happen copper might give your information could have been stolen, so there are a lot more ramifications to than the just fixing the website. it is one of the largest exposures we have ever seen past -- in the past 10 years. it will be a long time before all of the issues are fixed because it does require a lot more than just running a patch. there will be a lot of issues in common, and the major problem is detection. prior to it being released there was no way of the deck the weather was be exploited prior to the patch data. we a lot of companies will no idea if they were asked -- hacked. >> excel partners is known for taking early bets on companies like facebook, dropbox, spotify kebab next we will speak with their investments in mobile. ♪

>> welcome back to the best of bloomberg west, i am emily chang. google made google glass for sale to the general public this week, but for one day only. it cost $1800 for axis to the program -- $1500 for axis to the program. we sat down to talk about who will could go mainstream. >> who will is still in beta at this point of and we talk about a $1500 price point it is still very much intended toward developers to experiment on applications. the reality is if you try the product, and he read the reviews it's probably going to be a while before becomes a mass-market hit.

it is perhaps interesting to those of us who live here in the valley, we welcome new technology, but it will be a while before mainstream advice this in a broadscale way. >> i was told zero chance of having it going mainstream? >> it is too early to predict that. i would not make that prediction myself. when we saw the google by android in 2005, we saw them winning the -- put the operating system and everything of and without they were not spread into that google has executed incredibly well, so i would not count him out at this point. greg said terms of wearables in general, as a mobile investor, how closely are you looking at wearables? >> we are not investors in nike, but we are believers in that trend. my fitness foul aggregates a lot of the fitness and nutrition data, and we think that is a real trend. the fitness aspect of wearables is extremely real, and is accelerating even if the glass aspects are probably still in beta. >> what about the idea that people just do not want a

measured life? to measure their life completely? i have not been compared to wire them everyday -- wear them everyday. >> there's a very serious user, and you can get motivation from them, the idea that you're able to beat with your friends across the country in a part of the world is a very metaphor the behavior -- is a very motivating behavior. the trend in wearables are on the fitness basis of very genuine trend. >> what is the hottest thing out there? >> in the context of i think the last five years is that about ubiquity, and the next five or about richness. android was purchased by google in 2005, iphone in 2007, and now we're about one billion smartphones and 250 million tablets. getting to mass ubiquity has happened. mass consumer adoption today. the fact that we have the smartphones, but apps are still down more not fully integrated to the information on those phones, the idea these applications become smart and predict the and that's a major

area what is new. >> you're talking to the founder of the app secret. they are very construed show that controversial -- they are very controversial. >> we are not investors in secret or was brave and though we think they're fascinating services. i would we doubt that the idea of anonymity on the internet is not a new idea. going back to blackboard and chat rooms, the set of behaviors that people are concerned about, plus sharing ideas anonymously has been around for a great amount of time. on a mobile device and being able to share that way is not better or worse than previous iterations. you need to put the right amount of moderation and monitoring in place. they will do that as a part of making those communities robust. >> what about snapchat? >> i think snapchat is a little

bit different. snapchat is a thumb rule service as opposed to anonymous. it is a day-to-day communication tool. >> what about big tech companies in mobile? we saw google buying a drum company have a facebook is been in that area as well. when you think of all of that going on, given that drones are not bringing broadband to remote parts of these -- the world yet? >> there's a lot of option now the about where they are going. sometime the original idea becomes clearly fulfilled where google made that android purchase a huge success, but sometimes it is all about the taliban continued. i'm hearing the same reports that your cover that there's a view that drones could be applied for mapping technology, photographs for navigation or could be applied for broadband internet service. it is pretty early for both technologies. >> there has been so much activity in the tech space, facebook buying what's that for $19 billion, oculus for $2 billion, made rounds of funding being raised. 11 digit rounds happening. multiple rounds like that so far just this year. what is going on right now? are things getting too hot?

>> there are a number of major revolutions going on in technology. we talked about this desktop to mobile shift many times before. there is this rise of big data, and the move from the social internet. if you're incumbent technology company, and you're not writing one of these key trends you can get pretty scary. you can get left behind if you're not one of the key players in one of these three major shifts. on the flipside of if you're one of the startup or growing companies that is the personification of one of those chefs -- shifts, you represent the personification of that trend and you can be strategically valuable to a lot of people. intel did a large investment just a few months ago as an example of that. >> i've been asking pretty much everyone on the show do you think we are in a bubble? i spoke with trite, and i want you to listen to what he had to

say. grace to be in has been a steady sequence of large round, that majority bubble territory. very few people are saying we are in bubble territory. >> you are the first person. >> no one wants to save the because no one wants to break it, because everyone wants to cash out before we see it over. >> are we in bubble territory? >> we are not dramatically not, the majority of companies being fun is had real cash flows which is quite different from the 2001 time. the multiples are getting up there, the multiples in revenue

and cash flow are getting higher.

i think the 10% pullback that we've seen in the nasdaq this far is likely to have some impact on the late stage round of editing is likely we will see some moderation because of that. broadly defined as a bundle ball chasing company that has no business model are things or proposition that is not accurate. >> do you think the growth we are seeing a sustainable? the funding round, is that not sustainable? >> and the valuations of the companies are sustainable, but it do not know if they will continue to accelerate at the same pace they have. in many cases investors are looking ahead at next year's revenues and pricing some of their investments off of that. that growth rate has to be there in order to support those valuations. i do not think it will double again or triple again in some of these cases in the following 12 to 18 months. >> my interview with excel partners which one -- rich wong. ♪

>> welcome back, i emily chang. hollywood heavyweight jerry bruckheimer is betting big on sequels. the producer recently teamed up with paramount pictures to bring out a new installation of his top gun and beverly hills franchises. >> in the book there is a conversation around design with companies like apple, we know where they are going with design. what about design for you in your films, and television, what

the rocawear design -- what does jerry bruckheimer design? >> we always try to put something a little different and unusual and special in. >> you have this new first look deal with paramount. you have talked about words as he is focused on its movies and where your focus on your movies, disney doing a lot of superhero movies. they're not the only studio doing that right now. is there superhero fatigue at some point? >> i just saw the latest captain

america and thought it was great. the whole place was full of everyone was cheering and laughing, and it was a great experience. that is what the movies are all about. >> the first film that you highlighted as a part of this new deal with paramount is that you're working on another beverly hills cop. what can you tell us about it and where things are at right now? >> we are in the process of getting the script finished. paramount is excited, and eddie is excited. i'm going to take him back to detroit, he is really excited about doing this. >> and the other film that everyone has been talking about is the next top gun which you have been working on it, but this is a long process for you and for tom cruise.

you have been setting the stage of cruise versus the drones. >> technology has changed since we made the first one, so we're going to take advantage of what the world is like today. the drones really taking over in a lot of our wars. is the pilot obsolete? are those jet jockeys gone? i do not think so. you stop to make quick decisions, and the pilots are the ones to do that. hopefully we can highlight both worlds. >> what is the timing on that one? >> we have been working on it for over 30 years, so i wish i could tell you how long it will take us to get there. it is a lot of fun working with tom, and unfortunately tony scott has to wake of and that is very sad for us. >> i think david ellison is a financing partner.

a lot of able talk about that family, megan is getting a lot of attention during award season recently. what can you tell us about david? >> he is a pilot. that helps us a lot. he has great taste. the movies that he is and it has been very successful company continues to make successful movies. he understands the business better than anybody. for a guy so young to understand the deals and what actors work and what directors work and what writers were, he has done his homework. i'm very proud of what he brings to the project. >> despite the fact that you have the new deal with paramount can be used off ties to disney and there are projects that you're involved with through disney. pirates of the caribbean, the latest installment as ones that people continue to ask questions about. >> we are working on number five, hopefully we will get that going this fall or maybe even within the next year. >> is there a sixth? >> we make them one at a time.

>> we will keep johnny back, will keith richards be back? >> would love to have him back. >> you have had huge success in film and in television w you go through it is a long list. csi is on that list. a lot of people are talking about this as the golden age of television. financially for you, what does that mean? is there literally a pile of gold? has this been the most initially successful time for you since all of these storylines have been in tv right now? >> what is been great for me and all of the shows we are putting on the air and even though there's -- they may not be on network, but maybe on netflix, the writing is so good. if you look at what the other channels and networks are putting out, some of the series they have their amazing stories that are told great actors. grace is that mean that working with partnering with netflix on original shows or movies is something you would think about? >> absolutely. we have not had the click yet, but hopefully we will. >> how long can csi stay on the air? it seems like a long time still. within is going on its 15th season. it is not that the writing was great and the acting was great, it is the raiders and rectors that digby words and, life --

take the words and make them come to life. it is all about entertaining audiences. that is what we do. >> on that point about the csi spinoff, you seem quite interested these days and how technology is influencing cigna that society and bring that to be smaller bring screen. >> absolutely. there are so many things that have changed. you can imagine what has changed in 15 years. things change. >> jon erlichman with jerry bruckheimer. and has been one year since the boston marathon bombings. we going to look at how the city of boston is using technology to boost its security. ♪ >> you are watching the best of bloomberg west where we focus on technology and the future of business. a year after the boston marathon bombings we are looking at the technology that is helping to prevent crimes like this from happening in the future.

this includes artificial intelligence, high-tech cameras and crowd source information. they analyzed social media postings to find the bombing suspects earing the investigation. they help the police to do this.

>> you are watching the best of bloomberg west where we focus on technology and the future of business. a year after the boston marathon bombings we are looking at the technology that is helping to prevent crimes like this from happening in the future. this includes artificial intelligence, high-tech cameras and crowd source information. they analyzed social media postings to find the bombing suspects earing the investigation. they help the police to do this. they can pull real-time and pass data from twitter and facebook feeds, internet forms, mobile chat rooms and more. i spoke to the ceo about his open's involvement in last year's investigation how their helping law-enforcement agencies across the country today. >> our involvement actually predates the tragic events of last year up by about two years. the commissioner reached out to me after the 2011 london riots with the thesis that the boston

police department should start actively monitoring social networks as a way of fighting crime. what happened in london is that different organizations and gains actually managed to move throughout the city of london using social networks to communicate between each other. being quite pricey and at the use of technology of crime-fighting we started a pro bono relationship where we offered our application for free to the boston police department so they could monitor in front social networks. we are actually on the scene when things in boston actually occurred last year. >> after the bombing there were days that went by where it seemed like we had no idea who did this.

there was a critical moment where they released some surveillance video of the suspects. how critical do you think social media was in solving the costing bombings in finding who did this? >> we as an application provider that provided our services for free we were not a part of the investigating team because we legally could not be so because we are not law-enforcement officials. i cannot speak to what happened on the classified side of things. there was clearly efforts to look for patterns in past data and an ongoing new social media

that was being shared as the general population began to volunteer information. the various photos that they took that began to be shared in near real-time. our application was one of the tool that was available to law enforcement during that time. we step back and look at what happened, ultimately this was sold by good old-fashioned policing. unfortunately at the loss of life in the form of officer sean collier. they were all part of the information and below that was used after the events. greg powell well other law-enforcement agencies using social media and crowd sourcing information? how good are these agencies that talking to each other? >> there was already a really significant effort before the events of last year. there is a term you may hear called open source intelligence. from the federal side to buy from the federal agencies there is already a movement afoot to leverage social media to gather

intelligence for their purposes. i think what has happened post-bust is that at the municipal level you have agencies get more active. the international association chief of police have right -- quad and quite social -- have gotten quite socia with thei constituents and are quite attractive with their users. it is a new form of communication for a new channel of information that cannot be a voted in conducting an investigation. ideally in trying to prevent or avert a disaster. >> intel is giving some insight into its mobile business as a part of its earnings report. cfo stacy smith joins us to tell us all about it, next. ♪

>> welcome back to the rest of bloomberg west. intel transitions from pc to mobile is helping company. the world's largest chipmaker reported a one percent rise in first-quarter revenue and a five percent drop in output -- profit. >> it is all about how we think about her business, and it is how we have organized a company. what is different about our business today and maybe a couple of years ago is that we ship into a broad range of devices. we have a very healthy business and the pc, but we did 5 million tablets in the first quarter and we are off doing designs and phones, and we have this internet of things business that is growing at a great pace.

>> everyone is talking about the internet of things right now. you just bought a house band wrist band tracker. do you wear one? how horrible do you think these things will be -- help all do you think these will be? >> it ranges from in vehicle entertainment to devices that are in your house to devices that are factories. there are these that are developing out there. this business is well over $2 billion. we're doing a lot of experimentation, we're buying some companies, we are buying some ip, we are making investments. i do not know how it will play out or who is going to win but we are there early and our intent is that the winners emerge we're would be right there with them as the technology provider of choice. >> can you give me any idea what the exciting thing is you have seen so far? >> the most exciting thing i have been seeing is the level of innovation going in. it is a hot area as you go to talk to companies. there are all kinds of interesting things that range

from biosensors to the company that we bought that had great the technology to visual computing solutions to things that can interpret your voice and then provide information back to you. it is really exciting space, and it is a space where the requirements around having great computing capability at a very low power is ready-made for us because of our manufacturing leadership. >> every chipmaker is saying the internet of things is a great opportunity for them. and a lot of the internet of things makers are using different designs. what compelled him to go with intel? >> for us it is not a plan to win a marketplace. if you look at our business results which we are breaking out this quarter you can see we

are not the leader we are one of the leaders in the field already. we have a business that is over $2 billion this year and growing superfast and is very profitable. i think the reason that we are being so successful in this business is because of our manufacturing lead and translating that it means that we can provide more performance in these very low-power envelopes. that is our differentiator, that is what is allowing us to win in the market. >> the ceo has promised 40 million tablets running on intel by the end of this year. he has shipped 5 million so far. how do you get to 40 million by the end of the year? >> we have good line of sight to the 40. the tablet market is primarily consumer driven which means you have a lot more volume that

tends to sit in the back half of the year than the front half the cause of the consumer selling seasons. we look at it as we are right on track in terms of what we expected in the first quarter. we are right on track in terms of the engagements with the customers out there, the design that we know we have have and how much volume they will ship in the last part of the year. there is a lot work to do, but we are on a good start. >> my interview with the intel cfo. 1.8 and dollars of that is how much rice life spent in online marketing last year alone. most of it going to google. the travel agency also competes with google. ♪

>> welcome back to the best of bloomberg west. online travel is a crowded, competitive space. recently google licensed a hotel bookings company to book their travel on mobile. but it is priceline's revenue that makes it the largest online travel agency in the world. i spoke to aaron haft and about how the company is adjusting to more people booking travel on mobile. >> we are investing very heavily in mobile, and just to give you an example our largest booking.com did a bit billion dollars of -- did $1 billion of booking on mobile and 2012, $3 billion in 2013. the fact that people are using pcs, tablets, and other electronic devices along the whole journey of looking and staying is giving us great opportunity to enhance our product for our users.

>> are you going to be working on any mobile specific apps? >> all of our five rands, we have priceline, kia, booking.com, all of them have apps for the ios platform as well as for android. we continue to evolve those products of an event -- and they have high ratings from consumers. we have a great amount of traction on that front. it is not just about the outcome it is about the web. we have a very competitive mobile web process. >> speaking of the web, you spent 1.8 elaine dollars in online marketing last your drivel most of that went to google and search march the -- marketing. is that a strategy to continue?

>> we have always been very close partners with google. we have great websites and the convert tremendously well. we continue to look to google as well as two other sources of demand, whether it be trip advisor, kayak by there are other places where we go out and buy our demand. we will continue to buy some of those channels as long as the returns are there. we are seeing that our returns on all of those channels are great. at the end of the day we would love our customers to come more and more direct, but we use google and other sources of demand to go out and find

customers to show them how wonderful our product are very quick google is making more and more aggressive moves in your territory. how big a competitor do you expect them to be going forward? >> google is -- respects us as an advertiser. they would love to get more of my money. we have been increasing our portfolio accommodations, and we went from 290,000 to over 450,000 properties on the booking.com website. we will continue to look at that. the companies like home away and air b&b, there are a lot of things that they work with that not not exactly legal gevo and we hope that it gets more clarified.

if it does we are looking at any kind of legitimate form of accommodation to add to our website in the future. >> the ipo is coming up, they are the parent company of travelocity. how do you view them as a competitor? >> sabr operates in its own space now that travelocity gets done by the expedia group. it is not high on my radar to be honest. i focus mostly on the things that we can control which is the execution and operational discipline that we need every day to continue the great because we have had is a group. >> acquisitions are something that you control. you bought kayak a few years ago, what other kinds of acquisitions are you looking for? >> the priceline group has made some amazing acquisitions over the years.

booking.com probably the most successful acquisition in the history of the internet. our acquisitions are not that frequent. we did a lot of time to think things through. our focus is on organic growth. that day-to-day acquisition of surprising and delighting our customers and getting the supply on board, really managing from a data-driven perspective the way that we bring demand the platform and that continues to be the majority of our focus. we are always looking at poking around the space, but we have a pretty high bar on what it would be to be a great acquisition to become part of the group. >> you mentioned looking.com -- booking.com. we have also seen william shatner as the star of priceline. how much value does a guy like shatner bring to priceline when the majority of your revenue is not coming from priceline itself anymore?

>> he has been an amazing spokesperson for the priceline brand over the years. priceline is still a very significant part of our business. yet the great job in transitioning the priceline model to more of a retail model that takes rest deal -- that express deal. priceline itself with the introduction of kaley cuoco gives an extra point of view added extras of person into priceline that i am super supportive of what are team is doing there. >> coming up, we will introduce you to a cartoon from toy talk that actually interacts with kids. ♪

>> i'm emily chang. this is the best of bloomberg west, streaming on your phone, tablet, and on bloomberg.com. imagine a cartoon that actually engages in conversation. that is the innovative new entertainment that toy talk as created. the app brings characters to life who can listen and even top back. -- talk back. i caught up with him and asked how it all worked. >> it build up to a conversation between you and your family directly. we try to great characters that tell stories by talking to you, and you talk accusation cloud-based recognition of and the best writers we can find. >> your characters will react to what you say? >> we tried to make them something that you would believe. in that circumstance, something you would imagine. let's talk to a bird. >> you can't just throw me out of the nest. i don't know what this whole flying thing is. what am i supposed to do? >> i think you should do about an flap your wings.

>> that is insane. can you hear yourself? jump out of the nest and magically fly. what is so great about flying anyway? >> when the talented jump out and not flap has wings? >> we try to get characters that will play both sides. they will engage you in conversation. >> how do you do that? >> would take would you say in the marker phone, and that goes over a network to our cloud we process the speech try to recognize would you say, and that are artificial intelligence besides how do it is spot back -- how to respond back. >> you're also storing kids voices? >> we had to record the children

to recognize the speech live, and develop a better recognition technology for children which has not been done before. the voice actor has to record and perform the positive answer cover the negative answer, the quizzical responses. they've to do a large range, and we had to cast professional actors to do that. they have to perform that in the booth away from the audience which is difficult and challenging. >> you ipad show out, what are your goals? >> to open up the idea as conversation as entertainment. >> you work for pixar for 20 years. what are your views on children watching movies and cartoons? >> i spent a lot of time making movies i hope that families

enjoy. i think this is an integral part of this. >> it is funny, i have an 18-month-old son, and i'm constantly questioning a screen time do i give him? what is your approach? >> we talk about that with the kids themselves, that is constantly a conversation about how they spend their times on the weekend. homework is always the first to do. >> is more than just watching tv? >> entertaining to conversation is rarely entertainment, and primary character-based, but also able to talk to us and understand you as well. we see that it could be a strong value added. pixar and toy talk both exist at the intersection of value entertainment. toy story two or nemo, picking one is too hard. steve was able to speak to the truth of a situation more efficiently than anyone i've ever met. in an hour-long meeting, he would speak for two minutes, there would be 58 minutes of question and answer, but he could get it across sosa singly -- so distinctly.

>> what would john have to say? >> a lot. he would have an amazing influence on pixar helping the company become what we are today. we miss him very much. >> that does it for this addition of the best of bloomberg west gave you can watch as every weekday at 1:00 p.m. and 6 p.m. eastern. we will see you next week. ♪

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