>> from pier three in san francisco, welcome to "the best of bloomberg west." i'm emily chang. every weekend we will bring you "the best of bloomberg west." microsoft hosts -- hopes the third time is a charm. >> ladies and gentlemen, this is the tablet that can replace your laptop, surface throw three. >> we all thought that would be a smaller surface mini announced

to take on the ipad mini, but instead the surface group. the new one costs $799. it is lighter than previous surface pro models. microsoft faces an uphill battle with this tablet. apple leads with more than 32%. cory johnson was at this event in downtown manhattan and spoke with microsoft's corporate vice president of are getting. corey asks what has changed with the new surface pro. >> this is definitely a new device from the ground up. it will answer the question of tablet or laptop. we can honestly say both. intel powered, all the power to use microsoft office. superlight, incredible screen,

and it is a tablet. >> the marketing is very different for this device. tell me about that. >> basically, what we have been trying to do is a companies find out how we bring a unique point of view to differentiate and address issues our customers have. 96% of people with an ipad also have a laptop. part of what we're trying to do is do something no one has done before which is created device that has this beautiful ease-of-use with the productivity to get things done. >> tell me about the productivity. i was talking to an analyst for the company and he thought it was a much stronger message for microsoft because it ties in to what? >> we are talking about our vision is a company. we are focused on helping people do more and be more. that productivity will take the power of the microsoft cloud software and devices to create

an experience that helps you be more productive. >> i don't take away from the gadget time. i think the styling is particularly intriguing. >> you are a student or business professional and you want to write a note here. in tech, watch what we can do. one click, just like that a note pops up and i can immediately take my notes. one more click and it will save to clout. it will be available on all my devices, even if it is an iphone or android device. that is a one note. you get this rich display of all these graphics and these beautiful pictures. all of that with this productivity so you can write and edit right on the screen. it is one of the best screens we

have created. a high def deep type of screen. first, you have full windows, you have all of microsoft office. we have adobe photoshop to bring your creativity to the device. the visual we have is don't just read books, write books. don't just look at art, create art. >> where has the surface had most of its success? we have seen the numbers, 1.6-1.8 million sold. i wonder in what arenas are we seeing the most success for surface. >> it is among students of any kind. they want to be able to edit and write notes. is this professionals who take

into account the need to be on the move and take notes and be productive. artists, in particular. one of their architects or something else. we are trying to hit the sweet spot. we do pretty well across the channel. we do pretty well at best buy. >> is there any nokia magic in here? or is it too early in the relationship? >> nokia is definitely bringing a lot of strength for us in design creativity and manufacturing creativity and operational capability. we have had a lot of discussions with the new folks who have come over about surface and how we get better and work across surface and phones. it is an exciting time now.

>> you come from xbox which is the most successful software thing microsoft has ever done. what do bring from xbox to the experience that has worked out well? >> one of the experiences we have had an xbox is that it wasn't until we built the xbox that we understood the magic of hardware and software to really do breakthrough gaming. that is what i am saying about the complete experience. >> that is yusuf mehdi with cory johnson. we will hear more in an exclusive interview with cisco ceo when we return with "the best of bloomberg west." ♪

>> welcome back to -- welcome back to "the best of bloomberg west." he lets his new book that the nsa hacked into

networking. my partner cory johnson sat down for an exclusive interview with john chambers at the cisco live conference here in san francisco. cory started by asking about some of the exciting announcements the company has made at cisco live. >> i have done seven sessions and q&a's. >> you're really hearing from customers. >> in many ways. how are we moving together from selling posts technology to a business outcome looking in from the customer perspective? >> it seems to be the hottest idea in the world of networking right now. the way i think about it is that

i'm with my family in a car and then my wife the navigator decides, let's take a turn and go over here. let's stop for dinner and change something, so that my needs is a go through the network off the highway changes as ago and the software defines all that. >> the concept is absolutely right. software is a virtual layer and then you have your physical layer people what we did was embrace fdn and the financial element has guarded and the customer has it. now we are referencing for cisco. each of them talked about how applications specific infrastructure -- huge competitive advantage. we talked about security. a year ago we talked about becoming the number one security company and now we have a good

shot at it. we are taking telepresence to a whole new level with the device that is about the cost of a notebook and will combined android capability with voice and the capability to have world-class telepresence, touchscreen third that is just the device. the collaboration is what is missing in terms of productivity. >> it seems like the very notion of fdn sits on the argument that the virtualization of storage which says we are going to have a storage so specific that the direction will be decided before the packet leaves the network and you don't need the software. does that mean it is one of the other? >> no, i think software defined networks are here to stay. most people would not consider the number one player in sdn. we have the advantages of it

using programmability and flexibility with the advantage of having one network do this. we are to have a common policy throughout not only the data center but to the edge. >> i want to read part of that letter. i will also say that you are more specific than just about any big ceo, seeing there would be a big impact on your sales to china because some of the nsa policy. you said we simply cannot operate this way. our customers trust us to deliver product that meets the highest standards of integrity and security. what are you hearing back from customers outside the u.s. about the impact of the nsa activities? >> i wouldn't have written that letter if it wasn't for a picture of a cisco box. there has been no follow-up on that being used to practice how it might intercept products. let me step back if i may. the vice chair of our advisory

board to the chair after the 9/11 commission for the president. the key take away was that if you had told me we were going 12-14 years without another attack on american soil, i would've said impossible. and yet, the government has done a very good job of protecting us. if you expand too far, you begin to affect the global supply chain. the facebook sent googles and apples said we have got to have, using my words, the speed of proper conduct or rules of the road as we move forward. it is a wild wild west. i am not in critical of the administration. we now have to take a step back and with other governments around the world come up with here is how we move forward together and how do we position it so we don't affect the supply chain which may be in a given country like india or china, the supply chain of how you move products out.

i think the importance of customer -- >> is the business impacting china at? >> you never know the true impact on it. >> pnb -- cns a's installing failed. >> if people don't trust us, then we have an issue. that is where we need rules of conduct going forward. it gives us the ability to look at how we have become the global internet and how every country has now benefit from it. a list every country plays a role in the supply chain. you have to have a consistency that you can rely on. here's the transition. the only way you can defend this is from the cloud to the data center. several of my peers were even being pushed on security. they said this is john's issue

to solve. you can always solve it the the network. a year ago, people said yeah, maybe. we have done three acquisitions in the last year. we are moving rapidly to all areas. we even did an acquisition today, a company that focuses on malware and effective utilization. we are going to move and view this as how can the network really provided security in a way that no one else can. cisco will hopefully remain the number one security company. >> what are the vestiges of being in one job for so long? what do you see, around the pike? what meeting are you sitting in and you say, i have seen this before, here's what we need to do. >> you want to always listen to others. as he said, the ability to play off the game. you've seen the movie, just

variations of it. the disadvantages what one of my peers said to me about three years ago. he said john, i want to congratulate you on reinventing cisco one more time. >> i said that is why a ceo should be in the job more than four or five years. he said most of us don't reinvent ourselves every four to five years. your company and your culture and you as a leader have been able to do that in ways that others do not. i thought about it for a second. he said, how many leaders did you have attempted job longer than five years. the job was only one. if you can't reinvent yourself or market trends, used to be three-five years. now it is every three years. we will see if we can reinvent ourselves one more time. >> are you going to be sitting here and another 19 years?

>> the next time he hear from me will be when we announce my successor. my goal is to make that as smooth as can be. we have changed five cfos, and seven head of sales. my job is to make this just like your family. i want the family to grow up and do even better as i retire. >> cory johnson with cisco ceo john chambers. intel is betting big on the maker movement. what is the maker movement? we will explain in detail when we return on "the best of bloomberg west." ♪

>> welcome back to "the best of bloomberg west." intel is one of the godfathers of modern silicon valley.

as a country tries to -- as the company tries to extent bush -- to establish itself in the post pc world. we learn about intel's plan to get inside the hearts and minds of makers. ♪ >> i was born and raised in silicon valley. i remember my backyard was a palm orchard. that is absolutely true. this is the future. >> that is a low powered ship, right? >> yeah, it is designed for just this kind of environment and the space.

that is the one we developed. it is made for the maker. we're starting to use it for wearables and things like that. >> to sue the makers gravitating toward this chip? >> we are sold out. this thing has taken off. we gave 50,000 of them already to universities. demand was six times what we forecast. >> really? obviously, why is that? >> i think it is probably because the board itself is a beautiful board. >> if you had asked intel 10 years ago with the direction would be, it would be pcs and

mobile pcs, not robots, lights, stuff like this. how do you make sure that intel is an integral part of this movement? >> i think it is by me spending days like today, by hiring guys like joey. we have a whole group that is focused on this maker community now. building products for them. these are the people who will be the next steve jobs and the next google and everything. these are the people who are being raised up with technology and innovation. that is really what we saw over the last couple of years, was hey, they are not aware of intel technology. if we are not aware of what their needs are, then we will not line up together. >> intel has been partnering with community organizations to get kids, especially young girls, involved with technology.

part of course interview was about kids doing cool things with technology. >> [indiscernible] >> that is very cool. >> these girls are in sixth grade. if we can capture them in third grade, we're expanding to high school. by capturing them in third grade and keeping them through 12th grade it will help them. >> how big is this market? we are looking so far into the future.

>> i don't know how big it is going to be. we have our next product coming out this summer called edison, which is a pc and a card about the size of an st card. we have a -- and -- the size of an sd card. we're going to have a lot of things that we might not sell too many, but one of these things we will really take off. whether you participate or are just coming to watch, a lot of people have gotten into this movement very if they have become big events. >> would he is so attractive to people who are not in the tech community? >> i have seen these -- i went to a maker fair in roma.

it was just as exciting. i think it is something about the innovation and seeing just what somebody can make. this isn't all about this event. cardboard offense or the wind generator using home depot buckets. even these devices. it is about creativity and figuring out what you could build. >> businesswise, are you trying to seed the market? what is your business plan? you surely sat down with some spreadsheets and thought about what you could do and where you could be. >> we have not sat down with spreadsheets as much as saying look, this is a community that you see things like kickstart

her, indiegogo. this is where the next new product is going to come out of. either this place or these people. what we found was, we were absent from this. they didn't know intel and we didn't know them. by engaging with them, they now know intel. they know our products, they know we can do, and they will come to us. what we have found is as you have with the galileo, they are making our products better. they're giving us input. we think that working with them, they will know us, we will know them and that will be good for the long-term. this is one of those where it is an investment for the long haul. we don't know where this is going. we are ok with that. >> cory johnson at a bay area maker fair. he is one of the most outspoken critics of comcast's proposed

purchase of time warner cable. next we will hear from senator al franken and why he is so against the merger. ♪

>> you are watching "the best of bloomberg west." i'm emily chang. senator al franken has been one of the most outspoken critics of comcast's proposed purchase of time warner cable. he recently sent them a letter asking about their commitment to net neutrality. cory johnson i spoke with the senator. i asked if he had gotten a response to his letter. >> well, not yet. they just got it. they have been going on tv about how they are buying time warner

cable and that will extend net neutrality to a greater number of consumers. that is because they are required to by the conditions of their acquisition of nbc universal back in 2010. that runs out in 2018. they refuse to say what they will do past 2018. >> i want to play a portion of that ad. here is seven seconds of that ad from comcast talking about their commitment. >> how do you make life online better for more people? you start by extending net neutrality protections. >> ok. they start by buying the second-largest cable provider

and they are the first largest cable provider. you start by buying the third largest internet broadband provider. you are the first largest internet broadband provider. live up to the conditions that were imposed on you by the fcc. but the moment those conditions stop applying to you, you do anything you want. it is kind of not entirely an honest ad. >> you who called the deal a disaster. you're not happy with at&t and directv either. how disastrous do you think this could be? >> at&t and directv is further consolidation of media. i had not looked at that as thoroughly as i have the comcast and time warner deal.

they are competitors. they are both cable and broadband providers. to me, that was immediately -- i opposed that from the get-go when i heard that. i want to study at&t and directv a little bit more. let me say this. at the hearing, comcast said that this will start more competition if we combine and there will be a dogfight and innovation. this is the first thing that has happened is another huge company is wanting to buy another huge company. what has really happened is just more concentration in telecommunications and in media. that is very, very concerning.

the result i believe will be less innovation, less choice for consumers, higher costs for consumers, and worse service. >> senator, which is a bigger concern to you, the concentration of broadcasting with these two companies or the impact they can have in the future on the world of broadband? >> they are both very concerning. there is a relationship between net neutrality and this comcast buying time warner cable. they will have 40% of all internet broadband. netflix of course has paid for it. >> they paid for the fast lane. >> yeah, they paid for a fast lane. that speaks directly to net neutrality. for your viewers who may be -- net neutrality is at term not

everybody understands, it has been the basis of an open internet where all content travels at the same speed. a perfect example is there was this thing called google media or google tv or google something -- i'm sorry. anyway, there was this format. youtube was starting at the time to compete with it. it was google video. over a pizza shop in san mateo, california, they developed youtube. because youtube could travel the same speed as google video, people liked youtube better. youtube became youtube. if there was a fast lane for big

corporate entities, big content netflix or any corporate entity, which is what wheeler the chair of the fcc is talking about, then you would not have had that kind of innovation. >> senator al franken with cory johnson. what impact will this have on the companies creating the content? we will hear what disney cfo jay rasulo has to say on "the best of bloomberg west." ♪

>> welcome back to "the best of bloomberg west." i am emily chang. there but a wave of new deals in the tv industry. think comcast and time warner cable. how will all these deals affect the companies that provide the content like disney? our senior west coast

correspondent jon erlichman spoke with jay rasulo at the cfo conference. take a listen. >> whether it is that merger that may happen or the comcast and time warner cable merger, it is no surprise that there is consolidation in that cable space. we have strong relationships with all of those companies that are involved in those mergers. like everyone else, we are in the process of analyzing and trying to understand how that will affect the ecosystem down the road. we don't have anything strong that we want to say. we want to look at the implications to us. it is very early days for those announcements. >> what about the acquisitions you guys make? you explained the marvel acquisition, and beyond doing the deal, there is integration and part of your job involves bringing these companies together.

you said in the case of marvel, it is a different process and doing it versus how you do it. maybe lucasfilm which brought you the star wars brand. what goes into that process of bringing them into disney? >> we have done enough acquisitions and successfully integrated them to have a real point of view. i would say first and foremost there is the user interface. the user is the customer or the employee of that acquired company. we like to leave the user interface in place as much as we can. we like to keep pixar as pixar and marvel as marvel. we like to keep them that way and not let what has been so successful for the walt disney company or so successful for espn wash over them like a tidal wave.

we buy companies that are already well-run that we think we can access the ip and use further through our big ecosystem. in terms of the user interface, we like to leave that in place. that has worked extraordinarily well for us. even pixar, which is an eight-year-old acquisition, if you go up there, it is still very much the way it was from a look and feel and way of working that was when we bought it. we don't want to break that, and i could say the same thing about marvel and lucasfilm. >> that was disney cfo jay rasulo with jon erlichman. it has been almost two years since facebook went public, and we have got the timeline of the social network's public life coming up next. ♪

>> welcome back to "the best of bloomberg west."

i am emily chang. facebook just celebrated the second anniversary of its ipo. that first day of trading was just the beginning of several ups and downs for the social network. we took a look back at facebook's timeline in the public eye. >> may 18, 2012. facebook makes its debut public on the market. it is a rocky first day. shares closed at $38. it has a $104 billion valuation. less than four months later, the share plummets and hits an all-time low of $17 a share. in october, the social network hits 1 billion users. it shifts its focus to mobile and introduces poke. he tries to buy the snapchat app, but the $3 billion offer disappears. one year into public life,

facebook introduces home. home gets mixed reviews but facebook doesn't a home run in mobile ads with revenue soaring to $1.3 billion by 2014. then there is the acquisition spree. $15 billion on brands. $2 billion on oculus virtual reality. it adds up to a rebound. shares reach an all-time high of $72 on march 10, just in time for mark zuckerberg's 30th birthday and the end of facebook's second year in the public eye. >> chamath palihapitiya was at facebook at the beginning. now as founder and managing director of the social+capital partnership, he is investing in companies with a social mission. i spoke with him about the latest acquisitions from

whatsapp to oculus. >> i think most of it makes sense. having been there from a handfull and now from the sidelines, whatsapp will be the best acquistion. >> you think whatsapp to be bigger than facebook. >> i poached a bunch of people and we created a growth scheme. we use that with the companies that we invest in. they figure out what is growing. when we do our own internal projections, it tells us that by 2016 whatsapp will have more users than facebook. we are talking about a global phenomenon. when you look at facebook, which is worth $150 billion and you apply a reasonable discount to that, whatsapp will be worth multiples more than the $19 billion that facebook paid. >> does it matter that facebook is buying rather than building? >> absolutely not.

if you as a stalwart happening are not figured out everyday day how to disrupt yourself, you are going to die. you do want to be the company five years later with just a bunch of cash and no ability to innovate. if you do, then you end up like microsoft and cisco and hewlett-packard. there is a gaggle of these companies that don't know what to do. your lunch is getting eaten. kudos to zuckerberg for having the courage to do that. >> what about oculus? >> that's to me as a little bit of a head scratcher. i think it makes a lot of sense for gamers. is it worth $2 billion? i have no idea. the real question is does it matter when we are talking about a nominal amount. it is a reasonable negligible write off. >> how likely is it that

facebook will continue to be the dominant social network? >> we will see facebook be the dominant consumption behavior and whatsapp the dominant user behavior. a lot of things that you see in places like china and japan will get brought over to the rest of the world. there will be this massive platform that enables all. that'll keep facebook relevant for another decade. snapchat is a teen oriented product. >> google is buying a lot of robotic companies. they are competing and trying to connect the world different ways. >> google has a different proposition. they're going to organize all the world's information. information is getting generated in all these different places. they are unlocking it. you are buying nest, you are unlocking situational data

around the home. when you do self-driving cars, you are unlocking all of this spatial information that people get from a to b more safely. they realize now that the world's information is no longer trapped on a webpages on the internet. information exists everywhere. their job is to use all of the cash from search to get them into the information business everywhere else. it is an amazing business. >> what about apple? >> i think they're screwed. i think they have lost largely their mojo. when you see this transaction happen, it is a head scratcher. some people said when i tweeted that out -- they are buying the beats music service. well, you could get spotify and by that company. why not buy the number 143 times

as much than buying an also ran for $3 billion? that does not compute for me. >> director of the social+capital partnership chamath palihapitiya. anonymous social media apps like secret and whisper have start up controversy in silicon valley. it is unwarranted? we will ask the founders of secret next. ♪

>> welcome back to "the best of bloomberg west." i'm emily chang. there is no secret that anonymous apps are generating plenty of buzz in silicon valley. while secret may be popular, it has also been called scandalous. it allows people to post thoughts anonymously with messages like "i'm gay" and "i have not washed my hair for 11 days." i spoke with david byttow and

chrys bader and asked them about their vision for secret. >> we have worked on social networks for several years. we noticed that something was missing. we have all these thoughts and feelings that we have everyday. we don't have a place for them. they don't belong anywhere. like some of those things that you just mentioned or i want to get engaged or i want to quit my job or i am falling love. all of these thoughts that we have everyday that don't have a place. we created secret to be a place to share those with your friends. these start as secrets and they are private and personal to you. there's nowhere to put them. they is why we created secret. >> you worked at google. i know you worked on google plus. there is a lot more guilt with secret than with most social apps. >> i think provocative and intriguing is good interesting.

>> what kind of growth are you seeing? >> it is a secret for now. >> you ask for my e-mail and my phone number. why do you need that information? can your employees see that? >> security is the most important thing. when you join the product, you want to build your social network. you can start sharing with friends and friends of friends. >> anonymity breeds negativity. how concerned are you about the negativity? >> this is the top priority for us. we want secret to be a safe place. we don't want it to be a place where people can hurt each other. we have invested a lot in our moderation team. we have internal guidelines for this type of stuff. when things are flagged on our

platform, we review it and it is taken down. >> we are having to grow up very quickly. we are having to button up. >> in terms of having to take down posts, what does that involve? how actively are you curating and watching? some of the posts single out specific people by name. maybe they are true or maybe they are false. >> we want to make a safe place for private individuals. we should be able to talk about news worthy individuals like the president or other public figures. we are not in the business of deciding between true and false. when we see the people are flagging content, that is what we look at and make a judgment call based on internal guidelines. >> cannot open you up to legal issues? >> we have really good lawyers. we are prepared for this and have thought it through.

in the case that somebody does something illegal or we are subpoenaed, we have the ability to turn that information over. >> secret is not a place for illegal activities. >> there was a twitter burst that these experiments and with broken hearts and ruined lives and everybody regrets participating in them. how do you respond? >> he has some experience with products. we need to solve this problem and make a productive route that uses anonymity. >> this is the secret of silicon valley. people are using this around the world now. this is more like a dinnertable conversation. you have had a couple of glasses of wine and you are being vulnerable.

that is what we see on secret. here in the valley, people like to predict the future. it is hard with social products to predict where they are going to go. >> when you look at the products, it is a reflection of you and your friends. a lot of the things that you see are being said in public or private and around dinner tables. >> evan williams jack dorsey are two of your mentors. how have they been helpful to you? >> we spoke to them about this very early on. jack is a very deep thinker. he was the one who made me realize that this could be a powerful force for self-awareness in the world. >> my interview with secret cofounders david byttow and chrys bader. that does it for "the best of bloomberg west." you can watch "bloomberg west" monday through friday.

we will see you again next week. ♪

about time. >> the number one people -- them one reason people have for not working out as time. for don't want to work out an hour. are you kidding me? i don't have the time. >> no time to work out? no p