>> i'm emily chang. our highly valued startups spending the cash to quickly? a german company cloning american businesses like airbnb on groupon has doubled the size

and there are other startups io.e spotify and rov amazon ceo jeff bezos has a wide variety of investments and now he's betting on home renovation. he just sunk money into a seattle startup focused on making from projects easier. first to the lead. the top of a bubble is starting to gain speed again. some are sounding the alarm. burning through way too much cash leaving many with multibillion-dollar valuations. andreessen recently tweeted when the market turns, and it will, many hibernate companies will vaporize. andreessen is not stopping.

tweeting up a storm. he rode on his blog that valuations can be fixed and you can do a down round, three or four but earn rates are exactly that, burning cash, losing money, emphasis on losing. future bidding editor -- contributing editor paul kedrosky, do you agree? >> it's hard to disagree with math. and whenever the market turns they will be vaporized. there are high burn rate companies. there are a perennial problem with bubbles coming and going. >> josh, what do you think? >> when they talk about a bubble

they are usually focused on valuation. i think they're focused on burn rate. years in venture capital, a high burn rate can impact a company's ability to execute. whether or not the burn rates are too high on average is something to debate. >> lots of people, big shiny made it"the fake "we feeling removing the pressure to deliver real results. they are moving into some of the most expensive spaces in the country. >> they have a fair point. a startup is like a car. sometimes you want to go really fast when you have a great opportunity ahead of you. >, you burn.ast

>> i love his tweets. the notion that it gives an entrepreneur the feeling of success. we've made it because we spent this venture capital money on rent. i remember the.com bubble -- the dot com bubbles. money long after those companies were out of business. buildingve to focus on a real company and not getting distracted by that. that being said, high burn rates are not indicative of a problem. two years later they had a profit of $260 million. that paul wasmass talking about. they had moments where they could pull back. they are moving away from free cash flow. we are hearing from venture

capitalists that the high venture capital is not high enough. is there another side to the story. >> i like capital scarcity. i do not want them out there putting so much money into these because we good lie capital to be scarcer. it's good for returns. -- we would like capital to be scarcer. having said that, there is this kind of temptation out there right now to confuse a financing event having raised a lot of money with a customer event and the two have very little to do with each other, certainly not in the short run. more companies are blowing up on that point than anything else i can think of. burden,invest, escalate

vaporizing when the market turns or under invest. vaporize, implode. is this a reality for some of these companies? conundrum and why we work with entrepreneurs overlying time -- over a long time. it will be specific to each company but that is the trick. the talk of the bubble is generally overblown. >> no bubble? >> they also have very high revenue. if you went back to the bubble, that was not the case. a little bit see less of that right now. is other issue though here venture capitalists -- you. you see a binary result. >> blame me. paul, but i blame will blame you for a minute. you want a binary result.

this can either be huge or zero. when i see some of these business ideas might actually like to have 10 years to figure success. modest i feel like a lot of venture capitalists are pushing for only home runs. >> we do push hard and that is due to the technology markets that are very asymmetric. winner take most. competition moves very fast. youhave to invest otherwise will be left behind. we push them for that reason. the young founders today have only been around in an environment where money is easy to raise, where valuations are high. this will not last. will the money dry up? is there a bubble that's going to pop? showmember that old mystery science theater 3000 were people talk over a movie? we should do that and just talked about mark andreessen for the whole day.

i totally agree. this part of the problem is cultural and generational with young entrepreneurs who have never seen anything of the age of 20 whether it's the money that comes to them almost a free when they are in a tech startup or accelerator or what they see when they are in a hot space in the bay area. the thing we see about capital is it is intensely cyclical and it will go away even faster than it arrived and they will be shocked how quickly it disappears and shame on them for not paying attention. >> paul just did the "old man." these kids today don't know how good they've got it. and >> emily started it. >> i never said you were old. >> alan greenspan said irrational exuberance will give them all of the confidence for that but that was back in 1996 four years before that bubble

blew up. it's one thing to spot a bubble. >> i think the whole young entrepreneurs haven't seen a crash is a little overstated. it was not a picnic to raise money. i think the current generation of entrepreneurs have seen a down market. important it's very to focus on building a business not on the vanity metrics, fundraising, image. generally you think mark andreessen is exaggerating. >> what he's saying is at the end of the day in the long run, the only thing that matters is cash flow and profit between here and there there are other things you need to focus on. as they're focusing on growing eyeballs, keep in mind some point you have to make profit. , paul kedrosky, thank you for the debate. i'm sure it will not stop nor will mark andreessen. how a german startup has built a

$1 billion business by cloning american companies like ebay and groupon. watch a streaming on your tablet, iphone, apple tv, amazon fire tv. ♪

>> i'm emily chang and this is "bloomberg west." they'll already planning a second edition of the passport smartphone selling out 200,000 units in the first few days of sales. as for earnings, revenue fell in the second quarter but their million.owed to $207

i asked ceo john chen when they would become profitable. that we will be profitable in fiscal year 2016. depending on the reception of these phones and this one coming out and about two months, the software releases next month, i'm expected to see some growth next year. if i could get some growth on the top line, i would be able to make it profitable sooner. tohe would like like mary return to the consumer market but it's too soon to do so. rocket is a german investment company that replicates businesses like groupon and

airbnb. they plan to close the ipo october 1, one week ahead of schedule. the plan is to list october 2. for more on the public debut, cory johnson is still with us as well as paul kedrosky. and aaron joins us via skype from frankfurt and covers rocket. what do you make of all the enthusiasm in the markets? mle.y, you have these twin german ipos going out right now. rocket internet is the start of the vehicle controlled by a pretty prominent figure here. they just moved up their first trading day five days to october 2. a big e-commerce retailer out here, very popular in europe for online fashion retailing where spun out of rocket some years ago. they started trading october 1. rocket has gotten a lot of

criticism for copying companies whether it is amazon, ebay, foursquare. is that fair or do they have original ideas? >> oliver is the front man, the ceo of rocket. he just spoke for about two hours at a press conference here in frankfurt i was at just the day before yesterday and he's been at this for a long time. youngre well-educated tech savvy germans. a take ongo, they did to buy them ebay out. then they did other startups imitating u.s. websites. sometimes they've been successful in getting them to buy their knockoffs and

sometimes they built the business on their own kind of like what they did with the knockoff of zappos and became a stand-alone business. themfirst became aware of in the groupon offering when they were shareholders and were responsible for a lot of groupon's gross. i wonder what you make of these guys. mostly despair. i don't have a lot of patience for these geographic arms strategies predicated on fast knockoffs in new geographies. it is a pox on both businesses. it shows you how low the barrier to entry is but it also says there is an opportunity to knock it off quickly. you cannot continue to play that for long. developed markets become developed really quickly and the whole business of bringing in new geographies does not last very long. it's a phenomenon that has a

very natural course that will run quite quickly and it's an offering i don't have a lot of confidence in him. a lot of the companies from the 1990's are singing along the corners with me. >> cmgi? that might be the first reference to that on "bloomberg west." thisron, you seem to agree company has copycat and u.s. companies. they want to try to reinvent .hemselves her at thed all of press conference in germany the other day and he has almost made calling card.his it's amazing. he's very well trained, obviously, but he's made that into a selling point and eight

perverse way. when i spoke to him, he said we are not the german auto companies. leaner, more it efficiently, cheaper than others have. our talent is execution. he's wrapping it up in a cloak of something else. he's become very good at selling that story. >> interesting. we will continue to follow rocket internet. taron ricadela in frankfur and bloomberg contributing editor paul kedrosky. how amazon is taking delivery into its own hands for the holiday season next on "numbered bloomberg west." you can watch a streaming on your phone, tablet, bloomberg.com, amazon fire tv, apple tv. ♪

>> amazon is hoping this holiday season goes better than last years with a surge in demand and bad weather causing shipping delays with its largest partner, ups. to make sure packages are going to be shipped on time, they have built 38 new fulfillment centers and 15 smaller warehouses known as sortation centers. to putis also starting its own delivery trucks on the road in certain locations. chain,ng amazon's supply is this all jet -- is not all jeff bezos has been up to. most recently investing in and homeor contractors

improvement project. they raised funding with increase in borowitz and others. horos -- with increase in witz. why is he backing them? what's going on here? the service business, plumbers, babysitters, interior decorators, this is kind of like the last frontier. maybe $1 trillion per year. they've been trying to crack it for a decade. now with the success of uber and airbnb, every professional out there has a smartphone in a computer in their pocket, it's possible. not just pro, thumbtack raised 100 million dollars recently from google among other investors and amazon may have some interest here as well.

option melody and backing in some form or amazon executives in this space. optionality. >> these are former amazon executives. where does this go? ow it is very much like zill trying to offer some data in an opaque real estate market. you can kind of price out your home project and they're hoping to parlay that into connecting you with professionals. i went to visit when i was in seattle. first of all, i love the fact when you are talking about burn rates, they are in an old enterprise rent a car office. it still has that sort of we are saving money feel. >> very amazon-like, capital efficient. >> every time this gets used,

they start to gather data. >> like zillow, the data is not perfect right now. i went to price out a painting job i wanted to do in my living gave me a value. then i called a professional they hope me up with and he thought it would be a little higher. with thefacilitating officials in seattle. businessweek" brad stone. we will be back with more from " bloomberg west." "on thenow for market's," lima julie hyman a. an interesting week with a lot of ups and downs. -- i'm julie hyman. from late day rally

yesterday's decline that was the worst since july. today's gains in the s&p 500, the most in five weeks among other reasons we saw the gdp revising higher. ♪

bloomberge watching " west" where we focus on technology in the future of business. yahoo! acknowledges they received a letter from an activist investor urging them to take steps to create shareholder value including cutting losses in the display ad business. in response, marissa mayer says we have maintained and will continue to maintain an open dialogue with all the bear shareholders as part of the strategic initiative to drive sustainable shareholder value reviewing the letter carefully and look forward to discussing it with them.

has greatyer says she confidence in the strength of yahoo! business. how is yahoo! news the display ad is this doing? would it better for them to abandon? an experto josh stein in the field of digital ads and an investor in chart b about the prospects for yahoo!. should they expend on new ad technology or not? cory johnson started by asking him what's next for yahoo! in the ad space. high-classe a problem. they've been a holding company and they just realized about $6 billion after-tax but they are flat. andhave search, number one the biggest, google. social is facebook and twitter. brand is big, about $15 billion, but it's always underperformed expectations. >> what do you mean by brand? >> cars, movies, coca-cola,

budweiser. yourare trying to get engagement and attention. tv is a big medium. $6 nfl by itself does like billion. you feel the resonance. the internet has fallen on delivering results for advertisers historically. >> the publisher of people when i worked there 1000 years ago said it's fundamentally about the leaf. you have to believe that advertising works. you cannot measure it. -- it's fundamentally about the belief. telle nfl does not just viewers that your is paying more attention than are more engaged. one of the hottest companies in our portfolio is called chart beat. there are the first technology that lets you actually directly measure attention and not just age likes -- page clicks. >> you say it disproves most of

what we take as fact like what? is a sense that banner ads don't work. they can work great if you put them in the right places, in front of audiences that are engaged and care about the content. we all know that there are click bait articles. they clegg on them but they just bounce right off versus a much more in-depth article that people care about and scroll to read for 10 or 15 minutes. beat helps you find those audiences input it against that. prove?t did chart beat dis >> i'm a v.c. cannot dohat you successful brand advertising but the capital has been misallocated spread like peanut otter over everything. when you allocate correctly you can deliver exceptional results. >> good, in-depth content and

not these listicles. >> the trick is knowing where they are paying attention and that's what they can measure the entire audience pixel by pixel and they are doing that for about 80% including bloomberg. >> this is bad news for buzzfeed media, these websites getting lots of >> but you are saying -- lots of clicks. >> buzzfeed is changing the model to be more in-depth. >> they do not find sites very good for building the engagement they are trying to get. coca-cola or a movie trying to get awareness it's not where you want to be advertising. >> i'm wondering if that changes the valuations of those companies because we see them thea lot of interest and

notorious e-mail that went around "the new york times" about how much does they were getting. the nature of journalism is changing to respond to those clips you are saying are high calorie, low value websites consuming time but not interest. a zero-sum game. by getting the ads where they are supposed to be an getting seeer results, you will dollars flowing from tv to the internet. the whole pie will grow as a result. >> top 10 most annoying things about cory johnson. we will not quick on that now -- not click on that now? >> that would get a lot. >> what about video? selfishy i have a interest, but it has historically been difficult. will people still want to put

their money and television even though that might not be where the ad dollars are? testingbeat is different technologies. jack defined where people really engage. if the person does not really see the ad as an engagement it wastes money. companiests of tech will be there and advertisers. what will people be wrong about? put allwill continue to of their money and to search and social. social in particular is great for driving traffic. brand advertising in the real world is more than half so you will want to focus on engagement and attention, not clerks and shares -- clicks. .> dfj partner josh stein you can watch a streaming on your phone, tablet,

bloomberg.com, amazon fire, and apple tv. ♪

>> i napoli chang and this is "bloomberg west -- i'm emily chang. this is "bloomberg west." and is raising privacy safety concerns. cory johnson has more on that. they can prevent subprime lenders stop him from the starting their car. have sold 1.5 million of

these things. hudson cook partner from nicole monroe. talk to me about the legal ramifications of this technology. legalre are a few ramifications. legallytes do not address whether or not you can use a starter interrupt device. what states do is they address when you can or cannot repossess. there are states that do address the use of a starter interrupt device. dol a friend and connecticut specify. these are new and legislatures have not dealt with them for the most part. they can be used legally within the confines of state law. >> how's business? been well. has

we've seen a change in the marketplace. consumers are really excited to have the device because it's , aing them a better vehicle better experience with the lender. they're getting a chance to drive the vehicle that they want. it is becoming much more accepted in the industry. >> it also may be makes them want to pay more because they know at any given moment their car will get shut down. >> the device has really helped change the way that consumers are dealing with the lenders and dealers. it gives them an opportunity to actually work with them and it tool and givesa them payment stability. it also creates a positive step to rebuilding their credit.

are excited they did to change things that have been difficult for them in the past. nicole, i know we've seen a huge boom in subprime lending. is there a particular shift towards a certain price of car for these subprime shutoff devices? the subprime industry is really concentrated on used vehicles. these devices are not typically used with respect to new vehicles. the devices can be used in vehicles that range from 5000 dollars, 15 thousand dollars, but they are lower-priced vehicles than sold by your typical franchise dealer. >> subprime borrowers are not paying back not only more than

prime but more than they were even a year ago. does this mean your devices are going off a lot more and you have a digital repo men out there flipping the switch killing cars all over the place? >> it's providing an opportunity for the consumer to work with the lender. they can call and say i'm struggling and having a hard time. can you work with me? even though they can work with the consumer to get a little extra time to make a smaller payment or a couple days late thomas and allows them to change the way the communication happens. a couple days late, so it allows them to change. they are allowing the consumer so things canhem change. this is giving the consumer more opportunity to stay in that hicle and making

it a more positive experience for them. corinne kirkendall, we appreciate your time as well as hudson partner nicole munro. at the othera look stories making headlines right now with mark crumpton. air traffic an control tower causing major disruptions to chicago-area flights at both o'hare and midway grounded earlier this morning resulting in hundreds of cancellations. local officials say the fire was intentionally set by an faa contractor. well jeter's yankee fare was the most viewed game in 13 seasons on the yes network. the game received an average 1.25 million viewers turning a rating of nearly 12 in the new york market. more new yorkers watched the giants beat washington last

night than they did the baseball game. now that he's no longer coo of oracle, larry ellison might be gearing up to buy a franchise. he may be a potential bidder for the atlanta hawks. won the america's cup sailing race and is worth an estimated $42 billion. >> how much does it cost per year to charge the new iphone? find out how much energy it takes to charge the latest devices next. we are streaming on your tablet, phone, bloomberg.com, amazon fire tv, apple tv. ♪

>> welcome back to "bloomberg west." this may offer the biggest apple screens yet but charge and will not make a dent to your energy bill. it costs just $.47 per year to charger iphone 6 and $.52 to charge your iphone 6 plus. how did the company figure out how much electricity it takes to power the new iphones? is here with more. cory is still with us as well. mine was charging

faster but maybe that is just perception. we drained study and the iphone 6 and the iphone 6 in may measured the electricity through a power monitor device and we extrapolated what it would take through the course of one year multiplying by the average retail price of electricity around $.12 per kilowatt hour and arrived at the 47 and 52 cent figures. >> how long does it take compared to the iphone 5? 6 took around one hour 15 minutes and we were using the 12 watt usb power adapter. we found the similar links of charging time for the iphone 5. the iphone 6 plus takes about two and a half hours because it has a larger gas tank. >> what's interesting about this

to me is that you think about the battery charger for all kinds of stuff, the tech around your house. i bought a new house and i'm amazed that my power bill. i have a solar array and it's still not enough. tv's allvo machines, over the place, the wine fridge. are we seeing homes consuming a lot more electricity even though we have these more energy-efficient appliances because of all of the tech? of homeiggest area electricity consumption of the last three decades have been electronics and appliances. to the smallerng superefficient devices we are seeing somewhat of a reversal there. compared to these larger devices that you mentioned -- >> dvr, fridge. >> it's using 50 times the

electricity dan your iphone 6. your xbox one, if you have one, uses 60 times electricity. and your big screen uses 70 times. of theoffloading a lot activity that we used to do on those clunky devices onto superefficient device like this. >> are we? time is still on all the number particularly when matt miller is around. on.y computer is not >> at maybe your house, but with the aggregate data tells us as the majority of time we spend consuming digital media is now happening on mobile devices. 60% of our consumption of digital media is happening on smart phones and tablets rather

than a desktop device. iswhat is it that the apple doing that even though the phone size is increasing the charge does not change that much? >> i do not know too much about the internal working of the device. they can increase energy density in making the processor of the phone more specific. whatever they are doing it's a good thing. it's good for the environment. it's good for consumers, of course. they may not realize it uses such a small amount of electricity, but consumers do want to save energy. they do shop for more efficient devices. >> is there a time shift as well? one of the biggest issues on the power grid is moving the consumption of lots of energy to more different times of the day. >> one of the biggest challenges .s the electricity demand

hot summer afternoons really puts a lot of stress on the grid for every extra plug load your dues in. we have worked with utilities to useurage consumers to electricity during off-peak times. unplug your devices, manager thermostat better, delay loads of laundry. feel a littlee better. when i plugged it in every single night i'm just thinking i charge this thing all the time. barry fisher, thanks so much for sharing that interesting data with us. it's time now for the bwest byte where we focus on one number that tells a whole lot. what do you have? >> 95 is the number. m.v.p.ahoma city thunder kevin durant rating 95, his player rating in the nba franchise. night onearned last

jimmy fallon when he plays the game, and he plays it a lot, he does not play as himself. the barn james is at 99. -- lebron james. >> you play as you? >> no, that's kind of arrogant. [laughter] >> no! you have to play as you. who do you play? >> everybody. >> who do you play >> all right. lebron. [laughter] >> he has the m.v.p. playing as him and this very successful game. >> lebron has a lot of other things. >> this is just one more. cory johnson, thank you for watching this edition of "bloomberg west." all the latest headlines anytime

on your phone, tablet, and bloomberg.com. we will see you later. ♪

. .

>> welcome to "money clip." i'm adam johnson. bill gross leaves the company he founded for another. he's not the only one jumping ship. attorney general eric holder is also stepping down. here's a question, who is going to get his job? around the world, the ebola treatment. in tech, bigger than hearbleed -- heartbleed.