♪ >> live from the vanity fair new establishment summit, we are live in san francisco. my name is stephanie ruhle. emily chang is inside, sitting down with more of the influencers like i will be in a moment. for now let's take you to the top news and media headlines. here's pimm fox with more. >> thanks very much. the stock market got hammered today, wiping away gains from yesterday's rally. the dow, nasdaq and s&p 500 falling about 2% as the market was hit with the most volatile stretch since 2011. energy stocks were hit particularly hard amid concerns about a global economic

slowdown. billionaire activist investor carl icahn fires back at venture capital's mark andreessen a day after andreessen called icahn an evil captain kirk. here is what he told trish regan about andreessen. >> he is a quintessential guy that i say is what is wrong with corporate america. i mean i put him on last night , when i heard he said stuff about me. it's hard to hear him because he talks in that squeaky fast voice. only a dog could really understand exactly what he said. >> icahn also said andreessen should not be on the ebay board. apple supplier gt advance technologies is asking the court to seal documents. in its bankruptcy case. in a filing gt says it is trying , to avoid millions in fines for violating confidentiality requirements with a third-party.

gt signed a deal to build furnaces for making synthetic sapphire. disney chairman and chief executive bob iger says the upcoming disney theme park in shanghai will fare much better than disney's park in paris. iger points to a larger population base and stronger economy. here is what he said at the new establishment summit. >> the two things i'm most excited about are the development or the construction of shanghai disneyland. should open up in a couple of years. and we are making "star wars" right now in the u.k. that is extremely exciting. >> iger said he was surprised at how strong demand was for merchandise from the movie "frozen." let's go to stephanie ruhle, who is at the vanity fair new establishment summit in san francisco. stephanie? >> indeed i am. i'm sitting down right now with the ceo of discovery. david we are talking so much

, about content, cable, how we are delivering this new media. i feel like with cable tb when times are great, everybody is talking about the great ratings. when things are not going well, everybody says, who's got a nielsen box. how do you measure the success of networks? >> by how big of an audience we can aggregate that love our channels. in the end, people still watch only six or eight channels. even though there is 300 available. for us it's about getting people to love tlc, discovery, animal planet. it's getting velocity. it's getting people to love our channel and spent time with us. if we do a good job telling stories, our ratings grow, the number of people who spent time with us grows. in the last seven years -- seven years ago we had 14 channels in the u.s. and 4.5% of viewership on cable. today we have close to 12% of viewership. we do look at how much time people are spending with our channels.

that is the currency. >> there are 300 channels out there but people are only watching six to eight. does that mean 10 years from now we are no longer going to have cable offerings? the truth of the matter is we only watch a few. >> the bundle, it works almost everywhere in the world. we are bigger outside the u.s. than we are here in the u.s. some of those markets are less competitive. there are a lot of countries with 40 channels and we have 10. so the fact there is 300 channels makes it more competitive. but we have been able to grow. it is a very efficient bundle. you can click around. with tlc -- you might have been a big fan of tlc recently, but maybe two years ago you did not know it is there. so the fact that you have a bundle, you pay a certain amount and it's almost like a , democracy. we offer all the channels and it is our job to offer great content. so you spend enough time on our channels that you start to love them. >> why has international been better for you than domestic? >> the u.s. market has been slow

for a while in this sense. subscribers are relatively flat. if you go to brazil or mexico or russia or india, the emerging markets, subscribers are growing. viewership on cable is growing. the economics that advisers are willing to pay to be on cable is growing. in the u.s., viewership is flat and subscribers are flat. you have to fight hard to grow. >> do you expect more m&a among cable programmers in the u.s.? >> probably. that's not that many smaller players left. we are the largest independent cable player in the marketplace. we have 14 channels in the u.s. there will probably be some more. there's not much left. consolidation has already happened to a great extent. >> when you first saw the headlines, time warner, what was your reaction?

>> i thought it was interesting. i was surprised. two great companies. i guess i was surprised it didn't go through, because usually when rupert and james and chase embark on a path, they usually -- they are hard to stop. their great operators. jeff has done a great job with i think there will be two great companies separate. >> when you said it is important for my networks to stay on grand, does that mean the viewer only wants six to eight channels but with tlc, you can't diverge? >> our brands are very important. people do watch a number of our shows and they love the characters and stories. often people are saying on a friday night, i love discovery. i love tlc. or i love oprah. i think brands still matter, particularly in a world where as you move off of cable, when there is so much content out there, brands become a curation

device. we have a good sense of the people that love discovery, what they want. the people that love velocity or animal planet. it is almost a curation. otherwise it is pretty confusing to go outside of traditional cable. there's almost unlimited content out there. then you ask the new ask the question, so what do i want to watch? brands make a big difference for us. in the u.s. and everywhere in the world. >> when i think brands and what you have done, i think shark week. >> shark week is big for us. >> what is the most exciting thing you have going on right now? >> on monday we are launching a new channel in the u.s., discovery family. it is in about 75 million homes. it was called the hub, and it was all kids. now we are rebranding it. as discovery family. we think there's a real opportunity in the marketplace to build a channel where moms and dads can watch with their kids. we have a ton of great content in the library that is family-friendly. >> what is your all-time favorite show?

>> baron seagull. >> really? >> it has to be a discovery show. >> thank you so much. great to see you. when we come back, it is all about carl icahn. the day he launches in and takes aim at apple. what it is all about. you are watching bloomberg television. i'm here in san francisco at the vanity fair news establishment summit. ♪

>> welcome back to "bloomberg west." i'm stephanie ruhle at vanity fair's new establishment summit. speaking -- not one my favorite ceo's, but one of my favorite companies.

last time we spoke it was very soon after you were fired. what has this transition been like for you? >> it has been amazing. we spent about seven and a half months. we could not be more delighted. zero regrets. larry and i talk all the time and we are able to build the business out. the way we wanted to, even before we got acquired. >> there is no downside of living in someone else's house? >> at this point, no. i have been pleasantly surprised about how well we have been working together and where we are taking it together. >> people talk so much about the internet of things and how we are moving into this futuristic society. you are one of the first players to get there. how far away are we from being truly connected in our homes? >> i think we already are connected in our homes with smart phones and tablets and even tv's. we are already connected to read what we are talking about is using parts we use every day and making those also connected. it is the next wave of things

that are coming together, and now we have 2000, 3000 different companies working to put these things together to help you make it more convenient to run your life. >> what are you doing now, now that you are fueled by the power of the google? >> i'm not. what i'm not doing now is i'm not raising money anymore. i'm focused on the business, building the team and building products. altogether. that is what has been great. the other thing i have been focusing on is finding all the gems inside google and bringing those in and collaborating to make those even better. >> like what? >> i can't tell you right now. but you can imagine. >> is there a project you are working on right now that you are so excited about? >> absolutely, more than one. >> can you tell me any of it? >> i'm sorry. more than one. the biggest 1 -- you have 3000, four thousand different companies trying to build stuff to connect --

to me, all kinds of things will happen. >> the sun can't always be shining on silicon valley. what are your biggest challenges? >> number one, getting people to understand what we are trying to do and not be afraid of it. people worry about security and privacy about these kinds of products. we have an open discussion about that and make sure people understand what we are trying to do. i think the other one is we can never get enough great talent. ultimately, working with all of our developers, having them understand being transparent and understanding the security needs of these homes. >> you mentioned security. many of us are getting more scared about hackers. if we submit control and leave it to a device, are we giving up having real security? what the you say to those concerns? >> it is a great question. if we want the convenience, we are going to need to have these things connected.

if we really want convenience. for us, we have teams inside, another part of google, we have great security themes -- teams trying to break the things we have. we have external consultants trying to break this thing. to the best of our knowledge, we have not had any intrusions by anyone stealing data. you are always in control and we want to make sure you stay in control. it's not about us taking over your house. >> were you surprised when you dre?pple buy beats by >> sure. when i was at apple we were always talking about headphones and doing headphones. all of a sudden headphones are there. i was amazed it was beats and it was as big of a deal as it was. i was glad to see it. >> after living at apple and now inside google, are the culture so different? >> both of them strive for quality. one is very technologically focused and the other is very much marketing and product focused. those two things are blending between the companies.

apple is becoming more on the services side and google is becoming more on the product side. the two cultures are becoming more similar. >> is regulation an issue for your business? they don't necessarily realize going in what a roadblock regulation will be for them. it is tough because our government is so far behind in technology. what does it mean for you? >> we can look at the product level. if we just look at building codes and all the arcane, old language trying to get new products out, for us that is a concern. we are always working with governmental agencies to overcome those barriers, but it takes time. ." unfortunately for us, it's very frustrating. we move very fast in the technology world and they don't necessarily all the time. when we look at security and privacy, what we saw with the nsa, those kinds of revelations

-- those are the kinds of things we have to face. this is not an easy world to navigate, but we are having a lot of fun doing it. >> is there a technology and innovation that you are looking at and saying, i wish i came up with that? >> i look at something like tesla. >> doesn't everybody think they came up with tesla? >> i don't think i came up with tesla. elon and the team did a great job at it here it is showing the world what can be done when you embrace technology to the fullest. >> thank you. and congratulations. when we come back, it's all about icahn and apple day. is pimco ready for carl knocking on his door? you are watching "bloomberg west" live from the vanity fair new establishment summit in san francisco. i'm stephanie ruhle. ♪

>> this is "bloomberg west." i'm stephanie ruhle, in for my colleague emily chang. i'm live in san francisco at vanity fair's news establishment summit. a lot going on here, but back on the east coast today, apple in a letter to sam cooke, billionaire activist investor carl icon argued that apple should trade at $203 a share, twice its current price. that would boost the company's valuation to $1.2 trillion. earlier icahn spoke with trish regan. she started by asking why there is such a disconnect between icahn and other investors when it comes to apple. >> i think it is some secular

change that people don't realize in apple. it is a change in the greatest industry in the world, the mobile phone, in that apple is not a hardware manufacturer as people would like to have you think. it is an ecosystem. it's a way of life. every time they sell a phone it is an annuity. this deserves a better multiple. it is going at eight or nine times earnings when it should go 20 times earnings. in my mind that 20 times earnings. that is really simple. i like to look at things simply. left by the market, look at a couple things that are simple. to me, you try to reduce it to the simplicity. >> how much money are we talking about here? they have already done $30 billion. you considered that a success. how much more? >> i said it not completely jokingly that i would see

nothing wrong with them doing $100 billion offer. we think this company -- i spoke to tim cook. i sent him the letter. i spoke to him the other night. he believes the company is very undervalued, as i do. i mentioned the buyback to him and he could not say anything. just reading the tea leaves i think they will do a major buyback. that's my guess. but as a poker player, i throw a lot of chips in on that bet. it makes sense because this company -- looking at it simplistically, is really on a new paradigm. you say to keep introducing and i don't think that is factual.

to the extent you have to keep doing that. in other words, people own this. it's not like one day you own a buick and the next day you buy a cadillac. it is sort of an annuity where you own an ecosystem. you own the ipad, but also the watch. you also own the iphone 6 and you have your collection of photographs on it. you have all your music on it. you don't go away from that when you are used to it or really involved in it. you do get market share from say samsung that isn't quite on the same level. samsung is a good company and all. they are making the hardware and google is making the software. >> you're talking about potentially $100 billion. how would you structure something like that? >> i would tell you this. i would love for them to call me, but i doubt they will. i think we have proved we are

very strong in this area. i will boast for brett and dave. if they have a 31% annualized return over the last four years -- >> if they were to bring they , have a lot of cash overseas. if they were to bring it back, they would get hit with taxes. >> first of all. they can bring back some, but you so easily -- they have a lot of cash here. secondly, they could borrow money at 3.5%. i think they are happy they did this and i like to feel that we were an influence.

on the buyback last time. >> is he receptive to you? do you talk to him regularly? i know you guys had dinner at your apartment when you first got into this stock. what is your interaction like? >> i spoke to him two nights ago to tell him his letter is coming. we're both busy guys and he's very busy. it's not like we talk every night. i do think he respects me. i greatly respect him. >> that is icahn enterprises chairman and ceo carl icahn with our own trish regan. you want to stay watching bloomberg tonight. 5:30 p.m. on the west coast, 8:30 p.m. in new york. studio 1.0, a new program is with emily chang. she will be sitting down with y combinator. you don't want to miss it. ♪

>> it has been called the harvard of silicon valley. combinator is perhaps the most prestigious start up incubator in the world. founding dropbox, airbnb -- but behind the start of machine is a couple with their own startup story. how did they build why combinator?-- y , paul and today jessica. thank you for joining us.

so it has been what, six months since he steps down from the helm? how is it going? >> so great. i wish i had done a two years before. >> why? >> it is so hard. i am not really an administrator. it had gotten kind of big. suddenly i was running a big thing. >> you said you would get your brain back. did you get your brain back? had the bestnoon i conversation with a founder i ever had. i had lunch with the founder of stripe. ambitions.out that is the best possible. >> how involved are you? >> i am very much involved. i'm doing the same thing i used to do. i miss working with paul, but i love working with sam altman. >> sam was one of the founders of one of your very first companies.

when you stepped down, people said he is not you? >> i was not cut out to run this. he is better. >> i was good at giving advice. >> is sam going to be better? >> they are going to be different. sam brings a lot of things to the table that neither of us had which is an amazing amount of energy that is needed to broker deals with investors. y combinator is doing different things as a result. >> i want to talk about you where you came from. >> my family came here from england when i was 3 1/2. and we lived in pittsburgh. because my father worked in the nuclear business. when you design a nuclear reactor, he figured out if it was going to explode. i was a bad kid. half the kids in my neighborhood

were for britain to play with me. >> what did you do? >> i was always, always getting in trouble with everybody, just constantly. i was suspended from school i think at least once every year from like first grade to 12th grade. >> and you got into computers. did that help? >> they didn't teach computers in school. it was something you did on the side. >> when did you start coding? >> i think when i was 15. on an ibm 1401 with 12k. >> you got your degree from harvard. to get your phd in computer science. and you took art. >> it was very disorganized. i never knew what i was going to do. always a mess, random accidents. >> jessica, what about you? >> i grew up outside of boston, and i was an angel. [laughter] i grew up with my father and my grandmother, his mother. i lived a very happy childhood

and friends wanted to play with me. i knew i liked to write, but i had no idea what i wanted to be or what i wanted to do. >> you ultimately ended up at a boutique investment bank. did you ever learn to code? >> i'm not technical in the least. sometime when i retire, i'm going to learn to code, but i was interested in it. >> you started another company. tell me about viaweb. the idea was quite revolutionary at the time. >> the reason the company was called viaweb, the company worked via the web. it was known as a web app. it was an online store builder and got bought by yahoo!. and eventually became, still is yahoo!'s store. >> what was it like working at yahoo!? the guy who was suspended every year.

>> i was basically getting suspended from yahoo!. i apologize to the people i ever worked for. i barely lasted a year. >> you went on to write. writing essays. >> yeah. >> and you started building your following. >> i suppose so. >> what were you writing about? >> writing about software and i realized that no one would drag me away if i started writing about other things, too. >> what time did you guys meet? >> at a party in paul's house in cambridge that i almost didn't attend. >> so it almost didn't exist? >> scary how close. >> how did you come up with the idea for y combinator? >> jessica was writing a book. >> that was the first book that i read when i moved to silicon valley. your book about founders. >> really? that's great. i never tire of hearing stories like that. it was hard to find any information, and i was fascinated by all the stories i heard from these guys. and you did the talk at harvard.

>> became how to start a start-up. one of the things i told them was they should raise money from people who had gotten the money from starting a start-up. then they could get advice. they were looking at me like baby birds. and afterwards, i felt sort of bad because i had thought i was going to do angel investment, but i didn't know how. i thought, i'll do it and start doing angel investing. it wasn't supposed to grow into this big thing. this is one of the things we told founders so often. the best way to start a start-up that is going to take over the world, just start a start a project. >> how did you come up with the y combinator. >> the original name was cambridge seed. >> we were in cambridge. it was too tied to one place. the y combinator is a trick,

which is a formal expression to -- a math concept. >> how did you decide to work together? you were not married yet? that is a big decision. >> it was scary because we were only dating for a year.

>> there are myths about so many of the great companies, start-ups, founders that are boiled down into legends and what is the myth of y combinator and what is the reality? >> people don't realize how much we were not interested in making money. of all these people, all these forums, all self-serving, we weren't trying to make money. >> it was an experiment to see if these new ideas could work.

a lot of people think paul graham's y combinator. >> there is a myth. >> you call jessica the secret weapon. >> jessica did not like put her -- nothing is ever happened that jessica did not put her seal of approval on. she basically has veto over everything. >> first time you guys have been interviewed together? >> yeah. >> i can't believe that. >> let's face it, i'm not as interested as you. [laughter] i don't make colorful remarks. i'm more comfortable behind the scenes. i like running things. >> that is why she is the secret weapon. she is one of the people that has perfect pitch for character. she can talk to somebody and fairly quickly feel whether they are a good person or not. >> tell me about the first class, eight companies, but you didn't know if anyone was going to apply, right? >> we didn't know if people were going to apply. and we had a few hundred applications. >> the most critical innovations

is to fund a bunch of startups at once. it is better for the investor, and also better for the start ups. the big thing you are missing, in a startup it is so lonely. and now it has some of the advantages of being a company without the disadvantages. >> at what point did you decide to take money from investors? >> we had to, frankly. i ran out of money. and it takes -- god, how long does it take? we don't know how long it takes. 10 years maybe. >> going into your 19th funding cycle. what do you consider the most successful? >> it is pretty much the ones .ith the high valuations airbnb, dropbox, and stripe. >> did you know they were going to be hits? >> we know the founders were good. >> what was it about them? >> different things.

different things about the two of them. in drew's case, he was the guy who could write this software. dropbox succeeded by solving an impossible problem. airbnb is different. mass movement where people are staying in people's houses. worldwide. >> we were skeptical and i remember thinking we don't is.ly care what the idea these founders are awesome. we are funding them. >> patrick, i have known him since he was 14. back when he was a high school kid in ireland, he used to email questions and i had no idea he was a kid. >> now these companies are worth billions of dollars, if you look back, would they have sold? >> almost everyone. if someone came along with a big enough offer would have taken it. with drew, in the y combinator application, we used to ask if someone offered you money, what is the least you would take.

i think drew answered million dollars. it was convenient that no one wanted to buy drop box early on. >> can you identify the future drop boxes sooner than everybody else? >> we might be able to identify them better than other people, but there are limits to how well you can identify them. there is a good deal of luck. if you had to boil it down into one word what you are looking for, it's authentic. people who are real friends, not people who got together for purposes of a start-up or in it for the money. zuckerberg turned down the acquisition offer. without having done that, he would never have made what he had today. >> how was the interview process evolved? >> it was 40 minutes. >> 40-minute interviews and now with 10-minute interviews we

don't have a pitch. >> how can you really kn? in 10 minutes? >> you can't know for sure. after each minute, how likely are you to change your mind. if you had another 10 minutes, you might change your mind. 2% of the time. >> what is the average valuation? >> the valuation is is $30 billion. >> what is your stake? >> all the money is in the few big hits and you have to ask what percentage you end up and we assume it will be end up being 3%. 3% of 30. i have never done this. >> $900 million. until you asked me that, i never actually multiplied those numbers together. >> an article said sequoia has made more money than y combinator has. >> straightly speaking, i believe more of the equity

belongs to sequoia. >> and your policy is you don't make follow-on investments, right? >> yeah. >> would you consider changing that policy in order to make money off the hits that you pick? >> we never say never. but the problem with that is there is a signaling thing. if we are going to do follow-on investments, that would hurt the founders who are probably great investment opportunities but we didn't choose to answer on that. >> does it bother you sequoia has made more money than you have? >> know, who cares? >> i'm happy for them. >> y combinator has gotten so much praise and a lot of criticism. why do you think it is so controversial? >> one of the most surprising things i realized as y combinator became successful, the more famous something becomes, the more people want to attack it. >> it has been a mystery to me. every night i go to sleep, i think did we help the founders today and the answer is almost

always yes. >> she goes to bed and say why are people saying mean things about us. it's so not true. >> you think investors have tried to stab you in the back? are they jealous? >> there have been some things you just can't believe someone is going to do that to you. i don't know why. it boils down to money and power. i don't know. >> one thing that people have said to me is that, well, why -- yc invested in 700 companies with only a handful of hits. is that a good track record? >> you either have a couple hits or no hits. those are the only two options. >> are y companies overvalued? >> maybe all startups are. i have heard investors that yc startups are 2 times over value. that is the greatest complement. that means we can take people into yc and if nothing else, they would get twice the value they would have had otherwise.

>> is that a good thing if the company is not worth that? >> if it is worth a lot, it is a bargain anyway. >> i know something that jessica has thought about, not admitting enough women. is that true? >> we don't have enough women applying. which is what we are making an effort now trying to do. we don't ask on the application what someone's gender is. we're trying to get the word out there that someone should be -- more women should be starting start-ups. we hosted a female founders conference we will do again. we bring successful female founders and tell their stories to inspire more women. >> some of the words that people use are harsh. they call y combinator a frat house. how many women have you funded? >> in the past were 4% were

female, and now it is more like 12%. and that's not where we want to be. but it is moving in the right direction. >> how do we get more women founding? >> examples of what makes everyone to start start-ups. >> how have you changed the interview process to make sure you are getting the best people, that you are not discriminating? >> one thing that has changed is we have a female partner in the interview rooms. >> why not blind screen everyone? >> how could you tell up they are telling the truth? >> i couldn't observe their interaction.

>> we've got two kids. >> what kind of parents are you? >> paul is the best father i ever met. i'm going to say that. he spends so much time with

them, speaking to them, exposing to things, rarely seen that other fathers have done. i lucked out. >> how do you manage being married and being colleagues? >> it always worked really well. >> really easy. we never disagreed on anything. >> have you ever filed about -- fought about y combinator. i don't believe it. >> it's really true. and the secret is the same secret for co-founders in general, you have different responsibilities. each person is in charge of their own thing and they are experts in that thing. >> what is the hottest y combinator company we don't know about? >> booster board. >> why booster board? >> they have bigger ambitions. the making skateboards. >> what is the biggest fire you had to put out? >> i put out fires at least once

a week of cofounder disputes. that and fundraising, interactions with investors and investors maltreating the start-ups. we intervene. >> how do you protect a start-up from its own investors? >> you don't have to make explicit threats. you just sort of say, come on, guys. be nice. but the investors know behind that, if you don't, we won't send any more start-ups to you. >> if you don't, all of the y combinator founders will know about it the next day. quite the next day. >> biggest regret? >> it is. it is very easy to say what my mistake is. >> i'll do my answer. my biggest regret is i kind of squandered my college education.

i didn't learn as many things as i could learn or work as hard as i could have and i compare myself to the founders, who are doing so many interesting and ambitious things and i kind of squandered a little bit of my youth. >> paul. >> i have to say it very carefully. so i can remain in control myself. remind your parents to be screened for colon cancer. >> i understand. my father passed away. there are many things that i would like to tell him. >> colon cancer. if they catch it early, it's so preventable. make him go get screened. >> what is next? is yc it? or will there be a second act from paul and jessica? >> i'm fully just as

enthusiastic about y combinator. as i was the day we got started, if not more so. we are doing so many exciting things. >> now it actually seems like a good idea. >> how about you, paul? >> i'm going to go back to writing. that was what i was doing before y combinator. and that is what i was always hoping to do. >> how do you guys want yc to be remembered? want it to be remembered. i want us to still exist. i want yc to be this institution that persists for a long time. it could last a lot longer than a product company does because structurally it is like a university. it could in principle last for 100 years. >> i want us to be remembered for changing a lot of people's lives and making the world a better place. >> thank you so much. >> thank you for doing this. ♪

>> you laughed with her, you sang with her, you cherish your time with her. >> who, me? >> there is no star in hollywood more lovable, more talented, more entertaining than carol burnett.