>> live from pier 3 in san francisco, welcome to "bloomberg west." wall street, the market changing moods back and forth. the s&p was down as much as 3% at one point. the closedown, just .8%. the dow jones and nasdaq, the nasdaq composite average did come back from those big losses. concern about a slowing global economy and concerns about the effects ebola might have on industrials all playing a role.

american express's profit rose more than 8% in the third quarter. customer spending increased. sales were flat in the quarter. more than $8.3 billion. the company has been working to expand its reach by teaming up with mcdonald's and apple and other tech companies for digital payments. the us-led coalition is stepping up air strikes against islamic state targets. 18 strikes carried out today during the town of kobani. militants are trying to capture the u.s. central command. strikes destroyed several islamic state positions. apple annoyed quite a few of its

customers after u2's you album was crammed down their itunes last month. bono is apologizing for the whole thing. this comes after a fan asked him about the issue. >> i'm sorry about that. i had this beautiful idea and we got carried away with ourselves. artists are prone to that kind of thing. a drop of megalomania. the touch of generosity. a dash of self-promotion. >> apple give users a way to delete the album, only after the complaints. the u2 issue may not be its only misstep.

apple leaked details of a new ipad early. apple updated its official user guide for the ils eight to include images of the new ipada ir 2 and ipad mini 3. the ipads a tear to have a touch -- appear to have a touch fingerprint reader. netflix shares are getting crushed in after-hours trading after new concerns about the streaming network possibility to keep going, let alone growing. subscriber growth is slow in the third quarter with netflix adding 980 u.s. subscribers. the ceo reed hastings blamed it on the one dollar a month price for new customers that took effect in may. if they're really concerned for shows such as "orange is a new black" and "house of cards"? know all the numbers are really bad, but a few of them -- not all of the numbers are really bad, but a few of them stunk. >> subscriber growth is very disappointing. the company came short of its own target as well as the

consensus. this shortfall was not only a domestic side but the international as well. i think you see that translated into a relatively temperate guidance in the fourth quarter and that is why you see the shares reacting. >> i really care about the business and what the business will do to the shareholders. we look at the subscriber numbers. the company has had a huge marketing spend to try to require new subscribers while they go through a business transaction -- transition from a place where they once advertised you can see all the movies, you can see less and less but a couple of special once. >> that's right. a lot of resources devoted to marketing. to be fair, we have seen that translate up until this quarter into accelerating subscriber growth. the main question is whether

what we saw this quarter is a blip or whether it called into question the longer-term addressable markets. we think there are no structural changes that would prevent a company from reaching potentially high addressable market. we have talked about two to three times the size of hbo. the one to find out how much of the content investments as well as marketing will be sustainable and what impact that has on the viewership going forward. >> we said there's no impact on the long-term sustainability of the model. if they can't generate free cash flow to pay for the expansion to handle the upfront costs of this content and subscriber additions, let alone the costs way back then -- they're free cash flow went from positive to -$74 million in the quarter. they have huge content costs. if you are not adding more

subscribers to that, the whole thing falls apart, doesn't it? >> to be fair, on their part the subscriber growth has been outgrowing content spending. as long as they can maintain that balance, i think they should be all right. they have got right now 1.7 billion dollars in cash. i don't think they have any liquidity pressures in the near term. as you indicated, free cash flow is a very volatile metric. >> when i look at this kind of model, amazon has pulled it off fantastically forever where they are barely profitable, spending every dime in free cash flow and growth but they have managed to stay one step ahead. i think of it like the guy in the circus who is spinning plates. they always managed to keep him up just long enough to read -- enough. wonder if the market reaction is

saying, these guys cannot spin plates forever and you can see it in today's results. >> that is some of what is happening. this week also has the lever. it can pull back on international expansion and try to maintain that breakeven profitability. in the case of amazon, it's a pretty dramatically different strategy. having said that, i think for netflix it's going to be a really critical to see what they do to try to maintain this balance between streaming subscriber growth and content spending. >> all right. i appreciate your analysis of this really interesting company. thanks a lot. san francisco has turned out not just for the national league championship series, but dream force when he 13.

it is possibly the biggest conference in san francisco, period. their annual conference taking place right here in san francisco and right now my partner, emily chang, is talking to netscape and andreessen horowitz cofounder mark andreessen in a fireside chat in downtown san francisco. >> my favorite thing to do now, you go on youtube and there is a whole jon runyan tim -- on youtube of how to use the internet from 1994. it aired on local public television or you could buy them on cd-rom and they would tell you how to hook up your modem. they are awesome. the clothing is spectacular. the computers look like they are stone age. super big monitors. they will be running windows 3.1. you will be able to hear the hard drive to the microphone. you are like, oh my god, that was in the ancient past. it was not that long ago that things were like that.

today we have all these gadgets. in 20 years, we're just going to get laughed at. we are going to laugh at ourselves and our kids are for sure going to laugh at ourselves for how crude and primitive everything will look in retrospect. >> you are on a few boards, including ebay, hp, facebook. ebay and hp recently made the decision to split up. symantec is doing this as well. why is this happening? >> emc is another one under the gun from a hedge fund to do the same thing. my view is there's going to be more fundamental structural industry change in the next five years and there has been in the last 20. the internet works now. mobile and smart phone works. all these technologies work and

are pervasive in people's lives. you have a lot of new companies like salesforce in the last 15, 20 years that have grown up in this new environment, then you have these really important franchise technology companies that have been around for 30 or 40 or 80 years that still are doing incredibly important work, employ a very large number of people. my prediction is that i think every technology company more than 20 years old will almost certainly break up, literally split apart. >> define every. >> every. it will take time, but i think you can go down the list. >> you mentioned oracle. >> i don't want to sit here and whiteboard specific -- >> please do. >> two big reasons. one, they are all super cheap. this is something that is widely misunderstood trade there is this conventional view that there is this tech bubble. all of the large sort of older technology companies are all really cheap. even google and apple -- >> emily chang's talk with mark andreessen. still ahead, ebay reporting

better-than-expected earnings in the third quarter, but cut its sales forecast for the year. interesting stuff from that importing company as well. ♪

>> i'm cory johnson and this is "bloomberg west." weeks after announcing a spinoff of paypal, ebay reported third-quarter earnings for the combined company. sales up 12% in the quarter to $4.4 billion. profits fell 2% to $673 million. ebay is dealing with a number of lingering issues, including fallout from the big data breach in the spring as well as a decline in traffic. joining us from new york is mia saini. what did you hear? >> the first lingering issue is that consumer, where are the customers? that is what john donahoe was focused on on the conference call. they have been impacted by the stronger dollar, but also the consumer along more wary after the cyber security breaches you

just alluded to. the ceo said that the majority of users have gone through password resets, although they have had to do it multiple times because of glitches. that slowed the user returning to their site. they have increased their customer service representatives. they are increasing their marketing efforts to get more individuals to their site organically after there was a change in algorithm through google, and they're looking to reduce the volatility as a look to index more volatility back on. at the end of the day, they said this is a business that delivered $2.2 billion in revenue. it grew 6%, not as strong as the paypal unit, but they are seeing an increase in the users, 3.4 million in buyers so far.

>> when they talk about the search engine optimization, that is an interesting thing. we heard about amazon and google comparing themselves as competitors. ebay spent a lot of money getting people to go to ebay. that has cost them a lot. >> that is going to cost them a lot. their guidance is something that will always be on their balance sheets. they mention the competitive landscape. they talked about how amazon is really trying to build their own platform, third-party platform, and how google is looking to do a lot with her google express platforms as well. they did not comment on where they believe they will be positioned in the future, but they did say they are not looking to refrain from spending

when it comes to the seo part. >> you look at the operating margins there, you can see down 150 basis points year-over-year. think what that means for every company that has got a website, every company thinking about technology, let alone great tech companies like ebay, if they have to spend that much in cyber security. >> it's a really good point. at the end of the day, if you look at the free cash flow, it is pretty strong. 2014 has had a variety of unanticipated setbacks. they believe their position going forward, their most crucial point that they made was that -- do not think ebay without paypal is a company that will not be competitive. >> you can imagine they have a lot of reasons to say, we will be fine without them. bloomberg's mia saini, interesting story. when we return, we will head back to the conference in san francisco for more of emily's sit down with mark andreessen of entries in horowitz. ♪

>> i'm cory johnson. this is "bloomberg west." earlier in the broadcast, we to do to the conference -- took you to the conference. emily chang is sitting with mark andreessen. we will return to that discussion. >> the line the wine people used to use is, cash is more important than your mother. i don't know if it's true, but it made the point. it's a question of how much money do you raise, can you keep

raising money all the time. at what point should businesses go? the amazon lesson is your company is worth $200 billion and you are a genius. if you ever generate a penny a profit, you have made a mistake. people look at that and they are like, i can get away with it too. they are just wrong. they fundamentally don't understand how amazon is able to pull that off. they are just not going to be able to do the same thing. i think people need to know, it's not that easy. >> it's not going to end into and gloom, but it could? >> who can tell? i don't think anybody knows the future at that level. the optimism that i have comes back to what i said, when these companies work they work really well.

salesforce is a primary example of this. they start small and it looks like a radical idea. and then you wake up 15 years later and giant company, huge number of customers, customers are thrilled, catalyzing huge industry changes, huge amounts of money, revenue and market value being created. here is the other thing. there's no reason why the new generation of technology companies can't be larger than the previous generation. the other thing is technology is moving into so many other categories and it used to. we have companies bringing technology to health care and real estate, financial services, education and really powerful ways that were not possible 15 or 20 or 30 years ago. there's no reason why there can't be a really large and healthy and diverse set of very powerful and viable technology companies. it's like, how would we have that not be the case? we would burn our way through every dollar of cash on the planet and self-destruct.

>> how is this playing out in your portfolio? how are you balancing making those investments and practicing what you tweet, scaling back or being careful? >> all of our companies are the exception, just to be clear. [laughter] i'm talking entirely about other i'm talking entirely about other people's companies. this discussion is the same discussion we are having with our companies. this is the same conversation we have with all of our ceo's. it's a cautionary conversation. it's not a conversation that says, stop spending or have smaller goals. it is a conversation that says, be aware, learn from history, have an appropriate sense of risk, have good discipline. he rest of it is the devil is in the details. airbnb which is unambiguously a huge commercial success. you want something like that to take the global market as fast as they can. there are other companies where it is more of a balance and you want to see prudence and caution, and you want to see they are staging the activities

and the spending in the right way. the other thing i will highlight -- extravagance is probably a little bit over the top. is one thing, a company gets to be at salesforce's success level, when you are burning $50 million a quarter as a new start up, maybe not having bruno mars play at a concert. maybe we can have the regular water and not the coconut water. [laughter] coconut water has become a basic human right in san francisco. maybe the masseuse can come in on wednesdays and fridays, not five days a week. it has gotten to be a bit much. we have that conversation too. there is sort of this legend in silicon valley, this ghost story that people tell called the edifice complex, which is there is this high correlation between these companies get all excited and everybody loves them and then they build these shining headquarters and these offices and they are just gorgeous headquarters. there are dogs everywhere and

fancy bikes and the whole things, the swimming pools and everything. there is a high correlation between fancy buildings and falling off the cliff. it is peak eagle relative to the fact that the company actually does have to work for a living. one of the things we talk to companies is about, the alternate model is the amazon model, jeff bezos model, which is you want a desk it is a recycled door. we are much more on the side of this and maybe tamp down on the spending. >> you had a spirited back-and-forth -- >> he knows of what he speaks. we will have more of emily chang's interview with mark andreessen when "bloomberg west" continues. don't miss a special studio 1.0

show tomorrow night with salesforce chairman at 8:30 in the evening both in the east and west coast. coming up, the company told investors it made big in detroit. but did it? ♪

welcome back to "bloomberg west." 3-d printing, one of the most exciting areas of technology, our 3-d printing companies living up to their promise? 120 2% rise on their first day of trading. -- 122% rise on their first day of trading. check this out. the idea of 3-d printing excites the imagination. on-demand products from guitars two guns, sexy dresses, fully functional cars, the holy grail of 3-d printers are opposite

ends of the spectrum. on one side, you have the desktop size printer, the laserjet sized printer. on the other side of the spectrum, you have the huge printers that can make things like a jet turbine or the hood of a car. a german company is going after that giant 3-d printer problem and they say they are focusing on selling to the auto companies. their minivan sized printers helped launch a wildly successful ipo a year ago. in the first quarter, the public company sold just three printers, two of which were sold after they loaned money to the buyer. now they are promising a new light of growth with a second factory opening up in michigan year the motown automakers. the ceo told investors on a second-quarter conference call

-- quote, the facility will initially support four large renters by the end of this calendar year. we expect to be using on demand parts by the end of september or early october. we will start to see revenue contribution in the fourth quarter. i headed to detroit to see this new voxeljet facility. here i am. canton, michigan, middle of october. this is the voxeljet factory. not much going on here. let's check it out. inside a big, basically empty room there are no parts being distributed, no printers being manufactured, just a few workers doing rudimentary framing work, one literally sleeping on the job. this is the right address, same as the website, but this is about as tranquil as a manufacturing facility can be. this facility clearly was not shipping on demand parts by late

september or mid-october. it sure doesn't look like they are going to be making large-format 3-d printers before the end of the year. perhaps all the 3-d printer companies will live up to the hype someday, but for now 3-d printing is [indiscernible] and for voxeljet, apparently it is hard to build a factory, even in detroit. folks from voxeljet said the facility is running four to six weeks by schedule. the company blamed construction delays and said the building had been empty for a really long time. they hope to ship something in the fourth quarter. the company did want us to take note it just acquired pro shop, a u.k. producer of motion picture props.

they meant that on ironically, i assume -- un-ironically, i assume. emily chang is speaking with mark andreessen in downtown san francisco right now. let's take a listen. >> potentially a replacement for a large amount of the status quo, but has the big chicken and egg challenge. commercial stake declined. you will not see a huge amount of transaction volume. what we say from our standpoint is bitcoin is by far the most innovative and radical thing, but apple pays the thing that will have the big impact over the next three years. the combination of those two will cause enormous change. >> you have been a huge supporter of bitcoin. the price has plummeted.

>> and come back up. >> do you allow for the fact that you could be wrong? >> absolutely. the saving grace is we are venture capitalists. i think like a venture capitalists. we make 10 bats, we assume five of them will go straight to zero. we keep looking for it. no one has figured out how to invest only in the good startups. it is the nature of our business. we refer to it as a slugging percentage. it is not a batting average. it is a question of when you are right, how rights are you. i would put it quite squarely in that kind of that. if anyone is thinking of getting involved in a bitcoin startup, this is also a way to think of it. bitcoin may or may not work. if it does work, it could be profound.

it could be profound and revolutionary and gigantic. you discount the risk and return in that way. i'm completely enthusiastic to take that great it is a classic venture capital risk to take. people who understand that risk should feel good about taking it. underneath that, the thing i'm quite confident about is that the crypto currency concept itself will become vitally important. it will be in the form of bitcoin, but even if it's not bitcoin, it will be something else. even if it's not this year, it will be in five years or 10 years. it will be a very big deal. it is h or advance in technology. from that standpoint, i both do care about what happens in the short-term because we have to live in the short term, but i also have tremendous faith of what will happen in the long

run. >> a lot has been made of the power of the sharing companies like uber and lyft. you recently tweeted, perhaps the single biggest key enabler for the sharing economy is the affordable care act of 2010, obamacare. i know you have been a republican donor, but some republicans what obamacare repealed. what would you say to them? >> this is entertaining. i think it was a buzzfeed story pointing out that the obama administration has refused to market obamacare on probably what is its greatest strength, which is that it makes it far easier to switch employers. you can live life as an independent contractor and have freedom in what you do and you still have the same benefits that you used to have to have a full-time job to be able to have. the question raises, the administration has had such a

hard time convincing people obamacare is good. why haven't they marketed it that way? it goes to the fundamental definition of what work is, especially in america and in the modern times. we sort of have this idea that the ideal version of work is a career at a company, lifetime employment. out of school, i go to work for a company, general motors or ibm, and i worked there for 50 years. the nape at me on the head and give me the gold watch and i go -- then they pat me on the head and give me the gold watch and i go fishing. it was great for the people who were happy living in that world. a couple of problems with it read -- it. a lot of people never like the idea of working for one company for 50 years. the second problem is that

career path was never available to most people. if you were female or black or gay or latino or disabled or from the wrong country or the wrong ethnicity or the wrong religion, you did not get on that career path. it was a fairly exclusionary way to go. the third problem is it basically collapsed in the 1970's. starting in the 1970's, the car companies started doing layoffs. the last 40 years there has been huge anxiety about work because you can't rely on this long-term career path. i want to be able to seize opportunities. i want to be able to start a company, i want to be able to contract. >> we will have more of emily chang's exclusive interview with mark andreessen in just a little bit. you can watch a streaming on your tablet, phone, and at bloomberg.com. ♪

>> i'm cory johnson, and this is "bloomberg west." we have been listening to my partner emily chang's exclusive interview with mark andreessen live at the dream force conference in san francisco. check it out. >> there is a challenge that can be addressed. the pessimistic view is that

technology is inherently exclusionary, this is a bunch of white male nerds and women are not welcome in black people are not welcome. there is something kind of wrong with tech. i don't believe that. i believe the opposite. i believe tech is inherently inclusionary. tech wants to include as many people as possible. the reason i'm so confident about that is because of the incredible coverage, the incredible people in silicon valley from an incredible number of countries. any company you go to in the valley, any group you go to, you have people from 100 different countries. you get these incredible spreads a people's backgrounds and

experiences. enormous amount of her presentation from countries like india and china, but also from countries all over the world. there is something about the culture that i think already is very inclusionary. the challenge is we are still underrepresented when it comes especially to women and in the u.s. when it comes to african-americans and latinos. >> should women ask for raises if they think they deserve one? >> yes. [applause] >> i don't care what anybody says, i think women should ask for raises. i'm a fan. i think these are solvable problems here and -- problems. one is pipeline. with women, women are only 15% of computer science graduates in the u.s. we have to get more girls and women into computer science and we have to go early to be able to do that. there are a bunch of efforts to do that and they are very exciting. the other is access, which is network, which is how you plug in. the great thing about silicon valley is if you know people in silicon valley, they are incredibly helpful.

if you are not connected, how do you plug in? how do you get the leg up from getting plugged into the network? the three organizations we are funding are working on both sides of that, the pipeline and the access part. think if we really bear down on both sides of that, we can move the needle on this pretty fast. >> i want to talk about the next 5, 10 years in silicon valley and ask you a few future of questions. i want to start with television. i know you love watching television, and i work in television. what is the future of television? >> i think it was announced this morning, hbo announced you will now be able to subscribe to hbo without being a cable customer. [applause] i always maintain that people wanted that, and everybody in hollywood told me it would never happen, and now it is just obvious. if you're hbo, it is obvious you want to get all these customers. i think there is an incredibly -- think the media industry overall will grow a lot in the next 10 years. video will grow tremendously.

television in the form of everything from live television all the way through to documentaries all the way through to fiction, drama, comedies -- it is all going to grow a lot. the reason i'm so confident on that is because the number of people who can receive streaming video around the world is 2 billion people on its way to 5 billion people by the end of the decade. you view the endpoint of video is everybody with a smartphone, and there are so many more people who will have a smart phone that ever had any ability to connect. the market size is going to grow enormously. quality is way up. it's amazing what has happened in the quality of television in

the last 10 years. it is like it is the golden age of content. the challenges you have this old economic structure with broadcast and cable in a bundle and prices that rise 15% to 20% a year. i think that change is now very fast. in the future it is either you want to watch something, you just google it and go straight to it or go on youtube and go straight to it, or new bundles, netflix. if you are going to buy netflix stock -- i would never recommend buying it, but on a day the stock is 25%, it might be worth $15. i don't think there's any reason why it can't be gigantic. amazon will be very big. the new bundlers will get extremely large. >> what is the future of apple under tim cook and will apple be a big player in television? >> it looks incredibly promising. it looks extremely promising. the iphone 6 is a huge hit. it is going to be extremely successful. apple is gaining strength. this is what i talked about earlier. if the company gaining strategic

strength or losing it? you can feel with apple that they are. they're going to do extremely well. apple keeps refusing to build a tv and everybody keeps predicting there will be the apple tv you put on your wall, and they don't build it. there's a bunch of different reasons for it. i believe the big reason they don't build a tv goes back to -- >> emily chang's exclusive interview with mark andreessen of andreessen horowitz. don't miss more from the dreamforce 2014 tomorrow at 8:30 p.m. in the evening. ♪

>> cory johnson and this is "bloomberg west." we turn back to salesforce's annual conference. mark andreessen is on stage with my partner, emily chang. >> someone said to you, what is the next big thing.

you said, something new. what is something new? >> [laughter] we are trying our best to find it. peter talks about this. people who have not read peter passbook -- his book is called "zero to one," and i highly recommend it. people in our industry, it is so tempting to try to find a pattern. who is the next oracle? who is the next google? the point peter makes that i agree with is that there never is one. there was only one microsoft. there will never be another microsoft. there will never be another google. people like the whatsapp -- peter talked about this a lot. everybody in the valley thinks you want to be first to market rate peter makes a point that you want to be the company that closes the door and other people

can't walk through. when there is a huge win like whatsapp, which -- whatsapp is not just a huge win financially. it has north of 500 million users. the odds of anybody flying right up against them are really slim. it is almost certainly -- there almost certainly will not be another whatsapp, but there will be new things. they will be viewed as completely crazy. the one thing we know is nobody is going to think they are the next big thing. it is going to be something that is considered bizarre. it will be software and service in 1999. 10 years later, it will be the next big thing. >> the marc andreessen, everybody. [applause] thank you so much. >> that was emily chang. mark andreessen was the bald guy. they were speaking at dreamforce

2014 in san francisco. tesla is everywhere. they successfully built a brand of high-end electric cars for rich people, but they're hoping to take themselves mainstream. we have yet to see a company succeed with electric motorbikes, and till now. italian company is looking to become the tesla of motorcycles. matt miller took this $34,000 bike for a test drive. >> tesla has made the electric car mainstream. so far there has not been a standardbearer in the two wheeled world. we had the zero in the u.s., but now out of italy we have the ego. ♪ >> this is the first time i have ever ridden a motorcycle to a gas station and not needed to tank up. the hard part is keeping it light.

it weighs 569 pounds, a third more than a fully fueled ducati 848. the big bonuses in the battery. it provides 144 pounds of torque, more than twice as much as a ducati. this bike goes for $34,000. for that you get mars okey and oz wheels. the best part about this bike is a traditional tubular trellis spring. my favorite part about writing -- my favorite part about riding this bike is the sound. it is addictive. it is a high-pitched wail that you expect to hear from a jet plane. it gets higher and higher the

faster you go. it does take a while to get used to the fact that there is no clutch. there's not even any shift lever down here, but it's all worth it once you twist the throttle. energica is going to make 300 of these bikes. if that's not exclusive enough for you, there is a more limited edition model for $68,000, the ego 45 goes on sale next spring. >> matt miller, who also gets higher and higher the faster you go. get the latest headlines at the top of the hour on bloomberg radio and all the time on bloomberg.com/technology. we will see you tomorrow for more of "bloomberg west." ♪

>> welcome to "your medicare, your decision," the program that guides you through the medicare options available from humana. there are many different medicare choices available but, are you sure you have the right medicare plan? are you with the right company? do you wonder if you could save no matter what kind of medicare coverage you have? now, this program will give you