>> live from pier three in san francisco, welcome to "bloomberg west." i'm emily chang. here is a check of your top headlines. as christy paid a visit to calgary, urging approval of the keystone pipeline and a better relationship between canada and the united states. coming is tofor communicate the importance of friendship. it's simple. america has to pay closer attention to its friends, it's most important allies. the u.s.-canada relationship has got to be a priority. >> christie's visit comes as the

canadian government approved burger king's purchase of tim horton, which burger king made for tax reasons. just raised another 1.2 billion dollars at a valuation of $40 billion. they have more than doubled their valuation since june and is worth four times as much as other startups like airbnb and dropbox. the company is going to use the cash to expand operations in asia pacific. paid tv channel stars is considering partnerships after failing to find a buyer. a person familiar with the matter said cbs, lions gate, fox and amc looked at starz but passed because they thought the price was too high. billionaire john malone currently controls the company. -- ismarissa mayer's mercer myer's strategy having an impact?

yahoo! will command 3.7% of the market next year, edging out twitter but still way behind google and facebook. to our lead, facebook ceo mark zuckerberg wants to bring internet to the masses from poor, crowded towns in africa to the remotest parts of the globe. today we have an update on internet.org, the partnership zuckerberg launched between facebook, samsung, ericsson and others. i spoke to him about his efforts to connect the world beyond facebook. here is some of that exclusive interview. that the biggest hurdle actually isn't either technical or affordability, it is the social challenge where the majority of people who aren't connected are within range of a network and can afford it, but they don't know why they would want to use the internet. if you grew up and you never had a computer and you've never used the internet and someone asked you if you want to buy a data

plan, your response would probably what is a data plan and why do i want to use this. >> facebook is a for-profit company. is this a nonprofit? is this charity? >> if we were primarily focused on profits, the most reasonable thing for us to do would be to really focus on the first billion people using our products. the world isn't set up equally. the first billion people using facebook have way more money than the rest of the world combined. from a business perspective, it doesn't make a huge amount of sense for us to put the emphasis in this that we are right now. the reason we are doing is we're here to help connect the world. we take that very seriously. you can't really do that if two thirds of the world does not have access to the internet. over the long term, it could be good for our company as well if you look at it in a 10, 20, 30 year time horizon. a lot of these countries will development over time they will be important. peek of my a sneak

exclusive interview with mark zuckerberg. stay tuned to "bloomberg west" for more of our sitdown with zuckerberg as we discussed his ambitious goals with internet.org. still ahead, an exclusive interview with michael dell, dell's cofounder and ceo. he tells us about the future of the cloud and what he thinks of dell's competitors. watch as streaming on your tablet, phone, bloomberg.com apple tv, and amazon fire tv. ♪

>> i'm emily chang. this is "bloomberg west." year since over a shareholders approved michael dell's bid, backed by silver lake and others. it seems the deal not only made some a lot of money, but the

business itself has rebounded. michael dell sat down with erik schatzker in an exclusive interview. eric started by asking about increasing competition in the cloud. >> you have to have a very efficient supply chain. you've got to be relentless on cost. it's an operational excellence business for sure. and you've got to keep moving up the food chain in terms of value-add an software and services. you feel prepared for it. we are doing well. we've had a great year. we are energized to do that. we bought 40 companies in the last five or six years. we added tremendous i.p. we grew over 20% last quarter. we are off and running. >> microsoft has been a good partner of yours and hp's. move as your server

business to unbranded boxes? that isodel conventional wisdom is that the public cloud grows and everything else shrinks. i think something different is happening. people don't actually want the public cloud or the cloud. they want the benefits of the cloud. but what is it? software that allows you to get better utilization over this shared pool of resources. what is happening is you are starting to see a new breed of software in these private data centers and is making them much more efficient. that efficiency over time is approaching efficiency of the public cloud. and talk tot there a company, 500 person, 1000 20,000 person and you

say what do you like about the cloud -- i like the efficiency, the cost. i'm worried about security. beingrried about my data stolen and the risk associated with that. we are seeing real growth in the private cloud. you are seeing a lot of energy being applied by microsoft, red .at, a number of new companies >> private enterprises to do the kinds of thing that the public cloud offers. >> exactly. >> these sound like powerful trends. if you look into the future, what do ucs a most disruptive technologies, the things that are going to change our lives as consumers, the things that are going to change the course of history for companies? >> silicon costs are coming down dramatically. creating not a billion

devices but a trillion devices. is enabling all kinds of new business model disruption beyond technology disruption. airbnb,k about uber and these aren't really technology innovations as much as much as they are business model disruptions driven by the availability of technology at low cost. and's going to continue only accelerate, and then of course as you go from one devices,o one trillion you have enormous amounts of data. that data has to be analyzed and interpreted. you have to do something with it, and then you can enhance all kinds of businesses for better outcomes, and not just businesses, but health care, education, environment, energy, etc. there is an enormous amount of opportunity in our sector, and it is becoming much more important.

it used to be it was a big companies, it was very expensive. can't do anything without technology, small businesses, they are able to go global much ise rapidly, and so the pie expanding significantly in our sector. there are only about 10 companies on the planet that have more than 1% of this $3 trillion market. we have about 2% of it. we would like to have 3% or 4%. we will keep working on it. >> that was erik schatzker with michael dell, founder and ceo of dell. to googlepple one search, silicon valley has taken a central role in innovation. but is it responsible for the most innovative [indiscernible] in history? ♪

>> i'm emily chang. 1947, researchers at bell labs invented the transistor, critical first step towards the creation of the microchip. fast forward 67 years, and the rest is history. bloomberg businessweek is celebrating the microchip's 85th anniversary this week with a list of the 85 most disruptive ideas in our history. ourjoined by editor-at-large, cory johnson. give us a big highlights. >> when we started working on

this issue about a year ago, we wanted to highlight ideas that have changed the business landscape but also innovations that have really changed the way ordinary people lead their lives. a lot of the technological innovations that we highlight become large,ases multi-billion-dollar public companies, but we really felt the things that have been most disruptive and influential are those things that have truly changed the way people organize their lives and in some ways have made their lives better. >> i just love this list, romesh. it reminds me of some of the things we take for granted, like the birth control pills, says the guy to another guy. i love the things that have changed the world around us in dramatic ways. actuallyny that invented powerpoint as well as filemaker back in the day, and did so on the macintosh. >> right.

is aning like powerpoint idea that no one really knew would have the kind of impact that it eventually came to have. it was originally designed and only offered on macintosh and microsoft purchased it and it became the goto application in just about every business meeting you have ever sat through. a lot of these ideas are disruptive. that arethese ideas disruptive are not necessarily things that everybody feels have been -- have added the greatest benefit to their lives, but they have changed the way business operates and change the way society works and that is why they are highlighted here. >> we throw this word innovation around ridiculously. when we cover silicon valley, we talk about innovation so much. i wonder when you took the time

to look back if you saw things that were truly innovative in their day and look at things today and say, that is not innovative. >> there are a lot of things that we considered putting on this list to fall into that category. there are things that for a brief period of time were important and widely used, but then something else came along and replace them. >> like what? >> one thing we talked about was the fax machine. the fax machine was in some ways a very early form of social media. it was something that was used in most businesses, and yet we wasd that over time it overtaken by other technologies and ultimately replaced. >> talk about some of the up and comers on the list, some companies that we should be watching for future innovation. >> we have some very young companies on this list. it's hard to believe, but

companies like facebook and twitter are really not that old compared to some of the other ideas that populate our lists here. we believe the sharing economy, broadly speaking, is in and of itself highly disruptive. it is disrupting so many different industries. we have a great graphic in the magazine that will show you just how many different ways you can take advantage of the companies and websites that are offering sharing opportunities and allowing people to monetize themselves in many ways. obviously that is a huge new innovation is something that is going to be creating a lot of value over the next decade, century, potentially, and maybe when we come back 85 years from now we will see some of those companies on the list. >> what made the list that was the biggest fight within the hallways of business week? i don't know that we had a

huge amount of disagreement -- >> oh, come on. i know you people. dispute aboutome the whole notion of ranking these ideas, which we decided to do only a couple of months ago. we had a list of 85 that was more or less that. we decided let's really make people mad and actually rank these things 85 to one. when we decided the number one engine,ld be the jet which i can disclose is the number one item on our list, i think there are some people who thought there were other ideas that might be more important, the manhattan project, birth control pills. we feel the jet engine is a single innovation that really made the world a smaller place. themeo me is the dominant of the last 50, 70 five years -- globalization and the growing integration of the world, and engine, by facilitating

transportation, bringing people together, allowing people to see parts of the world they could not have seen 75 years ago, that is why we thought it was the most important, the most disruptive idea of the last 35 years. >> romesh ratnesar, thanks so much for joining us. it skips velcro. i thought they would talk about velcro number one. "studio 1.0," on i speak with the blackberry ceo. he is famously known for reinventing [indiscernible] taking it from near death to $5.8 billion powerhouse. just why did he take on the challenge? that question on the latest edition of "studio 1.0." people are telling you blackberry is already dead.

>> yes. >> why did you take this job? i think i flunked retirement. there are a whole bunch of reasons. i could give you a reason about it being iconic in the industry and it's a great company, has a lot of technology, therefore i think there's a lot of potential -- all that is true. but that doesn't automatically answer the question why am i doing it. i started asking the chairman of the company. i was going to find a management team and formulate a strategy. i thought i was a little too old to run around the world and play cowboys. it, i find it's hard to just guide. we really don't have a lot of another teamfind and then a person and think about the strategy and all that. we just kind of have to get it done.

i decided to become the ceo. >> so you're not crazy? >> i'm not crazy. there's a lot of good potential here. we made a lot of progress in the last six months. >> is this part of your personality, you like to feel needed, to fix things? >> that's probably the negative part of my personality. i'm a little paranoid of not being needed or wanted, i guess. no, i think it's important -- what i do every day, i know it means something to people. >> history has been cruel to phone makers. -- what makesa you think you can change history? >> by not following the same plate. we are trying to broaden ourselves beyond a device. think isit there and could make another really great phone and somehow everything will be well. >> you did vow to keep making phones. >> of course. this is our strategy, and to and

-- end-to-end mobile computing. >> have you ever had a single moment where you thought, what did i get myself into? >> twice. yes, i had. after the first 30 days i said i'm running against time on so many things. i did not dwell on it for too long. i start putting a plan together, recruit the team. that was once. i could feel when my mind starts feeling very focused. right now i'm quite at ease with all the plans we are working on. >> do not miss more of my interview with the blackberry ceo and executive chairman john chan tonight, 8:30 p.m. eastern

1.0."vic on "studio up next, nasa's next giant leap took a step back today. ♪ >> it is 56 past the hour. time for bloomberg tv to go on the markets. i'm olivia sterns. equity markets pulled back a little bit. s&p and dow coming off their record high closes yesterday. only slightly, the dow off by 12.5%. nasdaq down five points. all focused on the jobs report due out 8:30 a.m. tomorrow. ♪

>> you're watching "bloomberg west." we focus on innovation, technology, and the future of business. 3-2-1, no go. nasa's test flight of the orion space craft is scrapped today. they will try again tomorrow. the mission is to launch an unmanned cap jewel 3600 miles above earth and see if it can withstand the extreme heat, with hopes to someday send humans to mars. at a cost of $370 million on the there is a lot riding on tomorrow's flight. a former nasa deputy administrator is joining us. cory johnson is still here as well.

you have spoken out against the funding of this project. why is that? >> my view is that nasa is doing and has done so many tremendous things over his history. we just talked about the jet engine being the biggest invention of the last century. i would add to that the satellite. we did a polo. this program -- apollo. this program is focusing too much of nasa's limited resources on a purpose that does not provide that broader benefit. forward, $60 billion, that would get you a vehicle further from earth than we have was since apollo, but that 50 years ago. we are doing this commercially billion tonding $3 get people to the space station using the private sector. why would we be setting technology in place today, and

using engines that are already trip to old, to go on a mars that is 20 years away and we don't have any of the resources to fulfill that over that period of time? i think it's a mismatch of resources. stepey say this is a towards landing on mars. how significant do you think it is? is that an incorrect characterization? >> i do. i've heard them say it is the first step to mars. we have rovers on mars. we have a space station where we are learning how to live and work in space, to get us further. this is a test of a flight that will go for four hours and go no further than certainly satellites we launch all the time on a commercial rocket we have launched many times, testing a heat shield which is very likely not to be used in 20 years when we actually go to mars. of aink that technology heat shield would not advance in

20 years is not reality based. nasa likes to launch things. this is something the contractors and politicians who sold this mission to the congress have decided they would like to proceed with, but it's not something that in my view is the best use of mass resources. >> you make it sound like boys and their toys. what is it about launch that the private contractors like so much? >> these are dollars. this rocket contract was a couple hundred million dollars. these are taxpayer dollars. it is a bit like instead of focusing on the purpose, we focus on contracts. but that is a government program. strong, andxtremely the inertia of this program -- >> especially in space. >> in space especially, it seems to be holding true on earth as well. >> particularly in silicon

valley there's a lot of talk about the legend of the side benefits of the space program and the other inventions that happen concurrent with the space program that helped private industry so much. i have always found this to be a little bit specious. i wonder, is there a difference in this kind of technology for this orion program that you think won't benefit raven industry -- private industry and innovation at large? >> of course dollars spent at innovation. it's a question of balance and how much and where is the emphasis. a lot of this technology is older technology that we are piecing together to try to relive the glory days of apollo at a time that is quite different. we should be investing in benefits primarily and things like the jet engine and satellite were not spinoffs, they were what we chose to invest in. what are those things today that

we can invest in? communications, technologies that will help lower the cost and the operations cost of traveling to space and more people can experience it -- those are the kinds of things that will be more lasting that should be the focus of nasa today. >> at the same time, you have private companies in an aggressive race to space. blue origin,d richard branson and virgin galactic -- should nasa be in competition with these companies? should nasa be partnering with these companies, as they are in some cases? how does a country maintain its edge? >> this is a really important goal of the space program that i believe we are working to focus more on, and we are partnering with some of those companies. that is where the excitement is, in my view. you leverage the government's investment in technology, allowing the private sector to innovate.

that is how we have advanced other industries. that is how the jet engine went and how the satellites have gone and launched other vehicles as well. that aspectlight is of space travel that the private sector wants to get in. there is no way nasa should try to compete with them, which is difficult for them. if we had this much excitement and hype over those commercial launches at the space station, the public would understand all the great things we are doing in space. it's nice to see nasa's p.r. machine do so well and talk about this as a flight that is eventually going to go to mars, but they do so many other things that we can be connecting with the public on in more ways. >> former deputy administrator at nasa, lori garver. thank you for sharing your thoughts with us. we will be watching and continuing to cover this race to space. dick costolo is selling off more of his shares.

it is the third major sale in a month. what does it say about twitter's business? watch us streaming on your tablet, phone, bloomberg.com, apple tv, and amazon fire tv. ♪

>> i'm emily chang. family trusts belonging to the twitter ceo and his wife continued to unload twitter shares. the trust just sold off half its or meaning stake in twitter, selling about 141,000 shares. this coming after the trust sold shares last month. what does it mean? cory johnson joins us with more. should we be concerned or curious about this? >> i'm certainly curious about it. on one hand, here's a guy who's telling us to buy twitter stock and how good things are at the company and he has unloaded 75%

of his stock in the last four weeks. that looks worrisome if you are a twitter shareholder. the old saying on wall street is there's lots of reasons to sell, only one reason to buy. >> marc benioff sells shares. they say it is for tax reasons. >> in zuckerberg's case, he has held a ton of shares to cover the taxes on exercising his option. marc benioff is selling a lot of stock he owns to make money with the stock he's taking money off the table there, diversifying, clearly taking some of these guys of the sales force number. >> why is dick costolo doing this? view is he'sicious doing this because he doesn't believe in twitter. onhe sent a picture to us twitter yesterday. it's kind of a grainy picture. he clearly needs a new phone. >> i like that he's engaged. >> is engaged with his tweeting, indeed. he is selling the stock he

owned, but he has a vast number of shares in the company in the form of options that he has not exercised that he could exercise. in terms of the percentage of his overall stake of the company, while he sold 75% of his exercised shares, he has millions of options he has not exercised worth hundreds of millions of dollars. >> does this make him one of the biggest non-founder sellers? agholord a guest from yesterday. the talk about the big sellers, non-founders selling shares in the last year. sheryl sandberg selling $572 million worth of stock. oracle, $385 million worth of stock. seagate, he ist selling shares. there have been some really big shareholdings of non-founders of other companies. what dick costolo is doing pales in comparison. >> twitter has been under a lot

of pressure lately, highly scrutinized about product issues, dick costolo's leadership himself, widely differing opinions about how will twitter is doing. why is he doing this now? >> it is such a small amount of his overall holdings in the company that is not very significant. he has taken some money off the table. you could look at the stock and say this is an expensive stock. let me take a little bit off the table. having been there, a company that went public, the company valued over $1 billion -- by the time i could sell it, it was worth a couple hundred million. dick costolo has been all around the block. >> so no big deal? >> probably not. some of these other companies, it's definitely a thing to watch when you see big insiders selling lots of shares. >> we did recently speak with a founder of twitter, who expressed the most confidence in dick costolo and his leadership.

we take that for what it's worth. [indiscernible] cory.you, "bottom line" with mark crumpton coming up at the top of the hour. >> the new congress will have a lot on its agenda. at the top of the list, avoiding a crippling government shutdown, with republican set to control both houses starting next month, will anything get done? the committee for a responsible federal budget will join me. emily, back to you in san francisco. >> thanks so much. see you soon. need a loan? you are in luck. startups are taking on the challenge of consumer loans. be back with more on lending alternatives and what you should think about. ♪

>> this is "bloomberg west." peer-to-peer. online lending is a growing industry. with the number of companies trying to get into online lending, is there enough interest to go around? with ourn editor-at-large, cory johnson. take it away. >> there is a thing called lending the banks use to do. they would find businesses and give them money or find consumers and provide them with capital. silicon valley startups, new ideas and new software. joining me from chicago, a ceo. talk to me about how your business works. what problem are you trying to solve? >> thank you for having me on. we are trying to lower the cost for the average consumer to borrow money and reduce the friction in the process by creating a digital bank that

will solve their unique financial needs. >> the investors you have lined up have been fairly amazing. kkr. thiel, what is it about your powerpoint that is so awesome? honestly it has been a great run because our company is only two years old. we are nearing our two-year anniversary on new year's eve and hopefully we will have a lot of fun celebrating. we have had great investors, starting with august capital in our first couple of rounds, and tiger beating our last two. we have had great support from peter thiel, kkr, etc.. the future ofin revolutionizing the whole consumer banking industry is what has really worked. we have assembled a great team, great organization, and we have executed. >> explain to me how the business works. what fundamentally do you do for consumers? >> today it's pretty simple. we have a core product, personal

loan product that is unsecured. we allow consumers to spend a couple minutes on our website, via their computer or mobile phone, to submit a simple application. in real time we will give them a response that says if they are approved or declined. they can get funds the next business day. over the long term, we hope to continue to build our business in new markets and new products to continue to serve more needs for the customers. >> how big are the loans, typically? >> on average, $5,000. we will lend up to $20,000. >> rates? >> they start at 19%. our goal is to use advanced analytics -- >> 19%? >> that is lower than what most credit card rates are. >> interesting. i talked to peter thiel earlier this week. there's a lot of companies like yours am a lending club and others, that are going after this notion of lending money.

thiel had this interesting idea when we were talking about the kinds of investment. he said if your investment sounds like another investment, if it is another energy disruptor, the uber of whatever, it's probably not that original. i wonder what it is about your business that is fundamentally different that he'd are teal, who has spoken out about these investments, would invest in another company doing consumer lending. what is so different about your business? >> what we're doing is a little bit different than what you have heard about with the peer-to-peer companies you mentioned. we are lending directly to consumers. we as a lender are very focused on creating the customer experience that will be best for that customer. things like allowing customers to get approved in real time or get funds the next business day just don't exist in the market at all today. using what we think is the best analytical models in the universe, or in the lending universe today, we have done a good job of creating products

that are unique. over the longer term, there are going to be big winners in this category. by most accounts, we have a rising economy and things getting better. warren buffett always says you can only tell who is naked -- they're swimming naked when the tide goes out. i think that's a great question. part of that is we really are focused on our credit and underwriting standards, and look at risk from a longer-term standpoint. we are a direct lender, and not necessarily just a peer marketplace, although that is part of our longer-term strategy. we are focused on long-term performance. we are going to continue to improve and only time will tell. >> in terms of the kind of usage in loans, what is the principal use of the loans you expect to see? >> our customers use loans for a variety of reasons. roughly half our customers

consolidate debt that is less flexible or has fees. our products don't have any fees. the other half just takes care of life events, which are pretty diversified. >> i've had a few life events myself. in terms of the questionnaire you use, is there a magic question, something that you think illustrates or you know illustrates risk better than other kinds of questions typically asked? what you're talking about is metadata, which we definitely use as far as things like how a customer fills out a certain question. we are focused on a wide variety of data sources. the goal is to get as good as we can at predicting the performance. >> what is the weirdest one? the u.s. it'sn all about things like fair

lending. a lot of the weirdest ones you just can't use. things like what time of day you submitted your application, how you typed it in, whether it is in all caps, are things that a lot of people have talked about, but they are quite interesting. >> all right, al goldstein, thank you very much. >> thank you for having me. >> hey, cory. it's time for the "bwest byte." what do you have for us today? >> i don't have a credit card loan, but i'm thinking about it right now. how about 175 million dollars amid the amount microsoft lost in the nook deal with barnes & noble. buyback comes to about $125 million. thatlost $175 million for two-year adventure with the nook. >> we continue to see these black eyes on microsoft's record. we have been talking about how

big a job he has ahead of him and how microsoft has really missed so many of the great advances in technology over the last 10 years. at some point, do these add up? >> i wonder more if this is about the realizing the surface is working for them in the ways they wanted to work. -- want it to work. the surface initially had a rough run but seems to be doing better right now. maybe they think that is helping them tom at it own need to be in the nook business. barnes & noble is willing to pay them something for it, may be time to get out. >> the tablet market is struggling. how optimistic are you? seeing is are really that the use case -- the launch of the tablet was so big so fast. some of the best use cases we can't even imagine yet, but we will start to see them soon. >> cory johnson, our editor-at-large, thank you, and thank you all for watching this

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