>> live from peer three in san francisco, welcome to "bloomberg west" where we cover innovation, technology and the future of business. i'm emily channing. here's a check of the top headlines. final details may come down to a wire. negotiated will probably wait until tomorrow to release a plan which will keep most of the government open through september 2015. earlier today house budget committee member tom cole sounded optimistic about reaching a deal. >> at the end of the day, the votes are there, the agreements are made, it's very bipartisan. the democrats control the united states senate. we still have to get through

this a democratic senate and eventually get a democratic president to sign it. >> funding for the government expires thursday and congress intends to vote on the new plan this week. the s.e.c. is looking to suspend standard & poor's from rating commercial mortgage bonds. this would be the agency's toughest action yet against a major credit rate o'er. broad hill financial is still in talks over a possible settlement with the s.e.c. comcast chief final officers say it will return capital to jefferson in 2015. it will happen after the purchase of time warner cable closes and he is optimistic the deal will wrap up by the first quarter of 2015. the c.f.o. also mentioned that cord cutting helps the broadband business. one of bernie madoff's longest serving employees was sentenced to 10 years behind bars for his role in the morning $17 billion fraud that was less than half

the term sought by prosecutors. he is the first of five former madoff aides to be sentenced in the coming days. to our lead, new details surrounding sony pictures massive cyber attack, hackers claiming to be behind the attack are releasing new data and demanding that sony not air the seth rogen comedy attempting to assassinate kim jong-un. they named sony pictures film head and the studio's tv director as the next possible targets. it's the first time hackers have demanded that the studio halt the release of the sbuff which has drawn scorn from the north korean officials. they deny involvement but call it a righteous deed. it is slated for release on december 25, so what do we know

about who may have launched this attack. i sat down with jordan roberts and jason glassburg as well as our editor at large cory johnson, take a listen. shows i think that it the global nation of this attack and whoever did it was clearly sophisticated to target sony and embarrass them. i don't think we have ever seen this before. this is new unchartered ground. >> what do you make of the fact that the north crean government has denied responsibility for the attack. they complimented the attack calling it a righteous deed. does it look to you that the government, the state is behind this? >> i think it's impossible to say. from the north koreania perspective, the more attention it gives them, the better. let people think that they did it and even if he had didn't, they're still getting credited

for an attack they may or may not have done. in any event, they clearly had a political agenda and are happy to see this attack go down. >> jason, let me ask you more specifically, dark soul i the d -- it's spelled like capital, not like my own soul. what are the fingerprints, what is it exactly that looks similar to previous dark simon cowell attacks? >> one of the things they were able to find was the code executed within sony's network. that code was specifically put together and compiled to attack sony. it had the name of specific servers and specific i.p. addresses. that code is very, very, very similar to an attack that happened in saudi arabia as well as another attack that had happened in south korea. so there seems to be quite a

bit of similarity in the attack code itself. it wipes drives and causes all sorts of havoc. >> why hasn't sony better able to contain the data that was leaked and will we see more of it? >> that's really the problem is that once someone has collected your secrets, so to speak, you're relatively powerless to prevent them from releasing it. it is interesting the theatrical -- these attackers have gone. they have taken terabytes of data, and yet they only released 40 gigabytes of stuff. clearly they are trying to draw this out and embarrass sony as much as possible. >> i want to bring in jordan robinson of bloomberg news, who helped break these additional details of where exactly this hack attack originated from after midnight out of a hotel, the saint regis of all places in bangkok.

jordan, first of all, how did you track that down and why were they using this network? >> it is interesting that because of these hackers, they have made information public, they do leave little clues behind as to where they are operating from. one of those technical indicators that investigators are looking at now was this i.p. address located at the saint regis bangkok in thailand. there are a few caveats there. we talked to folks that believe that hackers may have been working out of that hotel physically. there is a possibility that hackers are also working remotely off a hacked serve inside the hotel. it is very rare in these cases that you get a juicy tide bit like this that the hackers were operating at the very least through this hotel and their high-speed network. there are many unanswered questions about that detail.

because these hackers are making information public, they do leave breadcrumbs for investigators to follow. >> jordan, outside of the glamour of the saint regis. what is new about this? as a new era, and dangerous new era in cyber security, what is this to suggest this is not just a one-off but a new era? >> that's a very good question. what we're seeing with sony, this is the kind of breach, it's kind of a rolling breach. it gets worse and worse. when the attackers came out, a lot of people looked at that and said that is a lot of data. they probably don't have that much. it's probably bluster and it may be. they may not have all they are claiming to have. they have a whole lot of information, much more than people initially thought. they compromised sony very thoroughly. everybody is waiting with bated breath to see what drops next. that's the new era, there are

two aspects. the destructive idea of this mall wear. we hack into your network and erase everything. we are going to physically destroy it. that is new, that is really damaging. also this idea of we are going to lay bare all of your corporate secrets on the internet for everyone to see, medical history, social security numbers, salaries, leaked copies of movies. that is not acting out of profit motive. that is acting out of provocation and kind of malice and giving a company a black eye. we really haven't seen lots of hacks like this. this is a new attack and damaging to sony. >> it seems they wanted to embarrass sony more than anything else, which is different from the target or home depot breach, where the hackers are, we presume, trying to profit on this information they are putting out there into the cyber world. one thing i would say is if anything it seems the interview, this movie that the

hack attack is potentially in retaliation for, a comedy about kim jong-un has only gotten more publicity. you have seth rogen and james franco, the actors on "saturday night live" and we're you will talking about it. isn't that ironic? >> it's funny how these things turn out. the one thing i would also point out on what makes this attack so unique is that this was in fact an absolute targeted attack. these guys were looking to get sony. they did everything they could to get sony. they even coded a specific attack against sony. many other breaches we have seen, those were kind of like targets of opportunity. they presented an ability for attackers to go in and took advantage of that opportunity. in this case these folks were targeting sony. they were looking to get sony and only sony. >> jordan, last question. it's a line in your story that really grabbed me.

you mentioned that north korea had something call a koran computer center hacking effort ith offices in many countries. why the uae of all places are they allowed to operate? >> it is an interesting question. it's something that struck us as well as we were doing the reporting. here's is the challenge with hacking from north korea. north korea has an advanced cyber warfare capability, most of which they got from russia or iran or other partners. north korea only has one outbound connection to the internet, and that is through a chinese internet provider. if an attack were ever to be traced back to that internet connection, attribution is instant. so they have she's satellite offices around the world usually operating under front companies. they are not north koran embassies, these are front companies that access the internet and access talent in some of these countries,

germany, russia, china, and others. this is a necessity for north korea to implement their cyber warfare attacks, because it is simply too risky in many cases to launch them from north korea itself because of its control over the internet. it is very easy to identify when it would be then. they operate she's satellite offices that kind of do the attacks on their behalf. >> a fascinating read. thank you so much for that additional detail. jason glassburg, we will right back with more of "bloomberg west" after this quick break.

>> i'm emily channing and this is "bloomberg west." evan williams is starting a new venture capital firm to work on world positive investing. obvious ventures is seeking to fins young companies with investments ranging from $1

million to $5 million. bryan womack joins us with more. how is this different from everybody else's? >> he has a little bit of clout here in the valleys. he is going after this space. it's in three different buckets, health, sustainability and for small businesses bringing cool tech for small businesses. he sees opportunity here. he is not the only one in this firm. he wants to make money. it is not just a charity thing. >> that's my question. world positive investment, how much does he care about it? >> he has done some of this before. he had an incubator when he stepped away from twitter. that sort of became what is medium. this is something he sees as a moneymaking thing. he has done it before. he has a track record and finding good stuff. >> what is the structure of this? he is also working on medium. that has been what his full-time job is.

>> that is his full-time job. he is c.e.o. there. he is leading it, and once again, another successful company at this stage. this is his thing. i want to do some stuff to help make the world a better place for lack of a better term. that's what he is trying to do. >> from an entrepreneur's perspective, how much does it matter to get evan williams of all people on board? >> i would think it would matter a lot. >> there are a few names as big. he has got to be top 10 in the valley at least i would say. it says something when you go to other investors. >> evan williams, we'll be watching. bryan womack, thank you so much for bringing us that update. still ahead, u.s. family spent $243 billion per year on baby-sitters, nannies and other care services. we will talk to the ceo of one come in a helping to provide care packages to companies like linkedin and facebook. ♪

>> welcome back to "bloomberg west," i'm emily chang. finding work and balance is hard for parents. care.com is hoping to help companies that support benefits for children and adults. joining us in the studio is the founding -- founder and ceo of care.com. corey is still with us. corey and i both parents ourselves. i think of the things you're doing more recently is working with companies if silicon valley like facebook. they are providing your services and they are paying to provide your services to employees. tell us about that. >> what is very difficult for many companies is the key driver of absentee i am and impacts productivity is actually care. companies like facebook, linkedin, ebay, google, these heads of companies realize the

importance of attacking great talent. the public sector doesn't support our care infrastructure in this company. off. women get paid time we don't over paid time for women and companies are realizing that they need to provide these benefits to their employees. >> speaking from personal experience, if you're not using a service like care.com, it's word of mouth if you're trying to find a nanny or daycare for your child, it's very difficult, you have spent time talking with people as high up as president obama about these issues. does he understand how difficult the situation really is? does the government understand? >> absolutely, president obama hosted the first white house summit on work family event and

invited companies, we had a voice at the table to listen to the importance of care and investing in infrastructure. why not invest in a care infrastructure? obviously the challenges prevent the public sector from investing. it was 1971 when nixon really got rid of a bill to support federally funded day care. the reality is the private sector has stepped in to provide an option for families because it's very difficult for families, especially with a work life balance that they are looking for. >> so given all that, you have seen some pretty dramatic growth, a lot less than expected evidence by the share price. when you try to get into this business, you made a big acquisition recently. how do you grow in a business? the opportunity is there. the need as emily and i know all too well is a really profound one. how do you make a business out

of that? >> we can't comment on the stock price. we are targeting 42 million households just in this country alone. we are only 2% penetrated. the demographic trends are heading in that direction. we know there is not enough for a top-tier infrastructure. we know that people are ages and seniors are just increasing. that is just across the globe and countries around the world, not just the united states. we know that the private sector is very interested in providing care. the public sector is hampered by budgets to provide it. and it is really a solution for families. >> in order to get bigger, do you do more acquisitions? do you sell more stock to get more cash. you only have about 14 million shares in the 31 million. there is possible equity offering. is the stock price what you want to do here? >> we said we would raise money and continue to be focused around m and a and go after the 42 million households.

we are going to continue to do that. our team is focused on delivery, focusing on providing value in the future and provide families and caregivers and to go after our mission to serve and help families. >> i'm curious, you're working with silicon valley companies. facebook are now allowing women to freeze their eggs. what do you think of that? oes that help the situation? >> the key for care.com is choice. the reality is to provide women a lot of choices so they can make the right decisions in their lives to plan for family. different women have different priorities. that's their prerogative. one of the things i am very pleased with with the platform that we're building is the fact that different ages, different needs, what we were talking about before we started here. you can look for child care, pet care, housekeeper, tutor, whatever your need may be. the largest actual number of jobs posted on care.com, 60% of

the jobs posted on care.com are part-time mostly afterschool jobs. it's very difficult for families. i call it the hair on fire moment. >> amazing. so to the hiring, right, you guys are looking for a new c.f. o. your chief financial officer quit or left to pursue another opportunity. i wonder will you change the way you address the community, the cash flow for your company it's sizable because of the acquisition you just made. i imagine when you look to the long term, make you make change and adjustments because the opportunity is so big and you want to get more traction there or stay with the plan as it is right now and hope you get profits? >> we're come at the tent in the cash that we raised in regards to going public, we said within two to three years we would break open for the company. targeting 20 to 25% with three to five years. we're consistent in the way we

are communicating with the street in our expectations. we continue to be excited about the growth of our company. >> great to have you back here on the show. we will be watching as you guys try to solve this very, very important problem. >> thanks, emily and cory. >> an employee exodus at the new republic could the co-founder chris hughes be to blame. that is next on "bloomberg west." ♪ ♪ >> time for bloomberg television on the markets. i'm julie i'man. let's see where stracks traded today. we had declines among energy producers as oil fell to about a five-year low. that pulled down the energy producers with it. we saw weakness in material stocks and information technology being led lower by shares of apple. ♪ ♪

>> you are watching "bloomberg west" where we focus on innovation, technology and the future of business. i'm emily chang. can tech moguls also run media empires. several have tried to make their mark in an industry at

the crux of change. recently at the new republic, the century old publication bought by chris hughes in 2012, there has been a mass exodus of employees citing a cultural disconnect between silicon valley and the media. what exactly happened at the new republic, joining us is cory johnson. a dozen or so editorial staff have resigned and there have been complaints. >> fairly amazing. >> there have been complained that chris hughes came in with this tech start-up mentality and it just didn't work. >> in the history of magazine publishing, there is no magazine that has been beloved by it's subscribers and more turmoil on its masthead in the st 40 years than the new republic. the drama -- bought it amongst incredible sort of opportunity because subscribers love it.

it is enormously influential in washington dc. if faces a business problem as print publications have, but the notion that users are consuming information digitally and creating stuff in print isn't working for them. these attempts to make a new digital media company really upset a lot of the staffers that are there. they ran for the exit. not least of which because of the messaging around it and the way it was communicated. it sounded like it was no ifferent from a buzz feed or gawer or these buzz awards that are so beloved by people in digital media right now. >> we have seen so many new media upstarts. great post on medium by jason gilbert spoofing all of the movement between these publications. it starts out today i resigned from the new republic, but i'm

excited to join fusion which i'm resigning from by a venture at buzzfeed that ends today because i have been hired by box. it goes from there. a, a lot of people moving around, a lot of brand name journalists moving around and b nobody knows what the future is. >> i loved about this. this sounds like the thing you would read in the new yorker and spy imagine san diego. it was on medium. >> they are staying printed stuff is going away. the business question to ask is how can the kinds of journalism that happen in the number republic, "the new yorker," the magazines that come in the mail that are 40 or 50 pages long instead of 200 painls long, where is the place for that journalively if anywhere, where

is room for business in society if will is no room for those things. >> i wonder. a tech business is fundamentally different from a media company. the way they do things in silicon valley different from a chris hughes should be, running the new republic? >> that's a great question. certainly they operate without profits. that is in common. the tech companies are going after, especially these people getting into journalism for the first time may be looking for the lowest common denominator. how can we reach the most amount of people, instead of the few that care and pay for it deeply. that is what they're trying to address in the other start-ups that had enormous problems, the intercepts are doing great journalism about at least not of which all of the stuff from edward snowden.

>> the new republic seems to be up and running just fine. how much does it hurt the brand and reporting? >> i think it is going to hurt a lot. the great writers this magazine has are the things that people follow. the readers are following a lot of these, specifically a lot of these people who make a name for themselves going back to andrew sullivan. these are the great writers that come out of the magazine. people follow that magazine for the writer they've come to identify. you can't throw them out the door and replace them with nobodies. >> we will kept watching, thank you. are two companies better than one? aztec companies grow to behemoth sizes, do they offer a way to free up resources and fobes the business. we will be back speaking with a venture capitalist who specializes in these deals. that's next on "bloomberg west." ♪ ♪

>> im emily chang and this is "bloomberg west." ebay, hp, and symantec have announced major spinoffs this year. breaking up is hard to do, but some of the biggest tech companies in silicon valley seem to see the advantages of it. are the splits part of a new industry trend? cory johnson back with more on that. >> this is an interesting story about where great opportunities are. we went to think about silicon valley as two guys, a dog, and a garage. there are some great opportunities from companies that exists in other parts of giant companies. a new venture partnership that

hasn't experienced carving out some of the successful businesses from large companies. this is a new partnership that is based on an old partnership. rob, talk to me about the big picture idea about where you find opportunities to invest in. >> the opportunity lies in large companies. these companies have nuggets or business divisions that are no longer strategic. no longer imperative. and we work with them to carve them out, spin them out, or establish a joint adventure. in in case we rework a lot of the product, the technology and put them on a growth path. >> a lot of guys are restarting things right now. there is a company called blade and it was a spin out of nortel. nortel was this dominant network equipment company that really fell on hard times, had did a lot of acquisitions and

had a lot of things under their roof including blade. >> blade technology existed inside nortel networks. it was not a priority of nortel, however they got great product, great technology, and a well-established customer base. we were able to spin that out, blade participated, nortel participated -- >> let me back up. what was the technology? >> the technology was internet giga bit switching. >> nortel was trying to put the fires out. >> they didn't invest thoroughly in it. what happened is we estructured the business and enhanced it to 10 gigabytes and eventually a 100 gigabytes ether net switch. the company grew and ibm acquired them for $450 million. >> which is a lot more than what you guys paid for it, your portion of it. you typically do this with a

stub. it kept an equity stake or an option or what? >> correct. they generally keep an equity stake below 20%. they have the ability to participate on the upside as the company becomes successful. >> you can tell i listened to your partner, i take him on these torturous walks up and down the embarcadero to get stories out of him. pgp is another company spun out of their associates. something they weren't very focused on. >> terry and i did that in 2002. it was a product technology that had millions of customers. it was encryption technology for email. we restarted it, enhanced the product, made it enterprise class and grew it. >> this was part of the company, but they weren't focused on it in any way. how do these acquisitions happen, they go into a business and then they keep it but just

let it sit in the corner and die, what has happened to the overall company? >> in this particular case, it was an acquisition that occurred many years prior and it was just no longer a mandate of network associates at the time. we saw that the technology could be approve for data at rest, sitting in storing so that your information systems like social security numbers and credit information would not be stored in the clear. that is what we applied information for. >> you start to become aware of the little projects, the last c.e.o.'s pet project. the new c.o.e. can't stand it and doesn't kill it. >> rather than killing it, i think it's a lost opportunity that we can work with the companies to put they will on growth paths and we work with companies that do that. >> so when we look at some of these spinouts, spinouts of

note, we hear about semantic and hewlett-packard, do you start to swarm on these and say what do they got that they might be interested in getting rid of or what do they have that they don't know about? >> we work with those opportunities. in certain cases there are opportunities to address some of these issues. we mentioned ebay as well with their pen pal spinoff and something else they're not focused on as well? >> yes. >> do you start with, like any investor, deal flow is the biggest problem. do you start by saying this company is going through issues, let's see what they have, or do you look through hot areas? >> we start on both sides. one, where the opportunities exist, but in many cases what we also do, is look at major opportunities. spinning out a particular piece of business without understanding where to take it on a growth path is not exciting for us.

we go through the process of connecting a left dot and right dot together so we find an opportunity exists and the customers demand it. >> the returns tend to be a lot better than average venture capital, slow and steady in terms of the profits of those companies? >> the returns have been phenomenal as has been reported. in this particular case, for the companies themselves, sometimes they start with no revenues. as we have talked about, they grow from zero to 100, 150, 250 million in revenues over time. >> thank you very much. interesting story as always. emily. >> coming up, the kim kardashian game has been a hot commodity game for gamemaker, how is the company planning to deal on that success, my exclusive interview with the c.o.e. from glu mobile next.

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>> i'm emily chang and this is "bloomberg west." when glu mobile first launched the kim kardashian game in june, the company stock at a huge boost. since then shares have been on a slide. there is a concern the title may be losing some of its appeal. how does the company planned to reignite that success and build on the kardashian brand? we're getting a clue right there. joining me for an exclusive interview glu mobile c.o. will talk about the stock in a moment. court and khloe joining the game.

>> we had kris just a couple of weeks ago. >> we have kourtney and khloe joining just in time for the holidays. there is a lot of mis-perception around how long this game will stay in the top 10 grossing. >> how long -- how involved have they all been? what is it like to work with the rest of the kardashian clan. >> kim is certainly on point for all of this. er momager is second on point. they are all approving their images and there is a lot of iteration on how people look and how they will be involved. kim has been doing a lot of this for us directly. >> you have a contract until 2019. what if she is no longer popular by then? investors do seem to be worried. >> that is probably unfounded. if you look at the history of the kardashian franchise, obviously we have taken a big bet on that. deal terms have been publicly disclosed. they're really quite reasonable if you look at the size of

minimum guarantees versus royalties that she has been paid. i think her brand has just getted started. in international markets, she is popular in a few of them. she is scratching the tip of the iceberg of where she will be in three, four years time. >> you said you are paying significant royalties. how much does it cost you to have the kardashians involved here? you are looking at the most significantly profitable year for you. does this weigh on those profits? >> the misperception is that stocks are enhancing profitability quite significantly. even q3 was $15 million, it is guided to be another big quarter for us in q4. kim has been a big piece of that in bloge quarters. on a blended basis, royalties are running at something like 12% of total revenues. but it is going down in percentage terms because it will be a lower percentage of q4 than q3. >> what are investors worried

about? i know your c.f.o. has sold millions of dollars of his stock. >> i would never look at selling so much as buying. people sell for a lot of reasons. there is retirement planning, buying houses, getting divorces. they only by for one reason. the last two weeks, i bought some stock, just yesterday or rather friday, two more of our directors bought stock. i think the distinction has never been greater in our history. >> why should we be betting on the kardashians essentially. this is a huge driver of growth for you. >> there are four games. >> kim is number nine. racing rivals is number 33. deer hunter is 57. contrakiller is 75. we are a franchise company and four of our big franchises are going to do well for the next year. >> a philosophical gaming question. we have been talking about grand theft auto, which allows you to have sex with prostitutes and kill them.

they say that it is art. what do you say? it is a different kind of gaming than the games you guys are making. it is part of this world. >> i think free speech is free speech on one hand. on the other hand, we are a mobile game focused company. we partner close with apple and google. we have a board member in common with google. we want our titles to be featured prominently. we won't have success with these partners if you go over that line. we keep our games 12 plus, and sometimes g, so to speak. if you look at a deer hunter or contrakiller game, they have little violence compared to a consul game. the revenues are indeed not coming from are violence to that extent. things like racing rivals and the kardashian game, they are very, very family friendly. >> you got kim, kourtney, khloe, and kris, she is

protective of north. how do you build out the glu empire aside from getting north onboard? >> step one for us is make sure the kim kardashian hollywood game has a five-year plus run. we add more indications. whatever kim is up to, this game is more intwined in her life. there are opportunities for other hollywood partners. if you look at kim's world in its entirety, there are other people to interact in which we can add into the game. look out for that next year. >> like who? there is room for other celebrity games. we are in discussion with other big names and social followers who want to make transmedia experiences, make a game that mirrors your real world in the virtual space. there are other people that will be excited that will come out next year. >> we will be watching to see who those people are. great to have you here on the show. thank you for stopping by.

we are focused on one number that tells a whole lot. what have you got for us today? >> emily, it's 36.3%, the holiday shopping season is upon us as i witnessed firsthand at the amazon fulfillment center where i spent all day a week ago today. a new study released just today says amazon is already a big winner in mobile shopping. amazon got 36.3 percent all e-commerce dollar spent in the u.s. for this holiday season so far. they are doing twice as well as the second competitor, ebay. >> we were looking at a study out of google that shows that shopping on mobile was just off the charts, including people literally standing in line at retail store shopping on their phones. i will not lie. i am guilty of that very same thing. i see things in a store and think, can i get this cheaper on amazon?

>> because of the opera study, half of those shoppers were either on ebay or amazon. 2/3 of those were on amazon. it is interesting that amazon is taking share there. who do you think is the next celebrity game from glu? the emily chang game. i like that one. no? >> that would be interesting. i could make a lot of money if the kardashian royalties are any indication. would you play it? >> i think i already play the emily chang game as well. it's so much fun. >> you would be the villain of course, in my game. >> probably, that's how it works. this is good. forget this tv show thing. >> i will talk to him after this after the show. thank you, cory, for that idea. thank you for watching this edition on "bloomberg west." all of the latest headlines online and on your phone and on television and radio.

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