>> live from pier three in san francisco, welcome to "bloomberg west." i'm cory johnson. here is a check of your top headlines. switzerland sent shock waves through the market after it suddenly ended its cap on the swiss franc-euro exchange rate. this caused a huge decline in the euro. it tanked 20% against the swiss franc. republicans are gathering for

their annual retreat, hershey pennsylvania. they will talk about priorities for the upcoming year. the north dakota senator john hoeven talked about some areas of possible compromise. >> we need to pass a six-year highway bill. i think we will get that done. that is huge for america. tax reform, absolute priority. everyone wants to do it. i think it is doable. good for jobs and the middle class. >> house and senate republicans have frequently found themselves at odds in various issues. the chinese uber competitor has just raised $600 million in funding. the round was led by softbank. it is now valued at $2 billion.

is this the end of the road for radioshack? shares down about 24% after reports the company may have to file for bankruptcy as soon as next month. radioshack has posted a loss for 11 straight quarters. in china, xaomi is known for one thing, cheap phones. now the chinese upstart is jumping into the higher end market, taking direct aim at samsung and apple. it just announced its biggest and most expensive iphones. for $371 a lot less expensive than the iphone 6+. here is the press conference in beijing -- >> we are lighter thinner

narrower, and shorter than the iphone 6+, but we have a bigger screen all without impacting performance, function, or design. >> is this a risky move for the company whose success has largely been built on offering lower-priced phones? >>♪ >> xaomi, the chinese smartphone maker, isn't so little anymore. it is five years old. last year alone, sales more than doubled. xiaomi is flush with cash following a funding round, larger than uber and worth more than garmin library, and intuit

combined. in 2011, xiaomi took on the iphone. just like apple, xiaomi surrounds its product announcements with great fanfare. how did xiaomi go so far, so fast? phones are sold only online and not a dime is spent on advertising. that allows xiaomi to undercut competitors on price. can it play outside of china? the company is facing criticism over the similarity to the iphone design. its success in china may not be easy to duplicate on the world stage. venture investors are battling that -- betting it has a big future. >> what is today possibly can

announcement mean in china for xiaomi? -- does today's announcement mean in china for xiaomi? a xiaomi investor joins me. hans, what did you think? >> i was very impressed. the phone looks nothing like the iphone 6+. it is very slick. the photo taking quality of the phone is amazing. it is the best phone that xiaomi has ever made. >> when they announced it, xiaomi makes a habit of glomming onto other brands. i think there were other announcements giving credit to the component makers, the qualcomm snapdragon ship for example. why does xiaomi do that and

other phone makers don't? >> beijing wants to project its companies as being very prosperous to its consumers. [indiscernible] >> the price point is interesting as well. still coming with a much lower price point. is that going to matter outside of china, where the phones are subsidized and most people in the bigger markets like the united states and parts of europe where there are no subsidies, people are not paying the whole price of the phone? >> you look at the emerging markets, whether it is china or taiwan, hong kong, southeast asia, india, brazil -- there are a lot of users out there who would love to have the xiaomi phone. xiaomi is demonstrating itself with popularity in china.

xiaomi will be a great item. >> the next biggest emerging market is india, but company sales were halted because erickson sued, saying they violated some patents. what was the focus at today's event on the important issue of patents? >> based on past experience samsung paid off erickson. if xiaomi pays, it would not be an issue. it is in discussion right now. >> i guess so. you write a $500 check you can make a lot of disputes. >> this recent round -- i'm sure an earlier investor is very happy. i wonder about profitability, how important it is for this company and the razor thin margins. what you think xiaomi's target

operating profit margin is? what do they want to do? >> [indiscernible] on top of that, all the software related services are to the bottom line. for 2014 beijing has stated the company will [indiscernible] in sales, and a net profit is roughly around $1 billion. for 2014 roughly around $500 million. [indiscernible] as a company gains more scale, there will be more profits. >> with a 10% operating margin

as you're describing, you think that margin is going to get higher over time as more services are ladled on or do you think they will stay at that 10% operating margin? >> [indiscernible] he also shows companies that xiaomi invested. samsung takes a more conglomerate approach. xiaomi is taking an ecosystem approach to make investments with other players to make great accessory products. >> hans tung, take every much

for joining us from beijing. facebook is launching a new product for the workplace or it put down your facebook. stop posting. you are supposed to be working. facebook knows at and they are going to try to make employees more productive. really? we will talk to brett taylor next. ♪

>> and cory johnson. this is "bloomberg west." i do not visit facebook while i'm at work. i'm sure you have never searched facebook at work. now facebook is in failing a social network entirely for office communications called facebook -- unveiling a social network entirely for office communications called facebook at work. but will it work? or will he go the way of other failed facebook launches?

brett taylor has done a lot of work on this notion of what people do at work and how they share things and information. i have been using quip for the last couple of months and it is a fascinating solution towards this issue of what works at work and how can you be social at work. this facebook get what people do at work? >> i think they do. facebook at work isn't necessarily going to take on traditional products like microsoft office. for me it represents this trend where consumer product experiences are creeping their way into the enterprise. a lot of people joke about using facebook at work. almost everyone uses text messaging at work. >> what are people doing? >> if you want to talk to someone urgently or they are on your vip list, most people -- because e-mail is so high volume at this point -- they're using short for messaging, maybe facebook messenger linkedin to

communicate with colleagues. we have seen it with products like yammer making their way into the enterprise from the outside. it is not that surprising that companies like facebook are trying to more overtly bring experiences into their enterprise. >> i guess i wonder what facebook has advantage is here if it is knowing what people do try to take these chatting experiences and find ways to make them work at work -- i wonder if there are things facebook knows about their users and the way people interact and if there is some advantage to having the social grasp that can exploit that in the workplace. >> there are some advantages. i have been humbled by moving into enterprise by how little i knew about it right i worked at google and face book prior to this. enterprise software is different, dealing with i.t. departments security requirements. that is the biggest challenge

facebook has. whatever advantage they have they don't necessarily have credibility for the audience with facebook at work yet. a lot of work faces block facebook and things like that. i do think the experience is familiar. to the degree that you think this type of experience is valuable in the workplace having a look and feel like the experience that almost everyone has used at this point is an advantage. the sales and marketing and relationships with i.t. departments is what i would look at as the biggest hurdles overcome for a company like facebook. >> facebook flops, there have been many. the list of facebook flops is not a short one. you have facebook credits facebook phone, facebook gifts, facebook e-mails, and more. is it a culture of experimentation? >> i think it is just a culture

of experimentation. i worked a google when -- >> you probably did all those things. >> no you certainly don't put them that high in your resume, but i was at google and wall street criticized google for doing too many things. that has come around to the huge wins that have come around to that and forgotten all the misses. facebook has had good streaks and bad streaks. at the end of the day, a company like facebook with such a huge project generating such revenue, it's intelligent to invest in a lot of research and development. >> do you look at what you are trying to do with quip is coming into the same area? or, this is a competitor i don't want to have? or do you know why quip is going to kill these guys? >> i view them as consummate jury. facebook uses quip. most of the company uses quip.

we are almost ubiquitous there. i think that the kind of serendipitous sharing that facebook at work represents is different than creating and collaborating on documents. one is a creative tool. another is more about broadcasting to the people you work with. for a lot of vendors like us, facebook at work is completely complement three. -- complementary. it's sort of completely separate from what we're working on. on the other hand, i do think when any big company moves into a new market you pause and think what is going to be next for them. facebook is such a happy quip customer, we have not worried about it much. >> my first day working for bloomberg, i flew to new york and sat next to betty liu and jeff winner. he said there will always be a

linkedin separate from a facebook because there'll always be a picture of you doing a keg stand that you don't want to share with work. can facebook really be something at work? some of.. >> the >> stuff on it is so personal -- the stuff on it is so personal. >> it is a completely separate instance of facebook. your work persona is separate from your personal persona. that is smart. >> facebook for mom. >> thank you for a much. "bloomberg west" will be back. ♪

>> starbucks, amazon lots of

companies embracing new mobile technology. helping them is a company that creates custom written cloud-based software for 3.5 million companies. matt, give me an example -- what have you done for starbucks behind the scenes to help them incorporate mobile into how they operate their business? >> building custom applications that make them different, special from other firms. starbucks came to us to do the inspections for all their facilities 17,000 facilities around north america. they inspect them all using our software. they do that to live up to standards that only starbucks has to make that a better and unique environment that you can find a similar eating establishment. we take 243 photographs of each

starbucks. we give a grade to the manager before we leave the store. starbucks can react very quickly to any deficiencies in their environment. >> is it as simple as taking a clipboard and tossing it out and putting that stuff on the ipad, or is there more to the process? >> there is more to it. if you had a clipboard there would be a long delay before that information gets back to headquarters in seattle and action could be taken on it. we want to make everything instantaneous, but allow you to collaborate. as soon as something gets put in about the state of one starbucks, that information can be shared with everybody else inspecting starbucks. that knowledge comes back and is pertinent to decisions they are making at headquarters. >> it seems like the first integration of going mobile is doing the things you did without mobile and putting mobile -- taking mmo and turning it into e-mails -- a memo and turning it

into e-mails, but it does not do all the things that devices can do with location and real-time knowledge of what is going on in the environment. >> to leverage all that, it's important to be native on a mobile device. the mobile revolution is on hold. it has been for a couple years now. even though it is exceptionally valuable to put your applications on a mobile device it has been too expensive. mobile keeps changing. there's always a new device, a new operating system you have to keep up with. >> android has been android without updates -- with updates. the tablet market has been dominated by the ipad since it came around. why is that change stifling growth? >> it seems like every quarter there is a new tablet size and a new way to consume information. there are multiple operating systems in the first place. ios and android, that is more than there used to be. mobile is more complex, faster

changing, and more expensive for applications to penetrate. as soon as the world gets around to the idea that applications should be written on a platform and then taken to mobile as a set of drivers instead of build is a series of silos, we will see the mobile revolution come due. >> it seems your business is really about consulting and lots of bodies being put to work as consultants for you. where does the scale show up in your operation? >> it's about getting your applications rapidly deployed. dallas, fort worth, they have had our software for 9 months. they have been able to roll out 18 applications. they've got security issues, scalability issues, privacy issues, world-class problems, and they can solve it at a g.a. level. you can only do that if we have gone beyond services, which would have taken a year. >> appian ceo matt calkins,

thank you very much. a bogus report sent blackberry surges -- shares surging yesterday. what does blackberry really look like right now? ♪

>> i'm scarlet fu. we are on the markets and here is the fallout from the swiss national bank posta price decision to scrap a currency [indiscernible] the u.s. treasury's yield of 1.8% suddenly looks a lot more attractive, certainly compared to some of the other g7 markets. the yield is 74 basis points more than the average of other g7 countries. yields are declining. as for the equity markets the dow is down for a fifth straight day. there are lots of 100 points. yet another triple digit point for the dow jones industrials.

the swiss national bank abandoned its currency tag. euro losing ground ahead of the ecb meeting. ♪ >> welcome back to "bloomberg west." the headline sent senators scrabbling yesterday. reuters reported that samsung made a big offer for blackberry. they cited an unnamed person and documents. blackberry shares went bonkers jumping 20% at $1 billion in market cap. what is the real value of blackberry? it raises the question. to help us answer, alex bring to and achieve officer at idc. this issue of buying blackberry has been out there for a long time. people use to look at the cash

flow. now they look at the business. what do they see? >> when you look at the business you see a couple different parts moving in different directions. he did some things that others were not willing to do, which was outsourced manufacturing. that has helped the gross margin story on the hardware business, but they are still not growing that business commensurate with the rest of the industry. when you start getting into the software side of the business, the software side of the business is small. it has been growing. you get into the i.t. part of the business, which is a question of what is it worth going forward. in the smartphone business, that could be worth a lot going forward. some of the patents they have are around things we are concerned about right now, which is managing wireless spectrum, security, and the physical fundamentals around how you actually -- what you can do with a smartphone, things like keyboards and other ergonomic

issues. when you look at the different parts of the business, samsung is an interesting company. they are into security like no other android supplier is and they want to differentiate on top of the android platform. >> when you look at this company is there a sense they are doing everything they can to position is for sale? >> right now it seems like john has his head down, trying to position for growth. they are still kind of missing on sales. you knew look at where he's building, that hardware business is 45% of the business. service is 45%. the software side of the business is only about 8%. he is looking to grow it. he's doing that by going after a partnership like we saw with samsung a couple months ago allowing samsung to use blackberry's system, which lets

companies manage different devices, what data goes to what person, what kind of devices are able to access the data. he's really pushing the nontypical blackberry products not necessarily the hardware. he's pushing more into the software and services. >> interesting stuff and for fixing the inventory issues. on the conference call, there seemed to be consistent questions from investors about what are you doing about inventory. all the cheap phones, what are you going to do. >> the only phones he has really introduced are the passport and classic, which are really geared towards the business customers high security, high usability you have that keyboard in there. he's trying to clear out the old stuff, bring in the new. you did see the interesting thing at sony when they got hacked. you saw their employees digging up their old blackberries. they were the most secure and they trusted them to keep their

information safe. if there is an inventory issue there, he is tried to move past it. >> the cat was already out of the bag in that case. crawford, i wonder if there is any value in this. i can't help but think that while we are talking about blackberry getting out of the phone business, we are looking at xiaomi making a big splash in china getting into the phone business. if there is some kind of value in hardware out of blackberry -- >> i believe the value is not on the hardware side. i think there are some levers that john chen is throwing around outsourcing manufacturing, blowing out old inventory, and around making themselves more attractive to the tried and true black or a customer. -- blackbery customer -- blackberry customer. what people do not realize about blackberry is the end-to-end network and the way they handle messaging so efficiently on the spectrum.

that security angle is something that can be differentiated on, the idea of blackberry as a service. if john chen could, you would like to get further away from hardware. he knows that is not a place they can differentiate going forward. you can't move that quickly when you are so dependent on that revenue stream. >> emily chang asked john chen about selling to china. his response was interesting. he's essentially taking a potential buyer off the table. listen to what he had to say. >> would you sell to a chinese company? >> probably unable to do that. one of our biggest base is in the government. so are the five i-countries. there will be a lot of regulatory issues and concerns. i appreciate that. >> that seems like a really boneheaded move to tell somebody are bidding price will be lower because a lot of the buyers can't buy it. >> ibm just offloaded a business

unit to lenovo, which is used in a lot of back end for corporate and government customers currently had to get security clearance to move forward with that deal. in terms of the kind of customer he wants, it could potentially scare people off if john chen were too had this company over to the chinese company. whether or not there is snooping and those kinds of malicious factors going on some companies and some government entities just don't want foreign governments to have their hands and things that need to be very secure and very private and not get out of the eyesight of the people who are supposed to be seeing this information. >> definitely do not want china to get their hands on all those selfies. thank you very much. go big or go home -- a lot of startups are now doing both

staying big, getting big, and staying private. now dozens of companies with $1 billion price tag -- we will talk about the growing trend of staying private next. ♪

>> welcome back to "bloomberg west." google is moving in -- moving

its google glass program out, but they are not taking the glass holes to the curb just yet. google glass will be led by ivy ross, who says it will wind down its google glass explorer program. what is most surprising is the size of these companies when they go out and the size of the companies that are not going public. tech companies are staying private longer. bill siegel joins me from new york. the second market in its first iteration was a different company. let's clear up what you guys do. you used to go in and create a marketplace. accredited investors could buy

-- what is your company buy now? >> we have come a long way since the days of 2011 and 2012 and facebook and twitter. the feedback we got from those private companies was they did not like the activity, it was distracting. we stepped back and took a tender and put a new spin on it. our service now is all about facilitating how the company tenders and buybacks where the company controls 100% of the activity. they control the price, they control the disclosure, they control who can sell and how much. they're controlling who the buyer is. about half of these transactions the buyer is themselves. their purchasing stock directly from their constituents. the other half is a single or maybe two institutional investors, some current investor or a potentially new investor like a mutual fund coming out of

the table. >> one of the amazing things is a number of companies, over $1 billion valuation that are staying private. it's growing dramatically. >> absolutely. there has been a real shift here. it started with a jobs act in 2012. a portion of the jobs act, title five, changed the act to allow private companies to increase the amount of shareholders they can have from 500 to 2000. it exempted employee shareholders. this is very important. if this law had been in place, a lot of the venture backed private companies that went public with not have had to go public when they did. -- would not have had to go public when they did. in 2014, we have over 40 venture backed private companies valued at $1 billion.

>> it makes me think about lots of implications, not least of which is a guilty pleasure about the journalists who don't know how to write stories about companies unless they do and ipo. it makes you wonder if these companies are really focused on making money and building out great goods and services and not focused on the financial transactions, they can get in front of those important goals. >> exactly. it is one of the reasons we developed our solutions so these guys can focus on their products and their businesses and not have to worry about a secondary market that is distracting their own employees, where the price is changing every single day. typically are best clients will do a liquidity event once or twice a year and they will structure that liquidity event so that current employees are allowed to liquidate their

options. they are allowed to get liquidity on their stock. it allows them to look at their options as a portion of the regular compensation. >> let's talk about those sellers, who they are, and the sellers that come to second market. who are the kinds of people selling? i always thought business would be a lot bigger. >> the companies coming to us have these transactions already baked. the type of companies typically seven or eight years old, has raised $150 million in capital and has valuation of around $1 billion and typically 300 employees. these are large, established companies. they are coming to us and saying we want to offer this as an incentive as part of our equity , and we want to do it on a regular basis so our employees know they can count on us. >> i'm also surprised you got so

many companies doing share reports. why do companies when they are private -- companies use their actual treasury dollars that are so precious for a start up, why are they using that capital to buy back shares? >> it's very common for these companies to do a primary raise, where they will issue a new security to an investor and immediately following that, do a secondary. we will use a portion of that capital they raised to conduct a secondary thereafter. when you look at these transactions, the average transaction we did was $20 million. we had some that were several hundred million dollars. what is more important is the cadence. the companies show the employees we are going to buy back stock every year. it doesn't have to be a monumental red letter deal, but we are going to buy back. >> interesting business.

bill siegel, thank you very much. "bottom line" with mark crumpton coming up at the bottom of the hour. what have you got? >> today's move on the swiss national bank to end its minimum exchange rates stunt the global currency markets. what are the implications for the u.s. federal reserve and the european central bank, and how will investors respond going forward? a colleague scarlet fu and lisa abramowicz will have analysis of the action. the academy award nominations are out. the senior media analyst will look at who is in and who was passed over in this yours oscar race. -- year's oscar race. >> they make more than pocket knives and cuckoo clocks in switzerland. >> oh, geez. matt miller, our friend. >> he keeps things interesting. i can't wait for this story.

>> thank you, cory. >> it has been almost two years since tumblr was sold. ♪

>> i'm cory johnson. this is "bloomberg west." the ceo to $1.1 billion for the deal in 2013. he told emily chang that russ meyer's has helped tumblr amass more than 2 million -- marissa mayers has helped tumblr amass more than 2 million blogs. >> marissa mayer's acquisition strategy has been criticized and tumblr is the biggest acquisition she has made so far.

critics have said tumblr wasn't making money. how do you respond to those criticisms? >> we are growing fast. if she wanted to go out and buy a profitable company at the time of acquisition, there were and still are plenty to choose from. she saw a real path forward in something that she thought could be not just a really big business, but a business with a lot of alignment with yahoo!. we are a year in. we are starting to prove that. we are about to have a lot to brag about very soon. >> what is tumblr's ad strategy for growing the business now that you are within this bigger company? >> we have this really novel ad platform. it's about wide open creative expression, trying to get the most creative parts of the ad industry the people who got into the industry to make ads.

they tell the same stories tom inspire us to become customers of these grants, get us to aspire to drive the beemer or drink they coke. yahoo! is building more and more of their contents on top of tumblr today. the digital magazines you have probably heard of, yahoo! tech and yahoo! travel, those are built on top of tumblr. what was launched a few months ago was the ability to take that advertising for the tumblr network where you come to get the reach demographics and engagement of the tumblr network, you take that and offer it to the full reach of the network of you who. >> catch the full episode tonight. "bwest byte," we focus on one number that tells us a lot. shelby holliday joins us from st. louis. what is the byte? >> it's really warm out here.

today's byte is 1121, the percentage growth of tech startup funding in st. louis making st. louis the fastest-growing tech city in the united states. i'm not saying st. louis is the next silicon valley. all you people in northern california can cool your jets. >>there is body of talent. it's relatively inexpensive. the toasted ravioli is a big hit out here. there are a lot of young people out here and schools like wash u., st. louis university are very invested in entrepreneurship. the government is very committed to startup funding as well. there are a lot of incubators, a lot of accelerators. he will say this could be the next big midwestern tech hub --

people say this could be the next big midwestern tech hub. >> so is new york, scottsdale. everyone was a little silicon valley in them -- wants a little silicon valley in them. why not? >> i was reading a tech blog. it said that v.c. wealth here is growing. a lot of people in the city have more money and they are looking at what to do with it. tech is hot. the percentage growth more than 1000% -- that is a big number right now. maybe this will be on the map in a few years. >> just shows you how technology is being embedded in every kind of growing business of every stripe and everywhere. thank you very much. get the latest headlines all the time on your phone, tablet bloomberg.com and bloomberg radio. ♪

>> from bloomberg world headquarters in new york, i'm mark crumpton. this is "bottom line." to our viewers in the united states and those of you joining us from around the world welcome. we have full coverage of the stocks and stories making headlines on this thursday. shelby holiday in st. louis missouri home of the gateway arch, to talk about an architectural arms race with skyhigh ambitions. peter cook in