>> live from pier three in san francisco, welcome to bloomberg west where we cover innovation technology, and the future of business. i'm cory johnson. u.s. stocks rally with the s&p 500 raising his loss for the year. this is after the european central bank announced a 1.1 trillion euro stimulus program. here is ecb president mario draghi. >> the ecb has done a stake further, but it is now up to the government to implement these reforms. and the more they do, the more

effective would be our monetary policy. >> 60 billion euros worth of bonds every month until 2016 to jumpstart the economy. amazon is beefing up the cloud business again. the e-commerce giant, the deal not closed. it would update disputed performance of various data centers all over the world. the price tag is $370 million. dreamworks animation has cut 500 jobs. it the company has also cut its output to two films a year instead of three. flops like the greats, mr. peabody and sherman, turbo. is tom brady a cheater? underinflated footballs he says no way.

>> i didn't alter the ball in any way. i have a process before every game where i go in and pick the balls that i want to -- the footballs that i want to use for the game. our guys do a good job of breaking the balls in. they have a process that they go through. when i take those footballs out at that point, to me, they are perfect. i don't want anyone touching the balls after that. i don't want anyone rubbing them, putting air in them, taking air out. to me those balls are perfect and that is what i expect when i show up on the field. >> will belichick also denied any knowledge of under inflating footballs. now to the lead. a critical time for ebay, laying off 2400 employees. 7% of its work horse. the market -- workforce.

facing intense competition from amazon and beyond. there are not two but three separate companies. they sell off their enterprise unit not too long ago. carl icahn, he got one of his nominees on the board. mark joins the right now. it's a really interesting quarter from ebay. it was almost dramatic. 1%? >> there was a heck of a lot of noise out of ebay this quarter. the stock is working off or brick catalyst because the fundamentals are deteriorating. it's easy to be upfront about it when they are focused on it.

we have seen a spike in deflated footballs for sale on ebay. >> i want to separate the investor interest in once going on in the business. they are going to cut some cost may be etf will go up eventually and the paypal spinoff seems more certain. >> nobody on the street brought this up but there is clear competitive risk that is accelerating. amazon and ali baba. those companies are starting to have a material impact on ebay. this was a turnaround story. they led a very successful consumer pitted. >> five years ago, negative sales growth. >> he came in, turned it around. and this year, they hit a wall. our sense is that there were not

any more low hanging fruit to pick. those assets out there international markets like russia it really started to snow ball and they are having a negative impact. they had a google algorithm change. >> you mentioned this in your wonderful note this morning. what is the relationship with ebay and google? >> ebay, showing up in the paid organic search results. the users that depended on google for a lot of traffic, when they make those tweaks, they view your traffic as lower quality, you will get less traffic. the google machine out there the ultimate arbiter of what good and bad on the internet some of these links were not high-quality.

>> it does not show up anymore because google made that change. can they adjust for that? can they change the way that they are listing or is this permanent damage? >> >> name i need to start putting money into facebook or twitter or other sites like that. they are going to that process now. they now say it has no real synergy with the rest of the business. >> that was the thing that was so important to them. they have said that they are now willing to strategic options. an outright ipo or sale to a better. -- bidder. it's a little bit of a black eye that they bought an asset and now they are selling it. and there is nothing gained or

lost. >> the fulfillment centers, it seems like a way to try to match what amazon is doing. >> that is probably the right point. they are cutting out of other things. ebay now, same day fulfillment. they did these baby steps getting into real fulfillment and realize that is not their core competency. >> keeping it with that business and having a ten-year horizon, ebay has three businesses with a one-year horizon. >> they've also talked about sharpening their focus and investments in a couple areas. they should be focusing more investments, spending more than paypal. and they should be doing whatever they can to turn around the marketplace business.

it's much more competitively challenged than the paypal business. >> going to the site, it's a massive marketplace business that once would have been an ebay kind of business. are those the kind of things that are starting to threaten ebay? >> you get these marketplaces. as he shows up as a top 10 e-commerce site in terms of your traffic -- etsy shows up as a top 10 e-commerce site in terms of your traffic. all those are eating away at ebay's market share. >> always appreciated. thank you. the auto company is teaming up with technology companies to try to bring their next generation of cars with cool stuff inside. we will talk to the ford ceo. you can stream us on your phone,

tablet, apple tv, or amazion fire tv. ♪

>> i'm cory johnson in this is bloomberg west. salesforce eeo marc benioff says that companies need to work harder on cyber security. >> for many executives they realize that cyber security has become a knock more on -- an oxymoron. we live in a world where the internet is inherently unreliable. you will have to work harder to get that security to happen. >> a good interview. check out the whole thing.

they have a history of being cheap and stingy. whether it is self driving cars greater conductivity, or other stuff, automakers are paying more attention to technology. in hopes to make innovations like economist driving widespread. matt miller spoke to mark fields earlier today and asked why it is so important to find a home in silicon valley. >> this is right for our business. we really want to be viewed as part of the ecosystem here. it just as the work that we do we want to be viewed as part of the neighborhood. this is an area where it is a marketplace of ideas and ideas come up in coffee shops, at meet ups. for us to be here, we think it's

important for us to drive innovation and drive a lot of progress that we have laid out. >> automakers and the media focus on the car and when i look around here it's clear that you are focused on a lot more than just that. >> that's why we call it forward smart mobility. the holistic view includes mobility, a vehicles, the connected car. evil customer experience and how technology will enable that going forward. by taking a holistic view, we can take the view of what is the whole experience. it is also a mobility company. we want to drive the business

forward. we want to make the world better place and in that is their business opportunity. >> you're doing experiments all around the world. as far as different kind of mobility solutions, you are putting sensors on bicycles. and i asked my tour guide, is for going to make a bicycle? he said electric bikes are very big in asia. is there a time where ford will make products that go beyond mustangs and explorers? >> potentially. it we will not be getting into the train business or large bus business, but we are thinking about mobility in a more holistic way. it may open opportunities to provide solutions to how they get around from point a to point b. it is very important for us to look at trends and project 15 years out. these cities of 10 million or

more people, we are seeing the trends are on the growth of the world around increased concerns about air quality. for us, we want to ask ourselves if there is a business opportunity beyond just selling more cars and tracks. but what we are doing, we are experimenting. and we will learn. we will succeed in some. it will inform us. we wanted to make sure that they are accessible to everyone. >> i noticed a lot of different silicon valley brands in this building as well. if you are partnering with people that make smoke alarms. so if i am driving my mustang it will pop up that there is smoke in the upstairs hallway.

how key is that, partnering with other silicon valley producers here? >> partnering is very important enough why we are moving here. as a company, we want to embrace the ideas from others as well as our own ideas. the old adage that you can make one plus one equals three. it's about how do we help customers with their home energy management? if they drive their car away, it will signal to the thermostat that it can lower the heat and reduce their bills. or when they are coming home, it will pop on. having those partnerships are so important because we can learn from each other and we can bring the best ideas together and go forward to serve customers better and provide a business opportunity. >> if i am driving home in my ford vehicle, the nest will know

what temperature i have it in my raptor and put that temperature on the thermostat in my house. >> we want to make lives better for folks. and how do we play a role in that? we are asking engineers and marketers to don't stop at traditional innovation. think broader than that. and think from a customer standpoint and see what happens. >> i noticed you hired a guy from apple. and i think a guy from apple also made the nest. are we going to see some apple type products and or type cars? >> first off, we are hiring aggressively here. when we are done filling up the facility, we will have 125 oaks. researchers, scientists engineers. we will have one of the largest dedicated teams in the valley.

we are looking for software engineers, designing. it's engineers, and business development folks. i.t. professionals. we are really saying come to ford and not only will you have a great career but you can work on really important things. >> matt miller joins me now from palo alto. interesting stuff. i think about peter lynch's thing, de-horsification. when are they looking into the clouds and taking their eye off the ball? >> it's a question a lot of people asked. they have the majority of their folks in detroit working on cars. this will only be a few hundred people out there. ford has been into this technology thing into this feature thing for a long time.

now that mark is on board, it's a passion of his is well. they don't want to miss the boat going forward. a lot of carmakers are specifically focused on autonomous driving but they are not casting his broader net as ford does. they are doing a lot of experiments. not everything is going to work out. they may hit on something that becomes the one thing we all need in our cars going or word. it makes a lot of sense to me and they are not devoting much of their resources are that you need to worry that they are going to stop producing f1 50's in detroit. >> in the auto business, is there a thought of one thing that no one realized everyone is going to need and everyone wants now? >> when i think of stuff that i never thought i would need but now i don't think i could live without, i think of that little step in the back of the truck that helps you get up and balance when you are putting stuff in and out of the truck

bed. it seems like something i wouldn't have any use for and now i use it constantly. now they are finding things that have to do with technology. i got nest installed at home and i and changing the temperature every 30 minutes. i will be able to use my car to do that as well. >> you're torturing your dog all the way from palo alto. you know you are the only person in palo alto wearing a tie today? >> i realized that when i got here. but if i not wearing one, i feel like i'm not working and i've given up on life. >> kind of like me. matt miller, thank you very much. bloomberg west will be right back. ♪

>> the annual letter from the bill and melinda gates foundation is out and in it the

cofounder says the fight of the world's order will get dramatically better in the next 15 years. erik schatzker in an exclusive interview. >> if you look at the world as a whole, it is less unequal, more equal than in the past. that is because poor countries have had growth rates way above that of the rich countries. the inequality has gone up in almost every country. i think everybody believes in a balance that you should have progressive taxation. if you get wealthier, your consumption, your income, your state ought to be subject to much higher taxes than, say, the middle class.

it is an equal opportunity is the inner-city schools are really good and the access to health so that it is not holding people back. there is an equal chance to becoming a lawyer, doctor, or becoming a good school. that is about freedom and about developing capacity as opposed to a zero sum transfer. you have fund the things that create that opportunity and taxes are absolutely necessary. it's those two operating together. taxes to fund it. and the execution of that equal opportunity. we don't have equal opportunity. it's what we aspire to as a

country, but educational loan is so poor if you grow up in the inner-city compared to the suburbs that we are not being true to our basic credo. >> bloomberg west will be right back after this.

>> you are watching bloomberg west where we focus on innovation, technology, and the future of business. 10 months since the company tried to go public initially the prospectus looked crummy forcing box to delay the ipo. they needed to tweak the business model, narrow losses. emily chang set down with the ceo a few months ago. it to what he had to say. >> you took on funding companies about at $2.4 billion. why did you take that money?

>> as you may have seen, we filed to go public in march of this year. a week after we filed to go public, there was a bit of a market correction. so you saw quite a bit of volatility and high-growth technology companies. we decided it was not the best time to bring a new company to market. we had amazing support from some private market growth in late stage investors that were interested in supporting the company. we took that money on to allow us to continue to invest in growth and the business model without necessarily going public. >> how much have you wondered did we make a mistake and file too soon? >> what is obvious is that we should not have filed when we did because we certainly dealt

with a lot of distractions because of that filing. i think that whether that was the news reports that had to happen around the business, we brought on because of the filing, it was a distraction to what the core focus is which is execution and building up the business. but life is certainly too short to have a specific reaction. we have remained in full execution mode. >> everyone can see your finances. they called it a house of horrors. it >> that is an extreme phrase. we are competing against the biggest companies on the planet in the technology industry. and so to do that, we need to make a pretty significant investment. that's an investment in research and development, our ability to actually go to market and reach

these customers. >> you are spending more on acquiring customers then you are making. has that changed? >> every dollar that we acquire of revenue is recurring annually. we have to keep them happy and compound that overtime. we are happy to reveal a point where the new investments had outpaced the revenue scale. we are at a stage where the revenue is focused on growing and we are compounding. but we don't have -- we have built out a lot of the sales. >> how much heavy thought about selling box versus taking it public? >> the company itself, we spent 0% of the time thinking about it over the past two years. >> special edition tonight.

they are offering 12 point 5 million shares, the range of $11 to $13. let's bring in institutional partners sandy miller working over 100 ipos and we have seen some that look like box before. sandy, i just described the financials looked crummy. it's a fairly remarkable thing the way this company has spent so much more on marketing than it has in revenues. >> it is interesting with box that they have achieved an awful lot. 44,000 customer accounts. it they have 225 annual revenue rate that is growing 83%. they are gaining customer

traction but they are spending to get it. they are facing pretty big entrenched competitors and they have to spend to get their product into the market. what is interesting is that there financials were all exposed early because they did not file silently under the jobs act. it's something that was a surprise to me. >> there have been so many jobs act filings. what about what the jobs act might have afforded them? >> by the way, we are not an investor inbox. we recommend that they file silently, do the testing of the waters with two shall account. and it only exposes a public offering at the time. i think a lot of what box went through in the thought process of is it too early to go public it was played out in the public arena rather than behind the

scenes which has now been facilitated by the jobs act. >> i was send to see the financial state of the company. does it really take that process or a rocket scientist to see that they are far outstripping revenues and you might want to do another round and weight. >> it is not a surprise for private companies to do. a lot of the major companies will salesforce, etc.. they have to spend ahead of time. that is why the box ipo will be a pretty interesting test of what the market will bear because it has a lot going for it. and it is a big burn and they

are asking the public investors to support that model on a profitability basis. >> talk about what this means for it to be a down around. if it goes out, the violation of the company will be -- valuation of the company will be $1.6 billion. >> when you invest in a company the ipo is not an exit. box has been smart your to do a relatively small deal compared to a massive ipo. there is no secondary selling. and there is the price relatively conservatively there were adjustments in those private rounds. i don't know the exact particulars but the prices do it just related to the ipo

price. >> let's unpack that for a minute. the late round investors keep the percentage in the early investors probably employees of the company, they see their state squeezed as a result. >> early investors ran at a dramatically lower valuation than the late stage investors. the percentage differential means a lot more to the late stage investor than they would to the early stage. it's not a meaningful change from the standpoint of early investors. i don't know how they sorted it out internally because i am not an insider there. typically, it does not have a major impact on the early investors. >> and ipo veteran, we appreciate your time. it has become a crowded space since launched in 2005.

can box really compete with the likes of microsoft, google? we will be back with one of their biggest rivals, next. ♪

>> breaking news to report, saudi arabia posco in abdulla has died at the age of 90. the crown prince is now being named as the new leader of saudi arabia. king of dollar was 90 years old and led the country for 10 years since 2005. he ascended to the throne in 2005. he is one of the 10 sons of the leader of greater modern saudi arabia. and led the country for of the last 10 years and is one of the richest men in the world, an

estimated net worth of over $18 billion. he has died today after a long illness. pimm fox joins me right now from new york. he's been sick for quite some time here. this was a very interesting time for world oil prices and what this might mean for adjustments and how much oil saudi arabia -- and how much saudi arabia is governed from an oil price point. >> it means a lot to the saudi arabian government. budget just as important. the political implications in the death of king abdullah and the ascension to the throne of his half otherbrother. saudi arabia was an ardent supporter of sunni muslim fighters in syria, looking to topple the current government of

a sod. -- of assassad. saudi arabia, a big supporter of sunni interest in the region. and his successor, the 79-year-old half othebrother is expected to continue his policies. it means the political situation in saudi arabia, not necessarily going to increase women getting the vote. not on the agenda. he will be mourned by all those in his country as well as allies such as the united states. being a staunch ally of washington since the formation of modern saudi arabia. >> a delicate time in the middle east. but anytime is a delicate time in the middle east the last hundred years or beyond but this

is a particularly interesting time given the role of the third player in terms of isis. >> you have a lot of players there. you have the shia majority in tehran. it may have been supportive of hezbollah as well as supporters of assad in syria. with the continuing conflict between the sunnis and shia it will continue to fund those sunni efforts. but also, it is coming at a time or you have a collapse of the government in yemen. the insurgents basically taking over the presidential palace. it supporter of the united states and an ally of the united

eight, but also a training ground for terrorist operations from al qaeda. the recent bombing, rather, massacre in paris of the charlie hebdo magazine and the supermarket. they claim responsibility came from factions in al qaeda in yemen. it will be interesting to see if the new king in saudi arabia will deviate from many of the policies of his now deceased half-brother. >> out remember any significant changes happening when the house was passed on from one brother to the next. >> it has to do with a generational issue. this is the generation that is the son of the founder of modern

saudi arabia. and taking over power in the country. use born in 1924. and now his half brother will be taking over for him. it will also be interesting to see that the oil policies of pumping oil and maintaining the price level right now, will that change under a new king in saudi arabia? nobody knows. if the policies continue, they will pump oil to maintain their market share. they are looking for any movement or any words perhaps, of condolences from other competing members of opec as well as iran or condolences coming in from libya.

the confrontation that continues between sunni and shia muslims in the middle east, it seems like it is set to continue. no word on if the new king solomon will be changing the policies of his half-brother. >> a time of political transition like this, one of the ways they can boost the forces of the country is to change oil policy and pop more oil. and prices go up again, because of such volatility. >> the price of oil now trading a little bit higher up $1.17 a barrel. $44.47.48. we heard from the head of opec

not to be drawn by francine in an interview that was taped in dollhouse. he was not to be drawn on the correct price or the potential price of a barrel of oil and maintained this would be set high a continuing market force. it's well-known that the history of ruling in saudi -- he was 90 years old. there is already in place a mechanism to guide the country's energy policies. and until we hear different, we will have to wait and see what the new king is going to do. >> maybe we saw this coming but king abdullah of saudi arabia passes away. power turned over to his half-brother. we will cover this story. it you can check us out online. ♪

>> i'm cory johnson and this is bloomberg west. turning to shutter stock. millions of royalty-free stock photos. they have been off to a shopping spree lately to boost its business. they borrowed british image library for $32 million. joining us from new york, john orange r. how do you see your market? >> people that use shutter stock our businesses. we sell images to companies of all sizes to sell their products and services to advertise their products and services. we have been expanding into video over the years. we have been expanding into audio for commercial rereleased stock music. and we purchased an editorial agency.

>> are these offerings or have they folded into a single offering for a single customer? >> there are individual offerings but we plan to merge them into one. you can access them from the shutter stock website. they are sold under very simple licensing terms. royalty-free so you can use them however you like to sell your product or service. we plan to make it easier for companies. >> we look at those images and those things are hard to come by. what do you do to police those rights or manage that political -- manage that issue? >> it is a crowd sourced product so we have 70,000 contributors that upload images every day.

they can contribute stock video and even hollywood studios. you kind of have to know the creator, the producer. the reason we purchased greeny and beat was to accelerate the entry into that market because the video commercial licensing base -- >> i came across a statistic that i tried to fax check. -- fact check. that more images have been taken in the last two years than the previous hundred years of photography. are selfies filling the world with more images? >> i believe it. we are all photographers today.

very high quality images in their pocket. kind of tips and trick from people online as a way you can kind of accelerate your way in film. >> i grew up in rochester, new york. kodak was everywhere. it is sort of amazing what happening in the world of photography. >> it is interesting. it the entire spaces being democratized. it is difficult to become a professional photographer. lenses cost thousands of dollars and you had to develop film that took weeks before you learned

kind of what you are doing wrong. you have to keep shooting and developing. that process has now been accelerated into the split-second. we had 60,000 photographers around the world creating amazing images for us. we have hundreds every day. >> bwest byte, one number that should tell us a whole lot. pimm fox, what do you got? >> $758,000. the brand value, brand exposure value all because of the replays of bill belichick's new england patriots press conference. when they do the hashtag for twitter.

flexball. >> flexball? it's about deflategate, and it's flexball? did the geniuses say that this may not be the best thing to stand in front of. >> they might be looking in the wrong direction. >> do you think bill belichick knew it was behind him? >> that is why companies pay the big money, to have their logos featured behind the sports stars . they don't necessarily think that it's going to be about good news. >> sergeant schultz, i did not see anything. it did not know that the balls were deflated. >> the three monkeys, right? they don't know what happened. >> pimm fox, thank you very much. get the headlines all the time

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