>> from pier 3 in san francisco, welcome to the best of "bloomberg west," where we focus on innovation, technology and the future of business. i'm cory johnson. every weekend we bring you the "best of west," the top interviews with the power players in global technology and media companies that are reshaping our world. to the lead story, president obama addresses issues critical to technology. net neutrality was one focus but the president said a lot about cybersecurity. the u.s. could be at greater

risk for an attack if his cybersecurity bill is not passed he said. > we are making sure our government integrates intelligence to combat cyber threats just as we have done to combat terrorism. tonight, i urge this congress to finally pass the legislation we need to better meet the evolving threat of cyberattacks, combat identity theft, and protect our children's information. that should be a bipartisan effort. >> will companies support the legislation which main dates the sharing of information between businesses and the n.s.a.? joining me is the chief strategy officer, chas fulgham. a former c.e.o. of the f.b.i. i asked him if the sony hack could change the way they look at cybersecurity. >> i think it has changed. people tried to tack for notoriety and publicity.

today, it is about money. if you have information that is valuable to someone, they will come after you. right now, organizations need to do everything they can to safeguard information and be able to react when they do experience a breach. >> what in the president's legislation is best about what could be found? >> it is a noble first step. i think the administration -- >> that means you think it stinks. >> well, last night we heard the president talk about cyber security just a little bit. but to get into the state of the union, that is a big deal. when has that happened before? the president has to talk about all kinds of different things going on in the world and cyber finally got the first notice that this is important and we need to come after this as a team. >> both the government and commercial. from a legislative standpoint we have so many companies in silicon valley whose businesses have been harmed, they say, by the nsa's policy of vacuuming up information and it has hurt

their ability to sell internationally. those companies don't want to have to share with the nsa and fbi and the president suggests they have to do that and it would help them protect themselves. what do you hear your customers starting to say about cybersecurity protection plans? >> i sat with the director for three and a half years and i remember when i would go out and visit companies or conferences and people would bring up the nsa or some type of information gathering would come up and i would say you've got to realize, think about about being an f.b.i. agent. you have to balance trying to stop that from happening and put bad people away. but it's the only organization that is there to safeguard your civil liberties. think about you being in that job and saying i want to try to stop that thing but we need access to information. if we are going to try to live in a safer world, we are going to have to empower some

organizations to go after people who want to do harm to americans and allies and our businesses. >> there is an old "new yorker" story that says there's more new york city police officers and fbi agent. i was starting to think about what their capabilities are to fight cyberterrorism. does the fbi have enough resources? >> the new york city police have more police officers in the city than all employees at the fbi. we are a very small group, but very dedicated. these men and women go out every day trying to protect our citizens, trying to do their best. i can't talk to you about the programs there but i got run into programs where i was that -- would sit there and look at the person briefly and go who thought that

up? some of the things you see in movies and tv, we have those tools. >> talking about net neutrality. this comes as house and senate subcommittees hold hearings on the issue. the f.c.c. is set to have its own rules in weeks. >> the interesting thing from our conversation, maybe it was only two or three months ago. we were talking about are rules needed at all? today the conversation is how do you put those rules in place? >> who has changed their mind in where elected officials have gone on both sides of the fence.

it wasn't too long ago they were saying no change was needed. >> the republicans have taken real steps forward but the fcc, chairman wheeler is five weeks away from voting on rules. i think we will have to -- a chance to see what will come out in five weeks. it is certainly heartening for all of us to hear republicans and democrats say enforceable rules are needed to protect an open internet. >> so what is it that made the republicans who were against this change their mind and decide there for some sort of regulation on the internet? >> the one piece you were talking about in the previous segment is should the fcc reclassify broadband providers as a telecommunications service versus an information service. >> title ii -- let me paraphrase it -- it essentially says companies have a responsibility to the public and have to offer services in a fair and open way even though that might raise costs. >> exactly. that is essentially right.

that has been the sticking point for republicans and democrats. we saw in the hearing this morning, but i think paul mizer from amazon nailed it from the consumer standpoint -- and from our standpoint. we are results oriented, we want to make sure at the end of the day that the internet is open and for 99.9% of internet users, they don't care about how it happens. it is congress or the fcc, they want to make sure they are protected. the internetthere is no blocking and no discrimination. is open. applies to wireless as well as a wire line. >> that does raise the cost for companies like time warner and come cast and beyond. a lot of money has been lobbied on that side of it. comcast spends more than any other company. the internet association they've spent a lot of money lobbying as well with google spending $13 million and facebook spending $7.4 million and right on down the line.

amazon, yahoo!, ebay, all spending money on lobbying. are they getting what they are after? >> i think today the conversation has shifted. there is broad recognition that internet users need to be protected. i would rather have the conversation on how to we protect users rather than have the conversation be should we protect users? >> michael beckerman, c.e.o. of the internet association. up next, we're going to pivot back to securities talking about a top executive and co-founder of the security firm lookout. that is next on david west.

>> this is the best of westmoreland. i'm cory johnson. cisco has just released its 2014 security report. think their security tools or vared or effective evened a they use only standard protocols to prevent breaches. i talked about this paradocks with jon stewart. >> it is a combination of elements. the first is with an industry that is only about 25 years old we're looking at an experience that hasn't been built up through all the companies. there is a perception and reality gap where top leaders will see the strategies and operations will be concerned they have not gotten over the goal line. >> is this bravado, or do they just want to say this because

they do not dare tell anyone they think their systems are weak? >> even i have got a little bit of that confidence factor where you do not want to's start off by saying, hey, we got it all wrong, let's go from there. this is one of the things in the security report we published. there is widening gaps between a whole series of things. partly the understandings at the top and the understanding at the operations level. >> so, the bosses do not get it less than they did not get it last year? >> partly it is more bosses get it at all. it is starting to turn into a place where the board room is having conversations about cyberwhich is relatively new. >> i think the sony hack has -- there is a lot of reasons. one is the embarrassment factor, the notion that the corporation became the target of a possible -- of a powerful nationstate. north korea is a joke in many governments. there was a new york times story yesterday. they invested a lot of money in going after attacks like

this. that must have scared the be jesus out of the board that pays attention to these -- that must have scared the beejezus out of the board that pays attention to these things. >> the corporate directors have talked to boards about the f.c.c. and has weighed in and said there is a particular risk factor for these businesses and it is increasing. the volume of the attacks, the number of companies, the number of situations receiving press, and the fact we are having a national dialogue about it completely tells you that boards are getting more and more aware. >> your report is fascinating. it talks about threat intelligence. what is the nature of the kinds of threats we are seeing now? is it that most of them look like this? >> yeah, most of them look like this. then there are the small ones that have heavy impact in high-impact situations. what most look like -- and we all experienced this in our day-to-day life -- you get spam e-mail. the technique being used to deliver it changed last year and the quantity went up by 250%.

that changed the entire modality. >> what changed? >> technically -- >> this is "bloomberg west." >> i understand completely. it used to be the in's rotation protecting -- the instrumentation protecting copies was when you got volume. tons of it was bailed. if one got in, great. that kind of email coming from those places -- >> so, if we see 300 e-mails that advertise viagra, we know that is spam, so we reject them all. >> and then e-mails that come from sites where it is obviously being generated, then you block it. what happened last year is i decided i am going to send the order for e-mails from 1000 different rights, very small, very low. because they are not hitting that volume attack or hitting those bad known addresses or bad sites. now it gets to the user.

when it gets toit is game on. user, then if you actually double-click, then i might be able to involve you in an attack on the organization locally. >> that was other john stewart. i recently talked to lookout's co-founder and talked about the most dangerous threats to our mobile phones. >> i think the biggest danger is download ing bad apps to their phone. they can take your phone hostage. >> getting hacked or attempts coming their way.

>> we estimate 60 million android users around the world. 7% of our users in the u.s. got some sort of malware on their phone. one of the biggest trends now increasing, we have this trend we call ransomware. it may be an app you download to your phone. it is most commonly seen in pornographic apps. as soon as you install it, it will take over your phone, lock you out, and charge you several hundred dollars to get access back to your phone. >> this is only happening on the android phones, not the iphone? >> yeah. since androids are so much more popular in the world, they can infect the most vectors. we see ios risk now being what android was in 2010. they are just starting to be targeted. >> and in china more people are breaking their phones and trying to get around the protection

anyway. >> yes. many people will download apps from a little stall. many people will download apps and bypass the app store protections. >> there is a big business on the other side of that. what is that business? who are these hackers and how big is that industry? >> it is very big and very broad. it is like trying to classify all crime in the world. crime can take many different flavors. we see risks to individuals. the risk is bad guys stealing your data. trying to get them to pay money on their phone bill or for ransom. for businesses -- >> i don't care about people. i care about businesses. because that is what the show was for, to help people understand how technology is changing business. >> absolutely. what we have seen is historically and i see you have a separation between enterprise technology and i.t. technology. with mobile, people are bringing their personal phones to work more than ever. what we see, when we talk to chief security and information officers, their biggest concern

is people bringing malware that they may have downloaded an app on their personal phone, then bringing it into the internal corporate network. you have all of this investment in firewalls and corporate infrastructure and one bad phone -- >> we have seen a really dramatic thing in the last few weeks really. the north korean attack, the presumed north korean attack on sony. it was really targeted at that business. it was not something an individual got involved in. are we seeing a changing threat across the board and who is doing that and what they are after? >> for businesses, two major actors are cybercriminals and state-sponsored actors, but sometimes they blend together and it is hard to tell. there really has been a large growth. >> give an example. >> in the case of google. google widely reported they believe they were hacked by china, as far as a state-sponsored attack. whereas in other cases, you have anonymous banks being targeted,

often eastern european criminal gangs. for a business, this is a big problem. anytime there is a large amount of resource being put on targeting them, it raises them up. while android for example -- we see a lot more threats to the average user, where the bad guys are targeting a metric ton, ios versus android, if they are targets attacks, they are equally at risk. >> amazon's latest venture, feature films. can they compete with major studios or are they just spending more money, good after bad? that story is next on "bloomberg west." ♪

>> i'm cory johnson. this is the best of "bloomberg west." amazon aims at hollywood after winning two tv awards at the golden globes. they announced they are going to produce 12 feature films a year. the movies will first be released in theaters and then on amazon prime. can amazon really make it big on the big screen? >> this is a continuation of a trend that is new in the past few years. there is a new frontal assault on the traditional thee at cal movie business where theaters would have the right to show movies without any competition from other distribution sources. with growth from netflix, amazon that is called into question now. right now the theater rornse not going to give, it seems but eventually i think it is going to change.

this is part of an evolutionary process that is going to change the way movies are distributed. right now, as you know, the audience or the viewers have changed their viewing habits. people are still watching movies on at here thes but they are also watching them on their laptops. >> why do you say thank god? >> i happen to be a traditionalist in terms of i really enjoy seeing movies in a movie theater. i think there is something about that experience that is thrilling, exciting and fulfilling. on the other hand, i've got to competing thoughts here. the growth of places like amazon, netflix, hulu plus -- it means there are far more outlets available to the creative community to create content and more opportunity to create content and more ways to get

that content to the audience. then i think one of the significant things of the amazon decision, they made it very clear they are going to make a certain kind of movie. in other words, they are talking about movies in the $5 million to $25 million budget range. primarily, you're talking about independent movies like "grand budapest hotel." we -- or "bird man". we are not talking about "the transformers." so the creative community response to that. >> don't rip on "the transformers." wasn't that made by an nyu graduate? laugh -- [laughter] this opens up amazon to awards. does that change the marketing aspect if the movies are actually any good? >> amazon already saw that it got a huge benefit from one of its tv shows. getting the golden globe award. they got a huge buzz and huge

publicity off of that win. it was the first time a show like that had won a golden globe. when you're doing lower budget indy kind of movies part of your strategy is to do imaginative or original material and get awards that will encourage people to go see it. on the flip side, i thought last week what was interesting, you could see the power of the oscar nominations when you have the success of "american sniper." it broke all kind s of box office records when it got the six nominations. that can be helpful. >> i remember when i was an undergraduate at nyu, film students running around talking about a graduate student called spike lee. i wonder what your students think of movies that are going right online and think of things going to youtube -- if they are

still thinking about feature films or if they are thinking about doing things on youtube? >> i think young filmmakers today have to adopt a multipronged strategy. obviously i would say they would still like to have theatrical releases but they realize the value of youtube and online to get noticed. when you are a young filmmaker today, you can get the attention of hollywood without actually going to hollywood or getting an agent or studio behind you. if you can create something that stands out and is original and simultaneously build a social media following, you can get discovered in some ways easier today than when i came up in the business in the 1990's. >> still ahead, the world's largest online platform for cool pictures just got bigger. we'll talk to the c.e.o. of

shutter stock. the global boom in the selfy. next on the best of "bloomberg west."

>> you're watching the best of "bloomberg west." we focus on invasion, technology and the future of business. let's take a look at the big picture by turning to shutter stock. millions of royalty-free stock photos. they have been off to a shopping spree lately to boost its business. that cost $33 million. they also boughtlibrary for $32 million. british image joining us from new york, john oranger. 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 called rex. >> are these sort of and-one 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 to access these assets. >> rights are always an issue particularly when you talk about

things like music and we look at those image of athletes. 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. we get about 60,000 images every day added to our library. on the video side, anyone can contribute stock video and we sell it to all agencies and even hollywood studios. with music, it is a little more complicated. you kind of have to know the creator, the producer. the reason why we purchased premium beat was to accelerate the entry into that market because the video commercial licensing base -- people who need video also need audio.

>> i came across a statistic that i tried to fact check. that more images have been taken in the last two years than the previous hundred years of photography. do you see that in some way? do you know what those numbers are like? are selfies filling the world with more images? >> i believe it. we are all photographers today. everybody is running warned a camera that can shoot very high quality images in their pocket. you can upload them instantly and get feedback on those images instantly and get kind of tips and tricks from people online as a way you can kind of accelerate your way in quicker than you were able to this the day s of film. >> i grew up in rochester, new york. kodak was everywhere. the joast eastman museum. -- george eastman museum.

it is sort of amazing what happening in the world of photography. >> it is interesting. it the entire spaces being democratized. it was kind of difficult to become a professional photographer. very expensive. 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. interpreting. that process has now been accelerated into the split-second. you can instantly know what you need to get better at. today we have 60,000 photographers around the world creating amazing images for us. we have hundreds every day. >> that was founder and c.e.o. of shutterstock. could new enterprise technology companies bring an end to cisco, microsoft and i.b.m.? that story is next on "bloomberg west."

>> this is the best of "bloomberg west." i'm cory johnson. with advancements in open source it software, mobile cloud computing, the enterprise business is going through massive change. the new kids on the block with leading the way. case in point i.b.m.'s fall in sales, failing to adapt to the cloud despite billions of dollars in effort. i spoke with an investor in enterprise companies. >> i think we're at a point in time where enterprise tech has been around for a long while. it has built some great names out there. i.b.m. cisco. >> you're going to start with cisco? i always give my old employer great credit. >> i think that we're at a point in time now where there are a set of new transformtive trends,

technologies, technology disruptions that are happening an we're setting the seeds for the next generation of companies. 20 years from now when we're on the show talking again, we'll be talking about different companies. >> it is interesting that some of the companies are having success, you know, amazon maybe is an outlyer, are new companies. why is it some of the companies -- we're talking about the things you know best. why are the new companies succeeding when the old companies can see those trends? >> if jour trying build a service that is cloud-based, a server company is going to suffer. some of these new technologies have been adopted by younger companies and company who are willing to take the risk of a

technology that might not be perfectly secure or totally mature but they are willing to go out and build components for that. sometimes those things are destructive or they are painful for incumbents who have a certain profitability and business model they have built up over the past 20 years. security is obviously we're going through the sony hack at the end of last year. security has always been a problem or an issue for enterprises but these thefts have been burglaries or thefts of a few credit cards. the sony hack could have torn the company apart. >> is the same dynamic in place where big incumbent companies

can't respond to the changes? it was always we will respond to the newest, latest threat s of what we do. >> well yeah. they will throw solutions at the problem but they are not looking really at the latest threats and the latest hacks that are happening. new kinds of attack services exist. mobile or cloud. another attack surface. all of these new attack surfaces, they don't see them as much as some of the younger companies like lookout for example, who are completely focused on the mobile side. >> infrastructure, something you know well from your days at cisco. i have a hard time figuring out which infrastructure companies matter and which ones don't. >> you have to look at the themes that are transformtive. disk-based media to flash.

it is now becoming an enterprise trend. >> instead of a macbook that was so skinny. a few years ago, people would have poo-pooed that idea. today they are doing great. >> one of the reasons it is happening quickly the s the data architecture is changing. you can write to multiple drives. if one fails you have another one that is instantly available. >> you a lot of other benefits too. some of the flash technologies which allow it to be cheaper, cooler etc., etc. in the data architecture side, what you actually see happening is first of all we have a big problem. we have a lot more data.

orders of magnitude more data. storing, you have to make it a lot cheaper. managing it is a lot harder. you need a whole new suite of technology. that's opening the road to technologies like hadup. it provides the ability to discover the right amount of data and right point amid this vast universe of dats. >> that was mike from index ventures. coming up, how the auto company is teaming up with technology companies to bring us the state of the art cars. we're talking with mark fields next on the best of "bloomberg west." ♪

>> i'm cory johnson. this is the best of "bloomberg west." tech companies have been giving an unusual focus to cars, self-driving cars, connected cars wi-fi enabled cars. car companies are also paying attention to technology. ford opened an innovation company. matt miller was at the center of the action in palo alto with an exclusive interview with markfields. >> 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. they come up in meet-ups, etc. 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.

we want to lead in these areas. >> automakers and the media focus on the car and when i look around here sh and got a little tour a moment ago, it is clear that you are focused on a lot more than just that. >> that's why we call it ford 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. not only is it just an auto company, which is very important, but it is also a mobility company. we want to drive the business forward. we want to make the world a better place, and in that is

their business opportunity for us beyond our traditional business. >> you're doing experiments all over the world, in 20 different cities, as far as different kind of mobility solutions, you are putting sensors on bicycles. pedal 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. we're not going to 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. we're seeing trends as a business. it is very important for us to look at trends and project 15 years out. we're seeing trends around these growing megacities or 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 is there a business opportunity in there beyond just selling more cars and trucks. because clearly congestion is going to become an issue. but what we are doing, we are experimenting. and we will learn. we will succeed in some. some we won't. but it will inform us. when we come out with these products and services, we wanted to make sure that they are accessible to everyone. not just a certain portion of the population. >> i noticed a lot of different silicon valley brands in this building as well. you're partnering with people like next, which makes 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.

again, that is why we're moving here. part of ecosystem 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 equal three. in the situation with nest, it is 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. >> little product plug. i notice, if i'm 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. which is pretty cool. >> 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. hardware innovation, etc. think broader than that. and think from a customer standpoint and see what happens. when you do that, magic happens. >> bloomberg's matt miller along with ford's c.e.o., mark fields. >> we're going to talk to the head of a web video net doing some really cool videos online. check that out. ♪

>> welcome back to the best of "bloomberg west." i'm cory johnson. the web video destination sports clip just raised $20 million. not espn.

the company is called whistle sports. it focuses on the kinds of clips you won't see on espn, like this. ♪ >> terrifying. i talked to the founder and ceo john west. this is whistle sports. what are you trying to attract? >> we focus on young millennials. this generation between 13 and 34 that have very different media habits and different sports media preferences. from the beginning, the objective was to give them their own authentic type of sports media on the platforms where they are today, which is largely social media platforms. they are increasingly adopting short form video as a primary media content. >> you started this company.

you are ceo. what was the inspiration? people have been trying to do media around alternative sports for decades. >> it's personal. i have three young kids and i sold my last company and took some time off and was at home. while i was at home with my young kids, i watched how they were consuming media and it was very different. they did not want to sit back and be broadcast to. they were not scheduled based. they want to lean forward, engage in the content and have a social and digital conversation. when we started looking at sports, they had not only the pro sports heroes, they had youtube sports heroes. and wanted to follow global sports. just very different media habits. there are 2 billion of them globally and 80 million in the u.s. who are underserved. >> the whistle sports youtube numbers are interesting because i feel like it demonstrates the long tail approach.

the notion you can have lots and lots of channels that would appeal to varying interests of a big group, even the none of them represent a single big group. >> i think the wave that media is evolving, certainly for our demographic, it is about mass niche. we have 240 channel partners today. i suspect by the end of 2015, we will be up in the thousands. there are lots of individual sports that might not get traditional media coverage, but there are fan bases globally that are significant and with digital media and social media, they can only harness them. >> the big issue with that is those partners you've got to get involved in some way -- you have partners in the nfl and the p.g.a. tour and major league baseball nascar. they don't want their stuff online for 20 viewers to watch in an occasionally seen and much loved youtube channel. don't they want to get big licensing fees you can't possibly pay? >> different leagues are at varying points in the

progression toward where our demographic lives today and part of the value to our partners is we've got 13 million subscribers on youtube and the total reach we have is close to 50 million growing by 2.5 million a week. we are able to take that young millennial audience and reengage them around traditional sports in a way that is unique i -- by bringing a sports partner to a tent pole event or a facility with pro athletes and provide that authentic view of sports that resonates with this demographic much more than traditional sports or typical coverage. >> one of the toughest things for media when it comes to long tail business ideas such as yours, is having things that are high enough quality and low enough cost that you can survive on a channel with a couple of thousand viewers so you can put

out a hundred channels or that channels, -- 245 channels, whatever you've got. what do you do to make sure this stuff is really good but cheap enough to produce? >> great question question. the bulk of our content is created by the community on youtube and other social platforms. we are creating about a thousand videos a month on that ecosystem. we have some original content but when you involve the in -- the community in creating some of the videos, which is part of the digital dna that's different for digital natives, it is cost effective and the best rises to the top. that's one of the best things about this new way to create media is audiences find the great talent. it is still really about quality content and entertaining content but our demographic probably defines quality a little differently. >> john west, founder and ceo of whistle sports. that does it for this edition of the best of "bloomberg west".

you can catch us monday through friday 10:00 a.m. and 3:00 on the west coast. we will talk to you next week. ♪

>> the following is a paid program. the opinions expressed do not express those of bloomberg, its affiliates, or its employees. >> the following is a paid presentation for p90x3 brought to you by beach bodies. ♪ >> do you wonder what it would be like to be in amazing shape? you look in the mirror and wish you had a sixpack? do you want a body that can perform like this and look like this?