cory: live from pier three in san francisco, welcome to "bloomberg west," i'm cory johnson. with a check of your bloomberg top headlines, u.s. stocks posted big gains today. bank shares rallying after they passed the stress test. the dollar fell from a 12-year high against the euro. one of the upswings, poor retail sales in february which bolstered the case for keeping interest rating low. two people have been questioned in the case of two police officers shot in ferguson, missouri. >> these two officers took a

very hard hit. any time you're shot in the face and have a bullet lodged in your head, any time you have a through-and-through wound where the bullet enters your shoulder and comes out the middle of your right back those are hard hit. we're lucky, by god's grace, we didn't lose two officers last night. cory: the officers have been released state police are assuming control of ferguson. protests rose again after the police chief arrived fol -- resigned following a report that showed extreme bias. disney announced it's working on a sequel to the blockbuster film "frozen" and there are three "star wars" films in the work with detailed of two more announced today. >> the first of the films will be released in december 2016. oscar nominee chris withes is

writing the script, and we're thrilled to have oscar nominee felicity jones in a starring role. i'm also very pleased to announce, drum roll, please, that the title of the movie is "rogue one." cory: disney says it will release 11 more marvel films in the next four years. charter communications in talks to acquire brighthouse communications according to people with knowledge of the matter. both agreed on an outline of an all-stock deal, not expected to be announced until regulators clear if regulators clear it. starbucks will introduce cold brew coffee starting march 31. cold brew is different than traditional ice brewed coffee because it's steeped in cool water for 20 hours. to the late -- the latest

cybersecurity bill takes a step forward after hacks of exeans like sony and j.p. morgan chase. they voted -- the committee passed it and it will encourage companies to share information. peter cook joins us now. talk to me about what happened to this vote. 14-1 sounds like it's bipartisan. what are we going to hear? peter: it is bipartisan, and that vote total is a big deal here in washington. this is a significant step forward for this bill. we've been fighting here in washington over cybersecurity legislation for several years now. democrats and republicans agree there's need to bolster the nation's digital defenses but haven't been able to agree on a bill to do that. this bill may be the single best chance in some time to be able to do that. this vote reflects that. this bill would allow the private sector to share threat information with the government

in realtime and vice versa. the government could share information with companies and there would be legal protection for the companies for the first time. that's the single biggest component for this bill for the business community going forward. there have been concerns about privacy going forward. some of those have been addressed to the satisfaction of some democrats on the intelligence demesm question will be in the full senate, in the full congress, whether or not this bill meets that test and of course the president as well. the white house did get information on this bill other the weekend and diane feinstein said she thought there would be some -- there would be white house support for this bill but we're not clear yet where the white house stands on it. cory: how strong is the bill sniths peter: according to supports of the legislation, including the co-author, chairman of the intelligence committee, richard bird of -- byrd of north carolina it's a strong bill. not the bill he would have written had he done it on his own but it will provide defenses the nation hasn't had before, collaboration with the government and private sector we haven't seen before. i asked him if this bill would

have prevented the sony hack or the anthem hack that we saw recently. here's his answer. >> they would have happened but we might have minimized the loss because of the response time that we could have provided to those companies but more importantly, the fears that existed with other health care data companies or with other financial companies. they would have also been clued in by the federal government. cory: -- the president: again for richard burr, a strong supporter of the legislation, this is a big step forward. but there are still questions down the road. at every turn, cybersecurity legislation has been blocked. cory: i'm going to call this a couple baa moment, peter. -- a "kum ba yah" moment, peter. peter: well there is bipartisan legislation. cory: first earnings reported,

and some analysts use a different share count when predicting earnings per share. a report came out that they had 168% revenue increase but also saw a loss of $47 million in the quarter regardless of how many shares you divide that into. i spoke earlier with the c.e.o., aaron levy himself and asked him about the mixup on the per share numbers. >> we released the financial numbers and quickly realized that there was a divergence between the thompson-"reuters" calculation a lot of reports were using and the fact set numbers. on the fact set -- cory: and the bloomberg numbers. >> they were right also? cory: they were, yes. >> very good. so quality institutions here. so unfortunately what happened

was some of the chair counts that analysts were using to estimate our e.p.s. for q4 were incorrect and that led to then very different consensus number for thompson-reuters. we got that cleaned up but we had a little bit of distraction in the news yesterday and obviously kicking off the call. we thought it was an incredibly strong quarter. there's obviously more we need to be doing and that's what we're working on now. cory: i think e.p.s. is a dumb way to look at it -- well it makes sense to look at earnings per share but it's become a confused metric with share buybacks, especially right after a company goes public, and you had warrants that were converted ancon veritable shares that were converted. what do you think is the metric that will help us understand box? >> the metric we talk about is our revenue, top line, the growth rate, our operating income our convergence toward

cash flow break even which dylan, our c.f.o. announced yesterday were guiding into quarters to get cash flow even. billings which weal update on a quarterly basis is an important metric. those are things we think will be meaningful to the health of the business. cory: and the revenue did slow down. i know every looks at it year over year. i also model it out sequentially. it fell to 9.8%, still double digits, but the lowest it's been, part of it because the growth has been so fan it's a call. is your business seasonal or is it fair to look at it on a sequential basis? aaron: the seasonality gets a little blended in so deals we close in q4 don't necessarily show up in our q4 gap revenue. it's hard to look at it from that standpoint. bill sgs a way to look at that

quarterly trajectory. we think that that is showing strong quarter over quarter sequential growth. overall, another thing i should have mentioned is the number of deals above $100,000 we reported at 57 deals in q4 that were new, six-figure transactions, up year over year from 41 deals in q4 of f.y. 2015. that's things that when you look at where we're trying to shift the business, more toward the enterprise, those are the kind of metrics we think will be important to the health of the business. cory: and the marketing sense, percentage of revenues it's the lowest it's ever been it's still really freaking high. do you -- explain to me, try to do -- you try to do this in your statement, show cohorts, there are different classes of customers, can you talk to me about giving that idea again and maybe talk about what this

quarter shows further along those lines? aaron: we tried to illustrate two concepts in our s1 and road show. first was the net retention rate of our business. we have a unique model, we'll go in to a customer and sell maybe 1,000 seats of our product but we actually expect that to grow over time. many years late, we might have 5,000 or 10,000 seets of an organization we sold only 1,000 seats to only two or three years prior. one metric was a continued counter to show the growth rate of our customer sets year over year. the other metric is really around how we break down the profitability of our sales and marketing kind of motions. you have the cost to acquire a new customer and that is -- that's unprofitable in that first year, in that first transaction. you have the cost to upsell a customer which is marginally profitable, we have to pay sales reps' commissions, we're doing

marketing activities to do that. then you have the contribution margin of just the retention of existing customers or customers we don't necessarily upsell in that quarter. that's where we see significant profitability. cory: that was box c.e.o. and co-founder aaron levie. "bloomberg west" will be right back. ♪

cory: here's some top headlines. c.m.e. group has ended off-hours trading of the largest dow and

nasdaq futures contract. they are trading under e mini dow and e inside a back because they're cheaper to trade. toyota is recalling 2,500 rav4 e.v. models due to a software glitch that could cause it to shift into neutral while driving and lose power. they ended their partnership last year. ride sharing company lyft has gotten a huge funding round $530 million including tech giant racutin in japan, investing $300 million for a share of the company. they're trying to take on their rival uber.

turning to another startup this time in health care. google-backed genetic testing startup is now annoyancing plans to invest in drugs themselves. richard sheller who led genentech for years has been hired. why is 23andme getting into pharmaceuticals? carolyn broke this story last night or this morning? this is fascinating to me. ann, who running the company, covered the sector at the time. this is a very big change for them. >> in some ways you could argue it's the natural evolution of the company. first they get genetic day tark they start partnering with farr ma companies to do -- with pharma companies to do startup and now they want to turn those that into drugs.

caroline: they just got approval and now they're like, let's make drugs. cory: ann's comments to you were hilarious. caroline: she was joking, she was like, we got that test approved what's next? cory: thart a -- start a drug company, why not? what advantages does 23andme have when it comes to drugs? caroline: a lot of discoveries are based on a single strain, but 23andme has data from 650 test that they've been given permission to use for research. cory: they might be able to discover new things that no one has known before first because they have the data.

caroline: and not only do they have your genetic information, they have an infinite question box and they'll say what did you have for breakfast? do you smoke? what's your bra size? cory: didn't ask me that question. caroline: but they do get this information about customers that goes beyond just their d.n.a. they're hoping to draw ties. cory:: -- cory: it's always been a big data playism wonder if this changes their requirements what they need in the back end if they need a whole different level of computing power to understand what those results are now if they're going in this direction? caroline: it's so new and this happened so fast, richard scheller who they got from genentech announced his retirement in december and instantly went onboard with 23andme. i said are they doing rare diseases or large diseases? they don't know yet. how far are they going to take

this up to before they start looking for partners because running big clinical trials may be beyond their scope they don't know yet. cory: did you do the test? caroline: i have not because they stopped being able to do it for medical. cory: stay with us, we're going to dig a little deeper in what this deal means and how the world might change.

cory: welcome back to "bloomberg west." 23andme is transforming itself to a pharmaceutical business. and joining us is jay. you invest in tech and pharma it's all coming together, this

is an interesting development. >> it's big news. a surprise to us that's for sure. cory: why sit big news? jay: you know, you don't really think of 23andme as a company that's going to go into drug discovery. they have an interesting business on their own that's unique. cory: is this a direction we're going to see, jay, of companies that are doing raw tech stuff with electrons and big data and exploiting that or is this really a specialty that 23andme is unique in being able to exploit? jay: i think there's lots of ways to solve this problem, there's a lot of nonprofit entities that have a lot of genetic data they can use and a lot of great discoveries in terms of the genetic mechanism, disease comes out of a variety of academic and nonacademic institutions. cory: caroline is this a unique approach, to start with massive

piles of data and try to find drug information in it? caroline: it is, there aren't companies that have massive piles of data. they've been selling chunks of genetic data to pfizer and genentech and others but now they're doing it on their own. cory: do you think their business of selling to pfizer and the like will be hurt because they'll be a competitor and not just a partner? jay: i doubt it. there's so many paths to success and so many different targets, it seems unlikely that whoever their customer would identify the exact same target base odd then same genetics and then be competitive. cory: what is the hardest part for them do you think, starting this new venture? jay: i think it will be raising the money to support drug discovery. it's extremely important you know, this industry, i think, it's unique in the world in that it takes between 10 and 12 years

from a target to actually launch a product probably costs on the order of $1 billion or more per product. and you know, 90 to 95% of the time you fail somewhere along the way. i think, you know aggregating the capital to really drive a discovery forward, you know, is a challenge for anybody. we're in a good environment, good marketplace to raise money for biotech so they probably will raise the money. cory: caroline, do they think, at 23andme, that their data will have them -- help them have a better success rate? because they know, might know, think they'll know, how the drugs will react before they're tested? caroline: far total newcomer on the pharma market they are very confident and feel like they can do it better and faster than traditional pharma but also

because they say they have connections with consumers. other big pharma goes out and finds patients to use as lab rats but they say they have a relationship with patients, to say, you can help with this. they think that will make them different. cory: is that an advantage they have? is that an extensive part of testing and -- expensive part of testing and designing drugs? jay: you spend a lot of time waiting for food and drug administration getting back to you when you request to start a trial or if they need to review data and they could ask for more data. even just the final step of submitting your new drug application to f.d.a., they have nine months to review it and get back to you. and i don't know if this is

going to speed that up. cory: thank you, jay and caroline. "bloomberg west" will be right back. ♪

cory: you're watching "bloomberg quest" -- "bloomberg west" where we focus on technology. russia has expanded its presence in latin america in ways that signal, quote a clear return to cold war tactics, end quote. that's according to the general commanding u.s. southern forces john kelly. in a statement to the senate armed services committee he said that russia is stepping up efforts to gain influence in americas. president putin accuses america of meddling in his backyard by backing ukraine against pro-russian separatists.

iran's president likes that letter from the republican senator about as much as president obama does. he he said it makes him question whether the u.s. can follow through with any deal. >> these gentlemen, the senators who openly announced when the current administration is no long for the office, the deal that america is agreeing with you and the commitments it is making will be null and void. this is the ultimate degree of the collapse of political ethics. >> those talks are set to resume on sunday. two secret service agents are under investigation after crashing a car into a white house security barrier. the incident happens on march 4 as the agents were returning from a party. they have been reassigned to other jobs. one of those agents is mark connally, second in command of president obama's security detail. lumber liquidators is propre-dicting lower fourth quarter sales after its reputation suffered after a "60

minutes" investigation. they say sales will be $20 million lower than what analysts had been predicted -- predicting. here's the c.e.o. discussing it. >> we came into it with extremely positive brand sentiment with only 4% having a negative view. since the broadcast approximately 8% of consumers say they would not consider buying from us at this time. we have brought in additional resources to assist us in responding. cory: he said the company is unable to offer sales or profit forecast for the year. intel has just cut its first quarter sales forecast saying that -- the old projection buzz between $13.2 billion and $14.2 billion. now it's down about a billion dollars. the chip maker says corporate demand has been falling. it's been critical in stabilizing p.c. sales.

the tough global economy in europe is also hurting intel. former secretary of state hillary clinton thought it would be easier to carry one device for both personal and work email, and doesn't everyone. but could chef done differently to protect information and what -- could she have done differently to protect information and what can other people in that situation do? this coalescing of technology and politics, particularly interesting, a lot of people look to hillary clinton and said duh, you can have two email account obs one phone. can you when you're in government? >> yeah, you can. the "new york times" had a 13-year-old -- a video of a 13-year-old showing this. in 2012, it was a little different.

cory: on a blackberry at that time you could not do two accounts? san ji: -- sanjay: you probably could. she admitted my primary phone is an iphone i also have a blackberry. in the iphone world and samsung world it's so much easier and we have been making security management for the containerized life you can sand box your private and work life. cory: -- you say sand box, describe that to me and what the security requirements are to have really separate, private and really separate work. sanjay: we acquired air watch, a leader in mobile security. we work with the highest levels of security of federally regulated industries and government and banks. this is department of justice, white house and several others. in essence what we're able to do is create a sort of personal

space for you where you can have all your personal life, facebook or email, and then a secure place for your email primarily, it starts with email, but also other business applications higher security that is then corporate managed and corporate controls. cory: let's listen to what hillary had to say about this when she was asked. this is hillary clinton. hillary clinton: i thought it would be easier to carry one device for work and personal emails instead of two. looking back it would have been better had i simply used a second email account and carried a second phone but at the time this didn't seem like an issue. cory: is this unusual? was it unusual at the time because of the limitations of the blackberry? sanjay: possibly. i still think there were probably ways that you could have done it. i'm not going to comment on having a private server. there are ways, if you're a high ranking person

cory: bloomberg news did a story that said it was a highly unsecure way to run an email server especially one with secure information. she said she sent only one classified email to a u.k.k. official which seems incredible in a government that classifies everything willy nily but when i look at the requirements of the purchases -- purchasing in the state department white house and defense department, how are their needs different, besides the obvious? sanjay: it's not very different from banks. don't they want to secure that a banker could copy and paste a customer's information to a private email? the government has no different needs. that's why what we've been focused on how you can mix the two lives in the this post-p.c. world and post blackberry phone. -- world. i suspect today she wouldn't

make the same mistake. what happened between 2008 and 2012 i'm not going to talk about the political hot potato, we're talking about a woman who might be the next president. secretary of state kerry said what he's doing there. i suspect all the government people if they're using iphone or samsung have the separation of church and state, to speak, between their work and private life. cory: others said, colin powell did the same thing, governs did the same. when you look at this business how big is the industry for you guys of what airwatch is addressing? sanjay: we talked about this almost a year ago. here's the landscape of how big that market. is there's at least, of seven billion people in the world, at least a billion people that have -- have at least one. i have three devices. cory: three devices?

sanjay: yes. as you think about the device landscape, every one of them needs to be secured and managed for these reasons. it could be a high security thing like a bank or government use or it could be one that's not as regulated. we think that entire landscape of $1 billion devices gives some opportunity that similar to what semantic -- symantec and mcafee did in the p.c. world. airwatch is a leader in that market and we think we're on the verge of exploding that. cory: is the byiod trend of users wanting to bring their own device, does that exacerbate the problem of secure emails? sanjay: there's two policies where the company gives out phones and you have to as a forward-thinking c.e.o. of having your own -- of having a byod. there are certain places that

want you to have privacy restrictions. we're able to advise our clients about how to have the best security policy with a byod. cory: thank you, sanjay. we'll be right back. ♪

cory: welcome back to "bloomberg west." the work force of many tech companies is overwhelmingly white dudes like me. now aol, the interactive advertising bureau are teaming up to bring more diversity to digital media, technology with a new nonprofit called the i.a.b. education foundation. the two executives behind it aol c.e.o. brian arm strong and -- talk to me about why you're taking this big step here? randall: the digital technology,

media, advertising marketing industries require just a better and higher performing work forest and continuously improving work force. in order to get that continuously improving work force we have to be more open to the constituencies that make up our marketplaces, our audiences here in the united states and abroad. you've got to represent the people you work for and we don't. and so if we're going to have a better work force we have to be open to higher degrees, much higher degrees of gender diversity, ethnic diversity and also kind of economic advantage and disadvantage diversity. cory: talk to me about that, we want to provide opportunities for people hiring is hard and you want to expand your talent pool. but there's the issue of how your business changes because you understand the people to whom you're trying to advertise. >> the big -- the big thing is

how do you have your work force diversify. as much as diverse city a social and cultural challenge in our industry, i think it's one of the biggest industry challenges in general. one thing i'd love to see at my own companies is how do we make our products and service more attractive to more diverse people. cory: and the notion of how hiring works, it's interesting how these issues come up in a way that the hirers are not always aware of. urn doing a presentation on this that was fascinating, like people being passed over just because their name looks different. when i think the example was when lakesha jackson apply farce job and emily smith applies for a job, just, the numb of callbacks is half for lakesha

jackson. randall: we've been doing a lot of work with frida klein and she has some of the best research i've ever seen on unconscious bias and it's beth taking. it's so astonishing, you can't even be depressed by it. cory: examples? randall: you mentioned one, changing the names on top of resumes so that they're identifyably hispanic or identifiablely african-american or seemingly white. and the difference in callbacks is a three or four x. there was one she showed today i have never seen before. which is kind -- it kind of blow yours mind. she headlined it crossing while black. that drivers will stop for a

white person in a crosswalk, i think it was three or four times more frequently than they will stop for a black person in a crosswalk. but it's over and over and over again. she had this wonderful piece of the presentation where she had a student with whom she was working who was completely natively fluent in spanish. cory: and english, right? randall: his real name was vaughn baker. they sent him on video job interviews under his real name vaughn baker, and i think under the name alejandro diaz martinez. some of those entire views. there were four skews, some were totally fluent unaccented english, some were hispanic accented english, and again on the spanish side and the difference on callbacks on video interviews was night and tai. cory: we know there's a problem.

we knew there's a problem. when you're hiring people, what are you doing -- the one that got me was the discussion of the computer science class, when it was computer science 101 it was mostly dudes applying. when they changed the name to the joy and love of computing there was more women than ever before. tim: one thing we're doing is making sure diverse talent is involved in the recruiting process. if we're trying to recruit diverse people it's different than if they're sitting across the table from somebody who is diverse. the research studies showed even at university campuses, if that diverse person comes onto a campus, if they don't feel the diverse community is available to them, they have higher attrition rates. companies have the same problem, even if you hire diverse people if the culture is not around more types of diversity or understood how diversity affects

the culture, you end up with more diversity issues. cory: but if you send the black woman to the career fair then you say, don't forget about your real job. like it's probably difficult as a manager or a c.e.o. of a company to say this is the real job. tim: at aol this year, my personal goals for the company, we're trying to get a 30% increase in the diverse pools we recruit from. at my management table said we're going to put a diversity metric in and we talked about a bunch of different metrics. people in diversity area are worried that if you put a metric out there it's going to change how we recruit but we came up with a metric that we thought would put physical train tracks for us to get more into diversity road map in general. i think as a leader, in my position, i can affect how we do diversity inside our of our company and i can help randy with industry level things.

my goal ss a manager is to make our company as strong as possible with the best talent in the world. i think you'd be kidding yourself right now if you looked at where the internet if you don't go out to diverse populations and look forward, three, four, five six, seven, 10 years you're going to regret it. my management team made a physical change. we're going to get paid based on how we do on our metrics and profits, but also how do we open up more diversity and bring more talent into the company. cory: getting paid for it probably helps. tim and randall, thank you. we'll have more with tim in a minute. but first some headlines. united tech knowledges c.e.o. says the unit will be spun off. it's the group that makes the blackhawk military as well as chopper that -- choppers that carries u.s. presidents. they say sikovky doesn't fit

into the portfolio. nba says their referees are getting it wrong. nba referees made the wrong call or noncall 4 % of the time in the last two minutes of the game. they're reviewing it in an effort to be more transparent in explaining officials' decisions. and the mayweather-pacquiao fight is coming up. they met with the media yesterday. >> this is a fight the world can't miss. this is an unbelievable matchup. action-packed fight. cory: and the final $1,500 to $7,500 fight, could command much more on the secondary market.

cory: welcome back to "bloomberg west," it's time for the bloomberg byte the one number that tells us. here's the byte. >> 4%. cory: that means what? >> there are two 4%s that are important. one is 4% of the global $600 billion advertising industry is basically run on machines. 96% seasons. 4% of video viewing and watching of videos or tv is on mobile

phones today. 96% isn't. when you think about it, if this were a baseball game we'd be two outs in the first inning and the other team hasn't gotten up yet. we're excited about the future of the 4% going into the 96% and it's a huge opportunity. cory: randall, will we get it to the 100%? will we get nine inoffings the game? how big will it be? bill bordes won't be prommatic will they? randall: they actually are. lots of billboards are prommatically programmed now. tim was the first to speak about this, he called it the barbell strategy. there will be a big chunk of advertising that will be priced placed, optimized through automated mechanisms but we're already seing the opposite take

place. there's a big chunk of advertising that is increasingly customized specialized, really designed to fit very specific environments and very specific consumer bases. native advertising in many ways is like that. that's the barbell that tim has talked about for years. it's both-and. it's not either-or. you're going to have mass advertising that increasingly will be, again, price placed and delivered through automated means and much more highly customized marketing program. cory: we've heard this from the internet for forever. really quick, do you think we're going to see this adoption really spike this year and next year? to imngoie-hasahya we will. -- tim: i think we will. movie viewership in theaters has reached a five-year low. people are really going digital. when ugh you think about the spike, newspapers and tv, the same thing that happened, will happen in that marketplace.

cory: we appreciate your time. "bloomberg west" will be back tomorrow. ♪