tage, all of taylor swift's music videos, interviews, and more. xfinity is the destination for all things taylor swift. >> the pentagon comes to silicon valley. we'll show you the companies, the talent, and the technology the defense department is looking to recruit. >> i'm matt miller here in new york. "bloomberg west" east coast. coming up secretary ash carter talk to us about building a better relationship with the tech community and building robot soldiers. us is there a cyber security bubble? here from tanium, flexible

electronics, all that ahead on "bloomberg west." first, u.s. defense secretary says he has a lot to learn from silicon valley. he's trying to build a stronger relationship with the tech community. emily chang sat down with him. emily joins us from mountain view, california. emily, tell us all about the event. mily: the u.s. defense secretary is meeting with a number of different cyber security c.e.o.s. and the real thing that he is trying to accomplish here is to rebuild the relationship between the pentagon and silicon valley to recruit engineers who want to work for the government to change this perception that silicon valley leaders have, that they have to protect their users from the u.s. government given this is the post-snowden revelation era. he's scouting new technology.

he talked about google and drones and things that facebook is working on. this is a secretary that only has 16 months left in this administration. why should these leaders commit to him now? what will be tangible proof that his efforts are working? take a listen. >> we'll be making partnerships and direct investments as we have for decades going back to the era of jet engines right up integrated et and circuits. we can be a technology leader if we partner. emily: you understand this stuff. what are some key technologies and assets that you can get from silicon valley that you're not getting from current contractors? ashton: a lot of the cutting

edge stuff we do get. but the defense department has gotten too bureaucratic, a little too slow for the pace of people out here. so both on the people level, some of them aren't acquainted with us. and some of other people haven't understood the technology community. we need to get them to understand each other. in the technology department we have so much to learn from the cutting edge out here. remember, we don't build anything in the pentagon. upon nt in this country private industry and technology that next to the military, technology is what made us great and we need that technology. emily: so google has been buying number of robotics company, a humanoid. what -- when are we going to sew

robots on a mass scale? ashton: i think you'll see them soon. we have hell comenters, undersea vehicles. true autonomy never step forward -- i just came from a briefing a group of people that have the question of autonomous vehicles. you'll see them driving under water and patrolling cyber networks to defend them. all of those things will be done autonomously or in very creative man machine combinations in the future. we need to be part of that revolution. much of it occurs right here and that's another reason for my visit. emily: do you see a future of robot army? ashton: i think it will be a long time before humans are

entirely removed from conflict and, of course, we're always going to want human decision-making and human responsibility when i comes to the use of force. emily: what about drones? you have amazon, facebook, google making their own drones. ashton: we learn a lot. they're learning things about how for example to do logistics. we do a lot of logistics. that might seem mundane but if you're fighting in afghanistan, iraq or syria we're getting forces and equipment in is vital we learned something. we learned somethng in areas like warehousing and inventory management that may sound mundane but we're spending the taxpayers' money. we learn about efficient tech necks -- techniques.

emily: give us a sense of the severity of the hacking unclassified system of the joint chiefs of staff. and to what extent has that prompted you asking silicon valley for help. ashton: it is a sign that we're not where we need to be. we've known for decades that information technology was going to be critical for the military edge. so we have a lot to learn. -- clearly our joint chiefs of staff network. it wasn't exploited in a dangerous way and it resulted actual from a simple failure. somebody opened the e-mail. in all companies we are warned against doing that. so it was fairly mundane but something that mundane could affect that important network shows that we're not where we need to be. we need to be on the cutting edge of cyber defense and this

is the place with the cutting edge of cyber defense is defined if we're going to be there as we need to be, we need to do that in partnership. emily: tim cook has said he doesn't want his use irs to choose between security and privacy. what do you want from mark zuckerberg or tim cook? ashton: i'm with them 100%. we're trying to find a solution that allows ordinary people and good people ever where and companies everywhere to make use of this new technology in a way that is good for human kind and at the same time we do need protect ourselves against terrorists, against child pornographers, criminal network, drug runners and on and on. there has b -- to be a certain amount of public order and i don't think we can strike that in washington.

think we can only strike it through having the greatest leaders in minds. emily: you're wourk -- working on the budget. what needs more money? what needs less money? should there be a cyber security arm of the military? >> cyber does need new money. we will provide new money. even when there's a lot of budget turmoil, which is a terrible thing, a whole other subject, we need to invest in cyber. emily: how much more. ashton: in cyber investments as any company out here will tell you isn't so much the money, it's the people. it's finding good people that is challenging for us as we try to do cyber defense. and so hiring those people training them, deciding what mix of uniform people government people industry people we should

have in our cyber force, that's re challenging even than the dollars. emily: on that issue of crecruting secretary carter is going on to link in after his meeting at the nasa research center to get people to want to work for the government. the n.s.a., the director of the n.s.a. was also out here. the f.b.it. i was out here. tt: i would assume they were the hacker conference. that would be a great place to recruit. emily federal agents were banned from the hacker conference that you're mentioning. they've allowed more federal agents back in. but i think it's going to be a long time before the trust is restored between the security and the government.

matt: thanks very much. awesome job out of san francisco -- out of the west coast, i should say. time for a status update on the ashley madison story. the c.e.o. stepping down more than a month after hackers stole and published information about 30 million accounts. details are emerging about website. ison's very few women were actually using the site. so let that be a lesson to you. up next, one of the hottest cyber security start-ups in silicon valley tanium dishes on the blooming evaluation in his industry. and we'll check out how after the break.

matt: this is "bloomberg west." i'm matt miller. we just heard from emily chang speaking to the u.s. defense secretary. let's go back to silicon valley with emily is standing by with more. emily: he's meeting with tech leaders including c.t.o. and co-founder of a company called tanium. hwandawi eman orion has met with secretary carter

four times that shows how much effort he's trying to do rebuilding these bridges. tanium reported to have $3 billion valuation, a company that does a lot of work with the government. i asked him just what is that like. orion: the government is the biggest by far to have really interesting problems. we do work with 50 of the fortune 100. many of them have very interesting problems. but what you see from the government from a separation standpoint is really about as interesting as it gets. emily: another part of secretary carter's agenda is to rebuild trust. there's a lot of suspicion about the government. how difficult is that going to be to do? >> we hire many of our people based on the idea that we can help d.o.d. and the intelligence, the people secretary carter cares deeply

about. many of the engineers want to help on the field to be more active and effective. i think there is some trust that needs to be rebuilt around the n.s.a. and what they've done. there's a lot of good will and i think we need to capitalize on hat to help. emily: you worked on the technology before you started selling it. >> there's this myth that you can build this minimum viable product and you can sell it. but you really have to get it right the first time. we spent years with engineers building it working with customers in labs and in production to make sure it was working on hundreds of thousands of commuters before we took it to market. that's what allowed us to go from zero zoll lars up to $20 million is the technology just works. hat takes a long time to get

working. they don't even know how many commuters they have much less what they're doing or where they're data is. i've talked to c.e.o.'s who told me they had 200 or 400 computers. you have no number of computers you have no prayer. you can start analyzing against all the things you want to make sure that are true. ullnerblets are -- vulnerabilities are closed. we have 98% compliance because we can tell them what they have and what it is. does. what tanium emily: what trends are you seeing? valuations are getting very high. >> a lot of companys that are raising money on an idea and never executing and ironically

raising more money on the fact that they haven't executed but might be able do do that later -- there's so much interest in that area that any good idea is being funded to the point where it can keep on zombiing forever. that's going to have to change. there many companies where they're cost of sell is higher than what they're getting. they have no idea. they should reincorporate as nonprofits if that's the way they're going to run their business. there's going to be a real consolidation in our space. i think there's going to be a change in funding because i think the venture community is going to recognize that there's a pattern that they don't want to continually promote. that's going to be really good for our customers because many of them are struggling to find not. at's real or they don't have much technology behind them. >> would you say we're in cyber security bubble? >> i think there's a lot of companys that don't deserve to

exist. they're going to shake out. in aggregate we may not be in a bubble because there are going to be some companies and we hope to be one of them that will break out and become $20 or $30 billion company in the next few years. but a lot of the companies being funded today aren't worth being funded. >> you guys are raisings -- raising money. what's the real story? >> i can say that the reports are not accurate. but in the coming days or weeks or montanas you guys will get the story. >> so you're not raising money right now or the $3 billion valuation is not correct? >> one of those. emily: there have been warnings from bill gurley. how are you prioritizing versus profitability. >> we've been growing 300%. and we've been profitable during that process.

i will say very clearly, i think that being profitable as a start-up is hard but it's absolutely worth it because it forces discipline. many of these companies are throwing things against the wall and sighing if they stick. we think through everything we're doing and the company is better for it. tanium. ion founder of mark benny off they're going to be a loft dead unicorns out there in this case cyber security unicorns. ly be the interesting to watch, matt. matt: emily, thanks very much for that. now, facebook beefing up it's tools to spot pirated videos have become an issue for content creators. facebook is piloting a video matching that will spot copy content quickly on top of audio magic to find videos that

shouldn't have been uploaded. facebook warns it could take time before it's all in place. next apple, h.p. and boeing team up with the pentagon. we'll talk to the director on "bloomberg west." we leave you with footage of boeing's drone killing laser. it can shoot down drones mid flight and will supplement missile defense systems.

matt: time now for daily bite. one number that tell as whole lot today. today the number is $767. that's how much money the

swedish company has raised. the participation from intel capital and zook capital. izettle works with apple and google wallet. the latest funding gives izettle a $500 million valuation and is being funded to expand in urope. the hub is made up of 162 companies like apple, h.p. and qualcomm. they will receive $71 million including $75 from the defense department itself. emily with dr. malcolm thompson. emily: thanks so much. thompson. creo of the former xerox.

dr. thompson: that's right. emily: give us us some real examples where you're working with military applications. >> imagine putting a very thin film of electronics all over an aircraft wing, ok? you stick it to the outside of the aircraft wing and it measures stresses in the wing. now, you look at the plane when you're on the plane, the wing flaps. so it better be flexible. emily: so when might we see something like that. >> very soon in the next year or two. there are some examples we saw in the announcement where the air force brought some wings with some of that stuff on it already. emily: they talked about incorporating sensors into military uniforms for example. a company like apple is part of this partnership. what is a company like apple contribute to this? >> you know, every company contributes different things.

what it helps to understand is what their customers are wanting and what they -- they don't tell us everything about what they're going to do and what their next product is. but what they will do is to say, hey, i -- this is not an apple -- it's just an example, right? emily: give me an apple example. >> i want something that's stretchable. i want stretchable electronics. you ever try to put a bandage over your elbow? it better be stretchable. there's an example of something where, you know, in medicine you want to measure -- you want to find out how you're healing and you want to basically see if this has grossly affect and you want it continually monitored. we're working on stretchable electronics as well as especially when it's connected to the human body. >> this is $170 million partnership. what are your deliverables?

>> deliverables is to create a road map of technology and find out where all the gaps are this preventing things being manufactured. we go out and put out a proposal. we get all these companies working on those gaps in the technology. so eventually two to three years from now there will be a much more complete ecosystem and people be manufacturing these things in much my higher volume. emily: dr. malcolm thompson head -- we'll con tech continue to follow the secretary going on to linked in after this as he continues to rebuild this bridge between the pentagon and silicon valley. matt: what an incredible military edition of bloomberg west. that does it for this edition. on monday don't miss emily's full conversation with marc

andrieseen.

>> i'm lizy o'leary. and i'm john himeman. carly fi orrinna's car killed a deer today. we thought it was deer and sheep hat had you freaked out today. john: lizy o'leary is guest hosting today's sports fans in our school tonight. great in the economy. lindsey graham lectures and trump-anomics 101. the political