emily: how marc andreessen is investing in the face of volatility across the globe. i'm emily chang. this is "bloomberg west." why the ceo of blue street says we are in a bubble. netflix says goodbye to major hollywood films like "the hunger games." all of that coming up on "bloomberg west." we start with the markets. investors losing confidence in

beijing's ability to prop up markets. facebook, google, amazon also moving into the red. for more, matt miller. matt: the big takeaway is, after a week like we had two weeks ago, there is almost no recovery. last week, monday was this terrifying drop in the dow. it did not stop the entire month from being the worst august the dow has posted since 2010. the nasdaq had its worst month since 2012. it was awful because of that week where we lost 6% in almost every single index. take a look at some of the big losers.

media companies really reigned as far as the point losers. disney kicked it off with the poor earnings report, showing espn did not have the kind of subscriber growth or earnings that they expected. viacom was the biggest loser as far as media companies for august, down 28%. 21st century fox lost 20%. disney was down about 15%. i was just looking at apple for the full month. it lost more than 7% for the month. today, it was down another 0.5%. even though very cool cooperation was announced by john chambers and tim cook. apple will work with cisco to make cisco products work better with apple and vice versa for corporate. some interesting stuff.

emily: part of apple's big push into enterprise. matt miller, thanks for breaking it down. tech companies like apple are not only moving the markets, but they are also being watched in washington. apple is part of a new public-private partnership with the department of defense to build cutting-edge technology that can be used in the military. the defense secretary, ashton carter, has been courting silicon valley investors and entrepreneurs. he spoke with marc andreessen, cofounder of andreessen horowitz. marc: the big thing is i think the markets have been trying to adapt to the new economic data coming out of china. the other thing is american companies, and you have covered this extensively, global currencies have moved against american multinationals in the last six months. frankly, i think wall street was slow to adapt to the reality of

the dollar versus other currencies. when a big company says we missed our numbers because of currency changes, the presumption of investors is that is an excuse. in the last six months, it has actually been true. u.s. is doing really well. there are issues in many other countries, but the u.s. is doing really well. emily: bill gurley said prioritize profitability overgrowth. marc benioff says he thinks a lot of dead unicorns will be ahead. what does it look like on your side of the equation? marc: i think situation normal. these are startups. some of them are going to work well, some are not going to work at all. it makes sense to prepare for environment in which it is not as easy to make money. i think each company should figure out its own strategy. that's what we work with our companies to do.

emily: the headline on sequoia is "rip good times." what does andreessen horowitz say? marc: be measured, be careful, but invest in growth. if anything, we tell companies to push forward. the companies that are doing well are going to do really well. emily: just a blip according to marc andreessen. one stock that is gaining is twitter, up 3.5%, back above its ipo price. this morning, one analyst upgraded his twitter rating from neutral to buy. he expects clarification on twitter search developments. i also ask marc andreessen who he thinks should become the next ceo of twitter.

marc: i think if jack or ev ended up back in leadership at twitter that would be great. emily: the white house is tracking potential companies aimed at individuals and companies in china for hacking networks. the discussions come at a particularly sensitive time. china's president xi jinping is scheduled to make his first official state visit to the u.s. month. there is also concern that sanctions could trigger further attacks. marc: the department of defense was the first customer of all of the new technology companies. over the last 25 years, the defense department focused more on large federal contractors. there is a much greater focus in d.o.d. in working with early-stage companies.

cyber security is a perfect example. even professional warfare is heavily influencing -- the future of it is being heavily shaped by new technology. my belief is early-stage companies and technologies can play quite a role in national defense. i know secretary carter believes that. a tech startup is the smallest high-performance organization in the world. d.o.d. is the largest. there is no natural fit between organizations that small and that big. developing pathways that make sense and where d.o.d. can get the benefit of the new technologies without fundamentally changing not just procurement. that is really critical. emily: what's the biggest risk right now?

are we being outspent? marc: we are not used to defending against nationstates. 20 years ago, it was teenage kids. now the defenses are against nationstates. the threat profile has changed dramatically. cyber security, like other kinds of security, is asymmetrical. the defender has to be correct 100% of the time, but the attack only has to work once. defense is always going to be bigger as a challenge than attack. defense has to get much more sophisticated. we as an industry are still in the process of catching up to that. emily: marc andreessen, cofounder of andreessen horowitz. bloomberg lp is the parent company of bloomberg tv and is an investor in andreessen horowitz. there is a bubble in the private sector.

and we have a special focus on virtual reality innovators. we are looking at one company transporting you to a virtual world. ♪

emily: and now to the cloud. another strong quarter as it pushes further into europe. i sat down with workday ceo aneel bhusri. aneel: the marketplace for financials is about twice the size of the hr market. we are excited about the prospects.

emily: on your earnings calls, your ceo said you could be profitable. why focus on growth in this current climate? aneel: our business is a once in a decade transition. we went from the shift in the 1990's, the growth in personal software -- we are in that shift again. it's basically a land grab for market share. emily: let's talk about a few competitors. oracle and sap seem to be getting a lot more competitive. they spend a lot more in marketing than workday and salesforce combined. how do you defend against this? aneel: we are running at about 95% customer satisfaction. emily: you have such a long history in this business. we have talked about the established competitors. then you have the up and comers. they all want a piece of this market.

how do you as a public company stay nimble enough to compete? aneel: we stay close to the startup world. we just introduced workday ventures. i still hang out with my buddies at greylock to see what's coming down the pike. and we organize around small teams. emily: you are organized around what's happening on both the public and private side. what do you think about what's happening with volatility? aneel: i don't worry about it much. stock prices follow revenue and earnings growth. you have to take a long-term perspective. i think there has been a disconnect between the private and public markets. the private markets have been less rational. maybe with these corrections, the two will come closer together. emily: what does a shakeup look like on the private side? do you see down rounds, delayed

ipos? aneel: both, and a lot more in the way of merger and acquisition activity. there are probably folks out there that salesforce and workday would like to acquire. maybe with this correction, they become more attractive. emily: what areas are you interested in? aneel: core technologies, analytics, specific business applications. emily: and a lot of these recently public tech companies, twitter flirting with its ipo price -- what does it say about the valley that a lot of these newly public tech companies aren't doing that well? aneel: i think you have to sort out how their stock prices are doing versus how the company is doing. i'm familiar with box. they continue to grow their business. emily: we talk about m&a. there's been a lot of talk about

salesforce selling out to someone big-time. what's your take on that? aneel: you would have to ask marc. i'm not privy to know. he seems committed to building a great business. he has been a great partner for us. emily: there has also been chatter about workday selling out to microsoft. any comment on that? aneel: we don't comment on that. we are focused on building. emily: what do you think we are seeing right now? the term "bubble" is thrown around, but it seems to not accurately reflect what is going on. aneel: i don't think there has been a public market bubble. if you look at the valuations in tech, there might -- they might be a little higher than the historical levels, largely because of low interest rates, but if you look at the workday trading rates, it is not the

same size as six or seven years ago. the bubble happened. there is a bubble in the private markets. when you have to take a company public or you have to sell, then you find out how much of a bubble there was. emily: will it look like 1999? aneel: not to the same extent. the people impacted will not be venture capitalists, not the public market. in 1999 to 2000, the markets -- it sent it into a tailspin. i don't see that happening this time. emily: workday ceo aneel bhusri there. we are focused on emerging leaders. first up, we have the void.

they have a different way of looking at indoor entertainment. >> the void is an adventure. ♪ >> a lot of people have described it as a vr theme park, but i think it is something more than that. it's an ability to step into a completely alternate world. we wanted to make it more than virtual reality. in order to enhance that, we had to merge that with physical reality. we are doing everything in-house. we have everything from engineers to visual effects artists to various forms of videogame development. what we can do is we can merge different types of effects, like wind, hot and cold, moisture. we can affect sound transducers to produce different vibronic effects.

we want people to put on the equipment and go into another world and forget the equipment was ever there. there will be half hour experiences. the price point we are targeting is somewhere in the range of $29 to $39 u.s. our goal is to have 150 to 300 centers worldwide within the next five years. this is not just a business venture to us. we are trying to bring something amazing to the world and create a new form of entertainment. emily: tomorrow, our series continues. we will show you how augmented reality is changing the game for visual search and mobile advertising. up next, major blockbusters are leaving netflix for hulu. we will tell you which ones and why. as we head to break, uber's new "mad max" car will be providing

free rides in seattle. ♪

emily: we turn now to the daily byte, one number that tells us a lot, $786. that's the amount granted to a woman who says she is allergic to, get this, wifi. she says suffers from electromagnetic sensitivity. it is characterized by fatigue, numbness, nausea, dizziness when exposed to cell phones, wi-fi, or even batteries or screens.

the world health organization says research has not been able to provide support between symptoms and the illness. we are trying to get a second opinion. another number that caught our eye, $44 billion, the staggering amount of money samsung has lost since april, their worst losing streak since 1983. samsung, the world's largest smartphone vendor, is struggling to compete against the high end, apple iphones, and the low end. let's talk about netflix. big changes are coming. customers will no longer be able to stream major blockbusters like "the hunger games: catching fire."

epix, who owns the movies, they will switch to hulu after deciding not to renew their contract. it will focus on original material with names like brad pitt. joining me, anousha sakoui and brad adgate. can netflix keep up the original content to sustain its business model going forward? people like kevin spacey and brad pitt are expensive. there is no guarantee of another hit. brad: you are 100% right. it is really risky. netflix feels that exclusive and original content are things that are going to grow their subscriber base. this is the path they have decided to do. they have a deal with amazon prime. the deals they are making going forward, like with disney, are going to be exclusive. that is the route they want to do. emily: is there a sea change in

hollywood right now? how do content creators and actors feel about netflix? is all the momentum moving in netflix's direction? anousha: one of the things that netflix it has proven it can do is promote a movie or tv series. it has been doing that more on tv series. shows like "house of cards" are so part of our culture now. we have seen with tv many a-list actors going to tv, where it used to be shunned in favor of movies. netflix is in a strong position. amazon has joined it in this move towards originals. we are seeing netflix wanting to do oscar-worthy films. they have one with idris elba, which will be making a slash at film festivals in a couple of weeks. emily: brad, what are you going

to be watching in terms of signs to see if netflix can keep it up? does it all come down to whether they can come up with another hit? brad: you have to look at subscriber counts. they are focusing on global distribution. they are just rolling out in japan. it is their first asian country. they are in 41 million homes right now in the u.s. if you look at the pay premium sub count, it is about 60 million. the real growth and what is going to sustain the revenue that they need to get content is going to be global distribution. i think you have to realize some of the projects they are picking up may have more appeal around the world than in the u.s. emily: what does it mean for the netflix competitors like hulu, like amazon prime video? anousha: as brad was saying, one of the reasons netflix is so

positive about that is because it is not exclusive, and they want exclusive content from, say, disney. it's possible that analysts are already looking at who else might come in and and pick up their content. comcast is possibly one. acquisition costs for films and movies have been rising for things like netflix. this gives them an estimated $180 million to spend on original content. emily: anousha sakoui and brad adgate, thank you both. that's it today from san francisco. tomorrow, i will be joined by the head of youtube's global gaming. we will talk about how they plan on winning over users. ♪

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