♪ >> midday here in hong kong. i will up at you with the top stories. china is still weakening. shin gauge thai beating expectations at 40.6. that is still a contraction. tech sector growth this year still remains under threat. rba choosing to leave rates on hold. rulingerve tank governor out a cut last week when he told markets to chill out. there is some improvement in

economic data. that is it from australia. economists are betting on no change from india. this is after the gdp group grew faster than expected. coming in at 7.4% in the first quarter. let's get a quick check on the market action or lack of it. as far as china or shanghai goes. managed to they finish the morning session. hang --t 65% for the 1.65% for the hang seng.

emily: i am emily chang and you are watching "bloomberg west." cyber monday sales surge. target, neiman marcus, and even paypal. amazon air raids. a new droneveal prototype for the 30 minute delivery service. $30 billionbehind worth of start up. first, in what is shaping up to be a record-breaking day for online shopping, sales are expected at $3 billion, capping off a massive holiday weekend. consumer spending $8 billion online. at one point this morning, target's website was overwhelmed by demand and shoppers were greeted with this message, apologizing for delays. at the surge also impacting paypal.

over the weekend, neiman marcus, its website crashed twice and was down almost all friday. joining us now, shannon pettypiece, our contributor david kirkpatrick. i was one of the shoppers who tried to buy something from neiman marcus on friday. i did not go back. i imagine they lost a lot of shoppers. break it down for us. what went wrong? shannon: at target, the company says that they got twice as much traffic today as in their previous record, which was on black friday, so just a surge in demand. of course, these days, it's 2015, companies are supposed to be able to handle this, but target said they just can't handle the demand. they were metering people, queuing people into the website. at no point were people completely locked out, but they were queuing people to slow down the flow of people in.

the big deal people were after, 15% off sitewide. that was some big savings folks were after. emily: target and neiman marcus, companies that have struggled with hack attacks in the past. what went wrong at neiman marcus? for the site to be down for multiple hours over the course of an entire day? shannon: neiman marcus still does not know. they are still trying to get to the bottom of this. they do not believe it was due to a nefarious influence like a hacker. you do not necessarily think of neiman marcus as a place people are rushing to on black friday to get their deals. they are one of the leaders in

online retailers. emily: david, what is your take? retailers are still trying to figure out how to manage the transition. david: i think we are entering into a hybrid digital-physical culture. tryingse retailers are to navigate that. they want more traffic on the website. that is where the future lies. but they have all of the investment in physical stores, they have to continue making money out of that. it's an interesting thing. you and i have talked before about how it is surprising that not more is digital compared to the way that you and me spend all of our time shopping on amazon, multiple parts of amazon. i think what we're really seeing here is the transition of the economy and some companies are just not ready. emily: right, david, and i think i am spending a few more hours than you on online shopping. thanks for that update, shannon pettypiece.

david, you're going to stay with me. we will talk about another one of my favorite subjects. diamonds. blue nile, one of the largest online destinations for diamonds and fine jewelery, is taking a product that you would think most people want to buy in person and turned it into a 400 market cap business. harvey kanter is here. how do you prepare an online shopping business for today? harvey: being a reference 15 years gives us a leg up. e-commerce continues to evolve. we pressure test their system. we go through a series that targets traffic twice as much. don'tend to levels we experience.

we really pressure test a number of different times and experiences to make sure we can withstand, not just the traffic, but the checkout process from start to finish. emily: how much of a spike do you see over the holiday weekend? harvey: we had a solid start. we have seen increases in revenue and traffic year-over-year. there's a long way to go with three weeks left. the time needs to evolve before we know how it all ends up. emily: we have been talking about how it has been more like black november than just black friday. deals every single day for the last month. how do you entice shoppers when sales are happening so much more often? harvey: great question. the reality is blue nile's business is based on everyday value. our core businesses engagement. below jewelry stores.

we never promote it. it's our price today, tomorrow, and a year from now. we continue to drive that everyday value message. david: what if my questions about amazon, as it garners more and more information, people will go to it for convenience. what is your thought about that? reality is that amazon is a great competitor. the return policy we have, the certification, the certification is the gold standard for diamonds. we can deliver overnight. in most case, you can have a custom ring delivered by 10:30 a.m. the next morning. emily: i know you are opening web rooms, which is basically a physical showroom where consumers can go and look at diamonds. when it comes to physical stores, i was at the mall over the weekend, and there was no one there.

what is the point of having a physical web room anymore? harvey: the web room gives the consumers the ability to see, feel, and touch the engagement ring. we have seen quite the opposite. we had lines out front. we have to make appointments for people to come back. it's similar to what david talked about. it fundamentally brings a different cost structure to the retail business. square feet.is 290 we have a selection of product, about 400 styles in the store. david: so it's a hybrid with the physical world? harvey: very much. emily: can you give us numbers on transactions? going in, making the purchase, do they go in, think about it? bonobos and warby parker have done similar things. i wonder, how many of those

consumers, if they are too busy to go to a physical store, why would they do that? harvey: this is our second round. we had a test store in nordstrom's. we wanted to tease it out even greater. in reality, what we are seeing are heightened levels of purchasing where people are buying in the shop while they are there. higher thanrially the concept we tested. about 40 percent of the people are walking by the storefront and recognizing we are a jewelry store and walking in. and those 40% have become customers. it is changing the dynamics of what we are seeing. we are doing quite a bit of business. we will open three or four stores and bring to market a greater level of experience and testing in this process. emily: all right, harvey kester, ceo of blue nile. thank you so much for joining

us. that's the retail perspective. i want to talk more about delivery. easy post is an app platform that bridges the gap between companies and carriers like ups. david kirkpatrick still with us. and this is your busiest time of year. what do you do to gear up for today? guest: most of the major e-commerce companies are locking up september at the latest, but getting that for the holidays, so you do not have one of these target, neiman marcus problems. emily: so they would not have had a problem? guest: their shipping would have gone through, that is correct. emily: you are like a middleman?

guest: that's correct. emily: what you make of the problems? guest: i think a lot of the problems are focused on web uptime. we see 40%-90% of their volume in the last quarter. it's a challenge to scale up your infrastructure for three months of the year, never mind one month of the year. david: david, what you make of companies like ship, post mate, amazon unveiling flex. delivery is a hot space being disrupted over and over again. how do you see this playing out? david: ups and fedex are extremely strong companies that have continued to evolve. tremendously benefited online. surge in

i do not think they will be pushed out. but clearly, this is becoming a hybrid world, and different services are necessary as we have different needs that are emerging through off-line and online purchasing. i would be curious what the retailers need an intermediary for though. guest: in terms of some of the new startups in this space, i think it is great for the shipping industry to have people coming in and innovating. 20 orck has been around 30 years doing same-day. we have a ton of options that are really cost-effective in this market. if we really have to have it in an hour, i think it is great. a lot of people do not want to pay the one-hour delivery fee. emily: i do not want to pay any delivery fee. why does a company like jet buy you? why are you a standalone company rather than something another company should own? guest: we make all of the e-commerce companies ship effectively. we have a marketplace effect

where the more companies, the more data, the better we can ship effectively. emily: what are you doing for the next few weeks? are you hiring additional workers? how do you accomplish this seamlessly and make sure your customers do not have the problems other top companies are having? guest: on the shipping side, we see very high uptime. this is our fourth holiday season. emily: i have quite a few. ok, you are sticking with us. both of your sticking with us. we will be talking about amazon and drone delivery. amazon's delivery prototype is out. will it take flight in your neighborhood? ♪

emily: new hints at amazon's drone delivery system. they delivered a new helicopter design. they will use the drone to deliver packages in less than 30 minutes. when will amazon prime air get off the ground? joining me now, my guest and david kirkpatrick and the ceo of easy post. we have seen the video for the first time. what you think about how it looks? guest: i think amazon is creating a good dialogue around the concept of being able to carry things.

it is convenient to deploy this kind of video around christmas. emily: it is indeed. does it look realistic? christian: coming from a place of experience building these things, there are a lot of challenges. batteries are just not there today. in order for this to be effective, you need far better battery technology and the ability to carry at least 50 pounds. on the operational side, you have safety issues. you have the ability to carry multiple orders at the same time. on the regulatory side, there is no site in the future that this will be allowed given how heavy these things are going to be and the potential for them to fall out of the sky is very high. emily: they say they are working on technology that will sense

objects in the air and navigate around them. jerrett, what you think? >> i think it's exciting. emily: is it possible? >> it's like you said on "60 minutes" last year. it's five to 10 years out. now it is four to 9 years out. emily: david, get in on this. david: it is tremendous pr for amazon. here we are, talking about them. but there are people in the world today delivering things using drones in small places. i have heard about it in europe. i think it will happen quicker in europe than in the u.s., because frankly, the laws are much more accepting of that sort of thing. i looked at the video. it seems super pie in the sky to me. i totally by this point of all of the technical difficulties to make it really reliable. but i think we will move toward a world where this kind of thing that comes more routine. four to nine years, a little

pessimistic, but not here yet. emily: christian, you make drones and drone software. are you looking at delivery? christian: during the early days we talked to people who do logistics. ones that are very popular today. and the challenges are, in order for you to beat the ground transportation and all of that, you have to be able to carry 50 pounds. to carry 50 pounds, you increase the size of the battery, the size of the motors, and at that point, you have a massive piece of metal flying around. it makes it far more dangerous. emily: where is drone regulation right now? the faa has to make a decision. you have commercial drones. a lot of people find drones under their tree this year. christian: what is important is the faa is focused on keeping everyone safe. everything put out is with the

mindset that we want to avoid as much as possible having people hit other people with them. i think on our side, the commercial side, we are focused on our partners to work with the faa to make regulatory changes so we can work in job sites where we have far more dangerous things roaming around than in the consumer world. emily: it's fun to talk about at least. we will see. christian sanz, thank you for joining us. david kirkpatrick, you are sticking with me. we will have more "bloomberg west." ♪

emily: billionaire tech titans are joining forces to combat climate change.

as the un climate change talks kicked off today, bill gates joins a group of investors including mark zuckerberg, jeff bezos, and jack ma to launch the largest coalition for clean energy. the aim is to speed government-funded research. joining me, the captain of the team and david kirkpatrick. tom, how are these investments being structured? tom: it's quite interesting. it is a combination of public and private. you have a $2 billion fund. what they are trying to do, very innovative, take the risk, almost like a silicon valley startup. then you have 20 or so governments promising to double their r&d budgets into clean energy. emily: a lot of big names. how big is the commitment? tom: it is 2 billion dollars. bill gates said, hey, i'm going to put up $1 billion of my own money. then you drop back and you look at these billionaires, you look

at bezos, zuckerberg, gates, their total net worth is about $200 billion. you are looking at 1% of that. but absolutely a massive number. emily: david, what you make of this? david: the name is interesting. this is the name of a separate prize that zuckerberg and yuri milner have for science. it seems to me that zuckerberg may have had a bigger role in this. these people really care about energy, but it really surprises me what a wide range of people are involved. hedge fundunch of george soros, jack ma from china.

it's really an interesting group. i think it makes a very strong statement that is desperately needed. let's face it. we are in deep trouble on climate change. i almost said the other word. we have to do something about it. emily: what is the approach for the coalition and how will they make progress, tom? tom: one thing that needs the reassuring, as david just said, the quality of people involved. bill gates pushing this forward. he gave a speech today, next to him, obama, modi, president hollande of france. emily: but what is the approach? tom: for the fund itself, it will be tied up with the university of california. it's not really clear. they are just looking for risk, and in some cases, i think billionaires will invest individually. emily: all right, let's hope they make some profits. thanks for that update. david kirkpatrick, thank you.

great to have you on the show. up next, it is a startup that helps give life to startups. and an interview with the ceo of y combinator. ♪ >> 12:30 in hong kong and

singapore. been elevated to the elite group of imf currencies. of the recognition efforts that china has made to integrate itself into the global economy. addition and inclusion in the market of currencies is a recognition of the significant reforms which have been conducted of the significant opening up of the chinese

economy, of the financially, driven principles that are being used by the chinese authorities going forward. >> live images of beijing. it is lunch time there. smog is making it impossible for cameras to pick anything out. hitting 650 at 8:00 a.m. 25 times above internationally safe levels. things are unlikely to improve before tomorrow. up.ung electronics rising he replaced the head of the struggling mobile division. despite falling phone demand and increasing rivalry ,lee is in charge while his father has medical treatment.

papers over the deadly collapse last month. they are expected to receive $5 billion from them and its partner. 13 people were killed and six are still missing and what was brazil's worst environmental disaster. in asia-pacific is higher. >> getting started. we are taking a look around the rest of the region. strongest out of hong kong. extending them in the afternoon session. hung on.fter the rba we are seeing strong gains for the nikkei as well. that is really helping sentiment for exporters. really strong when it comes to capex numbers.

theese markets reacting to pmi numbers that were quite disappointing. we count down to the open in hong kong at the top of this hour. charlie: welcome back to "bloomberg west. i am emily chang. the presidenth and asked him how big is too big for y combinator> >> we know we can grow a lot more.

>> yc is really a number of networks. what are you guys doing to maintain that balance and greatin what keeps yc without losing what makes it great. >> if the founders that we pick are the best in the world, we will get better. far, that is the most important thing for us to maintain. emily: you have raised $700 million. what have you learned and what do you expect? >> maybe only three large investments so far this year. it seems to be going well. there seems to be a lot of turmoil. it is a good time for us to be

decisive and invest in companies that we really believe in. we are still learning how to be a late stage investor. it is very different than what we normally do. normally we are making hundreds of investment decisions a year, and now we are only making a few on the later stage side. a bad mistake on the early stage side was to miss a company that will be great and the a bad thing now is to invest in a company that turns out to be terrible. it is going well so far. emily: how do you manage the signaling problem? if a yc company asks for late stage funding and you pass, that doesn't look for a formerly y c backed company. sam: we debated this for months. we said we'd only raise this fund if we could get really comfortable. so we have put a self-imposed limit on ourselves that we would

only look at companies with over $300 million valuations. below that, it is out of the continuity fund. above that, it doesn't matter so much. we put that limit on ourselves specifically to address the signaling problem. some ofc has sponsored techost successful companies. it is also criticized of becoming part of the hype. how do you advise your company to manage that? sam: we try to remind our companies again and again that intermediate valuations don't matter at the hype doesn't matter. the only thing that matters is if over a decade or more, you create a lasting value. so we tell the startups to ignore the hype and the

valuations because the only thing that matters is how much value you actually create. all of the noise in the first six months is completely irrelevant. and there are companies that get a lot of hype. and those can be not too satisfying. emily: let's talk about a few years into a company's lifecycle, a company like zenefits or drop box. companies that people say got ahead of themselves with valuations. what do you think? sam: i try not to pay attention to the turnaround valuations. one of the nice things about investing in startups is that they are illiquid. there are downsides to that but one of the things that are good is that we don't have to worry about the fluctuations from month to month or year to year. we just try to buy stock at what we think is a reasonable price.

and then we hold it for so long that we will go through multiple business cycles, up and down and up and down. and eventually market gets the price right. so one of the things that is really nice about the way we invest is that we get to ignore all of those questions about whether something is 20% overpriced or 20% underpriced. we won't get it right every time but we don't have to stress too much about the turnaround in the meantime. emily: you and i have already talked about the bubble. i know this is not your favorite question. but you now think we are in a bust. what evidence do you see? sam: i think we are in a bust in certain areas. you can point to certain areas that do look like a bubble. emily: like what? sam: i'm not going to fall for that. [laughter] sam: if you look at early valuations and the index across

the yc companies, you will be pretty happy with how that is going. if you look at a company like apple that is trading at a single digit cash forward number, it's hard to call that a bubble. there are good deals and bad deals. emily: what about what happened with square? the valuation that they have in the public market is lower than what they were able to raise privately? sam: there are two versions of that story. there is one where they raised $6 billion at the last round and there is another version of that story that says there was a company that didn't exist for years ago and now it is worth $4 billion. i think a lot of companies will do far worse than layoffs. lots of previously highflying companies will go bust entirely. that has been happening since the beginning of time. it doesn't make something a bust it just means that some companies do well and some companies do badly.

if, on average, the index valuation keeps going up then you don't call that a bus just because some companies die. it is actually good when some companies die. it is the sign of a healthy market when companies are allowed to die. if no companies were dying than it would be more accurate to call it a bubble. emily: here on bloomberg, you are part of a speaker series. what do you think new york has to do more of to be taken more seriously in the tech scene? can silicon valley be re-created anywhere else? sam: i think new york is taken extremely seriously. if you look at the great tech

companies created in the last decade, silicon valley has a huge lead. the thing that would help the most with new york companies is that the long-term attitude that investors and employees in silicon valley -- bringing that mentality to new york, that we will be super successful and make a ton of money but it will take 10 years? that would go a long way. emily: sam altman, president and cofounder of y combinator. blackberry is choosing privacy over potential profit. they are preparing to shut down the operations in pakistan after refusing to allow the government to access private messages. last july, pakistan asked blackberry for access to the servers, but without a solution,

blackberry will leave pakistan on december 30. shares of blackberry finish slightly higher today. still to come, -- weighs in on the pfizer-allergan megamerger. ♪

emily: tomorrow on bloomberg, do not miss james tisch at 7:00 eastern. later, an exclusive conversation with jack lew. now, to pfizer and allergan. they announced a $160 billion deal last week, that would be the biggest drug company. most of the deal allows on in version structure, allowing them to take advantage of lower tax rates in ireland.

joining me now to discuss is beth seidenberg. you are also a doctor, you have founded multiple companies, been ceo of companies and then went into this. this is your wheelhouse. what do you make of this deal? beth: thank you for having me, great to see you. this is an interesting deal. there are economic drivers around the taxes and the ability to have a domicile in ireland. there are synergies with the portfolio. what is exciting is that this is a contrarian view. there are a lot of things that come out of a large merger. what we need with biotech, we need innovation. we need great people and we need product.

and when you have an acquisition like this, there will be a few layoffs. the good news is with biotech, those are potential next-generation ceo's. those are people who can go into the growth stage. we also will have products that will spin out of these companies. we started a company five years ago called sorrow. when merc bought -- they had a similar acquisition. it was called amend. they spun back out and started a new company and out as a public company with a $2 billion market cap with great innovation. and a product that would have sat on the shelf has moved forward. emily: is it a good or bad deal for drug innovation? beth: there is always a balance in all of these things between r.o.i. and r and d. history,ok at pfizer's

from king pharmaceuticals and going back many years to pharmacia and the r and d budget has been stable. allergan's budget is about 1.5 billion dollars per year and when you put them together, they will spend about $8 billion a year on r and d. that is a good thing. emily: how do you see it being affected, smaller companies competing for business? beth: the smaller companies will benefit because there will be great people coming out of this merged company. he will have thousands of people out of work who can now go into biotech companies. within the large company they will have to figure out what the priorities are.

it is unclear to me, when you look at the two pipelines, which programs will survive. the ones that aren't going to survive will have someone who has a catcher's mitt. emily: there has been a lot of m&a recently in biotech, why is that? beth: there has been. they had patent expiration and they had a lot of drug pricing pressure. now the same is happening in the biotech world. you see companies like amgen and gilead and they need to buy that to balance the patent expirations. for example, that company doesn't have a marketed product, but it fills a pipeline void. so actually, the whole ecosystem

is working together. it is creating innovation but in different pockets. emily: so are you rushing to get a new drug to market because you see all of this activity out there? do you see it as a possible benefit? beth: the larger question is, overall, for the biotech companies, the share prices have gone up on average about 4%. for biotech entrepreneurs, it can be a good thing. pfizer now has more cash offshore that they can leverage to buy new things. emily: do you see more m&a in 2016 in this space? beth: absolutely. to the 15 has been the largest amount of large-scale m&a. bellweathern the year. we are projecting to see the same thing in 2016. it is a macro dynamic.

the biotech industry is a big one and they see patent expirations coming. they need new products and they're going to get that by acquiring smaller companies. emily: all right, beth seidenberg is sticking with us. if you are a working parent at facebook, mark zuckerberg is the father of the year. he recently announced that he will take two months of paternity leave following the birth of his baby girl. he is extending the parental leave policy from two months to four months. it begins january 1. ♪

emily: one stock we are watching fitbit today, they are finishing up over 3% after matthew mcclintock upgraded the stock saying there is strong growth potential. target said the fitbit charge

has been one of the most popular gift items this season and best buy added that shoppers bought twice as many wearables on thursday and friday than they did last year. sticking with wearables and digital health, we have been talking about the impact of the pfizer-allergan merger. back with me is beth seidenberg, what do you think about wearables? fitbit has been up and down and up today. what is going on? beth: i think we can say wearables are here to stay. people want to measure how they are doing. and there is a huge issue in this country with obesity and diabetes. we will talk about that later. in order to manage those conditions, you need to know what you are doing. and people are getting used to tracking their steps and their weight loss and being able to manage themselves.

one of the key questions is, what do you do with the data? is it something that you want to have every day? a lot of people get bored and stop using them. but then there are patients who need these devices to actually keep themselves healthy. and now the question is, can we take the data and put it in the cloud to inform physicians to help manage the patients? emily: i want to talk about some of the things in your portfolio. one of them is cancer treatment. what progress are you seeing there? beth: we have a long way to go but one of the big things we are seeing is immuno oncology. the immune system usually keeps this in check. we had a break through class of therapies, and those are now able to harness the immune

system to kill and take care of cancer. we have a couple of companies that we are excited about. flxbio, which is working on small molecule pills. emily: are we going to have cancer cured anytime soon? beth: we will have one cancer at a time that will be manageable and you will not die from your cancer. emily: you are looking at digital therapeutics and redefining benefits. beth: yes. digital therapeutics, there is an important area in diabetes. diabetes,hink about that you have to be managing every day. but right now, we have one-way devices. labonte bill has put together a

platform that is high-tech and can sink your data in the cloud. there are coordinators who can message you when you need help. issue, i the zenefits know you guys aren't an investor in zenefits, but there is no question in their future. do they get ahead of themselves? beth: they are more and hr platform that does benefits. we have another new company that just got taken out of self mode and they are focused on benefits. what they are focused on is creating a marketplace that is personalized individual exchange that midsize employers can have their employees utilize. emily: we have been talking about evaluations being bullied. are you seeing that in the biotech? beth: we have seen the highs and

we are testing some of the lows now. we are calming down. emily: dr. beth seidenberg, great to have you. that is it for today. we will see you tomorrow. ♪

next a program. the firsta is treatment of its kind. posted by network television star and featuring some of the most dramatic before-and-after photos you have numbers. click i.