emily: i am emily chang. defiance on display in jakarta. demonstrators vow not to give in to extremists. a medical investigation underway in france. one man is brain dead and three others facing possible brain damage after volunteering to take part in an experimental drug test that went wrong. the drug trial was testing a new painkiller compound. taiwan could soon get its first female president.

voters go to the polls on saturday. here in the united states, rescue teams are searching for 12 marines missing at sea after two u.s. marine corps helicopters collided thursday night. the coast guard continued the search. the choppers went down about two miles from the north shore. south carolina senator lindsey graham has endorsed jeb bush for the presidency. he has been a coveted endorsement and now we know who he is supporting.

i am emily chang. this is "bloomberg west." a red letter day for tech investors, some of the biggest names caught in a major downdraft. venture capitalist new frontier as funding in the u.s. fades, investors plan for gold in china and india. the taxman comes calling for apple. a brutal end to the week for tech investors as stocks plunged to levels not seen in more than a year. the nasdaq falling over 2.5%. the average is in a correction. intel down 9%, twitter hitting another all-time low, down over 5%. joining me now is our guest host for the hour. a portfolio manager with endurance capital partners in new york. randy, i want to start with you. randy: three words -- broad market selloff.

we are looking at things happening in china as well as what is happening with oil, oil falling about 5.5%. i want to show you what is happening as far as the s&p's 10 sectors. technology was the biggest laggard. energy was down by 2.8. financials are down by 2.4%. out of the 69 securities in the s&p tech sector, 66 were in the red. emily: david, when you sat down today, are we rolling our sleeves up? david: it was not obvious. emily: when we talk edabout intel, it did not seem that bad. david: it is a very different 2016 that it is 2015. last year's winners are this year's losers. emily: i think we are having problems with your microphone.

is any of this sentiment spilling over to your business? >> it is not the way we would like to start the year. we have a bunch of great companies. we are so early, we focus on the

company building side. it will take longer. we are cognizant of that. david: the comment i was making was that 2015's winners are now 2016's losers. the large-cap growth names are off about 12%. they have lost more market cap than the 140 unicorns in the valley. it has been sharp on the s&p alone, down 8%. you have lost 1.1 trillion in market cap in u.s. markets in the first 10 days of this year. emily: is this the start of a bad year? randy: it looks like the last two weeks is not precedent. the oil glut continuing, banks

have been putting the oil price at $20, potentially $10. if all of those things come together, we could see a continued selloff. emily: google is one of your biggest holdings. how did you move your money around today? david: google remains our largest holding. when we look at the landscape, we find google the most reasonably priced. roughly a multiple of 20 times forward numbers on 18%, gaining share in mobile, increased monetization. for the likes of netflix and amazon and we have netflix reporting next week, those

valuations we find stretched in terms of price to earnings basis. the other rationale they worked last year, we will see if those subscriber numbers work for netflix. emily: we are seeing a slow down in venture capital funding. drastically lower than the third quarter. why is that happening? bubba: it is always hard to tie back. when public market investors pucker up and get a little scared, there will be effects. i think we will see correction there, but i do not know if that means less companies will be funded.

emily: are you guys changing anything that you are doing? bubba: we are not going to change anything. we continue to look for companies we can get involved in. before i joined, we made investments in solar city. we invested at the ipo, because we believe that much in the company. david: the public markets -- what has changed is the fed raised rates may december, the era of free risk capital is gone. this notion of companies that are land and expand, we will not

make profits for the next five years, those are the stocks that are getting crushed now. the market will have to find a footing with companies they think have gap profits in the traditional valuation metrics that start to bring some solidity and foundation to the equity market. >> have you put any money in the private markets? david: not yet, but i do like the position with the market coming in because having capital will be scarce and as a provider of capital, that favors my hand, your hand. i think the public markets are going to be very challenged in terms of the ipo calendar. emily: biotech stocks were way down today.

thank you so much for joining us. bubba, you are sticking with me throughout the show. another stock mover we are watching, shares of walt disney falling to the lowest levels since august after a downgrade from barclays citing concern about subscriber losses in espn. the company lowered projections for profit growth in tv business. a warning for silicon valley from one of its own entrepreneurs, why the uber ceo says beijing will soon surpass silicon valley in innovation. ♪

emily: i am emily chang. xiaomi founder's plan is to become the world's biggest smartphone company. it seems the company did not get the memo, falling short of the revised goal to sell 80 million handsets. the beijing-based firm says it missed its target because of the decline in smartphone demand in china, local rivals reportedly sold over 100 million smart phones last year. uber ceo has issued a big warning saying china will soon surpass silicon valley in innovation.

speaking at a conference in beijing, in the next five years, there will be more innovation, invention, entrepreneurship happening in beijing than in silicon valley. he is also looking to hire a chinese ceo to head up operations there. what are some of the biggest, most innovative companies coming out of china? back with us is my guest host for the hour. we should qualify travis's statements, he is trying to build a big business in china. what is your reaction? >> it is somewhat self-serving. you just raised a huge amount of capital in china. we are not really in a competition against beijing. we have had this argument with other cities as well. we are all on the same side. i welcome the innovation from beijing.

emily: you guys do not have offices in china. bubba: china is an interesting market. it has the largest market for consumer products in the world. you have the opportunity to build massive companies focused on a domestic market, which can expand globally. it is exciting as investor to see so much new opportunity for companies to figure out how to scale and go global. i am super excited. i agree with jonathan that it is not a competition.

emily: i was speaking with mike moritz who is still really bullish on china. >> the first thing you need to do is go there and admit you know nothing. the market is different and you definitely do not staff your company in china with people from america or europe. you also need to understand there is a very different ethic in china. people work a lot harder. there is a whole new level of competition. emily: you guys started putting people on the ground in china in 2000. what sort of results have you

seen? >> it has been a positive experience. you have to continue to change sectors as markets mature. 2001, we were investing in semiconductor companies. 2005, investing in mobile technologies. in 2015, we're looking at companies taking advantage of online to off-line businesses. we think there is plenty of opportunity. you do have to be on the ground. you have to have local folks on the ground. otherwise, you do just tourist vc and you will be taken advantage of. bubba: our strategy has been over the years, we have tried many things. as we have honed our own strategy, we have decided to display a smaller fund with a smaller set of partners that focus on the wheelhouse in our backyard. we are on the ground. it is harder as a partnership when you are spread across multiple geographies. the ability to make great decisions relies on us being local.

emily: your strategy has kind of evolved. initially, you are thinking you could globalize a bunch of chinese companies. >> it is a really large home market. we had aspirations to take a number of these companies into global markets. they were able to have success staying local. huge unicorn companies in china that did not need to expand beyond china. we took what the market gave us and we are happy with the results. emily: what about concerns of a consumer slowdown?

>> we are investing in innovation. we do not give our ceo's a free pass based on market conditions. we do not worry too much about consumer slowdown. bubba: have there been any other challenges or things you have learned by investing in china? what would you tell another venture capitalist? >> understand local customs, and that is different than local laws. deals happen 24 hours a day, they have a lot of interesting and exciting people working to create new inventions. you have to have the ability to understand the local flavor. you do not bring a term sheet in from silicon valley. emily: thank you so much for

joining us. bubba, you are sticking with me. the european commission's crackdown on corporate tax havens in ireland could cost apple a hefty bill. keeping our eyes on the markets after a rough week, micron shares falling to the lowest in over a year. shares down over 20%. ♪

emily: shares of apple closing down another 2.5%. a 28% decline. that is more than the entire

market value of roughly 485 stocks individually in the s&p 500. another bite may be ahead for apple. the company could owe more than a billion dollars in back taxes. it is an investigation by the european commission into ireland's tax policy. are they trying to make an example out of apple? matt, they are investigating ireland, not apple? why would apple get hit with the bill? matt: thank you for having me. the european commission's investigation is looking into to decisions that ireland made that

affect how apple calculates its taxes in ireland. apple has been under a lot of heat for the way it transfers money and revenue amongst its subsidiaries across the globe and part of that is a way to capitalize on tax of damages in different jurisdictions. the european commission is looking at whether or not ireland has fairly taxed apple in ireland. emily: amazon, starbucks, mcdonald's caught in the same investigation. apples foreign tax rate is 1.8%. that could go up to 12.5%. that is a huge difference. matt: that is correct. when we put out these analyses, we try to give a worst-case scenario. 12.5% is the going corporate tax rate in ireland. the way apple's taxes are being calculated is based on their operating costs and what the european commission did is look at that decision and said, because of the volume, it might be more appropriate to base

their taxes on profit margins or something that is more reflective of the value that is going through some of the subsidiaries. emily: apple has said it would appeal a ruling. tim cook has called it political crap. he said there is no truth behind it. is it crap? bubba: i cannot say whether or not it is crap. it is certainly more than they had planned to pay, as warren buffett always said, be happy if you have to pay a lot of taxes. emily: that was an inside joke between bubba and i.

what do you think? is it crap? do they pay every dollar? matt: part of it is looking at whether ireland has given apple an unfair advantage. apple has sophisticated counsel. they have been a great job of setting up a corporate structure in the way they pay taxes. they have got two legitimate rulings from ireland.

on the other hand, you start to look at the tax rate they are paying, is that in line with what the tax policy is set up to do? that is when you start to run afoul. emily: thank you so much. we will be right back. ♪

emily: i am emily chang. a very volatile day on wall street. the tech sector was today's biggest loser. joining me now with more on today's plunge, cory johnson. you have been digging into numbers all day long. what surprised you most today? cory: two give urgent trends and converge on one stock. i did a screen of stocks about $5 billion are larger that were up a lot last year and are down a lot this year. take a look at this list. netflix, it was up big time last year, up 134%. down 16% already this year. that is a substantial move. amazon.com, up 118% last year, down 11% in the 10 days of trading. see trip of 94%, down 19%. these are stocks that had terrific moves.

you look at a company like netflix, it has a lot of aspects to it. one of them is crummy financials. you can find a different list of stocks that have weak financials. the thing they have in common, their cash flow returns are less than 2%. look at salesforce.com, all of these companies have weak financials. all of them have been selling off big time to start off this year. companies -- those are the things investors might look out for. emily: how much of this is based

on fundamentals and how much of this is based on broader market volatility? cory: there will be two baskets. stocks that are just stocks. and stocks that are reflections of companies with bad fundamentals. those are the ones that will get taken out in a wheelbarrow.

emily: cory johnson, thank you. ♪ emily: i am emily chang. this is "bloomberg west." with tech stocks leading the selloff, we are watching twitter. shares well below its ipo price. wall street remains cautious about twitter, with mostly neutral ratings. are investors losing faith in jack dorsey's turnaround strategy? bubba, twitter, every day, it is an all-time low. jack dorsey has been back for five months. we do need to give them some time, but what is your read? bubba: it is a very hard problem to turn something around. i am very curious what jack dorsey can do.

i do not know if the market will give him the time he needs. emily: how difficult is that to do? the numbers from facebook keeps surprising. bubba: i joined facebook in 2008. everyone said, what are you doing? they are done growing. everyone was questioning the business and you saw what mark zuckerberg was able to do. he focused it on growth. he did it again right after the ipo with mobile. it requires 100% focus, a market or protection from the market to not have to worry about the day-to-day movement. emily: the challenges that twitter is facing, are they different than where facebook

was at that time? or are these similar circumstances? bubba: i am not inside of twitter. do they understand the one thing that matters court to their business? can they move everything they can to get that number going? i do not know if that is monthly active users, or tweets per day. it is something really serious they have to make sure they understand. they cannot turn things around until they have that insight or focus. emily: one of the things that mark zuckerberg has done that most companies don't do, he has made some big and risky acquisitions, spending $20 billion on whatsapp, virtual reality is something you are very bullish about. how optimistic are you about oculus? bubba: oculus -- if you have not done the demo, i would recommend it. i did it at stanford. it blew away the $35,000 research machine. this is really amazing. the reality is, for oculus to have gotten to market the way

they are doing now, they needed to go be part of a big company that could bankroll the capital investment. that will be billions of dollars. i brought the lowest end headset.

you can get these made for approximately $10. this is google's play on vr and i think it is incredibly smart. oculus relies on the smartphone supply chain. google said, why not just rely on the smartphone itself? emily: i tried this. the experience is not great yet. it is very simplistic. what about vr is hype and what is real? bubba: a surgeon was able to save a baby's life by practicing the surgery he had to do on the heart.

you might not want to do that all night. certainly, for getting easy access to it, it is amazing. it reminds me of the first iphone. it was the beginning of something. it is going to be a huge on-ramp for people to first experience it. emily: my guest host for the hour. in today's out of this world, some added drama on an historic spacewalk on the space station.

restoring full power to the iss by replacing a broken electrical box. a british astronaut and nasa astronaut worked in darkness to avoid electrical shocks from the solar power system. the repair was success. it was a proud moment for britain. he is the first astronaut to where the union jack on his suit. among his well-wishers, paul mccarty tweeted -- how a new financial services company backed by bill gates is changing electronic payment. ♪

emily: you think you had a bad week? the 400 richest people have lost $305 billion this month. local equities tumbled for their worst start to a year on record. i do not feel that badly for them. what happened? >> it has been absolute bloodbath. $300 billion has been knocked off the top 400. the tech billionaires at the top. they have been hit the worst. gates is down $2 billion today. zuckerberg down a billion. emily: isn't all the wealth on paper? tom: pretty hard to resist looking at your stock price. the biggest is jeff bezos. amazon is getting hard hit. it is reflective of what a great year 2015 was.

it is not a great way to start the year. emily: how do these guys move their money around? tom: for a lot of them, it is pretty difficult. in some ways, they are left to ride. we have seen people who hold swiss francs. emily: tom metcalfe, thank you so much. speaking of bill gates, over the past 15 years, the bill and melinda gates foundation realized in some cases, there is a better way to help the poor than by giving money away. the foundation is investing in companies with transformative

technologies. erik: the capital of bangladesh, home to wretched poverty, endless traffic, and one of the fastest-growing financial services anywhere in the world. bkash -- setting up an account is free, all you need is a mobile phone. transactions cost so little, services like money transfers are suddenly affordable. that is why the gates foundation is an investor, banking this cheap can change lives in a country this poor.

>> banking is more fundamental than i realized. there have been attempts, but the transaction fees were always too high. erik: the ceo and his brother founded the company in 2011. they had $5 million, profits from a previous startup. a plan to bring mobile money to unbanked. from 2 million accounts at the end of its first year, usage has explosion. 17 million and counting. workers are used to take time off can wire it instantly. rebecca works in quality control at this factory. she makes about $85 a month.

bkash is not just for money transfers. it is a payroll system, a mobile wallet, and a savings account. all regulated by the central bank. do you worry about monopolism? >> we have given about 28 licenses. it is old regulatory handholding.

erik: bkash is everywhere, more than 100,000 agents across the country. withdrawals are how they make money. the gates foundation saw the foundation as a case for charity and gave it a grant. in 2014, it became an investor. >> such clear alignments between the success of the business and the goals of the foundation. we will not reach the numbers by just giving away money. if we can put money behind this great entrepreneur with a great business plan, our ability to reach poor people is dramatically different.

erik: it does not happen very often, a company improving lives of the poor, drawing praise from philanthropists, while making a profit at the same time. bigger ambitions, loans, insurance, maybe international expansion. >> that is the most powerful thing that is happening. emily: erik schatzker reporting from bangladesh. speeding up the development of self-driving cars, proposing $4 billion over a period of 10 years for pilot projects, including the program to test self-driving cars by investing in technologically connected roads. earlier this week, i sat down with google x founder.

>> transportation as a service, the scale is different from owned cars. most of us who own cars, we almost never use them. they produced cost by sitting in the garage. the costs of service is about a quarter of what it would be for a human owned and driven car. emily: coming up, we are wrapping up the volatile week that was. that is next. ♪ emily: it is time for the week in review. i am joined by our venture capital editor, cory johnson,

emily: it is time for the week in review. i am joined by our venture capital editor, cory johnson, and our guest host. cory: autonomous cars, cars, cars, cars. what we saw from ces was stocks like nvidia because the thought was they would be the beneficiaries of what was going on inside the car. what we have seen this week, those stocks have sold off like a last year's fad. emily: i am more excited about the self-driving cars that i was two weeks ago. >> all of our kids will never have to learn how to drive if they do not want to. i do not know if it happens in five years or 10 years, but we have seen some demos. it is absolutely incredible. my partner's involvement with tesla, whoever thought you could auto upgrade a car to be self-driving? emily: we were discussing this, though, nobody actually has a self-driving car that is road ready, legal. >> tesla has gotten there in

certain variations. they have scaled it back a little bit. there is no are you can get into that is legal and will drive you around, though google is trying. cory: they put a car on the road that was dangerous for people to drive. emily: i do want to move on to gopro. gopro going through job cuts,

lowering their guidance, lots of questions about their business model. bubba: the product is phenomenal. as an investor, it is hard to watch hardware companies make the leap from product line to product line. only time will tell. >> vr is going to take a well to take off. that is a pretty large bet. >> i think it might be here sooner than we think. more people will experience it this year than anybody expects. cory: gopro is a camera on a stick. nothing other than that. emily: intel, it did not seem that bad we were talking about it yesterday. today, down 9%.

leading the way for all of these declines. cory: it is the difference between stock trading and venture capitalism. this is about decisions about money. intel said they would have a first-quarter weaker than the rest of the year. today, that really mattered to the markets. for the long-term, if intel does what it said it was going to do, it will be a pretty good year. emily: intel has been weathering the transition to mobile. bubba, you are focused on mobile. what trends are you going to bet on? bubba: that is a great question. up until this year, we have seen so much value creation in mobile apps. we still have 3 billion people to get online through mobile devices.

i am looking deeper into the stack, looking at things like a company -- what happens if you put software into the mobile network? what can you do? now your sales guys do not have to spend time entering data into salesforce. those are things i am looking for. emily: it has been a difficult couple of weeks for the market. anxious to see what happens next week. thank you for joining us today. happy friday. that does it for this edition of "bloomberg west." we will continue our tech market coverage next week. tune in on tuesday with netflix out after the bell.

have a wonderful weekend, everyone. ♪

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