let your freak flag fly. don't miss the grooviest trip at sea. coming up on "bloomberg best," the stories that shape the week in business around the world. a terror attack devastates brussels. onexamined the global attack policy, security, and markets. >> clearly it is in our business interests that borders remain open. >> the cooperation between countries has to be strengthened. >> we should not overreact to this. nejra: a big week in tech as applico small while twitter celebrates a big anniversary. bloomberg covers it all, from apple to xiaomi. >> it was a profitable company for a long time. nejra: influential people speak on topics of critical

importance. >> you would rule out the possibility of using nuclear weapons against isis? >> i am never going to rule anything out. nejra: it is all straight ahead on "bloomberg best." ♪ nejra: hello and welcome. i am nejra cehic. this is "bloomberg best." it's a weekly review of the most important business news, analysis, and interviews from bloomberg television around the world. in retrospect, this week has been dominated by tuesday's tragic terror attacks in brussels. on monday, attention was focused on silicon valley and a major product announcement from apple. unveiling a new iphone at an event in cupertino with a smaller screen and a smaller price tag, starting at $399 for the cheapest new iphone ever. what are your big takeaways? >> i think it's just interesting. i was making an analogy with the golden state warriors.

rather than go big or go home, the old traditional basketball adage, they found that small ball works well for them and they won a world championship. you can see apple tried the same strategy. apple is finding ways to go small. they got to 30 million people and that was a shocking number. 30 million people bought an iphone 5 last year. they have dedicated users who want to use smaller phones and want to pay less for it. >> they are being slightly more aggressive, maybe appropriately aggressive, with a price that should be more in line with emerging markets. this is a great price point because it is going to be more attractive, but at the same time, it is not going to be at the cost of their margins. >> europe wakes up to the threat of terrorism, once again in belgium, and we have to try and understand the scope of probablynderstand are coordinated attacks and how big this network will get. tom: you really wonder how they

will adapt, how europe will adjust. >> this certainly seems like a coordinated attack. it certainly appears to be in response to the apprehension friday of the main living suspect in the paris attacks last november. the belgian government has been under continual criticism since november, in terms of its terror, anti-terror campaign. why did it take four months to apprehend salah abdeslam? it seems like he was here if not at least in the greater brussels area for that time. they did get him on friday. they thought they had made a major breakthrough in the terror campaign, and this seems to be a big setback that we have today with these multiple explosions. >> belgium is on the highest terror alert level after three bombings in brussels today. at least 30 people are dead, 180 more than 180 are injured. police are at a standstill as

they search for more bombs. >> this is where many of the 31 people were killed in the two attacks that took place in brussels today. we had one attack here at the subway station, which, to put things into context for you geographically, we are right in the heart of the european union, the european commission. i'm actually right now surrounded by buildings that belong to the european commission. if you think about it, this is really the first large-scale terror attack, the largest terrorist attack that has taken place in this country since the second world war, and at least one of the attacks happening right in the middle of the e.u., the european commission's headquarters. >> credit suisse is accelerating its restructuring could the bank has announced cost savings of 1.7 billion since 2016, costing an additional 2000 jobs. credit suisse is a bank struggling to boost profits.

>> back in october, credit suisse said we have to kind of triage what we are going to tackle here and we need to improve our macro business first. credit is doing ok, but then the fourth quarter came and credit fell off the cliff. that continued in the first quarter. they had losses on distressed assets. now they are saying this is moving up the priority list. >> you said you were surprised .y your illiquid positions when did you find out about them? >> in january. why was this not clear before? >> as i said on the record, this was not clear to me and to many people inside. there needs to be a cultural change. it's completely unacceptable. there have been some consequences around that. francine: are the people trying to withhold information? tidjane: it is a very interesting question. it is linked to a cost problem. if your costs are too high and you are not taking them down, a you will lead a river in your strategy. a lot of the problems with investment bankers is that

people try to generate revenue at all costs if i may say so. it was a high-yielding book, and generating a lot of revenue. so people were reluctant to reduce it because it would expose the cost problems. >> chinese premier -- looking to asia to be the growth engine of the world, calling asia the growth engine of the world. steve england is at the forum and he really kept bragging on about growth, didn't he, steve? steve: the aggregate outlook of chinese leaders tends to be a little more sunny than in previous months. they are seeing signs of stability. as the point he made at the delegates forum in asia. mostly it is a chinese conference, but it is intended to kind of be china upon version 's version of the world

economic forum for asia. he kept on hammering the point that they are seeing stability. the quality of economic growth, according to him, is improving. he emphasized that china has enough tools to ensure "stable economic growth," and he is confident that china can maintain that pace of growth, 6.5%, over the next five years. he says, in his estimation the , fiscal deficit is not too high. he also said on the yuan, they will not devalue the yuan to boost exports. and on the property market, he says we want to avoid major fluctuations in the property market. he is aiming for steady development. nejra: coming up on "bloomberg best," a close-up look at the impact of tuesday's terror attacks in brussels. ♪

nejra: welcome back to "bloomberg best."

i am david shea pitch. mnejra cehic. the investigation into tuesday's terror attacks in brussels continues. go to bloomberg.com for the latest details and analysis. checking the impact of the bombings on global markets and gathering insight from experts around the world, let's look back at the best of that coverage. francine: when we first heard about a possible explosion, futures did not do much. then we saw a clear but shy risk-off mood. are people now dealing with this kind of thing in their stride? are we mispricing terror risk? >> it is one of the hardest risks to price. typically the short economic impact tends to be quite visible. economics always point to the fact that economies tend to survive these things. markets don't tend to price a persistent long-term impact. however, near-term you do see flows and price actions, such as

the one we are seeing at the moment. >> as we look back, whether we are talking san bernardino, paris, or 9/11, the markets have taken a leg down following attacks, but we have also seen a strong rebound. we are asking, is this time different? >> the market that seems to be reacting most is what we will call the brexit trade. the weakening of the pound, the widening of the buddha, the sterling, too. now you have political sides that can take advantage of this. if this happened a year ago, there is no political opposition that could take advantage of this. but now, not only do you have it in the united states, but because of brexit you have it in europe, too. they will take advantage of this, and that is why you see political trade having a bigger move than the standard playbook. how do i play a terrorist trade? are usually or

have been at least in the past two years or so pretty resilient to these terrorists. >> that is the right thing to do and it also turns out to be the more profitable thing to do. we should not be terrorized. the actions of a few sociopaths, it is horrible and we have a member of my team in brussels -- he is fine -- but at the same time, the reality is it does not change the overall movement of the global economy, the outlook for profits were interest rates, so people should not overreact to this. >> borders will be strengthened initially. the topic of schengen will come up again. as a businessman that operates within the european union, how important is schengen as an agreement and as a pillar of the e.u.? do you consider it under threat, and what does that mean for business europe-wide? >> as a european and also u.s. media company, we operate in

many european countries. clearly it is in our business interests that the border remains open and free trade continues. clearly, our objective has got to be that despite everything and despite concerns about security, borders remain open and people continue to travel and trade continues to flow. stephanie: could an attack like this or in paris get those governments around europe to point fingers or to try to act more in a unified way? >> i very much hope to see the latter. we have seen a real weakness of europe in the last weeks and months. with regard to the euro crisis and the refugee crisis, i very much hope that this is one positive thing that will come out of what is happened in brussels, that this will lead to a more unified approach combating terrorism. >> i do not think this has significant implications for

europe's policies in the middle east, which of course is the reason why we are having so many of these problems, nor does it have an impact on a divisive u.s. presidential election in the states. >> you do not think it is? >> i do not. no, i don't. we have already had these two major paris attacks. we have had a number of major terrorist attacks in turkey. we had the german assault, and now we have brussels. i think by next week, frankly, i would be surprised in the united states, this is the kind of headline that we are still actively talking about. we are getting inured to this kind of violence in europe. god for bid we have an attack like this in the u.s.. it would be very different. certainly a number of the political candidates, trump included, are going to try to to make a little bit of hay on top of these headlines, but i do not

think it will significantly affect the elections. >> there are statements from leaders all around the world, including from president obama in havana, a response to terrorism. what do you think government needs to do in order to defend our allies against attacks like this? >> i think we have to identify with what has happened to the europeans because it has happened in this city before. god for bid if it could happen again. the terrorist group islamic state is a threat both to the u.s. and canada as well as to all the europeans. what it means is, we have to rally around them. so judicial cooperation, law enforcement cooperation, and making sure that our intelligence agencies are working together, that is the best way in a situation like europe, where you have homegrown terrorists in the city of brussels, in the suburbs of paris, the best way to help europeans. >> pound falling today, posting its biggest decline in major currencies, all of that on speculations that the brussels explosions will boost the ofe for brexit, the result

closing more borders, curbing immigration, all of that fear potentially permeating what we might see in the june referendum. >> indeed it feels like a repetition of that particular occurrence. we had the tragic events in paris that led to an increase in support for the output. if you look at the polls, we did see a swing and fever of the late -- in favor of the leave flow. that was reflected in a sustained selloff in the pound, against the euro. the repetition of that seems likely in the near term. some of the negatives are already in the price, so if anything, unless we see a very significant swing in the polls, the pound downside from currency levels will not exceed what we have seen so long ago. >> lots of people talking about the future of schengen and the political pressure european leaders are under.

how do we see the euro trade and how thi does this tell us aboutw safe it is to put money in the euro? >> what we saw yesterday was the euro not performing well at all. you can explain that by saying that concerns about schengen and the e.u. have been going on for a little while. perhaps this brings it to a head. i think positioning explains why the euro did not perform well. if we go back to about a year ago, when the u.s. started to perform well when we had risk off events, that confused the market at the time, but we must remember that if we go back to the start of last year, the market was very short. the euro. and i think what we've had is a big correction in positions since then. the market has recovered to more normal levels, meaning that the euro is more vulnerable. >> it's not quite the safe haven play was a few years ago.

>> i think it is very difficult to say that euro is a safe haven. it was exhibiting safe haven behaviors. really, i think that was short covering. >> david cameron making it clear yesterday that we should not conflate the issue of what is happening in brussels with the issue of brexit. other people not taking that view. you look at the financial market reaction and that line was drawn fairly quickly. how does this story play into what happens with that debate as we work our way through the next three months? attacks like this, how do they actually impact the story? >> the impact it as the market showed yesterday. the pound went down minutes after brexit. the reason is people will draw that line, whether rightly or wrongly. david cameron has been out in recent weeks saying that the e.u., being in the e.u. makes britain safer and stronger. the situation in brussels challenges that view. there are other parties that will draw a thick line between

that and there are others that will draw in inference or raise an eyebrow. >> what is the mood like in the belgian government, ambassador? there has been criticism of the handling of this both of the government and the security forces. the spotlight has been on belgium since the paris terror attacks in november. it has led to the question, how is this allowed to happen? >> we may be, given the openness of our society, we are one of the most open countries in the world. as a matter of fact, we happened to be the most open economy in the world, and that openness normally is an asset, but sometimes it becomes difficult. when things are right in the world, you benefit from it. when things are less well, your subject to problems, as we right now face. >> what needs to be done on a europe-wide level to combat terrorism? >> if there is a lesson to be learned from the recent past i would say, it is exactly that the cooperation among european

countries has to be strengthened. most of the countries are fully aware of that. our prime minister spoke with mr. hollande yesterday. that was one of the topics he addressed. what is the point? the point is that intelligence should not only be gathered, it should also be exchanged and beyond the exchange of information, the intelligence should be actually used by the final destinations. that is not always the case. so there is some work to be done, but i think the awareness is fully there. ♪

nejra: you are watching "bloomberg best." cehic, highlighting top company news, new developments and ongoing stories.

lastly, and insurance giant made a surprise bid to top marriott's offer for starwood hotels. >> starwood shares of the hotel company soaring today after it accepted in improved takeover bid from marriott. are we in the middle of a takeover battle here? >> very much so. takeover classic toke where we saw them coming with this improved offer last week. marriott has come in to match it. they've gone slightly over it. i think what is interesting is the dollar has clearly been -- the door has clearly been left open by starwood for they come back. i think it is very likely that bang come back to the table on this one. >> is there a game changing price? what is the ceiling here? how high can both companies go? >> it is a really good question. we think that marriott would have put more money on the table if they really wanted to put this knockout bid on there.

clearly by just bumping this a small amount, it suggests maybe they have some more room to go, but maybe the chinese come back in first and there is more of a bump for marriott. the chinese have shown themselves to be incredibly space.us buyers in the they have done the strategic hotel deal with blackstone. i think this is going to be one that will run for a while, and i think we will see another one for sure. >> the first chinese company to sign up as a major fee for partner and also has been a major theme of the football body since the corruption scandal. what is behind this move? >> last year xi jinping made football a national priority. since then, we have seen some wealthy investors from china really put money behind the sport. the chairman and founder has been aggressively investing a 20% stake.

last year with the deal with fee for, it's running through until 2030, worth hundreds of millions of dollars. >> is it a good use of that money? >> he says it is very worthwhile. he says other chinese companies could sign up to become top fifa sponsors also. >> valeant ceo mike peterson is stepping down after a series of controversies that culminated with the 61% drop in shares last week alone. isknow that mike peterson out and bill ackman has to board seats, but there is not a new ceo yet, correct? >> we do not have a new ceo yet, and pearson is going to be staying in until they find one. we know that the board has asked the former cfo, howard schiller, to resign because they have accused him of financial after friday, which is leading

them to restate some of the results. >> shares in valeant rising after a second day of news that michael pearson will be stepping down. hours after that news, pearson have satto upset south b side-by-side bill ackman and how they will adjust hundreds of workers in the new jersey office. what do we know about what they said? >> months ago bill ackman was talking about how they were involved and interested. bill ackman himself is sitting on this board after yesterday's announcement and doing a town hall style meeting with mike pearson, who has been outed as ceo and chairman of the company. they are saying there will not be major layoffs. debt is the priority to pay down here. they are looking for somebody to replace pearson as soon as possible. >> what is happening to former cfo howard schiller? can he be made to leave the board? >> it starts to get really messy. howard schiller, former cfo and current board member, they have accused him of impropriety and how everything is handled with

some of the restatements there and have asked him to resign from the board. he has refused. he has $26 million in bonus he is sitting on. it is probably a lot easier to fight a clawback from inside the board than from outside. >> sharp shares tumbling in tokyo. nearly a month and since it's board voted in favor of the bailout proposal from foxconn, but the deal has been held up. is there a risk that the deal could fall apart? >> there is. as you mentioned, we are coming up on a month now since sharp's board approved of the deal from foxconn. it is 26 days to stay. it is a growing list of issues that foxconn is going through before it signs this definitive agreement to proceed with the deal. they looked at some contingent liabilities that sharp has had. they are looking at some of the loans that sharp has to see if they can roll those over at lower interest rates and perhaps get more favorable terms. they are also looking at the company's performance in the

current quarter. there are reports that foxconn may try to decrease the amount of money it is putting into sharp, in additional equity. that was originally proposed at ¥489 billion. we may see that number go down a bit. >> so the timeline, when can we expect a decision or an announcement? >> march 31 is a big day for them. they have credit lines and loans expiring on march 31, and next month we will probably see some foxconn on the front to see if this acquisition does indeed proceed. investor starboard value is saying they will nominate nine new members to the yahoo! board, effectively trying to replace the current board entirely. this is the 1.7% shareholder that is growing frustrated. it's over a possible turnaround

at yahoo!. >> we know a little bit about starboard's plan. they plan to take over, basically, right? >> yes, it is effectively a palace coup. it is worth pointing out, vonnie, starboard has done this before, in 2014, when they nominated new investors in darden restaurants. they were in the process of selling red lobster and currently owns a little garden. they succeeded. since then, darden shares are up 50%. that is not the way it is going to play out at yahoo!, because starboard is not interested in a turnaround. what starboard wants yahoo! to do is to sell the core business and then we will see what happens. vonnie: it is interesting to see who starboard is planning to put on that board. that's a shareholders agree. one would be the former head of tech m&a at deutsche bank. and then somebody who used to run directv. erik: the question for shareholders, and it will be for shareholders to decide if the proxy fight goes forward, is whether they like these directors better, whether they think they can do a better job

than the current board. the current board does not have a great track record over the past 18 months. nejra: still to come on "bloomberg best," and anniversary assessment of twitter at 10. up next, the week's most important interviews, including a conversation on terrorism with u.s. presidential candidate donald trump. ♪

nejra: welcome back to bloomberg best. hours after tuesday's attack of brussels, bloomberg television's mark halperin sat down with leading presidential candidate, donald trump. their conversation about u.s. foreign policy and the response to terrorism leads our review of the week last most important k's mostws -- wee important interviews. us.trump: they must respect

mark c.: one element is that they don't respect the west? mr. trump: they have no respect for our president and for our country. >> whether you would will out tactical nuclear weapons, would rule that out? mr. trump: i would be very late, compared to my opponents running. >> you would not rule it out? mr. trump: i would not want to tell you that. , maybe we would use it. be do these interviews -- everybody, not just me -- and you ask a question like that, and everybody comes so clean, so honest. we need unpredictability. isis is an enemy. they are not wearing a uniform.

we need unpredictability. when you ask a question like that, it is a very sad thing to have to answer it because the enemy is watching. i have a really good chance of winning. i don't want the enemy to know how i'm thinking. with that being said, i don't rule out anything. i would say definitely, nuclear weapons are possibility. >> i want you to speak to the people in the st. louis district where do we get the growth? policy is what monetary is. there is a business cycle. if you run a good policy, there is a business cycle, but not as vague. it is driven by growth in technology, human capital. what the u.s. needs is a better medium term growth strategy

>>. >> kevin next president do that, or does it come from congress? all of your extraordinary policies, much of wit which is still in place, is it still effective? >> i think they are still accommodative. i think we are providing an accommodative policy with the zero interest rate. i think we want to be edging closer and closer to something of a more normal settings he don't get stuck in this zero rate environment, the way japan did. you want to edge your way towards a more nominal interest rate structure. i think that would get us back to the kind of equilibrium we had in the 1980's and 19 nice, which was really pretty good. >> when it comes to monetary policy, how do you see it? >> monetary policy, for eight years, has been cutting rates over and again.

forward spending from the future to the present. passes, tomorrow becomes today. we have done it all in spending. central banks have been forced to do more and more. it is like a cyclist pedaling up a hill that is getting steeper and steeper. spend faster and faster. >> i look at the bank of england -- i'm sorry, the bank of europe, the brink of japan. as you see it, how effective have they been? a while, they were extraordinary measures. >> you can see what japan and the euro area, in essence, banks are trying to push down the exchange rate. most places in the world can say , if only the rest of the world

is going normally, we would be fined, but since it isn't, we aren't. what is left? pushed on the exchange rate. not everyone can push down the exchange rate. most countries have been trying to do that at the expense of the u.s. dollar. >> european energy stocks -- this is a pe story. energy stocks are trading at the premium in more than decade. would you be a buyer at this point? >> i feel that the situation is changing. ,n terms of supply and demand there is an anomaly. demand is increasing, not at the same speed we would hope, by think there is some recovery.

stock, the physical stock, is very, very high. it depends. in 2016, we can reach a balance in september or october. 2017, the situation will change. >> i want to bring you back, the equity stock, your stock has gone straight through the roof. the earnings story is going down. analysts are downgrading energy. the price is going up and the earnings are going down. something is not right. >> know, something is not right. pricet looking at the oil . i'm not looking our stock at the moment. country andat the

our investment. you cannot do anything about the price. you have to be resilient. you have to be strong also. i think it is falling, the price, and try to understand what is happening is wasting your time. >> china recently had its nationals people's congress. there was some concern that the country was to focus on stimulus and short-term growth at the expense of reforms. what is your take on that? >> we believe that china will continue to grow. our assessment, at the moment, is 6.3%. we have to assess the decisions that have been made by the chinese authorities to factor in those decisions, and see whether we forecast a little more growth.

>> you recently urged asian nations to take the lead in adopting policies to counter global economic challenges. which country specifically need to work on this? what specifically would you like to see? >> i think the whole region needs infrastructure. whether it is entirely public or public and private, it will have a short-term impact on growth, as well regional impact on improving product this to being factors. -- product distribution factors. ♪

nejra: you're watching bloomberg best.

more tech news this week. apple and the u.s. government was scheduled to continue their court battle over digital privity. a hearing in southern california was canceled at the last moment. >> the u.s. said yesterday it may not need apple's help to sanck the iphone from the bernardino attacker. you think the battle is over? >> not at all. i think this is going to go on for a long time. belgium and, brussels will ensure that. when there is an atmosphere of fear, there will be a constituency for intrusion into our communications. id that is a given. 11th hour, thehe government came forward and said, we don't need you after all. if that is true, if that does does that substantially undermine apple's position in the sense that these phones are

not as protected as we thought they were? >> may be for the iphone 5s, which is what we are talking about. for future phones, and has no bearing whatsoever, in my opinion. on the other hand, i think there's a lot of posing on both sides on this issue. what is really new about this is that he i went to court to make apple complied. quietly, i think -- we know there has been cooperation. probably they did not need to do it, and apple can do things, and probably has done them in places like china, but we might not really want to talk about public he, or they would not want to talk publicly. >> another tech headline. twitter turns 10. the company reached that milestone on monday. it's recent performance has not been cause for celebration. >> 10 years ago today, twitter

cofounder jack dorsey sent the very first tweet. now findsced them -- himself as ceo and facing a barrage of problems. shares are close to an all-time low. growth has stalled. story.e cover what did you learn? >> they have a big problem. dorsey thinks it is basically marketing and product. they have the user growth stalled out at 320 million users. the other problem is so may people have tried twitter and decided they don't like it. part of the huge challenge is getting those people back >>. >>what is the recipe? the actual game plan? >> part of it is convincing people you don't have to tweet to use twitter.

you can sit there and just listen. and, twitter is the best place to listen to world events that you are interested in. argument, isn't working with advertisers? at the end of the day, they have to make money. >> advertisers like the product. they want a bigger group of users. they want closer to what facebook has which is 1.6 billion users. >> if you think about facebook and acquisitions they have made, whether whatsapp, instagram -- you cannot even compare to twitter. are they even in the game? >> jack dorsey has very high hopes for periscope. he told this story about a puddle -- >> a puddle? .> yet, a puddle on the street

his point was basically that pairs go can make life events out of anything. you don't have to wait for the super bowl for twitter to get excited. >> may be a puddle of tears. what does he think the company will look like in 10 years? >> he thinks it will grow, he thinks they will get users back, and advertisers will follow. i think part of it is convincing people again the don't have to necessarily tweet, be active -- controlsdd editorial onto this firehose they have already created. valued startghest of just released an update. much like apple, it had to field questions about slowing growth in its home market. lulu chen caught up with the vice president this week and

asked whether the company plans to raise any more money. at thise not raising point. in fact, the last raise was the december 2014. we raised over a million dollars. that gives us a huge amount of investment firepower. we will invest into startup companies. the business itself is operationally self-sufficient. we don't need to raise any more money beyond the round that we did. >> how long do you think this will last? >> the company can keep itself going operationally. >> as of when have you been profitable? >> we have a profitable for a long time. when you look a how much money you know,aised -- right away, we have been a profitable company for a long time. >> last year, you sold over 70 million handsets, a little below

expectations. now, analysts say the valuation is not sustainable. what would you say to them? >> we were number one in china in 2015. in fact, number one for the second year in a row. even though the market is not growing fast anymore, we are maintaining our leadership position. is also very competitive market. we are doing very very well. we will be back to wrap up bloomberg best with a memorial tribute to a silicon valley legend. ♪

nejra: this is bloomberg best. tell cohen founder died this co founder died this

week. he was a mentor to many silicon valley superstars. ve's lifeabout gro and legacy. >> you and andy were very close. you called him the greatest inventor and ceo ever. talk about what he meant to you. readingarted with me his book. it is this amazing thing. here's this guy who came here literally as a refugee, and then build ant intel, which, in my era, was the most important technology in the world. he wrote a book -- a lot of ceos write books, but no ceo writes a book like that. ceos write books about how great they are, or how awesome the

company was. he wrote a book on the right way to run a company. i think it is still one of the best management books ever written. it completely change my career to have a book like that. it was not always perfect. what do you think was so important about him, when it comes to the history of silicon valley? how did he shape this place that we know today? he buildk not only did literally the foundational company, the microprocessor -- and tell was in the memory business for the first 13 years life, which is an in tech

to switch theed business to microprocessors, something he foresaw might be a big market. , and as a result, the u.s. became the center of the microprocessor market, and the pc industry, which led us to be the center of the internet. he was a foundation for the u.s.'s leadership in technology. that was the really big thing. also theat, he was cultural foundation of silicon valley, in that his leadership in turning around, once he achieved what he did, and assuring other people knew how to do it, was unprecedented. really no one has done as well since. we have all lived off it, and it has made every company that has been built read that book.

for more on the life and career of andy grove, and more business news, visit bloomberg.com. that will do it for bloomberg us this week. thank you for watching bloomberg television. ♪

emily: this is the best of "bloomberg west." we have compiled our best interviews of the week. coming up, apple introduces a smaller, cheaper iphone. how are investors digesting it? we discuss. we remember andy grove, a founding father of silicon valley and a mentor of the biggest minds. i check in with shopify as reports swirl of an acquisition by google. first, to our lead.

apple unveils the iphone se with a smaller screen and smaller price tag. starting out at $399, it is the cheapest new iphone ever. they are appealing to those loyal to the iphone 5 and new buyers in high-growth markets like china and india. investors initially were not crazy about the reveal. shares dipping as the event got underway, but investors are typically slow to digest apple product announcements. looking back since steve jobs died in 2011, shares rose 1.5% after product launches, but retreated 1.8% three months later. right after the event, i spoke minneapolisnster in . i started by asking, how will investors look at apple? >> investors are concerned.

that is already priced in. they should take away they are being more aggressive. maybe appropriately aggressive with pricing that should be more resonant with emerging markets. this is a great price point. it will be more attractive, but not at the cost of their margins. investors should feel good about that. the march guidance they gave, many investors believe that included the anticipated lower on phone. that is a sign that it will not be out until march 31. the quarter ends on march 26. that means the march quarter doesn't benefit. investor, one of their takeaways should be to feel better about the march guidance based on the timing of when the phone is available. emily: this is the lowest priced iphone ever. will this help reinvigorate iphone sales? >> i think iphone sales are doing well, just not growing. , there are one

billion devices out there, not all of them iphones, but we are looking at a huge audience that will expand. perhaps slower than we are used to, but one billion people potentially using apple devices here. how much faster can they grow? how many users are non-consumers of iphone? probably most of them will have smartphones in the next few years. there will always be the green opportunity. i do not know if this is it. we will see more iteration. they will keep improving this product. emily: who will buy this phone? is it for people in emerging markets? for people who have not upgraded yet? people who already have an iphone but want the smaller screen? who are they targeting? ben: when we look at intent to purchase and the installments, we see a portion of the base that has not moved. it is not always price-driven.

20% of our panel said they wanted to upgrade but are not sure about the size. they will upgrade at some point. which device will they choose? do they like the small? i think the existing base, the holdouts that are adamantly set, that is relatively small. if our panel indicates correctly, that is 10% to 15% of those owners. the important thing is they are bringing the platform to current generation technology, but they were very intentional in saying that a first time buyer buys in at this screen size. it also has to do with the price. china, india, indonesia, it is the price point. this is indicative of a maturing middle. consumers, as they grow and mature, saying i'm drawn to apple and like the apps, they

are willing to pay more and apple is meeting them at the middle with this price range. emily: his apple's looming -- is apple looming against the tide? there's an economic slowdown in china and a potential economic pickup in russia and brazil. the smart phone market is saturating. to what extent is this outside of apple's control? >> a lot of it is. they're doing well in emerging markets. in china, units grew at 18% year-over-year, and deceleration since december, but better than overall industry growth of smartphones in china, close to 10%. yes, they are up against the headwind. everyone is against the headwind. shares reflect that given the multiple it is trading at. this should be a mid-to high

single-digit growing business with the benefit of emerging markets. even with the headwinds, it should be a growing business. emily: we are seeing a low priced iphone and iwatch cut, lowering the price by $50. could this impact the brand? >> my thinking is not on the purchased,e device but the per day basis. if you work out how long they stay in use, are upgraded, you get to an interesting figure. i used to say that an apple product is $1 per day. i have refined that, and now it is $.70 per day. on a per product basis we saw $17 for the lowest iphone and up to $31 for the most expensive -- not the most expensive, but the high-end model.

$30 a month, it is $1 a day. $15 or $17, that is $.50 a day. that is how we should take about -- think about these products and think about how many of those customers there are and services they add. we're looking at $20 a year of additional service revenue per device. it can be boiled into one model and reduced to how many users you have, how much they spend on each device, and you get a valuation. emily: you have done a lot of work on the watch. you are wearing yours. my two guests earlier have them but do not wear them. we are now seeing a price cut. can this be more than a niche product with an update or redesign? >> there are a couple of ways to think about the watch. one thing is that this was not something preceding it that gave

us a frame of reference. the iphone, most of us had feature phones and understood cell phones. the ipad was successful because we were familiar with the iphone. this is such a brand-new category of product, it takes time to get your brain around it. we see higher levels of consumer satisfaction within the mainstream markets, every day buyers who are finding value. this is just version one. we are optimistic that this product goes. again, the question is how big is the size of the market? we will have this are all new categories, how big is the opportunity for the markets? the research continues do suggest there's something there. how big that goes will be the debate. they will continue to evolve the product. putting a modem in it and

unbundling it from the iphone would make sense, better improvement of native apps. that will come as it matures. what we are seeing in the market is positive. there's something there, but it is in its infancy. emily: that was gene munster, .orace and ben coming up, we remember one of silicon valley's founding fathers. intel's former chairman andy grove who died on monday at the age of 79. we will look back at his legacy. that's next. ♪

emily: this week, the tech world has been mourning the death of andy grove, who died on monday at 79 years old. he played a central role in the creation of the semi conductor business, on which the internet age is built. he was a mentor to steve jobs, larry ellison, and mark zuckerberg. i spoke to tech leaders who knew

him, including craig barrett, who took over as ceo of intel. he told me about the impact andy grove had on him personally. craig: i worked with andy for 35 years. i greatly respected his insight, his wisdom, his strategic thought, and how straightforward he was. i think he was the most direct human being i've ever met. you knew exactly where he was coming from, and he always had a great strategic idea of what to do next. emily: intel was known as the world's best managed company, yet he was also known as a ruthless leader. , people still followed him. what would you say were the hallmarks of his style? craig: i do not think "ruthless" is the right word. he was straightforward and practiced constructive confrontation. that is an intel buzz word. you always knew where he was coming from. he would not tolerate shallow

thinking. he wanted every strategy well thought out and considered. he did not mind challenging anyone in the company or the industry. emily: what was it like trying to fill his big shoes? would he continue to try to influence you even when you were the ceo and he wasn't? craig: intel has had such a tremendous history of leaders -- icons in the industry. moore and andyon grove. following those three is a daunting task for anyone. i worked very closely with andy in a consulting basis after he left the ceo position. i followed him. he was helpful. he was respectful of decisions i made. so, he was a wonderful mentor.

overstep, overreach. he respected the next generation of management coming into play. emily: young ceos revere andy grove. his book on management is like the bible. i wonder, do you think his leadership style survives generations, or can other styles be just as successful? craig: certainly, there is not one way to manage a company. andy imprinted his style into the culture of intel. they indoctrinate all of the new hires into that style where strategic thought is important. constructive confrontation, addressing issues, running communications up and down the company -- the lowest level employee feels free to contact the ceo at any time with an idea. all those were things andy put

into the company and into play. they are all alive and well. emily: craig barrett. when we return, i will speak with one of the men andy grove mentored. ben horowitz of injuries and horwitz -- injuries and horowitz -- we will hear more about andy grove and his extraordinary life. i will sit down with a ceo discussing the issues facing the world of cyber security. ♪

emily: as we remember a pioneer , former ceoindustry and chairman of intel, the late andy grove died on monday, i spoke to ben horowitz, cofounder of andreessen horowitz who had his own special relationship

with andy grove, a beloved mentor and teacher. he talked about his role in shaping silicon valley. ben: not only did he build the foundational company, and to get to the microprocessor intel was in the memory business. that is usually the end when you get to 13 years. he faced brutal competition from the japanese. including subsidies from the japanese government to his competitors, which forced him to switch the business that weight late in its life to microprocessors -- something he foresaw might be a big market, but at the time was tiny. as a result, the u.s. ended up being the center of the microprocessor market and the pc industry, which led us to be the center of the internet. he was the foundation for the u.s.'s leadership in technology. that was a really big thing. beyond that, he was also the cultural foundation of silicon valley.

in that his leadership in turning around when he achieved -- once he achieved what he did, and making sure others knew how to do it, was unprecedented. really, nobody has done it as since, but we have lived off of it and it has made every company that has read the book or followed andy grove better. emily: the idea of a turnaround is still elusive to most baked -- big tech companies out there, with perhaps only apple truly turning itself around. now, we are seeing yahoo! and ibm going through difficult times. what do you think andy grove's advice would be to them? or, what did he think about them in his final months? ben: there's probably some

things that i should not share. i will say that the thing that andy and steve jobs had in common was that they had the courage to take the company in a direction that maybe nobody at the time thought was a good idea. i think what you see in leadership now is what i would consider more followership. what do the shareholders want to or what do the analysts think is a good idea? and you look at what steve jobs did with apple or andy did with intel, no one reported on it. no one was an armchair strategist. neither would have sent them in the directions they took. they knew what the right direction was and were ok with whatever happened then. they were ok with doing what they believed was right. i think that defined andy as a leader. the thing that people who follow him take away is that courage

and determination to do what is right. emily: it seems like so many young people want to be entrepreneurs, come to silicon valley and live the silicon valley dream. what was his take on young entrepreneurs who might be called overly arrogant or naive? what was their take on andy grove? ben: he continued to believe in people. even the young people that some consider arrogant. he spent time with a lot of the younger ceos. the ceo of dropbox, mark zuckerberg, if you look at mark's career and what he has done with the company and philanthropically, you can see that he has learned a lot from andy. he knows the importance of giving back. andy's career was so influenced

by how grateful he was that this country took him in as a refugee. at 18 years old, he had nothing . he came over on a boat. he got a few dollars from us and we let him be a citizen. he never, ever stopped trying to repay that. he paid it forward to all of us. it is an amazing thing. that level of gratitude and belief in humanity is what we all try to take from him. emily: ben horowitz, speaking to me about the death of former intel ceo andy grove. now with me to discuss, our king.reporter, ian i want to touch on something that ben mentioned, how he became this way. how did he become so great? share a little about his story. ian: he wrote a moving book process, his

childhood growing up in europe during the war in eastern europe. being jewish, what happened to his family when the nazis occupied hungary, and when it was fought over by the soviets hen they took it over. how his family was persecuted and he had to escape. emily: you met him many times. what was he like? ian: scary. inspiring, but scary. everyone talks about his intellectual honesty, love of the truth. that was absolutely what he was like. you cannot have a flirty and flattering conversation. he was not interested in his own celebrity or power. all he cared about was getting to the truth. he would push people's buttons until he got what he felt was useful out of them. david, i'm sure you have your own stories about andy grove, having covered silicon valley for so many years. how do you remember him?

david: listening to all of these wonderful comments, one thing that has not been mentioned is that he played a key role in building the ecosystem that is silicon valley now. this complex relationship between microsoft and intel that incredible success of the pc, of which he was a great champion. bill gates is not a pushover. andy grove was a formidable match for him. it was necessary, in those years, that both companies were led by super strong, super intelligent, rational, but feisty leaders who wanted to win and push each other around. in the end, they knew they had to win together. he was not mean, but he was gruff and straightforward. he was an incredibly nuanced thinker. there are so many wonderful things about him. he was generous, too. when i first started covering tech, he got to know me and gave me pointers on what i should

think about. emily: your profile of andy today opened with this amazing anecdote about a conversation with steve jobs and larry ellison. share that with us. ian: they went to his house on his birthday to celebrate. thought, by way of tribute, they would tell him that he was the only man in silicon valley that they could work for. his response was that he would not have hired either one of them. he thought they were flaky. david: that sounds very much like andy. he was not going to sugarcoat anything. he wasn't mean, he just told it like it was. you had to be braced for unpalatable truths when you hung around with him. he was not going to waste your time. he wanted to make a great company, industry, and he was ultimately a great american that wanted to build the country up.

emily: that was ian king and david kirkpatrick. up next, we will speak to the adobe ceo about the areas of focus beyond products like photoshop. ead to las vegas, next. if you like bloomberg news you can listen on the bloomberg radio app on bloomberg.com and in the u.s. on xm. ♪

emily: welcome back to the best of "bloomberg west." i'm emily chang. security, it is one of the hottest startups disrupting the industry is , pulling in hundreds of millions of funding.

they're racking up $3.5 billion in valuation. i spoke to cofounder orion hindawi, who took the reins of ceo from his father. orion: i think we are doing what i have wanted to do for eight years. to build something we are proud of, ship it to customers, and have 99% of them renew. the interesting thing is that they care about things like revenue, cash flow -- and i do, too, but what is important is to me is that our customers love what they do. every year they are able to pull out technology they do not like and replace it with tanium. emily: you raised another $100 million in additional funding. why take new money if you do not need it? orion: i said a year ago that what was happening in the valley will not continue. that we were running in a profligate environment. people were spending money like they didn't know what to do with it. they were wasting it. i thought there was going to be a turn. we were raising money primarily

because we did not think we would be able to do it again. if you look at the market now, it looks like people will not be able to raise money at the valuations they want. i'm glad that we have the cushion to execute without worrying about the dynamics of the market. and we can execute the way we want to, irrespective of that. emily: who gets left behind? orion: people are being left behind already. emily: what companies? orion: in the security industry, there is point solution after point solution that is losing millions of dollars per are desperately trying to raise money or be acquired. eyesight was just acquired by fire eye. sometimes the acquired are unsustainable and will be a target for acquisition. a lot of the security market does not deserve to exist. that will shake out soon. emily: at an age where we are

more at risk than ever, are there a lot of companies and people in danger because their cyber security firms are not doing their job? orion: 100%. a lot of people are relying on a foundation that is crumbling. very quickly, they will have to take antivirus and firewalls, some of the endpoint capabilities they have and some of the companies they deal with, and upgrade them if they want to prevent the next attack. aattackers are stealing billions of dollars every day in credit cards and health care data. they will not stop. if we do not provide solutions, our customers will lose that and information and credit card data at an increasing clip. emily: apple versus the fbi, your take? orion: it is more complicated than people give it credit. in the valley, it is popular to say apple, but the reality is our society is based on the idea that a warrant, when issued,

should be followed. if we end up with a black box in everyone's pocket, law enforcement will have a harder time doing their job. conversely, if you break backdoors and put , nothing ever stays secret. it is a difficult problem to solve. everyone wants to shake their fists and say encryption is awesome. if you do not have law enforcement, the society breaks down. emily: should tech companies be able to create warrant-free spaces? should the government be able to look at this? orion: i think the government has a reasonable need to get to data to prevent the next attack. if we build systems that are so closed that it is impossible for them to do their jobs, i'm afraid we will all suffer. emily: you said an ipo is in your sites. it is only fair to employees.

is that something we will see this year? orion: that is hard to answer. i don't know what will happen with the market. i think people are realizing it is frozen. i have seen the ceos counting on going public that are terrified. they are losing money, but thought the market would make up for it. they are realizing that won't happen. we are in a luxurious position where we are making money. we can choose when to go so we aren't forced into an unfriendly market. i continue to believe our investors, employees, and customers deserve to have us go ipo. emily: you think they would like to see you become a public company. orion: i think they want to see we are running a tight ship. they want to know we will exist in five years. some companies that have gone public are paying the price. when customers look at their financials, they realize they are non-substantial. we are very clear.

i caught up with the adobe ceo. the company is in the midst of an effort to shift its product lineup from desktop to the cloud. adobe shares were higher after the latest report. shares and profits beat estimates for the first quarter. adobe boosted its forecast for the full year. i spoke with the ceo in las vegas, asking him how he looks at his business. shantanu: we had a strong quarter across the board. all three of our growth businesses, the creative cloud, adobe marketing cloud, and adobe document cloud did well. we had successfully reimagined the creative process in moving the business to the cloud. in the marketing business as well, we had a strong quarter. what is driving it is every business around the world is talking about the impact of digital and putting the customer front and center. we enable them to make that transition.

we are seeing demand for digital , and that is boding well for adobe. emily: you are close to creating the shift from subscription to licensed base sales. what particular areas of business are seeing the most strength? shantanu: i would say that we are through the heart of the transition. that is why we have talked about how the creative business will grow greater than 20% this year from the peak. the marketing cloud will grow at 20% this year. i think both businesses are steadily fueling growth. in creative it is about the mobile applications, the video being consumed. on marketing, it is about re-platforming the core infrastructure to deal with the demands of digital. emily: longer-term, what are the areas of competition you are worried about?

we have been talking about andy grove today. the day after his passing. his famous line, "only the paranoid survive." what are you paranoid about? shantanu: we're paranoid in terms of how technology will disrupt the entire industry. i think the good news for adobe is that we have always been a product company at our core and in our dna. as long as we continue to innovate -- we have transformed our businesses by focusing on the customer. when you are looking for the next innovative startup and idea,duals with a great we have been innovating well within the company, and will continue to do so. emily: you are in las vegas hosting a digital marketing conference, one of the lesser known areas of your business.

why is marketing a big focus for adobe? shantanu: we have always been about art. if you look at the impact of our products like photoshop, illustrator, indesign, and premier, there is not a piece of communication out there that did not have some use of adobe software. a few years ago we recognized the world was moving to re-platform its web infrastructure. every business had to put the customer's digital journey front and center. we recognized that if we have done with art with the science of marketing, that would he a unique opportunity. finance had been automated. been automated. no one was targeting the chief revenue officer, the chief

marketing officer with technology. we are the undisputed leader in that category. it is a business that continues to grow north of 20%. we were first to recognize this large opportunity that we think will be something like a $25 billion plus opportunity. emily: that was shantanu narayen speaking to me from las vegas. shopify is expanding is ts partnership even as it may be an acquisition target for a silicon valley power player. we will hear from tobi lutke. then, we dive into the world of space startups. ♪

emily: reports this week that alphabet might be eyeing acquisitions for their cloud business. shopify is on the short list , which provides for vendors on pinterest and

twitter. they are not stopping the software maker from forging new partnerships, announcing new platforms like the coupon app e-bates and house. tony lucca joined me to share more. tobi: it is going well. they picked us up the year ago with the idea that let's get in more places. let's get to a place where they can show their products and buy directly. it has been going amazingly. great partnerships. emily: facebook has tried e-commerce before. it has always fizzled. do people really want to shop on facebook? tobi: ads are behind a lot of facebook's business. places thatertising sell products. shopify is for advertising

anyway. to bring us closer together with the identity and maybe the credit cards that facebook has on file -- a compelling experience for the people shopping. emily: what about amazon? how much, in terms of sales, has been generated by the amazon partnership? tobi: it has been about their web store business. they have brought over a lot of merchants that have been selling on the platform. partnership that has enabled payments directly through amazon, the ability to ship the product directly into the amazon marketplace. it is a meaningful channel for the people on our platform. emily: what about google? what have your talks with google been like? tobi: it is hard for me to comment. i know where you're going with this. emily: let's talk about the elephant in the room. talkedgle talk to you --

to you? are they trying to buy you? tobi: as a public company, i cannot comment. emily: do you wonder about google as a competitor? they've been trying to expand their shopping efforts. tobi: google, and everyone else, is finally taking e-commerce seriously. everyone realizes what an important role it plays. what we want to do at shopify is be the neutral office. we want to power the merchants. we love helping entrepreneurship. we want to make it easier to build these online businesses. no one paid attention to how difficult this was. we built the back office. we are getting your orders in and getting your packets out. we integrate with facebook. we give you online stores to where you can sell directly. that is our role.

emily: you're getting so much information about the payments business because you work for these businesses. who is winning in payments? is it paypal, stripe? tobi: they both have a good place. now, paypal, through acquisition of a company called , and in stripes' case it is more home-built, but it is a sign of how products like retail is very important. we have looked closely. if you sign up for a new shopify, you get shopify payments, which is related to stripe, and we automatically set you up with paypal as well. emily: the new trudeau government is making tech part of their plan. how does the canadian government keep entrepreneurs from moving to silicon valley and taking their ideas here?

tobi: well, coming to the valley, you meet a lot of canadian friends. it is the ambition of the canadian government to get everyone to keep building the companies in canada. we have 4500 people in canada. it is suddenly a great place to build long-term companies. the new focus is very welcome. justin trudeau is savvy on technology. he understands it. it is fun right now. emily: that was shopify ceo tobi lutke. coming up, we dive into the world of space startups and the first accelerator for the aerospace industry. ♪

emily: this week, i looked at the world of space startups. the starburst accelerator, after starting in france, is coming to l.a., helping aerospace

companies off the ground. i spoke with the founder about what he is excited about. why did you start accelerator? what kind of support do aerospace startups need, besides a lot of cash? >> i am an engineer by my background. i worked for the u.s. air force research labs. i'm passionate about aerospace. i've been doing consulting for the past 20 years. emily: you are in paris, l.a., munich, singapore. why these places? >> we wanted to be global. our startups need to be connected to grow their businesses with large corporations as fast as possible. for us, the major hubs combining aerospace, science, corporate aerospace, money, and entrepreneurs, we wanted to be

in all the locations where the startups can meet and collaborate with large corporations. emily: where does space talent cluster? do they come to you? francois: it is a combination. we start in university, whether it is in the l.a.-area, m.i.t., asia, europe -- these people , these engineers with phd's want to do something different. they do not want to work for large corporations anymore. they want more autonomy. they want to be more empowered. they want to put their name into withry like elon musk spacex. emily: they're not only trying to build rockets like musk? francois: there are so many different subjects and startups. we are working with more than 300 across the globe. out of the different areas, we can name electric cars, vertical

takeoff and landing capabilities. we have 20 startups working in that area. there is a lot of them that want to work on satellite constellations, whether it is through observations or communications. inside the aircraft, a lot is going on. in the cabin, for example, more connectivity with the startups that want to do big data. there are more sensors. we want to operate aircraft that are smarter and more efficient. emily: a lot of people think of spacex as the only space startup. there is also sierra nevada. which we've had on this show. do you think we will see more space and aerospace startups on the main stage? francois: beyond spacex, people are spurred by what he was able to demonstrate with a proper

business model and good valuations. he showed the way to many more of them. now, with that, there is one more and more who want to invest and more and more who want to develop their own products. there are 300 to 400 mature startups with strong technological world-class products coming to the market. not all of them will succeed, but the landscape in 10 years to 15 years will be different. emily: and elon is helping? francois: absolutely. by what he is doing, what he has announced with hyper loop. with the launch electrical cars. by showing the way. emily: that was the starburst accelerator founder francois chopard. that does it for this edition of the best of "bloomberg west." we will see you next weekend. ♪

♪ emily: he has backed some of tvs biggest hits. 24, er, arrested development. then, he joined showtime and has led the resurgence in original programming. >> what we do has consequences. now, the executive has a chair at the top. joining me today on studio 1.0, showtime's new ceo, david nevins. thank you so much for joining us toda