♪ emily: i am emily chang and this is "the best of bloomberg west," where we bring together the best highlights from the week. coming up, a bit of financial make-believe. we take that question to the seed investor who spotted some of silicon valley's most celebrated entrepreneurs. plus, piling into renewable energy like never before. defined the theory that lower

gas prices would break funding away. we will meet the business minds driving the sector forward. over? text right finally i sit down with the vendor and to watch which sector he is watching for the next big thing. first, the top story this week -- investors wondering if startup valuations are a bit of financial make-believe. this week, we employed the question on whether the unicorn ble has popped. i sit down with dropbox ceo. what do you have to say about the mutual fund? >> we don't pay that much attention to it. we focus on 500 million people using dropbox, 8 million businesses using dropbox, 150,000 of them pain like expedia, all these new big deals. our customers are happy and we are happy. do it again, could would you take money from a $10 billion valuation? >> the markets were different

othernd we, like companies, will be affected by the public markets. valuation is an output so you have to focus on inputs. emily: on one hand, people say this is just on paper and snapchat has gotten written down and up, but it does have a ripple effect on sentiment. how much do they matter? >> it doesn't matter that much. stocks go up and down. down and up.marks i know fidelity marked down the dropbox at one point. it is unclear to me if they believe the markdowns because i have once before offered to buy the shares from them after they marked them down and they did not sell it to me, but i offer that again. we would love to buy them. you are expecting sentiment and even if it does not affect the changes you are making that dropbox, it says

something sentiment about dropbox. >> they would have long been public, so i think everyone is trying to figure out how to talk about them and there is can you play but be written. when you talk to investors, the markdowns, markups, whatever, it is a bookkeeping thing. it is not like the fund manager sitting there and evaluating the performance of the company, so they rolled their eyes at us honestly, too, so they focus or would refocus on -- what are the ingredients of a great company? you have to have a big market, awesome team, product people love, that is what emily: you need to spend time on. emily:people were getting -- that is what you have to spend time on. emily: people were worried that google would kill you. think customers love dropbox. we have spent so much time building a product that people really love. this is the one thing that we do

, and we have built a huge audience and we are solving a problem that every person, company in the world has come so that is the heart of building a successful company. , when you guys were in nyc, everyone said, google will kill them, apple and google have this product ready to launch and it kept being delayed and it would be the dropbox killer and microsoft had one, and i think that this tough because that scares people. how do motivate the team or deal with uncertainty when you have these 800 pound gorillas around the corner? the people that join the company have been dropbox users for a long time and they love the product. realize step back, you that any company that becomes great always has a petition. facebook was -- has competition. facebook was worried that google

would come after them, microsoft was worried ibm would come after them. if you don't have competition coming when not doing something important. it is a fact of life. i think that jeff bezos says it well, you want to be customer-obsessed and not competitor-obsessed. emily: i have been told that an ipo for them is two years out. what is the answer from you? how are you thinking about an ipo? is that going to happen and when would you be able to? >> we don't need to raise money, so that is not something that we need to be too worried about. you have to have the control of the foundation in place. the business needs to be doing well and the conditions and the market need to be doing well. the market has not been very kind to public companies or public tech companies lately, so we are exactly in a hurry, and that is why it is part of the flexibility we have gotten by raising money.

now, it is the flexibility behalf. quickly, how do you keep employees motivated as you put off whatever exits they have? >> we help -- the best thing we can do for anyone who is a shareholder is make the stock price go up in the long run for building value. we try not to get fixated on what is the valuation right now. people get liquidity and we will solve the problems, but the most important thing we can do is build a great company. emily: my conversation with dropbox ceo. coming up, we continue to talk about startup valuations of one of the hottest unicorns, airbnb ceo. later this hour, verizon jumping on tv. what is so viable about the content and what verizon's

broader plan is. we will bring you the details. ♪

♪ emily: how do you walk that line when you are in the middle of the crisis suation? >> you have to have big and audacious goals. there is a lot of innovation. a true and great leader.

emily: continuing our conversation on startups, venture investors are pulling back on deals with activity falling to the lowest level in four years. investors seem inclined to put their money in to more mature companies. toat down with airbnb get their views on funding dynamics in the valley. now that we are seeing a broader economic out turn, how does this impact your business? >> so far, we have not seen any impact. the shares were off to a strong start. the great thing about airbnb is

we offer consumer choices. not only do they get a more authentic travel, but we have price points at any level. in a recession, there are opportunities to still travel and find something. emily: this is still up for you in a sense. nathan: so many people rely to pay their rent with airbnb, so more and more people are opening up their homes which makes it a great experience for travelers who want something different. you guys raised money for the first time in 2009 when it was hard to raise money. how did you think about building the business when people worried about the market turning again? do you have any lessons? 2008, we tried to raise money and this is before the recession began. people thought, this is a crazy idea and we got turned down left and right. procession begins and we came

across someone who saw our vision and we were so blown away that the top investment firm would invest in us after so many said no. what we learned from that is it is amazing what you can achieve when you set your standards really high. ever since that point, we were particular about who were our investors. sam: two to go with one year of no investing? we were on thed verge of quitting. thatwe went to nyc -- yc, if they do not produce changes in results, we would quit. your suggestion now for people getting a lot of no's? nathan: you have to pace yourself. startups die of suicide and not homicide, usually, self-inflicted wounds. sam: how did you survive and you had no money? nathan: it is fun. emily: it all comes out now.

cereal we sold right before the election. it generated income. emily: that is insane. you are working on something called magical trips, which is a play to own more of the travel experience like bike rental stores. what other services can airbnb provide to host and travelers, and had to expand the business opportunity beyond the trips? nathan: what we're seeing is that airbnb will increase when we go mainstream. one third of all their hosts are over the age of 50. traveler segments and business traveling has become interesting. we have 5000 businesses registered with airbnb. companies like morgan stanley, google, salesforce having their employees book travel. what is happening is they are

saving money but the employees are beginning to feel like they are at home when they travel. it is good if you are on a long trip. think the safe do market is outside of what you are doing? what is the market for? nathan: tourism is one of the biggest industries, second to oil and gas and you see different numbers, 2 trillion to 6 trillion. we think we can play a big part of that. emily: would you ever get into toesharing partner with uber take travelers from the airport to airbnb? nathan: i don't want to speculate. [laughter] sam: would you do longer-term rentals? tardis a common use case. when you move to a city for the first time, before committing to a long-term lease, quite a new state in different neighborhoods to find the right place? we do have a lot of folks

cookbook a flight -- who book for one month to three months. legalizeu helped to airbnb in san francisco basically saying it is free if you register. there is a report from the city that claims airbnb has listings from unregistered homes that will not cooperate with the city. what is your response? nathan: the core problem there is the registration process for the city. it requires to get into different permits. what is forgotten is that these are ordinary people whom they are asking to go through these steps. the city isn't really promoting this. this and theying sent out a notice to itemize all the blogging's. they need to apply for this is tax from everything from the couch, the tv, this overwork and it does not make sense and they

are missing the bigger picture. we do have a good relationship with someone as a city that we have had impacts for the last year and a half. emily: you have told me the same thing before, but sources are telling us that airbnb will be profitable this year, is that true? nathan: we had a figure last year and it won't be too long. sam: do not rush. emily: advice from the top. nathan: we think there is a lot of growth opportunity. if we had been in a rush, we would have been profitable long before. emily: how you thinking about this and the environment? nathan: we are actually well-capitalized. we see all these new segments that we think we can drive in, cuba, china, so we went to invest in the growth but we are also running the business. emily: that was some altman with airbnb cto nathan blecharczyk.

coming up, how the company could become the next billion-dollar unicorn. later, the tech story is over, according to one of our guests. we will tell you why on "the best of bloomberg west." ♪

emily: could home advisor be the next tech unicorn? it matches consumers with home service personals and seems to be pushing to a billion-dollar valuation. the ceo sat down with erik schatzker and talked about what it takes to push the business over that billion-dollar line. >> i think we would think it is possible in the next three years or five years, but it all depends on what kind of investments we make and what sort of things we do over the next 12 months to 24 months. erik: how big is the market that you have? chris: if you look at the estimates of the 300 billion

market, we look at the terms of value of jobs that are created. right now, we are about $30 billion in project value. take 10 million service requests last year, it will grow around 15 million this year. we are in the 5% to 7% range. erik: here is what i would term the problem, you have a business growing perhaps in three years to $1 billion, but because of all the money not to spend a and theg and the hiring sales force to support it, your margins are only 5%. shouldn't the business growing this past have better margins than that? investing.re when you invest in television and sales, we know what the payback is. you will see the margin expansion continue in the next three years to five years and we'll get back to where we were historically. in the past, we had margins, so i think this helps us extend the

marketplace and walk in supply and demand and we will see the expansion follow. erik: two people interested in your business look at the $60 million spent on tv advertising this year and wonder what it will be next year and the after that? is it on the slope upwards indefinitely? chris: i don't think it is indefinitely. there is a point in which you will invest in a stable period. continue toill spend the next couple of years and i think we will continue to spend the same incremental pay over the next years but that will flatten out as build up awareness aided and unaided and you get that repeat usage and it pays off. erik: there is the other obvious question, white television? it costs -- why television? the cost a lot of money. post housing crash, baby boomers were the ones that stand in. they had discussion income, the watch a lot of television so it is a great way to get to our

core audience. also, i have been in television a long time and it is unusual in this space to be positive on your television and we are, so it is a powerful medium for us to drive qualified homeowners who understand the value and want to use our service and do it in a profitable way. erik: one of the nice things about working for barry diller, he is willing to buy things to make your business better. i made an offer for one of your business competitors, angie's list. an unsuccessful offer, but what was the rationale of combining the two businesses? chris: it was an interesting point in time. incredible monetization engine, high-growth and they had qualified traffic. they were not sure what to do was an interesting point in time opportunity and we looked at that opportunity and they decided it was not a fit for them so they go back to business as usual. erik: is the rationale as valid today?

chris: they are in flux and making changes. we'll have to wait and see. erik: not everything has to be acquisition. you could do partnerships. chris: true. erik: what you went are good leads to new businesses. what other platforms might generate those leads? chris: we are working with dates and small to find with his partnerships -- big and small to find where this partnerships are. our matching engine is so strong and powerful. we are finding that lots of folks are interested in letting us come into their ecosystem and come in front of the homeowners they naturally have. i think you will see some interesting things coming up. the watch, and, we are doing interesting partnerships like all we did with realtor, where we continue to try to get our engine in front of homeowners who could use it. erik: how long until homeadvisor

is ready to stand on its own feet and spun off? chris: that is above my pay grade. er,ould prefer to mr. dill but the action ability to put things together and go after big industries and be successful. i think what we are building is a powerful nucleus within the home industry. i have no timetable on anything beyond growing the business and doing it in a smart and organically. i think if barry feels like he wants to spin a doubt, great. erik: what you need more capital? chris: i think we'll continue to progress aggressively. reality have plans to push investment cases and i think they are interested in seeing this grow. erik: they're willing to commit more capital? chris: i think the other interested. -- they are very interested. that was crisp to route

with erik schatzker. still ahead, we take a look at -- rill with erik ter schatzker. still ahead, "the best of bloomberg west" continues. ♪

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x1 makes it easy to find what blows you away. call or go online and switch to x1. only with xfinity. ♪ emily: welcome back to "the best of bloomberg west." i am emily chang. this week, we took a dive into the world of renewable energy. wind and solar have been thriving despite the collapse in the price of oil and natural gas. the sector broke investment records in 2015 and is getting about twice as much global funding as fossil field. research shows of those, experts believe that energy will come to dominate because of the technology and it is not a field that will likely get more efficient. thet down and asked, is product of solar now inevitable

and how soon can we reach the point? bute are only at 1% today, the growth rate we have been able to achieve in eight years, nine years of time from zero to 100,000 customers with 100% year over year, that starts to compound and it will happen faster. emily: how much faster? lynn: i could imagine solar is about 20% to 30% plus within three years to five years. so, what are you doing" solar be competitive with incentivesithout tax or other incentives and tax credit? lynn: solar is competitive today. is subsidized. the global subsidy for fossil fuels are $5 trillion, so fossil fuels in the u.s. received a times the subsidies that renewables did in the u.s..

they have an even playing field, so even with the subsidies apostle appeals or received, we are 20% cheaper and costs are going down. is going up at the same time. a lot of people will say oil and natural gas is cheap, but what drives power prices is investment and the dissolution lines, which are aging in this country which introduces risks, which is why we have lockouts. what happens is as utilities need to upgrade and modernize, prices go up. emily: what about the battles you are dealing with now? have you expect them to play out? and innovation are driving change today, despite what is trying to be undone under the regulatory side. but we havseen happen is that when you look at the facts,

rooftop solar strengthens the grade because it is produced on-site so you don't have to invest in as many transmission distribution lines, things that cost money. those are the things that utility make money off of and they don't like it. but the battles are coming down to our publications. -- what the battles are coming down to our complications. when consumers can choose cleaner and cheaper energy, they will drive the change. emily: the battle is far from over. what do you think are the next points in the debate? wins this yearg that set us up for long-term success. the federal government extended our tax credit and give us a five year run rate. second, california established term support for the market. two places where we are showing that we will leave in the country that switches of electricity from dirty fossil to renewable, so what i see

continuing to happen is they willbe battles and they try to protect their monopoly. when we look at the facts, we is asee that top solar benefit and we will win nine out of 10 times. there will be a few extreme examples, such as what happened in nevada, but something similar happened with gay marriage in indiana. emily: that said, solar stocks are down. are you facing slower growth? why aren't investors buying into this? lynn: fundamentals have never been better. i have been doing this for nine years and they have never been better. consumer demand is strong. we are saving customers 20% on electricity. this is something they made. secondly, you are seeing [indiscernible] in the industry. it is hard to do. there has been short-term noise as companies enter the market with some having trouble raising capital, but quality companies

of quality assets have not. we just completed our best year ever. our prospects for the future are terrific. we just closed and attractive financing, so people are seen markets closing but continuing to raise capital. that is what we did last month. we were able to raise financing through the credit cycle in 2008. the reason is that these are high quality assets. these are homeowners that pay their bills. these systems perform. have been operating for a years so we have the track record. when a look at a market like this, i am encouraged the cousin i think it is a short-term entry barrier. lynn: that was sunrun ceo . this week, we spoke to a company that could become the first in the world to generate a series amount of energy from our ocean tide. u.k. start up is proposing a

multibillion dollar project that would supply power to coastal cities and wales. it is in negotiation with the british government to secure the subsidies for the project to go ahead. the chairman keith clark sat down with caroline hyde and london. she began by asking how his title technology would work. in twice atide comes day, goes out twice a day and we build a lagoon that closes the large piece of area and turbines make power predictably. it is technology capable of improvement, said technology and it is going to work and it works for about 120 years. just the moon, so this is such an easy way of harnessing efficient energy, there is low carbon and it is editable. caroline: talk about the scale. keith: the great things about the lagoons is the bigger you do

it, -- so our first one is about 570 watts. 175,000 per year. as we increase that, if we double the size, we go from 16 turbines up to about 90 turbines, but by doubling the enclosed wall, we multiply the enclosed area by 10. .o we go up from 5500 it gets to be really serious as part of an energy portfolio. the asset we are capable of is the program. swansea is a great first project. that is a big project. caroline: for international a is in wales,e where else could this move to? keith: good locations, india, the western corner of northwest

india, canada, france, south america. we believe this is a form that can look at other sites but we first. do swansea we need to show something we are capable of doing, we know how to run the supply chain and win hearts. caroline: this has been delayed because you need subsidies, government help. help sizable of the subsidies do you need? keith: with government at the moment, as we speak, we need a subsidy, particularly for swansea. we believe we will be compatible with nuclear. this goes good time. caroline: with nuclear, you mean on an equivalent price point? on an equivalent price point but that gets more advantageous as we increase the science and we have a learning curve.

unlike offshore wind, they had an improved asking the project, so onshore had the same thing decline.ssive we are not even assuming that. the scale of the project gives us that price scale and on top of that, we will set up the u.k. supply chain, so the turbines are clever but they are not nuclear reactors. caroline: that you feel that this works within a hold array of power plants. keith: the u.k. will have mechanical engineers and saying they will have 40% shortage of power in the u.k. you could argue that it may be 30% but we have an issue. that is the equivalent of power stations. we will always have an energy and element of nuclear. we need solar, offshore, and onshore is a nightmare here. this gives you predictable security power, which becomes

more and more efficient and it gives you an export market with zero carbon and we have a climate change act in the u.k. and a global agreement that we will see carbon eyes are economies. carbon in the economist. caroline: when you have oil prices at $30 a barrel, how does that affect your longer-term aspirations to have affected and competitive this can they? keith: if anything, it helps. if anyone will put the 10 billion pound project into investment in new oil fields is gone. shale gas -- how much debt is there in the u.s. economy? i heard $200 billion of debt in those companies with equity at risk. none of those survive at oil prices of $30. most need $70 to $80. we will see a carbon tax of some sort or ration if we are going

to meet the two degree rule. we are going to ration what we do it oil and gas. there will always be markets for oil and gas and we should do things more intelligent than sticking it in a boiler to burn. caroline: how much will this cost in the long run? keith: once we get -- the first project is about $2 billion to install and the next is about $10 billion. after that, we expect to have six to get you up to about 8% of the uk's total supply. by the time we have done that, like that is that they will have invented storage because they are out there saying that energy storage is the key. we are going to go through a revolution now in the weight we run this. and this going. we do not have the money to invest that we as a society. neither here nor global. we need to solution of power.

emily: that was tidal lagoon keith clarke speaking to caroline hyde in london. ♪

emily: this week, we had our first installment of the spark and met neuroscientist and received an award for figuring out for the first time ever how eyewitness take images from the outside world and process them so the brain can understand. it started as a pure research project that now she is building

a device that could bring sight to the blind. it started about eight years ago. it results in loss of central focus vision, like i am looking directly at the camera right now and i cannot see the lens of the camera at all. i cannot recognize faces, i cannot read hard copy any longer. >> rosemary is about one of 8 million americans that are partially or completely blind. notdamage to her retina is reversible, so there is no cure for her fading vision. years, bionic technology has allowed us to make headway against some disabilities by integrating humans with machines, but creating bionic vision has remained a sticky problem. no one has quite been able to contain what the eye and the brain. at least not yet.

people who work to help lined people for probably more than 20 years in the focus of implanting electrodes into a patient's retina so they will seek a spot of light wherever the electrode is. when people first put the implants agitations, it was really exciting to be able to before thend gretna patients out anything, but it was not that effective. nobody worried that much about it at the time because they assumed, if we had more electrodes, we will make it under an better and it will be ok, but it is not really true. there was a factor missing and that is the signal processing, basically the code the retina uses the connecticut with the brain. when information comes into your eye, it goes to photoreceptors and agosto secretary to the output cell. then that goes to signal the brain. the big question is what gives

seeingsensation of something. this is what i work on anyway. of and take a retina animals and put it on a bed of electrodes and you can present it with all sorts of images and record the output, so you can figure out what the relationship between the outside world and the code that the brain wants to receive. and we doing this unraveled. -- unraveled it. >> this is vision, the code that i use is to comedic it would communicate with the brain. if you're looking at this image of the baby's face, your brain is receiving this pattern in electrical signals. decades that for this code exists, but dr.

nuremberg is the first to have cracked it. i realized that not only was it useful for figuring out a stepping stone to figuring out how the brain works, but it had potential application. the way it would be implemented in the real world has two parts. the one part is it is a device that could be warned that would take images and and extends the code in the form of light posters -- pulses. the redaction. it causes it to fire and an electrical pulse. you could pulses in the pattern of a neural code and it would send damages up to the brain. >> the next step is to hold human trials to prove it can restore vision. patients like rosemary would be

injected with a light sensitive gene and then be shown images in the neural code. erg: the best is to create contact with other people, but just knowing that i have the code and that i can pass it to the next generation and someone else will be able to do it. >> i don't even dare go down that path of hoping there will be a cure for this disease. it will be a miracle if i could see again. dr. nirenberg is seeking fda approval to start clinical trials. coming up, the tech story is over according to one veteran tech journalist. we will tell you why. ♪

of wiredfounder magazine has spent the better part of three decades writing in and usinging technology. in a new post, he wrote the text story is over. he says it is time to move on to the next big thing that will shape our future, just like technology has for the next -- for the past years. they had launched a new company in partnership with media in order to find and follow the big story. i caught up with him and asked, what is the next big narrative? john: i did follow the tech story for 30 years because i thought it was not being well covered or given a full view and the story of tech has changed our entire society and we know that that continues, however, it

is no longer than the next story over the horizon, the one that may be changing everything and i am interested in that story. what is the equivalent today of what we launched "wired" magazine 20 years ago? mainstream is now so and incumbent that i'm interested in the next story. , fbi andat about apple the government struggling to figure out how to deal with new technology? john: that do not take 10 months or 10 years to figure out. that took 10 days and it went away. they figured it out. emily: for now. what if apple creates a truly an hackable phone or -- unackab hackable phone? john: i'm interested in the new element that might be changing the ecosystem. emily: what is the next big story? john: every story that we tell

goes up to this idea. we talk about solar, tax evasion, these stories are all going to want large story, which is the form of capitalism that engine, thethe muscular american capitalism that we lived with for the last 70 or so years. it is notring and sustainable and i don't mean only in a green way. it is not giving us a society that is increasing returns and we want that kind of society for our children and grandchildren, and we will get to it if we reinvent this. emily: you just launched a new media property that is entirely on medium to capitalize on this. what are you doing there? an interesting place to launch. i love the name because it is a happy medium between the wild which isopen west,

rife with fraud and difficulties of modernization. notvery large platform, really built for publishing, so medium is built for publishing. it has a social network underneath and allowances to focus on making great content about this story. emily: you said the comparison is like "wired" meets the "economist."explained. john: the approach that "wired" takes is to look all around the world and do longform journalism and we are interested in that. "economist" is focused on a weekly cadence and we will release stories on a weekly cadence. emily: you have founder of twitter commenting on your he's saying that "wired" is irrelevant. you agree? john: i was pleased to commented on it and he told me that "iron" rodham out of nebraska to san francisco where he created twitter, so i would not say it is over -- what he told me that

"wired" brought him out of nebraska to san francisco, where he created twitter so i would not say it is over. .ohn batelle of newco that is it for "the best of bloomberg west." we will see you next week. ♪

carol: welcome to "bloomberg business week." i am carol. david: i am difficult. -- i am david gura. let's go meet the editor. ♪ we are with the editor of "bloomberg businessweek." you have a double issue focused on design. how did this come about? >> when bloomberg bought is this week in 2009, we read that