♪ >> coming up on bloomberg "best." the stories that shape their emily: i am emily chang and this week in business. is "the best of bloomberg west," where we bring together the best the panama papers create a tsunami of controversy. interviews and news highlights >> no one said mr. putin was from the week. coming up, a bit of financial make-believe. involved. >> the u.s. comes down hard on we take that question to the seed investor who spotted some of silicon valley's most inversions with implications for celebrated entrepreneurs. deals. the fed did discuss an april rate hike, but what should we plus, piling into renewable make of that? energy like never before. defined the theory that lower christine lagarde on challenges to global growth and oil and gas prices would break funding away. we will meet the business minds opportunities for companies

driving the sector forward. committed to clean is the tech story finally over? 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 -- we explored the question on whether the unicorn bubble 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. what we focus on 500 million people using dropbox, 8 million businesses using dropbox, 150,000 of them paying like expedia, all these new big deals. our customers are happy and we are happy. emily: if you could do it again, would you take money from a $10 billion valuation? >> the markets were different

then and we, like other companies, will be affected by the public markets. whatever we are today, it will be something different tomorrow. 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. fidelity has marks down and up. i know fidelity marked down the dropbox shares 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. emily: if 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 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. >> i 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, every company in the world has at the hearteally of building a successful company. >> one thing, 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? >> probably most of the people that join the company have been dropbox users for a long time and they love the product. when you step back, you realize that any company that becomes great always 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 you are 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. that anrank has told me 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. emily: quickly, how do you keep employees motivated as you put off whatever exits they have? >> we help everyone understand that 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 will 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 the conversation about startup valuations of one of the hottest unicorns, airbnb ceo. later this hour, verizon jumping into online video. what is so viable about the -- what is so valuable about the

content and what verizon's broader plan is. we will bring you the details. ♪ emily: investors seem

increasingly inclined to put their money in a more mature company. i sat down to get views on the funding dynamics in the valley. are seeing a broader economic downturn, how is this impacting your business? >> 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 recession. 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 actually really 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? nathan: all of 2008, we tried to raise money and this is before the recession began. people thought, this is a crazy idea, it cannot be a big market, 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: did you literally go for a year without anyone interesting? nathan: yes, and we were on the verge of quitting. when we went to nyc -- yc, that if they do not produce changes in results, we would quit. emily: what is your suggestion now for people getting a lot of no's? nathan: it is all about perseverance at the end of the day. you have to pace yourself. startups die of suicide and not homicide, usually, self-inflicted wounds. they do not plan appropriately. sam: how did you survive and you had no money? nathan: it is fun. emily: it all comes out now.

nathan: we sold cereal right before the election. emily: did it really generate revenue? nathan 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 s, tors. 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. in traveler segments and business traveling has become interesting. we have 5000 businesses registered with airbnb. big 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. emily: how safe do think the 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. we do not think that is off limits. emily: would you ever get into ridesharing partner with uber to take travelers from the airport to airbnb? nathan: i don't want to speculate. [laughter] sam: would you do longer-term rentals? many years ago i found my apartment because i stayed at an airbnb first. nathan: 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 who book for one month to three months. emily: you helped to legalize airbnb in san francisco basically saying it is legal if you register. there is a report from the city that claims airbnb has listings from unregistered hosts and 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 two 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. they are tracking this and they sent out a notice to itemize all the belongings. 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 in some ways with the 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 are doing very well, financially. we had a big year 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 unit economics and the environment? nathan: we are actually well-capitalized. we see all these new segments that we think we can thrive in, cuba, china, so we went to invest in the growth but we are also running the business. emily: that was sam 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. chris, 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 best 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. that was last year. we figure if we take 10 million service requests last year, it will grow around 15 million this year. if you look at service requests, 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 you have to spend on marketing and the hiring and the sales force to support it, your margins are only 5%. shouldn't the business growing this fast have better margins than that? chris: we are investing. 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 15-20%, so i

think this helps us extend the marketplace and lock 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. i think we will continue to spend in the next couple of years and i think we will continue to spend the same incremental pace 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, why television? the cost a lot of money. chris: post housing crash, baby boomers were the ones that stand -- the ones that were left standing. 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 our 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. a few months ago ifc made an offer for one of your business competitors, angie's list. what was the rationale of combining the two businesses? chris: it was an interesting point in time. we had an incredible monetization engine, high-growth and they had qualified traffic. they were not sure what to do with, so it 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 an acquisition. you could do partnerships. chris: true. erik: what you went are good -- what you want are good leads to new businesses. what other platforms might generate those leads? chris: we are working with 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 announcements coming up. we have our app, the watch, and we are doing interesting partnerships, like the one 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, ready to be spun off? chris: that is above my pay grade. i would prefer to mr. diller, but he has shown incredible 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 organic way. i think if barry feels like he wants to spin it doubt, great. erik: what you need more capital? chris: i think we'll continue to progress aggressively. we already 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. emily: that was chris with erik schatzker.

still ahead, we take a look at -- that was chris terrill with erik schatzker. still ahead, "the best of bloomberg west" continues. ♪ ♪

emily: welcome back to "the best of bloomberg west." i am emily chang. this week, we took a dive into world the world of renewable energy. wind and solar have been oil 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. -- fossil fuels. research shows of those, experts believe that energy will come to dominate because of the -- because it is a technology and not a fuel. i sat down and asked, is the product of solar now inevitable

and how soon can we reach the point? >> we are only at 1% today, but 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. emily: so, what are you doing" -- what are you doing to reduce installation cost and will solar be competitive with utilities without tax incentives or other incentives and tax credit? lynn: solar is competitive today. a lot of people do not know that all of energy is subsidized. the global subsidy for fossil fuels are $5 trillion, so fossil eightin the u.s. received

times the subsidies that renewables did in the u.s. let's have an even playing field, so even with the subsidies apostle appeals or received, we are 20% cheaper and costs are going down. the power 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 the investment and the distribution lines, which are aging in this country which introduces risks, which is why andave brown outs blackouts. 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? lynn: consumers and innovation are driving change today, despite what is trying to be undone under the regulatory side. but we have seen happen is that when you look at the facts, rooftop solar strengthens the

grid 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 utilities make money off of and they don't like it. that is what these 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 on the regulatory side. what do you think are the next points in the debate? lynn: we had big wins this year that set us up for long-term success. the federal government extended our tax credit and gave us a five year run rate. second, california established their longterm support for the market. those are two places where we are showing that we will leave -- that we will lead in the country that switches of

electricity from dirty fossil to renewable, so what i see continuing to happen is they -- there will be battles and they will try to protect their monopoly. when we look at the facts, we will see that top solar is a 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 in this industry. 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 need. secondly, you are seeing real entry barriers 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.

that is why you have seen companies like ours. we just completed our best year ever. our prospects for the future are terrific. we just closed a very 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 who have theyhigh fight go scores, pay their bills. these systems perform. have been operating for a years so we have the track record. when i look at a market like this, i am encouraged the cousin i think it is a short-term entry barrier. emily: that was sunrun ceo lynn jurich. this week, we spoke to a company that could become the first in the world to generate a serious amount of energy from our ocean tide. u.k. start up is proposing a multibillion dollar project that would supply power to coastal

cities in 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. keith: the tide comes in twice a day, goes out twice a day and we built a lagoon, a big pile up encloses the large piece of area and turbines make power predictably. it is dumb technology capable of improvement, it is safe technology and it is going to work and it works for about 120 years. it is the moon, so this is just such an easy way of harnessing islly efficient energy, that low carbon and it is predictable.

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. homes perout 175,000 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. so we go up from 5500. it gets to be really serious as part of an energy portfolio. the aspect we are focusing on, this is a great program. swansea is a great first project. that is a big project. caroline: for international viewers, swansea is in wales, it is west of the united kingdom. 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 that we will export, we are already looking at other sites but we need to do swansea first. 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. how 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. as we increase the size of the project, that radically reduces. this goes good time. caroline: with nuclear, you mean on an equivalent price point? keith: on an equivalent price point but that gets more advantageous as we increase the size of the project and we have a learning curve.

unlike offshore wind, they had an improved asking the project, so onshore had the same thing , a massive decline in price curve. 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. even with conservation measures. you could argue that it may be 30% but we have an issue. that is the equivalent of 30 gas powered 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 d carbonized caroline: when you have oil prices at $30 a barrel, how does that affect negotiation. 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 a carbon ration if we

are going to meet the two degree rule. we are going to ration what we do with 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? and how much will future projects potentially cost? 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. now by the time we have done that they willis 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 way 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 more distribution 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 -- neuroscientist who received an award for figuring out for the first time ever how our retinas 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. the damage to her retina is not -- is irreversible, so there is no cure for her fading vision. in recent 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 untangle the complex relationship between 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 into patients, it was really exciting to be able to drive a blind retina before the 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 better and 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 to communicate with the brain. when information comes into your eye, it goes to photoreceptors and goes through all of this complicated circuitry and then to the brain did the big

question is what gives us the sensation of seeing something. this is what i work on anyway. you can take a retina of and 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 is between the outside world and the code that the brain wants to receive. we were doing this and we unraveled it. ♪ >> this is vision, the code that uses to 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. we have known for decades that 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 huge 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 worn like classes that would take images and and extends the code in the form of light pulses. it can change the redaction. when you shine light on it it , causes it to fire and an electrical pulse. you could pulses in the pattern of a neural code and it would send images up to the brain. >> the next step is to hold human trials to prove her technology can restore vision. patients like rosemary would be

injected with a light sensitive gene and then be shown images in the neural code. dr. nirenberg: the best is to have someone be able to see faces, 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. has clearly as i used to be able to see. emily: dr. nirenberg is seeking fda approval to start clinical trials of the technology. coming up, the tech story is over according to one veteran tech journalist. we will tell you why. ♪

emily: cofounder of wired magazine has spent the better part of three decades writing about, investing in and using technology. this week 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 past years. they had launched a new company in partnership with media in order to find and follow the big -- that the next 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

it is no longer 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 the tech story when we launched "wired" magazine 20 years ago? the tech story is now so mainstream and incumbent that i'm interested in the next story. emily: what about apple, fbi and the government struggling to figure out how to deal with new technology? that is a huge story. 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 unhackable phone? john: i'm interested in the new element that might be changing the ecosystem. i am interested in what the next element is. emily: what is the next big story?

john: to me it is the reinvention of capitalism itself. every story that we tell goes up to this idea. we talk about solar, tax evasion, these stories are all going to one very large story, which is the form of capitalism that we created, the engine, the muscular american capitalism that we lived with for the last 70 or so years. it is altering and it is not sustainable and i don't mean only in a green way. i mean 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. -- reinvent business. emily: you just launched a new media property that is entirely on medium to capitalize on this. what are you doing there? john: medium is an interesting place to launch. i love the name because it is a happy medium between the wild west and open west, which is rife with fraud and difficulties

of modernization. and the very large platform, not really built for publishing, so medium is right in the center, it 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." explain. 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 "wired" brought him 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. john batelle of newco. that is it for "the best of bloomberg west." we will see you next week. ♪