ofly: this is the best the bloomberg west. microsoft adds linkedin to the professional network and we speak with the ceo about one of the largest acquisitions in tech history. apple's blueprint for the next generation. they renew their commitment to software at the annual conference and ask developers to

get in on siri. and the must watched moments from the bloomberg tech conference. first, to our lead, we kicked off the week with microsoft announcing the acquisition of linkedin. microsoft is paying $196 per share in an all cash deal, taking on $25 billion in debt. for details, i sat down with the microsoft ceo and the linkedin ceo and asked about the synergy of the deal. >> it is about really bringing together the professional cloud, which is at the core of microsoft and the professional network. the dream we have always had is how can we connect these two worlds so that our mutual users and the professionals of the world can get their work done more seamlessly. that is the vision. bringing the network with the cloud i think is very transformative and i have been

thinking about this for a while. starting in february we started having serious conversations and once we started talking about the possibilities of the product and the coming together of the mission, that is when we said, we -- that full combination can allow us to accelerate what we both wanted to get done. that is what led us here. emily: it was about the same time you and i had a very in-depth conversation about how big you think the future potential of linkedin is. why would you sell linkedin for a price less than it was trading at six months ago? >> for us that future just got bigger and it has always been about the realization of our long-term mission. if you think about the global footprint that microsoft has, one billion customers plus any think about the opportunity to integrate our network, a social fabric if you will, throughout the ecosystem. outlook calendar, windows, skype, directory. the possibilities are almost and less. emily: you are saying this will

create the social graph for the cloud. jeff has been saying that linkedin will operate independently, sort of like youtube or whatsapp, is it integrated or independent? >> it is independent and integrated for customers. if you think about what we are talking about, is two grass, a microsoft graph which is about people, the relationship with other people, the calendars, digest, all the work aspects. you connect to that with the professional graph and then you start completing the scenarios. you do not need to change the social network, but you do need to bring these things together seamlessly. emily: linkedin could not grow as fast as the market expected

this to grow. you are saying this deal increases microsoft's market by 58%. what is the change in strategy? how does microsoft help linkedin grow faster than it was before? >> part of the beauty of the deal is the alignment in terms of purpose, what we are trying to accomplish, the value we bring to individuals and customers. it is so strong that this is very much about sticking with the path in terms of the mission and vision, and amplifying it across the microsoft ecosystem. emily: the key here is integration, what will the process be like and how do you make sure this does not turn out like nokia or to some extent even skype? >> when i think about acquisitions i think about, is this something that will be expanding our market opportunity? is this writing the technology wave of the future and is it at the core of microsoft? this checks all of those boxes. when it comes to integration we want to try a different approach.

that is something we have talked a lot about, we want to be fully integrated with the customer scenarios, but we want to preserve the operating entity of linkedin, the culture and the brand and how they have built this professional network. that is really what i think will be very different about this. even if you look at our own past, minecraft being a tremendous success and down the road, there is a team called the powerpoint team which is long past, but it is one of the most excess -- successful operations death acquisitions of microsoft. emily: you are getting a huge customer base with office, how much do you think microsoft can scale linkedin's membership? will it skyrocket? >> we certainly have enormous potential here. over 100 million active unique's and we have the opportunity to

bring that same value over a billion customers. that is definitely the plan. emily: anymore big acquisitions to come? will this spark more m&a? >> i am excited about the linkedin acquisition. emily: thank you for the assist. >> we will be in just how the industry and what customers respond because it is all about us realizing our mission and adding value to customers. emily: that was the microsoft ceo and the linkedin ceo on the announcement of the microsoft $26.2 billion acquisition of the professional social network. i want to discuss further with my guest, ceo of a recruiting platform at the top of the job market. you have some against the grain

thoughts about this acquisition here? it started with, if microsoft were a better company linkedin never would have a -- would have existed, explain. >> my basic point is microsoft is the essential tool or an essential tool for many people at work. if microsoft had been smarter about seeing where workplace communication was going, it would not have let companies like dropbox and vox emerge, file storage better than microsoft could do it. it would not allow companies to do chat better than microsoft to do it and it would not have allowed the creation of a professional network like linkedin. emily: that said, john, you have a startup that is taking on linkedin and now microsoft. what this is mean for you? you are pretty happy about the deal when you walked in. >> i think any startup would

prefer to have their competition gobbled by a large company. i think the cultures and the products and how they come together -- there is a lot of uncertainty. emily: who got the better deal? the deal is worth 26 times linkedin's estimated earnings and yet, linkedin was trading higher than this six months ago. -->> a lot of software companies are in a similar boat. we saw the stock valuation of many other companies come down sharply at the end of last year and the beginning of this year. there was a single day when linkedin stock fell almost in half when they presented disappointing revenue numbers. on the one hand, you mentioned 50% -- nearly 50% premium from where linkedin's shares started on the weekend. on the other hand, the stock price was higher than the microsoft offer as recently as mid-january.

it depends on how you look at it whether it is a glass half-full deal for linkedin shareholders or half empty. emily: is this all out war on salesforce? >> i think it might be. i think linkedin by itself and microsoft by itself would have a hard time competing in the same way that linkedin with microsoft could compete. if you looked at the presentation, it was focused on sales relative to recruiting, which is linked in's biggest biggest -- business line. emily: does twitter get spooked into selling here? >> there was a lot of interest in what this means for twitter. i find it hard to believe that an acquisition of linkedin would really have anything to do with an acquisition of twitter. link and is a social network, but not really an advertising company. they get 2/32 -- 2/32 -- 2/3 of

their revenue recruiting. emily: marketing solutions is another big part of the business, the other third of the business and a business microsoft is not really in. how does this change the competitive landscape? >> we spoke with people this morning that were trying to piece together, is this about sales, or tana -- cortana, something to integrate with office? there is uncertainty about what this means. mike is up has had some success with acquisitions but clearly a lot of them have not hit the mark and that is one of the things customers were saying, will this be one of the acquisitions that we look back on and say, that was not so good.

emily: entelo ceo, john. the fix that can help apple take on paypal. we will bring you the highlights of the apple developers conference. twitter will be just fine according to mark andreessen. ♪

emily: this week apple hosted the annual worldwide developers conference in san francisco. some changes to the voice control digital assistant siri. it is now open to outside developers. is it too little too late? we discussed this with a roundtable of experts. one of the earliest backers of siri, jim tuttle, and quip ceo. opening siri up to developers, is this game changing? >> i have a that i thought it was entered thing how much they opened up maps and messenger, and siri.

i think you will start seeing third-party apps in every part of your experience and that is a pretty big change. people can order uber with siri, probably through mass and messenger as well. being able to see your map permeate the entire experience of your phone rather than being just an icon, that is a meaningful change. it is something into it has been doing an obviously competing messaging apps have been doing as well. it is hard to stay on a competitive angle because i think apple is so unique being the default messenger on the phone. i think the apple phone experience will substantially change. emily: can they maintain the quality of it?

>> i think they will, they are using -- they launched and they have slowly integrated to every part of the phone. when i was reading the siri api was just -- was restricted at first. i am sure the app store review process will continue their approach. that is always been there -- quality over quality -- quantity and quality over speed. i think their approach has worked pretty well and it will be into thing to see if there are killer apps. like a siri app that everyone needs. emily: what are the earliest investors in siri, there has been a lot of buzz over what siri has not done yet. were you expecting more by now? >> i am gratified and happy to see what happened today at apple. this is the second phase of the digital assistant revolution and this is six years since siri launched, five years since apple bought it.

apple has moved from closed to open, from 12 apps that launched 25 domains enabled prior to today. today, if you asked me, i would say this is less than meets the eye. they announced its new domains. they curate each of the domains. this is a cautious step into the open world. maybe they are chased by microsoft experience with cortana. emily: are we not giving apple enough credit or should they be farther along with it comes to ai? >> i think there is a large base of users that wishes they were further along. it is a big step for them to open up the series api -- the siri api to developers. they are not the first mover. amazon opened up the alexa api last year.

cortana had open api last year as well. google is planning to open it up, they announced it a couple weeks ago. emily: you are also an investor in another personal assistant company that facebook and google have reportedly tried to buy. what is coming here? >> to your point, the ceo has said about the explosion of applications. we did not see that today. apple has 13 million registered developers. of those, you have to say there are six domains open today. phone, messages, photos search, ride hailing, workouts, and personal payments. those are nice, but that is limited.

you have to ask, how many of the 13 million developers actually have their application domain open for use with apple and i think the answer is a limited number. the opportunity here and the excitement should be around the fact that these digital assistants are now open. this is a new platform play, race to a single interface, and the world is now opening. the question is, do they stay open on existing ecosystems, google and apple? five major companies, google, apple, facebook, amazon, and microsoft. and you have the insurgents, tim over here, you have my friends at vidlabs? the idea is to create ai enabled for an entire world of developers. emily: what is a big you would like to? >> there were rumors that

messenger would be open up to android and other platforms. we were chatting backstage about how the major technology companies are competing on a lot of common fronts from ai to messaging to mapping to mobile operating systems. i think in the messaging wars, facebook and others have some advantage because their platforms are open to all platforms, all mobile phone platforms are they are reaching a broader range of users than ils. i was a price to not see them more open. emily: in an interview earlier today, i asked about ai and the deal with linkedin and the future of cortana, i am curious, you run a company that competes with microsoft. what do you think of this deal and does it change the competitive landscape?

>> it was that really a surprise to me and a drastically new market for microsoft. it is a steep price tag but i think it is a talented team at linkedin, the team is top-notch. i think there is interesting product integrations there, whether it is like outlook and the data in linkedin to things like cortana, and the data in linkedin. if they execute well this could end up making both companies more valuable than they were independently. as you know, it to greeting to extremely large, currently public companies is ahercul -- is a herculean task. emily: given that apple has not made a huge deal, does this change the landscape for apple? >> linkedin is primarily

business service and if apple defines itself as primarily come -- consumer service. so you could say, not particularly. on the other hand, this is a social network of great importance with a large number of users. people have personalize and business lives that overlap. i would say it is a strategic move by microsoft and apple is behind in social networks. they are behind and not there yet. emily: people have talked at length about the possibility of apple buying twitter. certainly interesting to watch how things develop. that was the early investor of siri, and bret taylor. was the microsoft-linkedin deal just the tip of the iceberg? later this hour, the eye -- the highlights from this e3 gaming show. ♪

emily: this week at the 2016 bloomberg tech conference we caught up with the -- we caught up with marc andreessen. i asked him about the current state of silicon valley and when we will start to see investor exits from the most prominent startups and what the future holds for twitter. marc: linkedin is a great case study of what silicon valley does well. i was lucky enough to be an investor. there was not that long ago, 2004, 2005. it was not that long ago, they built an amazing company over the last 12 years. it eliminates a lot of the guesswork as to what the companies are worth when someone pays you $25 billion in cash for them. it was an enormous amount of effort over an amount of time. the linkedin user base and the

microsoft office user base are effectively the same user base. they will be -- be able to bring those together. emily: how does it change the landscape for other companies? marc: we see more m&a activity happening in the pipeline. we see more deals in negotiation now that we have in four years. i think that is typical. i think what happened -- one of the things is the markets ebb and flow. a lot of public companies set back and watched the drama play out in the valley and the constant drumbeat of bubble, bubble, bubble. there are a lot of acquisitions that should happen that did not happen. now what you find our big companies, most big companies have -- have done well. they have piled up lots of cash and have good as this is an they have to go shopping week as they have to fill gaps in their portfolio. they can go shopping and by these companies.

i think it is indicative of what will be a series. there are not many this big, but there will be a run of m&a this year and next year. emily: who is going to buy and who is going to get bought? >> i think that is something every set of investors has to deal with. we get companies into positions where they can be the buyers, but somebody you get someone who makes an offer and proposes a strategic fit and it makes sense. a lot of the big american tech companies are in a good position to buy. we are seeing a lot more of what we call the nontraditional buyers. we are seeing a lot more of the fortune 500 outside of tech going shopping. there have been a bunch of transactions, the car industry, companies in the car industry that have gotten inquisitive intech. other kinds of companies, clothing companies. there will be a run of nontraditional buyers. emily: twitter stock, is that a sign of something?

marc: i think of the new york review is that, if linkedin gets bought it makes twitter more likely to be bought. the opposite is, if microsoft is buying linkedin they will not buy twitter tomorrow. on the margin, it made acquisition of twitter slightly more likely. i am positive that -- there are big companies thinking about it. it would just append to see who steps up. emily: twitter is now the only other public social network si from facebook. can twitter survive? marc: i think twitter can survive just fine, it is a $2 billion-$3 billion revenue is this. -- revenue business. there is no question, they can generate arbitrary levels of profit anytime they want.

they have a very competent cfo that can make it all work. they have a strategy to do lots of new things. i think they can survive fine, they can be around indefinitely. i think the question is, tech companies are a little bit like sharks. they tend to not stay still. i think the question of twitter that people are watching is under jeff's leadership what are the things you're going to do? emily: mark andreessen. coming up, as video pushes into original programming, can the interim ceo help the video service move ahead? we will hear from the ceo next. if you like bloomberg news, check us out on the radio. you can listen on the bloomberg radio app, bloomberg.com and on sirius xm. best of bloomberg west continues after the break. ♪

♪ emily: welcome back to the best of bloomberg west. at a bloomberg technology conference, the dropbox ceo announced big news that the storage provider is cash flow positive. i sent them with houston and asked what exactly that means. you guys announced some news on stage saying you are cash flow positive. what does that mean? >> we are funded by customers, not investors and we control our destiny. this is important in this kind of environment because the market has shifted from focusing on growth at all costs to going back to fundamentals and thinking about profitability. emily: what does that include? >> it's just money entering into the bank. emily: how far away from profitability are you? >> we are managing towards profitability but this is an important first step. emily: one year, two years? >> we are on our way. emily: i want to talk you about microsoft linkedin.

this is your business. were you surprised by it? >> i think everyone was surprised. i thought it was great. i'm a big fan of both companies and i think jeff and todd are amazing and it makes a ton of sense. emily: does it change the strategic balance of power for you and for other companies like you? >> i don't think it has. i can't see an immediate impact on us. i think it will depend a lot of the details. how much is linked and integrated versus not. i do see it as an opportunity for microsoft to expand what it is working on. emily: the twitter stock popped on the news. yet it was maybe twitter is also in play but maybe others would be open to the idea of being acquired. doesn't change anything there for you? are you open to that? >> it doesn't change anything for us. i just read a lot of excitement in the market. and a focus on companies, whether it is linkedin or us,

there are not that many companies that are built networks of hundreds of millions of people the way linkedin has and the way we have. emily: is the plan still to remain independent, go public? if so, what is the timeline? >> the thing about being cash flow positive is we have flexibility. we can go public on her own timeline. emily: how is the market influencing that? >> we have now prioritized a lot more. getting to cash flow positive and staying there. the scorecard has changed. i told the post-unicorn era. i look at three things when i think about the new scorecard. you want to be a category leader. we created our space and continue to lead in a huge market of hundreds of billions of dollars, and be cash flow positive and controlling your

destiny. emily: the post-unicorn era. we are seeing venture capitalists, uber analysts raising billions of dollars. is silicon valley turning? are we still in a valley? >> i think the markets and cycles change that there are things that don't. when i think about the long-term, great businesses generate cash, great businesses lead in big markets. that is always where we have looked on the horizon. i think there are other behaviors that can happen in the interim but we focus on how to make our customers happy. and building great business business. emily: you are working on business offerings. you were on stage with meg whitman last week. how is that going? how are you transforming into a truly enterprise and consumer company? >> we are all on the spectrum. we had millions of individuals buying dropbox. last year was a tipping point where it had larger customers buying dropbox.

news corp., expedia, hp is now a big customer. the reason people that's the reason we have been taking out the enterprise is for the first time we are making it so i.t. does not have to compromise. let people use easy tools or use secure tools and lock everything down. we think that is a bad choice. we give them something easy and secure and that's why it has taken off. emily: the theme of this conference is invention. you started something from scratch. how are you cultivating a culture of innovation and invention at dropbox to keep employees excited? and you focus on the product that is record business? >> people love working at dropbox. we have no shortage of big an interesting technical challenges. we announced not too long ago magic pocket, our infrastructure project that's about going from zero to trading with the largest

cloud infrastructures in the world in just a few years. we just announced project infinite, and infinite dropbox. never run out of space again. the engineers are keeping busy. emily: dropbox ceo drew houston. one of the biggest videogame brand names in the world is fighting for market share as gamers moved to the mobile and they experiment with vr. we are checking in with nintendo from e3. infinity and beyond. steve jurgensen joins us to talk about funding of the space industry. ♪

emily: this week also saw the biggest videogame event of the year. e3 took place in los angeles. microsoft and playstation both announcing leaner, meaner hardware capable of vr. nintendo has its own new console in the works. nintendo of america president joins us from e3.

we started with the big unveiling of "legend of zelda." how big is this for nintendo? >> is a huge deal. is a fantastically huge game. a game that is bigger than any that nintendo has created. we brought it here to e3. we have lines around our booth. people are waiting up to four hours to get your hands on this experience. it is so phenomenal, pushing the edges of our system. it is a game we have committed to launch along with the nx version sometime next year. the fan reaction has been fantastic. emily: a lot of fans were hoping that maybe you would unveil or at least release some details on

the nintendo nx new console you have coming. what details can you share? >> what we said is that for this year e3 is all about zelda, this brand-new experience or you can go through the entire environment. anything you can see, you can get to and explore. that's what we brought here. nx is going to launch next year in march of 2017. we have plenty of time between now and then to share details. here at e3 it's all about zelda. our booth is the entire immersive environment. right now the attendees at the show are loving that. emily: how is nintendo positioning itself for the future of reality? >> here is nintendo's take on new technology. for us, we want to make sure technology is mainstream. we want to make sure the technology represents strong values to the consumer. as an example, there was a lot of gyroscopic technology out there in the marketplace. it took the wii and the remote to make it extreme. even going all the way back to the nintendo ds, that was the first electronic device that really made extensive use of a touchscreen.

the way we look at vr or even ar, which we do have an hour 3gs system, for us the technology has to be at a point where it can be mainstream and then it takes content creating companies like us to make them want to jump into the particular technology. we have been looking at the vr space since the days of the virtual boy. with us, we want to make sure our next content will be mainstream, mass-market approachable and went something like vr is at that point you can expect nintendo to be there. emily: how far out is that point? >> i have to say i had nothing the latest here at this show. i seen just about every other vr experience that companies are working on. i have to say in my judgment i think vr is a bit further out there for mainstream mass-market applications and applications that consumers can invest a lot of time in versus short snaps of entertainment.

emily: we heard about the new pokemon go game. can you elaborate more on that? >> it is a fantastic experience. you can use your smartphone as well as an accessory that is called pokemon go plus to look for pokemon in the wild. it takes you around her home city. you are walking through the various streets, riding a bicycle. anywhere you go, you can find pokemon. the development team is very experienced in these types of applications. we are very excited about it. this is going to be a very fun experience for the pokemon fans, but the older fan and the younger fans. for us this is something we are very excited about and we look forward to driving it for next month.

emily: nintendo of america president. we also cut it would take two interactive ceo from e3 was even more skeptical about virtual reality. >> we position ourselves for any upcoming platform in the same way. we do are indeed a make sure we're ready for the market when it arrives. we can not to make the enormous investments in advance. we are the only company to bring our intellectual property to market. we does he necessarily a benefit of being out first. we do want to be out when we are out and be out the best. emily: i know you said that vr technology isn't really good enough yet to invest in heavily. there is still the nausea factor. how are your views evolving? >> there is enormous excitement around vr. the truth is the market has yet to emerge. we are not even sure what sort

of form factor or software for those devices will take. it is such a novel experience. we are open-minded. we are doing our homework. there are some challenges that have to be overcome. other challenges include the notion of vision and hearing headsets. how long do you want one on your head? how long is the experience going to be and what is the nature of that experience? all these things have to be sorted out. i have no doubt they will be in the coming months and years. excitement always standing, the market has yet to develop. emily: what you are saying echoes something we heard yesterday from sequoia partners who associated virtual reality with a trough of disillusionment. and his concern that the hype will not live up to reality. how many years out to you think you will be ready to support vr in a bigger way? do you think it will really go

mainstream? >> i have my questions, which i have raised on a number of occasions. we remain open-minded. it makes a nervous when billions of dollars are invested around a conventional idea. often at least two disappointment but sometimes it does not. certainly it worked out where for google and facebook. that are plenty of things we can point to where a great deal of enthusiasm has led to success. on the other hand, it's a fair question. we are in a place where if a market develops, we will be there and develop from it greatly. if it doesn't develop, our investment is diminished. emily: coming up, the legendary vc aiming for infinity and beyond. steve jurgensen joins us to talk about funding of the space industry next. ♪

emily: now to the final frontier for comedies like spacex and blue origin are trying to slash the cost of rocket launches were making them reusable. another startup called planet is trying to do that for the satellite industry. planet takes high risk photos of earth from dozens of small satellites to track things like illegal deforestation where the growth of syrian refugee camps. spacex and planet are backed by legendary investor steve jurgensen, who i sat down with this week at the bloomberg tech conference. it sounds really cool but tell me the business for planet. had is the company make money? steve: when you can scan the

planet every day, see every meter every day, there are a lot of customers that pay for the industry in the agricultural sector or financial services. they want to know how crops are doing. in the future that will grow genetically when you have all the data. not just where you point your satellites. you can count every car in every parking lot every day. or count every tree on planet earth every day for environmental monitoring. emily: there is a company called earth cast that is public. it's down 78%. how is planted different? steve: earth cast is a tax to the international space station which is a dead end. there's not much else you can do with it. planet launched 130 satellites and will be launching several hundred more this year. they are like the internet to a mainframe. swarms of satellite blanketing the planet. it's a completely different kind of product. emily: i will ask you are we living in somebody else's simulation?

elon musk says a couple of weeks ago that there is a one and one billion chance we are living in someone else's reality. we heard from marc andreessen on this today. steve: is a fascinating subject. it motivates engineers, scientists and everyone who has read science fiction. as someone who is interviewed the pied piper king, they thought they were living in a simulation. i had a lot of conversations with elon over this. there is something about the fact we have a limit to our ability to explore the world and the other solar systems of our universe. the way a game designer would design it. you look to smaller scales, there is a fundamental limit to the pixels of our world. that's about as far as the speculation goes. it's more -- emily: you talked about this many times. do you agree with him? steve: it's quite possible you

realize everything in our world is in self -- itself a copy to. whether you think of evolution as an algorithm. fractals and how things unfold the nation. everything can be thought of as a mathematical construct. everything is exchangeable for a simulation. being immersed in one is with the philosophical questions started coming to play. you think about the future of virtual reality wars many writers think about, we jack into a simulated world. how would your brain know anything? how would we know more than what we see? emily: doesn't matter? steve: it might not. emily: last night they said it for living in a simulation, the right time to turn it off is when we realize we are living in a simulation. steve: that something out of the matrix. emily: that does it for the best of bloomberg west. we will bring you all the latest in tech throughout the week. tune and thursday for full coverage of the brexit vote and how the tech community is bracing itself. see you then. ♪

narrator: the challenges facing our world are growing all the time. how do we build stronger economies with equal opportunities for all? how do we build a sustainable world for generations to come? how do we protect our cities and harness the power of technology for our common benefit? in this series, using the latest bloomberg research and analysis, we will make sense of the problems of tomorrow. inequality, sustainability, artificial intelligence, the