cory: i am cory johnson. this is "bloomberg west." america reeling from a night of violence in dallas. tesla feeling the heat. crash.ond terrifying was the project properly vetted?

and we take a deep dive intake investment in china. what's next in m&a. two all-star tech investors join us for an in-depth conversation. tech media leaders descended on thisalley, attending hushed, closed-door event. managed to get a few of those people on the record. david started by asking him about tesla. take a listen. >> i am a tesla owner. i use the autopilot feature of the time. believes my stress in bumper-to-bumper traffic. by don't take my eyes off the road.

chances of may running into a truck at high speed are probably small. direct about it. you have to keep your eyes on the road. i am personally saddened that a lot of autopilot feature was they have been safer than human drivers. >> take us that to a philosophical decision. why did you decide that was about to take? >> we wanted to get to the point where we get rid of all the traffic accidents during to us it felt, having someone in the loop is tricky. you wanted to get to the point where you can push the button at some point and be completely

accident free. .e pushed at google a metric got this to be three or 4000 miles. >> when you look at it compared when do you see it ready for a mainstream market? is an entertainment technology. it gives kids a chance to go somewhere rather than flip pages in a book. ai gets to the core of human effectiveness. it can make our brains super brains because it can remember anything. it will turn us into better human beings. for me, ai is a productivity enhancing thing to make humans more efficient.

>> there's so much conversation commoditization of content, who is going to be producing content. >> i find this fascinating. only a fewa child, people were allowed to do content. the distribution was very limited. now we are at an age where anybody can do content. we have enormous amount of content. in the race to the bottom is cheaper and cheaper to consumer. it makes all the content available t the space free of charge. what we charge for a certification and services. you are going to feedback on your project, come to us.

we can even give you all your tuition back if you cannot find a job. the future of content is going to be interesting. we will have a race to the bottom and it is going to get cheaper and cheaper at some point. caught upid also with dave armstrong. >> we've been heavy investors in content, even when it wasn't popular. content is the great differentiator. it helps people not get their businesses commoditized. if you look at what happened in france, what i'm guessing is going to happen here, you will see a lot of the silicon valley -- content will be the future differentiator for all of these platforms. i think we are in the early stages of the content error when it comes to mobile and online and i am excited about it. it is the right place for industry to be. you will see more and more deals in the next five years come out of people.

david: we have seen the shift in toevision turned internet-based content. how do you think that transition is going to go? tim: you see people like the nfl bring their coent online, which will drive more eyeballs and more advertisers will be interested. when you look at things like cultural reality and augmented reality -- we just called it -- just bought a company called riot -- when you see how that content can be brought to life, comparison -- consumers are going to love it. but advertisers are going to love it. video tv switch from to more online things and mobile platforms overtime. you are at an early stage of another seismic shift besides the internet that is going to

happen around video. it will be even better for consumers and advertisers overtime. forill be better outcomes everybody. david: you have facebook and google, big giants in that space. tim: google and facebook are juggernauts at this point. they have done a operating and executing. it is great to be in an industry to have competitors like that. we have standpoint, been focused on being an open platform. part of the reason we did the verizon deal was to have differentiated data. we already have differentiated content. copying facebook and google won't get you anywhere because they are strong in their positions. our position has to shift and we want to be the best company in the world to building brands ar -- building brands. cory: coming up, the dark side

streaming live forms were people pull out their cameras at crime scenes. five years in the making, juno successfully entering the orbit of jupiter. look at the science behind it. this is bloomberg. ♪

the new world of live video is in sharp focus after a minnesota woman streams live. soon, the content went viral. it was temporarily unavailable on facebook that has since been restored with a warning for graphic content. but it underscores how unpredictable live content can be in raises difficult questions about how video should be monitored and curated. >> when you have something as

emotionally charged and politically charged as this, it is something that facebook can get in a little trouble for taking down. they say it was a technical glitch. who knows if that is the whole story but that is their statement right now. of the videoiced was down and probably because there was a lot of furor about it being down, they restored it with a warning that there could be graphic content. cory: in terms of the popularity of this thing, -- popularity is a poor word to use -- there was a lot of attention on facebook. the behind-the-scenes business of making video that everyone wants to see available to be seen? ofi think there's a number elements in that. obviously, from a business perspective, i don't think any of the networks are going to -- platforms are going to look at these kinds of visio's -- videos

as something they want to sell advertising against. but they reinforce the platform as powerful channels for understanding views and current affairs. platforms like facebook and twitter are really proud of the impact they have had in political movements and political impact. i think the success of these kinds of videos underscores the kind of impact, posted impacts that these platforms can have in distributing these kinds of stories. cory: i think that is the message here. the internet and social media haven't really lived up to the promise of democratization for messages. but we see it right here. said,edy central, he think got for cell phones. i couldn't agree more. black and brown folks have

been saying for decades that is not the treatment that we receive. we were disbelieved and discounted. this technology is a game changer in multiple ways. it means that movements and individuals are documenting the kind of treatment and that too often communities of color are receiving. share it.hen able to sometimes live streamed, like we saw this case, sometimes after the fact to millions of people. then they are able to organize. you see people working together in the spirit parts of the country and sometimes in despair parts of the world who would never have connected. exactly the situation we are seeing here. this has been a problem in the black community for decades and people are saying that just now, now that these videos can be seen and distributed, is it theing the kind of shock in world and the community. so yes, it can be a very powerful medium. we saw this on twitter for the

arab spring in 2011. we saw this in other instances on that site. thefacebook has rarely been genesis of these kinds of videos. they are sign that going to be a political force as well. cory: what are the commercial implications here in terms of facebook making money off this? everer and snapchat, first a social purpose for snapchat. it is intriguing from a business standpoint, too. >> i don't think they will be looking to make money specifically from these kinds of videos. but i think they are proud of their ability to be platforms to communicate these messages. when you look at facebook investing in facebook live and twitter investing heavily in periscope, these platforms are to be the platforms of the future in distributing love content and live media and video

content. whether it's this kind of thing are political news or celebrities talking about stuff. i think it is very clear that there are huge bin is -- huge business opportunities. i think they are all going after that and this is one of the impacts of that journey. cory: i don't know if this is a moral question. should commercial enterprises like facebook or twitter or -- segregate is the wrong word -- should they put this kind of content in a separate ad free place and leave commercial out of it? >> i tend to think so. but this is news>> and social content and i think it should read treated as other news and social content is. so these are commercial platforms and everyone understands that. i think it would be both crass and insensitive and somewhat intermittenthave

as in commercials between these images that we are seeing. but i think what we are seeing is there is actually deeper saturation amongst communities of color on some of these platforms than among others in the general population. so that means different audiences are being reached. i think it is relevant to what other ads are run on these platforms, hopefully not in the midst of these kinds of images. it is relevant to who is using the platform and how. cory: it is also interesting cops in louisiana had body cameras. reason, forterious both cops, it didn't work at the time of the shooting. >> we know that a lot. we do not know if there was a genuine technical malfunction or malfeasance. but we often see malfeasance turning off of cameras by some officers in some places. the fact that everyday individuals, citizen journalists

are also carrying this kind of technology is absolutely crucial. we will hearhead, from one of the uk's biggest venture capital firms. after two terrifying tesla autopilothe company's technology is at the center of -- this is bloomberg. ♪

cory: tesla's autopilot technology is under scrutiny. a second driver has been reported as being injured. this comes days after nhtsa

opened an investigation in florida, raising questions over whether tesla has done enough testing over its autopilot technology and whether consumers are understanding its limits. tesla made it seem like this technology.onomous what we are finding out is that drivers believed it was when in fact it was really something quite a bit less than full autonomous driving technology. cory: our way right to suspect the drivers are not doing the right thing here? >> i think it is a bit of both. the branding of the product and the hype around it mean some people are offering -- think it is offering way more than it does right now. tesla's own communication can be somewhat confusing. her protocol last or that elon was talking about

cars becoming fully autonomous 15 to 20 years from now. but tesla getting there much quickly or. -- quicker. i think it is a race among leadership and people think that they are already there. died inis guy who florida, joshua brown, he is not just any old tesla driver. he was well known in the tesla community for pushing the limits of this car. videos onseveral youtube, showing what he could do with the car. and tesla owners say the autopilot feature wouldn't work in certain circumstances. this is actual video from joshua brown. how it avoidedw a collision with a truck that pulled into his lane. tweeted out a link to this video. brown, who was in the accident

was elated to get this mention on the video. and he went on to shoot at least one more video and posted it on youtube. this suggests to me the relationship between tesla and sort of, i don't know -- they certainly did not want him to drive dangerously -- this raises the question about what the company's relationship is with users and encouraging our limits >> area >> i think the company as a -- encouraging their limit. >> i think the company as a about buildingks the rest any factoring company in the world and sets of possible targets. in this particular instance, tesla has been quick to point out that it gives a lot of warning about the system when it switches on, that it never tells

.rivers to simply switch it on but obviously, when you are doing something which is called public beta testing of a piece of equipment that can take you into a life or death situation -- cory: it is in beta, but it's on the streets. >> this is not beta testing on a phone. these are people driving large pieces of equipment and the danger is real. is notion that the cars get better and better with software updates. numbersany released that missed their own estimates. they release them on a sunday of a three-day weekend in the middle of summer. you couldn't find a time to bury and the company lowering its guidance on how many cars they could make.

we have two quarters in a row with declining sales. i wonder if you think there is any relationship you to the tesla tolivery of the the promise of limitless technology goal -- technological advancement. >> i've certainly noticed a shift in the online conversation around tesla, going back nine months or more. what you have seen in the last month or two is that it has really accelerated. tesla'sat issue here is key asset, which is not really technology. it is elon musk specifically his credibility. i think you have a decade of thomases from musk and tesla -- promises from moscow and tesla, many of which have not been fulfilled. you have this perception of what the technologies capable of and the reality of it. cory: now we take you to space. nasa's juno spacecraft finally

entered jupiter's orbit this week. simulation. but the first to successfully make it to the outer planets of the solar system with the help of lockheed martin. aboutked to kenny stearns the spacecraft's successful entry. is important to science because it is so massive and it is the first planet formed in our solar system. -- iss important interested in what is in it is made up of. so this will unravel a lot of the ministries on how the solar system was formed and maybe where we came from. cory: what are the problems this could face? : some of the biggest

obstacles have to do with the massive amounts of radiation that surrounds the planet itself. radiation is very damaging to electronics as well as people. intensityuch higher at jupiter. spacecraft will be going in and out of these radiation belts at different levels and it will be observing these radiation, which will ultimately be its demise in the mission is over. cory: remind me when this patient took off. we launched it on august 5, 2011. of the technological advancements that have happened in the ensuing five years that you wish you could have taken advantage of. kenny: we haven't run into any of those things yet. buildtime we make a new for a spacecraft, there is new technology and better ways of doing things. low-power electronics is key. one of the key things for jupiter is to be able to run on

very small amount of power. the solar rays, although massive, only generate about 500 watts on average at jupiter. cory: you talked about radiation issues. the magnetic field on jupiter are particularly unusual among the planets in the solar system. the largestit is magnetic field among the planets in the solar system, which is a subject of interest among the scientists while we're there. studying the magnetic fields and its origin and how he gets there. it is also a place for high energetic articles, like electrons and protons, that are running at speeds much higher than what they normally do or closer to the speed of light. cory: what new questions do you think will be prepared to look at after we get some of the answers that science is expected to give us? kenny? : we will have to get the data first before we see what the next questions are going to be. certainly, after we understand more about the formation of

jupiter, we will start thinking more about what doesn't mean for some of the other planets. what does that mean maybe for xo planets in solar systems that are beyond our own cory: lockheed martin's juneau project manager. double-click the curtain with a special conversation on investing in china. it is called series a and that is next. check us out on the radio. you can hear a whole lot more on the radio in boston, new york, d.c., san francisco and anywhere with the bloomberg radio app, bloomberg.com, sirius xm satellite station number 119. this is bloomberg. ♪

cory: welcome back to the "best of bloomberg west." i'm cory johnson in for emily chang. we kicked off the new segment called series a, themes of tech investing.

we launched a conversation about china. they've amassed the world's largest arsenal of venture funds ready to be deployed in a market that is complex, fast-moving and elusive to international investors. david chow and hans tung joined us. tell me what we're seeing today in terms of the festival -- investable product? >> first of all, they are two worlds when it comes to vote -- public companies in china. that they go public on the u.s. exchanges, like the new york stock exchange and nasdaq. and there is a whole separate ecosystem around a domestic companies they go public. cory: companies in shanghai and the shenzhen? >> yes. and venture-backed tech companies could only go public in the u.s. largely because the domestic market requirements are different. you have to be profitable.

now, i think on the u.s. -- probably the best tech companies in general go public in the u.s. there are some dynamics that are changing up a little bit, but it typically is very choppy. we had probably 11 chinese company ipo's in the u.s. in 2015. the first six months of this year was zero until one of our early investments went public. corey public.cory: 20 ucs quote >> what you see is that the company you are shorting -- a lot of them are not growing as fast and they resort to certain tactics. we safety engineer on paper what is interesting growth. the real story is the growth of the internet. internet enabled businesses in china.

alibaba is 1000 x over a 10-year period. both played a new economy w here internet allows you to bua big consumer business in a shorter period of time. cory: where some of these names are new, how do you sus out what can be real when looking at companies that are so young? >> the fundamental thing you look at our similar worldwide, worldwide,lar whether you are in the u.s. looking at startups. i think until maybe five or six years ago, a lot of the chinese companies were bi-du companies. they said it was the google of china. the last five years, largely

because of the mobile market, innovation is starting to truly be cutting edge in china as well. and so, there has been a shift. we would look at what succeeded around the world, whether it is japan or the u.s., and maybe there is a copycat company in china that does well. i think the last five years were fundamentally looking for innovative companies just the way silicon valley firms find a great deal. it agreat deal. cory: you talked about some of these big names early. do you look for the earliest stage of a company to invest in? is it different than taking early-stage company in silicon valley? >> we all look for companies that are growing and have huge potential. on the team with a lot of experience you see that happening in china more and more

as is the case in the valley. you see a team that can build a product to solve a real world problem. that is very big. market team product is how we look at investments. cory: and when? >> the earlier the better. when you invested 10 years ago you did not see as many entrepreneurs that are proven. over the last 10 years you have 400 or 500 companies that have gone public. there are a lot more vps and directors starting your own companies now. it's ok to go earlier because there are better entrepreneurs. cory: chinese counties are looking to the u.s. given the notion, and i will set the premise we have chinese entrepreneurs creating new ideas , but also give got them looking at u.s. tech companies. i wonder what the appeal is a

u.s. tech company's the chinese companies that are looking for m&a. >> i think it is largely strategic. much the way in the 193'gm started to sell cars outside the u.s. citibank going global probably in the 1970's and 1980's. in that sense many chinese companies, whether it is bidu, tencent, they are investing in u.s. companies wanting to see some of the cutting-edge technology and to bring you back to china. number two, they want to start dabbling in global expansion. as great a market as china is -- >> you see a lot more now. cory: as much as they might be interested in technology, they would be more interested in just a beachhead where they can have access to sales teams and know

some of the companies that sell their products? >> i was part of a team that helped recruit hugo barra. there was a collective team effort to do that. hugo joined because he sees this interesting android platform emerging that can be more than just a smartphone. it could be beyond just china. a lot of former google and microsoft folks have it in their dna to have a shot at becoming more global. both of us are investing in a company. it is a new app. cory: this is a china-based thing? >> it is based in shanghai and 10% of the team is in san francisco. cory: my daughter's are all over this app. they love this area -- this. >> it originated in china and is on top of the u.s. charts. it was hard to imagine five years, 10 years ago. cory: coming up, the u.k. struggles to make sense of

brexit. what the vote means for venture investors. we hear from one of europe's preeminent funds. ♪

cory: global markets try to recover from the shock of brexit, ventures just want to get back to business as usual. they backed silicon valley's like facebook and -- the headquarters is in london and works throughout the eu. the san francisco outpost is a few blocks are here. we set them at their london headquarters to talk about brexit. >> it's been a big shock to everybody. it has created a lot of conversation on a daily basis. everyone talks about brexit. there is no denying there will be impact. the greatest one of which will be uncertainty. >> how is it changing your behavior?

are you doing things differently about how you think about the company's you invest in? >> the advice we are giving is stay calm. continue building your business. continue building products and looking after your customers and making revenues. our business venture is a long-term play. certainly the brexit discussions will take at least two years of negotiations. we still don't know the impact ultimately will be apart from there will be a lot of uncertainty. the best thing we can do is carry on. business as usual. >> does it make you think of a company based in berlin or another region more favorably? as a give you pause about investing in the u.k.? >> we have to be optimistic and support entrepreneurs who thrive on change. we think that with the decline

of the currency here britain has become a lower cost base. it might be advantageous for entrepreneurs to set up here. more generally we invest wherever entrepreneurs start their companies. certainly for index venture we have seen this in the broader venture community. i think everyone will continue investing. whether it is in the u.k. or mainland europe. >> if i'm coming to you for advice and i want to set up an outpost in europe, my company is growing, i had been thinking about london but now what should i do? should i be thinking about going somewhere else? >> the key decision criteria for a corporation or startups coming from america to europe would be in availability of capital and availability of talent. on the capital side, no change so far.

it would be absurd to think governments would put obstacles preventing investment. regarding pools of labor of great people to hire, so far nothing has changed. we will be watching carefully if there is any restrictions on movement of labor. the fact is that with the to a decision between london or any other european hub are probably the same so far. so far no change. >> are you worried about a recession and the effect they can have in europe and elsewhere around the world? >> we are worried about recession. the unknown gives pause to consumer behavior as well as company behavior to maybe not think that anchor mental investmenttal purchase. it's realistic to expect there is going to be a shock and an

unexpected negative shock. having said that, startups are not driven by the same factors as multibillion dollar multinationals. they are starting from a lower base and the growth rate is not necessarily affected by plus one or minus percent changes in gdp growth. >> do you think of me go out of -- companies will go out of business because of this? >> it is possible but we don't know. certainly the entrepreneurs are nimble at their businesses and business models. >> should european startups be thinking more about m&a activity as a result of this? >> i think that is a realistic scenario, especially with the current decline. -- currency decline. any sort of input cost to have been nominated in british pounds -- denominated in british pounds will become cheaper for you. but that is a production base and it has become more attractive for european counties

to acquire u.k. targets. they have become overnight cheaper. cory: jan hammer. still ahead, cyber security warfare. the worms to disrupt iran's nuclear efforts. now with getting the documentary treatment. the man behind the film about an incredible computer virus. this is bloomberg. ♪

cory: a cyber security web and web it -- widely believed to disrupt iran's nuclear program. neither the united states or israel has a knowledge to this. -- acknowledged this. an academy award winner has made this the focus of his latest documentary, "zero days." he takes an in-depth look at worm. >> this was something that set a new paradigm, a new kind of weapon. a weapon that could take over

machines. it was kind of a science-fiction vibe that i thought would be worth investigating. cory: it's a cute to figure out how that she was behind it and how it grew? >> at first we didn't know what this was. it was nothing like anything we have seen before. well we got to the end we discovered it was trying to basically attack iran's nuclear centrifuges. cory: how does this code look different? >> every time we looked at it we would continue to find things that were not just evolutionary but revolutionary. an example. most code, you have to open an e-mail or click on a website. it spreads autonomously all by itself. you don't have to click on anything. this is extreme the unusual in the threat landscape today. we discovered at the end ultimately that it was conducting cyber sabotage,

affecting the real world. that is the suck movies are made out of at that point in time. typically the kind of things people doing espionage or selling your credit card number. now we had something that can literally blow things up. cory: movies are made of that. it is a computer narrative cliche that you try to avoid making this film? >> one of the things we try to avoid, and this is what we got a lot of help from eric and his partner at symantec, was just two slap shot the computer code. we wanted it to be a living, breathing character. we have the code in our office but we wanted to make sure we were showing various aspects, control mechanisms, we were in the right part of the code and that it moved and operated in much the same way that the code did. we wanted to get inside and have it be real, not some kind of phony backdrop. cory: how ubiquitous was this code? where did it spreads to? how far?

it was ultimately targeted on iran, but where did spread to? >> it spread to all over the world. most of the sections we saw were in iran. ultimately it escaped iran and began to spread anywhere and everywhere. if he had a windows machine connected to the internet you can get infected. it is still out there today, spreading. cory: is there further functionality we can see in it? is there unknown functionality? >> we believe we have analyzed it quite in-depth and gone for -- through it with a fine tooth comb. but there have been multiple versions. and we believe there are versions we have never recovered cory: what surprised you about this story? >> it was a computer story but also in espionage and spy story. how big an operation it was. the other thing that surprised me was how quickly the technology moved. we were exploring a kind of origin story, the first time a piece of malware jones -- jumped from the cyber world to the

physical world and started blowing things up in real time. we discovered in the process of doing this story another operation, another kind of tech launched called nitro zeus. it had a much bigger attack vector. it basically was targeting the ability to shut down the entire iranian grid. cory: was it a good thing? >> it was a very smart and savvy tool for a particular operation, which is to say the slowdown the development of the iranian centrifuge program. but it was a bad thing in the sense that it lost a whole new arms race for cyber weapons. cory: that was alex bigney -- gibney. that does it for this edition for "best of bloomberg west." we will bring you the latest in tech throughout the week.

see you then. this is bloomberg. ♪

>> coming up on "bloomberg best" the story that shaped the weekend business around the world. the aftershocks of brexit continue to make markets queasy. >> the level of panic is spreading. >> what boris johnson called the lady diana death-like hysteria. >> the dominoes are not falling. matt: in the u.s. investors digest said minutes and jobs data from june. >> i don't think this change is much. matt: italian banks struggle for stability. >> italian banking shares have been clobbered. >> it might be too big to fail and to make the bailout. it could spin out of control.