Business week. We have been talking about this buying aours Google Company that makes digital smoke detectors. 3. 2 billion. Not bad for a little thermostat company. I dont know what is more surprising, google buying it or them selling. One of the cofounders of nest made a ton of money make working at apple both of the cofounders worked at apple. They were behind the ipod. These guys dont need the money, that is for darn sure. But teaming up with google gives them some runway in some capacity that they wouldnt have otherwise because they still remain a very small company. Hardware company is different from a software company. They were looking at raising hundreds of millions of dollars. The deal, i should mention, is still pending regulatory approval. Once they are part of google they will mandatory about money. Scaling is a much easier proposition for them. What else do they do . Faddell and rogers have always talked about the greater implications than just come in this case, a smoke detector. Ongoing part of this moved to connecting the home. They have identified object that of you think about the thermostat on your role in your house. Im presuming it might look like it was on the wall when you were growing up. I am a customer, but there are people out there, customers saying uh oh, what does this mean for me . Is google going to be seeing into my home now . You think about the way the nest works. It has a motion detector to know when people are in or out of the house. That is how it is so smart about regulating the temperature. Now tying into google, who is perhaps reading your anonymous email to send you ads, they now know you are at home. Some people say that look, we give up a certain amount of data to get free things over the internet, like a mailin music and other things. Y need to give more information about our physical whereabouts to connect our homes. And the cofounders said your data will rest with nest, not google. Everybody says that. He talks about nest being an independent operation, but google didnt buy nest so that they couldnt touch it, so that it cant cross pollinate across the company. You think about google, they made purchases, they bought boston dynamics, a Robotics Company they bought motorola. Some may say it is more the patent portfolio than the company itself. That is still a work in progress. Why did google buy this company . They have a dozen or so armor committees over the last year and many of them are robotics companies. We know they are working on google glass, driverless cars. Where does nest fit in . Where does it fit into googles broader ambitions and the future of technology . I think nest is a Talent Acquisition as much as anything else. You have 2 men who have inmate understanding on how to produce and design consumer friendly products. Good hardware, good consumer hardware. Desirable hardware. Think about nest, it became and aspirational product. Almost everything google has worked on is in the area of research in science than a gotta have it product. Used tously they both work at apple good 100 of the 300 employees at nest used to work at apple. In a lot of ways nest looks and feels like an apple product. Absolutely. Buy nest . Nt apple there are lots of stories about how people left apple. Power struggles. emigres,these apple and there was talk that maybe apple would buy it back but i dont think that i was ever going to happen, given the players involved and the personalities. Dell is basically the guy who invented the ipod am a very involved in the creation of the iphone. He said, look, i have already worked on phones. He is right to do so. But my question is, look at what is happening the last 2 weeks. Samsung has come out with a connected home. Ugo has bought multiple robotics google has bought multiple robotics countries. Other countries have smart watches and smart tvs. Is the pressure heating up on apple . Where is the next big product from apple . Apple to a certain degree has been the victim of its own success. Year was a five to seven period where it was one blockbuster after another. We became accustomed to thinking, what is the next one . Those products were the culmination of so many different technological trends that were happening at the same time lowpower processing, small displays, wireless capability. We have hit this moment where all of these things could mushroom up. And unsure we are having that moment yet again. It may be unrealistic to expect that apple can create magic out of thin air. You recently sat down with and went inside apple. They try very hard not to say anything. You timey give cook has said multiple times that we are working on incredible things. Whatever that made i whatever that may be. Did you get any feeling of what they are working on . We always think apple a something up its sleeve. Maybe they dont. They have everything up their they havefar as what tried and experimented with and it is a question of what they want to let out of their sleep, to torture a metaphor well what is going to come out . Lets keep going. For starters, i dont think it is the tv. That is my own opinion. I think the Panel Business is a terrible business to be in. A lot of analysts are saying tv. Wars with into price lowcost operators and it becomes commodified but maybe you can create a better experience and negotiate with Cable Companies and that is its own problem. Devices, cookable has talked about that. Apple just made a product that everyone wanted to buy. Does google, out looking smart . I think it is a smooth move on their part, not to get too joe camel about the situation. Nest is an exciting brand that has a lot of places to go and if they can harness that it will be great for google, great for android in particular, and whatever data they can collect. Is there a risk to android keeping into the ash creeping into the nest creeping into the nest. When this deal happen, a lot of users and consumers said ugh, i dont know. You can put any number of layers over that and mobile phone operators in the sum degree mobile manufacturers do that. Android isnt anything more than a means to an end. The deal is pending regulatory approval, but google is making a bid to buy nest labs for 3. 2 billion. 3. 2 billion. What is higher than 3. 2 billion . 5 billion. Squares valuation. We will talk about that on bloomberg west. Welcome back to bloomberg west. I am emily chang. We are with a Senior Writer at ssweek andbusine also our tech editor. Square is holding a secondary offering of 5 billion, squares latest iua should. What do you think of that number . Emily, this is an opportunity for early employees and investors to take a little bit of money off the table. Equitabley has had an run, growing in terms of users and the total amount of dollars flowing through the system. Whether that is a high dollar amount or not, it is hard to say. You have investors who are willing to buy at that price and in a marketbased economy, it means it is probably worth that much. It is a private company so there is a lot we dont know. They say they are processing tens of billions of dollars in payment via. They only use the skype technology. The swipe technology. Is that a big deal . Could that be a square killer . Its interesting could i dont know, ari, when you are hearing about there in terms of the security scares and has a square talked about this at all, the security of their system . Init really has not come up the context of what we have seen a target or Neiman Marcus or the other retailers. To the extent that it does come up, squares response has been we havent been involved in it, sure was an instance where our technology has been cut show us an instance where at technology has been compromised and we will respond. It is always to their benefit until it is not. Once we see a breach, and you would think that at some point we will, there is just too many dollars flowing to the system for not happen. One of the squares limitations is that it is a start up and there are only so many people they can hire. They have been hiring like crazy. That aside, i recently spoke with jack dorsey and i spoke to him about it with respect to international expansion. As we discussed yesterday, companies around the world use square more than 80 companies not in the u. S. What he told me is that they are working on it, they are talking about it. I talked to him about valuation and this was only back in september, and back then square had a 3. 25 billion valuation. I asked him about how when he is raising money he thinks about valuation. It puts quite a bit more pressure on to have a bigger exit. Take a listen to what he had to say. Just fairness. The market decides. We have conversations with investors and we talk about what we would like to see and where we are going to build and how valuable it is to us and what we think the value of the company is, and they give us feedback them and it is an honest conversation, and we want a fair deal for both sides. So, i guess, good for both sides. Deciding in his favor, and that is nice. When im curious about is what is next for the company. They seem to be moving into more of a partnership with other retailers. I am curious to see where square goes next. Ari, what do you think about where square goes next . They have made some big deals with retailers like starbucks. But really, square is mostly in it is the lunch truck down the street. Wherewe think about payments are telling are going, in the nottoodistant future we are not going to need to plug the device, plug the card to make payment pull out a device or card to make payments. Increasingly we wont need to do that. Square wants to be the technology that is being used at places that are comfortable with the idea of recognition. You walk into a store or copy and wed or copy shop know who you are and you have an account with us and we can make a purchase without any money changing hands and without any devices being pulled out. Headed,is where we are and it is still an if, square wants to be that technology. Gotten traction is any Small Business that allows it to attach to an ipad or iphone or smart device. They want to go to where nothing changes hands at all, i go there and say hi and make the purchase and im out of there. What about this idea that you will never have to carry a wallet in the future because the whole future of communication is just that, you dont need to swipe . But it hasnt happened yet. Trouble ever been since it came about because it requires this new hardware, it requires retailers to have the readers and the chips and apple has its own system called ibeac on which uses this new technology called Bluetooth Low Energy and almost all mobile devices already have the tooth already have bluetooth. You dont need that kind of solution to affect this devicele ss payment system. By namee also has pay and face. When i walk into starbucks in the money, they should know me and what i want and just trust me automatically and i get my chai tea late and i dont take latte and i dont take anything out of my wallet. We are so far away from that and paid by name and face hasnt really gotten the traction they were expecting. It is really too early for that kind of technology. Fort is, and fortunately square, in the meantime, they have a product that is doing tens of billions of dollars in transactions a year and is only gaining in popularity. Perhaps i am of the bubble sam, you are part of it as well. Keeping it real in new york. [laughter] is incredibly easy to use, slick product. That is the one main reason that the folks may not be using it, because there is a transaction fee involved but there is a transaction fee involved in accepting the cards at all. If you are a Small Business or the cost of using these devices versus and lamenting an entire physical nobrainer. St a they have the design down, one thing they have in common with nest. Ari levy, thank you so much. Most people train their entire lives to become an olympian. Can one do it in just a year . We will talk about that next. Welcome back to bloomberg west. I am emily chang in new york. The Winter Olympics are around the bend and i always get warm and fuzzy. I love the luge. Watching it i always wanted to be a gymnast. My sister and would do routines in the dark. I think i wouldve been good. Big d be like flapping my big meat hooks together. This story is about a venture capitalist who wanted to be an olympian, too, and he is doing it in a very short amount of time. He became a colombian citizen to become part of their ski team. Not a lot of competition. Take a listen to this guy. Hey, everybody. In real life i get to say i am a venture capitalist. Go this year i decided to through my biggest childhood dream come to make it to the 2014 Winter Olympics. Ive dropped everything and i am pursuing this fulltime now. Bobsled is cool but you need a team. Skiing downhill skiing island at it because im a snowboarder and i dont like downhill skiing. Day has me in beautiful italy. I started skiing in april. I really havent done sport almost 10 years. This is a drastic change in my body. Andve lost about 35 pounds, i trained anything from 2. 5 two 4 hours a day. I am at the point where i can do about an hour now. I have to get out there. It comes down to the last minute. Some people compare it to the jamaican bobsled team. Pretty Amazing Company to be part of that i am excited about that. Nothing like enjoying the sun after a long day of practice. Good for him. I do have an update. He got a really bad lung infection, he had a high fever, and was not medically disqualified. But he is petitioning them to hopefully change their decision. So we will see. We will see, but you know, at least he made it, you know . He made it. Really, really interesting story. Coming up, more of our special series on Artificial Intelligence. It is 26 after the hour, that means it is time for on the markets. I am julie hyman. We have a rebound after the biggest drop of the year yesterday. In terms of individual members, were looking at this drug maker teaming up with aetna to examine the benefits of its diet pill combined with Lifestyle Changes to help away like the it is expected to run to the end of the year. Ann shares rallying after thirdquarter revenue declined less than estimated. We will have more on the markets in 30 minutes. You are watching bloomberg west, where we focus on technology and the future of business could i am emily chang with the top headlines. An Appeals Court has struck down the Net Neutrality rule. The court ruled that the fcc does not have the power to force internet providers to treat all traffic equally. Large companies could face new charges for fast connections and it would have particularly large implications for company like netflix. Rejecteder cable has the unsolicited 61 billion takeover offer from charter communications. In a statement, the Time Warner Cable board called the charter offer grossly inadequate. Charter says it is preserving all options going forward. There is another tv battle going on out there, between directv and the Weather Channel. Directv moved the Weather Channel from its lineup due to a fee dispute. The Weather Channel is urging viewers to switch providers, saying they are losing potentially lifesaving coverage. Andre in new york all week we have a special series this week about Artificial Intelligence. We are calling it beyond robo is and we look at how ai changing the way we communicate and live our life. We are looking at retailers physical retailers. This is not ecommerce were talking about. With us is the ceo of euclid as well as the futurist at intel. Your job is to see the future. Best i can. What is the future of retail ai . We are looking at every part of retail. Every aspect of every part of our lives. Are you looking to get chips in it seems they want to be in every part of retail. There are more parts to be and it is not just the cash register. Phones, displays. Computers are getting smaller and smaller and smaller work time, to the point where you can tune anything into a computer. Products will change. Cups like this will become smart cups. And in the retail environment, the shelf. Interface fortail 2000 years or more and can now become smart. Chips will be small and lowpower enough and lowcost enough that you could make everything within the retail environment. You help retailers by giving them data about what shoppers do and do not like. That is what we are trying to retailers, what google and amazon have done forever. We sent smartphones using the wifi infrastructure in the are walkingl who by, who is coming in are there privacy issues . I think privacy is a fundamental here and something we have worked on from the beginning. The key things are focusing on making sure it is anonymous data and you are limiting the data you collect. We work with senator schumer and the fcc to work on a code of conduct for our space in general. How do you get the data . We get the data by installing software on existing infrastructure in the store and counting the wifi signal of the smartphone. The store for a lifetime people talked about this ago retail versus ecommerce and said that it was going to eat ecommerces lunch. The storm was all most like a black hole. In, you when went who knows what is going to happen . But now it seems like there is a much more data to collect from the location. The data advantage that online retailers have forever is diminishing and just like amazon, to make sure you have a seamless shopping experience, physical retailers can do much the same thing by showing how many people are coming in for five minutes and leaving, indicating the lines are too long . Indicate that the red dress or the blue dress and a store window drive more traffic. Which is it . Red dress drive the most traffic. Really . I wore the wrong color. Lets talk a little bit about the future. How is some of the technology you guys are working on going to make my Retail Experience different . I rarely get to go to physical stores. When i walked in, i am often overwhelmed. I dont know how it is organized. Im not there often enough anymore to understand how i, but buying what i want. It offends yo it depends on what mood you are in. If you are in a mission mode, you want to go in and out i generally am. Sometimes we are in a leisure mode where we go in any spirits and technology will help with both of those. Imagine yourde, kid has a peanut allergy and you want a glutenfree cake. As you walk down the grocery aisle, the shelf th