Rose 5. 8 in the Fourth Quarter am a driven by playstation 4 and xbox one titles. Go pro shares down big today, losing more than 12 today. This was after apple was granted a patent for a remotecontrolled camera system, leading some to believe apple will create a go pro competitor. The Patent Application specifically mentions go pro and hd camera that is resistant to damage. Last night from National College championship game was the mostwatched Cable Program ever. More than 33 Million People watched ohio state beat oregon. It earned espn ratings of 31 . Now after the hacking of sony home depot, target, jpmorgan, you name it present obama is sick of it. He is renewing his Cyber Security law. The long stalled bill would require companies to share information with the government. In exchange, they would be shielded from liability. Here he is speaking in arlington, virginia. Our financial systems, power grids, pipelines fuel systems run on networks connected to the internet. This is a matter of Public Safety and Public Health and most of this infrastructure is owned and operated by the private sector. So, neither government nor the private sector can defend the nation alone. Its going to have to be a shared mission. Government and industry working handinhand as partners. The president is also proposing to prosecute botnets and give powers to shut down those involved in fraudulent activities. Joining us to discuss the enhancement to security, our guest. The proposal ill be president is that what we need to focus on . Currently, we have various information sharing communities that are already in the private sector, helping to share information. The legislation being proposed system cispa is to help the government. This would do nothing to stop the sony hack. It is really more to help Cyber Security problems in the government by enabling data access in the private sector. I wonder, erik, just the fact that they are sharing information, will that enable the companies to take this more seriously when attacks happen . I do not see this legislation at all in acting that. I think there is separate legislation that could happen to drive that agenda. But cispa in its current form really, i do not think will create a lot of improvement in the private sector. I totally agree. I would offer a couple additional comments. There are unintended consequences when you have this kind of registration. One example, the Computer Fraud abuse act has restricted our ability in the Computer Security industry to do certain types of investigations let me unpack that a little bit. How so . It has made it difficult for us to do broad scale scanning of the internet to see what is vulnerable. If there are projects that are joined to do exactly that. They are meeting with resistance from certain groups that it seems unlikely that people are going to be really thrilled to turn in their credit card information, their shopping data, every thing else to the federal government. Yeah, absolutely not. Also this has the ability to allow companies to masquerade data sharing as investigations which we already sort of have the problem of Large Organizations buying and using that data to market. It would be very difficult to prove if something was purely an investigation are being used for another purpose. Even with masking, which is a great idea, there are still other ways you can use this metadata we have all heard about to drive information about the derive information about the u. S. Populace. All right, robert and erik thank you very much. Breaking news i want to get to. The online crafting marketplace at sea is crafting a deal to go public. It is a website that focuses on crafts. Leslie picker has just broken the story here he joins me from new york. This is fascinating. What can you tell us about the deal . What we have learned so far as they are working with morgan saks and Goldman Sachs and Morgan Stanley on a deal. It may be a battle of the companies east coast, versus west coast. Tupac versus biggie . I dont think this is going down. With the private valuation of over a billion dollars . Exactly. When you talk about the average float size were talking about an ipo of 15 . That is a two point 5 billion valuation for this company. It is sizable. When you look at their business model, a kind of resonates where with where alibaba was. Individuals making a profit selling on their site, which of course is easy to scale. Their ceo told Bloomberg News back in 2013 it is profitable. Weve not seen their Financial Sense then, but if they are profitable, that could also be a plus. Bloomberg News Reporter leslie picker, thank you very much. Shoppers dancing in the aisles for the first dotcom boom, but was it a biased . Ust . Im cory johnson. This is bloomberg west. Fundraising led by the Venture Capital firm but with competition from tech giant like amazon and google and the ghost solve Grocery Store deliveries past, what makes instacart different . We find out. Grocery shopping is getting an overhaul. A number of companies are going into the business, notably instacart. I decided to try. A little overdressed. I can handle that. The app is the simple part. Pull, select your groceries, hit order. Behind the scenes, it is complicated. They partner with stores like all foods and costco. They stroll he aisles, poke the produce, scan each item as they go. They ensure they get the right stuff. They make money by charging fort dollarso 4 to 6 per quarter and sometimes charging more if they actually went to the store. Dotcom history is littered with the wreckage of failed delivery concepts, but this uberlike model may give them a better ending. Thank you very much. All right, so i have got something i can do if this tv thing does not work out. What do they do that is different . For more in speaking to heather. Heather, thanks for giving me a job for an afternoon. For a short time. I have this web van tattoo across my chest. Thirdplace was the terror tattoo. They are the poster child for me for the dotcom era. It went to nothing because it was this huge infrastructure play. Yours is different. Very different. We do not have the infrastructure that webband had. The smart ones are prevalent now. People can make orders via smartphone, ipad. And the shoppers use the smartphones. That is a big change. I cannot tell you how many Venture Capitalists have set in that chair and said, i am sick of hearing about the uber of that and this. But this is really an uberlike model. Right, and is very convenient for the customer to place the order from the local stores that they know in their neighborhood and have it pulled by one of their shoppers who is doing this as a job. Maybe theres Something Else they are doing on the side. Where the interesting things going through the experience in the store, certain items did not scan correctly or some were not available in the size requested. It really involved that sort of person who knows what they are doing shopping for the goods and services. Was that a learning experience for the company . Yeah, i think so. We had to ensure we are training our personal shoppers in such a way that we are providing a great experience for our customers, but also picking the right produce or being able to make decisions for the customers as the personal shopper to make sure the customer is getting what they are looking for and a great interaction at the end of the day. I learned how to find out if they pear is ripe. Did you know this . You poke it at the bottom. We teach our shoppers that as well as buying a ripe avocado, all sorts of things. Doesinstacart ever take a loss on an item . Right now, we are working with our partners across the board and we do not have any differences in races for customers, whether it be an of charge writedown charge, but there are circumstances differences in prices for the customers, whether it be an up charge or a down charge. Do you see situations where you could take advantage of commonly ordered items and acquire those in size so you can lower the cost, or is this never going to be part of your model . Were looking to use a new round of funding for three different things. One is category expansion. Second is geographic expansion, and finally technology enhancements. That really changes the knowledge of how we are making money or serving our customers. Category expansions such as . Looking beyond grocery. Giving the ability to deliver items to customers within an hour. How do you decide what kind of categories work . What did groceries were . Yearly low ticket items depending on what you selected. What grocery items work . We actually selected one of the most obligated verticals out there. It is a way to get it off the ground. It is complicated, so it is complicated, so we would get easier along the way and better be able to serve customers and managers. Why does this work or make sense to do versus complication very skus is not it . I think customers would look at ondemand and same day delivery. I was surprised. Customers will reach out to our pick me up something for dinner. Yeah, get dinner special requests anything they are looking for, and the shopper will get it for them. All right, thank you, instacart general manager. Amazon is looking to cash in on the selling power of woody allen. We tell you about his new gate, next. Im cory johnson. This is bloomberg west. After a disappointing 2014, analysts may have reason to cheer. Amazon shares were upgraded to a buy. Scarlet fu breaks it down for us. Scar whats up . They had the worst annual performance since 2008, but that may all change. One analyst says that pipeline growth remains strong. Holiday sales support the fourthquarter numbers and margins are ready to reverse the trend. In other words, the money that they spend on warehouses, video content in 2014 is not likely to get worse. It may even get better. 2014 may have been the low water margin. If you look at the margin over the last five years, they have risen from 2011 22013. They stumbled last year to 6. 7 . They are projected to be at 8. 2 for this year. There is reason to be optimistic. Optimism always blooms this time of year. Thank you, scarlet. Speaking of Amazon Amazon changed this week. They got attention from hollywood. The company has decided to sign fourtime Academy Award winner woody allen to create his firstever tv series. They took the momentum from their first Golden Globes win over the weekend for transparent. Join me from los angeles, a senior media analyst. Paul, its interesting amazon had award success, because we have no idea how the business is doing of streaming the content. Yeah, i think this was huge for amazon. They got so much attention from the Golden Globes and certainly transparent getting the win in that category was very big. And obviously having Jeffrey Tambor who was incredible actor, jill following, who worked on six feet under for hbo eight or 10 years ago, they are bringing a lot of tell it the table. And i think talent is becoming agnostic as to the platforms on which they will share their wares so to speak. Woody allen is an icon, a huge name, and for amazon to get woody allen is a big deal. That raises awareness for amazon in a major way. This is an iconic director known obviously for his film work on the big screen. Certainly his movies have done very well on the small screen as well. This is just a great move by amazon. I wonder if it is Something Else actually. I wonder woody allen is a classic case of a director whose work some people like and most people dont or some people love, and most people dont. I wondered this is true some of there is room in this new Distribution Strategy for the long tail, the people that some people love and most people want, but the economy is there now, the economics are there now where you have more than a few channels to work watch and more than a few ways to pay for them. That is right, and woody allen is very polarizing both in front of the camera and behind the camera in his personal life. Amazon is taking a chance by putting woody allen in charge of a tv show, something his never really done before, and they have the bandwidth, they have the breadth of audience where this just brings attention to them. And i think ringing attention to their roster if you look at orange is the new black and house of cards, hbos original series now that they have the bench of talent to create this original content that is getting lauded obviously by the critical side of things, the Critical Community for the work and such. This is to me, for amazon, a great step toward building that roster of having great actors, writers directors, producers. In the name woody allen, like him or dont like him, he is a big name and everyone knows who he is. It heightens the awareness of amazon for sure. And maybe the Golden Globes were really a game changer for them. Paul, thank you. Ibm wrote the record for the most password changes in a single company. What does it mean for the Revenue Growth . That is next. You are watching bloomberg west where we focus on Innovation Technology in the future of business. I am cory johnson. There were 7500 patents granted to the company for the second straight year. They have been granted more patents than any other company. Ibm has been the worstperforming stock on the dow for two years in a row. Patents good, company bad . Our guest joining us right now. And from new york. Patents are a big focus for the company. What benefit do they get . They have been a big focus for 22 years. Traditionally, patents are thought to signal where future innovation might come. No ideas, new things where theyre staking a claim and using their big research forced to figure out what is next. The big question iq set for ibm is can they use these patents to write these constantly falling sales they have had for the past three years . The report week next week. Whether they are making customers products their customers want, it is a big question. And want to say invention good r d Good Technology good. What are the real value of these patents from ibm . It is largely a numbers game when youre talking about 7500 patents. That is a heck of a lot of patents in one year. The u. S. Patent office granted a record amount also. Some degree of inline with the growth your sing at the Patent Office. The growth in the patent said they are securing, it does serve their three Main Business models with respect to outgoing licensing, reducing litigation costs, and dividing design freedom. All three of those are served right having a large amount of patents. They are Lightyears Ahead of the secondplace finisher. There is value that is serving that. I do understand the point about the dips with respect to revenue in the last two years but largely they are bidding across a lot of different technologies. A lot of Growth Opportunities with respect to Cloud Computing and cognitive computing. That will play dividends in the next two to five years. I remember once a long time ago reporting on hewlettpackard. They told me there was tremendous pressure from the ceo to issue patents so they could [indiscernible] before he felt things are ready. I look at the ibm results and wonder if we are not saying seeing the same thing. Talking to the researchers are very passionate about what they do. Theyre focused on creating new technology. The idea of furthering the human good by technology. When it comes back to the top of the chain to the c eight make sure she is managing these people in a way that you are turning these New Inventions these new ideas into actual commercial products that they can sell. When you look at crowd cloud, they look at the patents and that is an area where they are trying to build out and they have been laid in doing that. They had their own smart cloud platform. Whether these two decades of patents have led to the kind of box things that they want to sell, they did go into the mainframe and some of the hardware and software they are selling. You have to prove that these new ideas can sell to the customers. I also wonder as the example twitter comes to mind. The company was criticized for its lack of patent protection with fewer than a dozen patents but then they acquired hundreds of patents from, who else, ibm. That is right. This notion that start up companies do not need ip or there is a movement afoot is a little bit of a myth. Even twitter itself as antipatent they might come offense on their talk their actions have spoken and told a different story. From the getgo, they have been aggressively acquiring intellectual property with respect to acquisitions, 900 patents after their Public Offering in 2013 but a lot of applicants they have been filing in the pipeline. Twitter is he Young Company coming out in 2006. The patent process itself take somewhere from three to five years from filing to issuance area a lot of those pending applications are in the pipeline and things that we will see coming forward. As far as ibm, you can expect them to be on the list because they also have a healthy pipeline of pending applications coming through the system. You have noted [indiscernible] in fact, the percent of revenues, they spend less than a lot of Big Companies in silicon valley. They have 6 of their totals a year. When you look at oracle and microsoft, they average around 13 . Ibm are doing the things and they are coming out with this New Invention but the criticism from investors is th