Transcripts For BLOOMBERG Bloomberg West 20150831 : vimarsan

Bloomberg west. We start with the markets. Investors losing confidence in beijings ability to prop up markets. Facebook, google, amazon also moving into the red. Miller. , matt matt they take away is after a week like we had the big take away is, after a week like we had two weeks ago, there is almost no recovery. Monday was this terrifies and this terrifying drop in the dow. He did not stop the entire month from being the worst august the dow has it did not stop the entire month from being the worst august the dow has posted since 2010. The nasdaq had its worst month since 2012. It was awful because of that week where we lost 6 in almost every single index. Take a look at some of the big losers. Media Companies Really reigned as far as the point losers. Disney kicked it off with the poor earnings report, showing espn did not have the kind of scriber growth or earnings kind of subscriber growth or expected. Hat they viacom was the biggest loser as far as Media Companies for august, down 28 . 21st century fox lost 20 . Isney was down about 15 i was just looking at apple for the full month. It lost more than 7 for the month. Today, it was down another 0. 5 . Even though very cool cooperation was announced by John Chambers and tim cook. Apple will work with cisco to make cisco products work better with apple and vice versa for corporate. Some interesting stuff. Emily part of apples big push into enterprise. Matt miller, thanks for breaking it down. Tech Companies Like apple are not only moving the markets, but they are also being watched in washington. Apple is part of a new Publicprivate Partnership with the department of defense to build cuttingedge technology that be used in the military. The defense secretary, ashton carter, has been courting silica and best courting Silicon Valley investors and entrepreneurs. Andreessen,h marc cofounder of and recent horowitz. Andreessenr of horowitz. Marc the big thing is i think the markets have been trying to adapt to the new Economic Data coming out of china. The other thing is american companies, and you have covered this extensively, global currencies have moved against american multinationals in the last six months. Frankly, i think wall street was slow to adapt to the reality of the dollar versus other currencies. When a big company says we missed our numbers because of currency changes, the presumption of investors is that is an excuse. In the last six months, it has actually been true. U. S. Is doing really well. There are issues in many other countries, but the u. S. Is doing really well. Said bill gurley prioritize profitability overgrowth. Marc benioff says he thinks a lot of dead unicorns will be ahead. What does it look like on your side of the equation . Marc i think situation normal. These are startups. Some of them are going to work well, some are not going to work at all. It makes sense to prepare for environment in which it is not as easy to make money. I think each company should figure out its own strategy. Thats what we work with our companies to do. Emily the headline on sequoia rip goodd time times, what does Andreessen Horowitz say . Marc be measured, be careful, but invest in growth. If anything, we Tell Companies to push forward. The companies that are doing well are going to do really well. Emily just a blip according to Marc Andreessen. One stock that is gaining is twitter, a 3. 5 , back above its ipo price. This morning, one analyst upgraded his twitter rating from neutral to buy. He expects their location on twitter expects clarification on twitter search developments. I also ask Marc Andreessen who he thinks should become the next ceo of twitter. If think is jack or jack or ev ended up back in leadership at twitter that would be great. Emily the white house is tracking potential companies aimed at individuals and companies in china for hacking networks. The discussions come at a particularly sensitive time. Chinas president xi jinping is scheduled to make his First Official state visit to the u. S. Month. That is also concern sentience could trigger further attacks. That sanctions could trigger further attacks. Marc the department of defense was the first customer of all of the new technology companies. Over the last 25 years, the Defense Department focused more on large federal contractors. There is a much later focus in duty in working with earlystage at d. O. D. In working with earlystage companies. Cyber security is a perfect example. Even professional warfare is heavily influencing the future of it is being heavily shaped by new technology. My belief is earlystage companies and technologies can play quite a role in national defense. I know secretary carter believes that. A tech startup is the smallest highperformance organization in the world. D. Is the largest. There is no natural fit between organizations that small and not big. Developing and that big. Developing pathways that make sense and where dod can get the benefit of the new technologies without fundamentally changing not just government, but havent. Just procurement, that is really critical. Emily whats the biggest risk right now . Are we being outspent . Marc we are not used to defending against nationstates. 20 years ago, it was teenage kids. Againstdefenses are nationstates. The threat profile has changed dramatically. Cyber security, like other kinds of security, is asymmetrical. The defender has to be correct 100 of the time, but the attack only has to work once. Defense is always going to be bigger as a challenge than attack. Defense has to get much more sophisticated. We as an industry are still in the process of catching up to that. Emily Marc Andreessen, cofounder of Andreessen Horowitz. Bloomberg lp is the parent tv and is bloomberg an investor in Andreessen Horowitz. There is a bubble in the private sector. And we have a special focus on Virtual Reality innovators. Youre looking at one company transporting you we are looking at one company transporting you to a virtual world. Emily and now to the cloud. Another Strong Quarter as it pushes further into europe. Aneeldown with ceo bushri bhusri. Aneel the marketplace for financials is about twice the size of the hr market. You are excited about the prospects. Emily your ceo said you could be profitable. Why focus on growth in this current climate . Aneel our business is a once in a decade transition. We went from the shift in the 1990s, the growth in personal software we are in that shift again. Its basically a land grab for market share. Emily lets talk about a few competitors. Oracle and sap seem to be getting a lot more competitive. They spend a lot more in marketing then worked day and salesforce combined marketing than workday and salesforce combined. How do you compete . Aneel we are running at about 95 customer satisfaction. Emily you have such a long history in this business. We have talked about the established competitors. Then you have the up and comers. They all want peace of this ofket all want a piece this market. How do you as a Public Company stay nimble enough to compete . To thewe stay close startup world. Ye just introduced workda ventures. I still hang out with my buddies at greylock to see whats coming down the pike. And we organize around small teams. Emily you are organized around whats happening on both the public and private side. What you think about whats happening with what do you think about whats happening with volatility . Aneel i dont worry about it much. Stock prices follow revenue and earnings growth. You have to take a longterm perspective. I think there has been a disconnect between the private and Public Markets. The private markets have been less rational. Maybe with these corrections, the two will come closer together. Emily what does a shakeup look like on the private side . Do you see down rounds, delayed ipos . Aneel both, and a lot more in the way of merger and acquisition activity. There are probably folks out there that salesforce and workday would like to acquire. Maybe with this correction, they become more attractive. Emily what areas are you interested in . Aneel core technologies, analytics, specific business applications. Emily and a lot of these recently Public Tech Companies, twitter flirting with its ipo price what does it say about the valley that a lot of these newly Public Tech Companies arent doing that well . Aneel i think you have to sort out how their stock prices are doing versus how the company is doing. Im familiar with box. They continue to grow their business. Emily we talk about m a. Theres been a lot of talk about salesforce selling out to someone bigtime. Whats your take on that . Aneel he would have to ask marc you would have to ask marc. Im not privy to know. He seems committed to building a great business. He has been a great partner for us. Emily has also been chatter about workday there has also been chatter about workday selling out to microsoft. Any comment on that . Aneel we dont comment on that. Emily what do you think we are seeing right now . The term bubble is thrown around, but it seems to not accurately reflect what is going on. Hasl i dont think there been a Public Market bubble. If you look at the valuations in tech, there might they might be a little higher than the historical levels, largely because of low interest rates, but if you look at the workday trading rates, it is not the same size as export seven years ago. The bubble as six or seven years ago. The bubble happened. There is a bubble in the private markets. When you have to take a Company Public or you have to sell, then you get find out how much of a bubble there was. Emily will it look like 1999 . Aneel not to the same extent. The people impacted will not be the Public Market. 1999 to 2000, the markets it sent it into a tailspin. I dont see that happening this time. Bhusriworkday ceo aneel there. First up, we have the void. They have a different way of looking at indoor entertainment. The void is an adventure. A lot of people have described it as a vr theme parks, but i think it is something more than that. Its been ability to step into a completely alternate world its an ability to step into a completely alternate world. We wanted to make it more than Virtual Reality. In order to enhance that, we had to merge that with physical reality. We are doing everything inhouse. We have everything from engineers to visual effects artists to various forms of videogame development. What we can do is we can merge different types of effects, like wind, hot and cold, moisture. We can affect sound transducers to produce different by chronic different vibronic effects. We want people to put on the equipment and go into another world and forget the equipment was ever there. There will be half hour experiences. The price point we are targeting is somewhere in the range of 29 to 30 39 u. S. Our goal is to have 150 to 300 Centers Worldwide within the next five years. This is not just a Business Venture to us. We are trying to bring something amazing to the world and create a new form of entertainment. Seriestomorrow, our continues. We will show you how augmented reality is changing the game for visual search and mobile advertising. Up next, major blockbusters are leaving netflix for hulu. We will tell you which ones and why. As we had to break, bloombergs car will be providing free rides in seattle. Emily we turn now to the daily e, one1 daily bit number that tells us a lot, 786. Thats the amount granted to a woman who says she is allergic wifi. T this, fromould she suffers electromagnetic sensitivity. It is characterized by fatigue, numbness, nausea, dizziness when exposed to cell phones, wifi, or even batteries or screens. The World Health Organization has not says research has not been able to provide support theeen symptoms and illness. We are trying to get a second opinion. Another number that caught our eye, 44 billion, the Staggering Amount of money samson has lost since april, their worst losing streak since 1983. Samsung is the Worlds Largest smartphone vendor and is struggling to compete against andhighend, apple iphones an, the low end. Lets talk about netflix. Big changes are coming. No longer be able to stream major blockbusters like the hunger games ca tching fire. They will switch to hulu after deciding not to renew their contract. It will focus on names like brad pitt. Sakoui andanousha brad. The originaleep up content to sustain its Business Model Going Forward . People like kevin spacey and brad pitt are expensive. There is no guarantee of another hit. Brad you are 100 right. It is really risky. Netflix feels that exclusive and original content are things that are going to grow their subscriber base. This is the path they have decided to do. They have a deal with amazon prime. It happened with the deals they are making Going Forward, like with disney, are going to be exclusive. That the route they want to do that is the route they want to do. Emily is there a sea change in hollywood right now . How do content creators and actors feel about netflix . Is all the momentum moving in netflixs direction . Anousha one of the things that look has proven it can do is remote a movie or tv series. It has been doing that more on tv series. Shows like house of cards are so part of our culture now. We have seen with tv many alist actors going to tv, where it used to be shunned in favor of movies. Netflix is in a strong position. Amazon has joined it in this move towards originals. We are seeing netflix wanting to do oscarworthy films. Elba,ave one with idris which will be making a slash at film festivals in a couple of weeks. Emily brad, what are you going to be watching in terms of signs to see if netflix can keep it up . Does it all come down to whether they can come up with another hit . Brad you have to look at subscriber counts. They are focusing on global distribution. They are just rolling out in japan. It is their first. Asian Country First asian country. Homesre in 41 million right now in the u. S. If you look at the pay premium subaccount sub count, it is about 60 million. The real growth and what is going to sustain the revenue that they need to get content is going to be global distribution. I think you have to realize some of the projects they are picking up may have more appeal around the world than in the u. S. Emily what does it mean for the netflix competitors like hulu, like Amazon Prime Video . Anousha as brad was saying, one of the reasons netflix is so positive about that is because it is not exclusive, and they want exclusive content from, say , disney. Its possible that analysts are already looking at who else might come in and pick of their content. And pick up their content. Acquisition costs for films and movies have been rising for things like netflix. An estimatedem 180 million to spend on original content. Brad Anousha Sakoui and adgate, thank you both. Thats it today from san francisco. Tomorrow, i will be joined by the head of youtubes global gaming. We will talk about how they plan on winning over users. With all due respect, this election is about china. China. Something about that video makes me laugh. I,the show, the king and obama gone wild