Transcripts For BLOOMBERG Bloomberg West 20151024 : vimarsan

She has been called the most powerful woman in startups. I sit down with the top vc. First, to our lead. An explosive day for tech stocks. Amazon, google, and microsoft adding nearly 100 billion in combined market value. Amazon surprise profit promise for the highly seated boosted the stock 6 . s, givingd up bezos him the title of third richest in the united states. Rounding out the search, microsoft. Shares reaching a 15 year high. The cloud is getting crowded and competition amongst the biggest players is fierce. Earlier today the former microsoft ceo compared microsofts business with amazon and it got personal. Steve ballmer theres intense competition between microsoft and amazon is also intense competition just in the city of seattle over talent. I think they are a place that people dont want to work. Anybody who ever left microsoft can count on them coming back within a year or two because its not a great place to work to do innovative stuff as an engineer. Emily fighting words there, but ballmers latest tech focus is twitter. Last week he announced he had taken a 4 stake in twitter. Hes now the second biggest individual shareholder behind the cofounder at williams, any bigger shareholder than ceo jack dorsey. Since disclosing, ballmers praise dorseys leadership. Today he made a point to say that dorsey has more point over the company than ever before. There is a huge difference between being on the board and running the place. Boards do not run things. Ceos do. Its incredibly different to be a ceo than just a board member. When did you take your position on twitter . Steve ballmer it was before i knew jack dorsey would be taking over. I was glad the board was looking for a new ceo. There is incredible assets there to work with, and i have faith they could absolutely have the right guy come in as ceo. Underlyingundamental value, as you say. But they havent sort of iterated, they have not change and modify their product the way facebook has. Facebook has renewed and extended things like that. Is that part of the challenge, opportunity for them . Steve if they were doing everything perfectly, im not sure it would have been a good buy. You take a look at it. Everybody who is try to communicate with the world tells you what are twitter handle is. Every new show, every everything. Thats an incredible asset. The fact that maybe they were doing as good a job really they werent doing as good a job really points to the opportunity as opposed to sitting there, whoa, some things arent perfect in the company. They have a chance to make great improvements, which is where shareholder value can get creative for me as an investor. Stephanie do you want a board seat . Steve no. i dont have a board personality and i like flexibility in terms of my shareholding of not being a board member. Stephanie do you see yourself in any way as a friendly activist, where you say i see all the problems with this company, they can improve . Are you going to be having conversations or are you already with jack dorsey on the problems you see them having and what they should do . Steve thats a fair thing to say, friendly activist. I will say what i think, and the company will do what it wants to. Emily former microsoft ceo Steve Ballmer with nothing but a positive outlook for twitters future, but he was also bullish on facebook, calling the Company Super impressive with a clear direction. Facebook shares today crossed the 100 mark. It cap what has been a 75 rally 2012. 2 yard ballmer told us there is a place for both facebook and twitter because they are apples and oranges. Joining me for the rest of the show as our special guest, the managing partner at floodgate, which put his name on the map with an early investment in twitter. Great to have you here. Its been a little while. We will get into startups and what you are investing in later in the show. I want to talk to you about twitter. Do you agree with ballmer that it is apples to oranges . Guest the use cases for facebook and twitter have been fundamentally different. I look at my own use case. On facebook im sharing to my friends about things im doing in my daily life. That is what people thought twitter was originally. It is a place where media and information gets shared. Fundamentally those two things are very different both in terms of how i think about my audience, to whom im posting, but also how i ingest information from those things. Emily Facebook User growth is still impressive and were seeing twitter user growth really slow down and i wonder, do we find a different metric altogether to measure the value of twitter, or is that a really worrying find . Ann i dont think so. At the end of the day there is still a use case here and so there is an evolution in the way we measure what we want out of twitter. The daily use case within facebook is checking up on my friends. Everyone is going to do that, including my mom. Twitter is still in the phase where its about sharing information. There has been a core audience that is hungry for it. They are going to expand upon that, but it requires understanding what the value is. I have seen this, even with my husband explaining what the value is there, but once you get on and you start to see, i think there is a period in which it starts to catch on. Emily twitter does take work. Not just getting up to speed, but once you have used it it takes time to find stuff. I guess i wonder, what do you see twitter becoming . Because jack dorsey has come in and already made some changes, but he could make more dramatic changers. There are talk there is talk of the limit going away. Do you see something do you see twitter becoming very different from the way it looks right now . Ann i think so. We were just talking about the Product Innovation had stalled for a little bit. The big hope is with the return of jack as ceo, that there will be an increased focus and Product Innovation. Were already starting to see that. The way i think about it, typically the founder is the owner of what category a company with its fits within. They place a company within that category and then they actually make the category an important part of that conversation. The reason why a founder coming back is so important as they are the ones who created that category. Its important for any company to on the category and become the category king. That is what twitter is able to do now. Emily someone like steve balmer, who did not have the most success on the consumer side of microsoft, coming in and being an activist. Ann it remains to be seen. All these investors have their own opinions of how they will act within as a shareholder, and you never know whats going to happen until you see it in action. A lot of people have varying ideas about what twitter ought to be. The beauty of having jack as ceo is he has a reason for what hes doing and people believe in it. He has some leash to be able to create what he wants to. Almost any other ceo would be on a much tighter leash. Emily we will be watching. You are sticking with us throughout the show, ann miurako of floodgate. Stay with us. One stock worth noting today, pandora, shares in a Music Streaming Service went into freefall at the open this morning, thinking as much as 40 before closing down more than 30 . Shares are now lower than the 2011 ipo price. The company is facing increasingly stiff competition from spotify an apple music for paying subscribers. Also in the latest earnings, pandora disclosed it paid nearly 50 million to settle a dispute with record labels over royalties. Coming up, one of the u. K. s largest telecoms has been hit with a huge security breach, and the hackers are holding the company for ransom. That story is next great the that story is next. Plus, the consumer evolution is coming, a Digital Culture skeptic tells us, how much is too much screen time and how it will hurt us as a society. Emily developing story, the British Telecom company says it has received a ransom demand from hackers who breach the cup and as website. Shares slid as much as 11 today on this disclosure. The hack may have compromised data on 4 million customers, including names, birth dates, bank account details. A spokesperson for the company said it was contacted by someone claiming to be responsible and seeking payment. She did not disclose the amount of the ransom. It is talk talks Third Security breach this year. A growing converged Infrastructure Market combines computing, networking and storage onto one platform. You buy everything at once. Customers include at t, ebay, yahoo , and a new deal with the f ei Just Announced this week. But the sixyearold company has more than 300 million in funding and a 2 billion valuation. I spoke to the nutanix ceo at this weeks del world in austin and started by asking if this dell deal thinking about what happened in the last years in i. T. , consolidation in every decade. 1990s was another consolidation wave. Now theres yet another wave of consolidation. What we have done is pure conversions were software is [indiscernible] emily it doesnt always happen in your territory. They are trying to do exactly what you already do. Thats true. Dell is a great partner. Take the example of u. S. And germany. Friends, u. S. And u. K. , they are great friends. [indiscernible] emily youre here, you have a relationship with michael dell. Did he try to buy nutanix . Weve always had offers on the table. But we are really building a company for the longhaul. There is another need for a bellwether iconic infrastructure company. Emily offers from who . Every Large Company would like to acquire us. Emily i can think of cisco, hp. Did those cubbies make offers for nutanix Companies Make offers for nutanix . Obviously i would not comment on confidential discussions. There is a big void. We are ambitious as a company and we want to build something for the longhaul. The landscape is changing, and that is opportunity for us. Emily it does make you a much more attractive acquisition target, if you were not one already, how are you going to approach those offers, given your ambition, and also wanting to make sure they are not completely impractical . When you disrupt yourself, you create a bigger company. Amazon was a book company and now it is disrupting in a big way. For me, it is to take care of the fiduciary responsibility of the shareholders and so on. Given what our mission is, no offer is too good an offer. Emily what about a merger . No, i think partnerships are better. Mergers can also be messy. Emily will nutanix be public before the end of the year . I would not speculate. We are building for the long haul. There is great synergy. Customers love us for what we do. As long as we focus on employees and customers and partners, we will be a company [indiscernible] emily what you think about whats happening in the Public Markets right now and the uncertainties surrounding the ipo window . I was talking to somebody the other day who said, the window is closed. For great companies, there is no such thing as a window. Look at tesla. It went public at 1. 8 billion. Oracle went public at 700 million in 1986 and is a 200 billion company today. Trying to find your ipo is the most myopic thing you can do. If you are building for a marathon you will not try to optimize at one lap. Emily how big is your Customer Base . We have more than 1800 customers. We are not trying to go after hundreds of thousands of l. A. On it customers. We could if we wanted to. We focused on handfuls. These are customers all across the board, fortune 500 companies and oil and gas and manufacturing and retail, education and government. Emily like . If you look at government, we have more than 100 agencies where our customers. In the retail space, nordstrom, best buy. You look at hyundai, toyota. Lots of very marquis talents. Emily which Government Agencies . We Just Announced a deal with dell. Fbi. It just happened a month or so ago. Pretty much any agency that you can count is a nutanix customer. Emily are you planning to raise more money . I think it will be pretty good where we are as a company. Pretty efficient with capital, something that can be for the long haul. Emily i will be watching for them on the ipo circuit. The nutanix ceo there from dell world. Apple, google, microsoft all the big cubbies profit from the all of the big tech names crop it from the profit from the fact that we are all assessed with our phones. According to a consulting firm, people in the u. S. Spend more than half the waking day in front of a screen or consuming media. All of this attention to screens is damaging our ability to hold a conversation and even feel empathy. At least that is a take away from an m. I. T. Professor and Digital Culture skeptic. I asked her how she sees this cultural shift playing out. People are starting to see that this is not good. I think there is really going to be a Consumer Movement like there was a Consumer Movement about better food, about safer cars. Technology companies will need to respond to this movement by creating phones that encourage us to use them with more attention. Emily she is the author of a new book, reclaiming conversation. Catch the full interview at bloomberg. Com. It is an eyeopening interview if you have time to catch the whole thing. Ann miurako still with me in the studio or you are a mom. Im a mom. I did that interview and felt so depressed and guilty about the times i have the phone on the table and i glance at it when im with my kids. You know intuitively it is bad but you cannot stop yourself. Somebody in the Technology World why is itsomebody in the Technology World who understands the benefit of technology, how do you balance that in your own daily life . Ann i have really struggled with this. I look around and i see all the other moms and dads in the world really trying to figure out how to balance it. For me, im trying to implement what i call screen free saturdays, which does not include tv. I feel like tv is ok because i can sit down with my kids and enjoy a show or movie. The place where conversation gets cut off is where my child is actually trying to talk to me and i have my nose in my phone or my child is playing a soccer game and instead of watching her make that goal, im busy responding to an email. That is the places where we miss the interaction, and the things that actually could create realworld joy rather than digital joy that we seem to be getting. Emily screen free saturday coming to my house very soon. Ann, we will get into some of your investments after this quick break. Coming up, a joint venture might be the answer to sales struggles in china. Details when bloomberg west continues. Emily elon musk has a plan to boost tesla sales in china. Musk said tesla could start producing electric cars in china in just two years. Musk is reportedly in talks with chinese partners to potentially set up a local production plant. Venture Capital Funding this year has exceeded the amount raised in all of 2014. Discussion of a bubble continues to fill conversations amongst everyone here in silicon valley. What are vc firms telling their Portfolio Companies . Still with me here, ann miurako with floodgate. Companies have to go public because liquidity matters, he says. Ann if we look at limited partners who invested in capital firms for 30 years and you go back to them and ask them, have you ever seen a scenario like this where valuations have skyrocketed, but if you look at the exit environment, the exit environment has not skyrocketed at the same time, they will all say no. I think the big fear is that we will go through this and have this huge increase in valuation, but then we will see it come down, and all of these vcs have been cutting these big checks with no exit to even talk about. Emily how is this changing your behavior and what you are telling your company . Ann we are trying to caution our entrepreneurs that valuation itself is not the end. As a result, fundraising also is not the end in and of itself. Your ability to constantly fund raise isnt an indication of success. Its an indication of potentially high burn. The few things were really talking to our entrepreneurs about, number one, make sure your burn makes sense. We have seen some of the best companies be incredibly capital efficient. Using less than 10 million and ipoing on that. Emily if you have a tagline for 2016, what would that be . Ann develop capital efficiency within your business and make sure Unit Economics makes sense. Emily words of truth. Ann miurako, managing partner at floodgate. Its been great to have you back on the show. Thank you for watching this edition of bloomberg west. Next week we have big earnings to watch. Apple, google, gopro we will be all over it. Dont miss it. Have a good weekend. With all due respect to lincoln chafee, governor, we hardly knew you. John greetings and salutations. The birthplace of glenn miller, who spent the day to day with two of the Top Republican president ial candidates, including our i will pull leader, ben carson. Also on the show, i will poll standings with rooms in ted cruz