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tv   Bloomberg West  Bloomberg  February 23, 2015 11:00pm-12:01am EST

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>> live from pier 3 in san francisco, welcome to "bloomberg west," where we cover innovation, technology, and the future of business. i am cory johnson. the clock is ticking down to the end of funding for the department of homeland security. funding expires friday. here is the president earlier today. >> these are folks who, if they do not have a paycheck, are not going to be able to spend that money in your state. it will have a direct impact on your economy and it will have a direct impact on america's
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national security, because their hard work helps to keep us safe. >> the president speaking to the nation's governors. 30,000 employees would be furloughed, putting their paychecks on hold. and 80% of those employees will have to show up for work paycheck or not, because services are deemed essential. st. louis-based stifel buys stern agee for $150 million in cash and stock. the deal combines two of the largest brokerages. stifel's ceo says the addition will help the wealth, income and fixed management divisions. motorola mobility is working on phones and tablets for google's upcoming wireless service. it will allow google to compete directly with major carriers. google owned motorola mobility
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until early last year. google wallet will come preinstalled on new android phones. shares of the online textbook rental company up the big in after-hours trading for chegg. digital revenue includes advertising and learning services up 71%, making up a third of revenues. and more importantly, chegg can exit warehouse operations. twitter says it supports the net neutrality proposal ahead of thursday's fcc vote. twitter called the open internet "the heart of twitter." two republican commissioners on the fcc are calling for the vote to be delayed. they are calling for the entire
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322-page proposal to be made public before the vote. and subscribers are leaving satellite-tv as companies like dish network are scrambling for ways to make up lost revenue. founder charlie ergen is returning as the ceo of dish as joe clayton just announced his retirement. and he will be raising the stakes, arguing more than any other company in technology. that it -- betting $50 billion on spectrum. he has not said what he is going to do with it. joining us, alex sherman, who covers this for us in new york and our senior analyst. there are lots of questions out there, but what is charlie ergen going to do with all of this spectrum? >> i think you can expect that
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was the dominant thing throughout the call. i have to tell you, we left the call not closer to any potential clarity on the wireless strategy here. still, there are the potential partnerships, monetizing through potential sales of the spectrum. we still believe that building out the network is the least possible path here. but i think the results of what the last auction did was reshuffle the deck and we think dish has become much more attractive as a potential partner to maybe t-mobile or even sprint. i still believe there are a number of options here as a result of this spectrum acquisition, pardon me. >> yes, alex sherman, let me bring him out, who covers deals as well as anyone. i wonder, does this make them a likely acquirer, acquiree, partner?
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>> i think dish has always wanted to be an acquirer or partner. that has always been charlie ergen's strategy. and partly why he renamed himself ceo today. he has been behind the scenes, orchestrating the strategy of dish. now that they have this accumulated storage of wireless spectrum, it is time for phase two. it is time for the reveal. of course dish tried to buy sprint and it did not go anywhere in 2013, but now the time has come again where they will likely make their next wireless move and i think charlie ergen will try to partner or acquire an existing wireless carrier. t-mobile was brought up on the call, and again charlie ergen
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didn't deny he was interest did in sprint. i imagine that that is option number one for him. >> also, the existing spectrum would give them coverage of 70% of the united states. to do what with, alex? do they just want to be a mobile carrier? >> part of the whole plan for dish is to use their new sling tv product and bundle it in with a wireless network. they have the spectrum. they just do not have the network piece. the whole plan is for dish to have a mobile video product. that is what he thinks the next iteration is going to be. he wants to get away from the big subscriber acquisition cost of $800-plus every month for every person they sign up, because you have to pay for the satellite, install the satellite, etc., move it over to
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online, push it to mobile, where he sees the future of the business going. if he cannot do that, if no one will play ball with him, then he will have to think about selling the spectrum side of the company. >> during the call, i wonder that project is -- sling tv. is that enough to amortize the spectrum acquisition? >> i think the simple answer is no. it's still very early. no one is really sure, frankly how the economics are going to evolve over the long term but what is pretty clear, it gives them a plan b to defend themself in the pay tv universe, which is an industry-wide phenomenon. i see them trying to hedge their bets and keep their options open and seem a little more indispensable. especially since some of the
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content providers themselves are taking this content online, and when you think about wireless, the question came up, whether the wireless strategy and the online video strategy, are they independent? i think in some ways the spectrum that dish is acquiring can become even more valuable in the over-the-top video universe world where the industry is now gravitating. >> and remember, that $50 billion valuation that came from bloomberg reporting, that is not what charlie ergen spent on the spectrum. he did not spend $50 billion. $50 billion is about three times what he spent. the idea he could buy it for cheaper and then sell it or use it after the fact. >> in the most recent auction, dish armored with some tiny,
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-- dish partnered with some tiny, barely existent businesses to qualify for a small business exemption in the auction. was that discussed? that was a fairly amazing thing they were able to get away with. >> that was not expressly -- the discount you are discussing. if you look at fcc rules, i think there is some flexibility. but i think the bigger question is, what does this massive holding of spectrum do to the valuation? investors are looking at dish as a spectrum play as opposed to a core pay-tv business, which is what we saw today -- if you kind of think about it in the next year or so, i think, how this is all going to play out in terms of what use they put the spectrum to is going to determine what the embedded shares are today -- which is kind of why we are neutral on
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the shares at this level. >> tuna amobi, alex sherman, thank you. "bloomberg west" will be right back. ♪
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>> i'm cory johnson. this is "bloomberg west." here are your top stories. new home sales at a nine-month low. they fell 4.9% to an annualized rate of 4.8 million. rising home prices put more first-time homebuyers on the sidelines. port workers are getting back to work finally, trying to clear a
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backlog of ships in ports all over the place. they ended the labor issues that have cut cargo movement in half, but it will take six to eight weeks to cut the backlog. and the oscar for best documentary goes to "citizenfour," which tells the story of edward snowden. snowden's girlfriend a appeared on stage and snowden himself released a statement, saying that he hopes the oscar will show people that ordinary citizens working together can change the world. more on the oscars coming up including the editing technology that many of the winners used. the current reddit interim ceo is suing kleiner, perkins, caufield, & byers in a lawsuit. she said that she was pressured to have sex with a coworker who spent five years retaliating against her after she broke off
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the affair. the firm says that it was consensual. and she never complained about the case until much later. but what does this say about the workplace culture involving women in silicon valley? let me start here. what do you make of this particular case? >> in some ways this is quite different from what we have been hearing about from silicon valley. on the one hand, i just completed a survey of women in stem, and one third reported sexual harassment. but with women in silicon valley, it is usually more subtle stuff. women being called aggressive, women having to prove themselves over and over again. here we have situations where, as alleged in the complaint and we will see in trial what comes
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out, where there were literally different business rules applied to men and to women. so business rules that were directly related to comp, for example. women not invited to important male only business dinners. this is really important. and it is the kind of thing going on in law and medicine oh, 20, 30 years ago. >> is this case an outlier from what is more subtle and pervasive things affecting women in silicon valley and technology? >> not necessarily in my view. the bottom line is the courts look at these situations case-by-case, ok? it is hard to look at trends as would a law professor, but when you were in the trenches you are looking at what happened. she has direct evidence the statements were made to her. she was denied compensation.
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she was sent to siberia in terms of where her office was. men were promoted over her. this is typical of most sexual harassment cases and silicon valley or no silicon valley, women face harassment and it will be a situation of what the jury feels occurred and how they want to dole out the damages if they feel there was a problem. >> as a straight white guy certainly the last thing i want to do is -- if the case proves that she was not the sexually discriminated against and was a crummy employee, if the case proves that, is it useful to look at it through the lens of this case or is it damaging to do so? >> i think it is important to look through the lens of this case. keep in mind she did not allege sexual harassment. what she alleged was retaliation. she brought this to their
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attention and the firm disagrees. she brought this to many people's attention -- the coo the head of hr, and they basically were not responsive, or they were inappropriate. for example she alleges that one partner suggested a one-on-one lunch with the man who allegedly harassed her. not a professional way to handle that kind of complaint, to read -- so really important messages for employers, if you have an employee alleging either sexual harassment or gender discrimination of any kind, it's very important to take it seriously, to get on it immediately, to conduct a really thorough, responsible investigation, and act on it. >> i would say duh, except she apparently did not get this if what she is alleging is true. is this damaging to the
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reputation -- is it not helpful to have this discussion if it is a question of someone who is a crummy investor as opposed to someone who is sexually discriminated against? >> in every one of these cases you have the same situation. you have the employee saying that they were retaliated against and the employer saying that there were legitimate business reasons. that is a given. what is really striking to me that the case is going to trial because there is going to be a lot of inquiry into the way that the company does business. no one wants to look at how you make salami, and that is going to be revealed. on the other hand, a lot of personal issues will come out about her life, emotional distress, her relationship with her husband, her motivations. nobody wins. i think this case is less about money and more about vindication and position in the industry and trying to not accept each other's position. but most of the time, these
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cases do not make it this far. there's definitely some bad blood going on here. >> really quickly, just 30 seconds here -- the fact that tom perkins stated very early on the company needed to return to its highest ethical standards, does that matter a lot? it was curious that that was one of the first things that came out of the trial. >> it will hurt the company just being in the trial. when you are brought to task and there is a national spotlight on you and you have to explain yourself, regardless of the outcome, i think the company will take a hit and that is probably a good spin at this point. >> thank you very much, and bill frumkin, thank you as well. "bloomberg west" will be right back. ♪
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>> i'm cory johnson. this is "bloomberg west." the business of business travel is getting a caffeine fix. concur will partner with starbucks. why starbucks? they can now earn reward points. chief product officer barry padgett joins me via skype. barry i answered my own question, but why starbucks? >> you heard howard schultz, the ceo of starbucks, refer to starbucks as your third place. not your home, not your office but your third place. and we have found that that is true. we do about 10,000 transactions a month through concur in business meals alone. >> i am more of a cafe roma guy. that's just me. that is my third place. i will ask you to backtrack and talk about concur and what your
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main business is. the expense business is a fascinating one. >> absolutely. we are laser focused on the simple, perfect business trip. we think about the way it ought to work in terms of his newest -- in terms of business travel. taking the pain out of travel. you mentioned tripit and taking the effort out of expense reports. >> when you look at expense reports, who buys this service and how do they roll it out across the company? >> absolutely. we see customers from the individual all the way to the largest companies in the world. hundreds of thousands of employees. i think that they are trying to take some of the pain out of the process or for companies to get more visibility, get it
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integrated into their payroll and erp system, and really remove a lot of the paper and the manual processing. >> i sat down with oracle's ceo and talked about her getting the geek -- the gig and everything and she responded with i thought a hilarious comment, ripping at your company concur. she said "concur is only a tiny module." i literally went down to my car and thought, sap bought concur. maybe they will buy dairy queen. explain to me why concur is anything more than a module? what can make this a really big business? >> there is no dispute that the travel industry itself is a multi-trillion dollar industry. the great thing about expense reports and the great thing about business travel, like you
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and your viewership, you know the pain of taking business trips when there are delays, connection issues -- >> barry, we have to cut it off there.
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♪ >> you are watching "bloomberg west" where we focus on innovation, technology and the future of business. i'm cory johnson. the big winner of the oscars was not just "birdman." it was also avid. all of the best picture nominees were edited using avid technologies. they are going through an interesting business change. avid ceo louis hernandez joins us now. congratulations. i guess you were in a no-lose position yesterday. despite all the advances of all your competitors, you guys are holding onto market share with
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the biggest movies out there. is there something about the technological change of your competitors where they are not getting something? >> avid started by digitizing the filmmaking process. now that the whole process is fully digitized, we have the advantage because we are anchoring at the beginning. we tried to change with the times as the business model has changed. we have changed along with it. we have stayed in an elite position as a result. it was an exciting night last night. >> it always is. talk about how those movies were made differently than what we would've seen 5 or 10 years ago. >> the business model has changed dramatically. not only in how you create content, but how you optimize it, how you monetize it has changed significantly. a lot more collaboration. take something like "the grand budapest hotel." wes anderson had to shoot that all over the world, primarily in london, germany and l.a. using cloud-based collaboration for
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editing, distribution, marking the content -- really incredible technical accomplishment. "birdman" -- i'm here in mexico city the day after the oscars -- they are so happy for alejandro here. if you have seen it, you would notice it looks like it is one take, one continuous film but it was shot over multiple tracks and gives the illusion as though it is one story. that is the kind of thing that is happening with media technology today. >> let's back up and talk about the cloud and how that process is very different. what is happening right now with how it is being shot? we know what the sets look like and what the directors like shooting. what happens to the content then? >> that is the interesting thing. that is probably the most significant change in the actual business model.
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what happens after -- marking it, tagging it, protecting it, making it available to distribution channels globally and easily, etc. how the business model has changed fairly significantly. the digitization of the file record coming off of the camera and onto an iphone or ipad or the internet -- whatever you have the rights to -- the business model has really changed. it is causing media companies to change, rethink how they cut movies, how they produce them and who they hire and the technologies they deploy. it is an interesting time for media because of these changes. >> is the pace of finishing a movie faster because of this cloud-based technology? >> absolutely. let's think about tom cross who did "whiplash" for best film editing. they wanted to get that show out for sundance. it was more of an indie-esque. they finished the production and one week later were able to show it at sundance. that was not possible before.
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the fact it is fully digitized and you have software like ours, it allows you to manipulate it quickly. it is really what moviemaking is all about today. it is really exciting. you still do need professionals. >> i wonder in terms of where the people are who are working on the film, it changes both how quickly you can work, but also this notion of what you pay people whether they are in los angeles or london or berlin. you can maybe find cheaper people than you have to be stuck with in hollywood or new york even though they may be the best, but also the highest-paid. >> i would say you can optimize your cost structure through labor arbitrage. it is also the savings on travel. if you can attract the best anywhere in the world who happen to be in germany or mexico or wherever it might be -- the fact you can work collaboratively as
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though you are next to each other, still protect the file, secure the file and the other components -- that is really the key. there is the potential cost savings but you don't have to fly everybody around anymore and you don't have to do as much on location because the technology allows you to add so much to the richness of the story. >> when you look at the other companies in silicon valley -- are there particular innovations you have been able to borrow for your business that are happening with other technology companies? for example, software service, billing by the seat and so on. >> it is amazing. by the way, i love your location. i live right down the street in san francisco. >> and we had to get you from mexico? next time, come up the street. when you look at silicon valley, where do you see the innovations you could use for your company? >> avid was born and raised in media. we are looking for the very latest cutting-edge technology.
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that is why we have major offices in silicon valley and other countries around the world. we have to adopt those in a media-savvy way. security is a great example. a lot of great security and technology but we have to adapt to the needs of the media industry specifically. after what happened to sony, that is front and center in the strategies today. >> louis hernandez, thank you very much from mexico city. "bloomberg west" will be right back. ♪
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>> "bloomberg west" -- innovation, technology and the future of fish food. half of the fish you eat probably comes from a fish farm but the source of food for those farms are endangered. sam grobar takes a look. >> the oceans are magnificent
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and huge, but certainly not forever. especially the way we are fishing. >> we are running out of fish. the reason is simple. we have been taking them out of the water faster than nature can put them back. at the pace we are going, the oceans could be out of fish by 2050. in recent decades, we have stopped getting many of the fish we eat from the ocean and started raising them in fish farms. but there is a problem. to feed the farmed fish, we are going to the ocean to pull smaller fish called forage fish. >> sardines, anchovies -- they grind them up, remove oil and it becomes animal feed. there is limited supply of forage fish in the world. >> many forage fish populations are already at dangerously-low levels. without their food source, most fish farms will cease to function and fish could be off the menu permanently.
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♪ >> this is an issue of common sense. there is a problem and an obvious solution. we are at the forefront of finding a different way to raise fish in the world of agriculture. >> they are working on an idea they hope will help out the planet and ensure that fish farming has a future. this is where you store the feed? >> yes. it is made out of algae, pistachio oil. >> flax. >> flax oil. >> they have developed the first completely vegetarian fish feed to be used commercially in the u.s. >> we are trying to keep away from using the ocean as an unlimited resource for free fish.
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the cheapest possible way to put a pellet together has been to use the ocean which was considered an unlimited amount of free fish. >> but, it's not unlimited. >> it is extremely limited and we are finding out now. >> the goal we have set is to get rid of fish meal completely from the diet of our farm fish. how you do that is a little more difficult. a quick search on the internet came up with a few papers. one by a doctor at usda. >> i have always liked fish. i have a trout stream, a 300-gallon aquarium. i am a fish freak. i call it passionate, some people call it obsessive. bill called me and asked me about fish meal, plant-based diets and i said yes, i have one. fish nutritionists for the last 30 years have been looking for replacements for fish meal. we know we can totally eliminate fish meal from fish diets and still have healthy fast-growing fish.
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in here are containers with some of the ingredients we use. >> one of the first things he told me was fish do not need ingredients, they need nutrition. they don't need fish meal. they need an intelligent set of ingredients that formulate a perfect protein, the right amount of carbohydrates and fat. >> we have evaluated fish meal-free feeds with different species. most are considered carnivorous, but i don't think we were turning a carnivorous fish into a herbivore. we are not changing the animal just changing what they consume. >> wow. >> you can see they hate it. >> they are obviously not interested in it at all. >> you realize what a technique it is to make a pellet float instead of sink. that is truly a fine art. >> they are very happy with the
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way the fish have been performing on the feed. the products they are producing, i understand, are well accepted by the chefs in san francisco. >> the color is right. the texture is right. from a health standpoint, it is really enriched omega-3's. it tastes like what it should be -- like a wild fish. i'm just a big fan. i foresee this as the future in sustainable fishery. >> there is a downside to all of this. the plant-based feed cost about twice as much as conventional feed. that is a barrier to wider adoption of the diet. but, if wild fish populations continue to decline, it will not be long before going vegetarian is the only option. >> we have been treating the ocean as a limitless supply of free fish.
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if we don't have a backup solution, there will be a whole lot of hungry people. >> yes, fish food. that was sam grobar with the first episode of a series we're calling "the spark." some top headlines from bloomberg. security is tightened at shopping malls in europe and the united states after al-shabab issued threats against those malls. the group is calling for an attack on the mall of america as well as locations in canada, paris, and london. here is homeland security secretary jeh johnson. >> if anyone is planning to go to the mall of america today in they have to be particularly careful. as the statement you read indicates, there will be enhanced security that will be apparent to people. >> federal security as well? >> enhanced security. >> the terror group is taking responsibility for the 2013 attack on the kenyan mall that killed 67 civilians.
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disney is raising admission prices to its flagship magic kingdom in orlando by 6%. tickets are now $105 for single-day ticket. disneyland prices are also up to $99. price hikes at disney often lead to similar moves by rival theme parks, including universal studios and seaworld where they also have fish, of course. volkswagen sold the 450th and final bugatti veyron. it is called the finale and will be on display next week. $2.6 million for the average price. "bloomberg west" will be right back. ♪
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♪ >> i'm cory johnson. this is "bloomberg west." from dinner to dry cleaning, there is an app for that or something. startups galore coming up with all kinds of solutions to problems you did not know you have, including your laundry. one startup called washio is trying to make doing laundry easier and faster this company launched washio now. they promise pick-ups within one hour. they pick up your laundry and they return it clean and folded. they are doing this in los angeles and other cities -- not new york city. the ceo joins me right now. why not new york city, home of the chinese laundry? >> thank you for having me. good morning washio first started in los angeles where we are headquartered and we offer
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services in six cities across the u.s. from los angeles, san francisco, washington, d.c., chicago, boston and oakland. we have not tapped the new york market yet. it is one of the largest markets in the world for laundry services. it is a difficult market to tap. we have found massive opportunities all across the country. >> can you convince me this is a technology company? >> absolutely. washio is an on-demand washing service. from the client-side, you pick up your mobile phone or visit the website and select a pickup and drop-off time. somebody will come by your house and pick up your laundry and return it to your house the next day. once you pick up your stuff, it goes through our drivers and brought back to one of our distribution centers where we image tag every single garment. once we go through that -- >> let me back up. you image tag every sock, every
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pair of underwear? really? >> on the dry cleaning side, yes. we image tag for quality control. we make sure the garments you give us are the same ones we deliver back. on the laundry side, it is a little difficult to tag them individually but we take photos that show overall what you had to make sure we get you back your stuff on time. >> how does that compare cost-wise to what the former laundromat would be? it sounds like a lot more. >> from a price perspective, we are in the median price range. you can compare it to your local laundromat. we are looking to continue lower prices and using the scale of our software and technology to do that. your first question was, are we really a technology company? the amount of technology that happens in real time is really immense. >> you have gotten some interesting investors.
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i know there are competitors. you have some investors like ashton kutcher and nas and scooter braun. tell me about that. >> we have had really amazing investors from ashton kutcher and nas to gary milner. we have some great investors. they have really picked a winner in washio and we have continued to show that as we are the leader in the market. with our success comes a lot of copycats and we have seen that in the san francisco market and new york and london. we know this is a very difficult industry to tackle. we focused a lot of our time and energy on building technology that allows for this experience. we felt strongly will continue to lead to the marketplace in this industry. >> i'm glad ashton kutcher has his laundry problems fixed. thank you very much. the bwest byte, where we focus on one number that tells us a
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whole lot. katie has the number which is? >> 1.9 billion. >> that is a lot of something. >> that is how much apple has decided to spend on two data centers overseas. >> that is intriguing because "citizenfour" won last night. we found that silicon valley businesses like apple were getting hacked by the nsa. that data is kept here in the u.s. that is not going to happen if they are building it in ireland or is it? >> companies like apple have decided they want to build more data centers overseas so they can store their customer data safely there. there is a lawsuit now between microsoft and the department of justice where microsoft has decided to fight back against an order saying they have to give up data in europe to the government.
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>> even though the data in europe maybe from european customers, the nsa still wants that. i talked to the ceo of symantec and he said their european customers are saying they want more assurances that the data will be kept out of the u.s. >> they do want more assurances which is why cases like the microsoft case will be watched all over the world. the other reason why apple is building the data centers is because they are making a point -- they are saying the u.s. government will not let us repatriate the millions of dollars in cash held overseas. they don't want to pay the 35% in taxes. they are saying they will start building, expanding and growing outside of the u.s. >> it will have some implications. thank you very much. you can get the latest headlines on your phone, tablet and bloomberg.com, bloomberg radio. we will be there. see you tomorrow. ♪
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>> the following is a paid advertisement from starvista entertainment and time life. >> ♪ somewhere beyond the sea ♪ >> bobby darin, frank sinatra, dean martin. >> ♪ volare ♪ >> tony bennett, nat king cole johnny mathis.

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