tv Bloomberg West Bloomberg September 24, 2015 11:30pm-12:01am EDT
emily: president obama hosts a private dinner for chinese president xi jinping tonight. first course on the menu -- cyber security. emily: i'm emily chang and this is "bloomberg west." watson is moving west -- ibm is betting big on the artificial intelligence that won jeopardy. opening a new headquarters. plus watch out apple -- a circular smart watch just announced that is thin and sleek. and you won't want to miss my
interview from tech crunch disrupt. an extremely rare interview about where he is investing now. all of that ahead. first to the lead -- in washington tonight, the chinese president sits down for a private dinner with president obama. there will be more than food on the menu. the two men will attend a formal state dinner tomorrow, but observers say tonight's get together will allow president obama to have a much more frank discussion about the issues confronting both nations. one of the talking points will be cyber security. president obama is expected to bring up a recent cyber attacks. coming out of washington, how do you expect the dinner to proceed tonight? are these dinners constructive? reporter: that is what the white house said. the president gets to talk with out many people in the room and discuss the issues that face both countries.
cyber security is an issue both countries are facing and president obama says he will be frank in his discussions over concerns he has that china is backing and supporting the hacking of u.s. companies. emily: what do you think is going to happen when it comes to cyber? are we going to see a deal and how effective would it be? guest: that is a tough one. the chinese president doesn't even agree to the fact that mark china is supporting hacks on u.s. companies. so that is the first step -- getting the chinese to admit they are evening doing it. we may see something that starts along the lines of an arms deal. we may see a framework for what both countries say they are not going to do, but in terms of a full arms agreement on the cyber, it is going to be difficult and the administration
says it will be a while before we see something along those lines. emily: what really happens at these state enters? -- state dinners? is it going to end up with them smoking cigars in the back room or is this much more formal than that? guest: they have had a couple of these dinners in the past. in 2013, the two presidents sat down. last year in china. they do have a rapport and they do know one another, so this is an opportunity to have an informal discussion. but with the number of tough disagreements between them, you don't see things becoming too informal. president obama says he has a number of issues he wants to bring up and will have frank discussions. they will have an informal discussion, but everyone knows they will be talking about serious issues. emily: we will be watching to see what comes out of this dinner. thank you so much for that
report. turning to venture capital -- sequoia capital is one of the most sought after investors in silicon valley and one of the most exclusive. i got a chance to speak to roelof botha, a member of the paypal mafia and early investor in youtube. we spoke at the tech rubbed disrupt -- tech crunch disrupt conference. i started asking him about all the new money from foreign investors to hedge funds chasing tech deals. guest: there have always been tourists. there are always people who come and go depending on the macro environment and interest rates. we don't pay too much attention to that to be honest. we try to keep our heads down. emily: let's talk about the macro environment. in 2008, sequoia said good times. some people say that's when uber , and airbnb were conceived. do you stand by that? roelof: i don't think anybody could have seen how aggressively governments around the world reacted to monetary policy.
cost, ifink about the you were not prudent, there was a risk the rest of the company might not have succeeded because you were unlucky and running out of money at the wrong time. many of the greatest companies have been born in tough times. entrepreneurs are serious and are not doing it because it is fashionable. they are doing it because they are passionate about solving a problem. emily: if you said rip good times in 2008, what is it today? what is the headline? roelof: if you look at companies right now, it's certainly not a marker when it comes to technology stocks. people point to anecdotal examples of private companies they think are overvalued. i'm sure some of them will be proved overvalued, but i'm not sure you could point to
something systemic that cuts across all the companies. when i look at some of the companies we are involved with, and i see how they get written up, it is from people who don't know the details. i remember being at paypal and reading the articles and one title was "earth to palo alto." they made a mockery of us at paypal, thinking we were delusional. nobody knew what we were building and today it is a $30 billion dollar public company. emily: how are you devising companies? it is always good to raise money when you don't need it. it's probably a good time to think about raising money. you'd rather raise money now and take a chance for a lower valuation than you might have achieved later. risk -- de-risk any macro
economic shifts. but i don't think there is a rush because of a fear of an imminent meltdown. emily: what companies are you most excited about and what will you stay away from mark what is overvalued and what is undervalued? roelof: hard to tell. we love the theme of the rise of the developers. we are investing in a company that helps mobile developers. we think there is a lot of reinvention taking place in enterprise infrastructure and software. software defines networking. storage. we are excited about a company in the 3-d printing space. these are some of the things we are excited about. i'm going to meet some of the tomorrow who is coming up with an idea in an area i have never thought about.
the best part of the fund is always keeping an open mind. emily: you were one of the earliest investors in instagram and they just announced they 4.5 have 400 million users. what do you see as instagram's trajectory going forward. how much of this is due to facebook and how much of this would have happened anyway? roelof: facebook has been a wonderful acquirer and has given the team the resources they need to scale. talent. it has given them room to be able to continue to flourish, but they were already on a tear by the time they were acquired. it is very hard to know what might have happened otherwise. i think they have a very bright future in front of them. emily: with square, are you convinced you have your ceo jack dorsey for the long-term? roelof: no comment. emily: if he said i want to do both? what would you say? >> i think he is the founder of both companies. i don't think it is for me to
judge and tell him he can't do it. emily: there's so much debate about what makes a good investor. they are saying founders and ceos make the best investors. what do you think? roelof: i'm not sure there is a recipe for that. what are the things i have observed, part of what makes us a good partner, it's not the individual, it is the key. part of what we have benefited from his having individuals with different types of backgrounds . maybe they have been in engineering or marketing. it is that complement at a team level that helps make fabulous investing decisions. not just individuals. emily: coming up, ibm opens a brand-new headquarters for its think like a human software. the father of watson tells us how it could soon turn a profit.
john kelly leads the watson team and stopped by to explain his plan for san francisco. john: watson is no longer one machine. it has a platform in the cloud and we wanted to come where the developers were so we had an ecosystem on top of our platform. developers will be working on the watson platform and the venture capital community and startups out here will be all over watson as they now have local access to it. emily: you talk about watson incorporated into apps in terms of vision and discovery. what can it do now that it couldn't before? john: it can now speak. it could before read any amount of literature. it has ingested wikipedia and all the world's medical records. but watson now has the ability to look at images and understand images. for instance, in health care, we are in the process of acquiring one of the top holders of medical images. watson will learn from those images and help doctors such as radiologists give a better
diagnosis more quickly and precisely. so giving watson site. next, we will give him other senses in the world of the internet of things. emily: you are trying to grow the number of developers using watson. how many developers are using watson? how fast is that number growing? john: we have hundreds of partners and thousands of developers on the platform. we have several dozen apis that developers can get on and that number will grow to hundreds in the next year or so. emily: what are you doing to attract more developers to the platform? john: first of all, we make it free. as they develop their product and solutions. as they get to market, we share the value that has been created, but the on ramp is very easy. emily: are these expansion part of a new investment in the watson group or is it part of the $1 billion you committed to
last year? john: this is part of the $1 billion we have been saving for this area. we are thrilled to be here. emily: how much have you spent so far? john: we spent a substantial amount of money since the beginning of this program and the system is progressing fabulously. the business is growing exponentially. watson is part of the $17 billion analytics business and is the fastest-growing portion of that business. emily: this is a big bet for you on watson's future and the future of ibm. when do you see it as a big driver of the business? john: it is already incremental. is growing very rapidly. one of our fastest-growing segments. as we look at applying it to other sectors, we will grow those sectors. emily: what does incremental mean to you? above are based business. all new.
this is a whole new era of computing. we still have many programmable systems, but this is a whole new era. all incremental. emily: do you see it getting to $1 billion in sales and if so, when? john: yes, and as soon as possible. emily: there are still questions about the financials behind watson. how it works as a driver of the business. when do you see watson becoming profitable? john: watson is a heavy, heavy investment for us right now. if you look at the performance of watson, whether it is developers, platforms it is , surpassing anything we have seen before not only in our business but any other as a service business. the growth is exponential and with these new businesses, we think it will be a huge engine for ibm going forward. emily: when you say it could get to $1 billion in sales, are you saying in the near term or is this five or 10 years out? john: near-term.
emily: how does watson compare to everything else you have worked on at this company? john: i've never seen anything in my career like watson. think about it. a system that can sit by us and reason with us and help us make better decisions. watson will not be parked in a glass house computer room or confined to a mobile device. it's going to be everywhere in our lives going forward. emily: ibm senior vice president, john kelly. you can catch the full interview on bloomberg.com. now an update from oculus -- the company unveiled a new $99 samsung headset powered by oculus technology. it works with samsung phones and you can buy it in time for the holidays. but it is not the highly anticipated rift headset oculus is making itself. i spoke to brendan iribe today and asked why he's pushing ahead with both products.
brendan: we think it's going to be very big. you will have mobile vr at a lower price point, accessible for a different audience and it's going to be super compelling and we will play them both. emily: while we don't have an exact sales date, he confirmed it is on track to be ready to be shipped in the first quarter of 2016. you can catch my full interview with the ceo of oculus at bloomberg.com. coming up, pebble unveils a new smart watch. it's lighter, thinner and round. eric migicovsky is with me in the studio, next. ♪
emily: it is time now for the daily byte -- one number that tells a whole life. today's numbers 25 million. that's how much money at&t has spent preparing for pope francis's visit. that's big considering they spend $16 million on the super bowl. why so much? to cover all of the pope-related selfies and tweets. most will be used to boost coverage so those can be uploaded without a disruption in coverage. verizon has spent about $24 million. now to pebble, introducing its
first round face smart watch. it is lighter, thinner and only costs $249 versus $349 for the cheapest apple watch. while pebble has already sold 95,000 watches, it has fallen to third place in sales. can pebble catch up? joining me now is the ceo of pebble, eric migicovsky. you are wearing the new watch. we have mallory our floor director wearing the watch. give me the specs. eric: it is the thinnest smart watch in the world and just 38 millimeters in diameter. it feels like a real, classic watch and that's something our designers and engineers worked hard to make sure it had that
feel. emily: can you explain the rose gold? what is it about rose gold? eric: we were looking at the trends and we started thinking about what would make a smart watch look like a classic watch on your wrist? we make rectangular watches -- that has been our go to for the last three years and we've seen a lot of people make rectangular watches, but one of the best ways to camouflage the tech and get it on your wrist is to make it look like a classic watch. emily: who are you targeting? eric: we are targeting people who were not interested pebble before. there are a ton of people who have put pebble on the wrist and there are over a million pebble users around. but for this, we are explicitly saying who else could be interested in pebble? emily: arguably, you are trying to get more women to buy pebble. >> this is the smallest and lightest smart watch on the market.
it just so happens that some women have smaller risk than men and this is important for us because it is the design, the look, but also the feel. emily: you are first to market with a smart watch. i came down and saw you when you were in a garage and apple watch didn't exist. now you are in third place and have to catch up. how do you see yourself reclaiming market share? eric: apple, when they move into a market -- i don't think anybody could have sat in the chair and said that apple would not have been able to sell millions of watches. but i think that's not really the point. what we're looking at right now, we've been working on this for seven years and we are looking at the next seven years of smart watches. it is clear, apple has made it extremely clear what they are doing. they are building a watch that looks like the rolex of smart watches with prices starting at $400 or $350. that is not what we have been building.
from the get-go, we were building products that are fun, colorful, affordable, entry level cross-platform products. i think we are positioned to be like the swatch of smart watches. emily: the swatch of smart watches. ok. let's talk about battery life. two day battery life. the big question around the smart watches is how often am i going to have to charge them. i'm not wearing my apple watch because i forgot to charge it. often times i go for it and i just can't wear that day. how do you improve and the battery life? eric: we have announced a range of products. we have products that go up to 10 days and i think that is the big message with this watch. we have been working on smart watches. we know millions of people are using pebble but we really wanted to build our option. for us, getting pebble onto more and more wrists meant looking at the size and shape and how it fits on other people's wrists. we have products that start at $99 that do tracking.
activity tracking. that ranges up to $250. emily: in the beginning, you could not keep up with demand. how are you doing on supply versus demand? eric: we sold almost 100,000 watches. in a span of 30 days. it took a while to catch up it was a fair amount of demand. i'm not personally manufacturing the watches anymore. we have a talented team. we are now in best buy, target and it is spreading. emily: great to have you back here on the show. i like it. it looks good. that does it for this addition of "bloomberg west." up next we have a special report on janet yellen speaking at umass amherst. next. ♪ >> the following is a paid
program. >> the following is a paid advertisement from starvista entertainment and time life. >> ♪ you're the meaning in my life you're the inspiration ♪ >> ♪ that's how much i feel i feel for you, baby that's how much i need i need your touch ♪ announcer: intimate moments. cherished memories. unforgettable romances. the language of love can be spoken in many ways and nothing ignites your emotions like "