tv Best of Bloomberg West Bloomberg July 30, 2016 11:00am-12:01pm EDT
♪ emily: this is the "best of bloomberg west." coming up this week -- the end of yahoo! as we know it, we will hear from the ceo, melissa meyer. verizon is beating out the other suitors for yahoo!. the verizon executive vice president and aol ceo both join us on the deal. plus facebook blows past , second-quarter earnings estimates thanks to a surge in mobile ads. first, to our lead from it is
the end of the road and the start of a new chapter. rising announcing it will buy yahoo!'s core business for $4.8 billion in cash. the deal concludes a seven-month process. bids from at&t and dan gilbert did not make the cut and the deal also effectively ends the turnaround efforts of melissa meyer. her appointment in 2012 was celebrated by wall street and silicon valley. though she is staying on for now. we spoke with her right after the deal was announced and asked what verizon could do for yahoo! that yahoo! could not do as an independent company. take a listen. >> i think there is tremendous scale that comes together from all of the different assets they have been investing in and overall, one of the big challenges is we have reinvented our product and try to make new yahoo! mail perfect for the phone, very proud of where yahoo! mail is at today.
the same thing is true for news, weather, sports, finance. we have cornerstone applications that when users use them, they engage with them and love them every single day. for us, verizon has tremendous distribution and that is one area we are excited about. overall i think it represents a huge amount of scale and opportunity for verizon. emily: what role you envision for yourself in this new entity? melissa: f the immediate future the transaction will close in q1 next year. i have two priorities. number one, seeing the transaction through the close , but watching the value of our asian assets and equities we have there. moving forward, we will ultimately figure it out. it is unlike a one-on-one acquisition where you spend a lot of time doing the process. we will sit down with marnie and tim at verizon and desire the
integration plans. it is important to see yahoo! into the next chapter. emily: you came here with so much possibility and so much hope. how do you personally feel about the outcome? melissa: i feel very good about it. marissa: i feel very good about it. i think yahoo! is a company that changed the world and not many companies get to change the world. before yahoo!, the internet was a government research project. it really humanized the web and one of the reasons all of us have e-mail accounts. it popularized search and real-time media and that is amazing. to me, it was, how do we take all of those historical moments and influences and harness that in the paradigm shift to mobile. if you look at where the business is, we are proud of our
products in the way we transitioned our users. we have more than a billion users each month and 600 million are through mobile, that has tripled over the past four years, a large part we think because of the quality of the products and the investments we have made. to take this incredibly powerful transformational company that has changed the world and help see it into this new era is important and the transaction is not just about the strategic feature for yahoo!, but also unlocking value for our shareholders in the remaining equity stakes. this is an opportunity to kill two birds with one stonend we feel we achieved that. emily: do you think having an active investor made your job harder? melissa: i think the company has rissa: i think the company
has had various active agendas around it over the past few years. i think you should always be open to challenge and scrutiny and i think there are elements that become more of a distraction, but the challenge of the scrutiny is not something i wouldn't shy away from. emily: there's a lot of scrutiny. marissa: i think you have to be able to stay focused through it and i could not be prouder with how the teams have executed through this period of uncertainty that has been around the should review process we have been in. we have exceeded our goals for the first half of the year and we will keep that momentum going. emily: you had said come if you had three more years that you would turn this company around and do what you are, what to do. do you think you could have done more? melissa: i think we see the path to growth and i think that path gets accelerated with verizon. i do think that we will get yahoo! back to growth on the
revenue side and we have continued to grown on the user side, it is up 50% with the mobile base tripling. we have a large legacy business that has been declining. i am proud of the growth we have had. we grew them to $1.6 million in revenue to basically nothing and i am proud of that. i think we will keep -- keep growing and i am excited that verizon is a great acceleration to the effort. emily: what do you really want to do next? will you be a public company ceo again, do you want to start something of your own? marissa: i love a being involved in companies that get the privilege of changing the world.
i got that at google, i got that here again at yahoo! and i love all phases of companies. i was at google from tens of thousands -- i managed hundreds of thousands and i love all phases of companies and i love the effort and eight energy and the hard work required. all of that is exciting to me. it is really about the rare privilege of being able to be part of a company that gets to transform culture and people's lives. emily: in this job he became a mom. your decisions around parenting were highly scrutinized. that is such a big a competent, . such a big accomplishment. how has motherhood changed you and changed the way you lead and your approach to business?
marissa: i think you learn so much about yourself and having children. my children are amazing. motherhood is incredible. you learn a lot about yourself. i learned that i had quality time with my kids, but i love to work. i love to talk with them and have an impact. my parents are visiting this weekend they had to laugh because yesterday my son came up and we were making dinner plants and he said, you will go and do your board call and i will go and kick the ball and then we will have dinner. it was silly that my three and a half-year-old knows what a board call is. to me, it has been a blended lifestyle. i get quality time with them and
watch them grow and learn. my background was artificial intelligence, so to watch your own children learn is incredible. i also learned that i love to work and have a big impact and have that base to grow on and to bond with them. it is important to me to keep going. i think being able to come up with a blended working style that incorporates them and allows me to prioritize has been important. emily: our conversation with yahoo! ceo marissa mayer. up next, $4.8 billion a steal, we will focus on what verizon gets out of this deal with the president and ceo. all fingers point to russia and -- in the democratic national committee hack attack. we will hear from the director of cyber security and policy. this is bloomberg. ♪
emily: now back to the deal that kicked off the week -- verizon's purchase of yahoos's operating business. verizon's president marty walden and tim armstrong joins bloomberg . take a listen. we have donethat is collectively come up with large-scale goals for the company and we want to be competitive in the next generation of how digital is taking over the world from consumer media. we let out a set of 2020 goals and a main goal is to get the 2 billion consumers. the yahoo! brand is excellent and the team is excellent and it fits into the larger strategy that verizon has. from our standpoint, if you look
at what we announced 12 months ago on the original deal to what is an ounce today, you will see straight focus and strategy focus overall. >> this is not a big surprise, you signaled this -- as a likely where this was going, but yahoo! has been in decline and losing money. how quickly can you turn that around by putting it together with aol and other verizon assets? >> it will take a lot of work and we have confidence in the leadership in him and his team and the talent at yahoo!. we understand it will take work to integrate, but we are confident that there are brands that people love. we have a number of assets across verizon that will strengthen the business. it is hard work putting two companies together, but we have the right talent and leadership to make that happen. >> can you be more specific? can you actually identify the assets that verizon has that can make a job at yahoo! that others
could not. >> first and foremost, if you start with product technology. when we brought aol, it was about tim and his talent and the ad tech capabilities. he also had great brands that we were not as still where we -- that scale where we needed to be. yahoo! gives us a scale that takes us out of the millions and into the billions. we also have been investing in content across verizon, just from licensing linear complex -- content into ownership. a company called complex, which we have 50% ownership in. we are building our own digital channels and made an investment optimist tv, and in mobile which is important i and how we scale the business. our goal is to take the content assets and bring them across the digital platform and bring more people to our platform and make the flywheel spend.
marney, talk a little bit about who will be running what. it was a popular belief marissa mayer would no longer be part of yahoo! in any capacity after the court business was sold and we got a headline crossing that says for her, she is planning to stay. who is running what and who has what job? >> this process was a bit different. tim and lowell and all of the management team were working side-by-side to talk who will lead. we were doing that before the deal closed, because it is an auction, we did not have the ability to talk freely about those things because there were competitive bids coming in. tim and i will be out in the bay marissa and her team.
we will come back to you and talk to you about who is and what leadership roles. for verizon, tim will leave the -- lead the integration for us and we will work closely with and makend her team sure we have the best integration and retain the best talent. >> most deals fail because of a culture clash, because they do not get integrated. yahoo! from -- comes from a silicon valley culture, versus verizon that is east coast. what are the challenges with those two cultures? >> one thing i would update everyone on -- we have a huge presence in silicon valley and i started my career working for paul allen and the cofounder of microsoft. that is when the west coast started to take off for consumer internet and i spent my time shuttling between new york and california. i think we are uniquely positioned as a company and a management team to understand both coasts. we call it culture in code at aol in the real culture of new york mixed with the culture -- the code of silicon valley will make us successful. i think you see, it you see al a
popping up new york and london , and paris. i was at vivitech. i don't think silicon valley and new york are different anymore. i think what you are doing is bringing the culture and code together and we are the best positioned company to do that. emily: that was the executive vice president and president of product innovation at verizon , as well as tim armstrong, the ceo of aol. coming up investors cannot get , enough of facebook, we will dig into the blow away quarter and hear from sheryl sandberg herself. we are focused on the explosion of interest in health tech with two longtime investors. this is bloomberg. ♪
it also got a big lift from what mark zuckerberg called the golden age of online video. i spoke with sheryl sandberg about continued engagement on facebook. >> the explosion of video on the platform is great for our consumers and also great for our business. if you talk about new format, a lot of them are video, live and recorded, but also 360 pictures. all of these formats are engaging, and we think they are contributing to our time spent metric. emily: and that is paying off. facebook now has over 1.7 billion users, two thirds of them use it every single day. i spoke with harry cartman, ceo of cargo. >> facebook has done an incredible job getting the entire world on its what form. it's platform. it's unbelievable. if you look at advertisers, they are following where the people are. when you look at the ads on
facebook. they are less brand advertising and more app install ads. facebook has done an incredible job getting people on their platform. emily: you think the app install ads are a weakness? why? harry: i call it the cocaine of the advertising world. here is why. if you are a startup and venture funded and you need to get people on your platform, facebook is one of the best ways to get those people to install those apps on their phone. emily: that is why we see a lot yft and food delivery services. harry: exactly. the new way to go and get packaged goods to be delivered to your home -- there needs to be a way to get those services out and facebook has been the catalyst for installs of those apps on people's phones.
i think it is a question if brand advertisers will make the migration to facebook versus traditional places where they advertise, typically on great editorial properties that have a voice, like bloomberg. emily: irna added $2 million to revenue, do you think there is a problem here? >> it is going to be difficult for facebook to continue with the explosive growth they have had. thus far given the fact they are , continuously able to grow their dau and mau numbers signal the fact that they have a skill in keeping and attacking -- attracting users. the fact their ad revenue continues to grow at this time is also significant and speaks to the investments they have made in mobile and video and measurement. i think another interesting note is the activity that brands are now creating around messenger. the fact that they are willing
to create chat bot experiences speaks to the fact they see that platform as an extension, potential extension of their brand. emily: when it comes to messenger and what that, i asked -- whatsapp, i did ask sheryl sandberg about monetization and she did hence those are coming. listen to what she had to say about messenger specifically. >> we are not breaking out instagram, but facebook is the main driver of revenue growth and instagram is making a real contribution and we are excited about instagram. we announced earlier this year, 200,000 active advertisers. 75% advertising the u.s. between facebook and instagram we have the two most important mobile app platforms and that is why we see strong growth. emily: now let's hear what she had to see -- say about messenger and whatsapp. sheryl: in messenger we are looking at the organic activity that is happening between businesses and advertisers.
we are happy to see we have one billion messages being sent per month between businesses and people and almost all organic activity. we are doing very early testing to see how we can monetize and drive engagements between business and consumers. right now it is organic activity we are looking for. emily: you are worried about the overreliance on app install ads. they have turned on -- they have not even turned on the firehose. does messenger and whatsapp hold huge potential? harry: i think they spend $30 billion on whatsapp. emily: $20 billion, but it is a lot. harry: when you look at asia and wechat. you see more and more commerce taking place on messengers platforms. those functions spread in the united states and people start
using chat and messenger to do transactions. if they can be there in the platform at the time of transaction and bring advertising into the platform, that will be an interesting growth area for them. it will be a different game and different set of advertisers in theire. because they own the platforms and messenger seems to be the next growth area in terms of how people communicate, it is very exciting. emily: the last thing i spoke with sheryl sandberg about, there is a mentum behind facebook live and they believe that is driving time spent on facebook. she said they are not interesting in long-term content deals like with twitter with the nfl games and the democratic and republican national convention. how important is facebook live going to be to the platform overall?
harry: i think it is an indication of them wanting to go head-to-head with youtube. there are so many dollars ring taken from tv that continue to decline in millennial market. when you look at where those tv dollars migrate to, they will migrate to digital. which platforms will capture them? today youtube is the key , platform that captures the vast majority of those video dollars. tomorrow, what facebook is saying is they want to be involved at capture more of the video dollars shifting from tv. emily: what is your take on facebook live, what -- how powerful is it? they will not add ads, but facebook live is a new speed. -- is in the news feed. if facebook live does well, that enables them and increases time spent, that enables them to make more money on ads. erna: i think facebook live is part of the overall roadmap to making sure that the majority of
content on video -- the majority of content on facebook in the next five years happens to be video. this is another way of attracting a different type of content producer as well as another impetus for users to get in on the video game. it will be interesting to see how the live battle plays out between twitter and facebook. they both have different approaches, but they both have different goals. there is more to be told. emily: that was erna and harry kargman, ceo of kargo. coming up all fingers pointed to , the russian government in the democratic national committee hack attack. we will take a closer look. if you like bloomberg news, check us out on the radio. the bloomberg on radio app, bloomberg.com, and in the u.s. on sirius xm. this is bloomberg. ♪
emily: welcome back to "the best of bloomberg west." i am emily chang. the fbi is investigating a massive hack attack on the democratic national committee, which some u.s. lawmakers and cyber security specialists have already linked to russia. chris finannd, -- the former white house director , of security policy and legislation and the current ceo of manifold technology joined us. where does the fbi begin? what are they going to be looking into? chris they will be looking for : more data to figure out who did this. attribution is difficult, but if they can get more forensic evidence and potentially other sources of intelligence, that will make for a stronger case. emily: from what you have seen, isn't it clear? chris >> it is consistent with : russia's overall m.o. and the evidence that crowd strike has provided is pretty compelling.
emily: how hard is it to find out where they got into the system, how they got into the system, and what the motivations really are? chris: intent is difficult, but in terms of finding evidence of intrusion, typically you can find evidence of malware. in this case, the hackers seem to be sophisticated because they covered their tracks. they deleted data and manipulated data. those are pretty high-end capabilities and would have taken a lot of time. emily: this has been incredibly disruptive to the convention. many of the people on the floor who are angry are bernie sanders ' supporters. trump has been piling on here. what is your take on this story? chris i find it tragic from many : angles. the thing that i have been , maybe now we are at the point with e-mail and security generally where if you are not one of the biggest players, you cannot make thing
secure. facebook and google are pretty much encrypting everything and i think that is direction things are going. here we have hillary's server hacked, they said, in addition to using it in the first place as an error. now we see the dnc's internal which probably was one that they ran on their own server to some degree. i don't know the architecture. it strikes me that people using primitive technology will get primitive results. i cannot help thinking about the fact that donald trump refuses to use email and he is probably smart not to do that. emily: i spoke to kim dotcom, the notorious creator of megauploader. last year he said he thought julian assange would be hillary clinton's worst nightmare. listen to what he had to say. >> i would have to say it is probably more julian.
i am aware of some of the things that are going to be roadblocks. emily: you are saying that julian assange will be her worst nightmare? how so? >> he has access to information. emily: what information? >> i don't know the specifics. emily: i did message with kim today. he doesn't think that wikileaks is behind the hack, but he does think that there is more to come. he said that hillary deleted over 33,000 emails. i suspect those deleted e-mails will reappear in the upcoming wikileaks releases, and i am convinced that wikileaks has the deleted clinton e-mails and more. what is your reaction to that? >> it is not hard to predict that trolling will occur. it is also fair to assume that more certainly will come out. i think what secretary clinton has going for her is that she is generally held under the microscope all the time. so i think to suggest that some
new revelation will come out in email is probably far-fetched. david i would not go that far. : i think that she is clearly reeling from each successive revelation and i don't think you can say it could not get worse. but i wanted to ask before, shouldn't we be operating as if essentially everything we do is a potential open book? is that how bad it is? chris: it is pretty bad. we encourage our clients to invest in data security, but also to take great care. emily: what about not e-mail? chris you have to be certain : that what you say could come out on the record. you need to make sure it is consistent with your organization's strategy. emily: if this is really coming from russian intelligence agencies, how should the u.s. respond? chris: i think this warrants a response for several reasons. if attribution can be made to the russian government this would be a significant intrusion of u.s. sovereignty.
it undermines a political institution in this country. and so to do that in my opinion, is well outside the norms of the international system and does , should require some type of government response. emily: it's like a new cold war. a new front has opened. david what reminds me of his : watergate. think of the controversy that unleashed and the chain of events that unleashed. it happens that it is a foreign power. in these bizarre reports of the possible links between the trump campaign manager trump himself , and the putin administration and network. it is very weird in so many ways. i think that this sort of thing is tremendously destabilizing. i agree with chris that this has to be taken super seriously. emily: that was chris finan and david kirkpatrick. we are seeing an
emily: this is "the best of bloomberg west." i am emily chang. it is time for our weekly roundtable exploiting trends in tech investing and venture capital. this week, health tech, from ,earables tracking your steps we address the issues on the cutting edge of health care disruption. i sat down with two people who have been investing for years. esther dyson of 23 and me and robert middendorf, partner at norwest venture partners. i started by asking them why health tech has been grabbing the attention of traditional vc. >> the affordable care act says you will be paid to keep people healthy. it is not totally happening yet
and it is amazing how slow the medical system is to respond to incentives, just the way that people are slow to take care of their own health. but it is beginning to happen. the financial flows are changing. they are beginning to realize we can make money by preventing as well as treating. >> i think we have seen three major shifts. we saw the market for the digital -- the government basically funded $30 billion of an industry to digitize health care. then the affordable care act , as esther said changed how , doctors in health systems are paid. they are becoming more and more paid on an episode or warranty-like care model. a cap versus, i did one procedure. the third thing is, we have seen the consumer adopt, as well as physicians and other providers, digital technologies. so you have the infrastructure
in place, the data in place, and payment in place to create a new laboratory for change. emily: you are an investor in 23 and me and in digital and mobile health companies. what is your personal philosophy guiding your decisions? >> because it is my own money i can take risks. i can do things that i like. i don't have a list of criteria. and over time fundamentally, i have become more interested in laterating health van paying to recapture health. you can make money in both, but i would much rather prevent diabetes than treat people with it. what i am looking for, though some of this has changed as i am doing a nonprofit that i don't want a conflict of interest, but to me, the ultimate business model for a huge amount of this is an app with the curriculum, user-feedback data, plus coaching. the motivation part is so hard.
omatta uses coaches. blue mesa. all kinds of mental health services. talkspace. it is all a combination of something digital, some kind of data tracking and the human beings that keep you motivated. emily: you are wearing your wearable. robert, you invest in wearables. what is your philosophy? robert: i would say i agree with a lot of that. one of the big themes that we have looked at in health care is taking the labor of health care whether it is a physician, therapist, or a nurse and improving their ability to scale to more patients over time. if you look at the labor and health care over the next 20 to 30 years, we will fall short in the united states to deliver
care face-to-face, one on one. there are a couple ways around that. you can either go to lower cost, less trained providers, think -- take the current providers that we have and will have, and use software to automate the routine aspects of their work. i think you'll see that at all modern were they took a program that was being used face-to-face where a counselor might train 16-30 people, and it to wear aing counselor can manage 1000 people at a time. emily: i wanted to take a few moments to do a lightning round. i will mention a few different technologies. i would like to know if you think within 10 years, will it be ubiquitous or mainstream? first of all, what are you wearing? esther i have a fuel band, which : is out of production. on, the i have a job battery is dead. and i am about to buy an oura ring from finland that is the best consumer sleep monitor.
emily: you are all in. i don't have mine. i do have some in my tour. -- in my drawer. you are not wearing yours. will everybody be wearing health tracking devices in 10 years? esther everybody of the top : 60% to 70% in some form. they have to become better, more seamless. the exciting thing will be real-time glucose monitors. emily: are you invested in this? say i wear them during workouts only, trail elevation and such. i think we will all be wearing or carrying sensors that we do not carry today or did not carry 10 years ago. most phones capture your activity. if you think broadly in terms of that, i think the vast majority will be sensorized. emily: what about chips in our body? is that going to happen? esther: not in 10 years.
robert: for a certain percentage, but not for most of us. emily: in our clothing? robert for a minority. : emily: genetic sequencing for all? esther: yes. it is like getting your blood type. emily: will that happen when you are born? esther or before you are born. : more interesting, you're talking about sequencing your tumors or whatever weird things happen. robert: definitely a significant percentage of the population isl get sequenced whether it xl or the entire genome is another question. almost andriving that inevitability. emily: how about a replacement for antibiotics? i don't know if we are getting too scientific. robert no. : emily: why not? robert in the next 10 years? : there are other approaches to treating infectious disease, but the bigger concern is resistance that will require new agents.
i think you are going to see more drugs because the bacteria are winning in some area, but i don't think we will get rid of antibiotics. esther we will do lots of other : things, including sterilizing the infectious agents like mosquitoes. antibiotics, some of them will no longer be useful is the bigger problem. emily: instant medical test results? esther: already exists. robert continued. : convenience, especially in the u.s., as consumers bear more of the burden with high deductible plans. convenience pricing and seeing the data yourself will become more important. the technology exists. emily: what about instant blood test results? that is what farah knows was ranos was do -- the trying to do.
emily: ride-sharing in china just got greenlit. the chinese government plans to legalize car hailing services in november, benefiting companies like uber. the lock clears a regulatory uncertainty and lays out a new frameworwhich allows them to operate. peter l. stremme explains the details from the bloomberg tokyo bureau. not surprising that these is is -- that these businesses would be operating in a legal gray area, but how in particular has this law changed? peter: this is a significant
decision because you have the world's second-largest economy saying in a stroke that ride hailing will be legal within the country while regulatory battles are being waged across the rest of the globe. for the chinese government to say that right hailing will be allowed and legal is a significant step forward. as you mentioned, the market has a lot of potential for both didi and uber. that's not just because of the size of the market because china is wrestling with significant issues of congestion and pollution. and the government is now saying that ride hailing will have a central role in trying to address those problems. emily: dan loeb is now backing didi as well. he commented that being a money manager for the year has kind of been like game of thrones. but this is a country backed by apple, alibaba. er overcome-- ub
these odds in china? peter: you're right, it is a significant move. it is interesting to see dan loeb jumping in where apple has gone before. uber is far behind in the china market. didi was formed of the consolidation of the two largest players at the time. they have very high market share in the taxi market as well as the car market. it is a brutal battle of competition. both countries have been spending billions of dollars on subsidies to draw in drivers and riders. the key legislation is that the government is saying you cannot charge less for a ride than it costs. it is not clear how that will be interpreted that -- but it may mean that the subsidies come down and that may change the playing field. emily: baidu earnings just crossed. what are the highlights to you?
peter: the company missed on revenue and earnings. it is a challenge for the company. they have been described many times as the google of china. the issue for them is that they have not been able to evolve beyond that core search business and the way that google has. in china they refer to bat, or baidu, alibaba, and tencent. alibaba and tencent are about four times bigger. baidu has to make up some ground here and they are facing challenges on the advertising front, particularly because of these new regulations that restrict what kind of ads they can run. emily: bloomberg's peter elstrom. that does it for this edition of "best of bloomberg west." we will bring you the latest in tech throughout the week.
♪ erik: coming up on "bloomberg best," the business stories that shaped business around the world. yahoo! sale finally goes forward while european banks reverse a downward trend. >> the sentiment is really bad, valuation is really bad. and the results are really bad. >> we have been very consistent in saying we do not need to risk capital. erik: the fed continues running in place while japan takes more steps down the stimulus path. >> they had to do something. they did the bare minimum. erik: from tech to pharma to autos to oil, earning reports come fast and furious. >>