tv Bloomberg Technology Bloomberg November 1, 2016 1:00am-2:01am EDT
keeping key rate at record low. check out this state of sony shares right now in tokyo. after slashing profit forecast by 10%, down more than 1% here. operating at $2.6 billion after taking a hit on battery. than expected.er the news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. update, afternoon trading getting underway in hong kong and china after that better-than-second quarter. also taking a look at singapore. ♪
>> i am emily chang and mrs. bluebird technology. coming up, silicon valley is most divisive voice. peter thiel defense. by another block lester week of tech earning. everything you need to know. withmy exclusive interview a ceo about the impact of learning machines and more. first of all, peter thiel opens up about his support of donald trump. he said the presidential nominee represents a new republican party. peter thiel: the medical it happens in this election, what donald trump represents is not crazy and is not going away. he points to a new republican party beyond the dogma of the reaganism. he points beyond the remaking of
one party to a new politics that rejects bubble thinking and reckons with reality. emily: peter thiel has been a political lightning rod will stop he has been affecting supporters which almost universally oppose the presidential nominee had he increased his support by donating $1.25 million to donald trump's campaign. , asing me, bob o'donnell well as bloomberg tech venture reporter. it was interesting as those allegations around sexual assault started rolling out about donald trump, peter thiel went in there and said, i am money.you more anything surprising about what peter thiel had to say today? >> for the first time he talked about his donation. he said he did not think money was a big issue in the campaign. he had not considered donating.
they asked him to and he did. he bus trust that with comments disproving -- he buttressed that. he called tribes comments inappropriate and offensive. emily: take a look at what he said about tribes interactions or at least a legend interactions with women. do not agree with everything donald trump has said and done and i do not think the do either.ting prime no one thinks his comments about women were acceptable. i agree they were clearly offensive and inappropriate. here supporting him for president of the united states of america. look, regardless -- and i do not feel positively about what he had to say about what donald trump had to say but the only comment i will make his or an
argument being made there is not a lot of diversity of opinion .cross silicon valley and tech it is interesting and in the fundamental nature of american society with always had room for debate and that is the only potentially positive thing i can say but arguably it is a valid point some people are trying to raise. emily: the founder of oculus is a trump supporter. however, you know the tweets , rolled in as the speech was ongoing. tweeted, "there is peter thiel and everybody else in tech." bret taylor saying, "listen to what he means and not what he says." he is referring to something that thiel said today about take trump seriously, not literally. don't literally listen to what
he says. means.bout what he what do we have to take away from that? lizette: he did say that. i think when he says build a wall -- i don't know what he means by that. emily: it just means i have different views on immigration. lizette: the big thing that came out was the statement that he was surprised how controversial his position was. he said he's done things that are far more far-fetched than this, yet this is the one he agrees with half of the country but taking the most flack for it. businesswise, he suffered very minimal blowback which is a serious statement given some of the comments and the things we have reported on last week with venture firms and some companies. emily: you have said mark zuckerberg said he will maintain his seat on the board.
jeff bezos said it is a very dangerous road to kick someone off a board because they have different political views. should company separate themselves from peter thiel and they don't believe what he said. >> i can speak to social capital. we decided we will spend the time to create a more bottoms up world. i think it is fundamentally about a positive view of inclusion. i cannot stand to work with people directly at social capital who would have views that transcend policies and enters this gray area bordering on hate. i would have a difficult issue with it. emily: you would kick him off? >> i think so for social capital. if it was romney versus obama, that is politics.
i'm not so sure this is politics anymore. emily: he would kick him off. bob: other people would as well. we are in the throes of a lot of things going on. it would be interesting to see what the situation is like after the election, after things settle down presumably. what is the reaction and what is the long-term impact? i think there are a lot of questions because he's clearly uhiel and trump. emily: i have spoken to many of peter thiel's friends, and they all, even though they don't support donald trump, they voice support for peter thiel. even though they disagree with him, they respect his views. do you think this will have any
impact longer-term on whether entrepreneurs want to take funding from peter thiel? lizette: i think it will be split depending on how some people feel one way or another. you have the mark zuckerbergs saying we support a difference of opinion. you have the right to support whatever political party, beliefs you have. people on the other side are saying this is not just political beliefs, this is hatemongering. that is something that peter did not address in his speech today. you get a little bit of literally versus -- i don't know. bob: he didn't really say that -- i completely agree -- i think that is where the line gets drawn. if you thinkhis moves beyond politics, clearly it will have a longer-term effect.
emily: we need an outsider to fix a problem. lizette: interestingly enough, it would seem that donald trump was not peter thiel's first pick. he actually first donated to carly fiorina. also, he said that he wished this election would have been between sanders and trump. clearly, his vote is for an outsider. what that outsider looks like is the issue. emily: lizette chapman and bob o'donnell. coming up, staying with peter thiel. the company he cofounded is getting a second chance with a u.s. army contract. a federal judge ruled the army violated bidding rules by failing to consider commercially available options, effectively
shutting down the firm. the court has ordered the army to reevaluate all tech sectors. another jampacked week of tech company earnings. we will break down everything you need to know ahead of square and facebook's results. all episodes of "bloomberg technology" are live on twitter. this is bloomberg. ♪
the leadership of the former ceo of alibaba's web browser. he will report directly to the alibaba ceo. time now for our weekly roundup of tech stories of our radar including alibaba. another big week for earnings. alibaba and facebook coming up. videogame makers over the next few days. a key deadline on friday for the $9 billion oracle ceo in doubt. joining us now for the most important topics to watch is bob o'donnell and cory johnson. we will start with square. last quarter was a good quarter for square. not so much for twitter. it is apparently a high buy for twitter. cory: i think the biggest focus will be the management issues and whether or not jack dorsey could do a half-time job and
when the change will happen. it will have to happen at some point. certainly come of the performance of twitter and perhaps square as well. bob: the other question i have for square is as we start to see the banks get much more involved with these sorts of transactions, easier transactions, they are coming from a position of power. can they really weigh in more than they actually have? may have given square a fair amount of running room. will they start to catch up to them? emily: so, alibaba coming up later this week. we have a letter from jack ma to shareholders that alibaba will have to differentiate itself
more from regular e-commerce companies. you have to be something more, which rattled investors momentarily. recent.day was cory: it was fake. bob: it's a fake. cory: they sell it over the course of many days. they already have pr people out there. it is the biggest shopping day of the year. they might record them in one day but it happens over time. that is exaggerated by their accounting. emily: let's talk about the actual results and the efforts to be more transparent. are they actually more transparent? cory: i'm unaware of said efforts. it would be good of them to be more transparent. i don't expect them to do so. bob: i think this investment will be interesting longer term because it puts them in an amazon-like position because they have these content services as well as that. the only question i have is we have heard some rumblings on the issues of the chinese economy. does that start to impact than a little bit? my guess is probably not immediately.
longer term, are there concerns because part of the economy that is supposedly being hit, we have seen matches very well with what alibaba is selling. emily: facebook is coming out this week. the biggest company of the week. cory: perhaps the most important with the impacts of the market. facebook is seeing real reacceleration of user growth. we have seen twitter sputtering with user growth. the numbers out of facebook have been impressive. they have increased the pace in which they are adding users which is amazing given the size of this business. they are able to charge more and more towards advertisers. you look at any basis, year-over-year, straight dollar amount, $5.80 is fantastic for this company. what they were making two months ago was great.
the growth is accelerating so they are really hitting on all cylinders. they are growing on the way they collect. not just add users. emily: is it really just facebook and google in this digital advertising? they are the heavyweights. everyone is just nipping at their heels. bob: that is a fair assessment. to cory's point, they are figuring out other ways to generate more revenue. you have the messaging services, direct commerce services. it is a pretty impressive how they are really extending themselves. the other question is there has been this discussion in the "wall street journal" today, are they a media company or a tech company? media evaluations are significantly lower than tech companies. the question is can they continue to innovate in that regard? for the near term, absolutely and i expect them to have big results.
emily: let's talk about oracle next week. is it going to happen? cory: they are certainly playing hardball. they were talking about this very subject. they want more money in this deal. driver'srice is in the seat because of the corporate governance policies they put into place. this is what she had to say to me. >> we have offered $109, the board accepted that. every shareholder will have to make their own decision. we believe that is the price. emily: on top of that, they say it is the best and final offer. cory: if you can read that poker face -- that face looks pretty resolute to me. emily: if it does not happen, is that bad for oracle?
is that bad for netsuite? cory: it is bad for both. i don't think another bidder will emerge. the salesforce deck, the documents showed us that salesforce does not want to put into a bid. there is not likely to be a second bidder. salesforce won't buy them and them.ng else won't buy they may want to take what they can get here. bob: netsuite could lose more than oracle would in this case. based on that ownership, it will be tough for somebody else in a similar market -- unless someone from the outside comes around, but i don't think that makes long-term sense. i think oracle is the obvious choice. maybe it does not happen now and they delay it a couple of months, or years, but it will eventually probably happen. based on hat ownership
relationship. emily: bob o'donnell and cory johnson. it is a big week of earnings. thank you both. now to a story that is trending. new research has found racial discrimination by uber and lyft drivers. a study found drivers canceled rides for men with black sounding men twice as much as other passengers. the research has been published by m.i.t. and stanford university. and the university of washington. the companies say they do not tolerate discrimination. coming up, elon musk unveils his latest project and it is not the self driving car or a rocketship to mars. we will look at tesla's first ever solar roof project next. this is bloomberg. ♪
for a solar energy trifecta. tom: take a look at the roof of these houses. can you tell which one is covered in solar cells? trick question -- they all are. tesla just unveiled its first ever solar product and it is stunning. it is not a solar panel. it is a range of four solar roofing materials that look indistinguishable from other products. >> people really love their homes and they want it to be better. with this approach, it can be. tom: the top of the roof tile is made of glass. it looks like shingles, but it allows sunlight to pass through from above into cells.
tesla says the glass is as tough as steel and can weather a lifetime of abuse from the elements. it can be fitted with heating elements to melt off snow. >> you can call your neighbors over and say, check out this sweet roof. it is not a phrase you hear often. tom: it is tesla's plan to become a sun to energy the company. you can run your home on solar power and use the electricity to power your home and car. tesla also doubled the capacity of the battery, creating the world's cheapest storage to extend rooftop solar power into the night. this combination is perhaps the closest we have ever come to affordable off grid electricity. he was a little fuzzy on the pricing details. >> the goal is to make solar
roofs that look better than normal roofs. it is less than a normal roof charges for the price of electricity. why would you buy anything else? tom: the solar roof was musk's closing argument to shareholders before closing the bid to merge with solar city to make it all possible. there are plenty of reasons to be skeptical. if musk pulls it off, this trifecta of solar products will be available in stores across the u.s. at the end of 2017. emily: that was tom randall. coming up, vinod khosla sits down on bloomberg "studio 1.0." we discussed everything from investments in so-called black swan to a company that has a
rides the index is gaining. china turning positive after -- after pmi index the highest in 2014. now gaining. the xinhua cap one half a percent. we continue to see exports slumping. down 1.5% after cash rate left unchanged. the central government saying earth is a moderate to and that the large decline in the mining sector is being upset by growth in other areas. today we see only the utility sectors gaining at the moment with the index moving about have a percent. the policy decision came out of the boj. they let their monetary stance unchanged. boj decision in the
negative, it surged after the decision. those, it is now pairing gains. of course, shares of financial assets are converging but then oil companies are losing ground. now, more of the hour from london. ♪ >> this is bloomberg technology, i am emily chang. turning to studio 1.0. we sit down with cofounder of sun microsystems and later, coastal ventures the company behind companies like hampton creek, square, and benefits. we talked about his humble beginnings and the road from founder to venture capitalists. >> we started another company about three months before we started others. i love the this story for the
following reasons. nobody remembers sure failures. even though the probability of success was lower. failure does not matter but the willingness to fail gives one the ability to succeed. if you are not willing to take risks if you are not willing to fail you will not do anything interesting because most interesting things are new and most new things and volvo risk, and risk and balls failure. -- and and risk involved failure. emily: why did you leave when you did and what was your biggest take away? khosla: i started a company called daisy systems. it was quite successful and went public in 1986, and it made more money for me than i thought i needed ever in my life, so i then want to do -- i then wanted the freedom. i joined one of my lead investors to mentor and help entrepreneurs.
emily: how did the industry back then compared to today? khosla: there's many more investors now. many bad ones, some good ones. i think entrepreneurs need to understand that. i make it in trouble for saying that, but entrepreneurs have much more options. emily: you got multiple degrees, engineering at the institute of technology, biomedical at carnegie mellon can, and -- carnegie mellon, and an mba at stanford. you wrote that it does not necessarily set you up for success. this caused some controversy, which i know you're not shy about. one commentor wrote that the real assertion is that humanity is tied to the accumulation of wealth. what is your response? khosla: that is a nonsensical response.
ist liberal arts has become work.use to do less i speak to 80% of students who do it for the wrong reason, but bottom line, if liberal arts goals are the goal, then liberal arts is the wrong curriculum. logic and philosophy should absolutely be part of any liberal arts curriculum because otherwise, you do not learn how to think. linguistics, economics, learning how computers work because we live in a computer age. why require a second language that is french for some esoteric language when the most important second language is computing? not that most people ever need to code, but because it is a style of thinking. the critique is all from people i feel they'll to understand, which is exactly the point i was making. should there, like the one you mention reinforced the notion they did not get a good education?
emily: do you think college is important at all? should kids go to college? peter thiel is paying them not to go. khosla: i disagree with peter. i think college and high school are very urgent. there are people who do well without an education and people who will do well no matter what subject to take. i think college gives you a grounding to be able to do things that adapt over time. emily: vinod khosla on bloomberg "studio 1.0." more next when khosla gives us his take on the gender gap in silicon valley. this is bloomberg. ♪
♪ emily: in part two of our conversation with vinod khosla, we talked about the advice he gives to entrepreneurs. we talked about why he believes most vc's actually hurt rather than help. take a listen. khosla: applying business school metrics to innovative startups is the wrong thing. when people do that, they actually hurt a company. i do not believe just because you have earned the right to advise an entrepreneur, but being a board member. if you are going to advise entrepreneurs, you should have started companies, known how hard and painful it is, how difficult the trade-offs are. it is painful being an entrepreneur.
life is not easy, not unless you have empathy for an entrepreneur by having done it yourself -- in 30 years, i have never ever voted against an entrepreneur. they do not need hypocritical politeness from board members trying to be their friends and not help them think through all the risks they are going to face and challenge them. emily: you also do not go to board meetings if you can help it. khosla: i do not go to board meetings because i cannot and -- cannot stand to listen to other vc's talk about things -- emily: what is your advice? khosla: do not take advice because it is from the board. ignore the board to the maximum extent you can, but consider the input of people who have real experience as input to your thinking. emily: we have talked about the lack of women in the venture
capital industry. what do you think it takes to be a successful vc? do you need to have a stem degree? some of your top partners do not. do you need to have been a round or? khosla: you do not need to have a stem degree. it helps because you are dealing with technology. speaking their language makes it easier. probably, and this is not even essential, the most important requirement is having been an entrepreneur. emily: is that why it is harder to find women in these roles? khosla: i think there are fewer women in these roles, so as more women play and offer powerful, and that is increasing -- we have more women playing in entrepreneurial role in deeply technical areas -- they, when they get enough experience, will be a powerful influence. we need to encourage more women to be entrepreneurs. emily: you have a broad range of
invest, companies with unusually high failure rates. you say every four or i've years you go into an area you know nothing about -- every war or five years -- every four or five years. what has worked and what hasn't worked? khosla: i really enjoy learning about a new area. independent of if the company is successful or not, i will have learned a lot. the two most important things that can happen in technology that really change humanity for the better is artificial intelligence and nuclear power. i cannot think of any two things that would impact humanity more than those inks.
emily: you recently tweeted it ai scenario happens, we will have abundant gdp to take care of everyone. only people who want to work will need to work. paint a picture for us. khosla: if ai does what humans can do, it is pretty likely in 40 years all the jobs that exist today, the majority, more than 50% will be done by machines, and it does not if it is a farm worker, a hamburger flipper, a legal researcher, a radiologist, pathologist, or oncologist. if that happens, we will have dramatic gdp growth, dramatic productivity growth, all the tradition of economic metrics, and because more people are able to work, more income disparity. it's hard to say if that will happen in 30 years or 50 years, but it will, i'm sure, happen. the question is how we rarely address the people who are left out of this.
-- how we fairly addressed the people who are left out. we will have enough gdp to provide basic income to everybody. i know it sounds horrific, but if per capita income is $150,000, $200,000, $300,000, i think some kind of income as per capita income climbs above $100,000, will become very important, and that will be a social and political issue we have to address. emily: vinod khosla there. next, we dive into the future eggless mayo maker hampton creek. this is bloomberg. ♪
♪ emily: returning to my exclusive conversation with vinod khosla, founder of khosla ventures, investor in hampton creek. the eggless mayo maker. khosla's thoughts on the troubled company's future. khosla: there was a bloomberg article recently. the reporter believed a former employee who bought some stock and accused the company of giving false information. i would have bought his stock. if he thought he was defrauded, why not sell the stock back and not lose a penny? moneyld have gotten his back and gone away.
marc benioff is an investor. he did not feel defrauded. his wife is on the board. maybe there is other stuff we will discover. i personally went and talked to him. he did not have one credible allegation. i talked to the people he talk tod i went and three other people. i did. emily: do the allegations bother you? do they concern you? khosla: any company that has employees leave, they have allegations. sometimes they are right. 70% of the time, they are just bitterness. we look into them when they are serious. i will not comment on the specifics, but suffice it to say we are always looking. is the buyback relevant? the 77,000 dollars reported? completely irrelevant to our investment decision. investigating?
the american egg board was plotting to destroy hampton creek because the egg industry hated them. unilever sued hampton creek for calling their mayo mayo and then withdrew it because they realize how bad it was. enemies are many, many usingmpany has, including federal funds in the department of agriculture to target a company with e-mails asking how we could prevent them from wholet distributin foods. why would a federal agency be
trying? because there's interest involved here, people who are being disrupted and will get hurt. i will tell you it is a complex story, but i cannot go into specifics. emily: do you still think this will be a winner in your portfolio? do you still think this company can transform the food chain as we know it? khosla: hampton creek has already done a lot to change the food chain. all male chicks when they are born are crushed live in hoppers. he is changing that practice, bringing visibility to it. caged hens -- he is bringing visibility to it. even if they are not successful, they will have made a difference by bringing visibility to these real issues that the egg industry is trying to distract from. as far as the ceo is concerned, we normally talk to his team and see if the team supports the ceo. when they do not, do we have to talk to the ceo? do ceo's make mistakes? absolutely. do we make mistakes? absolutely.
it is a constant evaluation process. emily: you are very passionately about cleantech. some might say you have made a mistake going into this field. khosla: clean tech is an important area. climate change is an important risk. i view climate change no differently than i view homeland security, nuclear proliferation, terrorism -- they are all risks society faces, and we should insure against the -- that. how much of our gdp do we spend insuring against foreign attack, national defense, homeland security?
we should treat climate change the same way. we should encourage new competitive technologies to come up and then stop supporting them when they get to a certain size. it is time to stop supporting wind. maybe even solar, the subsidies should start to decline. we have done ok in cleantech. we probably have six companies that could be worth $1 billion still, but i would rather try and fail than fail to try, something that is really important. emily: it is clear you care deeply about the environment. you are incredibly philanthropic, you have pledged to give away half your wealth. yet, a story that gets that to you is a lawsuit you are involved in around public access to your beach. some would say that is at all at odds. khosla: i normally do not like to talk about ongoing litigation, the giving up half your wealth does not affect my lifestyle. i find that i can spend more of my time working with technologies. i will probably have way more impact than from my giving. the other half of that is having principles, having a point of
view, having a belief system. it is amazing to me how many fortune 500 ceo's read the press, read "wall street journal" and respond to it instead of saying, "here is what we believe in as a company." entrepreneurs have of faron that sort exceeds their desire for short-term profit, and because of that, they make more wealth and more profitable the long haul. in fact, wealth is to give you freedom to do what you want to donald rumpple like
get trapped in the cycle of making more. that is not that interesting. trump, doing all the deals, he thinks it is smart to avoid taxes. it just blows my mind. i am religious about my belief systems. back to your question, the battle on the beach is about property rights and about a set of people who told me they would like to embarrass me into giving up my rights. if you have a belief system, even though it is unpopular, even though the press and knocks you for it, you want to live by your principles. if it's that or protecting private property rights and fighting or what the law is, and with it is not clear, there are clearly some things that are not clear in the law. it is important to get them legally resolved. emily: our exclusive interview there with vinod khosla, founder of khosla ventures. do not miss our interview with steve ballmer.
brocade has struggled to grow its networking business, which has competed with much bigger rival, cisco. an acquisition could be announced as soon as this week. brocade has struggled with competing with its much bigger rival, cisco. speaking of deals, the two biggest daily fantasy sports sites are close to joining. this according to people familiar with the merger talks. the combined company, is still unnamed. investors have been encouraging a tie up four months after the companies spent millions competing against one another. that does it for this edition of "bloomberg technology." tomorrow, tune in for square's latest earnings report, another test for jack dorsey after twitter reported earnings last week. remember, all episodes of bloomberg tech are now live streaming on twitter. check us out. that is all for now.
>> china's official factory gauge jumps a two year high. the bank of japan pushes back the timing for its inflation goals, but keep the monetary policy unchanged. we hear from governor kuroda later this hour. babysitting the brexit. mark carney says he will stay at the bank of england until mid-2019. and hold up. three of the federal reserve's primary dealers ignore the bond market and say they will be no hike in 2016.