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tv   Bloomberg West  Bloomberg  October 30, 2014 6:00pm-7:01pm EDT

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live, from pier three in san francisco, welcome to "bloomberg west," where we cover the future of technology and innovation. i'm emily chang. twitter is replacing vice president kevin wheel. severalhas gone through executive shuffles this year are replacing its cfo and ousting it coo.
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ofsked him about the future his management team earlier this week. >> management teams grow and evolve and change over time, and i think that's always the case. i love the team we have in place. we've developed all sorts of tremendous leaders across the company. >> twitter lost its head of engineering and analytics manager yesterday. linkedin has reported a loss of more than $4 million in the third quarter. revenue was up 45%, although growth is slowing in its main recruiting business. the company reported 332 million members in the quarter, up from 313 million last year. member page views rose to 28 billion. actor seth rogan is in talks to play steve austria in the upcoming film about steve jobs, that is, according to people wozniak inplay steve the upcoming film about steve jobs, that is, according to people knowledgeable about the matter.
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now to our lead. xiaomi's incredible rise shows no signs of slowing down. the chinese upstart has just become the third biggest smartphone maker in the world, trailing only samsung and apple. xiaomi, which makes inexpensive phones packed with high-end features to my has 5.3 percent worldwide market share in the third quarter, up from 2% just last year and its gain is coming at the expense of samsung, which saw its market share plunge 8% year-over-year. how did the company come so far, so fast? take a look. but xiaomi may be a new -- >> xiaomi may a nuclear block, but the smartphone maker known as little rice is no longer little. they were founded in 2010, and just four months later, it officially launched its first android-based software. then it took on apple with its first smartphone.
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and just like apple, xiaomi has introduced new products every year with great fanfare. how did xiaomi writes so far so fast? first, the price. at 275 -- $270, it costs less than half of the cheapest iphone in china. then there is the business strategy. it sells rectally to consumers online with limited quantities available. a recent one-day sale in china brought in $241 million in orders. launchs flagship product last year, xiaomi sold 100,000 phones in under 90 seconds. xiaomi plans to expand outside of china to 10 new markets and triple shipments from 19 million to 60 million phones by the end of year. and they've just dropped the "little" from its domain name, proving this $10 million startup disturbing to think a lot bigger. rise, i on xiaomi's want you to meet the program director at idc.
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his team put together this report on the top five global smartphone makers. and cory johnson is with us in studio as well. ryan, how did xiaomi do this specifically? is it because of the smartphone? >> it's not so much the device, but the portfolio altogether. they are selling for quarter the cost of apple. they are competing for manufacturers across the board in china. and their focus is not so much on the profit ability of the device, but where they can make revenue in services. >> how does it compare to apple or samsung? using materials that are not quite up to apple standards. there is no question that their premium is justified to some extent. i would say, to a portion of it though, they are using plastic that samsung and others are using. they have really good design language across the board. the devices are nice and there is no question that consumers are attracted to them. >> you can bend it. >> yes, i know.
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>> my these numbers come out quarterly, iowa's think about when the big product -- i always think about when the big product releases happen. how much of these numbers are skewed by certain product releases? >> that is a good question. xiaomi has done a lot around individual product launches. last quarter if i'm not mistaken, they had verbally eight in market -- probably had eight in market at once. a lot of it is based on individual product launches. words, they got a boost by the release of a couple of new products in the last quarter. >> yes, i think they have a well-rounded portfolio that goes from the very bottom. i would say, 100 dollars to probably $300 of the top, maybe $400. a at the same time, you see company like apple, you see sustained demand for the iphone. it was not necessarily because of the new phone. >> you have to look at it in a couple of ways. apple is making more money on
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these devices than anyone, so they are doing well. sin term -- in terms of marketshare, they will probably continue to lose and others like xiaomi gain market share. but it's where you're making your money from. they have very different business models right now. >> what about samsung? they are reporting their worst quarter since 2011. will we see their dominance truly challenged? in terms of marketshare, you'll continue to see it come down somewhat. but keep in mind, samsung is in the majority of markets around the world. they have the threshold with these operators and retailers that will continue to cell phones. the difference is, when you look at it from an investor standpoint, they will not make as much as they made on each device in the past. they have to come to grips with that reality. >> apple may have wanted percent to 30% of global market share, but they will have 80% of -- may have 20% to 30% of global market share, but they will have 80% of the profit. >> and samsung has to comes to
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terms with that. they were pretty understanding in terms of rapid ability per device. >> what other devices are you watching echo lenovo, lg, they actually did pretty well. >> the number one would be lenovo. there is the formal announcement of motorola coming together with them. and motorola is doing a lot of good things right now. there is no question in my mind that is the smart phone maker to watch. there's a copy at that they need to -- the caveat that they need to execute well with lenovo. >> an obvious the, xiaomi, their main market is china. how successful have they been elsewhere? i know they are looking at india and beyond. >> we estimate 5% of their businesses outside of china right now. it's very small, but i think they've got their eyes focused on very big market. one artist has talked about
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india, -- they have talked about india, brazil, very large markets. >> and the google executive who went over to xiaomi is now running a lot of their international operations. thank you for joining us. coming up, apple ceo tim cook announces he is gay and says he is willing to trade his privacy to help others. he wrote an exclusive op-ed in bloomberg businessweek. we will bring you more of what he said after the break. ♪
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>> i'm emily chang. firstented the world popular browser and has become one of the most influential investors in technology, mark andreessen. he's the next guest on studio 1.0. here's my sneak peek of my sitdown with the sage of silicon valley. what is the future of elon musk? >> well, obviously, he's going to build the ironman suit. [laughter] i mean, i think it's obvious. and in the suit, he's going to fly to mars. [laughter] he has some work to do between here and there. there are three guys, three sort of founders who i think are really revolutionizing. we are a lucky industry. we have all of these people who are incredibly well known who will build these incredibly -- these amazing companies.
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ands peter teal and elon, the twitter page. their ambitions and aspirations for what they are trying to do is just another step up from all the rest of us. -- i mean, just look at elon musk's career. the audacity of starting an electric car company. the one thing he knew in 2005, whenever he started it, the one company that you should never start in the united states is a new car company. and the other company you should never start in the united states is a new rocket ship company. and he's just getting started. i mean, he's only in his 40's. i mean, here on earth he's only got another 40 years. [applause] discoverer thiel can immortality, he certainly will. you actually, write back to people. someone said, what is the next big thing, and you said
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something new. what is something new? >> we are trying our best to find it. always talked about this. and the point i make is that there never is one. the resulting one -- there was only one microsoft. there will never be another google. the same thing when people look at whatsapp. they're almost certainly will not be another whatsapp. but there'll be new things. what do we know about the new things? they will be as completely crazy. nobody will think they are the next big thing. it will be something out of the french. they will be considered bizarre. everybody will be like, there's no way. and then 10 years later i might will be the next big thing. but do not miss the full interview with mark andreessen on a special studio 1.0 tonight at 8:30 p.m. eastern and pacific. exclusive op-ed for
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bloomberg businessweek, apple ceo tim club -- tim cook discloses he is gay. he writes, "while i've never denied my sexuality, never publicly acknowledged it until now. so let me be clear, i'm proud to be gay and i consider being gay among the greatest gifts god has given me." cory johnson and i are back more on -- with more on such a good read. he says, if this helps a single person out there in their own struggle, then this is worth it. but it's really interesting that he would choose now to do this. -- >> it's really interesting that he would choose now to do this. i read the essay. it's neat to see him express himself. i was particularly intrigued that in his office he has pitchers of martin luther king and robert kennedy as inspiration. which struck me as an odd thing to have in his office. he was very much a young man when those guys both died in
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1968, but they had such an impact on the world. >> and he found himself constantly thinking to himself that famous quotation from dr. king "what are you doing for others?' one of the most interesting parts of the peace for me was him talking about how this affected him in a great way. saying, being gay has given me a deeper understanding of what it means to be in the minority and providing a window into the challenges the people in other minority groups deal with everyday. it's also given me the skin of a rhinoceros, which comes in handy and you are the ceo of apple. boss, our colleague, our did a great job of pulling this together. he was on surveillance this morning talking with tom keene. he asked josh why tim cook did this now. here is what he had to say. but he ultimately decided that it's more -- >> he ultimately decided that it's more important to him to step out not only within the business community, but rim -- within the world to get apple is a global company, and to say i'm gay, and i'm
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proud. it's an important moment. and greatting stuff, for us to get this in business week. wonder, is tim cook just the guy who stepped up after tim -- after steve jobs? what is it that motivates him and how does he see apple's place in the world? that sort of underdog mentality is something that really drives apple. you can start to see how that comes from tim cook and who he is, and how that also helps drive the company, even though it's the biggest company in the world. they still feel like underdogs. >> he closes the piece i saying, "when i arrive in my office each morning, i'm greeted by frame photos of robert kennedy and dr. king. i do not pretend i'm in the league. it just helps me to look at those pictures and know that i'm andg my part however small, however small to help others.
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we pave the summit path toward justice together, brick by brick. this is my brick." this should not be news at all. nobody should have to talk about this and explain. but everyone on some level -- >> everyone on some level is the minority on the individual level. it's great to hear him talk about it in context of what he's doing at apple. >> check it out. what is the biggest threat to the internet? is that hackers or something else? --will ask the seo of akamai the ceo of akamai next. barry diller ♪ --
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>> welcome back. i'm emily chang. 's business is dependent on the internet.
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if income was up 26% year-over-year. for more, i'm joined in new york by the akamai ceo. cory johnson is with us as well. one of the interesting things we've been talking about are the grand challenges to the internet in the next several years. i would like you in that shelter tell me what the biggest threats and challenges are. >> before four challenges revolve around delivering very the fourity -- challenges revolve around delivering very high quality video at scale, making web applications appear instantly on any mobile device, securing websites and infrastructure trying attackers who are to steal sensitive information, and enabling enterprise networks to embrace the cloud, to make and toetworks the fast scale and affordable. >> talk to me about video. there are a couple of events
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that are big and last year, not the least of which was the world cup. how many of those are unique, or are they just helping new platforms getting launched and continue to grow? >> any event by itself doesn't make a huge difference, but when you have a series of events, that drives more eagle online and drives more video online. overall, the growth right now and the traffic on the internet is increasing at a substantial rate. >> i know netflix, for example, a big bandwidth user on the internet, they used to be a customer of years and then they just went off on their own because they got too big. we've been having this debate about fast lane or no fast lane. should companies be able to pay more for faster service? what is your position? >> we don't get involved in that debate, per se. provide technology that enables big video to be delivered at scale and at a lower cost.
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what you see in the debate today is the congestion at points where people cannot get high quality video. that is a technical problem, not so much a business problem or legal problem. the way akamai delivers video is to do is close to end-users or you have a lot of capacity. you can deliver much higher quality levels and at lower cost. because you do have a lot of connectivity available in the last mile and you have congestion in those places that become bottlenecks today. akamai does charge more for better service over the last mile. is that correct? akamai charges for our technology come and carriers or content buyers -- providers can pay for our services. the net effect is that it decreases the costs not only for our customers and carrier partners, but for the entire internet. as the offload traffic from the congested places, everybody gets
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better quality, whether they are paying akamai or not. talk about how much money not just been to make that happen. we saw a fantastic rise in revenues, but not as big a rise in net income because you are having to spend so much to do that. do you look at your capital expenditures as something that will continue on forever? or do you get to a certain point where you will get leverage? >> we are getting a lot of leverage today. .e invest a lot in r&d some of that obviously gets capitalized. to build out our platform for customers that want to consume akamai as a service. and you will always see us investing in capex and heavily also in r&d to develop the next generation of technology. but what about security at cowee recently released a report -- >> what about security? you recently released a report that attacks are up almost 400%. what is your room -- your role for your customers, given the
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increasing attack threat? >> threats of attack are up and 'sat is helping to make akamai security business our fastest-growing business. we protect the major brands and governments out there against the denial of service attacks. we depend 100 of the world's largest banks today. you see a lot fewer headlines now of banks being taken down by groups with political agendas and that is because they are using akamai. we also defend the leading brands against web application later attacks, where they are trying to sneak in and steal sensitive information or to corrupt a website. >> tom leighton, akamai's ceo. thank you so much for joining us. you are at the center of so many important and complicated issues when it comes to the future of the internet. it is home to blockbuster hits and theden nfl, fifa, sins. and it is cashing in on mobile gaming, too. next i'm a electronic arts ceo
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andrew wilson. -- next, electronic arts ceo andrew wilson. ♪
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>> you're watching "bloomberg west" where we focus on innovation, technology, and the future of business. electronic arts is cashing in on the rise of mobile gaming along with the new generation of consoles from playstation and microsoft xbox. the video game giant announced that active users of mobile games sports titles have more than tripled from a year ago thanks in part to titles like " "fifa '15."and are you surprised by that?
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>> they are surprised by home much it is growing. digital, mobile, and, of course, the console business driving electronic arts to new heights. i spent some time at the headquarters of ea down the street here, and i talked with the ceo about a wide range of topics. it's his first year at the helm of the company. i started by asking what he imagines is the future of ea. i got to fast-forward, 36, 48 months, and think about the evolution of technology. the interactive component, which is far more compelling than passive forms of entertainment willse you are involved injure our lives much the way the digital music does today. a company like electronic arts who has a tradition across those devices, who has a port olio of content that maps across those devices and has a breadth of ip that speaks to probably the
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largest gaming generation on the planet, i think we have a unique position to curate that player journey and help find what is meaningful to them at that point in time, which delivers value a lot greater than just a provision of content. >> i'm so fascinated by the way that gamers -- game developers create this content and create an immersive experience, increasingly immersive experience. i imagine managing both that creative process and those creative people is really a pain in the but. >> depends who you are. today it's a lot of fun. i look at people who run sports teams. these highly athletic, alpha-type individuals that are supremely talented but very, very distinctive, strong personalities, and getting the chemistry right, making them and not just one game and win season, but multiples, building that dynasty, that's the value. we have the leadership team, and we have created's across the
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organization that have gel that a chemistry level and are doing great things. do we have out that tight creative's? yeah. we have people with strong opinions and strong alwayslities that do not agree? absolutely. but you put that together, you get amazing games coming out. that comes from people who have a deep passion to deliver amazing entertainment. >> jockeys such as myself, look at what you've done in terms of cost control. they are pleased with what they are seeing in your first year as ceo. do your measured -- do you measure yourself and those kind of statistics? >> absolutely. it has to be part of the recipe, and it is not the entire recipe. again, you cannot cut to growth, you cannot cost control the growth, and growth is very important for a publicly traded
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company, but it absolutely has to be part of what we do and how we do things. for us, that cost control comes with focus. >> why do so many of the games have lousy ratings? sims -- alletball, those games have what i would call subpar ratings. is that related to much cost-cutting? what do you do about the problem? a wonderfulh is game, and for anyone who understands is probably the best game we've made, what consumer feedback scores represent our did you get it right on all levels? what we heard from the in hl community and critics where this is an amazing game, probably the best playing nhl you've ever there were some things that are missing. things are being reengineered for a new generation, things
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that porting from the old generation we did not think would be good enough. we hope that we could get that out and people would understand just how great the game was. they said it was great, but they want the other stuff as well, and what we have been doing since then is putting that back into the game, not as paid content, but as an ongoing live service. again, it's a real shift in our business from just being on fire and throw it over the fence and vacation model to a launch and service model. as a result, people are playing our games for much, much longer. the in hl audience -- the nhl audience and scores have grown consistently since launch as we have demonstrated a willingness and readiness to continue to serve this player base. they are not going to do anything that you do not in. i am out of what the team has done what i would say the game is really solid this year and will get better next year. we've been on this journey before. i am confident that in the
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not-too-distant future, it will be the preeminent best ballgame in the future. >> digital help you do things .ou could not do before is more than half the revenue from digital now? >> more than half the revenues are digital, but more than 80% of our player base is connected digitally. when i grew up playing games, i would build a game, and if it was not good, you had to live with that for a whole year. there was nothing you could do. fun is this emotional value overlation of enjoyment time, and it's different for every person. while we think we are good at finding the one, sometimes you have a disconnect. is about this console release that has really taken off with consumers so much more than previous iterations? >> as you look at the history of our industry, and i've had the great fortune of being in it or while an operating in a lot of different functions through the industry, but as you see each platform generation, for the most part, every platform
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generation is bigger than the one before. >> this one in particular -- >> it has taken off fast. i think the world is waking up in recognizing that interactive entertainment is the best form of entertainment. we seek out entertainment for reasons, and that's why we as human beings go looking for it. that brings that inspiration and escape element. movies are wonderful things. i consume a lot of movies. music are wonderful things, and i listened to a lot of music, but for the most part, you are bound by the director or musician asked a how you experience that. games, you are the director, the musician, the artist that gets to experience that, and i think people are starting to recognize that. we see growth in mobile gamers rapidly through the cloak, and the growth, just a pickup of this new platform of generations, and the games are amazing. >> cory johnson's exclusive
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interview with electronic arts ceo andrew wilson. ismer sec chairman levitt joining the advisory boards of two bitcoin companies. find out why he is backing the digital currency next. ♪
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>> i'm emily chang, and this is "bloomberg west." the longest-serving chairman in the histories of the -- history of the securities and exchange commission is getting behind bitcoin. can levitt's support and legitimacy to the general -- to the digital currency? what does arthur levitt bring to the table? why did he choose this? >> it was great talking to arthur. something that was really important to him was bringing instant settlement into the financial industry, so when he saw bitcoin, that's what he saw, and he understands the value that that has. having his experience advising us and helping us communicate
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that message to wall street and others i think will be invaluable. >> everybody knows the price has plunged. supporters say it does not matter, but doesn't it remain a to popular adoption, all this volatility? >> we are in about the fourth or fifth bubble of the coin, and the people who say it does not matter -- what they are saying is that it does not matter as a transaction medium. matter what the price is, people can still exchange value, but everybody pays attention to the price. it's exciting. >> how does it affect what kind of volatility -- what kind of volume you see? >> when the price goes up, people like to spend their bitcoins and buy things with the additional wealth they have, and when it falls, you see the transaction volumes fall with it , so it becomes the savings preference.mption
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>> some have been very bullish on bitcoin and digital currency in general. peter teel, on the other hand, who has a lot of experience in payments, cofounded paypal, said it is not going to work. >> i don't think he is saying that. i think he wants to see more evidence that it will work. that's a good thing to have. >> he told me it's very unlikely that it will work. >> well, ok. i would agree with mark andreessen -- marc andreessen. >> why this huge diversity of opinion? >> people see a lot of excitement and hype, but they want to see more progress. some people want to see more real progress. >> what do you think about apple pay? >> is apple doing what apple does best, and they will optimize that payment flow, and they are partnering with thanks to make that happen. because of that, we saw an
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uptick in interest in bitcoin. >> how does chinese operations affect you? >> we would like to operate everywhere in the world, but when governments take a stance that they do not want it to be used, obviously, we have to abide by that. >> how can someone like arthur levitt help with legal issues? >> when we talk with arthur, what we really want to help him with or have him help us with is how you get the banking industry to sort of warm-up to using this technology and what do we need to do -- what are the steps we need to do to accomplish that? i think he will sort of work that courts. that's the goal, and we will figure out what other steps we need to take to make that happen. >> if you say we are in the fourth bitcoin bubble, how many will there be? >> i think there will be bubble after bubble. what happens is you get a lot of interest for one reason or another. a lot of people decide they want to buy them, and this might be their first experience with them, and they are like, "now what do i do with them?"
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some of those people lose interest, and then you have a fall in the price, and it's a blaze is a little bit, and then the next wave comes. i think the next wave will probably be triggered by a seeing some really truly unique applications of the technology that people maybe have not thought about. >> where will we see that? >> i think we will see it in the next six months. >> what do you mean by that? >> there are things you can do with the bitcoin payment system you cannot do with any other kind of payment system. bitcoin fundamentally is a record of history, and you can in that anything in that record, not just transactions. i can record -- there's a great .ebsite, internet archive the timestamp or take snapshots of websites. it would be great if you could snapshot those websites in the history of bitcoin so that you had an indisputable record of history that nobody can alter. that is just one application. there will be things like that
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that i think people have not thought of that once they see that, they will get excited about it all over again. >> ceo and cofounder of bit pay areitpay, let's see if you right. millions of americans suffer from diseases like arthritis and asthma. a new company wants to help people manage their conditions with their smartphones. that is next. ♪
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>> welcome back to bloomberg west.
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i'm emily chang. get ready for another fitness tracker, this one from microsoft. band -- the microsoft band, a device that can track and analyze your health stats and exercise moves. it costs $199. it is on sale today. microsoft also unveiled a health pp. vita just launched, an on demand health benefits platform to help manage diseases. joining me now, the founder and longtime tech executive who has had roles at google and kleiner perkins. also joining us, a senior help tech investor. stephanie, i will start with you. how can vita help me?
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>> you can go to the store and instantly get connected to a health expert. throughntly connect voice and video and chat with you and cater to your conditions and your needs. there are 133 million americans who have chronic conditions. >> what kind? >> weigh loss, diabetes, heart disease, cancer, arthritis, asthma -- anything. it is a backend platform that enables us to tailor the platform directly to the consumer. >> how much does it cost? >> it is $15 a week. the first week is free. you can sign up a friend and get another for a week. >> jennifer, you have been investing a long time. what attracted you? >> i am a long-time investor in health care. we see vida as a continuum in the global health space particularly. as you may know, you mentioned the microsoft band, there have been -- health applications have been growing.
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what vida health is doing is quite unique in health care problems. they are solving a chronic care problem specifically. for someone who has had a health attackent like a heart or has gone through cancer treatment, just because you leave the hospital does not mean you are well. working with the hospital staff and protocols, those are things that vida is working with to help consumers get back to wellness. >> do i have to be the one saying, hey, i need help or is there a coach saying, hey, don't eat that doughnut? >> it really depends. it is very coach-driven actually. if you have cancer, like leukemia or bladder cancer, you are on a post-surgery protocol. the coaches giving you day by day text messages, videos of
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support, telling you to exercise and focus on nutrition. if you have any med compliance, sleep or stress disorders, a lot of these people are on multiple medications. it makes it very hard, and they have comorbidities. if you have expertise in cancer and ids and heart disease, you can handle a lot of the different issues that people have. one in four people have core -- comorbidities. one in two have a chronic condition. we can handle over 20 different conditions. the coach on the platform and a crm for health. we can customize and personalize the care you get based on your needs. >> this works with apple's health kit, as i understand. >> that's right. it was launched in the apple app store yesterday. >> do you see this as a consumer or enterprise product?
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>> that's a great question, actually. it is absolutely a consumer product because consumers have to use it. but it very much worse with enterprises in the sense that, especially after a post events, you need to get workers back to work so they are motivated to have their employees using a health coach and working with vida health platform in order to drive back to wellness quickly. >> interesting. much for sharing this with us today here on "bloomberg west." great to have you. it is time now for the bwest byte where we focus on one number that tells a whole lot. , what have you got? >> the bwest byte today is one. it is the number of pockets -- pocket squares i am wearing right now.
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this is the visualization of a melanin cell. it is breast cancer awareness month. it is to remind people to take the steps to detect early breast cancer. >> you know, i noticed it. i thought it was a unique pocket square. i did not remark on it. but that is really interesting. how did you come across that? >> from a company called the stain. a recent business grad operates it. some of the proceeds for some of these pocket squares and ties goes to breast cancer awareness as well. >> all right, well incredibly , important, especially with this month being breast-cancer awareness month. thank you for making us all aware. thank you all for watching this edition of "bloomberg west." remember all the latest headlines on your phone, your tablet, bloomberg.com, and bloomberg radio. we will see you later.
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