tv Bloomberg West Bloomberg August 11, 2015 8:30pm-9:01pm EDT
now a reality -- a radical reorganization that is another nod to the future, alphabet. on this special edition of bloomberg west, we go in depth about a company that has tried to change the world in depth not once, but many times over. i and emily chang and this is a special "bloomberg west" -- delivering health of that, meet the new google. -- delivering alphabet.
we look at new financial options. plus, is it has? -- is it tesla? big-ticket acquisitions. and how much is riding on moonshot? is significantly extending life even possible? all of that i had on this special "bloomberg west." first, let me tell you about the holding company under which google is just another branch. alphabet is what we once thought as google, but separated into more clear units. there is fiber, the internet calico, theer, biotech firm trying to cheat death, and x, home of the moonshot. the court moneymaking business still lives at google. some are calling it classic google. it includes search, android, youtube, maps, and is being led by larry page's chosen one. chai launched chrome who took over android operations and
recently almost all of consumer google products. joining me to discuss how we can accomplish big things is brad stone, and then leg. -- ben leg. what can larry and sergey do that they couldn't do before? >> arguably nothing that they haven't already been doing. ever since larry was appointed ceo of couple of years ago, he has shown a little bit face for -- it of this taste -- this taste -- distate for the grittier responsibilities of being chief executive, talking to shareholders, being on the quarterly conference call, talking to regulators and testifying before congress that is why gradually we has handoff -- handing off more responsibility. what this allows him to do, and that sergei has already been doing, is to look at the next
twist in technology and let him handle all the stuff he hasn't wanted to deal with. emily: you said that you don't envy sundar. it is not an easy job to take on. >> i don't think people seemed quite understand how deep that is from facebook, from apple, from amazon web services. google is a company which doesn't do anything really well. it is a fact. emily: wait, google is a company that doesn't do anything really well? >> they won the search category. look at search performance. as human beings use a google search. we have nothing excited to say about it. we don't love it the way we used to when this company started. emily: as someone that works at google, the coo of google
europe, howdy respond to that statement, that google doesn't do a single thing well? i think the main thing they do really well is what you call universal searches. you don't know something, you go to google. hotel searches, flight searching. there is a risk that google gets chipped away at by other specialists that do a better job than them. they have been to a lot of things quite well and there are many people that may be not as hungry as they might've been. the company may be too big and bureaucratic. emily: there is the why. but what about why now? what is this have to do with regulation and what is going on in europe and the antitrust battles, with the need to be
more nimble and make it in a place like china? brad: larry and sergei want nothing to do with the antitrust problems in europe. in the west, they are in the clear. eric schmidt has been running that game plan for the past five years. it hasn't been successful, no called of eric's, but the political climate in europe is terrible. sundar is known inside google as the peacemaker. fighting, there was a lot of other innovations at google. he basically integrated it into the opening. i think sundar will take an increased role in navigating google through what is a serious situation in europe. emily: the new cfo, does she have anything to do with this? how much of this is pressure from wall street? om: i think there is enough pressure from wall street that they acknowledged it in an fcc letter. google founders did not really give a dam about wall street for the longest time.
they had to defend themselves against what these companies were saying, why they were not focusing. i think investors were right in asking where the focus was. i think investors were wrong for making them focus on the near term. a lot of companies suffer because they are forced to focus on the near-term by wall street, which is a very industrial era understanding of business. emily: and now they are saying, we will not accept the new google. but that is sundar's job. you are sticking with us. thanks so much for joining us today. another developing story we have to mention -- china, a surprising global investors by devaluing its currency the most in two decades. u.s. and global stocks tumbled on this move, concerned that china is headed for a greater slowdown. but the yuan cut could be could be welcome to apple suppliers, foxconn and pegatron.
most of them pay most of their workforce in yuan and sell in u.s. dollars. devalue might boost gross margins for both companies even in the face of slowing iphone sales in china. up next, could offer that -- could alphabet go on a buying spree? plus, should amazon or facebook take a page out of alphabet 's playbook? are they already? ♪
emily: welcome back to our bloomberg west special on alphabet, google's new parent company. i spoke to hugo barra, former googler and a former front man for android. hugo: google could make large acquisitions. not only in businesses that are directly related to what google has today, but why not enter an entirely new areas? not only moonshot-type investments, but there is nothing stopping google with this option they accreted operations focused businesses if they want to. emily: for more, i am joined by bryan weiser in portland. and my guest redstone. -- brad stone. alphabet now has $70 billion on its balance sheet to spend. how would they spend it?
om, you had a few suggestions. om: i would say there was talk about google and tesla in the past. ashlee vance bloomberg wrote a book about it. it may actually make a lot of sense for google to actually take a substantial position in tesla, not exactly buy it outright, the let's say google owns 20% of the company. it removes pressure from wall street, on the company to deliver results. i think the technology needs some long-term thinking. tesla is not something that can be judged on a three-month increment. from that standpoint, i think that would make a lot of sense. emily: i wonder, is "t" for
tesla or for twitter? i spoke with chris sacca a couple months ago about his opinions. he thought that twitter would be an instant fit for google. they haven't done in social well, i think we can all agree. brad: i don't know well, but it has been in decline for the past few months. it certainly becomes more plausible that google could buy them. emily: brian, you cover both google and twitter. how would you like to see google spend this money? brian: i think the question is, what is the optimal capital allocation situation? if you look solely on that basis, you would separate the advertiser related businesses and those are directly ancillary to google play. while you may admire what they are trying to do, from a capital efficiency perspective, from
allowing investors to invest their capital in identifiable distinct, and synergistic businesses, that is not what google is. that said, they are not going to do it. investors buy into google knowing that they are buying a seri -- i larry and her day company. -- they are buying a larry and sergei company. om: i think if you read larry's note, and i'm just going off that, right toward the end he talks extensively of vetting founders and entre nous is -- and entrepreneurs with a long-term view. at the and of the day, he tells them clearly what they want to do with the money they have, the kind of investments they want to make. spotify will need daniel x. it won't work without him. emily: i wonder, does this structure make it more likely for this acquisition to happen? could daniel x come in, or jack dorsey for example?
om: if you look five years back, this will be a prototype architecture for a large technology company exiting -- they bring out how to expand opportunities for it. i have said time and time again, google is still a one trick on me. they are trying to find the next horses. they cannot buy talent like facebook bought oculus and retain it. that is the problem. in this case, they can buy talent, let them be, and let them go. emily: brad, if you are mark zuckerberg or jeff bezos, what are you thinking right now? brad: i will take a counterintuitive approach to the answer. maybe they are excited about this. larry is elevating himself above the core business, bringing potentially other companies into the alphabet umbrella, and arguably taking their eye off the ball that is the profit business and its ancillary
businesses. we haven't said anything about there a conflict executive, but no match for jeff bezos or zuckerberg. maybe this is an opportunity where larry really starts to look at other things and disassociates himself from the search business, and we say this is a moment where google started to lose itself. emily: brian, do you have a comment? brian: there are several. i did want to hit on the idea that google is a one trick pony, last time i checked, google will probably do $10 billion this year. if you look at all the successive entities related to double-click, it is massive. emily: what about mobile? hasn't google succeeded a huge portion of territory there to facebook? brian: on purely mobile plays, their personage of -- their purchase of ad mob was in the space. it's not about a mobile
advertiser to a mobile device per se. google along with facebook are the two hegemonic players in advertising. om: i will respond to that. google and facebook if you want , to measure them on any metric, it has to be on the attention grab. the attention of the average consumer is increasingly on facebook. looking today, it seems all great and dandy. but looking forward if more , people are spending more time in facebook, or in the so-called communication apps, then you start to see that people are starting to shift their time on twitter to different platforms. which takes away from their core business of advertising. i say one trick pony -- they do very good advertising. there is no match for them just yet. on mobile, facebook is ahead of them. and they will continue to
increase the lead, because they have more personal data on that. emily: and u.s. adults spend 20 minutes a day on facebook. brian, you're sticking with me. thank you so much for joining us today on this special edition of "bloomberg west," monetizead, planes to moonshot on the newly formed alphabet. we will discuss. ♪
and a half billion dollar buy in a chinese commerce group. last year, the company invested over $600 million in a company that operates department stores. the ceos are counting on international expansion outside of china to match any kind of slowdown in sales. tomorrow, be sure to check out my interview with alibaba's ceo dano john right here on bloomberg television. now back to our special show about alphabet, the holding company for google. while search may keep the lights on, moonshot divisions are the life of this company, giving birth to finish projects like driverless cars and google glass. i spoke to the founder and asked him about calico. >> it is another audacious moonshot. there are no people around that live for 200 years. we don't understand why. there is very little research
done on this compared to curing , cancer. it is a perfectly good proposition to say let's give it , a try. if there is a remedy for old age and dying, i would say that is fantastic for the world. emily: joining me now to discuss, ryan betancourt -- ryan om.nd ryan, it's interesting in that interview, sebastian says he we will see the impact of google's research in our lifetime. is it really possible to extend life to 200 years? ryan: without a doubt. when you look at extension of one of the new hires at calico actually showed she was able to double the life span of worms with one gene mutation. emily: how are they doing this? calico is the most opaque division of google. nobody knows what's going on. brad: we are all rooting for them. [laughter] ryan: we are all rooting for them. we don't know what pacific
league is going on in calico. we do know that they have a heavyweight team with them. they're not necessarily outside the biotech space, but incredibly famous within it. was the ceo of genentech. -- most people know the ceo from apple, but he was the ceo of genentech. they have the ability not only to do the basic science, but deliver as well. google in the past have said that they are looking at the long view. we think we can start to see quantification and success within the short term. brad: it seems trivial to a -- to talk about corporate structures and we are talking about a company trying to extend human life. but what do you think the calicos are of taking maybe one day spitting it out as its own entity? ryan: one of the big issues in this space is allowing it to follow certain past that a
search engine wouldn't follow. biotech is expensive, especially when you are talking about therapeutics. let's say, they identify couple of genes that may actually extend healthy lifespan, delay the onset of alzheimer's or heart disease. those are drugs that will have to get developed. we are talking about multiple billions of dollars. brad: you'd would have to raise money on the public markets. ryan: on the public markets or maybe with joint partnerships. emily: you wonder om, don't you, how much will this costs? om: i don't, actually. i don't think we can quantify what google is doing with the moon shots in financial terms. if you think about it, bell labs tried this look at the impact on , the entire society. is there a way tight financially qualify that? when you take the long view, you can't really take the long view of what earnings are going to be
a year from now. adove google for turning dollars into something useful for community. emily: we also have google ventures. bill meredith is running the venture arm of the company. he talked about lifetime investment. take a listen. we puttart with a team, 36% of our capital last year into life science companies. the goal of those companies is to help people not suffer from diseases. not die of congestive heart failure, or cancer, or the sorts of things that affect lifespan. emily: ryan, can you give me a better idea of how they are extending human life. ryan: how is looking at the disease itself. what is aging? it is gradually the onset of disease is that kill us, cancer, alzheimer's, cardiovascular disease. once we started tackling these diseases -- lifespan should start to prolong.
it is about 120 years currently for the normal human lifespan. if you look at other areas where i am sure google is involved, and researchers are also in that space as well, organogenesis, failing organs where they can be replaced and built. emily: you have been inside google x. what about the other moon shots? how successful have they been? brad: it is a mixed record. google glass was probably the one that got the most attention and it wasn't very successful. it moved over to the nest unit. connected balloons, there was that. they are trialing that. there are other options to spread internet access to developing parts of the world, some of which may be more capital efficient. they are dealing with high wind at high altitude, so we will see if that is practical. to the extent that it frees up more capital for google x, that a good thing because we want all of these things.
emily: they promise we will see more transparency. they don't know just how transparent it will be stopped , but what do you think it will look like an alphabet, google aside? om: five years from now, not too different. i think it is a holding company very much like berkshire hathaway. perhaps not the same makeup, but looking at big swings on the future of humanity and technology. not everything will work out. they will have a lot more companies that go over. i definitely believe there is a revitalization of interest in google and what it can do in our ecosystem. emily: thank you all so much for joining us. i definitely want to see what alphabet looks like five years from now. we will be watching and covering. that doesn't for this special edition of "bloomberg west."
>> from our studios in new york, this is "charlie rose." charlie: we continue with our of the 2016 presidential coverage election. donald trump continues to lead the republican field. meanwhile, hillary clinton proposed a 10 year college tuition plan that has come under criticism from some republican contenders, including marco rubio and jeb bush. the iowa caucus is first. joining me now is mark halperin