Alibaba, Weibo Eye IPOs: Bloomberg West (03/17)

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March 17 (Bloomberg) -- Full episode of "Bloomberg West." Guests: InMobi Managing Director Crid Yu, LiveOps CEO Marty Beard, Equinix CEO and President Steve Smith, 1-Mainstream CEO Rajeev Raman and Draper Fisher Jurvetson's Bubba Murarka. (Source: Bloomberg)

Live from pier 3 in san francisco, welcome to "bloomberg west" where we cover innovation, technology, and the future of business.

I'm emily chang.

Chinese tech ipos are in the spotlight.

The twitter of china has filed to go public where alibaba said it is going to start the process in the united states.

Apple makes a big bet on college sports.

A check of your top tech headlines.

What he did apple cofounder thing of an apple tv set?

According to a new book, steve johnson's not a big supporter.

He said, tv is a terrible business.

They do not turn over and the margins suck.

And apple reporter.

A los angeles man said invented a bit quite have hired a lawyer to clear his name.

Dorian nakamoto said he did not create, invent, or work on bitcoin.

The 64 year old engineer said at the story has hurt his family and chances of getting a job at his nod had steady employment in a decade.

Russia's richest man has sold shares in apple and facebook and looking at chinese companies.

Chinese companies now account for 70%-80% of his foreign investments.

They include alibaba and others.

To our lead story.

Alibaba starting the ipo process as saying it will file into the united states.

There've not filed yet.

Much discussion of them fouling -- filing.

We know the rumblings have been going on.

They're trying to get the waters ready.

They have talked with the six different banks and huge valuation.

Some saying two hundred billion dollars.

This could be the largest tech ipo in history.

If they offer 12% of the shares, my math tells me $24 billion.

That is why we care so much about this thing.

What we should explain a little bit more of what it is because alibaba has a number of different businesses and referred to as the amazon/ebay/paypal/google of china.

How do you describe it?

I want to go to the match game.

It is the blank of china.

It is the amazon of china.

The ebay of china.

The google of china.

The twitter of china.

It owns 19% of weibo that filed for an ipo on friday.

But it has -- it has b2b and b2c where they do high-end luxury brands.

And sort of like ebay but not an option bank -- auction, where anybody can sell.

A massive scale.

And in their pay business.

The numbers are incredible.

The numbers you can only see in china.

Let's talk about how significant this offering is going to be.

I want to bring and the ceo of -- and a former google executive.

I will start with you.

How significant is it that alibaba is going public in the united states?

We have been anticipating for some time.

It does two things.


Who has a big stake was a it will be good and they have been a acquisition.

Going public i have to believe will provide more currency.

What kind of acquisition?

They said $1 billion last year.

Outright purchases and minority stakes.

We heard they took a stake in weibo and it took a stake in a video and movie production company and it has been launching a lot of mobile areas where it has a weakness.

What time of numbers -- what kind of numbers do expect to see when they file to support this $200 million valuation?

Some of the numbers are staggering.

Investors will start with the overall chinese market and growth opportunity.

600 million registered internet users in china.

E-commerce is a bigger part of the retail sale environment and that in the u.s. for much of western world.

It is a company that has a sweet spot of some the key categories in the chinese economy as the chinese economy becomes more consumer oriented.

A big base to start with and as you know, investors want to see top line and a bottom-line growth to support the valuation of $200 billion mike and ply.

Is it slowing down?

We think it is.

You expect.

How much of a slowdown?

That is the growth itself organic?

They have done a lot of -- much of the growth is through acquisitions.

Or is it truly growing?

One of the concerts a you can see in the weibo, here -- tier 1 and 2 cities have seen a lot of growth for these businesses.

After it passes the cities, not a lot of growth in china.

It limited the potential because not all of china is a valid will.

Weibo it's a slowing down.

The same and the united states with the twitter.

Talk about the significance of ali baba and weibo going public.

What kind of advantage do they see doing it in the united states?

I think the capital markets in the u.s. is a little better for shares.

For controlling the company.

Moreover, this shows for alibaba to grow, they have to start in other areas like international.

There is speculation they will start to go into u.s. markets and businesses selectively.

But a big question, it is set up to do business in the u.s.? given that the infrastructure, you see, son and ebay -- you see amazon and ebay, ken alibaba get into it?

I think so very selectively.

Alibaba is focusing on cross a border growth.

It started that way you to get the chinese merchant does internationally.

It can certainly do it for b2c, the luxury brand going into china.

And also goods from china exported to the u.s. alibaba has quite an operation and in the united states.

On the b2b side, u.s. businesses get their goods through

Maybe a random ingredient to a special kind of lotion they cannot get into the united states and they get on alibaba.

Maybe it comes from tahiti.

I have talked to the business owners in the united states.

Paul, what do you think of the extent of alibaba's potential to grow even more to further infiltrate the u.s. and other markets?

One of the reason for the u.s. offering, the primary reason was control, jack ma and his partners want to have control over the board even though cap 7.4% of the stock.

That is the key reason they are looking into the united states.

To make this company, to introduce alibaba, something a lot of people outside of china do not know.

This u.s. offering, this global offered is a way to introduce in different parts of the world.

But initial partners out th -- potential partners out there.

Even though the growth potential in china is great, they want to grow into the u.s. and around the world.

It will be more competitive.

Paul swimming -- sweeney and crid yu.

We will talk more.

Also, speaking of other big bills, facebook purchased whatsapp have many wondering what mark zuckerberg will do with the messaging service?

One of the top developers tell us what could be in store.

? welcome back to "bloomberg west." we are talking about alibaba planning to go public in the united states and also weibo filing to go public in the united states.

With us is crid yu and former executive at google and china and paul sweeney.

Let's talk about the regulatory issues.

Obviously, a lot of discussion between alibaba and hong kong listed executive of whether it could be an hong kong or the united states and they decided to go with the united states, why it allows jack ma to control with a minority stake and that has to be the primary reason for him to do that.

A fairly amazing thing.

What jack ma is looking for is unique, no other company has this kind of structure he is going for.

I have never seen a company where they want to have partners name certain board members.

Fundamentally, they choose who is on the board.

What is amazing that u.s. security law will allow this at hong kong offers better protections than the u.s. the u.s. is going to get a $1 billion likely from lawyers and exchanges and investment banks and everything.

Paul, let me put it to you.

The same with the weibo.

Let me read this from the filing.

If you are buying the stock, you are not abiding weibo but a cayman island holding.

They said is it a problem.

"it may be difficult or impossible for you to bring an action against these individuals in the united states, you believe your rights have been infringed." if you are an investor, tough luck.

Is that ever a problem?

Risk in china is always front and center for global investors.

We have seen it before.


Had a big issue with alibaba over government issues just a couple of years ago.

Yes, it is.

For the filing, the structure allows jack ma at his partnership group to have referential appointment for board members effectively giving his group control, that is unusual.

The way was the minority shareholders exert control over you as especially in the media industry is through super voting stock.

Giving 10 ovals to one.

That is the typical structure here.

Jack ma are choosing a different structure.

That is the structure that do not bid approved in hong kong.

It is more typical here in the u.s. and the u.s. will bless it.

It is quite confusing.

I want to talk about the fact that dick costolo is and china.

Very different, they have wonder 49 chinese characters -- 149 chinese characters.

More media and emoticons.

Any likelihood that twitter is going to be unblocked in china?

It is possible.

It is very, very difficult for a western company today will work within chinese media because there are so many different types of relationships with the government in different agencies at all levels.

Twitter has said it is a personal visit with dick costolo talking to the universities and students and what they are thinking.

I want you to describe the differences in of services and competition between weibo and another company and twitter and how many people actually use twitter through vpn.

Talk about that landscape.

There were some features weibo that predated twitter in fact and twitter adopted.


The first thing that we do not realize is messaging is not just messaging.

By that i mean messaging is the backbone for a lot of mobile users activities.

Think about how much we use messaging and gaming.

The services are critical's two companies like alibaba because it allows them to lay down services for example commerce.

Paul sweeney let me ask you about accounting issues.

They said in their filing, there been a lot accounting issues with chinese companies and their account as it may not be able to examine the books because of security law.

Will that way against either of the ipos -- weigh against either of the ipos?

They will look.

The risk section and ipo documentation has gotten much, much more robust.

A lot more risk that is illuminated.

If you invest in a chinese company and even though it will be listed in the u.s., there are accounting issues and regulatory issues that investors have to get comfortable with.

What a couple of companies like baidu that have, to the u.s. markets and this is something that investors are primly come -- are pretty comfortable.

Paul sweeney a bloomberg industries and crid yu, thank you.

We will be looking at both of these companies.

What makes a great leader in attack?

We will look at the do's and don'ts.

A lot to learn.

? i am emily chang.

When marty replaced the ceo, he had big shoes to fill.

One of the challenges was a finding a way to take customer service to the cloud.

Along the way, he learned a lot about how to be a leader in tax.

Cory is in the newsroom.

Part of the transition and he pushed to integrate like social media platforms, facebook, twitter.

As a result, they are seeing interesting growth.

Marty joins me.

Live ops is a cloud application for our customer service.

We are solving the customer service problem and helping people coming through twitter or facebook are any channel looking for help from companies.

You took over as leader from our friend who was told about super managing in tech companies.

Is he full of it?


what is it like taking over from somebody like that and what changes have you made?

Coming in from somebody like maynard with a great culture, eyesight huge opportunity to take it in a different direction.

With full support from maynard and the board.

Capitalizing on mobile and social in every thing impacting everything and customer service.

Tommy what ways you are using -- tell me what was your use and customer service.

You see businesses react to social media complaints.

Like the notion instead and line at a delta airlines for 30 minutes and tweeting seems ridiculous.

It does not solve the problem.

What companies realize is we are all using more than one channel.

We are really optimizing.

You make a phone call a you wait for somebody and hopefully, they know something about you.

The world has changed.

People are tweeting and putting things on facebook.

It could be the same person who made a phone call or an e-mail.

We realize the reality of how we are conducting business and people are looking for help.

We can help make this a better.

Describe what the optimal customer service reaction is now given in the new era.

When you finally get to a person, you want to the person to know who you are.

They have an understanding of what you're interaction have been previously and they know about you and your relation with the company is an today are better able to help you.

You get an agent that is happier because they have a full view of the customer at a customer that is happier because they know who you are.

They know you tweeted and what type of help you are looking for.

This knowledge is able to come to gather much more quickly that in the past and the agent helping you is better informed and happier.

Is making that kind of change in an organization of a rapid change like that difficult for a company that is still kind of new?

It is.

You have to embrace these new channels like you would a voice and if you would treat twitter like voice.

An important channel, a new channel.

Important to your customers.

How do you combine?

You have to share the value.

Look at the help we provided.

Somebody tweeted thank you.

Awesome help from a cable company hard to imagine.

Thank you very much.

Thank you, cory.

What is mark zuckerberg thinking?

We will talk to a former facebook executive vehicle knows what is going on inside of his head.

And that is an next.

You can watch us on your phone or

? you are watching "bloomberg west" where we focus on technology and the future of business.

I am emily chang.

Facebook made a huge acquisition buying whatsapp for $19 billion.

Many are wondering what is mark zuckerberg thinking a what does he plan to do with it.

I spoke to a former facebook developer for android and spearhead.

I started by asking about buying whatsapp.

It shows a marked is everything i hope he continues to be for a long time which is making big bets and proving he can pull them off and getting the deal done and one month and not backing down.

$19 billion, is it worth it?

Only time will tell.

It is hard to tell.

For active users, the market opportunity for whatsapp could replace applications on a mobile.

How big is the mobile carrier market?

$1 trillion annually.

I think had a real shot.

When you are at facebook, were you unaware of whatsapp and was marked a where whatsapp and whether they start carefully watching?

I think we were always aware of it.

80% of facebook users are outside of the state and we were aware of other companies.

Very aware of other companies.

But i think, it was a serious observation based on the whole category.

You had whatsapp and even tangome.

There is a phenomenon going on at that is why they created messaging brand and ultimately, they realize the right way to win in this market was whatsapp.

To give an idea of what you think mark was thinking a what he plans to do with it he got the deal done.

When you want to do something fast, that is a hallmark of facebook.

That is really important.

You have to give him something and make the deal so compelling.

Price was very compelling.

I think, what he's going to do with it he is transparent.

You cannot do it without knowing what your plan is an sticking to it.

That is what drives it independently and giving it resources.

Over time, the way it complicates -- compliments of facebook.

It puts itself that it has to have communication and social on a huge franchise to own.

Do you think there will be advertising and in ca -- app purchases?

Where did they go from here?

Mark has had a real serious conversation.

Anything can change in the future.

I expect them to monetize subscriptions are charging the carrier.

Some model that is not advertising.

Not the distribution.

Will it change is the ground?

Kevin is not on the board.

When instagram was purchased, it was a lot earlier.

When it close, it was close to 100 million active it.

Half of facebook users.

Whatsapp just under 500 million.

A different time and acquisition.

Both of them are equally going to be important.

What did you think of the idea of facebook work on more standalone apps?

It looks really great when it came out of people have forgotten about it it seems.

One of the challenges with that portfolio is getting distribution and engagement.

Not a lot of mobile apps that people open every day.

One of the things we saw when i was at facebook.

On the flip side, the principles and building lots of mobile apps , single-purpose apps.

People want to go to an app and go to a another.

That user behavior is really dictating facebook's strategy, to know what users want.

And i think they are adapting the strategy and there are other challenges.

They have to figure out ways to engage.

Bubba murarka.

Well, cory johnson, back here with me now and talking about apple tv coming up.

Bubba was at facebook for a long time.

And how the organization works and what mark zuckerberg is thinking and maybe he is changing.

Showing a willingness to involve -- to leave off.

Tended to think of companies -- think about companies adding services, ebay at in -- adds in paypal and yahoo!

Adding sports.

The notion of the standalone that mobile apps might be different and facebook's image might be different.

It might be other how to around facebook that we cannot see as the users.

A very different way to think about the future.

But the question is how successful will the strategy be?

Facebook paper which they tried to do sort of disappeared after it came out.

It was like number one for a while and now nobody is using it.

The same thing with facebook messaging which is why they ended up buying whatsapp.

The question is how successful can the strategy be?

It is nice that mark zuckerberg has a willingness to change his mind on certain things.

If you talk to investors in technology, they admire him so much because he is willing to say maybe i was wrong.

After showman lots of millions of dollars in these efforts.

Instagram successful without advertising.

Whatsapp said they will never have advertising.

You can only have so many products without revenue.

It might be sucking the oxygen out of the room for the competitors.

Whatsapp took the text messaging revenue from the carriers, it makes him a more valuable place to be on facebook.

There has to be revenue and profits.

Facebook is enormously profitable.

They are all quiet.

-- acquiring.

But we will be talking about march madness and apple tv.

You can do to be games on apple tv.


I am rooting for harvard.

They made it.

? welcome back.

I am emily chang.

So-called secret apps like whisper and secret that allows you to share content secretly is a hot topics.

Not everybody is a fan.

He took to twitter to post never mentioning them by name.

Tweeting they start out as naughty fun and ends in ruined lives.

They will always get users but to what end and cost.

Michael heyward told me his company has a strict policy on what can be posted and he feels he is giving users a voice would maybe they felt like they didn't have one.

Apple tv is given to the march madness mix.

Home to the duke blue devils.

The apple tv streaming device.

Jon erlichman is in late with more detail -- l.a. with more details.

They are not offering full games budget highlights?


The broadcasting rights have been locked up for a long time for cbs.

If you are apple and you want to grow apple tv, what are your options?

To go and cut deals with conferences that have big fan bases like the druk -- duke fan base.

When company built to this, he is the ceo and he joins us.

Us talk more about to be tricky rules of a rights.

Why can't these apps be created when you have these monster deals that the broadcasters sign for the live streaming rights?

Hey, jon.

As you pointed out, a lot of the rights are locked up and it takes a long time to get the agreement.

It is not always easy to do something a be able to do it, it takes time and we are seeing that first wave of what is possible on a digital device.

A streaming device.

The other way to think about it is where do the digital devices have an advantage over the life channel untraditional -- live channel on traditional tv?

Cater to the database of a specific school.

These type of things we can do better.

Those who follow apple closely may know the ceo, tim cook is a fan of duke basketball.

We saw espn gravitated toward apple tv relatively early on.

Are all of the signals that sports make their way to apple tv?

I hope so.

What i can say is, you know, not that long ago where the consumers' perception of what was possible, we have, from that to streaming movies thanks to large streaming service providers like netflix and hulu.

We are seeing sports.

That is where the important point is, where to the broadening of the type of content available.

Ultimately, it makes it a very exciting into the next three years to look forward to.

What ultimately is the real game changer?

There have been discussions that google may want to acquire nfl sunday ticket and that cannot happen.

It still sucks you have to see a very big, very pricey deal cut between a sports league and a technology player for everybody to really shift their focus away.


Sports rates are extraordinarily -- rights are stored in early expensive.

-- rights are extraordinarily expensive.

You cannot just walk in and do live sports.

I do not expect that to change anytime soon.

If you look outside the united states, we are seeing evidence of that more and more where sports rights which can be quite compelling, are starting to make their way to do -- to digital devices within a few minutes.

A very small time relative to what is on the air.

I do think it will take somebody with really deep pockets to really change the way the economics work.

I am not sure how that will be.

In terms of what you do, the app you were able to do and a relatively short amount of time, a few short weeks.

What to do step out your technology?

The thing is with always had content copies focus on content into the old ways.

With the digital coming about, we face unfortunate pressure from content companies to develop capabilities.

We stored as a company, content companies, focus on content and users at marketing and editorial aspect and work with us as a technology partner so we can take care of all of the underlying, underpinning of what it takes to have a digital experience on a variety of streaming devices.

That is what we are here to do.

That is our primary message to the content companies.

A lot more to watch for.

Rajeev raman, the ceo of one mainstream joining us.

You know what else you could get on apple tv?

"bloomberg west," shameless plug.

We'll be right back after this quick break.

? i am emily chang and this is "bloomberg west," advertising company radiumone is in the final round of an ipo.

What powers all of the data?

Cory is back with more on that.

Yeah, emily, we talk about the stuff as a big data in data centers like to the cloud.

Equinex operates 100 companies with radiumone.

Microsoft and sco joins me now -- ceo joins me now.

I want to drill down on one of the things you do to throw ads in front of webpages.

Talk to me about the technology and how different it was from five years ago.

What we are doing is enabling the companies to do real-time bidding.

It is up to us to digital advertising is doing and these auction-like environments.

We are enabling these companies to form groups and companies and take advantage of what we have in our data centers and really move apps around the world.

When i think about open bidding, i think about the guys on the commodity floors trading in chicago or wherever where something is offered.

Lots of things to buy and sell.

That is happening behind every webpage that is loaded up.

What is it about your technology that makes that?

The advantage that we have and is similar to electronic trading, futures and foreign exchange is moving toward electronic.

I love that happened because we have hundreds of networks that enable really ultralow like a flash trading or high-frequency trading.

You can move stuff very quickly across multiple networks.

Is the same kind of facility?

We have 975 networks.

You can choose the fastest routes to move.

Fundamentally, doesn't that mean advertiser is able to reach the potential herb it's of the product in a more -- product in a more real-time basis?

Media buyers whether video or mobile or print, they can move ads and buy and sell ads much more quicker.

Is 20% of the growth and it is supposed to triple over the next three years.

More of the activity is going on.

Will is trade -- change the notion of advertising?

We see budweiser and brand advertisement that went to the appetite of a future purchaser.

What role it plays.

It is absolute change because it is real time.

It is being bid in the auctions.

Reducing 50% of the time to buy and move ads.

It is economical and high-performance and logical.

A new busy -- and is being built.

It seems like a monetize and.

-- commoditizing in terms of margins.

Like amazon, they do not seem to care about profits at all.

That is a little different but a good point.

They are putting a lot of pressure because of the price reductions and they have done.

Even though a company like amazon will have a big data center storage farms, they use in big cities to do what they are doing.

Talk to me about the things you can do to spur that kind of growth.

Or just follow the money?

A little bit of follow the money.

You mentioned a company called bright roll.

Something like that in your data center, people have to come in and get it.

It is moving the ads and that is in the engine.

The phenomenon grows and grows.

It goes east coast and west coast.

We're also in a singapore and amsterdam.

It is going global.

What are the results when they switch to your platform?

What kind of numbers?

20%, 30%, 40% improvement in their budget and the speed.

A getting advertisers connected.

Steve smith, thank you.

Thank you.

Do not go anywhere.

It's time for bwest byte, one number that tells a lot.

What have you got?

$1,193,000 alibaba had an operating costs.

It gave them a $21 million net profit.

Either way, financial results from weibo.

It has one thing that twitter does not -- often ability.

Profitability for one quarter.

Comparison to the two businesses, very different, isn't that right jon?

You showed the video of robert downey junior.

In hollywood, stars look at that platform like twitter.

They usually team up with partners who could do the equivalent of tweeting on their behalf.

That is a huge a way that hollywood ends up using these platforms to get the word out of what they are doing.

Hollywood and celebrities and china as well.

Millions of followers.

A lot of them celebrities that china has and is a huge platform and china just like twitter is a platform here in the united states.

When i went to the filing, one of the things i notice is how many different ways the numbers really do it twitter.

You wonder how much of twitter.

You see the same kind of dynamics on weibo a big about sustainable trends.

Weibo, you can fit a lot more in one post on weibo than twitter.

Either way, we will fall it's a road to ipo.

Thank you.

We will see you later.


This text has been automatically generated. It may not be 100% accurate.


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