Bitcoin’s Price Plunge: Bloomberg West (02/07)

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Feb. 7 (Bloomberg) -- Full episode of "Bloomberg West." Guests: TradeHill CEO Jered Kenna; Drive Capital Co-Founder and Partner Mark Kvamme; "The Lego Movie" Producer Dan Lin; Marble Security CTO and Founder Dave Jevans; GoPro CEO Nick Woodman. (Source: Bloomberg)

Live from pier three in san francisco, welcome to the early edition of "bloomberg west," where we cover the global technology and media companies that are reshaping our world.

I am emily chang.

Our focus is on innovation and technology, and the future of business.

The value of the digital currency and coin is plunging following more than seven percent.

This after one of the best bit knowing -- known bit quite -- known bitcoin exchanges going through with drawls.

Understand the issue thoroughly commend the system need to be in a static state.

Just days after apple removed the popular bitcoin cap from the app store.

On skied with us -- sykype with us is the ceo of trade help -- trade hill.

Can you get your money in and out of these instruments?

With drawls have been halted.

Fundamentally, what i think is going on here is the one of the many places that it will be exchanged.

I have to disagree.

I hear a voice.

This isn't a fundamental issue about it going, the this is one of the exchanges on which people trade bitcoin for other currencies.

It is not the source code, it is this unregulated entity in japan that people used to do more than half of the trading day by day here at -- day by day.

The new york stock exchange doesn't say anything about stocks, while technically that would be true in currency or whatever it is, it is important to point out that if 50% cannot go through, the trading environment goes through -- goes away.

Within the bitcoin community, the diehard believers have problems with the exchange.

It is not the people who are wanting to take on bitcoin and use it as a currency to convert their lives to more of a bitcoin way of thinking, it is traders that are trying to make money on it using it as a commodity.

You run your own bitcoin exchange of ideas suspended trading at one time.

What do you think is going on here?

We have seen a huge price disparity for quite a while.

That was due exclusively to the effect that you could not resolve dollars from it.

Now that bitcoin is slowing down, i think the volume has been shifting away from that for years.

People usually quote bitstamp now.

It is important to separate bitcoin from that.

If you cannot get your dollars out of wells fargo, you do not blame the dollar.

It is very rare that that happens.

Let's talk about the other regulatory issues here.

There is no regulation yet been that is continuing to be a problem.

Is definitely -- and there is definitely regulation, new york is moving forward with some regulation that should be coming this year.

That is the reason you do not have an exchange in the u.s. right now, and that is the reason i'm not operating at all right now.

Over time can as you see these regulations evolve you're going to see more secure exchanges, long -- come along.

Keep in mind, that it is located in japan, so if you have your money and wells fargo, you probably feel safe egos within the zen is states i can keep using my bitcoin, as long as it is not on the apple iphone.

There will be more and more places in the u.s. that are popping up as one of our acres tweeted -- anchors tweeted.

This is about apple, disappointing to see apple turn it back -- its back on millions of bitcoin users worldwide.

There are a lot of other places to use bitcoin, and a lot of other places to use it and traded.

All the buying and selling i have ever done has been on the streets of new york.

They do not think the exchanges necessary.

That is the disparity.

Millions of what -- you are talking about trading on the streets of new york, which is a different marketplace.

What we see in the hurdles of the exchanges of the u.s.? new york is taking a stab at it, and there is so much potential money on the table.

We are talking about digital currency, it will not fail, and people are starting to realize that.

We will probably see something pretty decent by the end of the year.

Matt, can you give us an update on the actual regulations that have been passing?

New york has been talking about regulation, but nothing has happened yet.

I'm not sure is what is happening -- as to what is happening here in new york, but with washington i know a couple of people that are working in bitcoin are talking.

One congressman has bitcoin bitcoin asked for campaign donations to his campaign in -- has asked for campaign donations to this campaign in bitcoin.

The family of matthew mellon are talking to the u.s. government and trying to pass regulation with them as well.

You do not need regulation for bitcoin to work.

As long as the internet survives, bitcoin will be out there.

I think digital concern -- currently will survive even if bitcoin does not.

Because it is a democratically controlled, decentralized currency, whatever starts working in other digital currencies will be picked up and used in the bitcoin source code.

What about the real issue of the day today?

Can a digital currency overcome technical issues?

You do not have that with real money.

I wonder where the technical issues are.

I asked a lawyer this morning, i told them the exchange is down because of technical issues, and he joked that the technical issues were getting money into cases fast enough.

The software that they have written does not work well enough to communicate with bitcoin source code seamlessly.

It causes problems, because a lot of people say they do not have the right programmers.

This is a that jerod to answer better.

-- something that jerod could answer better.

We continue to see these difficulties of trading, some prices that have been quoted not just $100 higher, but quoted way out of whack with where it is trading elsewhere.

What is it about the exchange that tolerates these problems?

Historically there had the liquidity and they say that liquidity begets liquidity.

If you're not doing an over-the-counter trick about a lot of times it is your only option to buy $100,000 or $1 million from bitcoin.

That is not true anymore.

Many are gaining in volume, and there is a lot of options for those who want to buy large volumes bitcoinin -- of bitcoin.

When it dropped, and drop the price down, and was hacked back in 2011, there were not any really good options.

Had there been, it probably would have died dan.

This might be the end now.

We'll continue to follow this story.

Thank you.

Coming up, wyatt robinette venture capitalist -- why a prominent venture capitalist headed to the midwest.

? welcome back to "bloomberg west." shares of linkedin are falling today after concerns that growth is slowing down at the career networking site after the company reported earnings.

Shares are down about seven percent of and first-quarter revenue is 460 million dollars, marking the fifth straight quarter of falling sales growth.

To jumpstart growth, they are writing right media, a data company that helps job seekers.

-- buying bright media, a data company that helps job seekers.

Mark is joining me, thank you.

I would to talk about drive first.

After spending 12 years at sequoia, why move to ohio?

My partner, chris olsen, and i, saw the opportunities here.

There are 25% of the u.s. research here done in the u.s. -- done in the midwest.

You do not have the incubators and a lot of the technology that people could actually stay here and utilize, so people left.

Mark andreessen, who studied at the urbana, champaign, so we wanted to allow the best and the brightest here in the midwest, stay in the midwest.

We fundamentally believe that today it is the best place in the world to build a company.

I spent a lot of time in the startup scene of detroit were talking about the things you're bringing up.

If you guys just raised $250 million in funding, specifically what kind of innovations are you seeing out there that you want to put your money behind?

We think there is a fundamental shift in technology.

If you look at facebook, when mark zuckerberg moved from boston to silicon valley, he moved from money and access to technologists.

-- for money and access to technologists.

Billions of files stored without ever owning a server, it is all done in the cloud.

When you have things in the cloud, the most important thing is to be next to the customer.

We have world-class universities, and world-class engineers and merging from those universities, urbana, champaign, university of michigan, osu, and they can stay here and build the services and products here, and access the cloud services.

That is the one thing they have been they have that lj, but they also needed the capital.

So chris and i decided to start direct capital here in columbus, ohio.

The waters of early-stage investing are very crowded, how do you navigate the crowds?

If you look about it from the midwest per second -- perspective, the average fund size is what we would consider in silicon valley to be seed stage.

Very few of our funds -- it is my understanding we're the largest between the coasts, if you want to raise $4 million or $5 million way you have to raise it to the far east or fire west -- far west.

We wanted to grade a place that you could come to an get the same capabilities, networking, and other surveys -- services and not have to move your company to silicon valley or boston or new york.

You are the very first investor in linkedin, and on the board gave what he think of their new efforts to get into different businesses?

They are buying more companies like holes and right -- pulse and bright.

When you think of these efforts?

I a huge fan of -- m a huge fan of linkedin, and reid hoffman always asked if he could but together all of the white-collar workers across the world.

I think eventually there will be many more, and if you want to be the central place to get information when you want to be the service to them.

Facebook started as a fixed income -- bloomberg started as a fixed income platform and now you have bloomberg news and bloomberg tv.

There was always full -- the largest of large numbers.

It is a unique lap for them a unique and always.

They will see different changes and growth as different things happen.

It is interesting to me about how people are talking today about last quarter.

Remember the first couple of years, sitting on that board and trying to figure out how we would make money.

It is great to see what they have done their at linkedin.

They have a full-service marketing and recruiting operation message to correa but -- operation, should sequoia be doing that to?

We bought this in early 2000, we brought in help in recruiting in 2002. sequoia has been doing that for many years, as have kleiner perkins and others.

They just did not talk about it too much.

Mark andreessen has built a fabulous firm, they have just been more on the forefront of talking about these services.

Here at drive k we just hired a fellow who is heading up making sure we have all of the best talent in the midwest.

Getting talent is just as aboard as marketing and sales services.

Kleiner perkins'cofounder just recently joined us on bloomberg west.

He has been getting a lot of heat for this comparison to the not the persecution of the jews.

And ohio, what do you make of his, -- in ohio, what do you make of his comments?

? he made some very poor choices and analogies.

It is quite sad, because he is a very accomplished man.

He made some mistakes.

It felt like he is a step back from those comment, but a very poor choice of words.

Do you think he should take his name off the door?

Any firm or you have multiple founders, he has not been with the firm for many, many -- he has been with the firm for many, many years.

People just call it kp now.

When they started sequoia, they did not want to make it about any individuals.

Personally, we did not call it after ourselves, we wanted to create a firm for 30, 40, 50 years.

Yes we are the founders, but we think it is about the firm, not any individual.

All right, we will be watching you from out here in silicon valley.

He is one of the biggest movie stars on the planet, we will hear from george clooney next on the challenges of directing his new movie.

Welcome back.

George clooney many hats in his latest movie, which opens today.

He directed, produced, cowrote, and stars in the film.

It is about a platoon of u.s. orders in world war ii -- soldiers in world war ii who tried to rescue art from the not these.

We talked to him about the challenges of directing.

Anybody who thinks you have this worked out, they do not.

You do not learn by successes will because its methods are really easy.

Success is when you have a great review, and you think you have it down.

It is when they tear into you, and you learn what to believe and what not to believe.

That is hard.

I still struggle with those kinds of things.

If you want more of george clooney, you can catch the full interview on charlie rose.

We will be right back.

? bloomberg tv is on the markets, let's get you caught up on today's trading action.

These indexes say it all, real trust in the equity market with the s&p up .9% and the dow up within 118 points, even after a disappointing jobs number.

Back in 30 minutes with more.

You are watching "bloomberg west." we have your top headlines.

Apple says that bought back $14 billion of stocks, shares her rebounding today after dropping about eight percent post earnings.

Apple has been under pressure by activist investor carl icon to use it massive cash pile to buy back more shares.

The online travel companies like expedia, triplett buys her, and orbits are greening -- orbitz are gaining today.

Expedia also saw an increase in online ticket are just as very google has -- take iticket purchases.

Google leading the way with a market cap of $465 billion.

It started as a camera for surfers and snowboarders, but go pro has become a big business.

Founder nick woodman has a eight -- big plan for go pro him and started off by asking about the newest camera.

This is an evolution of the world cost best selling ultracompact camera.

This is the love, and it is 20% smaller and lighter than the previous camera.

It is 30% better battery life by a bunch of new features that make it better than before, and we take the best of rope rope -- go pro for you.

It starts at $199, to $99, and $399, for the black one.

Go pro is so successful because we are just developing products for ourselves.

You are a big action sports guy your self?

N.o.i. my family guy, so i am thinking of new use cases for the product, and new accessories that make it easier for people to film themselves not just when they are skiing or surfing, or involved in sports.

Also filling their families.

I have a one-year-old duchess started walking.

Should i be using this?



Your personal content of your family will be some of the most meaningful content you will ever capture.

I was at the beach with my family, and created an incredible video because -- that you would think was professionally shot.

I came home and edited it in the go pro studio, using the templates that we provide to people for free, and i created a video that looks like it was rationally produced eric you are not afraid of google glass am about your pitch sounds a lot like what they say about google glass.

I can take pictures of my kid and i do not have to look away, i can capture all of these moments.

Enough to be looking at the competition, and hatching a plan.

Glass is terrific for catching what you're looking at.

Take your one-year-old.

As soon as they start moving around more, do you want to be filming like this, or do you want to be able to hold your go pro, and build them as they walk around the house.

If you look at the film i made of my family, none of them are from this perspective of me looking at you and they are from perspectives that make for great content other than just your own personal perspectivee.

You are profitable, you brought in more than 120 $5 million last year, one of the numbers looking like?

-- what are the numbers looking like this year?

Very good.

We are looking at one to two times year-over-year.

Business is good.

We are keeping in line with the trend we have set over the past few years for growth.

You are profitable, and you are making more money than you did before.

People are asking about going public, with the market looking good, and twitter wiling for an ipo.

What do you guys think?

As i have said before, we are giving the company prepared, because it is prudent, and it gives us the opportunity, if we feel it is a strategic move for the company that we want to take.

As you mentioned, we have been profitable from the beginning, so going public is not a necessity.

We will see how things shape up . a huge investor in you, they invested at a 2.5 valuation.

How's that working out?


I met him through our lead investor, and he is good friends with terry gou.

When terry was visiting his partner companies, he visited and we hit it off and realize we had a shared vision of the future.

It was a fantastic opportunity to not just part of foxconn -- harder with foxconn, but also a great opportunity for jerry as well -- terry as well.

Now that they have become so successful, and they're planning to go public, where do they go?

Go pro is trying to be more of a media company, and i think on this road to the ipo, you're going to hear a lot of that.

Investors are always curious about what that next page or next chapter is going to be.

The reason that they can point to that is they are a big hit on youtube, people like this video.

They are already packaging this video for others like virgin on certain flights.

I think there is this next chapter that we're still figuring out.

It is the go pro branded content.

Facebook and twitter are the new cable companies were you find all this different video, and these people might be like the new cable network.

Interesting stuff.

We will continue to follow this road to the ipo when it comes to this ipo for go pro.

The world's largest toy company is going to hollywood.

The lego movie.

? welcome back to bloomberg west.

Picked by brick about lego has finally built a feature film, "the lego movie" opens in the artist today -- opens in theaters today.

The road to hollywood wasn't always an easy one for the world's most popular toys.

A look back at the danish company's 82-year-old history.

? lego is most -- the most popular toy company in the world.

More than 5 billion pieces have been produced.

This has made lego the second largest toy company, second only to mattel, but they are still owned by the original family.

It is a contraction of lay well in danish -- play well in danish.

. he bought the first one taken down and -- plastic injection mold them and began making plastic ricks -- brick that will still mold to those today.

After suffering a major loss in 1998, and heaters in teetering dangerously close to bankruptcy, they began to cater to girls and adults.

By 2019, there will be more lego people than pete -- real people on earth.

A new lego movie opens this weekend, ringing many characters in the lego universe to life.

It has only taken the company 82 years to get the spotlight to itself, but a reputation does not happen overnight.

It is painstakingly built, brick by brick.

For more on "the lego movie," jon erlichman by this now -- joins us now.

I am sure you made some awesome lego stuff growing up, so i'm curious about it.

He was the person that made it, the film for dessert -- road user, he joins us now.

What was the thing that pushed you ahead with this project?

I loved lego as a kid, and i wanted to make a movie that my kids could watch together with me.

When i became apparent, this was a 20 we could play together, and i doubt that we're playing together as a family, and why not make a movie that the whole family can go to?

You dumped into that process.

What is the biggest difference between making a movie about lego, versus making a sherlock holmes film?

Honestly, this is my first animated movie.

I have made live-action movies before that, and it is a much slower process.

This took five years from start to finish.

It is a long painstaking process , but gratifying in the end.

As the producer, you end up being this bridge between lego the company and warner bros.

Which made this film happen.

What do you do in this role?

Do you keep a kissing scene in the movie, take it out?

An interesting spot, one hat that i wear is to be the brand steward of lego, to protect their brand.

I immersed myself in who they are.

I've gone to the theme park, the original factories, the events, good to know who they are as a company.

I know warner bros.

As well, as i was an executive there before.

It is nice to be able to bridge both of their interest, and find the best version of the movie that honors both warner bros.

Values and lego values.

Are some big stars in this movie, will barrel, and others very when you start to redound to the celebrities, do they say awesome, or not sure?

They were super excited.

If we got everyone we wanted for the movie.

Most of them play with legos, and are begins inside, playing it with their kids.

The cast was really passionate about the product, and you see it on the screen.

It was reported that there was a lego sequel in the group -- works.

When you talk about wanting to respect the brand, and would you think that you would want to make this one film, or that there was something we could do more substantially over time?

When you first start the movie, you just want to make a great movie.

As we started to tell the story convoy fell in love with the characters.

You will see, you go to all of these different worlds, go to the wild west world we go to we go to the city can we go to water world, and we thought wow, if audience was -- audiences like this movie, we can go forward in the future.

Would love to tell more stories.

Here's your opportunity to boast about your lego talents.

In terms of your lego congressman, what are you most proud of that you have built?

I'm very poor, not a master builder.

My son is the master builder, he is a nine-year-old who throws the instructions away.

I am the opposite, and as the get go to sleep and i'm still playing with my legos.

Thank you for joining us, the producer of the lego movie.

Our bidders to the winter olympics -- our visitors to the winter olympics in danger of being hacked?

? welcome back to "bloomberg west." it has been one of the hottest topics on twitter this week, #sochiproblems.

Many have taken to twitter to complain about brooklyn showers, hotels with round waters, and rooms without tvs or internet.

The games are starting today with the opening ceremonies, and the russian authorities are keeping an eye on potential to -- security threats as well.

U.s. travelers are advised to be especially cautious while traveling.

Perhaps out of an excess of caution, but in circumstances like this it is hard to define access.

Let's be safe.

Clearly this is the high visibility event, the kind of iconic target that terrorists like to go after.

Let's be extra cautious.

Cyber security is a major concern, visitors have reported their devices were hacked as soon as they connected to networks in sochi.

First of all, how big of a problem is this hacking thing?

Is it as soon as you turn on your phone when you get off the plane?

It can be, but the bigger risk is when people connect to wi-fi networks.

As you mentioned, people have hotel rooms with poor internet, and they are desperate for internet, and criminals and organized crime are sniffing that traffic, and looking for privacy information.

Then attacking.

This is about organized crime.


We're seeing the typical criminals that do fishing -- p hishing doing this type of activity, and malicious apps.

Being prompted to download a fake olympic reporting app.

What is the information they are actually looking for, because i read that maybe you're getting hacked, but not actually taking anything, just poking around.

We have analyzed over 50,000 apps, and over 30% are sending information out that can be sniffed by criminals and hackers.

At the end of the day, they want your usernames and passwords to all of your accounts.

A lot of people use the same password on multiple sites, and by having faith -- fake apps or sniffing wi-fi, that is how they get it.

With all the problem that we have had in our security agencies, how can we protect?

It is up to consumers and businesses to have security software on their mobile phones, on the android, their iphone, to encrypt all of the traffic and to look for malicious apps.

What should they be doing?

We need to be having to think, one is the ability to scan apps with security software that can look at the apps and see if there's anything malicious on the mobile devices.

The second thing is to encrypt all of your traffic on those on trusted wi-fi networks.

Anyone can scan a network and intercept your traffic and for all of these businesses, you have lots of businesses people -- business people doing work, i wonder for them, any business with those accounts might be captured, what should those businesses be doing to prepare for the return of all of these agent zero from sochi?

If a device has gone into sochi or another country, if it does not have security software on it, has not been encrypted on the networks, it might be prudent to wipe that device, and restored from a backup.

You might want to do that before you even go.

Not what you tell your employees to do, but what can businesses do on the other side whose customers might be infected after the olympics?

They need to look at where people have been connected to, and password takeover.

If they connected from russia, and then they connected from another country in five minutes, chances are that has been taken over.

Will continue to watch this for everyone who is there, white earphones and start over.

$520 million, that is how much roger -- russia baspent on these olympics.

The most expensive olympics ever.

No kind of spending ever like this before, a lot of it was corruption.

Those story about that year was that they had spent so much money to produce the games, and they say similar problems were not fun for the people there.

Again, so much being wasted incorruption, and going to the people who are never going to be building anything.

We will be watching twitter and the opening ceremonies.

We will see you back here on monday.


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