China Brings Disruptions in the Tech Space

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April 8 (Bloomberg) -- Zillow Co-Founder Rich Barton examines the landscape for startups in China. He speaks with Stephanie Ruhle and and Erik Schatzker on Bloomberg Television's "Market Makers." (Source: Bloomberg)

China right now?

The amount of innovation happening in china especially in the internet space is really difficult for us, at least me as an american, to wrap my mind around.

I thought i had seen exciting times in silicon valley around the internet, but what is going on there is mind-boggling.

For instance, we went and visited alibaba.

The alibaba headquarters are like this thing out of star trek.

I felt like a colonial governor walking in to pay fealty to my new overlords.

These guys do the propaganda video and talked about a trillion dollars worth of gross merchandise value they plan to sell this year, which i think is five times the size of amazon.com.

It was exciting and humbling and i came away quite impressed.

What you are saying amounts to myth busting for many people because as you well know, the conventional wisdom around china and entrepreneurship and technology is they don't know how to innovate and that's why the chinese government conducts cyber as you dodge -- cyber espionage, to steal secrets from the western world.

Are both things happening?

I think both are happening.

I don't know about the stealing part but absolutely, the chinese government has been a key factor in keeping facebook out, keeping google out and twitter out so the services equivalent to those services have time to develop in china and boy have they developed.

We chat which isn't used by 400 million people a day is kind of like a what's up combined with facebook combined with paypal.

People actually use it to pay for taxi rides in beijing and all over china.

Innovation is absolutely happening and the chinese are smart and work extremely hard.

Harder than most anything i've seen here in the states.

Then coming back from china, what is your advice to silicon valley?

Get your act together, kids?

I think we have our hands full competitively.

I asked one company -- i don't know if you are familiar with this new smart phone company.

They are styling themselves as the new apple based in china.

Their devices are really gorgeous and they have an inexpensive and beautiful smartphone that sells for a really cheap price, under $200, that sold 40 million units last year and i think they expect to sell 100 million units this year.

I asked the team and their charismatic founder when it's going to come to the united states.

Through a translator he answered probably not anytime soon because we will have legal issues with google, apple and microsoft.

How interesting.

I want to ask a question about google and it has less to do with google and more to do with the way to encourage not just innovation but to commercialize it and get people to use your stuff.

I think about expedia or zillow, the companies you were involved in the cofounding of, they are both built for a purpose.

Expedia is an online travel website and application and zillow is in the real estate business.

Google does many of the things both of those companies to call but you would not know because they are buried inside google.

I'm thinking about the announcement they made just yesterday licensing room 77 software so you can book hotel rooms on google.

You can do on google what you do on kayak.

But nobody knows it.

This is a really interesting strategic question.

In the old world, where google is a desktop search engine, their desire and ability to get deep into these verticals like travel or real estate or jobs or online reservations at restaurants or food ordering, their desire to get into those verticals was pretty limited, so we did not see a lot of vertical integration.

They were making a tremendous amount of money simply by redirecting people to the competing services and those verticals.

As we move to a smartphone based world where google is far and away the dominant platform -- a 90% market share for android, they are losing a revenue stream . they make all their money in search by ad words have more people by keywords.

In the smartphone world, there's not that opportunity, so they're trying to figure out how to go deeper up the stack and integrate these vertical services.

It's a serious concern for me and my portfolio.

We are watching it really carefully and we want to partner with them where appropriate but we also have to keep a keen eye on what our value proposition is to our consumers.

That's one of the reasons we are investing so much in those zillow brand right now.

I want to ask you about your or folio.

You are invested in another -- in a number of startups.

Where is there the most promise?

I'm lucky to have a fantastic group of portfolio companies i have helped it together.

They all follow a common theme and i call it power to the people.

I'm really intrigued by enabling people with smart phones and pcs to plug into a world of information -- what company is that?

What company are you betting the most on?

Barely, zillow is doing incredibly well.

I have a really capable team running it.

The one i'm spending quite a bit of time on right now is a company i cofounded called glass door.

It is trip advisor or yelp for employment.

Maybe you guys have used this site.

It's a terrific site to use for journalists because it gives you an idea of what's really going on in companies.

There are salaries and you can figure out what journalist or software makers make at google if you're working at face.

It's a really interesting site and we have about 18 million unique visitors a month.

The business is getting quite large and it will expand globally very gracefully because like trip advisor, it is user generated content.

The more content we get, the more audience we attract, the more audience we attract, the more content we get.

It does sound like a good reporting resource.

We are going to check it out.

I want to ask you about your appointment as ambassador for global entrepreneurship.

A lot of cynics say this is nothing but a photo op.

Why is it important -- it's a good photo op -- why is it important for you to be, did again with the government?

You know well the line we consistently hear from people in silicon valley is that we are changing the world.

Government is far too slow to do anything of value.

Lex i think we should all try not to forget the foundation upon which we build our companies here in silicon valley and in the whole valley, the foundation is good governance and respecting property rights and a functioning judicial system.

There are all kinds of issues we get caught up with in government but this country is the greatest country in the world to start a company and.

Why i accepted this honor to be the presidential ambassador for global entrepreneurship is the united states greatest export is our brand of startup capitalism, our entrepreneurial spirit will stop i have a really good time when i go overseas and talk to young entrepreneurs from around the world who are trying to make their lives better, make their mothers lives better, and lift their countries up.

I think a key mechanism to doing that is through startups and capitalism.

I like you, rich barton.

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

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