Cyber Monday Hacker Heaven: Bloomberg West (11/29)

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Nov. 29 (Bloomberg) -- Full episode of "Bloomberg West." Guests: Source Metrics Founder and CEO Scott Lake; Adly CEO Walter Delph; Marble Security Founder and CEO Dave Jevans and Motif Co-Founder Hardeep Walia. (Source: Bloomberg)

Live from san francisco, welcome to the early edition of "bloomberg west." i am cory johnson, in for emily chang.

Our focus is innovation, technology, and the future of his mess.

Shoppers line up for black friday sales.

More people will hit the online checkout today.

Hackers are also trying to find out -- they are trying out new tricks for the holiday shopping season.

Find out how businesses are fighting hackers on black friday.

And microsoft has narrowed down the next ceo.

Alan mulally is at the top of the list.

What would it take for him to take the reins?

We will see.

And "frozen" is heating up the box office.

We will go behind the scenes to see the business behind this blockbuster.

First, it is black friday.

Early reports are off to a strong start.

Amazon's sales were up 30% over the last two.

According to ibm, online sales were up 20%. mobile usage is skyrocketing.

Cyber monday is right around the corner.

People get back to the office and, rather than work, they shop.

Cyber monday is changing dramatically.

Cyber monday was lucky to crack the top 10 of e-commerce shopping days.

Price-cutting online has led to cyber monday becoming the weakest day of the year for e- commerce.

Last year, it grossed 1.5 alien dollars in sales.

17% more than the previous year.

For more, i want to bring and scott, the ceo of source metrics.

They were track -- they help retailers track sales.

Talk to us about what we know.

Every year, the retailer say that things are great.

People are shopping.

Later on, we find out what is good or bad.

What is happening today?

There will be 100 million people who will hit the stores today.

That is quite amazing.

The interesting thing is that it is a shorter shopping season.

We have a lot of competition between online retailers, who would love for you to just buy online.

Brick-and-mortar retailers want you to come to the stores.

It will be interesting to see how this plays out.

I know that the mobile commerce aspect, or the use of smart phones, will play a lot into how black friday goes.

The first part of what you said -- you could've said before.

They both want the money.

What is different this year?

Is mobile different?

Is social media substantially different?

What you will see this year is that the portion of mobile commerce transactions will go up.

It will probably be 20% of all transactions on cyber monday.

What is happening on the retail inside is that there is a battle going on with smartphone technology.

Retailers are using smartphone technology to get people into the stores.

They can interact with either their in-store apps, they can interact with discount or couponing apps, or reporting apps to get people to buy more products.

At the same time, they're making it as easy as possible for people to buy directly on their phone.

It is a battleground.

How do they measure these things?

It is very interesting.

What we do is help to measure the impact of sales from social marketing campaigns.

What that means is, as retailers are pushing people to -- as they are pushing their products out in social media, we are trying to find out how people can convert that in-store.

When a retailer sends a product from a phone and they like it, they going to the store.

We want to know how to convert it.

This is been a hard thing to do.

You usually have to do this with the point-of-sale system.

We are trying to take that out of the equation and simply allow people to have a conversion tract on their mobile phone through an unlocking code.

The cool thing about that is, from facebook, they can then lead us to track things like clicks and conversion and store location.

And the time the conversion took place.

What that means is, we get a whole other amount of data.

Specifically, around the transactions that are happening as a result of social.

The reason social is important is because, for the most part, the in-store experience revolves around apps.

For an app to be successful, they have to download it.

It has to be in your pocket.

One of my favorite metrics is that the number of people who actually continue to click is 1.3 openings since they have downloaded it.

They don't use it.

Every day, they're looking to see what their friends are doing.

If they follow brands, the brands can market to them directly.

We're trying to do leverage that use.

There are twitter users -- we are trying to convince brands to push information through the mobile stream to the communities they have already built.

They have millions of followers.

The conversion rate -- even if they appear to be small, result in large transactions.

What we're finding is that the conversion rate can be very high.

We have had -- there was a gartner analyst who said that the conversion rate could be 20% or 30% for some of these offers.

Compared to single digits for other offers.

If you can get a two percent conversion rate on an ad buy, then that is a good conversion rate.

Scott, i wonder if this is a pivotal technology shopping season for all of those reasons.

Interesting stuff.

Thank you very much.

Microsoft's board has narrowed its focus to do to ceo candidates.

We will tell you who they are later on "bloomberg west." ? this is the early edition of "bloomberg west." you can also catch us at 3:00 pacific.

Microsoft has narrowed the shortlisted candidates to succeed steve ballmer as ceo.

The leaders are ford chief alan mulally and satya nadella.

It looks like this is coming down to the internal cloud versus the external card guy?

It feels that way.

This is a huge decision for the company to make.

The board would like to make this decision by the end of the year.

A lot of moving parts to it.

If it comes down to these two, you're talking about somebody who is not a technology background person.

He is somebody who could take the roadmap that steve ballmer has set out and add the outsider -- he would be in the position to make a few hard positions -- decisions that would be hard for an outsider to make.

The dela is somebody who has not gotten as much attention in the past.

He certainly knows the world of technology very well and knows the enterprise part of the business.

That is very future -- important to where microsoft goes.

To be clear, i had nadella from the very start.

He was my guide.

There you go.

Go ahead -- please continue.

I was going to say, i think there are just -- different opinions.

For someone like stephen elop, is it the case that he is lower on the list of internal candidates?

Certainly, he is somebody who gets headlines because he ran a public company and has come back to microsoft.

The question is, does the experience of running nokia, it's already had its fair share of problems -- the right experience that is needed to take microsoft ahead to its next place?

Does this ultimately come down to the company -- is this bill gates'decision?

He has some sort of a vote on this, like all of the other board members.

The other view is come on, it is those dates.

This is his baby.

A lot of his worth is tied up in it.

Once a candidate is selected and becomes the new chief executive, people are doing the analysis -- if that ceo is not deemed successful, what does bill gates do then?

That is why he is part of this process.

All right.

Jon erlichman, thank you very much.

Cyber monday shoppers will be looking for the best deals.

Amazon.com actually hides its super low prices.

Sam unveils the secret behind those hidden discounts.

You know when you are shopping online and the price of the thing all me appears when you put that thing in your shopping cart?

What is up with that?

It has to do with something called minimum advertising.

It is an agreement between a manufacturer, like samsung, and a retailer, like amazon.

It governs the price that they can advertise for a particular product, like a tv.

Why did they want to control the price?

They do not want their products looking to cheap.

That is a way to control the price, at least in the open.

That product page?

According to the agreement, it is considered advertising.

Amazon is not allowed to post a bargain basement price there.

If they did, samsung could cut them off.

This is very important because we compare prices online.

If there is no crazy low price on the product page, there is no crazy low price showing up in a search.

That would undermine all of their pricing strategy.

When that price shows up in your shopping cart, that is different.

That is between you and amazon.

Amazon retains the right to sell you a product at any price it wants to.

The agreement just controls the price it can advertise.

Manufacturers do not really care if their product is sold cheaply.

A sale is a sale.

You just do not want everyone to know about it erie it -- know about it.

Coming up, i will be inside the amazon fulfillment center in phoenix.

We will show you what amazon is doing to crush the holiday season.

? i am cory johnson.

In for emily chang.

You can also catch us at 3:00 pacific and 6:00 back east.

Now to the top headlines.

China is scrambling to unveil a new defense zone after japanese planes flew into the area.

They are scaling back on threats of military retaliation.

The u.s. has said they will not honor the declaration of the new defense zone.

This is over islands in the east china sea.

Protesters in ukraine after the company -- the country rejected a trade deal with the european union.

Leaders have decided to forge closer ties with russia instead.

They will address these rallies tonight in kiev.

And brooklyn nets head coach jason kidd has been fined 50,000 dollars for intentionally spilling a drink on the court dream wednesdays game with the lakers.

He spilled a drink on purpose to get extra timeouts as the team was trailing.

The spill was not on purpose, but the lakers one of the game 99-94. shoppers are crowding the stores on black friday in bigger numbers than ever before.

Retailers -- what about the brands?

How are they reaching out to deal hungry consumers?

Jon erlichman nouns -- joins us from l.a. social media is playing a big role in boosting brand awareness.

One of the companies that is helping to distribute holiday shopping campaigns for social networking sites -- the ceo joins us now with more.

Walter, do retailers make sure they have the inventory and pricing figured out?

What about the social media strategy?

What is the first thing they have to do?

The first thing is to make sure you are engaging with your consumers before the big holiday.

Do not just blast them with campaigns and different offers on black friday.

Get in there and have conversations with them one week and one month in advance.

Get them excited about things that are coming out.

Get them in-store, not just last them with one message.

Let's go to one example.

Wal-mart -- the chief merchandising officer was on bloomberg and said that things have been encouraging so far.

Cyber monday is so important to them.

What are some of the things that they are doing via social media?

We have worked with them in the past.

They are all over social media.

They send over 200 messages per day.

They have different fans across different channels, whether instagram, facebook, or twitter.

They are not only engaging frequently, but they engage with multimedia.

They add pictures and video.

Walmart is actually having conversations, which is the best way to get high-level social interactions with your consumer.

I have always wondered about those conversations.

You are absolutely right.

You can reach somebody directly whom might be frustrated, whether they had a bad in-store experience or online experience.

Do you have to address every single complaint?

Sometimes, the complaint is not justified -- i think it is a different way of looking at it than the past.

You have a mechanism to engage with consumers.

Not every interaction will be a good one.

The important thing is being true to the brand.

Being authentic.

Consumers really appreciate that.

One of the things that we do is bring and influencers.

They bring out certain attributes that brands have.

That is really valuable for the medium.

Celebrities, influencers and whatnot -- they are very influential.

They reach a lot of people and they generate a lot of buzz.

They generate a lot of favorites or likes, which can help a brat -- rand.

-- brand.

If this is about getting your brand out there, about total sales -- everyone remembers oreo during the super bowl.

It was very successful.

Twitter used it as an example on the road to its ipo.

With cyber monday, it is not a live tv event.

It is an event that people are discussing.

What are some of the ways that a brand can get its name out there?

Even if it is not about the number of things you can sell on one day.

Let's do a deeper dive here.

One is about having the conversation prior to the event.

Get involved with your consumers.

Then, with social media, you can do real-time marketing.

You can do contest and sweepstakes.

You can bring certain items to the top.

During black friday or cyber monday -- you can offer up different products.

You can have expiring windows.

You can do a lot more flexible and creative things.

It gives those marketers the ability to come up with ideas that consumers really resonate with.

It also gives the brand and ability to drive different types of promotions.

They have been planning this all year long.

All right.

Walter dell, joining us with the outlook for cyber monday and the social media strategy.

I appreciate it.

Back to you.

What a cool company.

Shoppers are not the only ones gearing up.

Hackers are also preparing themselves.

We will tell you how to protect yourself and how businesses are trying to fight hackers on cyber monday.

? this is "bloomberg west." i am cory johnson.

They have now scrubbed the second launch attempt for the falcon rocket at cape canaveral.

Some engineers manually pulled the plug on the launch.

It will be a few days before spaceex tries again.

The rocket is putting a commercial satellite into space.

It will peak 50,000 miles from the earth's surface.

Holiday shopping is expected to jump 15% this year.

But, consumers and retailers are not the only ones looking for a busy shopping season.

Hackers are also looking to make big bucks.

More people are turning to mobile devices and e-commerce sites to shop.

Those scary looking hands -- how are they planning to get your data?

I sat down with the founder of a firm called marble security.

They focus on preventing malicious activity before it happens.

Cyber monday is one of the biggest shopping days of the year.

Particularly online.

We see it as one of the most risky days.

The days leading up to it are risky as well.

It is -- is it just about the volume of transactions?

Or are people trying new sites that they have not done before?

It is both.

It is also the criminals know that we are doing online transactions.

They may not be in this country.

They may be in europe or asia.

The same is true with cyber criminals.

A pickpocket lovesick route.

-- loves a crowd.

The attacks seem to be like shipping a fake -- delivering fake shipment conversations -- confirmations.

The new attacks are like trying to install a mobile lab.

A coupon app or a shopping app.

That poses a danger to consumers, but also to businesses if people bring those devices back to work on tuesday.

What happens?

Those devices have applications that might take passwords.

They might allow criminals to get into a network.

They also might take, for example, the corporate database of all of the people who work in the company.

It could send off of the mobilephone or ipad to someplace in russia.

It exposes everyone to further attacks.

The coupon app downloads -- in terms of spending, to get away from these problems, are the big retailers being more vigilant?

Are they spending more money to keep their shoppers save?

What they're doing is spending more money on cyber security.

They are more on authentication.

Particularly for ebay.

They're protecting their top sellers, with a variety of different programs.

They also work with the variety of nonprofits and other security groups to monitor the internet.

They look for fraud.

We also see some of these groups that are leading the charge in law enforcement, globally to find these people.

Are there concentrated rings that are small?

They are generally pretty small.

Where?

We see them in eastern europe.

It is spreading much more globally now.

Cyber crime is starting to spread into asia, south america is joining a party.

These groups of criminals are working together.

They may never see each other in person.

Are there reputational risks as well?

Yes.

There are definitely reputation risks.

If fraud is starting to happen to their customers, people lose trust in those brands.

That is a big problem.

You lose a significant amount of business.

What is the biggest take away?

When will we know if it is a bigger problem?

We will know within one week or two afterwards.

We will have initial indications.

You probably will not get a good handle until january of next year.

That is when credit card information will start showing up.

The chargebacks will start happening.

The bank and hence the retailers will start to get a handle.

The bank is at risk as well?

It up a banking rates -- it is a banking risk and a corporate risk as well.

That was my interview.

It is a platform that allows you to invest in ideas.

The motif investment next on "bloomberg west." ? this is "bloomberg west." i am cory johnson.

This company announced that it will declare chapter 11 bankruptcy.

In a statement, they say that they're secured lender had seized their bank account.

We reported that they were having a previously undisclosed felony conviction -- it was later amended to a misdemeanor.

He told us that his only conviction was for trafficking stolen property in exchange for marijuana.

They have proposed selling their assets to toshiba.

An online brokerage does not want you to buy stocks.

Motif wants to diversify investment across the scene.

How does this work?

Here now is their ceo.

You have a very interesting -- the show is about technology.

Your company is about both.

Your viewers are inundated with great investing ideas.

You can go bankrupt over a ceo's dealings.

We want to take ideas and allow your viewers, investors, to act on them through motif.

This is a basket of 30 stocks.

They are intelligently waited.

They are built around ideas that we can all understand.

Cloud computing, all of these interesting trends.

This sounds like an easy -- are companies call us a no fee, customizable etf.

You own the stocks.

You can tweak it and make it your very own.

One of the things we announced is that you can actually go online today and build your own etf motif.

Put it on the web.

Any time someone buys it, you get a royalty payment.

Explain this.

It is long only.

Pretty soon, it will be long, short.

You can change this by moving a simple slider.

You could be long starbucks and short green mountain?

This is the kind of thing that should charge fees.

We do charge a transaction fee.

You can put $1 million to work.

There is no management fee.

Or etf?

Those fees will add up.

One of the things that you understand about investing -- we always talk about the return.

There is a huge ttaax.

One of the reasons we are beating the competitor with our motif has to do with stock taking.

It has more to do with the fact that we do not compound these fees every year.

That eats away at your return.

This is one of the tricky things about some mutual funds.

The way that they harvest their returns is actually incurring taxes.

You own underlying securities.

One of the things we will launch is you can harvest your tax losses at the security level.

When we launched next year, you can tell out all of your losses.

All of your stocks that are down -- we will reinstate your portfolio.

You cannot sell something for loss and then turnaround and by it the next week?

We will reinstate your pull fully.

-- portfolio.

Or you can maintain your exposure.

That is the model.

Really clubever.

Let's talk about the technology.

Why is this possible now?

The online platform is social.

How do you find customers?

How do you go in?

We have a process for acquiring customers.

A lot of our algorithms are possible because 10 years ago the technology was not able.

We can sell you 30 stocks for the price of one today.

It would cost to $300 to buy the equivalent product at an online broker.

We are disrupting the economics of this industry with a high margin product, first as a money loss product.

Are you actually buying the stocks?

No, you were buying the stocks.

Interesting stuff.

Fascinating company.

More coming up after the break.

Cyber monday in this exciting e- commerce -- ? welcome back.

I am cory johnson.

Disney's "frozen" opens this week.

It has already sold millions of dollars in tickets.

Jon erlichman spent some time at their animation studios in burbank.

He is looking at the business behind "frozen." how similar is this to pixar?

Similar leadership.

They just highlighted that they have generated $400 million in box office.

They have had success with films like "monsters university." that is helping the team overall.

Here's more on the back story.

It is completely frozen.

This movie is based on hans christian anderson's "the snow queen." patience pays off.

We have waited a few decades to write the story.

It follows hits like "tangled " and " wreck-it ralph." disney animation is in a creative renaissance.

He cites their purchase of pixar in 2006. veteran chris buck recalls sentiments at the studio before the deal.

There was a different attitude towards animation.

A different feeling in the studio.

He credits the leadership of two of pixar's founders.

Lassiter was the first to run the studio since walt disney.

He understood what everything was going through at each stage of production.

You cannot buy that sort of empathy.

He showed us the caffeine patch -- with pixar's atrium and mind.

Is important to us to have accidental encounters.

For jennifer lee, the studio that released "nosnow white" -- blow it up if you have to.

That is such a wonderful mentality.

They use the technology that powers today's films.

It is distinctly disney and incorporates the 2-d look that they have mastered.

There is a lot of different people throughout the company who are really rooting for disney animation to find its way back.

The biggest opening --

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

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