Heartbleed: NSA Connection?: Bloomberg West (04/11)

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April 11 (Bloomberg) –- Full episode of “Bloomberg West.” Guests include Veracode’s Chris Eng, Lark’s Julia Hu, Rent The Runway’s Jennifer Hyman, Legendary Actor William Shatner, Delectable Wines’s Alex Fishman and Bloomberg’s Leslie Picker, Jordan Robertson and Sam Grobart. (Source: Bloomberg)

Live from pier 3 in san francisco, welcome to "bloomberg west," where we cover the global technology and media companies that are reshaping our world.

I'm emily chang.

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

Let's get straight to the rundown.

The nsa may have known about the heartbleed virus for years.

We will look at whether the selloff will give some company second thoughts about going public.

First, a check of your top headlines.

Salesforce will leave half of the office space under construction here in san francisco.

The 61 story skyscraper is scheduled to be completed in 2017 and we the tallest building in san francisco.

Chinese e-commerce giant ali baba, the takeover valued at $1.5 billion.

It allows them to expand into another internet area as it tries to broaden its customer base.

Sony is telling consumers to stop using the new bviofit laptop.

The battery may overheat.

First to our lead story, the nsa may have known about the heart bleed security bug for two years according to people familiar with the matter.

This is one of our bloomberg reports we are standing by even though the nsa has denied this.

Twice it is shocking.

-- it is shocking.

Despite the risk of hacking, they made the decision to keep it a secret.

I do have their statement.

The nsa was not aware of the vulnerability.

The so-called heart bleed vulnerability.

Reports that they otherwise are wrong.

It is government policy to not do this.

There is no way to know.

Joining us now to talk about this, who looks at these things, what do you pick of the report?

It is interesting.

The bug is a major vulnerability that affects the critical component of the infrastructure.

We have not seen nsa explicitly deny knowledge in this way before.

They usually have carefully crafted wording around it.

He may not have had advance notice.

To you think it is possible the bug could have been out there for two years and they didn't know?

There is always a possibility.

It is such a widespread library that it is going to be the target of a lot of scrutiny by any intelligence agency or anybody looking for software bugs.

I would imagine they were looking at it and they didn't find it.

We know from previous reports they have a lot of different tools at their disposal.

Some of the other exploits that they may have had may have been more effective for that in these targeting scenarios.

What about the notion that there are speculation the nsa itself, it helped contribute this piece of code secretly and left it there on purpose.

Again, i think that that is far-fetched.

A bug that you introduce would be a lot more subtle and provide you with a lot greater degree of access to information that you wanted to search out.

The way this bug works is that you get that data from a server that is not really under your control.

You do not get to choose what you get.

That makes it less useful than a bug that would give you unfettered backdoor access.

The nsa hunting down these kinds of one abilities?

We know from the weeks of the past year or so that they definitely look for vulnerabilities in software.

They find ways to exploit them.

Waste to further their mission.

I do believe that the nsa or other intelligence agency or anybody looking for vulnerabilities would be targeting open ssl.

It is so widespread.

It is used everywhere.

Two thirds of all web servers are using some form of this.

Ok.

we will continue to follow this story.

Thank you for sharing your view.

We want to give you an update on the way the markets ended today.

The major selloff in technology stock and tenuous.

The nasdaq falling, its largest weekly loss since june 2012. what is interesting, so money stock to go public.

It brings us to this question, how companies think about when they are going to grow, when to spend on growth, and when to spend on tech.

What is this going to mean for the ipo market?

Will that change?

Is it going to impact box?

They have filed for ipos.

Bloomberg news, joining us now from new york, what is your sense?

Is the selloff going to continue?

It depends on what investors are thinking in terms of these ipos.

In terms of what it will do to impact the market.

The nasdaq was skyrocketing.

Investors were looking to the ipos as a way to outperform.

Now they are going to be pickier about what ipos they will invest in.

I wonder about these giant ipos that are out there.

There is this huge sound of ali baba coming down the market.

I wonder if that can get done in a week market.

We reported that alibaba can file as soon as this month.

We could expect to see their initial filing.

They most likely will wait before pricing.

They do accord themselves some time to allow markets to recover . it could be beneficial, aside from pricing which may be difficult.

It could help them in terms of beating first-quarter earnings.

And then, rising from there in terms of stock price.

Lex how likely is it for companies to change their timeline, the schedule they have had planned?

When twitter went public, in the middle of the government shut down.

It ended when twitter came out of the gate.

There was speculation, is twitter going to change its schedule.

They didn't. it has to do with what they need the funds for.

If they need them immediately, they're going to push to get the deal done.

I heard that for several companies.

Despite the selloff we are seeing they are going to push the deal.

If you can afford the time you will way.

You can push your deal out.

You can see if the market settles and then go out when it is,. i talk to folks, the deal is still planning to go ahead.

Maybe as early as next week.

Companies where they are spending more on marketing than they have on revenue, they don't have a long momentum.

They might need to go out in other markets.

They are going to be pickier.

We are going to be cheesier than they listen to these companies pitch stories and business models.

These investors are not going to be counting on the momentum like they did a couple of years ago when the markets were strong.

It is going to be difficult.

What is going to happen on monday?

Read the tea leaves for us.

Monday is passover.

A lot of wall street will be off.

We have a couple of companies on top.

We have mollis pricing on tuesday.

We have sabr.

Plenty of news on tap.

Companies -- it doesn't seem to be slowing anytime soon.

It would be a big surprise.

We are going to be closely following those.

Our ipo reporter, thank you.

Up next, more on the heartbleed glitch.

That is next.

Welcome back.

The heartbleed bolick has been found in hardware connecting homes and businesses to the internet.

Some products are susceptible to the encryption bob which was discovered by researchers.

The flaw could allow hackers to get access to personal data, passwords, other sensitive information.

We are joined by jordan robertson.

A new development you are writing about is that this bug is in millions of android devices.

We learn about nor -- we learn about more devices affected.

We thought about this as a web server bug.

Yahoo!, google, facebook.

What wasn't known was that a lot of hardware also used this vulnerable software.

Cisco, some of their software.

It is android phones.

Millions of them.

It is an older version, but a lot of people still use them.

Millions of devices.

The interesting part it is the responsibility of the handset makers to push out the patch.

The way android works, say you have a samsung phone.

If google puts out a patch for android, samsung is responsible or your wireless is responsible for pushing that out to you.

Cory stone got hacked -- so cory's phone gets hacked, it is samsung going to be on the hook for lawsuits?

This is an area where it is a weakling.

It is harder to attack a phone versus a website.

It does mean that samsung and verizon, they are the ones responsible for fixing these devices.

These are the guys who are the guts of the internet.

When there is stuff wrong with their devices, they need to be fixed quickly.

How?

You have to apply a patch.

It is a similar situation.

You have to do the patches one by one.

One router has to download the patch.

It takes a lot longer.

Even if you're diligent.

It is manual labor to do all of these updates.

Google already has the patch for this.

It takes a long time to get the patch out.

If you're an android user, update.

All right.

You will keep us updated as it develops.

Thank you.

Now onto android devices.

It goes on sale today.

Offering lots of incentives, up to $600 in freebies, including a linkedin account and paypal voucher.

The company is trying to stand out.

Apple is the big competitor.

Galaxy s5, lots of free stuff.

Sam joins us now.

What is in this phone.

This is an incremental improvement on the galaxy s5. take any feature and expected to be faster, bigger, better, lighter.

There are new fingers -- there are new features, a fingerprint scanner.

It is waterproof.

Up to one meter submersion for 30 seconds.

The general take on this phone is typical next step.

Everything is better.

Nothing extraordinary.

It is getting mixed reviews.

How do we think this is going to sell?

How do we think this is going to do against the iphone?

The iphone is its stiffest competition.

The other competitor is slowing down at the high-end of the smart phone market.

All numbers indicate this is a shrinking portion of where smartphone sales growth will come from.

Given the fact the galaxy s5 was considered a success, but maybe not as amazing as the galaxy s5, the numbers may not be as stellar.

All right.

Sam grobart, thanks for giving us that update.

We will have more on samsung coming up.

We will sit down with one of the makers of a fitness app that is using samsung's biometric sensor.

And, watch is on your phone and tablet.

Welcome back.

I'm emily chang.

And i'm cory johnson.

I well rested.

Likes good for you.

We are talking about fitness apps.

A heart monitor that can monitor heart rate activity.

Apps are plugging into that.

I am all about them.

I can't having my -- i can't handle my life being analyzed in that way.

Helping people understand their sleep patterns, there have interesting twists.

Right when this new samsung phone, you guys used to talk about this.

Now on every single phone, you can have a personal coach that uses your phone as your activity tracker.

Then it figures out what is the easiest way to be healthy.

And, it coaches you on that.

Show us how it works.

We are different in a few ways.

The first one is now you do not need someone strapped on your wrist.

This does everything.

It doesn't kill battery.

It is a personal assistant.

Unlike others, it doesn't just track and monitor your data.

It has a conversation with you to get you motivated to become healthier.

I need motivation.

Look at this.

It is just having a conversation.

It says you are doing well so far.

I can say great.

What does that mean?

You get a lot more walking in the midmorning than you usually do.

I was running around to come here.

It really starts having a conversation.

Talk to me about the partnership with samsung.

Sam some came to us about a year ago.

Our collaboration started then.

They thought health was huge in their next device.

They said there is so much data that is going to be out there.

So what?

Who cares about data?

Can you do with data?

We have been working with top experts for many years.

We know that if you can coach people at the time that they are making decisions, and then you can actually help.

To i need to walk more, what will i eat for lunch.

I have been using the that bit.

An unexamined life is not worth living.

I am weird in that regard.

Most people discarded after six months.

Even shorter.

So, people don't do that with their phone.

Is that an advantage?

Absolutely.

I heard the statistic that said phones people have, 90% tethered within three feet of their body 24 hours a day.

If we can use this phone and it doesn't kill battery to track your walking, running, will driving, we can understand information about you in real time and coach you at that moment when you're making a decision.

Should i walk further today so that nice restaurant, or should i drive?

That would is what -- that is what makes the difference.

The galaxy s5 goes on sale today.

Thank you.

William shatner will be joining us.

Are you star trek fans?

I was.

His priceline ads continue to be briel -- his priceline has continued to be hilarious.

I'm emily.

This is bloomberg west.

Streaming on your tablet am bloomberg.com.

Rent the runway, the members only fashion site, is on a tear, growing and expanding, opening a brick-and-mortar store.

We caught up with jennifer heineman, asking how the company is harvesting mobile shopping.

Our mobile business has exploded since we launched our at.

For two percent of traffic is going through mobile.

The engagement is seven-10 times the engagement of people who are just on the web.

We see it as a browsing platform.

It is easy between meetings to just daydream about dresses and excess threes for five minutes.

The other think we see it is, a seamless way to track your order.

Women are going on and figure it out when is my order going to show up at my house.

You open to retail locations.

How do you balance the physical retail side versus the online side of the business?

Our customer is this go-getter woman.

She is using different channels for different things.

Our retail stores are interesting places, which we billed as technology first stores.

A woman is coming in.

She is trying on 15-20 dresses for her upcoming occasions.

That information of what that her and how to access arise the look is being stored in a virtual closet.

In one click, she has all of the outfits she needs for the year.

You see more of those?

We are going to do more.

In terms of scaling the business, where'd you see this going?

Beyond dresses and accessories?

Lex 100%. we will have exciting news about the further disruption of the closet.

You are not your traditional company.

We have seen e-commerce companies that were once hot struggle.

I was talking with kevin ryan, who's thinks that the e-commerce companies are going be whittled down and there we just a few big companies that rise to the top.

What do you think?

It is a tough business.

E-commerce is top.

Traditionally, the margins are low.

We have high gross margins.

We can utilize inventory dozens of times.

Because we control the operations from end to end, we know how to preserve the lifetime of our garments and how to buy more efficiently.

How is it going?

What can you update?

The business has exploded over the last few months.

We have seen almost a trickling -- a tripling in orders.

Our loyalty rate has doubled.

Our bookings have doubled.

We discovered that women would rent for more occasions and would consider us for date nights and saturday nights out if the price was right.

When it comes to social platforms like facebook, twitter , interest, does one offer you more?

Platforms that are photo-based are incredible for us.

Rent the runway enables women to build their personal brand.

Facebook has been a massive channel for us in terms of word-of-mouth and how people find out about rent the runway.

What about instagram as a platform?

They are rolling out more ads.

You think they could be useful for e-commerce?

I am more excited about pinterest rolling out their advertising.

When women go on pinterest and billboards for their wedding or bachelorette parties, they are in the mode of either dreaming, or of shopping.

You wrote a blog post about how you have developed as a young leader.

You say you have your own personal board.

Describe that to me.

It was on your board?

I found that one of the great things about being a young entrepreneur is that there are all of these other young entrepreneurs.

We are doing this for the first time.

Lexi have said being a ceo can be lonely at times.

You think it can be lonely being a woman ceo?

It is difficult to be a female ceo.

The only role models i have had in my life are men.

When a man ask tough, he is viewed as being confident.

When a woman acts tough or she has a point of view, she can be considered aggressive, bossy, other negative words.

Trying to figure out how do you be authentic to who you are as a woman, and how i am able to be warm and loving in the office, and being tough, and aggressive, because it initially i was trying to model what i had seen in the past.

That was an authentic to im.

I feel that over the last two years becoming more comfortable in my own skin, i can laugh with people.

I can hug with them.

I can dance to madonna, which i have.

We can set really hard-core priorities for the business.

He can meet high objectives and be tough and aggressive.

That was the ceo and cofounder of rent the runway.

Coming up, william shatner.

Captain kirk himself.

Tj hooker, there he is.

You're watching bloomberg west.

I'm emily chang.

He is a legendary actor, best known for his role as captain kirk on "star trek," but a new generation of fans know him as the priceline negotiator.

William shatner is an author, recording artist, and the owner of his own ios and android app.

Shatoetry.

It allows you to say almost anything in his voice.

On april 24, his one-man broadway show hits theaters for one day only and he will be the start of a new home renovation reality series on diy network, legendary actor william shatner joining us from l.a. how do you say it?

Showtoetry is very imaginative.

There is nothing like it out there.

I read words, you the owner of the app choose the words, choose the delivery and then you can send it as a message that you want to send but with my voice.

Throw out a few at us.

What?

I can do the voice, maybe.

Throw a few words out.

Your voice is too deep and around and volume in us.

-- you have to go through your nose.

I can wiggle my nose.

Now you've got it.

Turn to your left and say i love you through your nose.

I think she will slap me.

There is something about your character from even before star trek days but this whole reality thing is interesting.

You bring out this comedy and it works and connect with people.

Do you have a sense of what that is so you can re-create that in your different roles?

No, do i have a sensibility about what i do?

Yes and no.

An actor should be both conscious and unconscious of it.

Aware but unaware but if you are too aware, you are self-conscious and of you don't know what you are doing, it's happenstance.

You work on multiple levels.

Why this reality show and why now?

It's really interesting.

They came to me and asked me to update my house.

Much to my chagrin, the house needed updating.

It was like a wish fulfillment.

My wife said we need new appliances and i said we will get the appliances.

She said i wanted to break this wall down.

All of a sudden, there is diy saying we will do all of this for you and put it on camera.

And they did and it's fantastic.

The result is every homeowners dream.

They say ok, done.

Somebody else gets it and puts it in and makes it work and somebody else cleans it up.

It's wish fulfillment, really.

That is the show titled " shatner project" and that will be on in october.

Plus, there's something more relevant and more progressive than that.

On april 24, at a movie theater in your neighborhood and wherever that neighborhood is across the country, this one-man show that i did on roadway where i toured canada and most of the united states is on movie theaters.

On april 24 at 7:00 at a movie theater near you, for the price of a movie ticket, you can see this acclaimed one-man show.

If you can find how to buy tickets at the theater near you, you can go to shatner's world.cimema, the websites will let you know how to buy a ticket in your neighborhood.

It's really worthwhile and you will have a great evening's entertainment.

The world of apps and websites and smartphones -- "bloomberg west" is all about technology and business and i suppose you have given a lot of thought to this because of what star trek" step -- touched a nerve with so many people and it has been almost 50 years.

Why do you think people love technology so much why do they see the future in gadget so much a fascinating subject to which i am applying myself.

The moment before i came here, i was arranging something and the moment i leave here i am arranging something.

I stumbled over the words app and website.

In a business venture i am starting the results of which will be out to the end of the year, an app that ties to a website that feeds you pictorial and verbal information so that all those separate applications combine.

There's this whole technology.

When bloomberg began was right spanking new ideas.

It is -- it has now matured and you guys are progressing.

There is so much more out there.

I sat at a table last week with three kids who were popular on i -- one vine.

These kids were the most popular people for their six seconds of communication on vibe.

-- on fine -- on vine.

They did not know who i wasn't and i did not know they were.

There is such a turmoil going on in this industry, and this communication.

There is such a burgeoning thing going on that we are barely able to see the horizon.

You are big on twitter and you recently quit titter and came back u andnquit.

What happened there?

I came back so i could tell my twitter audience that april 24 is an important date.

There was a terrible mixup and the story is to disorganized to tell you except that i quit and then came back on within moments of it and i got away from me.

I never intended to quit.

It's too important.

Last question -- of all the roles you have played, what is your favorite?

[laughter] that's not a progressive question.

That's an old question.

Talking to you -- how's this?

Talking to you this morning is my favorite moment of the day.

Oh, that's wonderful, thank you.

And the day is not over.

Turn to your left and say i love you through your nose.

He is trying to get us to do that.

Are you ready?

Legendary actor, william shatner, thank you so much for joining us.

Coming up, we will talk about wine and a new app?

I love you.

? welcome back.

I'm emily chang with cory johnson.

Have you ever had a great bottle of wine but had no idea where to find it?

Lost it?

Both have happened.

And you can't tell anything from the label.

There is a neat app called delectable.

We have the ceo of delectable.

Instagram for wine lovers.

It is this fascinating database.

The ceo is joining us, who used to work where he chase down terrorists.

Talk to us but that transition.

I love palantir as a company.

I wanted to work something that was relevant to our culture.

What palantir does works at the foundation of our society, protecting our borders and making sure our institutions work.

I wanted to do something for our culture.

Making the world a more delicious place.

I'm going to put the app to work.

We went to the wine merchant next-door.

We will see how this goes.

Tell us how it works.

You take a picture of the bottle.

They will identify the wine, and tell you more about the wine.

It will keep track of the wine you are drinking.

If you like it, you can buy it.

Does it help you buy it?

Yes preview -- yes.

You push a button.

It will show up at your door if you -- it will show up at your door a few years days later.

This is a big data problem.

There is a lot of wine.

Assembling the wine is a technology challenge.

Lex how did you start?

Did you get everything cataloged?

We started.

We thought mobile was going to be big for the wine industry.

When you look at wine the label tells you little.

Maybe we can tell people about what the wine is, with their phone, that would be valuable.

We built it.

We started to see if people would like it.

People like it.

Even before we got started, you would study -- you would see people taking pictures of wine with their smartphones all the time.

That is for you.

Cheers.

The competitive side is interesting.

I collect one a little bit.

There are a lot of wine games.

The competitive set, inter-all the information, all of these tastes.

You make it may be too simple.

It is will -- everyone has a moment where we say this wine is awesome, i want to know why.

That is what delectable is for.

You have leaders in the industry reporting on the wines they are talking about.

One of the things that makes wine so difficult, you have no idea what it tastes like.

Have to taste it.

How can make it to a place where winds are brady?

That is what we are working on.

We are working on a collective brain everyone is contributing to.

One of the things we focus on is how much martin -- how much margin until the consumer pays for it.

It is incredible.

I think there is a lot we can do in able direct to consumer.

That is enabled in the product now.

The cha°teau has not shown up yet.

It is still being identified.

It usually finds what i'm looking forward -- what i am looking for.

Thanks for having me.

It is time for the bwest byte.

Jon is in now way -- is an ally.

-- the current cost of whatsapp.

Now only a $17 billion purchase.

That price could go up since the deal was announced.

You have been watching the sellout?

Yes.

The stocks, in terms of how deals are structured, with incentives.

If the meat performance they get more money.

I expect more deals like that because of the uncertainty.

Thank you.

Thank you for watching this edition of "bloomberg west." . see you later.

.

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

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