Live from pier 3 in san francisco, welcome to the late 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, technology and the future of business.
Could this man be the next steve jobs?
He has the jeans and a black t- shirt and his company is already beating apple in china.
Samsung may have beat apple to market with its galaxy gear wristwatch, but the pebble watch has been available since the beginning of the year.
How safe is that camera on your computer or smart tv?
A government agency says some webcams can be magnets for hackers.
Smart phone maker has already claimed a larger share of the chinese market than apple's iphone.
The founder and ceo took a page just out of steve jobs book.
Taking the stage out of an audience of screaming fans.
All of this for the launch of a new smartphone billed as the world's fastest and a 47 inch smart tv that will run on the android operating system.
We got exclusive access.
How much do companies like google and apple be worried about xiamaomi?
To provide more context, when you look at the market share gains in china with smartphones, you start to understand, a very young company that is competing was a very large companies and succeeding.
Or is a breakdown of the china smartphone market share in the second quarter.
There is -- very quickly becoming a popular player.
Here is a company that actually is not as comfortable being compared to apple.
A founder that does not seem to be all that interested in being compared to steve jobs.
When you think about the business, the company is trying to send a message that may be a better comparison is amazon.
Pricing devices at a low level and trying to make up the difference on services.
With amazon, selling kindle devices to get you to shop more through amazon, a comparison they feel a little bit better about.
At the end of the day, the push into television only raises questions about whether apple has one more thing to worry about.
One of the biggest differences maybe china mobile, right?
That has been the void for apple, not having a deal with china mobile.
The two sides not being able to come to favorable terms to date.
As every day passes, it feels like there is more of a risk on the apple side not being able to team up with china mobile.
700 million subscribers.
Being able to get at&t and verizon on your team.
Not to say there are not people who are indirectly already using iphones through the china mobile market, but if apple really wants to make a very fast dent into the chinese market, the no- brainer way to go is through china mobile.
Jon erlichman, thank you.
Speaking of apple, the company is looking into some new claims of labor violations at an iphone plant.
This comes days ahead of the company's president in cupertino and beijing on tuesday.
Adam covers apple for bloomberg news and joins me now.
Let's talk about china mobile.
Apple is holding an event in beijing.
That is a sign.
They think china is really important.
Might we see something different?
They are having a rebroadcast of the event they are holding in california in beijing.
Some of the media there will be able to watch it and get their hands on the device.
That is creating a lot of speculation that there will be a deal with china mobile.
Clearly, china is a huge market and opportunity for apple and there is more and more competition there.
Getting on the world's biggest carrier is critical.
Apple has been trying to strike a deal with china mobile four years.
What are the sticking points?
When apple started with the iphone in 2007, it was able to dictate the terms.
It was also able to drive a harder bargain.
As the market has matured, china mobile has not wanted to concede.
Or has been some technological things where china mobile network works in a different way that has been compatible with the iphone.
Maybe this is the time when things can finally get hashed out.
Now you have upstarts like shall mean -- xiaomi.
They are taking advantage of certain things.
They are using android software, which is free.
As the market matures, there is less differentiation between the different devices.
Customers can decide based on price or marketing or whatever.
What is the plan to build more apple stores question mark that is part of the problem.
They do not have as big of a network of a network there as they have in the u.s. or europe.
They are planning to ramp it up.
Tim cook has made that a big priority to get more into china.
That will be coming online in the next few years.
Do we know how many more stores?
Do we know how fast this will ramp up?
In the past, they would -- it has not worked out as quickly as they thought.
It is more complicated than they anticipated.
I want to asked you about some of these labor issues.
Apple is looking into claims of abuse.
Tell me exactly what they are looking into.
China labor watch has done a lot of investigations into apple's practices and they go around doing anonymous interviews with workers.
They found several labor violations at this plant that has opened up the make the back plastic casing for this new iphone.
Excessive overtime was the main one.
There is also accusations of women workers leading to get pregnancy tests to go against apple's code of conduct as well as some of the chinese labor laws.
Women have been forced to take pregnant the test before they are even hired.
They are given five minutes to eat.
Alterable people sharing dorm rooms.
Apple has made a lot of strides in terms of trying to improve the factories.
Why do these things keep popping up?
They have a very big supplier network.
One million workers building these devices.
It is a massive endeavor to keep a watch over it.
They have enlisted outside groups to help do audits and they have been pretty public about their findings.
They also released their audits every year, which are -- a lot of the -- to their credit, they are pretty transparent compared to other technology companies.
That does not make some of these violations any less horrible.
Adam, thank you.
Yahoo ceo marissa mayer is making her mark with a new company logo.
Will the new look drive results?
You can also watch a streaming on your phone, tablet, and bloomberg.com.
? i am emily chang.
After holding a contest, yahoo has revealed its new logo.
It is still purple, still has an exclamation point, but it is meant to be more modern.
There you see it.
Jon erlichman is back with us from new york with more.
She wrote a detailed public post about this change.
" we wanted there to be a mathematical consistency to the logo.
" will the rebranding help yahoo's business?
Jeff is the former chief marketing officer for kodak.
30 days of buildup.
Here we are.
I would go back to some of the comments i have been reading.
I would say the biggest one i saw that sums it up, yahoo cares?
It does not seem to be that exciting.
If i were changing the company, this would not be the thing i would be talking about.
I would let someone do it, let the chief marketing officer do it.
I do not think marissa should be the one unveiling this.
It has missed the mark.
I want to go there, but before i do, how important is a logo?
What's the bigger thing is the brand and the promise of the brand -- the bigger thing is the brand and the promise of the brand.
A brand is nothing but a promise delivered.
What people are wanting to see is what are you going to be delivering?
What new changes are you going to be making in the company?
I am ok.
Every ceo that i know that comes into a new job, that is one of the first things they want to do, make a change in the logo.
Is a different?
Over the course of the weekend, she rolled up her sleeves, she'd sat down with some of the design people and said, let's bang this out.
I think of them calling up a few different shops, think of something new, that does seem a little bit different.
I do not know if she is really doing it.
I saw they made sure the triangle looked exactly the same between the y and the a. that is cool to do.
I really do not want my ceo of the company really worried about those things.
Most ceos always wants to own the brand.
Let the chief marketing officer do it.
Let them go do it.
She should be focusing in on how do i deliver promises that i need to make in terms of fundamental changes in the business?
I like her, i like what she is doing.
This is a distraction.
Sometimes people interchange the word marketing and advertising.
There is another story about the possibility of a chief marketing officer at the company feeling a little bit of pressure.
This big move to mobile.
Are those separate arms?
Inside the outward bound activity of the company, advertising is part of our getting.
From her revenue side, it is a totally different perspective.
-- from a revenue side, it is a totally different perspective.
Marketing is the ideation of whatever the product or idea or service you are going to have all the way through customer satisfaction.
The chief marketing officer is going to have a say in which they put out the advertising product.
Certainly, the chief marketing officer owns the advertising side.
What does yahoo do with all of the feedback that it has received?
Which is a lot more than what some companies get a cut as they unveiled it in this way.
I think it is cool they try to crowd source a little bit of that.
I am large, moveon.
It is time they move on.
You got your feedback.
Get back to business.
That is what most people need to do.
Jeff, always good to see you.
Are hackers watching you through your webcam?
A government agency thinks so and it is cracking down.
That is next on "bloomberg west ." ? welcome back.
I am emily chang.
You can also catch our early edition at 10:00 pacific.
Web connected baby monitors and smart refrigerators are meant to make our lives easier.
The ftc is cracking down on what webcam maker for lack security measures.
This is the first time the agency is taking action against a company for not ensuring its devices are secure.
What we start to see more federal crackdowns?
For more on that, i want to bring in brian white.
What exactly happened in this case?
This maker of baby monitors and home cameras called trenton dnet was broadcasting its ip signal.
They did not encrypt the credentials.
Some very basic knowledge of how computers work,. how do they steal the credentials?
What are they looking for?
It is analogous on how you gain access where they do not have a password for their home network.
If you have a password on your home network, you are ok?
You are fairly well protected.
You are not totally protected.
They are making it harder.
The idea is to make it harder for someone to cause mischief or harm.
But i have a new baby, you have kids.
I have baby monitors.
Should i be worried?
I would make sure you have your encryption turned on and you have a password on your home network.
You also have a password on your mobile phone.
I would not be too concerned.
But it is something you need to be aware of.
What is suggest is that consumers are going to be more concerned about going forward -- concerned about security going forward.
They wanted to make a point, this was a basic stake, they should have known better.
-- basic mistake, they should have known better.
Other than the creepiness factor of it, what are they actually getting?
Most of them are mischief.
Because it exposed credentials, that is often the same name we use for online tanking accounts.
-- banking accounts.
They may be able to target your bank, gain access to your financial information and do serious harm to you.
Other than using a password, what else can be done?
Should we avoid smart refrigerators and appliances and smart baby monitors?
It gives us more information, more control.
What it also requires is us to be knowledgeable about putting in security.
Making the passwords include some numbers and uppercase letters and doing some security hygiene.
You will lower your risk of to being affected.
-- risk of being affected.
We are fortunate, there are a lot of people who do the basics.
There are a lot of open networks they can target.
What about the makers of these products?
Do they have a responsibility?
Security needs to be a feature and not a bug.
Consumers need to buy security.
We need to pay a premium if we want something that is secure.
Security becomes much more common and security should enable business rather than being a cost of business.
Malware is targeting mobile devices.
It is going to increase.
However, it is not a big issue right now.
We mostly see it coming out of the eastern european countries.
They are focused on financial information.
Scary stuff, to.
Always great to have you here on the show.
Stanford university is investing in its own student startups incubators.
How will the school allen's finding the next big thing and educating its students "bloomberg west?
That is next on "bloomberg west -- students?
That is next on "bloomberg west ." ? "bloomberg west you are watching," where we focus on technology and the future of business.
Microsoft has won a patent ruling against google.
A jury awarded microsoft $14.5 million in damages after ruling googler did not act fairly and its licensing agreement with microsoft.
Motorola demanded that microsoft a more than what the judge deemed fair and reasonable.
The russian billionaire man behind facebook has sold his shares.
He invested in facebook in 2009. he also owns shares in twitter and ali baba.
And sprint sold $6.5 billion of debt yesterday and the biggest high-yield offering since 2008, but the junk sale may result in the breaking of their own terms of their loan.
They are trying to avoid a possible default and are in talks with the to get a waiver on its covenants.
The university behind tech giants like google, sun microsystems, and snap chat is making its first steps into investing companies coming out of the school of stanford.
Since founding in 2009, they have used several major acquisition targets, including wi-fi, and loki studios, ought by yahoo.
-- bought by yahoo.
How do they plan to promote the startups and their student educations at the same time?
For more on that, i bring in randy livingston, the chief financial officer and vice president of is this affairs at stanford.
Thank you for joining us on the show.
What is your goal?
Why are you starting this fund?
The purpose of the fund and are operating grants is to promote entrepreneurship among stanford students and faculty.
We have a wonderful history of companies and new technologies and medical innovations coming out of the university, and we want to continue to encourage that and support it financially.
How will the fund work?
What is the relationship with start x? the fund is really dedicated to companies that have participated in the startex incubator, either as current participants or former participants.
The intent is to invest alongside professional angel investor capitals.
We will not be taking the lead on these investments, but we will be investing alongside of them.
The intent is for as many startex companies as confined funding from the venture and the angel community.
Stanford is one of the most prestigious universities in the world, one of the most sought after universities when you are talking about aspiring entrepreneurs, but how do you balance promoting onto partnership with education?
Isn't that the primary reason students go to stanford in the first place?
Student certainly come to stanford to get a wonderful education, but the entrepreneurial culture really are vague the university at this point in many different places.
There are students from all kinds of disciplines, whether it be humanities, social financing, the sciences, or engineering who are interested in trying to start companies and participate in the new economy we have in silicon valley.
In most cases,'s dude is migrate to start x -- in most cases, students migrate to startex.
There have been several instances where they go to start companies and then come back and finish their degrees.
What about when students drop out to start companies?
A company called clinkel, several stanford students dropped out to start this startup.
I presume that is something you do not want to happen.
We like students to get their degrees, but we are very proud of students whether they complete their degrees or not.
Steve ballmer famously dropped out of stanford business school after one year to join bill gates and microsoft, and we are proud to have a student even for one year.
Are you worried that you are venturing into dangerous territory, whereby professors are supposed to be professors and provide mentorship and advice, not necessarily looked at as potential investors by students.
Isn't there a fine line there, and what sort of due diligence or rules do you have around the relationship between professors and students when it comes to startups?
First off, let me say that in the case of stanford startex fund, professor not directly investing in these companies.
On the other hand, we have many faculty who have started companies.
We have many stanford faculty who have developed technology or scientific or medical innovations in their laboratories that have led to the spinoff of wonderful, successful companies.
I think that is part of the culture and part of what we do.
On the other hand, there are thousands of students at stanford who have traditional educations and get traditional degrees as well.
As much as it invades the culture, it is not ubiquitous by any means.
We have a bloomberg contributing editor, nicholas thompson, who also runs the new yorker.com, a stanford alumni.
He wrote a piece, you know, called something like the end of stanford, question mark, are they still a university, and how do you respond to that criticism coming from one of your own alums?
We are proud of the many facets of the university, and entrepreneurship, we are very proud of something like 40,000 different companies that have been created by stanford alumni and faculty over time.
It is a very important part of driving the economy.
We have created hundreds of thousands of jobs as a result of that and contributed to the growth of the u.s. economy.
So it is definitely not something that we have any shame in continuing to promote and participate in.
I understand the university has said it plans to invest alongside her fictional vc's and angels.
Can you give us any idea of who you are planning to follow and how you expect the process to continue from this point?
Yes, generally the way the fund will work is it is an opt in fund on the part of the startex companies.
They are not required to take up funding from the fund, but we make it available to them.
We only invest if there are other professional investors who have made a commitment to the company.
In some ways, we view them as the good housekeeping part of approval that the company has a plan that is viable and has potential.
Typically, we will invest 10% of the new money that comes into the companies in each round of financing, both in the initial financing and the follow-on financing as well.
Interesting stuff, randy livingston, cfo and vice president of business affairs at stanford university, thank you for sharing this new program with us here on "bloomberg west ." thank you for having me, mla.
Twitter is getting closer to going public, talking to banks about handling an ipo, but what does one of twitter's earliest investors have to say about that?
We sat down with the benchmark capital general partner and early twitter backer peter fenton, one of the most respected vc's in the industries.
He has not had an ipo for the longest time?
And he has been in the industry 14 years, a good track record the first half of his career of backing enterprise software companies, business software companies that got all likes by the likes of caa, citrix systems, yahoo.
You can have a great career that way, make a lot of money for yourself and your firm, but it is really the ipo's where you make your name and the billion other ipo's where you establish your brand.
He did that with yelp, and now twitter is on the horizon.
He has others?
He has several in the business software space, and this is where peter has an interesting opportunity.
The history of venture capital is there are very few have done really well in consumer and enterprise.
You typically do well in one or the other, may be some overlap, but you are known as being a consumer guide or enterprise guy.
Peter has this opportunity to be on the words of yelp and twitter as well as companies like lithium batter all potentially in the ipo field on the next few months.
Should one of those be a breakout company, this could be interesting.
Any idea how much money he stands to make?
I cannot even speculate because you are looking at what the firm puts in and his take of the fund.
Safe to say, a lot.
It's a lot.
thank you so much.
Why are drivers in washington purchasing more teslas the no most any other state?
-- dan almost any other?
We explain when "bloomberg west" returns.
? this is "bloomberg west." i am emily chang.
Tesla shares have risen nearly 900% since their ipo, pushing their market value to nearly $20 billion.
The stock rally comes as the tesla sedan scooped up a variety of safety awards, but despite the impressive accolades, fewer than vehicles have made it on the road with just 12,700 vehicles delivered to date.
How popular is tesla?
For that, i bring and kyle stock from new york.
How popular is tesla, really?
Just depends on where in the country you look.
California, they are huge.
South dakota, not so much.
Why not in the south?
A lot depends on where the company has decided to put their showrooms.
There are huge parts of the country, the dakotas, the gulf states, were you don't see a lot tesla showrooms or dealerships.
That has a lot to do with it.
There is also the word-of-mouth factor.
You tend to see tesla purchases near other teslas.
If there is one on your block, you may think about it more.
Are there legal issues as well?
Yeah, the traditional car dealers are pushing back heavily against tesla in some states because tesla wants to go direct to consumers, either online or in their showrooms.
Massachusets, there is a huge push against them, texas as well, north carolina has been a struggle.
That is a challenge for the company.
In texas, there is a unique situation, right, there is no dealership sales, just happening online.
How does that affect the number of teslas on the road?
You can go into the show room and see the car.
They cannot give you a test drive, they cannot tell you how much it costs even in texas.
Surprisingly, our data shows it is not really affecting sales that much.
Massachusets was number 10 on the list in terms of most popular states, and there is been a huge push against tesla thereby income and car dealers.
Texas was up there as well, number 18 on the list.
People are finding a way to buy these cars if they want them.
We have seen tesla sales rise exponentially in the last year, because they were starting from almost zero.
What about next year?
Where will we be?
You would have to ask you one must.
A are optimistic and they are making them as fast as they can.
-- you would have to ask elon musk.
I know they are very focused on europe, unlike arts of the u.s. where we do not see a lot of teslas.
So that will be a big part of their growth story.
We will be watching, kyle stock, thank you.
Setting records on kick starter, on the market months ahead of samsung new device, so what did they think of the new competition?
That is next.
? welcome back.
I'm emily chang.
This is "bloomberg west." samsung has won a battle in the smart watch wars, getting its galaxy gear wristwatch on the market ahead of apple and google, but there is another key player in smart watches.
More than 100,000 pebble watches which connect to the iphone and android smart phones using bluetooth have sold since january.
Earlier, i asked the pebble ceo about his new competition.
We sell the watch, but i think it speaks for the push towards this type of market, this type of device in the market.
We see more and more people over the year starting to make wearables, and pebble has been here several years already and we are happy to see people begin to accept these devices and put them on their bodies.
How is your vision different than samsung's? we are not a smart phone maker.
We don't have this entrenched legacy of smartphones and operating systems to support.
Pebble comes at it from the perspective that it is a watch.
Hold it up.
It is primarily a watch on your wrist back next to your phone, working with your android and apple smartphone equally.
It is not something that you really have to check to see if years phone supports it or not, it generally works with all of them.
And the galaxy does not support other phones, does not even support samsung phones yet.
It supports the tablet, right.
What is missing from the galaxy gear?/ i think one thing we have done at pebble is try to emphasize that a watch should not be something that you have to change your life too, a smart watch should not be something that you have to change your life.
Apple has a seven-day long battery, not something you have to charge every day -- pebble has a seven-day long battery, not something you to charge every day, and it is also good for activities.
We have gotten a lot of commentary on this over the last 24 hours.
Some love it, some hate it.
I want you to listen to an analyst we spoke to yesterday who has been wearing a pebble watch several months and he had this to say about trying out the galaxy gear.
I actually where the pebble watch, which was a kickstart a project, and it feels like it is 10 years old and paired with samsung has done with the galaxy gear.
He says it feels like it is 10 years old now.
How do you respond?
I think the perspective samsung has taken is trying to cram everything and the kitchen sink onto your wrist.
He had taken the perspective of simplicity.
What are the one to five tasks that you want to do one your wrist.
Your phone is in your pocket.
There are a lot of things that your phone is much better at doing, browsing the internet, taking photos.
The rest is for small tiny bits of content that are locked up in your phone, bringing them out onto your wrist into your life.
What sorts of things?
Incoming messages, e-mail, calls, being able to see a text.
It is also useful for accessing small bits of data inside of apps on your phone.
For sample, run keeper supports pebble, free caddie which is a golf cap.
I have asked before and you say you're not worried.
Apple is working on this market, two, but any ceo or founder is watching the competition.
Are you doing anything differently now that you have more information about what samsung is working on, what apple could be working on?
We don't think it changes the announcement of the samsung watch, it does not change our perspective, but we have been focused the last 3, 4 months on the developer experience, figuring out why developers want to build apps for the watch, what types of experience people will build on to the watch.
From our perspective, the focuses tightly on helping developers incentivizing developers to build apps for pebble.
We want to figure out what people are going to do with smart watches and for them to write apps to get there first.
What is next for the pebble watch and people who buy your watch, which i must add is a lot cheaper than samsung's watch.
What do you think of the price?
I think you could get to pebbles for the price.
What is next for pebblers?
Pebble will expand with notifications and alerts, sports, health, fitness, and remote controls.
Those are the three primary use cases we are focused on.
That was the ceo of pebble, who also told me after the interview their sales actually doubled yesterday, the same day the galaxy gear smart watch was being unveiled.
How is that for ironic?
It is time now for the bwest byte, one number that tells a lot.
We have a special guest today, joining us with it.
87%. as is the number of yahoo employees who were for some kind of change in the logo.
A huge majority of the company was pulled and like the idea of changing the logo.
The reaction on the internet is mixed about people who like it or not.
What are people saying?
I think the vast majority of the internet's not like change and it is hard to get people to like a new logo, of a brand they have known and liked for many years, but the employees kind of gave their input, they like the idea of changing this thing, so marissa did the design by committee thing, very controversy all.
It is more modern, but it has several similar aspects to the old logo.
It is a little skinny, i feel.
What do you think?
And it is all uppercase letters, which is one of the things the employees wanted and asked for, and is also something she said played better on mobile devices.
So she is thinking about what kind of display appears on mobile devices better.
So many things go into one new logo.
We will be watching and continued to watch the reactions.
Iq so much for bringing us that great byte.
Thank you all for joining us on the show.
We will see you back here tomorrow.