? live from pier 3 in san francisco, welcome to "bloomberg west." i'm emily chang.
I had on "bloomberg west" this hour, the move adds restaurant bookings to priceline's online travel business.
The deal is expected to be completed in the third quarter, and is the first big move for priceline ceo who took over in january.
The head of twitter's media unit is leaving the company.
She announced her exit publicly on twitter.
Her departure follows the resignation of the twitter c.o.o. this weekend marks the season finale of the hbo hit "game of thrones." the show's director says this could be the best episode ever, and explains what it is like to direct such a popular and dramatic series filmed in locations around the world.
Priceline is stepping up its acquisition spree by buying opentable in a deal valued at $2.6 billion.
The online booking service seats over 15 million diners per month across more than 31,000 restaurants.
The purchase will help priceline connect to local businesses and boost its presence on smartphones.
The company said the deal is expected to be completed in the third quarter.
Tori johnson here with me in the studio.
Paul kedrosky, thank you for joining us.
What is your take on this deal?
It's a great deal, especially if you are an opentable shareholder.
You did not get quite back to your price, but 40% plus bump on the trading price is a pretty fair purchase premium.
I like that part of it.
The thing that is most surprising to me as it did not happen a long time ago.
Opentable sits out there in the front end of the travel entertainment marketplace.
These properties will not be stand alone for long.
There's going to be more of this.
Would you agree?
I agree with paul, as would any other opentable shareholder, it's great for them.
This is one of the few companies that could acquire opentable and expand its market.
It is one of the problems with opentable, if you need a restaurant reservation in san francisco or new york or where paul is, you might need some help getting one.
If you live in des moines, charleston, it is not as hard to get a restaurant reservation.
In europe, where opentable could see big opportunities, priceline has had a lot of success opening new doors in the hotel business, and that is where the growth of their business has occurred.
How does this position vis-a-vis the other competitors?
Priceline seems to be getting so big with all these acquisitions.
They have been unapologetic about that, and they are pretty good about not re-banding the things they acquire -- re-br anding the things they acquire.
I think that's very smart on their part.
What is happening is consumers find favorites and use them and become dedicated to those individual services on their apps.
Opentable is one of those default choices.
When you want to pick a restaurant, you end up going to opentable.
I think that makes perfect sense.
What does it mean for yelp?
It might mean interesting things for yelp.
Yelp always comes off as an acquisition target.
It also looms as a competitor to opentable.
It also drives a lot of business to opentable.
One wonders when they might want to get into that.
One of the secrets is opentable has successfully embedded itself in the hardware of restaurants in ways -- some of the hardware is specialized.
They have a lot of software, and restaurants know a lot about certain customers in which customers are a pain in the butt, which customers like a certain kind of meal, server, have a certain history with that restaurant.
Opentable is the platform upon which that information sits.
More and more i'm finding when i do a google search for a restaurant, i'm looking at google restaurant reviews it for yelp -- before yelp reviews.
Paul, is yelp in a difficult position here?
The reality is that the yelp data is so much richer than the google data.
Google is trying to surface their own data first and make sure that yelp doesn't have more market power the google wants -- than google wants it to have.
When you are searching for a restaurant mobile, you pull up yelp.
The power that google has on the desktop is vanishingly small and mobile with respect to driving that search and seeing who's reviewed data you use.
It shows why yelp has so much power.
I do not think it makes it through 2014 without being acquired.
So much tech m&a we have seen this year.
Some of this is an attempt to make sure that no other bidders show up.
You get into the winner's curse, where you pay so much to make sure the deal is not competitive that you make a de facto competitive and you pay premium such that the deal is no longer obviously how the underlying result turned out to be good for your shareholders.
Certainly this deal and a yelp deal would look that way.
They are not going to be a huge boost to the bottom line.
I think the priceline is trading 10 times sales now.
On some level, they need to start acquiring any kind of earnings and sales they can to boost that.
The valuation discussion is an interesting one.
There is a direct correlation between opentable and uber.
The idea behind opentable is you will have the customer who has a certain technology and the provider of that offering, the restaurant, have the same technology.
Ios, and dried.
They will use that in one single vertical to really make a business work.
Uber is the exact same thing, based on the same idea, with some of the same investors.
We have the same technology from the provider to the consumer.
I think there's a direct comparison between the two.
Tori johnson, our editor at large.
Paul kedrosky, our bloomberg contributing editor.
Two key executives have left twitter this week.
What does it mean for the future of the company?
George zachary with us next on "bloomberg west." watch a streaming on your phone, tamil -- tablet, bloomberg.com, amazon fire and apple tv.
? i'm emily chang.
This is "bloomberg west." after sending her first memo to apple employees in which she outlined her vision for the company's future, she has made her first official appearance.
The former burberry ceo tweeted a photo to celebrate the opening of apple's third retail location in tokyo, located in the upscale shopping district of tokyo.
An executive exodus at twitter.
Just the day after the twitter ceo resigned, twitter's head of north american media announced her departure.
This coming weeks after the former vp of product and senior vice president of engineering left the company.
Joining me now is an early twitter investor.
George, what is going on here?
I'm not involved in the day business of twitter.
And not on the board, so i really don't know.
My guess is that dick is cleaning up the operations.
Growth got distributed across business units.
Dick is centralizing growth again, which will be good.
Dick seems to have the support of employees and the support of the board.
Is that how you understand it?
I totally see it that way.
Why can't they get the executive house in order?
These executive reshuffles have been going on for several years.
They have been going on since i invested.
Why does it keep happening?
The dna of the company it said very early on.
It's difficult to change it over multiple years.
Do you think this goes back to the bad blood between the early founders?
I'm not sure if it was bad blood, but a lack of communication is how i would put it right it is strictly connected to it.
It radiates forward.
This happens in every company i have been involved in.
You have the early cultural values radiating to the future.
What do you think dick costolo should be doing?
Shinto rising growth -- centralizing growth.
The people i know, i still believe there is high engagement of the users at twitter.
I can see the next generation of the product driving the growth.
All the people that were there were great, and the people that are new and active in the company are going to add a different flavor to the company.
How concerned are you about user growth?
Last year was not a great year for user growth.
The picture that got painted was this was a niche product.
I think this is a global product, and this product is the commons for the world.
This is not facebook, which is primarily a social network between friends and family.
This is a network for everyone in the world.
It is more of an information network.
You are not concerned?
I still own my twitter shares.
How would you describe the culture at twitter?
I have not been there in about two to three months.
I went to lunch with a friend of mine in the design group.
It looks like there's a lot of energy there.
It does not look like people are slacking off or look bored.
Do you think they are moving into the future, and you are not worried?
What are you worried about when it comes to twitter?
That they will have to prove out that they cannot actually grow.
Until they do, no one will take it seriously.
Twitter was one of your biggest hits.
You have had a string of them, along with yammer, millenial media -- what is the next one?
One of my companies that is growing quickly is a company called pebble, the smart watch i'm wearing.
In our first full year of operations, we sold 4000 smart watches.
This year we will probably do two times that amount.
One of the criticisms of pebble is that the interface is not as modern as samsung.
The samsung watch gets mixed reviews.
How do you respond to that?
We are an 11 person company that shipped 400,000 units.
We have people who are focused on just the watch.
Samsung's products have not been the best.
I don't think they have a central design point.
The founder of pebble has been doing watches since he was in college.
I cannot believe they are at 100 now.
I remember going to interview him when they were in this tiny space in palo alto.
That was not that long ago.
That was about 15 months ago.
What about apple and the iwatch?
I'm concerned because apple is a great company, with huge brand and distribution power.
I expect they will come out with a watch in q3 and it will be fairly high-priced, in the $600 and above range.
At pebble, we are taking more of a google focus of we want to be the smart watch for the world, not just the richest people.
The last time you came on the show you talked about how apple was having greater difficulty with getting great talent.
Is that still what you're hearing when it comes to this idea of is apple innovating?
I think the ios 8 innovations they made a couple of weeks ago were very good.
The big thing everyone is waiting for is what will be the new hardware innovations.
I think those will be announced in the fall.
Will there be an apple tv, will there be a smart watch?
The only thing that people know is that apple will make a bigger smartphone.
Uber, $17 billion.
Airbnb and dropbox, $10 billion.
Compared to what?
Valuation is share price times number of shares that the last shareholder was willing to play.
Can they exit beyond that and give everyone a return?
That's a function of the market in the future.
The market is definitely doubly and frothy.
-- bubbly and frothy.
The stock market is like a game of musical chairs.
No one wants to admit the music is about to be over because they want the chair.
In the public markets, you are seeing tech stocks being revalued.
Twitter dropped 40%. in the private market is seems like valuations are going up.
That's right, because they're so much private capital available.
People have seen there are these big hits coming in the public market.
Twitter still has a large market cap.
People are expecting the companies can grow into a global phenomenon.
If those companies become global phenomenon, they become worth tens of billions of dollars.
I would not invest in those companies at those prices.
I am an early stage investor.
When you are at that point, you are into momentum and investing where you are working on market timing.
One of the number one factors is what warren buffett said in 2001 , his best indicator is the ratio of total market value to gdp.
Right now in the last 45 years, we are at the highest ratio other than the year 2000. to imply that it is not frothy would be completely wrong.
It is a bubble that is inflating.
All right, george zachary, charles river ventures, they queue for joining us.
Hewlett-packard plans to cut another 50,000 jobs.
Not everyone at hp is feeling the pain of restructuring.
Y meg whitman's bonuses boosted in the midst of a tough turnaround.
? welcome back.
I'm emily chang.
Why does hewlett-packard keep restructuring and laying off more people?
Is it possible that meg whitman takes more money the more she restructures people out of her jobs?
How restructuring boosts executive pay.
Hewlett-packard has announced a one-time restructuring, with more layoffs.
It could all help ceo meg whitman make more.
A restructuring cost estimated at $3.6 billion in 2012 --half $1 billion more.
29,000 layoffs, $50,000. what is restructuring?
Structuring is the cost of building a business.
You have a new idea and you hire someone to build it.
Maybe it is awesome.
But maybe it becomes obsolete or it is failed.
You shut down the project.
And lay off someone.
That is business, right?
When a company restructures, it suggests that laying off someone and shutting down the project is one time.
That is how the accounting works.
Sales go up here.
Costs goes right here.
The restructuring goes down here.
That is the bottom line.
The more cost the company can move from here down to here, the bigger the adjusted profit.
Then there is a bonus question.
In the last three years, meg whitman has received $50 million.
A $4 million bonus last year.
Hp has seen 11 quarters of shrinking sales.
Restructuring will cost 50,000 people their jobs.
You wonder, how did the company seeking to cut costs raise bonuses?
Buried in hp's s.e.c. filings, a quarter of meg whitman's annual incentive plan is based on bottom-line financial performance.
What online financial performance is based on n on-gaap profits.
The more meg whitman can move down from here to here, the bigger her bonus.
The bigger the layoff, the bigger meg whitman's potential payback.
There are other factors that contribute to her overall pay package.
Everyone would be that are off if hp could revise its business.
Cory johnson with us now.
What has each pay said about this -- hp said about this?
They stand by their compensation plan.
They say it is based on numerous factors.
Earnings performance is a definition of earnings, not actual earnings.
Is hp unique on this?
A lot of companies do this.
There is no other company out there that has had 26 consecutive recorders of restructuring costs -- quarters of restructuring costs.
Consecutive quarters of compensation restructuring costs going back to the first quarter of 2008, there is nothing like this.
Does it seem like the layoffs and restructuring are helping the company?
The profits have fallen.
Revenues are down 11 quarters in a row.
By moving all the costs into restructuring, it creates a bigger pool for her bonuses going up.
Her salary is going up too.
Her salary is going up to $1.5 million.
The san francisco giants are the baseball team in tech's backyard.
How do they use digital tools on and off the field to improve performance and connect with fans?
? you are watching "bloomberg west." we cover innovation, technology, and the future of business.
The san francisco giants are at the top of major league baseball this season.
How does the baseball team used tech on and off the field?
I put that question to the jive ceo larry baer.
-- giants ceo larry baer.
There are lots of ways we can use it.
It is widely known that just now the light bulbs have gone on about tracking hitters' tendencies so you can see defensive shifts in the infield and outfield.
You will see more often than ever before, three position players on one side of the infield as opposed to the balance, two and two, because you are tracking trends of hitters.
There's a lot of advanced metrics that have to do with tendencies that have really become a big part of the game today.
Do you find times when you are questioning data versus instinct?
You produce all the data, then it goes to the manager on the field.
In our case, it is bruce bucci.
-- bruce bochy.
It is his job to take that in blend that with gut feel.
You can say, this pitcher will do well against that hitter.
This pitcher in the bullpen might have a stomach ache, might be going through a divorce, might not be feeling good for whatever other reason.
And it's not the right move.
The manager and coaching staff take the information and blend it.
Just going straight off the analytics is a mistake.
We are not robots.
You do have some injuries this year.
Any innovative ways of getting them back on track and getting them healthy again?
In baseball, it is a 162 game season.
We really take our time getting the players back on the field.
Rehab, not just physical, but rehab assignments in the minor leagues -- we want to get them back.
Pennants can be won in april and may, and august and september.
We are really careful that it is a measured approach.
At&t park is one of the most tech savvy stadiums in america.
What is next?
There's a lot going on with us in the ballpark.
So much of it is through at&t. the chairman and ceo, heads of at&t, they have their name on it.
We have wi-fi long before others.
We do upgrades every off-season in powerful ways.
There's the day that you walk in and you say, i like my seat, but i would like even a better seat, and you are already in your seat and it is the first inning, go onto your handheld and you can be in another seat and pay another $10, tony dollars -- $ 20. the 49ers are moving to a new stadium in santa clara and claim they will be the most tech savvy stadium in america.
The 49ers and giants have a really -- there is a #, sf rules -- we have a good compatibility, starting with alex smith wearing a giants cap in all his press conferences.
Send a clear is great.
Santa clara will be 15 years younger than our ballpark.
We are keeping up with the joneses pretty well.
We want it to be very relevant to the fans.
The fan for baseball is looking for probably a two screen experience in general.
If they are home, there's a couple of different screens they are looking at.
They are watching the game, and if they are at the ballpark there watching the game and doing things.
We want to relevant -- want to be relevant to the things they are doing with your handheld.
A lot of what they're doing with their handheld relates to more game information.
The team and players are very active and popular on social media.
Is that a requirement?
the players have brands.
What is really important is that the players' brand and the giants brand can be co-mingled.
In more ways than not, that's the case.
Sergio romo yesterday, former sponsor for yahoo!, did a commercial that we produced with yahoo!
It's a perfect example of everybody coming together around a personal brand.
The giants would tweet out about it.
Sergio would tweet out about it.
Everybody is talking about facebook.
It's pretty cool.
That was san francisco giants ceo larry baer.
Coming up, uber's $17 billion valuation -- is it justified?
Watch a streaming on your tablet, phone, bloomberg.com, apple tv, and amazon fire tv.
? i'm emily chang.
This is "bloomberg west." multiple nine figure financing rounds.
It announced a $550 million fund this week.
Companies like king, zen desk and arista going public.
I sat down with index ventures and started by asking about what the fund plans to do with all this new cash.
Thematically, it will not change too much.
Consumer internet, t-technology, the same set of companies we have been doing historically -- the things we really look for our network effects, marketplace dynamics, companies that have become platforms.
We don't try to be too picky about which sector or what.
The world changes so quickly these days.
By all accounts, there is a ridiculous amount of capital and technology these days.
How would you raise the fund raising -- rate the fundraising environment?
For us, it is our seventh fund.
We don't change who is investing in our fund.
For us, it is an ongoing conversation with our limited partners.
It was not particularly hard the last time.
We still talk to them about the climate and explain to them what is going on.
It was a normal process to raise money.
With the track record we have, it is never particularly difficult.
Your fund is unique because your portfolio is spread out across the u.s., europe, israel.
If the environment there any different?
The environment is positive across the board.
Investing in europe and israel is different than investing in the u.s. you don't have particularly compared to silicon valley the density you have in silicon valley.
You have to turn a lot more stones, and you have to be more nurturing of the companies.
Here the entrepreneurs are so knowledgeable about the process of building a company.
In europe you have a lot of incredibly smart and competent, hard-working people.
It is not as obvious.
Is there anything cool, any exciting technology being developed outside of the u.s.? there are a number of things in europe that are locally very well done.
Commerce is an area the europeans have done a fantastic job around.
We have seen a lot of interesting advertising technology that has come out of europe trade -- europe.
Europe has always been a hotbed for music.
Spotify comes from stockholm.
Sound cloud comes from berlin.
There's a lot of music that europeans have figured out.
They have verticals where they do extremely well.
You are on the board of sound cloud?
Can you tell us the latest on twitter trying to buy sound cloud?
Both of them are great companies.
So it is not on the table anymore?
As far as we know, we are running our business just like we were before any rumor came up.
No acquisition anytime soon?
We think not.
Uber just raise money, $17 billion valuation.
Dropbox, $10 billion.
Do these numbers seem fair to you?
It is very criqui -- tricky to interpret numbers like this on a one-off basis.
Whether it is dropbox or uber, they get big numbers.
Fundamentally, it means the market has high expectations for them and over a period of time, they will adjust upwards or downwards for that.
In the stock market for the last couple of months, there has been a big adjustment downwards.
Uber is a terrific company.
Dropbox is a terrific dump in a. could they be the next microsoft -- company.
Could they be the next microsoft?
If so, they should be worth $200 billion.
When you talk about bubbles, do you think that we are not in one?
I don't think so.
Particularly if you look at the way the market has behaved, you have seen significant corrections.
Some companies have been corrected more than others, which to me means investors are getting more knowledgeable about how to value these big disruptions happening.
I do think that these companies, at least a set of them, will be worth a lot.
I don't view this climate as way ahead of the possibility of what the companies represent.
You guys ranked third in terms of number of exits for a vc company from 2013. what will it be in 2014? we have a lot of good companies in the queue.
The m&a climate, you can never guess what happens.
It's a little more tricky right now.
You have to have better earnings capabilities and be more predictable.
That will be a little bit slower.
We still hope we are going to have a banner year.
Last year we had seven companies that exited north of $1 billion.
I don't know if we can repeat that.
Baucas the latest ipo.
-- bach is the latest ipo.
There will be a significant amount of m&a. if you look at historical ipo's per year, this year was tracking a bit ahead of what is normal.
30 to 40 companies normally go public every year.
I think the markets have pushed back a bit.
The bar is higher for that ipo.
Some companies will be looking to m&a exit when it is tougher to get through that ipo hurdle.
That with index ventures general partner.
The season four finale of "game of thrones" is this weekend.
We speak with the show's director about the difficulties of shooting with thousands of actors over several continents next.
? our vows never specifically forbid intimate relations with women?
I shall father no children.
What about other activities?
It is open to interpretation.
A scene from the latest episode of "game of thrones." while it has been a germanic season so far, the show runner says this week's finale could be the best episode ever.
Jon erlichman is back with us.
John, i'm so excited for the season finale and so devastated it is already over.
[laughter] there will be parties to talk about what you do after the fact.
People love this show.
It is more than a tv show and a lot of ways.
This is a massively expensive movie that happens to be cut up in different shocks that you get to watch every sunday night.
They made -- need a massive team.
Alex graves, we caught up with him recently and started by asking him, how does the show compared to other once you have done.
You cannot compare "game of thrones" to another show, starting with the fact that it shoots on three continents.
The entire season is written in advance.
You have all of the material for the season when you start, so you can be very firm in the storytelling in a way you are not usually able to be in television.
Instead of there being eight characters, there are 40. it is hard to compare to anything else.
When you talk about filming all over the planet, what is the logistical planning that goes into this?
The planning is in the extreme.
They work on a schedule -- they have to write them in advance so they can schedule it in a way that can make some financial sense.
Every director gets a different color on the schedule.
I did four episodes this year.
There was light blue and dark blue for my colors.
It was all over the schedule.
You are shooting for six months.
When you are not shooting, you are flying to -- when you are not shooting in belfast, you are flying to croatia or iceland to prep when you are trying to get back to shoot something else in ireland.
It's really intense, and it's really fun because of that.
Those relocations where you are shooting are enhanced by visual effects.
How much would you say of each show's budget goes to something like cgi?
A lot of the locations are not enhanced.
Given how beautiful ireland and croatia and iceland are.
And yet, there will be several episodes during the course of the 10 that require a lot of money for any kind of visual effect.
As i said, i did four episodes and in the four episodes there were very different categories and visual effects that had to be pulled off.
"games on thrones" has a lot of supporters in silicon valley.
Have you received any interesting feedback from tech executives who have notes on the show or you give -- or give you their likes and dislikes?
the feedback is either, that was amazing, or that was so gross, is usually the feedback.
[laughter] everybody is talking about this show all the time.
Right now you have jj abrams on the set of "star wars," trying to keep all the secrets from spilling out.
In "games on thrones," how do you guys keep the secrets from spilling out?
Everybody who makes the show love so much -- loves the show so much that it is a labor of love now.
They are careful and tightlipped.
I find that most people don't want to know.
They want to have the surprises the show is bringing them.
I was hacked when i was in europe shooting.
I got hacked out of zagreb and paris and i removed everything for my computer and put it on a drive.
-- from my computer and put it on a drive.
This raises a good point.
Even though you are directing some episodes, and then there is a team of directors, you each have to know everything going on tied to that season, correct?
The fun part of the directing the show is that it is like directing a feature in the old studio system.
They are very supportive.
The flipside is that you have to roadmap out the narrative of not only all the stories of each character in each scene, because it's all very specific what story you are telling, either because of the pastore because of what's coming.
-- past or because of what's coming.
You have done your share of jaw-dropping episodes.
With the final episode of the season, what should we prepare for?
Not being able to talk about the final episode and have a directed six now, and it up a huge fan of the whole season.
The finale of season four is anything -- unlike anything that has ever been mounted on the show.
It is a turning point in the books.
I'm really proud of it.
I hope it does well.
The show has been renewed for a fifth and sixth season.
How long do you think "games on thrones" can continue?
It's up to david and dan and george, and where the books take us.
I think david and dan will keep it as focused and tight as it has been, and not drag it out.
I know enough to know there is certainly a lot more story that has to unfold before the climax can happen.
I am dying to see it.
It's almost cruel that they make us wait.
[laughter] it is so much fun.
We now live in the world of netflix.
You have got originals they do, like house of cards.
Yet this model still seems to be working for hbo.
Somehow the secrets don't slip out in a big way.
This week to week excitement builds and it works for hbo.
Hbo a big deal for rights with amazon to stream a show that does not include "games on thrones." how good is that deal for amazon?
I'm sure amazon would have paid them a lot of money.
There is still hbo benefiting financially big-time as the seasons unfold.
Even in the most recent quarter for time warner, they popped up the fact that season three video sales were huge.
I still think they think there is a long runway before they have to cash out and amazon type deal.
I will have the popcorn out on sunday.
It's time for the bwest byte, one number that tells a whole lot.
Cory is with us as well.
Can you not wait for the season finale?
[laughter] here's the byte.
$1.8 billion, the difference between hewlett-packard's gaap earnings and non-gaap earnings.
Allowing her to get a bigger bonus.
The actual profits -- a bigger bonus than the actual profits would have allowed.
This is relatively unique.
Cory has done some incredible reporting on this.
As we sit here, waiting for the hp story to turn around, it's hard to not say wow.
How long has it been now since she took over?
September, two and half years ago.
The pack -- fact that this company continues to take restructuring charges and it does not count when calculating executive bonuses -- thank you, and thank you all for watching this.
Have a wonderful weekend.
Don't miss "games on thrones" on sunday.