tv Bloomberg West Bloomberg May 20, 2015 11:30pm-12:01am EDT
emily: salesforce is raising its forecast. we will tell you what we are learning about potential takeover talks. ♪ i am emily chang. this is "bloomberg west." coming up, jeff reseau's -- jeff bezos has a new partner, and it's a woman. we will tell you what it means for the future of amazon. spotify adding video and podcasts to take on google and fend off apple. you may want to keep an eye on your robotics engineer if uber is around. it seems the company won't stop at anything to build its own self driving cars. all that ahead. we begin with breaking news.
salesforce raising its forecast. they have seen the biggest first-quarter they have had. this underscores their attractiveness as a takeover target. cory johnson is in san francisco. it looks like a strong report. we heard no comment on the deals. but they are 1000% focused on customer satisfaction. cory: that's a lot of percents. that's like a hundred percent focused 10 times in a row. here is the big take away. if you want to compare it to what the analysts expected, it's better than that. it typically is. the reaction in post market trading is muted. last quarter, the stock jumped 12%. the next day it's down 5%. right now it is up 2%. we will see how it shakes out in trading. what we saw is while better than
, expected, it has dramatically slower growth. yes, it's the biggest first-quarter they have had, but it's only 23% bigger than one year ago. compare that to one year ago. 37% a year ago. so to go from 37% to 23% sales growth that is a lot slower. it is different growth potential than what we would have expected a year ago. one of the reasons from that is that they spent less on marketing. the big knock on salesforce is that they spend so much on marketing, 52% of revenues. think about that. that is what they are putting in the tank to make that thing go faster. the lightened up just a little bit only 49% of revenue. , sales growth dramatically slows down. i think for any potential acquirer, it's barely profitable, for revenue versus
profit. the business with less marketing spend grew at a slower pace. there was only slightly less marketing spend, but much slower growth. that would be a concern for a potential acquirer or equity holder. emily: i do want to bring in our panel of experts. we have gilt groupe founder kevin ryan joining us. he will be our guest tolls. -- guest host. we also have patch walraven, who covers salesforce. pat, you have been covering salesforce for years. you both have your ideas on how we deal is going to happen. pat, i will start with you. is the deal going to happen? pat: i don't know. they got a call. they had bankers telling them what was going on. emily: so there was interest echo pat: there is more than interest.
who might that have been? the three choices i'm sure we will get google, microsoft, and oracle. emily: katie, tell us your theory. katie: the reason it would be harder for them to acquire salesforce is they would have to acquire mark benioff. does he want to be a vice president of a huge company after running salesforce? emily: it doesn't seem like he would want to do that. katie: exactly. the choices are that he wants to step away from salesforce and go into politics or philanthropy, also seems unlikely. or he would go to oracle to be a successor to larry ellison. because a lot of people have said that is a company that needs succession plan. family our sources have told us : that talks are dying down. patch what do you make of that? pat it would be super : expensive. it would be the biggest deal we would have seen. if you're one of those three players and someone is
considering doing it, all of a sudden you need to consider whether you should. it would totally change the competitive landscape. if you are microsoft and google is contemplating buying salesforce, you've got to be all over that and figure out what it means for your business. the same thing for oracle. emily: kevin, back in the day you sold a company to google. i wonder what's going to mark , benioff's head right now? how much of a distraction is this talk? what does he do? kevin: it is a distraction. if you're going to sell a company for $60 billion, it's not a terrible thing. i just think it's a very unlikely transaction. until this happens, we have to put the odds at very small. it's just so big for those large companies. nobody wants to make a $60 billion mistake. we have seen many acquisitions go badly. those are not the type of typical transactions that google does. a double-click or youtube or
even an android, in some ways they bought core technology early on and build it from there. i think it is not very likely. emily: on that note, bill mcdermott said that you don't buy companies where prices are going to drop and revenue will be under pressure in the future. corey you have always been , beating on salesforce. what do you think of that statement? cory: i am always loving salesforce. it is not growing like it used to. in the latter stages of growth they have been fueled by bigger acquisitions. this is a company that has grown lately, not because of their software, but growing because of buying growth, and that has its limits as well. anyone who gets involved in a merger with this company starts to pull away the covers and see these things, and it's hard to imagine where this grows in the
future and where that growth is going to come from and the pace of that growth. that's the thing. it's a great big copy that's growing its revenues but what's , it going to grow like in the future? these growth rates are coming up fast. that's going to be a disconcerting note to a potential acquirer. kevin: on the other hand the , growth rate may be slowing but it's faster than oracles. cory: it would be a massively diluted deal. emily: katie pat, you guys were nodding vigorously. if you look at acquisitions to get into areas, that's been a mixed bag. >> hp is spinning out compaq. which it try to acquire in order to become a huge player in a dying market. you are seeing the ebay-paypal breakup.
you're seeing a lot of mergers being undone now. kevin: they have a ton of cash. these companies are sitting on huge piles of cash. google has 65 billion. microsoft has $95 billion. number two, they took an enormous amount of cost out of salesforce. if you are oracle, you got a salesperson in every company. you can cut out all that expertise. number three, the world is moving to the cloud and people have got to adjust to that. emily: pat, katie, kevin, cory johnson. thank you always. in today's attention of drive huber has emptied carnegie mellon's robotics lab, poaching 50 employees from software developers to high-level executives, all of this according to the verge. remember, back in february, uber and carnegie melon announced a
strategic partnership. uber set up shop next door to the university's robotics center. four months later uber is moving , into the advanced technology center. a mile down the road. it looks like that partnership may have been a job fair. we reached out to uber for comment and have not heard back yet. up next, meet jeff bezos's new shadow. we will tell you about this elite job and in the woman who is filling the role. ♪
♪ emily: a developing story we are tracking today. senator rand paul protesting a renewal of the patriot act. is it all for show? the senate has not taken up the bill yet. it technically is not a filibuster. they are set to vote tomorrow on legislation that prohibits the nsa from collecting phone records in bulk. but the bill renews provisions of u.s. spying programs that expire on june 1. to a big shift at amazon. for the first time, jeff bezos' right hand man is a woman. maria renz was named as technical advisor to the ceo. also known as a "shadow." she has been at the company since 1999.
she has worked on an array of projects. most recently, she is acting as ceo of the company that brought you diverse.com. what does her appointment mean for the future of leadership at amazon? i'm joined by my guests. jeanne, what you make of this? what can you tell us about maria renz and what she will be doing? g jeanne: she has one of the top us jobs working for jeff bezos. it has got to be a real learning experience. she has the tools to get there. at the core, she is a retail person, which means that she will be groomed to have some sort of ceo job that is retail related. emily: this is great. she's a woman. why is this important?
>> it is important for a number of dimensions. first of all, i see it as genderless. i think jeff is likely to treat women as brutally as he treats men, meaning in the best possible way. meaning, it is entirely bureaucratic but i think it is suited to a certain type of individual. emily: why do you say that? >> i say it from having been there. i started my career at amazon. jeff bezos's early on was betting on women. so from my perspective, amazon is a culture of go get it toughness. and maria is rising in those ranks. that's good for all women. emily: what do you think of the term "shadow?" it is actually on their linkedin profile. >> it is an odd term. they call it technical advisor
to the ceo. i think it provokes. but at the end of the day, everyone has run big businesses at amazon and have gone on to run bigger businesses. the key is that role has teeth. , emily: some of the former shadows are running businesses in their current roles. jean, what can you tell us about the people sitting on amazon's bench? there is always the question about who can succeed jeff bezos. gene: it's not obvious. jeff wilkie has been with amazon since close to the beginning. he runs their retail. if you're going to ask me to replace a non-replaceable person, it's probably him. i don't think there is anything in the queue. not that we are suggesting that but i think maria will be ahead -- a head of a major business.
i think jeff is probably the heir apparent at this point. emily: what you think? >> i think i agree. jeff has known the business since the very beginning. emily: you come from the e-commerce business. tell us how important it is to have diversity in leadership when it comes to e-commerce. >> one of the key reasons that women are emerging as e-commerce leaders is because there is investment in fashion, beauty, premium merchandising, these are all experiential types of commerce. i think in those types of areas understanding the female mind in -- the female mind and the female perspective, is something that a female leader brings to the table. emily: it's great to hear about maria's promotion to this role. though the term shadow is debatable.
thank you both. in today's edition of out of this world -- >> we have ignition and lift off -- emily: a successful liftoff from cape canaveral. but what is cool about this rocket is the payload. it's caring a highly secretive military space plane developed by nasa and built by boeing. the air force says it's being used to test a technology that can fly autonomously. also hitching a ride is the planetary society's kickstarter funded satellite project that is trying to use of solar radiation rather than rocket thrusters to propel itself through space. but it won't be in deep enough , space to test solar sailing just yet. using this missions data the society will launch that mission on spacex's falcon rocket in 2018. -- 2016.
♪ emily: it is time for the daily bite. today's number is 20,000, that is how many websites may become unreachable as engineers from the biggest tech firms try to fix a bug named logjam. a paper published this week by an international team of computer scientists disclosed the existence of the bug. logjam allows hackers to see or change information on a website that looks secure. when it's fixed, some older websites may not work.
microsoft passed the vulnerability last week, and patches for other popular browsers will be released soon. today, spotify announced it is getting into video. the company is now streaming updates from the bbc, ted talks, and clips from espn. videos will be served up based on what you have watched. spotify is also getting into original content. >> what is cool is the way it both complements and extends the core music experience. we believe it will keep users happy and engaged, but that they will listen to more music as a result. plus, it's really awesome content. it's really it adds value to the -- it's really adds value to the spotify experience. emily: spotify is feeling some heat. jay-z relaunched tidal and says -- recently launched titledal and
says he has 770 thousand subscribers. we are weeks away from the apple developers' conference. will this be a game changer for spotify? we speak to the director product marketing for iddo shai and kevin ryan. is this a place for ad dollars. if so, is the spotify admitting that it cannot survive on music? iddo shai: we've seen mobile video increasing last year. if you want to make money online, video is the way to do so, especially on mobile. advertisers love the mobile experience, and they know viewers are engaged with their mobile devices. if spotify was to make more money, especially from users who don't pay for the service, video is the way to go. emily: i recently spoke with the founder of pandora and we were talking about the difficulties
of working in the streaming music business in general. talking about way -- why they had to give it to an at-driven model. i want you to take a listen. >> we had the idea that we would be ad supported. we thought we would be a subscription business initially. clearly consumers did not accept that. when we grew, our idea was to be ad supported. we had to invent the ad supported business. it was touch and go for a long long time. last year was our first profitable year. emily: the founder of pandora there. kevin, i want to ask you. he started -- you have started 70 companies. -- so many companies. how big of a pivot is this for spotify and why now? kevin: i don't think it's a pivot. i think they're just adding to their product offerings. that's very different. spotify has incredible distribution.
it is easy to forget what they have built up. the number one by far streaming service. my kids only use that. there will be more products there. making money and music is incredibly difficult. they are as well position does -- i don't think they are worried about jay-z. i don't think that there is a momentum there. it takes billions of dollars and a commitment to the internet for a long time to be successful in this area. emily: what about google? youtube? facebook? even snap chat is getting into video. can spotify compete? iddo shai: i think they have a good suite of applications, so they can compete. this is something snapchat does not have. it remains to be seen about how they will push this video offering across the devices. because video is not easy. it's easier to handle audio files. if you want to get into
real-time bidding and programmatic ad selling, these are pretty tricky. we have seen big companies that wanted to get into the video business, like facebook. they had to buy live rail in order to do that. also yahoo! and aol before that had to buy because they wanted to play in that game. it will be interesting to see how spotify will be able to compete. emily: some of the original content looks interesting. a video series is showing a new dance move every day. i want to take a look at that. thank you so much for joining us. kevin, you are staying with me now. i do want to talk to you a little bit about something new that you're working on. you've had a lot of experience launching and building up companies. you just announce your latest startup called kontor, for office design. kevin: there is a $60 billion market every year of companies
buying office for -- office furnishings. there is no website to see the entire selection, get inspiration, so were building that right now. i have a 10 person team. we will launch in a couple of weeks. it looks very exciting. i think it's going to be a huge opportunity. it's exciting that you can still find enormous opportunities in the internet where no one has launched yet. this is one of the areas where you can find big things. i think kontor is going to be a big success for signing up the architectural firms. we will do some interesting visual search, and it will take a subcategory and make it bigger. emily: quickly startups used to , be started in garages. now we are seeing companies spending a lot of money on their offices. is it assignable bubble? -- a sign of a bubble. real quick. kevin: the biggest increases the large companies, the traditional company then need to spend more on their offices to compete to get workers per that is where