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tv   Bloomberg West  Bloomberg  June 15, 2014 7:00am-8:01am EDT

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>> from pier three in san francisco, welcome to the best of "bloomberg west." we focus on technology and innovation and the future of business. i am cory johnson. every weekend, we will bring you the best of west, the top interviews with the power players in global technology and media that are reshaping our world. virtual reality may be the next big thing. ranging from facebook to sony and the potential of this technology. at e3, the videogaming expo in las vegas, sony showed a new headset. facebook shocked many when they announce a $2 billion deal to
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buy a company whose headset is not on the market. oculus showed off potential of applications. jon erlichman sat down with the oculus ceo. he asked about the incredible two-year run. >> it has been an incredible ride. one of the journeys we get to participate in. the community is a big part of it as well and everybody got behind it, launching our kick starter. something we do not do in the past and we would take advantage of the internet and get it out there. it felt like overnight. it was somewhat overnight. within 24-48 hours, $1 million. thousands of people and the company was off to the races.
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>> some people still fascinated by facebook's interest in oculus. you had been swapping messages with mark zuckerberg. got to the headquarters and tried out the technology and he said, what? >> how can i help? he is a powerful guy and incredibly smart guy. he shared the vision we had. it really came together. we all got together. and mark zuckerberg shared the same vision. he wanted to get in the hands of as many people. we started the company on the foundation of how to get it into as many hands and homes and hopefully, hands as possible. >> you're saying you've got into the facebook headquarters for the first time since the deal was announced recently? >> it was a pretty wild the way to do a deal.
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this is my third company getting acquired. they made the deal on a handshake to a signing of the agreement within a week. about four days or so. we did not sleep much. going back and having the memories of getting the deal done. it showed the passion. it was incredibly fun. >> we are at a big game event. you have a gaming background. oculus has strong ties. oculus could be a part of facebook. you have talked about communication and face time and skype. how do you balance the time and energy and focus of the oculus team? which you told me is growing quickly. is it 50% on gaming and 50% on everything else? bloomberg was talking about the future and what it could mean for us. >> i saw it.
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we are game developers at heart. games are our talent. we have michael and 3-d graphics really helped at the beginning. they are back together working on vr. we have the big names. the legendary engineers and top talent that come together. the industry is the gamer. we are focused on the gamer. a lot of people think, it will go into communication and other areas. oculus is part of facebook. they will not be focused on gaming as much. that is not true. that is our top priority. it is built on a 3-d theme you have to render in real-time. >> to that point, sony has its own technology that it is focusing on at e3. have you tried it yet? >> not yet. it has been super busy. other guys have gotten a chance. we are really happy to see other companies, especially big companies, getting into vr.
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it will be a really big deal. >> they will be a competitor of yours, and is that how you foresee it? >> we have a closer relation to sony than any other company with him being in the vr space. it is creating the vr industry together. they are focused on the console. we are a company focused on vr. the unique side of oculus, we are well over 100 people. some of the smartest engineers have adjoined with a single focus -- vr. core platform and content. we have a lot of the grid console games and will be running the studios. we will be developing our own vr games. >> we think of the headset.
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give us a timeframe of being able to pull out sunglasses and experiencing the technology. what is the pricing of this? is it something facebook will give a way to users? they wanted them to enjoy the experience? tell us what's what happened. >> it has moved a lot faster than we thought. we got into it with a hot glue gun prototype. in less than three years, a second developer kit that is close to the consumer experience. internally, we have a prototype. we have a prototype that is less weight. it weighs almost, you can barely feel it on your head. that was a big challenge. it can do six degree of freedom. it is very comfortable. the prototype, would've hundreds of people.
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a handful of people complained about any disorientation. that elephant in the room. what about motion sickness? it is behind us. we are a focus on what will be the magical content in vr that will attract millions? hundreds of millions of people with sunglasses. that's something we got together on the vision with mark. we are looking at how to get one billion people in vr. a lot will be centered around gaming. ultimately, it will bring the next generation, final generation of communication. you will be to sit here and have a conversation. right in front of me and right in front of you. is going to be a longer horizon driver. >> that was oculus ceo, brendan iribe.
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taxi drivers across europe hitting the brakes over uber. how the start up is reacting to demonstrations. ♪
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>> welcome back to the best of "bloomberg west." more than 30,000 taxi limo drivers protested uber. this protest happening throughout the eurozone. from berlin to madrid. emily chang spoke to olivia sterns. she started by asking what it was like on the ground. >> up until an hour ago, the area was a two-mile radius. here is the square.
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essentially, traffic came to a standstill. it was gridlocked. several thousand taxi drivers turned off the engines. there were several hundred policemen trying to keep with the order. things went quite smoothly. no reports of arrests. taxi drivers are very angry. they said uber is operating illegally. they said it threw them a curve ball because as of this morning and i checked on my app, you can order a black cab through uber. i spoke to the chairman of the cab club and he said uber can -- he said no can drivers will move on to uber and if they did, they would be scabbed. i asked if he was losing business and he said no. he said they are angry with the authorities letting one company
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operate without going through the legal channels they had to go through. they said they had to jump through hoops to become cab drivers. here is uber making money without doing those things. >> and it shot up 850% in london. could it backfire on the cab drivers? >> yeah, it is pretty incredible. the winner in all of this will be uber. up 850%. an enormous spike in traffic. i saw people trying to protest. and the police broke it up. london resented the drivers for bringing it to its knees. it has been blocked up. several cities.
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it is slightly different everywhere. it is the same thing. the frustration that this disruptive startup technology is shaking up this very regulated industry as they are concerned because they set their livelihood is threatened. >> that was olivia sterns. more on uber's reaction. emily chang spoke to uber in paris. emily asked what it was like in paris. >> what you are actually seeing is simple. trying to bring it to a standstill while uber is trying to be more reliable and affordable for people to move around.
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>> overnight, you launched uber taxi. what is the state around the rest of europe? >> we do not offer the technology to taxi drivers outside of london. it is something we do across the world. the focus should be on how the technology can be a better asset to consumers. >> consumers seem to have made it clear that they want uber. what are you seeing in other parts of europe? >> we have a similar trend across europe. i think the market in barcelona, across the rest of europe, it went pretty much the same. >> wow. you discounted trips 50% today when rides share to cut down on congestion.
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you are not going down easily. how do you see the protest and other issues you are facing impacting your expansion plans? what is the plan? >> we are seeing a ton of support from riders, drivers and we continue to expand the product area the numbers are very exciting in terms of what we have seen. the job force is to make sure that on a tough day like this we can move as many people as possible around the city. this is what we are putting into lace, a romo to share assets on a day like today. >> uber does have pricing power in london. how does it play out in the rest of europe? is it that much cheaper everywhere else as well?
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>> i think in most markets we have a range of offers. some are more expensive than taxis or very high-end services. we do offer a product that is a ridesharing product. this is 30 to 60% below taxi prices. >> what kind of luck are you getting to get drivers. some cabdrivers are refusing to change over to uber. i know that in san francisco many uber drivers are former cabdrivers. are they fleeing to come work for uber? >> we do see across a number of markets some taxi drivers switching over. uber is bringing them opportunity they did not have a before. they can start their own business and make a living out of their own work. they have the flexibility and time when they want to work.
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>> that was uber europe's regional manager. he was speaking with emily chang. speaking of uber, the company was valued at $17 billion. there might be some new changes to grow into that valuation. that is next on "bloomberg west." ♪
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>> welcome back to the best of "bloomberg west." i am cory johnson. we've seen a multibillion-dollar tech fields. we have seen skyhigh valuations for independent companies like airbnb or uber. let's talk about business. what makes this business worth
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anything? how does it work better? we looked at the business of companies like uber that are so loved by investors. is this just investors pursuing growth at an unreasonable price? >> that point really matters. what is good about this environment is the company is going public and getting an extreme valuation, at least in the most part, they have's substantial businesses. the company was just on here. it is very clear that companies like gopro are very substantial businesses. >> i would throw out a three printing company. an electric battery maker. >> what i would tell you is this. the news the day before yesterday that eric cantor lost his seat in virginia set back immigration policy.
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when immigration stops in the united states, economic growth suffers. particularly when you have china restricting u.s. companies selling to their markets. growth is going to be hard to come by. investors will go where they find it, which is the tech market. >> we see oracle and cisco and ibm see falling revenue despite billions. >> let's forget the phony ones for a second. the ones that are really substantial are fueling numbers. you get this bidding war naturally. the thing that is amazing about uber is that fidelity was the largest investor in that financing.
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what is remarkable to me is not just that they are out public layer, they started a private car business. boston coach. i know that category well. they think this thing is worth $18 billion. whatever the number is. i'm scratching my head thinking there may be something going on at fidelity that is different. what i see at uber today is an extraordinary opportunity but with some big changes required to fully realize it. >> at our next big thing conference on monday i talked with a bunch of venture capitalists and investment bankers. they really have analysts who know these businesses. they are bringing those analysts
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to these private companies saying here is a we know about this business. this is where we might be able to help you. >> definitely not. in the 80's, i had this insight that you could not be a successful public investor if you did not know was going on in the private market. i know that at zero price they have follow that ever since. fidelity is doing the same thing. they bring a lot of value to the situations. they can bring amounts of money that you can't get anyplace else. i look at all this and say that in some ways this is a healthy development. i am not going to try to defend the valuations. $18 billion for a company that is still very small and rob was losing money. a reservation system, i don't care what you are making reservations for, it is hard to grow to an $18 billion evaluation.
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they want to roll up car-based transportation. yes you want a taxi or a black car to come pick you up. it is way more interesting if they own all the cars. they take their zero cost to capital. >> you think because of their ability to raise money they can do something they wouldn't do for the business if money was more of an issue. like by a fleet of cars. >> the target should be to own a 10% of the markets of that operate in. they can be all those things rolled into one. >> 10% of all the cars driving on the street? >> google is talking about driverless cars. they are thinking about these cars being on the street and using your iphone to check them when you need them and check them back in when you don't. why shouldn't uber be the biggest player in that marketplace?
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car loans are expensive. if you think about their ability -- >> relative to credit cards. >> relative to the cost of the capital. they are still very high. if you are a limousine or taxi driver and you want to lease your own car, uber can give you a much better deal. they can split the savings with you. if you look at it, the consumers of already voted for uber and that model. objections of the incumbents they been overwhelmed by the public. >> they own both the reservation and the payment system. they own the vehicle itself. >> if your cost of capital is essentially zero and you get limited amounts, you can think really big.
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you did a business plan you can grow into. they could be as big as general motors. without doing that claim, it is hard for me to justify 10% of that. >> it start to look like a priceline or something else. the inventory is very different when it comes to hotels. >> when we look around the marketplace today, there is desperation for growth. it may turn out to be a huge problem for investors. the equity markets right now are in better position than the economy as a whole. they get a better rate of return. that rate of return may only be three to five percent for while. compounded over a long. of time in a zero inflation and zero growth environment is a good return in real terms. >> that was roger mcnamee. what happens when you combine baseball with technology? the giants ceo will be here next
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to help explain how tech helps. ♪
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>> welcome back to the best of "bloomberg west." we focus on innovation and technology and the future of business. i am cory johnson. the san francisco giants have quietly built the best record in the major leagues. how does a team use digital tools to boost their results on and off the field? emily sat down with the giants ceo to discuss it. >> we use it on the baseball side and the business side. there are lots of ways to use it. just now a light bulb was going on about tracking hitters' tendencies.
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you can see the shifts and defensive shifts in the infield and outfield. you will see more often than ever before three position players on one side of the infield instead of the balanced two and two. there is a lot of advanced metrics that have to do with tendencies that are becoming a big part of the game today. >> are you ever questioning the data instead of your instincts? >> you reduce all the data and then it goes to the team manager on the field. whoever that manager is, it is his job to blend that with gut feeling. you can say this pitcher is going to do well against that header. the pitcher in the bullpen might have a stomach ache, might be going through a divorce, might not be feeling good for what ever other reason. the manager and the coaching staff take that information and
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blended. i think going straight off the analytics is a mistake. we are not robots. they are not robots. >> you have some injuries this year. any innovative ways of getting them healthy again? >> it is a 162 game season. one of the things we do is take our time getting players back on the field. we have physical rehab and we want to get them back because planets can be won in april and may and they are also one in august and september. we are really careful that it is a measured approach. >> at&t park is one of the most tech savvy parks in america. how do you keep that up?
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>> there is a lot going on with us. a lot of it is through at&t. the chairman and ceo have their name on it and they want it to be an unbelievably advanced ballpark. we had wi-fi long before others. we have upgrades every other season in powerful ways. there is going to be a day when you walk in and say i like my seat, i would like maybe a better seat. it is the first inning. you can go onto your handheld and you could be in another seat and pay another $10 or $20 to be in a different seat. that can happen in real-time. >> the 49ers claim their new stadium will be the most tech savvy stadium in america. any pressure? >> we have a good relationship. we have a rivalry but we have a good compatibility starting with alex smith wearing a giants cap at all of his press conferences. santa clara is going to be 15 years younger than our ballpark. we think we are keeping up with the joneses pretty well. we want to be relevant to the fan.
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the fan for baseball is looking for a two screen experience. if they are home, there are screens they are looking at. if they are at the ballpark, they are watching the game and doing things relevant with the handheld. those things relate to statistics, replays, just getting more information. >> the team and players are very active on social media. is that a requirement? >> the players have brands. what is important is the players brand and the giants brand can become co-mingled. we did a commercial that we produced with yahoo! with sergio. it is a perfect example of
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everybody coming together around a personal brand. the giants tweet out about it. sergio tweets out about it. everybody is talking about it. it is pretty cool. >> you are a fourth-generation san franciscan. there has been a lot of debate about the equality gap in san francisco. >> we have a chance is a baseball team to take a whack at that. i see our ballpark as town centers. that is where people come together. i remember hedge fund guys sitting next to a 14-year-old from the boys and girls club during the world series. what we provide in baseball is a lot of games and we have tickets at eight dollars.
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baseball can provide a coming together and a melting pot to take a whack at that inequality. what we do with some of the hedge funds that and companies that are in town, it is important and we encourage and facilitate it. that is the way that we will address the digital divide. >> san franciso is he unique city. you have people leaving the city because it is getting too expensive. >> i think it is ok to have a regional team. if people with affordability issues drive out of the city itself, we have 20% of our fans coming from outside the bay area. that is a good thing. we would like to think we have a lot of fans in other places like new york city. there is a giants bar in greenwich village.
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we think we have fans that come to games throughout northern california and fans in other parts of the country. we want to continue to create that rand and hopefully that is a monetization opportunity for fans of the region. >> the niners are doing well though they haven't won a championship. the giants have won two. is san francisco a baseball city or a football city? >> people said that this is in a baseball town. i think that quite frankly we are now in a motive over the last 20 years with sellouts and a couple of championships that we are as much a baseball town as a football town. >> that is very diplomatic. >> i think it is both. and it is good to be both a football town on a baseball town. >> that was the giants president and ceo with emily chang. hewlett-packard has restructured and restructured for years. they are cutting their workforce by 50,000 people. that is boosting the pay of ceo meg whitman. we will show you the interesting
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math on "bloomberg west." ♪
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>> welcome back to the best of "bloomberg west." i am cory johnson. why does hewlett-packard keep laying off more people? is it possible that meg whitman makes more money the more people she restructures out of a job? let's look at the layoffs boosting executive pay and hp. >> hewlett-packard has a one-time restructuring.
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they have more layoffs. this helps meg whitman make more. a restructuring costs at $3.6 billion has ballooned. that is half $1 billion more. that is about to hit 50,000 layoffs. let's take a look at businesses. the structure is a cost of building a business. if you hire somebody to build it. maybe it becomes obsolete and stale. you shut down the project and you lay off somebody. restructuring suggest the shutting down of a project is a one-time in nature. that is how the accounting works. sales go up. the restructuring goes down here. that is the bottom line.
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that is what the shareholders get. a the more costs a company can move from here down to hear, the bigger the adjusted profit. meg whitman has received $50 million in bonuses. they have seen 11 quarters of shrinking sales. net profits have fallen. restructuring will cost 50,000 people their jobs. you wonder how a company that can cut costs and raise bonuses. a quarter of her incentive plan saves them bottom line financial performance. that is defined as non-gap rockets. the more cost she can move from here to here, the bigger the
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non-gap rauf it and the bigger bonus. the bigger the layoff, the bigger her pay package. there are other factors. until that happens, with every restructuring it improves the structure of the ceo's pay package. hewlett-packard is not alone in this practice. the company is notable for restructuring costs that have extended for years and years. the director of "game of thrones" is here next to give some hints about the upcoming season finale. ♪
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>> welcome back to the best of "bloomberg west." i am cory johnson. the battle of castle black may
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be the biggest set piece in the "game of thrones" history. this weekend, the season finale could be the best episode yet. we spoke with one of the directors of the show. what is it like directing "games of thrones?" >> you can't compare it to another show starting with the fact that it shoots on three continents and you are prepping on three continents. the entire season is written in advance. you have all the material for the season when you start. you can be very firm in the storytelling. you are not usually able to do that and television. instead of 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 that?
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>> it is in the extreme. they work out a schedule as advanced as they can that makes some financial sense. every director gets a different color on the schedule. i did four episodes this year. there were light blue and dark blue. it was all over the schedule. you are shooting for six months. i think i shot for 100 days off and on. when you are flying to croatia to prep that. or flying to iceland to prep iceland. you are all over the place. it is very intense and it is fun because of that. >> those real locations where you are shooting our enhanced by visual effects. how much of the budget goes to something like cgi? >> it varies. a lot of the locations are not enhanced and given how beautiful ireland and croatia and iceland are.
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there will be several episodes during the course of the tenant require a lot of money for visual effects. i did four episodes and there were very different categories of visual effects that were pulled off. >> it has a lot of supporters in silicon valley. have you received any feedback from tech executives that have notes on the show? >> the feedback is either oh my gosh that was amazing or that was gross. that is normally the feedback. >> everybody is talking about the 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. what is your strategy? how do you keep the secrets from
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spilling out? >> everybody loves the show so much that they are dedicated to it in as a labor of love now and they are tightlipped. it goes both ways. i find that most people don't want to know. they want to have the surprises in the show. i was hacked when i was in europe. i him easily removed everything from my computer and put it on a drive. i was warned that somebody might be trying to get into all the stuff and i had the entire season on my computer. >> even though you are directing some episodes and there are a team of directors, you each have to know everything going on tied to that season. >> directing the show, it is like directing a feature in the old studio system. they are very supportive. you have to roadmap out the narrative of all the stories of each character in scene because you are doing something very
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specific. >> you have done your fair share of job dropping episodes. with the final episode of this season, what should we prepare for? >> i can't talk about the final episode. i'm a huge fan of the whole season. the finale of season four is unlike anything you that has been mounted on the show. it is a turning point in the books. it is a big turning point of the show. i am very proud of it. i hope it does well. >> the show has been renewed for a fifth and six seasons. how long can this continue? >> and is up to david and dan and george and where the books tickets.
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i think they will keep it as focused and tight as it has been. they will not drag it out. i know that there are more stories that need to unfold before the climax can happen. >> that was a "game of thrones" director with jon erlichman. up next, we are testing out the technology and design of drones. how durable can unmanned flying machines be? ♪
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>> welcome back to the best of "bloomberg west." i am cory johnson. amazon and google have not made their stocks crash proof. why should we trust their drones? we tested out the indestructible
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drone. i spoke with the cofounder of the guy advancing drone and technology. what is the purpose of game of drones? >> we are a group of inventors and engineers and we have been flying drones for about four years. we have discovered that the biggest problem with them is that they are furry fragile. one of the first things we do is when we crash we have asked and sieve fixes to do. we made the only ruggedized airframe that we know of on the market that is indestructible. >> they can resist fire. >> baseball bats. >> i have a regular drone.
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>> should i move? >> here we go. >> that broke a lot. >> this is not going to break it all. >> this is one of the leading airframes on the market today. >> nice weighing in. >> nothing. >> go to town on it. >> what is it made out of? >> it is a proprietary ballistics grade material. it survived that. it is a blend of lasix we have developed ourselves. >> what i did not realize is there are drone fight clubs. people fight each other's drones. >> you might've seen robot wars on tv. a lot of us do that. when we knew that we could fly, we abandoned the ground-based robots altogether.
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we have gladiatorial combat in the air. >> were people getting hurt with these things? >> we are very big on safety. >> we are going to have a drone off here. >> you are operating which one? >> let's give it a spin. >> the black one is mine. here we go. >> this seems like a great idea. >> we like it. >> where do the's drone battles happened? >> all over the bay area. we have a warehouse in san francisco. we are developing the aerial action sports league. we are taking that national.
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we had a huge turnout. it is very popular. all we do is flip them over. >> we usually have 90 seconds to get them back in the air. >> that looks different than the one that is going to be delivering my amazon package. >> we can make those drones completely crashproof and they are going to need us. >> does fsa rules inhibit the growth of this business? >> you can't fly within two miles of an airport. you can only fly as high as 400 feet. it is good to be insured for property damage. you will not have drones that damage anymore thanks to us. >> that was the cofounder of game of drones.
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that does it for the best of "bloomberg west." you can catch us monday through friday. we will see you next week. ♪
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>> it is the human condition to question where we came from. to seek answers to impossible questions. to explore the unknown. the cost of space travel has clipped our wings. >> 2011 was not just the end of the u.s. shuttle program. it was the end of an economy. now nasa is passin


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