tv Bloomberg West Bloomberg August 21, 2015 10:30pm-11:01pm EDT
influence silicon valley. and i will be joined by a videogame executive whose tournament sold out this weekend at madison square garden, all of that is ahead on "bloomberg west". now to our lead. epic stock selling across the globe, the biggest weekly losses in four years and technology is getting hit hard, amazon, google, facebook were tumbling and apple is entering a bear market. in the nasdaq, extending its biggest drop since 2008. they fear private tech companies could face a similar fate. benchmark capital's will gurley warned ceos to prepare for tough times. i sat down with bill to get his response to the selloff. >> we are seeing a shift, we have been for the past 12
months, we have had internet investors, on the scale they have been pegged to the right rails. the only way to go is down. whether it is the chinese economy, it has caused them to drift to the center. >> if the negativity is around the chinese economy, or oil prices tied to the international supply, you tweeted that he talked about the impact of this on the silicon valley. why is it that this means the sentiment changes? >> two things, returns and venture community, they have always been highly tied with the nasdaq.
if you go back, go back and there is this correlation, the output of products in silicon valley is to take them public and how this public companies perform. that is how we create companies. there is a huge correlation. number two, the incremental price center in the late a private market has increasingly become the mutual fund buyer that has reached down a class from where they used to invest. if they are getting their ass kicked every day, it is highly likely it will reflect how optimistic they are. just because the private companies do not trade every day, that doesn't mean that values are not falling. >> it does seem like the lesson, there is this inexhaustible supply of capital from private equity. later we will be talking to a ceo who just raise money,
european funds. but maybe if the public markets continue to do this, this will be a source of light. >> i would be surprised, just because these people are working out similar pools of capital, you could be right. i am making a bet that probably is not right. one thing, one of the reasons i am signing this alarm, every entrepreneur is forced to play the game on the field and that game has been capitals spree, get as much as you can and grow at every cost. the burn rates are up. if the game on the field shift, the capital gets more expensive, then you have a shift. you can rest assured the message i brought to twitter last night is one i have sounded internally to our companies for over one year now, i want them to be ready. >> you asked, rhetorically,
whether unicorn companies are ready to make this shift, perhaps move to profitability. are these the ceos that have been through business cycles and are good at listening to outside impact? >> anybody who went through 1999, that is the best learning you could have for this. i think of 2009 as a speed bump. i took huge value out of this. it did educate the community very quickly. i can remember coming into board meetings in 2009 where the board members had decided to do a headcount reduction, because that was obvious what needed to be done. >> then there was great acceleration. >> but the companies that did not have catastrophic events.
we have already seen in the past three months the good eggs, we are starting to see catastrophic events, and we haven't even seen the shift in capital markets. those are coming in at $50 million each. >> some companies are growing at astronomical rates, one of them is in your portfolio, another is airbnb, uber, they are investing overseas. what does it changing gears look like? >> i would speak broadly about the companies we work with, i encourage everyone to constantly do scenario plans and here is the path we are on, if capital markets shifts, here is where we will go. and build that financial model, you know what is going to look like. you have multiple paths.
>> you want them to look at what will happen, if it comes to pass, what will happen in silicon valley? >> it will be different for different companies, because different companies have taken on more risk. there are people who i think are more conservative, that could shift to a profitable model and bring down growth, because they are more experienced and pragmatic. there are some, the younger you are the more likely you are at risk, because you tried to follow the path, or maybe investors are young. i mean, good judgment comes from that experience. >> there are some public companies like amazon that actually continue to be valued for growth instead of profitability. what is the lesson there? >> there have been times in the
past, where amazon has lost the trust of wall street, you have written about it, you think, they need to show profitability and earn that trust back. they have played this game over time. but every once in a while, they contribute cash flow and they contribute cash flow and they are nowhere near like they were in the past, where it is an issue. many startups could run out of cash. that is what happened at did a -- good egg, they ran out of cash. >> if you are something like square, what does the pipeline mean to you? >> if you have good financials and you are ready to go public, you are hitting quarterly numbers, it doesn't matter. windows are always open for good
companies. we took open table out in '09. we were one of the first companies out after the crisis and it was fine. you want stock to go up over time. going out in the market increases the likelihood it will go down. it is a long journey. >> that was bill gurley, now mark joins me to break down his comments. mark, thank you for joining us. >> good to be with you. >> is gurley right, is there going to be an earthquake in silicon valley? >> there will be a tremor, similar to the 2000-2001 time. i think he is right on. >> you are observing this entrepreneurial environment from afar, do you think that silicon
valley is it ready for a shift in psychology, or will we see something like 2000 where it took a lot of entrepreneurs by surprise? >> sorry if i look a little scruffy, i just flew in from silicon valley, but i talked to people out there and many companies have not gone public. back then, 10,000 companies had gone public. there just weren't good management teams. they were not built right. i think that we are now in much better shape. >> what happens on sunday in the asian markets, how far will the pessimism keep directing the markets? >> hopefully some people come back from vacation and we can get some humans back in charge of the market, rather than the algorithms, i think also there has been leverage traders who are being tapped on the shoulder, we are down 5% and we are liquidating these positions.
you will see those big positions go down more in the market. the pessimism will start and ebb a little bit by next week. as long as growth expectations fall, it could be a tough market for a wild. >> thank you. next, zaqdock officially a unicorn, i ask where the ceo will take the platform. ♪ in unicorn news, zocdoc has
raised $130 million. the digital health service which lets patients book doctors appointments from a cell phone, had participation from atomico. i am joined by cyrus. how are you reacting to the epic decrease in stock prices and how will it affect zocdoc? >> zocdoc was started in 2007, shortly after the great
recession came about and we had to do that deal with realities of markets being constrained. it created discipline that carried over to the company, even to this day. from the very beginning, we have been the company that is focused on fundamentals and kept in mind that the problem we are solving which is healthcare, is a real problem that will not go away. if you look at what the market does, frankly we are challenged with solving problems that are quite frankly, cyclical. >> you allow people to easily and urgently book appointments with health care providers, but now that you have raised $130 million, what doors does that open? >> we want to add to the platform, but we want to show our full vision, being the center of care. we think of the patient as just not a patient, but when they are
trying to understand insurance benefits, try to communicate with doctors after the fact, or maybe order prescription refills, very much what we believe zocdoc can do is streamline and simplify the entire patient experience. that is what we will focus on with the fund-raising. >> health care insurers, they see this as their territory and they want to turn their websites into this, how much are they competition for you guys? >> that is like asking jeff bezos what kind of competitive threat barnes & noble had to them, fundamentally if i look at the landscape and health care in general, the shift to the consumer has not happened fast enough and that is a trend that zocdoc is focused on, and every
other industry, we are used to getting things immediately. but yet, we are not getting our doctors immediately and that is what we are hyper focused on solving. insurance companies had their time to solve it, they haven't. zocdoc is solving it now. >> ok, cyrus. thank you so much. if zocdoc decides to go public, they may find themselves in a battle for wall street, using real-time data to build and manage their own simulated trading firms. we sat down with the cofounder to discuss. ♪ >> i think the best way to describe the battle for wall street, the only difference is a battle for wall street, you are managing traders and you have to trade real stocks, so real that it is coming into the game. you trade equities, but it also
includes commodities and funds. we are going after the millenials and gamers, and also new traders, ones who want to learn about the market and have a fun way to do it. this game should become a component for education, we are talking to a lot of schools, middle schools, high schools, even colleges about incorporating this game in classes. we are trying to make learning the stock market fun by turning it into a mobile game. >> coming up, 27 million players every day in a sold-out stadiums around the world, the gaming phenomenon that is leak of legends, ahead of the tournament this weekend. five times higher than the world largest building, that story is next. and check out this video, the m.i.t. lab that used a printer
tourism, observation, and research. they believe that i can build that elevator in 10 years and it will cost $5 billion. this week, madison square garden hosts the championship of the league of legends, one of the most popular games in the world. 27 million people play the game every day and the world championship brought more viewers last year than game six of the nba finals. the company behind league of legends. dustin is here. madison square garden is associated with the knicks, the rangers, and now league of legends. how does it feel?
>> it is great for us and our fans to host this their, people grew up rooting for teams that played there, now this is a dream come true for our community. i think that you will see the passion resonate throughout the crowd this weekend. >> we just mentioned that the viewership from last year was larger than the nba finals game, that is incredible to a lot of people. isn't this primarily an asian audience? >> it is played all over europe, asia, south america, so the ability to have a sports that is enjoyed by fans across the globe, a really impacts the
-- it really impacts the viewership. it is not just one region watching, it is literally the globe watching. people are rallying behind, people stay up all hours of the night to watch favorite teams. >> tell us about the athletes that will be playing this weekend at madison square garden. who are you looking forward to seeing? >> we got lucky with how the season played out, this is really the yankees and red sox of their sport. they have dedicated their careers and professions to playing games at the highest level. they live in gaming houses together, they play 12-14 hours a day. they have coaches, weight trainers, everything that is traditional. it is great to see them play on the level. >> so amazon's twitching tv,
youtube is trying to get into that, are these accelerators for your business? >> you know, it is a great question. we have seen e-sports take off over the last few years. youtube is about to launch a platform for us. to see players come out like this, they get excited about e-sports, it is great for the athletes, but most important it is great for the fans. it brings legitimacy to the sport that they are passionate about. and to see competition among their ranks has been exciting for us. >> dustin, what does the winning team get this weekend? >> some cash to bank on, but
they will also qualify for worlds, this is the north american tournament, but then 16 teams will compete all of october in different cities in europe, that is where they will play for the $1 million prize. >> how much is the prize money this weekend? >> a couple hundred thousand dollars. >> excellent. dustin at riot games thank you. that does it for this edition of "bloomberg west", emily chang will be back on monday. have a great weekend. ♪
john: with all due respect to my wife, i swear i was doing opposition research. happy national spume own a day. in our lineup tonight, joe biden versus hillary clinton, hillary clinton versus the media, and ted cruz versus the establishment. first, donald trump versus everyone. the city of mobile, alabama will play host to donald this evening in front of an expected crowd of