tv Bloomberg West Bloomberg July 1, 2016 11:00pm-12:01am EDT
>> i'm mark. you're watching bloomberg west. let's begin with a check on your news. in bangladesh, a hostage situation in the capital, dhaka, continues, at a restaurant popular with foreigners. gunmen storm the holey artisan bakery. two officers were killed. more than 20 people wounded. according to the intelligence group that monitors jihadist activity, islamic state has claimed responsibility for the attack. u.s. attorney general loretta lynch has acknowledged her impromptu meeting with bill clinton at a phoenix airport caused a political firestorm. she admitted people may believe the meeting could taint the investigation into former secretary of state hillary
clinton's private e-mails. >> i may have viewed it in a certain light, but the issue is, how does it impact the work that i do and what the department of justice does? i certainly wouldn't do it again, because i think it has cast a shadow over what it should not, over what it will not touch. >> donald trump tweeted that mrs. clinton, quote, "probably orchestrated the airport meeting." democrats who last week staged a 25-hour sit-in to demand votes on gun bills are said to believe the measure amounts to an n.r.a. written proposal. from bloomberg in new york, i'm mark crumpton. bloomberg west is next. ♪
>> i'm corey in for emily chang. this is bloomberg west. coming up, we'll look at brexit and a technology edition. plus, oracle slammed with a major one. this could cost the company billions for breaking a promise made to hewlett-packard. we'll explain. and no longer just for billionaires, we're going to take a look at the founders, reaching for infiniti and beyond. the brexit vote left the world reeling. standing by is oliver to recap the highlights of a crazy, crazy week in trading. >> indeed it was, corey. thank you. a little bit wild today, especially given that we had such a big move really throughout the entire week. i'm going to jump right in. this is a great function on bloomberg, just to kind of capture what's been going on. the grr returns. these are the first-level s&p index, grr, on bloomberg.
this is basically going to show you everything that moved this week. first thing that pops out is telecoms, staples. investigators continue to go to places that they perceive as being sort of -- maybe not safe but at least giving you a better return when treasuries continue to dive and yields get lower. and they continue to dive into these places that basically are supposed to have lower volatility. but the other thing to take away, green across the board. all sectors up. you can see the returns this week. then i'm going to jump into probably one of the bigger stories in the week, the banking sector. this is basically showing you the kind of volatility that's happened over five days. this is the graph, starting from monday. every day up to friday, where you can see generally they ended green on the week, where they were up. which is interesting, because these are really the focal points for trying to assess
what's going to happen from brexit, what's going to happen in terms of the banking sector, whether or not there's political turmoil bleeds over into financial turmoil. we had a date where basically you had the results of the stress test that kind of threw banks for loop as well. a solid rebound in that group, ending up on the week. this has got to be the story of the week, the volatility index. essentially you see this huge move down this past week. massive move down, more than 40% decline in the volatility index, following a huge jump going into brexit. part of that is the realization maybe brexit is not going to be as bad for stocks as people thought. part of it is people were using this to hedge, and you had to get out of that. you had this big move down. very interesting to see how that volatility perspective is playing out in markets. it was a crazy week. but there you have it. >> oliver, great stuff. appreciate it. all right. meantime, employees are in for a
big change. we learned that shares will be replaced with new stock. >> hey. i haven't done t.v. with you before. >> what's the deal here? >> so, there's all these new kind of companies called other bets within alphabet, the former google. >> this is the driverless car and all this stuff? >> the contact lenses. glucose. things like that. they want these new businesses to act a lot like startups. but there's been something missing, which is the equity incentive portion. they need to get people's stock in those businesses rather than the holding company. >> in what way is that missing? >> right now, if you're at the contact lens group, if they do really, really well, you've been issued with alphabet stock. that really goes up and down, depending on how google does. >> but isn't that like working at any company, you might do well in your sector, but the
overall results of the company are how you get paid? >> yeah. and so google has -- alphabet has become so large, so many different businesses in there. they felt like they needed to take this next step where they're trying to make these different divisions. >> for a true venture fund, what happened is the employees actually put their own side bets in on the things they're working on. because it seems like they're sort of saying, hey, you're going to be rewarded just in what you're working on. is there any thought of that? are they doing anything like that as well? >> not that i know of. it's more the case that -- especially some of these executives that maybe are going to -- might go to another start-up. and they want to say, hey, instead of that, stay, run one of these other companies and we'll give you stock in that. if you do really well, you can become rich just like a start-up. >> it's a very interesting way to reward employees, because there are companies, if you work
in sales, you get a bonus on the project you're working on. but issuing equity, it's essentially a tracking stock, because they're not actually going to have ownership. >> alphabet has to create this new kind of six-month thing. they say, we're doing a new stock. come and sell it back to us. >> and how will they determine the valuations? >> they're going to do it with an outside service. they're going to evaluate, when a start-up is issuing stock options, they get an outside accountant to come up with a fair market value of it. >> so all the ownership will, of course, will owned by the alphabet shareholders, but within it, they're going to have a tracking notion of what the value would have been, had it been independent? >> and if you leave one of these other companies or alphabet completely, you can't take that
stock with you. you have to sell it back to alphabet. >> will everyone's vest in the same way? >> i'm not sure. i wasn't able to find out about the vesting. but one of my sources say they would vest a bit like a regular stock award company, like 25% a year. >> and finally, is there any notion -- like how many employees are we talking about? >> so i know for sure that they are doing it. they probably only have hundreds of employees at this point, verily. but if all of them did it, it would be thousands and thousands. >> this is interesting. oracle, big story. $3 billion, a jury in san jose, california, ordered oracle to pay that much for bailing out of a chip deal with hewlett-packard. they decided that oracle violated a contract to support a software for hewlett-packard's once-promising chip. this follows a $9 billion
lawsuit against google. we bring in matt from washington, d.c. to help us understand this. so this was this platform that intel, hewlett-packard, oracle, all thought at one point was going to be big. but that's when mark hurd was running hewlett-packard. >> that's exactly right. eventually mark hurd was pushed out for nonbusiness reasons. it was picked up by oracle. and shortly thereafter, after there was a settlement, involving trade secret disputes, oracle eventually decided to back out of providing software support for the products. that gave rise to the current lawsuit. h.p. essentially, at the time hewlett-packard said that oracle, when they resolved this prior dispute, had agreed to continue providing software support, that the companies had agreed to continue moving forward as they had when hurd was at the helm of h.p. that didn't happen. >> jury trials can go any way
sometimes. it sounds like a lot of h.p.'s arguments was that this was personal, that this wasn't about oracle making a business decision or oracle making a punitive decision. but it was about mark hurd trying to stick it to his former employer. >> that's exactly right. that's the best story. this was a five-week jury trial. it's a slog, for anybody who is, you know, sitting through that long of technical details, of arguments back and forth. lawyers on both sides, experts, people who were there, testifying as to what happened and what e-mails mean. ultimately, at the end of the day, i think the story that this was a little bit of a vengeance on a former employer won the day. it's something that's easy to grasp on to, makes sense, and i think it really resonated with the jury that that's the case. >> well, larry ellison was actually there at closing arguments. clearly this was a serious thing for them. >> this is a huge case.
oracle has had a number of setbacks. it's legal department has been getting hammered with a number of different lawsuits. the $3 billion verdict is way beyond, i think, what was projected to be the likely outcome and certainly a worst case scenario that came to fruition. it will get knocked down on appeal, most likely. courts are going to take a look at this and maybe scale back the damages award or potentially question the underlying contract, if it's enforceable. i think it's certainly a huge hit, 5% of oracle's cash closings over the last year. >> the oracle -- the size of the verdict makes it less likely they'll settle, because the number is just so big, it wouldn't be in oracle's interest to appeal and appeal and appeal. >> that's exactly right. at this point, it's more cost-effective to pay your lawyers. you've got a 50/50% chance of getting the appeals court to reverse it or at least bring that number closer to something
that could potentially settle the case. but when oracle is looking for realistically something in the low millions, maybe they would, you know, consider something in the $100 million range. you've got a $3 billion verdict out there. the parties are just too far apart, so it's going to be knocked around in the courts. >> oracle said, look, we stopped developing on it. h.p. stopping developing on it themselves. intel stopped developing on it. but h.p. e-mailed us a statement that said oracle's decision to stop software support, was a clear breach of contract, caused serious damage to h.p. and our customers. of course, oracle said they never believed they had a contract to continue to support software. they went on to say we do not believe so today. >> the question is, who pushed
the first domino, so to speak? was this a sinking ship and oracle was the first to jump off or did they actually cause the breach in the hull? h.p. has one view, oracle view. we'll see how that plays out, at least over the next half year or so. could potentially take another couple of years. >> at least the lawyers are going to get paid. i'm so happy about that. matt, he also likes when lawyers get paid. coming up, could apple be diving in with title? diving and title, talks are in the works for acquisition, at least according to one report. what does this mean for the music streaming industry? we'll figure it out, next. ♪
>> turning now to the music streaming the war. spotify accusing apple of blocking it. they are saying,, quote, spotify was seeking preferential treatment. this comes after the dispute. joining me from los angeles, vicki newman. the cross-border world is the name of her company. she's consulted a lot of project. vicki, when you look at this industry, is the business model sort of to imagine that people will own two or three subscriptions if they're big music fans because they want access to the latest drake and they want access to the kanye videos, so they've got to be paying for title and so on? >> well, i think that there is definitely a movement afoot to use exclusive to try to drive customers to one service or another. i don't know how effective that will be, because i think there's a proposition to all the
consumers and the music fans that you pay for one streaming service and you get access to everything in the world. so i'm not sure whether or not people would have an appetite to subscribe to two or three services. but exclusives are definitely emerging as one way of differentiation. >> yeah. it's a compelling one too. the biggest artists in the world, rihanna, beyonce, drake. you know, these are just the most popular artists in the world. >> well, they are. and i think that, you know, i actually am really in support of artists doing things for innovatively. i feel like we've lost the magic of the limited release and the scarcity. so when artists do something special and it resonates with their fans, that's really at the heart of what is going to help get digital music to flourish. but i think for fans who may
join one service, if their favorite music is held out of it, that's not really serving your fans very well. >> yeah. i'm really curious about this. i've been watching the music industry for as long as i can remember. i feel like all of a sudden you've got the distributor here, apple, sort of bordering on being an actual like music publisher or even a label. >> yeah. well, i think one of the trends that we're seeing is what's happening with netflix and amazon and, you know, original content creation. and that helps all these companies differentiate. but there's a big difference between what netflix and amazon are doing in terms of production, because they don't have a value proposition to the end consumer that they have everything under the sun. >> but it's my understanding, though, that like apple, for example, is using its big cash pile to front the money to drake
to record an album, to try to cement the relationship. it's a very label-like thing to do. >> well, it is. it is a very label-like thing to do. and there's been speculation for the last 10 years of, you know, couldn't apple just buy the entire music industry? couldn't they just buy every label, or google or alphabet? the truth of the matter is, yep, they could. but is that their core business? and how can they enter into that game when it starts to get into things like artist development? that's a pretty tough business but they just brought in jimmy and some of the big ones that were there. so they're perfectly poised to start doing that. >> and jimmy has developed a few artists as well. i wonder, when you look at this, you made the point that i made last night, which is when this news was crossing, that, you know, we are in a golden era for television and film production, because of amazon, hulu, hbo,
showtime, stars, all of the traditional makers of content. are we starting to look at a similar thing where the artists are going to start to get flushed with cash? we've seen complaints from the artists, saying they're not getting enough from these streaming services. >> right. i think there's a couple of different problems that are crossing in the streaming services. one is getting the money flow. and that is, you know, getting the pennies that -- from a consumer to go all the way through the industry value chain, back to the artist. that is really problematic right now. there's a lot of great companies trying to solve that problem. the other is just the economics of streaming in general and is there enough money in that to float the entire industry? 2015 was a really significant year in the fact that there was growth and there was tremendous growth from 44 to 68 million, year over year, from 2014 to
2015, in paid streaming subscribers. that's tremendous growth. but is that enough? and is that enough to support all of the mid-tier and top-level artists? so i think a lot of the big tech companies that have music inside of their platform, you know, they're starting to play this game of engaging directly with artists, going into the studio, doing custom work that can be used in media and other kinds of leverage. and that's a really valuable income stream for any of those artists. >> i'm hoping at least it leads to lots more good music. thank you very much. appreciate it. >> thank you. >> all right. up next, health care. could this really replace medicine? one company is trying to prove the outcomes of digital health care, both good and bad. ♪
>> this week, bloomberg is presented a focus on farm. going deep in the global business. stories and analysis from across bloomberg's platforms. today we take a look at digital health care. it claims to increase patient access. these ideas have yet to revolutionize the health industry. but could they? joining us now, a company that helps startups. i love this. >> that's right. >> so do you find that some of these health tech startups can't prove the results, or do you actually sometimes disprove their claims? >> of course. there are hundreds of thousands of digital health apps. and so a lot of them are making claims that can't be substantiated in the real world. our job is to step in, design and run clinical studies to show the health care world that some of these things do work and should be prescribed and used i the health care system. >> clinical studies in pharma, biotech, long established practices. clinical studies in digital health or even in alternative
health, not so much? >> brand-new thing. typically these clinical studies in pharma, they tend to be millions and millions to run. it takes several years. a lot of coordination involved. we're trying to revolutionize the way that we do clinical trials, that we can do them better, faster, cheaper, but just as accurately as they're doing with the larger-scale ones. >> when i think of health claims of like fitbit or some of the wellness apps, things that i do to sort of monitor my blood, stuff like that, the claims are squishy, because the results are squishy, like you'll feel better? how do you prove those sorts of claims? i love fitbit, don't get me wrong. >> i do too. obviously all these things are useful in the course of everyday life. not all of them should be used to determine different ways to treat diseases, however, until they're proven out. so, you know, all these things
have a place in the system. we kind of look at these things and say, okay, there's a constellation of stuff that works. let's find the right constellation for each person. >> and as you say, why do you -- for whom do you provide the service? >> the people who pay our bills are people who make these things. so digital health providers, digital health products and service creators themselves. sometimes that includes pharma companies. other times it includes payers who want to understand what works before they deploy something. other times, it's providers who are increasingly taking a risk for their populations and need to understand how to manage them better. >> i feel like we need, for these alternative ideas to move forward, we need proof of them. and i think exposing fakes will make all the difference in the world. >> thank you. >> all right. very cool stuff. full coverage of pharma. go to bloomberg.com/pharma.
>> you're watching bloomberg west. let's begin with a check of your first word news. likely republican presidential nominee donald trump was the featured speaker at the western conservative summit in denver, colorado. he discussed what the u.s. supreme court would like like if he wins in november. >> we're gonna appoint supreme court justices who you're going to be very happy with. [cheering] >> such a big thing. and these are justices that will uphold the constitution of the united states and fully uphold it. >> as for potential vice presidential candidates, indiana governor mike pence is expected to meet with mr. trump over the holiday week. the associated press says trump is also considering newt
gingrich and chris christie. there's an air war going on in the u.s. presidential campaign. right now it's one-sided. over a 12-day period in june, hillary clinton spent roughly 500,000 a day on television commercials. donald trump didn't run a single ad. president obama says a vaccine for the zika virus could be developed in short order if congress acts to pass a zika-prevention bill. the funding has been stalled in congress for weeks. the president says the effort is well-funded, he is fairly confident the virus can be stopped before it spreads to the continental u.s. he says lawmakers shouldn't take their summer recess before passing the bill. puerto rico's governor says he plans to sign an $8.8 billion spending bill for the fiscal year starting today. this comes after the island said it will miss payments on a record amount of debt. garcia padilla says the commonwealth doesn't have enough
money to continue essential services and pay bond investors in full. on thursday, president obama signed legislation that sealed the island from bond-holder lawsuits. the foreign ministers of russia and turkey met friday and agreed to restore their anti-terror cooperation and military contact. ties were cut when a turkish yet downed a warplane at the border. the nations decided to mend ties once turkey apologized. the justice minister on friday made the case why he should be the next prime minister. >> i'm in the leadership contest for one reason and one reason alone. i want this country i love, and which has given me so much, to embrace this opportunity for change with optimism and with conviction. >> tiger woods won't play in the
british open in scotland. he's still recovering from back surgery. woods also pulled out of the u.s. open in oakmont earlier this month. he hasn't played competitively since he tied for 10th place in august. ♪ >> i'm in for emily chang. forget brexit. doing business across europe just got easy. the new electronic signature rules go into effect. docusign is ready for this, bolstering its investment, spending $100 million. we are joined right now. keith, good to see you. >> thanks for having me. i really appreciate it. >> it's a big deal, seems like to me, for no one more than you guys. in the context of brexit, this sort of explains the purpose of a european union, it seems to me. what were the rules yesterday?
>> yes. so yesterday every e.u. member state had different regulations, different type of requirements in terms of electronic signature. now what has happened is they have standardized and simplified the e.u. laws, in every european member state, it's one unified platform. so my hats off to the officials in brussels. and it's probably pretty rare. >> thank you, brussels! but -- >> but i think it will really drive the acceleration of the digital transformation in europe. and really accelerate electronic commerce for europe with the rest of the world. >> it was said that the most important issue facing government is digitation. but it seems like europe is sort of getting on board the same way that india is really ahead on this.
>> they really are. there's probably not a fortune 1,000 c.e.o. where the digital transformation is at the on of their strategic initiative. it's either one, two or three. and that's what is really driving docusign's business. what has ended up is we've become that first step in their digital transformation. really for three reasons. one is we get the paper out. and you have to do that before you get into artificial intelligence, big data, analytics. the second thing is that it's a cultural transformation. and the beauty is that docusign gives you quick access. the c.e.o. spoke at our conference. he said the beauty about docusign is those quick wins, because in order to steer the ship, it has to be moving. and we were able to get that. the third big reason is the value proposition, which is so quantifiable in terms of impact
on companies' bottom line as well as reducing the risk. >> less paperwork, you know who has actually done the dl. immediate accountability, moving something forward. >> exactly. >> are there certain industries or certain types of businesses that were just hard, because europe was a pain in the butt before, easier for you now? >> i think the regulated industries, so banking. you know, which is heavily regulated. insurance as well. we're blessed with great customers that have standardized on docusign in europe. deutsche bank, bark clay's. the big ones. >> you told me, i think, 20% of revenues presently are in european union. >> i think it will go up to the 40% range. it's our fastest-growing business. >> but you think this change is
going to accelerate that growth? >> yes. there's no question about it, because now every company can pick the best solution. we just announced our invest for europe initiative. it's the biggest, boldest initiative ever at docusign. it encompassed three global acquisitions. our data centers are up and running in frankfurt, amsterdam, paris. regardless of what country electronic signature, qualified advance, it's that great docusign user experience. then we also announced that our solution runs on the hybrid cloud and private cloud. >> so c.e.o. search. you guys have been close but no cigar yet. what's the latest on that, and where do you guys get with that? that's an important thing. >> i made this decision about a year ago. we never put a timetable.
we call it our built to last succession plan. the press calls it the number one c.e.o. software search in the world. we're making great progress towards that. >> time frame? >> well, you know, we always say three to nine months. ha ha! >> it's like the fed raising rate. it's always six to nine months away. last question. in terms of funding, you guys are one of those companies that has been able to sit there and be private and be stand alone. do you think the ipo is going to be the right outcome or is there going to be an acquisition, to merge with a bigger partner? >> we haven't set a date for the ipo. we've been able to invest about $1.5 billion in the category and also the platform. i see this as one of the biggest opportunities in the world in terms of every company is a potential customer, every department is a potential customer, every person is a potential user. and our sole competition is
paper. so it's a land grab. so we've been heads-down focused on that. it's also allowed us to have strategic, powerful technology companies like microsoft, google, visa. invest in the docusign network. >> still the c.e.o. of docusign. i'm glad for that. we appreciate your time. and one vital source of funding is the european investment fund. they pool billions in financing from private banks to back startups. since 2011-2015, they put 2.5 billion into it. that's 37% of all the venture funds raised in great britain in that period. let's get this report from london. >> following last week's vote here in the u.k. to leave the european union, a lot of venture capitalists are worried they're about to lose one of their major investors.
a lot of these firms would never have got off the ground without a hefty check from eif. this was a fund created by the european government because private venture capital just has never taken off to the same degree it has in the united states. so they decided to create this fund to act as catalyst for ventures throughout europe. the fund has about 9 billion euros currently. it's been a big backer of the venture sector in the u.k. in particular. since 2011, they have provided funding that's gone to 144 different funds. that represents 37% of the total amount that the sector has raised during that time period. now the fear is that that money is going to go away. immediately after the vote last week, the eif put out a statement saying it noted the result of the vote with regret and that its future relationship
with the u.k. would be subject to negotiation. and a lot of the venture capitalists i talked to, they were guardedly optimistic that this funding will continue. they often invest throughout europe, so they feel it's a justification for the eif to provide the funding to them. but as with so much else with this brexit vote, that's a lot of uncertainty. >> bloomberg's jeremy in london. well, the stock we're watching, micron seeing its worst day in six months. shares dropped as the chip maker reported a 25% decline in sales. investors can see another loss in the coming quarter. coming up, spacex, virgin galactic. we're going to talk to francois next. don't forget to tune in this week. we'll bring in the best interviews from the entire week. best of bloomberg west, this weekend.
>> and now to the space race. the new space race. over the past few years, we've seen an influx of aerospace firms. we caught up with the director of nasa's research center and asked about how nasa is benefiting from the increased competition. >> we don't have all the best ideas. and a lot of the opportunity, the ideas developed, we're building upon things that are done outside of the aerospace industry to help do our emissions as well. >> francois is the founder of the star burst accelerator. i asked him for his thoughts on space race 2.0.
>> you're right. it's been a very booming, the last three, four years. even last year and this year has been extremely busy. we've seen innovations. of course, related to purely space, following facebook. a couple of startups. we know yesterday at nasa, the rocket lab was pitching in front of a large corporation. whether it's observations or telecommunications. we are really expending. we see more and more startups. >> but is there a technological advancement that has just happened? i've been asking this question for month. i can't get my head around this. it's got to be something that's just happened that makes this more possible than it was? >> what happened is the success of a couple of startups, just demonstrating that the business model is valid. just ignites all the other
startups. >> which ones have been successful? >> again, planet labs. they demonstrated that they would be either possible, or a greater valuations, which make more and more entrepreneurs want to break in and more and more money is going to flow in that area. >> because i suspect that the big ones, especially spacex, losing tons and tons of money. 5,000 employees with, what, $100 million in revenue probably for each launch? that doesn't get you there. >> but if it's the same model on the other, you know, internet startups, they are all losing a lot of money. linkedin is using a lot of money. amazon used to lose money a lot of times. >> are the people who used to go work for nasa or a government agency, are they now looking at startups, and is that changing
the nature of sort of what happens to these people? a lot of them would stay in academia. very different world starting businesses. >> so, yes, to be an entrepreneur you need different skills. but what we've seen in recent years is all these big talents, new engineers, either from ucla, cal tech or u.c.f., are not going to the large corporation anymore, but more wanting to be hired by the new startups or even these emerging successful players. >> where do you find the best talent? >> yes. we have a couple of spots around the globe. in the u.s., you will find them mostly around stanford, a lot also in l.a. that's why we set up base there. that's for the u.s. but we have a huge pool of talents in europe. whether it is munich, paris, london or even in ireland. >> is there one signal event that sort of signals -- pardon
the pun -- but the launch of this emerging industry? >> yes. last year, there was a report saying that the amount of money invested in space startups was equal to the last 15 years of visa money in the same type of startups. >> it's a very capital-intense business, unlike creating an app or social media network. >> definitely. it's different. i have a couple of developers, in their home, can develop what they think would work and then put that online in a couple of days. >> a dog in a garage is not going to get it done? >> yes and no. we have now startups, drones, the size of the 737, that are developing in their garage, and they are getting their first financing, because they want to disrupt the cargo industry using drones. so, yes, you still see these
startups growing out of their garage. it's not on the same scale and not the same type of products. >> turns out he is french for san jose. great stuff from francois. staying in space, on july 4, well, we are all barbecuing and watching fireworks. nasa's spacecraft will be arriving at its final destination, jupiter. the trip has been five years in the making. it will hopefully bring us some of the most detailed photographs of the planet that we've ever seen. >> three. two. one. ignition and liftoff! >> nasa launched juneau on august 5, 2011. on july 4, 2016, it will become the first spacecraft to peer under the clouds of jupiter's massive surface. it has already made the farthest solar-powered trip in the history of space exploration. jupiter's orbit receives only 4%
of the amount of sunlight we receive here on earth. that's the equivalent of about eight standard household light bulbs. once it nears jupiter's surface, that will drop, due to radiation degradation. needless to say, not many manmade things have endured anything near the punishment that juneau will over the course of its mission. but after five years, it will reach its destination. by looking deep into jupiter's atmosphere, track its cloud motions and map both the magnetic and gravity fields, juneau will not only provide speculate never-before-seen images but unprecedented insight into the formation of our solar system. >> well, as bloomberg's max reporting, that incredible story. tune in tuesday as kenny, the lockheed martin project manager,
>> well, the garden state is going vertical with aeroponic farming. aeroponic. yes. a commercial farming company. building a 75,000-square foot farm in new jersey. it will be the largest indoor farm in the world. the company has raised more than $70 million to expand globally. joining us now -- so close to new jersey. david, this is a mind-blowing concept. how do you explain this to people who have no idea what you do? >> we grow without sun and soil at aerofarms. so plants don't need soil. they need nutrients. they don't need sun.
they need spectrum of light. so we grow and warehouse. it's level upon level of growing. so in a warehouse, a modern warehouse that's 36 feet high, we have 12 levels of growing with these grow towers that are approximately 80 feet long. in the farm we're building, there are going to be 35 of these. >> it's going to produce what? >> just under the -- it will have the capacity to produce just under two million pounds on an analyzed basis. we grow leafy greens, watercress. we've grown 250 different varieties. we want to bring back some of these heirloom varieties where most people could just name one to like five, 10 different varieties. 250! there's some great culinary tastes and flavors that people should experience. >> how many kinds of watercress are there? >> we've grown probably around five. but i'm sure there's much more than that. watercress, if your audience doesn't know, is actually the most nutritionally dense food.
>> that's why i asked. and, you know, this notion of farm to table, imparted about lowering pollution, use of oil, trucking stuff from wonderful farms to wonderful stores, this is pretty crazy, though, to grow this stuff in newark, new jersey. >> yeah. on the environmental side, which is a lot of our inspiration as well as the societal side, we grow using 95% less water. 0% pesticides, fungicides, and approximately 50% less fertilizers. our productivity is about 75 times higher than a field farmer. it allows us to spread out the cost of rent amongst a much larger product base, revenue base, and really reduce our cost. as well as bringing in automation and seeding, harvest, and packaging. so we sell to supermarkets at the same price that they buy from field farmers in the
category of organics, which is typical about a 20% premium. >> and supermarkets are your principal customer? >> yes. >> and finally, you know, do you imagine this expanding? is there a certain kind of characteristic you need, a place where you're going to do this? >> we look at where we could grow near food distribution centers. we want to be in cities. we typically go in places where the economics are a little cheaper. we're in newark, where the cost of real estate is a little cheaper. but there's also a social side where we're alleviating a food desert in newark and also creating a lot of jobs to the city of newark, which could use it. beyond building farms in cities all over the world, so people have access to fresh food, where there's a lot of waste in the supply change, what's exciting for us is our ability to influence the crop biology in a way to not only optimize yield but taste, texture, nutritional density. we're talking about data science