Live from san francisco and los angeles, welcome to the edition of "bloomberg west" where we cover the technology and media companies reshaping our world.
Our focus is on technology and the future of business.
Tesla is obviously dealing with a lot recently and there is more trouble.
In an industrial accident, the plant injures three workers on the heels of the recent model s fires.
Is tesla about to have a reputation problem?
Netflix reveals its the guest overhaul ever.
It's a whole new interface meant to appeal to those watching on tv sets and making it easier to discover new content like "house of cards." and after twitter goes public, the pegs turn at the big board.
Why the new public company could be profitable right now.
First, to the lead.
There has been an industrial accident at a tesla factory in fremont, california.
In a statement, tesla says -- tesla makes it flagship sedan at the facility.
This is the latest black mark for the carmaker.
Three model s sedan that caught fire in the past month and a half, though the company insists they are safe.
For more, we are joined from detroit by jamie butters.
What more do you know or understand about this type of accident?
These accidents can happen from time to time.
What do you know?
You have really hit it.
We don't know a lot.
We know there was this accident that three people were hurt.
When you talk about injuries from hot metal, you are talking about extremely serious burns that could be very traumatic for those individuals and for everyone working around them.
The spirit of the workers there at the factory, which is one of those intangibles that seems to be on tesla's side as they try to get into the game as a scrappy underdog.
The practical risk for tesla is that this is their only factory.
If they cannot make cars for a while, they are not bringing in revenue and that's a real risk for them.
They have so many executional hurdles ahead.
This is one that wasn't even on anybody's list.
Being able to stick with the weekly production schedule, this is a company that has talked about in the neighborhood of 21,000 plus vehicles coming out in the course of a year?
Rex they are up to about 550 cars a week.
That's just not a lot.
If they can't make any -- they're trying so hard to get an extra couple hundred sales per quarter, so to lose 50 or 100 cars were the reduction puts a real challenge on them.
They are trying to make cars, so far of very high quality and this is one of the unexpected wings coming their way.
They have enough challenges.
And operational accident is something different than a car being on fire on the road.
You can't help but do it, but on the issues of the tesla reputation, what do you hear and what are people saying?
There seems to be no direct connection between the car fires and the industrial accident, but there is the risk of the headline trauma, people seeing these words over and over again.
A fire at a tesla factory -- listen, they are only talking to a small slice of the consuming population.
The cars cost between $70,000 and $100,000, so it is a pretty narrow group.
So far, the crash victims, none of them have an hurt.
But if more and more people start to get this idea that electric cars are dangerous, that is the kind of thing that could put a ceiling on their growth opportunities.
They are looking to build this into a company that makes $40,000 cars in a few years and they are going to look for a much bigger audience.
They might not be able to count on a handful of people who are passionate about these cars.
Elon musk said yesterday that there would not be a recall, but some have asked the question is that his call?
Is definitely not his call.
I didn't mean to interrupt.
The federal regulators will look at the statistical likelihood of an accident.
Are these accidents coming in situations that are fairly routine and predictable and should be expected?
How serious are the injuries?
Regulators, like any of us, take things very seriously when people get hurt or killed.
That's why there is so much recall structure around things like fires.
Those are fires where you have some pretty grisly incidents, and these cases so far, you have had fast driven cars or cars that have hit large metal objects.
The person pulls over and gets out and it are stingy flames, it's a still a traumatic thing with a lot of fire.
On the surface, it seems like there may not have to be a recall.
I think that's what elon musk was trying to say.
Statistically there's nothing here and no one has been hurt, but the safety regulators have the need that something he done.
Lots of different storylines here, but thanks for shedding light on all of them.
I want to talk about a stock market story today.
Eight textbook rental company making its debut on the new york stock exchange and raising more than 187 ilion dollars in the process.
Stocks struggled in the public market debut, closing below $10 a share.
This is the first tech ipo since twitter went public last week.
This is a fast-growing and he -- fast-growing company that has not turned a profit.
I started by asking how the twitter ipo affected the demand.
We were on the road for some of the same days and people were very vocus on twitter.
I love the company and think they've done an incredible job.
I think people are focused on how do you pick category leaders and how do you back category leaders?
The opportunity is so much bigger looking forward than backward, and they are excited about these offerings right now.
You have told us before that this is a highly capital intensive as ms.. the documents rarely stayed there is a history of losses.
No guarantee of raw ability in the future.
You you want to be a profitable company?
Of course we do.
We want to be a profitable company.
When you are after a trillion dollar market opportunity, in three and a half years, we've expanded from doing renting textbooks to college recruitment market, we connect kids to the right schools and help them pick their classes.
We get them required material and nonrequired material.
We've expanded hermetically and the opportunity is that much vigor.
All of our new businesses are growing close to 100%. the future of the company asked that books transfer from print to digital is a much higher margin as ms.. all of our cost and capital use is associated with the print market, which we all agree will go away in a couple of years.
Some say that you need to worry about the mighty amazon.
Do you worry about amazon?
Rex dan worries about everything.
There are some dynamics to the education market that are unique.
Because of the textbook business, demand is generated by the publishers.
It difficult to get a license to give something away for free, which amazon has tried to do.
We don't think that's going to be an issue as a rose digital.
We offer so much value as far as getting kids into college, picking classes.
We will roll out more and more services over time.
Amazon has been in the market for a while and they are a tremendous company.
But you saw our units row year- over-year.
We are able to compete very effectively and we think others are worried about how to compete with us.
Acquisitions have helped to broaden out this is this.
How much money has been earmarked as part of this offering for future acquisitions?
Rex one of the things the best companies have our strong balance sheet.
Now we have the leverage not only of a public currency, but capital.
We've become so efficient at it that we are armed to make smart acquisitions when they are available to us.
We look at them and say can lead grow into a whole new category and open up the high school category.
That's a business growing at 100% a year.
You mentioned the class schedule that a million students use which allow us to get them there required reading material more efficiently.
You see our year-over-year marketing dollars actually going down.
When we buy something, it's about better operating the tricks or accelerated growth.
We have not earmarked a dollar amount, but now that we have a better balance sheet, we are going to use it for our students.
Netflix is getting a facelift.
Find out what the video streaming services doing to keep its viewers glued to the set, next.
? this is "bloomberg west." i'm jon erlichman.
Netflix's homepage is getting a facelift.
They have unveiled a new design aimed at delivering a richer experience to viewers who watch on tv sets that will be rolled out on smart tvs and devices that connect to them like that top boxes and game consoles.
Our next guest says netflix is starting to look more like hulu and apple tv.
What does netflix have that its competitors don't? any -- the editor of new yorker.com joins us from new york.
What did you think?
I think this was a design that was needed and i think netflix is doing what everyone else on the internet is doing, which is moving toward larger images and new grids.
They really put forward three big things.
It's the transition out of a textbased interface the user navigates.
It is something very much like what facebook has done.
Everybody is moving toward larger images.
It's time for netflix to do it and i think they've done a pretty good job.
Is interesting you mention facebook.
Read hastings is a friend of mark zuckerberg, one of the early facebook board members.
Social has always been part of their strategy.
It's a very important part of their strategy.
It hasn't really taken off the way i think they hope, but there has been growth there.
If you look at the different content companies providing stuff for you to watch, there are a million out there, so why would you use netflix estuary have a good selection, but another reason you would go for them is because you are socially integrated.
You can see what they rented yesterday.
There's a huge advantage and a huge amount of data.
The social elements are more integrated into the design than they were before, which is a smart call.
Netflix has in the neighborhood of 30 million subscribers in the u.s., but they have land to see that number double or triple and a portion of their subscribers enjoy the monthly trials.
They are trying to keep you locked into the world that is netflix.
Does that help you if you are using a trial or do you just say i will pay the $7.99 a month?
Anything that makes you say you will watch multiple videos, they need to build loyalty and the best way to do that is to have you think what am i going to watch?
Am i going to go to youtube or netflix or play a game on my console?
What about the fact that these changes don't take effect on certain devices like apple tv or microsoft's xbox one because they have their own rules for how things look and feel on their devices?
This seems like an important storyline as we move toward this of tv and the devices themselves . that's a great point.
What netflix has tried to do with this redesign is make it so they can make one change and have it spread to all of their devices.
You fix the playstation version, you fixed the desktop urgent.
They want to have just one version.
They were not able to do that from their perspective and have it work on apple tv.
It is slightly limited, but they have massively simplified their own project and it is amazing the number of things that let you watch netflix.
It is embedded like everything you buy.
More people watch it on playstation's than anything else, but it is on a zillion things now.
Should apple and samsung be worried about the chinese telecom giant?
They are pushing into the higher and market at its new headset looks similar to the iphone.
That's coming up after the break.
? this is "bloomberg west turco i'm john erlichman.
How worried should apple and samsung be about the new competition from a chinese telecom company?
We got an inside look at their facilities and their new phones.
I've been looking forward to this segment.
Tell me what you saw inside and who you met with.
Obviously, this is a fascinating company.
You are talking about a company between rd billion dollars, a company that employs 140,000 people and whose profit generates around $2.5 billion in profit every year.
It is really all-consuming.
We met with a number of senior executives from the enterprise side of the house.
They have a vision and goal to be a world-class gear and consumer technology supplier.
They are on a mission to achieve that and they continue to grow in each of the theaters they are focused on right now.
Would you be able to compare how these facilities stack up against the likes of samsung or foxconn?
From a facilities standpoint, think all-consuming.
When you go and get off the exit, you are at the end of the ramp and there's a sign.
You drive then and you are talking about dozens of goldings.
You are talking about restaurants and laces where people are actually housed.
It is very much very different from any western company, but more like a samsung.
Obviously like foxconn in that a are providing services for their employees, they are providing places where people live.
These people are not just manufacturing.
There are reports that 40% of their employees are in research and development and are focused on it and driving r&d and engineering.
You are talking about a company taking the long game here and driving into multiple aspects of the i.t. market.
Let's see what that r&d has created.
What can you tell us and show us?
So they ship phones and in the most recent quarter year- over-year, they are up about nerdy percent.
They continue to grow and represent less than four percent of the market.
But we have here and iphone 5. this is the flagship p6. it bears a striking resemblance, cynically, you could say.
It looks like an iphone that has been run over by a steamroller.
But what is fascinating is this product is very unique.
We are not talking about a low- end product.
We are talking about rich materials and the use of dateless deals and a gap here for the antenna.
You are talking about an etched back and metal back.
You are talking about and over four inch screen.
But what is interesting is also what's on the inside of this phone.
And why samsung should pay attention is not the processor.
It's not a qualcomm processor.
It is a wah way processor.
It is him there silica manufacturer.
They are really focused on the poor sand in one side and phones come out the other side.
They are focused on vertical integration and driving technology.
There is so much more to talk about.
We will have you back to discuss it in greater detail.
What does it mean going forward western mark that story is next.
? you are watching "bloomberg west" where we focus on technology and the future of business.
I'm john erlichman in for emily chang.
It could be tough sledding for cisco in the next few months.
The company sees revenue down three 8% and 10%, surprising analysts who called for revenue to grow.
A slowdown in spending and an increase in competition is hurting their sales.
Apple is under investigation in italy for allegedly evading more than a on .3 billion dollars in taxes.
A person familiar with the situation says apple may have used foreign companies to avoid paying italian taxes.
Apple says in a statement it pays all of its taxes.
The company points out the tax authorities audited apple in 2007 and 2008 and 2009 and found no wrongdoing.
Sprint says it will not bid on high-frequency airways in an auction set for january.
Been -- sprint says they want to focus on higher quality airwaves.
It comes after sprint says they were not interested, possibly clearing the way for dish network.
Time now for our office hours segment, featuring yahoo!
Chairman maynard webb.
He formerly served as the ceo of live ops and current ceo of ebay and currently sits on the board of om.
He's with a start up focused on workplace mentorship and is here to talk about what goes on behind the scenes as companies like twitter navigate the move from a private company to a public one.
What is the main tip you have for ceo and board members during transitions like this?
X first, it's nice to be with you and congratulations to twitter on a great ipo.
But my biggest tip is going public is an exciting time and it's a a day, but it's only a day.
The ceo's focus on the board off focus has to be on building a great and enduring company.
Lex the office for twitter in san francisco, on ipo day, they decided to close it to outsiders.
Just to allow people to reflect for a few hours and then get back to work, what is the biggest challenge in the weeks following the ipo when everyone is coming off this high?
Lex hopefully it is a big high.
There are ipos that don't do so well.
It's about calibration and making sure people realize you have to now be a predictable company and every quarter, you have numbers to report and you have to keep going upward and onward.
You have a lot of new regulatory issues that you have to deal with that you did not have to deal with before.
You want to get your employees fixated not just on the stock price, but what they do every day in building a great service, like what twitter has done.
I think that word protectable is important.
Can a company be relevant to young people even if you have to be protectable?
Giving wall street analysts a sense on where you are going to be going every three months with your business?
Absolutely eerie there are several great companies that have done that.
I'm on the board of salesforce, and we are relevant, not just as a consumer company, but we are relevant, protectable and growing fast.
Growth is what most companies need.
I also don't think you cannot innovate.
It doesn't mean you have to make money all the time, you just have to live up to what you told people you were going to do.
A lot of people on the lead up to twitter's ipo, they talked about what's going to happen in six months when employees start selling stock.
One thing that you have to keep in mind is that it's workforce has absolutely x loaded over the last year.
People if they have stock options, twitter has obviously had some strong stock performance, but it could be a while before it is in your interest to be selling stock.
What do we miss when we are talking about that when the insiders start selling their shares?
First of all, it doesn't last that long.
Number two, a lot of those shares are still vesting.
It's not like everybody has all of their shares that hits on that day if they are eligible.
Some of the early founders have quite a bit available.
But if they are believers in the company, what you like to see is the stock price be the worst on the day you go public.
You are supposed to actually grow the company quite a bit and the stock would be worth a lot more as you go forward.
We do know that when a company goes public, inevitably, some employees will leave.
Probably at the same time new employees are coming in because the company is growing.
What are some of the ways to navigate at in terms of keeping everybody focused?
We went through quite a bit of that at ebay.
You have to make sure that people know that it's an evolution and what is most important is you have an engaged and committed workforce that has totally bought into your strategy.
If someone has made a lot of money and wants to go sit on the beach, it's probably better to let them do that then hold everybody else back while you are trying to get to the promised land.
What about for the board at companies that have just gone public?
In the lead up, it's probably all-encompassing, this idea of which hangs are we going to work with and what prices the ipo going to be done at question mark it's a chance to focus on where you want the company to be, but you have to be protectable.
How do you balance that?
Lex first of all, you add some board members with public money experience.
You will have a committee chairman who knows how to make sure everything goes well.
You put more committees in place and have governance and hopefully make sure you spend the majority of the time growing and helping the business as opposed to just governing the business.
Before we go, to get back to that example of saying if the stock has a lousy first day, it's not necessarily a bad thing for the company.
What kind of comments would you be making if we have a hypothetical company with a bad earth day of trading and morale and down 24 hours?
Lex the first thing i would say is let's go to twitter for a second.
Everyone may be all excited about that, but the people that bought in at $27 on the first day and then it jumped into the 40s made quite a bit of money.
They took their money out at 27. you could argue that maybe the management team lost too much money on the table for investors that first day.
I would be saying this was a successful ipo.
We now have the money we need to achieve the next steps in our journey.
We did not get the pop we had hoped to get, but let's focus on the next quarter and next the month and the stock to come back.
Look at where facebook is today versus where it came out a little over a year ago.
A very good point.
Great insight and always great to have you with us.
It's a pleasure.
Before we had to break, if you have some ideas, we are looking for advice from maynard webb.
Just submit a short powerpoint pitch.
That includes background info on the team and the problem you are solving.
Webb and his investment team will review the pitches.
Coming up, we will show you how technology is helping revive a 50-year-old motorcycle brand.
You can always watch is streaming on your tablet, phone and at bloomberg.com.
? this is "bloomberg west." i'm jon erlichman.
Best buy could beginning it grew back, in part due to stores within a store.
They highlight major rant like apple and samsung.
Sam grobart took a closer look at the new best buy.
Top quiz -- can you name the single best performing stock on the s&p 500 in 2013? it these guys -- best buy.
They are up more than 270% this year.
Let's go in and find out why.
There are many reasons why best buy has had such a banner year.
Let's take a look.
Electronics companies are not just selling gadgets.
They are trying to sell an entire ecosystem.
At best buy, they are pursuing a store within a store strategy to show off all of one companies on x, like this one from samsung, all working together in perfect harmony with a staff that can teach you how to use it.
Stores with a store come from microsoft, apple and sony as well.
Used to be a company like this only sold one kind of thing at best buy, software.
But now, it moves onto much more expensive hardware, like this tablet.
Iker soft is also looking to sell a lot of smart phones as well, and they are not alone.
Google started out as a search engine, but now they own a motorola.
That means these mps are going to need stores like best buy more than ever to get as much of their product in front of as many customers as possible.
See all of these cds and dvds?
This used to take up a lot more space in best buy but the company has been getting rid of low margin products.
Why sell and 1199 new kids on the block cd when you could sell a $550 vacuum cleaner?
That's where you find new kids on the block.
Now to another turnaround story.
The legendary indian motorcycle when it was first introduced was considered high-tech.
That was 50 years of competition with harley davidson.
The indian motorcycle brand that was resurrected this august by a company known for snowmobiles and all-terrain vehicles and they are using 3-d printing and light scanning to make it happen.
Cory johnson spoke to them about the technology that goes into making these bikes.
In 1901, when these bikes came out, it was leading-edge technology.
We had to bring that out.
When we ought about what to do with this bike, we relied on our experience with a victory.
We have tire pressure monitoring, we have 111 cubic inch engine?
I don't know if that's for safety.
That's just for going fast.
We brought the bikes to market and that's obviously -- we did leverage some of the best technology.
3-d printing is a big thing.
We have several machines and we rely on suppliers for that as well.
What kinds of things were you able to do with those technologies?
We built an entire bike using 3-d printing.
I would argue we have the best as i nurse in the world.
We went from there clay designed to bikes consumers could see with the fit and finish you would expect in three months.
Compared to would it -- compared to what it would have been 10 years ago?
We are probably looking at a 15 month process.
How do you differentiate price wise and everything else?
The iconic brand stands up for so much great the victory is a bike mentor ride.
A great performing bike that's an alternative to the japanese bikes.
But indian as at the heart of the market and we are excited to be part of it.
Bigger than victory?
Victory does not compete with the classic cruisers and indian does.
That's why we are bringing it back.
I have a lot of experience doing this.
This thing is awesome.
That was worried johnson trying to ride off on an indian motorcycle.
We will be coming back in just a couple of minutes and talk about the evolution of the gaming business.
A similar situation to las vegas casinos, where there is all sorts of stuff they do to keep you inside.
What's happening in the gaming world?
More of that next, on "bloomberg west yuriko -- on bloomberg west." ? i'm jon erlichman.
This is "bloomberg west." these days, a lot of people are using their phones for all sorts of games -- we have seen the gaming industry enjoy huge leaps and bounds in the last two years.
But one company is taking cues from the traditional business in vegas.
My vegas is basically the focus of what this company is doing right now.
Joining us for him san francisco is the coo and cofounder of play studios.
Tell us a little bit about the background of your business and how that has led to what you are doing now.
Thanks a lot.
The whole idea of the company is to extend the las vegas experience onto mobile devices.
A lot of people recognize gambling is a form of content and its pretty popular.
It's just natural that it would find its way onto these channels.
What distinguishes us as we are delivering the whole experience and leveraging real las vegas brands than letting people play games that are close to the kinds of experiences they will have in the casino all for free.
But as they play, they amass loyalty currency they can use to purchase real world rewards.
They get to play for free and in the course, when a free trip to the bellagio.
You have this partnership with mgm.
Walk us through these things that people are able to enjoy through that.
We have a great partnership with mgm which has a broad collection of properties from the circus work is to the blodget and the mgm grand.
We have created a virtual las vegas where people play games and amass that currency and get to shop for everything that is accessible like dream vacations, swimming with the sharks, it has been a great ardor ship and what they love about it as they get to leverage these important channels.
Mobile devices can acquire new devices and deeply engage the consumers they already have and we are proving that is what they are responding to.
They love the opposition and that they get to engage with their brands.
I should also note that we are not just partnered with mgm.
We have a broad collection of partners, including the house of lose and wolfgang.
We will continue to expand the collection of orders that we have which makes it more compelling for our players.
As we talk vomit it makes me think of zynga and the founder there.
There were stories thereof his company going to vegas and taking members of the team to hotels.
You worked at when.
Do you think being -- someone who has been a senior executive for a long time maybe give you an edge in this interesting new world of gaming?
What was interesting is when i decided to get into this industry, i attended one of the gaming conferences.
Everything they were talking about were chance-based mechanics and loyalty systems.
The way these games are designed to engage.
All of that stuff is what we have refined it in las vegas and i would argue las vegas is the first social game experience.
You convert that into an intermediate currency and the more you play, you advance and as you advance, you unlock a world of services and benefits.
I think the experience me and my team have focused on the more traditional gambling world absolutely translates and applies to what we are doing now.
We appreciate the time.
The bwest byte is one number that tells us a whole lot.
This day, we have a specialty bite.
What do you have for us?
The number today is 99,999. that is how much yahoo!
Is asking for for a url it is offloading -- sandwich.com.
There are a number of different urls they are selling off, some of them for more than a million dollars.
I love this story.
Puts together a tumbler and says we are going to make a bunch of our domain name -- domain names available for sale.
Sandwich.com might appeal to somebody but if you look at the potential auctions, they could end up with millions of dollars selling these domains.
I think bologna.com would sell better than sandwich.com, but who knows?
You never know.
A few other examples out there -- maybe a little less fun -- web server.com, westerns.com -- i believe i had seen crackers.com.
There is a food theme.
Thanks for joining us and tanks to everyone for watching.
You can get the latest headlines at the top of the hour on bloomberg radio and on bloomberg.com.
We will see you here tomorrow on "bloomberg west yuriko -- on "bloomberg west." ?
This text has been automatically generated. It may not be 100% accurate.