? live from pier 3 in san francisco, welcome to "bloomberg west," will recover innovation, technology, and the future of business.
Google makes glass available to everyone, at least everyone with $1500 to spare.
With glass on the market and the self driving car hitting the road in urban areas, and the robot acquisitions, is google becoming a hardware company?
And a stretch of coastline that lands a venture capitalist in court on whether he is illegally keeping the public off the beach.
First, a check of your bloomberg top headlines.
Rising mobile traffic is helping cisco's bottom line.
A 5.5% drop from a year earlier.
Increased data usage from smart phones and tablets fueled the demand for networking products as businesses upgraded equipment to accommodate traffic.
The "new york times" unexpectedly replaced executive editor jill abramson after just three years on the job.
The company named former managing editor dean baquet as her replacement.
He is the first african-american executive at the paper.
The chairman said the change should help improve management in the newsroom.
Samsung issued a rare public apology and will compensate workers that say they got cancer after working in a semiconductor plant.
Dozens of workers say they contracted leukemia and other blood related cancers after being exposed to chemicals that several samsung plans and south korea.
However, samsung fell short of technology a connection between the cancers and the chemicals used at its plant.
Our lead story of the day.
Google is opening its glass doors.
After opening sales of google glass to the public for one day last month, the company is now letting anyone by google glass as long as they're willing to shell out $1500 a pair and while supplies last.
They are moving to a "more open beta," and it comes as google is making other ventures into hardware.
The self driving car is being tested in urban areas.
There is the question of what google plans to do with all the robot companies it has purchased.
Joining me now in new york -- i actually have a pair of glass of my own.
Anyone, anyone can buy them.
Why is google doing it this way today?
It is not the full on consumer launch that is supposed to happen later this year, but now anyone can buy them.
It is part of what they started last month with having it available for just one day.
Google is seeking better ambassadors for the product.
Up until now, the main people with glass have been marketers, people who basically have a big interest in self-promotion.
Google really wants more regular people, people who wants to lifelog events, get pictures of the kids, share them, help word-of-mouth to the product in that way.
You are wearing glass.
I am wearing glass.
It certainly has cool features, but i do not find myself reaching for it all the time.
It is like a new habit that has to be developed, and it is not natural.
How would you feel about it?
I know what you mean.
I was wearing glass once and asked someone for the time, and they looked at me -- you are wearing google class and you do not know the time?
There is a habit you need to get into in using the product.
Once you do, it does have a lot to offer, particularly when you want to take photos, share them quickly on twitter, facebook.
Glass is ideal for that.
When other apps come, instagram will probably happen at some point, though nothing has been announced.
It will be much more natural.
Very quick shareable moments you can capture with glass and share out.
After you do them once or twice, it becomes a very -- why wouldn't i want this on my face?
I wonder, though.
I had people tell me, i do not think this will ever go mainstream.
Will this be for a select group of tech hobbyists, use in the enterprise, or will regular consumers want to buy this?
Enterprise is a very strong interest in the product.
Having the instant access to crucial information in a hands-free environment is sort of a proven thing.
That is very helpful for many professions.
For the mainstream, google has bigger designs.
They wanted to go mainstream.
Or the mainstream, i think google needs to do a rethink on the design.
One of the things about glass, a kind of looks like -- and i'm hesitant to even say it -- a segway on your face.
It attracts attention, based on -- on the way here, two or three people stopped me to ask about it.
Very excited and polite, but it is a telegraph you are wearing technology.
In subsequent generations, google will want to dial back the ostentatious design.
Then you might have something that is mainstream.
In its current form, probably not.
I have to say, i'm hesitant to wear these in public.
Bryan womack is joining us on the phone from palo alto.
He just took a test drive in google's driverless car.
Obviously they have been testing the cars for years.
I have driven in one of them myself, three years ago.
What is it like today?
How smooth is the right?
It is very smooth.
They wanted to show them off in particular to reporters yesterday, because they have really been tackling this issue of getting them to work on surface streets.
Not just on freeways, but on surface streets.
Navigating the yellow lights, red lights, pedestrians, bicyclists, all those things.
When i was in there, he did a pretty good job.
It was more gentle than i might have expected.
So that is interesting.
I remember when i rode in the car three years ago, it was a little bumpy.
The breaking was a little abrupt.
I mean, would you say this is closer to being ready for prime time?
I think -- there is good and bad.
There was one stop in particular, where it was such a nice, soft stop.
It was very well done.
Your driver's ed teacher would be proud of you.
On the flip side, there was a time when it gave a lot of following distance to the car in front of us because of some other issues going on around a railroad track, and most of us would not do that much space.
There is a lot of progress here.
It is not perfectly analogous to a human driver yet.
How does this all add up?
Driverless cars, google glass, the robot companies.
Is google becoming more of a hardware company?
I should mention before i into -- the foray into smartphone hardware did not work out so well.
I think the hardware is kind of secondary to the bigger picture that they're a page sees.
Larry page is a 10x guy.
Wants things that will improve your life 10x. big, ambitious projects.
These all reflect that.
By the nature, you will be getting into more hardware.
Motorola was a competition thing because it had to do a patents and licensing ip, and they did not want to become just a focus on cell phones.
That kind of thing will still drive google, hardware will be part of what they do, not the whole picture.
One last question for you, brian.
I know google is speaking with automakers about self driving cars.
Can you give us an update on those discussions?
Well, they were not forthcoming with a lot of details, but they did they -- say yesterday that they are having talks about driverless cars with a lot of manufacturers . this is still a ways off.
We were talking about four or five or six-year time horizon yesterday.
A lot to be talked about and worked through before these is really hit the mainstream.
Bryan womack, who covers google for bloomberg news, and pete pachel, thank you both for joining us.
She has become the face of justice in silicon valley.
Federal judge lucy koh has presided over cases involving the biggest tech titans, but who is she really?
That is next on "bloomberg west." ? this is "bloomberg west" on bloomberg television and streaming on your phone, tablet, bloomberg.com, apple tv, and amazon fire tv.
Online advertising and cyberattacks, and what companies like google and yahoo!
Should be doing about it.
The complexity of online ad networks makes it -- hard to stop malware attacks.
Industry self-regulation has not been enough to ensure security.
Megan hughes is with us now.
What can you tell us about today's report?
The name of the game, the word of the day, malvertising.
That is what this report was all about.
It points to growth in mainstream sites, like the new york times, major league baseball, san francisco chronicle, hosting ads with links to malware.
That is the big problem.
Sometimes not even requiring additional clicks.
Right now, the consumer largely pays the price.
The report recommends shifting responsibility to the industry.
The report released by a subcommittee of the homeland security committee.
Very interested in cyber -attacks.
Here is senator mccain -- they need to know who is on their websites.
They need to know the hoops they're going through, and who can take advantage of an opening to provide malware.
The report concludes that new efforts at self-regulation should be the first step.
Self-regulation would be the ideal, but if that doesn't work it also looks at actions by the ftc, by congress.
This is coming on the heels of the presidential review that also recommended congressional action.
We are hearing the drumbeat for regulation coming from first the white house, now also congress.
Is the report blaming the industry for allowing these attacks?
It is not blaming them.
It is saying the industry may be more capable of dealing with this than your average consumer.
Mccain specifically pointed to google and yahoo!, saying right now they do not have direct control when delivering ads from third parties.
He pointed to an attack on yahoo!'s ad network during christmas that involved using people's computers to generate bitcoins.
The industry needs to take more responsibility, not necessarily blaming them for the attacks.
This is in advance of a hearing tomorrow on the subject.
What are we expecting?
How does this parsley out?
Tomorrow we are going to hear the industry perspective on all of this.
We will hear from the chief information officer at yahoo!, alex stamos.
Also the senior files manager at google, george salem.
We will also hear from the federal trade commission, and different advertising and self policing groups.
Witnesses including big tech, including regulators, and also be self-regulating body.
The big question we will be addressing tomorrow, can the industry really police itself and deal with this problem, or does the government need to step in.
megan hughes, in washington.
Now, to the woman who could be called the face of justice in silicon valley.
Judge lucy koh has overseen some of tech's most controversial trials.
Presiding over privacy suits against google, linkedin, and yahoo!, and has overseen the three-year patent battle between apple and samsung.
But who is she?
Joe rosenblatt covers u.s. federal district courts.
He joins me now.
You have been inside her courtroom many days over the last years.
What is it like to be in her courtroom?
It is interesting.
These trials are sometimes very dull.
They go for a great length of time, covering great technical details.
Then there comes a time when judge koh issues a ruling or indicates which way she's going to go.
And those moments are very interesting.
She has a very kind of candid way of expressing herself.
Tommie about the time she told an attorney that it sounded like she was smoke -- he was smoking crack?
This reflect a lot about lucy koh.
She was tired, it was toward the end of the first apple-samsung trial.
She had the impression lawyers were adding work to her and her staff, adding paperwork for her to get to.
And she told him, you got to be smoking crack if you think i'm going to do this.
That is an interesting thing for a judge to say in a courtroom.
Not what you would expect.
It also reflects something about lucy koh, she speaks her mind.
She is in many ways very plainspoken.
She's a brilliant judge, dealing with very sophisticated legal issues in technology, but she speaks about it and addresses it in a very plainspoken way.
Are the attorneys quite deferential?
That is another interesting point.
While many -- there are many women on both sides of the apple-samsung case in very senior positions.
The trial lawyers are men.
The ones doing closing arguments and opening arguments.
There are more men on those teams than women, and it is interesting to see a woman handle those outsized legal lawyer personalities, almost all of them men.
They treat her with the utmost respect.
They know who they are dealing with.
Judge lucy koh, who was appointed by president obama.
We are waiting for more from her as the apple-samsung case develops.
They have both been found to infringe.
The biggest, the main objective, what apple in particular has sought in both cases.
We are waiting on that ruling.
Joe rosenblatt, thanks so much for sharing that great profile today on bloomberg.com.
Speaking of samsung, the company has sent out invitations for a health-related event later this month.
The event says it will be a "new conversation around the future of health" but does not give any other details.
Coming up, more of "bloomberg west." do you hate grocery shopping?
You are in luck, thanks to a new startup promising to deliver your groceries in as little as one hour.
That is next.
We turn now to our "wiring the world" series.
Looking at how technology is changing retail.
A batch of companies are angling to disrupt the business of food shopping.
We spent the day with an ambitious startup looking to outsource your trip to the local supermarket.
He used to be an engineer at amazon.
Now he is going head to head with amazon's grocery business with his own fresh approach.
We do not have our own warehouses.
We do not have our own trucks.
We do not use fedex and ups.
We do that all in-house.
The service, instacart, is simple.
Customers order, and they get the incoming orders on the smartphones and hustled groceries to you in as little as one hour area today, a shopper is filling an order at the rainbow grocery co-op.
Organic apples, carbonated water, and pretzels.
Online grocery delivery is not new.
Webvan was what -- webvan was one of the darlings of the first online bubble.
Now it is a punchline.
To keep costs low, they rely on independent contractors to pick and deliver orders directly from existing grocery stores.
Today the order is heading to a local startup.
We use it at work pretty regularly forgetting things for the team, getting different beverages, teas, yogurt.
Delivery ranges from about four dollars to $15 if you need your groceries in one hour.
Drivers can earn up to $25 an hour depending on the workload.
It is a really flexible job.
You get to choose your own hours.
It is more independent than most jobs.
Insta card has raised more than $11 million from big-name venture firms, including sequoia capital.
It currently delivers in big cities like san francisco, new york, and l.a., but the company has even bigger ambitions.
We plan to be in every major city in the united states by the end of this year.
Instacart's ceo says he sent -- created the service because he did not have a car and self, and needed a way to get his own groceries delivered.
Alibaba could become one of the largest tech ipo's in history.
We speak to one of the company's first investors, next.
You can watch a streaming -- a streaming.
? let's get you caught up on where stocks traded today.
We are seeing a decline across the board that accelerated toward the end of the session.
Basically coming off record highs we have seen the previous day.
Not any big catalyst triggering that.
You are watching "bloomberg west," will recover innovation, technology, and the future of business.
Alibaba's first cloud data center opened in hong kong.
It comes just after ali baba filed for its u.s. public offering, expected to be one of the largest tech ipo's in history.
One of the first investors took an early bet on alibaba in 2002. its managing partner, jeff richards, joins me in the studio.
What was it in 2002 that you saw in ali baba?
Was it jack ma who said personally, you should make a bet on us?
Jack had a relationship with one of our founders.
It was less than a $20 million revenue company, but he had a very good vision of what he wanted to create.
If you read the prospectus, they have a 100-year vision for the company.
A great entrepreneur, jack and his team.
It has not been smooth sailing.
He took the company public, it did not work out, he made it private again, and they are bringing it out again.
Are those bumps in the road behind them?
Every entrepreneur has cycles.
They went public.
Now you you have the ali baba group going public, and that is a much bigger, broader story that allibaba.com.
It did have a $10 billion market cap.
It was a successful company.
They brought it back in, and now the group is going public.
Bumps in the road made them stronger, and they are a much bigger company.
The filing does not write down how each of the businesses are doing.
Overall sales and net income are strong, but we do not know how individual components are doing.
Growth could be slowing down at one of the other.
They do not break it out.
A lot of companies do not break out underlying subsidiaries.
Both are very successful forms.
It is a large, successful platform.
Alibaba has 60% of the e-commerce market in china, which is now the world's largest e-commerce market.
It is an e-commerce market that is growing.
Mobile commerce, mobile payments are growing.
When investors get excited about the ipo, they're looking at the sum of parts and not as concerned about underlying divisions.
Just betting on the strength of the brand, the management team, the overall opportunity in china and the rest of the world.
How much are they concerned with going global?
How much do they really want to go global, move beyond china, expand to the united states?
Every company wants to be a global company.
They certainly have the resources.
China is the world's largest e-commerce market, so the primary focus is in china, but recently they made investments in the u.s. and other parts of the world.
Part of a long-term plan for alibaba, just like other chinese companies.
They have made a number of strategic investments and acquisitions around the world and in the united states.
How likely are they to succeed in the u.s. market?
U.s. companies, on the flipside, have not succeeded in breaking into china.
We have invested with them in a number of opportunities, so we think they are making the right approach with local partners.
Betting on companies that are reinventing categories with logistics and payments and search.
So i think a high percentage chance of success, given the resources of the brand and the strength of the team.
Alibaba has one of the greatest management teams in tech.
You take amazon, google, baidu, iconic leaders of the tech community they have a fantastic.
You just raise your fifth fund.
How would you describe the fundraising environment right now?
We have been talking for several months about whether there is a bubble, high valuations, a lot of capital flooding into the private market.
What you are seeing is a number of funds raise capital right now.
The interest is high.
Our fundraising process, we had a lot of demand and a relatively short process.
That is a reflection of returns.
Returns have been exceptional.
A lot of firms have been returning more capital to investors.
People see massive opportunities for disruption in cloud and mobile, wearables, enterprise technology.
We are investing over the next three to five years in that fund.
We are somewhat tied to current conditions, but investors and venture capital have a long time view.
We see a lot of appetite for the long-term view, and perhaps rotating out of shorter-term classes.
Do you think we are in a bubble?
It is hard for me to call it a bubble when we have had a five-year sustained run of exceptional performance.
You look at q1 performance for companies that fullback, a lot of momentum names, 90% of them beat revenue and earnings targets.
The companies are performing.
It is not like there are underlying cracks in the rotation.
A lot of -- foundation.
A lot of the rotation happened with hedge funds.
What about square?
There have been reports they might be running out of time.
If you look at the opportunities square is going after.
Ebay is $50 billion in annual mobile payment.
Square is going after a gigantic market opportunity, with one of the best entrepreneurs in the planet, jack dorsey.
A terrific team around them.
We remain very bullish on square.
I would not believe everything you read.
Zendesk is about to go public.
What are your prospects?
Is one of the fastest-growing companies around.
They built an exceptional track record, defining the category they are in around customer care, with an exceptional team that has grown the business.
I cannot comment specifically on the ipo process.
I would say that from our vantage point, we believe good companies can go public in good and bad markets.
It is not easy for companies to go public.
There are companies notably struggling with that process.
We are excited for the zendeskt team.
Speaking of china, we expect a big announcement from the company some call the apple of china.
What do you think of their prospects to become a true global smartphone player?
They are much more than just a smartphone player.
They are a software that form.
If it were a u.s. company, we would be reading about it every day.
It is one of the greatest success stories of the last five years in tech.
Fastest company to ever go from zero to $1 billion.
Valued in the tens of billions today.
An incredibly innovative company building terrific hardware and software.
A brand people in china love.
To me, it is more than just a hardware company.
It is an iconic round -- brand, a software company.
There is a lot more people in the u.s. will become aware of.
jeff richards, thanks so much for joining us.
A quick programming note.
"bloomberg west" will have complete coverage of the news event in beijing, right here on "bloomberg west." it is the airbnb for retailers.
A company helping digital sellers bring their business to brick-and-mortar stores, next.
We turned back to our "wiring the world series." this week, how technology is changing the future of retail.
Ebay and etsy have allowed small sellers to gain customers.
Now a company is helping to make the jump to brick-and-mortar.
Storefront connects sellers with retail spaces for rent.
They offer booths at street fairs, spaces in boutiques, open storefronts in malls.
The storefront ceo joins me now.
Pleasure to be here.
Is called the air be in the of retail -- airbnb of retail.
How does it work?
We work with retailers looking for short-term he from a boutique to a vacant space on main street.
In a matter of minutes, you can put in a request through our platform and set up your store in a matter of days.
Tell me who is using it.
One of your customers is kanye west.
We had a lot of great brands and designers use our platform.
Kanye west has been a huge fan of our platform, along with large brands like google.
Thousands of designers that are local, who maybe do not have the brand name but are looking to expand and grow business.
How are you getting inventory?
How do you find spaces where there is available -- there is a lot of spaces that are vacant or looking to increase foot traffic.
If you own a boutique store on main street, you are competing with online, looking to bring in more customers.
They are excited -- i can list my storefront, rent out part of my space and get this really cool brand coming in and attracting new customers.
You are not canvassing the city for empty space.
The people come to you.
Half our businesses have been referred through users.
Now, i want to talk a little bit about the importance of physical store space.
How important is it?
How much does a booth at a street fair really drive up sales?
Is a significant?
94% of commerce in the u.s. is ill through -- still through brick-and-mortar.
It is a huge channel, and we want to make it more accessible to small businesses.
If you are making something in your house and garage, you are not sure what is the next step.
I can open a online store, which is good.
But only part of the conversation.
I can do wholesale, but i lose margins and i lose control of my grant -- brand.
So brick-and-mortar, renting a booth at a street fair or a pop-up shop, it allows me to control the message and grow my business.
Do you have any numbers on how much it actually adds?
Brands average a one to seven multiple.
If you spend one dollar meant -- renting a space, it will generate seven dollars in revenue, which is pretty compelling.
Compared to traditional retail, a want of five ratio.
We are beating that 25%. what about bigger retailers like target or nordstrom being one of your customers?
We have been working, it is not public yet, but we are working with a few larger retailers who want local makers.
In their stores.
You have seen this with etsy wholesale, with a few providers.
But if i have a really cool product that maybe works well for pet owners, i will get into petsmart.
If i have a kickstart her campaign -- kickstarter campaign, let's get into best buy.
A lot of matchmaking is going on.
Are you looking to partner with someone like etsy?
We have a lot of etsy and ebay sellers.
We are at gnostic -- agnostic.
We just want people with compelling stories and great products.
Airbnb has had problems with people trashing apartments, tax issues, legal problems in certain states.
Have you ever had a problem?
We have not had any problems yet, thankfully.
Knock on wood.
We are working with businesses on both sides of the platform.
It is not necessarily a consumer getting into a business they are not aware of.
It is businesses looking to grow business.
We protect them with an insurance product, like airbnb or zipcar.
We have a $5 million insurance policy for every customer.
Erik eliason, thanks so much for joining us.
It's a billionaire venture capitalist trying to keep you off this beach?
One environmental group believes so.
We explain next on "bloomberg west." ? welcome back to "bloomberg west." take2 interactive reported earnings last night.
Profit at $21.5 million, thanks to the blockbuster hit "grand theft auto." more than 33 million copies sold.
"grand theft auto 5" is the most successful release in videogame history.
The chairman explains why that is a good thing.
The successes continuing to feed more success.
Not just "grand theft auto 5," but "grand theft auto online." it is true, not just for "grand theft auto." it is true for a number of other franchises.
Zelnick says the company is looking to add more franchise hits like "grand theft auto." "vanity fair" called vinod khosla an eco-warrior for donating millions to environmental causes, but he is now being sued by environmentalists who say he illegally closed off the only road to a popular beach in san francisco.
California law prohibits blocking access to beaches.
He purchased the beach in 2008 for $37 million.
A university of california hastings law professor joins me now.
The beach is called martin's beach, a very popular beach for many years with surfers.
What is your take on what is going on?
Like a lot of the questions, it is pretty collocated.
There are two different lawsuits going on involving mr.
The outcome is hard to predict.
These are questions that involve old questions of property law and relatively new regulations under the coastal commission act.
Being litigated right now.
Almost certainly will go up on appeal.
Probably will take a long time to resolve.
The most common thing he said in his testimony this week, i do not specifically recall.
What kind of answer is that?
A little unusual, i suppose.
That somebody does not recall details like that.
But it is not even that relevant to the outcome of the case.
What we have here is a classic sort of battle between private property rights and public access to a treasured public resource, the california coast and the whole culture of the california coast.
So what he remembers or does not remember is not actually that essential to the case.
As i understand, the law says you cannot develop the california coast without permission.
Without a permit.
He claims he just put a date gate up.
Does that count as development?
That is the question being litigated.
His predecessor allow public access to the beach, and he has decided to close it.
The question is, is that closure development?
The california supreme court has never specifically addressed the question, but it has said the idea of development should be broadly construed.
The idea of the coastal act was to about protection and access to the coastline.
I would say he has an uphill battle.
Did the prior owner allow out of the goodness of their heart, or because they had to?
I think you would get different answers to that question depending on who you ask.
But the prior owner did allow fairly open access to the beach.
Even if he loses here and has to get a coastal commission permit, the question will be, can the commission deny him the right to close?
Can it make an open access?
He bought the land a few years ago and has not done anything with it with the exception of the gate.
We do not know what his current plans are.
Does it matter what he plans to do?
If you once to do anything in terms of development, like building a new house or anything, he would need a coastal permit from the commission.
The commission might be able to demand him to provide access as a condition of getting the permit.
So how do you see this playing out?
Sounds like it is pretty unique to california, right?
It actually happens all over the country.
You have very desirable property from a public access standpoint, and very desirable property from a private rights aspect.
Those rights are in collision here.
The california coast commission is set up in part to provide and improve public access for all citizens of california.
We have wonderful resources here in california, and happily a lot of the unique and desirable property in california is publicly owned, which is a great thing for the quality of life into this state.
That means a lot to a lot of people.
A similar thing happened with a property owned by david geffen in malibu, and i believe he lost.
What is the president out there?
Based on precedent, how do you expect this to -- to some extent, each of these situations is controlled by its own peculiar facts.
If they simply deny access, he has a better argument.
If he says i want to do this and that, give me a permit, they might be able to exact access as a price so that.
It depends to some extent on the facts.
What he does that later?
Then the access issue may come back.
This will probably be litigated for a long time.
These are high cost issues, and people feel strongly about the private property.
People feel fairly strong about having access to the beach.
This case, there is no other access to the beach other than -- one group said they would take this to the supreme court.
Is that possible?
The california supreme court has decided dozens of cases involving coastal rights.
It is a common thing.
Either strongly-felt issues on both sides.
The chances of ultimately going to the high court are very good.
A case we will continue to follow.
Thanks so much for joining us.
Time for the bwest byte, where we focus on one number that tells a whole lot.
Jon erlichman is with us from l.a. i am a simple guy, and i bring you a simple byte.
30. today is mark zuckerberg's 30th birthday.
He has moved out of the 20's, a group he once said is really where most of the ovation comes.
So we will see if he can be an innovative 30-plus-year-old.
It is an important milestone to highlight.
I don't know about you, but i am feeling really all right now.
[laughter] he accomplished a lot more.
There you go.
Thank you all for watching this edition of "bloomberg west." you can get all the latest headlines at the top of the hour on bloomberg.com and on bloomberg radio.