"bloomberg west" is next.
? live from pier 3 in san francisco, welcome to "bloomberg west," where we cover innovation, technology, and the future of business.
I'm emily chang.
We have a special edition of bloomberg west for you, today.
We will be taking an in-depth look at the business of lyft, the ridesharing app known it for the pink mustache.
It was scheduled begin service in new york city today, but legal challenges could but -- but those plans on ice.
Eric schneiderman and benderman -- benjamin losee losee say it violates state law.
The defendant has simply waltz into new york, and set up shop, while defying every law whose purpose is to protect the people of new york.
Lyft's ceo will join me here.
What is left, -- lyft, and wise it sparking so much controversy?
If you see a giant pink mustache driving towards you, don't be alarmed.
Is a list -- it is a liyftyft car.
The passengers badly, the driver is smiling.
These let you use app to get a ride.
Owning a vehicle is the second-highest household expense.
There had to be a better way to collect -- connect people who needed a ride.
Opening up, enter your location, and a car shows and.
-- shows up.
It is cheaper than a black sedan, or a taxi, and it helps put cash in the pockets of regular people.
. between main.
He started offering lifts in his car.
He can bring enough to do under dollars a day.
You can really be able to help out.
A lot of people -- i need rides.
You get to be there for them.
Matt miller joins us from new york.
Matt, we will see you taking a list -- a list -- a lyft in new york.
I used my own car, put pink mustache on it, and drove around.
I can we do see it.
No one asked you about the new york attorney general's -- what is happened this morning.
All of this developing in the last hour.
Eric schneiderman has gone to the court instead, i wanted bandit -- to ban it.
They are supposed to start functioning tonight at 7:00 at brooklyn and queens.
The is -- the concern is whether or not the insurance is efficient.
The same kind of concerns reported on earlier.
I spoke with john zimmer, one of the cofounders of lyft.
He told me not only do they offer a million dollars in insurance, that was previously additional to whatever the drivers personal insurance was, but now they are offering across the nation $1 million in primary coverage insurance for driver.
That should answer eric schneiderman's concerns.
Is not clear whether those have been able to communicate that.
As it stands now, if you are a lyft driver, you are facing a potential fine -- they are threatening to take her car away?
Why would any driver take that risk.
I don't see why they would if you are she knew about it.
This will be cleared up -- or if it isn't cleared up, then there won't be a launch tonight.
It's an interesting story.
The company is start -- supposed to start operating tonight at 7:00. these headlines came across eastern time.
Lyft has six hours to talk with the attorney general in some senses, and clear this up.
It has not been halted yet.
Schneiderman has just asked the court to stop them.
It is not clear whether the court will take the action by 7:00 tonight.
Met we back with us later in the hour.
First, i want to talk more about lyft's business.
I spoke with the ceo and cofounder, and i asked him what was planned -- and what had been planned for the launch today in new york city.
It will be lyft's biggest launch yet.
We have been under operations for two years.
We launch in the largest presentation capital of our country.
The first two weeks are free.
Every single ride and user takes, the system is free.
We want people to give an easy chance to check it out.
They wonder what it is, what is this pink mustache, who are these drivers?
How does it work?
The best way to get people accustomed to it is here's a free ride.
You actually brought a pink mustache for us today.
I know that was some confusion as to whether you are keeping the mustache, or doing away with the mustache -- what is the latest?
They will always be our symbol and very close to her heart.
We are launching with something a little smaller, and cuddles -- -- a cuddle-stache.
How much of you thought about getting rid of the mustache altogether.
Some drivers say it is inconvenient.
Some of the driver of the services -- some of them drive for other services.
Some passengers don't want to show up to business meeting with this on their car.
I think the mustache will always be our icon.
But we will evolve how that shows up on the car to make it more convenient for a driver.
We always want passengers to be able to identify a lyft when they see one.
But it won't always be quite as giant and loud.
It was a fun way to start.
But as the brand matures and evolves, -- you think someday the mustache will be gone?
I don't think it will ever be gone, but they will evolve into something a little more refined.
What about the fist pumping, chatting, sitting in the front seat?
I know we are friendly in denver cisco, but maybe in new york not so much.
New york is different.
This inserted values with the company are true.
What lyft asks him a end -- what lyft asks is that you treat each other with respect.
You might be delighted by the conversation that happened.
The suggestion of a fist bump is just sort of an artifact of that.
This is a way to break the ice.
Connect with another person.
That has allowed us to bring in a higher-quality type of driver.
Bring in a driver who normally wouldn't be doing this.
Maybe they just do it for five to 10 hours a week.
But they are having a good time, enjoying themselves.
They are being treated with respect.
On the passenger side, you are delighted by much better driving experiences.
What if you don't want to do the fist bump?
You can politely declined.
Uber has been cutting place -- prices aggressively.
It is sometimes cheaper, but now you were about the same price in new york.
Why should i as a tempest -- as a passenger take the risk when new york city state officials don't want you there?
As a passenger, there is no risk.
Lyft has the strictest purity procedures of any company out there.
We do county level criminal back run checks on every single driver.
Dmv driving record checks.
We have a $1 million insurance policy on every single vehicle, and every vehicle goes through 19 point inspection.
We have the most correct string -- strict screening process.
You will have the friendliest drivers and the sacred experience.
This will be like an episode of cops -- there was an uber driver that took some guy on a high-speed chase a few days ago.
It all sounded very scary.
there will be no high-speed chases.
The u.s. -- new york attorney general announced they are trying to ban you guys in new york.
What is your response?
This is all developed quite quickly.
We are in regular story proceedings as we speak.
To fully understand the dynamics , you have to understand the history.
If you go back 80 years before the medallion system existed in new york, there were 30,000 tabs on the streets of manhattan.
When the medallion system went into place, there are now 13,000 -- less than half the number of tabs in new york city needs are on the streets today.
This sort of artificial medallion system -- these medallions are valued at about $1 million apiece.
They are owned by wealthy individuals.
When you add up all that value, it's over $13 billion in medallion value.
When you see a big controversial regulatory battle playing out, what is happening is -- you have these wealthy medallion holders doing everything they can to protect this asset.
It defies all logic.
It is worth for the driver, worse for the passenger.
Passengers pay more, drivers earn less.
Lyft is there to open up a new alternative for folks.
Get drivers paid more money, provided cheaper and better experience for passengers.
New york has been hard on the sharing economy.
What are you guys doing behind-the-scenes change that?
Sidecar tried working out in new york, and they left.
Behind-the-scenes, we are explaining all of the detailed safety procedures that we take every driver three.
What we are doing is brand-new.
Most people don't understand all of the details of our operation.
We sit down with them, we walk them through all of the safety procedures.
We get them in lyft, we get them understanding how we operate, what we are about.
Where we are headed.
We were together to find a way to regulate this.
In the past, it had been black and white.
There were personal assets and commercial aspect -- assets.
Your personal car you drop the kids off to school and get groceries.
Commercial vehicles were only used for commercial purposes.
The sharing economy has introduced an area in between.
You are using your personal vehicle, but you also are giving someone else a ride in your community.
With airbnb, you are using your personal apartment.
Occasionally, you host somebody else.
This is regulatory agencies across the country -- they have been grabbing -- grappling with how you create a middle ground to a comment at the sharing economy.
Do you think you'll be ok?
We are and 65 other cities, we have asked model regulation in california, the state of colorado, washington, dc -- we have legislation pending in a dozen other jurisdictions.
I think the time for this has come.
We are here to figure out how to make it work.
My interview earlier today with lyft cofounder and ceo logan green.
We will be speaking with the taxi and limo commission of new york and at this hour.
What is it like to use lyft in brooklyn?
Inside lyft's early days, and the competition with uber.
We talk about the company's past, present, and future.
Breaking news, we have the new york city taxi and limousine chairperson and ceo joining us on the phone right now to discuss lyft.
We know the new york attorney general is trying to ban it.
Where do you stand right now on lyft?
Our position has been that we welcome new technology.
We welcome innovation, we have even gone to court to fight for the right to allow passengers to use their smart phones to hail a taxi.
But when it comes to safety, vehicle safety, and vetting drivers, we really cannot undermine the taxi system.
The four higher system here in new york, we have standards that must be met.
In order to operate in new york city, lyft must meet the standards.
Lyft's claims their standards are even better the new york city taxi standards.
For example, the driving age is 21, 4 a new york city cab driver is 19. i have seen what they purport is a list of what they say is improved safety standards.
When you strip away it, it's not true.
There is betting when you come a -- when you become a driver.
That's completely absent from lyft's model.
If you have an arrest after you have been licensed, you can have your license revoked.
There is drug testing annually.
There is education requirements that far outstrip what lyft is suggesting.
There is required defensive driving, which is not part of lyft's model.
Most importantly, that constant daily check that we have on your ability to abide by traffic laws, and your ability to abide by the criminal laws of the city and the state --lyft something that is completely absent fromlyft lyft's model.
I understand you had issues with uber in the past, but it seems like you worked out some things.
How is your position with lyft differ?
Uber came in and wanted to work outside of the licensing system it.
We highlighted to them what we highlighting to lyft -- ultimately, they decided to get a black car-based license, and that is how they operate in new york city.
It is also grew to everybody that it is not that difficult to become a licensed operator in new york city.
There are people out there who say that you guys are stuck in the past.
This new technology is inevitable.
How you respond to that kind of criticism?
It is a criticism that is not based in fact.
We welcome innovation.
We have started any hail at -- an e-hail at.
tens of thousands of livery cars are dispatched every day using app technology.
We allow customers to pay with these trips using their cell phones.
We are always open to new ways to make the passenger experience seamless.
To say we are not open to new technology and new innovation would just be flat out wrong.
What we won't stand is going backwards.
What lyft is proposing is that we go backwards.
We go back to a time when there were far more illegal caps on the street.
There were no standards for with the driver should meet.
No standards of what the car should meet.
The passengers were really victims to whatever car and driver showed up.
We don't want to go backwards.
We do want to move forward, but we can't move forward with a company that is asking us to dial back on our standards.
When are you expecting the state to make a decision on this and whether lyft can remain operating?
The city and the state attorney general's office are in court arguing before a justice -- a new york state supreme court justice, requesting a restraining order for lyft to go forward.
I expect by the end of today, the judge will make a decision.
We will be closely following that.
New york city taxi commission chief, thanks for calling in.
As lyft expands into its 68th city overall, what is its potential?
Will it be as big as uber?
Get tackle the regulatory system?
I know you are the tail end of that conversation, what is your response to what she had to say?
You may remove the last time i was on bloomberg was right after seattle attempted to restrict ridesharing.
I said that was temporary, that was the case.
Americans want options beyond taxis.
There may be a year, month, quarter, where regulators and old-school philosophies interfere with progress.
But when american consumers want something, no regulator will get in the way.
Americans are voting with their feet and san francisco.
They prefer these options over taxis, or certainly to complement -- as a complement to the taxi service.
Someone will challenge a candidate for governor, and the people who support the economies of sharing are going to win.
And that will be the end of the story.
Some times you do see it destructive technology or technologies they claim to be destructive.
You must take these risks into account.
How much you worry about revelatory hurdles that comes of this?
Not at all.
I have the benefit of having been an attorney.
One of the reasons why i was comfortable investing in youtube was i made an independent electoral prophecy -- property intellectual property statement.
Some things are clearly wack.
The key is to ship the product.
Have a lot of users addicted to the product.
If you get deterred, and you're not allowed to launch, people have these parade of horrible's. it's not as if new york city is safer than san francisco.
There is no evidence that taxis in new york city are safer than whatever options exist in sand and cisco.
-- san francisco.
People create these scary scenarios, and the use regulation to deter the launch itself.
But once you get live, if there is massive adoption, massive popularity, and people are in love with your product and services -- that will be the end.
How does this play out in new york?
I don't know.
It may be a political issue -- right now it is a regulatory issue.
At some point, candidates who support the sharing economy will run for office against people who are legacy interests.
Those candidates will win.
Why did you invest in lyft and not uber?
I invested before they were even lyft.
Uber didn't really exist when i invested.
I didn't do a comparison.
A lot of companies evolve.
We didn't really believe that ebay was going to be the markets.
But then we watched 54 sellers adopt paypal as a payment product by themselves, and realize that would be an interesting opportunity compared to our beliefs about where the world should go.
How do you feel about lyft's chances seeing how big uber has grown?
They are both growing at a fast clip.
I haven't seen any data comparing their growth rates.
I think lyft is growing extreme it well, i think they are here for a very long time it.
They've raised $1.2 billion -- $1.2 million.
Uber is valued at $70 million.
Investors are very optimistic -- $17 million.
What do you think?
Investors aren't always right.
I wouldn't use the valuation ascribed to a particular business as a way of checking it.
At the end of the day, users will vote with their feet.
I suspect they will both be in business for a long time.
Was very successful, and both transformative.
Self driving cars will also play a role in transforming the way americans work, get to work, commute, travel, and maybe even live.
Do you think they are worth $17 million?
I don't have an opinion.
I focus on startups, not the late stage growth.
Big picture, it looks like uber has a great foothold on markets around the world.
Do you see lyft being that big?
They are growing, expanding very rapidly.
Notwithstanding this new york saga.
I think lyft has grown massively in the last two years.
The growth rate is impressive by any standard.
What you think of the pink mustache?
Kind of cool.
Should they keep it?
I saw his comments earlier today, i tend to agree.
As an icon, it is perfect.
How it manifests itself in markets, probably yes.
Keith rabois will talk with us about opendoor.
You can sell a home in 30 seconds.
I can we discuss.
-- i can't wait to discuss.
Matt miller takes a lyft with cofounder john zimmer.
Welcome back to "bloomberg west." i'm emily chang.
Imagine a world where you could buy a home with just a few clicks.
With opendoor, new startup from paypal cofounder, you may be able to.
It is just announce a funding round of nearly $10 million.
It is backed by nearly everyone in silicon valley.
Keith rabois is here with me now.
You claim you can sell the home and 30 seconds.
We will allow any american to sell your home in 30 seconds.
You verify your identity, and we will give an offer to buy it for me right there and there -- right then and there.
You get the convenience of instantly selling your home, but you can choose any time you want to move out.
Part of the reason this is a japan staking process is verifying with you -- a painstaking process is verifying all of the information.
What about the risk?
You sell your home to us, guaranteed.
Instead of having to spend 60, it 70, 90, 120 days waiting for buyers, subject to all these risks, all this time you're waiting in unsure -- and unsure, we will give it to you.
We find a buyer.
We will transfer that burden to us.
We do this everyday.
It will be easier for us than have an easier seller.
How you afford to take on this risk?
We will value your home, sight unseen.
Accurately give you an offer that hopefully you accept.
How can you value a home without seeing it?
Theoretically, you can.
But what if you make a bad call?
We will make some mistakes.
Like in any business, this isn't a zero-sum business.
But over time, it has been proven that generally speaking, data is better than human judgment.
This is true across multiple verticals, medicine, the law, human experts are flawed.
It is absolutely case that relying upon next for it is a disaster.
Using data, math, and statistics -- you are almost always better coming to a right answer.
Now, you ask a friend.
You look down the street for sales on your block.
You may go to zillow or truly a -- trulia.
Their accuracy is like throwing a dart at a dartboard.
We are going to use actual data, actual science, actual math, to project the value of your home.
Who are the target sellers and buyers?
The median home in the united states is worth $200,000. i have to remind people of that all the time it.
Normal americans spend about $250,000 to buy a home.
It is the number one asset.
That's our target market.
Most people use it when you try to move.
The cost of the american dream and is upgrading your home as you get promoted.
It is a competent against the home seller has to go through.
As you try to buy a new home, you have to sell your old home.
You won't will apply for a new mortgage with extracting -- without extracting yourself from your previous mortgage.
It's very nerve-racking.
We will make that easy.
You can sell your old home whenever you want, and walk into your new home when it is mostly means.
It certainly seems like every single potential angel investor in silicon valley is on that list.
How did you get these people to sign up?
Most of them are people we worked with before.
We didn't raise money intentionally from anybody.
When they heard what we were up to, people were interested in transforming this market.
Residential real estate is living in the dark ages in the united states.
Unaffected by technology.
It is massive.
5.5 7 million americans home -- sell their homes in spite of all of the friction.
We believe technology and data can transform this market.
That has resonated with a lot of entre nous spurs we work -- entrepreneurs we worked with before.
It's almost irrational to rent property.
If you earn a reasonable income, it is just wasting money to rent instead of own.
The reason why people do that is because of the convenience of leaving a rental property at the end of the lease, versus the perceived pain, friction, and cost of leaving a home.
We will allow people to substitute this at scale.
You have a full-time job as a partner here, how much time we be spending on this?
As much as necessary.
There's a successful precedent for this.
A great investor a greylock.
One of the entrepreneurs we worked with is both an investor and the founder of oscar, which is thriving.
There are a lot of examples of success in this area.
Keith rabois, an early investor in lyft.
Thank you so much for stopping by.
Aston martins are known for their high style.
They are james bond's car of choice.
How about writing in one with a mustache?
Matt miller tested out a lyft in brooklyn.
You are watching "bloomberg west." i'm emily chang.
Lyft is scheduled to roll into brooklyn and queens tonight, with more than 500 drivers armed with pink mustache is looking to make a mark, and a fist bump, on the competition.
That is a new york state officials don't get their way.
Matt miller added to her -- got a tour with a ride in style.
I was try to drive a cart i can afford.
Tonight was no different.
The future of lyft in new york may be in doubt, but if all goes well, they could start driving tonight at 7:00. i got a lesson in how to become a lyft driver.
They are trading in san francisco for brooklyn.
They typically need for cars, but they made an exception for me.
Why did you pick brooklyn and queens instead of manhattan?
The need of transportation.
You only have one line going to the outer boroughs.
You have taxi pickups happening in airports.
They still need affordable transportation here.
The company just received $250 million of funding, and it is burning through some of that cash, offering the first two weeks of ride for free.
Is a trillion dollar opportunity.
What we are building is the scale of an international highway system.
An international railroad.
It's a massive opportunity.
Lyft says it is more of a social experience that typical limo service.
I suggest you right in front, and give the driver a fist bump.
What is the deal with a fist bump?
All of these things are suggestions, not required.
It's a weighted -- a way to break the ice.
I just ended meeting people, and it helped with a smile from the start.
You break the ice, have a good conversation.
If you want to be quiet, sit in the back, you are welcome to do that.
The company aims to disrupt modern taxi pricing.
How much you pay depends on how much you thought of the ride.
Is a cheaper than a taxi or uber?
And the passenger decides whether they want to pay more or less?
For now, it must originate in brooklyn or queens.
But people can say i want a ride to manhattan, and lyft will take them there.
To be clear, they are allowed to leave brooklyn or queens.
We started one area.
And then we expand.
We kind of are doing the same in new york.
Riggleman queens need it the most.
-- brooklyn and queens need it the most.
There is a lot of interesting people in the outer boroughs.
When you put them together in a lyft, we think it will treat new york for a well.
-- very well.
You can see they are trying to do something different than what you would think of at uber.
They are doing to the very different than what you would think of as part of the taxi service is concerned.
People can do this is a job, do do this is a job.
It is still a commercial venture.
They are not literally sharing cars with each other.
I think it is a little unclear.
He said it is cheaper than uber, but they have been aggressively cutting their prices.
I dropped the price 20% earlier this week.
What is the real story?
How is it different from uber?
Uber has dropped its price temporarily, on its cheapest product, to match the price of lyft.
In response, or maybe just because they're launching here, lyft is offering rides for free for the first two weeks.
To get that concept straight, you don't pay anything at all.
It is generally cheaper than any price of any money.
For the first two weeks, but what about after that?
When is uber's temporary pricing going to change?
Both companies are trying to get under each other as far as price is concerned.
You can't go much lower than free.
Unless uber starts paying people to ride in its cars.
They have enough money.
Both of these companies earned through money with these price cuts.
I think we are seeing a price war in action.
We will be watching matt miller in new york, in an aston martin, in style.
Thank you, matt.
Why new york state and city officials are challenging lyft's arrival.
We have the former regional commissioner of the scar.
Also with us is a professor of management sciences at nyu stern school of business.
His research focuses on how to regulate destructive technologies.
Gentlemen, thank you so much for joining us.
Is new york making the right call trying to ban lyft?
It is a more public in its story in new york than it is in any other american city.
We rely so much more on public transportation.
As a consequence, our regulatory of the structure is so much deeper, and so much more complex.
The ways in which we regulate the analogues, the old way of sharing, is a little more complicated than it is in a city like austin or a city like san francisco.
This is the beginning of the conversation.
It's a conversation that has to recognize as matt pointed out that we are blurring the lines between personal and professional here.
We used a sort of live in a world where some people would not drive people commercially, and other people would drive people commercially full-time.
Right now, we have a continue on that.
Some only drive five hours a week, some 10. we are in the process of adjusting our regulatory system to accommodate this new model.
This is just the first step.
New york is a unique model -- market, but every market is unique in its own way.
Having worked in chicago, is new york handling this the right way?
That's a tough question.
New york has to handle it the way they feel is right.
I worked in dcn chicago, and faced these issues.
The mayors i work for, and myself, are in favor of innovation.
The free market, to some extent, is deciding what were the right prices, what was the right type of ride.
And then seeing how things shake out.
We are also seeing things in new york -- the issue of the value of medallions.
Medallions, to drive a taxi, is about $700,000. you have to think about the paradigm where someone can start driving for free, no regulations.
Perhaps upwards of $1 billion of tax italians.
The same time, you have the regulations, and some place -- even richer relations.
You talk to drivers here all the time, and some of them -- some of them like the services, some of them don't like the services, some of them have gone over to uber and lyft.
Some continue to drive taxis.
Are the company's right going into these cities and waiting it out?
Seeing what happens, rather than waiting until it is legal?
You can think of companies having to strategies.
One is to ask permission, and the other is to ask forgiveness.
In some cases, eventually what should be driving whether or not a city governments opened this kind of services its popularity.
It would be hard to ask uber to stop working in new york, because there are people who rely on it.
If he gets popular, improve the value of their service, it probably has a stronger position when trying to sort of expand the regulatory framework to accommodate them.
You say that these services actually create an infrastructure that can save the city millions of dollars.
You are talking about medallions , and worrying about all the money that these taxidrivers have invested in medallions.
If these services can save money, could it be a long-term bet?
There's definitely a place for the systems.
We have complaints here in washington from african-american citizens who say i can get the debt by a taxi.
Services like lyft and uber are agnostic.
They are into queens and brooklyn.
Please is that have been traditionally underserved by taxis.
I think there are no questions.
On the supply side, they are providing employment for people that are underemployed.
We do have four .4 million part-time workers in 2007 before the recession.
Now we have 7.5 million.
Services like lyft or airbnb can allow people to keep their quality of life with a need to, and they don't have a full-time job.
We will have to leave it there, unfortunately.
Senior fellow at the urban land institute, thanks for joining us.
Why is the weather channel's ceo wearing a smart watch?
Find out how mobile tech factors into the company strategy.
We turn to the one number that tells a whole lot.
Jon erlichman is back from sun valley, holman l.a.. you have the bite today.
98,000. the weather channel basically tracks weather conditions at about 98,000 global locations very that has attracted apple's eye.
It's part of the new ios, pushing down the weather to the side.
We caught up with david kenny, who was on the yahoo!
Here's more on the strategy.
I think the value is determined by the subscriber.
I would say the fact that we are so highly rated that people are starting their day with us, that they are staying with us all day, that they come back with us to storms -- they are registered.
I think they love us.
Our distributor partners get good value from that.
It's a great brand.
They know everyone likes it.
It's a fair value to the distributor.
You guys hired sam champion.
That was a big play, to sort of say, we want to be a very important morning destination.
How is that going?
We have sam and his colleagues doing an awesome weather show from 7:00 to 10:00. before that, we have al rocher.
We have jim kant tori.
He added to the mix, and people know it is the definitive place to come for weather.
You are wearing a smart watch.
It's a nice transition, because obviously, people think weather channel, they think of the actual channel.
But your brand is big in the mobile world.
Tell us how you were able to coexist.
I think we have always had to give people weather science and with the stories wherever they want them.
Mobile is growing in a huge way.
Not only in united states, but in the world.
It's hopeful to have it in your car and mobile device.
-- helpful to have it in your car and mobile device.
They turned to television for more depth.
More people start on mobile, and then come to tv.
Basically, the mobile experience is helping to drive traffic for television.
It certainly is.
That's an amazing thing to think about.
To talk about that five years ago.
We certainly learned a lot about how to use our mobile audience to drive the television audience.
They work well together.
The weather company, san francisco weather on saturday.
17 and 70? new york, 80 degrees where lyft is trying to launch today.
At least it will be warmer.
Thank you for watching the special edition of "bloomberg west," talking about lyft.
We will see you on monday.