Live from pier 3 in san francisco, we cover the media companies that are reshaping our world.
This is on innovation, technology and the future of business.
Tesla tries to keep his shares from going down the lane.
This is a model s sedan on fire down the highway.
Calling the company town facebook, a new residential complex just a bike ride from it said quarters.
The third day of the federal shutdown.
How is the dragging on political showdown dragging down tech?
There are new questions about the safety of tesla flagship model s sedan after a video was posted one of the electric cars on fire.
It happened tuesday outside seattle and was captured by people driving by.
The fire was caused by the direct impact of a large metallic object to one of the 16 modules within the model s battery pack.
Nobody was hurt, but what is getting hurt is tesla shares, driving the market cap down by about $3 million.
Cars on fire is never good.
How serious is this?
A small portion of the car is where the battery pack was on fire.
But look at the video.
It shows the car engulfed in flames.
I just spoke with the fire department and they have a lot of requests for the incident report.
They found that adding water to the fire made it worse.
In the context of the stock, we always talk about the business and not the stock, but the phenomenon that is tesla stopped is fairly amazing -- tesla stock is fairly amazing.
406% rise in the last year.
The fire was on monday, but when the video hit the internet, it had an exuberant effect on the selloff of the shares.
Do we know even more about what the car hit?
It is unclear.
I just requested to the incident report from the fire department.
The report is that it had a metallic object on the road but they couldn't find it.
I don't have that information.
How long could this jug on?
-- how long could this drag on?
For all of the excitement of tesla shares, the car is very new.
It has been on the market for just over a year.
There are only 12,700 cars that have ever been delivered.
15 months on the market.
It did get a five-star safety rating.
It came out with its own metric, which is a whole other story that we covered on "bloomberg west." it was rated a safe car in crash tests.
It is to different thing -- it is a different thing when you talk about hitting a metallic object.
The cap is bigger then clorox and they have only sold a little over 12,000 cars.
It is somewhat divorced from reality.
We saw the stock selloff.
It's the same effect.
Now to another story we are following today.
Facebook is known for its employee perks, free food to the work at facilities, but now the company is working with a developer to build a $120 million rental housing community near its menlo park headquarters.
Jon erlichman has more.
It seems like facebook wants to be both employer and landlord.
Quest i find myself wondering, if you can't pay your rent, can you use facebook credits?
But in all seriousness, there is a competitive landscape out there for talent.
Whether it is google, apple or facebook, everybody wants the west and the brightest engineers.
They want them to be dedicated.
They want them to work long hours.
And there are so many young technology companies that are based in san francisco.
Twitter is a great example.
They are able to make his pitch -- hey, why go to silicon valley?
You can stay in the city, live in the city, and work for a technology company.
We spent some time at the faced the campus.
When you leave campus, there is not too much going on.
That is one of the key reasons why come on campus, they built a lot of stuff to keep you interested and keep you there, whether it is a barbershop or different restaurants.
The logical extension is that -- the logical extension of that is to have housing nearby with a kind of things that people like him everything from a pool to a doggie daycare.
We know that mark zuckerberg is a big fan of dogs.
As we have talked about on the show before, the rise of the tech industry has led to incredibly astronomically high rents and housing prizes in san francisco and very low inventory.
Is that related here?
It very much could be.
There are all sorts of measures out there on the rates and seven cisco.
But actually sentences go-based company that gives you data on what is going on says that, in september, you had seen a 12- month increase in rentals in san francisco, more than 8%, which would easily be more than double the nationwide average.
I'm sure you would find some people who say, actually, my rent went up more than that.
And that could play into facebook's favor and here's a company that allows for people to live in san francisco, to take it a spoke bus to headquarters.
Those transportation costs add up, whether it is for based on -- for facebook or google or any other player.
If you can get them closer to the office, that makes more financial sense as well.
Facebook starting its own mini village, thank you.
With all those perks, why would anyone want to leave facebook?
We ask a former marketing exec for why he decided to go ahead with another start up.
Welcome back good some of the world's most successful companies like google, facebook, and the soon-to-be public twitter have all built their businesses thanks to advertising.
They are constantly looking for new ways to keep the attention of users/ just yesterday, faced took announce a new mobile advertising tool that will link users to other apps on their phones and tablets via promotions that arrive on their newsfeed and offers new interactive ways for brands to reach the mobile consumer.
Our next guest says we are still in nearly days.
He spent more than four years at facebook as vice president of global marketing solutions where he worked closely with sheryl sandberg.
He just left facebook to take a coo position at flurry.
He joins me now here in the city of.
You worked with -- in the studio.
He worked with cheryl for nine years.
What exactly do you do?
It is a mobile advertising platform that is powered by big data and insights from one point 2 billion devices around the world that consumers are using -- 1.2 billion devices around the world that consumers are using.
It's a great opportunity for advertisers to expand their profit and yield.
A stop about analytics.
What are some behaviors, something that people do on their phones that might surprise us?
People are in and out of mobile applications all the time.
Some people are having in 25, 50, 75 sessions in a given morning.
They are going in and out of multiple applications.
Sometimes you might expect some of the to be very engaged, like many adjusted in sports.
We find those people are in sports applications a very small percentage of their day.
They are looking at news and a whole bunch of other information.
So there are a lot different insights.
So people are multitasking.
Yes is, going in and out of these things all the time.
It is the first thing i go to now.
I use my mobile or my smart phone or my tablet before use my computer, before go to my tv a lot of times nowadays.
You help app developers grow their revenue, grow users.
I know you have only been there for days, but can you give me an example of how the work you guys do has had a massive impact on one particular company?
If you think about companies, a company like bloomberg, we use our analytics product today and make tweaks to how it is exley set up, -- how is actually set up, how people are viewing information.
It will process the information using air analytics tool and have better advertising opportunities.
41% of ad revenue comes from mobile.
Why use facebook when they are asked why leave facebook when they are on top of their game here?
I had a great time working with mark and cheryl then building great teams around the world and creating great products.
I am very excited about that have in front of them.
For me, personally, i wanted to go to a company that is mobile first and fleury is focused entirely on the mobile space here in it is -- noble . it was not -- entirely on the mobile space.
Personally, it would stretch me a little bit more.
What was alike like to work with cheryl for nine years?
She is an incredibly unbelievable motivator, highly articulate, and moves really fast.
I found it to be energizing, motivating and a lot of fun.
How do mark and cheryl were together?
Question were together really well.
It is really the dallas the way they approach things.
They meet every day.
Throughout the day, the catch up every morning.
And really have a good sort of back-and-forth in terms of how they approach issues.
Was there a directive from on high when the company went public and mobile was at zero when somebody said we have to get these mobile numbers up as a priority?
Quest if you think about mobile, it is really where everything is going -- if you think about mobile, it is really where everything is going.
Facebook did that were it allowed the newsfeed to be a graded vehicle.
That was the progression that we were making over a long time.
Question mentioned wanting to be at a mobile first company.
Twitter actually makes more money from mobile than desktop.
Do you see twitter as a threat or a big competitor to facebook?
I think it is great what they are doing.
They bought a company that is a competitor of flurry.
That is great.
I think it is a really great validation for the world is going.
The mobile world is really important to us.
It is really our first screen where we are getting our information and interacting with everybody.
If we can provide a great way to provide relevant ads to consumers all over the world based on data and how they are actually using devices, it's an opportunity to lift every interaction with a mobile device and we can deliver great roddick's that allow -- great products that allow advertisers to make more money and do better with fulfilling their mission.
Don't you think that twitter come as a competitor to facebook, how do -- that twitter, as a competitor to facebook, how it can pose a challenge?
The figures show that it is a $60 billion industry by 2017 hearing that means there is a lot of room for growth.
That would be a third of the digital marketing.
There is a huge amount to do.
User behaviors changing and it is changing behaviorally around mobile.
And fundamentally for flurry to provide great data and assets to improve what we are doing.
Fleury also competes with twitter and facebook and google . how will you challenge is kind of competition?
For starters, there is a lot of room here and there are a lot of ways we can actually work together and areas where we will compete for ad dollars.
In a world like this, it is driven by data.
We are confident in the data we have and bring great results and it will lead to success.
It has been said that your hiring at flurry was a thought of flurry thinking about going public.
What are the plans?
For days inn, i don't have -- four days in, i don't have any plans.
We have customers globally and we have to really come up with a great product for them.
We are absolutely focused on delivering great results for those customers and then figure out where it goes from there.
We will keep watching you guys.
They do so much for joining us.
The l.a. dodgers made headlines when the team was bought for more than $2 billion last year.
Now they are headed for the playoffs.
We go inside dodger stadium next on "bloomberg west." you can also watch us streaming on your phone, tablet, and bloomberg.com.
This is the early edition of "bloomberg west." catch us at our later time at 3:00 pacific and 6:00 eastern.
With a multibillion-dollar cable tv deal set to kick in, winning means everything.
Jon erlichman recently caught up with the president of the dodgers to talk dodger ball.
Doesn't winning mean everything?
Winning is big.
Stan kasten, as a baseball executive, is very well known from his years in atlanta and washington.
But this time in l.a., he says, is like none other.
Thank you for coming.
Stan kasten is as busy signing baseballs as any of the team's star players.
I tell people this is the most fun i have ever had.
After falling to 12 games under .500, they rocketed from last place the first thanks to their best 39-game stretch since 1953. knock on wood, when all the pieces came together, it looked as good or even better than we thought it might.
He is referencing the high hopes that he and the powerhouse guggenheim had when they paid $2 billion for the dodgers last year.
The winning has helped boost plans for the regional sports network.
Starting next year, they will have their own channel starting with a 25-year deal with time warner cable.
Nobody is paying attention to the price of the network.
Time warner cable has raised the price nla to help pay for rising sports costs.
Compare that to houston where they have opted to pay higher fees for the struggling astros.
That regional network just filed for bankruptcy protection.
There will not be any resistance.
I think fans, most of them, have been waiting for this for a long time.
I don't anticipate any problems in getting them to all sign-on.
Caston does hope to bring down the team's payroll by bringing more homegrown talent.
What do you think of the boss?
[indiscernible] i taught him those.
Those are the only words he knows in english.
[laughter] crises also considering businesses based on the dodgers brand.
Once we fix this, we will be able to think about the next part of our development.
And the dodgers will start the playoff run in atlanta tonight.
They weren't just the biggest draw at home.
A worthy biggest drop attendancewise on the road.
So maybe there will be a lot of dodgers fans in the stadium in atlanta.
Dodger tickets are going up for dodgers fands next year.
Are you a dodgers fan now that you have less us -- have left us for l.a.? i have lived in too many places.
I will stay on the sidelines for this one.
[laughter] i will tell the san francisco giants you said that.
Time for on the markets, a look at what is happening in the markets.
Day three of the shutdown, how are the markets looking?
Yes, u.s. stocks now firmly in the red, stocks falling for a second a good meanwhile, bonds are rallying.
The s&p 500 is now off by 14 points.
The nasdaq is off 40 points.
I should say that we are off the session lows and the market seem to have turned around after reports that john boehner had told some of his colleagues that he would not let the u.s. government default.
Two quick highlights, tenet healthcare getting a healthy boost after being removed from ratings watch negative.
And zales falling today.
More with that after the break.
For your bloomberg top headlines, at least 94 people are dead and hundreds more still missing after a ship carrying african migrants sunk near an italian island.
A fire broke out on the ship causing it to capsize.
It left olivia earlier this week carrying 500 people.
At least 200 have been rescued so far.
Chevron has started evacuating workers from the gulf of mexico facilities as a tropical storm threatens a area.
It has formed between cuba and mexico and could hit the u.s. gulf coast this weekend.
As it barrels toward the u.s., females reactivating its hurricane response team and will be ready to assist -- fema's teams will be ready to assist -- fema is reactivating its hurricane response team and will be ready to assist.
What will twitter do with the money from an ipo?
It is in talks to leavese and office space.
We know this will potentially double its workspace.
Tell us about it.
Is pretty amazing when you consider the fact that twitter basically just moved into a new headquarters, june 2012 the end here they are now looking at a property which is basically adjacent to where they're building is right now.
As you highlighted, this is based on what we have heard from people with direct knowledge of the matter.
And we hear that it is possible that the talks could break down.
But in this space of three under 20,000 square feet, you compare that to their current san francisco foot rent, which is around 295,000 square feet -- san francisco foot print, which is around 295 thousand square feet, that is a lot of space for sure.
I think the workforce has tripled since early 2011. could we see more hiring?
How much more hiring could we see?
The numbers do help to tell this story.
The workforce from 600 people to 2000. we have asked a lot of people about this new office space, how many people he could accommodate.
Very easily 1800 to 2000 people.
You can see the workforce double turn what would they be doing?
Obviously, helping to build out the business that is twitter, but there is a lot of questions about where the business could potentially go and will we get more information on that on the road to the ipo.
We reported here that they just hired someone to spearhead the commerce initiative.
They are thinking long-term and you need office space if you're going to do that kind of thinking.
I want to get back to the government shut down.
President obama is calling on congress for a spending bill without conditions asking house speaker john boehner to bring that vote to the floor.
John boehner and other representatives are currently working on another plan.
Welcome back to "bloomberg west." president obama is meeting with congressional lawmakers to discuss potential plans.
Julianna goldman, our white house correspondent, is standing by.
What can you tell us about the latest?
I am standing by here with national economic council member gene sperling.
We had house leadership, senate leadership here yesterday.
Has there been any other negotiations or discussions between the president and republicans on the hill?
I think you just had the condescension with the president and the leadership.
I think it is very clear what needs to be done.
The president, as he said today, wants of the house to allow a vote in the house of representatives on whether or not we should open up the government for six weeks and give ourselves time to have a more sound but a going forward.
That doesn't solve the debt ceiling.
It absolutely does not solve the debt limit problem.
In a similar way, if the speaker was open to allow a vote on a clean debt limit, you could very well have a majority that is willing to take away the threat of default, takeaway this uncertainty that is hurting our economy right now, and i think what the president has made very clear to them, both in the meeting and publicly, is that he is willing to negotiate on the budget.
He is willing to negotiate on ways that you can reform and improve the four-ball care act, but not under the threat of shutdown or the threat of default.
So if they are willing to do the reasonable thing, which is to extend the continuing resolution for six weeks, which is at republican levels, and make clear that there will be no demands or threats of default, then i think we can move on and have the type of productive budget negotiations or talk about ways to improve the affordable care act.
There are reports that the owner -- that john boehner is secretly telling house republicans that he will do what is necessary.
Is that something he conveyed in the meeting yesterday?
I am not aware.
I am not aware that that has -- why hasn't somebody in the white house call up his office and ask them?
I don't think the president could have been more clear that more time is needed.
We will be more than pleased to move beyond this episode, to put to rest forever the idea that any faction in our government threatens default as a way of getting the budget negotiation, and then return to the old- fashioned type of wrangling over taxes and entitlements and spending.
Once we put away the threat of default and the threat of shutdown, there will still be leverage on both sides here in or will people who want to keep the sequester where it is, people who want to increase the amount they goes to defense and investment, people who want no revenues, some revenues the france's over -- some revenues differences over entitlement reforms.
Take away the threat of default.
Open the government and then we can have these types of normal, traditional, rough-and-tumble budget negotiations here in.
You are at bloomberg earlier this week and you said that markets are being too complacent right now good you had lloyd blankfein and jamie dimon.
What would take for the markets to be less complacent?
I will try to predict market.
I can tell you that democrat and republican presidents, democrat and republican secretary of treasury, and if we were to go into default, it would run the risk of being an extraordinarily negative event that could even put our economy in recession.
Weren't these similar warnings over sequestration?
Quick snow, not at all.
I think this is very different.
I think what is alarming many people in the business community, people who are the job creators and investors in our country, is that default is of a different magnitude.
I don't like the sequester levels we have.
I don't agree.
I think it is bad for investment.
I think it will hurt children and research.
But that isn't the normal type of debate that people have about government spending, revenues, deficit issues.
Our country has had a are correct record of paying its bills since alexander hamilton as our for secretary of treasury and we all benefit from it.
We all benefit with lower mortgages, lower car loans because of that record.
If the united states were to default for the first time, the immediate impact could be very serious here and things could unravel.
Markets could stop functioning.
It could put us at risk for recession.
But unlike a one-time budget issue we have come a could also mean that, for decades to come, people will be paying higher interest rates because no longer could they say that, for sure, the united states's full faith and credit is beyond question.
Gene sperling, thank you.
We will be back with you throughout the day for updates on the shut down.
Day three of the government shutdown.
The illicit online drug bazaar called silk road has been shut down.
That is next.
You can also watch is streaming on your tab that -- on your tablet, phone, and on bloomberg.com.
This is "bloomberg west." the 1.2 billion dollar black- market bazaar that allowed people to buy and sell drugs using bitcoin has been shut down by the feds.
The alleged operator has been charged with running the most sophisticated and extensive criminal marketplace on the internet.
His linkedin profile is known to be dreaded pirate roberts.
He is facing charges in new york federal court and attempted murder charges in maryland.
Nick thompson spoke about the fbi's investigation that led to the demise of the silk road and the arrest.
It seems as though he did a pretty good job at describing himself.
-- at disguising himself.
They found very early posts of silk road.
They got some clues about the person who was sitting it out . then they brought him down.
-- about the person who was setting it up.
Then they brought him down.
The price of bitcoins listed on the exchange is falling as much as 33% today, the sharpest drop in the virtual currenc y's history.
Turning now to silicon valley group representing more than 375 companies.
To address major public policy issues that affect the economic health and quality of life in silicon valley.
Cory johnson is back with us now.
They are often in washington.
One in every three private sector jobs i'm a they claim, is related to silicon valley pimco knew they would go to washington, d.c. this time.
-- silicon valley.
Who knew they would go to washington, d.c. this time.
Could you find any congressional hearings willing to talk to you today given what is going on with the government shutdown?
Here's the great news.
The 40 ceos and senior officers who joined us on this particular trip on immigration reform and tax reform, the two biggest issues impacting long-term innovation in the economy and our nation, found not only congress ready to meet with us, but ironically shorter lines to get into their offices.
We met face-to-face with 70 targeted members of the house of representatives on immigration reform and also the meetings were kept and quite successful.
Most of those, by the way, were with republicans that we think will be amenable to a meaningful immigration reform.
With the government shutdown, what is the viewpoint of the ceos regarding the government shutdown and what do they tell the congressman when they have them in front of them?
Each meeting, of course, we address the obvious, which is the reality that our government is in this shutdown and we need to work through that as quickly as we can.
We especially need to avoid the debt limit issue and make sure that we don't, in any way, go in the direction of not meeting our debt obligations.
That would impact all of our companies in america.
How will the debt limit or the debt ceiling not being extended affect silicon valley companies?
What are ceo's saying?
What they are saying is clear.
Businesses don't operate well in uncertainty.
And the uncertainty of a fiscal crisis in our nation will impact every business.
It will impact the markets.
It will impact consumer confidence, which is 70% of spending in the united states.
And that will hurt all of us.
So please, do not go there.
In terms of answering your first question, when we went into each of the 70 meetings, again, you have to state the current affair what they are dealing with in terms of the government shut down.
And we just impressed upon them again, in a nonpartisan way, resolve this.
We need you to act as the leaders that we have elected, whether you are a house or senate republican or democrat, whether you are with the administration and will resolve this for the american people.
Our companies are global and the reactions in the other countries is a head scratch of how we could even get to this place here . so let's resolve it.
We feel often that congress made up of very fine people need a marriage counselor so they can work together.
So we can get big innovation policy issues.
By futzing around with the debt ceiling limit and the health care act and the shut down, they are pushing aside those important things like immigration reform.
But i wonder in what ways is this shutdown hitting technology.
There is a number of ways that the shutdown is impacting innovation economy.
One right now, as you know, skilled workers means the processing of visas for talented workers who were not lest to be born in our country.
The labor department being closed down means that these people are not being processed.
The ipo process, if the sec isn't operating and is shutdown, that can be impactful to ipos going forward.
The u.s. pto right now isn't affected because they operate with these by innovators and entrepreneurs.
But they estimate three to four weeks of funds.
After that, we will have more of a backlog on the work of patents and trademarks.
We have to jump right now.
Coming up on the late edition of "bloomberg west," facebook is known for its employee perks, free food to workout facilities, and now the company is working on in a prude jock -- on a new project.
We will have more on this project and many other benefits offered to facebook employees at 3:00 p.m. pacific, 6:00 p.m. eastern.
Bloomberg tv is on the markets.
Olivia sterns has more.
Stocks are still firmly in the red, but equities have climbed back a little bit.
This is as we enter the third day of the shutdown.
The dow is now trading close to a three-week low.
The nasdaq is the laggard among the main indices.
Also, on the bond markets, treasuries are trading lower.
Things have also turned around a little bit on the bond markets.
You can see yields on the two- year and 10-year old up but only slightly.
Sticking with fixed income, the bond market saw gains all across the board.
For more on bonds and how they are trading, my guest anthony joins us from san diego.
What is your outlook now?
After that big rally in september, i think we are in a wait-and-see mode.
At the end of the day, the bond market knows the next move by the fed is a day.
And it is a move to remove stimulus.
In that environment to manage prospect for a sustained market rally is pretty limited come unless we get economic data that will show an increased risk of a recession, which we haven't got it has been mixed lately, but nothing to suggest a dramatic slowdown.
So the 10-yield will probably hold in the 2% to 3% range.
The important step for bond