Twitter Falls on 2nd Day: Bloomberg West (11/08)

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Nov. 8 (Bloomberg) -- Full episode of "Bloomberg West." Guests include Rhythm NewMedia's Ujjal Kohli, Zuckerberg Media's Randi Zuckerberg, Robert W. Baird's Ben Kallo, Huffington Post's Peter Goodman, HomeAway CEO Brian Sharples and Bloomberg Contributing Editor Paul Kedrosky. (Source: Bloomberg)

Live from pier 3 from san francisco, welcome to late edition of "bloomberg west." we cover the global media and technology companies that are reshaping our world.

Cory johnson, in for emily chang.

Our focus is on innovation, technology, and the future of business.

Let's get straight to the rundown.

Twitter dropped in its second day of trading, but is still flying high.

We ask, how much are twitter's bankers helping slow the fall?

The tesla have a safety problem?

Another fire involving one of its model s sedan's. would you trust a car made on a 3-d printer?

The world's first 3-d printed car.

First, to the lead, the little blue bird that can.

Shares of twitter falling 7% on the nyse today.

A closing price of $41.65 a lot higher than the ipo price.

It is not far from the $45.10 share price that opened yesterday.

How much do twitter's bankers have to do with keeping that share price up?

The banks are certainly getting rewarded for managing the sale, sharing more than $59 million in fees.

Joining us is paul kedrosky of s k ventures and bloomberg contributing editor.

You were in new york, yesterday.

The little blue bird flew across the country with us?

I don't even know where i am anymore.

I'm assuming it is san diego.

I'm glad you are wherever you are.

What do you make of the goings on yesterday that you got to witness firsthand on the floor?

That was pretty remarkable.

I characterize it as watching the worst forced prom date ever, given the dynamic between these guys.

For whatever reason, the nyse does not want to talk about it that much -- watching the spread wide and as it went from the early indications, 44, 47, and why did -- widened out -- let's talk about that.

When the market first it's a new issue, they have a widespread.

It gets narrower and narrower.

The indication got wider what it should have been getting closer right before trading.

What was happening?

It was really interesting.

You could see this murmur of discontent work its way through, and then ripple out to the traders at the post behind as the spread widened out again.

It was supposed to lock in on a price.

It's not clear what happened.

What was interesting was the reaction, a couple of traders saying for letter profanity -- four-letter profanity.

I'm try to think which one it could have been.

What are the issues besides trying to decipher what four letter profanity options there were?

Was it feeds from brokers not coming in at the same time?

I think they weren't allowing market orders at all.

They were not, but it sounds like there were market orders coming in.

There are a number of stories floating around that were telling brokers at various firms that open market orders would not be accepted anymore, and then they said, this is crazy, we will not accept open market orders until after this starts trading.

That was part of the imbalance.

There were issues with their own proprietary data feed.

There was a moment around 10:15 where i felt my eyes rolling back in my head and i felt, we're about to do another facebook.

Seeing that spread wide and up at that point is not a good thing at all.

Listen to what the head of the new york stock exchange had to say to our own emily chang who was down there as well.

I was predicting 1015. we were trying to get the message out early that it was going to be a while, especially when i saw the opening indication was over $40, i had a feeling i was going to be wrong at 10:15. the evidence that we got it right, it has been in a fortified dollar range -- four dollars to five dollar range since the opening.

Is that because of the new york stock exchange and the people they're trading, or because goldman sachs was buying shares?

He makes a fair point that it did open and it was not a face plant thing.

This is not price discovery that happens at the end, or that happens post the initial trade.

This is price architecture that happens for the balance of the day.

It is a careful process where you want to present the appearance of price stability.

The way you do it is with the arcane aspects of the ipo process, but that is what your underwriters do for price stabilization.

What we watched was a master class in post offering price stabilization by twitter's underwriters.

You had 70 million shares offered, but what hundred 20 million shares traded that day.

How much money do you think goldman sachs put to use for that?

I was trying to do the math earlier, and it's hard to guess.

I have to assume it is substantial.

You do that math, you think about the number of shares that changed hands at the ipo price, and subsequently to the balance of the day.

This is a significant fraction of their trading capital on a daily basis.

If you look at the spikes in trading volume throughout the day, it's pretty suggested that a lot of this is about price stabilization.

This is not blocks changing hands between disinterested traders.

That is part of what you have to do on the first day.

That then goes away.

We're no longer in the business of architecting price, we're in the business of letting price find itself.

We saw a substantial 7% decline.

It was not the people showed up and were suddenly bottom fishing on this thing.

We will never confuse price stabilization with price discovery.

A lot of people did on that first day.

I'm glad you were able to make it back across the country.

You got to use all your mobile devices all the way on both flights.

Westbound, but not eastbound.


I'm serious.

I could only use it one direction.

Apparently bad people only travel in one direction.

Apparently, dante's advice as well.

Paul kedrosky, thank you very much.

And ipo is traditionally a fundraising event.

Were going to look at how going public could boost twitter, next.

? this is "bloomberg west." i'm cory johnson.

Good hype attract new users and advertisers to twitter -- could hype attract new users and advertisers to twitter?

89% of the company's revenue last year came from ad sales.

Twitter aims to bring more growth.

Thank you very much for joining me.

You were chief marketing officer of airtouch.

At the time it was the largest tech ipo ever.


What is the effect on a consumer facing business of and ipo?

The impact of successful pr is like a home run.

It's like winning the lottery, from a cmo's point of view.

There are amazing benefits.

There are people who quantify what the advertising value is.

I would not be surprised if the number was in the hundreds of millions.

Hundreds of millions dollars' worth?

In fact, there is something money cannot buy.

Real or perceived, as there is the optics of third-party impartiality.

That is huge.

Advertising typically has a steep decline over time.

There is a big impact, then it's gone.

Why pr lives especially in the world of search and with ongoing marketing, you can leverage pr for a long time.

It's priceless.

When you look at this, is it the kind of targeted pr you can get?

Fundamentally, i don't think twitter is trying to get followers to follow the stock market.

They're trying to get a retail person who is not that sort of techno-geek dot financial person.

With advertising, you can get awareness.

One can argue, what further awareness does twitter need?

Pr gets you something more, and that his credibility.

People who have not tried twitter for one reason or another, it makes him go, what am i missing, or maybe become curious about what it is all about.

I think it will bring those people in.

Your company is an advertising platform in some way.

What do you think of the way markers are looking at twitter as an advertising medium?

Are they still in the experimental phase, or do they know what's going on and how to use the data that comes out of twitter?

By definition, it is experimental.

Twitter's ad revenues are in the hundreds of millions in an ad system that spends $165 billion in the u.s.. over time, if twitter can prove the results, there's a lot of upside.

What is working best for them?

What are the great new learnings that marketers have gotten from their usage of twitter?

It is to early to tell.

People are still experimenting, and the jury is out.

Really appreciate your time.

Thank you so much, ujjal kohli.

The former facebook marketing executive, we will hear from her next.

? welcome back to "bloomberg west." she is best known as the sister of mark zuckerberg.

These days, randi zuckerberg is the ceo of a company she calls zuckerberg media.

She's also the author of two books.

Emily chang sat down with a zuckerberg to talk about the new books.

She started by asking how to create a tec life balance in today's obligated digital age.

-- complicated digital age.

I'm not advocating that people do a complete disconnect, but i do think that if we can take moments for ourselves, we do end up coming back to our work more productive, more energized.

For me, even if it's an hour putting my phone away while i'm at the dinner table or just a few minutes of undivided attention with my son, that moment of disconnecting is really important and something we all need to try to integrate into our lives.

It is ironic, since your brother runs facebook and his mission is to connect the world.

You do share some intimate anecdotes about him.

How supportive was he of the book, and what does he think of the final product?

My whole family has been so supportive.

I never would have written a book like this without their support and love.

One thing that is so awesome about my parents and how they raised us and continue to interact with us is that they celebrate everyone at their kids' achievements identically.

You could be running a billion- dollar company, you could be baking a delicious apple pie, and it's the same to them or.

You have also put out a children's book called "dot," a bout children and their use of technology.

What do you think today about how much screen time kids should have?

How much should young children be exposed to smart phones and tablets?

This seems to be the number one question i get asked when i speak with parents.

They are always wondering, how much screen time is too much.

There are a few things we should be thinking about.

It is good for children to have a little bit of screen time.

These are the tools they will be growing up with their whole life, and you want them to be on par with their peer group.

You want them to be exposed to sun technology.

There are great apps out there that encourage creativity, learning, interactivity.

These are great uses of these devices.

When it starts to get dangerous is when children are using it as a habit, or is just passive viewing of the ipad, videos as a babysitter.

It's up to us to make sure our children are using these tools to be creative, using the mindfully instead of handing them the ipad to entertain them all the time.

You talk about the importance of digital privacy.

Facebook just relaxed its privacy rules for teenagers, allowing them to post things online publicly if they want to.

Do you think teenagers are capable of making smart decisions that they will be happy they made later when they post online?

It completely depends on the teenager, and it really depends on the teenager's relationship with their parents.

Some children will be ready, especially maybe if they have older siblings, if they have gotten used to this, but i think it's really important for parents to have very diligent conversations with their children about what it means.

Do they want that photo or that post to be searchable for them when they are applying to college, applying to a job, and just encouraging them to think before they post.

We live forever online now.

Facebook did acknowledge that teenagers are logging on a little bit less to facebook.

Thinks like snap cat are very popular among kids right now.

What does facebook need to do to keep teens coming back?

The instagram purchase was excellent.

A lot of people spoke incredulously when facebook purchased instagram for that amount of money, but now you see the real future of talent -- how teens are using social media is completely visual.

It is instantaneous photos, videos, life blogging.

Teenagers want to document every moment of their lives.

A stat i read a said that 60% of teenagers think about how they're going to document a moment before they even experience that moment.

Instagram was a key purchase for that level, and facebook has to double down in visual and mobile technology to enhance their offering for younger users.

That was randi zuckerberg speaking with emily chang.

Disney's animation studio, the studio is hoping to continue a recent hot streak at the box office with some help from the folks behind pixar.

Jon erlichman has more.

It is an important business story when disney acquire pixar for more than $7 billion.

That deal was not just about acquiring pixar business.

It was meant to turn around the struggling disney animation unit.

Here is more on that back story.

Disney's "frozen" is based on "the snow queen." patience pays off.

We waited a few decades to crack the story.

It follows recent disney hits such as "tangled" and "wreck-it ralph." it is an exciting time.

Disney animation is absolutely in the midst of a creative renaissance.

Millstein cites disney's purchase of pixar in 2006. disney veteran chris buck who directed "frozen" recalls sentiment at the studio before that deal.

It's a different attitude towards animation, and a different feeling in the studio.

Buck credits the leadership of two founders.

Lassiter being the first film maker to run the studio since walt disney.

The understood what everyone was going through at each stage of production.

You cannot buy that sort of empathy.

Andrew millstein showed us the caffeine patch, a central meeting spot.

It is important to have accidental encounters with people and check in with each other and see how they are doing.

For jennifer lee, the studio that released "snow white" in 1937, feels somewhat startup like.

It is like, go ahead and try.

And push.

That is a wonderful mentality.

"frozen" uses much of the technology powering today's animated films.

It also incorporates the 2-d look that disney mastered.

There are lots of different people throughout the company you are really rooting for disney animation to find its way back creatively -- who are really rooting for disney animation to find its way back creativity really -- reactivity -- creativity.

Probably going up with another well-known film these days, "the hunger games." jon erlichman, thank you.

More reports of tesla's going up in flames.

Investigators say they will be taking a look at the latest fire involving a tesla model s. ? you're watching "bloomberg west." i'm cory johnson, in for emily chang.

Let's get to your top headlines.

A new strategy may be coming to microsoft.

If the nokia executive is named the next ceo, he's considering a push to make office programs such as excel available on a lot more smart phones and tablets.

Microsoft has traditionally tied itself to windows.

First it was internet access, now on board texting could be next.

A week after the faa changed its policy, in-flight wi-fi provider go go has plans to release an app which will allow messengers to text while in the air.

The source would be offered on airlines already equipped with go go's networks.

Tough times have fallen on the console videogame business.

The industry made $13.3 billion in revenue last year, a fall of 32% from 2008. that is expected to slip again.

What is expensive, electric, and red all over?

Flaming teslas.

Three accidents have resulted in big, scary fires.

Reports of tesla vehicles bursting into flames after hitting debris has sent the stock tumbling.

Tesla is quick to point out that the government investigation of the first fire did not turn up evidence of defects.

Ben, elon has this great argument -- cars with gasoline, when they catch on fire, they burn.

So do ours.

Is this the way we should look at this?

It poses a lot of headlines.

That is reflected in the stock price.

To be determined, whether or not effects demand.

Three and five weeks, it is starting to be more than headline risk.

The stock is a phenomenon almost divorced from the car.

You and i were talking about having a bull-bear debate on this broadcast, you went from bull to bear and spoiled the whole thing.

[laughter] do you think this can have such an effect on the stock because it is such a psychologically buoyed stock?

I downgraded the stock on the day of the first fire.

I got lucky there.

There are some built-up expectations there, and this compounded it.

The fact that two of them had a car on fire by running into objects in the road raises a question mark about whether the needs to be change made to the bottom of the battery, the bottom of the car.

It is important to point out that nobody has been heard in these accidents, but they are terrifying.

We don't have the video of the mexico fire, but i put a link to it on twitter.

Have you seen this video, with the explosions?

It is germanic and scary.

-- dramatic and scary.

The fire in washington, they did not know how to put this thing out.

They dusted it with hoses and it started up again.

They had to jack the car up and cut it up to get into it.

Is this technology so new that we will see things like this?

I don't think so, but when you have incidents like this -- mexico is reckless driving.

When you have reports like this, it raises a concern that we are dealing with new technology.

Tesla is quick to point out that there are 150,000 fires in gas powered vehicles in the u.s. per year.

With this new technology, three in five weeks, it comes out to even less than that.

We're talking about a lot of old cars, a lot of unsafe cars.

I think the way to look at this, an interesting study today or yesterday where nick wiseman looked at the number of vehicles driven in the u.s., guessing how many miles are driven by teslas, and looking at the chevy volt and nissan leaf, which have not had any fires on the road.

Does that matter?

It raises a question mark around technology and whether it is safe.

We have to remember that tesla has gone to -- through a crash test, and they did receive good marks on that, five stars across the board.

None of the crash tests actually test whether something goes under the undercarriage of the car.

They have some explaining to do.

That is what investors will be looking for next week, whether or not there will be formal investigation on this.

There have been questions about how long the battery will last.

What do you think those replacement batteries will cost?

What are customers going to have to pay for them, and how much revenue might tesla derive?

Tesla talks about $10,000 to retrofit a battery after eight years.

When you have a couple hundred thousand dollars -- cars on the road, that can be a significant amount of revenue.

A car with a replacement after it is three or four years old might hurt the resale value of those cars.

Could to see you.

Thank you very much.

From tesla cars to 3-d printed cars.

This week in london, there is an international 3-d printed show.

Ryan chilcote went to check it out, including a test drive of the world's first 3-d printed car.

The promise of 3-d printing is that everyone can create just about anything, right?

3-d printed high heels?


We're are printing everything from silver screen successor is to -- accessories to silver screen superheroes.

This is a 3-d printed car?

Everything you see that is orange is 3-d printed.

Shall we take a ride?

They build the first 3-d printed car on a shoestring budget in a garage.

It is fragile.

This is the first prototype.

How far are you from your second photo type?

$3 million.

If 3-d printed cars feel like a bit of a distant prospect, there are areas where technology is already making inroads.

What here is 3-d printed?

Most of what we see is a 3-d printed.

Let's go.

This is made from a ct scan of the patient.

There is even one-man printing stem cells.

In the future, maybe organs.

The jury is still out on what the technology's impact will be for mass manufacturing.

General electric is jumping into the $2 billion market.

Foxconn calls it a gimmick.

One thing is for sure, 3-d printing has a long road ahead.

Ryan chilcote, bloomberg, london . fixing blackberry's business will be a major challenge for the company's new ceo.

He stands to make a lot of money in the process.

? this is "bloomberg west." i'm cory johnson.

John channel gets $3 million in salary and bonuses, and restricted stock valued at $85 million.

The ceo will be warded 13 million shares over the next five years.

The company has lots to do on its user list, including increasing users.

Compare that to 1.2 billion on facebook.

We heard twitter ceo dick costolo talk about this very issue.

We have a core value, reach every person on the planet.

One of the things i told investors is, with over two point 4 billion connected people in the world, we are less than 10% penetrated.

Everyone in the company has five or six examples of why they know the service could be so valuable to anyone, and why it should be valuable to anyone in the world.

My partner jon erlichman is in los angeles with more on the story.

Thanks, cory.

This gets us to an important conversation about china, which is potentially huge for a company like twitter, also very complicated for any social media platform.

Peter goodman is the executive director of global news at and "the huffington post," and just returned from china.

Peter, what was your take on china and china's leader's view on social media?

There's a lot of complexity to this question.

On the one hand, what we in america tend to think of is that social media is potentially a threat to the communist party.

It's a new channel for free expression, a wafer lots of people outside of traditionally controlled chinese channels to communicate.

On the other hand, it is well controlled.

The large chinese internet portals that have various social media services have thousands of sensors who in real time are reading posts.

The less obvious side of the story is that the leadership in beijing really benefits tremendously from having an unfiltered flow of information from below, from provinces, ordinary people, places where corruption is happening, where there are protests festering.

Instead of having to rely on provincial level and county level and municipal level officials, to give them a straight story, they can get it unfiltered from the public.

That's very compelling and useful.

I got the sense from a piece you wrote that the government basically has a couple of options, to move faster on reforms, or to do the opposite and try to slow things down even more.

What do you think is the likely option they go with?

Reform, it's one of those words that -- it sort of depends on who the speaker is, in terms of the content.

China is going to change.

The leadership in china is engaged in a debate over the future.

There is a true political process.

It may not be our political process.

There are factions, competing interests.

There is a real debate over how to keep the growth going.

Everybody wants to keep a basic level of economic growth going because you have millions of peasants streaming into cities from the countryside who need employment.

The question is, what kind of growth is required?

How do you alter growth such that inequality -- levels of economic inequality in china are greater than they were 60 some odd years ago when the communist party took power.

Party historians get they are in potentially dangerous territory.

There is tremendous unhappiness from the top to the bottom over pollution, tremendous smog choking all major chinese cities, water pollution, food safety scandals, and corruption.

How do you keep the growth going while eradicating some of the problems?

We heard dick costolo saying that the goal of that company is to reach every person on the planet.

As far as the chinese market is concerned and twitter possibility to be there, especially when people view it more as a newsfeed delivering more news faster than some of the other social media platforms , what do you think happens on that front?

I don't think it happens anytime soon, if ever.

China has twitter, but it's chinese twitter.

If for no other reason than market competitiveness reasons, china has got its own internet market locked up here and people are highly engaged.

There are profitable but cutthroat businesses, private sector and state owned enterprises.

Twitter is not only a massive mode of communication with the outside world that is beyond the control of the party, it's also a competitor of some very well- connected businesses in china.

Don't look for that to happen anytime soon.

We appreciated.

Peter goodman joining us from new york.

One quick programming note.

We are looking for entrepreneurs who would like advice from maynard webb on building or launching a startup.

Submit a short powerpoint pitch, fewer than 10 slides.

Bring it to facebook.


His team will review the pitches.

We may feature the right here on "bloomberg west." what are the hurdles that online home shares are facing?

Care b&b get past them?

? this is "bloomberg west." i'm cory johnson.

Consumers use the internet to do everything.

People are opening up their cabins, condos, and beach houses to people planning their trips online.

It offers more than 570,000 listings on its site.

Emily sat down with the ceo and cofounder as part of our sharing economies series, and asked him how business has changed with the rise of peer-to-peer transactions online.

What we see that is different today is that people are starting to read things like their own houses -- rent things like their own houses that they live in, or their own cars.

For us, it is an old business dubbed a new economy business.

Speaking of air b&b, we have talked about how they're one of your competitors.

They run into a lot of legal issues, especially in new york.

Some people alleging that what they are doing is not actually legal.

How have you been following this stuff?

We follow it very closely.

There is a big difference between home away and air b&b. most of air b&b's owners rent beyond the primary home they live in.

For home away, those homes are located in vacation markets.

A lot of the stuff has been sorted out a long time ago.

Air b&b has focused their energy in cities.

For home away, in new york, it is may be .2% of all of our listings worldwide, but for air b&b, it is a significant percentage.

We actually work with them.

We have a group that is an advocacy center that would put together for owners that we do in partnership with those guys.

It is an important issue to watch.

As new york goes, a lot of other cities in the world might go.

How likely do think it is that air b&b might overcome these legal challenges and survive?

It is hard to say.

The high-tech startup world has a lot of historical precedent of people who have come along, created a service that nobody envisioned before.

That then runs afoul of regulations or different tax issues.

As long as the economic base being supported by it is big enough, then ultimately people will figure it out.

In new york, some of this is about tax.

Some of this is also about neighbor issues, where there are people who don't want strangers coming into the apartment next door because if a building where they expected everybody to be a primary home dweller.

That will be the more difficult part.

At the moment, it is still anyone's call how that might turn out.

Earlier you teamed up with expedia to showcase some of your vacation rentals.

How is this partnership going, and how important will it be to your business?

So far we have signed a deal and announced it.

We have been thinking for years that it would be great to distribute some of our inventory on the ota's. we have the largest collection of vacation rentals in the world , almost 800,000. expedia has a tremendous footprint in the travel industry in the u.s. most ota's have been reluctant to put vacation rentals on their site because the bread and butter of their business is the hotel business.

A lot of hotel years view the vacation rental business as competitive.

Expedia will experiment with ways they coexist.

The next three quarters will be seeing if there is a new distribution channel we can use.

A big part of your strategy has been acquiring your competitors, aside from air b&b. how much will that contribute to your growth going forward?

Not as much.

It was not so much about acquiring competitors as it was about acquiring a footprint.

The vacation rental business is a worldwide business.

There are a lot of markets, whether in south america or europe or asia, where it's easier for us to quickly acquire and integrate that with the rest of the company.

We will continue to do that going forward, but most of what you will see is us making acquisitions in geographies where we don't exist today.

That was brian sharples with emily chang.

Revenue jumping 23% from last year.

The bwest byte, we focus on one number that tells us a whole lot.

What you have for us, jon?

Byte today -- that number represents an application from the u.s. patent office published from good roles -- google's motorola mobility, and electronic neck tattoo.

This skin tattoo can include an embedded microphone and better capture your voice when you're on the phone.

When you're on the street, calling each other, it's hard to hear you.

Now you can attach something to your neck.

I could have patented this?

I had no idea.

I don't think you will have to hire tattoo artists.

Jon erlichman, thank you.

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Have a great weekend.

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