Twitter on the Road: Bloomberg West (10/11)

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Oct. 11 (Bloomberg) -- Full episode of "Bloomberg West." Guests: MC10 Director of Sports Business Development Isaiah Kacyvenski, Bloomberg Contributing Editors Paul Kedrosky and Nicholas Thompson and Bloomberg's Sarah Frier. (Source: Bloomberg)

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

I'm emily chang.

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

Let's get straight to the rundown.

Let the roadshow began.

Twitter plans to ditch itself to potential investors in a couple of weeks.

We got details of the timing and how much twitter bankers are getting paid.

From facebook ceo to landlord, mark zuckerberg spent millions to buy his real estate in palo alto only to lease the house to its former owners.

And call it elon musk -- making a cameo.

It helped inspire the storyline.

We will have much more on twitter's ipo.

First, the latest developments on the government shutdown and debt ceiling negotiation.

President obama and house speaker boehner spoke by tv of the short-term proposal for an increase to the debt ceiling.

The white house has a number of concerns.

Phil mattingly joins us from washington.

What did the white house have to say about all of this?

It was very interesting.

Jay carney delayed the briefing today by about three hours.

There is a good reason why.

It was right after markets closed that they talked about concerns.

Republicans proposed increasing the debt ceiling for six weeks.

The white house is skeptical, but ok with that.

Time to budget for postal to reopen -- proposals to reopen the government.

They want the government to be open before negotiations begin.

However, there was a little bit of good news.

Talks are ongoing.

Not only did they say the talks would keep going, but they are not talking specific details about that call.

Stuff is not leaking.

That is a good sign things are on a good path.

There was some development on the senate side of things as well.

Are they on a parallel track?

This is the interesting thing that everyone is watching tonight and will start watching tomorrow.

Senate republicans had a trip to the white house.

The caucus met with the president again, just like house republican state.

There are house democrats working with them.

The white house is keeping an eye on it.

The lawmakers are ones that worked within the past.

Our house republicans willing to join together with this?

Or do they see this as a competing plan?

Some are skeptical of what the senate is doing.

They're not sure they can get that through the floor on their own.

They are worried they might be roque.

These are two plans on two separate tracks that people need to keep an ion.

Phil mattingly in washington, thank you for that update.

Twitter is getting ready to hit the road.

Bloomberg has learned that it will likely start the last week of this month.

He will of knowledge of the matter says that twitter plastic paid bankers a fee to handle its ipo.

It is much lower than the average for u.s. -- u.s. ipos this year.

They are leaning toward listing on the stock exchange -- new york stock exchange.

Jon erlichman has been working the story for us from l.a. what is the latest you have learned?

Twitter is home to one of the hottest brands these days.

When it comes to the business, this is still a young company.

The investor question that we will hear about and will be asked about on this ipo roadshow could be a little bit different than the ones tied to facebook.

The most obvious one is the products that are tied to twitter.

Promoted tweets in the way that twitter makes its money.

They will likely explain that in more detail.

He will explain, for example, the repeat business.

Our advertisers coming back every day?

Every week?

Longer than that?

They are spending a lot of money to ramp up their s-1 filing.

Where is that money going?

Those are the key areas to watch for this ipo roadshow.

Let's talk more about the bankers fees.

Twitter is paying less -- i'm sorry, more than facebook page.

What does that mean?

There are two sides to it.

Twitter is getting a better deal than a lot of companies going public right now because of the relative size of the deal, as well as the fact there is some cachet here.

This book was a much larger deal.

Let's not forget in the case of facebook, i felt like bankers were trying -- falling over each other to get this deal.

It doesn't feel that same way with twitter.

Maybe that is because of what happened with the facebook ipo.

Jon erlichman, our senior west coast or sponsoring, thank you.

For more on the pending ipo, i'm joined by paul kedrosky.

He is currently an early stage investor.

He is with me from san diego.

The roadshow will begin in a few weeks.

What is the number one important thing twitter needs to do?

Not say anything.

The hardest thing for young companies to do when they have not been through this process is to sort of learned the art of being artfully boring.

Answer questions in a way that seems genuine and forthright and missed wednesday and -- and mr.

Webster -- and in western and lovely, but you're not saying anything at all.

It is an art form doing that well.

My expectation is that it will either be particularly boring or will have breaking news.

As we know, facebook had technical issues on opening day of its ipo.

The stock fell.

It took several months to turn around and come back to its opening price.

How does twitter avoid that?

Facebook had technical issues that were out of its control.

Some say it was also too high.

I think it is all three.

One of the big factors is that it was last-minute, this expectation that there were sellers who decided to be part of a larger eve of the ipo expansion that caused it to explode.

That changed the calculus for a number of institutional investors.

If there are new sellers going up at the last minute -- and that change the structure of the book, as it book runners call it.

They were forced at the last minute to do this 11th hour stop through all kinds of channels.

I remember the morning of the ipo.

I was suddenly magically holding five times as many facebook ipo shares.

The reason was because it was blowing out these shares through the channel.

The lesson to be learned is less about technology, and more about the eve of the offering and being forced to blow out stocks that are a channel you were not expecting.

What does twitter need to make sure not to do?

The book that it builds now, the list of institutional investors it puts together, is a solid book.

It is a bunch of investors of large institutions who know what they are getting.

This is what the shape will look like.

There will not be an 11th hour expansion.

There will not be a tourist or a wrinkle.

-- not be a twist or a wrinkle.

They are not whimsically holding -- expecting to do a foot or change the structure.

It is being placid and boring and conservative and building a book of people who want that and will not disappear in the offering.

That way you have a, opening.

--a a calm opening.

When you look at the twitter business model, it relies on advertising.

Do they need to diversify their revenue stream?

We have heard about commerce.

How can twitter diversify in the future?

It is the same comments we had leading into the facebook offering.

What have you done for me lately?

You build a fantastically fast growing business.

Do something else.

Twitter -- this has been an incredibly vast growing company.

What are you trying to do by making is going to other areas?

You will see three things.

One, a move toward self-serving advertising.

Smaller advertisers can be more actively involved.

Two, march more of a connection to transactions.

It will be easier to track what is being sold and to whom.

There will be post purchase analytics.

Three, more data flowing out of the service.

You will see more of this aftermarket data.

It is the reverse of what you see happen with the traditional financial markets.

A company like bloomberg, you start in the dayta.

Stick around.

Is not so fab after all?

We look at numbers behind the e- commerce start up next.

? this is "bloomberg west." i'm emily chang.

Alibaba and american express is investing in an e-commerce company.

They gave alibaba a bigger footprint in the u.s. as the chinese company prepares for a possible ipo listing here.

Join me for more is a bluebird reporter.

What is the strategy for alibaba?

They are a big investor.

Alibaba has been making a few investments in the u.s. recently.

They have their talks with the hong kong exchange breakdown.

They are looking to list their stock in the united states.

They are in negotiations with u.s. markets to do that, but they also seem to be increasing their footprint by investing in e-commerce companies here.

Ali baba is the biggest e- commerce company in china.

This would give them a huge foothold.

The biggest e-commerce company here is amazon.

Are they trying to take on amazon?

It has a model that is supposed to compete with amazon prime.

There is two-day delivery.

They have a partnership with retailers to make that happen.

It could be something of that nature.

This ceo is scott thompson, yahoo!'s former ceo.

Do we think the relationship he had with ali baba when he was at yahoo!

-- scott thompson was at yahoo!

When ali baba and yahoo!

Negotiated to a $7 billion deal to give ali baba their stake in the company.

He deftly has a relationship with ali baba's ceo.

We have not heard much from him after he left and missed a cloud of issues.


This trust from the community.

-- distrust from the community.

Thank you.

Tough times for e-commerce start up,

Traffic is down.

Job cuts hitting at least 20%. now the ceo is for going his salary.

My next guest says is not so fab after all.

Back with us is paul kedrosky in san diego.

This is a company that has managed to raise so much money and yet it is having a massive pivot down the line.

Why were investors putting so much money into the company in the first place?

It is one of those things where how did the company go roque slowly or all that once?

-- broke slowly or all at once?

It is accumulation of capital.

It is in large part driven by the seductive notion that they had traffic.

They had something like 4 million.

There is this thing that happens to investors.

There must be a pony in there problem.

There must be something there.

The reality was it was a pile of traffic that was predicated not -- i'm not much else.

-- on not much else.

Now you got this problem.

Traffic collapses.

It is obvious there is no pony in there.

It is dying a slow death.

Is this beginning of the inevitable end?

I think so.

It is a great domain name.

My guess is that is what is happening here.

There where nash there were a series of -- there were a series of pivots.

They are at the end of the road.

Marketing is down.

They are winding -- china find a way to be cash flow positive.

They are trying to justify it all.

-- they are trying to find a way to be cash flow positive.

They are trying new is to fight it all.

You cannot build a business like that.

Is this a sign of a bubble?


it is a sign of too much capital chasing bad ideas.

All right.

We will be watching for it to pop.

Talk augusta, thank you.

Have a wonderful weekend.

Paul kedrosky, thank you.

Have a wonderful weekend.

Find out how mark zuckerberg's move could be a way to protect his privacy.

? this is "bloomberg west." i'm emily chang.

From facebook ceo to real estate mogul, he spent money biting four homes in -- buying four homes in palo alto.

He is leasing them to the former owners.

Is this all for his security?


My colleagues out bloomberg news reported that zuckerberg started this $30 million purchase in december of these four homes around his home and he heard a rumor that a developer would comment in and buy one of them and market it as hey, come live next to mark zuckerberg.

He wanted to maintain his privacy.

It is a really nice house.

It is not a palace and it is not even in the best neighborhood in palo alto.


It is pretty modest for a multimillionaire like mark zuckerberg.

The late steve jobs lived in the same zip code.

Add -- as did larry page.

They can take walks around the neighborhood.

When he bought the house, didn't he negotiate this insane interest rate?


He got a $6 million mortgage on his home.

1% rate over the years.

It is unheard of.

I did not even know banks could do that.


When they are pretty confident you are a multibillionaire who will pay off the loan, they will get it.

The average on a 30 year mortgage is something 3.5%. 1% loan is unheard of.

Interesting stuff.

Going from ceo to landlord.

We will see how that works out.

Thank you.

Thanks to his success with electric cars and his spacex exploration, elon musk as captured hollywood's attention.

You might have remembered his cameo in "iron man 2." we are on the verge of a major breakthrough.

Elon musk often talks shop on the small screen and occasionally makes cameos on the big screen, like this one in "iron man 2." ready for this?

Rodriguez was toying the idea of sending his new character to space when he ran into musk.

Elon musk walks in and starts talking about space.

We will go to mars.

He showed me one of his rockets called the falcon.

Why do they call it the falcon?

It is the millennium falcon.

I'm a "star wars" fan.

[laughter] it seem like a fun thing to do.

Even let barbara guys -- as for his cameo, it is near the end when machete board the spaceship.

We have got to go.

That was jon erlichman.

We will be back with more on "bloomberg west" after this quick break.

? this is "bloomberg west," where our focus is on technology and the future of business.

I'm emily chang with your bloomberg top headlines.

Blackberry might be on the verge of sparking a major funding battle the two in canadian businessman.

It will likely look at the same sources for potential funding.

Both men are looking at biting black berry.

-- abiding by perry.

-- buying blackberry.

And foxconn has been criticized.

It has resolved 98% of employees issues raised by their labor association.

And broadcasters trying to take the case against training service area to the u.s. supreme court.

-- aereo to that u.s. supreme court.

The suit includes abc, nbc, and fox.

And i want to get back to washington for an update on negotiations on whether to raise the debt ceiling and the end of the government shutdown.

Yang yang joins us from washington.

Is there an end in sight?

We might be getting somewhere.

There are signs of progress.

President obama and house speaker boehner spoke on the phone.

Once the president and the speaker agree -- both the president has speaker everyone should keep talking.

That is a welcome change.

They hope an agreement can be reached.

Dallas jay carney.

He kept reporters waiting for more than three hours as a white house proposed -- prepare their response to the latest house proposal that would extend the debt ceiling for six weeks and keep the government open until mid december, but not without policy changes and a commitment from the president to a wider budget negotiation down the road.

Jay carney would not say whether the president was rejecting the plan.

He did not say they would accept it either.

Don't they have a plan as well?

There are basically two plans going on.

Senate republicans were the most recent to meet with the president.

They seemed more open to a long- term resolution.

They are working on a framework to reopen the government.

They would like to repeal the medical device tax.

The president has not said whether he will accept that plan either.

They sounded optimistic.

He has sent conflicting signals for that debt ceiling increase and what might be attached to and what might not be.

At least he is talking to members from both sides of the hour.

He may not want to call it a negotiation, but that is what i would call it.

At the end i shutdown 11, all sides are calling it progress.

They will keep working throughout the weekend.

That is encouraging signs.

Are we expecting some major progress through the way?

Will monday be a different story?

I do not have a crystal ball.

I do not want to make predictions.

We can expect them to work across the aisle.

Tomorrow, we know that the senate majority leader harry reid will call for a test to vote and to extend the debt ceiling for six weeks.

That is something to keep an eye on.

Will they make more headways in that?

We will see.

We will be watching through the weekend.

I hope there will be a different conversation on monday.

Thank you.

Google is updating its terms in the service.

Google allows -- it allows google to use a person's picture in an ad.

Their endorsement might show up in ads for a google partner site.

Adult users can opt out.

The new policy goes into effect november 11. joining me is nicholas thompson from new york.

What is your take on this?

Is this a good move or a dangerous move?


It was inevitable.

Google has incredible data from users.

They want to be able to use teachers and endorsements in front of the user's friends.

Isn't that it is a great way for advertisers.

-- it is a great way for advertisers.

It is also dangerous though.

It will creep people out.

It is easy to opt out.

They have told everyone what is going on, unlike what facebook has done in the past, but people will not opt out and they will see their picture in an advertisement and it will make them feel weird.

It is not how the intended.

-- it is not what they intended.

If you do opt out, there is sort of a guilty message.

That means your friends will less likely to benefit from your recommendation.

What about the people who do not realize that i don't opt out simply because they do not know?

How do you know?

You probably opted out today.

[laughter] no comment.

People write a little comment in google plus saying they like something.

They will be thrilled when their picture comes up in the google plus stream saying joe loves this.

That is cool.

I love this brand.

I'm associated with this brand.

People say, wait a second.

That is strange.

That is not what i meant.

So they paid google money to use my picture?

That is strange.

It will be a hard balance.

Google will have to make it easy for people to quickly flag something and quickly opt out.

People who are frustrated will be able to back out, or else there will be tension.

How does it compare to move has made in the past regarding advertising?

Is it better or more user- friendly?

It with that facebook used to do it is they change the use of services and thought you would click to private settings which is already set to public settings.

That has changed.

This is the old facebook.

They changed the terms of services and all my god.

What are the pictures of my children doing there?

They have been much clearer.

Google is acting like the new facebook and not the old facebook in this case.

How impact global this be?

How many people are using google plus?

-- how much impact will this be?

How many people are using google plus?

There are other parts of the google empire.

They made an interesting case that even if you may not know a ton of people using it, it is growing rapidly.

Like android, it will take over the world.

I use it for "the new yorker" for all kinds of things.

But there is also the case that there is not many people using the service.

It is hard to tell.

Riddick say it is a waste land and others say it is growing quickly and it is cool.

The jury -- critics say it is a wasteland and other say it is growing quickly and it is cool.

The jury is still out.

Nicholas thompson, thank you for weighing in.

Have a wonderful weekend.

And good a new ceo be named?

You can also watch us on your phone, tablet, and on

? this is "bloomberg west." i'm emily chang.

Steve ballmer is set to retire.

Microsoft is serving for his successor.

The iconic internet company has chosen thompson to lead the search.

Cory johnson is here with more on who thompson is and why thompson for the job.

The job, by the way.

It is interesting.

You never know what happens behind closed doors.

It is interesting that a giant company like microsoft has seen so much change over the cow -- course of the last year and a half.

He has been on the board for 20 months.

You look at his arrival coinciding with this massive change.

He is the new guide.

He is the new -- he is the new guy.

He is the new guy.

He took his company from one of dozens of players in the world of enterprise and in need of pc security software to the dominant company in the arena.

A stock rise to over the course of time.

He built a giant business there.

He was at ibm for 20 years.

He was at semantic for 10 years.

He was at virtual instruments for three years.

He has served on so many corporate boards.

You mentioned the stop on the how did semantic do under his leadership?

-- you mentioned the stock.

How did symantec do under his leadership?

It did very well.

It was an incredible growth for a company that was not small to begin with.

His work as a board member might be what he is known for best.

How does he find all the time to do these things?

That is the key to what he is good at.

He is known to be a guy that people go to for counsel.

He listens to many different voices.

He is able to sit and say, we talked about issues at this company like this, and at another we talked about this.

He is able to see many different parts of the world and bring that advice to the board room.

That will be shipping the decision of what kind of ceo should run microsoft.

And terms of that name said we have heard, we have heard several.

Any sense of honing in on a certain candidate?

It is the board and pr reacting to the response they will get no matter who they pick.

They will say, we looked at that one, too.

All right.

We will be following the play- by-play.

Cory johnson, editor at large.

Speaking of leadership changes, who might be naming hopkins as its new ceo.

It would take over from the interim ceo.

The owners decided not to sell the video streaming service.

Jon erlichman helped break the news.

How did this come together?

It is an amazing story and a sense that you have got multiple owners of the hulu business.

You highlighted the situation at microsoft.

Does it get trickier if you have companies like disney and fox and comcast doesn't have a say because the regulatory rules.

There are a lot of cooks in the kitchen when it comes to hulu and a lot of different views on who should be the next leader of this company.

There was reporting on this story.

The choice of mike hopkins as ceo make sense if you think of what hulu wants to do with this business going forward.

The owners have spent a lot of time on this concept of tv everywhere.

Bring the programming to network tv and phones and tablets as long as it is authentic through cable.

This guy spent a lot of time at fox working on ensuring that fox was getting paid properly by the pay-tv providers.

Maybe there is a way to think about how it will all come together over the next few years.

If that is the important story for hulu, many would say this is the person for the position.

And terms of the direction of the business, it is making a big push into a regional programming.

How did this affect all of that rush to mark -- how did this affect all of that?

This is a company that said it would get money from its owners to build up in a variety of areas from technology to a regional programming.

Netflix has been able to make a lot of great headlines with specific shows like "house of cards." hulu has originals, but none with that same level.

There will still be a lot of pressure on them to deliver standout originals.

That will be part of the focus as well.

Jon erlichman, our senior west coast correspondent.

From sensors that can track in your head and monitors hydration , making electronics conform to you.

We explained next.

? welcome back.

I'm emily chang.

This is "bloomberg west." for today's athlete, tracking performance and health is everything.

Wearable electronics company is looking to do that, m0. there is a cap that captures ahead impact during play and a hydration sensor that tracks hydration levels.

My partner, cory johnson, is back with more.

Interesting stuff.

The electronics within these things, it makes these wearable functions functional for all sorts of levels.

Andrew luck was signed on as advisor to the board.

M0's director -- was a member of the seahawks.

You signed him as an advisor?


It was a little bit of serendipity on luck's part.

It was the lot of months talk with andrew.

It was great to have him on board.

He is really thoughtful and a bright individual.

He will be perfect for it.

Good to see you.

Harvard grad.

Sanford -- stanford grad as well.

What does it mean for your company to sign on these big- name players?

It is one thing for gatorade to do it.

When we talk about serious things like head impacts and concussions, what does that mean to have active player signing onto the board?

It talks about the power of technology and how the players understand it.

These are not random people.

These are players and athletes that are at the pinnacle of their sport and are very thoughtful and have taught themselves how to perform and optimize their performance.

What we want from these guys is a way to understand how to make our products better and to make them relevant and to have meaningful ways to capitalize on that.

I feel like as i watched the games in college and in the nfl, there is a much better understanding and a different sort of way that people think about head injuries in football.

If you talk to place now, do they think about it differently than they did a few years ago?


The players have really come full circle.

A lot of that is the environment that has been created around the game.

It is ok to admit there is a concussion.

That is the first step.

No one will have a lie detector.

You have to feel that you can admit readily all the time.

Interesting way, not just concussions, per you are also looking at hydration.

Talk to me about how that works with a skullcap.

Hydration is in a -- form.

-- patch form.

You can put on the body anywhere.

You can track sweat lost real- time.

It has a meaningful metric that everyone can readily understand in real time.

And distinct staff.

-- interesting stuff.

Big luck.

You went to hartford -- harvard.

I have to say that i refer stanford.

I live here now.

Don't tell anyone.

[laughter] it is time for bwest byte, one number that tells a whole lot.

What have you got for us?

A special biteyte -- 135. 135 companies at the san francisco tech conference.

Thank you for coming.

A bigger crowd is there.

It is hard to imagine there were so many companies like job own and hightail and others.

It is an interesting model for the conference.

Jon, you're missing out.

It is cool.

I'm in l.a. we have to chat by the beaches.



Thank you a lot.

Thank you for watching.

Have a wonderful weekend.

See you on monday.


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