>> live from ebay headquarters in california, welcome to a special edition of "bloomberg west: inside ebay." it started as an auction site. it has become much more. a major player in online payment, the company has transformed to a bonafide silicon valley leader, and making billions annually. "bloomberg west" is at the center of it all inside ebay. and here we are on the ebay campus live from san jose, california. i am emily chang. i'm here with cory johnson.

and we also have jon erlichman. we have been learning a lot about e-bay. it has been an exciting day. john donahoe is the ceo. >> yeah. it is like a smackdown between ebay and amazon. auction is a minority of their business. it will be entertaining and enlightening for people. they will learn about a lot of things. >> we will talk about that with john donahoe. we will also learn about the ebay's moonshot business. it is the same day delivery business. it will get to that within an hour. i have got these gloves. >> styling gloves. >> it was cold this morning. and the payment business, that is a monster of a business.

billions of transactions every quarter. it is growing at double-digit rates. >> you go very in depth on some of the innovations they are working on at ebay. you are inside the commerce and innovation showcase. what is that about? >> this is a place where they try to explain to their many retail partners what the technology behind ebay allows for these retailers to do in their stores. we know that paypal is available in a lot of store locations. how do you explain that to retailers who see business change quickly? you build something like this. >> this looks like a shopping mall. >> this is where the honey mustard is. >> but it is not a store at all. it is a fake storefront built by ebay to demonstrate the future of shopping. >> this is our technology playground. it gives us an opportunity to showcase what we have put into the market. >> hill ferguson is the chief product officer.

>> if you look at what e- commerce retailers were able to do for online shoppers, personalizing the website and giving them custom storefronts when they register and come back to it, none of that is in the offline world today. >> for paypal, that means for having businesses to replace cash registers with ipads that run paypal software, to swapping wallets for phones. they are also partnering with brands, rolling out high-tech touch screen walls like this one in san francisco. >> it is an interactive glass. we turn a tablet storefront and interactive store. you walk up and you touch it. you push the cart to your mobile phone. you pay on your mobile phone. >> last quarter alone, paypal brought in $6,000 every second.

42% of ebay's total haul for the whole quarter. it is a crowded field for companies like square and google competing for the action. >> there are consumers who use the paypal wallet to shop. that is a meaningful advantage we bring. it is a relationship with the consumer that goes beyond just 16 numbers. it is not just the big brands. it is small businesses that are welcome as well. they are basically online with ebay. emily? >> thank you. we are here with the guy who runs the innovation here at ebay. these digital storefronts, that was your group's idea.

how is that going so far? >> it is going great. we see people in the shopping environment. we are capturing them as a go from one place to another. it is a vibrant and engaging piece of glass. it is different. they see people interacting. they want him to rack as well and understand what is going on. >> and this is an experiment? >> that is right. this particular activation at westfield -- >> westfield mall in san francisco. >> they have lots of malls and lots of empty spaces. those spaces do not feel good, even to the consumer. they do not like the idea of something going away. if you take those spots and do something engaging that helps both retailers and our partners think about a couple of brands that we are doing. toms. you have this large, engaging

glass. >> how fast will you scale this? >> as fast as the physical stores and as the brands allow us. this glass is not just the glass on the storefront. it is a tabletop. it is the walls inside the store. it is the kiosk inside of the store or out in the street somewhere. we will take it everywhere we can and to all the places that people are stuck. think of a train station or an airport or a bus depot or terminal, even the glass that is around the enclosure at the bus stop. >> even the glass on the car window. >> absolutely. we're working with a world leader in innovation on glass. the future is to have glass that you can see through, that can become an interface.

at some point, all of the glass that is already in our life -- the architectural glass, the window on the oven, the microwave, in the bathroom, they can become an engagement surface. >> it is your job to think about the future of shopping. john donahoe told me earlier that that amazon drones are a -- what do you think? >> it is everything. it is our paypal and ebay marketplace. i look at the technology around us. it could be a connected device or a wearable or glass. i will take all of that hardware to innovate on and we will create software in our marketplace and bring it to the market somehow. my idea of the future is essentially a digital personal assistant that takes care of shopping for you so the things that you do on the weekend are things that you're passionate about.

i'm working on gting there. the answer is yes, but it is a journey. >> how do you get there? >> we create software. for example, think of "minority report." there is an app on your phone that has awareness. imagine that glass that shows you things only in your size. that is how we get there. they use data and technology to create in reality what feels like a personal assistant. >> do you think amazon is wasting its time? working on things like octocopters and google buying a robotics company? >> i will give you an answer -- when i built the mobile business for ebay, people talked about competition.

my goal is to have everyone -- i will look forward to how to innovate for ebay and its customers and its merchant partners. >> one of the most important things you say you're working on is time. shopping is a chore. it is fun, but it takes time and it is work. >> everyone can think about how much time you spend during a week or a month doing shopping where it is an errand and it is not fun. i need to get more of the same mustard and mayonnaise and some bulbs to replace the lights that went out. you do not want to necessarily peruse thousands of gloves. >> i was able to get some gloves. >> we want to give you your time back.

i want you to spend that time after work and that time on the weekends doing what you want to do as opposed to dealing with all of the errands. >> you have a lot of patents on the technology. steve, thank you for joining us on "bloomberg west." thank you for having us. >> thank you. >> still to come, where is the free stuff? there are other perks to lure workers. jon erlichman has been hanging out on the ebay campus. we will take a look at what he is up to. >> this is a fast-changing world of commerce. there is some physical activity. ♪ >> i am emily chang.

we are coming to you from inside ebay in san jose, california for a special "bloomberg west."

silicon valley is known for its talent wars. perks like food has become a way to attract new workers. ebay takes a no-frills approach to hiring. jon erlichman has a look at the culture of ebay. there are not a lot of restaurants out here. [laughter] >> sometimes people compare them to willy wonka's chocolate factory. at the end of the day, ebay wants to bring people here. here is more on that story. from the free gourmet meals at facebook, ebay is offering plenty of employee perks. ebay takes a different approach. >> we have a variety of different perks. that is not the way we ask people to join our company. >> shuttle service from san francisco to san jose, but employees pay for on-campus food and massages. >> the perks at ebay is working for our company. people come and they believe in

our purpose. >> that purpose enables the hundred billion dollars worth of commerce in 2015. e-bay is adding to its army of customer support staff, already more than 31,000 strong. roughly 40% of new ebay hires come from an intern program. a case that may not care much about the freebies. >> they care about having an impact on the world. >> and recruiting from 300 schools globally, they look at how the next generation feels about the brand. >> we asked them what they think about when they hear ebay. what do they say? >> what is interesting is that ebay has changed so much in the last few years. not all of the students realize it. they still think it is an auction company. >> even as its ranks grow, the business is growing faster.

>> we are in an internet company that works off of the platform. the intention is able to grow the business about having to grow the number of employees at the same rate. >> that was jon erlichman. we will be back with more from inside ebay. ♪ >> welcome back.

i am emily chang. we are coming to you from inside the ebay headquarters from san jose, california. there are new features on its mobile app. that is just one of the new products that paypal. the company launched more digital payment products and in the previous five years combined. cory johnson has more.

>> when ebay acquired paypal, it was losing money. they were worried that someone else would buy it. they said they were going to buy it for competitive reasons even though they would lose a ton. paypal is now a dominant business. >> there are two campuses. this is mainly the paypal campus. there is the other campus that is that ebay campus. >> the business is growing strongly. i wonder what is it that you think has really changed? when ebay acquired paypal, the business was losing hundreds of millions of dollars a year. it looked like a competitive purchase just to keep someone else from acquiring it. now it is a stand-alone business. it is doing well.

>> yes. e-commerce is growing. more people are buying i'm mobile. people are paying on mobile. for this shopping season, for black friday and cyber monday, many people used paypal. >> 91% more sales on thanksgiving. 99% more on black friday. that is incredible growth. why is that happening now? >> people do not want to be waiting in stores. they prefer buying online and on mobile. mobile is growing like crazy. >> because growth is so great, can you tweet about the results? or is it too big? >> we can see it.

in europe, the economy was slowing down. we had to compensate. generally the team really fights when those things happens to try to compensate for the macro. >> how do you compensate? >> be more aggressive and getting more merchants and doing more promotions. when we have macro events, they try to compensate. >> it is hard to see anything at a macro level. what are you staying in terms of the economic environment in the u.s.? >> this quarter was slow to start, right? look at the holiday shopping, it was pushed late. other than that, i think things are looking better and better. >> you have done so many acquisitions and have launched many products as well. john donahoe was excitedly showing this beacon. how do you describe it? >> we want to change how people shop. people love shopping, but they

hate paying. >> and it is not just because they are cheap? >> no. everyone is like that. we want to remove that friction and make it completely invisible to pay. with beacon, we did that. you can go into a coffee shop like he did earlier today and then your phone vibrates. you can pay completely hands- free. it can be a retail store or restaurants to enable that and have one of these systems. >> and i have big merchant partners, but how many point-of- sale locations are you in? >> in the u.s., we have over 100,000 locations.

i do not want to make it specific -- >> you can. >> we have hundreds of thousands of locations. in australia, tens of thousands of locations. there are tons of restaurants where you can pay at the table. you do not have to wait for the waiter. >> why should you pay online? the expense of the apple store where you talk to a salesman in the aisle and you make the purchase and leave. you looking at those type of innovations or are you there are ready? >> we are there are ready, but we have to scale those experiences. that is what 2014 will be about. >> to that point, i was talking to you today and one of the things i heard from a number of people is that there wasn't a great consumer awareness of these point of sales. will there be a marketing

campaign? when? >> this year and into 2014. you need to have enough of these expenses out there. 2013 has been the year where we have reinvented all of our existing products. now we have a lot of new products and experiences that we need to push out there. 2014 will be the year where we will invest in. >> you have a company called braintree. what did they have that you couldn't build in time? >> we need payments os. any disruptor or builder that wants to build something completely new that involves payments whether it is companies like uber or others, they need to be on top of paypal. both braintree and paypal, 100% of the profits on uber goes to

paypal. >> it has been slowing down measurably in the last quarter. >> it was 20%. yes, we think we still have a lot of growth ahead. mobile is growing fast. we will start seeing the benefits of all of our efforts. not in 2014, but 2015 and 2016. we can accelerate revenue. >> accelerate growth. you heard it right here. amazon might be experimenting with delivery drones, but john donahoe says it is a fantasy. first, to jon erlichman. >> ebay is all about enabling

commerce around the world. we have onesies and a soccer ball. ♪ >> welcome back to a special

edition of "bloomberg west" inside ebay. i am emily chang. from auction house started to e- commerce coming ebay survived and thrived since the dot com bubble. here is a look at ebay by the numbers. >> ebay, though mobile company with more than 31,000 employees and 33 countries around the world, driving three different businesses. there is a online marketplace where active users buy, sell, or bid on items.

men's sunglasses -- a pair every 18 seconds. accessories are sold just on mobile devices. then there is paypal. you can pay in 26 different currencies on paypal, ranging from the turkish lira to the yen. it has big brands like levi's, mattel, and sony. earlier today i sat down with the ebay president and ceo, and

john donahoe, to talk about all aspects of the ebay is this coming including his his plans to amazon's plans for delivery by drones. he is a leader in global payments. under his leadership, ebay revenue has grown to more than $15 billion today. i asked him about the holiday shopping season and how it is going for ebay so far. >> it has never been a better time to be a consumer. technology is changing how consumers are able to shop. it is no longer just around black friday. we call it the cyber five. it begins on thanksgiving day where people can shop sitting on the couch and getting ready-to- eat turkey. they can shop on their smartphone or their tablet or their laptop. it continues into the holiday weekend. for that five day period, we saw all of our properties, 96% increase in mobile commerce.

>> i'm pretty happy. i got 50% of my shopping done. are you done? >> i'm getting there. [laughter] >> going into this holiday period, you said you had a lot of angst about the e-commerce market decelerating growth. how do you feel now? >> we are optimistic. at that time, we did not have a federal budget. we had a government shutdown. going into the fourth quarter, our hope is that consumers see there are great deals and great opportunities to get great gift for their loved ones. we are trying to make that as easy as possible for consumers. >> it was the biggest online shopping day on cyber monday. shopping was up 20% or so. growth is still slowing down. that is the reality. one of your big strategies is connecting online and off-line.

talk about connected glass. you have kept it in new york. you are doing it in san francisco. how is that going? >> we used to think of shopping in terms of digitally or in a store. you can have a seamless experience that has technology involved with it, but you have a choice of how to receive the item. we started with kate spade in new york. there is a touch screen on their storefronts. when people walk by, they can shop and have it delivered to them with ebay now. and with the westfield mall in the bay area, we had these gigantic touch screens. >> still to come in part 2 of my exquisite interview with john donahoe, ebay can get your packages in nearly an hour, something that amazon does not offer.

that is next on this special edition of "bloomberg west: inside ebay." ♪ >> welcome back to a "bloomberg

west" special "inside ebay." i am emily chang. in a world of same-day day delivery, time is money. ebay has an advantage over the competition. they offer same-day delivery within an hour, something amazon has yet to offer. in part 2 of my interview with the ebay president, john donahoe, i asked if he could give us numbers behind ebay now. >> we're not publishing any numbers on it, but what we have done is in three cities, we partner with retailers so that when you have a situation and you want something to date like these gloves and you do not want to waste the afternoon away or have it delivered to you tomorrow, you want it now. you go to ebay now and order the

gloves and the courier will have it to you within an hour. >> when i tell us more about how it is going? i download the app. there are a few reviews. >> we are building the consumer experience. when you build a new experience, you have got to get the experience right. the consumers that are using it like it a lot. it is evidence that we think it is successful. we have expanded it from one market to three and to five. we just buy a company called shuttle that will help us expand to more cities across the u.s. >> amazon made a lot of headlines a few days ago talking about deliveries by drones. they are working on octocopters. >> no, we're not focusing on long-term fantasy. we are focusing on things that will change that consumer experience. >> other companies are also experimenting with delivery. there are upstarts.

how do you have an edge on that? >> we have millions of active consumers that come to ebay intending to shop. we have paypal, which makes payments easy and safe. we start with an enormous advantage of an ecosystem and a willingness to partner with retailers and not compete. there will be a lot of people trying different innovations. our focus is delivering a great experience to consumers both in the u.s. and around the world. >> speaking of drones and google's moonshot, they have acquired a lot of robotics companies. do you think moon shots are important? >> i think bold innovation is important, but our focus is around commerce. the notion of making a storefront window a touchscreen, i called a bold innovation. the notion of saying you can get a product delivered to you within an hour, i call a bold innovation. five years ago in mobile, what

we were doing was considered bold innovation. $20 billion in mobile payment volume. we have those moonshot be focused in our area of commerce. >> paypal is now 42% of the revenue that you guys bring in. when will it become the majority? >> do the math. it is only a couple of years out. paypal, what it is doing is paypal is making payments safe and easy. we have always been online. we are the clear leader in mobile payments. the reality, emily, is that people like to shop. no one wants to pay. paypal is making it easy to shop and making the payments a frictionless experience. >> and you made a pretty big acquisition. what will be the strategy be for next year? small acquisitions?

or bigger bets? >> the braintree acquisition is a great example of what we are talking about. braintree is a power maneuver. you are shopping and not really paying. braintree powers many of the sharing mobile first business models that are being developed and will continue to grow. we are bringing in the same principles to the off-line world. i went to the starbucks in our lobby. i walked in and have my mobile phone in my pocket. i did not pull it out. i do not carry a wallet anymore. it recognized that i walked into the starbucks and when i got to the front of the line, the barista had my name and picture on the cash register and said, "john, the usual?" she pressed a click when i bought it and i got a text. >> what about china? alibaba -- you have a limited

partnership in china. how do you get in on that action? >> we enable chinese sellers to reach consumers all over the world. this year we will do 6% and billions of dollars a volume of chinese sellers selling on ebay around the world and using paypal to reach consumers. we have a strong presence in china, but it is a cross-border residence. we are not competing in the domestic market. we will look at that. it is early days in china. >> i want to ask you about this. sheryl sandberg wrote about you in her book. there is a balance in work and family. you have done a lot to try to elevate women at ebay and working dads. >> my marriage is a partnership. you could argue that my wife is my boss.

we work hard to balance the work and raise a family. for me, this issue when it come to ebay, it is about competing and winning. if we will be successful, we need the best people. by definition, half the people in the world are women. we need to have the best women and men and have a diverse team that can lead to the best possible decisions and executions. it is a matter of good is this and it extends back to the family and in my case, being a good husband. >> he did say his wife is his boss, everyone. yes, that is what he said. the ebay ceo, john donahoe. earlier we talked about how i got my gloves delivered to me on the set via ebay. ebay has same-day delivery service. jon erlichman followed an ebay courier around. >> this is a great, innovative

story going on. technology allows us to be more impatient. ebay has seen that happen and is taking advantage. here is more on that story. >> do you need something and need it now? if you live in the bay area or big apple, james her april could be waiting to answer your call. >> i just got an order. >> a bluetooth speaker. looks like i'm going to best buy. >> they are shopping valets for ebay now, the newest addition to the online marketplace. it is an experiment and instant delivery. customers in san francisco and san jose and new york and chicago and dallas can purchase electronics from nearby retailers. the ebay valley delivers the goods in under an hour. >> mobile has changed the consumer immediacy. the delivery is a logical expansion.

>> this holiday season, it is waving a fee in the hopes to gain more shoppers. >> we know that working professionals really like the service. over half of our usage between 9:00 and 5:00. >> amazon is building facilities closer to cities to reduce delivery times. and jeff bezos is working on a program that will deliver packages via drones. >> retailers love that we are able to help them take advantage of the existing stores and meet consumers increasing expectations. when they win, we win. >> earlier i ordered my gloves on ebay now. it was a pleasant experience,

the valet. she let me know when she got my order when she was at macy's and then when she arrived here. how did they make this economical for them? >> that is why they have been quiet about the numbers behind it. they are just starting to build this up. they're trying to figure out if people will order gloves like you or something else. we get a sense that people like to buy electronics and different phones and gadgets through a service like this. when he think about the corporate story of technology companies and doing acquisitions, they acquired a company called shuttle. that allows them to get that scale and say they can get this to a couple of dozen cities quickly. they are figuring out the financials behind what the customer wants and whether it can make sense for them and roll

it out. they are getting scale from an acquisition they have done. maybe this becomes an extension of the bigger story and maybe the financials do not have to make as much sense if it is part of that broader story. you are right. they are still figuring it out. >> i can say in all honesty that i will use it again. now i know about it and how good it is and how easy it is. i'll definitely keep in mind for future purchases. thank you. bloomberg tv will take you inside another company next week the shipping giant, ups. we will get a tour of the ups hub in louisville. that is all day tuesday on bloomberg tv. want to go to sold-out events like the super bowl, but do not have a ticket? chances are you might turn to that ebay ticket have called stubhub. ♪ >> welcome back.

i am emily chang. this is "bloomberg west: inside ebay." from the super bowl to broadway, fans turned to the ebay stubhub to buy tickets. stubhub is using technology and data to create a better experience for fans. i know you love your concerts. >> and a big sports fan as well. there is no more efficient market than stubhub. stubhub will opt in with a solution. ebay scooped it up in acquisition a few years back. check this out. >> scalpers -- it is time to change the way that tickets are

sold. >> it is about the fan experience. innovation is used across the business. >> stubhub takes a percentage off ticket sales on the rest goes to the seller. stubhub is after a lot more. the business has grown dramatically. back then it sold 10 tickets a minute. today it sells one ticket every second. it has grown with mobile ticketing. stubhub is a risk for even. the ebay gross margins have fallen.

milking big data could be the key. >> this is a new science. we are trying to understand that. raji arasu is the chief technology officer. >> where we are taking it to the next level is what that consumers might be intending to do. >> for years i bought tickets from a site called mr. ticket. but stubhub sets the market is like a new york stock exchange and nasdaq. >> mr. ticket's phone is ringing off the hook. [laughter] >> it has really sucked up the industry.

>> it is time for the bwest byte. >> there are so many ideas of what ebay is. it is constantly inventing stuff. >> steve said they have specifically filed 35 patents that are pending. >> we did a piece early in the program of the culture of people who are hired here. >> what kind of patents? >> i do not know the specifics. there are young people who are

highly motivated and they get the pace of the ebay story. by the way when they learn it is not necessarily an auction, when they think about the ways for commerce to be facilitated by 2014, what are some things they could be cooking on -- >> how many patents need to be public? >> they will talk about a patent portfolio. it is interesting science. they use those patents in aggressive way. all of the small businesses out there, this is their platform on the internet, having those patents and security is an interesting and powerful approach. >> i'm sure they will be a big part of the future. >> and gloves related patents in the future. >> yes. i'm inspired. i'm so glad i have these. i have enjoyed the show much more. thank you for joining the special edition of the show.

♪ .

>> this week on "political capital", former secretary of state madeleine albright talks about nelson mandela and north korea. the november jobs report. margaret carlson and ramesh ponnuru debate obamacare's revival. we begin the program with the former secretary of state, dr. madeleine albright. madame secretary. >> good to be with you. >> you paid tribute to the noble statesmen, nelson mandela.