♪ >> live from pier 3 from san francisco, welcome to "bloomberg west." our focus is on innovation, technology, and the future of business. here with our editor-at-large, cory johnson. tom perkins is at it again. at thedown at an event commonwealth club with "fortune" magazine, reiterating his key points about america's war on the 1%. he had a lot of controversial things to say again. we should be getting good

stuff out of him as usual. is interesting to hear from the other side of this debate, even if i don't tend to agree with it. it's good to have a voice and put a face to it. you become that voice for the 1%. >> the most controversial thing he said was that rich people should get more votes. >> one would argue that they do. we will look at an interesting story. ways to find new media. .nteresting new publication jeremy talked about his amazing story he has written about, how technology is driving the decisions of the nsa in ways they never have before, perhaps exclusively providing content for decisions about drone strikes. nsa gathered cyber material,

drones making the strikes, humans hardly involved at all. we talked about that story and the publication as well. >> the founder of ebay, this part of his news organization he has founded. our top story is twitter. insiders will be able to sell their shares for the first time tomorrow, saturday. >> it's the timing here it after trading today is when they can start to sell. just 1.8% of shares outstanding. compare this to 13% that facebook allowed its employees to sell when their first lockup expired. there was the ability of companies like facebook and twitter, which is somewhat new, to sell in the private market. maybe there will not be that rush to sell. twitter shares up quite a bit. maybe people want to take some profit. >> they are only allowing them

to do this so they can pay taxes that they owe because stocks are up for sale. >> perhaps. strategy drives a lot of decisions people make about stock options. the trickle will turn into a flow. >> tell me if you think this number sounds right. i saw somewhere that on average, twitter employees could go more than $400,000 in taxes -- owe more than $400,000 in taxes. >> it could be. but jack dorsey's position would skew the average grade it depends when people join. -- average. it depends when people join. >> i want to bring in the chief economist at ct wells. $400,000 per employee -- does that sound right? >> it sounds like one of those

averages that is like -- the average family has 1.3 kids. if you get caught with .3 kids, you are in trouble. i would have to concur with corey's points there. the average might not be all that illustrative in this case. twitterill this impact share prices? >> i do not think it will be a big deal. you will see a coming around and focus of some of the more bearish sentiment on the name. it is priced in already. i do not think it is existentially important. the real challenges for twitter we know. twitter will best those. intois a maturation point, being a part of the public markets and a portfolio element. i do not think it is a great point of impact on twitter going

forward. >> it might be the people decide to take their winnings and leave. once they're able to sell the shares, you wonder about the brain drain that could happen. some and an that at silicon valley companies. a year or so after the ipo, people decide they have achieved a certain amount of personal wealth and walk away. google and at yahoo!. people go from those companies to start new companies or start a vineyard in napa. >> we will see some of that. twitter was fairly aggressive. they sucked up a lot of other firms. they made a lot of those other purchases with stock. folks who did not intend to be at twitter are at twitter. now they have shares that have nicely appreciated. baby they will be the first guys and gals to look for the new startup opportunity in the area and be a part of that energy.

>> how would you compare the way that twitter is handling the lockup process to how facebook handled the lockout process? >> it is a smaller release. we will get a test of this when we see a big lock up many many times the size of this expiry. facebook has such a wild flurry of unconstrained trading. it created a bit of an overhang of some folks who are trapped in there, just trying to get their money out, particularly given facebook had a much less pleasant initial ipo than twitter did. foundare always new millionaires who are under pressures, whether that is to pay taxes or buy a home or support a family member, who will of for an exit. some of those folks will make it out the door with this expiry. >> are we going to see a secondary? what would that tell you about

what's going on with facebook, if a lot of secondary shares are offered? whether it is employees selling shares or the company selling treasury shares? both will see a bit of there. facebook has been settling into a pretty aggressive valuation as of late and that will be the true test of that valuation. secondaries are more of a test and expiry,en particularly a small expiry. facebook is doing well, beginning the process of earning its valuation. there are a lot of people who want to turn this into money. there's a lot of people who want to go back in and by the next facebook. zynga, theith secondary was announced so soon after the ipo that while some of the insiders, in the case of mark pincus, were able to sell in the secondary.

the other employees were locked up. if twitter were to follow the same playbook, with that concerning what all as far as the effect on the morale of the company? >> it would concern me. there's almost no chance we see things handled that way. managerial and performance issues started intensely. one of the lessons of zynga is to not spend more than your total free cash flow in a year, and then announce a secondary. >> if i'm a twitter employee, should i sell now? >> i don't think you have to. selling for diversification is a wealth management strategy. theou want to be a part of story of the evolution of the valley, you do need some free cash flow. you sell some. i don't think you're walking away. >> zt wells chief economist max wolff, thank you for joining us on "bloomberg west." "house of cards" is back. yay! >> i don't know. >> i will be watching this

weekend and binge watching, i'm sure. more about how the netflix series has some high-profile fans in washington. ♪

♪ >> welcome back to "bloomberg west." i'm emily chang. the time warner and comcast deal has raised a lot of questions. the leader of lifestyle television, home to popular cable networks like hg tv and the food network reported earnings today. jon erlichman has more from l.a. >> i think you are right about that area there was an immediate reaction, what does this mean for the media companies.

the bigger players with the biggest brands seem to be feeling ok about everything. ken lowe joins us now. i would love to get your take as the observer of everything going on on those two companies getting together, outside of what it ultimately means for your business. it's always a pleasure to be with you. you are right. our industry always seems to have something interesting going on in the distribution landscape. as far as the cable industry -- we have been in it about 20 has always been consolidation, and there has always been changed. for us, we see it as opportunistic. we are big believers in the tv everywhere model and initiative. we think this is an opportunity

to take our brands beyond the flat screen tv's on the wall. we have already committed about 70% of our footprint to the tv everywhere initiative. it is an enormous opportunity. at the end of the day, we are a content company. we are about creating compelling, quality content. it is what we do as good as anybody. when you have compelling content, you will always be desirable to distributors. we have a great track record of hard during with our distributors in many ways beyond just tv everywhere. it is exciting in many ways, but it does not change our game plan. >> let's talk about that content for a second. a lot of people will say, the best thing you can have is live programming. people will tune in for that. >> in my house we watch a lot of

"house hunters." i have gotten a sense from what you said in the past that a lot of people on your different channels do that. they turn it on and watch for a long time. can you elaborate on that? appreciate your household watching "house hunters." you are among a majority of viewers around the country. i don't know if folks know, but about 94% of our viewing is done live. it's the highest of any cable networks except barring sports events. people tend to watch our programming and leave it on because it's about a category. , the food category category. that bodes really well for engaging upscale consumers. it's a great opportunity for our advertiser. live viewing as opposed to

recording and binge viewing later will sometimes delay people watching commercials. hallmarks of our company and networks and it is something we take great pride in. that brings a different aspect to the partnership for the distribution immunity -- communi ty. >> what about where your content is going? amazon a partner of yours. about makingious the move into that world, especially because of the audience and the amount of live programming or live audience viewing on traditional cable. what do you think about the amazon partnership? will that be a long-term partnership? is netflix a long-term partner? how should we think about streaming deals that scripps cuts? >> when you go back to the amount of live programming that we do, there's probably less of an opportunity for cable networks like ours in those types of streaming deals.

we have been very pleased with the amazon deal. they have been a great partner. less of ad partnership relationship with netflix. does not workdel quite as well as amazon does, as far as downloading our content. going forward, we're are open to all distribution partners. at the end of the day, we are very much proactive on the cable and satellite distribution model, dual revenue streams. it served us in our company so well. back to the advertising aspect, because we deliver an upscale audience that is highly engaged, it is a hallmark for the advertisers that do business with us. we are about distribution, getting in as many homes as we can. we think the streaming model, while important, is not a major play for us in the coming years. go, there were

reports recently, short-lived in the end about discovery being interested in acquiring scripts. to play a quick game based on your show, i love you -- know you love scripps. would you consider listing or selling scripps? -- i wouldan imagine expect you would ask that question. we get that question quite a bit. as you would expect me to say, we have no comment there. brands, a great company, a great future ahead in the cable network industry. >> thanks, ken. thanks for playing along and joining us. emily, back to you. of cards"up, "house has returned. what are netflix's hopes for the hit show this season? ♪

>> a clip from "house of cards." the thing about binge watching, it's so good when you are doing it. >> like binge eating. >> 13 new episodes of "house of cards" were available at midnight. kevin spacey and robin wright penn coming back to the screen. one day early.

jon erlichman is with us from l.a. as well as phil mattingly in washington, who did stay up late to watch it or it as the president would say, no spoilers, please. >> i will keep them away. i only got one episode in. i was up at 4:00 a.m. and got that first episode in. it's great. i'm psyched to spend the rest of the long weekend watching it. >> how much do people in d.c. love this? you mentioned the snowstorm on tuesday, where everybody started clamoring for netflix to release it. they decided not to. netflix is really involved everyone in this. they got lawmakers to come in and help them with the process. people just like watching something that is so intriguing. we took a camera up to capitol

hill and asked senators their thought on the series. unrealistic thing on the show is that a democrat can represent south carolina. think kevin spacey makes it look a lot more exciting than it actually is and a lot more devious. none of us are quite the interesting. >> i'm one of the few living americans who has not watched it, but i will. is this different than "west wing"? it reminds me of the way news people watch the show "newsroom" on hbo puttered -- hbo. >> not my thing. >> i wonder if it is the same reaction. >> it's the same thing here with "newsroom." everyone hate watches it or it is different with -- it. it is different with "house of cards."

lawmakers from that state would never say this. the people behind me in the white house, including the president, are expected to be spending this three-day weekend watching all or at least pieces on this. >> what is the view from netflix on this? >> in retrospect they are glad they picked a town that likes to talk about itself more than the town i'm in. great marketing approach. what is different with the second season is now there is a show that everybody knows. that can drive subscribers for them. it has turned out really well. the other thing i would say about binging, for netflix it was more about consumer choice. phil got one episode in. emily will watch it all at once. say, we'reis to different from what you usually get, one episode a week.

that will help our business. >> jon erlichman in l.a. and phil mattingly, thank you for getting up extra early to bring us the story today. the faa startl cracking down on the use of illegal drugs? ♪ -- drones? ♪ >> i'm julie hyman. let's look at where stocks are trading right now. we have a mixed picture with the dow and s&p trading higher and nasdaq little changed coming off of an update yesterday. we had better than estimated consumer confidence numbers this morning. in terms of individual stocks, marriott out with news, announcing that it is authorizing buyback of additional 20 million shares, bringing the total repurchase authorization to about 34 million.

shares spiking up on the news. it has repurchased 5 million shares so far this year. more on the markets in 30 minutes. ♪

♪ >> you are watching "bloomberg west." i'm emily chang. company'sle tech valuation is at roughly $3 billion. one of the biggest investors in twitter will probably lead the financing. jawbone makes products such as the fitness-tracking bracelet. viber, payinging $900 million for the instant messaging and calling service which has 300 million users.

the move will help them expand their customer base outside of japan. smartphone growth is slowing in china. shipments fell more than 4% in the fourth quarter, the first drop since 2011. several factors may be behind , the fact that china mobile do not start selling the iphone until the end of the quarter being one of them. drone usage are in the tens of thousands. this drone boom is overwhelmingly -- overhwelming the faa. megan hughes has the story. >> we are airborne. >> drones have gone mainstream. even the "modern family" character has one. he has borrowed it from his real estate company to spy on his

son. really state is one area where real life drone use is widespread. capturing top surfers hanging 10 on hawaii's north shore. the filmmaker of a gettysburg documentary boasted about the technology. >> it is mounted with a high death camera. it can shoot from a few feet off the ground to 400 feet in the air. >> they are beautiful shots but may be illegal. the faa does not permit drone flights for commercial purposes. >> you cannot just buy one of these vehicles and launch it into the airspace. >> but you can. >> the regulation needs to say that you can't. >> we went shopping at a drone dealership in maryland to see how easy it is to get one. >> for the one with the camera, that will be closer to the 1500 to 2000 range. >> we have liftoff. it is technician says

flying off the shelves and the sales are legal. how the drones are used as someone else's problem. that there anything here will show me what the faa says i can and cannot do? >> the box will not tell you about the faa. >> while the faa struggles to , you can guidelines see a chopper in the drone's airspace. >> in the worst case, the drone could bring down the helicopter. the faa says 17 notices ordering people to stop using drones, but if you just one fine. ordered a the faa stand down after an online pitch to ice fishermen in minnesota. >> megan hughes joins us live from washington. what is the timeline for the faa

to let businesses know what they can do? huge source of frustration. it seems to be a moving timeline. for commercial use in limited rules were supposed to be out in 2011. now they're expected to be out in november. we're waiting for final rules for incorporating drones into the airspace homologue with planes and helicopters. i wonder if these drone companies are enjoying the fact that the rules are so vague right now, and there is no regulation. >> we talked to a drone industry group about this. they said quite the contrary. you have a lot of people who want to bring their businesses to scale. the representative we talked to said a lot of them are going overseas. is a lot drone use bigger than it is here. it is much more widespread and

permitted. there's a lot of frustration there. is one example of an industry of manufacturers that are begging for regulation so they can have their businesses be legal here. >> we will continue to follow what, in fact, they do. megan hughes is in washington. thanks so much. ta, is the nsaa providing metadata and phone tracking for lethal phone strikes -- drone strikes? groundntelligence on the may be replaced, according to a new report. cory johnson has more on that. >> really interesting stuff. jeremy joins me, writer and cofounder of a new publication called "the intercept." i want to talk about your story and i want to talk about the publication. maybe we can get to your academy award nomination with "dirty

wars" as well. you have come up with something that is near and dear to the technology company, the idea that technological intelligence only is being used by the nsa to order drone strikes. >> i think a lot of people are under the perception that with the drone program, we know the individuals we are tracking and they're involved in acts of terrorism, and drone strikes are a better alternative to sending in u.s. military forces. documents provided to us by edward snowden -- but we determined is that in many cases , what the u.s. military or cia is using is the metadata provided by the nsa's satellite technology or fake cell phone towers that have been put on the bottom of drones that are used to track down sim cards or handsets of mobile phones. in many cases, the u.s. does not know the identity of the individuals using these phones.

they simply have build a web of their social network tracking, and they are targeting people on the metadata. where was this phone, who is this phone in contact with, and if enough of the selectors art off,lectors are ticked this person can be targeted for a drone strike. the notion that technology has its limits, right -- human intelligence versus signal intelligence. mastery of signal intelligence, technology over human intelligence? thehe u.s. going back to beginning of the founding of the republican some form or another used signal intelligence. it has always been a part of major u.s. military operations. what we're seeing with the rise of the use of drones and the ability of the nsa to tap into fiber-optic cables around the

world to penetrate mobile phone networks, track sim cards to within a few feet of the user -- we are entering an age of pre-crime, where people can have a profile built on them based on their usage of their computers, electronic devices. instead of knowing the identity of the individual, we are targeting them based on the activity there engaged in on the internet or with her handheld devices. >> it also seems that what was once the sales of military more of thes a lot companies we cover in silicon valley, the companies providing the tools for the research of the nsa. >> this is a booming industry. with amazon talking about using drones to deliver their products. one thing we have seen is that as everything goes digital, from medical records to intelligence files, but we have seen with

hackers and whistleblowers is that there is a cyber war going on. on the one hand the u.s. can use these drones as a bombing alternative to sending in pilots. a matter of just time before we see hackers, including those sponsored by nationstates, actually hacking into the u.s. drone program and redirecting these drones. point is that more than 80 countries around the world right now have weapon iced drone technology. only the u.s., france and israel are known to have used these drones. beforematter of time other nationstates use them, and that will cause a real debate on the morality and legality under international law of using this technology to kill people. >> i want to talk about your publication. "the intercept" is an interesting thing. the ebay founder backing it. to begreenwald has come known internationally for his

breaking of the nsa prism story. talk about this publication and what you're trying to do and what the business model is. ebay hasunder of wanted to get into the world of meeting for a long time. at a time when glenn greenwald and myself about six months ago were talking with our colleague about building a news organization that would have inherently adversarial posture towards the stage when he came to violations of the first amendment and fourth amendment of the constitution, pierre omidyar reached out to glenn greenwald. ofsaid, i'm thinking starting a news organization. would you guys want to collaborate in some way? he did not envision building a news organization. he wanted us to collaborate. glenn and i were in rio at the time and we said, let's pitch canre on this idea that we

work with them. at first we were talking about building this much broader picture news organization with sports and entertainment and politics and national security reporting. what pierre and his team come up with a brilliant idea, that pierre will create several digital magazines that will each be led by seasoned reporters or journalists in that area, and they will build infrastructure around those individuals. "the intercept" is the first launched.pierre has >> you have got a movie, "dirty wars," nominated for an academy award. is this part of what you are doing? >> we are in the beginning stages of this. we envision working with all kinds of visual data activists. also a filmmaker. we are in an exciting world in

new media, and the sky is the limits and we're looking forward to the future. >> jeremy scahill, cofounder of "the intercept." we appreciate your time. >> we will be back with more of "bloomberg west." ♪

>> welcome back. i'm emily chang. america's war on the rich. he railed against taxes in the u.s., saying they will lead to economic extension of the 1%. the tom perkins system is, you don't get the vote unless you pay a dollar of taxes. be i really think it should like a corporation. to pay a million dollars in taxes, you should get a million votes.

>> last month perkins spoke exclusively to meet here on "bloomberg west." he said he regretted his comments, comparing the treatment of the rich to the treatment of jews in not see germany. he said he did not regret the message he's trying to get across. rising home prices in tech hubs. 142%.e was up we will get to the inequality thing in a minute, and where housing prices are going. let's talk about earnings. give me the highlights. >> significant growth in our , up more thance 100%. subscriber numbers were 60,000. record numbers. 90%.

announcedws we yesterday is strategic marketing campaign, really focusing on how we scale the awareness and engagement of trulia. we have a great product. >> you are hiring a cmo to help you? >> yes. cmo tounced a great drive our marketing campaign, our awareness. we think of this as the evolution of business. we launched eight or nine years ago, this emphasis. built a robust business model and now it's the opportunity to expand that. >> how do changes in the market affect your business? if prices in san francisco are higher than ever before, what does that mean for you guys? >> we look at the market opportunity as a $27 billion opportunity. that is a function of home prices times home sales. areission percentages

fairly static. you look over the last -- 2013, for instance, prices are up significantly, as were home sales. the market opportunity has grown quite significantly. in particular in the bay area, home prices have gone through the roof. growing asare not fast, principally because there's no inventory. anyone trying to buy a home at the moment is struggling, particularly in san francisco. is function of the two driving the overall market. clearly we are on a national basis -- the product of marketing, the number of sales is going to grow incrementally. >> the study you guys came out with, it showed the technology was not necessarily the reason that prices were going up. they were high to begin with before san francisco became the tech hub it is today. perkins heard what tom has to say.

there have been these protests against the google buses. a real estate technology business based in san francisco, what do you think of the tensions that have been going on and what you feel is trulia's responsibility in this environment? >> the employment situation in the bay area -- there are more jobs than there have been in many years. there is significant employment in san francisco and the greater bay area. clearly we are watching this tension, which is a minority of thele that are having evictions. i think this is fantastic for the bay area. fantastic, this housing growth. what has held things back is the permit situation, the amount of new construction has slowed to match the demand for housing. you watch around certain areas.

every block there is a new building that is going up. some of it is commercial, some residential. there's not enough housing to meet the demand. we think over the next several years, all these buildings will come on board that will ultimately lower prices. >> you think prices will come down? >> i think they will stabilize over the next several years. her so much inventory that will come on the market. i don't know what the policy in the office is. i imagine they're looking at this and saying this is an opportunity to increase the number of housing units that are available. that will moderate supply and demand. ofis the manhattanization silicon valley. the construction going on, the price appreciation. in maybe five years' time you will start to think of san francisco like manhattan is today. >> pete flint, cofounder and ceo

of trulia. we will be right back. ♪

>> welcome back to "bloomberg west." no, we did not forget. it is valentine's day. we have the perfect person to talk about valentine's day. the ceo and founder of eharmony. how is your business on valentine's day? what happens to traffic for you guys? >> we have five times the traffic on valentine's day. we wish every day were valentine's day. >> i bet you do. i bet you don't see that kind of growth the rest of the year. how does that tie into the way your business is growing in terms of users or revenues, compared to the rest of the year? 50% in ourgrown business during the past 12 months. everything is growing very rapidly.

valentine's day, especially since this year there is a four-day holiday, it is the top of the top. >> what you think of some of these newer dating apps like tinder? >> that's kind of popular right now. but we don't think very much of it. we have 25% marital satisfaction rate in america the way it is. eharmony tries to do in depth matching. if you don't do that kind of in depth matching, we think the divorce rate will get even higher. we don't think for a much of these sites that throw people together. >> i know people who use tinder who are in a serious and committed relationship. wouldn't it be better if your customers did not find love so often, because then they would keep coming back to you? is not a problem with the business of dating websites --

isn't that the problem with the business of dating websites? >> we have always tried to say to ourselves, do it the best way we know how. i have been a psychologist for 40 years. we brought in a large group of social scientists and we tried to do it the best we can. asother people can do it best we can, we salute them and congratulate them and encourage them to keep doing it. marriage sure does need all the help it can get. andhen you look at mobile anything, especially in dating, it seems the revenues are less than they were online. do you think you will make as much in the mobile business as you did in the online business? >> 47% of the people who apply to us now are applying to us from a mobile device. challenge to make that work, but we think it's a great opportunity. as soon as people get used to the idea -- romantically on leave it there. we are out of time.

happy valentine's day. have a wonderful weekend. ♪

>> from bloomberg world headquarters in new york, i am mark crumpton. this is "bottom line." big deal in retail, joseph a bank agrees to buy eddie bauer. we will examine how the weather is the fact in the u.s. economy. and is the commercial use of drones legal? to our viewers in the united states and those of you joining us, welcome, we have full coverage of the stories making