>> live from pier 3 in san francisco, welcome to "bloomberg west," where we cover the global technology and media companies that are reshaping our world. i am emily chang. the world wide- 25thelebrates its birthday. calling for magna carta to

protect the internet's open and neutral system. we will get to those stories later in the show. first a check of the headlines. stores,titan fall hits xbox live had technical difficulties. some users had problems signing in but those problems have since been fixed. the director has tweeted that the issue was not related to "titanfall." selling solar service best buy. those who sign up before earth card.ll get a gift starbucks testing a new mobile ordering service.

they released an updated iphone app that lets customers leave electronic tips for their baristas. first to the top story. new details on king's ipo. they will sell more than 22 million shares at $21 to $24 apiece according to a latest sec file. our editor at large cory johnson here with me in the studio. this is a company that has one hit game. >> they would argue that they have a couple of hit games. that is the whole thing here. is how replicable is this thing. one of the things in the filing is they do not give just quarterly numbers to my they give you the february number so they are seeing an increase in users and that is a good thing for company. with these guys you have them trying to make the argument that they have a number of hits in the pipeline and they have been able to develop a lot of different games. >> online gave an -- gaming is a

hit driven business. -- zynga hasas struggled. >> if you look at this business am i zynga is the model out there, maybe a cautionary tale. you have a company that has 1.9 billion dollars in sales and it is profitable. they had over $500 million in profits. their daily active users are increasing. 144 million daily. they talked about having 180 game ip's. >> what is that? >> i do not know. not 180 games but they wanted to suggest that they have a machine for creating intellectual properties. they're trying to say we are a hit maker, not a hit area do >> -- hit. search pricing affects less

than 10% of trips. they say they are transparent. long blog post about this. thanks for joining us today. i have a question about search pricing in general. -- search pricing. has the company debated that haveis the right policy, they considered alternatives? >> it came out of and experimentation process. we were noticing this was almost two years ago in boston. late in night about 1 a.m., the drivers would clock off the system and the boston partygoers were opening their apps between 1 a.m. and 3 a.m. and getting no cars available. issue where we did not want the service to be unavailable so we experimented with offering different amounts to drivers to see we could

affect that supply. he found out we could. we have done a lot of experience -- extermination with price drops. we have been able to see what that does to demand. what we found is you have hyper sensitivity to price on both supply and demand and that gives you the capability to move supply and demand around in ways that could be helpful to the system. >> to me as you know, i do not care about people, i do not care about the pricing thing. i think about the way this impacts the business and the reputation they have with consumers is surely important. >> yes. >> i wonder if you sit on the board and you have these discussions, were you taken aback i the reaction to the search pricing by the storm that hit the east coast? i happen to be in new york that night. we know [inaudible] a lot of people. >> you have to look at what the alternative is.

>> alienating people would be the alternative. >> what could you do differently? we all know hotels, airlines, they do the equivalent of the search pricing in periods of high demand. they have actually a benefit relative to us. this supply is fixed and the demand shifts. in our case the exact time like new year's eve, the supply shrinks while demand is increasing so both of those curves are moving for us. that driver does not want to be out on new year's eve either. the times that most humans want to not drive, these seem independent contractors do not want to drive also. you have an extreme example that is worse than the hotel case. if we were to set prices at normal pricing while supply is tricky and demand is increasing, 95% would see note ours available. when you ask what is the pr hit,

you have to contrasted with what the hit would be if we did not do it. the company has come to the conclusion and i believe this as well, the product would look broken if we did that. because in these moments when you want it to work the most, it would not be available. this is a better alternative to that. >> can you explain why it has been compelled -- compared to hotel rooms and flights were but exponentially higher. we have seen an uber ride that more expensive. >> is created controversy. when travis was flying home he showed the airline ticket was 10 times the normal price. i do think they go to those levels. i happen to believe that these types of peaks are going to go down over time. one of the reasons why this notion of gouging is silly is because the company is out there begging people to be aware of it . being ridiculously

transparent. drop feature -- that is great. ofall that amount transparency, people making aware and making drivers where are going to cause the peaks to be smoothed out and i would also argue this last new year's eve, there were large numbers of hours in new york where there was that any search pricing at all and it is partially getting awareness. >> there was no search pricing at all after midnight. >> those things will abate over time because of awareness of the problem. talk about the number of cars in san francisco and how that has changed since uber. >> when i first talked to travis about investing in this concept to my there were 600 licensed black cars in san francisco. at any given moment there is a number that is a multiple of that on the system.

to >> what is the number? >> i cannot give a number. >> 1000? >> yes. >> that is amazing. this company has the opportunity to transform how we live. --started as a black harel car alternative. now it has become a car ownership alternative. i know people who have gotten rid of car leases and are using this as their primary means of transportation. this have talked about number. the number of people under the age of 20 who are getting drivers licenses is falling dramatically. i think that is part of it. >> in the past 10 years car ownership has fallen by 30% between 18-24. it ties into the urbanization that is going on.

there are changes happening in america. >> we will continue this conversation after a quick rate. the search pricing model. what was on the first website? we will take of -- a look at the history of the web as it turns 25. you can watch a streaming on your tablet or phone. ♪

>> welcome back to "bloomberg west." benchmarkber's pricing. a great record you guys had. sent a text to driver saying that it was close to search pricing, people would be out all night and earnings would

be higher because they did not activate new drivers over the weekend. uber did respond saying the net goal was to get more drivers on the road but it is things like that that make people think uber is shady. how do you respond? >> the earnings they were talking about in that case is the earnings of the drivers. a bunch of new drivers. if you bring in supply and the demand has not adjusted they will make less money. they are sensitive to what the drivers were making. i think that was ms. resented -- misrepresented. they wanted to be considered -- >> uber had such an impact. when it hit the town. >> how does travis think about it? does he debate this things -- these things in his own mind.

when i talk to them he is firm. >> this one he has gone over and over in his mind and i have had long conversations with him about it and he goes back to what i said earlier. you have to make a decision as to whether availability is more important than that. if you want the system to be usable, it has to be available. people say i cannot use it because i do not know what the price will be. you cannot use it if you cannot get a car. >> one of the most interesting things is it is a car service. reminds me of opentable. which is just a restaurant service. this is something about fear of technology that is about these vertical applications that are just one thing but are excellent at that one thing. will we see them expand to other types of services or more companies like them? >> travis has talked about it and it is possible. when people look at this company

as an investment they would catch a late how big the lack car market is in north america. blown through that at this point. there is a ton that is happening in the background with the optimization technology that is causing utilization to go up and one of the reasons we have been able to drop price four times on wer is because every time drop price demand goes up. with the software utilization goes up. these cars have people in them far more frequently than they would have traditionally. and then like a traveling salesman problem where they are able to be more efficient and more effective as a whole. >> one of the -- what do the optimizations show? they have a predictive demand model for every city for every day for every hour. >> could you see them taking on fedex or something like that,

what is next? ambitions are big. >> absolutely, the ambitions are big. think about those types of things are interesting. any -- we have a saying at benchmark that more companies die of indigestion than starvation. to speak to the importance of focus. the company is hyper focused but they are thinking about those things. as you have noticed over time, we do experiments. day.ream, valentine's >> kittens. >> those things are about pleasing consumers but they've provide data to help us analyze other opportunities area do >> i want to ask you about valuations in general. erest, three point $8 billion which makes no money at all. what do you think about valuations right now? the best it has been

since 1999. the highest. >> this is the point where venture capitalists say if it is to expensive for me the public markets are cheap. >> we have never had this low of global interest rates ever and it is creating a ridiculous amount of supply capital. we see it most acutely in the venture world in the late stage market which is where some of these valuations are that you're talking about but it is in the public markets now. it is common to hear bankers even doubt.0 times >> i want to know the way these -- the bubble is different. >> it is because of the interest rates. there is a lot of capital searching for home. and also because of growth. global growth is missing. and these companies have growth

and the search for growth is a search for where do you put your money. and then there is a game we get into every time and this is more similar to how it was which is one ipo goes out and he goes up 100%. that causes everyone to want to be in the next one or the next one early. >> how sustainable are these prices? do you see a point in the near future where they're going to come down? >> near future is always the hard part of the question. the phrase irrational exuberance was made in 1996 and prices 2000. in 99, if you got off the field for that time you missed the three best years in the history of venture capital. it is tough. i would say this. the way we get into these cycles happens very slowly. because they build on each other. and when they do, part comedy, part very quickly. they comeey do, part

apart very quickly. it would be more of a global catalyst than something internal to high-tech or silicon valley. such as a google -- a market collapse or the nasdaq retreating 30%. you are investor in snap chat. what does this mean for snap chat? >> i do not know that there is specific implications other than facebook clearly sees being in more kind of one-to-one messaging that is critically important for various reasons. i think it might cause of the people to look at whether or not they are. he has stared down the m&a opportunities that have come in front of us so from that perspective it does not change anything. >> thanks for joining us. always great to have you here. we will be back after this quick rake. -- quick break. ♪

>> ben hurwitz is one of the biggest names in tech investing but in his teenage years he was an aspiring rapper. lyrics tohip hop drive home truths. me nothing. tell

♪ the kind of music of entrepreneurship. aspirational. if you meet anybody in hip-hop they kind of think of themselves and talk about themselves as an entrepreneur. post it is to try to teach an entrepreneur have to do something. the posts can take you through like ido it and feels [inaudible] i wrote a post called cash flow

and destiny which is about why going cash flow positive is important because you can control your destiny and not be dependent on outsiders. it is great for me to explain that but kanye wait till i get my money right and then you can't tell me nothing, right? it is a little hard to understand. rakim said yout are a rent a rapper. i will watch you flip like a renegade. you don't often get to hear him actually rap the lyrics. just gos a boeing 777

missing like that? we will discuss next. ♪

>> you are watching "bloomberg west." i'm emily chang. crews are still searching for a missing malaysia airlines flight. malaysia is now investigating and unexplained radar blip far off course 45 minutes after contact with the plane was lost. patrick smith joins us from boston. he's a commercial airline pilot and author of "cockpit confidential." this is a technology show. is it that in the 21st

century, a plane can simply disappear with no trace of it on radar, no communications? how does that actually happen? >> you use the word there, radar. air traffic control radar is exists inthat only certain parts of the world. there are vast stretches of the planet that are not covered by radar across the ocean, certain remote parts of asia and africa. when an aircraft is in one of we communicate other ways, by high-frequency radio or what we call sms datalink. there are different ways of communicating, depending on where you are exactly and depending which air traffic control facility you are working with. it varies. i keep being asked, why wasn't this plane being tracked? it was. touchews are always in

with air traffic control and companies on the ground, one way or the other, through any of those means i just talked about. what seems to have happened here is all of that equipment, one way or the other failed or was shut off. we don't know. without power, you cannot communicate here it -- communicate. that is where we are. we don't know why that happened. was it foul play, which is conceivable, or was it some sort of bizarre and catastrophic power failure on the aircraft? >> there are reports about the plane being inside a military radar when it was not seen anymore by the air traffic control radar. how do two kinds of radar differ? >> i don't really know. i'm the wrong person to ask about that. and who was tracking the airplane and where -- all of

that seems to be very confusing right now. entitiesgot different focused on finding the plane now . message, getting from there and filtered through the media and finally out to the public is becoming garbled. i don't think we really know who was watching what and where. we are kind of confused right now. eventually the message will be more clear. not yet. >> how unique is the situation? have you ever seen anything happen like this before? >> not exactly. we tend to have short memories and when you go back over the history of commercial aviation and all the different accidents that have occurred over the years, there have been some strange ones. what is important here is that people need to be ready for the possibility, not the likelihood but possibility that we just might not ever learn the whole truth about what happened.

that is kind of bold for me to put out there at this point. they have not even found the wreckage yet, and i suspect they will. my hunch is that we will understand at some point what happened. but we might not. at the very least, it's going to take some time. people want fast and easy answers, and that is just not the way this works with air crashes. it sometimes takes weeks or months or even longer before we really understand what happened. >> conceivably if they do find the wreckage and they do find the black box, they may get more clues. what is your gut feeling? it is so unusual that the plane would be flying so far off course. why do you think that could be? more senseere making up until the point when the news came out that the plane apparently had wandered around

for an hour or more, for hundreds of miles after contact was lost. that really pushes the whole conversation literally in another direction. that happened is the million-dollar question right now. it is very unusual and it suggests to me one of two things , which i touched on earlier, which is the possibility of some hijacking or other foul play or catastrophicl but power failure on the aircraft that would have shut off the radios and transponder and datalink system. very strange. i don't want to say what my hunches are. i don't like speculating on an accident when so little is known. all we really know is that a

plane wandered off course and disappeared and almost always in these cases when you start conjecturing and throwing out theories and ideas, they turn out at the end to be either very incomplete or completely wrong. the safe thing to do is hang on. i'm sure we will find out or i hope we will find out more in the coming hours and days. piece ofingle technology do you think is a reasonable thing that might give us more information that should be added to cockpits or whatever? >> that's a great question. understand how rare this sort of thing is. thet a good idea from airline industry's perspective to invest billions and billions of dollars in some sort of high-tech real-time failsafe forking technology something that happens once every 20 or 30 years? i don't know. >> you are a commercial pilot.

our pilots trained to deal with losing contact like this? if the power shut off, what do you do in that situation? >> of course. , electricalailures problems, loss of communications. those are all things that pilots are trained for. another thing that has been coming up is the possibility of a sudden or explosive decompression, and the idea that theplane de-pressurized and crew became incapacitated and the plane then wandered around and eventually crashed. crews are trained to deal with de-pressurizations. i do not want to say that reacting to one is routine. it is something that is practiced in the simulator and

it is a procedure that all pilots are familiar with, and even a worst case de-pressurization is survivable. i'm not ready to go there yet too unless something happened on the crew did not react the way they were trained to react. that's a possibility. all of this is unlikely. each of these scenarios is unlikely but one of them happen or maybe a combination. we just don't know. >> the mystery still unsolved but we will continue to follow this story. "cockpit confidential" author patrick smith. ♪

>> will come back. i'm emily chang. the world wide web celebrates its 25th birthday today, not the internet, just the world wide web. >> it is amazing it is only been 25 years. >> 25 years ago the scientists submitted a proposal for an information management system. now he is calling for new guidelines for the web and once a web magna carta. he released a video this morning. >> we have built an amazing web. so we still have a lot to do that the web remains truly for everyone.

he was to connect people with no internet access and create a web that can run on any device. we have a couple of great guests to discuss the web. ucla computer science professor from l.a., the first message transmitted over the internet was sent from his lab at ucla. the internet history program at the internet history museum. thank you for joining us. al gore once claimed he invented the internet. who is this tim berners-lee guy? who really invented the internet? >> the internet and the web are different. al gore actually did put a lot to funding the expansion of the internet. that was in the 1980's. in thedecessor, ancestor late 60's and tim berners-lee

proposed the world wide web in 1989, around the same time al gore was beginning to fund massive buildout of the internet , which is the plumbing for systems like they web. >> what was it that was so unique about the web? there were notions of hypertext at the time. apple had a hyper-card project. thatwas it about the web was so revolutionary and different? >> the revolutionary part was twofold. idea that multiple computers would be able to communicate using the web technology. the other amazing part is the -lee that tim berners suggested this live connectivity where you could click on things and reach out to other documents across other computers came exactly when it was needed. you heard marc talk about al gore's contribution to laying

out the global infrastructure, the backbone. at the same time, the dot com's were coming online asking for access to this wonderful thing they had seen as the internet. what was missing was an easy user interface. d wastim berners-lee di suggest the concept that was later implemented in a variety of ways. netscape browser, internet explorer. it gave the consumer and businessman a wonderfully simple graphically user interface to access the wonders of the internet they were seeing. >> how quickly did the internet develop from that proposal? was it very slow, baby steps or did it explode? tim did propose the web, there was no easy way to use systems for the internet. there were several proposals.

it is kind of the least likely proposal in a way to become the world's standard. thehe time, the big money, commercial interest was in systems like compuserve, aol. they were systems were you paid by the hour for access. the idea of having an easy to use system on the internet was something that was radical because the internet was academic, it was a research network at the time. minitelirst ever reference on "bloomberg west" in three years. [laughter] something about the browser specifically, mark andreessen's rouser -- borws -- browser there really accelerated this? >> it was the graphics capability.

andfocused a lot on tech documents. allowing photographs, images, pictures and video to be easily accessible was extremely attractive to the consumer, especially to the businessman. one of the main applications the business world was interested in was e-mail. they sought e-mail being used by the research scientists. they wanted access. it was not easy to do. add to that, the graphics, images, video. an easy interface. the human computer interaction was the key missing element that we saw emerge in the early 90's. >> we know where the web is today 25 years later. 25 years from now, are we still going to be using the web? it is actually not very well-known, but the web started off as a graphical user interface browser similar to

later ones. it did support multimedia at the beginning. there was a catch. it was done on a sophisticated machine from dave -- steve jobs after apple. -lee and his partner on the project, the team, asked for support for both browsers on pc. they did not get support. they called for volunteers to build browsers. that is where midas and mosaic came out of. in line ofd graphics the text, which was in a long-term plan from tim berners-lee. they did it quickly in a way that caused tension in the community and that became tremendously popular. >> we will be watching for the next 25 years and discuss what happens next after this quick break. marc weber and leonard

kleinrock, thank you both for joining us on this special day. ♪

>> welcome back to "bloomberg west." massive amounts of data source cross the internet every second and broadband increases 20% to

30% every year. >> what an interesting time. of they structure internet is going through interesting changes. a big part of the way the internet is working. the longest standing ceo in the optical space joins us right now. what happens in the internet in one minute? >> hundreds of millions of users are using tens of thousands of to educates, wanting themselves and buy things and socialize and entertain themselves. and derive opportunity for themselves to be able to do different things on the internet. >> is a bandwidth increases 20% to 30% a year? is that sustainable? >> it has been sustainable over the last decade -- >> what about the next decade? >> definitely. new applications are coming each and every day. we see that continuing. we need torowth,

manage with new technology. way that thehis backbone of the internet is changing. one of the most interesting developments is not just the existing internet and increased usage or even the addition of in the same way that optical does, using existing capabilities in new ways to essentially add new lanes on the super information highway. talk about where the ghost of future. >> -- that goes in the future. >> software and technology will take sometime. enterprises are ready today. we see that as a massive change. people have to virtualize their

hardware, have to manage their investments more effectively, especially the telco group because of their capital equipment expenditure limitations. they see continual pressure on investment dollars. telco is changing the way they build networks. >> how do you innovate in networking with the existing infrastructure? what are the challenges? >> very challenging, especially for the telco's. thanre more flexible telcos. telcos,comes to the they have operational processes that are very fixed. they have billions of dollars of invested capital in existing networks. when they moved to the next generation of networks, they build overlays. a new network. telcos areumber of moving, they are rolling them

out on the new technology on a separate solutions base. step-by-step they roll new services or old services over to that new infrastructure. >> can the internet ever break? >> i think it would take a lot to do that. it is very decentralized. >> probably not. we will be watching the next 25 years. brian protiva, optical networking ceo. thank you for joining us, and thank you all for watching this edition of the show. we will see you tomorrow. ♪ . .

>> welcome to "lunch money." i'm adam johnson. take a look at the menu. here's what we've got. the president walks in to the gap. this is not a joke, he means business. george soros says, forget the euro crisis. the euro has bigger problems. it in politics, marco rubio with a new course after regrets on immigration reform. and property, how to build a $20 billion neighborhood. in innovation, meet the man who wants to take a bat wing suit for a ride off mount everest. that is crazy. we will kickoff with a special