>> 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 web celebrates its 25th birthday. calling for a 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. just as "titanfall" hits stores, 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." and selling solar service through best buy. those who sign up before earth day will get a gift card. and 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 gaming is a hit driven business.

even zynga has struggled. >> if you look at this business, zynga is the model out there, maybe a cautionary tale. you have a company that has $1.9 billion 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. you wrote a long blog post about

this. thanks for joining us today. i have a question about surge pricing in general. has the company debated that this is the right policy, have 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. there was this 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 the price is exponentially higher. we have seen an uber ride that is 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. >> the surge drop feature -- that is great. >> all that amount of

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. >> what is the number? >> i cannot give a number. >> 1000?

>> yes. >> that is amazing. >> this company has the opportunity to transform how we live. it started as a black 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. >> we have talked about this 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 surge pricing model. what was on the first website? we will take 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." debating uber's benchmark pricing. a great record you guys had. uber sent a text to drivers 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. they onboarded 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 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. it reminds me of opentable. which is just a restaurant service. there is something about this 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.

they have 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 uber is because every time we 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. ice cream, valentine's day. >> 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. pinterest, $3.8 billion which makes no money at all. what do you think about valuations right now? >> this is 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 talk about 30 times even doubt. >> 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 peaked in 99, 2000. 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 come apart, they come apart very quickly. it would be more of a global catalyst than something internal to high-tech or silicon valley.

such as 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 break. ♪

>> ben hurwitz is one of the biggest names in tech investing but in his teenage years he was an aspiring rapper. he quotes hip hop lyrics to drive home truths. >> you can't tell me nothing.

♪ hip hop is the kind of music of entrepreneurship. it is aspirational. if you meet anybody in hip-hop they kind of think of themselves and talk about themselves as an entrepreneur. when i write a post it is to try to teach an entrepreneur how to do something. the posts can take you through how to do it and feels like i [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 until i put in kanye -- it is a little hard to understand. the great artist rakim said -- >> you don't often get to hear him actually rap the lyrics. how does a boeing 777 just go 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

>> 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. how 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 something that only exists in 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 these areas, 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. air crews are always in touch 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. 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.

you have got different entities focused on finding the plane now. the 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? >> things were making more sense 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. and why 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 really unusual but catastrophic 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. >> what single piece of 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. is it a good idea from the airline industry's perspective to invest billions and billions of dollars in some sort of high-tech real-time failsafe tracking technology for something that happens once every 20 or 30 years? i don't know. >> you are a commercial pilot.

are pilots trained to deal with losing contact like this? if the power shut off, what do you do in that situation? >> of course. electrical failures, electrical 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 the plane de-pressurized and the crew became incapacitated and the plane then wandered around and eventually crashed. air 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 and 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. ♪

>> welcome 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. but we still have a lot to do so 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 leader of 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 of support to funding the expansion of the internet. that was in the 1980's. the predecessor, ancestor in the 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. what was it about the web that was so revolutionary and different? >> the revolutionary part was twofold. one, the idea that multiple computers would be able to communicate using the web technology. the other amazing part is the time that tim berners-lee 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. what tim berners-lee did was 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? >> when 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. at the time, the big money, the 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. >> the first ever minitel reference on "bloomberg west" in three years. [laughter] was there something about the browser specifically, mark andreessen's browser there really accelerated this? >> it was the graphics capability. tim focused a lot on tech and

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 interest in was e-mail. they saw 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 steve jobs after apple. tim berners-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. mosaic added graphics in line of 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.

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>> 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.

the very structure of the 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 applications, wanting to educate 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. bandwidth growth, we need to

manage with new technology. >> there is this way that the 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 extra fiber, but 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 that goes in the future. >> software and technology will take sometime. a number of 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. they're more flexible than telcos. when it comes to the telcos, 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. the way a number of telcos are 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. ♪ . .

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