>> live from pier three in san francisco, welcome to bloomberg west. i'm emily chang. seattle deals a load to ridesharing apps like uber and lyft, the city council voting to severely limit the number of company cars on the road. also, a hit show -- we will talk to the woman behind abc family's "pretty little liars" ahead of tonight's finale. first, check out the top headlines. oracle has reported its best

quarter ever, with sales of $9.3 billion and a $2.6 billion profit. the competition from cloud computing companies may have constrained sales and record results disappointed wall street, the stock selling off after hours. oracle's troubled hardware units fell by eight percent. google has unveiled a new developer project for wearables with a focus on smart watches. they say they are partnering with a range of companies, including lg, samsung and fossil. the first smart watches will hit the market sometime later this year. the washington post is starting a new pilot program, giving subscribers of other newspapers full access to its website and mobile apps. this kicks off with six major

newspapers signing on. it's a move by jeff a's is to attract new digital traffic. first, we've got a special show for you today. cory johnson is with me in the studio as well as a partner at coastal ventures, celebrating one year as a venture capitalist. how is it going so far? >> i'm investing in an amazing number of companies. we are trying to keep up with the entries. it has been an entire year. the venture capital list is interesting. you get to meet the most ambitious people in the world. the hard part is to discern which one is sublime and which one is ridiculous. >> how do you do that? when i was on a portfolio side of things, it was keeping up on 30. 18 is a lot of companies to keep track of. >> if you did 30, i have 12 more. >> i had a history and things i could dig into that you do not have as a venture capitalist. >> that is true, but a lot of investments i've made have a common denominator.

there are common elements of local, social, community, payments -- so you know what you are looking for. when you are making an investment further away from your core expertise, that's much more ethical will stop you have to spend more time figuring out what matters and what doesn't. >> you were the ceo at square, a member of the paypal mafia. a long-time company operator. how does that differ from what you are doing now? i know you did a lot of angel investing before becoming an official vp. what is different about your job now? >> the biggest thing, is it is

not your baby. >> you have a lot of babies. >> you have a lot of babies, but they are not yours. when you see people on the street using your product, it's incredibly rewarding. all of the sacrifices are rewarded when you see normal people who have no idea you have involvement with the company using your projects. you are running a team in a company, mentoring people, mixing dna. it's a lot like being the general manager of a sports team. as a venture capitalist, you are just editing at the senior level. on the other side, if you are intellectually curious, it's awesome. it's like reading the world book encyclopedia everyday will stop you just read a different volume every day. everything from databases to rockets to photo sharing back to rockets or automotive or engines will stop it is incredible. >> you nearly took a job at air b&b. >> i won't comment. >> i could imagine -- >> i don't think it's news.

>> speaking of the sharing economy, uber, lift and sidecar -- you are a big investor in lyft. seattle is limiting the number of cars for uber, lyft and sidecar. they can each only have 150 cars on the road at any given time. also joining us is the ceo of sidecar from vancouver. but let's start with you. how big a blow is this? >> i think history is on the side of these companies. ultimately, real americans and real people all throughout the world love these products. at the end of the day, regulators will always cave to what real people want. it's just a temporary inconvenience in my view. >> do you think it is temporary? >> we certainly hope so. yesterday with that city council

vote, innovation lost and the taxi industry won a battle. this is a longer war and the people really love sidecar and these other services. we will win the longer war. but you're right, it was a big setback yesterday. >> speaking as a former taxi driver, i wonder about the response of the taxi industry. whether -- were they really focused on the industry and shutting down you and your competitors? >> yes. if you read the text of this legislation, it explicitly says one of the reasons they are creating it is because of competition with the taxi industry. that's why they have created a cap of 150 drivers for each company. the only rationale for doing that is to protect the existing

industry. these taxi lobbies have a lot of influence. drivers actually come off great under this new system because now they have choices. they don't have to just operate under the old-fashioned taxi system. they have new systems like sidecar. >> what about the safety issues? i'm a huge uber user. there are times when they have taken me the wrong way down a one-way street. >> has that ever happened with the taxi? new york city taxicabs are a classic example. they certainly violate the speed limits and take clever routes, sometimes approved, sometimes not approved. the zero defect standard is ridiculous. they'll have accidents, crazy

drivers, people who violate load regulations. i think the comparison should be compared to what people do every day. this is archaic. when this stuff started, it would have been ok for ac to experiment and say we will allow for 150 to see the incidence of driver error and number of complaints. there are so many cities across the united states and now the world using these products to scale, so there's no need to limit the experience in seattle and figure out whether users will be happy and drivers will be safe will stop >> -- will be safe. >> when i was a new york city cab driver, i would admit to going the wrong way down a one-way street once at least. have you guys done comparisons? there are requirements in certain cities to have a certain amount of training. a certain degree of safety and training is probably necessary. >> at sidecar, we are incredibly proud of what has happened on the safety front. we are pioneers in creating this entire category of having background checks and million

dollar insurance policies. will stop but what is unique to sidecar, uber and lyft, if you look at the actual safety record and not the rhetoric in the press, people use, the drivers drive as if they are driving their own car, because they are driving their own car. it is a very safe system. the vast majority of people who ride feel it is safer than a taxi. the safety argument is used a lot by the taxi industry, but the bottom line is these services are actually safer because you are being tracked by the phone, you've got a record of the transaction, and there is the safety of the crowd and other people have rated this driver. by the way, the rider is also rated, so it is safer for the driver. >> i was just in austin for sxsw.

it was raining and lyft and uber had trouble operating. it was so hard to catch a cab that you often felt stranded. do you feel these regulatory issues will go away? we see tech friendly cities the very unfriendly to these services. >> austin has always been this way. it has not changed and got worse. in seattle, the new development. but if you look at all of the cities, their welcome this to tech innovation and car service sharing has been incredible, mostly because at the end of the day, consumers love the service. consumers vote with their feet. if they have an unsafe ride, they can stop at any time. nobody requires them to use it and people will pick the services that provide a return on their time they appreciate.

>> let talk about uber versus lyft versus sidecar. uber clearly has the upper hand right now. >> i would not agree with that. lyft has a model that appeals to one segment and it's a more friendly experience. you have a conversation with your driver, it's a more social experience. you also have people driving their own cars which creates a different community dynamic. there's a segment that appreciates that verses like sitting in the back like a vip, like you or me in a different service. >> but even drivers tell me the pink mustache is annoying. what if it rains? >> but it gives a sense of credibility to the company.

when you are first trying lyft -- >> the first time anyone has said a pink mustache gives credibility. i wonder if there is -- the "wall street journal" just compared all three of us and find that sidecar is the winner because of the eta. it's a ride where you get a choice and it's very different from uber and lyft. >> users will vote with their feet and i think their growth rates are astounding. i did not read the wall street journal study. i know my friends generally choose uber and lyft, not sidecar. >> i wonder if it ends up being like a new york stock exchange -- the place where the most trades happen bring the most supply and it might be a winner-take-all. i would imagine that uber is making that argument. >> this is something debated all day long over coffee and drinks. there are some elements that are absolutely true. when you have a market in liquidity, winner-take-all dynamics take hold. but, if you take different population segments where people

prefer sitting in the back versus a conversation -- if you have different driver appeal, lyft and sidecar have different degrees of flexibility. so, if you have these discrete elements of the market, it's difficult to have a winner-take-all situation. >> you think all three can and will co-exist in a big way? >> i suspect there are probably two that are long-term or viable. you could see pockets -- new york city is a very special market in transportation. london is a very specific market where the dynamics are different. it's not that you have a global winner-take-all. >> which two? >> as you know, i am biased. >> hang on -- i just want to hear keith say which two? >> i believe lyft will do well and uber is clearly doing well.

>> he has put you at number three. i'm sure you don't like that. >> the bottom line is if you were to look back at other industries, in the beginning it looked like it was winner-take-all like facebook, but it does not end up being that way. there are lots of opportunities when there's a big market. there are ways to differentiate, and as people look at sidecar and compare it to the experience of lyft and uber, like the "wall street journal" did, they will find that sidecar is the clear winner. people have to give it a try and they will see. >> we will be watching. thank you for joining us. keith rabois will stick around through the show. we will talk about your expertise, and mobile payments. ♪

>> welcome back.

i'm emily chang. with me is cory johnson and my guest, keith rabois. we are talking about mobile payments, which have doubled between 2012 and 2013. you are one of the big emerging players in this industry. you power lyft, right? >> we work with lyft and sidecar. >> paypal powers uber? >> that is the case today. >> tell us what other platforms you power, because you are behind the scenes. >> this is a platform for all sorts of internet companies and internet commerce. we work with side products side projects, startups, and public companies. some of the ones getting a lot of attention right now are the new mobile first companies and folks like lyft, and sidecar -- those we tend to talk about in startup land. >> just to explain a little

further, it's a little different than just a thing that happens at the payment spot. we'll stop and we are not talking about some kind of crossfit wing and throwing the barbell up. >> we are not doing crossfit or batteries. >> maybe it is more akin to the visa than paypal. >> the focus of stripe is the idea that a lot of internet commerce is not happening yet that should be. look, on a macro basis -- only 2% of consumer spending happens on the internet today. we think of internet commerce as mature, ibut we are actually in really early stages. because it is hard to turn back to the phone or a friday marketplace like lyft or sidecar to operate, because the existing infrastructure is not set up well. we think there is a ton of opportunity to increase that 2%. we talk about the idea of increasing the gdp of the internet. that is stripe's focus.

>> you are a longtime expert, but you passed on stripe when you first saw it. >> i did. >> big regret? >> yes. >> why did you make the decision to pass on income on the other side? >> it was a good thing to do in life. it took a lot of money. the real reason is, i don't think i appreciated how much mobile was going to explode in 2009 or 2010, as opposed to substituting all the transactions occurring on paypal and other products to a new product, which is difficult for anybody as opposed to unlocking a new opportunity. it's a lot easier to build a company from scratch off of a new wave, and i missed the new wave. but i don't think anybody saw it back then. >> what is your number one question for stripe as an investor? >> startups are mostly about not screwing up in some ways. you are growing really fast and learning really fast, and

customers are demanding things. you are evolving internally very fast, and deferring mistakes is really important. that's why you see in the media, things occasionally break open, and linkedin had three ceos. take paypal, we had in the first year, we had three different ceos. it is a very complicated thing, to build a company in a massive market. just doing those things well usually yields excess. >> how do you make sure you don't screw up? >> we focus on every day. i think payment companies are particularly difficult. in some sense, it's remarkable we get to be the company that does this, and we were founded in 2010. we have all of the challenges any other high-tech startup has, but you have to contend with

international expansion, dealing with regulators in other countries, and substantial capital requirement. the opportunity means you can change what has happened in the shape of internet commerce, but it's an even harder market to exist in than most. we have been lucky that the folks who have joined us so far have been up to the task. >> we will continue this conversation after the break. we will discuss the competitive landscape, next. ♪

>> we are talking about mobile payments here on "bloomberg west." keith rabois joins us.

he passed on an initial offering from stripe. it is super-competitive. how does this evolve? is it winner-take-all or is it different? >> i think there is kind of a solipsism in technology companies, where we think a single company can do everything in a space, and it's kind of ridiculous. a media company thought it might have an internet play. we are on one thing, and that is enabling new internet commerce. these new services and websites, if you look at paypal, square, google, and so forth, they are focused on much broader things. square is doing peer-to-peer. stripe is just this particular segment of internet commerce accepting payment from consumers around the world. i think that focus is beneficial. when you look at the history of

companies that do really well, that focus turns out to help. >> thank you. we will continue this conversation with keith rabois after the break. ♪

>> you are watching "bloomberg west," where we focus on technology and the future of business. our special guest host for the hour is keith rabois. you have worked at some of the hottest tech companies ever. what do you think is hot right now? >> there is a lot of interesting innovation going on behind the scenes. we focus on the next generation and the next next generation. by the time things are in the public domain, it is already too late.

the way search works on the web is broken on a mobile device. who's going to figure that out first and be popular with users? you are seeing a proliferation of new apps powered by the address book instead of facebook, and that will continue. secret, whatsapp -- the address book is much more interesting. if you don't have a monopoly on the front apps, that poses a threat to facebook in the next five years. ask how big a threat? >> very serious. fundamentally, we are somewhat fortunate apple does not play in the social space and know how to massage the address book. >> they tried a little bit. >> the leadership at apple does not look at this. it could be a threat to all the social platforms. >> with the battle they had with at&t and facetime, they are building a fiber infrastructure,

quietly so they can carry their own messages, which i see as interesting in the world of google fiber versus verizon versus comcast. suddenly, you have fiber laid by apple. >> they need the social layer on top of it, so they hire someone like david sacks and turn it into facebook overnight. also former paypal mafia. what do you think of that? desperate? >> i don't know. it is hard to tell. buying up instagram was brilliant. absolutely one of the best business decisions i've seen in my entire life. whatsapp is a more complicated decision. i don't know if i would have made the same decision. it will take a couple of years to figure that out. >> what do you think of the fact that facebook seems to be buying versus building innovation? >> i think long-term that is scary. cisco has played this strategy well and it can be done.

>> you could argue not well. you could argue there hasn't been actual return to investors -- they've minted stock to give out and have bought back shares to keep the flow lower, but there has not in a tremendous return in the past five years. >> a similar thing could be leveled at salesforce. i think that is true, but there i think that is true, but there is some precedent by growing by acquisition but it's almost always better to grow by innovation. it is scary when you depend on acquisition too much. google had a very eclectic but insightful mix of acquisitions, so they purchase things like android which is absolutely indispensable. they purchase youtube which is very successful. >> manipulating financials at salesforce? >> i think there is an argument

about how they are accounting and the sec has some concerns. they are not breaking down revenue with the granularity you would expect from other technology companies. >> when you look at google versus facebook versus apple, who are the best innovators right now? >> i think earlier stage companies, generally. apple has a legacy of incredible innovation and i suspect there's another generation or two of innovations we can't even imagine yet. we will be wowed by them when they are shipped. i think the iwatch will be successful. apple fries where you push the physical constraints. they will have to do that to keep the form, factor and limitations of a watch. amazon has been innovating in various other dimensions that

would not have been predictable. i think it is possible to innovate successfully. most of the core innovation and people we are looking for building things from the bottom up will stop >> you mentioned secret in passing. what do you think of them? >> i think it is interesting and there is going to be more anonymous-to-anonymous transactions. reddit has been massively successful. it's a very vibrant community. if you look at their metrics, they are on par or better than twitter. it's very influential and has real schedule. hacker news is very influential in a tight community of startups. in other products -- they have to miss a story could well. the community can err on the side of a mob war not tied to real-world identity, but there's a lot of facebook that sucks up real-world identity and people creating antimatter are starting to thrive. >> you said secret is the most misunderstood absent twitter. mark andreessen said, never

naming it, these kinds of apps can ruin lives. there's a lot of negativity. some things are wrong, some things are mean. >> is that different than a tech blog? there are certain families of very mean content and comments. >> yes. >> building a business like secret successfully is incredibly difficult and a very rare set of entrepreneurs can pull it off. what i said was misunderstood, i think people's reflexive reaction misunderstood that the content that can be empowered on whisper or secret. if it's just your friends or friends of friends, the content is a result of people you know. maybe you should have different friends. think about who you are spending your time with if you don't like the content.

when you are adding content from strangers, you are playing with fire. secret does a little bit of both but if they steered more toward friends and friends of friends, the content could be a little more elevated. >> it is certainly a hot discussion topic lately. stick around. we will talk about ebay and paypal what our special guest, keith rabois. ♪

>> welcome back. i'm emily chang. ebay is in a heated discussion with activist investor carl icahn who is calling for a spin-off of paypal. ebay has contested the move, saying the segments are better together. and it has gotten personal as carl icahn has called out mark andreessen, claiming he has a conflict of interest in serving on the board as well as being a venture capitalist. here with us to discuss is our

special guest host for the hour, keith rabois, a former executive at paypal. also with us is a former microsoft coo. cory johnson is still here as well. do you think ebay and paypal are better together or apart? >> think they are better apart. reed has always believed more in partnerships and the rest of the paypal mafia, but i think he would probably agree with the following point -- when you have one big customer, which is what ebay is, it tends to crowd out a lot of innovation. there's a lot of demand and services you have to allocate to that very large customer. paypal over the last decade has missed all the innovation in a square world and stripe world. >> what do you think?

>> i think what needs to be done is a sensible analysis of the worst-case, the best case, most probable a case of a split versus keeping them together. one thing we know is electronic payment is going to be a hot area. consumers are struggling with the security issue. they are searching for a way to get out of the credit card mess, so to speak. the one that target represents as we have seen recently. you need to look at that and if the numbers say separating these mps provides the focus and the right p/e ratio for what electronic payment will be and the right p/e ratio for what the retail auction business ought to be, the numbers give us a good hand. >> i think that is carl

icahn's motion. a higher-growth business like paypal will get a bigger multiple. you are on the board of agile -- spun off from hp, one of the most successful tech spinoffs ever. how does the board make that kind of decision? >> with guts. there are a lot of words with mentally old people or possessive people who don't like to see the size of their company reduced. i am not commenting on the ebay board. >> keith, what about you? >> every board owes the shareholders that. >> the ebay board may have to consider this option seriously. the tactics of carl icahn are ridiculous. you could rebrand the company. it would help clarify the employees of their priorities. >> they have done that at some of the buildings already. >> they have completely dropped the ebay name and that would

help a lot to start stop you could do that tomorrow. then conduct the analysis of what are the economics and return on capital and how does it help with recruiting? >> what do you think of the tactics so far? ebay is fighting back and it has gotten nasty. >> i think the tactics are ridiculous but i also wonder why ebay is spending so much time and effort responding. it's like the shakespeare line, "the lady doth protest too much." ebay has performed well. john has grown the company well. the market reflects that. it would be difficult for him to get any real traction, so i would put it off on the side. >> there is the argument that an

ebay free and alone out in the world could be gobbled up by google or paypal could damage ebay. >> my response to that is so what? if that's what the world wants, the shareholders are driving this thing. if they can create more value for shareholders by splitting it and potentially someone looking at one part of it saying i'm going to acquire that, so be it. that happens all the time. let nature take its course. >> if you destroy more value in ebay come up you -- >> that's what analysis is for. get a good handle on where these p/e ratios will go and make a reasonable assessment of that. i think all the shenanigans in terms of the things you see in the newspaper are propaganda. they draw attention to the fact that there's an issue there. carl icahn's mission is clear -- let's get this out in the open. >> how do you see this playing out? >> i think ebay will make some concessions, either bringing

paypal blood back to the board. if you really want the energy of paypal, there are some talented folks like david, peter, elon -- they have been successful at creating businesses from scratch and innovating. >> do any of them want to do that? >> i don't know, but i don't think any of them have been asked. >> one of the issues is the appropriateness of mark andreessen being on the board and recusing himself. as a board member, the ebay guys make a very compelling argument that having someone like mark andreessen with his fingers so deep in everything in silicon valley -- is it problematic as

well? >> you could make the other argument equally as well. frankly, i don't see why he would remain on the board to tell you the truth, given what appears to be the risk of a problem. when you get to that phase, the right thing to do is step back and say there are other things to do where i can contribute. he's not the only human out there with that kind of talent. >> mark is a special talent without a doubt will stop but it's complicated. until recently, i served on the board of two public companies decided to resign from one. one of the reasons is yelp will be dominating all of local commerce and it causes potential conflicts and my next job was to find the next innovative local companies. i have stayed on the board of zoom, payments company, because it has not caused any potential

conflicts. but they expect me to be finding investments and if a public work service makes that more complicated, have to resign. but i think mark is easily capable of making those trade-offs. >> coastal ventures partner, keith will be with us after the break. we will be back in a moment. ♪

>> welcome back. i'm emily chang. ebay is in a heated discussion with activist investor carl >> welcome back. the season four finale of "pretty little liars" plays tonight. it's been a ratings hit because of its wild storyline, but social media is also playing a role. jon erlichman is in l.a. with

more. >> i bet you always knew i was a big "pretty little liars" fan. this show has too modestly benefited from social media. marlene king, the creator and executive user of the show, is a big fan of using tools like twitter. we started by talking about the interaction between fans through social media. >> definitely a very organic process for us. our fans were the people that started this social phenomenon. >> what are some of the best ways to keep your audience engaged through social media? is it a matter of giving them all sorts of teases on what could be coming next door is it more about allowing them to be part of the process? if they like a certain character, maybe that character ends up sticking around a little longer? >> we like to have contests and we do a lot of fun hide the clues and follow the clues, trying to keep people always engaged on twitter. but we just have a lot of fun doing it. the actresses love sharing.

it's sort of the modern world we live in. >> i have heard that you host tweet parties with a cast on days when the show airs. is this a hollywood thing or is this a marlene king thing? >> we started early on. we love our twitter parties but they're actually kind of boring. people ask if they can come see one of our twitter parties and it's just everybody sitting on the couch doing this and watching tv. it's fun for our fans and the people looking at the tweet, but we are just sitting there not very engaged with each other. >> what about the idea of people who come to must see tv and are doing it in part because all their friends are talking about and want to avoid the spoilers? how has all of this ultimately helped audience members for a show like yours? >> i think social media has helped it become must-see tv, especially teens who don't watch a lot of television live anymore. they watch it whenever they want to watch a show. they are watching because they are on twitter, watching it while they tweet, while they are on facebook, talking to each other -- it's not water cooler talk next day, it is live water

cooler talk as the show is airing. i don't think you want to watch it the next day, you want to watch it live. especially tonight, when we are airing the finale, some big secrets are revealed and answers are told. we hope we see some of the biggest ratings and twitter ratings for the show. >> you still need a good show and story lines to get people talking on social media. this show will be moving into its fifth season. how long would you like the show to go? >> i don't have an answer to that question. but just by the fantastic reception we've gotten in new york, people are so thrilled to watch the show and fans are excited to see these mysteries unfold. they've been very gracious allowing us this time to build all these questions, but it's time now for answers. but like sarah did in her books -- it's a classic formula. with every answer, new question arises.

we will keep going until he ran out of questions to answer. >> you got the bull excited when you suggested you might have an interest in doing a "pretty little liars" movie. 50% chance or 90% chance we will see a movie? >> i will say 80% chance. >> if we are talking about a movie versus a tv show -- it's a different social media experience. would you have to think differently about the way you go about telling the story? >> i would find a show like "pretty little liars" and in terms of marketing the movie -- if our fans all came out to see the movie on opening weekend, we would have a huge opening weekend. i think the story would be one fantastically great two-hour episode of "pretty little liars"

on the big screen with bigger action and the bigger mystery and a bit more sexy time maybe. >> a little more sexy time, perhaps. that was marlene king, the executive producer of "pretty little liars." >> it's time for the bwest byte -- we focus on one number that tells a whole lot. >> the number is 46. >> what's that? >> 46 is the number of wins for the alabama football team. but it's the exact same number of wins as the stanford cardinal team. >> of which you are a fervid fan. >> for 25 years. >> is stanford underappreciated? >> absolutely. the media spends time focused on alabama but stanford has won the same number of games. >> who are you rooting for? >> i follow you on twitter, so i think i may stanford fan as a result of that. >> people on twitter think keith should have his own sports show someday. >> we will fit that into the

schedule. >> it has been great to have you. thank you all. ♪

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