>> live from pier six in san francisco, welcome to bloomberg west where we cover innovation, technology and the future of business. alibaba makes a big investment and the popular messaging app tango, putting $213 million into the country -- into the company. alibaba is likely to be the biggest tech ipo since facebook. which city is better for business, san francisco or new york? betty liu spent the last couple of days in san francisco and we

will do a friendly debate. first check of your headlines. google says from now on, gmail will always use an encrypted connection on 100% of messages which means that no one can peek into your messages as they travel back-and-forth between the user and gmail servers. google says it has made security a top priority. we are getting more details on the dreamworks 2.4 l yen dollar entertainment complex in china. ae product would include movie theater, restaurants, and the dreamworks studio. he caught up with jeffrey katzenberg. >> we are making movies here in china for china, for export to the rest of the world. in order for it to be exported, it needs to be of the highest quality. within less than a handful of years going to be the number one movie market in the world. we think it is a great center for us to attract great artists

in china and we think it can be a world-class competitive studio. >> the project is expected to finish in 2017. we got new pictures of the up dated design for the facebook new campus in palo alto. it is being designed by a famous architect who was asked to create a more subtle campus. 400campus is more than 35,000 square feet and will feature tree-lined pathways and tunnels. office also feature an building with a giant open office space that can fit 2800 employees. we've got a very special show today. we have a very, very special who has an-- incredibly impassive bio., andcofounder of paypal board member of yelp and there's

more -- founder and president of hbs. >> that's a long link in page. >> how do you keep track of it all? >> um - justnk it's primarily massively overgrown adhd. >> how involved are you in all of these things? >> it varies. i am not a believer in multitasking. i'm a firm believer in narrow focus. i realize that there are different kinds of focus that i enjoy and need to have in my life for balance. just sure joy because is a mix -- it is an exciting good for humanity project. being a part of that makes someone want to wake up and sing. that is my 105% job were i am

ceo. >> intellectual oh aces, we will talk about that later in the show. >> do you feel working as an operator on one thing and in other cases a chairman is where you want to get operational details or do you try to approach it from different sides? >> it's exactly the latter. being able to scratch the operational itch at a firm makes me a pretty good word member or chairman because the job of a board member is not to say or tell how to do, it's to hold management to the highest possible standard. once i'm exhausted from running a firm, i can say tell me what you've got and i will tell you where it is delivering but i will not tell you how to do it. a $280aba is leading

million investment in tango. there has been a flurry of dealmaking in the messaging space. for $19 bought whatsapp billion, what's your take? >> the most obvious layer is suddenly everyone who does not have a mobile social platform says i need one. facebook stepped out and said here is the price and it is huge. there is a frenzy about the second third and fourth. the more interesting question is that these arel enormous companies that are asked successful, the are they capitulating and admitting that it is not that easy for them to build a social draft, especially facebook building the sub during a transition to mobile. buyingwhatsapp defensive? >> it's very valuable.

them asry valuable to they firm their grip on the rest of the world. it's a very international app. i think is genius. i think the calculation that mark zuckerberg made around how much more will this ultimately contribute to my market cap and the price seemed outrageous on the absolute scale. relatively, it is a step forward. >> is it that they will have a profitable this must inwhatsapp but messaging might move that anyway? what about the phone carriers making a lot of money with text messaging and maybe communication will happen near a facebook platform? >> ultimately, facebook has aspired to be a communication utility. any form of a successful network that has a real effect as a

utility is a threat. whatsapp oram, like the free sms platforms that become medication devices. envision a time when facebook is not dominant? >> they have purchased a company that could be the future dominant social markets i suspect they are getting toward being the dominant social matter. being that they are so not asleep at the switch suggested they are intending to be. >> it also suggests the pace of innovation and things that could become social networks, it makes you wonder if something else might come along like a facebook. >> it's very exciting. noty time the giants are quite so strong as they seem to be, it's >> an opportunity for entrepreneurs.

we are excited to have you for this hour. coming up, we will talk about carl icahn changing his tune when it comes to paypal. max is a founder of a pale. -- paypal. we will discuss that next. ♪

this is "bloomberg west." cory johnson is here as well as max levchin our guest house for the hour. carl icahn is dropping his proposal for paypal to split off from ebay. instead, he is going from an ipo of 20% of paypal. e by praise his ship but said the company should stay together. i am curious to hear your thoughts on this. what do you think of this new idea from carl icahn?

>> i literally learned this from you in the break. >> that's why we love you. >> at first blush, that's not a bad idea. you have the commercial view of having paypal intact. i agree that the separation between paypal and ibo -- and ebay commercial is a bad idea. there are tons of value and revenue to create there. giving the management team of trackable motivation to come to work every day and innovate and break rules and do crazy stuff is pretty good. pulled aay carl icahn good one out of his hat. thisher members have said might be a bad idea. >> when you take a lot of big companies, you can get more short-term values for splitting things up. it is plausible that paypal and ebay armor for -- worth more separately in the

short-term. it is probably worth more in the long term together combined. i think the devil is in the details, this 20% partial split. will they still be able to execute the long-term integrated product? side of theyn the are better together. deal, ii look at this understand why ebay wants paypal. i don't understand why paypal would want ebay. >> a decade ago, it was clear. it's a little different now but there is still a tremendous -- ebay is a manufacturing factory of small american businesses, in a way. this is where they grow and figure out the logistic details and they solve their payment problem. every truism about how ebay has been completely dominated

the i paypal, there are still new sellers coming in and they are not basing 100% of their business on ebay. paypal being there is very valuable. as its own payment platform could flourish everywhere. it's a business case for paypal being part of ebay may not be good for paypal. >> i don't think it's bad for paypal. i don't think paypal needs to separate from ebay to cash in on the opportunities outside ebay. >> what about the innovation case? many people have said ebay has not innovated when it comes to product. what do you think? >> innovation happens and lots whenfferent times scales you shake things up, you're likely to get more innovation for a little bit and whether that will result in more innovation over the next few years, it's harder to say. there are a lot of synergy

between paypal and ebay. there is a lot of stuff that ebay can do overseas that is beneficial to paypal. there is a lot of deep products that we probably don't know about that takes years to come to fruition. that kind of innovation could be disrupted by pulling them apart. >> what is the payment space missing? what is paypal missing? >> i don't think a pal is missing that much. an excellent payment stack, if i do say so myself. i'm working on a company that has a payment product but is starting to be a lender. we are trying to build a modern 21st century essentially credit issuing bank, something that is , something that has scores, offers, markets, lands and processes payments. we are a little bit different and we don't look at paypal and say that is paypal 2.0.

we say we could be a provider to merchants like paypal. , it looksk at a pal like it was written in c++ 15 years ago -- >> by you. >> with the acquisitions, there is now hope for a lot of that being blown up and rewritten and rebuilt. they have stagnated for use. -- four years. >> i wonder if it is about keeping it out of the hands of amazon. maybe they want to get a piece of that. is that what you see happening? >> i don't think so. i don't think who owns various pieces -- i think it comes down to the experience and the innovation what's the best way to move the industry forward. there is lots of smaller companies innovating in the payment space. there is room for ebay and

amazon to innovate in there as well. i doubt these decisions will be made wanting to prevent paypal from ebay and winding up in the hands of someone else. much to the both of you. we will talk about wearables next. talk about the future of wearable technology next. ♪

welcome back to "bloomberg west." fixit is facing a class-action your us -- lawsuit. it was filed on monday in san

diego county one man o afte they recalled products. device tracks sleep patterns and exercise patterns. this is the same a good google unveiled android where, new version of android designed for wearable technology starting with smart watches. you are a big wearer of fit bands. also max levchin. you guys have apps for different wearable devices. i'm wearing jawbone. >> i have trimmed it down to just the jawbone. i was rocking the jawbone and the fitbit for a year because i could not get a commitment. >>phil is wearing the pebble watch. >> we are really geeks.

>> it's an interesting time with this growing business. we had the chief financial officer from garman and they are doing $350 million on fitness wear. we don't know what the numbers and jawbone.t why is the business blowing up? >> there are a million great reasons. it's finally possible and the battery life is extending and the low energy transmission particles exist. to reflect on the lawsuit -- it's ridiculous. isbonkers.hing it is coming out for a more subtle reason. the people that were buying these are still buying the product. we are the health-conscious one percent spurs. -- percenters. population is unaware

of these devices. there are many people that could benefit from these devices. it's an exciting field but it is a form of class action lawsuits around it. these are early adopters. it might burn your hand sometime but that is bad but you chose to go and do this. much, iexercised that wore these today for you. i'm not compelled to wear these on a daily basis. can this really go mainstream? some people have said these will go away quickly because sensors will be part of everything we wear like clothes. you have been working with wearables for two decades? yes, and i don't exercise all the time i know it will shock you. the mainstream potential to where both is bigger than fitness. the fitness potential is huge but just the potential of making

yourself smarter and having a hyper awareness where you know what is going on because you have information when you need it all the time is vastly powerful. or two from becoming mainstream but that's to time to work in it so we are investing heavily. >> it's amazing how much is in your phone. xtrava app is great for athletes. the sensors on the phones are changing quite a bit. what does the phone lack where the wearables might show up in other forms like wristbands? >> i think the major change -- >> they have phones in their hands all the time. >> even a split second of having to look at it or take it out of your pocket or look away makes a huge difference in the user's case. if you look when software was written on desktop computers, you only used it for a couple of

hours a day when you sat at your desk. when you had laptops, you used it two or three times a day. then we went to phones, you went to using software 20 or 30 times per day. now we are going to watches and glasses and other things and you will be using products hundreds or thousands of times per day. that just changes everything. >> how much does it matter -- it seems that google has a head start -- we are still waiting on apple. >> i cannot speak for apple but i think the android announcement yesterday is massive because there is an enormous infusion of developer talent. people who have been sitting on the sidelines and say they are pretty committed to android, now they can develop anything and everything that runs a very popular mobile operating system. i think it is an enormously intelligent move by google. >> thank you for being with us.

we will say goodbye to phil. coming up, we will talk about health care technology, what is eating the burrito or skipping the gym costing you? a new app helps you stay on track with the financial twist, next. ♪ >> bloomberg tv is "on the markets." we have a rise in stocks today after the fall yesterday on concerns that an interest rate increase will come sooner than investors were banking on on the heels of the janet yellen comments during the federal reserve press conference yesterday. we are seeing some really today after economic data this morning beat estimates. in terms of individual movers, first solar is the largest u.s. solar panel market losing its effort to put solar panels on roofs of homes as demand from smaller -- from solar farms shrinks. they got 50% of its sales last

year to large utilities and the stock rose 20% yesterday after it raised its forecast for it we will have more "on the markets." ♪

>> you are watching "bloomberg west." from wearable technology to health care technology, many new apps are helping people improve their health but how can users stick to their promises? gives you a financial incentive to exercise and eat healthy and it's called pact. levchin was an early investor. t.ll us what is pac >> it's an app that helps people live healthier using financial incentives.

that means people commit to exercising or eating healthy with their own money on the line. at the end of each week, if you don't make your goal, you pay into the pool and that becomes a reward for everyone else who meets their goals. >> why? >> it's obviously brilliant. care isre of health fundamentally about changing the cost structure. we cannot get further along without modifying the way you pay for health care and the way costs changes by becoming healthier. there is no other way. cost is aite to the great idea. fundamentally, a app that tracks your performance with a financial component is a sweet spot. how could i not invest? >> did you find this and you thought you would help but this has to be different?

the way i think we ran across pact is we were brainstorming ways of creating a financial incentive to exercise. you don't really have the motivation to do this all the time. if it hits your wallet, much larger percentage would do that. someone said i think there was andcompany called gympact they became pact. >> i'm not sure i would want to bet on my cell. might bet -- i on cory johnson but not me. >> you are more likely to be motivated by loss than gain. by having five dollars on the line, we see that people made over 90% of their exercise and healthy eating pacts from six months to a year. >> we hate losing.

it's especially to for people in silicon valley. there is a bias me, i have noticed the purchasing of something, a lululemon purchase will send someone back to yoga class. the technology keys may going further for another couple of weeks and a few miles on the road. that makes all the difference. >> i would like to point out that you are thinking about this from a bigger picture perspective. glow, you areke trying to lower health care costs. also hasou think pact the possibility to do that. statectly, these later versions look like insurance product. with glow, we on the right

portion of hospital treating fertility. pact is more about wellness and fitness and overall general health. all these things ultimately lower the cost of being healthy which is the role of insurance companies. they spread the risk so we try to lower the risk. >> do you think about it from a port folio perspective? i think that's taking it too far. we want to build glow because passionate about in fertility and that it's not covered by insurance companies. as we got smart about health insurance, we looked around for other countries trying to approach it from different ways. >> what is the size of this market? >> we started out in the

consumer market and we have most -- motivated over 7 million healthy activities. the real opportunity is in the behavior change tied to health care utilization. we have looked at the before and after data of fitness users after they join pact and we see there is a 40% increase in activity over four months. that leads to a next or five miles walk every week and that is the type of health care utilization change we strongly believe in. if we can change people's behaviors, we can change the cost associated with those behaviors. >> many people are speculating about the apple health book. we have yet to see any company really own health care technology. when will it become more than a few good apps? towith glow, we are trying make it more than just a good app. it's a great community and the product that solves both that financial problems for people. as the platforms themselves step

in and say here is a unifying likef using these products the apple passbook enables several kinds of financial transactions, health book will probably be a good thing but we have not seen it yet. max levchin thank you. as we go to break, here is a look at what is coming up tomorrow. the former facebook cto brettt taylor will tell us what he is working on now. next from the crisis in ukraine to a missing 777 jumbo jet, can the best minds in silicon valley solve the biggest world problems? ♪

"bloombergback to west." our special guest host is max levchin and were talking about big world issues, the crisis in ukraine and the search for the missing jetliner which i am assessed with. -- i am obsessed with. there are so many problems to solve but what are the biggest and how can technology help? that's what we will talk to max about. allbs, you are tackling kinds of things but i want to talk to you about the process because you spend a lot of time thinking about problem's and how you might be able to solve them. walk me through that. each event has a special color to it in that it is focused around the notion of data as the raw material to be used to solve big problems. the process always works around -- we sit around and brainstorm.

i's more loose than that but like to think that we ask a question -- what sort of data is coming online? in sets of not know information that is just about to happen and what does that tell us? aen mixed with that, we have question that we love asking which is -- what does this problem look like when it is sold? my an optimist despite former soviet roots. i would like to think that 30 years from now that we are thriving and art good and are building exciting things. 30 years from now, this problem is solved. what happened between now when it looked bad and 30 years out when it looks great. what took place? we go backwards and say this must've been discovered and this

happened and this was cured and this was invented. then we ask who is doing these things? if we are not doing these things, who is? it is an uplifting process. here are the top 10 things that will happen in the next 20 years. what about cancer, for example. >> how does that look on your daily calendar? what is the agenda for that kind of meeting? i think it is a work process that very few people go through. >> i wish i had more time to do it. recentlyomes together, i found that we are actually more productive when we are not in our office. our office is covered in white boards. we brainstorm floor to ceiling. we have a lot of interesting toys in the office so we sometimes play around with a 3-d printer. most recently, we found ourselves going to strange and

interesting places that are not our office. we were on the peer very close to your studio. >> tell us next time. >> it was late at night. we were there well past midnight. at that time, we talked about what happens to video on mobile which is interesting. -- anit and engender agenda? almost except that much of it shapes itself as a start of the conversation. everyone shows up and says something. let's talk about the big things going on in the world right now. ukraine, you are originally from ukraine and technology has been used on both sides with government and protesters. can technology help in this situation?

are there limits to what technology can do? >> technology is central if you look at the organization of the independent square protesters and the cyberattacks. it is clear that conventional proto-violence -- fortunately it never got to violence in my hometown of kiev. i grew up there and have been on that square many times. this is very close to home. the only part of my family that lives there is in crimea. was not thatthere much bloodshed as i expected. it does not look like technology makes all that much difference. we are spending our time looking at ukraine and it looks at us and it looks like boots on the ground are still very decisive. >> there was also a cyberattacks that coincided

with the russian troops moving in. >> absolutely, we live in a world where every armed conflict will include a cyber component. that is irrevocable. >> what about this place? how is it that two weeks after a gigantic jets as appears, we have no idea what happened to it? >> i don't know. to be honest, i'm more preoccupied with the ukrainian situation. disappearing planes usually take three days to fall out of popular consciousness. two weeks later and we are still looking for the plane. i hope they find it because i think there are bigger issues in the world. >> what about flight data? >> the reason we have not found that is not lack of technology. it's a lack of technology in the cockpit. the permission to use an ipad

for a pilot that united airlines gave a few months ago -- that was great. that should be wrapped in sensors. the plane should never be allowed to disappear from radar. radar does not reach to the ground. all these statements seem ridiculous. why do i not have very high speed internet connection to a huge number of satellites sitting much closer to this plane than the terrestrial network? the fact that we don't have really good conductivity on flying fortresses is the real issue. >> how do you solve that problem? >> you start examining the regulations that were written in the 1950's and say that is stupid, let's allow for communications. er of nothelming tow using ipads in, these things could be struck down and should be allowed. >> we will see of we are still

talking about this a week from now. and weank you so much will be back with their special guest host after this. ♪

welcome back to "bloomberg west." i am outside with his -- another special guest, betty liu coming here from new york on a beautiful day in san francisco. >> it's chilly. >> we will have a friendly debate about which city is best. >> it's a smack down. i came here to cause trouble, i think. i will talk about how great new york city is compared to san francisco. >> is it even an argument? >> i will take it up with this -- when i hear this stuff about capital funding and you guys are raising rounds and rounds of if you want real

money, you raise it on the new york stock exchange. >> they build their companies here. >> the companies will often start here. i cannot take sides because i live most of my life in new york and have been here for 15 years so i am firmly in the middle. >> you build companies here that lose money. $8 billion in sales last year and google $60 billion in sales. >> maybe. >> $1.5 billion. >> they talk about things like that all the time, monthly active users but what about real earnings? >> two companies just lose money out here? been thetely, i have head of profit less institutions. forrisk capital and thirst companies that go on the stock exchange in new york are born here. you areaise money and

building companies here and in new york. how about we talk about the fact that in new york, we have jay-z and beyonce. >> i will give you that but can you give us the weather? >> i can't argue with that. >> i haven't shelled a driveway in a long time. -- i have not shoveled the driveway in a long time. >> max invests in companies on both coasts but why do you live here? >> the ecosystem and the friction to start, recruit, build, create is the lowest in san francisco. and silicon valley. >> new yorkers say they have tech companies and venture capital but it's really here. >> new york has everything. there is a tech community but there is a banking community. >> i think you are helping me out.

you get startups focused on fashion which is harder to do in san francisco. people are not as passionate about it here. >> it is a cultural difference at the heart of this. when people come to california to reinvent themselves, they start with a blank slate. in new york, there is history. in new york, you've got the f train and here you've got the donner party. this is where the action happens. it's the beginning of a better life. ande also invented cronuts we have the new york giants. we have the san francisco giants. we have twice as many teams. the oakland a's winning the division two years in a row, come on. >> we have way better buried as. -- doritos.

- burritos. >> we have better pizza. >> you have better new york style pizza. >> i don't know if new york is better for business but i feel san francisco is better for technology. >> san franciso is at her for tech. business, maybe not but we have some of the brightest minds rapidly moving here because they feel they can start and grow and not face any limitations. ago, it was hard to go through the wall in new york city. silicon valley for the last 30 years has allowed that. >> there is a distortion field that goes beyond steve jobs and cupertino where companies here tend to talk about things like active usersonthly and grow revenues without a notion of profits where you can have a company like instagram

with no revenues whatsoever in turn down multibillion dollar offers. >> you have to go through suspended disbelief because most startups have to. >> i will say that we are creating the silicon alley in new york. the other week, there was a report of google looking for office space. draw.s a one number that tells a whole lot -- >> 10 billion is a parent leave the valuation for the new money raised by air b&b. i think it is disrupting the hotel business. we don't know the numbers of profit. i think they have the potential to dominate a market. they may be paying it forward or

mall -- may already be worth a billion dollars. i readspirit of bytes, somewhere that walmart pays $1 billion in interchange fees. there is a company like walmart that is still paying $1 billion into the discrepant system -- decrepit system. >> they can certainly erase a lot of that money they pay out. >> they could added to their bottom line and said could many other merchants selling online. one i put $10 billion price tag on that? >> you guys have a great backdrop. to say that i will give that to you. >> great to have you here that he and max as our guest host. thank you for sharing your genius and thank you all for watching. ♪

>> from bloomberg world headquarters in new york, i am alix steel in for mark crumpton. this is "bottom line." today, president obama ordering a new round of sanctions against russia over the crisis in .kraine then, why the president's top advisers oppose the keystone pipeline. we will take you inside a lab that develops tasty new flavors. to our viewers here in the united states and those of us joining -- those of you joining