♪ >> live from pier three in san francisco, welcome to "bloomberg west" where we cover innovation, technology, and the future of business. i am cory johnson. online food delivery service grubhub has just priced its ipo at 26 dollars a share boosting the size of the offering. executivesdo tech think of hbo's upcoming series "silicon valley?" but first, a check of the top headlines.

ike, rippedo rendon by some in the tech committee for donating $1000 to a proposition aimed to ban gay marriage in california. the debate over that donation over six years old has been raging on social media. are coming to late-night tv. david letterman says he will retire as the late show host. ,e has been on tv for 33 years the last 20 on cbs. the longest stint ever for a late-night tv host. in february.red john malone isre shutting the book on barnes & noble investment. liberty media selling 90% of the initial investment and will abandon the struggling bookseller. barnes & noble have suffered with lowrs of losses

sales of its nut tablet. mr. pricing -- nook tablet. raising the expected value of , showingo $192 million excitement over a deal that doesn't deserve excitement. a reasonable question that we hope to answer. leslie covers the ipo market. out, what does it tell you about this deal? on april 1,member they raised it three dollars a share on the low-end and high-end. now they are pricing above that range with more shares. restaurantstive to in the u.s., relative to internet service. and relative to e-commerce, much

higher. we will see if investors are receptive. >> we were trading spreadsheets today. i just took yours and cap mine. sales?ks like 15 times that is a big valuation. peers inon't have any the u.s. to compare it to. the london counterpart started training today and i have never seen a company that didn't have any here but appeared in the same day across the pond. that ipo did very well. it traded up nine percent today in the first day of trading. we are kind of seeing the same type of investor appetite take place here as well. thehe grubhub guys like deal that it ran after the ipo. it is a profitable company.

here is the problem with profitability. ratio, noto-earnings just wall street geek talk but it speaks to -- it is trading at 217 times last year's earnings. that is higher than tesla or anything i can think of of note. what is it that people seem to like about this deal? >> it obviously has a brand name. with tech companies, it is rare to see this profitability. i think they like the fundamentals and they like the brand name. they take a commission from each restaurant. it is relatively easy to predict that over the long run. it is what investors are looking for these days. >> essentially, they have this

plan that opentable try to take, reservations trying to take the mobile. these guys have a similar model that they think they can make the connection between restaurants and deliver, being that platform. >> they say they took the standard paper menus and telephone calls, making their order to restaurants and putting that on the web. it is good advertising for the company and it is also more convenient for the consumer. by and large, a pretty decent business model in terms of what it has been able to do for their top and bottom line. their success depends on the ability to spread throughout cities. about 29,000 restaurants, three times as much market share to gobble up in the u.s. before they hit capacity.

to watch thatue growth, but it will of course be one of the big endurance is -- hindrances for them. sothis technology is different from 15 years ago in 1999, the frenzy of the.c dot-cm bubble. ipo's, you seeing a lot of them right now. does seem like there are a lot of tech ipos coming out. last year was the lowest in terms of the amount raised. this year, the pipeline is incredibly strong. that number will skyrocket. >> incredibly busy. thank you very much. delivery to the debate over income equality. the lack of affordable housing has become a huge issue here in silicon valley. what is the tech industry's role in finding a solution?

george zachary invested in twitter. them aboutby asking the types of sacrifices that companies like twitter have to make. >> companies tend to keep the based on a smaller demographic. there are a lot more tech workers on the peninsula. you are kind of self-selecting for a certain group of people. that is what i see recurring over and over. i feel like there is this adoption of technology in a much broader way. [indiscernible] it's about consumer facing tech

and a broader adoption tech. >> if you look from san jose to san francisco, you will see the stack of what is the internet. systems, enterprise software, consumer applications. ibm is sort of further south and -- >> enterprise software. oracle. haved moving up, we consumer business things like twitter. of theexperience internet now is a consumer phenomenon in addition to an infrastructure phenomenon. it is natural it will take place in cities where there are more consumers and people attuned to daily life. >> you think that companies >> id be doing more gekko don't have a strong opinion about it.

they actually did a bunch of work in the community before they were purchased by microsoft. >> there is something about the young tech workers that the city appeals to, that they have a different set of skills than pure programming or [indiscernible] i hear that i want to be near other young people because i can bond with these people. i can date them. i can have friends -- dudes is why we are having this income inequality debate? >> cory. i want you to take a listen to what they have to say. across the country at all income levels, take a listen. >> this is not easy to solve. we will always have income inequality. always. >> a capitalist system. lacks the nature of it.

but we absolutely can't have where the barbell is so high over here and so tiny over here. income equalization. but it is called that you cannot that primarily cannot survive and build a family and have opportunity. >> barry diller speaking with erik schatzker. is that the conversation that people are having in your circles? >> no. everyone is trying to build the next biggest company. everyone is so frantic and hyper, they will miss a great opportunity. here in the studio, we will talk about facebook buying oculus and more. and the dynamic eel behind the smash hit "24." tomes like a beautiful mind --

films like "a beautiful mind" and director ron howard later in the show. ♪

>> i am emily chang and this is "bloomberg west." streaming on bloomberg.com and your devices. mark zuckerberg had plans to change the future of our everyday experiences but the oculus rift has not even shifted to -- shipped to market. to start with a tweet that you sent out as soon as this happened. i believe this facebook oculus deal will have the same impact as yahoo!'s acquisition of geocities in the 90's. basically, people get richer, but not the world. a rift between $2 billion and something of value.

i worked in a company that coined the term virtual reality in 1990. >> what has he said about this? >> jerod says it will not really change anything. we knowy called vpl, that there are certain problems that are not solved by commercial companies as well as the middle terry -- the military. the human brain has evolved for your eyes and ears to be correlated in motion. motion sickness is when your ears are moving but your eyes -- your ears are picking up motion and your eyes are not. there is simulator sickness, the eyes are getting motion but your ears are not. >> you say that our brains are not ready for virtual reality? >> they are ready for augmented reality. rejecting a small image on top of the glass windshield or a glass display. they are not really ready for this form of entertainment.

>> why did mark zuckerberg byatt? >> -- buy it? >> i don't think that he knew what he was buying. and i think he was wanting to invigorate his gaming. >> geocities, it was quite a phenomenon. >> it was supposed to transform yahoo! into this next gen portal. anymore.es that word geocities was an early social network but it never amounted to anything. >> a pile of websites. >> it sounded exciting but it never materialized into a substantial business and i think oculus will be the same for facebook. >> obviously you are an twitter, but why is he building from within? do you see facebook as an enduring thing? or will it fade?

ini don't believe anything life is enduring but in terms of silicon valley, facebook will be around for at least 10 years. >> what about the notion that mark zuckerberg in particular -- you view his stock is overvalued. it will the klein? >> -- decline? >> when you get to the peak of a shared currency like facebook -- i am thinking about individual stocks. in the bubble, all stocks are percolating up to the highest. when people get to that point, do i want to use cash or my stock? use mythink i want to stock and when things get tough, cassia still worth something. is still worth something. >> if facebook will be around for the next 10 years, what will be the next big thing -- >> the truth is, i don't know

the next big thing after facebook. almost every company that i invested in, when i met the founder, i had no preconceived notion. i have to invest in this person and in this idea. microsoft buying for a vast fortune, which -- what did you see that you draw lessons from? with thefriends founder. we talked about how twitter was not being well managed. i am investing. the building to allow people to collaborate. he basically build the company

out of this idea that there should be twitter for enterprise that he migrated to be a facebook for enterprise. what are you trying to look for? >> when i joined -- what i join these people to pursue doing this? >> i want to talk to you a little bit more about the investment you're making. it more with george zachary, next. ♪

>> welcome back to bloomberg west. i am emily chang here with cory johnson and george zachary. we have seen three figure rounds, multiple rounds so far this year. raising $250 million. what does that mean to you? >> a steady sequence of very large rounds and in bubble territory. very few people are saying it. >> you're the first person. >> nobody wants to say it because nobody wants to break it. usually everyone is saying, i'm paying too much but the guy

i am selling to is paying too little. the early rounds, these companies are two highly valued. valued.ighly >> we are seeing an expansion of valuation. >> is their desperation here? >> i definitely feel it. desperation to not miss out on what will be the next big thing. >> what about the frenzy around secret apps? >> we looked at a lot of the mets talked to the founders. they don't really make the world any better. they are used too much to hayes people and bully kids. >> what about pebble? fantastic,s doing growing at twice the rate we did last year. the category between google glass and the watch, for example.

i don't know of other wearables that are growing. i can tell you the watch space is growing very quickly. >> they have not gone mainstream yet. ?ill they ac >> i hope they do. >> has the introduction of android -- setting up their own ,.s. like up, like fitbit like pebble? >> android is the only one i have taken seriously as a watch competitor. android requires 64 megabytes of memory to operate. the double os runs at 128 k of memory. to be the most high-volume smart watch supplier . we can't do it with android. >> ettore opportunities and you can last for a longer time. -- we wantt want to compet

$50.ovmove to >> what about apple not coming out with a watch? >> i have heard that engineers they are trying to recruit, it is difficult to get a new project accepted that apple. in have the resources, and the tim cook era, you have to put together a spreadsheet that shows how much this business is going to be worth. and how it will add to apple's revenue. those are the thoughts that come out of someone with a supply chain background. i don't believe apple is set up to succeed. having youwhy i love on, you are not afraid to say what you really think. thank you for joining us today on "bloomberg west." trying to keep government eyes away from user data. we will tell you about the web company's latest move, next. ♪

>> you are watching bloomberg west where we focus on technology and the future of business. i'm emily chang. thering user data from prying eyes of government surveillance and other possible snoopers. in a blog post, the traffic moving between yahoo! data centers is now fully encrypted. yahoo! also made yahoo! mail the homepage and search more secure by making https encryption the default. tv will haveomberg an exclusive interview with defense secretary chuck hagel. you can catch the full interview

at 6:00 a.m. eastern. in today's new hollywood, discovery communications is partnering with hollywood producers ron howard and brian grazer to form a new studio that will make short videos for online viewers. the venture is called new form. ceo davido discovery stanislav and producer ron howard in a bloomberg exclusive. why now was the right time to push into the digital game. >> our core mission is to tell great stories. the way we have been doing it is through our channels. we have been growing market share. and we have had a hell of a ron. it is not just on the tv set. journey.d on this we launched 90 youtube channels.

we also bought a leader in nonfiction streaming. does almost half a billion streams a month. and we build the streaming business. how to distribute it, how to monetize it. space,u look at that there is nobody playing hard in the scripted area. who are the best storytellers of our generation? in gauging a generation on the big screen and on tv, why can't we do that on the streaming space?- in the streaming we reached out to ron and brian new had been exploring this area. we said that we can really make something happen. that is how i got started. from your perspective, what gets you and brian most excited about something like this? you have had this it for a while. -- itch for a while.

>> we experimented with a company called pop.com. we were years and years ahead of the curve on that one. it is because the medium of short form is just very tantalizing. -- it isenticing and enticing and scratches various itches that you can do with the feature film because of the way the narratives have to roll out. and the way the characters can unfold. we've always had a fascination with it. once in a while, i would go over and direct something for funny or die. david and brian started talking about it. discovery. they really understand entertainment and have had experience with it. it really reignited our interest should belief that we

approach it. but you have to approach it in a new way. that havethe people been exploring it creatively. it will be great to be part of studio around a those very specific kinds of tones and ideas. >> where should we think about where we are going to see this stuff? do you see it on yahoo! or facebook or twitter? >> the great thing about digital content is that it goes everywhere. if you go to russia, we have 11 channels. we have been there for 15 years building those channels. ron and brian can produce a great use of content and we can put it on and be available to everyone to consume. it is a real democracy on these platforms because the great content moves to the top.

thing is you can really scale up quite quickly. not like the cable business or the broadcast business where you're getting a license. we are taking advantage of the worldwide infrastructure. web, cell is on the phones, all those are screens today where people are consuming content. we see ourselves on every one of those screens. the great thing is a great piece of content gets pushed all around the world. better atobody creating great content than ron and brian. and finding some great creative people to work with is a very good part of this. excited about that collaboration because as a consumer, i'm out there and watching and absorbing. i am fascinated by it. it is great to have a really compelling reason to get involved and understand it and build upon it. ceo and president of

discovery communications, david zaslov and famed director ron howard. some of the biggest players in technology and media are pouring dollars and devices into media and education. we will sit down with the ceo of news corp.'s education and technology division. you can watch us streaming on your tablet, phone, bloomberg.com as well as apple and fire tv. ♪

>> i'm emily chang. this is bloomberg west. cory johnson is our editor-at-large. you have been talking all week long about education, technology, and startups. startups are not the only ones using technology to improve education. pouring companies are dollars into devices and classrooms as well.

like players teaming up with washington, 700 $50 million to support president obama's education and technology moves. andng investments renaissance learning. it is interesting to see these new companies, old big companies, they all look at this market. sees education technology as a potential business opportunity and in 2011, the company launched amplify. a division devoted to technology tools for the classroom. there joined from new york, former chancellor of the new york city department of education. take you for joining us. amplify has both hardware and software. tell us how it works. >> the hardware was designed for the school. isrything we do, it this important. it's not about technology, it's about teaching and learning.

the hardware has functionality that the schools want and the teachers want and the kids want. it's not just taking a tablet and saying you can use it in schools, we come with a curriculum that is unlike anything we have seen. it is the kind of thing that i prayed for in new york. it really immersive -- really immersive stuff. it is a complete and new approach to the way we educate our kids. for the reasons that you alluded to in the introduction, we will see more and more companies jumping into this space and eager to play because we are at the beginning of the digital revolution in public education today. are youany schools working with right now? how many tablets are deployed ?ekk >> hundreds of thousands are deployed and we will be rolling out 20,000 in a school district in illinois. educatorsth 200,000

in the united states on a range of services. analytics, customize learning experience, tablets and curriculum. we are really in the early innings, but it is something very exciting. the thing about silicon valley startups, they have been able to make some pivots. the initial plan is not quite right. the ipad has come along to dominate the tablet business. nothave only sold hundreds, tens of thousands, not millions. you have done, getting away from imagining specific hardware to compete with the likes of apple? is the magic of this thing, the tablet is the vehicle for functionality. if it's the tablet, nobody is going to gain by it.

we will be flexible as we move forward. the kind of thing we have on our tablet is driven by our software and much more rugged. something i think schools are going to want. we will see how things develop. a me, it has always been functionality we can bring to schools. something that our tablet does so that when the teacher said we are no longer working off the screen, we are working in the class. we have quick quizzes. modebody who is in startup , you've got to be flexible and see what the schools want. we are getting constant feedback and we will continue to learn. what i am convinced about is we are at the beginning of something that five or seven years ago would have been unimagined. if you look at the amount of investment in this space, the big companies that you mention want to play in it. news corp. is uniquely positioned because we don't have any legacy products to worry

about. .e created this from the get go designed it for the classroom. we see it as the best education company. as long as we can occupy that sweet spot in the middle, we will be fine. >> a viewer tweeted in the middle of this series that his wife is a speech pathologist and has found that having more tablets in the classroom makes it more difficult to teach social skills. students are developing social skills later given your experience? on how it is being used. if you syndicate for hours in front of a tablet, it's not going to work. that is not an engaging educational experience. one of the reasons that we put teachers on our tablet is so the teacher can say instead of looking at your tablet, look here. that we have quest designed one after the other where kids work together.

i was down in a pot the row graham -- at a pilot program in new orleans. about who killed edgar allen poe. this classroom was buzzing. it is not about technology. it is about teaching and learning. we, through these methodologies, improve the kinds of things that that speech pathologist is talking about. greater interactivity among kids. more cooperation, more teacher feedback. we have a device and an application that tells the teacher how much feedback she is giving to each child. she can look on one screen and say, emily has a lot of feedback and cory hasn't. that's pay attention to cory. >> speaking of which. rexx sounds pretty typical. -- >> sounds pretty typical. >> there is a book called the flickering mind that came out a

few years ago. isthere something that really different now, different this time then you guys are embracing with the notion that there have been long-standing introductions of technology and long-standing failures in the classroom? >> we always thought we could --e consumer technology >> when i was in new york, i was amazed at how many computers stated in their boxes. -- stayed in their boxes. he technology won't get us where we need to go. amplifying everything we do through the prism of teaching and learning. i have educators, former teachers and principals working hand in glove with our tech people and creative people. if teachers don't embrace it, it won't work.

i don't care how cool the tech is or if every consumer might want it. if it's not enriching the teachers experience and the student experience, it won't work. this is the first time i am seeing people develop things that this classroom is going to be improved by the teachers will be embraced. when i was in louisiana last week, i was amazed watching the seventh grade kids trying to figure out who killed edgar allen poe. they had to work with each other, do reading together, share ideas, and read like a detective to figure this out. that is what makes it rich. it wasn't the fact that some kid had a tablet in his hand and was surfing the internet. it was the content they were exposed to. one of the things we have been talking about is why big technology companies are not more involved in education. is education really a lucrative business? we will only make

money out of this if we do it in a way that the schools find it an enabling and empowering. companies aretech moving in this space. google is doing a lot in this space, apple is doing a lot in this space. would you will see is greater convergence across the board from the tech and the content companies. that thingsphasize in education move slowly and nothing is going to happen overnight. er at the beginning of something very powerful and very exciting. -- we are at the beginning of something very powerful and very exciting. ofyou were involved in one the most important cases in technology, going after microsoft for antitrust. now that it has gone to the forefront with comcast and time warner, also the trailing deals of t-mobile and possibly sprint, do you see a real change at the -- the justice department

>> he was at the federal trade commission when i was running the antitrust division and i his thinking is similar to mind. e. you don't want to impede innovation and make sure there are no bottlenecks. it will animate us and certainly animate the justice department as it moves forward. thank you so much for joining this specialart of series, wiring the world. you can check out that content on bloomberg.com. tech with itson new series "silicon valley." we got a sneak peek with some special friends. you will see how we all reacted to this show. coming up.

>> he is a poser and didn't even write code. ♪

rexx welcome back to bloomberg west. i'm emily chang. hbo is launching a new series on the tech boom. silicon valley airs this sunday but we watched the first episode with some tech executives. take a look at what some insiders thought of the show. about apps, software, websites, this is silicon valley. all right. >> it's dead on. >> that is eric schmidt. >> you have to deliver. like steve. >> steve jobs -- >> i heard you. is a poser and didn't even write code. >> i think steve jobs is amazing. wozniak was the engineer that created apple, right? imaginean totally having that discussion. >> it was much better than a

bravo show. >> everything is for sale. >> $600,000. 10% of the company. >> can you imagine zuckerberg saying eight ilion, ok, 19? >> the arbitrary nature is dead on. no matter what the offers are, they are based on nothing. it you to acquirer or the thunder. nobody is interested until someone else's. barackere sitting with obama and saying we are making the world a better place. constructing an elegant hierarchy for sensibility. >> changing the world by making enterprise software. that claim. i was thinking, is this an exaggeration? it's not.

>> what company does it remind you of? s >> every major dot com. yahoo!, google, facebook. >> bit soup. like out the bit soup but 1's and 0's. .> it makes you cringe which is something that judge is brilliant at. >> keep running. >> he had to have an internship at google recently. >> it was good. at her than i think all of us were expecting. i don't watch much tv. but it was funny. and it was very true.

things it is also the outside of silicon valley like to watch. >> we focus on one number that tells a whole lot. jon erlichman joins us from l.a.. >> how about the number five? the new ticker for google plus. googl. the four-letter ticker goog is used for class c stock. class b shares controlled by page and schmidt. those shares still get 10 more votes. that is the format for the stock. >> we spoke with mike judge that created the show. we will see that tomorrow, right it --> looking forward to

right? picks for watching, we will see you later. ♪ .

>> welcome to "lunch money." i am adam johnson. in tech, it is all about the launch. they are bringing new products and new competition. and movie producers ron howard and brian grazer trying to make video for the digital generation. by the way, they are short videos for short attention spans. we have heard about high-frequency traders, but how do you write a best seller? and lands for reinventing the modern corporation.