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'm emily chang. i am here with cory johnson. lots of big stories. you are looking at for profit colleges. >> we took a long look at technology and the way it is innovating education. we have an example of billions of dollars online. the education results have been disastrous.

we will talk to the attorney general's investigating this crisis. >> is stone will be right here. he will talk about his new book. he is a great, thoughtful guy. he launched a bunch of great companies. i cannot wait to hear what he has to say. we will take a quick look at the headlines. dianne feinstein says that she now supports a proposed requirement that u.s. phone companies hold records for use by the nsa. finding support is keys and she is the head of the senate intelligence committee. legislation to curb nsa powers may occur. president obama help teacher views on the issue. a tv guide company lost a patent case against amazon. they ruled it amazon did not infringe on their patents related to interactive programming guides. they have 12% of the market.

lyft is cutting prices after raising millions of dollars in a new fund-raising round. there's now a 20% price cut in all markets. in january, huber announced a similar fare reduction in 16 markets but top they areg on uber, expanding their horizons. they are starting a career service in new york city. >> going from four wheels to two wheels. >> two feet. basically, it works like a typical career service. you call and within minutes you can have a career come to doorstep. in manhattan, one of our business week writer's tried it out. he says they got to did bloomberg offices in new york within 10 minutes.

90 minutes later, he had something delivered to battery park. it costs more than standard career rates, but less than rush rates. >> it is a fascinating business for them. it is weird when you think about their competitive abilities. it is a revolutionary business model. imitated across the company and other companies. this is not a place you would expect them to go. like i do not think it is weird. if you can get a car somewhere in 10 minutes, you can get anything somewhere. why not make deliveries the next that? they have delivered kittens. i had to mention the kittens. the starting price is $15. it is cap the $30. search pricing will not apply. we have the general manager with us. he will tell us more about it.

>> how long have you been working on this idea? rushber roche is -- uber for things. you can have a career come to door five minutes. he will approach and you can give him anything he can carry. it will be as little as $15 and as much as $30. we have been doing these experiments for a while now. we started with on demand ice cream in 2012. we have done christmas trees and kittens. this has all been tested to see how our technology can go beyond transportation. >> i understand you have been following the app. you can follow it the same way you can follow a car accident is coming to you. >> you can share with the recipient the progress. it is direct and dedicated.

it is taking your package. it will not do other pickup for deliveries. it is dedicated. under deliver anything in one hour. >> when i think of this, i think of it as you guys having a true understanding of what is going on with traffic. you have so many cars on the road. does this builds on big data? >> part of the way that we had this idea is that people were using uber cars for this. someone said a passport to a loved one at the airport, or a pair of keys to a roommate. we are just taking something that our users are already doing and giving them a dedicated way to do that. we willthis experiment, learn the ways that people may use the service. think you can get something anywhere in an hour. it took us today about 90 minutes to get something to its

destination. at any point, are you going to guarantee a time? >> this city has unpredictable elements. trackback and subway delays -- traffic and subway delays. there is no guarantee yet. the test we did was on our test day for our test period. that wetty confident will get it done under one hour. >> why would people use this instead of a standard service? instead of ebay now? >> we think no one is getting this thing just right. this is not to go and buy something. you have an item and you want to move it across town as fast as possible. with traditional services, you call and you are put on howard -- hold. if you get a rush service, you are paying $60 for it. we can deliver faster service for less money. people will be interested in

that. >> he talked about the difficulties and the uniqueness of new york. i wonder, how much of what you learn is applicable to other cities that have great similarities? san francisco is similar to new york, but left angeles is a different animal. what do you know that you can learn? huber -- uber is local. we have folks dealing with the challenges of those cities. what might work for new york might not work for l.a.. bike messengers going from santa monica to the galley will not work. the general principle is that we have been moving people successfully. we are going to give it a shot to move things. if we are successful, and this , if it works, i concede expanding. couriers willber

not make purchases for you. you have to have the item and give it to them. might that change into something with an e-commerce with? -- twist? >> we will see how consumers want to use uber rush. this is the first step. anything is possible. 's generalht, uber manager. thank you for joining us today. coming up, we are talking about technology playing a bigger role in improving online education. maybe it is not always doing good. look at howake a some companies in for-profit parttion have been a big of this. students have lots of debt and no degrees. west"s when "bloomberg continues. ♪

>> welcome back. i'm emily chang. last week we had a great series about how a handful of technology companies are coming up with new solutions and education. but, technology does not always help. you have been working on a big investigation over the last few weeks about how some for-profit companies may not be doing the job that they claim to be doing. education online can have worse outcomes. things isthe stunning how these companies have spent billions of dollars moving operations and growing operations online. amount of tuition at a chart on campus, but the education results have been worse. let's talk specifically. the failure to get a degree. according to the u.s. senate study, 64% of students online did not in fact implead their

degrees. 46% offline did. ne results are much worse. students take on tons of debt. none of the companies are were -- willing to provide specific results. in public schools, nine percent of the students default. 22% default. there is an enormous default rate. studentse for-profit evolve over the lifetime of their loans. the default rate is so much higher. the dropout rate is so much higher. it is a disconcerting number. >> a couple questions. that those kids would not drop out if they attended a traditional school? >> the dropout rate at traditional schools and community colleges, and before your schools, but the dropout

rates tend to be higher. that is the spite all the money that the students are spending. then there is the question about the value of a degree. >> who is at fault? >> the companies have spent a lot of money to move their businesses online. there have been a lot of things driving this. the for-profit schools have a lot of market saturation. 20 years ago, there were very few. there are so many schools, publicly traded schools. in a certain market, they are full of them. they are looking for new places to grow. a 2006 law that they help get through congress allowed for online only degrees. the whole world became their marketplace. offering those courses, a much lower cost. schools do not have to spend as much money. >> i know the federal government is looking more closely at tightening revelation --

regulations on these institutions. is not having them denying students access? would he deny opportunities for education? >> when you look at the marketing dollars spent by these companies and they are spending 25% of tuition dollars on marketing to new students, but they know that up to 60% of the students will drop out, they are just getting more students involved. it is a concerning thing for the fads to look at. they are looking at a handful of companies. schools i mentioned are being investigated by being -- the kentucky attorney general. she is joining us right now from kentucky. of for-profitroup colleges. thank you for joining us.

what is the worst abuse? >> thank you for taking this issue up. it has been underreported. i was listening to you as they came on the air. you hit the nail on the head. the thing that is most concerning to me is the amount of our tax dollars going to these schools. it is over $30 billion per year. the economic model for the for-profit colleges, when you look at a traditional school, most of the money will go toward education. if you look at the for-profit model, 25% is going toward marketing. another 20% is going to profit for the school. that is $.55 on the dollar to try to stretch for an education where the credits do not transfer any students are left with debt that they cannot discharge.

it is the model in terms of how much they are spending on recruiting. it is the high-pressure sales tactics that a lot of these students are subjected to. >> i will put the same question to you. these institutions attract a certain kind of student. how do you know they would graduate if they were at a traditional institution? how do you know they would not default on their loans? >> i do not know that you know that they would not default. the problem with this model is that from a consumer protection standpoint, and that is where we come in, we want to make certain that we do not have unfair advertising in terms of selling a product. when you were in the for-profit realm, education is a product. what we see is boiler rooms where people are engaged in telemarketing. they are paying companies and tracking down any leads that they can. they are making telemarketing calls.

they are spending a tremendous amount of money to train recruiters to get people to sign up. on theey do those papers federal student loans, they are hot. they cannot discharge those. that is not to say that the students may not fail, but i'm hopeful that as people sign up for an education, they will comparison shop and recognize that local community colleges tend to be three times less expensive than some of those for-profit colleges. i cannot guarantee that every student will graduate. i can pretty well predict that if someone is preyed upon in a tough economic time without adequate disclosures, that is a bad way to sell a product. >> i was amazed when i look at this from our point of view as a technology show. these businesses made a very concerted effort to move their business online.

without online, there would be no growth in enrollment. that is a function of these for-profit schools. what have you found specifically about online education? >> i think that the online education aspect has been a significant area of their growth. my whole thinking is that technology, which you report on, should lead to more efficiency. there's nothing wrong with distance learning if you are in a system of higher education. if there is an outstanding professor, and you can figure out ways to use technology for distant learning. online education is not necessarily bad. when it is more expensive than a public education and it is not leading to a drop in the cost, it is only leading to padding the bottom line, that is a problem. students, are

nontraditional students. a single mother who is holding down another job, trying to better herself for the future by taking an online education. her need to be more safeguards to make certain that if you're taking a class online, the time is spent and the appropriate grades are given. you have certain metrics that make sure the product is delivered in the end. >> kentucky attorney general, we will continue this conversation after a quick break. thank you for joining us. we will be right back. ♪

>> i'm emily chang. we are back with kentucky attorney general jack conway talking about for-profit

colleges and whether they are providing the benefit that they promised. johnson has been doing an ongoing investigation. online,these guys move they often move their sourcing of students online. tell us about those practices. investigation. we investigated a company that is based in california. they had 800 different domain names. now they're down to 100. they had a site called gibill.com. someone should have known that this was not a government website. it may make a government website. about these websites, and we have had a lot of our veterans coming back and wanting to know how they could use their benefit. they would go on to this website and they would have yellow ribbon schools that they were highlighting.

veterans likek to they could only use their benefit of for-profit schools. we had a very aggressive marketing campaign through this site. a lot of these schools have gone after veteran because of the 90-10 rule. >> please explain that. can onlyhat schools have 90% of their money coming from loans. the other 10% can come from veteran loans. government could be entirely backing these goals. do you want to change that law? >> absolutely. only 90% of the money coming from the federal government should be exempted from veteran benefits. schools have gone after these benefits as a way to sign up more students. we are very concerned about that. seeing state partnering with the federal government. and are issuing subpoenas

instituted several lawsuits. >> kentucky attorney general jack conway, thank you very much. this is something we will continue to follow. reached out to companies that are under investigation. they were investigated by other attorney general's. said,ked to them and they the statistics are unique. the vast majority of our students take classes online. our adjusted graduation rate is 30%. 92% of our students are seeking associate degrees. our graduation rates are in track with the industry average. the company intends to cooperate. it is too soon to determine any scope. >> a viewer wrote in and said that just because they did not

get their degree, it did not mean that they did not get the skills they were looking for. sometimes they are just looking for job training skills. >> the degree is part of it. >> biz stone, coming up after this break. ♪

>> you are watching "bloomberg west." we cover innovation and the future of business. is the founder of twitter. he is also the cofounder of jelly. he is the author of a new book. the book chronicles his move to silicon valley and offers advice to budding entrepreneurs. he joins me in the studio. great to have you. it is part of vice, part memoir. why did you write it?

>> i started over a decade ago. i was invited to teach a master class at oxford. it is a fancy class for -- word for a lecture. they invited me back and i started doing it every year. other groups started inviting me to lecture. something pretty amazing happened. i found that everyone from high school students to ceos would thatup afterwards and say the thing i said about creativity, or my perspective on opportunity really resonated. i thought to myself, that is a wide group of people to come up to me afterwards. someone suggested writing a book recently. i turn the lecture into a book. i realize that people want you to come even more once you read a book.

i wrote it because this lecture was honed after a decade. people were finding value in it. >> the audience is quite broad. what do you want people to take away? world -- iof the have described it as hallucinogenicly optimistic. i want people to take away the hard-earned lessons that i share. if it is only one thing the takeaway, it is hopefully the chapters on creativity. everyone is creative, not just artists. creativity is a renewable resource. i would like people to take away from this book a fresh perspective on the idea of giving back. so many people think that they should wait until they're comfortable and older and money.

if you get started early with volunteering and donating five dollars, the impact you will have over your life is so much greater. i talk about compound interest. very aspirational aphorisms. >> you do not sugarcoat how broke you were in the early days. you are living in your mom's basement with your girlfriend. you cannot even buy a bed. what drove you then? what drives you now? -- i had aways believe in my future self. he is going to be smarter and figure things out. i will not worry about it now. me, the work i was doing was engaging. i always found something that i was really excited about doing.

when i started my first design studio and that led to learning web design and that led to my first foray into being an with an early social blogging network, i believe in the idea of democratization of information. i was excited to work up blocker. -- blogger. money did not matter because it was more a mission. >> doesn't still drive you? >> yes. for sure. especially with jelly. i left twitter on a day-to-day basis a few years ago. that gave me space to look at things from a higher level. philosophical about this amazingly connected world we are living in. what is the true

purpose of a connected society? waiting tois someone work with the right now. i cannot help but think that the true promise of a connected society is people helping one another. in a way, jelly is a platform for doing just that. i feel like it cannot go wrong. into being the ceo for the first time, how does it feel? >> it is so great. i have learned so much from being on the sidelines. i have been a supporting actor o someone -- >> now you are the lead. [laughter] >> i get wonderful support from my team. to pick up traits when i like them. it is fantastic, growing into this role. i have plenty of mentors. >> could you go to for guys?

>> i go to jack dorsey. i go to dick costolo. >> what you go to them about? >> each one of them is different. serving as my executive at this point. he has grown so much in the last four years. it is unbelievable. we meet every wednesday. you know, very specific questions. jelly for a year. what do you think i should do? should i offer more money? what would you do in that situation? sometimes it is specific and sometimes it is high-level. it is a walk and talk. we joke around. because anteresting, lot of the assumptions about the

downing of twitter were questioned. what we are the new. is a marketingck genius. how do you respond? >> jack is a very talented marketing guy. look at square. it is amazing and it is taking off. >> what about product? >> is great product. he is an artist at heart. he thinks abstractly about product. maybe that is where the confusion lies. when he first describes square to me and i invested in it, which i'm glad about that, he talked about -- really? payments? are a form of social interaction. we do it every single day. we look at another person in the eye and we give them money.

it is a social transaction. i saw the light. -- taking thatat thing we have been doing for anturies and making it into beautiful experience. it is a beautiful product. you have your own story about the downing of twitter. >> i lived it. it is what i saw. jobsing food done a great of making relationships of everyone, deep relationships. one of the problems he saw early cofounders did not talk enough. are they better now? >> i meet with them all the time. they have kids now. we get together to play. jack and i meet socially. i forced them to communicate.

i had a working party recently and they both had to come. >> you are the globe. >> they are so similar. they are quiet and soft-spoken. middle, itin the would be two guys. >> who would play you guys in the tv show? >> i have no idea if that would even be a thing. it could be a cartoon. >> i will watch it. i want to talk you more about about jelly and ask you some questions. we have those. , cofounderbiz stone of twitter after this break. ♪

>> welcome back. i'm emily chang. i'm here with biz stone, the cofounder of twitter and jelly.

he is the author of a new book. i want to talk to you about twitter. they rolled out a big redesign. images are bigger. people say it looks more like facebook. >> mine is not updated yet. >> that's funny. >> it comes from a high level. it is great. that is the most important thing. it is difficult for a publicly traded company to be bold and make changes. that is what you have to do in this business. i applaud them for that. there may be many more changes to come. from my perspective, i am looking at twitter in decades. i think that i will have every confidence that twitter will be a timeless company was enduring value. in order to do that, there is a lot of work ahead.

that involves making big changes when necessary. >> i talk to dick costolo about what they are working on. some people say that twitter is .till more of the niche product it will not be as big as facebook. >> i think it will be really big. twitterend to think of -- i have always said, you do not need to know how to code a website to use the internet. we in orderave to to be considered a person who uses twitter. you see tweets everywhere. saying, how doof you think about twitter in use? it is not just about composing a tweet. it is about consumption of all of this fantastic content. that, freeing that,

that is something going forward that twitter has a great opportunity to do. >> a lot of people compare facebook and twitter. >> they always lumped them together. >> i have to ask you about acquisitions made by facebook. virtual reality. will you think about that? not a facebook expert. i have never worked there. that doesn't make sense to you? >> i guess so. -- they are are done for different reasons. they are making bets on what is next. they are picking up great talent. >> are they good bets? >> who knows? that is the whole nature of that. you do not know. they have the drive. why not? twitter, 65% since the ipo,

down 40% m.v.p.. how much do you follow the stock price? >> i do not follow it. they tell you, when you try to lose weight, you do not look at the scale every day. it will go up and down. back andto take it way think about things long-term. will this be a company of enduring value. is that all kinds of different people and industries are getting value out of twitter. i know it will be a valuable company. people are getting value out of it. organizations are getting value out of it. regular, everyday people are getting value out of it. when value is being created, you have something. >> you are not watching the stock price every day?

maybe some employees are paying closer attention to it. about the employees and insiders selling off? >> i do not worry about it. i don't worry about that at all. i have complete faith in the deep executive branch we have built a twitter. there is an incredibly talented team in place. this is one of the reasons why felt it was appropriate and comfortable for me to leave. the right people are in the right spots. there is no worrying for me. >> how about this debate that twitter has become a target? the whole tax right thing. the protests against the bosses. -- busses. people say there is a widening disparity between the haves and the have-nots. >> in the united states.

again, i left the day-to-day operation, so i do not have authority to speak on their policy. i am starting to look into this now. just personally. i'm trying to get involved with leaders in various industries and some of the nonprofits that are trying to work in this space. when so many jobs are being created and there's so much energy and life happening, it should be different. if it is not, what can we do to fix that? it is not a weekend solution. there are a lot of different people who have to get together and think long-term. that there has to be a way to solve this problem. it should not be a bad thing.

>> a question about jelly. i got responses in seconds. when are you going to merge jelly with twitter? >> it is already working. we work with twitter and facebook. we blend the two networks together. that is one of the ways that we get answers. >> he is probably asking if you ever sell. jelly.re trying to build we want to work on it for the next several decades. this is what i am doing. there is no sell date. >> what our current use cases? what is the best use case? threefar we have noticed use cases. we have seen recommendations made. >> i have used it for that. >> they go out to people in your network. that is good. -- there is a

camera involved. we have seen a lot of it -- identification. what is this? is this poisonous? we see troubleshooting questions. people are taking pictures of the back of their tv. how do i set this up? people say, you have this in the wrong place. it is great. those are the kinds of things we are seeing. recommendations is branching out. it is increasing. tojust introduced being able ask for maps. that is exploding. that is a great way to ask a question. we have redesigned the interface. we feel that we have designed a better way to ask a question.

, cofounder of twitter and jelly. thank you for stopping by. it is great to have you here. we will be back with more after this quick break. ♪

>> welcome back. i'm emily chang. it is time for the bwest byte. john, our senior west coast correspondent is in los angeles. what do you have? >> i have three. when it comes to streaming video content in the u.s., amazon's instant video service is in the third spot, behind netflix and youtube. this was based on some tracking of all the stuff by a company called bill. that amazon'sst video service has surpassed those of apple and hulu for just being very busy with streaming

traffic online. amazon put out a press release highlighting this today. everyone is fighting their spot in this battle. >> i am a big amazon customer. they are pushing those videos all the time, we have gotten letters in the mail saying that they have video. >> is so amazon not to actually tell us what the numbers are. they point towards other peoples's numbers and not suggest great success. >> how much do we know about this company quote? -- quilt? they are talking about overall amount of traffic. they know networks well. these to work at cisco. i think we should highlight that surpassing apple, apple has been operating the same kind of

instant video service. if you aretreaming watching it through something like apple tv. it raises the question, if you're putting a lot of content free, is, and it's for that good or bad? we do not know. we know that apple makes a lot of money from itunes. position themselves well. >> there is obviously the same physical infrastructure. interesting that they are trying to save their dvd business with this streaming effort. they are making a big push with amazon prime. >> those rankings will shift around. it is by no means the end. it seems more like the beginning. johnson, --n, kari

cory johnson, thank you for watching this edition of "request -- "bloomberg west." ♪ . .

♪ >> welcome to "lunch money." we tie together the best stories, interviews, and video in news. i am matt miller in for adam johnson. jim's big fix turns out it hasn't even left the parking lot. in media, amazon on top. the e-commerce giant be too low and apple at their own game, sort of. in nation, equal pay under the law. president obama wants federal contractors to get on board. in the classroom, sprint is reimagining the reading process one word at a time. and the final frontier, even instagram has made it.