>> live from pier three in san francisco, welcome to "bloomberg west" where we cover the future of business. twitter shares take a tumble as the lockout time expires. we will look at what the selling has to say about the future of twitter's is us. and he gained worldwide attention when he went on the run in central america, but now antivirus pioneer john mcafee is turning back to tack with a new app. he will be joining us live. check of your bloomberg

top tech headlines. apple is giving the retail chief more than 113,000 restricted worth about $68 million at today's price. to have counting on her the same success while leading burberry, where she more than doubled sales over her tenure. percentposted a four rise in sales, but a drop in first quarter profits. they added just 12,000 subscribers in the u.s., but 361,000 in latin america. be a target ofto dish and at&t with a possible takeover, with the wave of consolidation the pay-tv business. morgan stanley has been fined $5 million by the financial industry regulatory authority for sales practices involving ipos. that includes the ipos of 83 companies, including facebook and yelp. morgan stanley did not

distinguish it is policy between a science indication of interest and a conditional request to buy. first, to the lead story of the day -- shares of twitter are plunging as the lockout time expires today. about 480 million shares became eligible for sale, more than quadrupling the amount available for trading and the shares are falling, even as many insiders pledge not to sell. this coming week, after twitter reported rising revenue growth, but lackluster user growth all stop joining me in the studio is cory johnson johnson and with us via skype is crawford del pratt. even the volume is high. what's going on? >> people are selling. ifwill never really know it's company employees or everyone else. the people are getting out of this stock quickly. it suggests the company has been

waiting for the chance to dump their shares and they are doing it now. they think today's rice is as good as they are going to see for a while. >> i agree with what cory is saying. you've got people who have been locked up and looking at the first possible liquidity event and want to take advantage. aalso think there's concentric circle, which is expectations got out of whack for the stock. theou are worried about revenue growth story, this might be a chance to take something off the table. so they are getting hit by that concentric circle of investors who are taking this as an opportunity to sell. >> it's not unusual for companies to slump when the lockup expires. groupon down eight percent. the markets are still open, so we will have to see where it falls today. what makes twitter different? >> i did not expect this at all. >> we spoke with adam nash who

manages portfolios for twitter employees and they said they were not going to sell. >> he was wrong. also said the first day lockup expires is the worst day to sell. what's interesting here is twitter employees from a we are in a new era here. one of the things that's different is twitter employees have had the opportunity to sell for a long time before the ipo. there was a secondary market to help this sort of control the market a little bit. they limited the ability for them to sell, but unlike ipos for the last 20 years, you have an active market. maybe more than groupon and zynga and may be about the same as facebook. they also had an earlier lockup for employees to cover the tax bill that would have resulted from the ipo. lockup that left

the nonexecutive to sell that, there were half $1 billion in shares. the old saying on wall street is there are lots of reasons people sell but only one reason people buy. this does not code well for what the insiders can see about their business. on that point, what does this indicate to you about the future of twitter? six months now, one year from now, can they get the user growth story back? and >> i think this comes to expectations. this is one of those wacky stocks were people horribly jumped in because they knew it, they used it, and with the news they had last week at momentum starting to go down, some of those people on the retail side started moving away and that has compounded the problem.

going forward, the expectations for growth have to get under control. company isthis really changing the way people engage with media. >> that is the key phrase. company or stock -- totally different things will stop we are looking at the tea leaves to read the stock. david einhorn on market makers earlier today talking about a bubble. thoughtful investor, but listen to what he had to say when he was asked about the fact he was short basketball tech stocks. >> we thought there was another tech double, but we said it was an echo bubble. i like to emphasize the echo, meaning it's a smaller bubble. we are massively long tech. ofthink there's a subsegment tech which is high momentum

stocks that have gotten completely out of control in terms of their valuation. we think those stocks did reach a bubble proportion. >> he called it an echo bubble. leader, a company called ultimate software. earnings, revenues at about 20%. and it'sny went public a software business. twitter ann is is echo social media company. is it the other facebook or is it its own thing? >> is it? >> i think it is its own thing and we have to get expectations under control and i think they can grow from here. >> all right. .hank you both coming up, as tech valuations soar, are some companies getting caught in a valuation trap?

we will put that question to matt murphy next. ♪

>> i'm emily chang. this is "bloomberg west" on bloomberg television, streaming on your phone and tablet, apple tv and fire tv. kleiner perkins just made it second largest investment ever company called insight investments.com. it was one of the most competitive funding round and closed at a million dollars as the legendary firm pushes deeper into the enterprise. valuations, joining me now is kleiner perkins gerald partner matt murphy. how competitive was this inside seven term sheets is pretty unusual. at least from where our initial offer was. one of the most competitive ever

in terms of how the price move again. >> but you were willing to pay it. why? >> it starts with the company growing 100% year-over-year. reimagining enterprise applications and had to change workflows and modernize them. it really took analytics. if you took a work flow and made it more analytic and things that could help to make better decisions, you could them pre--- you could increase that and on top of that, had a dynamic ceo i know you've met and we really believe he can take the company to be a big public company. upvaluations are kicking across the board. do you feel like it's getting too high? do you feel like we are in bubble territory? >> the private markets seem to be willing to pay more.

some of that based on historical hedge fund like fidelity and t rowe coming down and they have a growthnt thing with funds. that's one of the dynamics going on in the market right now. the main thing making this happen is it's one of the best times in the last two decades in the world of enterprise as we the should -- as we see the .hift to cloud computing it never been easier to sell enterprise ruddock's. now when you sell, there are five different paths. you can sell the sale, so how you can sell, the way you can sell, how quickly these companies can grow, we've never seen in 20 years. even on the enterprise side, you see a company like box delay its ipo. would you say these companies

are tracked by their valuations? >> ultimately, the choice for each of those companies whether they want to accept the price these companies are willing to pay. that's why brought up the delta between the public and private markets. can they go public? absolutely, but they may not like the valuations they get. why not stay private longer? valuations are bouncing around because we are in a choppy some of thoseop valuations were so high that there was no shame in any kind of down round all stop in the end, this is about what they were worth when investors and employees sell their workshops will stop you don't get too caught up in little blips in the market. >> what do you think about what's happening with twitter today? if it is employees who are

selling and supposed to believe in the long-term future of the company more than anybody else, isn't that more of a concern? >> i don't know the dynamics, except the lockup is open and that can create uncertainty in the market about what's going to happen. yet to look a month or three months from now and see where things land. there was a run on facebook stock and things like that, but what happens in these stocks is a bunch of institutional buyers these must hold kinds of stocks. we'll get back where these people are buying. everybody needs a little liquidity. i don't think anybody is selling 100% of their stock. let's give it up couple of months and every buddy will be just fine. >> how confident are you in twitter's long-term story? >> it's a phenomenon.

it has revolutionized the way a lot of us get our news and the way we communicate, so that's a very strong phenomenon. done some pretty disruptive and important things around the world. i don't think there's any risk in terms of what this will he come. lots ofis environment, companies getting acquired in valuations really high. what do you have your eye on? >> i think it's what we've talked about before. in the enterprise where you have these large and small companies rethinking the way they build their infrastructure. the companies that used to lead are not the names that are brought up anymore. people are rethinking the way they build their infrastructure with new software ventures, which is why it's a nice time to be growing companies like this. a number of

traditional e-commerce and web companies have had their user to 80% mobile. same thing is going to happen with the enterprise. the screen you want to be looking at is no longer going to be that screen. it's going to be your phone and the tablet and the implications of that and infrastructure is huge. if you look at the rise of companies like workday and how people get work done, it used to be the way you bought software was you'd go through i.t., a long cycle of six to 12 months, integrated, deploy it, and see whether anybody cares. thepeople just login to application and get immediate value. short cycle and it's just a different world in terms of how you build and scale companies. be maybeodel used to

one the first year and there are that are two of the fastest-growing enterprise companies we've ever seen by a factor of three x or four x. it's a different time. perkins general partner matt murphy. thank you for dropping by. >> thank you for having me. lift, shop runner and tango me -- just a few of the investments alibaba has made before the much-anticipated ipo. details on that and the moves, next. ♪

>> welcome back. i'm emily chang. it's an intriguing time in the wireless industry with softbank

said to be preparing to make a bid for the nation's number four carrier-t-mobile. weise ok exclusively about the possibility of a deal. >> i think the industry would be healthier. you have a stronger number three and i can't comment specifically on anything with respect to an mende, but it would you good for consumers. >> here's what he had to say about his own future and whether he would be running the combined company. lex one of the things about sprint is they talk about the ideal time as seven years. i still have fire in the belly, so i could -- it might be a good opportunity to do something else. >> jon leger is said to be the leading candidate to run t-mobile should sprint come through. now to another major deal we're following today -- the ali baba

ipo filing expected to come any moment now as the chinese e-commerce giant prepares, it's been making huge investments in u.s. companies angst to a former liberty media who has been leading the charge. cory johnson is here with me in the studio as well as jon erlichman in l.a. who has been working the story. tell us about this liberty media guy. it's an interesting story. they hired him late last year and he worked for liberty media which is known for its big media and telecom investments. they also have e-commerce investments and he led that strategy. he had come to ali baba, he was making investments in us-based companies. a invested in online sports retailer and had headlines for investing in shop runner which is run by scott thompson.

but since his arrival, they have been ramping up with some of these investments will stop they invested in lift and first hymns. they invested in the parenting company of tango. they want to be in the conversation of being a service like ebay or amazon, on the road to generate a lot of money -- 15 alien or 20 billion long-term. >> many u.s. technology companies have failed to get into china. ebay and amazon among them. what do you make of the investments alibaba is making in u.s. companies and moving on u.s. turf question are >> we will see what kind of business they try to get here. the opportunity to try new things as they get into it. we will also see how they reported when a file. it will be interesting in part because it results in some of the companies they've required

will be rolled into the trailing results. -- companies will say it's actually organic and will count as part of revenue. could some of these investments lead to outright acquisitions? they have in china. >> it seems like they are testing the water. the easy thing to do is buy stakes as opposed to doing full acquisitions. the regulatory or government issue -- get someone from a company like the pretty used to making purchases of stake and you take it from there. jon erlichman, our senior west coast correspondent. we're following ali baba has potential filing and we will bring it to you as soon as we have. coming up, john mcafee has been busy after fleeing belize and returning to the united states. we will get the details on his

newest venture in an exclusive interview right here. ♪ >> it is in 26 minutes on the hour. i'm alix steel. stocks declining for the third time with weaker profits dragging down the financials. the worst performing sector and s&p, down over 1%. keep track on a couple we're watching -- merck has agreed to buy consumer unit for biggestion, the second consumer health transaction in a month of industry reshuffling. claritin and

coppertone from their portfolio. offerl electric and their , not good enough according to the french president who said the deal does not protect french jobs. ge is still continuing to find a better deal.

>> you are watching "lumber and west" where we focus on technology in the future of business. the last time we spoke with john mcafee was shortly after he had been deported from a prison in guatemala after fleeing belize, where authorities wanted to question him as a person of interest. now he is getting back into the tenseame with future systems and a secure messaging app called chatter. he joins us to talk about his new business and life after belize will stop thank you so much for joining us.

you asked us not to disclose your location today. why is that? >> due to the residuals from belize, i continue to be gout and presents evidence of corruption. the government in belize is not happy i'm still alive and talking. i think secrecy is best in this case. >> before we go any further, let's the latest? you are never named as an official suspect. where does it stand? lex i was never named as a suspect official or unofficial. i was merely wanted for questioning, like all my neighbors. given the circumstances and the fact that government had invaded my property almost a year earlier and demanded huge brides, i thought it was judicial not to be questioned. >> i think it is beyond ironic -- i wonder if your experience of being outed by technology and

-- there's a picture in vice magazine that accidentally exposed where you were. i wonder if that informs one of these new apps you are doing right now? rex absolutely. when you live for a year and a half trying to live in secrecy and privacy, you become very aware of the lack of these attributes in the world around you. we live in a world where privacy and security simply do not exist. monitored byes are the nsa and the cia and every corporation and google. world has turned upon a new principal, which is information about who you are, where you are, what you buy and what you're doing is power and money. because of that, every app you download for free, everything you do every time you buy something, that information is

logged and used by thousands of people. we have no privacy and i would like to return some privacy to the world. >> let's talk about some of the products you have. calledity solution chatter or messaging. ellis about that. >> the central one was our first app. it makes you aware of what you have done in terms of downloading these apps. it scans the apps and informs you what you've agreed to. agreed to the terms and conditions, none of us read them. they are pages long. they will tell you which ones are watching you and you given them permission to turn on your microphone and e-mail and texts or to send e-mails and texts on your behalf without telling you or make phone calls without telling you. you would be shocked and you run this app to find out how many of the apps you have downloaded are doing this.

that was step one. our second project, chatter, is basically a product designed by teens for teens. as adults, we've missed the boat. we've created a world that has no security and no privacy. at implications, the world is headed for chaos. the team i put together included a 13-year-old boy who has to associate degrees and is in his second year at rit. the needeens aware of for privacy to create a sane society i think is paramount. the program we put together is astonishingly secure and unique in the area of security. >> how are you paying for all of this? i still have a few dollars left. the government of the below -- the government of belize to 99%

of my cash and all my property. i'mve a few dollars left still eating and have a roof over my head and i have enough to fund these companies. >> specifically about the development, talk about these teens and how you are developing while you are on the run. >> i think "usa today" had a friend page article -- "on the run with john mcafee." i don't mind that term. i think a motivated person, motivated not just by the salary they are getting but the instantaneous results of projects, motivated by what can happen in the future. these people are hard to come by and when i come by them, i retain them. one of the guys rooting for me

has been working for me for almost 20 years and knows me well. of i will under see it through to the finish will stop at the finish, there will be rewards. i've been out motivated people. the rochester institute of technology are highly motivated because they want to do something that changes the world and i think they are doing something to change the world. i hate to call teenagers children -- but even the two of you sitting there are sort of children to me. and ifn are our future we don't guide them properly, the future of humanity is in question. call cory arying to child by age standards will stop i don't know how much of this

you are willing to share, but what do you do on a daily basis to keep yourself more secure? what browser do you use and what apps do you use? how often are you talking on the phone? how do you change your behavior to make sure you are more secure? number one, it's very difficult in this day and age if you use a smart phone. arecially android phones notoriously insecure. applicationsoad that will do all sorts of things without your permission. easy for hackers using any number of facilities and their wi-fi. if you are at a coffee shop and you think you have logged on to the coffee shop wi-fi, you may not have done so. there may be someone sitting there with a hotspot pretending to be the coffee shop and you are logging on through them. your passwords him a your detailed information is being monitored and watched.

this is as easy as the day is long. it's easy to circumvent this by going into the android system and unchecking the automatic connect to wi-fi. appsd, i download no because you have no idea where they are coming from. >> not even your own? >> i know where my own are coming from. exception, i do have to test them after all. e-mail is constantly being hacked. fault three major or four months ago where millions of it users passwords were obtained. mine included. on various sites and see whether yours was hacked or not and mine was. i had to go in from another because my e-mail was hacked and probably my android system had been replaced.

shop,to go into a coffee rent a computer, and fix things manually. it's very difficult. >> i can't think of a better place to hide out in rochester, new york. i'm not saying that the genesee river behind you. i was in rochester last week and nobody found me. hiding out, you are doing a tv and movie and app development. what is the movie? >> there are a number. once being done by warner bros. which i have nothing to do with. it aced on a script by josh davis that i think is my nemesis and a man who pretends to understand who i am and what i have done. another is done by an independent film company based in canada. documentarydoing a that was just picked up by spike tv. we are doing interviews with directors next week in an undisclosed location.

i managed to do this because i'm a highly energetic person and highly motivated. in my 68 years, i've lived a fair amount, especially in my younger years on the dark side. that all stopped about 35 years ago. enoughable and talented to do these things and still stay safe. and founder pioneer of future tense central, john mcafee on the run from an undisclosed location. thank you for joining us. he has helped millions of people search for love online. coming up, we are talking to match ceo about the companies success. ♪

lex welcome back to "bloomberg west." i'm emily chang.

match has a stronghold on the 2.2 billion dollar online dating market. their properties include match.com, ok cupid and tender. it's expected to make up 27% of the u.s. dating market this year. helping people find loved is boosting their parent company. the match unit saw a more than 9% increase while the overall revenue in the first quarter went flat. fromeo joins me now chicago. he also cofounded ok cupid. with online dating, there's been a perennial problem, a perennial challenge. it's hard to get people to come back after you have match them up. what have you done to combat that? by what we are finding is having 70 people finding success on our product, they are our biggest evangelists. there's nothing more compelling to get people to try online

dating then for one of their people to say i just meant someone on ok cupid. so they are best evangelists to bring in customers. theou just moved all of dating products into the match group. first stepis the toward a spinoff. how are you taking about that? decide's up for iac to what to do and defend when the time is right. we've grouped together all of our is mrs. that have similar businesses under the match group. >> i have to ask you about tender. in my world, teams like everyone is on tender. as someone who found it ok cupid, what do you see is tender's future? >> i think they have a tremendous ability to be a breakthrough product. it's the fastest growing dating app and history of the industry

in the last 20 years. tremendous brand. if you walk out and talk to people on the street, they know what is. just a year and half since what -- since launching, it's a phenomenon. somebody dubbed the recent olympics the tender olympics. i think it can be a product everyone uses alongside match and ok cupid because they provide such different products for a single person. productu think it is a that can really drive revenue? >> no question. one thing we know about dating is that is the most important search of your life will stop in terms of finding someone to be your companion to be a relationship with, that's a very valuable search and people will pay a lot of money if you can provide them that person. there's no question a product like tender that is so effective for our business

going forward. >> i know there has been some confusion about and are possibly wait and. between $5 million and $5 billion. >> what's and extra zero? was a standalone company, it would probably be one of the 10 standalones out there. sure enough, it's one of the most valuable startups out there. >> i want to ask about the first match made contest. you are providing it for children of match.com's couples. $50,000? think ofe starting to our 20th anniversary coming up next year and it occurred to us as we were thinking about it, there is starting to be a second generation of match customers.

we doe thinking what can to acknowledge those special people who would not be on the earth but for their parents having been on match? we created the scholarship where kids of parents who met on match a two minute video of their parents love story and we will pay them $50,000 toward getting a college education. >> you said over one million babies have been made on match. i love that statistic will stop is this a way to keep the bowl engaged? these are people who don't need match.com and more. is hoaxing on their children a way to get them coming back? >> we are not trying to get their parents back on the site will stop we're trying to talk about our successes in different ways of the that's very effective, but the imagery of i think million babies,

that such a visceral way -- i have been in the industry for several years and i remember when i first got a user who e-mailed us and said here's a picture of my baby, thank you. that was a life changing event. engaged than ire did at that moment and knowing we are having that impact on the world is a huge way of showing match's importance in our country. i want to ask- you about this -- they took a very public stance against the founder of mozilla who made ofations in support california's anti-lgbt law. why did you decide to take that stance and what is the fallout been? >> our business is fundamentally about ringing people together and having them enter into relationships. we will always be against any attempt to forge that. blockncludes attempts to

gay marriage. that's why we took the position we did and it much more in support of our gay and lesbian users and it was against any company or individuals. about how much they contribute to your business? >> sure. on ok cupid, our gay and lesbian 10% to 12% ofout users. that proportional effect on our revenue and profitability. rex what is next for match? >> next is a commitment to mobile. the flagship there. it's mobile only, all about your location and where you are. match just launched a brand-new iphone app that has risen to the top five highest grossing apps

in all of social networking, head of all the names that might be making more money than match. see all continue to streamlined of great new mobile features humming out. >> thank you so much for joining us today. >> we will be right back in just a moment. ♪

>> welcome back. it's time for the bwest byte where we focus on one number that tells a whole lot. -- islichman is in or let in l.a. and cory is in the studio. want one number? >> the rules never change. >> a dozen. >> that's not a number. >> that's as specific as david einhorn would get earlier when he was asked -- famously in his

quarterly letter, he said i'm short a basket of technology stocks because they're greatly overvalued. to give the him names and they suggested twitter but the only one he would come with is king digital. listen to what he had to say. >> i don't think we have a generalized stockmarket bubble, but we have a certain number of stocks that have caught everybody's fancy and attention. there are good stories behind lovely stocks, but the valuations have gotten out of control. mentioned we're, he believes there is an echo bubble, a smaller bubble than the tech bubble we had before. of what davidake einhorn had to say? different they are stories. there's the investor looks at a company and says that the crazy valuation. then there's the story we cover here in l.a. and san francisco of companies being acquired like facebook buying whatsapp or

disney buying maker because these large companies feel like they have to transition and do something quickly and that tries up these prices. it's possible valuations are out of control, but do the big companies that have to think about their future go out and buy something for a high price tag, does that continue and drive what's happening in the market? >> he pointed out they are long a number of tech companies, including apple. >> he mentioned micron, apple, marcel, semi conductor companies with reasonable growth, all of them. i think the reasons matter to non-investors, the big world of business people. make decisionsto about acquisitions, but we also see companies using things like stock options to reward employers, paying lower salaries. with twitter, you seen the effect of that, when it takes it down but in the stock looks less valuable. , jon erlichman,

thank you all for watching this it edition of "liberal west." we will see you later. ♪ . .

♪ >> from bloomberg world headquarters in new york, i am mark crumpton. this is "bottom line," with a main street perspective. today, the u.s. releases its latest u.s. climate assessment report, and bayer agrees to buy the consumer unit of marks, and remaking the chrysler jeep and alfa romeo. ♪ to our viewers in the united states and those of you joining us from around the world, welcome. we have full coverage of the stocks and stories making history today.