>> from pier three in san francisco, welcome to "the best of bloomberg west." i'm emily chang. we bring you the best of west. this week, alibaba files to go public in the united states in what may be one of the largest ipos in history. the price of shares has not been set yet, but the filing has a $1 million placeholder amount. alibaba had total revenues of $5.5 billion in the nine months ending december 1. the company is profitable, with net income of $2.9 billion in the last nine months of last year.

vice chairman will own 3.6%. yahoos stake is 22 when six percent. for more on alibaba, i want to bring in our editor-at-large, cory johnson. we spoke with our senior west coast correspondent jon erlichman. >> the scale of the business is something we have known about for a long time. the prior commentator i completely agree with. the upside for them is mobile. it really has to do with the transition of the chinese market. their market is slightly behind us in mobile adoption.

it is normal that that kind of customer mix would be in place right now. it is an absolute upside for them. >> you have been looking at some of the companies that alibaba has been buying. walk us through that and how that plays here. >> they don't get into a lot of detail in the ipo filing, but you are absolutely right. it is interesting as you look through this filing, it is not just the story of marketing to investors, it is the story of marketing to anyone who could potentially be a user of the various alibaba services. it is interesting that they use these anecdotes like american farmers, who through various businesses could maybe sell cherries to the chinese market. or small-business operators like the yoga studio operator or the

cake maker who can buy cake decorations or yoga mats in china using the various alibaba properties. they are very much on a mission to both invest in the united states and inform people in this country about what alibaba is. >> let's talk about the regulatory issues. obviously, the chinese government comes up a lot in the risk factors. what is your take on the chinese government's power over their business? >> a couple of things. certainly, the chinese government regulates media, commerce and finance instruments. for example, alibaba was going to get into money market or credit card business, which is under question. that is one element. then there's a broader risk element we have in the back of our minds. can they dismantle the company without the investors ability to do anything?

>> can they? >> yes. but i have to believe that china is trying to build up its economy. they're trying to establish its homegrown companies as international superpowers. alibaba has a long-running history with the chinese government. i have to believe they have already made the proper conversations and discussions. >> but me ask you, you have been looking at these companies and setting up business in china for so long, i wonder, is this the company that has been blessed by the chinese company to do things other u.s. companies will never

get a chance to do? the government has decided it will be alibaba, and that changes the competitive structure for this company? >> that is a great question. i think the government will pick a winner -- i don't think they will pick a winner that overtly. they have to be comfortable with you to be successful. jack is a very dynamic leader who is well-respected in the country. >> i see valuations ranging from $115 billion-$250 billion. is that fair? >> what is absent in the filing is all the bets that alibaba made in mobile. alibaba is going to do much more in cross border trade, for example like the yoga teacher buying yoga mats directive from chinese merchants. alibaba is leaving out its largest growth area for subsequent -- for room to grow, for additional value. >> interesting. we do know this is only a first step. maybe that is a question. what has been left out of the filing?

is that more important to discuss in what is in it? >> absolutely. we're missing a couple of things. what happened in that first quarter. one person i spoke with said march could be down quarter because of the lunar new year. that would be a strong indication of how resilient this country -- his company can be. in the fall quarter we saw the results of their single day. it will be interesting to say what they think about 2014 so far. we are looking to see who is selling and how much. we know yahoo! is selling, we know alibaba is selling shares.

we do not know the breakdown or how much they are selling. we do not know how much softbank is selling. they will maintain more than a 30% stake which is where they are at right now. >> john, i wonder if you have seen a reaction to the valuation of this deal in silicon valley in terms of other investments areas if people are thinking they want to buy the kind of thing that alibaba will use the cash to acquire, or comparisons along those lines. >> besides mobile, the next growth area is definitely the u.s. the word is they will be expanding very substantially in this market, particularly in silicon valley. there's no question from an entrepreneurial standpoint, it is an exciting ipo. i wouldn't put it on par with facebook, but it has that field. this is the emergence of another tech titan who is going to be moving aggressively. >> i want to talk more about the role of yahoo! in this filing. it is really a tale of two companies. you follow yahoo! very closely. this he filing shows that alibaba likes yahoos head of resources. yahoo! is supposedly going to sell as much as half of its stake in ali baba. what does all this mean? >> it is an incredible story, isn't it?

for the investment of $1 billion for 40% stake in 2005, you just highlighted what this company is now worth. we would be having a dramatically different conversation about the business of yahoo! and the future of yahoo! if yahoo! did not have this windfall coming to it. in some ways, they're working together, thinking about the future of alibaba. before the break we talked about some of the investments that they are making. there was this belief that maybe they would work a little more closely. maybe it hasn't worked out as planned. you're talking about two companies at both want to capitalize on everything that is going on, from mobile to video. >> what are the risks of this of this company being in china?

alibaba has a relatively weak position in mobile. china has the largest smart phone market in the world. there are companies in china that are ahead of telly -- ahead of alibaba in mobile. >> bloomberg news ipo reporter leslie picture, john malloy, and craig yew. he's known for the flaherty brings to his role as chairman of ali baba. more on the ceo of china's biggest e-commerce company next. ♪

>> welcome back to "the best of bloomberg west." ali baba founder has changed the way the chinese do things. he enjoys performing for employees. take a listen. [singing] quite a voice their. how has his zany personality helped pushed ali baba to the top? clark has known jack since he started the company. i asked him what he is like.

>> just like that. he was singing. he leaps out at you. he is not a tall man, but is a very tall man in terms of his personality. he has a wacky, larger than life image. you get a palpable sense that he is somebody different, both in chinese and english. >> back then, did you have any inkling that he could take the company this far? to become one of the biggest

technology companies in the world. >> when i met him it was a small apartment with a bunch of toothbrushes in the apartment which was the number of employees. you could see they were living in the apartment and working around-the-clock. that. there was already a vision. goldman was about to come in. even then, we it was like why are people so interested in this company? it is because of him. he would talk already in a very mellifluous way. you feel that he was somebody special. >> what is his fascination with the u.s.? it seems to be a common name. >> he's been an english teacher. he's always been interested in the u.s. and the world. this is not always true for the tech entrepreneurs in china. he was not educated here, but he traveled here early on. he had some experiences which opened to him the opportunity for china in the world. >> what kind of experiences? >> he discovered that there was nothing about china on the internet going way back to 1995 and 1996. he needed to make a decision but he understood it was cruel. what do you make of what he did that and what it means about him as a leader? >> for investors looking at the company, it is all slight buying a car in the sense that china is

a rocky road. you really need some good shock absorbers. there will often be contradictory things happening in the chinese government. different regulatory systems emerging. the company's promises that they will try to insulate you as much as possible from that. i don't know exactly what was in his mind, but they had to do something to take ownership into private hands, away from foreign ownership, to protect the company. it seems like the company will buy back its interest in alipay in the future. the ecosystem, which is so important to them. >> i wonder what he feels his irresponsible he has already taken the company public once. it is a significant premium to try to take the company private

again. >> this second offering is very different. the business model is much superior to the first way. in 2007 this was a need to be -- b to b company which had some appeal. there was more hype driven in the hong kong market by retailers. it did very well on day one. it tripled on the first day, but it began a very long rapid slide down. the business behind it wasn't that interesting. what the charisma of jack whipped up expectations. now we have jack trying to take a backseat, which is hard for him. >> how does he fit in with the other chinese tech titans like robyn lee of baidu? i can't imagine robyn lee singing in front of his entire staff. >> robin wood describe himself as a geek. jack is not a techie unlike

robin or other pioneers. he did not study overseas. he had the international outreach connections he cause of his english language skills, but he didn't actually study overseas. he didn't study the prestigious chinese organizations either. he didn't have pedigree in terms of tech -- >> i believe he failed the initial entrance exam. i recently interviewed robin lee of baidu and asked him what a successful ali baba ipo would mean for china. take a listen to what he had to say. >> it is always good to see chinese companies become more

successful, if an ipo means more successful. i would be happy to see that. the chinese internet market is already very locked. there are big dump is coming out every day. again, i am more interested in the changing dynamic of that market, what kind of new opportunities came out from there. i will pay more attention to that. less attention to the big gigantic companies going public. >> is interesting, because he is jack mas friend, but they're also fierce competitors. >> the relationship between robin and jack is the most strained of the three. they got on pretty well. i met them in the early days. their businesses are becoming much more competitive with each other. as a good personal dynamic there, but the businesses are

increasingly opposed. there is no law -- no love lost between baidu and ali baba. we have a balkanization emerging between these two. now we have the rise of $.10, that is pitching the two off against each other more and more. >> it sounds where it really was a small group of people who kind of knew each other, had personal relationships, not just in the .com days here in the late 90's, but in the early 90's, there was a small group of people that tended to know each other and go off in their own directions. >> in 2000, jack convened a group of internet pioneers. there was another company that predated jack, but he had the chutzpah. he can speak truth to power to the government and people of that stripe. >> antivirus pioneer john mcafee has been very busy after fleeing believes and returning to the united states. we have all the details on his

newest venture in an exclusive interview right here on "the best of bloomberg west." ♪

>> welcome back to "the best of bloomberg west." i'm emily chang. john mcafee was on the run after being deported from a prison in guatemala, this after fleeing belize where authorities wanted to interview him as a person of interest in a murder investigation. corey and i spoke with him who joined us from an undisclosed location to talk about his new business. i started by asking mcafee why he didn't want us to disclose his location. >> due to the residuals from belize, i continue to speak out and present evidence of corruption. the government is not happy that

i am still alive and talking. i think secrecy is best in this case. >> before we go any further, what is the latest on the case? you were never named as an official suspect, but where is the case stand now? >> i was merely wanted for questioning like all of my neighbors. given the circumstances, the fact that the government had invaded my property almost a year earlier and amended huge -- demanded huge bribes, i thought a judicial simply to not be questioned. >> john, i think it is beyond ironic, i wonder if your experience of being outed by technology and a picture in vice

magazine that accidentally exposed where you were, i wonder if that informs this new app that you are doing now? >> absolutely. when you live a year and have -- a half trying to live in secrecy and privacy, then 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. our cell phones are monitored by the nsa and the cia and every corporation and google. the business world has turned up on a new principle, that is information about who you are, where you are, what you buy,

what you're doing, is power and money. because of that, every app that you download for "free," everything you do free 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 out there. one is a d central one app, another is called chatter for messaging. >> d central one is our first app. basically, it makes you aware of what you have done in terms of downloading all of these apps. we run it, it scans the apps and informs you what you have agreed to. when you have agreed to the terms and conditions of these apps, none of us really, their -- read it, they are pages long. you given them permission to read your e-mails or your texts or in some cases to send e-mails and texts on your behalf without telling you. or to make phone calls without telling you. you would be shocked when you run this app to find out how many of the apps that you have downloaded are doing this. that was step one. our second project, chatter, is basically a product designed by teens for teens. we as adults have missed the

boat already, we have created a security and certainly no privacy. unless the next generation begins to look at this lack of privacy and its implications, the world is headed for chaos. the teens that i put together includes even a 13-year-old boy who has to associate degrees and is in his second year at m.i.t. to have teens be aware of the necessity, the need for privacy, in order to create a sane society, is paramount. the program we are put together is astonishingly secure and unique in the area of security. >> let's go from chatter to cheddar, how are you paying for all of this? >> i still have a few dollars

left even though the government of belize took 90% of my money. >> we are investigating the proposed time warner cable merger. ♪ >> you're watching the best of "bloomberg west."

massive would it be? multiple industries. in multibillion-dollar merger. >> and provide two of the largest cable companies. it is more than 11 million customers. it would reshape the country's

landscape and broadband. it would still be the biggest cable operator. it reached one in three american homes. lawsou dominant commercial ohio, texas. the deal is about internet service. comcast has more internet subscribers. this puts them in charge of one third of the american broadband market. >> comcast and time warner defended their proposed merger on capitol hill this week. they had a hearing with the house judiciary committee. antitrust experts gave their take on how this will help or hurt american consumers. congress holds no power to approve or deny the merger, their input can sway the agencies making the decision.

cory and i spoke with michael copps. he is at an advocacy organization. i asked him how he would vote on this proposed merger. >> i would vote without hesitation a loud and clear "no." it is a disaster for consumers. it is a disaster for people who are paying cable bills. it is a disaster for people who are paying broadband bills. and it'll send us than a monopolistic road we cannot afford. it is bad for every citizen in this country. it is such a conglomerate and so extensive of content distribution and what people will see you not see.

we have never seen anything like this area of they been working the halls of congress and developing a lot of power. a lot of employees are working in government organizations. i want to ask this, you talk about in terms of business, just because it is big it is bad? what do you think could happen if this merger went through? >> i think if it goes through you lose competition. it is ludicrous to argue that this is not anti-competitive when you take that enormous footprint that comcast achieved in the nbc universal properties that they own.

now you're going to impress that on the rest of the country. we have got to get back to a median environment where we have some localism. we need independent reducers and broadcasters, local news. every time we have one of these mergers, all of those things suffer. i don't just blame the companies that are involved. i blame the government particularly, the fcc where i served for 11 years. we encouraged it. we downgraded the public interest. >> that was former fcc commissioner michael copps. another issue that we will look into with the merger is the threat to the internet. more than 100 technology companies including amazon and facebook have spoken out against internet service providers like comcast to charge businesses extra fees for faster service.

they rally in favor of net neutrality. cory looks at how important this issue is for business. >> al gore did not invent the internet. he did invent the phrase "information superhighway." what better metaphor to explain this idea of net neutrality. let's take a drive. a bandwidth beast is like steve mcqueen's 1968 mustang gt. a metaphor for a video as part of the hulu parking lot. we hit the interstate at full speed, as fast as 100 gigabits a second. all of our fellow travelers are traveling the same fast speed before we reach the exit. that last mile is owned by a small group of service providers like comcast, time warner cable, and verizon.

we may have gotten off the information superhighway at blazing fast speed, now we are getting traffic. our fellow travelers, they were able to pay for the fast lane. that is what netflix struck with comcast. they want their service to get there faster to them their competitors. this would make it an even playing field for all the drivers on our road in that last mile. the toll keepers like comcast and time warner cable, they don't like this. they would have their own rules for the road. for drivers like us, we just want to enjoy the freedom of the open road. >> cory johnson, our editor-at-large.

one of gaming's biggest urban legends was just uncovered. we sit down with the man who found the mass grave for atari's e.t. videogame coming up next. ♪

>> welcome back to the best of "bloomberg west." i am emily chang. e.t. atari cartridges were dug up in the new mexico desert. many called this the worst videogame ever made. atari hid the game and that became a great urban legend. helping document this, zak penn documented the dig as part of an xbox documentary called "atari: game over." >> i grew up a gamer. my dad got us pong when i was six. i've wasted in an inordinate amount of time playing video games. atari took up a good third of my childhood. i just happened to like these

strange stories that perpetuate themselves. it was a no brainer. i got two sentences into the pitch and said i would do it. >> this touches so many of my favorite things. you have it excitement and failure of technology. you have the growth of this company. you have this bombastic character who was the ceo of warner bros. you have accounting fraud. what in particular was about the story that drew you? >> i actually think there is a corporate story here that is very interesting. there is also a larger story about why people are so attached to atari and what kind of cultural importance it holds for them.

why did 300 people show up to watch us dig up garbage that was buried in a dump? i think the answers to those questions are interesting. it is not what i expected. >> you mentioned pong, there is something about gameplay that wires into your brain in different ways with the game is great. is that something you're able to get out of this documentary? >> absolutely. i was the spoiler. nolan bushnell, shamus blackly, they made that point. they talked about how you could drop asteroids into a group of

kids today and they will still play it. certain games, there is a reason why people still play checkers. even if it is part it up and looks as good as halo, there is a reason why people go back to a game and that is gameplay. those early atari games were all about gameplay. that was all that mattered. it was a pure version of gaming that existed. >> that was zak penn with my partner cory johnson. facebook is launching a program to lure small business owners. details next on the best of "bloomberg west." ♪

>> "bloomberg west "bloomberg

west will come back to the best of." i am emily chang. the social network is launching a program to teach businesses how to better use the site for advertising. i spoke with dan leavy and asked him how this is going to work. >> we are hosting a series of five small business events around the country. it is going to be great to meet them. you can think of facebook fit like a boot camp for small businesses and get your business in the shape or if you are a business looking to add or expertise. we will work to help them understand how they can grow their business, especially on a mobile which they are asking about a lot. it will grow and benefit their communities. we are helping them to grow. that is what they asked us about. one of the big things that they ask is how can i work on mobile?

we think facebook is one of the best things for businesses on a mobile device. if you're a business owner who is not sitting behind a desk top computer but out of the go, we know that small business owners are looking for simple and effective business solutions. >> how much can facebook really help a small business? it is a limited audience. >> there are a billion people on facebook. facebook can be an effective place to grow a business. we had 12 small businesses come to facebook. it was our first small business council. we heard stories from all types of industries about how facebook help them grow their business. they could take it to a whole new level. >> this is what gave you the inspiration to do these boot camps? >> one of the things they told us that was remarkable is how they are teaching people in

their own local communities about facebook. there is a guy i have known for two years. he runs an entertainment center, mini golf and video games in dayton, ohio. he lost his business using facebook as almost as exclusive marketing channel. people started to come to him and say you have been successful, can you teach us what you did on facebook? he started teaching classes at his facility. that became the inspiration for us. we went to see if you get out in the community and teach people. >> what do you get out of this? >> we learn a lot from small business owners. we sit in silicon valley and look at a lot of data every day. meeting people face-to-face and hearing their stories and how you can change their lives is meaningful. >> what have you learned? >> this has been inspired by small business owners. we can help them grow. i will return to facebook and help us grow.

we only get paid make money when they are willing to invest in us. there are no fixed contracts. >> you are doing this in partnership with intuit, square, i know jack dorsey has done a similar thing. he went to st. louis. >> the companies that we heard of were inspired by the small business we talk to. oh they talked about payment and financial management. those of the partners we went and sought out for this event. we think the ones that will help small businesses grow as much as they can. >> he has helped millions of people search for love online. up next we will talk to match ceo about the recipe for dating success. you can watch us on your phone, tablet, apple tv, or amazon fire. ♪

>> welcome back to the best of "bloomberg west." i am emily chang. match has a stronghold on the $2.2 billion online dating market. the properties include match.com. they are 27% of the dating market this year. helping people find love is also boosting their parent company. the match unit saw in revenue increase. i spoke with sam yagan and asked how a company that matches people up remains so successful.

>> what we are finding is that by having so many people finding success on our product, they are our biggest evangelists. one of their friends saying they met somebody on match, the people who are leaving our product are the best evangelists to bring in more customers. >> they just moved all of the dating product into a separate business, the match group. this is the first up toward a spinoff. how are you thinking about that? >> i don't think about it all. what we have done is what together all of our businesses that have similar attributes. >> i have to ask you about tinder. in my world it seems like everybody is on tinder. as someone who founded ok cupid, what do you see as tinder's

future? >> i think it can be a breakthrough product. it has been more impressive and built a tremendous brand. if you talk to people on the street, they know what it is. this is just a year and a half since launching. it is a worldwide phenomenon. i think that gives you a sense for how big it has gotten. i think it can be a product that everyone uses alongside match or ok cupid. it provides such different products for a single person. >> can this drive revenue? >> there is no question. one thing we know about dating is that it is the most important search of your life. in terms of finding someone to be your companion and be in a relationship with, that is a very valuable search area people will pay a lot of money if you can provide them with that person.

our revenues are growing. a product like tinder is going to be a huge revenue contributor to our business going forward. >> i know there has been confusion about its valuation, -- >> what is an extra zero? if this were a stand-alone company, it would be one of the 10 highest startups out there. we incubated the business within a match. we don't have to worry about what the valuation is. this is one of the most viable startups out there. >> i want to ask you about the scholarship contest. you are providing for children of match.com couples. >> that is right. we were thinking about our 20th

anniversary that is coming up next year. it occurred to me as we were thinking about it that there are starting to be a second generation of match customers. what can we do to sort of acknowledged those people who would not be on the earth but for their parents meeting on match. we have a scholarship where kids of parents who met on match can submit a two minute video of their parents love story. we will pay the winner $50,000 towards a college education. >> one million babies have been made on match. i love that statistic. is this the way to keep people engaged? these are people who have gone from the site who don't need match anymore. is focusing on their children away to get them back? >> we are trying to talk about our successes in different ways. our commercials talk about more marriages. that is very effective.

the imagery of having a one million babies, these are people who met on match. this is such a visceral way. i have been in the industry 11 years. when i got a user who said this is a picture of my baby, thank you. that was a life-changing event for me. i never felt more engaged in what we are doing since that moment. we are having an impact on the world and sharing that with everyone is a huge way of showing our importance in the country. >> ok cupid took a very public stance against a former ceo who had made donations to a campaign in support of california's anti-lgb to law. why did you decide to take that stance? what is the fallout? >> our business is about bringing people together and having them enter into relationships.

we will always be against any attempts to stop that. that is antithetical to our business. that was why we took the position we did. it was in support of our gay and lesbian users. >> can you talk about how much they contribute to your business? >> on ok cupid, our gay and lesbian audience is over-indexing. it is about 10 to 12% of ok cupid users. it has a proportional effect on our revenue and profitability. >> what is next for the match group? >> next is a relentless commitment to mobile. tinder is the flagship there. it is mobile only and all about your location and where you are

then and there. match launched a new iphone app that has risen to the top five highest grossing apps in all of social networking. you will continue to see a streamline of great new mobile features coming out. >> my interview with sam yagan. that does it for this edition of the best of "bloomberg west." we will see you next week. ♪ . . . >> from the guarded