>> live from pier three in san francisco welcome to bloomberg west. m cory johnson in for emily chang. a check of our top headlines. --ebook market value facebook is the 22nd most valuable company in the world. mobile games has helped fuel the 62%k rises and accounts for of all sales in the second quarter.

amazon slashing the prices of its new fire phone. amazon does not release its sales but this dramatic price cut comes six weeks after the fire phone was released. ebay is going to start excepting bitcoin in the coming months. they will work to enable those payments, which could open up the possibility of virtual currency in millions of transactions. 800 investors packed the room in new york's famous waldorf astoria hotel. founder and chairman were hit with a number of questions, particularly corporate governance issues, corporate this is according

to people who were inside that meeting. it is the first of many roadshow meetings that will take executives from the e-commerce company around the world, everywhere from san francisco to hong kong and beyond. leslie was at the waldorf astoria you tell me what you heard after the meeting was underway. , i was not allowed to go inside the roadshow. those are closed meetings to the press. what i heard from investors is a got questions answered regarding corporate governance and margins. the one thing they weren't hearing that much about was international expansion. they said the executive touched a little bit on expansion into places like india and indonesia but they were curious about how alibaba can be not just a chinese internet company but an internet company that is based in china. an internet company that has global proportions. it would be compared to an amazon or ebay.

how is it going to be in other places besides china? there ishey see that some risk associated with the chinese government. they have tremendous control over companies that are based there and become this large in size. they want china to quell those risks. >> certainly having a bigger business globally would mean better things for the company. certainly we are looking for a bigger shareholder base as well. it is interesting what a company has to go through if they want to sell this much stock. boston, baltimore, san francisco, hong kong, that is quite a trip. >> when you think about it you're talking to these fundamental to his and saying i have a $21 billion share sale to sell to you. you can take a $750 million and that may be ok if it turns out the man supports

that. you want that exposure with management before investing that much money into one company, which would ultimately become one of your top holdings. as we have discussed in the past this is a company that is largely requiring investors to wayt their management the their partnership structure allows for a select group of individuals to have a majority control over the board. investors need to meet executives face-to-face to have that comfort. >> it is all about that confidence. thank you for going down there. we appreciate it. for more on what happened at the roadshow, specifically what investors are looking or, we talk with james geller, ceo of an independent ratings and analytics firm. i started by asking what they

see in alibaba's s-1 filing. >> this will be a record-breaking ipo in the united states. it could be the world's biggest. could top at 24.3 billion dollars if you include the overallotment. this could be the third-largest traded tech company in the united states after google and facebook. actually going to be selling these shares, it was fascinating to see not everyone will be. the largest shareholder had 34% of ownership right now, translating to $50 billion. yahoo! is looking to read -- toing billion dollars reap $8 billion. about the mission, he talked about how he was going to

write your ties customers first, employee second, shareholders number three. he expects controversy to arise but he hopes controversy creates some kind of constructive dialogue. it is all at his final plea. what leslie was showing you is not the retail investors. it seems that according to the analyst i have been speaking to, the retail guys are not there. it is a tepid muted response. >> you need some guys that can take a lot of shovels for it. when you look at this deal, specifically the letter -- depressed tends to focus on these letters from the ceo. it is the new trend over the last few years. when you make of the letters that are important to you. factor into the calculation of the financial health rating, our measure of companies overall financial health, which in this case is

71. the letter is interesting because it is really trying to engage in the potential shareholder. it doesn't have much of an effect on how the company is doing or what its prospects are long-term. i think it is a good effort that alibaba is making to engage shareholders in. >> is it? know the sec has forced companies to move the letter of this new trend from the front of the offering further down and it suggests to me that this is evidence of a real say's -- real sales effort. they are trying to sell something here. >> what we are going to see is an ambassadorial effort created china see this as an ambassadorial stock. alibaba is going to be the flag bearer for that. i think this is just a piece of

that, as is everything that will happen in each one of these roadshow stops. thatwas going to caution this should not be considered a proxy for the chinese economy. we don't look at ebay and say it is a proxy for the u.s. economy. a good glimpse on how china e-commerce is doing. we are talking about a rising middle class that by 2070 could be 70% of the entire chinese population, which is currently at 13 point -- 1.3 4 billion people. this gives you a sense of how i start up eve alton china but is no sense -- but in no sense is it representative of the companies. i'm you're probably betting on the chinese economies to grow but more specifically you are betting on the alibaba model. many of thesended roadshow meetings back when i was a professional. you have attended many more, i presume.

of thee sting of all failed chinese ipos, the reverse mergers, the worst of business practices in china, doesn't it intentionally staying this deal? or are they going to look at it -- doesn'tentional it stain it this deal? or are they going to look at it with fresh eyes? clock stay coach the executive staff to head them off so they do not overtake the broader message that alibaba really needs to convey. i think that is going to be how are they going to use the cash that they have been stockpiling? how are they going to use the ipo proceeds. how will they ultimately integrate all of that into an entity that can continue on the growth plan that alibaba has had? how will it return capital or and returns on capital

become as efficient a company as it can be? those are the things they need to be focused on. i think the investor community wants to hear that story. think they will try to piece that story out. >> that was james geller. would you buy a new jacket durably through twitter if you could? -- directly through twitter if you could?

them of this is bloomberg west. twitter is taking its first step into e-commerce by testing a buy button that will allow consumers to purchase directly from tweets. they are working with artists like eminem and brands to try out an early version of the buy button. how this by asking

button will work. >> we have seen a lot of conversation between brands and consumers. a lot of them are in service of a transaction. we have a new product that is coming out and today they post a -- we havensumer been looking for ways to narrow that gap and today we are starting to test that. >> in e-commerce it is really to discuss how important it is. what do we know about percentages of people that fall by the wayside? >> it is obviously huge. rates thatonversion are single digits. is on thatge now mobile campus. how do you move people from discovery and awareness down the funnel?

i think there are three things that make twitter different. they're focused on key trends. the first is algorithmic duration. we get strict -- we get great signals and contextual data. >> you can find the interest. if you have the defining rod that says this person is interested in this kind of stuff. >> the second is human influence, which is all of these influencers on the platform who are there extensively to build a direct relationship with the consumers. stuffive limited-edition that can come from that one-to-one relationship. >> kanye west says he will never touch a product -- if it is a branded product he will not let it touch his hand unless they are paying him. he is the ultimate brand influencer.

>> historically those sorts of influencers have been looking for that direct channel. it is why they come to twitter. >> let's say i want to say let's check out this really cool new watch. he will get a piece of the transaction if he puts the buy button on his tweet? them of the way he participates in the revenue is up to them to figure out. we are just giving the tools. >> you're giving the tools to the advertiser and the brand, not necessarily to the individuals who want to buy by affiliate. giving it to are both. we are focused so acutely on optimizing the user experience. monetization will come later. if you are trying to reach people outside of your follower base, i think there is a well-established affiliate model. >> we pulled back from that largely. >> it is a pretty

well-established model for publishers to take a transactional fee based on the transactions they drive. if we narrow that can -- narrow that connection we can build a business. i wonder if twitter takes great ideas, throws it against we wall, if it doesn't work try this -- is this the big direction for twitter going forward? >> for commerce we think about it aspirational he come a business that can be a stand-alone product for twitter. think about it, that is how we focus on our mission. it took me the better part of a year to come over from ticketmaster. where big ideas

can be pursued. now it feels great to be a part of this. when i think about every merchant on the world being on the platform and think about users engaging in them and think that our mobile services extends across the mobile platform to those who are , that feelstweets like a big opportunity. mergers want to get into this. why throw a charity in their? i'm all for that. is a lot of conversation on the platform. twitter is used to do a lot of good things. it is a way to measure across different products, price points, and verticals. we are waiting cautiously into these waters. we could have launched with a

much larger partner set. because theing slow trust of our users is everything. >> what is the governor going to decide which way to go and how fast you go? what are the numbers going to look like. >> we are certainly looking at conversion and we will look at the userthat purchase engages or potentially falls out. is it temporal urgency that makes a difference or is it like our advertising in -- advertising business? that is the purpose of this test. we are going to sit back and watch. >> that was nathan hubbard. facebookerberg says will spend billions of dollars to bring the internet to the unconnected world. that story is next.

>> i am cory johnson and this is bloomberg west. facebook surpassed the $200 billion market value. mark zuckerberg says it is not enough. he wants to spend billions to bring the internet to the unconnected world. this comes as facebook announces more than 100 million active users in africa. 80% of them connecting online via mobile. if this shows a zuckerberg is getting more ambitious. zuckerberg --ark is mark zuckerberg getting more ambitious because he can't --

this idea of connecting everyone has been in the back of his mind. it is only in the last couple of years it began to be an actual possibility that facebook could try to connect people in the early every country and increasingly in every economic segment. that is a high priority for them now. it changes the market. how can facebook continue to grow at the rate -- just add more people. tot thing he will be trying reduce the world supply of birth control. >> that's not anything i heard mentioned. he does think this idea of connecting people with each other is a globally transformative political tool that he has a unique opportunity to contribute to. i think there is a reasonable facebook has a unique

opportunity and it is amazing to me how much he has decided in the last year to devote a considerable portion to the company's resources for this project. the internet initiative japan -- it is the central strategy or he has partnered with ericsson and samsung or other companies in the mobile space. >> facebook may have to spend billions of dollars over the next decade making this happen. i believe in the long-term it will be a good thing for us and the world. i know i should be carrying this squishy feeling away. decision real business or is this a notion of what

becomes possible when people without an internet get one? >> those two things are not necessarily separate in his mind. he has come to believe facebook's long-term interest as is tied as a business with economic and social betterment around the planet. that is what he thinks. it is a very long-term view. people who hold the stock may not want him to be spending as much time and money as he clearly seems willing to do on a very long-term project. if you are a buy and hold investor he could be in the position to add in a targeted way to even more people. it could be a really big business in the long run. >> bloomberg contributing editor and author of facebook, david kirkpatrick.

go in to the new iphone announcement. we will talk to an apple developer who already knows what is in the new iphone. that is coming up next.

>> you are watching bloomberg west. we focus on innovation, technology, and the future of business. tesla has just expanded into japan with the company delivering its first model of sedan. the ceo talks about the importance of the company's battery factory, with locations in nevada. >> the constraint that we are trying to overcome in the next few years is that of cell production. in order to overcome that constraint we need to factory production to go live and we are expecting the giga factory approximatelybe

two thirds for tesla vehicles but one third for stationary storage and other vehicles. panasonic topects pay for this. 40% of the financing coming from the -- from panasonic. the largest screen iphone is expected to be unveiled along with other devices. fans andpress both everybody else that follows the company? and ceo of appetizer mobile joins us right now. he worked directly with apple to develop apps for previous iphone launches, including the latest investment. the new os that she joins me. it is not getting a lot of attention but i think that maybe one of the biggest changes of all. >> it is making the phone a lot smarter. updates across the board.

it will take advantage of new processors, you are looking at new in van -- new advancements with seery. >> how substantial's -- how substantial are these changes? is the user base fundamentally different? >> the ui will be on the backend. the accessories has information. --you put in movie tickets the specific movies you're looking for. you don't have to go super deep into the phone to find content. about what this means for developers. i suspect a lot of apt developers polled the resources away from fixing bugs over the last few months to work on the new os and get rid of bugs that maybe there. are we going to see a slew of new apps from existing app makers?

apt developers let ourselves are able to build apps within apps so we can enhance our functionality. >> explain it. >> basically taking a work management app and you want to be able to hook in newburgh to that. app it will say you go to this address and it will hook them. that is something really exciting for the platform because previously you couldn't to that. >> is that hard for app developers to figure out what is inside the other app and connect to that? used to working with third-party apis that we typically do integration with. we will have other tools and resources to create those integrations.

>> i would imagine that you have the developers super busy. what kind of resources take a company -- let's say you have an opentable where they have a big user base. they have to get ready for this big change. we have had the ios eight since our early spring. we have been messing around with it so it is nothing new to us. be of the things that will new is as we see the final hardware specs that come out tomorrow we will be a will to further develop and test across it. the bigger concern is the larger screen size. we will jump to a 5.5 inch. the other big issue is if we go to a 5.5 formfactor for the screen size we have to figure if it will be an experience for more of a tablet size or of a phone? out is what we can figure want to enter this category.

>> in the your perfect world what with the new features of the new phones contain? >> i would love for them to introduce wireless charging. that is a big thing that is missing, especially with the iwatch. not being able to have some sort -- that isolution one of my main concerns on that and easier access to pairing. even though it is more rumored they will go to the route of nfc. maybe a more tactile keyboard. their companies producing technology and hardware. that would be on my wish list of things moving forward. a tactile interaction with the device.

i guess today is the last day to dream. we find out what we are going to deal with tomorrow. apple's process in the past. samsung has a shorter development cycle. do have any sense this is the way they're going to continue to do things? get ready for tomorrow because you will be on in the next two years? , it has been more about creating evolutionary updates to it. they have not induced anything revolutionary to it. people criticize tim cook that he may have lost that spark. we will have to see what happens. the strategy has been creating device after device to a quick product cycle, getting it to market. apple wants to make things work properly and they take their time. will it be enough? we will wait to see tomorrow.

>> he has a lot of different clients out there and a lot of apps has written for them. echo >> wepps ready wait until the new spec comes out. as far as compatibility we are good to go. to make sureob is we predict what is coming out and forecast the trends and build into our platforms. all the apps will connect to potential smart sensors moving forward. we have to wait for the hardware to come out. >> thank you very much. coming up doesn't make sense for all the accessories of new iphones -- we will throw you the and their ability to get ready for the products.

, this is bloomberg west. accessory companies will be racing to get all those cases and covers to the store shelves after iphone announces tomorrow. it is a mad scramble for these apple partners to figure out what the new phone is going to be. behind the scenes of one company, look at what they had to do to deal with this. >> today you will see us gathered around tv. we will be watching the announcement live tv. -- live on apple tv. >> apple does a great job of keeping this information close to the vest.

we like the devices of the company. when a new device is announce we have to accessorize them. november 1 is the availability day of the product, which means we have to start running fast today. they will have dual microphones, so now all our cases need to accommodate. editing. go start they are not leaving because they're bored, they now need what they need to do. >> everyone knows what their job is. they're all listening for their bit of information at the announcement and they are going to act accordingly. right now we are going to start growing and prototyping and testing some concepts. this is starting right now. everyone asks me where my for is, i-- where my ferrari

tell them i don't have one i have this printer. we have old form factors we are going to continue selling through and new form factors. we are a very busy warehouse. there is a reason we are the best at it. we are pretty fast. we probably will be on shelves for other people. >> imagine all those partners trying to deal with that. they're going to make accessories for a whole bunch of smart phones and tablets. check on the stories making headlines outside the world of technology. steel, whong in alix is hosting bottom line today. >> usually my hands are freezing but i am doing on my own -- i'm doing ok on my own. let's start with ukraine because

the president has spoken with russian president vladimir putin to start bringing he's too eastern ukraine. the two leaders will continue the dialogue. ukraine says the four-day cease-fire with pro-russian militants is holding despite them scattering. police lou up a suspicious package that was found in a security area. they say the package did not present a wider danger to travelers. easyjet does not expect operations to return to normal until tomorrow. of a federer, djokovic, or nadal has caused prices to fall for the u.s. open. it is down 26% over last year. $390averaged over according to think geek.

relationships around the world have ballooned into a $20 million market. can a similar model be used for higher education? we will look at that next on "bloomberg west."

>> welcome back.

technology -- no more than salesforce.com's notion of software selling is a service. i think this is one of the big questions in software, whether or not you need industry-specific software in the software service. do you do it in education? >> in a case of learning relationship management crm's do not do the trick. >> comparable relationship management, the biggest of the offerings that lets a salesforce users follow some of three sales cycle, no who the customer is. >> the problem with applied education is when i am using a crm to track my relationships with customers at the end of the day it is about me tracking my interactions with them, not

about helping them make sure they have the appropriate relationships. what lrm does is reinvention --t this re-envision that what lrm does is reinvention that. yet to make sure they have strong peer relationships. whether no debate as to those acids help students become successful. a crm cannot do it without building a in entirely relationship layered on top of the crm. >> how much of this is already in play and how much of this is monitoring how strong those relationships are? is there anything like that out there? >> you would be shocked. there is nothing. -- the jury is in on whether the students need that to be successful. if you ask any administrator whether those things matter to will say yes. if you say which students have strong mentors and clear plans and strong objectives, who has strong peer relationships on

campus, who knows the professor, they will look at you with a blank stare realizing they do not have any way to know which students have them and which don't, which makes triage and working with the students to make it happen pretty much impossible. to happen andhis will credit customers are we talking about? >> some of our early customers are here is an state university, american public university come up ryan university. university, ryan university. education ist really about content, relationships, and purpose. the last few years is going to content but they have done that to the exclusion of relationships. >> the innovation around what is there to audiences. >> absolutely. we take a look at the successful organizations like general assembly, these companies take

it as a bundled package. they are not tripping up the content to the exclusion of relationships and purpose. >> they are tracking the environment for success as opposed to the content that may be superfluous. i spent a lot of time working on the for-profit education sector and it is. you mentioned content and relationships. don't mention and rome and. it seems i the entire focus is in and roll meant. john all for pick up one of my segments here on bloomberg west. , is that alltion changing? them in the late 90's to early , --, in the late 90's to early 2000's it was focused on

-- you got into a perfume business where you are spending 50% of your money on marketing. we have seen it as the result of a couple of things that led to it. the bottom line is almost all schools, including a lot of for-profit institutions are focused on the actuation and success, meeting placement of companies in the backend. i would say some for-profit schools are doing a decent job, a lot are doing a poor job. goes for the nonprofits as well. at the end of the day there is a new way of approaching students to help them be successful as opposed to just provide them a curriculum that they can succeed or fail with. >> let me ask my first question again, why sell this as a service? why not sell it as an off -- as a software is that software installation? -- as a software installation?

>> a lot of what we are selling used to people who have $3 million to $5 million crm plans and want to turn it into an lrm system. it is writing an entirely new code base. give us a try for a year and if you get the impact you are looking for we will blow that up and take it to the entire organization. it allows you to get started very simply and very easily and prove the efficacy of this lrm approach and expanded. idea.ove this always a pleasure to see you. >> one number that tells us a whole lot today, sarah frier joins us in -- joins us. >> 28. number of brands music artists and nonprofits that are getting to use twitter's by button. it is a new button that allows people to purchase directly from tweets.

they are partnering with credit cards and letting people to do it direct. big deal for this company, and other revenue source they have not had yet. i think a lot of people have been waiting for them to come up with a way to monetize even greater. >> it is a good new gravity source for them -- new revenue source for them. only 28 people can use it so we will see how they ramp this up. it is starting out small and they are just trying to get people used to the whole idea of purchasing through twitter. are choosingg they to do this through musicians. you buy the gear and music? >> they want to do purchases in the moment. a want to have this urgency to it. a musician can tweet about an upcoming concert, you can to location -- you can do location-based targeting.

sale exclusive to twitter for the first 20 minutes, or however they want to do it. >> this could be an interesting thing. twittere as to whether or amazon or google tries out a lot of stuff like this or is this a really serious long term focus? they hired jason hubbard from ticketmaster. they have been working on this for almost a year since they hired him. this is their first strategic announcement of what we are doing, this is what it looks like. facebook is trying one as well. how theteresting to see two social networks suddenly decided to do the direct commerce. >> thank you very much. you can get the latest headlines all time your phone, tablet, bloomberg.com, and on bloomberg

radio. we will see you tomorrow. ♪

>> welcome to "money clip." where we tied together the best stories, interviews, and video in business news. i am olivia sterns, in for adam johnson. alibaba is set to be the largest ipo in u.s. history, but that is only a small part of the story of how huge the company really is. a mega kitchen makeover. driverless cars. but is hands-free driving really the future of the auto business? in tech apple rumors ahead of , tomorrow're