>> live from pier three and sent francisco. welcome to bloomberg west. i am cory johnson. here is a check of your bloomberg top headlines. the fed repeated up pledge to remain patient. even as it boosted its overall assessment of the u.s. economy. describing the u.s. expansion as solid up from moderate last month. >> this statement got unanimous vote because it had everything but the kitchen sink in it. eight acknowledged the economy was strong and we had some solid

growth. it is one of the stronger verbs they used to describe the economy and talk about inflation. weight is not being as they could be. -- wages not as strong as they could be. >> done thompson gone -- -- don thompson gone as of march 1 and [indiscernible] shares getting hammered in after-hours. the latest round of ibm layoffs has started.

the company has been notifying about the numbers. and cranking out -- that is up 49% from the previous year. profits, $696 million. the percentage of ad sales, 69%. this is a mobile company. facebook user base is growing. the growth rate of sales and users continues to slow and for more i am chained why -- joined by david kirkpatrick.

and the former head of mobile. when you look at these numbers you see that the long-term vision of mark zuckerberg is playing out? >> i guess so. it is getting boringly predictable. they have been nine or 10 quarters in a row. i thought it was so interesting the way that he answered some questioner about how are they putting the wrong emphasis on building up use in the developing world? he takes such a long-term view. if you are the kind of investor we want. >> i heard that, it was an amazing moment. i never heard that. >> if you want short-term, do not invest. we think long term and that has

paid off. the thing that most blows me away, less than three years ago they went public and everyone will -- was saying that they will not get mobile. they doubled their mobile ads in the last year in revenue. that is incredible. these guys have turned on a dime. one of the great analysts said, this is a historic thing in business that they have achieved this mobile ad result. >> it really is amazing. you can change a fan belt when the -- engine is running but it is not preferable. >> it is remarkable. when i left facebook we were not close to monetizing mobile. it was more of a growth product very much a growth product consistent with mark's comments about trying to reach and connect the whole world, we were

focused on reaching users and new users via mobile devices because it was probably the only device they had access to. it would reach to the ends of the earth and not as focused on monetization. at the same time i'm not surprised by facebook's ability to blow away the numbers in this category. >> they were 526 million mobile only users. there was a percentage of monthly active users and there was 37.8% of the users. well over one third of the users now. only on mobile. was there a belief that that is where the world was going or we had better see what happened? >> it was a combination early on of initial inbound demand.

people hearing about corporations and other users hearing about facebook growing in the u.s. and wanting exposure to the product. some of it was inbound initially but a lot of it was in early recognition on the part of mark and the management team. this was the way that users outside of the u.s. and canada were going to first be acquainted with facebook. it really blew open with the advent of the smartphone. the iphone and the developer platform. >> what was the thing that mark said he wrote on the phone, the letter on the s1? >> it is remarkable. the phones that are being developed today, the network infrastructure that enables you to watch brand ads or other types of native content in this experience is remarkable. the fact that mark wrote this

letter on the phone is not surprising. the hardware and software is there and facebook has been with it every step of the way. >> facebook spent 1.1 billion dollars in r&d in the quarter. 29% of revenue, both of those numbers are near record. what does this tell you about their plans for the future? >> long-term again. if they are thinking that virtual reality is the potential next interface for computing that takes a lot of thinking and spending and experimenting to understand. they bought oculus. that money is going into interne t.org. it has a consortium quality. they have a thing -- a lot of things we do not hear about. could i ask a question? one of the things that continues

to strike me as just what an amazing and i do know the guy but incredibly good ceo mark zuckerberg is. you look at this chain of results, one after another and he is not trying to manage for short-term financial gain but he has done such a good job hiring people that can do that that he continues to grow and build about -- and connect the world even as the business improves. i have not seen a business leader this good in my career covering business. im curious how you saw him working for him. -- i am curious how you saw him working for him. >> there was always the long-term view, always the mission top of mind of connecting the world and making it more transparent. mark really cares about this. i think that has been consistent. >> thank you. more "bloomberg west" right

after this. ♪

>> ceo of mcdonald's don thompson will retire as of march 1. this was quite a shakeup. shares were up 3.5% in after-hours trading. this was an interesting story for mcdonald's. mcdonald's has underperformed in so many ways. the stocks down 5% in the midst

of a raging bull market because they have had some real issues. >> it is a question of how they have been doing anything right at all. sales has been slowing. the younger generation does not want to eat there. there has been protest against cal mcdonald's and its franchise treats its workers and don thompson did not have any good answers for any of that. >> this looked like a growth story three years ago. they achieved that by adding more drive-through windows and those places that could handle the drive-through windows seemed to gauge the growth. the menu fixes or changes were not helping but the drive-through windows were. >> mcdonald's still gets 70% of its sales through the drive-through. overall, service was slowing at

the drive-through and the restaurants and that is because the menu became complicated. they wanted to add a lot of new items to keep up with the competition but they did not call the menu and it became clogged. they started to change that but nothing they did was working well or fast enough. >> that is a pretty big deal. the menu intrigues me. you have seen the success of other fast food or joints that mcdonald's cannot come to. you have seen great growth at parties and carl's jr. >> it is not that people are not eating burgers. the problem with mcdonald's is they were never able to persuade younger customers and families that the burgers they were

offering were really fresh and as good for you as burgers can be. and a lot of the chains that have become more popular offer ways to customize the food. at mcdonald's, it is all about the system and moving things fast and standardization. the only very lately and in a few testing -- areas were testing out allowing people to create their own burgers. i have to say in the end, the burgers are the same. that is a problem for mcdonald's, the quality of the food is not as good as you can find in other places. people are on to that. >> is the supply chain that was mcdonald's great strength, is that their weakness because they

cannot adjust to a new world? >> that is one of the key weaknesses of the company. it always talks about its infrastructure positioned for growth but it is like trying to turn around the titanic. anytime they want to introduce a new product by trying to roll something out or across the larger system that mcdonald's has becomes difficult. acknowledging that issue is the first step. but the supply chains changes do not take place overnight and the company has a lot of work to improve on that front. it takes too long to get new products out there and accommodate customers who are looking for the next greatest thing. with more speed. >> the foot choices here are awesome and things like farm to table are part of a regular conversation but is the quality of the ingredients a problem on the marketing side? >> there is certainly -- the marketing is the key part of

that. the mcdonald's has long struggled with the perception of being lower foot quality. that has not always been the case at least relative to its other quick service peers but there is a marketing issue with that and combating this perception that consumers associate lower quality food and donald brown. that will be one of the other key hurdles at the management team will have to overcome. it is changing consumer's perceptions about the brand and that is something that does not happen overnight. >> it is -- the way it is typically consumed is not a healthy choice, to say the least. is that a fatal issue for mcdonald's or can they get around that by tweaking some food items and some ingredients? >> it is a really interesting question and an interesting problem for mcdonald's.

they sell salads but those salads have consistently been about 2% of sales. people do not go to mcdonald's for salads. they go for french fries when they can get them. the other issue as it takes them a really long time to introduce fresh food into the supply chain. it took two years to develop the mcwrap. >> we will leave it there. thank you very much. "bloomberg west" continues right after this. ♪

>> i am cory johnson and this is "bloomberg west." challenging the airbnb law. what does this mean for the future of homeaway? >> we think this is good for homeaway. we are not a -- which is curious. the city decided to argue that we were not a hosting platform that they were trying to regulate. >> they said that we were trying to regulate airbnb.

>> this was an airbnb law and we were making sure it was not infecting the rest of the vacational industry which is a 100 euro industry and has operated quite well for the last several decades. >> i wonder what this means for similar struggles that you might face in other jurisdictions whether it is in the u.s. or abroad. >> the one part of the lawsuit that has remained unresolved by saying that homeaway is not part of the coverage, there is a discrimination between residents and nonresidents having equal rights to rent their home is something we need to decide if we are going to press. we will look into whether or not that is something we should be doing. >> i am curious about what airbnb and homeaways mean for the residents of a given city. maybe new york city will not be

a ghost town in the summer because everyone is in the hamptons. >> it started -- there is growing pains that happened. what you're going to see is the -- people are not converting entire buildings into short-term rentals. people are not renting their home full-time because they need to use it. a typical owner wants to use their home a lot of the time which is why they want to rent it part time. i do not think a lot of this trip coney and dominoes falling and the city structure will change is going to materialize. >> i want to talk about the super bowl. this is an event where tens of thousands of people go into a city, in this case, the city of phoenix and look for some place to stay. what is going on? >> it is up over 200% as people

seek accommodations. it is fairly booked up. we had 3600 listings at the start of the season for the super bowl weekend. 500 are available and 200 of those came on in the last week or so. demand is driving more supplies so this is a great opportunity for people in phoenix to list their property has the demand is quite high. >> they cannot go to the game. >> if you want to rent short-term this is a perfect opportunity. you will be able to see if you like it. >> this is an event you can plan for. what do you do to get ready for something like this on the backend? >> we work with event planners. our favorite folks are south x

-- sxsw. we reach out to the communities. >> do you call them up and say -- >> they usually call us. we working with special olympics. they are driving toward their games in los angeles and we are helping them find homes with -- for people with disabilities. >> that is a non-tech way to call someone -- to solve a problem. >> we are the preferred partner for that. >> thank you for joining us. a big news day as well. 70,000 fans heading to the stadium and more heading to phoenix. can the nfl provide enough bandwidth to deal with all those

selfies and facebook posts and i am at the super bowl and you're not posts which will surely be all over the place? next with those details. ♪

wsuper bowl xlix in scottsdale. can fans get on line? the nfl is wi-fi standards for all of its stadiums. very interesting challenge you have here with this big game. >> all of our games present the big challenge.

nothing is quite like the super bowl when you have all the fans and the amounts of media. it definitely creates a challenge for connectivity. >> and want to take you back in time back to 2008. it was a very different technology world. the iphone had just launched and there was no instagram. the best-selling phones were made by no kia. it is a different tech world. how do you rewire them? >> you just have to work really hard to make sure that their continuing to reinvest. compared to 2008 the connectivity was focused on download abilities. now you see fans as you said earlier creating their own content and wayne to publish that themselves so that is what it is about, making sure that all the clubs especially when

you're hosting the super bowl that you have the latest and best connectivity. from wi-fi pervasive through the snow -- from the game. >> the nba was not doing anything in that regard. talk to me about why the nfl is trying to create some sort of wi-fi standard and what the standard is. >> if you look across our stadiums, they are in varying stages of age and some have recently opened like a 49ers new stadium that has the latest and greatest. for investment and planning purposes the wanted clubs to know what the expectation was and to make -- letter fans get

with a want. they want to be connected. the at-home experience has gotten amazing. we know the best place to watch an nfl game is an nfl -- in a stadium. we thought it was important to make sure clubs understood that there was a minimum requirement and work hard through many partners to help them get to that standard. >> i have been looking for someone to blame for the crummy 49er season. it occurs to me i could blame you. the new stadium is a lovely place. the foot is terrific and the wi-fi a spectacular. after halftime no one is going back to their seats. the home field advantage is not happening. it is interesting how you put them into the seats as opposed to having this experience that may not involve the game.

>> to algae should be about augmenting the game experience and not replacing the game experience so we do not only give standard connectivity guidelines but we also work closely with the clubs to make sure the in stadium experience creates an awesome game experience for fans and players that are on the field. fans are in their seats cheering and not in line somewhere else or doing something else. it is calibration that has to happen as you go along to make sure you could keep the game at the center of attention and not get carried away by the cool devices and things you can do. >> i was catching a game and those fans are so passionate and so loud, it was incredible. when you meet with these teams,

how does this integration happen, you say you work closely with them. are there the cio's as well? >> the producer -- there is a good bit of coordination they goes on between the technology that is available along with will happen. using the super bowl as an example we have programmed things that will be happening that is coordinated with the stadiums that we will be ready for super bowl xlix. it should enhance and augment the game experience. we do not want people looking down on their small screen to watch the game. we want them watching the game on the field and augmenting that experience with their devices. it will take a bit of coordination.

>> hopefully there will be some wi-fi-enabled scales so they can weigh the footballs. i cannot wait for the game. facebook will -- has a massive amount of user information that they gather but how do they find it, how do they sort through it what is the technology behind that? we will talk to the ceo of the company that provides analytics for impatient people next. ♪

>> from server farms to usb's, changing data storage. the company that helps companies

create -- locate data points quickly. the ceo ann johnson joins me. i love the notion of your company because there is so much more data being gathered by companies. >> this means interactive analytics and our goal is to make data part of everyone's day. everyone will be able to integrate data into every decision they make. what we have is a back and an integrated front-end that allows people to explore and interact with their data in seconds. and not only data but look at behavior over time. your machine behaviors, your user behaviors. you can group people. your most engaged and are least engaged users.

>> you say everyone, i am trying to imagine. >> that is a visual interface. you have drop-down menus for all of your column names or the values. really easy to use. when you have clinics and you went to windows and everything was there and it was easy to use . >> why is this possible now? >> my background is intel. it was clear how fast storage was getting cheaper. >> a corollary storage is getting cheaper. >> in the 70's it cost $200,000 per gigabyte to store data.

>> it was when it was $200,000 that a lot of these data tools were invented. they saved their inventory and their accounts. as soon as that data [indiscernible] data tools were expecting, that is the kind they were expecting. it is two cents per gigabyte to store data and people are saving everything. continuous time data. we have reimagined how you would interact with continuous time data versus the slices. >> tell me the inspiration for this when you notice this problem. >> my cofounders came out of facebook and facebook is a marvel. >> you were married to your cofounder. >> i have to cofounders but they both came out of facebook.

and what they saw was that facebook was able to pull this data from all over the world to load your home page. if you take that performance >> where is that data coming from? >> your data may be in one data center but all your friends is all over and they are able to pull that and load the home page quickly. if you look at data and with data processing tools they are outdated because they are thinking about data as this one slice of time. the applied this performance mindset. you can group behavior in seconds. >> does facebook have a tool like this or does facebook need a tool like this?

>> facebook has a tool that is a much earlier iteration that my cofounder made and people use it for slicing and dicing data. we have added an easier way to look for behavior patterns. it could be from machines, you want to know which ones are secure. you want to understand how your most engaged users differ from the least engaged users. >> thank you very much. we're here to check the stories making headlines. cyberattacks are costing businesses $400 billion a year. the number one and number two risk factor at every company. >> in certain specialist lines there is significant growth. cyber being the best example. to give you two numbers, the

cyber risk premiums were running at about 850 million. they have troubled. the demand is every -- ever-increasing and the inquiries are ever increasing. >> he is seeing more capital going to reinsurance. a panel of exit -- of experts may recommend limiting the so-called right to be forgotten to websites within the eu according to one unidentified member of the panel. google has received more than 200,000 requests to remove more than 750 thousand links from its website so far. and the first profitable year in 2012. sales are at half the pace of

the predecessor. they lowered their sales outlook way 7%. facebook, google, twitter have released a lemming diversity reports in recent months. what can silicon valley do to turn the tide on issues like race and gender and get rid of the tech bros who are turning up their collars and turning up some noses in technology? ♪

>> i am cory johnson and this is "bloomberg west." recent numbers show a very white and male workforce. they have some advice to help thousands of minority students

become engineers. >>this -- we talk all the time about how tough it is for these companies to make these changes. why is it so hard? >> several reasons. there pointing to the pipeline, lack of quantity of students especially from underrepresented populations. what we have learned over 45 years, one of the hardest things is corporate culture. as students matriculate at of college and go looking for work it defaults to a referral system. we notice a lot of companies hire at certain schools and only certain universities. >> a recruiter once told me that google -- they were not the colleges that this person has

ever looked at. >> we have been at it for 44 -- 45 years. we founded to address this issue in 1970 and partnered with industries they recognized, they were the startups of their time. they have been working at it for quite a while. the difficult thing is like you said, there are black colleges and tribal colleges and universities as well. great students i can tell you that every student we work with they are all s.t.e.m. majors, they are used to working on projects, we are preparing them for what employers are telling us. this is what we are looking. >> when and how when you deal with the students -- do you deal

with the students? >> we are -- [indiscernible] we are all the way from elementary school, what we call the precollege programs into community colleges and undergraduate institutions. a student can come in and follow until the graduate or they might find out when they start at community college. they intersect at different points. >> you're trying to find students and get them ready to walk out of college with the right kind of skills so they can get the attention of recruiters. >> absolutely. >> the a stands for achievement. students were not being academically prepared and in that sense, there are certain gatekeepers. one is that you take algebra

early enough so that you are in calculus in high school. and you are ready for the rigor of that first couple of years. nsf and this great research shows that 40 or 50% of majors either drop out or change majors within the first two years. it is hard. we like to say you are taking four ap classes at once and that is your life. and you are transitioning. you are a kid from a rural town in california and now you are in a major, some universities are like big city so -- cities so that there are some cultural issues there and they have to adapt. we remember in the first weeks and months of college, it is a strange place and sometimes you feel like you do not belong. >> great stuff and great work you are doing to the benefit of

a lot of people. appreciate it. the bwest byte, focusing on one number that tells us a whole lot. phil mattingly joins us from new york with more. what do you got? >> the bwest byte is 600,000. six hundred thousand dollars. that was the fcc fine in marriott international for blocking personal hotspots at one of their hotels in nashville the gaylord. the fcc is warning other businesses it is serious. in an enforcement advisory it is witnessing a disturbing trend among hotels and other commercial establishments blocking personal wi-fi on their premises. ma'am -- marriott had petitioned the fcc to change its policy. it makes clear that it views this as unlawful and interference and with the public's right to their airwaves. if there was any question, the

fcc went out of their way to answer that. >> i thought that was amazing. why would marriott do this, why do hotels not want people to have personal wi-fi? >> there has not been a good explanation for it. there was an apology from marriott and then this push to get some type of formal ruling from the agency on it which underscored the fact that whether or not they felt they were doing something wrong, they wanted to know the rules of the road to see if they could push it even further at some point. the fcc chairman tom wheeler saying under no certain terms that this is the way it is going to be going forward. nobody can do this and there will be significant fines of other companies or change do this going forward. >> tough for from the fcc. probably not the last. you can get the headlines all the time on your phone and tablet and bloomberg radio. we will see you tomorrow.

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