[captioning made possible by bloomberg television] >> welcome to the best of bloom beg wet weather. the top interviews with global power players and technology and media and the reshapping our world. coming up interviews and insight from strausezell nick. and matt maloney. but we're going to start with twitter. no tech ceo coming under such fire and constant speculation. but he's been busy shuffling

his tweaking and making acquisition. costello spoke with us topic number one twitter's acquisition of nearby project a company that connects social media stars with advertisers. >> it's absolutely the very beginning of providing opportunities to diviners who have done such great work at building this unique community of creators and connecting them to brands we think is just going to be a usome for the brands who want to leverage the great work they do to create stories and then build a career off the fun things. >> do you find yourself competing with snap chat with this new generation of video creaters? >> i think about it more as this unique platform we've

developed and this awesome -- there are these stop motion animation experts, there are these comedians, there are these sort of vine magicians through some of the frame by frame animation work they do. and being able to leverage their tall gts to help brands and companies tell their stories across the system we think is really cool. and by bringing nearby on board we think weesh going to be able to do that not just on vine but within twitter itself as well. >> thrgs so much energy it makes me wonder whether you tube has squandered some of the opportunity around mobile video. >> i think they're going to be lots of players in this native mobile video space. and again, by native mobile i say that a lot. and what i mean when i say that is video primarily produced for

consumption on mobile. we led the way there with vine. we just think there's an enormous amount of opportunity there and combying nearby was realizing that opportunity. we're going to do a lot more there as well. >> a couple weeks ago my and droid twitter ap updated itself to allow for mobile video. as those tools have rolled out what kind of consumption have you seen? >> we've seen great usage of them. one of the things we've been fascinated about is how much people are using native mobile video to reply to tweets. so someone will text -- write a text tweet and mention another user on twitter and that user will reply with a short video. we've seen that from individual users like gary vainer czech's been doing that a lot. we've seen it from companys. medium has been doing that. we just

we had the benefit of having seen what was happening in january. as we mentioned that outlook was base t on seeing a return to organic growth, growth initiative that is we've had inside the company that are delivering results and then some seasonality where is higher than 4 traditionally. >> you increased the cadence of product launches. a big one is instant time. talk about that. >> one of the things that i've been talking about since we were on the ipl road show is bridging that gap between

awareness of twitter and really engaged on twitter. part of that gap is new users are coming to the platform. they just saw it on tv. they just saw things happening. it's all on twitter right now. head over there. they sign up for the platform and then they can't find the right accounts to follow. they don't understand how to use it. it's about delivering immediate value to these users the moment they sign up removing the follow friction the way they get value and getting them a great timeline of 20, 40 90 accounts to look at immediately and show them how to use the platform not try to teach them how to use the platform. >> you've had some instability. some managers coming and going. has that situation stabilized? >> the short answer is yes. i love the theam that we have in place -- team that we've had in place. i've also been particularly enthused by the way my direct reports are building out their bench and strengthening their bench and bringing other

leaders in the company. we've just had a couple more additions. so that's something i'm enthusiastic. organizations are always going to evolve and change over time. >> do you feel you made mistakes in previous incarnations of the team? >> i always tell my leaders inside the company, it's your job to always be improving your team. and there are all sorts of things you can do to improve your team. your job is not to defend your team your job is to improve your team. so that's something i focused on and paid careful attention to. >> i was struck by the internal statement that you made about trolling on twitter. you said that the whole world knows that this bullying happens on the network. we haven't done enough to stop it. >> that was the first time i used the word we suck at this and used crass language like that in a companywide email. of course that's the one that gets leaked. not one of my more sophisticated writing memos.

look, the point of writing that note to the company was to let them know i take responsibility for that. we're not just going to go ahead with the status quo any more. we're going to get a lot more aggressive. it's on me to make sure we do that and we're going to be aggressive and fast about making changes. so that was about me putting the sort of weight on my shoulders, if you will, and letting the rest of the company know we're going to get more aggressive here and quickly. >> e commerce on twitter. i feel like amazon has been trying to sell me the same portable usb charger since they introduced the charger. what's the goal? >> we're still experimenting there. i've said a number of times that i think the opportunity for twitter is to really be the place for in the moment commerce, now commerce. in the context of seeing some public conversation, oh, yeah i want to that and i get it now. as disdifferent from other kinds of commerce such as

here's a cat log of stuff. we have a number of experiments. we're learning a ton. we don't have anything new to announce. i think you'll continue to see us explore with different kinds of, what does now commerce really mean in the coming months? and we'll see what happens. >> a long-term question. facebook has 1.2 billion usesers, is your vision for twitter still -- is it on the same par? is it facebook scale? >> i think our vision for twitter is to have the largest possible audience, the largest daily audience in the world. we believe that twitter is of value and can be of value to every connected person on the planet and that's the strategy we're delivering against. >> up next, take two is evolving. the company hoping the new game evolved become the next big thing following the steps of

grand auto.

>> tht this is the best of bloomberg west. cory action has built itsdz franchise but now the company is betting on a first person shooting game called evolve which pits human against monsters just like in real life. evolve went on sale just recently. check on the interview take two. >> it's pretty unique in that went on sale you have an opportunity to play either as a monster or team of

four fighting the monster. and as far as we know that's novel. the game won best of show at e both e 3 and games come. that's never happened before. we'll know very soon. >> how do you make plans to launch such a thing to try to fig crur out what the scale is going to be? >> i think that's true of every entertainment business. certainly of the movie business where you spend your money and create a marketing budget. and until the picture opens you basically don't know. we have a little more insight because we interact with retail and they order product from us and they tend to be very expert. they really know the market and can signal to us through their analysis about how our launch is going to look. >> in other words, it's unusual we would ship product and be disappointed how it sold through although it occasionally does happen. in this instance the retailers are very enthusiastic.

it still remains to be seen and we never like to claim victory until it occurs. >> i just don't care about sex and violence as long as i know it's going to be there. is that morally bankrupt or is that just the market is bigger? >> i think you said it right. you want to know it's there. it's incumbent upon us to deliver a rating to stand by the rating and to market appropriately to the right audience. the rating system used is the most robust in the industry. that is it has the highest level of compliances measured. so when a parent goes to the store to buy a video game for his or her child they know to buy something that's rated e for a child. and if an adult goes to buy an m-rated game they know that there's likely to be sexual content or violent content. the same way if you go to an r-rated movie or watch an action television show you know

what to expect. i'm a big believer that the right to bring what a publisher wants to the public is terribly important right in america one we need to stand behind. equally we have a social responsibility to do what we think is right and only to market to appropriate audienceanced and to let people know what's in the box before they get it home. and our ability to do what we think is right is important, our social responsibility to market appropriately is equally important. >> how do you see who your user is? do you put them into a small sort of -- or big groups? or how do you try to size it? >> we typically look as consentric circles with the core being sort of hard-core gamers. people who love video games and people for whom it's their primary entertainment activities. >> who is it? >> it's all across the board. a bit more male than female but

not that much. do you put them into median age is 37. so really adults. and older adults. i think the reason for that is that one consumes for the rest of one's life the entertainment about which you're passionate about in your late teens and that never changes. that's why our cohort is growing so rapidly and aging. obviously as the video game business has been around 35 years. every year that goes by our median cohort is going to increase in age which suits us just fine. people don't stop playing video games once they play them. typically. thai love them and keep loving them. then the second circle would be people who play video games but not their most important activity. then the third is broad audience who is sort of interested but it's not their primary or even secondary activity. in the case of grand theft auto 5, you have to believe you've addressed the entire market and in other titles you might just

address the core market. certainly our goal is to address the most as possible. and make it as beautiful to look at and compelling to play. >> you have this partnership in china. >> we've been in business with ten cent for some time and they were our partner as we ought to develop it on line in china, which is is a free to play multiplayer game in the chinese market and we entered with ten crent because they are the premier company there, how to do it and prepared to mitigate a gool deal of our risk. it's been a great partnership. we have a lot of people on the ground in china. it's still to this day the number one sports title in china for massive multiplayer game. i think we have 24 million registered users and it generates revenues and profits every month. >> in terms of the way showing profits already. what's the growth like and does it sort of latch on to the same kind of growth we see with ten

cent writ large? >> certainly ten cent's own growth is a nice backdrop but the game has to stand alone. it continues to grow and we hope it will continue to grow. but right now it's month to month. we can't predict what's going to happen. but it's looking very positive. >> consoles, you're saying the x box. what does that mean for you? >> that's a big market for people who love games but is a brand new market. >> you said it exactly right. people love games in china. they're accustomed to playing free to play on line games. so this is a brand new business. so far only the x box has launched. it's a relatively small installed base. we are seeking to get government approval to sell our basketball title there. that would be our first title for the x box in china. it's a massive market 300 million people in the middle class entire state of america's consumer population could fit inside china's middle

class. this remains still a very small market so far. >> what do you expect in terms of timing? do you have any idea what the process will be or might it favor local developers of content? >> so far the content has been sort of balanced with local and international. it would be -- soft is actually on the ground timing? do you have in china. that gives them an advantage. all of us need government approval for what we do and that is a bit challenging as you know. >> but you've already got the nba game playing on ten cent. does that give you in china. that gives them an advantage. all of us need government approval for what we do and that is a bit challenging as you know. >> but you've already got the nba game playing on ten cent. does that give you an advantage? >> i hope so. and basketball isn't controversial. >> competition in the online delivery business is hotter than ever, we'll talk to a publicly traded grub hub next.

>> i'm cory johnson and this is the best of bloomberg west. the hungry market for good delivery is spurring competition. online food services are inching closer to your plate. yell p just ate up online food services spending $134 million and grub hub announced two acquisitions recently. so which company is in a position to win? grub hub spoke with bloomberg about the yell p competition. >> it's just business as usual for us. e 24 has been around for a while. in fact they had a business partnership with yell p for years. i'm wondering why they pulled the acquisition. but for us it's about the opportunity ahead of us. there's $70 billion in takeout spent domestically and we processed 1.83w8 last year.

there's a lot left to go in front of us and that's what we're focused on. >> it must be val dating for them to look at your market and finding it appealing. >> i want to build the best product and service and that's why we acquired the two rdf companies, restaurant deliveries to now deliver, 15 major markets. that's what i see as a real opportunity to increase service levels. >> let's talk about those. you were once in the business of facilitating an online purchase and then a restaurant went and delivered the food themselves now you want to control the value chain, make those with a grub hub contractor or employee? why? >> sure. first start the majority, the vast majority of our business is still the restaurant delivers it themselves. what we found is that we can increase the level of service and make it more consistent for the diner if we're owning the last mile. we can is still the restaurant delivers it themselves. what we found is that we can increase the level of service

and make it more maintain the heat of the food. we can make sure the delivery gets there really fast. so by leveraging our technology and scale we think we can bring a better experience to the diner and add a bunch of new restaurants that didn't deliver before. that's the before. that's the value we're going after. >> how does it work? are these employees that are making the deliveries or spin off a kind of uber like service? >> we're definitely looking around the world and seeing how other people are deploying vast amount of individuals independent contractors is a very strong way to go and we definitely have a lot of those. >> do you see the ubers and the side car and uber like company here in san francisco getting into the business this week of making delifferies. do you see them as partners or competitors? >> you know we're going to leverage whatever we can to get the food there as fast as possible as hot as possible as high quality. the transportation company, it's a different use. they pull over to the curb somebody gets in. there's new packages. we'll see if that gets to the place where you can put someone who goes and gets the food from the restaurant make sure the order is accurate brings it

back delivers it rings your doorbell. we'll see if that can get there. for now we're going to do it because we can do it really well and if in time they can do that, of course we'll go with that. >> let's talk about the value prop position for restaurants. i'm a user. love the service. but it's incomplete even here in san francisco not all restaurants are on the platform. how do you convince restaurants that they're not leaching commission to you guys and two that they're not losing the relationship with their customer to an intermediary? >> restaurants want to make money. that's what they're there to do. they want to process orders and they will leverage whatever they can to do that effectively. so what we bring them is a very low risk very high reward opportunity. we say bluntly, we only make a dime when you make a dollar and then it's on us to make them more successful. we help them manage their data, what times are they delivers, these are things we are

thinking through. we give them a tablet to make them more efficient to process more orders and then we drive those orders through our 5 million plus active diners in 800 cities across the country so if you're a restaurant tour in a major company and especially growing in tier two, three, and suburban markets, you're crazy if you're not on grub hub because you make a lot of money. >> 20 what extent has open table been a model for you? it does remind me of open table which got a start by providing a lot of money. >> technology to restaurants to help them manage their inhouse inventory. >> it's a pioneer in the networks absolutely. the difference between open table and grub hub is grub hub has a vastly bigger addressable market. so currently, $70 billion in annual takeout sales of which we're doing 2. in reservations it's much, much smaller. so we're looking at our opportunity and really evolving our product. we're trying to figure out how can we add transparency,

control, increase the level of service proactively to give diners a better experience so they order more. >> so as you know for me no conversation is complete without a mention of amazon. fresh, the

>> net newt tralt is that a plan or -- >> net newt tralt is

>> you're watching the best of bloomberg west. i'm cory. tom wheeler says his net neutrality proposal will protect the open internet by subjecting it to more regulation. but that has some people looking at it. >> the worst thing is that it micromanages virtually every possibility of how it operates, opens it to billions of dollars taxes that consumers will have

to pay, lawyers filing class actions across the country. there are a whole host of harms that are going to happen. and that's why i only wish that you could see the 3 32 page plan that won't become public until after the f.c.c. votes on it. >> it looks like a phone book. let's talk about these and kind of go through those objections one by one because you've listed a handful. let's start with the micromanagement. at some point, and i'll take the other side. at some point if the skirmyirk is happening at this moment in which a user is trying to use isn't that the place where the regulation has to happen and get involved if there is to be any regulation? >> two responses. first nowhere in this document does the agency ever identify any systemic problem with last mile connectivity. they might say the competition is limited but they don't give any examples of isp's acting as

any competitive gate keepers in such a way that industrywide rules are necessary. secondly this document goes well beyond last-mile connectivity. for the first time the agency would insert itself into debates over interconnection. the negotiations between internet service providers and edge providers. it would set not only the requirements that companies physically interconnect but also the rates that they would have to adopt and it would open up a complaint process again more litigation that will would allow essentially either the commission or courts to second guess all of these decisions which currently are made in the free market. and that's not something i think the agency or the courts are equipped to do. >> well, you know, a lot of this hinges on these decisions which sort of the guiding principles of how to administer this and what tom wheeler wrote about it in wired, his op ed, there, is he talked about this commercial reasonableness and his evolution of what he thought about what that meant. i think what he said,

essentially he said i believe the f.c.c. could figure it out what commercial reasons meant. but he said i became concerned with this new concept might down the road mean what's reasonable for commercial interests not consumers. what do you think it i believe the should mean? should the rules be there to promote what's reasonable for business? or for the users of the internet itself? >> i view our role at the f.c.c. as vindicating the public interest. in my opinion the public interest is driven primarily fundamentally by what is good for american consumers. but putting that to the side the question about commercial reasonnableness or not is something we applied in a great many context to vindicate the consumer interest. but what really happened in this case was the president in an unprecedented fashion to change course, to adopt his plan to regulate the internet. and that's more than any change of mind i think is what's driving this bus.

>> now, the taxes. you mentioned heavy taxes. isn't there already a rule in place, the internet tax freedom act that prevents there from being any taxes on the internet? how could that lead to more taxes? >> this is a critical point. the internet tax freedom act only applies to a sales tax on internet access. it does not apply to the fees that would necessarily follow from us reclassifying broadband as a telecommunications service which is what we're on the brink of doing. if you look on your phone bill and see that fee this order explicitly leaves the door open to us raising the federal fees and letting states do the same. and that's why one independent study said that $11 billion at least in new fees will be, have to be increased as a result of this reclassification and that's something consumers will have to pay for regardless of that new legislation. >> the republican member of the federal communications commission.

expedia book its latest acquisition. but does that growing wave of consolidation mean more for the online travel industry? we'll answer that question next.

>> orbits has a pretty small share single digit share. orbits is it has been ceding market

shares for years. ceding market shares for years.

transactions part of the business. they've tried for years or made half hearted efforts and haven't had much action there. their business model works great. >> mark rbc capital managing director. and sam shank. check this out. google created a new high end robot named spot. rbc capital

>> welcome back to the best of bloomberg west. is uber worried about google rolling out a service with driverless cars? bill gurly spoke to us at the conference where he had some tough words for google and it's so called moon shot project. >> a lot of the really large companies have done a good job of what i would call distracting the press by profiling self-driving cars or drones. how many large market cap companies have done a drone pr event? and i think it's -- they want to appear innovative this kind of thing. but ask any analyst covering google what are the revenues they have in their model for autonomous cars in the next five or ten years? and i know the answer zero. >> but revenue aside google is

putting some mind capital on those shots including the acquisition of a robot company. innovation far from slowing. they just released video of a brand new robo dog. four legged 160 pound robot can withstand all kinds of challenges. so what does google plan to do with this robot? i spoke with their robotic director dan cara. >> it's important to make this robot walk or do research on this research because there's a number of other capabilities that will be built out of this. you have to stop thinking about google working to developing robotics products and think of it more as terms in developing a robertic solution stack. research which generates

capabilities which generates new products and market places tied mind capital on

those if you have an indwesm internet then you can have indexes of things such as object models to recognize people or objects or even to recognize things like how to open up certain doors or how to move up certain types of stairs or how to drive in traffic. so there's piles and piles of data which again drives intelligence for these types of types of stairs or how to drive in traffic. so there's piles and piles of data which again drives intelligence for these types of systems. so that's where the data component comes in. it's also important to notice that director of google's robertics nirble initiatives now first time i heard him speak was on the subject of cloud-based robertics. it's ubiquitous intelligence being act liesed in robotics systems that work in the real world. >> i don't see the place where

you've got this cow that runs across a parking lot leading to more impressions for advertising. is it about understanding the context of movement so that you can somehow, i don't know perform better search display better aps? am i too small minded for what this means to a company that's in the business of selling adds? >> i don't think they know how this is going to play out. but think of it more in terms of a research platform in terms of a product. to work on these roberts and use these not only handle that sort of dynamic walking and the ability to recover when it's not but also how to interact with humans, how to be able to work in the physical environment with the type of device out there. so once you're able to work in this physical environment you're gathering more information than is just limited to the virtual world. think of these things in terms of a mobile sensor as

>> this is the best of

bloomberg west. it's valentine's day weekend and if you don't have a date you can always pretend to have one. the technology is here to help invisible girlfriend. the st. louis startup that provides make believe boyfriends and girlfriends. >> one thing that we found is the whole judgment is that your worth is based whether you're in a relationship or not there's a lot of people who don't want to be in a relationship who want to have cover because they want to have cover at a job or they might be getting hit on at the office. >> $24.99 a month. you get 100 text messages. from a real invisible boyfriend or girlfriend. you get hand written notes, voice male and expanding soon to gifts and perhaps even flowers at work. >> wouldn't you go through that really fast? how many tweets or social media messages? >> we're not using social media. we realize most interaction

people have is through their phone so we're using text messages. >> on the other hand, there is someone who is sending -- i'm thinking of the movie her which is a movie that i loved, where this person had this actual relationship with this computer. >> you know, we're in a position where we're not trying to convince you you're in a relationship. we're trying to give you believable social prove. but we find our users are starting to use the service for conversation. they're talking to their invisible boy friends and girlfriends at a higher clip we anticipated. >> so beyond the person getting hit on at work, who else would need this kind of service? >> a soldier overseas without a girl back home. might be someone who is living a -- gay or lesbian and have the conservative parents in the >> so beyond bible belt. we found that we have lots of people using it for different reasons. we have one person trying to make their exjealous. so there's lots of different possibilities. >> if i signed up my wife might

be jealous? >> she might give you more presents. >> i'm not going to try that. >> you have a lot of users already. >> i do. >> give me a sense. >> we launched three weeks ago. in those three weeks over 50,000 people have created boyfriends and girlfriends from all over the world. >> when we talk on the phone you won a big startup contest in st. louis? >> it was november of 2013 we won the startup weekend competition and got a little bit of attention right then they have boyfriends and attention right then so we've been working to build the services that we launched three weeks ago. >> who are the people on the other side of sending these messages? do girlfriends? are they poly am russ? >> exactly right. >> who are they? >> we have a roughly 500 person workforce in the united states. we're partnering with a company in st. louis that helps us kind of generate these microtasks whether it's through amazon's o

desk. there's people who are doing these small tiny tests for us so they're able to respond to the text messages. >> so web services, is it's a distributed model not unlike uber without you needing to go out and hire them? >> that's exactly right. >> we have so many other businesses like that. are you also hosting an amazon web service? not yet but what we've found is we've seen such an immediate influx that we're focusing on scaling the business to handle those sort of traffic. >> what are you doing for valentine's day? >> i'm spending it here in san francisco with my wife who is in the room next door. >> invisible girlfriend cofounder. that does it. catch us monday through friday at 10:00 and 3:00 on the west coast. or 11:00 and 6:00 back east. we'll see you tomorrow. [captioning made possible by bloomberg television]

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