cory: live from p three in san francisco, this is "bloomberg west" -- pier 3 in san francisco, this is "bloomberg west." the apple watch mimics the sensation of being tapped on the rest -- wrist. the company's ceo says they are

working hard to catch up with demand. gdp slowed to a near halt in the first quarter, partly reflecting transitory factors. they expect growth to rebound to a more moderate pace. stocks closed down for the day. japanese prime minister shinzo abe spoke at a joint session of congress today. he is the first japanese prime minister to do so. he is trying to win support for a trade deal. democrats are skeptical. actions youshinzo abe: let us bring the ttp to a successful conclusion through our joint leadership. cory johnson: he also offered regrets for the lives lost

during world war ii and underscored their resolve to make the world more peaceful place. today in camden yards, the first major league game in major league history to be played in front of a completely empty stadium as a results of the riots in baltimore monday and tuesday night. shares of yelp did not do well as investors lack confidence in the company's earnings. britney spears will be part of a new mobile game. now to the lead, the largest

tech merger in history could be in the works. salesforce has an unidentified potential acquirer. financial advisors are helping to field takeover offers according to a person with knowledge of the matter. the deal is not a sure thing at all. it would certainly cost a pretty penny. salesforce shares surged on the news. joining us from new york is on a rocket grotta -- anarog grenda. guest: this is a massive company with close to a $50 million market cap. any company would have a hard

time in terms of how the market is going to shape up. it behaves very differently from how a microsoft or an oracle would behave, from a financial point of view. cory johnson: he surely, one of the things that is attractive is the sales growth. when you look at sales numbers for salesforce you see that revenue goes up and up and up. guest: absolutely. they have been going north for a very long time. they have forced traditional legacy software companies to change their model of how they sell software, so they are the big gorilla in the space. sales growth has been much higher than any other company.

cory: the thing that disturbs me about their results -- they don't care about profit. but from a free cash flow standpoint, this is a business that after acquisitions is just you know, spending all their free cash flow on acquisitions and hardly have any free cash flow at all over the last few years. guest: a lot of investors don't see that. they see past those things. they will grow 8%-10% someday in the future. that is when you asked the questions as to what is the free cash flow. right now, they are spending a lot of money in marketing, a lot of money in sales. and they are doing it successfully from a revenue point of view and market share point of view. cory: let's talk about who the acquirers might be.

when we run through a few and you can tell me if they make sense or don't make sense. we have an analyst saying oracle makes perfect sense. what do you think of that? guest: they have gone all in as it comes to cloud. they have said they are going to run all of their businesses in the cloud sooner or later. how are they going to go out and tell people what it is going to do to cost us and so forth. cory: i would look at that and say since they are already building their own it is not something they need to do, even though they probably have the balance sheet to do it. what about ibm?

guest: theoretically yes absolutely, because they are doing the same thing. they are moving a lot of their applications. a lot of their services are suffering because of the cloud. but the question is how are they going to find the money to do it. it's not going to be easy at this point. they are not doing so well from an overall economic point of view. i am not sure if it is going to be that easy for them to find $50 billion or $60 billion out there to make those acquisitions. there is so much criticism about cash allocation over the last seven years. i am not sure how they are going to justify this. cory: what about microsoft, another company that is focusing on the cloud, has some very strong enterprise plays?

guest: definitely, they have the best balance sheet when it comes to cash. they have got all in on the cloud as well. they have product. it is not in the top five when it comes to market shares but they have a product. it is a very logical choice for them. cory: well, hopefully we will see. this could be an interesting deal when it comes about. if you thought salesforce was expensive yesterday, you will sure think it is expensive today. conversely, if you thought it was a buy, now you must love it. thank you for helping us dig into that story. coming up next, when a ceo says he doesn't have a credibility

problem, the doc might suggest otherwise. we will hear from dick costolo next.

cory: on the vision may be bought by a group of chinese investors. a group of investors is offering to pay $29 per share, according to a group familiar with the matter. a glitch in the ipad program delayed 40 flights in the last day. pilots are increasingly using ipads as part of their flight deck. the planes had to return to the deck -- to the gate to access wi-fi. is twitter in trouble?

shares plunged after the most recent earnings report. investors have been concerned about the company's ability to generate revenue for quite some time. brad stone sat down with dick costolo today and asked him when we will start to see some results for all these new efforts. >> i think everybody in the company, myself first among them, would like these things to work right out of the box. you get to a much better place down the road. our advertising target is something that, when we launched it a few years ago, didn't work spectacularly well, and has now gotten much better. i have every confidence the same thing will happen here. >> i was just reading tweets by a venture capitalist arguing

that twitter needs to fine-tune the feed, help people other than power users get over the initial hump to where twitter becomes valuable. helping new users use the service more effectively. do you agree with that? >> there are a variety of opinions thousands out there, that what you really need to do is ask -- is x. how do i use twitter? here is a collection of tweets based on what you are interested in. the how to use twitter challenge is we like the strategy, we like the engagement we are seeing, and i am confident we

will do that. i think there is a place for human driven cure ration of moments and events all sorts of stuff. i think there is a place for that. i think that place works for logged out users. for example, two nights ago when the events in baltimore unfolded, there were people live, broadcasting as a periscope immersed in the streets, so you felt like you were live in baltimore. across twitter, there were authorities, religious figures, people on the street talking about what happened. when you think about bringing that content together to show people quickly this is how you get value from twitter, i think there is a place for manual cure ration their -- cure ration -- curation there.

>> let's talk about periscope. you got 10 million users into dales. how big does it scale? how do -- into cu days. how big does it scale? >> we're already seeing cross over from some of the other platforms, which i think is great, and was frankly, one of our hypotheses when we bought the company before it launched. one of my favorite things about periscope is that you have all of these philosophies prelaunch about how it will unfold. there are uses we can't even imagine yet that will start to unfold, and we are already seeing them. we are seeing fine stars who are quite popular on fine and using periscope to broadcast that they are making the vine.

nich is our service business. you start to have a great ecosystem of assets that you can build audience for across the twitter ecosystem, and i think the future of nato mobile video is massive and we are there now. >> let's take a step back. it didn't feel over the last few months that you were building momentum -- it did feel over the last few months that you were building momentum. was yesterday a setback? did your team lose credibility? >> i don't think we lost credibility. i think we have been very forthright with investors about what we are doing and what we think will happen over the long-term. you have to have a long-term plan. if you start trying to constantly over correct for, we

have to do this crazy thing in the next two weeks that's going to take us off our long-term plan that get us to tuesday, i think that's where you lose your way and the company starts to feel you are not focused on long-term or a strategic plan for the company, and it's no way to run a business. we have a strategy. we are sticking to the strategy. we like the strategy. everyone from me to the board to the leadership team is behind it. >> do you personally feel any pressure as a ceo? >> lesson, anyone who tells you that you don't feel any pressure is lying to you. >> what about job security? >> i don't worry about job security, and the board and i are totally aligned. the pressure is from your team.

you have a team of people looking to you to lead them, and you want to be successful. you want everyone to rally together and you want to articulate the notion of why you have to be successful, and those efforts are playing -- are paying off. >> other than the leak, which it sounds like was outside your control, is there anything you would have done differently in terms of pre-announcing or doing more to telegraph the situation? >> we constantly talk about how we are communicating with investors and the market and about a product and what happening, and i was supportive and 100% behind and led the way on how we did that and i think we made the right decisions. cory: that was dick costolo with brad stone. coming up, a little company called celerity.

cory: twitter's latest earnings will be remembered not just for the crummy numbers, but for how those numbers were released. a firm called celerity released the numbers yesterday after noticing they were published early on a nasdaq owned website. they got the numbers from a spider web crawling program like the programs facebook and google used to discover scam websites. to explain exactly how this works a chief -- a former chief scientist at bigley. guest: it's actually a fairly trivial bit of technology.

it's about 10 lines of code that a programming student could write. was interesting about this is that they looked at the url structures and were able to figure out what the next headline would be. the robot does essentially what you do when you load a page in your web browser. it goes to a new a dress and simulates that, which is much faster than doing that by hand. cory: so if the url was investor relations/twitter -- guest: exactly that. i believe it was investorrelationsreleaseid and they were able to correlate something like 400 digits to get the press release. cory: does this work like

programs hackers will use where they just throw out known words and combinations? guest: a little bit in the sense that you are exploring a space, but in this case, the space was public. it was published to the website it just hadn't bend linked -- hadn't been linked to yet. cory: on a level of stupidity, how stupid was the nasdaq for publishing this early, or is this just a really great program that almost any company could have been caught off guard by? guest: i think in fact it is not that stupid, though it is something people should be aware of in the design of their applications. they are likely to be vulnerable to this kind of exploration or space. a lot of companies do it. cory: when i was the manager at a hedge fund, i would hire companies to do this to get a

sense of new product releases and how many customer orders were flowing through a company or how popular a certain thing was. in my experience, the tools were really crude. the numbers were all over the map. have these tools gotten better in the last few years? . guest: absolutely, and that is where the hard work of building something like this comes from. folks have to know where to look for the information, when to look for it, and how it compares to what they have already seen and yes, these tools are progressing rapidly. cory: do you imagine there is a scramble at nasdaq to find a new structure for their url now that the world knows this is there? guest: i would advise them to consult a computer scientist and ask about hacking, but yes, there probably is. cory: that was the founder and ceo of fast-forward labs, hilary mason.

up next, yes, another ridesharing company. the ceo of relay rides joins us as well.

cory: this is "bloomberg west" where we focus on the future of business and technology. shares getting hammered at lumber liquidators with reports that its flooring contains hidden from aldehyde -- formaldehyde. >> he continues to be pressured by lower traffic and shift too

hard work and as a result has historically had a lower gross margin than the margin for the entire second quarter. cory: gregory worley of ernst & young will become the cfo on an interim basis. jerry brown is getting more aggressive on fighting climate change. he has ordered a dramatic initiative to bring water reduction levels below 1990 levels, far below the federal target. are you watching the fight this weekend? i am. i will not be watching it at buffalo wild wings. the chain has decided not to show it because they did not feel comfortable with the cost, which is $5,100 per restaurant.

hbo and showtime have sued to block live streaming of the fight. the networks are seeking an immediate court order preventing that streaming. a sharing economy, we talk about it a lot. it has given rise to some of the best funded startups in the silicon valley. there is room for competitors in that space, and there are lessons that can be learned by what has already happened. for more, i am joined by the ceo of relay rides. what is relay rides? >> a peer-to-peer car sharing marketplace that enables people to rent their cars to other people. cory: so, the same way airbnb will let me rent out my home to people, should it emd -- empty

i can also rent out my empty car. guest: absolutely. there is plenty of capacity in unused cars. it is actually one of our most unutilized assets. cory: why should we do this? guest: everybody thought ebay was a crazy idea. nobody would fund that because people were sending money around in paper envelopes. there was no electronic payment. i have seen crazy do really well. but there are really two reasons. the ceo is a dear friend of mine and was a rock star for years. we got him to move from europe to the bay area to work driving product and he went on to run shopping.com. we totally believe in this space. it is amazing to me.

people are looking for ways to make money, and yet, there are all of these idle assets that are underutilized. guest:cory: statistically, 90% of all cars that are owned are not being used at any given moment. guest: you pay a lot of money for them -- here is a great example. i am going out of town with my wife in august. i am going to have to park my car for three weeks and pay a lot of money at the airport for that, even if i do long-term parking. it sits there doing nothing. if i did the relay rides route i drop it off, they drive me to the gate, and i make money the whole time i am gone. it's better for everybody. guest:cory: there are a bunch of sharing companies now, and some of them are doing really well like airbnb and it uber, but

they probably had some screw ups along the way. what are some things you have learned from the perils of the sharing business? guest: they are all about connecting people in a trustworthy way and protecting people as they use the marketplace. we have, from the very beginning, put in place really important safeguards. we put in place a $1 million insurance policy that enables people to share their car without having risks on their personal premiums, their personal policies, as well is protecting renters as they drive the car. that has been a big part of building the company from day one. guest: one of the things that surprising about ebay and these other marketplaces is there are always hangs that happened in -- always things that happened that nobody expected.

what are some of the exciting learning things that you have encountered? guest: there are always things that happen when you create a platform. one of our biggest surprises was the business at the airport. when we initially thought of relay rides and built the first version, we thought we would enable people to share cars ins to these where there is a lot of density, where a neighbor can share a car with a neighbor. proximity makes that easier. as we grew the marketplace, we had a lot of demand saying this in, there is a lot of business at airports. let me list my car as an asset i can deliver to the airport. we launched the delivery to the airport option late last year, and it has really taken off. now it is more than a third of our business and it is growing

more rapidly than peer-to-peer within the cities. it is helping to really drive resource travel. that is where we are the biggest use of relay rides. the average rental now is for five and a half days. it is a weekday car, a travel car, and frankly, we are surprised. we didn't think it would happen that way. maynard: how do you address the fear people have of letting someone else drive their car? guest: first, it's all about helping people feel safe. i think the insurance policy we put in place really makes people feel comfortable. more importantly, i would say we have really been good at greening -- screening people

and we have created a marketplace of high quality drivers. cory:. a fascinating company. thank you for bringing it to us. want to use the internet anywhere anytime? a company is trying to tackle that problem. the ceo joins us next.

cory: this is bloomberg west. i'm cory johnson. hiring freeze at alibaba. the company is expanding to quickly. he says 30,000 employees should be enough to maintain operations. alibaba continues to develop its overseas business. russia called off a mission to resupply the internationals base nation after losing control --

space station after losing control of a rocket. the unmanned rocket is spinning uncontrollably through space carrying 6000 pounds of fuel and supplies. it will fall to her than likely burn up in the atmosphere. -- fall two earth and likely earn up in the atmosphere. a cloud service focuses on in improving web performance and video transmission, and has for a long time. they are up 16% in revenue and profits up 7%. making the internet work in all the weird places the internet shows up now. tom you have been around for a long time, but i feel like the challenges are getting very

different because the places the web goes are so very different. tom: it is harder today than it was 15 years ago. people are accessing the web from mobile devices using their cell network. it needs to be clear and it needs to be secure. we all know these are big challenges today. cory: can you give me the cocktail party description of what your company does? tom: our goal is to be fast, reliable, and secure. we want people to go home and have reliable internet. we wanted to be secure or so they do not have their credit card stolen. and we wanted to be instant with instant response times. that's what we do as a company. cory: i guess the way i think of the company, and tell me if i'm wrong, you think about what content people are going to want

her to and places, capture it and spin it out -- want certain places captured, and spin it out. tom: that's an important part of it. we have our servers and software around the world. we are over 100 million -- on over 100 million end-user devices today. the idea being that we can use our own communication protocols and routing protocols and application protocols to make it super fast and to keep the bad guys out, to block the bad traffic out so the bad guys cannot be stealing credit cards or product information or corrupt the content on a site. for example, there are new sites where enemies are trying to get their own stories on the site. cory: has the way you have managed security changed

romantically -- dramatically? tom: you seal the changes that have taken place -- see all the changes that have taken place. security is our fastest growing business today. cory: when you look at the internet of things and the notion of using internet protocol information on devices. we are talking about lots more internet signals. does that change the way your business fundamentally operates? can you manage the network in the same way? tom: it doesn't change the way we operate, but it increases the complexity and the demand for our services. there are billions of devices out there trying to access the zillions of petabytes of data. people expect their access to be instant, high quality, and secure, and that is what we do.

that is what drives our business forward to the future. cory: thank you. we appreciate your time. ♪

cory: how do you design people

and places that do not exist? this is a daily task for brain store a london-based visual effects company. i spoke to the founder at the design summit conference yesterday. check this out. >> we make emotional experiences. visual effects in the past has been just making things look real that don't exist. we make it in the computer. that it has gone further than that now and it is about creating memories for people that hopefully will stay with them for the lifetime. cory: i just watched "guardians of the galaxy" two weeks ago on an airplane. you made this character of a smack talking raccoon. what were you trying to do with that? it seems like there are so many ways it could have gone wrong. not just making it not look

realistic, of course it's not realistic i don't think. do raccoons really talk? mike: our raccoons do. most of the characters we create have to create emotion, have to interact with people. for us the challenge is keeping reality. it is a creature that is talking. we analyze science and how we create a facial performance from a creature that has to look real. because they are performing, we are also looking to get a great piece of acting here, a great performance. we look to the voice artist of the character. we video their face. the director will also get a physical performance from the voice artist, and then we use that as the foundation for the personality of the character we are creating. cory: you have a company that is separate from the movies separate from the director in some ways.

outsourcing significant parts of that -- how do you keep that from pulling away from the storytelling aspect of what a great film can do? mike: the real trick to that is having us integrated from the beginning. when we get involved in a film we're often breaking down a script from the studio before a director is assigned to the project. when a director comes on board we then collaborate and move -- work very closely to visualize this reality. that can often be making -- gravity making the impossible possible. throughout the process, the director will direct taxes on -- direct actors on set. we will be directing him, there is a six foot creature here. we have to make sure the eye line is right. we are looking at the technical he is getting the performance. when the filmmaking is finished we may have two years in post production where we have to finish the performance and

capture that live action. like paddington bear was -- it's all about making paddington give the performance and the director will stay on and work with our animators and technicians to get the performance from the cg character. cory: you have a potential workforce of 900 creative people. how does that work? mike: we have 1000 people in our global organization, but they are made of the people like mathematicians, physicists, and computer scientists. we put them in teams with writers, directors, animators, and artists to create the images. we need that makes of skills. -- mix of skills. you may have gone to college and be a scientist but you are working as part of a team to make an eye look real, that all has to go into making a film look as good as it does.

cory: the technological advances in your world of cloud computing is so important in terms of rendering and being le to do what you do and see what is working in ways you could not even five years ago. mike: yes, that is true. the technologies and techniques we are using are constantly evolving because we are always being challenged with, show us something we have never seen before. that usually involves in or miss rendering -- enormous rendering. new software, new hardware tools. cory: the old way to render was to spend $20 million on servers to do all the calculations so you could make a space ship 3-d or make a raccoon's mouth move. now it is what? mike: we still have offices full of computing and numbers being crunched. what we have to do is be clever in the way we write the code so we don't use as many lines of code. it simplifies the amount of

processing. we buy more, faster processes. we use special proprietary software we will write so when a piece of light hits my eye, it bounces off a surface and comes back into my eye, the computer will calculate that for you and render it great when of the -- render it. one of the great things i loved about "gravity" was if you render gravity on one computer alone and you wanted it finished today, you would have had to set the render off in 5000 bc. cory: cool stuff from framestore cofounder mike mcgee. it is time for the "bwest byte." brad stone is here with the "bite." brad: 180, the number of "seinfeld" episodes which will soon be on the subscription video-on-demand service through hulu plus. hulu plus won a bidding process to run "seinfeld." they were competing against

amazon, netflix and yahoo! according to reports, they paid $1 million per episode. cory: $1 million per episode? the air 10 years ago. mike: what surprises me seeing reruns is how dated it is. the technology, the fashion, the culture. the jokes. but you know, apparently some people still want to watch the show, and there was a big bidding process for it. cory: it was such a huge show, but the demographics of it were interesting. african-americans who watch the show are in the single digits. white people who watch this show at its height, it was one of the most popular shows on television. it's interesting to me how some people just did not get it and some people cannot get enough. brad -- brad: i'm sure there's demand for it. cory: i was in grad skill -- grade school at the time, so i don't remember. brad stone, thank you for your time.

we are on all of your devices. we will see you tomorrow with more "bloomberg west." ♪

>> from our studios in new york city, this is "charlie rose." charlie: we begin with marriage equality. the supreme court heard oral arguments in a case that could resolve one of the greatest civil rights issues of our time. they are considering two questions. whether the constitution requires states to license same-sex marriages and whether they must recognize those performed in other states. the issue is arise from consolidated lawsuits. joining me