emily: is uber charting its course to ipo? why they might be asking wall street for a $1 billion line of credit. i'm emily chang and this is "bloomberg west." coming up, a special report -- a sublet fight in san francisco's tech community. we talk to experts about what the trend means about a possible tech bubble. plus, down to the wire the senate works into the weekend debate the controversial bill that would rein in the nsa's dragnet. we will look at the risk on both sides. and twitter cofounder ed williams raises over $100

million for his debut fund. what he plans on doing with the money. that is ahead on "bloomberg west." first, uber making the rounds on wall street. the company is seeking a $1 billion credit line from a handful of banks. this according to the wall street journal. the company is in talks with six or seven banks. uber declined to comment. bloomberg reported uber was planning to raise $1.5 billion in a new founding round -- funding round that would boost its valuation. what does uber want with all this money? is it an ipo in the near future? katie benner joins me now in the studio, and from d.c., gabe klein who works as a special venture partner. gabe you just invested in lyft. , you are the perfect guy to be talking to about this. this credit line is something that facebook, twitter, alibaba had done before. how close are we to an uber ipo?

gabe klein: the truth is we don't know. i think that it is typical for companies like uber. facebook did this -- they went out and started to build close relationships with 6, 7, 8 investment banks -- banks in general. what is interesting about uber versus lift, the company that we just invested in, is that they are getting into a lot of different spaces. they're delivering food in new york. they have mobile stores in washington, d.c. they are getting into the autonomous car business. i imagine that is pretty capital intensive. the reason why they invested in lyft is we see a very focused company. excellent team, really believes in transportation and also a company that is really more about social entrepreneurship and has great values which we

which we think is sustainable for long-term and a valuation makes sense. katie, is this the drumbeat to an ipo, or is this uber spending money on self driving cars and perhaps trying to buy into the business? katie: they do this to form relationships with banks for the ipo which is difficult. it seems like that they will need a lot of cash. it is not because they are unfocused or they want to dabble. it is the idea of moving people , food, packages, could get monetized. even if uber has a great brand making an app where i can call and get somebody to move my packages around is not something that nobody can do. the barrier to entry is getting lower. uber is becoming the platform that everybody ends up using for

their deliveries which is pretty powerful. emily: gabe, regulation, regulatory issues still poses problems for uber. in d.c., they are facing a class action lawsuit. lift paying is -- lyft is as well. there are increases in taxes where they are trying to get state regulations. where do you see this going? is the tide going against him or? -- uber? gabe klein: i have a few thoughts. taxis should spend more time on innovation versus litigation. they think there is a huge opportunity for them to compete and so far they have basically let it pass them by. however, in terms of uber controlling all the ground transportation, i don't think there is a winner takes all possibility or strategy. i don't think that is practical. and i don't think cities want that.

so, it might be tempting to think you could push one button and get absolutely anything, but i think you will have the instacarts out there and these new bus services like bridge and you will have lyft and uber. lyft, for instance, grew by 400% this year. it is forecasting $800 million in revenue next year. i think there is a huge opportunity to dig deeper in the u.s. on the consumer ride market. i think i would rather let the car companies build cars. katie: i was not saying there was only room for uber. what i was saying was because there is room for right sharing services, uber could be very clever by also controlling the backend and the self driving car technology so if it becomes

monetized, uber has other ways to make money that go far beyond just being a ride. -- just being able to hail a ride. emily: a lot of people think lyft will never be able to compete on uber's level. gabe klein: i don't believe that and the metrics don't say that either. lyft is doing well. i was in san francisco last week and the lyft line product is phenomenal. there is a density of drivers and riders that they are bigger then uber in san francisco. multiple people are getting in cars and sharing rides. i think that is the future. i think this idea that we have -- that we will own cars in the future is not the way things will be in urbanized areas and we are rapidly reurbanizing. there is a huge opportunity -- the car business is a multi-trillion dollar business. when you think about the car business starting to decline, i

think there is a lot of opportunity for these up-and-coming services. emily: lyft has a lot to prove. gabe and katie, thank you both. now, don't try this at home. a canadian teenager part of the hacker group that calls itself the lizard squad has pleaded guilty to some they called -- to what is called "squatting." it involves making prank calls to police and tell them in things like holding a family hostage or there is a bomb or somebody was killed. the purpose is to get somebody to center a swat team to wherever you want. a teenage gamer was swatted after a live stream on youtube and will be sentenced next month. some people have way too much time on their hands. next google's developer conference is coming to san francisco next week. we will tell you the top three things to watch for. we crunch the numbers and found

tech companies are part of a big sublease fight in san francisco. can we say bubble? that is next. ♪

emily: a story we are watching -- tom wheeler calling the heads of time warner cable and charter to say regulators are not opposed to mergers in the cable industry. last month, fcc opposition put a

nail in the coffin for $45 billion merger between time warner and comcast. since then, the number two u.s. cable company has fielded interest from several others. reports say charter might offer more than $170 a share in a possible bid for time warner cable. meantime, the french cable company, altis, has also shown interest. now, to a bwest special report. square is putting part of its san francisco headquarters on the sublease market joining tech companies subletting their offices in the city after planning for future expansion. we crunched the numbers and found the growing trend. take a look. there is a landgrab in san francisco, but how much is too much? >> companies are being forced to lease twice, five times more space than they currently need for the number of employees they have today to ensure they have space to grow.

emily: sublease space makes up the largest amount of vacant space since the financial crisis. san francisco leads the nation at 13.5%, up from 9% a year ago. i'm here at the bazinga headquarters and much of this building is not filled with employees. last year, the company leased a large plot. square has 60,000 square feet on -- 50,000 square feet on the market. 10,000 square feet. also subletting, zillow. the landgrab is not slowing down. >> most of the commercial buildings will be delivered in mid-2016-2018. the buildings that will be delivered in 2016 are tech companies. emily: the good news is companies can make big bucks by subletting. the bad news is they cannot build it themselves. >> you can draw a parallel from

this -- in 2007 where people were doing three-year loans, and then in 2010, there was no one to fund it. you could be looking at something where three years down the road where it expires, there might be not anywhere to lease. emily: i want to bring in our panel of real estate experts. matt, a managing director, here in san francisco and glenn with us from seattle. glenn, is it or isn't a sign of a bubble? glenn: i think landlords got ahead of themselves with very long leases. sometimes you have companies that took too much space and now have to sublease. other times, you have companies that signed up for space and realized two years in that they need more. both of those factors are driving sublease activity and it comes from the fact landlords were able to get long leases against the very unpredictable part of the economy. emily: matt, you have been pounding the pavement. have seen spaces on the market. are you worried?

matt: it is a healthy trend because it provides short-term opportunities for companies that should not be making 10 year lease commitments. emily: what if they cannot fill those leases into the three years? -- in two to three years? matt: that remains to be seen. it is extremely disruptive and expensive. a lot of companies are taking more space than they need to accommodate future growth. right now, a lot of them are making money doing that. emily: glenn, are these companies getting too ambitious or are these spaces in the near future they could fulfill? glenn: i don't think they have any choice. the challenge is, if you want to be in san francisco or the peninsula, you have to pay through the nose and for a long time. some of these companies feel like they don't really know if they will have 200 employees or 500 employees, but they are signing 10 year deals.

that is a cost of being in the center of the innovation economy and some will pay it and some will leave. emily: matt, what kind of trends are you seeing in terms of new construction? we have seen linked and get some headquarters here in san francisco. matt: it is mostly residential. san francisco was becoming where -- is becoming where people want to live. if you drive out of san francisco, there is more traffic driving out right now. a company like linkedin is making their headquarters here they have leased 400,000 square feet, but they will be vacating about 200,000 square feet next year. emily: schwab put another 300,000 square feet in the market. it seems to be happening quickly. glenn, is this something that concerns you? what happens when rates go up? glenn: the challenge is not just for the companies that are leasing space over 5, 7, years. it is for the employees.

now, a median price for homes is $1 million in silicon valley. that is a psychological milestone. we have a number of people looking to lease silicon valley having doubled over the past three years. one in four people are searching for a home from silicon valley and are looking outside of the city or outside of the peninsula because it is so unsustainably expensive. we have heard for years that it is crazy here, but i think people are starting to act on that. they are voting on their feet and looking elsewhere in the northwest, colorado, texas, even boston. emily: is that what you are seeing? matt: absolutely. we have a lot of san francisco-based clients that are looking into salt lake city, phoenix, seattle where there is strong development and customer support talent. emily: glenn, how does what is

happening in san francisco compare to what is happening to other parts of the country? glenn: the whole country is getting more expensive but nowhere is it happening faster than silicon valley. when we talk to our commercial broker about what we are seeing in terms of commercial rent, he said it is funny because almost every client we have is now looking at comparing the cost in silicon valley, san francisco to denver, austin, portland seattle, boston. it seems like every business is awakening to the fact you can have developers everywhere and contribute code from wherever they are and looking to lower their overall cost. as the industry starts to focus not just on revenue growth but on profit, it becomes a significant factor. you look at the operating expenses and how much lower they would be somewhere else and employees would rather live there as well. it is an easy choice to open another office in boulder, colorado or austin, texas.

that is what is driving our own residential business. emily: quickly, glenn, sublet space can be a leading indicator of a possible bubble, or that something will pop. bubble or no bubble? is something going to pop here? glenn: there is a bubble. there are prices that are too high on companies, prices that are too high on real estate. as interest rates go up, you are going to see a contraction. i don't think it'll be the kind of freefall we saw in 2000 for the dot coms or in 2008 for homes. there is no way prices can keep going up at this rate. it is unsustainable. emily: there is a bubble, according to glenn. glenn, thank you for joining us. you said what i wanted you to say. matt, thank you as well. we will continue to monitor this trend. google developers conference is next week. here are the top three things to watch.

first, android -- we are looking for any updates to the operating system and anything about how it is expanding its product. second, gaming in virtual reality -- google vr headset "cardboard" allows users to have a vr experience with a viewer made from cardboard. specific sets of apps could create vr experiences. third, news on google's access programs like project five has already been delayed. the company says it will take at least summer to send invitations to those who signed up. ed williams raising an ocd-pleasing amount of money to put into world-positive business. what is in the numbers? we will break that down. the future of the nsa could be changing this weekend. why the senate is scheduling a

rare weekend vote on surveillance legislation. ♪

emily: it is time now for the daily byte. the number today is 123456789 or $123,456,789. got it right. that is how much money twitter cofounder ed williams and his team have raised for their first fund. some celebratory tweets yesterday. the money will back what they call "world positive as mrs.." -- businesses." it is not philanthropy or even social impact investing. it is benefiting for-profit companies that benefit society. companies like beyond meat which may be something that looks, feels, taste like meat but is made from plant protein. social change platform

change.org, and digital light field computing company is there, too. leonardo dicaprio is an investor. apparently, the actor gels with the team over a shared passion for the environment. now, to another developing story -- the clock is ticking for the nsa surveillance programs and the senate is feeling the pressure. this saturday, senators are voting on a bill that would end bulk collection of your phone records. some are pushing a measure that would extend the program for a short time. the program will expire in june so what could this mean for the intelligence community and the tech companies they track? our correspondent peter cook joins me now with more and we also have harley geiger. peter, i want to start with you. just how divided is the senate on this issue? peter: it is absolutely divided. even at this hour, there are closed-door meetings happening. there are a lot of support for the house bill you mentioned

that would end the bulk collection program. almost immediately but it is not clear it has the 60 votes needed to go forward. mitch mcconnell is a critical player, and is standing in the way. this is dividing republicans as well as some democrats. it is a very complicated picture. i cannot tell you how exactly it will play out. emily: harley, how would you like this to play out? harley geiger: we support the u.s. freedom act. we think it is time for the senate to end this unlawful and useless program. emily: do we really know how this will affect the security in the meantime until new legislation is put into business? harley geiger: one, the usa freedom act has six months to take effect. if it is passed, there is a six month waiting period. and, second, the program we are

trying to stop is this program where the nsa is collecting the phone records of americans nationwide. that has been proven over and over again by experts with access to classified intelligence to be useless for national security. it is not made a single concrete contribution to the terrorism investigation. it is invasive and not a helpful safeguard so why are we fighting so hard to protect it? emily: peter, is this too harsh a step? peter: in the minds of mitch mcconnell, for example, it will risk american security. he and other republicans have in -- have been making the case on the floor that this program, despite the criticism of the program, it is important and essential to keep americans safe. there is a huge debate in the congress right now about whether or not that is the case. he does not have confidence that handing this over to private companies that the nsa will have the kind of real-time access you

-- he thinks they need in order to protect american security. that is the debate right now. the white house is backing this house bill and will like to see -- would like to see this in the hands of the private sector but there is no clear pathway. harley geiger: mitch mcconnell is saying he is not confident in that doing away with it will keep america safe. yet, there was a letter issued by the director of national intelligence and a separate letter by the nsa director that say they are essential given -- that they are essential security capabilities will remain even if usa freedom is put into place. emily: harley, still a lot of debate in this issue. harley geiger, for the center of democracy and tech. peter cook, we are going to monitor this rare weekend vote. we did want to clarify a story we did on may 8. on patent trolls. we cited a statistic that 67% of all patent litigation was a nonpracticing entities and informally known as trolls.

i want to clarify that the source of the stat was used in a pricewaterhousecoopers report. that does it for this edition of "bloomberg west." have a wonderful long weekend. that is it today from san francisco. ♪

♪ mark: on the show tonight, more focus group action from iowa. but first let's go to our man peter cook with all the latest political news. peter: the state department released the first batch of hillary clinton's personal e-mails when she was secretary of state but using a private e-mail server. they are all related to the 2012 terrorist attack in libya that killed americans. clinton said she never use the -- never used the server for classified materials but the fbi