emily: uber fights back. we debate the future of the 1099 economy. ♪ emily: i am emily chang. this is "bloomberg west". two of the most influential venture capitalists say silicon valley is taking on too much risks. ibm says it has developed the tiniest and most powerful computer chip in the world. is it a game changer? gamers and geeks flooding san

diego. that is ahead on bloomberg west. to our lead, uber's fight. they say drivers use it on their own terms. that's why there is no typical driver. that's why three people can never represent the interests of so many different drivers. a lawyer for the plaintiffs did not immediately respond on the filings, but joining us now is my cohost for today. also, uber's outside counsel from los angeles. lay it out. what is uber's position?

>> we had drivers who filed the case. in a class-action, they have to represent everybody else, same situation, have an identity of interest with the other drivers who they want to represent as named plaintiffs in the class action. the problem is that they do not resemble those other individuals. as you mentioned at the top, we submitted 400 sworn declarations from drivers across california. it is compelling. the individuals tell their own stories. one woman says she wants to be an entrepreneur mom so she can spend time with her daughter and work when she wants, drive when she wants, take time off when she wants.

that theme through these declarations, the words of that drivers of themselves, the independence, autonomy. one driver says i do not want this lawsuit to go forward. it will interfere with my business. the classic class-action formulation says there has to be commonality and common issues that predominate. it is the essence of what the drivers like about uber, you can't have that, and you can 't have a class-action. it would be bad for many of the drivers who do not want to change the way the system operates. emily: have you heard from the plaintiffs in response to this latest motion? >> we have not. this was our response. they will get a chance to reply. in their opening brief, they submitted no declarations from other drivers. it's really just these three people. they have not come close to showing that they can meet the tough standards for class certification.

emily: david, you are an uber investor. they are asking for a guaranteed minimum wage, compensation for mileage, right to pay into social security. why aren't they entitled to those benefits? >> if uber loses the lawsuit, we will provide them with the technology. i think i am one of the -- top 10 users of uber. i don't want the service to change. when i get into an uber, i know it's the driver's car. these people are independent contractors. uber provides a convenient dispatch system and reputation system. emily: ted, this is a debate happening across silicon valley,

the sharing economy companies. two companies have started the process of turning their contractors into employees. one ceo has said that our shoppers require training and supervision. you can't do that when they are independent contractors. don't drivers need training and supervision? ted? >> if you look at uber's track record and how riders love uber, they do try to provide the services they want. that can be done to the independent contractor process. it is being done. the drivers themselves --uber did research that foreshadowed what the drivers said in their

sworn testimony, 87% of drivers want to be their own boss. they want the flexibility. that is better for riders because supply and demand can match up. that's what makes it work flexibility and autonomy. uber is providing a terrific service through this approach it is taking. emily: this debate the california labor commission is having, is uber a transportation company or a technology company? >> uber is a marketplace for transportation services. it is a question about where the technology ends and the service begins. i tend to think that they are technology companies. it's possible that it has to catch up with the reality of the on-demand economy. emily: ted, what is your answer?

technology or transportation company? >> it is a technology company that provides a mobile app that drivers and riders can both use. one driver looks at uber as his employee. it is providing a service to him. as david points out, this is a new economy and new approach and so uber is providing a technology that allows entrepreneurship, a great service for people to get rides, drivers and the like. it is a technology company, and the independent contractor system is really important to making it function smoothly and wonderfully as it does. emily: outside counsel for google. thanks for continuing to follow the story.

you're one of the top 10 uber passengers? any extra benefits? >> i get to reclaim that time that i was driving. i can do something in the back of the car. somebody created a mobile app. you login with your credentials. it is an opt in system. emily: greylock says investors are taking on a lot of risked. my interview with the two partners after the break. is this the computer chip of the future? the latest development out of ibm. ♪ can t-mobile undermine sprint. why legere says it has already happened. ♪

emily: a breakthrough in chip technology. ibm has unveiled a tiny computer chip with four times the power of what is available today. it is in the testing phases. could this be the breakthrough the industry is looking for? i want to bring in cory johnson. is this a game changer? >> the design is interesting. they use some different materials. chips are made entirely of silicon.

the way they are made is different than some of the cutting-edge chips out of intel. they are using extreme ultraviolet for the masking, which is the cutting into the chip to let the transistor happen. the test samples have yielded a chip that works at smaller and faster levels. emily: could we see this in every computer? >> first of all, it's not new. if you go through filings today, you can find nearly a dozen companies using the technology already in their chipmaking processes. what ibm is demonstrating is a thinner, faster usage. a new way of masking in combination with that. they have a long way to go to prove its costs and efficacy of

making it. emily: cory johnson. thank you. i sat down with greylock partners, david sze and john lilly, and ask if companies are taking on too much risked. >> there is a lot of money and optimism that's causing pricing to be higher, causing expectations to be higher. i think we are asking to take higher risks since 2000. i believe mobile is a fundamental shift and is only in the third inning. you can see how that is changing the world for businesses that would have been terrible businesses in previous

generations, now enabled by mobile in ways that weren't possible before. you can also look at public companies right now as a benchmark and say it's not clear that they are overvalued if you look at the multiples. so, there is a bunch of mixed signals that lead to an environment where risk is -- emily: would you use the word bubble? mr. lilly: we make our decisions on a micro basis. we feel the prices we are paying are higher. we are being asked to take on risk. we are finding great entrepreneurs too. >> it doesn't matter too much if you're overpaying, but you have

to keep your eye on the target. emily: it doesn't matter if you overpay? >> at the early stages. emily: what do you think of what they said. >> i'm shocked that investors want to pay lower valuations. when i talk to friends of mine who are starting out with new companies, they tell me it's not easy to raise money when you don't have traction. those aspirational raises are harder. my conclusion is not that silicon valley is frothier, but if you can't demonstrate

traction, everything is so benchmarked. it becomes harder. emily: you think we are in a bubble? companies taking on too much risk? many of these companies will not be able to sustain these valuations. >> the short answer is that we are not in a bubble. some late stage companies won't pan out. i don't think any investor is guaranteed a risk-free return in late stage companies. there is an argument that late stage companies were under priced for a long time. emily: interesting. john lilly thinks uber can be a $500 billion company. would you agree? >> it depends on how you see the market. if you see their market as replacing driving and car ownership, the answer is yes. i told you in my own case that within a week of using uber, i

stopped driving. i'm on the bullish side of this. emily: stay with me. make sure to catch my full interview with david sze and john lilly right here on bloomberg television. yahoo! offers cash prizes. my interview with john legere is coming up. ♪

emily: it is time for the daily byte. today's number is 56 million the number of fantasy sports players across the united states and canada.

yahoo! sports rolled out a new fantasy sport offerings to allow fans to compete with friends for money with daily and weekly contests. we spoke with the vice president of products. >> we have been in fantasy sports for years. users spend 30 billion minutes a year on it. while traditional fantasy sports makes up a significant percentage, we are seeing emerging growth with daily fantasy for competition and gratification. we felt it was a great opportunity to introduce a component. emily: the new offering will integrate yahoo! sports real-time news and scores into one experience. there are rivals. we asked ken what makes them unique.

>> we have a history over a long span of time. year after year, we improve. when you combine the fact that fantasy is ultimately a social product, where you're playing with 10-12 friends that you may have played with for years, and now you can compete with them on a daily or weekly basis makes it all that much more competitive. emily: betting on sports is illegal outside las vegas, but fantasy sports get a pass. they call it a game of skill. t-mobile is tackling its narrow user gap with sprint. they gained 2.1 million customers. the ceo john legere says t-mobile may have already beat sprint to become the third-largest carrier. legere: we are adding one million customers every quarter.

we have just under 59 million customers. you can play that out forward. i am pretty sure we are bigger than sprint. emily: t-mobile shares jumped today. sprint fell 8%. another opportunity in t-mobile's future could be a deal with dish network. they have been in slow-moving talks for years. i asked legere about the possibility. take a listen. >> if i was dish, i would be panting at t-mobile. we have a lot of options that we can do, including what were doing now, and doing it well. emily: they are expanding its roaming plan. they are offering service in canada and mexico. david joining me again. john legere, a fun guy to watch. what you think of that guy? >> i don't know him.

i like that he speaks his mind and is out there competing vigorously in the marketplace. that is the way business should work. emily: he is tweeting, periscope -- there was something about drinking about the ceo tweeting back at him. >> i tell you what happened. we've been out there in the marketplace. when we got traction, adp sued us to try to slow us down. emily: adp is a big payroll company. you guys have been partners, but a strained relationship because you compete. >> there are parts of the relationship that were competitive because they offer hr services and benefits.

we cooperate with respective payroll and we resold their payroll product. as you know, we recently raised a $500 million financing round. they saw the fast growth. a few weeks ago, they decided to block our acces to their site. when we sought to bring this to light. emily: they said legal action was not undertaken lightly and only came after adp try to resolve these issues. >> if they want to meet tomorrow and resolve this, we can. it's hard to do that when they are suing us for defamation. it means they don't like what we

say. they're not suing us for the underlining assertions they made against us. adp has been out there spreading fear, uncertainty, and doubt about us. they want to create fear about a new market entrant. it's incredibly ironic. >> you've faced other disputes. how you plan to deal with this. quickly. >> this is part of a larger issue. the way the old economy fights back. when you have a new economy company, with an innovative product, they try to restrict choice. we saw this with tesla. we are seeing this in uber.

the way for consumers to win is to express their opinion. feel free to tweet about this. emily: ceo of zenefits. always great to have you on the show. that is it for today from san francisco. don't forget to catch my full interview tonight at 7:30 p.m. eastern and pacific. tomorrow we are live from comic-con. i will be joined by playstation's head of research. it's all about the new star wars movie. we will have everything you want to know. ♪

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