emily: facebook shares surging after hours. ♪ i am emily chang and this is "bloomberg west." expedia books a multibillion-dollar merger. i sit down with nest ceo, the godfather of the ipod. we talk about steve jobs and his vision.

worries about cord cutters from cable stocks. are they cannibalizing their own business by doing deals with netflix? first a check on our first word news. u.s. stocks retreated from a three-month high today, remarks from janet yellen indicating we may be closer to a hike in interest rates. the s&p 500 slipped about half a percent. the dow dropped 51 points. latest u.s. intelligence suggest the crash of the russian passenger jet in egypt was most likely caused by a bomb planted by the islamic state sinai affiliate. the u.k. has suspended flights to and from the sinai peninsula as a precaution. egypt confirms the voice recorder is damaged. information from the date of recorder was successfully copied. there was serious damage to the voice recorder.

among u.s. election day winners - airbnb the company fought off a ballot measure to limit the service in its hometown. it would have imposed a 75-day limit. the measure lost 55% to 45%. comedy central says trevor noah what had an emergency appendectomy this morning. they say that procedure went well and he is expected back on the show tomorrow. he took over as host in september. the lead tonight is facebook. the social network crossing one billion daily active users for the very first time, 65% of people on facebook use it every single day. monthly users hit 1.55 billion. 78% of ad revenue coming from mobile.

i spoke with ceo david earlier today. he said we are seeing good performance and video making an instagram starting to make a contribution. joining me now to dig into the numbers, cory johnson, and david kirkpatrick joining us from new york. he is the author of "the facebook effect." we have been listening on a call. 500 million people are watching video on facebook everyday. the numbers seem insane. cory: facebook is like china, the number is always big. you have about 2 billion people on the site, 60% of them use it every day. extrapolate that to be about --

video is successful on facebook, to be sure. everyone on facebook is not watching videos every day. there are just so many people -- emily: the growth in advertising is not hurting user engagement at all. i never click on ads and i am starting to click on video ads on facebook. cory: you do not have to click on an ad for it to work. emily: i have been watching video ads on facebook. >> they can really get engaging ads on facebook. 500 million people is about 4 that is uprson, 100% from the last time they reported that number. emily: mark zuckerberg talking a little bit about china.

mark: people think that facebook is not in china at all and that is not true. our consumer service is not active there, but it is already one of the biggest advertising markets that we have. there are a lot of really big and important chinese companies who sell a lot of products to people outside of china. they use facebook as one of their primary tools in a lot of cases to spread information about what they are doing and grow their customer base. emily: david, you have been listening in, what is your take away? david: china is always a fascinating topic when it comes to facebook. they want to get in there for the consumers as well as the ad sales. one thing i thought was stunning was that their mobile only users are creeping up to almost half of their total users. their mobile ads are 78% of their total ads. a company that when it went public was very much faced with

questions about whether it could succeed in mobile advertising. it is becoming more and more a mobile only company. emily: when facebook went public, it had zero mobile ad revenue. i want to talk about spending. spending is not going to slow down, we benefit from a great business with solid margins. we are not giving specific guidance on 2016 spending, but we continue to see great opportunities to invest. he is talking about virtual reality, internet.org. cory: you can see in the user growth, a re-acceleration. they have over 2 billion people. you would think user growth would slow down.

it has not. you have seen a lift off in the user growth. it is up 3.7%. a re-acceleration of user growth. at the same time, we see a fall at twitter. you can see the benefit of facebook. emily: they say no plans to monetize whatsapp. instagram, he would not comment specifically on what it is contributing. he said he is pleased with the product. what is there to be concerned about? >> if they really go into a very deep investment cycle, we could see margins collapse. think of this as amazon, multiyear, multi-big investment cycle. that could be the real risk. so far, they are proven they can be very targeted and prudent in how they spend. we expect margins to come down

next year. emily: david telling me if facebook could go the way of alphabet, a family of mobile apps. he said we have a completely approach. what are you looking at for the future? what do you see as the main challenges? david: challenges are not what i focus on. this is a company for the long-term. zuckerberg is one of the great long-term thinkers in the history of business. they don't want to monetize lubsitiary businesses unti they get to a million users. whatsapp is getting close to a billion units. capital expenditures, maybe if you are a trader for the short-term, you will worry about that. execution is proving quarter after quarter to be exemplary. it is astonishing how good they are running this business. emily: indeed.

thank you so much for joining us. we will talk about this next big merger, expedia containing to -- continuing to spread its wings. they have agreed to buy home away for $3.9 billion. shares of both companies are up on the news. trade of homeaway was temporarily halted. the deal is expected to close in the first quarter. expedia just concluded the acquisition of orbits worldwide. how much of this has to do with competition from airbnb? our editor at large is still here with me. what does this say about the power and the threat of airbnb? cory: we do not know what airbnb's numbers are. emily: i use it all the time.

i prefer airbnb. i think homeaway has better inventory, but it is difficult to use. cory: i looked at all of the financial filings and in every one, they cite their biggest challenger as expedia. when you look at the sales growth for homeaway, you can see the growth in their business is slowing down despite a big partnership with expedia. 13% year over year sales growth. that is better than the trend, but they announced some big business changes. they will start adding a new service fee for users, lower their commission rates they are charging to pay for booking customers, and they will offer some affinity to their frequent customers. they are making a bunch of changes, but it is a very big

business, over 272 million bookings in the last quarter. airbnb may be even bigger. emily: is bigger always better? we will be talking about this tomorrow morning. i will be talking to the ceo's of both expedia and homeaway. eastern.. a warning from time warner sparks fears about cord cutters. details coming next. ♪ emily: reed hastings is opening

the company's checkbook for more original content. he said netflix will spend $5 billion on new programs.

hastings also said traditional television has to do a better job of its tv everywhere efforts. time warner has cut earnings guidance for the next year. earnings of $5.25 a share instead of $5.60. time warner is warning major media is down with time warner, disney, all slipping, but they down without a fight. they are ramping up efforts to win eyeballs online. first of all, these networks do deals with netflix. they sell content to netflix. are they cannibalizing their own business? >> that is one of the big questions right now among investors. if you are time warner or fox or

disney, do you take the short-term revenue that you get by selling your shows to netflix or do you hang on to those shows for little bit longer? maybe fewer people will cut the cord if those shows are not available on netflix or hulu or amazon. emily: analysts have been saying cord cutting concerns, some say they are overblown. are they? is this something they really have to worry about? >> if you talk to a lot of analysts, the tv industry is not in total meltdown. the tv bundle, the 500 channel bundle, that is not going away anytime soon. 100 million people pay for it. this business model is starting to fray at the edges. the cable companies reported earnings last week and their tv subscribers are doing a little

bit better, but they are still gradually starting to lose more and more video subscribers. the tv bundle is still around for a while, but cord cutting is a real concern. emily: if netflix is spending money on original content, how does that compare to a traditional tv network budget? >> that is one of the questions, netflix is ramping up its original programming and maybe they get to a point where they have so much of their own content, they no longer need the time warner's or fox or they no longer need to buy the old seasons of their shows. they are creating so many of their own shows. emily: we will definitely keep watching. $5 billion on original content, that is a lot. as long as house of cards

continues. we are watching qualcomm shares sinking after hours. the largest maker of smartphone posted first quarter earnings that came in short. the business is being squeezed as the top two smartphone makers are increasingly using their own parts. coming up, when you think of big investments, think uber, airbnb. the founder of the firm tells us why india is one of the most attractive markets in the world for tech. ♪

emily: when it comes to the next market for internet startups, the potential of india is staggering. 15% of the 1.2 billion people are connected to the internet, which is why the likes of

facebook and google are racing to deliver broadband to the second-most populous nation in the world. tpg growth is the growth arm of tpg capital is known for investing in a string of successful startups. i got to sit down with the founder, bill mcglashan, and asked what he finds to be the biggest challenge. bill: bureaucracy is a problem. they took the british democracy system and amped it up tenfold. you have an enormous bureaucratic infrastructure. it can slow things down and make life more challenging. the bigger problem in india is the rampant corruption. one of modi's for focus is to eliminate that. they are also trying to move

china up. it is very hard to do business in an environment where corruption is so endemic. emily: what are you bullish on and what are you hanging back on? bill: we tend to avoid anything to do with government or where bribery and official corruption could be involved. emily: couldn't that be anything? bill: there are sectors that remain quite independent of that. writ large, the consumer. it is an enormous population just now reaching the tipping point of having disposable dollars to spend. we look at the broad derivative consumer environment as being interesting and we look at situations where we can be a partner in helping bring western capability. we can bring western capability

to those indian ventures. we partner with a young entrepreneur who is about 30 years old. they started the channel eyeglass company, addressing a market in india that has 40% of the world's people that need corrective lenses live there and 70% of those who need them do not have them. we are partnered with him to create a world-class company. we will deliver them to india. emily: eyeglasses, one. where do you see the most potential for growth? bill: internet broadly is fascinating. ecommerce, we have seen major investments taking place, but it is still fairly nascent. there will not be the ability to build the foreign language equivalent of the u.s. model.

the disadvantage in india is that english is the common language. it is the number one spoken language with hindi being second. there are another 14 official languages after that. lots of other room to run when you have 20% penetration in india today, 600 million people in the next five years will be on the internet. emily: facebook has prioritized india as part of its internet.org program. there is controversy on how well it is doing. what have you seen as far as the rise of facebook in india? is it happening more slowly than you would think? bill: india today is still the number one market for facebook users. despite the challenges they face, they continue to evolve in that market, it is the number one place in the world for facebook users.

it was one of the early adopters up whatsapp. this in the context of a market that is just now happening. you have broadband just being developed. 250 million people today on the internet. that will go to 650 million in the next five years. there is tremendous macro growth. emily: give us some more examples. what do you see? you being there on the ground, what do you see? bill: we have a particular lens we look through. where is there an interesting entrepreneur? also, where we can bring a unique toolkit in helping to grow the business. another example is health care. we love health care.

we bring the modalities that a global firm can bring to bear will me invest in the company. we like the derivative areas around healthcare services. they have a 10th of the resources we have directed against health care, but it is emerging today. one hospital bed per thousand versus a dramatically different number in the western world. so, we looked at consumables. we invest in a company called sutures. it was a small business that is growing rapidly. we have built the fourth-largest consumable business in the world, headquartered in india. for us, it is consumer. digital media, new forms of media, internet broadly, marketplace businesses, consumer businesses, including health care. emily: what will surprise us most about india? bill: the pace of change on the consumer side is going to sneak

up on us. you are going to see a seachange when broadband penetration becomes ubiquitous. and the availability of inexpensive handsets will change things. emily: do you have a time frame? bill: i think it is sooner than we expect, the next five years. emily: bill mcglashan, founder and managing partner of tpg. according to fortune, the round is not closed yet and will likely include additional capital from existing investors. they give the amazon competitor so-called unicorn status. coming up, our exclusive interview with bill maris on his mission to improve health and prolong life. that is next. ♪ emily: i am emily chang and

this is "bloomberg west." the maker of architectural and engineering design software is being targeted by an activist investor. a stake of about 6% in the company and says it thinks the stock is undervalued. it intends to engage in discussion on the business. investors and regulators put more pressure on volkswagen after the company said it understated the carbon dioxide emissions for 800,000 cars.

they relied on discounts to post october.les gain in it was the first full month results since vw admitted to cheating on diesel emissions test. takata's problem is more costly than the fine in the u.s. honda will no longer use the airbags in its cars. honda was their biggest customer. honda says they misrepresented test results. $200a fines could hit million. dropbox says it has 150,000 business customers. the cloud storage provider is facing stiff competition from the likes of google, microsoft, lots of skeptics questioning their business model. the ceo said the company added 50,000 paying business customers.

to google ventures, the investment arm of alphabet. founded in 2009, it has quickly become one of the most active inter-capital firms in silicon valley with investments in over 300 companies. one other area the firm has been active in his life sciences. 40% of dollars when into life science companies last year. the man leading the charge is president and ceo bill maris. great to have you back here. first question, just curious how this whole alphabet situation has changed your job and your approach. bill: good to see you. it is business as usual for us. we have always operated independently. not much has changed for us.

emily: you had a role in the formation of calico, google's efforts to extend our lifespan. what are some concrete examples of progress there and opportunities you see to extend our lives? bill: the opportunity in the life sciences is hard to understate. the change we will see between now and the next 20 years is going to be similar to what we have seen happen in communications over the last 20 years. you can talk to anyone, anywhere, anytime for free. 20 years ago, you would write a letter. that is a pretty big change. we could see a similar change in health care. i am really excited about it. emily: let's talk about investment opportunities. what are the most interesting opportunities you see out there right now? bill: we look at the health care ecosystem as a continuum.

diagnostics, therapeutics, devices. a lot of different areas and health care and when you apply machine learning a new technology to each of those areas, there are some pretty exciting opportunities. a company we have invested in in the gene editing space. it is something that would have been hard to imagine 15 years ago, but it holds great promise to treat a number of diseases that are untreatable right now. emily: this idea of immortality is very fascinating to you. i was speaking with the founder of google x about the same thing and he said he thinks we will significantly be able to extend our lives in our lifetime. the question is, why don't humans live to 200 years? how far longer we in that process?

bill: i am always careful to talk about that. none of us know what our lifetime is. i could say yes and walk outside and get hit by a bus. these things happen. i think in a reasonable amount of time, we could see real improvements in treating a number of diseases. to talk about immortality is a good way to take it to its extreme, but we are talking about the realities of science and when we think about that, we have to think about the fact that we have the ability to extend life right now. if we just -- a lot of people talk about the redistribution of wealth and i like to think about the redistribution of health. the average lifespan is 70-80 years in the u.s. in western africa, it is about

40. we have the ability to extend life. do we have the commitment to see it through globally? emily: i want to talk about your opinion on theranos and elizabeth holmes. you told "business insider," we looked at them a number of times, but there was so much handwaving, we could not figure it out. we had someone go into walgreens and take the test and it was not difficult for anyone to determine that things may not be what they seem. she responded to you, he has never met with us, he has never reached out to us. what really happened? bill: the first part of what you said is exactly true. we had someone from our team go and take the test. it turned into five with a follow-up call looking for even more blood.

it is apparent things were not what they seemed. it is important because when you are dealing in the life sciences, you are dealing with a vulnerable population of people that are banking on some of the promises of this new technology. you have to be really careful about the claims that you make. what has been written about the company speaks for itself. emily: if what she is saying is possible, that is amazing. but it is scary to me that a company could raise money at a $10 billion valuation if there really is not that much there. what do you think actually happens here? do you think tehhey got too in front of themselves? bill: i read an interesting answer to this question yesterday. what happened, a lot of culpability and the media has something to do with it, getting carried away with the story and not looking into the science.

we have companies we invest in, they published over 40 peer-reviewed articles on their science. no one would question the accuracy of the data they are supplying to consumers. emily: theranos has not provided any of the data and that is part of the problem. whatever the media would ask elizabeth holmes about the data and the technology, they would say it was a trade secret. bill: it makes me wonder why so many magazines put her on the cover. i do not know if any of those folks have seen the science behind it because there has not been a single journal article about it. emily: you are an investor in 23andme, a company that saw a major comeback from its dealings with the fda.

she talked about how far they have come. >> i feel great. i am super proud of the company and what we have accomplished. you have to put your head down and know there is a lot of work ahead of you and you are not going to see a reward for a couple of years, it is hard. we have an incredible retention rate. people stayed and were determined and worked through it. even with the launch, we just climbed the first flight of stairs. we just -- there is a lot more to go. i think about pacing. it is amazing, we are back on the market, we have an incredible product. we have completely redesigned everything. this is the first chapter in a whole new book. emily: you will see that full interview in an upcoming episode of "studio 1.0."

what is your vision for the future of this 23andme? bill: apart from the fact that they are both companies, i do not see a lot of similarities. 23andme put their nose to the grindstone and they have worked extremely hard with the fda to get over some regulatory hurdles. that is very different from the basis of do you actually have a product? it is different to run into roadblocks and work through them than to claim something you have something and have no evidence that it actually exists. emily: i want to talk to you about robotics. are you still seeing good opportunities out there? have they all been bought by google and facebook?

bill: machine learning, it is not so much looking for general ai companies to invest in. artificial intelligence is all around us, on your phone. your phone helps you find where to go. artificial intelligence in your car, computer games that can beat the greatest chess masters in the world. it is a layer on top of a lot of companies we invest in. emily: we are seeing companies like uber becoming interested in artificial intelligence. google ventures is a big investor in uber, how much of that is predicated on that investment? bill: our investment in uber is not successful yet. the company is still growing.

i would be careful to say -- i do not think any success is predicated on the company because they have a lot of hard work ahead of them. we are trying to support them. emily: how would you describe your relationship with uber right now? to some extent, they are trying to compete with google. bill: when a company gets to a certain breakout size, they will compete with a lot of things. that is not a surprise to us. that happens. when we first met with travis, the idea of a self driving car existed. no one is shocked by this development. we are investors in uber. we are big believers in travis and that team. we have lots of friends that work there.

emily: i would love to get your thoughts on the environment right now. are you seeing more -- where are we in the funding super cycle? bill: this is when investing in startups become a spectator sport. that is when i start to worry about things. i lived through 1999 and 2000 and we are into that area again. 1999 to 2000 was a period for companies who had no business going public were going public much too soon. now that the pendulum has swung the other way. companies that should are waiting longer. it is a matter of time before it swings back the other way as well. emily: what are the biggest warning signs out there? bill: you have these billion-dollar valuation companies, some of which will do really well and be the foundational companies of the future and some that will not do

very well because it was not the right time. because the valuations are high and they get a lot of attention. when they do not succeed, they will probably get a lot of attention as well. when people ask the bubble question, what they really mean is if somebody about to lose a lot of money? it is part of the startup lifecycle. none of that is really surprising to me. it is part of the business cycle. emily: bill maris, thank you so much for joining us. turning now to spacex, elon musk's private company is vying to win a contract renewal with nasa. the company faces stiff competition from boeing, orbital, and the sierra nevada corporation.

they do have an advantage over their established rivals. it is the only made in america entry. all of the others use russian engines. nasa split the original contract between spacex and orbital. the new contract could be announced as early as thursday. coming up, nest ceo tells me about a conversation he had with steve jobs about an apple car way back in 2008. ♪ emily: we are excited to

announce, tonight, it is the season premiere of "studio 1.0." this season kicks off with nest ceo tony fadell, the godfather of the ipod. we discuss everything from google glass to the transformation of nest. here is a sneak peek of a conversation he had with steve jobs. tony: i think you will see some dramatic changes the way we think about these cars. we are still seven to 10 years away. emily: what can apple do for the car market? tony: a car has batteries, a computer, a motor, and a mechanical structure. if you look at an iphone, it has the same things. if you scale it up, i can make a

car with those same components, there is some truth to that. the hard stuff is on the conductivity and how cars can be self driving. i think when you look at google self driving car program or the allegedly apple thing, it is looking through that lens of software first. emily: did you ever talk to steve about building a car? tony: yes, we had a couple of walks and this was in 2008. if we were to build a car, what would we build? what would a dashboard to be? how would you fuel it? at the end, it was always, like, we are so busy, we are so constrained. it would be great to do it, but we cannot. emily: when he was alive, was it something like, we are not doing this right now?

tony: people said why didn't the ipod turn into a video camera? what was the biggest one that had the biggest impact on the world? cell phones. we will focus all of our energy on that. forget all of this other stuff. let's focus on a really big market. emily: google is taking it on, too. tony: yes, it is great. it blows my mind every time i go over there. it feels like i am being driven around by a professional driver. regardless, i love those services, but most people who drive, do not know how to drive. they just don't. even if they do it every day, they are not professionals. emily: how do you make these cars safe and desirable? tony: uber is a self driving

car, but it just happens to be driven by a person. they have already made that choice. emily: do not miss my full interview with tony fadell right here on bloomberg television, streaming online as well. ♪ emily: it is the first

nonprofit to graduate and it just secured funding from big backers like ron conway. it is a crowd funding platform meant to raise funds for people around the world in need of medical treatment. what is next? watsi cofounder joining me to explain. how does this work?

give me some examples. chase: it is a website where individuals can donate to fund health care for people around the world. you can see the photo and read the story of jose, a 15-year-old boy from guatemala. you can donate as little as five dollars. 100% of your donation goes to him. emily: you guys have said one more funding round and your business will be 100% sustainable. chase: that is the goal. we ask for an optional tip from donors. the tip goes to fund the operations. emily: why choose watsi over kickstarter? chase: watsi is for people who want to make the world a better place. emily: give me some examples of the traction you are saying. what do investors see in the numbers that makes them optimistic?

chase: it is one of the fastest growing nonprofits in the world. donors are excited about the opportunity to use technology to make the world a better place. emily: how difficult with all of these fancy unicorns out there and sexy consumer businesses, how difficult is it to get investors to back you? chase: it is challenging in san francisco. it presents some opportuinty, because we are unique. a lot of for-profit startups out there are pitching they are the next unicorn. we were the first nonprofit to participate. the first time we met paul graham, we went on a walk around the block.

at the end of our conversation, we had a simultaneous epiphany. we are a technology nonprofit. we are identical to startups with the challenges and opportunities. emily: how so? chase: everything from hiring to writing code. it does not matter. emily: when it comes to hiring, how are you incentivizing in this crazy war for talent? how do you incentivize people to work for you? chase: people want to write and solve problems they believe will make the world a better place. emily: it is good to hear that you guys are doing this. thank you for stopping by. that does it for today's edition of "bloomberg west."

♪

>> the following is a paid program. >> the following is an important paid program about medicare advantage plans. sam: welcome to your medicare, your decision, the program that guides you through the medicare options available from humana. there are many different medicare choices available today, but are you sure you have the right medicare plan? are you with the right company? do you wonder if you can save money with a different plan? no matter what medicar