china working vigorously to overcome the slowdown. it is still in reasonable range. earlier, president obama told the aipac's he expressed optimism about the upcoming conference. obama said there was no contradiction between growth and

development and being good stewards. the two states of united states in paris have been divergent. this is after an anonymous phone donet and the flight was to salt lake city. a quick look at the market, hong kong and china closed for lunch. this is how we are trading in the morning session. turkey and mumbai. two thirds of 1%. time for bloomberg west.

♪ emily: i'm emily chang. hitting the gas in competition with the uber. cofounder to the talk about the week ahead. to our lead and the debate over internet privacy. 129 people died in paris. leaving some to call for help gaining access to an encrypted cap's. democratic senator dianne feinstein says she has asked a number of tech firms for

assistance, saying she is asked for help and has not gotten any. if you create a product that allows evil monsters to communicate in this way, whether it is a game in a stadium or in paris, that is a big problem. there is some reluctance on the part of silicon valley to give intelligence unlimited access to their businesses. tim cook says everybody wants to be the cure, the question is how. an investor in cyber security and a human rights fellow at the center for democracy. steve, i want to start with you. you have washington calling on silicon valley and silicon valley saying we have to draw the line. where do you think the line should be john? believer in saying

silicon valley has to have a requirement to get involved and i understand how to do and corruption and privacy. as a venture capitalist, i see new companies being built. i have to tell you i am more optimistic than ever we have to create new companies and approaches that will have a balance between these. but also be responsible. tags how can you be optimistic in the wake of a major attack when it seems terrorists were using cryptic communications to plan these things. is part of a broader, how do we allow people to communicate. what we are able to do is think of it new ways to make sure we are unaware of what is happening.

on encryption, it is important for all of us, we use it to access our bank accounts, to keep our information safe. it is also used by those protesting in other countries. emily: what is the middle ground? what sort of new ways can we create to balance the two of these things and protest -- protect our privacy? is a wayot think there that anybody can get in. i think we can say, yes, some people can look at it, but i think it is exploited. i do not think we should have a than anybody can use. there is a lot of great technology and that is what we are known for here that we can make sure with the right process in place only the right people

can see the data at the right time. >> i would agree with that, i want to be clerk i see privacy as security. as steve indicates and is tim aok suggested, when you have backdoor it is a backdoor for everyone. the same when you have things like government-sponsored hacking. that creates vulnerability for everyone. we need to be careful to keep as possible.geted emily: steve, what is a happy medium? i surround myself with the amazing technologies and people. there are amazing things going on. security is a broad issue. more specifically, i am seeing a lot of interesting engineering

learningn with machine to look at so-called meta-information. you can tell where at timothy is happening or what time of day it is happening to see if it looks specific. user behavior which might look suspicious. emily: one of the legal framework? france passed sweeping laws. do they not work? >> i do not know about the investigation to be able to say if they do or do not work. we have no evidence to show that mass surveillance is any more effective for targeted surveillance. i do want to respond to something steve said, i think that looking at to metadata a information is a key tool but we have to remember that can be highly revealing of people's private lives.

we need to look at something as targeted as possible. emily: we are looking at the u.k. preparing to fast-track new surveillance laws. in light of what is going on right now, what are the chances they do not pass? sarah: i do not want to speculate on the chances they will pass. i think the government has been climbing down a little bit from fast tracking a bill. it gives us many reasons to be concerned. it takes many of the worst abuses revealed by edward snowden and it is going to enshrine them into law. the government can go and turn on your webcam or the microphone on your phone or on your laptop without adequate authorization. we have this -- we are very worried about the of privacy and reasons there. emily: do you think these could have prevented the attacks? steve: it is not the core of the issue. we are concerned about having what controls in place. -- the right controls in place.

when you have the right understanding of what is going on, we can find a play to get what is important to the law keeping. you really need to recognize is always quick to have unintended consequences are more often than not without people can get iness to the exact same keys getting at this data. that in turn can be used to prosecute people who were protesting government, to get medical data that is our own. it can have a lot of cd concerns that we're not thinking about. you need to be careful not to overreact and have unintended consequences from some of these policies. emily: thank you for joining us. this debate, insurable continue. now cyber story we are watching. the international hacking collective known as anonymous has begun posting what they allege to be personal information about suspected islamic state extremist. in response the islamic cyber army issued their own statement, offering guidance on how to protect against cyber attacks. twitter accounts claim the group is responsible for taking down more than 5500 accounts related to isis. it is important to note that none of the details that anonymous have been published have been independently verified. the group has wrongly identified

alleged extremist in the past. we watching to be seen how this operation plays out. a quick footnote on that last discussion. there are reports today that islamic state issued regular warnings to his followers to keep their communications secure. communications apps. coming up, what does square have to do to attract new merchants? we crunched the numbers on their ipo. and, activist investor carl

icahn is putting his money where his mouth is betting big on paypal. in his money where his mouth is after he asked it to split from a ebay. ♪

♪ emily: a stock we are watching, angie's list. shares fall as much as 8% at the open, but recovered. to pursuedecided not an unsolicited bid.

an increase from an earlier offer of 850 a share. they said they needed time to see the turnaround plan. some layoffs to report. they will cut about 1000 jobs in spinoff the go to business. they could have a value of $4 billion. two scores highly anticipated ipo. this week the mobile payment is expected to price on wednesday. according to a regulatory filing, they will marketeer between 11 and $13 a piece. they are aiming for 4.2 billion dollars valuation. this is short of the $6 billion in the last funding round. why the large gap in this valuation?

is it the right time to go public? joining me with a bullish case is wrecked almost become a partner at double diamond group. and arris group, we have a payment analyst with bloomberg intelligence. strength of the core payment processing business. how strong is it? >> the processing businesses quite strong. there's not a lot of debate on whether you should compare. they are the growth rate of the industry, and are the very brink of profitability. rick: i would not say i am bearish on it. but as investors and an ideal, you are looking at with the opportunity is valued at. we took a look at because the company is not profitable on an adjusted basis, we looked at trailing 12 month sales for the company. that is the evaluation they are looking for. what we came up with was the stock is valued at about nine to 11 times at trailing sales. that is twice as much as payment index bloomberg intelligence is valued at. the valuation is very rich on

our sales. emily: do you think the valuation is rich? >> i don't really. obviously, as a public investor, and is lower than what the investors were getting in several months ago. obviously, you have to look at growth in future evening -- earnings. they are the brink of profitability. when you look at growth and appear that to the rest of the industry, it should be -- emily: revenues growing up the bed so our losses. what do you see in the financials?

rick: revenue growth is still very fast. over 50% in the recent quarter. it has been slowly crawling with her volume growth over the past few quarters. one positive thing, in our research that we discovered, is that if you look at the transaction gross margin that we have been in recent quarters is over 1% of their volume. it compares favorably to their peers. i'm talking about companies like heartland payments that focus on small merchants much like square. they are also generating more revenue from outside of payments. things like software and data services. these things carry higher margins. that part of it is positive.

what i'm concerned about is one of the things they talked about repeatedly is about half the new customers are coming to them versus responding to marketing. with all the competitive products, square was very unique. there are a lot of similar devices at the market. are they going to have to ramp up their market? emily: this is not a good thing if customers are coming to them organically? >> it absolutely is good. what i'm wondering is that is going to become harder and harder. the novelty is gone.

when they first to the scene three or four years ago, it was a very novel concept that met the unmet need a small merchants, simple, fair, easy-to-understand pricing, fast settlement. now you have other companies, the -- clover that they bought. a whole host of others that are targeting the same space. emily: laying out the competitors in this landscape. how differentiated is squire from the competition? david: the devices itself. if you look at just the devices from you can argue that there's a lot of competitive options in the market. if you the overall end to end strategy, square is unique. heartland is an example. they dealt in the hundreds of thousands last i checked in if you look at the average square customer it is more like 12 or 13,000. so, those are just completely different world. the business model has been to go after businesses that have

not had access to payments in the past. the reason they have not had that is because it has been an unprofitable for the colonies like heartland to even targeted them. it costs too much to find them. therefore the revenues the rig you are not enough to bring in their coverage for acquisition. you can go out and find these customers and bring them in and make a profit on them. they have done that through innovation across the product level as well as distribution strategy and online acquisition and risk mitigation and all the things they had to do. it is an end to end business strategy. in one of our this device. no one has the full business model to target this small micro merchant and make a profit on it. there is very little competition out there. emily: i have to get to your views on jack dorsey running square. how bullish or bearish argue on that? david: that is tough. obviously twitter has their own challenges which he needs to spend time on addressing.

there's a lot of pressure from that side. he has been hiring a lot of senior executives. interestingly most are square capital. they have been bringing in some senior people but it will be tough. rick: i agree. obviously it is about the strength of the team. obviously, the track record is very good. and it is a strong team. is it ideal for our and investor perspective? probably not. but you look at the potential opportunities, i think it is a very good opportunity. emily: we will be watching to see where prices and shares late in the day tomorrow targeting to start trading on thursday. thank you for joining us.

activist investor carl icahn is shifting his sights ebay to paypal. according to sec filing. the billionaire filing has sold his ebay shares and taken an equal position in paypal. he lobbied hard to spin off paypal. carl icahn now is 4% of paypal. coming up, star wars battlefront. mixed reviews. ♪

♪ emily: earlier today i sat down for an extended interview with linkedin cofounder reid hoffman. he is a noted investor, and i asked him to weigh in on the great debate. are we in a tech bubble?

reid: in some ways we are, in some ways we are not. the key thing, it tends to be a private market bubble. the private level does not have as much market impact. it is not something we've hearken back to 2000 or 2001, you worry about quite as much. emily: as a venture capitalist he invested in the company airbnb. we talked about how airbnb needs and experience in strategy ended differs from uber. reid: airbnb has a global network of fact that is useful. if you have a whole bunch of residencies in europe or the u.s., then people who traveled there, that is a global network effect. that is very useful. they do not have to do as much work as overdose.

emily: why do they have to work harder? reid: they have to work harder because the network is much more local to a city. it is just easy to say that it could be a halo of london or different regions. they actually have to put intensive effort into the growing of each specific city which is part of what developed his playbook. they have done it extraordinarily well. and to do that intensively. emily: linkedin cofounder reid hoffman.

do not miss my full conversation with him in a special edition tomorrow at 6:00 p.m. in new york. coming up, the growth of gaming this holiday season. we will hear from the pic to ceo. ♪

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earlier today the ceo joined us. we asked where company growth was going from. growth is coming you to us. the plant forms from microsoft and sony are growing rapidly. that creates a tailwind. our growth is coming from continuing to put out a heads. we no longer are only grand theft auto, we are also many others. emily: how dependent are you, that you have to keep coming out with those hits. i look at something like zynga. how much pressure are you under to keep delivering new titles? >> it is a big investment.

to see our catalog continue to grow in value. in the last quarter, 45%. that provides protection for uncertainty related to new releases. every success before yesterday's headlines. >> it is a live event business. people crowding into madison square garden to watch competitions. >> we invested in twitch. it was sold to amazon. we were early believers. is it a great economic opportunity? twitch does not monetize themselves. it monetizes the activities surrounding. future andare the people enjoy watching professionals compete. about other areas of

growth. in media, the whole story is mobile. >> for walmart, they have stores. that is hard. skew -- right now our our business skews north america. it is all over it the world. our biggest market share, asia, japan. we see ignore miss growth. the your nicely with question. mobile is not the issue. the question is whether it is a casual game or a robust consul-type experience. you are referring to a free to play game. we are launching civilization online in the asian markets. also a free-to-play title.

we do see it as a big growth area. stephanie: do you see the effects of the reported china slowdown? strauss: we have not seen it, but it does not mean it does not exist. we are in a small segment. we create revenue. >> tell us about virtual reality. there is a lot of buzz about virtual reality and gaming. do you see that as a new opportunity? >> it remains to be seen. the headsets have yet to be released commercially. there are some issues around this notion of having inclusion of headsets. i'm not saying it will work but the jury is out. in terms of interactive entertainment, it remains to be seen. if there is a market there, we will be there. i am not saying it will not work, i am saying the jury is still out. if there is a market there, we will be there. r&d mode there.

emily: that was the take two ceo. turning to another videogame -- star whirls that -- star wars battlefront. sales kicked off today. electronic arts is projecting sales of 13 million copies. joining me now is chris, who covers the videogame industry. is 13 million a big number? chris: yeah, it is. electronic arts took up their estimate. they were originally saying nine to 10 million and bumped it up to 13 million. we have more controversy. the reviews came out and they were kind of mixed. ea's stock was up a hair today. it remains to be seen based on these reviews how big a hit it is. emily: talk to me about disney's strategy for star wars videogames from the disney standpoint.

chris: lucasfilm as a long history of making video games. when disney acquired the company, they decided to farm it out. disney is making the infinity 3.0 game which features star wars characters this year. it has a two-pronged approach. infinity is more of a kids game. battlefront is more of an older gamers game. that is their strategy. emily: what are the other hot titles we should be tracking? chris: a lot of familiar trends coming back. call of duty, halo -- they're having a good year with the nba and fifa titles. after a couple of years of this new wave of console, you will see a bigger focus on the games. emily: what do you think will be driving sales?

what do you think are the hottest games? chris: what is really having a lot because we are a couple of years into this cycle, you are seeing these bundled packages. you can buy the new playstation 4 with the star wars battlefront game for the same price. it is $50 lower than it was two months ago. the bundled deals will drive games like halo and xbox. emily: all right, chris, who covers the videogame industry for us. thank you for joining us. turning to media, gawker.com, a website known for its snark, is reportedly revamping. the new york times says the site which you see cover new york and the media will now focus on politics. other changes planned include emphasizing seven related sites like the tech site gizmodo and dead spin. 10 people are excited to lose their jobs. -- about 10 people are expected to lose their jobs.

coming up, lyft announces plans to exceed $1 billion in sales next year. my conversation with the cofounder next. if you like bloomberg news, check us out on the radio. you can check us out on bloomberg.com and sirius xm. more of "bloomberg west" next. ♪

♪ emily: today, lyft announces it expects to reach $1 billion in gross revenue this time next year. this increase they increase their u.s. market share despite increasing competition from uber who expects about $2 billion in revenue in 2015. i spoke with john zimmer, the cofounder of lyft, and asked him how they manage to reach this milestone. john: in october, we hit $1

billion gross revenue run rate and now we are 40% in san francisco and austan. those of the examples we brought up. emily: how did you come up with a number 40%? john: yes, there is third-party data on credit cards as well as e-mails that allow us to get the market share number. actually with the company we worked with, the third party, we asked them to predict how many rides we are doing and it was so accurate so we can track it. emily: what kind of investor has carl icahn been? what is your relationship like? john: it is good. i saw him last week. we approached them. he was a disciplined investor. they make good noise about the truth behind our business which is what we want to tell people about, the 40% share in san

francisco and the billion-dollar run rate. this is a massive opportunity. this is growing faster than any other player in the u.s. emily: i just came back from china, i was in beijing talking to uber drivers. you have a partnership. how is that going so far? what is the most important part of that partnership for you guys? john: it is going really well. before i saw carl, the week before i was in beijing. in a few months, we will do global roaming, our global coverage where you can take your lyft app take a ride to jfk and land in beijing and use lyft without having to open up a new account and without reading chinese and get your ride. that is one of the biggest unlocks. with the service coming to u.s. and vice versa, 8 million travelers a year can use that more. emily: john zimmer, cofounder and president of lyft. well, the gap is growing between

the technology world haves and have nots. the combined stock value of the big five apple, google, facebook, and amazon, makes up about 12% of the total value of the s&p 500. older companies such as ibm and yahoo! continue to climb. here with me discuss is shira. you came out with interesting observations. who is hot and who is not? shira: it is the tech winners and the tech sad sacks. the tech companies are the five you mentioned, the five biggest technology companies in the world which keep growing more successful. that has this network affect where success breeds more success. apple, google, microsoft, facebook and amazon.

i don't think microsoft would have been on there a year ago. if you see the charts in my piece, microsoft continues to shrink because they are heavily dependent on sales of computers, but i have managed to convince wall street they are going in the right places. emily: how much does this have to do with adela? i sat down with him and i found him refreshingly impressive. shira: he has managed to change the sentiment in wall street about microsoft. emily: who is not hot? shira: ibm, yahoo!, cisco -- these are companies where revenue is shrinking. they are strategically befuddled. emily: do they stand a chance? rejuvenating? shira: it is funny because emc and dell are teaming up for the same reasons hewlett-packard is splitting apart.

they say they are better apart than together. they have the same challenges and approaching it from completely different tactics. we will see who wins. emily: we have asked the question before and the answer is one tech company has really rebounded from the near break and that was apple. do you see that in the future for yahoo!? shira: it is hard to reinvent yourself in the technology industry to get change happened so quickly. to your point, apple did it, ibm did it arguably. ibm is trying to reinvent itself again. the fact we can only name maybe two examples in 40 plus years of technology history says something which shows you how difficult it is. emily: what happens the yahoo!? you have analysts saying it is time for marissa mayer to go. shira: they have not really articulated what the strategy

is. they have all this cash coming in from the alibaba spin. what will they do with it? marissa mayer says they will jettison some underperforming strategies. underperforming assets. that sounds like a good strategy. then what? they have not articulated what the strategy is. emily: do you see yahoo! going private? shira: it is getting to the point where they need to either sense strategy or think about plan b which is selling the company, breaking it apart. emily: it is all fine and good when you are on top, if history is any indication, companies do not stay on top for long. do you see an apple or facebook knocked off at the top spot? nobody can really come up with a viable scenario in which that happens. shira: that is right. it is not realistic. it is hard to see how those five big technology companies can get unseated. the nature of technology is

shift happens without being able to predict them. you are already seeing companies like apple which is heavily dependent on sales of the iphone, though sales are starting to slow. that is the big question for a company like apple after being on top for so long. emily: apple car, 2022. thank you for joining us. great piece from you today. up next, how close are we to truly mainstream vr? live streaming events in virtual reality. join me next with predictions. tomorrow, do not miss investment views from martin gilbert. he will be on bloomberg "go" at 8:30 a.m. more "bloomberg west" next. ♪

♪ emily: comcast and time warner are the latest big media giants to stake a claim in virtual reality. they joined a nearly $31 million funding round in the company behind the virtual lifestream of the democratic presidential debate and the warriors opening night game. disney led a round in the vr startup. joining me now is the cofounder dj. thank you for joining us. you are giving me a little preview. what am i looking at? dj: you are looking at the golden gate bridge. all of that you see is transmitted live. emily: it is pretty cool. what do you make of the fact these big companies want to make their stake in vr? dj: it is a way for audience to connect with content and entertainment. emily: talk to me about the live streaming aspect because i think that is what makes your company unique.

dj: it is. we started 26 years ago. the fact we have a real mature technology around broadcast of virtual reality helped us scale the delivery of content. emily: talk to me about what is possible. dj: you can put people in places you cannot buy tickets or places people want to go like sitting courtside at a game or standing at the end zone or going to the other side of the golden gate bridge. emily: you work on the output. who works on the hardware? dj: all the major companies working on hardware. we are expanding, not only our team, but the reach of our technology. emily: i recently got a chance to speak with the ceo of oculus. they are coming out with their headset early next year.

take a listen to what he had to say about the mass-market potential of vr. >> i believe the mass-market will be a lot of early adopters of vr. if you're looking at the smartphone scale, billions of users -- that will take a long time. emily: when do you see mass-market adoption of vr? >> starting this year. black friday is the first time consumers have the opportunity to buy hardware. emily: you think this holiday season we will see mass-market adoption of these? dj: it is the first time the mass-market has access to buy. but i think we will see it next year. emily: how does vr go mainstream? dj: as it goes out through mass-market, allowing people to connect as they have not had before. we have devices including our cell phones that will possibly be headset. emily: who are your main competitors?

dj: really anyone else out there that is working on vr. we are unique because we do live. emily: one of the most interesting things i've had discussions about with relation to this and live events is the potential for it to transform to music business and maybe artists do not have to go on the road one million times to make money now. what do you see there? dj: for artists, traditional medias -- this is another way for them to connect to their audience. not only can you follow your favorite band on a tour, you can sit next to your favorite drummer up on the stage and see it from a different perspective.

emily: does that hurt ticket sales? dj: i don't think so. nothing replaces going to a concert, but our experiences in vr you cannot get from a concert. emily: same with sports games. cable companies are interested in investment, but couldn't their hurt their business model? dj: i think it is as different as radio is the television. even though you are watching on tv right now, there are multiple ways to consume. on the cell phones, laptops -- it is a different way to get content. emily: the biggest surprise for next year? >> i think probably live and sports and gaming. emily: over and out. dj, the cofounder of nextvr. thank you. that does it for this edition of "bloomberg west" from new york. do not miss my interview with reid hoffman tomorrow. ♪

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