pandora, san dix and glue is litt -- zoo lily making moves to the down side. with we have a lot to talk about this morning. start with facebook, because it is going on the offensive. the social network grabbing paypal president david marcus to run its messenger unit. seems like the street likes the move. ebay moves to the downside. facebook trading higher. should tell you more because the social network accidentally released its new app shot, slingshot, on the app store. slingshot has been pulled but the app still supposed to be facebook's answer to snapchat, complete with disappearing messages. i'm going to start with you, kevin, from a management perspective, i guess is probably the question. do you think that facebook -- investing perspective, do you think facebook is really going to get into financial services,

that what this move, bringing this guy from paypal is all about? >> i certainly hope so. one of the most lucrative businesses they could launch. that's the answers. that that's why the street likes, this the assumption they are all making. you have got $1 billion users, everybody buys something every day. the opportunity to provide them some form of financial infrastructure that you get a click charge on is an amazing opportunity. that might get me to buy facebook store, when it pace dividend, of course. >> you don't own any facebook stock this make any sense to you? >> i think it does. the speculation about financial services is probably accurate. remember in april, facebook was apparently applying for a license to it be an e-money or a passporter, some sort of transactor in a financial services space in europe, but actually reach out to the central bank of ireland and they have not yet been approved to get that authorization yet. they haven't even secured the license yes. beck begs a question, do they need an exec peer againsted

executive to make the push for them, enough experience in house, as is? i don't think they do at this point. i think marcus is a genius hire. a serial entrepreneur. if there was ever a chance that paypal got spun off into a public company, a lot of those people don't like being ceos of a public company. this makes sense. >> does this say anything about ebay or paypal? >> i'm afraid it does. worried about paypal for a number of reasons. paypal has had some problems over the last few years. the organization is not lean enough. marcus was in the process of trying to reorganize that unit. it wasn't going that great, from everything i heard. hard for them to get products out, cut through bureaucracy, the fact he is saying i like projects, leaving paypal, not a good sign, a number of entrants in the space in mobile that just bought one in braintree, paypal not where they need to be in the prod spukt space. they need to be launching

products, a guy like this. to put a finer point on this, go to kevin on this, my understanding, you guys jump in on this if it's true, not about whatsapp. they just spent all this money on that >> no. no. >> you would think they would be trying to take advantage of that to create financial services on top. this is totally another thing. >> facebook messenger is different. maybe they have these ambitions, as caleb mentioned in the payment space but certainly want to expand that as a global platform. >> and also see different the only reason that's happening, just paid $19 for the management team at what's a.m. you can't put a new guy on top of them, you will cause all kinds of social problems that's one of the challenges of really garnering that 19 billion worth of value without it becoming dilutive. i'm extremely skeptical that was a good deal for facebook shareholders. i don't think it was. >> where slingshot is concerned, i actually think it was a good move, whether it was accidental or not to release -- >> talking now about the snapchat competitor? >> the snapchat competitor, because people thought, okay, they tried this once before, to

launch something akin to snapchat, it failed can they do it again? this app looks pretty cool a lot like snapchat. slate said she should call it boomerang, because they are bringing it back. what it wealhets the appetite o user it is fair lynn investigative there i'm looking forward to getting my hands on t facebook will be operating you the companies as stand-alone vehicles. interesting whether that app is a stand-alone app, integrated in facebook or whether that has anything to do with whatsapp, regardless of payments. > how do you monetize this? show me how you make money? that prerelease is not a mistake, never a mistake, sends it out there giving it preview, lots of media, all over the internet. those guys aren't stupid them did it on purpose. >> okay, kevin, gonna press the pause button for a moment. we have a news alert four. kate kelly is back at hq and has news for us. kate? >> thanks so much, andrew. news that david tepor, vet well

known hedge fund manager and his wife, marlene of more than 25 years, are considering the possibility of getting divorced. they have been living in separate residences for some time, i'm told. and talking about what to do. no official divorce filings yet out there. it's unclear what this would mean for appaloosa management, tepor's $20 billion hedge fund, one of the most successful in recent years. last year alone, for example, the palomino fund, one of his main funds, returned about 42%. as well, annualized returns in main funds, figure they released the middle of last year, 20-year anniversary, have been net gains of north of 30%. so, a really impressive performance from a market leader, andrew, unclear, as yet, if there is a divorce and if that divorce happens what it might mean for the structure or the assets of the fund. more details if we get them. >> thank you, kate. i'm thinking in my head prenup. i'm thinking postnups. do you after the, smiles to the hedge fund world, people get involved in deals.

>> i hope to never have to worry about any of that stuff. >> thank you for that >> hopefully we all don't have to worry about that. next up, american express and uber, they are working together h this on my uber last night. members who enroll in the rewards program with play for uber, which i did, with american express points. there is more. you can earn double points that's what i did. i didn't do the other point, i should same earn points, double points, rather, for any uber ride you do, take with your american express card. this comes on the heels, of course, of uber's massive $18 billion valuation. i wrote about it in the "new york times" today, request i can plug with the headlines "why uber might well be worth $18 billion." i can make the case, but kevin, tur mr. shark tank, mr. valuation. so you tell me if i'm right or wrong. $18 billion, too much or too little? >> andrew, i read your piece and i think you remind me a little bit of sort of 1998 when the globe came on and the speculations that all the wonderful market share they can --

>> i'm sure the. i'm hurt. >> all the businesses -- this was even the discussion that yahoo! had and at that time, even had some revenue. we saw it go to 250 times revenue and come back to earth. listen, think uber6 is a fantastic product i use it all the time, except when i'm in las vegas or miami, which unfortunately, it doesn't work at right now. but the bottom line is to speculate this early on that they are going to have such a global market share is extremely, aggressive of you and very optimistic, i might add. the world is a competitive place, andrew, in case you hadn't noticed. >> i know you think i'm a professional scenic, to be optimistic, i think i would get kudos. where are you guys? >> i'm fan of uber, use it fairly frequent any new york but my hometown of atlanta, where there is barely any transportation, a ton of traffic, people don't like driving. people talk about the markets, yes, they are not in miami, yes, no in las vegas, cities like atlanta, like austin, texas, where you're not intermediating

the taxi market, because there isn't a built-up taxi market, creating a new market for rides people weren't paying for those before. >> what happened to generating free cash flow after cap backs and putting a multiplier on it? >> we stopped with that. those metrics, i don't know what you are talking about. i'm joking with you. >> i forbid you to invest in a company that's not profitable. shame own. >> people said the same sorts of things about facebook and how that was overvalued when it was at $15 billion. think we are in a unique period with certain companies in this transition to mobile, whatsapp is one of them. uber potentially one of them, figured out mobile they got scale, well ahead of their competitors on some really key metrics. now, surely there's a question whether they can fulfill their vision, if you are going to invest in a company, got to be based on the idea that maybe they can do it because of the momentum they have had up to this point. >> kevin, i'm a believer --

>> tough believe. you have to believe. tough believe. >> this is a complete belief investment, we are all along for the ride i believe there is such network affect with this thing, not clear there could ever be a true competitor, lift, halo, others out there. hard for those who jump in you have the taxi, drive theers become locked energy the passengers become locked in. >> this is not a company that's about as you mentioned in your piece, just about cars and drivers. this san urban logistics company and as more people move to urban centers, more people need things delivered, this company is very important. >> i want you guys all to remember the word "gravity." gravity will revisit this. gravity will take down its valuation one day. it will come back to earth and if you own the stock. >> you will be hurt at that time. >> okay. >> kevin, if in three to five years this company pace you a dividend, i think your going to eat your words. >> i believe! i believe! >> we are going to save this tape and see where everybody's beliefs end up. finally, not so fast, we are

talking about the l.a. clippers. owner donald sterling is pulling his support for the sale of his team and going ahead with as 1 billion lawsuit, surprise, surprise, against the nba. almost too quick that he had come around. this comes after sterling's wife and co-owner of the team agreed to sell to former microsoft ceo steve balmer, waiting in the wings, did that for $2 billion. now, clippers interim ceo dick parsons spoke with our own becky quick today and told us what the latest lawsuit means. take a look at this. >> probably added a little longer. remember, i'm kind of -- the way i have thought about this in legal terms, i'm sort of the conservator. my job is to manage the team and run the business while the fight over ownership is conducted by others, by the league, by mrs. sterling, by mr. sterling, so, just means i will be there a little longer. >> kevin, okay so, sterling says he is illegally recorded, that

his sites are been taken away. um talk about property rights and everything else, what do you do if you're the nba? >> first of all, let prequalify my statements. i do not have any respect for what sterling did or said. i have a tremendous amount of respect about the process we have in our legal system in america and here's exactly what's going to happen. this will not be resolved until mr. sterling is dead, because this is going to last three to seven years, he is 83 years old. i don't think he is going to outlast the litigation it will get settled after he's passed. sorry to put that watch better get ready for a ride that long, exactly what's going to happen and that's the right thing to do in america. you don't take somebody's process away without going through the process first. >> kevin, i'm making you judge and jury then if this is put to you what is the answer? >> the answer is we do due course, we do the process and we wait. when mr. sterling passes, then you make a decision. >> if you were the commissioner of the nba -- >> it is -- andrew, it's

un-american to take away people's property. end of story. sorry. >> kevin, if this were just about his reputation, clearly, his reputation has already been tarnished, he is old and in the space of seven years, it's unlikely that this would go away, especially with the internet. why not take the money. isn't $2 billion greater than $1 billion listed on the face of lawsuit? >> if he wished to do that co-. already has $1 billion that is not driving the process. he is going to challenge this in the way we have set up in this country. >> to be clear -- >> if you don't believe in that process, you should try change that, but i'm a huge believer in it, it is what makes america great in the first place. >> the guy's reputation hasn't been tan nished, he is a jerk, said racist things. the owners lost confidence in hence. the players lost confidence, they are about to boycott him. questions about his mental state, very complicated, it's sad if you're a fan of the nba or the l.a. clippers and hope it will be resolved soon.

you're right, kevin. it could take years. >> we are going to leave the conversation there. our thanks to kevin o'leary for joining us today. his new book is called "cold, hard, truth on men, women and money." he always tells the cold, hard truth. kevin, thank you very, very much. when we come back, the next generation in virtual rating, the founder of second life tells us how he wants to integrate the technology into our every day lives. a pioneer in virtual reality tech says companies need to take notice. plus, talking to play station's man in charge about gaming and going apple tv. he will join us in a first on cnbc interview. forget silicon valley, los angeles is the new hotspot for startups everywhere. kara swisher will join ounce the new trend in the golden state. and behind his plan for a corporate tax holiday, it's been speculated about quite often but now, he wants to do something about t he is gop senator and possible presidential presidential candidate, rand paul who will join us in a first on cnbc interview later this

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companies might have to put their oculus rips on if they want to stay in business, says the mastermind behind the popular virtual world second life and latest creation, high fidelity, set to take virtual reality even further by integrating it into our every day lives. phillip rose state founder of

high fidelity, joins us at lincoln center, at the exponential finance conference hosted by singularity university, in partnership with cnbc. good morning tour phil. can you hear me? >> thanks for having me. good morning. yes. it's busy and noisy here at the conference. >> well, i want you to show off some of your virtual technology in a second. tell us what the world looks like, you say businesses are all going to become virtual, take me out five years from now, i don't know if that's too short or long a period. what does it look like? >> you know, five years from now, we are in the midst of a lot of changes that are going to allow us to liz go into virtual worlds, have meetings, talk to each other, that change is something we don't understand yet. used to video conferencing, audio conferencing, frustrating things to use, everything is going to change as we are able to put on these head step sets

and step into the virtual worlds. >> didn't we think this ten years ago, five years ago, ask you five years ago what it looked like when we thought we would live in these worlds and haven't gotten there yet? >> sure did. at a time when we were using mice and keyboards, as you talked on with the oculus being such an exciting product now august host of other products, like the ones i'm demonstrating here that are going to get us get into these worlds without using a mouse and a keyboard, just looking around and moving our hands the same way we do in the real world. >> do a little demo, think we gotten a extra camera there show us and tell us while you're showing us what we are looking at here. >> absolutely. yeah. so let me say hi to everybody here. this is the virtual or i questions in is the wall street, new york version of philip. you can see that i've got a camera watching my face, my hands here. i'm able to make expressions, wink at you, smile, maybe, you know, wonder whether virtual real itz is all going to come together and all of that is

being done by a 3-d camera and a little motion track they're i'm holding in my hands, both my hands and lets me actually be immersed now in the world and be visible to other people in a way that you never could before and you certainly could not with a mouse and a keyboard. this is something that's lot more fun than video conferencing. imagine what it's going to be like to look like this and be able to conduct business or a conversation in a virtual world. >> so this world version of philip, is he profitable? how does he make money? >> i think high fidelity, too early for that probably about a year from having our product to the point where people are going to start actively using it, but we're gonna make money probable any a lot of the same ways that second life did, by providing services to the users of these large connected virtual worlds. >> but second life was too early, philip, what are the key

ingredients that will let us knee it is finally time for this to create a real market? >> that's hard question. >> looking at his face. >> i think -- i think one key ingredient, looking back here, think one key ingredient is the oculus. it's the ability to really feel immersed in the these virtual spaces, to really feel like they are inside there. but the other one is a set of new technologies around 3-d cameras and body-sensing technologies that are going to let us walk up to a computer and move like i'm moving here and have those motions captured seamlessly right onto the computer and that stuff is going to come out over, i would say, the next couple of years. >> so, philip, the face books of the world getting into oculus, vr, the companies that are building holograms of people for concert he is and video conferencing there, do you think they are hitting the sweet spot

now or think they are too early here and what do you think of some of those moves? >> i think the oculus acquisition is incredibly exciting. i think there's a ton of ways to use the oculus that are incredibly remarkable that people are going to make a ton of money and get a lot of work done using. i think though as i said, there's a couple of new technologies, these things like these motion trackers, that are going to be necessary for us to really get face to face and kind of be completely removed from our computer when we are immersed in these worlds but the oculus is a huge and important step forward. >> philip, before we go, did facebook pay the right amount, too much or too little for oculus? >> you know, i think the overall market for what we are ultimately gonna do in these worlds is gonna be plenty large enough to just neigh acquisition price. >> okay. philip, thank you for joining us and thank your avatar for joining us as well this morning. >> thank you. thanks. >> in the meantime, we are going to send you off to --

>> thank you. >> send is it over to bertha comes for a quick market flash. >> i want my avatar to look just like halle berry. can i get that? order that? any way, watching francesca, women's apparel retailer, a trendy chain, cutting their full-year forecast after reporting a lower-than-expected quarterly profit on weak sales, the harsh winter, more discounts, look on their site, 40% discount now the stock trading down over 12%. and it's down about 50% from a year ago. back to you, andrew. >> thank you, bertha. up next, over $1 billion in revenue, but still unprofitable. the details on go daddy's $100 million ipo. from gaming online video, we are going to talk to the man in charge of the play station 4 about sony's new competitor and apple tv. "squawk alley" is going to be right back in just a moment. seeing the world in reverse, and i loved every minute of it. but then you grow up and there's no going back.

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the domain name filed under for an initial public offering or rather republic offering later this year. the company loses money on the bottom line, though it has over $1 billion in revenue as recently as 2013. there is another catch though. and that's very unusual corporate structure. there's a holding company, a number of private equity heavyweights including you kkr and silver lake and limits how dividends are paid, a one-time payment, a lot of stuff here, guy it is, a little bit peculiar. aspoke to an underwriter this morning liken it had to a very complicated highway on which there is a guarantee bud very hefty toll being paid to some people here, but this is pretty common for private equity reipos. >> any competition for these guys? i don't understand. i used go daddy when i set up my website years and years ago. >> this has change sod quickly, used to be you had dot com, dot net and dotting or, b ing oorg, that does to its domain

business. do people need domains as much anymore? >> a lot ovens can, yahoo! included, basically just stocked up a bunch of the dough mains and used that as a revenue stream to sell them back to people who might want them. andrew ross sorkin.com, already taken. >> too big too fail is taken, $500 i spent on that. >> thanks, guys. we want to bring in simon hobbs, count you down to the close in the uk and across continental europe. how is it looking? >> an ipo, don't want the filing his more. the exchanges together could be worth $2.4 billion. the real action in europe is he moment isn't on the big headlines you can see, it's more the kind of behind-the-scenes back room stuff. take a look at where we are on the euro, in the wake of the ecb move at the end of last week, on thursday of last week, the euro broke yesterday below its

200-day moving average, continues to move into negative territory, as you can see, and actually more than that the bond yields continue to rise, greece, maybe one reason why the euro is lower, because of the rates of the united states versus what's happening in europe, as those bond markets rise and the yields come down. and also, the rate at which banks lend to one another has hit a record low in the wake of that ecb announcement. so the ecb will be quite pleased with all that incidentally, wilbur ross, as you know, invests in distressed debt and the like, announced the bank of ireland, 5.5% stake, worth about $650 million, is basically to be placed in the market. you may be aware it was just -- just about three years ago he bought into bank of ireland at 10 cents a share. he and others, it was a big consortium. they virtually tripled their money, as you can see a right of 180% since then. he was on the channel the end of last week talking about still attractive options in europe.

we think he is going further near greece. the other thing that i want to mention to you is sab miller, the brewing giant, which has been spiking during the course of the session, as you can see. it's currently up almost 5%. now, i have absolutely no information, proprietary information on this, but i will point out that overnight the financial times was reporting that there's further chat they're anheuser-busch might take it over, according to ft, somebody's in the market, rumor is somebody's in the market, trying to i raise $60 billion of debt in europe and is one of the names in the frame. it's not conclusive. i have nothing in particular to tell you other than it is spiking toward the end of the session. guys, back to you. >> simon hobbs. we should do a show called "rumors and speculation." >> yes. >> just to -- but we will see what happens to sabmiller. any way, sony announcing a new online video platform, play station tv. but is it good enough to take on apple? we ask the man in charge of play station, ceo, sean leighton.

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tv wars more competitive. sony announcing play station tv

coming to the united states and canada this fault. julia boorstin at the electronic expo in l.a. with the man in charge of play station. julia? >> thanks so much, an drew and thanks so much, shawn, for joining us. shawn laden, ceo of sony entertainment america. big launch here, play station tv in the u.s., a very crowded space, google has chrome cast, you have apple tv, the roku box where do you fit into the landscape? >> we are a gaming platform. taking the power of play station gaming and putting it into a very small box to bring the other multimedia aspects to the users. i think a huge differentiation between us and others. >> access youtube through both your play station four and also through this. where does the new tv box fit into the entertainment landscape. >> look at it for an opportunity for you to have a small gaming device, have maybe in a second room, you can actually stream your ps 4 content through that and in a different part of the

house. way to expand the footprint. >> do you think it will compete directly with apple tv or people to own both? >> think those are two separate markets they are serving, ours primarily, bring more gaming experience to more places in your house. >> the announcements you made at your big press conference last night were focused on interteenment. you have a new series. "powers" about marvel characters. you have access to youtube. tell me about this toward focusing on becoming an entertainment hub and not the core gamer? >> not really a shift but more an expansion. last night at the press conference, you saw more gaming content, you know, hour for hour, minute for minute, than any place else yesterday at e 3, which that is our main focus, where our -- >> a dig at microsoft xbox, just to be clear, right? >> just talking about our team. >> so you are saying there's more gaming content, but there is also an expansion to focus. >> we want to bring more value to our gaming users and members and i think powers is a good way of showing how a company like

sony, sony pictures working together to bring that out to you is a good opportunity. >> john, want to jump in here? >> yeah, sure. shawn, nobody who is selling these overearth top boxes is actually selling the boxes themselves. apple is selling their ecosystem. amazon trying to sell theirs. google on youtube. where do you actually expect to make the money here? is it selling more games or is it sell morgue play stations? >> well, i think getting back to play station tv, it's an opportunity to bring another gaming device into the home and stream from ps 4, play games as well as providing streaming music and video services. >> how do you make money? is it on the games that you sell more of or do you sell more ps 4s? not going to make a lot of money selling those for $99. >> i think the business model we have come together for that product is veried a van table joyce toward us and whether it's a device or software itself, i think we are in a good piece of

business there >> last night, you also talked about launching this play station now service to let people rent games and play them via streaming. >> that's right. >> like video on demand but for video games. what is the business mod there will and are you just trying to move entirely away from reliance on that had 60 console game? >> think play station now is an opportunity for people to come in at an easy entry point oh 299 for a rental going up to 15.99 or 19.99, depending on the time period, experience new games, discover games they might not have wanted to buy right out, try before you buy it program, chance to expand the marketplace. >> i got to ask but virtual rate, facebook buying okay cue louse, sony has the more fee yus, a competitor, how important is virtual reality to your future around how do you compete with facebook and oculus? >> the technology behind project more fee yus is amazing. today at e 3 and all week, we will be showing that on the floor. we think that's going to take the whole gaming experience to a new level and allow people to really immerse themselves in their 360-degree world of

gaming. it's new technology for us. we haven't announced a launch date for that want to do a bit more work on that it is the next level. >> can you tell us how much it is going to cost? >> next year when you come and talk to me, we will have that conversation. >> andrew? >> shawn, streaming lots of data and lots of bandwidth are clearly going to become more and more important to you, curious if you would weigh in on the comcast time warner table deal, perhaps even the sprint t-mobile deal what does that mean to you netflix and others have had some issues. >> you are capturing a lot of pieces in that question. let's just suffice it to say that anything that provides more value to the consume and gives them easier access to our entertainment is something we would be supportive of. >> now, for the first time in many years -- sorry go ahead. >> but i was asking, do those deals do that for you as a content provider? >> i'm really not going to weigh into that i think that's an area

where other more concerned voices have made their play. we are an entertainment content delivery service and contend provider where that benefits the consumer, we want to be behind that >> sean, thanks so much for talking us to today here on the heels of your big press announcement and so many different pieces of news. we appreciate it guys, back to you. >> thank you, julia, for bringing thanks great interview. that was fascinating to me, all the different pieces of it. anyway, senator rand paul, he is pushing for a one-time tax holiday in hopes of leauring multination as to bring products home, microsoft, apple, pfizer. what he has to say about his possible presidential run, we have got that, when we return. . . but your erectile dysfunction - it could be a question of blood flow. cialis tadalafil for daily use helps you be ready anytime the moment's right. you can be more confident in your ability to be ready. and the same cialis is the only daily ed tablet approved

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what do the startups have in common? besides valuations that topped $1 billion, they are a different kind of tech company. nelly bowls of reco-took a look at the startup scene and why not all entrepreneurs look like mark zuckerberg. >> l.a. right now seems like it's in a really interesting moment. i figure there had had to be something more and deeper that was happening and that was creating this, like, incredibly interesting new bleed of companies. >> i did $250,000 my first year. $1.1 the second year. 6 1/2 the year after that, 28 the year after that. >> the thing that surprised me, to be honest, how much they raised, even the super serious hard core tech. what i found when they went to the offices, they had surfboards everywhere, surf shower and wet suits hanging all over the place and a real playfulness and kind of a joy. >> we had many people say, why

would you build this company in l.a.? why not move out to silicon valley? and just to be completely honest, we certainly thought about t in l.a., you have amazing schools between ucla, usc and cal tech. you look historically at l.a. 's past, it's had a lot of amazing technology. if you look way back to, you know, space companies early on. >> myspace was really the company that put l.a. on the map in a lot of ways. it spun off entrepreneurs, but i think emotionally, myspace was supposed to be the company that worked. and then it didn't. >> maybe myspace was one notable m and a devent, the cornerstone of the landscape. there's a lot of companies being belt with financing for the valley and that strong ecosystem, focusing down here has made a huge difference. >> a lot of money moving down there, including apple's money, $3 billion exit from apple buying beats. reek code, a series in day two

examining this phenomenon. bring in kara swisher, co-executive editor over the recode. kara -- >> yeah. >> who were a couple of the smartest entrepreneurs who you ran into down there when you and nelly were taking a look at this story? >> well, primarily nelly's story but so many -- so much going on, such a difference, so many of them. think tender is a really interesting story, i have always been interested, the dating app that's gotten really popular. think oculus, which was sold to facebook for $2 billion. maker, which was sold to disney for $500 million. there's whisper and, of course, snapchat, at the center of the ecosystem now. >> if you wanted to pit l.a. versus new york is there a clear winner? >> think l.a. in this case. new york has some great companies, it had trouble, four square, some of the other big rocket ships, that's problem with the not silicon valley

places, don't get into your bit the way they can, l.a. had the same issue, with not just that but overture got sold, a lot of the companies get sold, can you built an ecosystem without a big facebook or apple or something like that they have got really interesting companies coming up down there, need to be watched very carefully. >> what do you think the single most important factor tipping the scales is, kara is it lifestyleson, it real estate prices is it space? what do you think it is? >> there's a couple things going on there. i think the new internegotiate the internet where it's going is a lot more about the platform and the technology, because the technology is widely available worldwide to develop. and so now it's lot about emotion. i think evan speigel said that in nelly's story, feelings and fight back with feelings, a lot of the apps they are making, a lot of the products, they do have a warmth and a consumer appeal that there silicon valley can feel cold. more technological approach. >> i have never heard tinder

described as having a warmth. >> think about snapchat versus poke from facebook. just not the same. something there to it. >> so, what happens when we go through another consumer downcycle in technology? is there enough the l.a. scene has and enterprise and otherwise to sustain it? >> i don't know. that's the question. i think what's interesting is can there be centers of technology outside of silicon vally? very physical now. silicon valley is sort of the center, if you're thinking "game of thrones", it is wester rows, i guess, can you create other kingdoms? l.a. has a few things, cheaper rents. nasty gal is one of the most interesting companies down there to me, a very thriving e-commerce company led by a very compelling leader which has a great audience. i think you couldn't create nasty gal up here in silicon valley. entertainment, hollywood, the things that hollywood excels at, pieces of it in each of the companies, not every one of them, but interesting. >> kara, you think about the money behind all this though, still so much of it from santo

road or some from hollywood, ashton kutcher but others now. >> yeah, not enough there's not enough venture. that was the thing. the iron triangle of academia, entrepreneur around venture capitalists is not strong there. there are several schools, usc, ucla, but not stanford and they have very good vcs, but not enough of them. very good entrepreneurs. yet can you build that iron triangle in a way that really does throw off other entrepreneurs to create other companies and can you keep them there there? the real issue is what happened is several companies stay there had versus moving up to silicon valley, an interesting trend to watch and a lovely place to live. i was going to put on my sunglasses, but it's -- i will take them off. but i mean, it's a really nice place to live. the rents are cheaper and now enough tech noll gists down there. and one of the -- >> the recode conference just south of l.a., too. >> yeah. absolutely. beautiful, are you kidding? not going to have it up in freezing -- we have one coming up here. one of the things, one of the

quotes i like best in the piece, they have engineers with taste. that's really interesting idea. engineers with taste. engineers not just engineers. >> almost steve jobsian. kara, thank you so much. >> no problem. >> we will talk to you very soon. >> thanks. >> the meantime, forget about the bay. it's all about the l.a. tech scene. we just talked about that we are going to have a lot more after the break. also rand paul when we come back. chocolate is very individual. white chocolate lovers don't like dark chocolate. milk chocolate lovers don't necessarily like dark or white.

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foreign profit at $2 trillion from overseas, up from a year earlier n an odd couple pairing on capitol hill, senate leader harry reid and kentucky senator, republican rand paul, are pitching a one-time tax holiday to encourage companies to bring that money back home, a move which could provide a short-term treasury windfall of $20 to $30 billion in the next two years. joining me first on cnbc, kentucky senator rand paul. good to see you again, senator. i don't know which ask a bigger deal that you're teaming one harry reid or the plan itself. >> senator reid and i actually have very warm, personal relations and we have been meeting informally for months, both us and staff to try to do something good for america. we spend $40 billion on roads but only bring in $30 billion. there's an i don'tic deficit. we are not able to have enough money for building roads.

we actually estimate higher than the tax agency estimates. we think it could be as much as 50 to 60 billion -- >> oh, wow. >> if you do it over a three-year period. personally, i would do it forever, because i think a lot of money would come home over a long period of time at a low rate. so i'm for forever, but compromise, if all i can get a couple years two or three years would be a great boone, we have a lot of bridge needs and roads needs in kentucky and across america, i think a win/win situation, lower tax and more revenue. >> lay out the plan two or three years what tax rate, how much it brings in and then what happens after that? >> i think a low single-digit. it's got to be below 10. i would prefer 5. that's one of the negotiations we will have with democrats who are sponsors of this. personally i love five and forever. some of the democrats are going to want shorter and higher. we split the difference.

people say i won't compromise, i will compromise if it's good for america. the traditional washington mentality, we want a grand bargain, overall tax reform or something. for four years i have been here, we have gotten nothing, i say break this baby up into small pieces, do this on the transportation billed in the next three weeks and we will do something that republicans and democrats both like, lower a tax, bring in more revenue, build more roads. >> the problem is this happened back in 2004. we saw this tax holiday for overseas cash and it was not hailed as a success. many said it would never happen again. the problem is two-fold. number one, companies would be incentivized to keep their profits overseas until the next tax holiday, which could happen again. and number two it brings in a lot of money in the short term but ends up costing the federal government in the long run. >> i think you just made the argument for making permanent. here is my argument.

say we made it 5% forever. currently, about 5% of profit comes home. so, if we earn 100 -- or a trillion next year, about 50 billion comes home every year. that is an effective rate of, say 15%. we make the effective rate 5%, do you think it will continue to come home at the same rate or greater? you lower tax rate, more money come home chronically or less money? >> yes, but the -- >> inevitably, more money comes home, you will bring more money home. >> lower rate, senator -- that longer term, lower rate ends up costing. the joint committee on taxation says the next decade, cost $95.8 billion. >> they are wrong. they use funny math and they also accept a fallacy. if you lower tax rate, will revenue and capital come home at the same rate or a greater rate, forever. comes home a bunch in the beginning, if you had this forever, currently, only about 5% of profits earned overseas come home. if i lower your rate, how much

do you think comes home? more than 5% or less than 5%? the tax scoring agents -- yeah, the tax scoring agency says you get a bubble of revenue but then maintain that less than 5% comes home over the next seven years. they are just frankly wrong. we have never done it for more than a year. there's no objective evidence. there's conjecture and they are frankly wrong. if you lower a rate, more money will come home. if 5% comes home now, i think it will be 6, 7, 8, i don't know the number. but logic tells you, it will be a higher percentage chronically now than comes home a lower rate. >> got it the economy, see a paul reid plan any time soon on the senate floor? >> i am hopeful. i'm a glass half full kind of guy. i like harry reid personalism i'm working hard with him. we have to get beyond the practiced diggal washington restraints that say we are getting a big deal next year. just wait till after the election, we will get the big deal. the big deal never comes around

here. let's go for a small deal but still significant enough to help the country. >> well, those profits are significant enough overseas. senator regard paul, always good to see you, thanks for joining us with the latest proposal, senator rand paul of kentucky. andrew, back to you. >> sarah, thank you for bringing us that. netflix and verizon resolved some of their issues, the battle is far from over. we have got that when we come back. i spent my entire childhood seeing the world in reverse, and i loved every minute of it. but then you grow up and there's no going back. but it's okay, it's just a new kind of adventure. and really, who wants to look backwards when you can look forward? intercourse that's painfulit...

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netflix is retreating on one front after calling out verizon for slow streaming speeds saying the network is crowded right now, adjusting video for smoother play back, verizon hit back, sending netflix a cease and desist letter. the company says it is phasing out that, just a trial of naming specific internet service providers for customer slow download speeds, trying to be nice. netflix says slow speeds are squarely verizon's fault, however. >> it says in the statement, funnily enough this test period it is trying to figure out the source of the slow speeds ends june 16th, you still have a week. >> they just did a deal with verizon and then punched them in the gut.

is that what happened here? >> comcast as well, of course, we should mention we are owned by comcast, netflix in a unique position to put all these guys under pressure, if you hope they maintain that leverage. >> thank you, guys. >> thank you. >> a lot of fun. all for "squawk alley" now, we hit noontime on the east coast, get to the "fast money" "halftime report." guys, thanks so much. welcome to the halftime show. here is our game plan today from post nine. the rodney dangerfield rally. >> that's the story of my life. no respect. i don't get no respect. >> even as stocks keep climbing to record highs, why is this bull run still so unloved? right on the marks, oak trees howard marxen at most important thing you need to know about the markets and where to put your money now. worst trade of the day, how one fund manager's good intentions in detroit have gone to the goats and why the green-seeking grazers may have the last laugh. let's meet today's starting