Is your done with shrimp and soybeans. Lets go to su keenan for headlines. Su . Thane trade is down more 10 . The Company Posted secondquarter profits that trailed analyst estimates as Sales Volumes the clyde. The net income is 70 . It missed analyst projections. Meanwhile, Darden Restaurants ceo Clarence Otis will step down as chairman and chief executive officer. Otis will continue to serve as ceo until a successor is appointed. Last year, darden drew the ire after his selling red lobster, which is suffered from the climbing sales. And zillow has agreed to urges trulia in anchase all stock deal. And those are the top at once. Back to you. All right, su keenan. Thank you very much. Herbalife is a stock that bill team. Called a ponzis it missed analysts estimates. The stock is down sharply in afterhours trading. Joining me from atlanta, between joined stanford. Thanks for joining taking stock. What is the big take away from bees numbers . Herbalife has had a long straight, 20 one quarters, a beating expectations, and people are looking for them to beat expectations quarter in and quarter out. You see the result in the shares today. Taking the the shares down now. I was on the buy side. The analysts often get them wrong. Analystswere the getting the numbers wrong perhaps with the help of the company but the number one trend i saw, and i spent most of the day working on these numbers, the decline in sales quarter after quarter after quarter. The growth rate, yes it is growing, but it is the slowest growth rate in 14 quarters. Yeah, that is right. And you saw today sales missing at least expectations to read one of the areas is the u. S. Right now volume is down in the u. S. Latin america volume was down. In the u. S. , they have had changes lately to how sales leaders can qualify, and they say that slowed some of the although more people are involved. They think that will translate later into more sustainable sales. In latin america, u. S. Economic issues and they cited i just got off the phone with the cfo and he talks about the world cup distracting people in brazil, which could be depressing sales there. So the world cup is not making people want to get as healthy . I know they are selling the Health Claims in brazil. I feel like the story is always told that it is bill ackman versus wall street or some like it is a wall street story and not a business story. But indeed, they admit they are changing business right this is because of what they call they have a line item in their results called the attack cost of what they are spending to fend off attacks. It is hard to imagine the business would need to spend to defend itself if they did not have something that they did not want people to look at. They have spent the last two years changing various aspects of the business. One of the classic examples is the refund policy. A used to be you had to pay for a restocking fee. You paid for the shipping to get the product and to pay for the shipping to return it later. They change that so the only shipping you pay if the original shipping. You do not pay that restocking fee. They have made several changes like that the last two years. What ever happens with bill ackmans eventual case, one thing you cant take away, he has pressed the company to make its business better. Indeed those rules about returns are not a small thing. 1979, the federal trade commission decided if you did not accept returns, that was one of the things that went toward defining what a pyramid scheme is. And it is very important when it cost you to return product will kind of risk there is there. One of the cases bill ackman makes his people are coerced into buying a lot of product they cannot eventually sell. Herbalife says the business is risk free for people now because they can return all of the products within a year, and so there should be no reason people are buying product they have to stuff in the closet in the basement. That is the core of the debate right now. And what the ftc will eventually be looking at. And herbalife says you get the product and try it and see how gratis. At that point, you can return it. E stanford, thank you very much. A big deal and retail. Dollar tree buying Family Dollar. Joining us, Craig Johnson no relation this is an industry i do not follow as much as i like, but it is a fascinating one. It is the fastestgrowing part of the retail sector. The past century it only had a half percent share of the overall market. It focuses on a small basket trip, the convenience retail. Why the growing so fast . Savee bull are looking to time and money. It gives them 13 13,000 points of presence and the market, plus five canadian provinces. Is designed to fulfill customer needs for a quick trip to the market for stuff they need. Save time, save money. Isnt that why god gave us walmart . Walmart does not save you that much time. Have a 2000 square foot 20,000 square foot store. Is it a lot cheaper . Do the other stores require more inventory . More returns . Inventory is typically not an issue. Because it is owned by the seller . And it is a very rapid turnover model. Very rapid turnover. And it thrives basically on a lot of quick trips for people in and out, highvolume, per size of the store, and this gives it if this thing happens, another shoe may yet fall. There are thoughts of, will there be a topping offer for it . There have been rumors about dollar general. Also, which metrics are worse . Profitability. Top sales versus instore sales . The most in the metric you want. Versus almost any metric you want. This company has some of the best operating metrics and it has the best Real Estate Team in the business. Tree routinely has Better Real Estate through with Family Dollar, this one closed, that one close, this one we knew was a bad deal the best Retail Operations or cvs, walgreens, and dollar tree. Then it is able to leverage those skill sets against one of meeting Family Dollar and they will know what to eliminate, what to combine. There is some overlap, but not a lot. Dollar tree has a big residence in california. Family dollar, less so out there. Dollar general is very big. Really, there is a lot to recommend. Is the secret sauce, location, location, location . Ive heard that before and retail. Craig johnson, thank you for joining us. We appreciate it. A humanack honoring curated playlist. We will look at the founder of something called a tracks online, but they are still called a tracks. This is taking stock. I am cory johnson, and for pimm fox. Itunes. Rosoft tinkering to offer music online. Early this month, google announced it was purchasing millionr media for 39 bucks. Lets bring in the ceo of 8tracks. We were probably on the same plane yesterday. What is going on with the user industry . It is so dramatic to me the changes that have been brought in the way that music is delivered. It has been a shift historically from final two his sets to online. We have seen the numbers we go for spotify and so on. To me, they are not knock your socks off. They are good, but not incredible. You think about the world of buckets. In two there is ondemand streaming, best exemplified by spotify. And then there is the streaming best example by by pandora. There streaming hours were opened by a third, which was pretty significant. I want to get to you and talk about how this works pandora, when they became public, we saw a lot that we had not seen before and the company is been around for a long time. There was a lot of fascinating things in that ipo filing. P wasost notorious big lower there to royalty rates. What is going on with realty rates . The royalty rates are set by a compulsory license for webcasting, so effectively by u. S. Law. That is the default license that is set for how they structure like radio. The thought is if it is promotional for music sale and not cannibalistic of music sales, it deserves to have a slightly lower royalty rate. I never thought about that. That is why you have i heart where you have a pile of songs. And spotify, the royalty rates are higher because that is a substitute for owning the music. What is different about 8tracks is it is a cure ration platform, so any person or entity around the world what i mean by that him practice them a 1 of our users can upload music from their hard drive, create an online mixed it, add metadata in terms of a title, cover art, a description, classified by genre, mood, activity, and then the listeners tune into a series of online mixed tapes, ethically choosing a tag. How does this differ from a playlist on spotify . There is an important difference. Fundamentally because spotify is an ondemand service, the way people typically use playlist thing is for direct personal consumption. Oh, there is an album that came i heard a songnd from the 80s yesterday. I am going to put that in a playlist and listen to that this afternoon. With 8tracks, it is different because it is intended for an audience. It is not for personal consumption. How does this work with an advertising base . Advertising is a bigger market. Advertising question mark advertising associated with radio. Versus what you might see on a website. Or your device. The total market is about through 33 billion dollars globally. If you get 10 of that, you will be fine. That is reportedly what pandora has today. Reports are they are up to 9 of the u. S. Market. Pandora is still ahead by a large margin. Where is adoption happening or where is it not . Obviously the car is the holy grail for music listening in the u. S. That is true and we have seen that. Two years ago at this time, two thirds of our streaming came on web or desk top. Now it is about two thirds mobile. Years that changed . Probably a much bigger business, too. It is growing pretty dramatically as well. Thats right. Challenge of course, the the ad rate question example exactly. The ad rate . Thats right. It does come with lower cpms so they can be challenging. What was the last mix you were listening to before you walked in . I dont think i listen to one listened 21 today. Really . What was the last one you then . Ed to probably one of my own play, deep techno. Thanks very much for your time. Thanks for having me. Up next, we will be talking to the chief Business Officer behind the new york city football club. He just signed frank lampert. That is next. This is taking stock. I am cory johnson and for pimm fox. The world cup has led to an interest in soccer. Also, new business for the new york city football club, said to begin playing Major League Soccer next year. They have announced a threeyear partnership with hayes, the you ks largest professional recruiting agency. Here to discuss the business tim pernetti. , there are a number of people looking at what youre doing with great admiration already. Explain your business model. That is great to hear. We look at the new York Business market, it is such a chaotic market. There are eight or nine proteins. When you are a new franchise, you have to cut through in a unique way. Everything from the beginning has been about engagement. We are letting fans decide youreyre looking over shoulder. We are letting fans decide where they get to sit in the stadium. Dont fans always get to decide where they sit in the stadium . It is equivalent to the student section in College Sports. We sat down with our supporters. We put a map down in front of them, and we said where do you want to set . We thought maybe here. They said, no, the left field bleachers. I think that is the best way to cut through. It is good to know others are taking notice. What is your media strategy question mark as you know in sports everyone is competing for exposure. Mls is doing a great job. Have done a local broadcast deal we will be ready to announce soon. We have created a deal with cbs radio to have englishspanish broadcast about our games. There pushing as much out as possible. Cutting a deal is one thing. Workkind of splits do you out in terms of advertising . How do you get paid but out by the media . It depends. Our local broadcast and radio deal, those are advertising dollars that are recouped by the broadcaster. They are paying for the right to televise our games. There is revenuesharing in all broadcast games. We are up to about a dozen sponsorships and growing. That is an investment in the club. Recruiting it is a category that is not very vibrant in terms of spores. It is unique to what were doing because it is an investment sponsorship in the club. Hays is helping out. It is great because they are not just a sponsor. They can help us build a highperforming staff. And you have signed some big players, big on the international scene. What is it like to try to get these guys to play in a place where the competition is not the top rung in the world . Signing is complicated. There are a lot of people involved in the process. At the good news david villa is a younger player. Is 32 years old. The beckham model. Sure, he is a younger player. He has a lot of years in front of him. A lot of International Players in the u. S. And other places are really excited to play because the league is growing in a lot of people want to play in new york. How does the franchise ownership work . We are owned by the new york city football club. We have the new york yankees as the other owner in our franchise. The best thing about having a franchise in new york is having two global iconic sports brands behind this. Because of the brand recognition, the access, hitting football expertise from Manchester City football club, it has been a terrific marriage of strong brands. In College Sports it is going to be fun to creating new model. This is a somewhat different model than any other professional sport in the u. S. I think youre right. Building in pro sports is different today than it was 20 years ago. Building in a chaotic market this is a 20yearold league. I think people got a glimpse through the world cup of what soccer can to come. To capture the hearts and minds of new york city sports fans, you have to develop an emotional connection and give them a great experience. Tim pernetti. Thank you. More after this. This is taking stock. I am cory johnson and for pimm fox. For more on our market moving headlines, lets go to su keenan. Virgin america has filed for an ipo. By airline is partly owned british billionaire richard branson. The number of shares offered and the price are yet to be determined, but the company says proceeds will be used to fund growth and repay debt. Beatissans latest profits analyst estimates. Revenues rose to about 1 million. They cut their profit projections for the last two years. And finally in washington, house and senate to go shooters have reached a rare bipartisan deal. The agreement expands the number of nonv. A. Hospitals where veterans can receive care. Back to you. All right, thanks. Of people who buy ipads and max already have an iphone. A question ofs what the notion of an ecosystem is. There is already the suggestion that a new ecosystem is evolving around google glass. Joining me, my guest is talking about ways to innovate. I love this, because i do our Technology Show on the west coast, bloomberg west. Means ahink innovation lot. I do not even know what it means. What does it mean . Innovation is the creation of a viable new business concept. Every one of those words matters. Most people are not precise about it. For it to be viable means it has to return the cost of capital. For lest thing we do the cruelest thing we do for smart people is put them in a room and tell them to innovate and never teach them how. That is the standard. It is a good starting place. A magazine with editor who really put a lot of installing the tools of creativity. Which was usually sitting around a circular table and drawing ideas, honing them over and over and over again. Is there a difference between creativity and innovation . Massive difference. Here is what happened in the room where youre sitting. The individuals that a lot of talent. There, too. We have to make certain exceptions, cory. Most people conflate innovation and creativity. They think they are the same thing. They are wildly different. The difference between people who routinely and reliably innovate and the people who occasionally get lightning to strike are the people who look at it this way, say it is all about enhancing our creativity. The other say, no, it is about discipline. The discipline of taking an idea and implementing it . I am using your hand signals now. All of those things. We develop these ideas for how human beings are going to do things in their lives. Howthe we overcome the do we overcome the obstacles . Have we figured out the Little Things like the fact that most innovations are increasingly about the elegance integration of many things, not the invention of one thing. I want to talk about the notion of apple as an innovative company. It is clearly not. Structure ist didactic. There is one guy who told everyone else what to do. To me that is not where innovation comes from most of the time. I suspect inside apple, things are different. There are things apple does really, really well. One thing steve personally did was he said no to a vast amount of instructions. That is another form of discipline. I was myself brought him a billion dollar idea. I got most of the way through the second sentence before he said no. I said, excuse me. He said, strategy is choosing. I say no. I said, i do not have any trouble hearing. I wonder if you could give me a reason why you said no . That was something i respected him for. The ability to say no to things that were rate ideas, but not part of what he was trying to achieve now. Possible for a company that does not value innovation at its core to become innovative . I think that is something that people in business love, the notion that they can get close to innovation. It is quite possible today for companies to become good at innovation if they set in motion the right kind of journey. Thehey think about it as construction of confidence, not the creation of a culture. Once everyl at least 10 years from some ceo somewhere in the world who says, we do not have a culture of innovation. Can you help us . And my stock answer is, lie down and still the feeling goes away. It is like plumbing. If you do the right things in the right sequence, anyone can be good at innovation. What are pitfalls that people commonly encounter . Thinking you will end at some breakthrough products. There are so many Little Things you have to get right. There are about 20 major myth that are always getting in your way. Are there some companies that cannot be or should not be innovative . Sure. Innovation is not for everybody. There are hundreds of thousands of companies. You and i were running a dry cleaner on the corner, the amount of innovation we need is not very much. Most of that is about execution. A relatively small number of companies have to be graded innovation, not necessarily everybody. For all of us to say we all need to be innovative now is an overreach. It is impractical, unnecessary, and a waste. There has been criticism about the innovators dilemma. What is your take away from that argument . I am sure youre up to speed on that. It is one of my favorites. The innovators dilemma is an old one, the idea that if you focus on your most difficult it distracts you. That is the heart of what clay christiansens research discovered 15 years ago. Great research. He is a great guy. The important thing is for all of us to be insensibly curious about how we will be relevant to people today. Universal message and out to bust out of the innovators dilemma. Thank you very much. Up we willing speak with the owner of a shrimp farm and find out why she cannot grow a farm with a enough scampi. That is next. This is taking stock. I am cory johnson in for pimm fox. Last year the average american ,onsumed four pounds of shrimp making it the most popular seafood eaten by americans, even more than the humble can of tuna. Is providing shrimp. I am joined from chicago by carlino brown. Great to have you on taking stock. What did you do before you grew shrimp . Board and soybeans. From soybeans to shrimp. In the protein business. How different is this . It is a lot different. It is a totally different animal. Corn and soy. Talk about this how did you discover a question mark we were looking to get into jalopy of for about 15 years. We were looking to get into for about 15 years. Then it got to be very hard to find anybody to let us see what they were actually doing. Then we came across a shrimp farm and the rest was history for us. I wast history surprised by this article in the new york times, talking about shrimp consumption in the u. S. , shocked that it is bigger than canned tuna and has been for over a decade. Yes, it has. One of the favorite seafoods of everybody. I know one of the concerns about the wave farms tilapia, s almon, others are growth hormones and so on. What is required by the fda . Explain it to me. Now, forrimp, right indoor recirculation systems, there is no regulation because there are not that many of us and they do not know what to look for. Basically we tried to follow the standards of anybody. No chemicals are added to our facility whatsoever. That is interesting. Are you not using the stuff . I think it is a much better product. It is just the fact that we are offering much that are shrimp them what you will get from something that is imported. Better how . Waste better . Tastes better . Oh, yeah. Hours tastes clean. The fact that most Foreign Countries use antibiotic or home on that is banned in the u. S. , and yet they are able to put it in their facility and it is shipped here and that is what we are eating. To whom do you sell . Person who everyday walks in our facility. There is no rhyme or reason to our marketing. Just whoever likes shrimp. You can just walk in and buy . You produce in volume. Volume as sell in well . Our facility is small. We average about 400 pounds that goes out our front door. No restaurants, no distribution. Just basically anybody who likes shrimp comes in our door and buys it. Where exactly is the farm . We are in a little town called fowler, indiana. We are halfway between chicago and indianapolis. What kinds of people are in their buying live shrimp in indiana . Just is actually not indiana that buys our shrimp. We get people from toledo, ohio, kansas city, michigan, all over who will come to our facility and by two or three pounds of shrimp because they like the fact that it is fresh and live. What do your neighbors make of your operation . They actually think it is kind of funny we have a shrimp farm in the middle of fowler, indiana. We are right in between corn and soybeans . Does growing trip help the rest of what youre doing, growing hogs or what ever else question for example we no longer raise hogs. It has been our main income right now. My husband and i have been able to quit our day jobs to work this fulltime. Had issues with production in china, the shutdown of the gulf. You have managed to capture the pricing curves at a pretty good time. Yeah, we actually did. It has been great having you as a guest. We appreciate your time. Thank you very much. Talk to a i will former wall street executive who was living the dream. Up next on taking stock. Breaking news now and the ownership battle involving the nbas los angeles clippers. A judge has ruled that the sale to former microsoft ceo Steve Ballmer may proceed. Story aboutmazing family control and ownership. The issue and what the judge decide . There were basically three questions today and they all went in favor of shelley sterling. One was whether she was the sole trustee sorry, shelley sterling is the long separated, but still married wife of donald sterling. Exactly. Them owned it in a trust. Basically she had him ruled andally incapacitated became the sole trustee. The question was, could she do that . The answer was yes. When he subsequently revoked the trust, did this trial had to go to a different jurisdiction than the Probate Court question mark the court said no, this was the right jurisdiction. The third question, and this was the big one, could shelley sterling goahead with the sale to Steve Ballmer while donald presumably appealed this decision . And the court used a very rare power to say the sale could goahead and it did not matter what the appeal was after that. Why did the court say this . Essentially they said that Steve Ballmers 2 million bid was a bird in hand that would be hard to get in the future. There were no bidders coming forward with more money than that. The team would go into a death spiral with players and coaches wasdoning and it and it damaging be trusted not to go forward with this sale under a very advantageous price. , butis is bad news probably good news for the clippers to see the sale go forward and have stability, let alone a lot of money from Steve Ballmer. I think it was somewhat surprising they would basically squashed the appeal today and it looks like now the sale can go through free and clear. I would expect it now happens very quickly. There is another issue i have not seen discussed a lot and that is the issue of taxes. Donald sterling may not have to pay Capital Gains sale tax if he can prove that the sale was forced by the nba against his will. What those todays ruling me for his desire to prove he was forced to sale . I am not sure. I do not know if it is material. I do not know if the judge said anything on that matter. Today, i think, does not affect whether he has to make the Capital Gains payment. Is this done or does he likely appeal . I will be curious to see if he still appeals, because it will be kind of empty. His purpose all along has been to stop the sale. If he appeals now, it does not in two it does not do anything to the sale. My guess is he will because he is out to fight to the death on this, but it will be kind of toothless. Thank you very much. From basketball to the kitchen, he has taken a nontraditional approach to becoming the executive chef for top restaurants in new york city. To a Culinary School and then went on to work for Goldman Sachs. For there were auditions born ramzis Hells Kitchen. It makes more sense than you would think. There is just as much stress in the kitchen as there was on the floor of the New York Stock Exchange. Yes, you run the floor. Yes. What did you trade . Everything from aol to ibm. All of the big boys, some little guys that were fun to trade and take on an love that stock every single day and you nurture it. The bow you work in a garage. A garage. Worked in i had an old girlfriend who used to work down there and said it was like working at mcdonalds taking orders, but more stressful. Yeah, you are standing eating your lunch, when you are making your trade with some of the toughest brokers in the world. As a cook in a restaurant cooking is a small part of it in some ways. Running a restaurant i got this experience from Hells Kitchen of course. I have never owned a restaurant prior to that. I have go to my entire life. I knew that i wanted to open the restaurant after the shows airing. It has been a whirlwind. This is a fantasy of so many people who have jobs, whether they are on wall street or not, and dream of cooking for more than their family and friends. What is the biggest thing that is difficult about this customer example obviously be food ordering and keeping coming from a place like Goldman Sachs what you mean . The costs and employee costs. Ray shevchenko great food. But there is an entire business. Most people do not know. Chefs cook great food. S just when you look at the menu, do you imagine things with popularity. You think, protein is not big as cost, so i have to have enough routine to sell, but not so much that it bankrupts me . Of course. It is a puzzle, just like on the floor of the New York Stock Exchange when you have to figure out what you are going to buy or sell. There isto make sure something popular on that plate everybody will be able to order from. Making in menu is one of the hardest things. Tell us where you are. East are on the lower side. We have a stand on 20th and third. We have a new edition that is right underneath the bridge on the Long Island City side. Weddings. Lot of it just went through a major renovation. Are these swanky places. These are swanky places. You must give slinky people . Oh, yes. All of these celebs does that change the way you run the restaurant . Change the way you cook . Change the way you cater . Everybody is a bip. Obviously if you have someone walk through the door that has a notable name puffy . Restaurant t a we did a collaboration. You had Hillary Clinton there of course. Adam sandler. We did a movie premiere. Justin bieber, his release party. The events are tough stuff to do. Interesting story. Appreciate your time. Thank you. Thanks for taking stock. More of this tomorrow. For now, good night. Live from pier three in san francisco, welcome to bloomberg west where we cover innovation, technology and the future of this is. Im emily chang. Had this hour they are the two dominant read real estate website zillow and trulia. The news of zillow acquiring trulia said the shares up for trulia