Range. Companys roadshow is here in San Francisco today. We are learning more about the tense relationship between Tech Companies and the nsa. Court documents say the government threatened to fine yahoo 250,000 per day if it did not turn over user data. Apples biggest iphone appears to be off to a hot start. To the apple website the device is on backorder and isnt expected ship expected to ship for another three weeks. In addition apples website had some issues due to all the traffic. One user tweeted to me not everyone having problems. Apple facing a supply chain problem or is it a way to drum up demand . Joining me as cory johnson. Is this a marketing stunt or do they have supply issues here . Every time they come out with an iphone this happens. This is the way they probably wanted it to play out. Would be a disaster if it were two or three months. Is this an indication the six plus is going to be the most popular phone . Them all without a doubt people want a larger phone. If you travel in asia you realize half the world is there. We are behind. Of the people who left the ios for android did so for a bigger phone. There is clearly a hole in their product line. We talked about this at the end of the show. There are still mined countries where the initial phone releases going towards. Arerevious new phone they not in china because it is not approved in china yet or because of supply issues . Tweeting to you at two in the morning saying my hopes and dreams were dashed. Run andd get up for a by the time i got back my phone was already filled out. They had anticipation that demand was going to be so great. People there were more coming off of subsidized phones and able to upgrade than ever before. The potential market was greater than ever before. If they really wanted to because they meet the demands . At the end of the day they want to sell as many of these phones as quickly as possible. If they could have sold more they probably would have. The bigger screen, the bigger battery, the newer ship newer chip they did not have forever to do this. I always thought the marketing gimmick with the lines in front of the stores were a total joke. A they know how many phones they can make. They know how to get them to the store that morning. The fact they cannot manage the line is baloney. I think it shows the demand. Apple gave away the new u2 album for free. They actually pushed it onto everyones phone. Of apple and bono were on stage. Lets take a listen to this exchange. Them a we are the blood in your machines. Are we the very first people to see this in the world . Yes. This to as many people as possible . We do have itunes. Do believe you have over half a billion subscribers to itunes. Could you get this to them . We to do that. Apparently i thought this was kind of cool. People are complaining. I believe this may have been a shark jumped moment for at least folks under 35. Who is u2 and why are you messing with what is on my and in my playlist . I think apple missed the social effects of that. This is my phone. I choose my music. Apple is in this weird moment where they are going to offer multiple price points for lots of different devices. This is not the Company Steve jobs made. We have products that you personalized but the product remains the same. Here they are jamming a personal choice. A u2 is an extraordinary band. Watch any music chosen for me ever. Going to bewatch is amazing but i do not see it as a 400 watch. I see it as a 1500 watch because you have to have the iphone and all the other apple products for it to work. I am an android guy. If i want the watch im going to have to go back to iphone. I think it is the harbinger of a personal technology. , we should mention your conference. The entire San Francisco community is turning themselves inside out. You included all these Tech Companies to invite people into our office. We have a few dozen people behind us. We are talking about what the companies are coming about. Everyone from salesforce to adobe interest. You name it. It is exciting. These companies are the engines of change in our society. How wenge not only consume services and product but how we execute work. To open your doors and let people see how they can work inside those companies is a neat idea. Time,ferences for a long everybody gets together and watch as someone on stage. Do you find it to be that much more effective . , intimacy. Seeing the founder in his or her native habitat and you are acting with the founder. It is a completely different experience and it is great for both sides. What is different this year . These Tech Companies are not Tech Companies. Bringing local manufacturing through technology back into the local economy in San Francisco. These are all companies that feel like Tech Companies. I am finding that really interesting. Thank you so much for stopping by and bringing your crew to watch. We always appreciate having your thoughts on the show. There appears to be an overwhelming demand to own a piece of alibaba. We will bring you the latest on what could become the late what could become the biggest ipo of all time. , i am emily chang and this is bloomberg west. Alibaba is in the middle of a global roadshow and they are meeting at the saint regis right now here in San Francisco. Baking are buying in big time to alibabas ipo. The Chinese Ecommerce Company has demand to sell all of its stock at the highend of its 60 to 66 range. For more on alibaba we turn to leslie, who covers ipos for bloomberg. Cory johnson is still with us. What is the latest . How much demand is there . They have enough interest the interest is not necessarily from investors who will buy shares. It all depends on where they are allocated and if they are allocated they will purchase it. What we are seeing is a lot of interest. There were long lines in the waldorfastoria on monday. Every investor couldnt stop commenting on how many other investors their world lead. There will be. A thousand people attending the group meetings, that does not account for the private oneonones. We are seeing a lot of interest for sure. What is important to know is over the weekend they will look through that interest and see are interested in these shares at each price point and range. If they are seeing enough demand are key investors, if they seeing enough demand from those investors at the highend end of the range they may seek to raise it. They may seek to price it above the range. Those decisions are expected to be made in the next couple of days. Cory, you are skeptical. Why . I think the bankers decided that seven months ago they all said lets close the book early. Multiplece it at a that looks low so we can get some interest. You and i have been getting some calls getting some private money. They are trying to sell more stock than anyone who has been sold in the u. S. History. As a result they have a careful plan to get demand increase and announcing to us that it isnt going to stand. What do you make of this . Cory is completely right. It is a big game of psychology. They increased the range and priced it at the top of that to show there were strong demands for their stock. Big Institutional Investors started backing out of that stock when they did price it, which caused them to go down that hierarchy of more profitable clients. It big Institutional Investors even more. You want to psychologically make investors see that they and that this is a hot stock. While at the same time making the valuation and growth story match up to that demand so doesnt speak them lastminute. Given what the bankers learned, what do you think the likelihood that they price lee that they price this higher than suggested . It is difficult to say at this point. A lot of investor said within this current range, 66 at the 160 3 billion valuation looks attractive to them. It has been pushed that higher they risk marginalizing those key investors. It is one thing they will have to keep in mind. Do push it higher they will raise money for the company. Other hand you dont want this deal to go badly. It has the potential to disrupt the whole ipo market. We would say at 18 per share we will take down 1 of this deal. We will takeare down 2 . If you lower this to 12 i will if theof this ipo valuationtwas is a lot better. You can imagine the big investors Like Fidelity and vanguard. Him if you raise the price higher we are going to buy less. If you lower the price we will buy just as much. These are the kinds of conversations that they are very much actively involved in. We will knows an enough. We are expecting a price later this week. Ferociously. Yahoo is facing a fine of 250,000 per day if it did not turn over user data to the u. S. Government. Was thed of information government after . That is up next. Welcome back to bloomberg west. She is named Kristen Baldwin as the new editorinchief of the yahoo tv. Has named new york Restaurant Owner carry diamond as editorinchief of yahoo food. Yahoos content business is going. Nook Court Filings show yahoo phot the u. S. Government over nsa surveillance requests in 2007 and 2008. The company waged a 10 month battle against the nsas prison program. Yahoo ernment threatened with a fine up to 250,000 per day if the company did not turn over user data. Yahoo ultimately turned over the data and was not find. What did the government want and what does it say about Tech Companies and the nsa . Crawford ing in who brings us froms who joins us from skype. What we are finding is that the documents were made available. I think this is something yahoo we arer creative starting to see a profile of the kinds of requests that were made early. One of the most interesting things about this is there has been so much hyperbole about the far ranging the government wants to know everything. Trying tothey were understand. Is there ways under the current constitution for them to access data . It is a lot of hyperbole. About the you make fact that facebook, google, microsoft were also asked to turn over data and it appears they complied whereas yahoo was the company that phot back. Yahoo made a choice and they decided they were not comfortable with the request and the bulk requests that were being made. It is a new era. To have to think differently about a lot of things. How the laws need to be rewritten. I think the idea that facebook was requested, the google was requested, and yahoo was requested. Hubs of the modern ways we communicate. Yahoo phot as long as they could. It is where the vast majority of communications is happening. What were the government looking for . I think the government is in a very tough spot. The government is looking to be snooping. There is a lot of technology for pattern recognition. There is a lot of technology for analytic space. Is there a threat . Is there a potential terrorist threat . Unfortunately you need a lot of information to go through. These bulk requests offer up the ability to have full information to start seeing patterns. I am not necessarily sure these were individual targets. Seeing aan you start pattern develop and then decide where you want to go if you think there is a probable cause . To me that is what the government might have been looking for. Does this declassification help yahoo in any way . Do you think this trickles down to users who perceive yahoo as a defender of privacy . I think that to some degree it shows that yahoo was willing to take a stand and say we are not necessarily comfortable. Are outthink when users there deciding who we are going to build our relationship with it makes a tremendous amount of difference. Facebook operates at a larger scale, google operates at a larger scale. These are the places where we are communicating. Doesnt help yahoo . Probably not a lot. He doesnt hurt yahoo at a whole at all. So much for stopping by. Im sure this will continue to unfold. Coming up a bloomberg west special, the alibaba story. We will take you through their rise from an from a small internet upstart. We will interview former yahoo next. 26 minutes after the hour, Bloomberg Television is on the markets. We do have to clients across the board for the major averages and they are evening as the day goes on. They are speculating the fed might tighten. The ali baba story. Founder one set ebay is a shark in the ocean, we are a crocodile in the river. If we fight in the ocean we will lose but if we fight in the river we will win. You inside the Ali Baba Group to find out how this ,ompany, founded by 18 people has grown into a global ecommerce phenomenon with a profit that is bigger than amazon and ebay combined. We want to start by looking at the many is this is this is of the Alibaba Group. Alibabas revenue comes from consumer sites. It all started with alibaba. Com. How does ali baba work and is the profit similar to buying something on amazon . He joins us now with more. I know you like your pants. I really wanted a lot of them. Was to i could do that order them from a manufacturer who uses alibaba. Com. Of the entiresis alibaba. Com system, connecting buyers all around the world with an equal number of manufacturers around the world to give them what they want. To reach those manufacturers i had to create a buying request, a form that describes what i want to be made. Day i had replies from manufacturers in china, india, pakistan, and the czech republic. I firstle that down ditched any replies from companies that werent alibaba gold suppliers. Manufacturers computer. Among the remaining companies i judge their responses on prices and delivery times. It is a little bit like online dating. I decided to work with a manufacturer in pakistan. How can i be sure the suppliers were not in a bunch of sweatshops . I checked with the International Labor affairs bureau, which tracks labor abuses around the globe and it gave this project a clean bill of health. My guy in pakistan needs to give needs to get some money. Escrow service, which holds your money and only releases it to the manufacturer when you are satisfied with what you are ordered. Pay your manufacturer directly, using wire transfers. How much money are we talking about . Lets start by considering what i am asking for. I want more than one of each. Of that gives me the 280 power 280 pairs of pants. My cost didnt end there. Getting the pants is shipped to me would cost another 1983. That would get them from pakistan to new york in about two days. How did it go . Markedly simple. 25 days and 4500 after started this process i got exactly what i was looking for. They came out fine. Him what do i do now . I have enough pants to last me for the rest of my life. With 279d share them of my closest friends. There isnt a pair on the streets like them. Bloomberg businessweek is always stylish. Sam grobart is still with us. Also with us is leslie, who covers ipos. Sam hown, show similar was the process to buying something from amazon or amazon andcho ebay are based on an individual customer dealing with retailers. I am actually my own business and i am dealing with another business who is coming back to me with specifications and timing and schedules much in the same way you would do with somebody if you are buying auto parts or computer motherboards. As a result you have to really know what you are looking for as opposed to browsing through a catalog. You have the pants in todays. Does ali baba have something similar to amazon prime . They do not. Him the shipping costs almost as much as the pants themselves. It is about 500 less than the cost of making the pants. Talk about the rest of alibabas business. Cory, how we do you describe the group . What is interesting is they took some of the best ideas of internet commerce, whether it was the to be or auction ideas or payment ideas, and pulled them all together into this specifically chinese company. Him it has lots of pieces of all of those things. It is so important what they do there. Even ebay has their own businesses and fulfillment businesses. It fulfills a lot of the needs that are that a more robust post office may do. Roughly 80 comes from the Chinese Consumer sites. How are they similar and different . It is similar where businesses and brands sell products to consumers. It is where individuals and Small Businesses sell their products to consumers. Admiring your outfit. Are those yellow pants from the website . They are not. They totally could be. Him let me say that i think that for nine dollars a pair the gentleman that marks apparel at a very nice job. Him i am a little fancier. The big question remains whether alibaba can be a global phenomenon. Can alibaba complete alibaba compete with the likes of amazon so far their strategy has been to invest in the u. S. They have been investing in businesses in Silicon Valley. They have open up a shop in San Francisco to do those investments. Him they havent started moving into the u. S. , trying to take over amazon. Been their strategy and there is no indication there will be. They are capitalizing on the startups in the u. S. To build their global brand. Businessweek. Sam grobart and cory johnson. Thank you all. From english teacher to chinas richest man, we have the story of alibabas colorful fan there colorful founder. When it comes to alibaba there is one man synonymous with the company, just like steve jobs was to apple or jeff bezos is to amazon. He is the founder and chairman of Alibaba Group. Now he is chinas richest man. It is not quite a rags to riches story. His first job paid him 12 per month. Now he is worth 22 billion. Moss exactly is jack jack ma . Take a listen. Singing on a stage before thousands of employees, jack mott is not your average corporate chairman jack mott is not your average corporate chairman. He left the classroom to ride the internet wave as chinas economy opened up in the 90s. First he started chinas yellow pages. He persuaded 80 peoples to give him 60,000. He then recruited 17 partners and Alibaba Group was born. Him even though he is over five his largerthanlife personality has helped alibaba grow into the ecommerce giant it is today. And performs at mass weddings for employees during corporate events. He is a huge fan of kung fu and even started a Tai Chi School with actor jet li. He quotes chinese philosophers at the meetings. His own wisdom has helped him grow his personal fortune to 22 billion. A is now chinas richest man. It is not just about the money. He told charlie rose it ali baba ornot surpass microsoft walmart he will regret it for the rest of his life. Isfor more on ali baba colorful found on alibabas colorful founder i sat down with as it wasin 2000 just moving out of jack moms apartment jsack mas apartment. I started by asking him what alibabas founders were like in the early days. As big a dreamer at any Silicon Valley startup. Thought thise english teacher who is making an aims, there was there were a lot of skeptics. Now looking back he doesnt seem so crazy. You to work really closely. I wonder what he eggs of the film. He thinks of it. I told him i wanted to make a documentary capturing the good and the bad. He gave me his blessing. Disappeared for three years and kept it independent from the company. I made the film, started submitting it to festivals, and then i nervously contacted jack to tell him that i went ahead and made this film. It to him and his First Response was pretty lukewarm. A fair portrait and there are certain things he probably would have told differently. In the end i think he felt it was fair. He did not protest when i went on with my plan to show it around the world. One of the things you is the culturel of alibaba. You open with jack ma onstage singing the lion king and everybody cheering. Patriotice this devotion to alibaba. The interesting thing to understand is at the time when alibaba was founded there were not many places for young people. O go and pursue their dreams working for the government wasnt a great outlet. Timenternet was the first china had to go out and chart their own destiny. The company that attracted dreamers that had this passion and idealism, that is why they are so devoted to what alibaba is doing. I think you see that with a lot of Internet Companies in china. Are the first Real National heroes that were homegrown. Alibaba did go public in 2007. What was that moment like . It was exciting, just like you would expect from an ipo. We had worked building this business to business marketplace for a long time. Him the ipo was so successful in hong and even the current the ipo was so successful in hong kong that even the currency was destabilizing. I think the stock price immediately shot right up and then the financial crisis came and they ended up as the stock price fell they folded back into the company. Clearances with alibaba is the company went ough moments of euphoria my experiences with alibaba is the company went through moments of four euphoria of euphoria and moments of crisis. The minute you are on top things can stored of dash cam sort of collapse on you. Things can sort of collapse on you. One of the telling things of a good leader is how they handle not the best times but the worst times. Ipo at our annual meeting at one of the stadium events jack was pleading with the staff to stay true to your values, to not let the form of an ipo or sudden wealth takeover the company culture, and he even predicted the financial crisis before it happened. Keepinga great job of the company focused on the longterm and helping people anticipate iraqi half anticipate the rocky road ahead. Coming up, is there anything that can not alibaba off its golden road . Biggesta look at the risks facing the ecommerce china both in china and around the world. Welcome back to a special edition of bloomberg westbank. Bestba is of bloomberg of bloomberg west. Alibaba is dominating. Are showing their dominance now the company is still on guard. It is making acquisitions to keep up with other chinese Tech Companies, in areas like mobile and video. It is also entering the u. S. With the shopping site but its success is not guaranteed as it competes on amazon and ebays home turf. What should the company be most worried about . I spoke with yahoos ceo gas yahoos coo from to 2007. Rom 2002 i started by asking dan what he sees as alibabas Biggest Challenges as a public company. I think the biggest challenge is going to be when you get to scale, what happens then . Company int been a the Technology Space that has been around for 100 years that has been able to constantly reinvent itself. A couple have done it quite recently. Apple has done it. Adobe has done it. Time will tell whether these Technology Companies get spend after the after they spent all their time disrupting other people. Once you get out of china into a more competitive market, particularly focusing on the u. S. And europe, you are going to come up against people whose entire goal is to make sure it isnt done. They are very smart and have been very successful. One of the most tangible descriptions i have seen of alibaba is it is a little bit of apple a little bit of amazon and ebay with who will thrown in. With google thrown in. Do you think alibaba can take on these companies on a global scale . Originally when alibaba got started would be an apt comparison. In many ways alibaba was a copy cap of those companies. Copycat of those companies. It is a hodgepodge of all the best Technology Companies with the chinese twist. Tohink it will be difficult move into Southeast Asia or into the United States. When you look at it there are very few Tech Companies that are consumer facing that are able to become truly global players. Him you need to look at the types of products you need to look at the types of products and why people will want to use those products. They tend to be fairly localized. It will be to have for alibaba to scale up and become as dominant in the United States as they are in china. What about the idea of alibaba turning around and buying yahoo . For financial reasons it makes sense. It is a very inexpensive way to buy back your shares in yahoo japan. It is much more softbank than alibaba. I am not sure they would want the operating is this as much as owning whatever equity is left. That there will be much less equity left now. Interesting to softbank than alibaba because of the yahoo japan stake, as well as whatever is left in the chinese state. That would be a transaction about equity and other companies, not necessarily equity in yahoo itself. There are other scenarios that could play out. My hope is yahoo remains independent. But it would not surprise me if all of these rumors began to surface after the alibaba ipo. Look likees alibaba 10 years from now . Five years, 10 years from now they are going to have to become more focused on mobile devices. There is a lot of venture mobile capital money Venture Capital money going into the mobile space. That is chipping away at alibabas dominance in ecommerce. They may become a gigantic conglomerate. At the question that shareholders have to know is is it actually owned by alibaba or is it owned by jack ma and his private equity firms . There has been and a lot of anger and frustration for jack ma because he has low stake in his own company. He is not like a zuckerberg, who controls a large share. Jack ma has been making up his own investment through his pe firm. He gets a lot of press for that when the investment is his own. That does it for this special edition of bloomberg westbank turcotte of bloomberg west. From bloomberg World Headquarters in new york, i am mark crumpton. This is bottom line, the intersection of business and economics with the mainstream perspective. Retail sales in the United States climbed in august at the fastest pace in 4 months. We will look at the top schools in america. To our viewers in the United States and to those of you joining us from around the world, welcome. We have coverage of the stocks on stories making headlines today