Shares of ebay soared today after a report the company is considering spinning off its paypal unit. First, to our lead story. Salesforce is no stranger to spending, buying Companies Like exact target, striking a partnership with microsoft, and spending on new office space like the Salesforce Tower in San Francisco. In the second quarter, the Software Company reported sales of one point 3 billion, up 38 . Some of those moves are adding to the top line. Salesforce is also planning a major Product Announcement at its dream force conference in october. Shares up slightly. Joining me is our editor at large, cory johnson. What do you make of the results . A huge jump in revenue, but a loss. The 5 billion company that grew 38 and generated north of 200 million in free cash flow. They do spend a ton of money. Cory, would you complain . You complain about anything when you get the chance. [laughter] thats not true. Salesforce has vast fortunes in acquisition here. It has heard gross margins. Gross margins continue to fall for this company. I wonder what you make of the acquisition, whether spending vast fortunes and not just in cash but in stock as well to make the sales grow. [indiscernible] theyre paying a couple hundred times revenue for basically a new technology. That one was paid in cash. I think so. At the end of the day, when benny wants something, he wants it and tends to buy it. He has invested a ton in San Francisco real estate. They dont show any signs of slowing down. They have stopped hiring . There are groups where they have either been told to slow down their hiring or not to hire or not to replace an existing person when they leave, or they can extend offers but the people cannot start until october, november, december. They are starting to show a little bit of discipline around how quickly they have a headcount and may be show more leverage to make cory happy. Making me happy is a good thing. [laughter] i will try to keep that in mind. 10,000 to 15,000 employees. What do you make of the other verticals . We see the other software and services companies. We had concur on the show on monday. It made me think of all the other verticals that salesforce gets into. Salesforce is, we will start doing that. Are they getting traction and could that hurt the other Software Service companies . Some of them better watch out. Viva is partnered with salesforce and they are in the health care space. A rocket ship of a stock, went straight through the roof and doing incredible business, viva is. You think salesforce says, we see you out there, here we come. Keith is all about verticals. His job is, how do i get from 5 billion to 10 billion. He has to eat a lot of markets to do that. You have got to partner with some people and compete with others. It will get tight. What about products . What are you expecting . You will see analytics product, something that helps people get more insight into what they are doing. They have a lot of that already. Apparently it is not that great. Thats a place they can improve quite a bit. The thing they dont do well is an opportunity, not a problem. Well, you know. It has been working so far, cory. [laughter] the Stock Options i did the math and it is 13 of operating costs in the last quarter. What do you make of that . It certainly starts to dilute. Everyone does it, though. But its a pretty extreme level. I have not compared to the other Tech Companies and see where it stacks up. It is pretty common in silicon valley. What about all of the unbilled revenue . That is their backlog. Thats a good thing, right . You signed a contract and you will owe us more money in the future, and so they have visibility into that. When you look at salesforce, what are the Biggest Challenges . A lot is going well, but what are the challenges . One of the Biggest Challenges look at all the guests you have come in here. Ask them, do you already have salesforce sales . They all have it already. One of the Biggest Challenges is there going to start saturating that core salesforce automation market, particularly among the small Tech Companies who are the early adopters. You have to move into the fortune 1000 companies. You have to push s. A. P. And oracle out of these shops. Does the Software Business model, which helps you get your foot in the door what does it mean for the tale of a customer, that you can get a lot more growth of any Given Company because they did not have to buy the licenses, or does it mean that they dont keep buying, only the core users need to have it so the license growth is not as hard . That is what they are using. Now they are calling salesforce one for it. If i had my android phone, i could show you. At our firm we use chatter. Even though just a percentage of our firm has the sales product, everyone has got chatter. It costs like 10,000 for the entire firm. We are communicating about stocks all day long on our mobile devices. These are the kinds of products he needs to get to everybody in the organization. This is some criticism of chatter, is it the best option out there. For stocks, it works great. Your hashtag is a ticker. In our world, it works very well. Fascinating business acquisitions will continue . I think acquisitions will continue. These arent all not rate are not all great signs of a great company. [indiscernible] yes, another one. One thing they certainly have going for them [indiscernible] perhaps one of the best. Pat walravens and cory johnson, thank you both very coming up, the controversy in ferguson, missouri. Could it have been prevented if police had been wearing cameras . Im emily chang. This is bloomberg west. The city of ferguson, missouri may outfit its officers with the vest cameras as protests continue following the shooting death of 18yearold Michael Brown. If the Police Officer who shot brown was wearing a camera, would it have made a difference . Did it have prevented these mass could it have prevented these mass protests . Police one is a news portal for Law Enforcement officers. Doug, you have been covering these cameras for many years now. We are just sort of realizing it exists. As far as we know, the officers in ferguson may be had access to a couple of these cameras but they werent using them yet. Yes. It is my understanding, and i have not been able to independently confirm it, that ferguson pd may have been testing and evaluating some cameras. It is abundantly clear now in the past couple of weeks that there has been no evidence released, clearly the officer in question at the time of that shooting was probably not wearing one of those cameras. You actually brought in a few things to demonstrate to us. What are the options available . There are many options. Five years ago there were probably only a handful. Now there are probably 10 companies. Not quite exactly 10, but a whole bunch of companies. They are all very good cameras. They are different types of options here. This camera here would go on your body here, and be held in a pocket like that. This camera here would probably clip right in your pocket here. This camera here which i have lit up is like that. It is not google glass, but a similar concept. Yeah. Youre capturing a live feed here on a mobile phone that we are showing you. The critical piece of this is that the live feed is not for live consumption. One of the things the live feed is for is to adjust how your camera is capturing if you go like this, make sure you are squared away. You can go back and review an incident on your mobile device after it has happened. Its really good for training what are the numbers like in terms of how that changes how police use it . I have stumbled on a study that suggests when police use these things, there are fewer instances [indiscernible] indeed. Of using firearms and so on. There was a study done in rialto, california probably two or three years ago. I reported on that. The chief as part of his academic study decided he went to analyze the number of citizen complaints against officers. If memory serves, i think in that period of time that he was studying, 88 reduction in citizen complaints. A couple of things are happening. The camera is on, so you will behave a little bit more differently. So is the subject. The subject knows theyre being videotaped. You hear people all the time, officer, im videotaping you with my phone. Everyone here knows we are on tape, we are collecting evidence. It is not a secret anymore. If the officer who shot Michael Brown had been wearing one of these, how do you think things would have been different . Most notably, what you would have probably seen as opposed to 22 or 24 hours later a press conference revealing practically nothing, you would have had one of a few things happen. If the officer was incorrect in that assessment of the threat against him and it was a bad shoot, there would have been Video Evidence to that effect. The chief and others would have been able to look at it and say, we are going to pursue disciplinary action. We are taking action against this officer, what have you. The other thing is if it was a good shoot, if it was a deadly threat against the officer, that would have been compelling evidence on video. He is in fear for his life, there is a six foot 4, 300 pound man coming at him like this we would know. We would know. There might have been protests, but there would be compelling Video Evidence sustaining that officers perspective he was under threat. There is a question about how much this would actually help. The camera has to be working. The officer has to turn it on. In a chaotic moment, maybe you dont turn it on. Maybe the officer is resistant to turning it on. I hate making broad generalizations about anything with Police Officers, but more often than not, the younger the officer, the more likely and more inclined they are to embrace the new technology. They know more about technology. They are accustomed to filming their family and themselves with their phones, right . Generally speaking, it is a generational thing. Over time, that generation will get into leadership positions. Talk about this business. There has been an outcry about the militarization around this incident. What is the business behind this . Who is selling the stuff . Why are Police Forces embracing this gear . Speaking to the technology, at least 10 or so companies, really Good Companies making good products. The sales process is there are people on the street, banging on doors at police stations. Are they buying . These are 800 it depends on what you get. You can get the Body Worn Camera for 200 to 300 per officer. The elephant in the room nobody wants to talk about is data storage. That has got to get into the chain of custody and be stored someplace. That is another piece of the puzzle. The gear itself when you look at it, 1000 at the maximum for one piece of gear. If it is 1000 for a 60 man department, it is not that big of an investment when you think of all the frivolous lawsuits youre settling out of court. Is this a rapidly growing business . It can be. Right now were at the very beginning of a very steep hockey stick type of activity. There are roughly 15 or so percent of officers wearing these on the street right now. That means there is an 85 market for this to happen. And, sale of new cameras these things do break occasionally. You get into a fist fight, you might have to buy another one. This as protests in ferguson continue weeks later. Doug wyllie, thanks so much for sharing this gear with us. From raising awareness for als to broadcasting powerful images of protests in ferguson, we are going to take a look at how facebook and twitter have played such powerful roles in major stories this summer. You can catch us streaming on your phone, tablet, bloomberg. Com, apple tv, and amazon fire tv. Welcome back to bloomberg west. Im emily chang. In the last few weeks we have seen how powerful a tool social media can be, from heartwarming videos of people talking about the ice bucket challenge to images of the protests and unrest in ferguson, missouri. What are these stories saying about the role the twitter and facebook play in society and social change . Joining me now is brad stone, who just wrote a piece on this for bloomberg businessweek. One of the things you point out is that these events are highlighting major differences between facebook and twitter. How so . Thats right. Anyone who was on social media this week recognized pretty quickly, twitter was a very visceral, minute by minute, blowbyblow venue to follow what was going on in ferguson. Great reports from mainstream journalists jack dorsey, the cofounder of twitter. Unknown journalists. On the other hand, facebook a lot less coverage. It algorithmically filters what its users see, more in the vein of the ice bucket challenge is in the viral videos. Both those companies are trying to make their feeds more interesting and more relevant. It was a weekend in which a lot of people said, twitter kind of won the week in terms of how interesting and relevant the feed was. At the same time, twitter was trying to censor and suspend accounts related to images surrounding the execution of james foley. Twitter has been a place where all of this has been possible, but is it going to be that way in the future . It is interesting, because they have been making noises about trying to be more algorithmic, trying to extend their popularity to a broader user base. Not all weeks are as packed with news as this week. I love the fact that we have two social media windows into the world that take different approaches and really complement each other. I wonder, is Facebook Mark zuckerberg wants to be a window to the world. [indiscernible] is facebook failing at becoming the portal for news or is it just a different kind of news . It just highlights the challenge of being all things to all people. The algorithm is weighted towards what people want to read. There are reasons why the cat videos and the ice bucket challenge do well. People are watching them. The funniest thing i saw all week was the ice bucket fail video i saw on facebook about five times. Twitter probably did not offer that. If you have not seen it, go look at it. Its hilarious. They offer something different. What i was most impressed by, bill gates i think he has three or four buckets of water over his head. Is it good for the businesses that they are differentiating themselves, whether by design or by chance . Absolutely. A week like this, packed with good news, terrible news it highlights how we have begun to turn to these social networks to be our windows to the world. These are good problems to have. Theyre both trying to figure out how to coexist. The fact is that we turn to twitter and facebook first. When it comes to twitter, censoring certain information we saw something similar with the death of Robin Williams and some graphic images. Is that a good thing . That is not a twitter problem, that is an internet problem. That has been true of the internet since the early 1990s. It is anarchic. You can find horrible things. It is the responsibility of the gatekeepers of these companies that depend on usergenerated content to be responsible filters of information and make sure that small minority doesnt soil the well for everyone else. We will be watching to see how things play out over the next two days. Brad stone, thanks so much. Coming up, will amazons local register mean the end of square . We speak to squares former coo next. It is 56 minutes past the hour, which means bloomer television is on the markets. Im olivia sterns. Lets get you caught up with where stocks ended, the s p 500 closing above 1992. The dow jones closing above the 17,000. Nasdaq nearly at a 14year high. More bloomberg west after the break. You are watching bloomberg west. We focus on innovation, technology, and the future of business. Im emily chang. The race to dominate mobile payments is getting more intense. Last week amazon announced local register, a new mobile payment device, to compete with square, paypal, and intuit. Paypal may not be part of ebay for much longer, according to a report. Ebay is reportedly telling potential candidates for the paypal ceo job that it may be spinning off the business next year. Joining me now is the former square coo, also a member of the paypal mafia. What do you know . Is ebay telling people they will spin it off . I dont have unique information. I think it is a good idea. I think i have a better solution, which is to rebrand the company, change the logos, change the paint and the tshirts. You get the same value as spinning off to paypal. Change ebay to paypal. Just rename the company. It is a simple solution. You could probably do it in 24 hours. A lot less financial gimmicks involved. The market cap will appreciate paypal. People will want the job. It is a simple solution. Would that involve john donahoe demoting himself . I dont know about that. But if you want a serious leader for paypal, you will have to create an attractive role. John donahoe has said over and over again, he battled it out publicly with carl icahn that these companies are staying together. And now, reportedly they are telling ceo candidates that they are going to spin it off . I dont get it. I dont think theres any way longterm that the company stay together. Fundamentally the economics and logic of breaking them apart theres a reason paypal has missed every window. The stripes, the squares every level of innovation in the United States they will continue to miss as long as it is a subsidiary of ebay in san jose. Paypal needs to have a different culture, different leadership, different approach. The best way to do that is to rebrand the entity and spin off ebay on the side when no one is paying attention. You get all the market credit right now if you just rebranded the company. Part of the problem is that ebay is becoming a smaller part of paypal payments volume. Would rebranding really make that big of a difference . It would. It would clarify the Value Proposition to the world. Right now it feels like it is a subsidiary of ebay, and people still think of it that way internally. That is why they have missed the macro trends and innovation. They still think of themselves as hostage to the ebay marketplace, which is declining. Who should be the new ceo of paypal . David would be a great choice. He pretty much ran the operation. Hes available, according to reports. Fundamentally david is incredibly talented. There are other people, but most of the best people are busy doing interesting things. Max could do this job, but he better be focused on a firm. I think most of them are pretty committed to what they are doing. Some members of the paypal mafia say there is a good argument for them to remain together. I think reed fundamentally believes in partnerships more than any of the original members of the paypal team or if you pulled the entire paypal x leadership team, 90 believe in spinning off the company. Lets talk about square. Amazon launching its own credit card reader. Amazon doing it at 1. 75 if you start now. Square is a full percentage point higher. That is a gimmick. Even amazon put a finite limit on the time that pricing applies. Merchants are smart and savvy and they know the prices will be higher than that. Amazon has already disclosed the prices will be significantly higher. But still lower than square. Ultimately. Its not clear what amazons payment products entail. Do you have to have a credit check . Square doesnt. Its the only company that allows anybody to get instantly approved without a credit check. [indiscernible] as well as fast settlement of money. Merchants care about how fast they get the money. Square is the fastest on the planet in getting people their money. Amazons brand does not resonate well with local merchants. It is the antithesis of what local merchants are for. There are some fundamental difficulties that amazon has. It may be a successful product. Amazon is a formidable company. They understand payments and commerce quite well, obviously. They also make a lot of mistakes. Amazon fire is going nowhere. Im not totally sure this will go anywhere either. They also have the flexibility to push margins down, to get a new product going, which square does not necessarily have. They do, although amazon already has a fairly finite set of margins. You can arguably say that amazon is interested in this market to raise their margin. Squares margins are better than amazons. This might be an attractive opportunity for amazon to make money. Fundamentally, i dont believe you can compete on the basis of price forever. People want an iphone. An iphone is more expensive than an android device. Anybody who can afford an iphone buys an iphone. Square has a premium product that has a lot of value around data and analytics. It has value in terms of fast settlement, has value in terms of integrated platform that allows appointments and scheduling and various other things. Amazon totally lacks. It is a completely different product. Intuit had a product in the market before square even launched. It was ugly and expensive and required fica score and credit checks. Amazon may not do any better than that. Square has the value of the user experience. Many merchants i interact with use square and it is a solid, beautiful user experience. Square has been on the receiving end of a lot of bad pr lately. A profile came out, not flattering. They Just Launched Square Capital to give loans to small and medium businesses. They are buying a food delivery company. Do you believe in this strategy . How does it fit together . Square launched less than four years ago. Yet it is probably generating over 1 billion in revenue. It has the second largest paying user base of local merchants, Small Businesses and anybody on the planet. Square has more paying customers than anybody except intuit. Intuit is a 25 billion company. Square, like intuit, can build on that platform and provide valuable products and services that local merchants crave. Square capital is an awesome example. Merchants want to grow. Square provides some capital and can do it in a costeffective way because it has proprietary data. Merchants need insight into their business, how they grow. They dont have a Marketing Team like starbucks does. You have to provide them data. Merchants want new business, new customers. Square appointments allows you to book appointments and generate new leads. Can square be profitable . Absolutely. As fortune reported, square has margins of 34 , better than most of the companies you have on your show. It is better than most of the world. Square can be profitable. Square has ambitions on reinventing commerce, and thats very difficult. It takes a lot of money and time to do that completely. The fact that we are seeing the square halo has disappeared, at least momentarily. Is that unfair . Is that a phase . A lot of people want to compete with square and are annoyed they have not been successful. They are seeding stories that are fictitious, most of the time. I think it is disappointing to see journalists running with the stories. The wall street journal report was false, and they knew that. Theres a lot of people who are frustrated with squares success. Square ultimately is going through the same cycle every startup goes through. Everything is really successful. Ultimately, people will look at the metrics. Metrics will eventually be public and people will be happy with squares performance. Will jack ever sell to google, or amazon or ebay . I would be shocked. Square is an independent company. It has the metrics to support being an independent company. It has the value and the brand. If you talk to local businesses, they love square. You will see that enthusiasm that is genuine. Those companies tend to be longterm companies. Former square coo, keith rabois. We will talk to you about your investments after this quick break. And the latest in the uberlyft feud. Im emily chang. This is bloomberg west on bloomberg television. Streaming on your phone, tablet, and bloomberg. Com. From lyft to strive to open door, keith rabois has his hand in many of silicon valleys upandcoming companies. We are back with keith rabois. I want to talk about uber versus lyft. Lyft claiming that uber employees are canceling rides. Uber claiming that lyft investors are pressuring uber to buy lyft. What is really happening . I dont really know. Oh, come on. I invested many years ago. I believed in the general vision. It is not as if i am the on the board of the company. I dont have the latest information. It is obvious that uber has a very aggressive culture, a very aggressive leader. They will do things at the end of business strategy. Is that crossing a line . I dont know that it is crossing a line. It is clearly a very aggressive culture. Those cultures can work for a while. Occasionally they backfire. Microsoft went through this in the 1990s. Occasionally people make a mistake in cultures like this. Should uber by lyft . I would be surprised if lyft wants to be bought. Why . Lyft has a brand that is resonating with people. They are doing an effective job of creating supply and demand. Generally i dont see a reason why they would sell. What companies are you most excited about that you have invested in recently . I know you did a bitcoin investment. That is like asking who your favorite child is. I have a lot of different companies. From very early stage to later stage companies. Im excited about the future of health care. We have invested in health tap which allows you to connect live via hd video with doctors. 24 hours a day. We will be speaking with the healthtap ceo after speaking with you. Perfect. It will allow you instead of 2 00 a. M. Running to the doctor or when your kid has an ear infection and trying to be stressed about that, you can now connect to a doctor live in real time. You can actually get a prescription as well just through the doctor, 24 hours a day, from your phone. Its pretty amazing. We are interested in Financial Services and information. We have invested in interesting Financial Services companies that allow people to grow their businesses. That area is ripe for innovation. We invested in api. Building on bitcoin has historically been quite difficult where you need a lot of skills and Data Analysis and Data Processing skills. Most developers dont have by creating an api that makes it simple, we believe in developers right out of school will be able to take their creativity and bring it to bear quickly on the bitcoin protocol. I know we will be talking about something you really want to talk about. Coming up, you will be with us for the bloomberg west byte. We will be talking about sports. Your other passion. Keith rabois, we will see you in a few moments. Coming up, we will be speaking with the housecall. Talking about house calls and healthtap. Welcome back to bloomberg west. Im emily chang. Ever wish you could just call a doctor with a question about your health any time of day or night . I do. With healthtap, you can. Founded in 2010, healthtap provides a question and answer service that connects patients and doctors across the country. Last month the company rolled out a new service allowing text or Video Conference with a doctor for 99 a month. Our editoratlarge, cory johnson, back with us. You spoke with a healthtap ceo. It is an interesting business. This idea is not groundbreaking, but the execution is. It is a network of more than 62,000 physicians that will be available anytime, anywhere, on any mobile device to answer any question that you have, prescribe medication, provide checklists and help you feel good every day. In theory, a lot of medical practitioners on hmo or whatever allows you to call your doctor or have an email consult or something. There is an advice nurse available. Why do we need what you guys are doing . 24 7, anywhere, from any mobile device, from anywhere with a connection you can get in front of a doctor. You can do it on text, by voice, by video. It is not a nurse connection, it is a doctor connection. To quote tom petty, waiting is the hardest part. There is no waiting on a doctor now. No waiting room. Get not only the answer, but if you need a prescription for medication or if you need the check list to get things done, the doctor can prescribe to you. Every consult begins with a smile and ends with a checklist that is actionable. It helps you feel good every day. Talk to me about why doctors do this. This introduces a whole new complication in terms of knowing who the patients are, knowing their history, and knowing the technology, which doctors are not always good at. We have more than 62,000 licensed physicians in Good Standing in our platform. They want to help people throughout the entire continuum of health. We provide to them software for the first time that enables them to answer questions, connect with patients why do they do that . They want to help people. We pay them. When a doctor answers your question, they can practice from anywhere. They can be in their home with the mobile device. Were the only Health Entity that has mobile apps for doctors to practice with patients at the convenience of their home or office or clinic, anywhere they are in the world. They can fire up an android app, iphone app, ipad app, and connect to patients anywhere, anytime. It is convenient, it is easy, and very effective. What are the technological or legal hurdles you have had to overcome to make this happen . The technological ones are not great. I have already got face time on my phone. You can make that work. What are the other hurdles i dont see, the legal hurdles i dont see . There are a lot of technology hurdles. It is not just an application on an iphone. There is a whole Underlying Technology that makes sure that a doctor is available to you at any given point in time 24 7. Not only that, there is a whole medical record. Every consult starts with a smile. We train the doctors to make sure they are confident in providing health care using the phone. How is it different . What do doctors not get inherently about that . The notion of interacting with a patient on the phone starts with getting to know the patient well. Because we have an Electronic Medical record in the background, a doctor can get to know you in seconds using Artificial Intelligence to understand the patient really well because we have the data. We have an understanding of other patients like this particular patient. Even if they never saw you before, they know about you a lot immediately and can relate to you. You have a lot of users already. You have cobbled together a pretty good user number. Where are you at right now . We have more than 62,000 u. S. Licensed physicians that serve people. We have a lot of doctors, we have a lot of users. Cory johnson. That happened. It is an interesting company. They have sizable user numbers. Keith, you are an investor in this. I am. 62,000 doctors in network. 1000 doctors available at any time. It seems like an expensive service to me. You value your own time. Imagine what happens if you have to take off work. You have to travel across the city. You have to park. You sit in a waiting room. Doctors are never on time. Do you value your own time or not is one question . Then you get sick they dont value mine, thats for sure. This allows you to get instant access. I think this will a lot of people want to avoid taking time off work. A lot of people get paid by the hour and if they had to take their kid to the doctor, they dont get paid that day. It is time for the bwest byte, which keith stuck around for, because were talking about sports. And Little League. I was looking for a good byte about this. Mone davis, this girl pitching against boys in the Little League world series. She pitched last night. She went 2 1 3. Very exciting. It is on the cover of Sports Illustrated this week. My kids are really excited about it. Girls striking out boys she had a very successful debut last week. They are not out of it yet. They stay in the game. I was listening to an interview with her on npr. What is throwing like a girl sound like . Shes like, 70 miles per hour. She has this amazing command. I watched her on espn. She really does pitch like a majorleaguer, and shes able to control her pitches. Do they have a speedometer on pitches . They are closer. It is Little League. 3. 4 , the percentage of homes in the largest u. S. Tv market that tuned in to watch her. She may pitch this saturday as well. We will be watching and the johnson household. Get her on your radar. You are just thinking about stanford football. You will be tweeting from the sidelines. Thanks, keith. Thank you all for watching this edition of bloomberg west. We will see later. The following is a paid program. I am Courtney Thorne smith. Dont change the channel, because in the next few minutes you will learn about a breakthrough product that can help take years off your appearance. Heres the thing. You dont put it on your face. Want to learn more . Stay with us. Next, a paid presentation from perricone for cold plasma sub d. The first of its kind treatment for the area of your body that can actually age most. Your neck. Hosted by network television
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