Morning. Dow is currently up triple digits making up for two days of losses, and well get more on whats moving in the markets. First, tesla is going on a hiring spree. According to the journal, tesla is looking to add thousands of employees in the next few years to hold off competition in the auto industry. Of course, this news comes just a few weeks after elan musk put out a call on twitter for what he called hard Core Software engineers and said he would interview people personally. Jason, do you sense that competition is heating up for engineers and if so, who do you think tesla is competing squarely against . If you are going to work for elan musk, its like a basketball player going to play with Michael Jordan or lebron james or steph curry. It is the number one destination for the most talented engineers in the world. Steve jobs would have been probably the number one destination or tied with elan musk, but there is nobody los to elan musk in terms of desirability for an engineer because if you think about what he has accomplished with spacex and tesla in such a short period of time, people want to be on a winning team. Not just because of the stock options, but because as an engineer, you want to solve big problems that matter. Go to work at google or facebook and trying to make, you know, people click on ads they dont want to see anyway, you know,. 02 more, you know, its horrible. Its a death sentence for an engineer, and they do it because it pays a half Million Dollars a twreer, but go to work for elan musk, thats like the dream of of engineer today at silicon valley. He has zero competition for technology talent. If you are tim cook today, and you think youre getting into the car game, for example you are saying you cant compete with elan musk if you are google, which historically has been out front on so much of the selfdriving cars . You cant get those people you think are going to leave those places if they are there already to go work for elan . I dont think you want to go to apple and start on day zero when you can go to tesla and you can work on the highest rated car by Consumer Reports ever. Youll want to work with the winning team, and teslas lead is not diminimus. This doesnt mean apple in five, six, seven years wont have a loved car, but apple is not going to have a car on the road in the next two, three, four years. Even five. Tesla is going to go from 50,000 cars probably to 250,000. Who do you want to work for and who is the market leader, coupled with i think the Regulatory Environment has become extremely favorable to autonomous vehicles, and that is a complete sea change in the last 12 to 24 months. You know, local governments really want to fight to get the business of autonomous vehicles, and they have a very specific reason for that. Mike, elan musk says that autopilot, which is the unit, will report directly to him. He is already running two companies. How many direct reports can an executive have . Well, he is superman, right, or ironman. One of these. Wronk that to me is the big question. To me the question is the business of tesla and how labor intensive it is. If you have this competition at the upper end for engineers, you have 14,000 employees. By the way, more than facebook has. It could be further in the movie business. In an interview with a german newspaper, Ceo Jeff Bezos said we want to win an oscar. Am sdmron has already won Golden Globes and emmys. Our current target is to produce 16 movies a were. Bezos also said he is interested in streaming live world events like the world cup. Its not impossible. Sports is an interesting area. Shares of amazon are up pretty hand where ily this year. Up more than 120 . Its his second best s p performer. Its not amazons best year. Its had better years, but jason, does this surprise you that jeff bezos wants an oscar . No, not at all. I mean, theyve won a ton of emmys and Golden Globes, and theyve got a ton of series that are groundbreaking like transparent and house of cards and a bunch of other ones. What this is really about is creative freedom as well as data. Amazon is looking at a very granule ar level of how many minutes into each program, how many episodes into each series and also the sales of dvds, historically, et cetera, to figure out what types of content on a very granular level people are reading and what content theyre watching. This is going to have an impact on hollywood thats going to be very similar to what happened when robert evans came if in the 1970s and, you know, films like easy rider and the godfather and the conversation and just all these amazing films from scorsese and coppola and lucas came out, and they really changed hollywood forever from these big blockbuster musicals because of creative freedom. If you look at whats happened to television, people have no problem justifying a Netflix Subscription or amazon prime, but i tell you, a lot of people are considering whether its worth 100, you know, all due respect to the network were on right now, for their cable connection, right . Its very easy to justify 8, 10 for one of these over the top services, and i think amazon will win. I would guarantee theyll win a couple of oscars in their first, second, and third year. It means a lot. Whats interesting about both amazon and netflix and their focus on awards is its really the only standard that they have to meet out there, right . They dont really care about they dont really care about box offices. Theres no other real bench mash for how their content is doing. They have bragging rights is all theyre going for. Yeah, i mean, listen, theyre looking at amazon prime statistics. How many people are signed up for amazon prime, and thats 99 a year. You know, i think they got three million or four million new subscribers, and amazon prime was this idea that was originally laughed at at am sdmron. Oh, my gosh, were going to be costco. How many amazon prime subscribers, how much value can we give them . If you dont have an amazon prime subscription, are you missing out on the best deal on the internet right now. Moo whats the Tipping Point on prime to which currently right now i imagine 95 of prime subscribers are there because of the shipping issue. Theyre not really there for the content yet. When does it turn, and then the economics on that model turn . Its hit shows. When you can only get a Certain Program on amazon prime and everybody is talking about it, and you dont want to wait, and you dont want to go pirate it or steal it from somewhere, you say, you know what, maybe this is worth it. You know, if you look at it on a monthly basis, 8 a month or 9 a month, its so worth it. Its going to be exclusive content. Orange is the new black or, you know, house of cards or transparent. When these series come out and everybody is talking about them, wont shut up about them at the water cooler, heats when people go back to their desk at work and sign up. He is doing it exactly right. The price of prime is currently less expensive than the why dont they sell them separately, though . Im sorry. They seem like two separate products, and if they get prime right on the tv side, meaning they get that house of cards show that everybody wants, its almost an identity crisis because some people are going to confuse the issue. No. Its the same price, and what it does is it reduces churn. If you came for one and got the other, you are not going to quit because you feel like its icing on the cake. Its the same price as netflix. You know, if you would be you would be correct if it was twice as much and you had to make that cognitive decision. You dont have to make that kind of kog nizive decision, which one am i going to pay for, because its the same price as netflix. All right. Lets move on. Venture capitalist bill girly stepping down from the board of grub hub amid potential conflicts of interesting. Gurley is on the board at uber and they think it could expand further into food delivery. Gurley said he is stepping down to focus on funding and helping wrunger startups. Jason, bill gurley is currently on ten boards, so it is clear that he is spread very thin, but do you see, as uber eats and grubhub, being direct competitors . Yeah, full disclosure, wrovl. Im an early uber investor, and uber is doing really well in food. This is really less about the conflict of interest and more about return. Bill gurley is not interested in getting a 2x or 3x return in companies when he can invest in private companies and return 100, 500, 1,000 x on his investment and he is probably in the top two or three most sought after Board Members in all of silicon valley. He is the Gold Standard of Board Members. You know, he is probably sitting there, and he has 20 board seats that all could potentially return 100x, 1,000x. He said i got to get on a plane and review the materials, and he is a very studied and considerate person. He really thinks deeply, as you can tell from what he does here on the program, and from what i see playing cards with him every week, he is super considered when he makes a decision. Super considered. Is this a short sign . I love the product, grubhub, that is. Is this a bad sign for the company . I think grubhub, you know, obviously was a tremendous success leading up to the on demand economy, but waiting an hour for bad chinese food is opposed what uber eats and bento and sprig are doing. Thats Delicious Food in 15 minutes. Kind of gross food in an hour version delicious, health where i food at the same price in 15 minutes, people will go with 15 minutes and healthy, and delicious, and grubhub will totally have to reinvent that business. The business that got them to where they are today, is not going to get them where they want to go. Bad food, you know, coming an hour and a half or 90 minutes later, 60 minutes later, thats over. Its 15 minutes, delicious, perfect food is what happens here in San Francisco, and thats whats going to happen across the country, and eventually the world. Mike santoli, grubhub has lost quite a bit of its value amid all of this competition. Not just the ones that jason mentioned, but also caviar, maple. There seems to be a new competitor every single day. Do you think theyre doing enough to get that valuation up . Do you think theres up side . I think we just heard the answer. The answer to andrews question, yes, there is a reason for concern. Its hard to know if this is a transitional technology. This was a solution for a time and place. It is a good service for the Small Businesses that can use grubhub, you know, as their delivery mechanism. By the way, last thing i can get on seamless or grubhub that i cant get on uber. I think its fine. No doubt about that. Im a city dweller here in new york. It works for me. It did raise concerns for when max left the yelp board. You do wonder what is going on behind the scenes and potentially thats why the stock is down today. Nine to five google says it has the first look at the new version of the device dubbed the enterprise edition. It looks similar to the last model, but its a bit larger, actually, and it has the ability to fold up. Thats one of the most requested features. The new glass is also expected to be branded as a business tool rather than a product for everyday users. Jason, does this look any sexier to you . No. Its the opposite of sexy, whatever that is. If you wear these on the dance floor, people run from the dance floor, which is what happens. I was at a party and a google executive came on the dance floor with google glass, and everybody ran. These devices really look terrible, and they dont provide that much value. The apps werent there. You know, google released them very early as a speculative project. You will see that they will have great application when you are fixing, you know, an engine in a car, and can you see all the different pieces and watch a little tutorial, but, you know, its very early technology. Theyre not going to be a big deal, and now i think theyre reporting it to tony fidel at nest, and nest is really having a heck of a time keeping talent. A lot of the people from the drop cam acquisition have left. Theyre all in the market going to other companies starting new companies. Nest is i think a little bit of a troubled unit inside of google, and then sending a troubled product to a troubled unit inside of google is i mean, it could be the death nail for these devices. Theres a lot of augmented reality coming that will be better. Whats the issue with nest, and the whole alphabet model was this idea of giving so many of these units even more ought onme so that they could attract better employees. Yeah. Its a fine point, and its a great idea, and it will work overall. I think the problem is people dont want to work for tony fidel, and, you know, he is just a little bit of an extreme personality, and a lot of the acquisition talent that came there, you know, i see them on the street starting new companies and leaving the company in droves. I think nest is a challenge unit inside of obviously alphabet, an incredible company, and i think spinning off units is going to work. I just think nest particularly hasnt really shown any really great new product advancement. Look at the two or three products they have. Theyre not advancing at a fast pace. Theyre not releasing new product. Theyre not releasing new features, which is exactly what yeah few was into trouble. Yahoo is a dead company because they refused to release new products. I think nest is kind of a Walking Dead Company too. Theyre not releasing anything new and interesting. Well, perhaps so far as glass is concerned, the enterprise angle will work a little better than the dance floor angle, jason. Jason. If we dont see you before the new year, happy 2016. Happy new year, everybody. Thanks for joining us. Lets take a quick check on the markets right now. Things are trading lets see here. S p up about 18 points right about now. We should tell you shares of pep boys rallying after carl icahn raised his bid for the Company Valued at over 1 billion. That stock up 8 right now. Retailers also moving to the up side. Shares of both kohls and in order stromz having a good day so far. When we come back, what to expect from ecommerce in 2016. A top analyst tells us what names you need to watch. Plus, a massive winter storm sweeping across the country ready to drop ice and heavy snow. Now on the midwest and the northeast. Well take a look at what its already doing to air travel. And Peyton Manning fighting for his legacy after allegations of steroid use. The real life jerry mcguire, super agent Lee Steinberg breaks down mannings strategy going forward. Squawk alley back in a moment. . Working 24 7 on mobile trader, rated 1 trading app in the app store. It lets you trade stocks, options, futures. Even advanced orders. And it offers more charts than a lot of the other competitors do in desktop. You work so late. I guess you dont see your family very much . I see them all the time. Did you finish your derivative pricing model, honey . For all the confidence you need. Td ameritrade. You got this. Welcome back. Amazon working on a big expansion for our am sdmron now business. Sameday and onehour delivery could be the key to success in ecommerce space. Gene munster is an analyst with piper jaffray. Its great to see you. The margin compression, the cost of one hour delivery or even two or three hour delivery is incredible. So the question i have is how they can possibly make that up in volume, which is so different than the rest of their business. Sdmrooits still really thin. To answer your question, they need to get that up to about four deliveries per hour to be break even with the 8 addition, and then obviously they can add on to that. This is going to be a drag and theyre investing a ton into this. Walk us through both market size if they can do that in. I can imagine them doing that in San Francisco, new york city, maybe in l. A. You know, anything thats even more expansive than that, i assume, becomes very, very costly. It is costly, and, you know, its talk about 10 per order. That is costly. Theyre putting a lot of effort into this too. They have added we track this on a weekly basis the number of cities that have come on. Theyve added 13 cities to their prime now portfolio in the last two months. That gets them to 26 cities in total. If you lack at the last three months, theyve added 18 cities. You mentioned its the high density cities where the ones that its most easily. Prime now is going to be something that is going to be a drag on the wroefr all earnings. It will satisfy that instant gratification consumer that can only be satisfying yes, there will be a some of the earnings expansion because of this, but ultimately its for good. Gene, it seems to me, you know, you talked about what the Business Dynamics of this initiative might be in terms of what it would take to make it break even. It seems to me ag amazon someday lot of these things like publicizing drum tests to send the message that we are doing everything in a customer pleasing way, and its really just kind of that over arching thing. You never need to go anywhere else. Is there a risk . Do you talk to investors who are worried about becoming more asset intensive or basically a business becoming less virtual perhaps by flying planes and things like that. Yeah. On the fulfillment side, i think investors are concerned that they may dip more into that and compete with the fedex or ups. Ups is saying their relationship is in great shape. I think have you to look at each one individually, and thats how investors look at it typically, and i think some of the things that are crazy for them to do, like the drones or the other delivery, i think that investors arent as concerned. They are concerned on our call today about what the impact of prime now is going to have on earnings. Obviously given the history of amazon, all the good thats happened is still met with some form of apprehension that were going to drift back to this spending mode. We were talking to jason. Wron if you hearted him in the last segment, talking briefly about amazon prime and the content piece of all of this. I made the observation that maybe theyre separate businesses. Maybe the content needs to get it right, and its like netflix, right . They have their own house of cards. People buy it for the content, and then other people buy it for the shipping and its not clear to me that theyre the same thing. I agree with you that theres an