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tv   Bloomberg West  Bloomberg  April 29, 2014 11:00pm-12:01am EDT

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>> live from pier 3 in san francisco, welcome to "bloomberg west." i'm emily chang. let's get straight to the rundown. >> the nba takes unprecedented action against clippers owner donald sterling, banning him for life. we will take a look at how this impacts the bottom line. first, a check of your bloomberg top headlines. a tax charge crippled ebay earnings in the first quarter. they reported a $2.3 billion
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loss. the reason, ebay has decided to repatriate cash from overseas, resulting in a $3 billion tax charge. repatriation, which many are choosing not to do, may change its financial flexibility. apple and samsung made closing arguments today in the patent trial. apple accuses samsung of copying apple features. samsung accuses apple of twisting words, saying three patents accused of infringing are not used on the iphone. the apple lawyer has accused samsung of month after month of frenzied activity. telling the jury, we are counting on you. and in a memo to employees -- he writes that he does not believe he has legitimate legal claims. he cannot know for certain what he will do. he denies the board will accept a plea deal and says the company is keeping its ipo options open. now, to our lead story of the
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day, twitter trying to get more people to sign up, 255 million active users. revenue was a bright spot. sales more than doubled year-over-year. in after-hours trading, it was the lowest level. cory johnson is here in the studio. some positive metrics here, for sure. >> on the whole, i thought all of the numbers look better. >> sequentially? >> some of the numbers got
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better. it was not the continuation of the trend that we see. i think it is a big deal. it does accelerate the growth rates. we saw the miracle that happened after facebook. it re-accelerated. i do not know if trigger pulled it off because they do not have the option of discovering mobile. twitter is already on mobile. but, again, a lot of the trends that were slowing down, revenue growth, international users, all of these growth rates have slowed down, and all of them picked up this quarter. >> who knows what they are thinking? they have revamped profile pages. i really like it. it is a lot easier to use. you can see images. they are doing more things to
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help people they know find them on twitter. >> they want to make it easier for new users to find the things they want on twitter, because there is this mindnumbing aspect of too many tweets. a broadly used platform. nowhere near that. >> in terms of all of these changes, he did not credit any one single thing, and take a listen to what he had to say. >> there was no specific one thing in the first quarter, one specific change that was made for the majority of the growth of some of our improvements and our recommendations, based on algorithms on our natives,
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mobile sign up process, and then as we mentioned in the company remarks, and process of making twitter more visually engaging. >> now, i do want to bring in a couple of guests, a research officer, from boston, and from new york, the ceo of a marketing firm. i will start with you. what numbers stood out to you on the call? you are helping the advertisers figure out where to put their money. are you convinced that they should put their money with twitter? >> yes, i am not a numbers guy, a story guy, a content guy. he is loving twitter. online content. he is feeling bullish about it, and i think a lot of advertisers are figuring it out. to me, it is a glass half-full scenario.
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twitter is a bit of a niche product for some people. it has a little bit of a learning curve for people. the changes are starting to kick in. they are going to continue to broaden their growth, and it will become more of a mainstream platform, so i see it as a wide road ahead. >> twitter has deeply penetrated mainstream media, but what about mainstream users? the user base is, like, one quarter of facebook's, and it gets significantly more than that? >> yes, from my standpoint, emily, they have to focus on this point. twitter is still a little bit of a popularity contest. if you do not have a lot of followers, it kind of feels like you have not succeeded.
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like your cable tv, could you watch 250 channels? could you do that at once? you want to enrich your media experience with twitter, and i think that that advertising number, that is what jumps out to me. if they can engage people who are participating from joining the conversation or following a conversation, that is money for them, and i think that could be a very, very important metric going forward. >> i agree with crawford. twitter is like learning a new language for a lot of people, and they have to do a better job at starting and teaching people the language, and the more effective they are doing that, the more the numbers will follow. i think there are two stories, one for brands and one for television. there was a story yesterday, and i think they have two things to play with. >> crawford, to the numbers point, which he is disdainful of, one of the numbers that jumped out at me, revenue per
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user. take your pick. it is up 75% to 95% year-to-year. they are trying to figure out how to match the marketer with the useer. >> yes, that says that to me, the people in the pool are enjoying the pool, and the advertisers are enjoying them. the trick is to either better target the people they have in the pool as well as to make it simpler to get people to slide into that pool and engage, which gets back to user growth. i think people are focused on user growth, which i think it's a bit of a red herring. that number is going to grow a lot faster going forward. >> there were some statistics that show that facebook and google demand way more of the advertising market than twitter, which is still miniscule compared to facebook and google. do you see twitter commanding a greater share of that market?
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>> this is not a two-horse race now. you have linkedin and others. it is justifiable. i think they need to realize they have got a lot more competition out there, and their dollars are being spread around right now. it is coming. >> to my guests, thank you both comments, and don't forget, i will be having an interview tomorrow with dick costolo, the ceo of twitter. ♪
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♪ >> welcome back to "bloomberg
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west." i am emily chang. samsung is out with first-quarter earnings, sales gaining 2.3%, but profit fell 3%, $8.2 billion, and samsung posted its lowest sale in its mobile phone business in five quarters. cory johnson is with us in the studio, and brian blair is with us on the phone. so, brian, is this saturation, or is this competition? >> i think it is a little bit of both. we saw some of this last year, and i think things are slowing down in the smartphone market, but there definitely is a competitive aspect, because in china, a lot of asian, you are seeing others coming in strong at the low end, so i think they are getting hit on both sides. >> and one thing that really surprised me, how much samsung counts on mobile. something like 76%? >> that is right. it is three quarters of their operating profit, but from a
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sales point, about 32 of their money came from mobile, so this is the engine that has been driving samsung. semi conductors actually did pretty well, but the bulk of their business really does come from mobile, and right now, there are signs of weakness. >> you would have thought this company had such a strong position in the business. what do you think were the weaknesses there? >> there are a couple of things that we have seen. one of the things going on, there have been shortages, particularly where there is anticipation of the buildout of the 4-g network, and there are is some shortages of a lot of components, not just memory. there have been some imbalances, and there has been a lot of demand, but samsung does expect that to grow faster than the rest of the market, and i think we will see this between now and the end of the year.
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>> now, the apple iphone numbers on the other hand were surprisingly good. what is apple doing right or better than samsung at the time, because the price points are very similar? >> samsung is attacking all tiers of the market. he have the galaxy s5 line, but they have products that go all of the way down in retail. they may be dipping more into the mid tier market with the iphone 5c and keeping the 4 on the production line, but apple is focused on the high-end right now. samsung and apple really are taking two different approaches, but what will really be critical for apple is when they come out with the iphone 6, and they do a larger screen. that is going to really attack samsung at the high-end, and it will be interesting to see how that plays out on the back end
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of the year. >> the cash number here, $50 billion in cash. unlike apple, they are probably not invested in r&d like apple is. what do you make of that? >> well, you know what, they spent a lot of money on marketing. this is really where i think the bulk of their money is spent, and it is spent well. there is just a big presence in advertising. that is where a lot of their money goes, but you are right, they will be returning some of the cash to shareholders. i think apple has set a precedent with his last report, where they are increasing the size of their buyback, and they are getting a lot more back to investors. i think samsung is forced to follow. i think global investors are going to have a similar expectation, particularly given that significant quarterly jump
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in cash. >> all right, managing director at rosenblatt securities, thank you. big developments potentially happening this week. coming up, disney has just announced the cast of the new "star wars" movie, and more from bob iger, coming up. ♪
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>> welcome back to "bloomberg west." i am emily chang. with yahoo!, live nation concerts will be streaming. since city saints and one tree hill. and big news from disney today, and out in the cast for the next star wars movie just minutes ago.
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jon erlichman is in l.a. who is it going to be? >> well, i think there are two parts to the story. some of the old people are coming back, carrie fisher, harrison ford. there has been a lot about them coming back. this movie will be 35 years after, so that will satisfy some fans, and here are some of the new names you have likely not heard of. the team behind this team like jj abrams are more concerned that you focusing on star wars than the names. this is one important project for ceo bob geiger. the other is their new resort in shanghai. we caught up with bob iger and talked to him about that. here is what he had to say. >> i am very invested not just in disney today but disney long-term, and one of the things that i think any ceo needs to do is not just manage a business
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successfully in the moment, but you manage it for success long-term, and among the decisions that we have made, collectively as a management team, was to invest in china and not just to plant seeds but to plant trees, which will hopefully fuel enormous growth for the company long-term, well beyond my tenure. so it means a lot to me, because when i think about my responsibilities, my legacy, shanghai disneyland looms large. china looms large. >> talking about things and that theme resort that are unique to china. what are some examples of that?
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>> there is the team of great imagineers, and we are bringing a disneyland park to china, and our strong instinct and the research that we have done supports this, that people want a disney experience. but we also know like any other place in the world, there are cultural interests and tastes and cultural pride, and it is essential for this park in order for it to succeed to reflect the tastes and the culture of china, so there are numerous elements of the park that will do that. we have not been specific about them, because other than mentioning a couple of attractions, we have said very little about what will be in the park, but i will give you one example. in all of our parks, there is a significant amount of entertainment, and most of that is in the form of shows that typically take place indoors or under fireworks, and the creators for shanghai disneyland, those not just
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conceiving the shows but choreographing them and directing them, they were largely chinese, and the performers will mostly be chinese, so there will be a very, very strong chinese element throughout the entertainment in these parks. one example. another is use of language. well, it would be interesting to say everything will be in mandarin. what we are doing is we are starting in mandarin, so all of the storytelling, all of the navigation and wayfinding, all of the menus, all of the language nomenclature will start in mandarin and be translated into english, instead of starting into english and translating into mandarin. is just another example of our approach. >> you recently acquired a company called maker studios. tell us about that, why disney wanted to acquire maker. >> much of their traffic comes
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from outside the united states. it is great for a company who needs to grow outside the united states. we have been extremely aware of and impressed with huge growth in media digitally, particularly short form media, and maker has done a good job. they are the number one supplier of short form videos of youtube, not only identifying creators of short form video but distributing it very, very effectively and using algorithms and usage data to enhance distribution and consumption. bringing that kind of expertise into our company when the world is changing so rapidly right before our eyes in terms of media integration, media distribution, media consumption, we thought it was very interesting. >> that is the ceo of disney bob iger with our own jon erlichman.
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coming up, virgin america, state farm, and mercedes-benz, just one of the sponsors who have joined the situation with the clippers owner. we will take a look at how big of a financial blow this is for the team, next. ♪ >> it is 26 minutes past the hour, and that means bloomberg is on the market. i am julie hyman. the nasdaq higher by almost three quarters of one percent, and technology in particular performed well, the s&p 500 and the dow up. earnings reports helping to boost the major averages, and we are also looking at averages before the fomc meeting. not a lot of changing treasuries today, but they are poised for the best month since january as the fed does meet. economists have forecast that
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leaders will scale back their monthly debt buying program. for on the markets, i am julie hyman. ♪
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♪ >> you are watching "bloomberg west," where we focus on technology and the future of business. i am emily chang. nba commissioner adam silver has banned donald sterling. >> effective immediately, i am banning mr. sterling for life from any association with the clippers organization or the nba. >> the ban follows a phone call captured on tape with sterling, where he said racist comments, and apparently sterling confirmed it was his voice on the tape. >> you want to broadcast that
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you are associating with black people. i am not you, and you are not me. >> with me in the studio, cory johnson, and a former head of the memphis warriors. you have been with us all day long. you have heard what he had to say. what are your thoughts? >> i would give him a gold medal. gold for silver. adam worked with a number of people to craft a response to this stupidity that is going to take the league in a more positive direction, not easy in the short run. >> how do you see that playing out?
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>> what we would love is to have a phone call to mr. sterling's lawyer and find out what they have been talking about today, what his advisers are telling him, and i think that is the next act here. >> it is going to encourage a subgroup of the team owners to make this recommendation. the team owners do. >> a lifetime ban is about as long as you can get, and i think and the context of sports ownership, this may be a bit pushy, but he is a dead man walking in the nba. >> we have not heard from sterling himself? are we going to hear from him? >> well, the last time you heard from him may be the last time you heard from him. this is really bad. what could he say, even with an absolutely tear-filled apology, for the nasty statements?
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>> you mentioned earlier, the cincinnati reds, comments, a fascination with nazism, but i wonder, in an era when we have so much social media, does this change what it means to be an owner? >> it changes all the constituencies, the players, the fans, the media itself. this has happened in three days. if this happened in the playoffs or in the off-season, i am not sure it would have blown up the way it has, and social media shows that words can be much more dangerous than any kind of weapon. >> you mentioned the media. would this have happened 10 years ago? >> look at many of the comments in the press conference.
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talk about donald sterling's history. and social media has basically put everything in hyperspeed, not just for the nba but all kinds of statements people make. there is no place to hide anymore. >> i was watching the press conference. a handful of reporters, people in the room who have sat with adam silver 20 years ago and are still covering the nba and have that knowledge. do you think that adam silver, now on a more public stage, do you think he always identified that the clippers ownership was a problem? >> i do not know about that, but clearly today, he took charge of the steering wheel and looked in the front view, not in the rearview mirror. he took the windshield approach,
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which is i am not talking about the past. he made mistakes. this has all added up. the guy is out. >> game five is tonight. what is going to happen? >> a lot of great players. i happen to think, and don't we all want to predict what happens in sports, i think there has been a major body blow to the clippers in all of this, and i happen to think the warriors are going to take advantage of it, but the reason people love sports is that we do not know what the heck we are talking about until that happens. >> it has been discussed if they could even be $1 billion. this is maybe a million dollars more than what people guessed recently. i wonder if this changes the value of the franchise in any way, or pure economics and being in los angeles, that clipper name and jerseys are just as valuable today and tomorrow?
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the value on the market is just as high? >> it is directly corrected to credit cards, so i believe the value goes up because you have incredible disposable income. they are immediately going to distance themselves with this sad chapter of the clippers and buy something that they can do wonderful stuff with. >> i wonder if this helps to re-energize the fan base in a way. once they move beyond this, if, indeed, a sale happens. >> pretty re-energized by a guy jumping over and running a point on my team and a lot of others. even more so, and that is what i think adam silver and the players association, the fans, sponsors, and everybody reached a positive mark today. this is not going to go away overnight, but with a lifetime ban and taking such a strong
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position, they have positioned themselves in a very strong place. >> how does the league look at potential owners? as prominent a local business person you have in los angeles. magic johnson. how does the league look at people in business, not former personnel? >> well, if i had a business that did due diligence, i would be knocking on every sports door today. this instance has shown that people who do deep investigation of potential owners is going to be even deeper. they look at it with a microscope, a telescope, into finding out who are the owners, what is in their background, to make sure that an event like this never happens again. >> all right, game five, the
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clippers versus the warriors in l.a., what do you think? >> i do not like it, but chris paul. >> all right, cory johnson and our guest, thank you so much for joining us. coming up, the supreme court is deciding whether or not police should be able to search your cell phone. ♪
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>> welcome back. i am emily chang. a police officer can search a someone's bag, but what about their cell phone? the supreme court will hear a case today about whether or not they need to get a search warrant. a senior adviser, brian cunningham, joins us from l.a., a deputy legal adviser to condoleezza rice, specializing in security and privacy law. brian, thank you for joining us now. as it stands right now, some states, you can, some states, you cannot?
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>> this is a case the supreme court had to take up because you have conflicted rulings. they are trying to deal with the fourth amendment and theories of privacy that are in some cases a decade or half-a-century old. in a california court, they upheld the right of the police to search a cell phone upon making an arrest without a warrant, and a federal circuit court in boston said, no, you have to have a warrant, so the court almost had to take this case up, and it is a trend, finally after years, starting to look at the impact of technology. >> a cell phone is probably a lot more revealing than anything else they could search, right? how do you expect the supreme court to weigh in on this? >> there is a really interesting
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split between the justices on whether the prevailing theory of privacy over the last 40 or 50 years, reasonable expectation, or the right to property, with these kinds of searches going forward, and i think, and i talked to some observers in the court this morning, the justices really are looking for a middle ground here. they do not -- there are only two or three votes for a warrant requirement in every case, but they also do not want to continue saying if the device is on you, the police can do whatever they want. it is always risky to predict what the supreme court is going to do, but i think they are going to find a middle ground. a key part of the fourth amendment is whether the police actions are reasonable, so you can have different outcomes in different situations depending on how likely it was that the person being arrested could destroy the data on the cell phone, whether it is an urgent situation, like a kidnapped child or something, and one other thing they could do is
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that they can come to a ruling that says the police can take the phone, dump off the data immediately, and then go that to a court to get permission to search that data. if they do not act immediately, the arrestee or someone could destroy the data on the phone. >> you can remotely wipe your phone. you have got mobile phone security companies working on this very thing to make it as easy as possible. can you give us some examples about when cell phone use is particularly crucial in an investigation or where it was abused? >> well, going way back to my days as a cartel prosecutor in the clinton administration, records, data on phones, and in those days, it was not so much cell phones, but their work some cell phones, it was crucial in the investigations that brought down the cartels, and in the cases before the supreme boards, the data was crucial, as well.
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in one case, there were gang videos. it was a gang retribution murder case, and in another case, there was data that identify the home of the person who was arrested, that then led the police to go there and search the home and find lots of guns and drugs and other things, and in both of these cases, the data was crucial, but the question was, was it time sensitive? did they needed at that moment, or could they have gone to a judge and secured a warrant? they'd in both cases had probable cause. i tell my friends to be conservative on these things. if you can get a warrant, get a warrant and, because you do not want to put the fate of all police actions on the court, and they could make bad law. >> ok, we are watching matt. brian cunningham, senior advisor, thanks so much for joining us. >> thank you. >> still ahead, the apple your
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secrets you need to know before launching a startup. that is next. ♪
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>> welcome back to "bloomberg west." i am emily chang. apple and faster chips, and also cutting the price of the cheapest models. the entry-level macbook air is now starting at $899. and speaking of apple, our next guest spent four years with them and wrote a book. he is now the chief evangelist at an online design platform, and today he was with an online learning site. he joins us now from stanford. what exactly are you teaching? >> we are teaching how to start a company.
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this is a very, very positive entrepreneurial environment now. things are cheaper. infrastructure is cheaper. marketing is free or cheap with social media, so we want to provide a 13-course explanation of how to start a company raab -- properly. early, and it is based on myself and my partner, and we have been in silicon valley for two decades, and we have seen hundreds if not thousands of companies, and we wanted to pass on our knowledge about how to start a company. >> is this something you can really teach, when it comes to missionaries, like steve jobs and mark zuckerberg? there is something more to it. >> there is something more to it, but, still, with someone being entrepreneurial, they can still do things wrong, and so
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there is no reason to use the wrong kind of corporate structure to recruit in the incorrect ways, to increase your overhead too much, so i am not saying you can necessarily inspire someone to be an entrepreneur, but if you have someone who is an entrepreneur, you can certainly make that person a better entrepreneur, just as you can coach somebody, no matter what kind of athlete they are, to be a better athlete, and you can actually also take someone who is not athletic and make them more athletic. >> you mentioned it is cheaper to start a company than ever before. and anyway, do you think it is too easy to start a company these days? some entrepreneurs tell us it is so easy, it is easy to get funding, the valuations are getting higher and higher, and
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may be a little bubbly. >> as a point of correction, it is not easy to get funding. it is just that you need less funding, so it is less important that you receive funding because so many of these things are free or cheap, and you can make the case that it is so easy, it is too easy, but i think that is a far better condition than it is too hard or that you have to have the right pedigree or right connections to start a company, so i think the more people out there pounding on keyboards and starting restaurants and stores, the better it is, because there is more variety, there is more addressing of niche markets, there is more experimentation. it is like the monetization of computers by apple, the democratization of computers by ebay, and then with google. a company im ceo of, we are trying to democratize design. that horse is out of the barn. it is going to continue. there is nothing we can do to stop that. >> being a chief evangelist at apple, after that, there are not
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many places to go. it is not easy to top that. >> i chose canva because it is in the business of democratizing design. it is making it possible so you do not have to buy expensive hard to use software or to be a designer to create your own graphics. i had a wonderful time trying to democratize computing with apple, and this is the second time i have been a chief evangelist in my career, and we want to change the world. we want to make it so that people who could not make graphics before can now do this, and this is a huge, huge opportunity. it is also a huge challenge, but it is a very enchanting challenge. >> so any startups out there on your radar? things that are all the rage? >> it is almost too hard to keep track of anymore, because as i said, it is so easy to start a company, and if you are in silicon valley, they are popping like popcorn all of the time.
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they can have everything that you ever wanted to do, and probably somebody else has wanted to do it. social media doing things. you say, wow, that is something i wanted to try, and somebody has already thought of it. diversity is a good thing. >> anything stand out to you? >> megatrend that i am trying to evangelize is democratization. things started in fast and free and ubiquitous, and this course teaches you how to use these kinds of environmental conditions to create a great penny that will grow into a healthy business. that is what we are about. >> all right, a skillshare teacher and chief evangelist at canva. if you live or work near a transit line, great, but if you
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do not, it can be a big hassle. last mile vehicles have started to pop up. a company makes a vehicle you can take with you on a train. take a look. >> my name is grant, and i am the inventor. this is an all electric vehicle. it has a range of about 20 miles and goes about 15 miles an hour. one of the things i wanted to design into the urb-e is that it is incredibly small, and you can't take it with you on a train or a bus. -- you can take it with you on a train or a bus. it takes about half a second for it to become an actual vehicle. it also weighs just under 30 pounds.
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and i came up with the idea based on the need for people to have a vehicle to get to and from work if they choose to take public transportation. it is the last mile scenario. it is different than a bicycle, because there is a short wheelbase, and the wheels are very small, and the feet are connected to the steering. typically, most people will go a few feet, and they will get it. >> available for pre-order now. the company is hoping to get its first units out in the next months. and just a reminder, tomorrow, i will be interviewing the twitter ceo, talking about efforts to increase users and user engagement, and much more with the twitter ceo coming up tomorrow. ♪
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