>> live from pier 3 in san francisco, welcome to "bloomberg west," where we focus on innovation, technology, and the future of business. i'm emily chang. this hour, we take you inside to look at a ride sharing service in new york city. lyft is famous for its cars that was supposed to start its service in queens, but that is not going to happen. they claim that lyft violates state and local laws. they claim a temporary restraining order against lyft, but lyft says no temporary

restraining order was granted. "we agreed to put off the launch of lyft in new york city and we will not proceed with this model unless it complies with new york city taxi limousine regulations. we will meet beginning monday to work on a new version of lyft that is fully licensed by the tlc and we will launch immediately upon approval." we will hear from the lyft ceo in a moment. but first, what is its business model and why is it ruffling so many feathers? take a listen. >> if you see a giant pink mustache driving towards you on the streets of san francisco, don't be alarmed. it is a lyft car that will give you a lift and maybe even a laugh. >> there is a pink mustache. often times the customers are smiling. it really helps break the ice.

>> lyft is a new crop of ride services like uber that allow you to use an app to get a ride. >> it helps connect you to get a ride. >> average cost is around $10. that is cheaper than a black sedan or even a taxi. it helps put cash in the pockets of regular people. >> between here and maine. >> he started offering lifts after being laid off from his finance job. he could bring in about $200 a day. >> what i like about lyft is the community helping out. it is good to be able to be there for them. >> i sat down with the lyft founder and ceo earlier today and asked him about the company trying to launch in new york and offering rides to customers. >> it will be lyft's biggest

launch yet. we are in six to five cities. -- 65 cities. we have been operation for two years. >> and the first two weeks are free? >> absolutely free. every single ride any user takes and the system is free. you want to give people easy way to test it out. wendy but here about lyft, they often wonder, what is this? what is this pink mustache? who are these drivers? how does it work? here is a free ride. test it out. >> there was some confusion of whether you're keeping the mustache. what is the latest?

>> the mustache will always be our symbol. it is close to our heart. in new york, we are launching something smaller here it is called the cuddle stache. >> how much every thought about getting rid of the mustache altogether? some drive for other services. it is a lot to deal with. especially in new york. some don't want to show to business meeting with this on their car. [laughter] >> i think the mustache will always be our icon and will evolve on how it shows up on the car to make it more convenient for the driver. we always want passengers to identify a lyft when they see one. it will not always be quite as loud. it was a fun way to start. as the brand matures and evolves, so will this. >> do you think someday the mustaches will be gone? >> i don't think there will ever be gone, but they will evolve into something more refined if that is possible. >> what about the fist bumping and the chatting and is sitting in the front seat? i know we are very family in san

-- very friendly in san francisco, but maybe in new york, maybe not. >> absolutely. new york is different. what is valued by our company is too. the reason why people love lyft and what it is because we bring these people in the car and say hey, be nice to each other. treat each other with respect. you might be delighted with the conversation that happens. the suggestion of a fist bump is an artifact of that. here is a way to break the ice and connect with this other person. what it has allowed us to do in every city that we have been in across the country, we would bring a driver who normally would not be doing this. they do at five to 10 hours a week, but they're out there having a good time and enjoying themselves because you're being treated with respect. on the passenger side, your delighted by a much better driving experience. >> what if you don't want to do the fist bump?

do you have to? >> no. you can politely decline. >> uber has been cutting prices aggressively. now you're about the same price in new york. what differentiates you from uber? why should i take the risk when new york city said officials don't want you there? >> as a passenger, there is no risk. we have the strictest security procedures of any we do county company out there. level criminal background checks on every driver. dmv driver checks. we have $1 million insurance policy. every vehicle goes through a vehicle inspection. we have hands down the most strict screening process. when you take a ride as a passenger, you know you will have the friendliest drivers and the safest experience. >> this won't be like an episode of cops? >> what about some guy who took a guy on high-speed chase in washington a few days ago?

it all sounded very scary. >> absolutely not. no high-speed chases. there will be >> the new york attorney general has announced they are trying to ban you guys in new york. >> yeah. >> what is your response? this has develop quite quickly. >> we are in regulatory proceedings as we speak. to fully understand the dynamics of the situation, it is important to understand the history a little bit. if you go back 80 years before the medallion system existed in new york, there were 30,000 caps -- cabs on the streets in manhattan. when the medallion system when in place, there are 13 thousand, less than half the number of cabs that new york city needs. this artificial medallion system, these medallions are valued at about $1 million a piece. they are owned by very wealthy individuals. when you add that value, that is over $13 billion. when you see a big controversial

regulatory battle playing out, what is happening is you have these wealthy medallion holders doing everything they can to protect this asset. it defies all logic. it is worse for the driver. it is worse for the passenger. passengers pay more, drivers earn less. lyft is there to open up a new alternative for folks to get drivers paid more money to provide a cheaper and better experience. >> airbnb is dealing with that stuff as well. what are you doing to deal with that? >> absolutely. what we're doing behind-the-scenes is we are explaining all of the detailed safety procedures that we take every driver through. we explain that to all of the officials. what we are doing is brand-new. most people don't understand the details of our operation. we sit down with them and we

walk them through their safety procedures. we get them in lyft and understand how we operate and what we are about as a company and where we are headed. we work together to find a way to regulate this. in the past, it had been black and white. there have been personal assets. there is a commercial vehicle, yellow cab that was only used for commercial purposes. you're using your personal vehicle, the same when you drag your kids off in school, but you are also giving someone else a ride in your community. regulatory agencies across the country have been grappling with how to create a new middle ground to accommodate the sharing economy? >> you think you'll be ok? >> yeah. we are in 65 other cities. california and colorado passed

the legislation. we have legislation pending in a dozen other jurisdictions. everywhere we go, the feeling is the time for this has come. we are here to figure out how to make it work. >> lyft cofounder and ceo, logan green, earlier today. still to come, what is it like to use in brooklyn? we find out. ♪

>> welcome back to "bloomberg

west." i am emily chang. it turns out it was not "lyft" off in new york city. it has to work out its legal issues. earlier i spoke with the tlc chairwoman on the phone. i asked about her position on lyft. >> our position has been with lyft that we welcome new technology. we welcome innovation. we have even gone to court to fight for the right to allow passengers to use their smart phone to hail a taxi. when it comes to safety, vehicle safety and vetting drivers, we cannot undermine the taxi system and the hiring system in new york. we have standards that must be met. in order to operate in new york city, lyft must meet those standards. >> lyft's leadership claims their safety standards are even better than new york city taxi standards.

for example, the driving age is 21 whereas for new york city driver it is 19. how do you respond to that? >> they have a list of what they say is improved safety standards. when you strip away -- it is not true. there is continuing vetting under the tlc system to make sure you maintain those qualifications. that is absent from lyft's model. if you have an arrest after you become -- there is drug testing annually. there is educational requirements that far of strip what lyft is suggesting. i think most importantly is that

constant daily check that we have on your ability to abide by traffic laws and your ability to abide by the middle laws of the city in the state is something that is completely absent from the lyft model. >> i understand that you had issues with uber in the past, but it looks like you worked out some things. how is your position on lyft different from uber? >> uber came in and they also wanted to work outside of the licensing system. but we highlighted that what we are highlighting to lyft -- the need for the safety of passengers and confidence in the system. but it is also proof to everybody that it is not that difficult to become a licensed operator in new york city. >> so, there are people out there who say that you guys are stuck in the past. the technology is inevitable. how do you respond to that kind of criticism?

>> it is a criticism that is not based in fact. we welcome innovation. we started an app and that is to allow app providers to use their technology to link technology to yellow taxis. many cars are dispatched every day using app technology. we allow key customers to pay for these trips using their smart phones so they can use it in the car. we are open to new ways to make the passenger experience seamless. to say we are not open to new technology and new innovations would be flat out wrong. what we won't stand is going backwards. what lyft is proposing is the go backwards and go back to a time when there were far more illegal cabs on the streets and no standards of what the cars should meet. the passengers were victims to whatever car and driver showed up. we do not want to go back where

you want to move forward, but we can move forward with a company that is asking us to style back -- to dial back on standards. >> that was the new york city taxi limo commissioner chairwoman and ceo. coming up, a pink mustache on an aston martin? we see a stylish ride around brooklyn. ♪

>> as lyft aims to move into the nation's largest city, what is the big potential? we get reaction to this regulatory storm. >> the last time i was on bloomberg, it was right after

seattle attempted to restrict ridesharing opportunities. i mention it would be a temporary inconvenience, which proves to have been the case. americans want options beyond taxis. there might be a month where regulators and old school archaic philosophies interfere with progress. no politician or regulator will get in the way. it is clear americans in every city in the u.s. that they preferred these options over taxis or certainly as a complement to the taxi service. the people who support the economies of sharing -- airbnb, lyft, uber will win. that will be the end of the story. >> sometimes we see technology that claims to be disruptive. aereo was shut down by the supreme court. how much do you worry about regulatory hurdles when it comes to lyft? >> i don't worry about it at all. >> really?

>> i think one of the reasons i was comfortable investing in youtube is i made an independent risk to be involved. there are things you can do. the thing is to have a lot of users addicted to the product. there could be a parade of horribles. it is not as if new york city is safer than san francisco or other cities. there is no evidence taking a

taxi in nyc is safer than whatever other option exists in san francisco. before you launch a product and service, people can create scary scenarios and use regulation to deter the launch itself. if it goes live and there is a massive popularity and people love your service, that will be the end. >> how does this play out in new york? >> i think over time it might be a political issue. right now it is a law and regulatory issue. at some point, it could be people running for office. >> why did you invest in lyft and not uber? >> i invested in lyft before they were even lyft. i did not really do an a to b comparison at the time. a lot of companies pivot or evolve to something slightly different. we realize it an interesting opportunity.

>> at this point, how do you feel about its chances seeing how uber has has grown? >> i think lyft is growing at a good clip, too. i think lyft is going extremely well. they are executing extremely well. i think lyft is here for a long time. >> uber has -- lyft has raised $3 million or so. valued at $17 billion. investors are very optimistic about uber's future. some say it is not worth that. >> i think investors are not always right. i wouldn't just use the evaluation prescribed to a particular business as assessing it. at the end of the day, consumers and users will vote with their feet. both will be successful and transformative.

cars will transform the way americans work and get to work, commute, travel. >> do you think uber is worth $17 billion? [laughter] >> i'm an early stage investor. i focus on the two kids in a garage kind of thing and not the late stage. >> big picture -- it looks like

uber has a good foothold in markets around the world. do you see lyft being that big or are they a niche player? >> they are growing rapidly notwithstanding this new york saga. lyft has grown massively in the past two years. i suspect you will see lyft thriving. >> what do you think of the pink mustache? >> kind of cool. [laughter] >> should they keep it? >> as an icon, it is perfect. is a simpler, more simple way to express it? probably yes. >> we will be right back. ♪

>> welcome back to "bloomberg west." i am emily chang. imagine where you can buy a home with just a few clicks. soon you may be able to. a company has announced a funding round of nearly $10 million and is backed by pretty much everyone in silicon valley. so, you claim you can sell a home in 30 seconds? how is that possible? >> we allow any american to sell their home in 30 seconds. put in your address, verify your identity, we will give you an offer to buy from you there and then. you can choose when to move out. you can choose at any time you want to move out. >> the reason why it is that a painstaking office is they tell you where you qualify for a loan and making sure that you as a buyer can buy out. what about the risk?

>> we take all of that risk away. you sell your home to us and it is guaranteed in. instead of having to spend days on the market waiting for buyers and subject to all of these risk if they don't get a mortgage are qualify in all this time you are waiting and unsure, we allow you to go to the website and say i want this amount of money and we will give it to you. >> and then you find a buyer. >> and then it is our problem. we transfer that pain and burden to us. we do this every day. it is easier for us than it is

for that individuals. >> how can you afford to take on that risk? >> hopefully we do it well. [laughter] we use science to value the homes. after we give you an offer that hopefully you sell. >> how can you value a home without seeing it? i know theoretically you can. sometimes pictures lie. >> oh sure. we have made some mistakes, but over time, generally speaking, data is better than human judgment. this is to vote multiple verticals. there was a study on the failure of expert judgment. it is the case relying upon an expert is a disaster. relying on math and statistics, you are almost always better

coming to the right answer. when it comes to your friend, you ask your friend, ask for sale signs on your block, you might go to zillow. the accuracy is like throwing a dart at a dart board. we use data, science, math to protect the value of your home. >> who are the target sellers and who are the target buyers? >> i have to remind people in the bay area about that all the time. it is a surreal world in the area. normal americans normally spend about $250,000 to buy a home. that is our target market. most people will use it i think when you try to move. american dream is to upgrade the home. it is a very complicated dance. as you try to buy a new home, he

had to sell your old one and you'll probably not qualify for a new mortgage without extracting yourself and it is a tight timeframe and very nerve-racking. he talked to anyone who has gone through this. you'll be able to sell your old home whenever you want. you could walk into your new home whenever it is best and convenient for you. >> it certainly seems like every single potential angel investor in silicon valley is on that list. how did you get these people to sign up? >> most of them i have worked with before. we did not raise money intentionally from anyone. when they heard what we were up to, they were interested in transforming this market. it has been basically unaffected

by technology. it is massive. we believe that technology and data can transform that market. that has resonated with a lot of entrepreneurs who we have worked with before. it is almost irrational to rent a property. if you earn a reasonable income in the u.s., it is wasting money to rent instead of own. the reason why people do that is because of the convenience of leaving a regular property at the end of the lease versus the costs of leaving a home. we allow people to substitute leasing to buying. it could change the entire economy. >> last question, you have a full-time job. how much time will you be spending on this? >> whatever is necessary. peter thiel was a cofounder and spent a lot of time with the company. a great investor at greylock. workday is another phenomenal company.

josh is also an investor and founder, which is thriving. a lot of examples of success in this area. >> keith rabois, opendoor founder and early investor in lyft. thank you for stopping by. aston martins are known for their high style and they are james bond's car of choice. how about riding in one with a pink mustache? ♪

west" where we focus on technology and the future of business. i am emily chang. lyft put plans on hold. this after the new york attorney general and finance superintendent sued at the last minute, claiming that lyft violates state and local law. it will not be bumping in new york this weekend. but they hope to roll out the pink mustache is very soon. what is it like to be a lyft driver?

>> lyft is trading in the hills of san francisco for the cobblestone streets of brooklyn. the startup typically requires a four-door cars, they made the exception to allow me to drive in style. >> why did you pick brooklyn and queens rather than manhattan? >> the need for transportation is greater. you have 95% of taxi pickups happening in manhattan and airports. there is a need for affordable transportation here. >> the company received $250 million in series d funding and is burning through some of that cash offering the first two weeks of rides for free. >> we are building the scale of an international highway, international railroad. it is a massive opportunity. >> lyft is more of a social

experience in a limo service and suggest you right in front and give the driver a fist bump. what is the deal with a fist bump? >> all of these things are suggestions. at first i didn't get it, but i met people and it helps get smiles from the start and breaks the ice and have a nice conversation. if you want to be quiet and sit in the back, you're welcome to do that to. >> the company aims to disrupt modern taxi pricing. how much you pay depends on what you thought of the ride. >> it is cheaper than uber? >> yes. >> and the passenger decides if they want to pay more or less? >> correct. >> crazy. >> for now, the service must originate in brooklyn or queens.

but people could say they could have a ride to manhattan and lyft will take them there? >> that is right. >> they're allowed to leave brooklyn and queens? >> yes. we started in santa monica and expanded the coverage area. we are tying to do the same here -- trying to do the same here in new york. brooklyn and queens are places that you need it the most and need access to affordable contributions. there is a lot of culture in the outer boroughs. >> so, you can see that they are trying to do something different than what you would think of at uber. they are doing something different that what you think of as part of the taxi service. of course, people can do this as a job and do this as a job and make money doing it. it is still a commercial venture. it is not like they are sharing cars with each other. >> matt, i think it is a little bit unclear. he said it was cheaper than uber, but they have been aggressively cutting prices. what is the real story?

how is it different from uber and why would it take it over uber? >> uber has dropped its price temporarily on his cheapest product to match the price of lyft. in response or maybe just because they are launching here, lyft is offering rides for free for the first two weeks. to get that concept straight, you do not pay anything at all. it is definitely cheaper than any price of any money for the first two weeks. >> for the first two weeks. what about after that? >> when is uber's temporary pricing going to change? uber doesn't say that. you cannot go much lower than

free. unless uber starts paying people to ride in its cars. it is possible. they have enough money. >> all right. i think we're seeing a price war in action. we will be watching matt miller in new york in an aston martin in style. for more on new york state and city officials challenging lyft, i want to bring in some experts. one is currently a senior fellow at an institute. he joins us from washington, d.c. my other guest is a professor of information at nyu stern school of business. gentlemen, thank you for joining us. is new york making the right call right now trying to ban lyft? >> it is a more complicated story in new york than it is in any other american city. we rely so much more on public transportation, taxis, for our day-to-day functioning. the consequence is deeper and

complex. the ways in which we regulate the old way of sharing taxicabs is sort of a little bit more complicated than it is in a city like austin or a city like san francisco. i think this is the beginning of a conversation. it is a conversation that has to recognize that we are sort of blurring the lines between personal and professional here. we used to live in a world where some people would not drive people commercially and others would drive them commercially full-time. right now we have got a

continuum. some drive five hours a week and others who drive 10 hours a week. we are in the process of adjusting regulatory system to accommodate this new model. this is just the first step. >> there is no question that new york is unique, but every market is unique in its own way. having worked in chicago, is new york handling this the right way? >> that is a tough question. i think new york has to handle it the way that they feel is right. i work in d.c. and chicago and face these issues. they were in favor of innovation first and foremost and the free market to some extent deciding what were the right rices, what -- prices, what is the right type of ride and seeing how things shake up. you're also seeing in new york and the issue of the value of the medallion.

this is something people are not talking about too much. the medallion to drive a taxi is about $750,000 in new york city. you have to think about the economic effect on that paradigm when someone can start driving for free and there is no regulation. >> talking to drivers in different locations -- some of them love these services. some of them don't love these services. some have given up and gone over to uber and lyft. some are insisting to drive a taxi, a rune. are the companies right going into the cities and waiting it out rather than waiting until it is legal? >> i guess you could think of companies having two strategies. one is to ask permission and the other is to ask forgiveness.

in some cases, eventually what should be driving -- whether a government is open to the service is popularity. right now it would be hard to ask uber to stop working in new york. there are so many people who have started to rely on it. on this point of view, they come in and that popularity proves the value of their service, then they probably have a stronger position when trying to expand the regulatory framework to accommodate them. >> you say that these services create an infrastructure that can save a city millions of dollars. gabe, you're talking about medallions and worrying about the money that these taxidrivers have invested. if these services can save money, could it be a better long-term bet? >> yeah. there is definitely a place for

these systems. we have complaints in washington where i am sitting right now from some who say they cannot get picked up by a taxi. services like lyft and uber are agnostic. they're going to queens and brooklyn, places that have been traditionally underserved by taxis. i think that there is no question. on the supply side, they are providing employment for people that are underemployed. now we have 7.5 million. services like lyft or airbnb can often allow people to keep their quality of life where they need to and they -- when they don't have a full-time job. >> all right. we'll have to leave it there unfortunately. gabe klein at the urban land institute. thank you for joining us. and arun of nyu stern school of

business. thank you. why is the weather channel ceo wearing a smart watch? find out how local tech factors into the company strategy for driving traffic next. ♪

>> welcome back to "bloomberg west." i am emily chang. we turn to the bwest byte, one number that tells a whole lot. jon erlichman is back from sun valley and at his home in l.a.

what have you got? >> there is a new ios pushing of the weather to the site. we caught up with kenny on the weather strategy. >> i think the value is always determined by the subscriber. the fact that we are so highly rated in the morning with people starting their days with us and staying with us all day, that means they are very interested. i think those fans love us. i believe that our partners get good value from that. it is a great brand. they know everyone likes it. >> to your point about the mornings, you guys hired sam champion. that was a big play to say we want to be a very important morning destination. how was that going for you?

>> we have got sam and his colleagues doing the awesome weather show from 7:00 a.m.-10:00 a.m. we have another well-known name. who everyone knows for tropical storms. people know it is the definitive place to come to the weather site. >> i notice you're wearing a smart watch. it is a nice transition. people think of the weather channel, you think of the actual channel. your brand is big in the mobile world. tell us how you are able to coexist. >> we give people weather science and weather stories wherever they want them. mobile is growing in a huge way worldwide. it is helpful to have it on your

watch, in your car, on your mobile device. they turned to the television for more. i think people start on the mobile device and con to the tv. >> basically the mobile experience is helping to drive traffic for television. >> it certainly is. >> it is kind of an amazing thing to think about it or talk about that five years ago. >> we have certainly learned a lot about how to use our mobile audience to drive the television audience. they work well together. >> that was david from the weather company. san francisco weather on saturday, sunny. >> wonderful. i was looking at new york. 80 degrees where lyft is trying to launch today. at least it will be warm out there. thanks so much. thank you for watching the special edition of "bloomberg west" talking about lyft. see you on monday. ♪

>> this week on "political capital." congressman lewis iteris on immigration and the border. richard rubin and the highway bill. elliott gotkine from tel aviv on -- who is the biggest 2014 albatross? we begin the program with the chairman of the immigration task force, luis gutierrez of illinois, probably the most influential latino leader in washington.