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. The