>> we are finding it, we are testing it. we are on a quest to show you the most cutting edge companies on the brink of the future. tonight, we visit the epicenter of the american robotics industry, boston. i will start at irobot, the pioneer company at the start of it all. -- heart of it all. >> meet baxter, whose goal it is to bring american jobs back from overseas. >> i will visit where they develop robots to do the back breaking work no one wants to do. >> our goal is to revolutionize

agriculture. >> "bloomberg brink." companies that break the mold, conventions, boundaries. and the future of technology, design, and industry. >> we were just in boston, which is the epicenter of the robotics industry. >> it is. there are 100 robotics companies scattered around boston. the grand patriarch of this whole scene is irobot. many of these newer robot companies were all started by former employees of irobot. >> irobot makes the roomba, the vacuum cleaner. >> they do, but it also makes robots for the military, the police.

robots that will go anywhere you do not want to be or cannot be. ♪ >> so much has been done in hollywood around how robots will impact our lives. we set off to figure out what is keeping us from having the robots. that we all dreamed of. it has been an amazing journey. one of the exciting applications for robotics is to allow people to actually physically be somewhere they are not. if i could attend the meeting. i could diagnose a patient from my office as opposed to having to travel, the world would be a different place. >> since you have started in the boston area, there have been many more robotics companies that have taken hold here, some of which actually come out of your company, is that correct? >> absolutely. boston has become the center of the universe from the perspective of practical

robotics. there is no better place in the world to start a robot company than right here where you have all of the expertise. this is our outdoor test area where we run our robots through their paces. this is our largest selling robot. there are over 3500 of them in service. these went out to afghanistan, and we did some cave investigations. the idea is, how do we keep that operator in a safe location while the robot goes in a dangerous environment. we have a camera at the end of the arm. the camera can rotate, provide 360 degrees coverage of the vehicle. >> tell me a little bit about how the bot was used in the investigation following the boston bombing. it was used in the investigation of the suspect's vehicle. it was able to search the car, search the trunk.

>> we call this the first look. you make it simple to operate. you pick up a controller and drive it. it has four cameras on each. it knows that it is upside down. it can climb up over rocks. >> from small and cute to massive and hard-core. >> that is exactly right. >> designed for explosive ordnance disposal, designed for heavy lift. this is a very fast robot and the maneuverability is amazing. >> there we go.

>> come on. daddy is thirsty. i need my beer. >> i have been around and seen what irobot is working on for the present. this is what you are working on for the future. >> that is right. >> it looks like a space man's hand. >> this is a space glove. filled with air. there are tendons here that allow each digit to flex. flex these digits here. >> look at that. that is crazy. may i? >> of course. >> it is squishy. very cool. with all the advancements you are working on, what are the applications you envision? >> manipulating objects in the world.

this way, a robot 10 years in the future can interact in the home, pick up objects for you. they can do tasks for you. >> you talk about the context of presence, that it used to mean virtual presence meant you have visual information. audio information. i can see and hear. what you're working on provides an additional sense, which is touch. >> let me show you our robotic hand. very easy to control. each of the fingers, like this, also tactile sensing. you want to put a baseball in? >> yes, sure. >> all right. you have a good grip. >> it does. >> i have been here for a little while. i have seen robots with military and police applications. you have an entirely different environment that irobot has been

working on trying to being being -- to bring robotics to. >> hospital environments. it allows doctors to be at the bedside of the patient even though they may be thousands of miles away. >> you are not doing anything. >> it is driving by itself. i asked it to come. this can be helping the doctor to do a consultation. >> a monitor. >> it allows the doctor remotely to be able to talk and see the patient. >> this is working in hospitals. i imagine there are other applications. you are talking about extending your ability to be in other places. that is not necessarily limited to hospitals. >> you are right. we just partnered with cisco. the first business collaboration robot.

we enable the freedom of the remote worker to be wherever they need to be at their own control. once you are in the office or conference room, you could turn around and look at the whiteboard and it gives you the feeling of a physical presence. >> so i could be sitting at home, as long as i am wearing a shirt -- i could have nothing going on here and nobody would know. very good. >> this remote-presence concept is exciting and has a disruptive potential for caring for our elders and visiting france on a whim. now, as a result, the world is a little smaller. a little more connected. >> what was the inspiration for this charming face?

>> the face always looks where it is about to move. so you are comfortable being around it. ♪

>> the entire robotics sector is connected through irobot.

which was cofounded by rodney brooks has his own robotics company called re-think robotics. what did you see when you went there? >> i got to meet and spend time with baxter, a manufacturing robot created in order to take on chinese manufacturing and bring back jobs to the u.s. >> isn't the conventional wisdom that robots will take jobs away from human beings? >> that is not how he sees it. he believes it will create american jobs by stopping companies from outsourcing. >> we will have a lot more robots in all parts of our lives. it will be a symbiosis between people and robots. we are trying to build robots that ordinary people can use in factories. baxter is a robot that can go

into factories which would never have had robots before. that the factory workers can work side-by-side with. and train to do tasks. >> this is baxter. i am anxious to meet it. i have heard so much about it. >> it is meant for small companies that have never had robots before. the idea with baxter is it is easy for people in factories to train it to do new tasks. traditional robots are not sensing the world around them. that robot is going this way. it will keep going and it will be bad. baxter is aware of its surroundings. it has sonar. if it runs into you, it stops. it is safe to be up close to it. >> show me what this guy can do. >> baxter will sort the boxes, using this scale. if it is small enough, the weight will pass. if it is heavier, baxter will put the part in the trash bin. >> he will pick up that first object.

it decided that is the right weight, so it will put it on the table. >> this is not the part we want to take. baxter is going to weigh it, and it will fail. >> it rejects that. now it will get another part. grab the hand and we will see. >> a little common sense, passed on. -- the part's gone. it goes to get the next part. the traditional robot would have just gone through the sequence with nothing in its hand. >> what was the inspiration for this charming looking face? >> the face always looks where baxter is about to move. so you are not surprised by its motions and you are comfortable around it. >> when we talk about robots and manufacturing, there is always a question of the robots replacing jobs. >> what we are doing is getting american workers productivity tools. it makes american workers more productive so instead of having to send money overseas, the

money can stay in the country. and manufacturing can be done here. >> it is important to me we make our robots usable by ordinary workers. just an ordinary worker a very smart person, much smarter than the robots. for fifty or 100 or 200 years. >> the pc did not get rid of office worker but it raised up the game for office workers, who can do so much more now. >> i just saw a complicated task. that baxter was able to do. how does it learn that and how was it trained? >> i will let him teach you to teach baxter. >> you will train baxter to grab. you will grab baxter's cup and put it up on some of this. now you will take the arm. >> ok. >> now that you have placed it, go ahead. press run. >> now it is doing its thing. you just made baxter do a task. >> we had a version of the

robot. the baxter research robot. it has been shipped to universities all over the country. they are using it as a research platform to have other ideas. >> this is our baxter robot. we got it a month ago. we would use it for research on how robots can recognize. and interact with the world. >> what are you using these models for? >> you can send that off to other robots that are more mobile in the field. >> a lot of our work is geared toward harsh environments in the ocean and space, so we learn about objects and how to physically interact with them here and translate that to other robots in the field. robots that might be for the military. baxter is cheap enough, you might think about having one

baxter per grad student. lets us think of ways to use them that might not have been feasible before. >> it will lead thousands of people work on robots, and they will apply it to the biggest problems. >> basically, i think it's limitless. >> grommet thinks i am a plant. >> i am jealous it goes to you. it will go to you now. check it out. come get some. yeah. ♪

>> you visited another company that emerged from irobot? >> i did. i spent some time with harvest automation. robots can move potted plants around nurseries. >> they are taken a job that baxter could, potentially? >> they are jobs nobody wants to do anymore. harvest is hoping their robots can be the alternative. >> harvest automation is taking robots into the field of

agriculture. agriculture faces big challenges in the next 30 years. we believe robotics will play a big role. >> these are some robots. >> yes. >> does this have a name? >> harvey. we started out, as engineers do, giving it a serial number. we had a visitor in one day who said, you should call it harvey. it immediately stuck. each robot also have a name. this is astro. this, we call the gripper. stand back a little bit. this robot is designed to pick up and move plants. the plants can have the containers close together on the ground. as the plants grow, they need space for the plants to grow out. they put them out on these huge fields.

this is an industry had $17 billion in the united states. the important thing we realized a few years ago is they have huge labor problems. >> farm workers in this country -- the availability of people to do that work has been in decline over the past 10 or 15 years. they have relied on migrant labor from countries south of the border. increasingly, those people are choosing to stay in their own country. we saw a real opportunity to bring robotics and and take on -- in and take on some of those tasks that have historically been done by people. >> there have been a lot of failures and robotics. roboticists tend to love robots to death. they treat robots like they are in the future. if you build a product, once a product is built, it needs to be priced in a way that is competitive. >> what is all of this? >> our roadkill robot.

this is where we test all of the components and the circuit boards. as much as possible, we buy off-the-shelf components. the computer might be in a cell phone. the cell phone drives the cost of these things down. >> there are a lot of cell phones in the world. >> we can piggyback on that and get something not too expensive. >> what did you learn from the creation of roomba that you are able to bring to the creation of harvey? >> you know what it does. it moves around floor and does not get stuck. what i was looking for next was something that was one technology step more difficult. our robot also moves around a fairly flat surface but it adds one element. it changes the environment. that is a useful application in our industry.

>> this is our test farm. what we are trying to do is simulate to the best of our ability the conditions our customers will see. >> how do they know what to do? >> they are simple. they have a few things they need to know about. that is what they focus on. they start up and they do not have a plant. and they say, i need a plant. they have a sensor that lets them see the plant. they will get one of those. they find the plant and pick it up. now what do i need? i need boundary tape. i found the boundary tape. now i will follow that tape. i will keep following the tape until i see more plants. now i see more plants ahead of me, and i see a pattern of plants. and it says, where is the next hole in the pattern? there is the hole. back to the beginning. >> there is one pot left.

he has got it. what will it do? grommet. >> grommet thinks i am a plant. >> i am jealous they keep going to you. >> it will go to you now. >> check it out. come get some. >> yeah. >> in agriculture, more and more, you will see small robots in the field making sure every plant gets exactly what it needs when it needs it, maximizing yield. >> what we are working on now is a machine to work with harvey to trim plants and apply herbicides and pesticides, fully automating the maintenance of the plant. we can gather the right data and deliver chemicals in a targeted way and get higher yields in an acre of ground. >> our goal is to revolutionize agriculture.

the world will be in the next 30 or 40 years, produce 70% more food. it will have to do that with finite resources. the same amount of land. the same amount of water. we see that robotics will play a big role in solving the food problem in the next 30 or 40 years. ♪

>> get big fast. >> the mantra of amazon.com and the founder jeff bezos. >> from the moment i got there, the feeling was that i pressed down the accelerator. >> he rewrote the rules of retail. >> there is a sense of urgency around this internet land grab that was taking place. how do we establish the amazon brand? >> his strategy did not always pay off. >> people look at the financials and say the company will not make it. >> amazon.com was profitable in december 1995 for about one hour. >> with a series of slight moves, jeff bezos built and rebuilt amazon.com.

>> it is the thing he does not if you asked a question and the answer is something he will not want to get into, the answer you're going to get is the laugh. he is laughing all the way to the bank. >> you can buy anything at amazon.com from books, music, clothing, to a tiki hut. it is the most successful online retailer in the world. is still run by the man who created it back in 1994. it was founded by jeff bezos. >> he seemed to realize that being the singular place where a consumer can buy anything that is available in the retail market was a critical part of the company's growth strategy. >> the public image is of a super hero entrepreneur. and he is that.

if you look at his life from the very beginning, he has solved the problems and created billions of dollars. >> he is more guarded than his public persona and declined to participate in this program. jeff bezos was born in albuquerque, new mexico in 1964 to a 17-year-old high school student. his mother divorced his biological father and married miguel bezos, a petroleum engineer. miguel adopted bezos in 1968. jeff bezos described his early computer experience in a 2001 interview. >> there was a company in houston that had loaned access mainframe computer time to this little elementary school. none of the teachers knew how to operate the computer. there was a stack of manuals. me and a couple of other kids stayed after class and learned how to program this thing.

>> at summer camp based out of this house with an emphasis on finance and literature. five students signed up. in 1986, he graduated from princeton university, summa cum laude with degrees in electrical engineering. and computer science. we spoke to a deputy editor at business insider. >> he was recruited into a hedge fund. he did not want to work in finance. he wanted to work in computer programming. the hedge fund was a computer programmer. this is built around algorithms and the type of technology that he is interested in. >> it was not the only thing he found interesting. >> he found something that astounded him. the internet was growing at 300% per year.

he became obsessed with those numbers. >> studying the top 20 mail order businesses, he saw an opportunity online. >> chris anderson is the editor in chief of "wired" magazine. >> he could see a technical tsunami. it would change the way we bought and sold. the question was what the major we buy is. -- what domain should we apply it to? >> the answer was books. no comprehensive catalog existed. in 1994, he quit his wall street job to pursue his dream, to create one of the world's first online bookstores. his first investors? his parents who we talked about with the academy of achievement. >> first question was, "what is the internet?" he was making a bet on his son. ♪

>> in the summer of 1994, jeff bezos and his wife headed to washington state armed with $300,000 from his parents. this entrepreneur and technology expert is head of the investment firm. adventure holdings. >> a lot of people were leaving wall street for start ups. jeff was different. he had a solid business/wall

street background. he created something amazing. >> they settled in washington and hired two programmers to write the code. bezos related the story in a speech. >> it was the house for our first business. it had a garage. it seemed the right thing to do. since there is a history of startups in garages. this was not fully legitimate. it was a converted and enclosed garage. i consider it somewhat legitimate because it was not insulated. >> he named it amazon seemingly endless south american river with the countless tributaries. on july 16, amazon.com opened its virtual doors to the public. james marcus was employee number 55. he was hired to do right lists for the site.

>> it was quite rudimentary. there is a front-page. the most notable thing, there is a huge catalog of probably 700,000 books at the time, but there's no content in a catalog. >> the fledging amazon.com had no advertising budget. sales were generated solely by word of mouth. the managing director of internet research at ingenuity: >> it was a lot different at amazon from the beginning. they were not in silicon valley. they were not in seattle. they were not into the whole hype of the bubble. they were not putting out press releases every single day. >> it caught on. within a month, books have been sold to customers and all 50 states and 45 other countries. >> what was different at amazon is that jeff ran it right. he was organized and understood distribution.

he knew how to motivate people to buy. he did things with great attention to detail. >> jeff bezos' goal could be summed up in a simple line. >> it was a mantra on his part. get big fast. it was a strategic decision on his part. everything had to be on steroids. all growth had to be on steroids. >> eric was manager from 1999- 2001. >> there was a sense of urgency around the commerce market share. the land grab is taking place. how do we establish a brand and grow the overall business? at the expense of competitors within the very time-bound window? >> the strategy paid off bigby the end of 1996, the company reached $15.7 million in sales. the gains were boosted by amazon's ability to offer tax- free shopping. >> what makes us different is a vast selection and convenience. we delivered to the desktop.

we are the broadest discounters in the world. we deliver the best selling titles. we have twice as many titles as the largest bookstore offers. >> early investors were frustrated. the surge in sales came without profits. amazon spent millions developing software and expanding the business. >> there is a lot of risk that was taken on by the company during those early days. i think there is a lot of speculation on whether that was the right thing to do. it is easy to look back and say amazon needed that capital and to invest at the rate they did to achieve the scale they now have. that was not always clear from day one. >> what was clear is that jeff bezos was unstoppable. he kept up the pace and powered ahead for amazon's ipo. >> the idea was that you cannot rest on your laurels for one moment. you have to keep innovating all the time.

you had to stay ahead of your competition and not have a second of complacency. >> on may 15, 1997, the stock began trading on the nasdaq. it was nearly $12 higher than its offering price. >> the actual ipo was a very big deal. there were parties all over the company. jeff addressed us over the speaker phone from new york. jeff was telling us that we had made history. you have all made history today. it was pretty exciting. >> despite the well-received ipo, analysts offered a dour assessment of the company. >> tim o'reilly is founder and ceo of o'reilly media. >> most remember that amazon would be toast. people were scrutinizing their financials. they said it will never be profitable. >> there were a lot of naysayers. >> engineers were hard at work. updating the site,introducing features like one click

shopping. by the end of 1997, the value of amazon stock nearly tripled. >> jeff would say "do not pay attention to the stock price." he was confident it would go up and up and up. he felt it was very dangerous to look at it in the short run. >> amazon continued their frantic expansion. they hired more than 7000 employees and beefing up their product line. >> we are talking about virtually everything and anything. we could sell groceries, healthcare, a cell phone plans. magazines. then eventually hardware. garden hoses. toys. >> the expanded product line in high volume sales paid off fort amazon.com and jeff bezos. on december 20, 1999, he was awarded "time" magazine person of the year. >> my parents were proud. it made my mom cried. that feels great. >> it was the ultimate

legitimization of his starry eyed dream of conquering the world of e-commerce. >> it made him a folk hero in a way. it was like paul bunyan was in the office down the hall from you. >> jeff bezos was at the top of his game. an industry wide disaster was right around the corner. ♪

>> amazon.com was a juggernaut. the dot com bubble burst in 2000. stock prices slumped. jeff bezos was forced to take drastic measures. >> there were two waves of layoffs. you did not know who was going to go. you cower in your office and wait for the human resource person to do something. it feels bad to see our colleagues go. >> in the context of a slowing economy, this was the only prudent decision that we could make. >> by september 2001, the company's stock hit an all-time low and bottomed out at $5.90 a share. >> from a poster child to whipping boy in a nanosecond. it is not the kind of stock that you can own and sleep well if you are a small investor.

that is true of all internet stocks. >> the advantage that amazon had was that they had built this a war chest on their balance sheet to fund them through all of this. >> jeff bezos made a lot of large bets. not all of them paid out. the company did not profit for many years. the reason jeff bezos got away with it is because he was always very direct with employees and stakeholders in the company. >> at long last, by january 2002, those bets began to pay off. amazon stock price rebounded and jeff bezos' company did something they had not done in seven years, posted a profit. >> he was unwavering in his confidence. he could see the bigger picture. he knew that the skeptics were short-termers who were not seeing the big picture. he stuck to the vision. >> once the bubble burst, at the investors' patience for companies saying they would

build it out was very thin. amazon took advantage of that and started partnering with target and toys r us and other retailers. >> he joined forces with more than 400 companies. not all retailers were willing partners. >> i know of a number of cases in which he has acquired companies in order to take out competitors, potential future competitors rather than because he wants the business to continue. >> with this company back on track, jeff bezos switched gears and increased his focus on a much different passion. on march 6, 2003, he charted a helicopter to a remote region of southwest texas. he was looking to buy up ranches for a venture he started in 2000 called "blue origin."

it is a technology company whose purpose was to develop vertical takeoff and landing rockets for space travel. the trip was nearly a disaster. shortly after takeoff, the helicopter flipped and landed in the river bed. >> jeff bezos almost died in a helicopter crash. it is a pattern that he can go through something difficult like a dot com crash and be philosophical with it. laugh it off. >> unlike space exploration ventures, jeff bezos is obsessive about keeping his origins secret. >> he is secretive. from the point of view of the space industry,that is sort of a pity. what makes a good market is when you have a bunch of competitors openly competing in try to position themselves against one another. they compete for money and people. >> after six years of working

behind closed doors and locked gates, the test rocket blasted off. this was closer to home. >> this is an opportunity to expand this. it required someone with sufficient clout to do that into it. only amazon was in a position to do that. ♪

>> in 2007, jeff bezos talked to the "charlie rose" show. he was announcing the release of a groundbreaking new product. >> this is what we are talking about. it is called the kindle. tell me when you first had the idea that this might be possible.

>> we realize that there were a few technologies that were converging that we could combine together with the right recipe and make something that would be transformative in the world of electronic reading. >> it was an instant hit. >> amazon took this device out there that takes away so many of the pleasures that people take. you cannot smell the pages. but it turns out, book lovers love the kindle now. >> it sold out nationwide in just 5.5 hours. the number of ones sold remains a closely guarded secret. a spokesperson said they choose not to disclose the number. jane freedman is the co-founder of open road integrated media. >> and no one today knows how many there really are out there.

it is a guessing game. we know there are millions. how many millions? it is strategic for amazon. that is what they do. they keep information close to the vest. >> publishers saw it as an industry killer. >> there will be real blood on the tracks. publishers did not wake up soon enough to the fact that amazon was a competitor. >> while it was making serious waves in the marketplace, amazon was preparing to make its largest corporate acquisition to date. tony hsieh is the co-founder of zappos. it is the leading online shoe retailer. >> when i met him in 1994, he had contacted us. he said he was interested in acquiring at the time. we said we were not interested because zappos would lose its identity. >> he was hesitant to sell to amazon.

>> they were willing to consider a different scenario where we could remain there. we started realizing that they might actually be really great partners. >> amazon purchased the s hoe retailer in 2009. zappos investors received 10 million shares. worth about $1.2 billion at the time the deal closed. >> they got stock which is better than cash. jeff bezos can steamroll the competition when he needs to, but he also is willing to play ball and negotiate. >> the shoe fit. the kindle was about to get some serious competition from a technology giant. >> we call it the ipad. >> in 2010, apple launched the

ipad design for use as an electronic reading device. jeff bezos cut costs and added new features. >> he is always been comfortable playing with very tight margins. when you see the kindle lowering in price, you are seeing him recognizing that the real long- term game for amazon is to be at a place where everyone buys all of their e-books. the kindle is how they get them. >> the growth of the electronic book market devastated stores. >> amazon became a competitor to the brick and mortar retailers. everybody was coexisting. borders did all of their digital selling through amazon. it may have been their downfall. had borders established its own presence, it might have been a different situation today. >> according to the authors guild, amazon had been buying

books from publishers at $12 or $13 wholesale and selling them as kindle books for $9.99. taking a loss each time. john grisham railed against the pricing model. >> the book is worth $10. whether it is a discounted hardback or in e-book. if we are $10, the whole industry will change. you are going to lose publishers and bookstores. >> others saw opportunity. >> you look at all the authors that have been empowered to develop a direct consumer relationship that they never had before. that is where amazon is able to come out a winner by building a bridge between authors and their readers that in the past has never really existed. >> borders books filed for bankruptcy. barnes and noble is looking for a buyer.

>> in 2011, amazon.com steps beyond the retail sales market and into the video streaming ring, going head-to-head with netflix. andrew is a television editor. >> i think you are looking at amazon and really sizing them up as a competitor. amazon has a lot of traction on line. they have deep pockets. they are at the beginning of this effort. in time, amazon could grow to be as big as netflix. >> the retail giant is fending growing efforts to put an end to its untaxed online sales. new laws may force them to charge local sales tax. jeff bezos remains cool under fire. he continues to forge ahead. >> he has his fingers in everybody's pockets. he is video streaming, music, he is even selling android applications amazon.com's app store.

that goes right after google. if he sees something where amazon can make a piece of money and help the margins, he will go for it. >> going for it has gotten him this far. his space project is going even farther. in april, 2011, nasa awarded blue origin $22 million to develop the space vehicle design. he was listed by "forbes" as the 30th richest person in the world, estimating his net worth at $18.1 billion. amazon.com remains the world's hardest online retailer. >> he is not as a visionary. he is an architect. he has blueprints and some notion of how to make things work. he thinks very carefully about design and structure and operation -- that is what turns a visionary to somebody that accomplishes it. >> he could have sold amazon to barnes and noble and walked away

with millions of dollars. like in his early '30's. since then, he just keeps on coming up with really good ideas. >> he is not the hardest charging going to take no prisoners types ceo. he has his vision for how he will help this company. he can surround himself by people who will buy into that. that is one of the reasons why he has been so successful. ♪

. . >> welcome to the best of

bloomberg west. i'm emily chang. every weekend will you bring you the best of bloomberg west. every week we bring you the power players that are resshaping out world. it is an explosive story about the massive target data breach. businessweek has learned a target security systems quickly picked up the data, but executives did nothing. what when wrong? brendan greeley has a look bac