emily: imagine a global classroom where anyone can learn anything. he got his start as a hedge fund analyst. he posted a few tutorials on youtube that became so popular he made it his life's work. become an academy serves 6 million students over one million teachers. computerverything from to calculus, it is all three. joining me today is con academy

kahn academy founder. you grew up in louisiana. you are wealthy. you weren't privileged. you were on free school lunches. >> i never met my dad really. she raised us as a single mother. she had a bunch of odd jobs from managing a local convenience store. she collected change from the vending machines. headedad folks that were to a four-year college, there were kids that were out of judy. that was a group of kids were headed to college. emily: what did you want to be when you grow up? >> i got enamored with the golden age of theoretical physics. tries to science that

understand the nature of reality. i wanted to be a physicist. emily: you also learned how to code. >> eventually i got my hands on one of these programmable calculators. you could write games and all kinds of this. with a code you can create reality. that became captivating. mark: you went to m.i.t.. >> yes. said where counselor are you thinking about applying to? m.i.t.. he said no one has ever gone to m.i.t. from our high school. likely things worked out. emily: how did you end up at a hedge fund? >> i went to a tech startup. i was there for two years. but everyone in 1999i was plotting my retirement at age 25 years old. then the nasdaq collapses. ira member thinking maybe i should rethink my future a

little bit. i found a place with a guy who was an incredible mentor and boss. emily: you started tutoring your cousin on the side. how did that work? >> it was 2004. i had just gotten married. i had a conversation with my cousin who was having trouble in math. i became a tiger cousin. [laughter] icalled her school and said think she should retake the placement exam. two or three years later she was taking calculus at the university of new orleans. how many more kids who think they are not good at math but just need an intervention and they could run? alix: how did you end up -- emily: haddad unit posting tutorials? with 10 ord working

15 cousins all over the country. i started writing practice software. and tools for me as their tutor to keep track of what they were doing. why don't you make some of them as youtube videos and upload them? i thought it was a horrible idea. , gott home that weekend over the idea that it wasn't mine. i thought it was going to only be for my cousins but not long before people who are not my cousins were watching. emily: tell me about the moment you thought this was maybe going to be your mission. >> those early days when i asked my cousin for feedback, they liked having no judgment if they had to review something from ninth grade. they didn't have to call me.

it was on demand. when i started getting letters from people, simple thank you's, then comments. this is the reason why i was able to pass algebra. this is why i was able to go back to college and major in engineering. this is why my children are able to engage with their math class. but 2008 i set up as a not-for-profit. by 2009, this was all i was thinking about. so my wife and i sat down, and we figured let's give it a shot. it feels like this could be a real organization. and so i quit my job and tried to see if we could do it for real. emily: was it scary? sal: yes. [laughter] sal: you know, our first son had just been born. we ended up digging into our savings to the tune of about $5000 a month. but you almost have to have a somewhat delusionally optimistic mindset. it was the most stressful time of my life. you kind of question your self worth.

like, "oh, so what do you do for a living?" [whispers] i make youtube videos. emily: like, not the cats playing pianos, guys. sal: exactly. so, like, nine or 10 months into it, all of a sudden, we got our first major donation. it was from someone -- ann doerr. i immediately e-mailed her -- it was a $10,000 donation. i said thank you so much, this is the most generous donation the khan academy has ever received. if we were a physical school, you would now have a building named after you. and she responded back. she said, well, i love what you're doing. i'd love to hear more. and, you know, we met and we talked more. she said you have made a lot of progress, but how are supporting yourself? and in as proud a way as possible, i said i'm not. she said you really need to be supporting yourself, i've just wired you $100,000. so that was a good day. emily: wow. sal: that was what kind of allowed me to say, wow, maybe i can really do this. emily: and it is still all free. sal: it's all free. free world-class education for anyone, anywhere. that is core to who we are. we have obviously had support from the gates foundation, from google, from others. to turn into a real organization. it is not just me anymore. 80 full-time employees. we have volunteers. it's really a much larger effort than me.

emily: so john and ann doerr, bill gates, reed hastings, google, i know eric schmidt is on the board, how do you get these kinds of people to support you? sal: i mean, a lot of the folks you just mentioned, actually ended up -- they just found themselves using khan academy or they used it with their children. and so they were able to directly feel the benefit of it. emily: i am curious now. you know, because your model is there is no employee equity, right? sal: everyone gets the same stock package that i have. emily: there is not going to be an ipo, right? sal: there is not going to be an ipo, no. emily: so i wonder if at this point, do you worry about making ends meet? sal: we are a strange beast on a lot of levels. where we are, in some ways, we are a high growth tech thing that is reaching millions or hundreds of millions, but at the same time, we are not for profit. we are competing for the top people with google and facebook and, you know, dropbox, all of these -- uber -- these hot silicon valley companies, but we aren't able to give the stock

packages. we find if you give them a good salary, you give them a good mission, you give them intellectually challenging work, and then you give them other great people to work around, it just naturally feeds on itself. so i feel good about the model, even though it is a bit of a strange model. emily: and what about your own financial position? i know you have three kids now. sal: i pinch myself every morning. i feel like i came to terms with this is what i really love doing in life. we can buy a honda accord every eight years. [laughter] sal: that's all i need as long as i can pursue my passion. we get to dream about what could it be in the future. are we creating the harvard or the oxford for this next stage of civilization that could reach not 1000 or 2000 students a year but could reach a billion students a year. i could not imagine being in a luckier position. emily: you are hanging out with tech billionaires and you are on the same lists as mark zuckerberg, and you know, the same most influential people lists. so i wonder, how do you feel you fit in as an entrepreneur? yet, you know.

sal: yeah, i don't know. i joke i was the poorest person on the cover of "forbes." [laughter] sal: what is neat about silicon valley is as much wealth as there is here, it is not about the wealth. what people in silicon valley care about is what are you doing to innovate. what is the thing you're doing that's going to change the world? that is what makes silicon valley silicon valley. emily: what is the myth of sal khan and what is the reality? sal: the daily life. i'm still changing diapers and cleaning up burp up off the floor. i think the other myth is -- you know, sometimes it looks like these things just happen overnight. i don't think i'm speaking just for myself. i think i would be speaking for a lot of folks at silicon valley who've started things. you hear about their success, but they have a string of failures that kind of get swept under the rug.

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emily: you still create most of the videos, don't you?

sal: i still create a large number of videos. it's one of the things that keeps me happy. emily: so how many videos have you made, personally? sal: i think around 4000 videos. most of what we have been investing in is an extension of some of that software that i started with my cousins in 2005. where it's students can go, and learn at their own pace, it understands what they know or don't know. we are partnering with college board to be the official test prep for the new sat. emily: so by some measure, khan academy already is the largest school in the world. and one of your investors, yuri milner, says you are the world's first superstar teacher. sal: actually, we view it as a huge responsibility. you can imagine a kid who in a village in africa or in a slum in calcutta who gets access to a low-cost phone or tablet device that in five or 10 years will be everywhere. i like to think that for every albert einstein we found, how many of them we didn't find. how many got squandered because they didn't learn to read, get

an education, etc., etc.? imagine if we could increase by an order of magnitude, by a factor of 10, the number of albert einsteins in the world. the number of people who can do can cancer research. the number of people who can think about alternative energy. this could be a force multiplier like we have never seen. it is very exciting. emily: do you think videos can replace learning in a classroom? sal: i think if learning in a classroom is about information dissemination -- and some of the classrooms we grew up in was about that -- videos can do that. in some ways, it is more bite sized, it is more on demand. but i do not think the physical classroom goes away. i think it is a huge opportunity to allow the physical classroom to move up the value chain. if students are able to get their information at their own time and pace, practice and get feed back at their own time and pace, the physical classroom can now be used for real human interaction. emily: critics have said the videos can be repetitive. it's like drilling. sal: i am the last person to force videos on anyone. i will be the first to say i think the videos are the least important part of your education experience. the way i view it is if you need an explanation, it is great to be able to look it up.

but the real learning is going to happen when you engage in exercises. and then when you go into physical classroom, having dialogue, doing projects, having -- getting feedback from your peers. the teacher can be the human in the child's life and sit next to them and really intervene, get to know them better. figure out not just what the content gaps are, but what are their emotional needs? what is going on at home? and there is this whole body of research that says if you have a growth mindset, you realize that your brain is trainable. that if you just push yourself, and stay out of your comfort zone, you can make yourself "smarter," so to speak. emily: you guys actually have a new classroom that you set up at the khan academy where you are testing a lot of different things. tell me about this. sal: it has always been a bit of a dream of mine, frankly, even before khan academy existed. wouldn't it be fun to be a mini-dumbledore and experiment with a lot of these ideas. we should have a small lab where we can test some of these ideas. where we can test some of these ideas on what could a classroom be. emily: who are these kids, how many kids?

sal: my eldest son is one of the guinea pigs. [laughter] sal: a lot of the kids are khan academy employees' kids. we should live by what we are saying, otherwise we would be hypocrites. there is that. and we just started, so there are a handful of families letting us experiment on their children. emily: do you think online education is going to replace traditional education or the traditional classroom? ♪

emily: the u.s. spends more than any country in the world on education. $1.3 trillion a year. and yet still, we are 25th in math, 17th in science, 14th in reading. what's wrong? sal: if you went 50 years ago and you said, give me a list of the 10 most innovative companies in the world, maybe 30% would've been american. i think if you were to do that list now, probably 80% would be american. what i like to think about is how can we bring that spirit of entrepreneurship, that spirit of failure not being stigmatized, how do we bring that to the

schools? the transcript of the future doesn't just need to be your gpa and your test scores, it can be your portfolio of creative works, it can be your peer feedback. being a engineer is a creative endeavor. being a designer is a naturally creative endeavor. show us what you have done. emily: the u.s. is the only developed country with a high percentage of top performers and bottom performers. i mean, we live in the heart of innovation in the world, and the public schools in san francisco aren't good at all. like, what's the problem? why is that? sal: we're living in a world right now that if we don't fix something, we will have a smaller and smaller percentage of people who are able to participate in this innovation and wealth creation. we lose some of our most creative potential engineers and mathematicians based on how we evaluate them in middle school. you can't solve an exponent when you are 14, we don't think that you can be a doctor. we don't think you can be an engineer. emily: right, you are tracked so early on.

sal: the example of that is looking at a 12-year-old and saying you can't mix paint, we don't think you can be a painter. or you are not so flexible when you're 12, we don't think you can be a dancer. emily: do you think online education is going to replace traditional education or the traditional classroom in the future? sal: no, not at all. uber could disrupt the cab industry. airbnb might, in some ways, disrupt the hotel industry. but i don't think that is going to be the case in education. what i hope for my own children, i hope they use khan academy and other things to learn at their own time and their pace, but i hope they go to a classroom where they are able to interact with their teachers, have a conversation. not be told to sit still but told to move around. not told to be quiet, but told to discuss and create things. emily: decades from now, will people still be paying thousands of dollars for that m.i.t. degree or that harvard degree? sal: even today, the return on investment, unless you major in a really lucrative field, is a little bit suspect. if you extrapolate the growth in tuition 10 or 20 years, you have young children as well.

you are looking at, you know -- emily: oh yeah, we started planning for their education. sal: will it be like half a million dollars to send them to college? that is just not feasible. i think over the next five to 10 years, i think online will be part of a catalyst. there will be other paths. i don't want colleges to go away, but there will be some economic discipline that forces them to hopefully lower tuition as opposed to increase it. emily: so have you had any conversations with universities about lowering tuition? sal: i don't think it is as simple as "you should lower tuition." but i think there are not obvious tools at their disposal to drive it just down. i do think there are other narratives, other options that people can do might be -- have different economic models. i think that will naturally put pressure. this has nothing to do with online. you have folks like general assembly and these, like, coder schools. they accept students, they don't take any tuition. they train them for a year in something that society really

needs. whether it is designers or whatever else. then they say "hey, it will be like a recruiting model. we will take 20% of your first year salary." and that is a way to win. you think, "if i get placed, and make six figures, i got a good income." i don't have all the answers, but there are interesting catalysts and things happening that i think will change things in the next 10 years. emily: is there a government solution here? sal: there is no equivalent for a college degree. but you can imagine a world where government or some industry consortium can say that if you can prove to us that you know this set of skills at the same level as a college graduate, we will give you a credential. we will give a signal to society that you are employable along these dimensions at a very high level. this would be something that even a kid who graduates from stanford or harvard or m.i.t. would want to do. that will be one of those catalysts that could put pressure -- positive pressure on higher education costs. when you say we will pay $200,000 for a diploma, most parents are thinking, the bulk

of that we are paying for is a credential. but universities, if you think about where their resources are going, it is going into something else. it is going into the campus, the landscaping, the whatever else. i think if you decouple credentials from learning, it allows everyone to compete on the learning side kind of on equal footing and allows a lot of innovation to happen. it allows everyone to kind of aspire for credentials that have equal weight. and i am just daydreaming right now. that could be a pretty powerful way to level the playing field. emily: if the brain is a muscle, and trying harder can lead to better learning, does that mean anyone can be sal khan? anyone can be mark zuckerberg? or is there something innate about great entrepreneurs that can't be learned? sal: i don't know the absolute statement here. i do think that most people on the planet are capable of mastering calculus, are capable of programming a computer, are capable of understanding genetics or quantum physics. i generally believe that.

the example i alwasy give is if you went to 400 years back to western europe, you would see that roughly 20% of men and 10% of women were literate, could read. emily: but could anyone start facebook? can anyone start the khan academy? sal: i don't know. i don't know for sure. some of these things -- mark zuckerberg, with a slightly -- you shift his life a year forward or back, he might not have started facebook. he might have been an engineer for facebook. you shift sal khan's life a year forward or back, instead of growing up in new orleans, if he grew up in calcutta, i might have -- you don't know what paths would have been. it has been a combination of they do have a growth mindset, there are people who push themselves to grow and learn new things. but they also had a lot of opportunity. they were in the right places at the right time. and, you know, a little dose of luck never hurt. i think a mark zuckerberg would have been successful in anything that he did. i do not know if i can say that everybody could be mark zuckerberg, but i think that are

a lot of people that could be mark zuckerberg who right now think that they can't. emily: what does the classroom look like 10 years from now? 50 years from now? sal: kids are able to create things that 10 or 20 years ago you needed an engineering degree to be able to build. the schools are going to be these maker spaces. it does not have to be technological things. they could be making art, doing poetry, starting businesses, who knows what it might be. emily: what about you? sal: i hope to be doing this until, you know, the day that i die, which hopefully is not for another 50 or so years. it might be longer if we hit the singularity like some people think. if i imagine a world in 500 years, i hope khan academy is still around. what do we need to do to make this a 100-year or a 500-year institution that can be reaching billions of students and empowering billions of people? and so, yeah, when i go to bed, i think what needs to be done? what is at stake here? and just keep going. but i hope i also keep making videos, too. emily: sal khan, thank you so much for joining us.

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emily: tech investors celebrate. ♪ i'm emily chang and this is "bloomberg west." why he bought a 4% stake in twitter. a brutal week for pandora comes to a close. shares diving more than 30% on concerns about competition from apple and spotify. she has been called the most powerful woman in startups. i sit down with the top vc.