carol: welcome to bloomberg businessweek. coming up, we profile one of the most important and least known members of a leadership team at apple. why marco rubio is one of the presidential candidates looking to connect with the hot brand for political gain. the alamo drafthouse dine in movie theater may be the back to the future answer you're looking for. other stories that caught my eye, writing about antonin scalia and the impact he has had in class action suits. we are talking about walmart, american express, and often against the little guy. the story walking you through his thinking in those decisions.

portland, oregon, a growing number of tech workers saying they are leaving silicon valley and going to portland, oregon, looking to work for ebay, airbnb and salesforce. check it out. more detail on both of those stories in the magazine. let's get started this week. when you think of apple, you think of steve jobs, tim cook, and the cool gadgets.

there is someone behind the scenes stepping into the spotlight. his name is johnny srouji and he is the new vice president for hardware technology. adam is in san francisco with more. he is someone who stayed out of the spotlight, but he is not stepping into the spotlight. what is going on? adam: johny is an engineer, who joined apple in 2008, right after the original iphone was introduced. apple saw some of the limitations they were running up against. one thing they wanted to do was create their own silicon. that would give them more flexibility to create the features and the product they wanted into the future. steve jobs and one of his lieutenants recruited johny from ibm to come lead this effort. over the past eight years, he has been working in secrecy and

is considered one of the real preeminent chip design companies in the world. carol: you talk about johny, but i do not think of apple as a chip company. this story is also about apple being a chip maker. adam: there was a time when apple codesigned a sum of the chips, but they got away from that. you instead rely on a network of suppliers. apple still relies on suppliers for a lot of components. they decided they were going to

build it themselves and they have a big team working on this all over the world. in addition to california, there is austin, texas, in florida, some. a big presence in israel, where johny srouji is from. carol: tell me about srouji. you can say he is part of tim cook's inner circle. adam: he is. he was promoted in december 2 apple's executive team. that is the selective group that makes the decisions on where the company is going. he is arab-israeli, christian. he grew up within a minority in israel, but distinguished himself as an engineer. israel has tensions between jews and arabs, he was able to insulate himself from that because of the technical community, political issues are not a factor. one of his friends says it does not come up. he distinguished himself and went from ibm to intel and was hired by apple.

carol: i feel apple chooses to let us know what they want us to know. this is a guy who was out of the spotlight. why are they putting him out there? he took you on a tour of some of the more secretive facilities. why are they doing that now? adam: like all things with apple, this is strategic. we are at a period with apple, where the stock is being battered, it is down about a quarter over the past year. you have seen a lot of questions about whether the smartphone market is saturating. this is an area where they think

it differentiates them from competitors and it is a way to tell a different story about the company, what makes their products different and how they will be differentiated into the future. usually, apple will do some press around a new iphone release, do interviews with some of the different executives. this is a more technical part of the business a lot of people do not know about or understand. carol: he spent time with him. what was he like in terms of how he interacted with others? you talk about how secretive he is, even with people he has known for a long time outside france. adam: he is a serious person. at the same time, he laughed easily and was a gentleman with those around him. you can tell he is somebody who is holding a vault of secrets in his head. he is very secretive about what he shares. a common refrain from him is -- i do not want to go into too much detail about that. carol: very apple-like.

adam: there is a lot of equipment. at one is about the size of an ice hockey zamboni, where they run simulations to test a future chip. in the next room, another is simulating an ios software design that is putting the chip through its paces. it is a three to four year lead up process. carol: what do other folks say, specifically? is this something that intel has to be worried? apple works with samsung on chips. adam: it is an important distinction. it contracts with companies like

samsung and a company in taiwan that will manufacture the chips to their specs. what apple is doing is bad for traditional chip companies like intel. if apple is doing this themselves, that is one customer intel cannot sell to. intel has made next to zero progress in getting chips into mobile devices. qualcomm, they face a challenge because apple is doing more itself. they do not need suppliers like qualcomm as much. it is having reverberations that apple is doing more itself. carol: what is next for apple? adam: johny srouji is also in charge of batteries. we asked about when we would see batteries in an apple car, he laughed at the question.

small things, they are considering wireless charging, thermal charging, so you would not have to plug your handset in to charge. there is a lot of speculation around virtual reality and other products that they could do. he keeps things close to the chest and will not let us in. carol: i guess he is out in the spotlight. we will hear more about him. adam, thank you. you can read about the story. coming up, the perils of political branding. remember the president touting the chevy volt? gm wishes you did not. ♪ carol: welcome back. politics and advertising -- wait, advertising and politics. it is hard to tell which comes first. tim joins us. what came first? political candidates or brands? tim: chicken or egg. we would have to advertise it. i do not know. you look at political campaigns and they are launching a product and you want to have attributes like a brand and it is easy to appropriate brand characteristics to get your message across.

carol: welcome back. politics and advertising -- wait, advertising and politics. it is hard to tell which comes first. tim joins us. what came first? political candidates or brands? tim: chicken or egg. we would have to advertise it. i do not know.

you look at political campaigns and they are launching a product and you want to have attributes like a brand and it is easy to appropriate brand characteristics to get your message across. if you are a cadillac, you are a premium candidate. republicans talk about uber. chick-fil-a is another popular one they like to talk about. carol: in your story, you kick it off. you give an example of a press release that came out from marco rubio, where you talk about uber and chick-fil-a. tim: he talked about his campaign spent enough money at chick-fil-a to take about 400 uber rides. it is not just his love of uber and chicken that gets you there. you have seen a spike among conservatives who identify with chick-fil-a, the ceo of the company has made comments regarding gay marriage, more popular on the conservative side. uber has become a brand you can see division. democrats uncertain about how it

affects unions and of those kind of supporters, whereas conservatives see it as an opportunity to latch onto silicon valley. carol: it is not new. you talk about howard dean, associated with volvo, and president obama being associated with chevy volt. tim: no better way to insult somebody or send the message they are not one of you. in howard dean's case, he was a volvo-driving liberal. newt gingrich was making fun of the chevrolet volt, making comments, calling it the obama-mobile.

bernie sanders, supporters are more likely to eat at chipotle than the average american. hillary clinton supporters like an arrow. -- they like panera. donald trump supporters are likely to stay at the hampton inn. clinton supporters will be at the sheridan. this kind of data is used by campaigns and marketers to build a picture of who these supporters and potential voters might be. it helps color in the lines. carol: one brand sounds like everybody wants to be affiliated. the great uniter. tim: apple. the mass appeal of the brand, so many people buying it. it used to be seen as a democratic brand. it cuts across the whole population. carol: what about the apple watch? tim: still too soon to know.

we talked to a marketer who is a bernie sanders fanned and his takeaway was no, it was not going to appeal to her. carol: i thought product placement had gotten out of hand. it sounds like campaigns are taking it to another level. tim: look for chick-fil-a on the campaign trail this season. carol: thank you. we will watch for all of those brands out there. walmart is facing a class action lawsuit. the case argues it created sex discrimination by denying health benefits to gay employees. we are watching this closely. lay out the lawsuit against walmart. josh: up until january 2014, walmart provided spousal health support to employees who had an opposite sex spouse, but not same-sex spouse.

there is no federal law that mentions you cannot discriminate against people based on sexual orientation. a premise for this lawsuit and a wave of lawsuits we have been seeing over the past several years is the sex discrimination part of the 1964 civil rights act. that act says you cannot discriminate based on sex. we see in this walmart lawsuit, discriminating against someone based on sexual orientation, in this case, was a way of discriminating against them based on their sex. discrimination based on sexual orientation is about people's stereotypes.

carol: this has everyone going back to reading about legal theory, the civil rights act of 1964. i was doing it in preparation for this. there have been some other cases out there laying the groundwork for what is to come. josh: a pivotal case in 1989 was the price-waterhouse case. it established at the supreme court level that sex discrimination is not just treating a woman worse than you would treat a man or vice versa. under federal law, covers sex stereotypes discrimination. a woman who says she was discriminated against for not acting the way the partners at price-waterhouse expected a woman to act. that stereotype precedent opened a door for lgbt advocates to say what stereotypes are fundamental.

carol: where is walmart in this? they think differently today. they change there rules. why not just create some kind of settlement? josh: walmart has that opportunity. there is mediation scheduled for february 22. walmart did not make this case go away so far. this is a case that started at the equal opportunity employment coalition. the eeoc found there was reasonable cause that walmart had violated the law. --lution at penn resolution at that stage did not succeed. for walmart, which has changed its policy, the calculation is, on one hand, you have an estimated group of 1200 current and former employees you could

have to compensate. on the other hand, there is reputational risk. this is a company that has made strides and being perceived as a more tolerant, gay-friendly company. carol: it is a great read. thank you. we appreciate it. coming up next, we go to the back of the books for this week's "etc." the story behind the rise of the alamo drafthouse cinema. ♪

carol: we bring in brett, let's begin with the cover story. it is called "remember the alamo." it sounds like a company going after individuals, getting them out of the home.

brett: the business model is based on the idea that they think every once in a while you will want to leave your house and go see a movie. carol: they have been doing this for some time. brett: they opened in austin in 1997. since then, they have opened 22 theaters around the country. the plan is to open 50 by 2018. they have chains open everywhere. that is part of what makes the business model interesting. can you export something that worked well in austin. carol: we were talking about what a cool place it was. tell us about their model and what they started doing in austin. brett: they want to get you into the theater, and give you a beer. they do adult milkshakes, stuff like that.

they have a standard menu that has everything on it from chicken wings to buffalo chicken pizza. around certain launches, they will do a special-themed menu. they did one for the new star wars movie. they will do a second run of a movie like "silence of the lambs," and they had one for "lord of the rings." it increases food and beverage sales one they do these and helps them on social media a lot. carol: they do not do those annoying ads when you go to a movie. use it down, you have 15 minutes of annoying commercials. brett: rights. the founders of draft house do that intentionally. they want your experience to be enjoyable.

if you are playing $10, in some places of the country, in new york, it can be $15, you do not want to be annoyed. they pride themselves on the film experience. they hire and train projectionists in a way a lot of major chains do not. carol: you talk about the owners, i guess he is an engineer and he breaks down the pieces. they are doing specific jobs and tasks, and doing it well. brett: they have a systematic approach to this. they look at online customer surveys. franchisees are doing a good job. they will send in a swat team if a franchise is not performing well. you are going to the movies, having a good time. there is a lot involved in making this operate smoothly. carol: they have someone who operates beer. brett: each franchise has a custom bar. the bars are unique in each place.

carol: the movie theater business is not an easy one. we have major chains out there going up against them. brett: domestic box office is down and it is not surprising why that is. people are staying at home, watching netflix. they are expanding at a time when people are not going into the movies. they hope by offering dinner and drinks, they will lure you out. every now and then, even someone that stays home to watch netflix is going to want to leave the house. it is not absurd, but they are expanding into suburbs that are not necessarily like austin. the question is if the franchise can work in those places. i have been to one.

i think i saw "the hangover 2." it was pretty awful. carol: we won't talk about that. that does it for "businessweek." the latest issue featuring the cover story on johny srouji, a member of one of the least known teams at apple. ♪

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