♪ emily: i am emily chang and this is the best of "bloomberg west," where we bring you the top interviews from the week in tech. in boston, we have been diving into the biotech and startup scene. we will kick off with comments from mayor marty walsh about ge in boston. more than holding its own in biotech. to the heart of the innovation cluster and conversation with

foundation medicine. we talked to the director of the famed m.i.t. media lab, responsible for bringing the biggest innovations in tech from wearables to touchscreens. first though, bringing ge to boston. this week we went to boston's annual meeting of the chamber of commerce to meet the man who made the deal happen. boston mayor, marty walsh. i want to talk about boston in general. i work in silicon valley covering technology. it is the center of the tech hub, with new york in second. where is boston? mayor walsh: right now, boston is number two in the percentage of tech workers in america. people do not understand. there is a lot of great things happening with the great ecosystem, innovative economy. people often wonder where we are right now. actually, downtown boston, 35 percent of office space is tech

companies. we have a lot of great innovation and startup companies here. we have 25 universities in the city and 75 in the greater boston area. we have a lot of brainpower. emily: now, getting g-8 was a huge coup. mayor walsh: very big. emily: $150 million in incentive packages, how will you know if it was worth it? mayor walsh: it is already worth it. when you think of ge moving their global headquarters to the city of boston, we are seeing the benefits and results. it is incredible. just the chatter in our city of the companies here and wanting to stay here when they are grounded here. we have a lot of startups, and i think a lot of companies say, wait a minute. why do we want to leave the city when we have companies like general electric coming in every day? general electric is such a big win for the city. emily: do you think ge will be a big fire here? mayor walsh: i think so.

when we have conversations about moving forward, and it was a collaborative approach with the governor and myself, working closely. he is working very closely. i do not think we put the biggest incentive factors on the table. the political atmosphere in our city is healthy and in environment is healthy for business. that's really what we want to do. we need a good healthy business environment. emily: let's talk about tax breaks. there are some questions about that -- worth up to $25 million over 20 years to help secure this deal. you said they will generate more in property tax revenue even with the incentives. what are concrete ways that you think this deal will help combat things like income inequality? mayor walsh: the first thing off the bat, general electric made a $50 million in our education. $25 million will go into the city of boston's educational system. that was an upfront payment. when they announced it, the official announcement two weeks

ago, $25 million into the city working with us and schools like madison park high school. also dearborn high school which is a brand-new high school in the city of boston. it is actually a stem k to 12 school. they see the importance of educating the future workforce. not just ge, but companies around the globe, workforces in our city. emily: what about affordable housing? how much money will go to that? mayor walsh: there's not as big of a piece for affordable housing. we want to plan to create 53,000 units by 2030. last week we had 26,000 under construction or in the pipeline. 8000 are moderate to low income housing. we have already begun that conversation before general electric decided to come to our city. income inequality is a big problem. in boston we are the number one income inequality city, which is

not a good label to have. the way you combat that is having good jobs and affordable housing. emily: when i went to school here, cabs were king, but uber has infiltrated. how do you view uber from a regulatory perspective? mayor walsh: we are looking at regulations. i think both can exist. all different types of car services can exist. including cabs. i'm not caught up in the conversation happening in some places where you either pick uber or taxis. they can both exist. we have to make adjustments in both companies. with uber, we need more regulations to make sure people feel safe. with cabs, we have to look at the medallion system and make adjustments. emily: draft kings is a controversial boston company. how do you feel about them doing business? mayor walsh: one thing that is a problem that i have been saying is the government regulates. we like to regulate.

in congress, washington, other states, we have not caught up with how do we regulate these industries that start with an app? how do we regulate them? that is something thateeds to be looked at so we can make sure good business models are successful and that there could be regulations that protect you. emily: you have been referred to as the money ball mayor. how do you think data will influence your term? mayor walsh: data has made a big impact already. we are measuring everything from potholes to diversity in our offices. data is so important. the city has looked at data, but kind of on a year-to-year basis, we are looking at it on a daily basis. we keep track of everything. we have the city score. we're able to see how we are doing in certain services -- delivering services, whether it

is permitting or traffic or trash pickup, whatever it might be. one story in the budget, we saw it went down. i made a phone call and asked why the response time was down. simply our population is growing and we have not caught up. in this year's budget, we will make adjustments, buying more ambulances and having another class of emt. we are making investments every single day. emily: that was the boston mayor marty walsh. coming up, it is home to more than 180 biotech companies and all top five hospitals in the united states. we dig into the boston biotech scene, next. and later, it is the battle of the coasts, harvard versus stanford. which ivy league turns out the best entrepreneurs? we will discuss. ♪

emily: now on a per capita basis, massachusetts gets more than triple the amount of funding from the national institute of health than california. biotech spiked to $2 billion

last year. here, foundation medicine focuses on matching genetic cancer profiles to give doctors the best treatment resources. foundation's cofounder and third rock partner joined us this week, as well as the foundation chief commercial officer, dave daily. i want to talk with the biotech scene in boston. i'm curious how boston became the hub for biotech. did start with the universities? >> it starts with the universities. we have the concentration here of the academics, the clinicians, entrepreneurs. welcome to the hub of biotech. emily: what is ge get out of being headquarters in boston? >> we think they get access to a rich population of talent that is exclusive in the boston-cambridge area. as you indicated in the opening, m.i.t., harvard, the major medical centers. they have access to the same resources. it is attractive to the

cambridge area. emily: i want to talk about genome technology, which is one of the new frontiers of biotechnology. how does what you are working on get us closer to a cure for cancer? >> we can read the programming code of patients with cancer. being able to read that programming code, we know what the software bugs are and can suggest what types of therapies might be best matched for that specific patient. that ability to read the programming code and know what that might mean is a tremendous breakthrough. emily: a cure for cancer, how far is that, really? >> cancer is a tough disease and enemy. we have to remember there are probably 1000 different types of cancers. we are going through them one by one by one. for some, a tremendous effect has been had immediately, others we are working on. it will be a continual progress, but a lot of big improvements are happening right now. emily: how close are you to getting more insurers to cover

this? >> we know innovation outpaces reimbursement. we signed an agreement with united healthcare to cover us for lung cancer. we have regional contracts being signed. other payers are now recognizing the data that we are impacting, having a major impact on overall patient survival at a reduced cost to traditional therapy. that data is emerging. payers are coming online. emily: shares are down 65% from the peak a year ago. why is that? >> the whole sector has been down. and it is a long game that is fundamentally happening. we are incredibly enthusiastic about the future, but work needs to be done. emily: are you changing your story, your strategy? what can you do to rekindle investor interest? >> we focus on three primary areas. education, the ability to take action on the information we provide so we improve patient

care, and fundamentally it is about servicing pathologist and oncologists. they are busy. they need people to be there to answer their questions and help them with patient care as quickly and seamlessly as possible. emily: the sector is still in trouble. why is that? >> the fundamentals are extraordinarily strong. as we talked before, there was a period where things got ahead of themselves. things are good, but maybe there was consolidation. this is a sector that drives on proving we are making a big difference for patients. it is the steady progress of data saying a big difference is happening for patients. i think we will continue to see that moving forward. emily: when do you see a turnaround? >> it is happening now. we had a solid first-quarter.

the forecast remains as we continue to do the same thing we have been doing. creating awareness, driving adoption, and assisting clinicians in impacting patient care. emily: you have huge drug companies. pharma sometimes gets a bad rap over drug pricing issues. when do you see things like that getting resolved? what is it going to take? >> what do people want? people want to live long, healthy lives. emily: and afford the best technology ion medicine. >> right. the general compacts we have had in society is that if society rewards the fundamental innovation that lets people have those long healthy lives, bringing those important therapies to people that make that big difference, i think the ecosystem has worked. there is obviously strains on it. we need to make sure whatever changes we make to it, we keep

the part that works intact. emily: i want to talk about regulation. there are questions about whether the technology stands up. regulators are looking at it even more closely than they were. who is right? >> i think the feds are on that one. i will leave that one to the feds. the bedrock of making this important breakthrough therapy available for patients is about data. can you really show that things make a fundamental difference in the clinic? that is what foundation medicine is fundamentally about. >> y, we are fundamentally different and spend an inornate amount of time making sure our data is demonstrating our quality. we're working closely with the agency to certify parts of our laboratory for continued diagnostic processes. we are close to the agency and feel comfortable with their entrance into our space. emily: we have been talking about technology and how a lot of internet and software talent has moved to silicon valley. what do you think about biotech

talent? how do you keep that talent here, and do you think they are here to stay because this is the epicenter of biotech? >> this is the epicenter of biotech and you mentioned that density. if you were walking down the street in kendall square, you have the academics and the clinicians, the entrepreneurs, big companies, small companies, investors. literally, i walk one block and bump into multiple people. you have a conversation. sometimes it is about scientific ideas, investment opportunities, partnership. that density, that critical mass does not exist anywhere else. that is the liquidity of the labor market and ideas. it is something very special. emily: our interview with dave daly and alexis of third rock ventures. coming up, m.i.t. they have given rise to innovation. our exclusive interview with the m.i.t. presidents next.

and later, the future of flight. the boston-based startup working on a supersonic business jet to carry passengers faster than the speed of sound. ♪

emily: in boston, we spent time in the hotbed of groundbreaking research, m.i.t. we turned to the president's office for a look at entrepreneurship and innovation. the university teaches 63 courses in entrepreneurship. 162 faculty members are entrepreneurs. over 30,000 active companies have been launched by m.i.t. alums. here is our interview with m.i.t. president l. rafael reif. how do you see m.i.t.'s role in the startup community in boston and the world? mr. reif: m.i.t. is a unique place. students with a great deal of

talent come here because, not only do they want to get a degree, they want to use their skills to do something important for the world. to make the world better. they come here to learn and try to work on projects addressing the most important challenges the world faces. emily: you have a theory that we leave a lot of innovation on the table, like ketchup in a bottle. what do you mean? mr. reif: at m.i.t. alone, you see a tremendous amount of innovation. you see innovation you want to go out into society to address the world's biggest challenges. right now, we have an extremely strong -- the u.s. is the most innovative country in the world. the system works well. you have ideas from universities that are picked up by risk capital, then different companies. that is the way innovation moves to the market, to society. what is happening today and for

the last five to 10 years is that risk capital is only going to ideas that are a success rate very quickly or fail very quickly. the most important challenges the world faces, climate change, clean water, food, and hiv vaccine -- you name it -- all of those important challenges take long development times. risk capital is very limited. in that way, we are leaving a lot of innovation in the bottle. emily: we are based in san francisco in the heart of silicon valley. we talk about stanford being behind companies. is m.i.t. is at a disadvantage because they are not at the heart of the venture capital business. mr. reif: they're not at a disadvantage, they are on different things. you mentioned 50,000 plus companies by m.i.t. alumni.

50% are in massachusetts. 20% are in california. they go where they can make their company successful. i will not say m.i.t. is at a disadvantage. i will say the nation at a whole is at a disadvantage. the innovation we have in this country is huge, but not all of it is reaching the marketplace to benefit society. i'm trying to fine-tune the system we have. i'm not saying it is bad. it is actually perfect. we do need the googles, yahoo!s, and facebook. we need different types of companies. i just want to fix the system -- emily: how do you fine-tune that process when a lot of the ideas you are working on, which are incredibly potentially revolutionary but might take 5, 10, or 20 years before they are real? mr. reif: that is what we are doing. the most important thing we need is patient capital.

there are modern-day investors that are more in favor of philanthropic investors. they want to invest in companies that make a big difference in the world. they already make their money doing it the way americans do, but now they want to they want to invest in companies that make a difference. the most important thing we need is patient capital, and we are building that. we also need the proper amount of space, a connection with a mother institution -- in this case m.i.t. -- emily: one last question are great talk about the future of education. i wonder what is your view on the future of higher education. we were speaking with saul khan of the khan academy. online videos taking the world by storm. he believes the more students can learn online, the more they can free themselves to do projects and other things off-line. what is the future of higher education? mr. reif: there is no question in my mind that the model of

education -- the residential model of education, m.i.t., stanford, harvard -- that model is the best education there is. it is also the most expensive. we need these places because they provide the best quality of education, but for many people it is unaffordable or inaccessible that is we cannot accommodate all the talent the world has. we can only accept a small percentage. many of those we reject would do very well here. we need to find a way for them to also get a quality education. the online additional tools help. we need to combine those two. we have programming that can not apply to m.i.t., but take online courses. if you do well you can be invited to come to m.i.t.. emily: that was m.i.t. president l. rafael reif. coming up, we will sit down with the director of the m.i.t. media labs and ask them what he thinks is the next big breakthrough.

the best of bloomberg west continues after the break. ♪

bostonwe couldn't leave without speaking to one of the great visionaries of the area. the director of the m.i.t. media lab. that investor in twitter and flickr and kickstarter. he was tapped to become the director of the media lab in 2011. as the digital revolution plays out the biological revolution is next. the biological revolution is next, what you mean by that?

joey: when the media lab was created computers were about big companies and very special projects. most people didn't have to think about them. with the rise of the internet you couldn't not have an internet strategy. health has been about small molecules and hospitals in big pharmaceutical companies. but now people have all the tools that are involved. the fact that health care is now 24 hours a day from when you're born into you die. convergenceng this a lot like the internet has done for information. emily: biotech research is a lot more expensive. joey: it will scale differently. -- have to do fda tray

trials. human safety is the issue. one of the reasons i decided to was kendallt. square cambridge is really the center of biotech. companies dragged all these companies to silicon valley. all of these companies are coming to kendall square in cambridge. in biotech. nsb built in a different way. boston is not necessarily the next silicon valley. it will be different. but we can be silicon valley of biotech. software and artificial intelligence are all required for biotech.

it is very easy to do online. it is about walking over and looking at samples. you really need to be in the same physical space. you need to be near m.i.t. and harvard. on the chairman of the board of a company called pure tech. i had to go to capital markets. a lot of companies still require basic science. you need to bring academics and to do fda trials and a lot of companies technologies aren't ready to be big companies yet. sometimes that model doesn't work. kind of model for connecting academic research. experimenting with and testing new ways of translating academic research for companies that is what i'm interested in. emily: we think the future of bitcoin is?

joey: they reminds me a lot of the internet. i worked on a lot of the early internet programs in japan. thatd a lot of time toward the technology before people started pouring money into it. problem with bitcoin as you got it billion dollars in venture money for we really figured it out. bitcoin is that it will be to banking and law what the internet was to media and advertising. bit ahead of our pace. investments were making to make of doing theahead basics. we hire and are paying for a

lot of the core developers. nonfinancial interest. working on bitcoin and financial documents. what you think is the single most transformative idea joey:ou are working on? the reason not going to silicon valley every couple weeks is because the artificial believe the computers with it so smart you can ignore policy and law in all these things. therefore ossify's and without understanding the energy.

bringing human beings in society and policy together with computer science and artificial intelligence is very important. aboutthink it's terminator or not. the future's going to be about machines at human beings working together. networks inside of society. how those things work together is very important. the media lab has always been about the relationship between machines and humans. we call it extended intelligence. emily: we are highlighting some of the advanced bionics available today. he has a vision for a world without disabilities.

this is the man who is engineered some of the biggest recent breakthroughs in the device of artificial limbs. he went through a double education. he decided to dedicate his life's work to coming up with a better solution for people who need prosthetics. he thinks the answer is in bionics. >> combining structures whether from synthetics are biological materials. to where they are implanted inside the body. human physiological functions. able to extend human capabilities. no other commercially available prosthetics can do with these do. this is the first bionic ankle and emulatesowered lost muscles. all other commercial ankle devices are human powered.

the company is already fitted 1300 patients with these limbs. 50% of them were wounded veterans. patients across western europe can access the technology. the lab is also developing exoskeletons to augment human physical performance the on what nature intended. enhancing performance for athletes and soldiers. making extreme sports even more thrilling. bionics is about self-improvement. a journey toward what humanity can be. integrating with technology.

emily: coming up, a battle of the coasts. harvard versus stanford. which university nurtures the best entrepreneurs? interviews.gform ♪

emily: harvard's been around for centuries. the official engineering school is relatively new. founded in 2007. i caught up with the dean to talk to him about the schools ambitious goal of becoming a top five engineering school in the next five years. also the general partner of smart capital a boston-based

venture capital firm. you just moved out here from santa barbara. what attracted you this position? it was part of the legacy of harvard and the quality the students and the possibility for innovation. the raw creativity that you find here. ofbined with the power harvard's professional schools. the medical school and the law school and in the business school. and stored moment. tripling the enrollment of the engineering school. moving to a new building in austin. all this at the same time that these marvelous gifts are coming in from john paulson and steve ballmer. emily: someone said harvard's engineering schools have lagged

some other places like m.i.t. and carnegie mellon. you want to be a top-five school within 10 years. have you intend to do that? >> big players like stanford and m.i.t. up on top. if you will the metrics funding perr paper faculty member we compete with everybody that we are very small program. i don't think we want to change that. we want to keep the small collegial feel of it. that will enable us to do top of the field on a scale basis compared to everybody. >> how are things going with diversity, getting more women? >> were happy with the trend

that we definitely have more work to do. we aren't learned roughly one third women in the bachelors program. the concentration. favorably tovery the national average of about 20%. it's no reason to rest on our laurels. we want to make the top 10 rankings in that regard. we have to keep improving. we have to get closer and closer to the demographic of the population. after do it in several ways. we have to continue to recruit high school students to the undergrad program. graduate students from the undergrad cohorts. most importantly women on to our faculty ranks. we will be falling short of 300 that. a strong presence on the faculty is crucial.

some appoint a stanford is being the father of google and yahoo!. but bill gates and mark zuckerberg dropped out of harvard. have you keep that from happening again. >> our mission is to educate the students. with the degrees that their training for. that is our mission. our primary objective. creative invented kids have ideas and should get encouraged. i would say we're not trying to create a lot of short-circuits and ways to jump out early. folks, complete package. what it means to get a harvard degree and complete the training. those are exceptional people. zuckerberg and gates. that's not the mass of students that your educating.

you think that there's room for online education to supplement these. these online schools. >> we've been doing a lot of mass-based education. as institution. quite a bit in the engineering realm. in computer science. a bigger piece of it is bringing innovation more broadly to our area. this is something i would say has been slowly changed at harvard. there has been a mindset that harvard pushes fundamental boundaries. we do that brilliantly. over the last decade i seen a number of the faculty become very successful entrepreneurs. their excitement is infectious.

and increasing faction of our faculties inclined to do these things. if we can capture that can bring it to the curriculum that is a classic strategy. we can be even more effective. is dean ofk doyle harvard's engineering school. our focus on boston continues. we will about supersonic jet technology. you are watching the best of bloomberg west. ♪

emily: cutting-edge research to bring supersonic research so market. flying faster than the speed of sound. technology is been around since the 1960's. widely used in the military. the last supersonic flight that

carried civilians was the concorde flight that crashed in 2000. we sat down with the ceo of smart capital. explain boston's role in the aerospace seen. inthink of florida and texas the west coast. we don't necessarily think of boston. florida and texas get a lot of attention the aerospace sector. is an incredible amount of innovation and technology on this we have schools like m.i.t. and harvard here. tremendous aerospace programs. payload systems. our country has a background in m.i.t.. it has the academic resources

and the innovation. access to the european market. it has a great ecosphere. close to washington and new york. it is a great place to be. the concorde exploded not because of its mechanical design there's a scrap of metal on the runway that had the bottom of the wing. the market is changed. 15 or 16 years later. it was not as ambitious as global efforts.

the asian market has exploded. those atreides opportunities. but need to get from those destinations to the middle east and europe. >> i'm excited about getting on one of these. we do a lot of business in europe and in china. getting there would make my family quite happy. it is not something i want to do regularly if i can bring that flight under six hours. building that face-to-face relationship is so critical. you did to look somebody in ai. casual conversations. you can't do that by e-mail. and only: it is so loud you can only do transoceanic flights. >> the concorde was very loud.

our aircraft is specifically designed to minimize that. reducing the sonic boom will be we'reo fly over land going to start with europe and the middle east markets. our first deliveries should be in the early 20 20's. we may not be able to enter the u.s. market for about 15 years. due to federal regulations. as the u.s. policymakers see supersonic flights winning in other regions i think they will amend those regulations. emily: you need a hundred million dollar investments to count for anything.

have you do that? have you raise that much money? >> it is not easy. you can raise money for an iphone app a lot easier. though we have to make our vision so compelling and so interesting the travelers in business investors will also be went to invest their money in this aircraft. the commercial airlines we are talking to her looking at offering it as a premium service to the top clients. emily: that does it for this edition of the best of bloomberg

west. you can join us for more technology news every day of the week. next week will be back in san francisco bringing you the highlights from the google developers conference. see you then. ♪

angie: disappointing data underlining the challenge facing the economy. honda profit plunges again. the cost of recalling millions of cars with faulty airbags. the u.s. stock market hitting a snag concerned about restrictions. welcome to first up. right here in hong kong.