carol: i'm carol massar. david: i'm david gura. carol: amazon's plan to dominate same-day delivery. and how one small american company successfully faced down stiff competition from china. david: all that ahead on "bloomberg businessweek." ♪ carol: i'm here with an editor and you have a great story about the controversy involving mylan epipen's pricing. they doubled the price of it. there was a lot of attention

brought to it. they reduced the price and brought out a generic. it has made everybody take a look at the industry of pricing -- drug pricing. >> they do a good job of sort of explaining just how crazy drug pricing has become and how hard it is to fix the problem. epipens, it is widely used with people with terrible allergies, including myself. it is necessary. it is especially necessary for kids who have a lot of allergies. it used to be that you could get two epipens for $100 apiece. $600 is a lot. what peter shows in the story is how hard it would be to fix this. this is the excuse that the ceo of mylan made. what she was saying, the ceo was saying, you cannot, they did not

expect regular people to be paying $600. it was sort of the price that they were charging insurers and drug benefit managers. the idea was that there would be negotiations. if you don't have insurance, or if you have high -- or if you have a high interest adjustable plan, you could shell that yourself. carol: you take a look at what is going on in brazil. the official impeachment of the president, or former president. brazil, their economy has been in recession for the last two years. >> it has been in incredibly bad shape. oddly, or maybe not so oddly, the stocks are going up in the currency has gotten stronger because people think any change will be good change. the new president has brought in more typical economists, more orthodox economists, and the

idea is that it has to get better now. carol: there are concerns that there could be watered down to economic reforms, that would not be great for the country? >> the idea is can they get all of the reforms through. the economy was so based on subsidies, can you take them all away? the question is can he do what he says he is going to do and will be economy will back? carol: let's talk about the cover story. it is all about amazon and their move to control that last mile of shipping. they are going after ups and fedex. >> anyone who orders from amazon wonders how did it get here? if you are a prime member, how did it get here so quickly? the question is, how is it possible to do it when their number of packages keeps going up and up and ups and fedex can handle so much? we go behind the scenes and looks at amazon's plans for the future, and how they are gearing up to deliver packages. carol: it all starts in a town

in ohio. this company has been quiet moving into the delivery area in terms of planes and buying into companies. talk to us about what they have been doing? >> they are very secretive. they are very quiet. they have been as quiet -- initially, the place where i started to pay attention, they were building these stations around the country starting in 2013 beating packages into the postal service to get away from ups and amazon. once they have the fulfillment centers, from there they were able to create these delivery stations where they feed packages and hand them off to local carriers.

they created these prime now hubs but they have all the stuff like they do it by at walgreens or at 7-eleven. carol: that is so cool about prime. amazon prime is today delivery or something? >> free delivery. but if you live in certain parts of new york, seattle, you can get things in two hours for free and you can get it and an hour for $7.99. it is happening in the u.k. in germany and it is much bigger than a lot of people realize. when i started leasing the planes, the lightbulb went off. david: what is going in wilmington, ohio? >> versus secretive i did not

think there were going to talk. so i wanted to just go out and talk to people there. you have this little town. it is about 35 miles southeast of dayton. for many years, it was the hub for airborne express and then dhl bought airborne express and they ran a hub out of their. in 2008, dhl decided they were going to compete with ups and -- usps. a lot of people lost their jobs. and then you know last fall, , rumor started going around there was another company out of the airport and they were wrapping their packages and black plastic for the people. and they were referring to it as project archangel. [laughter] >> very nefarious. project archangel. [laughter]>> but of course it wl aroundd the rumor got and became a big story and everybody got really excited. that is going to be the hub for amazon.

carol: when does everything start going up and running them only to come ohio? >> it is already happening. david: jeff bezos who founded the company has been assessed from the very beginning and he cares a lot about the delivery side of things. >> he said, you know, a number of occasions, he could never imagine a customer wanting fewer products and less selection, higher prices, or slower delivery. he flips it around. [laughter] >> that has been something he has been thinking about for a long time. it took them and while -- early on, they had issues during the holidays getting packages out of the door out of their fulfillment centers. during the last couple of years, that is what they have been thinking about. they are concerned about the system being able to support their volume.

so they have to take matters into their own hands. so, this year, they are expected to shift 7 billion packages. in four years, it will be 13. how are they going to get all those boxes to people's homes? if they cannot count on ups, they will do it themselves. carol: i asked his take on prime air. >> we sent a photographer to shoot this big event amazon was having to show off their new planes. they look exactly how you would expect. they have a big amazon prime logo on the side. it did not seem like an interesting way to go for the cover. so we came up with jeff bezos making a plane out of the box like a child would. carol: he did not actually crawl into the box? >> no, that was the beauty of

photoshop. when we don't get cooperation from our subjects -- carol: tell us about the cover? >> it was him onstage at some conference. maybe somebody cracked a joke, but when we saw it, we had to use it. carol: any other ideas in terms of this? >> there was a plane made out of an amazon box. something to have jeff bezos animated special. carol: up next, how an m.i.t. professor is helping wall street traders control their emotions. and the former goldman sachs -- his carerer ong donald trump. that is ahead on "bloomberg businessweek." ♪

♪ carol: welcome back to "bloomberg businessweek." i'm carol massar. you can find us on radio on sirius xm channel 119 and on am 1130 in new york. and1m 960 inston

the bay area. in the markets and finance section, banks are storing the use of data from body sensors, phone calls and e-mails to identify top traders. it is a strategy developed by professor at m.i.t. >> for at least 15 years, angelo has been studying the connection between physiology and risk-taking. in this case, he was given a talk at a major wall street firm. he would not say which one. after that talk, they invited him in and said, we want you to test your studies with our risk takers, our traders. he did that in 2014. >> what did he find. he set up a simulation. >> he found that there is a physiological and emotional signature to people who are the best risktakers.

that they are -- that thdir bodies ramped up to volatility when it was occurring, but swiftly relaxed when the volatility was over. people who were unexperienced or bad risktakers, they experienced market volatility, unexpected things that their emotional response was a look at a map and elevated. carol: and the best traders are able to regulate themselves? kind of ramp up when needed, but calm down again. >> they are the most in control their emotions. the father, benjamin gramm had a quote decades ago, the people who cannot master their emotions are not set up well for success in investing. david: you think of this as an academic exercise. there are companies working on this right now. you talk about humanizing the

peace. >> humanize is one example and have workplace badges that are at companies. they have a pair of microphones that tells you how fast you are going. a couple of other sensors, like bluetooth, they use that to create data that essentially tells the employer how you are behaving during the day. import may, stress levels -- importantly, stress levels. when you're stressed out, your speech patterns are totally different. that is one of the aspects of the data gathered. carol: a profile of steve minutia. he wants to be his treasury secretary. here are the reporters. >> stephen is donald trump's top fundraiser and his job is to raise all the money that trump needs to be hillary clinton in -- to beat hillary clinton in the general election this fall. carol: did they know each other? >> he will not say. they work together on deals.

one of those deals ended up in a lawsuit. he says he is an old friend. donald trump says he really does not have friends. stephen got an invitation to trump tower to celebrate donald trump's new york primary win. even though he was headed to a dinner downtown, he said he will stop off. when he was there at the cocktail party, he could not find donald trump, so he waited and finally saw donald trump and he beckoned toward him, and he joined them in the escalator. then he was on stage with donald trump at the rally. the next day, donald trump invited him to be his finance chairman. carol: what is his background? this is a guy who is quite a pedigree, correct? >> quite a pedigree. his dad was a monster, huge trader a goldman sachs. people called him coach. [laughter] and he followed his father to yale.

he went to goldman. he worked for soros. he was a big investor and invested in "avatar." film of allcessful time. and bought a bank on top of that. carol: i think what is interesting about your story that you guys right is that the people who know him are kind of surprised he took this position. why is that? >> here is a guy that has had no background in politics whatsoever. he has given a little money over the years because he is a wealthy guy. most of it he said was favors to friends was raising money for clinton or obama or whatever. carol: lock the democrats, right? >> more democrats than republicans. goldman sachs, trump makes a lot of noise about on the campaign trail.

a lot of people were surprised to see that all of a sudden, he showed up, not just as a trump supporter, but as a key person helping him to get elected. carol: next, the hurdles elon musk is facing for testing for tesla. ♪

♪ carol: welcome back to "bloomberg businessweek." i'm carol massar. this week focus on section is a manufacturing. the report investigates the challenges facing tesla. july 1, 2017 is important for tesla. what happens? a >> that is the date when elon musk says suppliers and the teams need to begin final production of the model 3, which is the more affordable sedan.

david: the company is banking so much a message has of that model 3. remind us of the demand essentially the company says pony up $1000 to get on the list to get one. what was the response to that? >> the response was extraordinary you had hundreds of people -- 73,000 people had preorder the model 3. obviously, some people will cancel and some others will sign up. $373,000 for a car that is not in production isn't heard of in the auto industry. carol: they keep making forecasts and estimates and you have elon musk raining the men. i don't know, what are the expectations? >> tesla has a history of overpromising and under delivering, especially when it comes to production.

what is interesting is there is public demand for the model 3. everyone a super excited about a highly styled luxury car that is more affordable. the big azido is, can tesla make it on time? july first, 2017 is 10 months away. not a lot of time. david: we talked to devon who wrote a piece about amazon on how they are holding up their delivery system. tesla is doing the same thing, starting from scratch if you years ago and built a company that can manufacture cars. that is a difficult process. >> i think the hat trick here is launching a new car or model is difficult for any automaker. tesla is trying to vastly increase its mining production. they only delivered 50,000 cars last year. they are talking about building 500,000 by 2018. they have to launch a new model and scale it and doing that requires retooling their factory

in fremont with new equipment. that is all in process, too. they are building the machine that will build the machine at the same time. carol: reporter brendan greeley took a trip. we spoke to brandon. how did this company come to your attention? >> i was looking for people who had been displaced i trade. this database is run by the labor department of people who have applied for compensation from the labor department for having lost their jobs to trade. i called 50 people in rhode island trying to find one person. i got one callback from a guy named mel. he called back and said i cannot help your story. we were going to lose 20 employees to trade, but we got the company restarted and we kept all 20 positions. and i said that sounds like a -- [laughter] this was at the new england paper tube company.

based in new england. pawtucket. and they make paper tubes. so the thing that you find in the middle of your paper towel roll is made by companies like this company. this is the cradle of american manufacturing. a couple of things happened. the first thing, technology changes. providence was one of the hardest hit areas in america through foreign trade after nafta and after china's secession. in 2014, the company was a $12 billion company. 20 people.

-- it employed 20 people. in 2014, the company was a $12 billion company. it finally goes into receivership. it is a pre-bankruptcy step. it has been owned by a family, these are the grandchildren of the founder. when i talk to them, they said these are things that are beyond our control. and that is mostly true. but there was one person who decided the plant has to keep going and i know how to do it. and this was the person who returned my call six months ago and said, i had an idea and new how i was going to save the plant. carol: and he was the plant manager, correct? >> he thought, this is crazy. i think we are losing money on these products. he built his own spreadsheet. he figured it out. there was one cardboard tube that they paid nine dollars a unit to make and sold for $.40. this is the stasis that happens when a family company sort of does what it does, stops examining the books, has its customers and keep selling. he went to the family and said, i have a plan. let's just focus on these few things that we make really well that we make money on. let's get rid of the things we don't make money on. the difference is that spiral tubes is that they can make them faster and cheaper in china.

he went to the receiving lawyer and said, you have a choice. you can take this company and it can become spoils. you can scrap the machines and sell the building and not make much out of it. i think i have an asset that will continue to perform. that is what they did. they restarted the company with a focus on just the things they made better than anybody else. carol: up next, while the u.s. has failed so badly in preventing the zika virus from spreading. the unlikely bet making one brewer big bucks. that is ahead on "bloomberg businessweek." ♪

david: welcome to "bloomberg businessweek." i am david gura. carol: i am carol massar. david: still to come, why the u.s. is ignoring signs of the zika virus and having a hard time controlling the outbreak. carol: also, a team of professional hackers. david: and creating a premium market for rye whiskey. carol: it is all ahead on "bloomberg businessweek." ♪ carol: i am here with editor ellen pollack, there are so many more must-reads in the magazine, and in the markets and finance section, i love the story.

oakland, california, i had no idea was a pricier real estate market than san francisco and the silicon valley. ellen: it is well-known that high prices for housing is everywhere, and especially in san francisco, but it turns out that oakland prices are going up five -- faster now them san francisco, certain parts are more expensive than san francisco. people were thinking they would move to oakland because it was cheaper, and the prices are going up so fast, that people are sometimes spending 36% premiums over asking prices. there suddenly realizing they have to ask her more than stated asking price. again, the it is people who thought they were going to escape the high prices of san francisco. have a high crime rate? ellen: it is. there has been a lot of political activity, in certain

parts of oakland, there has been a lot of crime, that people do not care because it is cheaper, and it is not preventing prices from going up. carol: you guys do a story on monsanto, and it has to do with a pesticide, developing a new soybean seed. what is going on? ellen: they want to introduce a new insecticide called dicamba, which already exists. they came up with new seats that are resistant to it, to grow these plants, and it would take care of the bugs, etc. carol: it sounds like a good plan. ellen: it does, but it is that for other plants, so they come up with a formula that would to -- stick to the plant. it has not been approved, but it is ending up on other crops and so farmers are finding huge crops of soybean being

destroyed. carol: they're making a dicamba-resistant soybean seed, right? ellen: yes, and farmers feel like they have to switch otherwise their crops will be ruined. carol: the fight against zika, ground zero as florida, the miami-dade county area. it is a political battle. why can't we get money from the federal government to help in the fight? ellen: president obama addressed this issue how congress did not allocate funds to battle zika, and ended up in gridlock. what has ended up this there are only four people from the cdc or other agencies working with local officials, trying to fight mosquitoes, which cause zika in miami-dade.

it is a miniscule amount of the resources that miami-dade would like to have, and the federal government, to the extent that they are able to support the efforts, are sort of taking money from other projects, money from cancer, they are using money from other diseases to try to support the efforts in florida, but meanwhile, it is for people. carol: david gura and i spoke to a specialist. caroline: they are pulling out all the stops. you can see people going around spraying. they're trying to get rid of any standing water. the other is tracking the women, particularly pregnant women who may be infected, so that involved, you know, testing people, people who have traveled back to places that have zika, might be infected. also now we know there is local transmission from the mosquitoes in florida. half of it is trying to stop the mosquitoes, and half of it is trying to stop it from spreading. david: we have talked about how this is really county by county. i wonder, caroline, who is

running this? how much of it is a local effort versus a state effort versus a national effort? caroline: i think it is a bit of everything that you said. i think that in some ways is what makes it tricky to respond because the cdc is the government agency that is ultimately responsible for the u.s. being prepared, but they are only advising. so they can suggest to the state what they should do, or if a local counties of pay, can we send some cdc has to calm in and help us out, they will send experts onto the ground, but they cannot be like, "everybody has to deal with mosquito control right now." they just do not have that control. it is a mix right now where county by county people are coming up with plans, the state is trying to get them funds, the cdc is try to back them up with experts. carol: why isn't the government more sensitive, the federal government, that helping out florida? caroline: well, this is where it gets tricky with politics, right?

back in february -- so now this is months ago -- president obama asked congress for $1.9 billion for a zika response, and i think most of blue-green us some funds are needed, but where congress is deadlocked is where that money comes from, is that new money, is that money we shuffle over from other places? and then the house republicans wrote up a version of legislation that included some other provisions that senate democrats basically said is a poison pill, they cannot pass the bill as it is. it is the process of creating legislation that is holding it up right now. it is not that the federal government -- it is not that lawmakers do not realize it is a problem. it is that they cannot agree on the specifics and details of what is going to go in that bill to fund the response. carol: often the politics and policy section look at the rise in the automatic voter

registration. josh, what exactly is it? josh: automatic voter registration is a policy where rather than someone having to opt in and affirmatively make a certain amount of effort to register themselves to vote, a register themselves to vote, when it is possible, using existing government agencies who have the information, people by default are registered and less they choose to opt out, so when you go, for example, to the dmv, because you are sharing the information that is necessary for voter registration with the dmv, the dmv, in some states now, would automatically add you to the voter rolls once automatic registration is up and running, and lets you choose not to be added. david: what is the argument against this? we have heard, especially on the republican side, worries about or allegations of voter fraud. what is the argument for having a process in place? why not do that? josh: some of the republican

governors or state legislators who have opposed it have argued that it could lead to increased fraud or that it is a solution in search of a problem, that is one of them put it to me, it is a great privilege to get to vote, and what is the problem with asking people to make an effort in order to be able to do it? carol: you talk about different states. talk about oregon and what they are doing. josh: sure. so oregon was the first -- around a year and a half ago -- to actually take this concept, which had been kicked around by some of the progressive voting rights advocates for a while, and actually put into lockard oregon find it into law and has it up and running, and has a couple hundred thousand automatic registrations that have already taken place. since oregon did that, the policy has also been taken out and supported and made law in four more states.

three of them, like oregon, states where democrats have both the governorship and both houses of the legislature. carol: up next, hackers target pacemakers and enter into a short sell. and forget bug repellent -- how about drone repellent? the technology that could protect you from snooping drones. that is next. ♪

♪ carol: welcome back to "bloomberg businessweek." i am carol massar. you can also find us on radio and sirius xm channel 119, a.m. 1130 in new york, and 1200 in boston, 91.1 fm in washington, d.c., and a.m. 960 in the bay area. in the technology section, a researcher brought information

to a short seller. david gura and i spoke to reporter jordan robertson. jordan: this is a completely unprecedented thing we saw with saint jude, medsec, and muddy waters. typically, maybe companies collect a small bug bounty and move on. researchers have lots of problems with certain medical device makers, and what medsec decided to do was publish their research in concert with a short seller, and that happens to be a company who has a large of influence over the other direction of company stock.

and lots of questions about -- is that ethical? a cyber company makes a pretty compelling argument that what happens unfortunately sometimes when researchers bring vulnerabilities to companies as they get sued. companies do not want to hear this tough. it is a legal liability, so they have a business interest in this, and they also have an idea that by disclosing vulnerabilities in this way, they will draw an unprecedented level of attention to this issue and forced the company to make changes. david: they have a business interest here. what is the business model? how is the company going to make money off of this? jordan: sure. again, this is a completely unprecedented business model. the company was split up month ago, and they started exclusively researching medical device cyber security, and they had researchers trying to find vulnerabilities. their first product, if you want to call it that, is this trade. the company's ceo justine bone is a very respected cyber security researcher, very well regarded in the industry, and she has stressed that shortselling or seemingly shortselling is not the

company's only business model. the company's first product is this trade, muddy waters has a short position in saint jude, and medsec gets paid. carol: drone repellent. david gura and i spoke to a reporter. david: that leads to a lot of innovation in the anti-drone space. max: yeah, as we write in "businessweek," bar refaeli saw an opportunity. we thought, if bar refaeli needs this, maybe other people will need it. carol: so they created a company called apolloshield. how does it work?

max: it basically broadcast radio signals that allow you to detect consumer drones, basically between $500 and $2000 devices that you can purchase on amazon turn without using what the army called the kinetic solution, that is to say, without blowing it up. david: what is the market for things like this? yes, if you are a famous person getting married -- is there a bigger market? the market is nascent i would say. there are lots of stadiums,

particularly stadiums in the u.s., this is seen as an opportunity, also local law enforcement. if you have a printer or essentially a suspected terrorist or a drum that looks scary, their theory is that every police department and that he will need one of these. if everything plays out the way they think it will play out, something in the billions of dollars, but again, it is a speculative because the rules around us are not totally figured out. it is not clear what you are allowed to do as far as trying to stop a drone. carol: there are different approaches as far as how to stop a drone. max: yes. competing solutions are little idiosyncratic. you have a bazooka-looking thing that has a net with a parachute that snatches the drone, and then there are eagles. a company in the netherlands called guard from above trains eagles to snatch drones out of -- carol: that is my favorite

approach. [laughter] max: apparently it works very well. they say it never failed. it is totally real but totally weird. david: $30,000 for one of these things -- entry level seems pretty steep. max: and i do not know how much the falcon cost. i would imagine it is on the order of the $30,000 apolloshield, if not more, and you need more than one of these devices to defend your venue. of thousands of dollars probably. carol: whiskey making rye cool again. the success of whistlepig just ahead. ♪

♪ carol: welcome back to "bloomberg businessweek." i am carol massar. in the features section, we

spoke with sam. night, a friend ordered rye. >> we have seen it happen with scotch. david: we ordered a glass of whistlepig. it is attractive. they have a very big following. sam: they have a very big premium. whistlepig has created an ultra premium rye market. we have seen it happen with scotch, vodka, certainly bourbon. well, it is rye's turn.

this bottle, whistlepig, basically invented a section of the market. carol: who is whistlepig? sam: it is a company founded by raj bhakta. if the name sounds familiar, he appeared on "the apprentice," ran for public office, and with whistlepig, he has found the next big thing. david: what is the company up to right now? it is having wild success, yet it is finding is up in the midst of a legal pursuit. sam: correct. when they did was -- a consultant to whistlepig, a man by the name of dave pickerell -- a sort of living legend -- advised them what to do. he identified a source of aged canadian rye that had not been used as anything more than a flavoring agent for other blended whiskeys, however, the original rye itself he found was of high quality, so they started buying that rye from a different facility, then they started buying it in vermont, now they're trying to grow rye on their property, distill it on their property, and aged in barrels made from wood from their own property, so they have this sort of backlist of rye whiskey that they are continuing to sell as 10-year-old, 11-year-old, 12-year-old, and now they are try to develop their own stock as well.

carol: which kind of has original investors are saying, "wait a minute." sam: correct. raj bhakta sought investors to get himself started, including some former colleagues of his, people he had worked with an previous jobs, as well as representatives from the santo domingo family from columbia, columbia's richest family and the second-largest holder in sab miller. they put money into whistlepig with their understanding, as they put it -- and this is currently being disputed and will be settled in court in october -- that they invested in this event there would originally be an exit, that whistlepig would be sold to another distiller, there would be an ipo, something of that nature. raj bhakta at this point is

saying no, no, i intend to run this as an ongoing, multi-generational family concern here does is cause his partners to say, "had we known that, perhaps we would not have invested as much or at all or under the same terms." carol: "bloomberg businessweek" is available on newsstands now. david: an online. what is your favorite this week? carol: i love the cover story on amazon. we know they control the retail environment. now they want to control the last mile of getting the package to your home. they want to control the world. david: yeah. i love sam grobart's piece. doing hardship duty, going to vermont, going to whistlepig distillery, trying all of these rye whiskeys out. there are brands that he sampled and liked. i did not know the back story. carol: have you tried whistlepig? david: i have not. i will try it for sure.

we will see you back here next week. ♪

♪ emily: i am emily chang and this is the best of "bloomberg west" where we bring you the top news in tech. coming up, the iphone maker coughs up $18 billion. is europe putting tech giants a notice? plus, shares jumped off a conversation with ed williams. we will bring you the interview with the twitter cofounder.