♪ emily: he revolutionized the way we listen to music, even if it wasn't entily legal. sean parker co-founded napster in 1999, then went on to become the founding president of facebook. ringleader of founding tech like mark zuckerberg, snoop dogg and others. justin timberlake famously portrayed him in the movie "the social network" as tech's bad boy. he has since settled down, married, and devoted his career to philanthropy, donating millions to support life sciences, global health, and more.

joining me today on "studio 1.0," napster cofounder, facebook president, and chairman of the parker foundation, sean parker. thank you for having us at your pad in l.a. we want to talk a little about who you are and how you got here. you started coding when you were seven years old. what kind of a kid were you? sean: i was generally a good kid up until a certain point. things went a little bit off the rails. emily: what point was that? sean: we call it hacking now. which has both positive and negative connotations. that was the computer underground in the late 1990's. it was, it was a breeding ground for people who went on to be successful entrepreneurs. but at the time we were really interested in computer security. it had a way of sucking you in. because there was an element of danger. there was an element of -- there was an intellectual challenge

associated with it. and as i became more involved in that world, i became less involved in, you know, my day-to-day life. everything was probably going fine up until the age of 14. when i discovered this world that, and thank goodness i did. i would not have learned to code. i wouldn't have learned about the early internet. i would not have built napster. i owe a great debt to that small cabal of people who were essentially an underground community of cyber criminals. and at the same time, my parents -- it drove my parents crazy. emily: when you were 16, you met another hacker, sean fanning, online. you didn't go to college. you moved to silicon valley and you guys built napster together. sean: it was a great experience for us. we had nothing to lose. little did we know, there was criminal liability associated with enabling what they called contributory and vicarious copyright infringement on what

was realistically an unprecedented scale. i blame myself that i was not a better negotiator. i could not help them save themselves. it is sad to watch the decline of this industry. it didn't necessarily need to happen that way. and that is a -- emily: why not? sean: consumers turn to piracy by and large when they can't get the product through legitimate channels. so there needed to be a legitimate market offering coming from the record labels, and they couldn't get their act together for years and put that in the market. it was frustrating to watch this long, deleterious collapse of an industry that was producing something that i loved so much. that was never our intention. we never wanted to see that happen. emily: music sales peaked in 1999. and since then, it has been years of decline. you're on the board at spotify. do you think that streaming services can end the years of

decline the music industry has been facing? sean: i think we have now turned the corner and are getting back into growth, based on what i have seen coming out of spotify and apple. it looks like it bottomed out. in terms of -- for a while, spotify could replace cd sales, the decline in cd sales, and the decline in downloads, but not both. emily: how do you convince people to pay for services when there is so much available for free online, whether it is youtube or elsewhere? sean: this question of free versus paid has plagued the industry all the way back to radio. i would say that the services like spotify that monetize at a really great rate where we see, you know, users coming in to a free channel, we see at least 1/3 of those users over time becoming paid customers.

there is obviously added value. and that added value is convenience. it is the ability to make a playlist, share a playlist with the outside world, organize your music library, it's all the things we help to surface music that you would not have known about. emily: how does spotify get over its taylor swift problem? it's not just taylor swift. adele and others. how do spotify get over this issue that artists don't want to give their music away for free? would spotify consider a paid tier? sean: there is a big difference between artists who these days make their money primarily by touring and doing ancillary things. they get a certain amount of money from subscription services. download services aren't doing so well for them these days. they get a little trickle from youtube, which is really nothing. but the branding opportunities, the opportunities to stage large scale tours -- because the

touring industry is so healthy -- that's the bread and butter for these artists. now, artist management is a different story. artist management, these are, many of them are my friends, so i shouldn't be -- it's a necessary profession. it is a necessary -- artists would say it's a necessary evil. artist managers are always trying to extract every last drop of value. i find it hard to believe that the artists you are mentioning don't want their music to be heard as widely as possible by as many people as possible. i would say their managers want to extract every last penny from the product which they frankly had no creative role in producing. their job in the ecosystem is to extract every last dime. emily: you think this is taylor swift's manager speaking and not taylor swift? sean: i think that's an interesting theory. it's hard to know if it's the artist or the manager speaking.

we know that from social media. i don't what she really thinks. we have not sat down and talked about it. i have talked to other artists, whose managers are on a vendetta, who love streaming and they just want the music to be heard as widely as possible. emily: what do you think is the biggest threat to facebook's business? ♪

emily: you are known as the guy who dropped "the" from the facebook. i know you and mark were very close. give me a status update with your relationship with mark. how often do you stil talk? sean: we don't talk nearly as much as we used to. there was a period where we continued to consult every day. but yeah, generally speaking, it's a good relationship. emily: there's a scene in "the social network," where you and mark zuckerberg meet for the first time.

what some people may not know after that, you go and hang out with travis kalanick who is now the ceo of uber. is that true? you actually met up at a club or something? sean: i don't know that i went to a club. maybe mark went out to a club. emily: tell us about that. sean: travis hasn't really changed at all. he is sort of, in some ways, the perfect ceo of this company because he enjoys the, he enjoys, he feeds off of the conflict and the controversy. he -- he is very good at dealing with complex situations where, you know, he's being attacked from all sides. i think there is, i think he would thrive as a, you know, wartime leader. emily: really? general kalanick. sean: he is very good under those circumstances. i think there are a lot of companies that would have been

way too boring for travis. emily: how impressed are you with what uber has accomplished? do you think it is worth $62.5 billion? sean: do i think any of these companies are worth their private market valuations? it's hard to say. there is a disconnect between private company and public company valuations. and companies wait too long to go public, and they don't do so well in the public markets. and you are seeing the fidelity rate down for instance. there have been a lot of high-profile write-downs. emily: snapchat, dropbox. sean: it's not clear what any of these things are worth until the market, the public market values them. because in these close-knit private markets, you can do various things to engineer the valuation. emily: do you think a company like uber or airbnb, should they be going public sooner? sean: the traditional path would have been to go public sooner. something happened post facebook, which i may have played a role in this occurring, which was the development of this robust secondary market

where suddenly hedge funds and private wealth managers and various sovereign wealth funds and so forth began to invest very heavily in private companies. emily: you started that? you started secondary markets? sean: i certainly didn't start everything. i didn't start secondary markets. we encouraged at facebook a robust secondary market. we were much more open to having a secondary market. being in part because we had a longer-term vision, and you need to give people the opportunity to take liquidity on the way. emily: what do you think is the biggest threat to facebook's business? sean: you know, i think facebook's business has so much growth left in it. that in some ways -- it is really value extraction. it is value that has been stored for a long time. and there are smart people trying to unlock that value. that process is, you know,

another 10-20 years before we start to see what that looks like. emily: how big of a threat do you think snapchat is to facebook? sean: there has never been one communication network which dominated everything. they all serve slightly different purposes to people. i think mark zuckerberg has done a wonderful job. and i applaud his ability to understand which companies genuinely posed a threat and an opportunity, you know, to -- to facebook. the interesting question is how does snapchat iterate into becoming more of a communication platform that enables, you know, communication that is not necessarily ephemeral. emily: so you think they should work on non-ephemeral communication. sean: there is an indication that they are going in that direction. i'm not, you know, i don't spend that much time thinking about it.

emily: whether it's instagram or oculus or internet.org, which do you see as having the most potential to become the next huge business for facebook? sean: the interesting question for facebook is, you know, is that next big thing somewhere else entirely? you know, is it google x and life sciences and, you know, contact lenses that measure glucose? is it self driving cars or is it going to be something that is very close to the home? the core of what facebook is. emily: do you think facebook should move beyond the core? sean: i think that communication is the biggest market in the world. communication cannot be undervalued. so are there other paradigms and are there other ways of communicating that facebook could enable? does it make sense for facebook to buy something like snapchat? does it make sense for facebook to expand more into real-time communication, so not just broadcast-based where you are

sharing with the group and it's essentially public? facebook messenger is really no different from instant messaging, which we really had since the mid-1990's, going back to irc and the early internet. facebook is good understanding the core communication network apps that they should own and are there more of those out there? absolutely. there are enormous opportunities left in communication. emily: you mean enormous opportunities left in terms of what facebook could buy? sean: in terms of what facebook could build or buy. emily: so do you think facebook should consider buying snapchat again? sean: it will be interesting to see where snapchat takes their user base. the great analogy is when facebook launched feed. feed created a paradigm that became almost too ubiquitous.

every company thinks we do have a feed. could snapchat undergo a similar transition where they move from having everything is ephemeral, messages are destructive -- that's a possibility. i don't know evan. i don't have a crystal ball. i wonder about where they could take things. emily: twitter, do you think twitter survives? sean: i think twitter is a victim of their own success in so many ways. they are a company that, had it not been for the media's infatuation with twitter, twitter never would have built an enormous user base. but that came at a cost. and the cost was the lack of deep, you know, close knit community between its users. twitter was never an accurate reflection of your real social network. it didn't have the same level of intimate interaction.

i don't think twitter would have existed had it not been for its relationship with celebrity and media. but at the same time, i think its relationship with celebrity and media is its biggest weakness. emily: really? so how does that play out? i mean, does twitter survive the next wave of innovation and social networks? sean: the question of does it survive is maybe too dramatic of a question. it's a question of do they prosper and do they become, you know, a much larger company, or do they remain roughly the same size and become, you know, a part of our lives in a fairly narrow way? you know, don't think that twitter goes on to take market share from other players. and i think -- but i do think they will continue to exist. emily: there is a huge debate between privacy versus security. should the tech industry be more accommodating to the government?

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emily: there is a huge debate between privacy and security and how much silicon valley can help with that. and mark zuckerberg and tim cook have really put a stake in the ground in saying we are not going to help the government spy on our users. should the tech community be more accommodating to the government? sean: the reality of the relationship between large industry and government, you know, should not be underestimated. of course there is collaboration. to think that communication companies, network providers, social media companies aren't, you know, cooperating with the

federal government in various ways i think is naive. we are living in a world where enormous economic value comes from finding connections. like, i never would have met mark zuckerberg or shawn fanning if it weren't for the internet. we met in an underground chat room. we met in a place that would probably be monitored right now by the government because they are very suspicious of hackers. but had it not been the freedom to communicate, none of this would have happened. we would not be having this conversation. i think that, you know, by that same token, the more accessible and available these communication technologies are and the more accessible and available encryption technologies are, these tools are going to be used to foment necessary revolutions against dictators and be used by terrorists and the nine crazies who would never have met to organize homegrown terrorist cell.

every major technological platform and every major shift that happens in the way we communicate is a double-edged sword. emily: what is your current act? what are you spending most of your time on right now? sean: it's 50% venture investing, startups, many that -- many of which have been ongoing for several years, and philanthropic endeavors, most of which is life sciences related. emily: what did you think about the mark zuckerberg-chan initiative? it's been unexpectedly controversial. criticized for not giving to charity. characterizing it as an llc. is that unfair? sean: i don't think anything mark does should -- we should not expect it to be anything other than controversial. his intentions are entirely altruistic. it's very hard to criticize somebody who is saying they are

going to give away the vast, vast majority, 99%, of their fortune. i think that the goal of saying it the way he said it and laying it out the way he explained it was to spark controversy. the media cycle is dominated by donald trump and terrorism and, you know, a lot of really scary things. i think mark felt an obligation to create a conversation around the role of someone who has vast resources to try to reshape the world. and i think he has succeeded in doing that. emily: you founded the parker foundation. you are giving away $600 million to life sciences, global health, civic engagement. how has your own strategy evolved?

sean: the parker foundation is doing things that we feel extremely passionate about. that we feel need to get done in the world. and the reason you are seeing so much of this kind of new hacker-style philanthropy is because this group of people who, you know, they made their money by being disruptive. they made their money by being unconventional. there is a desire to see the same type of impact that they had in their business career, which has been, if you look at uber, for instance, it has been massively disruptive -- how does one find opportunities that are equally disruptive in the philanthropic world, but they are, you know -- the type of disruption that has to happen if these entrenched social problems are going to be addressed. emily: so you are giving money to advanced science. you are focusing on allergies, cancer. what do you think that you can do differently than traditional venture capitalists? sean: i think philanthropy can get ahead of venture capital. so, venture capital when it is done correctly happens at a time

when a business is ready for commercialization. it's not there to fund basic science. and i think there is this middle ground where, for instance, cancer immunotherapy. if you are going to fund immunotherapy, you are going to be taking money away from existing labs and researchers that have been built up over time. there is a hesitation there. the breakthroughs that happen quickly have been driven by private philanthropy because governments have been too slow to recognize that a technology is ready for, you know, investment. and whether that is a philanthropic investment or venture investment. emily: any crazy areas in biotech that you are thinking about funding that we don't know about yet? sean: i think pharma has done a

really poor job of understanding where past drugs that have been, you know, demonstrated safe in phase one and phase two clinical trials, you know, could have been approved in a much narrower indication. but it may mean that, you know, you need access to a drug that only 300 other people need access to. we don't have a regulatory framework today that is very good at getting those drugs to market. emily: so what is next for sean parker? sean: i think life sciences is the single most interesting area of exploration. it is to the world today what social media was to me in 2002, 2003, and 2004. the ability to, you know, get to a lab where a grad student to do something that someone would spend 30 years of their life

trying to do previously. but i do think that cost reduction, because of new technology leading to faster and faster progress, there are enormous opportunities. i think the fundamental question of the 21st century is, how do we make sure that the technological innovations coming out of life sciences are available to everyone? emily: sean parker, thank you so much for joining us today on "studio 1.0." thank you for having us at your fabulous house. it has been great to have you. sean: thank you. ♪

♪ announcer: from his if ariel fabric sculptures to his public installations to his more davos hasrawings, created a body of work that is undeniably unique. >> he has developed a signature will