>> welcome to bloomberg businessweek. bring you the best from the magazine headquarters here in new york. we going to the conflict in alphabet. moon shot could get messy and expensive. while donald is probably the his success,about nigel farage comes in as a close second. all of letterhead ahead is on bloomberg businessweek. ♪

we are here with megan murphy. to talk about this week's issue. first off, jumping into a story that you wrote about, they storm that donald trump tweeted -- trump caused when he tweeted about taiwan? megan: this continues to reverberate is later. we had a call that ended 40 of notf the approach trying to recognize taiwan but trying to bolster taiwan. and trump shows he is not afraid or not going to be reined in. when this initially came out it seems like a pr gaffe. is actually a year-long lobbying effort. we see people close to trump advocating for him to approach

taiwan. a tougher stance on china. china immediately came back and was criticized the toilet on their front pages. the respectnk about to china and putting in the trade tariffs, for your big first move to be a diplomatic call a taiwan, it shows people what the administration will look like. --another country in turmoil italy. it isn't just about the political situation. i think the bigger story is what is going on with italian banks? megan: the referendum was interesting in the sense that this has been priced in with the markets. and you are exactly right.

italian banks, most importantly the largest bank in italy, have had multiple bailouts. and it is really trying to go back and raise more capital. to stave off another round. this is a bank that has long been in trouble. one that has always been referred to in surveys as the capitalization of european banks as the weakest. isn't the issue of turmoil, in the sense of what is going to happen to the banking industry, but it does put the situation in a political vacuum. are looking at, although we have seen bank shares rising, with this means in terms for the euro and the a more recognized effort for banking stability?

that is what people oliver: are really looking at. let's go to corporate politics. google x -- tell us about the cover story? megan: a great piece of work. the group of engineers and the people who have long done moon shots. whether that is google class or internet in the sky through balloons or a lot of the other ideas that they are passionate about with changing the world in a big way. google brought in the former cfo of morgan stanley who is taking a business look at these how do wesaying, justify this? and bloomberg is going through an existential crisis. caught up with a report

you talked about the other bets. >> larry page shock the world by deducing this new structure. where google would be a berkshire hathaway with all of these subsidiaries and the big question is, how do you continue to do all of the crazy stuff that google has been doing? and maybe the second question is, it do you want to do that stuff? google makes all its money in a specific way. advertising. antenna has 100 other businesses. a lot of which make great products but very few make money. >> the other bets? it sounds almost rogatory. but yes. so google class was one of them.

it's not around anymore. about why theynk did this reorganization, partly because of this experience. was a pretty interesting product that was badly marketed. you could imagine if they hadn't , if theye's name on it hadn't had the big launch. showhere is a fashion week where they walked the show wearing it. it helped heighten the sense of disappointment when people got the device and realized that they couldn't do that much with it. and if you look at alphabet and google, they have been awesome at making cool technologies but not so great at turning them into businesses. >> silly good idea what to soon? they're spending a lot of money

on this but it kind of sizzle's. depends on what you are talking about. there were marketing issues. with the self driving car, google has seen to be head of the game technology wise, but in terms of the business seem to be .alling behind uber and tesla i think there is a question of whether they have a business strategy besides the technology. so i think that is what it comes down to. smart engineers and they're trying to get better about bringing product to market. let's talk about the fun stuff. google x which is shrouded in secrecy. at the end of the day, cool stuff. >> the core things are the self driving car, loon, balloon

powered internet -- you can think of these as little satellites that they float in the stratosphere and the other big one is weighing, delivery drones. they're doing tests in virginia are they are delivering chipotle. but the plan is that they will deliver lots of things. and they are bigger than your average room. and they're probably a handful of other products that got killed along the way? >> we know there was something called foghorn, a plan to bring hydrogen fuel. , a cargo blimpmp build there was a plan to giant tvs. that they also seem to have killed.

so what they're trying to do is be a little bit smarter. in the past, google would just invest in cool things. coolow they say, is this and in business? then they arecool trying to be smart about the investments. moonshot been no new for two years. is this a result of the chief financial officer? he has said to my cowriter and i that it is just a coincidence. it does feel like there have a conscious effort to pull back. expect that the next moonshot will probably happen with robotics. they acquired a big mass of

robotics companies. and this is part of the weirdness of google in the past, they didn't really have a clear mandate. and what they're trying to do no and i those into shape would guess -- if we hear from them in 2017, it will involve robots. although don't -- although i don't know exactly what they will be doing. it is possible that they will decide that the robot thing, we need to keep working. a box retailers have found a new way to ring money out of the small towns that they operate in. and donald trump. corporate taxes and how the rest of the republicans around him feel. ♪

oliver: welcome back. section, makey

box retailers are finding a new way to lower corporate taxes. but it comes at a cost -- but not to them. >> you write about something called the dark story theory. what is that? >> a new way that retailers are trying to argue their property taxes being appraised. the traditional method that cities and towns have used to figure out how much the big-box retailer is worth, you look at how much the land is worth and how much it cost to build it and then we market off. forows would build a store $10 million. for tax purposes, it is worth about $10 million. arguing,the retailers it is that the store should be valued at what it would be worth if it were sold.

so if lows close that store and it sat they can, how much would that sell for? and with the comparable sales data, they say no, that store with sale for $3 million or $2 million. there are comparable sales out there that they are using. they areores that saying hey, that is how much it is really worth. it wasn't matter that worth $10 million for us to build. , $3 million.arket obviously, this is a huge difference in property taxes. that is a close store in a different community. oftentimes they were closed because they were in a less desirable area. property taxe story.

oliver: so what was the determination in michigan? >> it is remote. an unlikely place for these battles to play out but lows built the store around that amount, and years later they came back and said, we built this $10 million store and you help to pay for the infrastructure and the utilities based on the assumption of what we would be taxed out that we've actually done thinking and it turns out a somewhat other stores have sold for, this store is only worth $3 million. lows won the argument in front of the michigan tax tribunal. judges agreed with them. and this town has lost hundreds of thousands of dollars in

property taxes from lows. and then other big box retailer said they would do the same thing. so target, best buy, kohl's and car dealerships in this town have made argument, well, i know it cost as much to build the store but comparable sales, car dealerships don't solve it very much. and that county has now lost $2 million in property taxes. $2 million is a a chunk for them. this isn't orange county. so they have been tightening the purse strings and cutting back on things. the fire department puts off new equipment they were planning on and the fire department will end in the red. they don't have extra money. next year they're looking at cutting back on hours the sheriff patrols the township.

all sorts of little things you wouldn't even think about. moving to corporate taxes. take a look at the proposals donald trump has said about corporate taxes through speeches but mostly through his tweets. ,> he had a series of tweets six, a lot for him, about companies that move jobs overseas. he said, if you're going to do can just't expect you bring products back into the u.s.. if you do that will put a 35% tax on you. and this struck a lot of republicans wrong. people in his own party. , who saidvin mccarthy hey, there are better ways to do this. a jr. house republican said -- is this, make venezuela great?

to set rules and let businesses comply with the rules and get things done. not a party of having the president come in and make decisions, day-to-day about who wins or loses and that is how things appear to be going over the future trump administration. that you say that tax policy is complicated. both sides agree something needs to be done but it isn't something that can be done in 140 characters or less. this is a complicated issue. to look at a leader tax policy in a smart way. cracks my article is not tax policy overall. business tax policy. complicated enough. it is rogan. we have the highest or one of the highest among major

countries corporate tax rates. but the amount we collect as a gdp is below the average for the rich countries. so clearly, something is wrong. we know the well-known story of the products being held overseas because people don't want to pay the high tax rate. something has to change. my article is about the house gop plan. a better way. it makes a lot of sense, what they are talking about. living to a tax plan that is new. destination-based cash flow tax. a change from the corporate income tax. it could have beneficial effects. interestingly, it has bipartisan potential. apiece a fewroad years ago, endorsing this kind of tax. this is a big topic.

strategist talking about what this corporate tax policy could do in terms of earnings. but what is interesting is that book and donald trump tweets. on thele focus a lot number. they say donald trump is at 15% and maybe we will end up at 17.5% and call it a day. these numbers are not comparable. the trunk plan is not a comparable corporate income tax rate. and the host gop plan is something different. it could have a substantially higher rate on it without causing the negative effects. oliver: up next, we follow the

money and connect the dots. plus, the coalition who may be best situation to deal with the trump white house. ♪

oliver: welcome back. you can also catch us on the radio. on 99.1 fm in washington, d.c.. london and in asia. in the politics and policy section, donald trump's presidency will be unprecedented in a lot of ways. not the least will involve his potential conflict of interest around the world. at the daunting task of putting this all-in-one place. >> he has been just interests

all over the world. and you guys headed out. how widespread are they? philippines, businesses set up to do business in china even though they are not yet. indonesia --nama, basically any place where donald trump has been able to find someone willing to pay for his name to put on a luxury building in an up-and-coming city. he is trying to do business there. oliver: where do we even start with this. in terms of figuring out the previous reporting that you've done. there has been no precedent for this. so how do the powers that be figure out where to begin? nowo what we're waiting on is december 15, donald trump will tell us what he is going to do to handle this.

this will be the first concrete other thane have rudy giuliani saying the kids will handle the business as to what they will do to try to mitigate conflicts of interest. so the onus is on him right now to take leadership on ?he front russian ma >> it is. if he doesn't do anything, all these questions that people have will follow policy. if he changes relationships with taiwan, why is he doing that? is it because he wants to have a business there? thing that kind of will dog every action his administration takes going forward if he doesn't create a barrier. >> how do you do that?

as president, your hand will touch everything. how do you avoid talking to officials in scotland where there are golf courses or even in d.c. with the post office? the government owns the post office so how does that work? >> it feels very overwhelming. the ministrations having commenting a lot on this and this is why they say he has to sell. yes to put it ipo and get rid of it because otherwise there is no way to separate. i don'tt we have seen, think we're going to get that. isso much of his business licensing deals. someone pays to put his name on a building. he talks about his brand and how

it is even more valuable now. that is a lot of his financial worth. >> those deals cause the most conflict. they do create a pretty free and ready stream of cash flow for him while the deals are in effect. sell thatf he were to small portion of his business, what makes it tick, the most assets, stake in buildings and the american golf courses, you could do a lot to byigate a fractional loss getting rid of the international licensing deals. but who wants to own the ability to license the donald trump name when they don't get to control what he does? oliver: up next, a researcher turned whistleblower.

plus, the drug that could help kick and opioid addiction. ♪

oliver: welcome back to "bloomberg businessweek." i'm oliver resnick. drugll take a look at a that is a cure for opioid addiction. ♪ carol: we are here with bloomberg editor and chief. some say it is a great medicine. >> it really gets to

behind-the-scenes look plays out across the industry, which is this revelatory battle between people who have a product that they find it helpful -- that they find helpful. substancesdrugs and that it's been an emerging crisis with people being addicted to opioids. here is a substitute that some people take that has allowed them to wean themselves off of opioid and make their pain go away even more effectively. the regulatory battles over this follows one woman's journey and she became a kratom user. glimpse atcinating how agencies could change your life. oliver: let's shifted years about a very interesting character. what is he up to now?

story. is a great a quite unlikely friendship to populist figures. nigel having blasted -- type character. he was quick successful. a big force behind driving brexit in britain. it is the nigel we come to expect, a no holds barred. is he is pushing for a bilateral trade agreement between the u.s. senate u.k.. britain said he

overstepped his diplomatic parameter. they did vote for a brexit. theresa may is working actively to four straight relationships with america and other countries. then you have nigel farage, one of the leaders behind the brexit movement saying he wants to play a real diplomacy movement. it is a great story that shows how the unlikeliest of characters is now putting on a whole new face to the public. carol: another great story has to do with an interesting figure. he was a low-level researcher at at the epicenter of uncovering all of things back in venezuela. >> someone who did not cultivate this, do not look for this, just became this receptacle of people coming to him with stories of corruption. throughout venezuela and venezuelan industry and shows this was a personal thing for

people. may be they are looking to leave the country, but what made them come forward is they were disgusted by what they were seeing. getting a behind-the-scenes look at what was going on in venezuela. oliver: they did indeed come forward. we spoke to a reporter. >> we started out looking for a story is looking not how venezuela -- we started out looking at how venezuela has fallen apart. we became completely fascinated by this world. a kind of broker, bringing people who want to give testimony, or feel they have no choice to give testimony to u.s. officials who are pursuing cases of corruption and drug trafficking. carol: i feel like he is in the

middle of it. take a step back. he was a low-level employee at the imf. how did he come to be at the of what is badl in venezuela? a youngd come here as graduate from university to study english and expand his or verizon's from venezuela. he came here and 2000. and he started working any medic at a party who became -- who went to work for a consulting firm that was hired by a big bank, worried money coming from a bank he wanted to buy it, had irani and money, which would violate u.s. sanctions. from there, he came -- he became a freelancer. oliver: where did his business start to prosper? >> to take it one step back, what happened was he had been an

intern for several months at an oil company before coming to america. when this guy calls him and says whether they are involved in iranian money coming into panama, he called a friend of a wholeit opened up bunch of documents and he worked the story. patriotismly out of because he was not making money, but ultimately, he realized the day u.s. agencies would pay him to bring these folks and he could act as an intermediary helping the people who wanted to talk, how to deal with u.s. agencies, and agencies paid him. and then those folks were willing to pay him to help get them out. ultimately, he also went to work as a consultant for big banks and hedge funds. carol: you actually say he brought two dozen elites from venezuelan to the united states

to tell about what was going wrong in venezuela, specifically with their giant oil company. you are talking about former generals, former bodyguards. >> these are very serious people. some of them have seen bad stuff. some of them are suddenly being pursued by the regime in venezuela. and martin became a guy they knew who had links to u.s. agencies, and became their intermediary. andy has a very charming manner. -- he sit to down -- often they would meet at a caribbean island and he would download what you knew as wanted to get information out, and then figure out where it could go. he ended up being this amazing intermediary. carol: you guys met him? >> i spent many hours with him. carol: what is he like?

>> he is a very interesting guy. the world we are talking about is like kind of an underworld. but margin is very charming. he is both able dozer and a push the cat at the same time -- he is a bulldozer and a pussycat at the same time. you don't have the feeling that he is out to screw you, to be perfectly honest. he is very upset at what has happened in venezuela, and he wants to have the government moved out. which:, the lengths to one startup is going to build a diverse workforce. after that, the energy drink that is all the rage in brooklyn and hollywood. ♪

♪ oliver: welcome back to "bloomberg businessweek." i'm oliver resnick. in the focus on small business center, they open up on the challenges of building a robust workforce. ellen: silicon valley has been under pressure to have a more diverse workforce. if you look at silicon valley

right now, that is not what they have. >> it is a story that started in 2014. there was a lot of pressure on the tech companies to release demographic workforce. google was the first to do it. numbersey put out their slicing and dicing different racial groups. a bunch of other tech companies followed. their numbers look the same. representation of white people and asian people and very few blacks and latinos and a lot of men. slack: let's talk about technology growing pretty quickly that played a major role in the story. why did you choose to focus on them? ellen: they are an interesting company in terms of discussing

diversity. they are run by a man named stewart butterfield. he cofounded flickr. slack is a new project that started in 2014. team when thisll exact thing was going on, and whothese large companies -- at the time had almost 50,000 people releasing their numbers, and they thought maybe we have a chance to start early and start hiring from a much wider range of people now that could make it easier for us to continue in the pattern later on. they are an example of this second guard of companies starting to prioritize diverse thing when they were much smaller. small: in that section, a tea maker in brooklyn. startup company that from energy drinks and tea

a plant that comes from ecuador. --is a broken-based company it is a brooklyn-based company and they are trying to grade a more natural energy drink option. oliver: tell us the science behind the plant. you, soay that it hits i have heard, it is slower. the way that coffee hit to right on. this is a slower build. it has been drunk by indigenous populations in ecuador with the amazon for a long, long time. gage,under, tyler experienced in his studies when he was in college and basically said this is an amazing plant and i need to bring it to the u.s. to this market. carol: he went to the farmers in ecuador and says this is what i want to do and they laughed at him. >> they did. he said i want to share -- set up a supply chain and pay you to

grow it for me, and they laughed. they said, would you mean? this is something we have had forever and it would not be valuable to the u.s. market. oliver: how come no one ever try to commercialize it before? >> no one had taken advantage of it. oliver: how do tyler stumble across it? he was in the area, so to speak. >> he was working for a botanist in costa rica in the costa rica and jungle. then he led back to school and traveled back and forth to peru and ecuador and ended up, he was in a class. he went to brown university and he was in a class where they were focusing on entrepreneurship. the goal of the class was you had to, with a business plan by the end of the semester, and they decided to make a business plan turning this plant into a beverage. carol: and he has the ecuadorian government that has invested a bunch of money. >> they invested $500,000 right

at the beginning. now we are eight years in. it at whole foods and certain corporate headquarters like google and amazon. they are rapidly trying to expand. gettingl like they are -- that they are still in startup mode. to the growers, it is a huge american company now. oliver: let's get to the glamorous part. some other backers are bigger names. channing tatum, the knot of dicaprio. leonardo dicaprio. >> it is the story behind the brand. tyler gage started a nonprofit alongside the company from the very beginning. supporting indigenous growers who would otherwise have to come at you know, grow other plants and kind of less humane environments.

kind -- it is is a great beverage. it is also a great story because it is this humanitarian effort and celebrities really like that. most prolificl's evangelist has a new product that may be a tough sell. and if you are a fan of health on ashelf, try a mench bench. ♪

oliver: welcome back to "bloomberg businessweek." .'m oliver rennick you can also listen to us on the radio. in the technology section, and

later startup. making things of israel's the ad hoc -- israel's red-hot texting. carol: you write about israel's most olympic -- prolific hype man. who is he? >> he is many things, and entrepreneur, a venture capitalist, someone who comes from outside the elite of tel israelie elite of the tech scene. he never went to college. and yet, he has had tremendous success in getting tons of money for his ventures. oliver: he sounds like what a character. entrepreneur, investor, hype master. cramer like a title that gets himself on "seinfeld." it is not leave think about is a venture capitalist. seems to be very sought after

in doing the biggest deals in israel, which is a booming area front of your ship. what exactly is he adding to these businesses? >> what he adds his marketing prowess and a rainmaker that can bring money and attention and celebrities. piece islk about in my no one had gone in and saw what was going on behind the scenes. he does not always raise as much money as you think he does. one example i given the story is he had a startup, a would-be instagram. i really think he had the idea before he had ever heard of instagram. that is mobley, right. its first round of funding rate $4 million and leonardo dicaprio was one of the investors. i found a document that showed leonardo dicaprio put in $9.54.

oliver: it is not about the money, but the -- .> technically, he put money in you can argue that having the endorsement of leonardo dicaprio if you're app is a photo sharing mobile app, it is valuable, but his an impression, he gave an impression that it was more than that. oliver: he had a little problem with dicaprio in terms of how he used the photo sharing service. blii was on its last legs and back pressed by instagram. one of the things he talks about said that leonardo dicaprio -- he wanted to be posting selfies at the beach or something. having some of that celebrity, paparazzi thing. savingnardo who is into

wildlife would post a lot of his philanthropy and saving animals. think it was enough to bring eyeballs. carol: talk about the other startups he created. a luxury phone. yo was anheard the internet sensation. yo app is a testament to genius. we are all talking about it. i have it on my phone and i think it is hilarious. again, have a knack, what is going to get attention and what intrigues people. oliver: and a focus on small business section, the next product will be the biggest hanukkah toy -- mensch on a bench. >> this guy named neil hoffman was in a store couple of years want anis son said i

elf on a shelf, and he said, you are jewish, so you need a mensch on a bench. it's from an idea. carol: he just came up with that idea? oliver: what is elf on a shelf? >> it was a toy created a decade ago by two -- a mother and her two daughters. over the kidss and reports back to santa if they are naughty or nice. it became a big hit. effective. you moved the elf to a different part of the house. it was like hide and seek. the elf was reporting back to santa. oliver: this goes on a couple of weeks in advance of the holidays. whether it is an elf or a mensch. >> the elf shows up after thanksgiving and it becomes this tradition. it is a brand that has taken off. it expanded into clothes and other products.

it has become a christmas tradition. this guy neil hoffman worked in the toy industry and was at a norstrom department for a couple of years ago, and is son, and he is from an interface marriage. his said i want an elf on a shelf, but he said no, you are jewish and you need a mensch on a bench. he did a kickstarter. created a product. and from there it took off. the big thing is that he got on "shark tank" and got to investors to invest in it -- and got two investors to invest in it and it took off from there. the story i did was what he do from there? you get this big boost from ."hark tank he tried to expand the brand.

there are two new characters. hannah, the hanukkah hero and bo bbie, the jewish grandma. oliver: i am are on amazon by it. i am curious because the funding incess is sort of tech-savvy modern funding in terms of getting recognition. it is this -- it turns into a businesslike mediums like "shark tank," and facebook. ofis kind of a case study building a company in the 21st century. >> that's right. he basically used kickstarter and raised $22,000. he put into thousand dollars of his own to get the initial product launched. he was a pretty savvy guy and realized "shark tank" had a christmas special each year and they feature one jewish product.

he feels like he had a good chat that he felt like he had a good chance. he is a marketing background. he worked for hasbro. he did marketing campaigns for like g.i. joe. he got it on facebook. station picked it up in boston and then he was on "the today show." it shows that you don't have to have a bunch of money behind you. it basically was an idea that sprung from his son. the company is projected to make $1 million in revenue next year. oliver: bloomberg businessweek is available on newsstands now an online at bloomberg.com. more bloomberg television starts right now. ♪

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>> coming up on bloomberg best, the stories that shaped the week in business around the world. italy's prime minister steps down. the ecb adjusts qe. china's stock markets open a little wider. a few trump tweets make news. >> we have seen the offshore yuan lower since these tweets. >> we don't know what the backstory here is. >> it has been a monster month for market since donald trump's election. investors tell us what they expect when he takes office. >> the consensus will be good for some markets and bad for others. >> i'm looking for a 2% economy.