tv Bloomberg Business Week Bloomberg January 22, 2017 8:00am-9:01am EST
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♪ carol: welcome to "bloomberg businessweek." i'm carol massar. in this week's issue, the d.c. lobbyist selling access to the white house. oliver: the hacker that promises to deliver technology to third world countries comes crashing down. carol: deception at europe's most important bank. oliver: all that ahead on "bloomberg businessweek." ♪ carol: we are with the assistant
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managing editor of "bloomberg businessweek," jim ellis. you talk about walter shaw junior. >> he is the head of government ethics, the office of government ethics. he is in an awkward position because it his job to make sure that politicians behave and talk about their conflicts and is sort of let the public know what is going on. he is in an unusual position because donald trump, unlike any president in modern times has basically kept quiet on many of the entanglements he has in the business world. that has put him in the unusual position of saying, mr. president-elect, you should do this, and the president-elect basically ignoring him. that has caused him to publicly say this is not a good thing and undermines the whole notion of the open skies, clean air we do in american politics, and that has gotten him in an awful lot of trouble with republicans. he has been vetting quite a lot
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of nominees, and because of the wealth of a lot of the nominees, it is taking a lot of time, but they compress the time to do it to the point where people are actually having confirmation hearings before they have been completely vetted. it is an unusual situation and he has run into a wall with the president-elect saying he does not have to be subject to the same law, which is true. but it's a question of just because you have the legal responsibility, should you abide by the spirit of the law and make sure you have the trust of the voters? oliver: let's talk about a story in the market section, how banks identify rogue traders using a bad behavior index. >> it is interesting because it revolves around a company using machine learning which is essentially artificial intelligence to sort of look at the traits that that actors and financial services have. they have assembled a huge database of people who have done bad things, financial fraud,
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swindles, sort of violated rules and they put it into a database and had the computer start thinking about the profile of what a bad person is. they compare that to the behaviors of people who work at financial service companies and are able to assign an index score on how likely you might be to be a bad actor. certain things we think of his good behavior, people who work all weekend, people who call their coworkers in the middle of the night, people who always seem to be around, often those are signs that there is some reason to take a closer look at a person, so that is what things like this catch up on. carol: i love that. index.avior hey, let's talk about the cover story, which is about deutsche bank. it takes a look at deutsche bank's culture through a relationship with another old bank. >> it is a strange and fascinating and still ongoing story about the bank's
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involvement with an italian bank, which i have butchered on the pronunciation. though, i it right think you did. jim: it involves a story that comes from a single trade where they have to construct a trading system where there was a gain and a loss so that monte dei paschi would not have to recognize $400 million in losses on its books. that's the kind of thing you pay investment banks to do, but there was internal dissent at deutsche bank that maybe we are skirting the line here on what we can construct for them, and one of the people who was against this ends up being found dead. oliver: wow and it is an ongoing piece with a lot of complexities. we dug into the details. >> this is a story about how the
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world's oldest bank, monte dei paschi, a bank in tuscany, ran into some trouble and how deutsche bank, germany's biggest bank, helped them to get out of that trouble, and what is interesting is that it opened a window into really one of the trouble spots that investors are concerned about in europe, which is not so much the little bank in italy, but what we learn about deutsche bank through this one deal that has turned into a legal case and scandal in italy. carol: it is really about the culture of deutsche bank, and by digging in to its relationship, you do learn a lot about deutsche bank. tell us about the relationship between these two and how that a littleells you the risk culture at deutsche bank. >> exactly. the approach we took is a
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historical thing, what happened at deutsche bank through the decades as it built up risk. deutsche bank used to be a lending bank, and starting in the 1990's, expanding in the 1990's, expanding in the u.s., built up its risk, doing derivative deals, buying investment banks to compete with the big global investment banks, and that leads us to the early 2000's where monte dei paschi de sienna, after hundreds of years, a 500 year old bank, decided it wanted to expand and starts buying of bankshares and needs to generate cash off of those and made a perfect match in deutsche bank. deutsche bank was able to do a complicated derivatives deal with them that instead of sitting on the shares, they were able to get cash out of them, but it was a bet. when the financial crisis 2008, thatcrest in
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bet went bad, and deutsche bank was in a perfect position to sell them in another deal. and this is the one that went wrong. carol: it was essentially a derivative bet that the bank made. explain this trade, because it is fascinating. >> it is a simple trade to became complicated. actually monte dei paschi was sitting on these losses that were growing every day towards the end of 2008. in october, it was 180 million lost and by the end of the year it was going to be about a $300 million loss. they were going to have to report their earnings at the end of the year, and the guys at deutsche bank that new about donedeal because they had the other deal in the first place, came to them with a proposal which essentially said we can give you a winning bet and a losing bet, and right now you can extinguish the loss before you have to report your year end earnings, but we don't give away money here. you have to pay the losing bet, and that is kicking the can down the road. you can't just sell a bet that has no risk in it, so they start with this simple thing, we will give you money now, essentially a loan, and you don't have to
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report it and you can cover it over years and years as a loss and never have to tell investors, but we have to work some risk into it, so there is some financial engineering, that they got a to the finish line in 2008, and if it hadn't been for a whistleblower a couple of years later, no one might ever have known about it because they made 230 million euros in this one trade just disappear by pushing the accounting of it down the road in a slow accounting, perhaps hoping that that would eventually turn around, but it came home to roost, and not only did they have to report the loss and account for it, deutsche bank had to change its accounting for the deal, and now a trial has just started in milan where deutsche bank is a defendant, along with some of the bankers involved in the deal. because you are not allowed to cover up a loss. it's called false accounting.
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matt phillips. carol: donald trump repeatedly talked about draining the swamp, and yet corey lewandowski is setting up a lobbying firm a couple of blocks from the white house. what is going on here? >> this is the exact opposite of draining the swamp. this is filling the swamp. but they argue this is actually draining the swamp because they are the outsiders. they are doing away with the establishment, and corey lewandowski, who was trump's campaign manager in the first half of the campaign, was a pretty controversial guy, had some sharp elbows, dustups with reporters. he left the campaign to be a cnn contributor. critics said he was a trump surrogate on-air. he has since started his own lobbying shop called app strategies, two blocks away from the white house. standing in his corner office, he can point out the window and say there is the president's bedroom, so that proximity not only suggests the physical access he purports to have, but actually his ideological kind of proximity to the man.
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his fealty is 100% to donald j. trump the man, not washington. oliver: that is essentially his value add, what he presents to potential clients, he knows trump personally. also going to basically standby and only work with people that can further some of the ideological principles donald trump has campaigned on. matthew: that's right. i mean, they are very direct in the way they describe what they will be doing. they are saying their loyalty would not necessarily be to clients. their loyalty will be to the trump agenda, and if you are not on board as a company, then they don't want you. they said we will not waste your time looking for a maybe. if you are not into this, we are not into you. that is kind of a backwards way of thinking about how lobbying has worked for decades. a lot of the established lobby
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shops are bipartisan, a republican and a democrat as your principles, and it is a one-stop shop where no matter what kind of company you are, you can find somebody who can give you access to capital hill. power.er who is in that is not what they are about. their fealty is to donald j. trump and his agenda. if that's not who you are, then they don't want you as a client. oliver: speaking of donald trump, in the global economic section -- carol: the qualities political candidates share with trump. oliver: who right now is sort of leading the race? who are the top candidates for this election that will be a couple of years down the road from now? >> with this spontaneous poll, you ask them who they will vote
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for without giving them options, the number one is lula, which is something of a signal that his workers party has difficulty in finding new stars in political renewal, and then number two is a deputy from rio since 1990, a former army official, army parachutist, and he is sort of similar to a trump phenomenon. he says things that are wildly inappropriate. he told a fellow lawmaker twice in congress that she was not worth raping. carol: oh! >> he later said that was because she was ugly and not his type, and that it was sarcasm. he said that the military dictatorship made one big error, which was in torturing them
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-- dissidents -- rather than killing them, so he says these things that are incredibly off-color, off-mark, and still his popularity grows. oliver: that is the bombastic version. the celebrity version, tell us about him. >> he is the mayor of sao paulo, brazil's biggest city. he made history by winning in the first round rather than have to go to a run-off. he was once host of the brazilian version of "the apprentice," which is an amazing coincidence. he has shown himself to have something of a flare for showmanship. in his first couple of weeks in office, he put on a street sweeper's uniform and was out there pushing the broom. and he is also, he has published a couple of wealth books, how to get rich quick, and has an affinity for cashmere sweaters.
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he is very well-heeled candidate that managed to win over the poor, too. neophyte is sort of a star out there. you do have a lot of neophytes out there. you also have a plastic surgeon that is well known. this speaks to what? the general malaise in brazil? whether you look at the economy or corruption, people have had just kind of enough. >> that's right. you can see it in the poll numbers. you look at the congressional disapproval rating, the highest in history, almost 60%. you have the president with a near 10% approval rating and they are trying to push through reforms that people are strongly opposing and that they did not vote for because the vice president took office after the impeachment, so you see this opposition to the establishment
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politicians, and at the same time, these politicians are trying to put through reforms that they say will restore brazil to growth. pull it from recession. in the meantime, limiting expenses on government spending isn't popular. oliver: up next, donald trump surprise attack on drug prices, but what can he change? carol: what it is like for a top ceo to go to the mayo clinic. details about the executive health program. that is next. ♪
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oliver: and in london and in asia on the bloomberg radio plus app. in the companies and industries section, why the pharmaceutical industry gets most of its profits in the u.s. carol: and why that could change under president trump. blumfield.rter doni doni: we saw a right after the election results came in that biotech stocks surged, and this was on a combination of things, expectations that obviously they were worried about hillary clinton and some pricing control that she might have brought in. she had actually proposed some of that, and also the allowing of these tax holiday so that drug companies could bring in dollars from abroad, but since then, we have seen a bring back from those high expectations as there has been a lot of uncertainty about obamacare and the potentially tens of millions of people thrown out of their insurance, also questions about medicaid that are related to
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that, and of course there have been major concerns because we have heard trump now on multiple occasions say he wants to rein in high drug prices. >> he said the drug industry is getting away with murder. carol: the drug industry is getting away with murder. >> yes. trump has a way of putting things. we don't know know what he means. as is often the case. mean, the truth is that during the campaign he wasn't exactly kind to the drug industry either. he said he wanted to negotiate with drug companies. he said he could save 300 billion dollars, which is an impossible number. so he was making some impossible promises there, but he was saying these companies were getting away with murder and he wanted to cut kind of cut back on drug prices that the u.s. was spending. oliver: do we know what to expect in terms of sectors, drugs, or companies he might
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being particularly egregious? doni: we have not seen that yet, and of course we don't know what kind of levers he can pull beyond twitter in order to target specific companies, but there is no question that people are worried that some of these high price to drugs that help where diseases that can cost hundreds of thousands of dollars a year, that could be something. we don't know what he could do if there was another situation like the epipen situation when they were raising the price of this old medication like mylan kind of did. carol: doni, we have donald trump saying i want to get drug prices down. that has been a major theme for him. you break it down and ask a couple of questions. trump has talked about drug companies would having to bid for business with the government.
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what exactly does that mean? doni: right now, medicare part d, drug program for seniors which went into law in 2003, the government cannot bid for drug business. it is basically farmed out to many different private contractors and businesses, so there is less leverage they have over drug manufacturers, so what he may be proposing is something that we have also heard from democrats, which is that the entire federal government can together try to force price concessions from drug companies by having a giant chunk of billions of dollars in spending on drugs a year, use that and have leverage over drug companies. carol: to change that policy, congress has to say let's do that? doni: that's right.
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doni: that's right. because the very powerful lobby the drug industry has got a 2003 law to prevent specifically the federal government from negotiating together as a bundle and having that huge leverage, so they need congress and especially the powerful republicans in control in congress to get on board and reversed their position in a very big way, and they would also have to give the federal government more than the power to negotiate. they would have to give it the ability to say no. the real reason drug prices are high is because there are monopolies, in this case, patents, and when you can't say no, you don't have leverage. carol: in the health section -- oliver: how ceos get treated in exclusive hospitals. >> these are called executive health programs. if you are a busy ceo, you don't often have the time to schedule all the appointments you have to schedule, so these executive health programs allow you to take almost every test you would want to take in a two days span. carol: how much does it cost? >> it is $5,000 out-of-pocket. as a percentage of total pay it is a worthwhile expense for these companies, but does not
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include food, lodging, and airfares. oliver: tell us about sam experience. carol: what tests did he get? >> sam underwent through hearing test, blood tests, general medical history, and what sam found was that a lot of the tests he got were because of the convenience factor, doing all these things at once is great. when you're at a place like the mayo clinic, you feel like you are under the supervision of a
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really, really, really good doctor, and that peace of mind is worth a lot as well. carol: companies want to know they have a healthy ceo or what have you, and it is also a profit center for the hospitals. >> it is profitable for their balance sheet because they are generally dealing with healthy patients. if you are dealing with corporate american, you don't want to not do this and discover something later, so so everyone sort of wins in these situations, which is why they are proliferating, not just the mayo clinic. there are also satellite offices available. oliver: you get a result. if it is paid for by your company, what obligation do you have to share that? >> you can share the full results, but you don't have to. they are private for you. you sort of carry around a little app and you could actually beam them right to your doctor if you want to.
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most people basically give the mayo clinic the authority to tell the companies that they passed or failed. oliver: up next, the hacker who caused and international incident after failing to deliver on promises. carol: plus, mark zuckerberg overhauls his public image, and what that might tell us about his future. ♪
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♪ oliver: welcome back to "bloomberg businessweek." carol: how technology is allowing the disabled to become as productive as other workers. oliver: the blossoming industry after edward snowden's revelations. carol: what might be mark zuckerberg's next act after facebook. oliver: all that ahead on "bloomberg businessweek." ♪ oliver: we are back with the assistant managing editor jim ellis. greathere are a lot of
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must-reads. let's start with the opening remarks that cast a profound light on technological advancement and what it can do for individuals. >> this is an essay talking about the writer's genetic degenerative eye disease, and so he is losing his sight, and he has gotten to the point where he has no night vision and has difficulty even seeing his wife from six feet away, but what he has discovered is that the march of technology nowadays has allowed him to function in a way that even 10 years ago, and near blind person could not. he is able to use technology from tablets, from his ipad, from a cell phone to read, to be able to translate things from emails, to basically do a lot of people can sighted
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do for a lot longer than his doctors thought he would effort do when he was young. when he was young, one of his doctors told him that maybe you ought to look for work that does not involve seeing. carol: good luck with that. it is fascinating because we spend so much time looking at the labor force and saying technology has wiped out these jobs, shame on robots, but here we show technology has helped make an individual very productive. jim: this is the flip side of it. his argument is that when we end up with an older population when talent becomes more of a commodity that we are lacking, that being able to engage in bringing people who would often disabled thought of as workforce and get them to participate and
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contribute, that is a good thing for technology and something we ought to basically applaud. carol: as you said, it is a moving story. let's talk about global economics. there is a story that looks at saudi arabia and its conflict with yemen, and you would think saudi arabia has lots of money send weapons and this conflict would be done, and yet it rages on. jim: that is a surprise to a lot of people. i mean, saudi arabia is the big guy in the middle east, i mean deep pockets, huge assets, oil and the ground and financial assets all over the world, and what has happened is they have become enmeshed in conflicts around the region, trying to sort of you know, become the big guy on the international stage, and boy, have they gotten into trouble. they have become mired in yemen, and even though it is one of the poorest countries in the region, they cannot make military headway. that is a problem. they have backed forces in syria that have not been particularly successful either and people have often thought they have all
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this money and it won't be a problem. what is becoming a problem is because of the people they work with, a lot of the allies of saudi arabia are starting to say, well, maybe we don't want to help you out on arms because there is a lot of dirty fighting going on here, and that has put the saudis in a position they are not used to, which is not being in control. oliver: it is compounded by the fact they are being financially broken by entanglements at a time where cash flow is dwindling. jim: because of lower oil prices, this is a time from the saudi perspective that they have had to come up with austerity measures. they put certain ministers on pay freezes. they have done things that you never would expect in a country that rich, but they have already been in the process of trying to develop non-oil businesses, but boy, you know, being involved in international entanglements that hurts your sort of standing and your pocketbook is a bad thing. oliver: speaking of international entanglements,
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there is an incredible story, one of the features this week, cyber warfare and hacking. jim: it is a world that we normally think of as james bond-ish, but real for people who are good coders to go out and sort of say what is in this for me. they are finding after the snowden incident that lots of governments, often shaky governments, the governments we don't like to talk about, would like to have the ability to use sort of the cyber world to control things come a weather controlling the phone network or the mobile phone network in their countries, whether it is being able to control and hack into other people's computers, they want to do that from a government standpoint, and we look at a guy who built the business around trying to promise that. unfortunately he did not have all the assets there, and that was trouble. carol: jordan robertson is the reporter on the story, and we talked to him. >> in august, i traveled to new
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delhi to meet a cyber arms dealer. as many listeners will know, any of these arms trafficking markets are very underground. they are very opaque. the people involved in them don't like to talk about what they do because they are doing business with governments around the the world. so i traveled to india with the idea of meeting with him. he agreed to meet and had agreed to take me on a tour of some of the places where he grew up, and the idea was to get some color and a sense of where one of these guys, you know, kind of comes from. well after i landed, i learned that he was more than just a cyber arms dealer. he was involved in this crazy west in mauritania, in
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africa, a cyber arms deal that went as wrong as you can possibly imagine, and then we stumbled into this really rich, vivid, and terrifying story that unfolded over the next 3-4 days i was there, and what it does is it shows the danger of doing business, whether it is physical arms trafficking or digital arms trafficking in some of these dangerous parts of the world. carol: well and there are a lot of details that go into your story. here,'t cover it all everybody will have to read it, but give us a gist of this crazy deal that happened. >> the gist of it was that he had a scrappy, up-and-coming cyber arms dealer, he tried a number of ways to get into the industry and none of them were particularly effective. he tried training courses. you know, teaching people how to be hackers. he tried selling individual computer exploits. that is a really hard market because software companies fix these problems quickly. in 2014, it was the culmination of his vision, which was to sell
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software to governments to help them hack their political opponents, terrorists, whatever, and 2014 was a big year. he rented a booth at this big government surveillance conference, and he gets his biggest client, bigger than he could ever imagine, the mauritanian government, a representative comes to his booth at this government surveillance conference and they start talking about seven-figure deals for this technology. manish kumar was more than happy to promise them the world with his technology. this was more money than he ever expected to see in his lifetime, and before he knows it, he's flying to mauritania, meeting with the president, and he is arranging this $2.5 million deal. that from there went horribly wrong. oliver: what exactly did they want? what did he deliver? and is that with a misalignment
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came into trouble? >> they wanted his software, a hacking management tool, which is identifying cell phones on a target network and identifying quote/unquote suspicious people, people using encrypted applications, people using secure video chats, anybody who looked like they could have something to hide from the government, which as we all know can be legitimate. human rights activists, journalists, lots of reasons to use encrypted communications, so they wanted that, to be able to identify people inside mauritania using these encrypted applications, but most importantly, they wanted to be able to hack these people, and was promising them a silent sms exploit. this is a very high-end exploit. what that does is allow the government to silently send a text message to a target's phone, opened up malware and infect the phones without the users doing anything, and that
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is a hugely valuable capability, that's what the mauritanian government wanted. oliver: in the technology zuckerbergy mark needs someone else to run his facebook page. carol: you write about mark zuckerberg's image on facebook. it has kind of evolved over the years. >> he has taken control of this image. when we thought of mark zuckerberg around the time of facebook's ipo, we had the image of jesse eisenberg in the social network, this nerdy, awkward person, and since then, we have seen him take charge of his posts to the public, his interactions with the public. he is now coming across as this sort of lovable visionary tech guy who is a family man, who cares about global causes, who cares about curing disease and helping fix education systems.
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we have seen this evolution and this emergence of likability and that has been interesting to watch. carol: it is a casual occurrence too, isn't it? [chuckling] oliver: right. [chuckling] >> no, he has quite the staff helping him at facebook. there are about a dozen people that make sure he doesn't have harassing or spammy comments, they delete them right away. higherke sure he has a
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follower count. it is an internal operation, 7-8 people working on communications for him. this is a strategic decision by zuckerberg to frame his relationship with the public, and he is turning into more of a politician than we have seen in the past, and he has posted about his business, world issues, and it has cultivated this personality that people are really interacting with. carol: up next, how amazon is expanding to reach lower income americans. oliver: blind hiring, the new technique employed by the tech industry. carol: this is bloomberg. ♪
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♪ oliver: welcome back to "bloomberg businessweek." i'm oliver renick. carol: i'm carol massar. in the companies and industries section, amazon is experimenting with delivering groceries. >> the food stamp program was looking to pilot the ability to use food stamps and snap benefits online. groceryn and some other stores got in. it is a limited program and a limited number of states, but the big thing is amazon pushing harder after the grocery business and connect with customers who might not be amazon customers at the moment,
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i mean these are people that are low income, using food stamps, and now they can buy groceries. you have to think that amazon is pulling these people into the fold. that is a huge market to tap. oliver: it is a pilot program, so amazon is sort of one of the pioneers. why did they find it important to get in from the ground up? >> amazon is going after the grocery business. you know, groceries, the food area is one place where e-commerce has not taken over. groceries are less than 1% of the market, and it is huge, $1.3 trillion if you include like paper towels, $800 billion on just food, and people don't buy food online at the moment. amazon is building grocery stores, experimenting with models. amazon fresh, but now they're saying we will build stores where you can pick up food, drive-by on your way home and pick it up. the big take away is amazon is coming hard after the first of business, and now low income customers.
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carol: i think about walmart, has got to be watching. because groceries are an important part of walmart revenue. >> more than half of walmart's revenue, and they use food as a way to get people in the store. they always have. sort of a low price on steaks. carol: the margins are not great. >> very thin margins. the only way it works is by getting regular customers coming in and week after month. walmart uses it to say come in for this steak, maybe you will buy a tv or a t-shirt, so amazon is saying the same thing. they will get food customers in, and you're on amazon, so you start browsing. next.ows kind of what's this is a big step because you hear about the bifurcation of the american consumer, high-end, low income of the middle class being hollowed out. amazon is on the high-end, snap on the low end, so here comes amazon. carol: amazon prime, $99 to
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it is seen as a high-end consumer, so this is a new market for them. >> they shop at walmart, dollar stores, price-sensitive. they might have $20 to spend groceries and they say, i'm going to go to the dollar store so i can sort of parcel that out. that is a group of people that online,es not shop maybe they are reluctant to pay delivery fees, because they are price-sensitive, and now they can use snap online. oliver: a new and more aggressive approach some tech companies are using to build a diverse workforce. >> this engineer, she was the first in 2013 to come out and ask both her tech company, pinterest, and other tech giants in silicon valley, what percentage of your software engineers are women? it is something people had been talking about, promoting diversity, especially engineering, but there weren't
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really numbers and we did not know what percentages of the work force were black, latino, people or women, or other groups not well represented. oliver: broad transparency to something where transparency needed to be, then from there, some of these companies started setting goals on what they wanted to accomplish. how are they doing accomplishing these goals? >> yeah, it is interesting to see how they respond to the demographic data. a lot of companies came out and said here are the numbers, not so good, here's how we are working on it. companies, including pinterest and twitter, came out and said not only that, but we want to set goals for next year in 2016. we want to make sure that 30% of our engineering hires are women, and that was big because it sets a strong need to really make changes that are going to get close to that goal, and what we saw with pinterest is they set goals around women in engineering and underrepresented minorities in different roles at the company. they did not meet the women in
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engineering goal. they aimed for 30%, and they only had 22%. for next year in response they actually lowered their goal from 2017 from 30% down to 25%, so they are lowering their expectations. carol: companies are trying to create more diverse workforces. you talk about companies using blind hiring, stripping off the names and faces from applications, and yet it is hard to create a diverse workforce. they are not having that much success.
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>> yeah, i think there are kind of two schools of thought on how you might approach a diversity effort within your company. a lot of companies are going for this blind approach where there are a lot of different ways to do it. maybe you do coding interviews where you are sharing your screen, or like you said, they remove names and pictures from resumes, or they try to remove details about candidates that might bias interviewers or recruiters early on. on the other hand, you have companies that are actively trying to go for some of these candidates and may be giving candidates extra value in how they are evaluating them if they come from a particular background. some feel blind hiring is not doing enough, and others sort of feel affirmative action hiring just sortnfair or of has a lot more baggage associated with it. what is tough to say actually is
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♪ carol: welcome back to "bloomberg businessweek." i'm carol massar. oliver: i'm oliver renick. you can also catch us on the radio on sirius xm channel 119. also, am 1130 in new york, boston, washington, d.c., and the bay area. carol: also in london and in asia on the bloomberg radio plus app. in the features section, instead of reviving old jobs as trump promised -- oliver: a venture capitalist is trying to save rural america by creating a new one.
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>> ross baird, he is only 32-years-old and one of these millennials with glossy academic credentials, a masters from oxford university. in high school, he was in the academy where his dorm proctor was mark zuckerberg. since he has graduated from college, ross has been working to develop businesses and some of the places that ultimately helped to elect donald trump, red state, rural america, and he started a venture capital fund called village capital, which has backing from big names in tech to provide early capital for businesses that can develop into something that provides jobs in these areas. carol: this goes to his thinking that he does not think there is a lack of skills, but rather a lack of opportunity, so with money he is trying to support startups that can provide opportunities for people. peter: right, his idea, he has
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noticed that silicon valley can be very insular, and he pointed out of the $60 billion in venture funding last year, 90% went into states that backed hillary clinton, so he put most of his money in states that voted for donald trump, into money into indigo, which can be turned into natural dye for blue jeans. another company in kentucky that turns the invasive asian carp, a species everyone is worried about, into a gourmet fish you can eat. oliver: it seems like he has a rigorous vetting process for companies he invests income and yet they are unique and off the, so how is he able to find those people in those areas that are underserved by the investment community? >> it is a unique process, one that he really traces back to a
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year he spent in india working on micro-finance. he noticed the village banks in india were making some progress by the small loans that would go to local entrepreneurs, and the loans were chosen on the basis of other entrepreneurs making a decision, mostly women in the small villages, and he notice when other entrepreneurs rated other entrepreneurs, the businesses seemed to do well. here in silicon valley, you have this closed network of people looking for the next snapchat and chasing trends, and his idea was to host contest throughout the country and go through a rigorous process of winnowing the ideas down and having others rate them come and he puts money into the ideas that won the contest. carol: "bloomberg businessweek" is available on newsstands now.
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online atd also bloomberg.com. what is your favorite story? carol: i like the story on brazil. it has a history of unusual elections. a clown and a monkey sort of getting into the process. they also have an upcoming national election in 2018, some interesting neophyte candidates are starting to get some momentum, and some have traits similar to donald trump. this story is a reminder of the pushback we are seeing by voters around the globe against the establishment playing out in brazil. and playing out around the world. how about you? what did you like? oliver: i'd like this story about deutsche bank. it is a complicated financial situation, so interesting to of interesting people involved with it. also, the hangover from the financial crisis that is still very much with us, ongoing court cases, investigation into the background of some people being nominated because they worked on wall street at that time, and it goes to show you how far the
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♪ caroline: i am caroline hyde. this is the "best of bloomberg technology". we bring you all the top interviews from this week in tech. coming up, netflix's crown jewels come out with a huge beat this week. we will break down the case against qualcomm as the fight over licensing heads to court. and why a judge decided not to arrest samsung's heir apparent. and what is next for south
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