>> welcome to bloomberg businessweek. i'm oliver renick. in this week's special double issue on cities, why there is an overflow of bicycles in beijing. in sanng lot experiment francisco and mapping the underground of new york city. all of that ahead on bloomberg businessweek. ♪ oliver: we are here with bloomberg business week editor in chief.

megan, let's talk about the story in japan. there is quite a bit of potential turnover and tension within the political structure. >> shinzo, the prime minister of japan, a man of her small --cination to me, people people underestimate the challenges facing him. of corruption, the battle just got steeper. we can't overemphasize how steep the economic challenge has been. he is famous for his three arrows -- he has reduced unemployment, but low deflation and low inflation continues to hobble the japanese economy on anas you know depends elder situation that creates a social security bill. to take care of those people as they get older.

is facing challenges on that. things he has done to jolt the economy have proven very uneven in terms of their impact. now he is an issue where, this this school that was connected to his wife, other people in his cabinet have done things that have caused scrutiny. he is jettisoned some of them. challenge is, can he marshall his forces in a way to continue this relentless focus on the economy? the defense issue is another issue with japan/ there is tremendous instability. with north korea oliver: japan is one of these countries that is different than the u.s. in that he has to call an election and he is a tough decision. >> i have an answer for him, theresa may. oliver: learn from the mistakes

of others and i imagine he has -- dealwith this as a with this as well. >> any country where you call your own election, is a bargaining game. policyople in your own -- your own party -- that is the issue he is facing. complex right now. instability in the region is causing new tensions to surface. he needs to keep focus on that economic issue. not only for the political but for the health of the economy going forward. they have made progress but they need to make more. oliver: an asian city we want to talk about his beijing. this is a cool look at the combination of venture capital money sloshing around and people sloshing around trying to get to work. megan: and a lot of bikes. for anyone who has ever traveled there, bikes are omnipresent.

now this venture money has poured in and funding these upstart bike companies, you bikes.see, hundreds of it is a fascinating tale of how it is improving accessibility and sustainability and livability. whether or not it is sustainable in terms of venture money, i'm not sure. oliver: details from the editor. >> infrastructure and transportation, huge part of all major cities. how all major cities are starting to rethink that is a global story. one of the things were starting u.s. with just in the programs like city bike, across the world you are starting to see a lot of vc money pour into the infrastructure. specifically things like bicycles. china in particular has this red hot venture funding universe.

there are a couple companies now competing to get dominance in the bike sharing market. oliver: this is interesting because it takes different angles. you have the economic side, the start of side, the transportation side. there has been so much of people within the transportation industry and how we inc. about getting from point a to point b. whether it is uber or city bikes. , if youne in the u.s. think about china, people are always writing bikes. when i was in hong kong and shanghai people were writing bikes everywhere. it is not surprising they want to disrupt this. how did you learn about this? >> christina larson, who works for bloomberg and works in beijing does what many of us do, take the subway to work. as anyone who does that in new

york, it is not the most pleasant experience and getting more unpleasant all the time. oliver: i thought my experience was bad and then i was reading her description. this is pulitzer material. how terrible it is in beijing. it speaks of how crowded it is. >> it is like mortal kombat every morning. in an attempt to free herself from a 50 minute commute, christina started to look at other options. in beijing especially, it is almost impossible not to notice the mountain of bikes that are piled up outside of every single subway station. all across chinese cities you have 3 million bicycles that are essentially dumped. there is no other way to put it. in front of the stations. it is an irony that to get into the subway you have to navigate around all of these bicycles which makes no sense. she decided, let me try this out.

in doing so, started to explore the market there for bicycles. there are two main companies right now that are competing. bike.s called mo' they can't compete on price. the price for a single ride is $.15. what they are competing on his availability and convenience. they hope you select there's. price there is incredible. $.15 a ride. explain how the app or the program works. for my reference point and many in new york, it is a city bike reference where you sign up for a year membership at a certain cost and then you are able to pick up a bike at myriad bike stands throughout the city. you ride one from the other. there is a time limit. get to check in.

that as many times as you want as long as you have the membership. what about for this program? is it similar or is it more chaotic? >> a little similar. you have a nap, you have to -- you have an app to scan the code and unlock the bike. the barrier to getting on one of these things is low. if you see the way they are dumped, the companies may not care about the quality of the ride or the maintenance of the bike but once you are on, you are then basically dodging traffic in cities like beijing and then dumping the bike somewhere else. you're not locking it into a docking station. it is more chaotic. musk's up next, elon hyperloop surprise. and also america's aging roads and bridges. ♪

oliver: welcome back to bloomberg businessweek. i'm oliver renick. you can find us online at businessweek.com and download the mobile app. transit systems are about to have a big rival in elon musk. >> he said he wasn't going to

get involved himself. he put out this white paper in 2013 and it was a gift to the entrepreneurial community. everyone else could take his idea and run with it. quitems like he has never let loose of the idea. in the back of his mind it was always there. in december he said he would start the boring company. if you are building a company like that why not throw in a hyperloop? surprise! after years of saying he wasn't going to build the hyperloop himself he has changed his mind. >> i remember when he first started talking of it, there were blueprints online, he emptied his brain into the document. people went gung ho after it. was that the case? >> yes.

a number of companies seemingly with elon musk's blessing because he said he wouldn't do it himself, when out and raise raised capital. one,pany called hyperloop which raised almost $200 million and has a prototype it is building. there are a few others as well. htt, and la-based company, a lot of people thought they could get into the field. there has been room for a lot of players. but now you have a formidable competitor in elon musk. oliver: it sounds from the name that hyperloop is not trademarked. i'm just curious because it is a great name and it seems attached to elon musk. >> it is.

he came up with the name and if you had been paying attention you might have guessed that he was not quite prepared to give up the name. before he even released his paper on how to build a hyperloop, he filed for the trademark. when you file for a trademark, it is called a service mark in this case. he didn't just file it and forget it, you have to keep renewing the application every so often. apparently he was doing that because earlier this year, the government here in the u.s. gave him the service mark to hyperloop. now he has that and potentially anyone else who is using that name, if they do it in a way he doesn't like, he could assert his right to that trademark. oliver: speaking of mass transit, and the politics segment, australia wants to help the u.s. rebuild its infrastructure. a group of australian business executives and

politicians who have come to the u.s. and lobbied the trump administration to do a plan that they put in place in australia a couple years ago called, asset recycling. i will tell you what that is. oliver: please do. i'm trying to wrap my head around it and it is not straightforward. >> here is what you do. in australia they put a plan in place in 2014 with the federal government put up a few million dollars to incentivize the state governments to auction off public assets. airports, toll roads, pieces of the power grid. you take that money that you get by leasing or selling these assets and you reinvest in a new infrastructure -- a new construction project such as the sydney metro. it worked for a couple years. it was shut down prematurely when a new administration came in power in 2015 in australia.

the brains behind the plan was at the time, a guy named joe hawky. the us trillion treasurer. he is now the australian ambassador to the u.s. he has a relationship with mike pence and the president and he has brought with him business whoutives from australia are lobbying the administration to do something similar here. oliver: we want to get to the australian point and why they are so keen. on the asset recycling element, give us an example? let's say a toll booth or highway? a public entity like a toll booth, how does that work? what is the typical time frame in which someone leases that? is it just depending on the length of the project or how much revenue they need? all case-by-case. for example, an indiana in 2015,

the indiana toll road was bought out of bankruptcy or the lease australianout by an consortium of investors called i sm. they paid $5.7 billion for it. you get that cash flow as the investor. if you are a pensioner and you have money, you need to invested in something that is long-term stream ofnt a steady revenue or cash flow, this makes a lot of sense. there are certain cases in the u.s. where this has blown up. it is not gone well. the most infamous is chicago in 2008. the city decided to selloff all its parking meters to get a one-time cash flow. a one-time payment. it ended up raising the cost of

parking in chicago. it cost the city a billion dollars of lost parking fees over a ten-year. . there are plenty of examples in the u.s. where this has not worked out well. as you can imagine in the broader privatization conversation, democrats are not fans. up next, mapping new york's labyrinth of underground pipes and what to expect as the trump administration slows down scientific research. ♪

oliver: welcome back to bloomberg businessweek. i'm oliver renick. you can catch us on the radio on sirius xm and on these radio stations.

in the politics section, since donald trump became president, scientific research funding has tumbled. >> the goal here was to try and find out what is happening now inside federal agencies. there is a debate in congress over spending levels for next year. right now, there is no new budget that has been passed. spending on research and development has already started to slow inside federal agencies through contracts. contracts are awarded based on money that congress approves and obligates. agencies have to decide how to award those contracts and the pace at which they do it. in theory they have a fiscal year to spend the year congress gives them. we use data compiled by bloomberg government to find out how much money is being awarded in research contracts by big federal agencies.

we found a significant slowdown since trump became president. the top line number is 16% compared to last year. ,ome agencies like commerce epa, department, much bigger drops. anywhere from a quarter to a half compared with the dollars awarded for contracts last year. ,liver: when we talk about r&d the money they are investing to develop products or potential products. talking about the government, give us an example of where that money goes? >> it can be a lot of things. systems to improve the way an agency does its job. technology that the market doesn't have yet. drugs, computer software, anti-cyber hacking tools. it is a broad range. they say it is important.

when the government spends money on research it is doing that because the private sector is not the area. the need that the government is trying to meet is not commercially viable -- the government spends that money first and the private sector follows. it is a leading indicator. if r&d spending slows down it can ripple through the economy. oliver: give us a sense of how these contracts give presented and i'm trying to picture if there is a branch of the government -- you have a new president, new administration saying this person is in charge of this money. inis it a case-by-case basis which these opportunities are put on the table and the appropriate party decides? is someone taking responsibility? >> at a high-level congress decides how much money and agency gets for a fiscal year. the agency is responsible for trying to figure that out. which company should get them. agenciesbreaks down,

see the conversation between the trump administration and congress about deep cuts. it seems as though they get shaken. they see cuts are coming down the road. one argument is they try to prepare for those cuts by slowing down spending now. the reason is, the next year, the next budget, starting in october, if that is anything like the drastic cuts in the proposed budget that will make it hard for agencies to keep doing what they are doing. the argument goes they are trying to prepare for those cuts by slowing down the spending of what the money they arty have, to smooth the path to next year. oliver: and the special cities section, subterraneous archivists are bringing light to new york city. >> i met someone who is retired from the mta, the organization that runs subways in new york

city. you mentioned that he knew someone who would been involved with the city who is now retired but who has been working on, the most realistic map of new york city. the city is it really is. it is a map of the underground. when he explained about the infrastructure, i thought i am misunderstood. i thought that must already exist. we must know what there is. how could we not know? he said, no. it has been going on for a lot of years. everyone knows where something is. no one has the same complete picture of where everything is. it makes it complicated. oliver: it is probably more of a situation of if you are a company or institution that has something underground, you know it that is but you don't know where everything else is how do you make the perfect map? the specificity you need to see that without a life-size map? >> there are two main challenges

, political and technological. the political one is more complicated. you have to convince these stakeholders who control their own little part of the underground that they should share data. hascially after 9/11 that become more fraught because infrastructure is considered a vulnerability. in light of the problem, getting that data and integrating it and putting it on the same standard and making sure that it is also the same for everyone. for data that is not there you have to use all kinds of things like remote-sensing. to figure out what is there -- it is complicated because things are stacked on top of each other. it is not just a matter of knowing where things are in two dimensions, it is three. oliver: there is a certain limit to where things can go underground. a shallower limit than aboveground.

if you think about the mapping and cartography advances, google and satellite imaging, we can see everything down two inches on the surface. reading through the story, it feels like is it too late to do this underground? it seems like there is an effort to make this work? >> it is not too late but it is a challenge. it is a next frontier in mapping. satellites have made it so that we can map everything aboveground. waves don't travel to the ground like they do to light and air. it is very difficult to know what is underground. there are a lot of people who are looking at the new york project as a blueprint for the future. not the first but once it happens for real it will be the best. oliver: up next the german auto-parts maker whose future is clouded by on exhaust problem. an exhaust problem.

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>> welcome back to bloomberg businessweek. i'm oliver renick. lot challenges. revitalized in london and new york. still ahead on bloomberg businessweek. ♪ oliver: we are back with bloomberg businessweek editor-in-chief, megan murphy,

to talk about must reads in the magazine. german automotive's fraught in the past couple years, let's talk about bosch. megan: this is a tale about the german diesel in missions scandal. this company is not well known --some in the u.s. and asia it is at the heart, it is an engineering marvel. it controls many things in cars. things,nternet of appliances, the way this world is moving forward in terms of how we interact with the wider array of things we use on an everyday basis. what is happened is, the issue surrounding them is, where they involved, did they know, about vw wasices that installing into its cars to beat admissions tests. were they complicit in it? how much do they know it when

did they know it? they are facing us in of lawsuits, some of them serious, racketeering charges, that they knew and assisted bw with this vw with this.h idea, itouched on this thought this was compelling about the company itself, they are at the intersection of many traditional engineering industries like vehicles, electronics, and the internet of things and connectivity. they want to do a lot with that. their big aspirations. are the scandals big enough to put that on hold? megan: it is a good question. when i look at bosch, having covered them for a long time in new york, they got ahead start on connectivity and looking at it holistically. there are a lot of german companies.

was like that too. a car is being treated like an appliance. forefrontme is at the in implementing smart technology. they have a head start. they are sucha -- an engineering be him off. this is a reputational battle. they will sweat it out and they will settle and move on quickly. they have hugest rations of being -- they have huge aspirations of being like google. engineeringnal company competing with the true tech companies. this is the battle. we will see that play out over the next decade. it will be fascinating. oliver: lawsuits don't help. now, on parking. i've not considered driving in

new york because of parking. you look at a potential solution. many years ago when i was a young lawyer in silicon valley, this was a problem at my law firm. when you live in areas like that where there is parking and people drive from other places which is common in california. did was they wanted to invest in other forms of transport and started charging employees for parking. they found the model was successful. they developed an internal market of parking where people could sell their spots for $10 a day. when they try to roll out this model to other companies in the valley -- they got shut down. if you have great ideas you need broader by in to have success. oliver: a great design and cartoon to go with it in the magazine. lyft parking lot is

interesting because it is like a metaphor for how people think about parking in general. moved into a new building and it had a great benefit. it was a parking lot with 53 spots. the company said free parking. >> tough to come by in san francisco. >> people were pumped. people who didn't used to drive started driving because there was free parking. lyft was rapidly expanding at the time. soon it was a mess. everyone wanted to try to get a spot because why would you pass it up? somenutshell, this is how people think about the problem of city parking in general. everyone is circling the streets looking for a free spot. two employs thought, let's start charging market rates. >> it got too crowded.

>> you didn't know if you are going to find a spot. >> people were coming to work and suddenly they don't know if they can fit their car in. >> then they are just circling. that was not a good look. oliver: there is a great cartoon that is with the story that euro. telestrate and's gamble does a dorothy gamble does a great job with the story you wrote. basically, it gets to this problem where you have to incentivize people to move out. >> exactly. oliver: how do they do that? >> the plan was to start charging what the market would bear for the spots. a monthly rate -- they started at $200. if you didn't buy a spot you that extra transportation credit. the hope was you would lose that for lyft.

oliver: transportation credits mean the company would give you $200? >> yes. this was controversial at first. now, you canee but definitely get a spot but you can pay $200. one complaint was, people talk about lyft, a highflying tech startup. you assume everyone is these elite engineers. oliver: the system they devised, the side effect was a class structure? >> that was the worry. but i am not a millionaire and now you are asking me to spend a lot of money on parking. people had to park further out because they couldn't afford it. it created tension. that was there. they started the program.

things started to run smoothly in the lot. i talked to a handful of former employees who liked it. many more said they never drove to work and didn't notice it. it was supposed to make you feel a little pain for driving or at least feel like you are paying for what you're getting. oliver: this is one of those economic puzzles you read about isfreakonomics because it applying economic incentives and supply and demand to solve a problem through money. and through charges. was it successful for them? >> the people i talked to thought it was. opposition died down overtime. there was a secondary market that arose -- if you needed a spot for one day you could trade. if you are not going to drive that day and you rented a spot

you could go on a facebook group and sell it for $10 or give it away to someone. people found that if they really needed a spot and they were willing to pay a little bit they could get it. up next, board rooms of the living dead. we explain and what could be the next big tech ipo. this is bloomberg businessweek. ♪

tover: welcome back bloomberg businessweek. i'm oliver renick. you can catch us online at bloomberg businessweek.com and the mobile app. in the finance section, a focus on boards of directors. even if a director has been forced to resign he or she may be sticking around longer. we got the scoop. see whate curious to happened with directors who were fired by shareholders, whether

they were leaving or not. this has been an issue going back 10 years. where shareholders were complaining that they would vote someone off and then they would stick around. the rules favor directors. what we found is there has not been much change in the last decade. oliver: how does that work? when you are leading a company -- what executives are we talking about? the ceos, others that get removed, a company goes through turmoil and they say we have to move/ on how can they potentially still stay on? >> we are talking the board of directors at every company, every so often, they are voted by the shareholders, in the past as recently as 2011, lowe's companies required a poll ali -- most companies required that it didn't matter how many voted against you. director said that wasn't fair.

a majority vote was needed. the company said we will do this thing where if we don't get enough votes we will submit a resignation. which is what most companies now do. most companies require if you do not get a majority of the boat you need to submit a resignation. the problem is, you just need to submit it. oliver: that is where the discretionary element comes into play. what is the legal backing here? do these companies have a case to take to court or to push back against these ceos that do this? is this what they are lobbying for? >> it is the board of directors themselves that are doing it. in the past, and entire board of directors have not received enough votes, they have resigned and they have been reviewed and opted for the best outcome of the company -- they should all stay.

that is usually what happens. a director will resign any fellow directors will review the resignation and put together a saying, for the financial fiduciary interest of the company the best interest of the company is for this person to stay. most corporate truck shares that is perfectly legal in most corporate -- in most corporate structures that is perfectly legal. oliver: give us an example because putting it in perspective is a good way to assess how this plays out. give us an example from your story where this happened at a company? >> there is a company called neighbors, a drilling company. their director has been voted 2013, two thousand 14, 2015, 2016, every year. he continues to stay. one of their other directors has been voted off four times. there has been a lot of issues

at this company. it is not a board that people think is bowing to the will of the shareholders. they keep voting against them. it is a statement when a director gets not enough votes. the average voter is 99% for a director. when you don't get a majority you're an outlier. that is a strong statement. even 20% says something. the shareholders are saying, please leave. oliver: in the technology section, dropbox is making more money. that does not mean it will be a clear path to an ipo. we ever ported according to sources familiar with the company, dropbox has likely filed for an ipo. as soon as this year. they've been talking to goldman sachs. we are talking about what the company did to get itself into shape after a slump and where they want to go in the future.

they are the largest filesharing company. market that is growing rapidly but they have bigger ambitions which put them even more into competition with google and microsoft than they already are. startupbig ambitions, company, they have been around, they are about to go public which brings on a whole other realm of scrutiny that they have not had to undergo -- it seems like there is the potential for growing pains but tell us about the company and what they need to do to convince investors that they can compete with the giants? >> this company has had growing pains already. a fair bit of scrutiny, they feel. nothing compares to being a public company. what they want to do is get more the market ofnd filesharing into what we call collaboration. creating a project or sales pitch.

sharing it with other people and working on it together. that is a core business to microsoft and google. they also compete in filesharing but those are newer for them. they are not the revenue generators like microsoft office. dropbox is going into this market from scratch. they have a product called paper which just started. filesharing, home turf competing.we asked the ceo and cofounder that question and also, why does the world need another collaboration project? his feeling was that what we have now doesn't really get the job done. he gave the example of, if einstein were alive today he would spend half the morning clearing out his inbox.

hiss a humorous example but point is the way productivity and collaboration software works right now as you spend a lot of time working for work. he thinks drop lock in -- dropbox can cut through that. you will have to convince people that his vision is better. , how robots are becoming our primary caretakers in space. how one hotel tighten is trying his luck in las vegas. this is bloomberg businessweek. ♪

oliver: welcome back to bloomberg businessweek. i'm oliver renick and you can catch us on the radio on sirius xm and on these radio stations.

in the technology section, automation is making working and traveling in space easier. our robots also poised to take over health care? >> they started thinking about how to do more different kinds of things in space that are more dangerous. they're trying to figure out how you minimize the risk to a human crew and maximize the payload? oliver: it seems like there is a lot that is happening by computers. areadvancements that we made since the start of space exploration has been geared towards automating and limiting what humans have to do when they are out there? >> there a certain amount of automated telemetry. are limited and they are guided by robotic masters. the other big pieces, being able

to automate or remote control the medical requirements on the craft. oliver: that is something you are looking at. treating maladies while in space. tell us about what the effort is for the medical side, specifically, what they want to do in terms of being able to treat astronauts while they are in space? whoe talked to an astronaut cowrote the book on space medicine. how you treat problems or injuries in zero g. his take is basically, for the time being and the foreseeable future, you won't get a human element entirely out of the realm of space medicine but there is a lot that doctors can do remotely and are already doing from the ground to examine and treat minor trauma and psychological stressors in space. man versus machine

breakdown right now, it seems a lot of calculations initially done by machine and check by man? believer in a human set of eyes being the last one on anything you do in space. tryingy good story about to link up with the international space station and the computer getting it off so they were stuck. oliver: not an ideal situation. i like the way you said both humans and computers have glitches. point, where it feels potentially,uld be a limit that is reached in terms of what can be automated in space? how close are we to that? >> we talked to the astronauts themselves and the folks at nasa, they say would be tough, the limits are tough at the moment to ever fully automate a space mission beyond a rover

craft/ as we start to think about getting deeper into space. perhaps setting up colonies on other planets in the future, it seems reasonable to assume that to beill need robots doing more to support human missions. oliver: in the city section, a projects areer's reinventing neighborhoods already. adding las vegas to the list. >> he is one of the most underrated hoteliers in the world. oliver: a good title to have. >> he is the mastermind behind many things. he was the guy that created nomad in new york. most recently he has opened a gigantic object in london called the med which is reinvigorating

their financial district, which was a dead zone. tell us about how he revitalizes these areas? >> he does not have the typical background. he did not start by working the front desk and eating a manager and working his way up through a typical hotel. instead, he came from a real estate law perspective. he was signing deals for great h oteliers for the last 30 years. the guy who created starwood was originally his real estate developer and go-to guy to figure out which properties were worth sweeping up and what could turn a profit. hea young age he realized had a gift for identifying beautiful buildings and neighborhoods that had potential. idea for what he has

his eye on now? everything he has touched has become exciting. >> he does have something of a midas touch. he is expanding quickly. not all his projects are going in the same direction as in the past but in his mind, he is actually taking a different approach. he saw with the london opening, which is a gigantic hotel. it is a former bank building in the middle of the financial district. you can imagine those grand buildings and the scope. this is a departure from boutique hotels. is realizing you can make it work. you can make a big hotel that does not feel like las vegas. oliver: but he is going to las vegas. --t will he be doing her? what will he be doing there?

idea ofn return to this him striking these amazing partnerships. he is partnering with mgm to create an extension of the nomad -- here in new york, he is also opening that as a brand in downtown los angeles in a beautiful area that is completely, undervalued. despite having beautiful, turn-of-the-century, gothic buildings. oliver: do we know what the new property will look like? this is pretty major. >> it is enormous. this is not going to look on the outside, significantly different than anything you have seen. it is not a new build. it is not changing the skyline of the las vegas strip. but from the inside, i think it will be familiar to people who have been to the nomad in new york and to people who like good hotels around the world.

it will be at the taste and sophistication level of the world's most beautiful properties. oliver: bloomberg businessweek is available on stands now and also online at bloomberg businessweek.com. more bloomberg television starts right now. ♪

♪ anna: coming up on "bloomberg best", the stories that shaped the week in business around the world. ceos turn on president trump, who lashes back. president trump: they are leaving out of embarrassment. anna: anger and frustration in an alliance and threaten an agenda. >> ceos will be reluctant to get too close to trump because who knows when the next outburst will be? >> if this was not enough to get you to withdraw, what would be? >> their romance with big business is done. anna: trade issues moved to the fore as nasa talks commenced. investors spent hours figuring out central-bank minutes. >>