>> i'm selina wang in san ♪ >> i'm selina wang in san -- this week we zero in on the future. >> some of the world's most respected figures in business spoke at this event. we heard from karen weaver

and talked with her about the water crisis. carol: welcome to "bloomberg businessweek." i am carol massar. jason: and i am jason kelly. we're here at bloomberg's global headquarters in new york. carol: this week, we zero in on the future with conversations from bloomberg's annual year ahead summit. jason: some of the world's most respected figures in business and politics spoke at this invitation-only event. carol: we heard from ceo's from duke energy and others. also, karen weaver of flint, michigan about the aftermath of the city water crisis. jason: plus, doris kearns goodwin on presidential leadership in years past and what that might tell us about what is ahead. co-ceo jim coulter made a dynamic presentation on dynamic investment opportunities he sees in 2019. it is a fast run through the biggest themes, something he recently presented privately to tpg's own investors. carol: and of course we are talking about things like cannabis and the power of influencers. jason: kardashians. carol: also, big data. >> we have been talking about big data for a while. but it has gone from hype to reality. and to be clear, it is big. it is extraordinary. it is hard to figure out. so let me give you the tagline that we are using to solidify our thinking. data is the new oil. we have been saying this for a couple of years. it is now being used more broadly. let me take you through how i am thinking about the impact of

data and where we are in the cycle. so, oil and data have both been around forever. the first well drilled was in 347 a.d. in china. data is everything all the time. but what makes it a new era is our ability to gather and refine it at huge volumes. when you have a new industry that is this important that shows up, what you get is early consolidation. in the early days of oil, we had massive consolidation. we have this massive consolidation in the world of data. you see titans created. getty, rockefeller, and the titans of today. and some interesting things happen. the industry gets shaped by spills and hacks. the exxon valdez basically changed the regulation for oil. and what we are seeing is hacks changing the regulation for data around the world. both have had testimonies and scandals. when i watched zuckerberg in front of the senate, i flashed back to roger about -- ron chernow's book "titan" about when rockefeller was in front of

the courts. at that point, the senate senate did not have the ability to subpoena people. and they did not lay a glove on rockefeller, just like they did not lay a glove on zuckerberg. and four years later, they broke up standard oil. and there were political scandals in the oil industry, the teapot dome, and obviously we are in the middle of one right now in the data world. and i think both oil and data are going to have a disproportionate effect on history. why did pearl harbor happen? because we cut off the oil supply to japan. why did germany invade russia when they should not have? because they needed the oil. and we are watching data shape the politics of the world. and the last point, and this is the important one for me, is we tend to focus on the scale of the data. it is all about the products. so the oil industry basically was not about the oil itself, it was the products that it enabled.

and what we are seeing today, is companies -- is google a search engine company? it really monetizes the data. is facebook? no, it is a data company. we are seeing the idea of data products that are going to dominate the years ahead. we are seeing it everywhere. also job opportunities. in health care today, you can take your fitbit data and get reductions on your health-care premiums which has created a whole new job type. there are people now who will take your fitbit for a walk. i have heard of dog walkers, but fitbit walkers? you can pay for things with data. so there are coffee shops. there is one outside of brown where if the students will give their information, they can get free coffee. and the information is then sold on to recruiters. jpmorgan uses it in japan. hired 40% of the people through these data cafes. and around the world, you are paying for things with data. and i would argue facebook,

google, etc., these are not free services. you are paying with a currency that is denominated more differently than you think. you are paying with data. and what is the value of the data. how much are you paying for those services and do we know? around our portfolio, there is data everywhere. spotify now partners with ancestry. so you can figure out your ancestry music and play it. we're doing tax season. we've run the metering system here. so across our companies, thousands of data products are popping up. but as we begin to focus on data, the point i would say i am thinking about a lot is there is a note of caution. because society always catches up with new a technology. it often takes 50 years before we have an faa. we don't have 50 years now. we are going to see society catch up pretty quickly. jason: so later in the day, carol, i sat down with another important figure in the world of investing, john gray, the president and coo of blackstone. more than $450 billion in assets under management. this past year was his first

year at the helm of the presidency of that firm, after years of building and running its real estate group. of course we talked about volatility in the market, what will happen to asset prices, what they will be buying and selling in the year ahead. john: we are certainly in a world with more volatility. the data would say that. and i don't think we should be shocked by that. we have had a great run in asset prices for a long period of time. volatility had been fairly low. the fed has begun to raise rates. we have got some trade tensions out there. we have some issues in emerging markets. we have some issues in europe as well. you know, oil prices have come down sharply. i think it is natural that you have this kind of volatility at some point during the cycle. so, i don't think that is necessarily bad. for our business, this is generally a good thing.

because if asset prices keep grinding higher, that is hard to find opportunity. and so if you have a business model like we do, where you get capital tied up for long periods of time, you have discretion, when things drop in price, you can move quickly. and because you are not short-term financed or the capital can't be called away, you are not forced to sell. so for us, we look at this and say, wow, there are lots of assets around the world that have been repriced. we have got close to $100 billion of dry powder. this could be more of an interesting investment environment going forward. jason: so they have been repriced already? what was the catalyst there? john: well, i was just saying, you look at the global stock markets. u.s. stock markets down 10% plus from where it was. i mentioned oil prices have fallen 30%-plus in a short period of time. some credit spreads have gone out. so, i just think, and certain asset classes have obviously

traded off more than others, the energy sector in particular. there has been more displacement there. and overall, as earnings have grown when you overlay this decline in prices, multiples have actually come down a fair amount. so the stock market on the years numbers is trading at something like 15 times earnings. jason: i want to go deeper into each of your lines of business, but before we get there, help us understand the investing environment versus the economic environment. because obviously they are interrelated, but not necessarily super correlated, it feels like, right now. john: yes. so i think on the economic side, people are nervous given this volatility. i would say if you look down look at the numbers, they are still pretty good. consumer confidence is at an 18-year high. small business confidence is at, i think, an all-time high. unemployment is obviously very low. corporate earnings have been strong. and what we are seeing with our companies is generally pretty

good. so that is positive. i think the issue back to my earlier comments is as the labor market tightens, the fed naturally is going to move towards raising rates. and that is going to put pressure on multiples. and that is really the shift we are facing right now. so it is very possible you could see a decoupling, where economic growth continues to be pretty good, but because wages go up, that impacts companies' bottom lines. and multiples come under pressure. valuations don't grow at the same rate that the economy, maybe -- so you have a stronger economy, less growth in valuations. therefore as an investor, you have to become much more selective in how you deploy capital. jason: what is in store for consumer brands, coming up. carol: also, weight watchers rebranded as w.w. in 2018. coming up, that transformation at the company is continuing. jason: more from the year ahead summit.

this is "bloomberg businessweek." ♪

♪ carol: welcome back to "bloomberg businessweek." i'm carol massar. jason: and i'm jason kelly. join us for "bloomberg businessweek" every day on the radio. carol: you can also find us online at businessweek.com and our mobile app. consumer and food brands are continuing a wave of consolidation in the face of competition and changing consumer tastes. no one knows that better than our next two companies, both product and spinoff. jason: the president and ceo of the dutch food retailer and the chairman and ceo of -- international sat down with jackie simmons to talk about where they see growth in the year ahead. >> i think that if you look at our sectors, in this moment

where the growth is coming from, it is about certain segments to be in. and not everything is the same in food. so if you are at the center of the store and largely north american focused, that is probably not a good place to be. if you are in snacking, and 75% of our business is outside of north america, you are in a much better place. i think if you focus on the segments that you really want to be in, and those are well growing segments, you will do well. if you are a little bit all over the place, that is probably a very difficult place to be in. so, i personally am not sure that consolidation is the way to go, from a growth perspective, and i believe that we are fine as we are in the snacking space.

there is still plenty of opportunity around the world for us to grow, and that is really the direction that we are planning to take. what is going to happen? yes, those more north american, center of the store-focused companies that are having more difficulty getting growth, they will need to find other ways to create value. and then you can expect that consolidation and cost reduction could be a way to go. my opinion on that is, ok, once you have done that, what do you do then? now it is a bigger company that still has the same problem of not growing. so, where do you go after that? and i think there will be a shift coming, that growth in food is going to be recognized as the way to go. >> would it ever make sense for a big retailer, and i am thinking amazon, as opposed to a brand producer like yourselves to get married? >> i like france, but -- [laughter] we don't know a lot about retail. so, we would not be a natural thought. that is what i wanted to say, when we do it online, we do it largely to people who know well how to do that.

so, i personally do not see easily -- maybe if you do superpremium and if you own stores, high-end chocolate, i could see us do that, but for the rest, i do not the us immediately getting into retail. i don't know in france -- for you, it is different i guess. >> for us, a little different because we have those private labels. we run our own brands. in u.s. 28% is our own brands. in holland and belgium, 50%. we try to make the differentiation there also. when you talk about who is going to survive in these markets, which are very competitive, there are not only things about market share and these kinds of things, there are also things about who consumers will trust in the future, how consumers would like to shop. can your technology support and offer a more efficient journey in a store, more time efficient, digitally supported? are there inspirations in the store with fresh produce today?

this is a different way to cook, this is nice to see. but the transparency in the supply chain -- we had this whole romaine lettuce scare, and i think a lot of customers will be much more conscious about food safety, where is food coming from, how was it produced? and not only in a safe way, but also in a social compliance way. and i think that transparency will also be supported by technology. and those companies who can invest in technology, who have a trusted brand for food safety, but also for example, data privacy, because that is another topic, of course, those companies will also earn the trust of consumers and those companies will grow. jason: so, carol, as those two ceo's continue to adapt to their changing marketplaces, we turn to another chief managing some massive changes of her own. what was once weight watchers is now just ww. carol: it is all part of a grander plan around wellness by

president and ceo mindy grossman, who is steering the 55-year-old company through the transition. mindy: we currently have a health solutions business, but just like we have spent a lot of time relaunching our consumer business, we will be relaunching that business in the first quarter of 2019 to really provide the same ecosystem of support, but with a dashboard that really can help those businesses measure efficacy of, you know, health care costs, absenteeism, productivity, satisfaction. and we think, and when we laid out our goals through the end of 2020, we said that here is what is going to happen in 2018. we will start the relaunch in 2019 of our b2b and health solutions business, provider, etc. we will also, we have also been doing a lot of work around the

emerging markets. so, we don't really currently play in latin america and asia, with the exception of very small business in brazil. we think it is an opportunity, but priority one was relaunch the brand in the markets we are in and have that trajectory, and then enter new markets. and those were really the components. and then the last component was expand our products. so, healthy kitchen, wellness, travel and hospitality, and wellness check. carol: so, big launch for the company. it is going to be a big year. you have a marketing campaign, i understand, coming out with oprah? mindy: it is actually our most comprehensive global brand campaign that we have ever done in the history of the company. oprah has been a great partner as we have been developing the strategies around the brand relaunch and the campaigns. we have two new influencers that we will be announcing. carol: you can announce them here. mindy: no, i want people to be surprised.

but they represent health and wellness out of the u.k. and the u.s. but most importantly, it is also really telling real stories, real stories of people's lives and how we have been such a partner in transforming people's lives. that is what we aim to do. carol: is that the most effective brand ambassador? i mean, it is hard to beat oprah as a brand ambassador. mindy: you know what? we look at every market as a pyramid of ambassadors. the base of those investors you have the evangelists whose lives have been transformed by what you have provided. then there is micro influencers. so that could be chefs in a particular category. it could be great body positivity bloggers. i mean, we are one of the biggest proponents of body positivity. what does healthy mean to you? and then, yeah, there's what we call celebrities. but like our partners, we put that through our purpose filter. do they want to inspire people

to lead healthier lives through their actions? and it is not just people who need to lose weight. it is people who represent, "i want to be healthier, this is how i live my life." we just did a body of quantitative work where we asked tens of thousands of people about their perspectives on health and wellness. and if you ask that amount of people, would you like to lead a zero life -- healthier life, pretty much all of them will say yes. you ask what the first thing they need to do, over 70% say lose weight or eat better. we know we are not going to give up our science of so many years of bringing the best program on the planet, but we know people need more to have it be sustainable, and we know that people want inspiration, not just information, and that is what we are trying to give to them. carol: so jason, as we know, mindy came to the company in

2017, summer of 2017. this past year, this 2018 year, has really been about really getting into the transformation of the company, offering up new services, and now they are really going to put it out in 2019. it is going to be a big year for the company. jason: they have to make it happen now. big decisions, bold moves, even renaming the company. carol: it is going to be a big year for the company. still ahead, the political action group she should run helped a record number of women to office in 2018. the question, jason, is it a one-off or the beginning of a trend? jason: that is the big question. up next, the energy industry is grappling with the threat of climate change. the duke energy ceo speaks very frankly about the strategy of her company. carol: this is "bloomberg businessweek." ♪

♪ jason: welcome back to "bloomberg businessweek." i'm jason kelly. carol: and i'm carol massar. you can also listen to us on the radio on serious xm channel 119 and a.m. 1130 in new york, and in boston and washington, d.c.

jason: and in the bay area, and in london on dab digital and on the bloomberg business app. this week, our focus is looking around the corner with insights from the annual bloomberg "the year ahead" summit. carol: among the a-list ceo's on the program, duke energy's lynn good spoke with joel weber. and the conversation very quickly turning to the urgency of climate change. lynn: we take this very seriously, and we have a team actually looking at the report that was issued last friday, and it really continues the conversation that started with the u.n. report a few weeks ago. and at duke energy, we have been focused on carbon reduction for over a decade. and the industry really focused on carbon reduction over the decade, because we do see climate change is an issue that is going to be important to our customers, our communities, our investors. and i think the important thing to recognize is the u.s. has made great progress. our greenhouse gas emission

reductions are leading the world. there is always more to do. but we are building on a solid foundation. and at duke, our carbon emissions are down 30%. we are headed to 40%. that is since 2005, which is the typical base year we use in these analyses. and we are on track to meet our commitments around a paris-accord-type standard, and we will continue. we have been able to use natural gas. we have been able to use renewables. we are also investing in our grid so that it is more flexible and able to take the technologies that will be important as we continue to transform, but it is front and center. and i think the focus of our industry remains very high on this issue, and certainly at duke as well, on carbon energy reduction. joel: so, let's talk about what that portfolio right now that you have looks like.

maybe where it has been, where it is now, and then where it might go? and 2030, when you look out to the future, that is what you are trying to build towards. lynn: sure. joel: so, talk about the progress you have made, where you are now, and where you want to go. lynn: if we go back to 2005, 2008, duke would have been primarily coal and nuclear. today, duke is a third coal, a third natural gas, a third nuclear, with increasing renewables, about 10%. we are one of the largest nuclear operators. located in the southeast, 11 reactors located in the southeast. so if you were located in the carolinas, 50% of the power is coming from carbon-free nuclear. maintaining those plants as long as we can is an important part of our strategy to keep carbon emissions low. so, a portfolio -- joel: nuclear does not get a lot of love. lynn: it gets a lot of love at duke. joel: why do you think this is such an overlooked asset for your portfolio? lynn: you know, joel, it is an interesting thing, because for

the most part our industry has been a behind-the-scenes industry. you flip the switch, it works. there has not been a lot of discussion about how does it work, what is making it work, what works all the time? and i think that conversation is beginning and needs to continue at a pace with a greater understanding. one of the resources that make it possible to knit together a low carbon future. a nuclear plant runs 95% of the time. it produces carbon-free energy and is an incredibly valuable resource when you think about running a power system that offers 24 hours a day. you know, natural gas, also an important resource. half the carbon emissions of coal, very complementary to renewables. and then you bring in solar and you bring in wind and battery technology and energy efficiency -- you should be painting a picture of a portfolio. we have never as a country or a world been dependent on one form of energy. and i do not see that being the case as we go forward. jason: coming up, carol, i love this conversation. carlyle group's david rubenstein interviews presidential historian doris kearns goodwin. carol: and record numbers of women were inspired to run for office in 2018.

and jason, we know a record number won in the u.s. congress. the founder of "she should run" says this is just the beginning. jason: more from the year ahead summit. this is "bloomberg businessweek." ♪

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♪ jason: welcome back to "bloomberg businessweek." i'm jason kelly. carol: and i'm carol massar. still to come, more from bloomberg's annual summit, the year ahead. jason: including two individuals tasked with solving two big problems, including the mayor of flint, michigan, and the person working on saving new york subways. carol: also all things digital with joey levin. first up, the subject is politics. and the guest is one of the world 's best-known political historians.

jason: doris kearns goodwin. we have all heard of her. david rubenstein hosts his eponymous show on bloomberg television. he sat down with the deal is a prize-winning author to talk about her latest book. carol: it explores how presidents have led the nation through crises. and as she explained it, it contains lessons for business leaders as well. doris: leadership is about human nature and the way a businessman or a politician builds a team i think has similarities. are you able to build a team of people with diverse opinions, people who can argue with you and question your assumptions and bring that team together at critical moments? obviously that is what abraham lincoln did with his team of rivals and franklin delano roosevelt did. eleanor roosevelt was always willing to question his assumptions, always willing to argue with him, speaking truth to power. i think any team needs that, in business or not. i mean, they said about her that

whenever she wanted something done, she would bring a person he didn't want to speak to because he was tired of that person, right to the dinner table so she would have to speak with him because he brought in an alternative point of view. he built in that dissension through her. f.d.r. built it in in other ways, too. he loved to have people who were down in the bureaucracy come into his office every now and then so that he could question them against their department heads. he put people against one another and said a little bit of competition does a good thing. he would give the same assignment to two different people. they all had ways of getting new opinions into their heads. carol: jason, of course just a tease of the conversation. a great conversation between those two. you can get more in an upcoming episode of "the david rubenstein show." jason: staying with politics, here is something that will happen in early 2019, more than 100 women will be sworn into the u.s. congress. that is following a 2018 election season that saw a

record number of women running for local, state, and national office. carol: and jason, one reason for that trend is you had organizations that sprang up to encourage and support women candidates, an incubator of sorts you might say. the founder of the nonprofit "she should run" says the loss of hillary clinton in 2016, it set the stage for women in 2018. the founder tells me why she was inspired to start the company. erin: i had been working in politics for a number of years, and often with women who had just put themselves out there to run at that point approving viability to institutional players. and we would work our tails off and i would look at all of the resources that go in, the money that goes into politics, the hours that are spent. and then, you would look after the election and see more often than not, we were going backwards in women's representation. so, the overall numbers were not

changing. there were incredible individual stories. but the research at the time shows that the number one reason why women don't run is because they are not recruited and encouraged at the same rate as men. it is a natural part of the cycle. if you have a majority of men represented in elected office, when a position comes open, it is more likely you will tap someone who looks like you and someone you know. it is harder for women to break into that. so in 2011, we wanted to figure out a way to help provide men and women alike an opportunity to tell us about great women they know who should be thinking about running for office so we could plant that seed, so we could build that bench. we launched the program that was an ask for women to run program. carol: how many did you start with? how many do you have now that are maybe considering a run? erin: we learned a lot of lessons on how to get someone to get somebody to really tell you about somebody they think should run for office. so, we started from the beginning and fast-forward to

where we are today, we are just over 21,000 women who have been asked to run for office through our work. and 14,000 of them are preparing actively for a run for office. [applause] carol: significant. that is pretty cool. you and i talked about if hillary clinton had won in 2016, would you and i be having this conversation about the midterms? erin: no, we would not. we would not be having the same conversation. we did a big sweep before the 2016 election to look at the landscape and see where we could add programmatic work that could be helpful to the field. and what we found was that nowhere was there a program that was a logical place for women to start. for any woman to start. so we built out the incubator. women could come to us to get a feel what it is like to run for office and learn about the resources to run. we launched that program just before the 2016 election day, because we were assuming that hillary clinton was going to be elected president and our work was going to get much harder.

so we had planned for small numbers. we had planned for how difficult it was going to be to get people into the program. and election day came and went. and i kid you not, i went from days of my head on my desk to having to rewrite everything we were doing, to the floodgates opening and us getting thousands of women into the program pretty immediately. carol: and jason, we ended the conversation talking about what women might be running for president come 2020. some of the usual suspects came out. we talked about elizabeth warren, kamala harris. we talked about nikki haley and maybe kierstin gillibrand. we will see what happens. jason: it will be quite a field for sure. another of the most prominent women in politics and policy over the past year was longtime justice department official sally yates. she of course was fired by

president trump for refusing to defend that travel ban in 2017 when she was acting attorney general. carol: and remember, that was just a few days into the trump administration and the controversy over the mueller probe and other issues. she says the independence of the d.o.j. is still in peril. she spoke with our bloomberg editor-in-chief john micklethwait. sally: you can debate whether you agree with a particular decision by a judge, but trying to undermine the very legitimacy of that judge or of our judicial system just by way of example is something that is not only new, but i think really dangerous. because we can't expect that at the end of this presidency, that we are elastic enough to where the public confidence all bounces back to these institutions. and for a lot of the reasons we were just talking about a few minutes ago, these institutions really only function properly if

the public has confidence in them. the department of justice really can only function if the citizens of this country respect and believe that decisions are being made based on the facts and the law and nothing else. john: do you think the department of justice reputation is really worse now -- is at a worse stage? the questions being asked about it, is it really worse or similar to watergate? sally: i don't think the justice department took the same hit in watergate. there you had the department of justice at the end there, resisting the efforts of the president to use the department of justice. i am not suggesting by this that decisions at the d.o.j. are being made based on political reasons, but it sure is not for lack of trying from the president's part. carol: straight ahead, the mayor who is leading flint, michigan through its water crisis. she does not just want the problem fixed, she wants people who caused it held accountable all the way to the governor.

jason: plus, the president of the new york city transit authority. can he get the subways in shape in 2019? or beyond? it is a tall order. carol: i am crossing my fingers. they both definitely have full plates. this is "bloomberg businessweek." ♪

♪ carol: welcome back to "bloomberg businessweek." i'm carol massar. jason: and i am jason kelly. join the two of us every day on the radio. carol: you can also find us online at businessweek.com and on our mobile app. jason: when you look ahead at 2019's big global issues, some of them can best be understood by looking closely at some local examples. carol: exactly. for instance, lack of access to clean drinking water is often a problem we see around the world. most notably, the emerging world. that is not always the case. flint, michigan, dealing with the aftermath of its water

crisis. leading the way is karen weaver who took office as mayor of flint and does not mince words. karen: what happened in flint was criminal. when you have kids that have been poisoned, and actually a whole community, but we know that kids under the age of six and pregnant and nursing mothers will be impacted for the rest of their lives. when you have people who have died as a result of legionnaires, what they are looking at now at the high cases of miscarriages and stillbirths that took place during that time. one of the things they are looking at now -- and i am talking about the medical community -- are some of the numbers of deaths attributed to pneumonia. and they are wondering if that was really legionnaires and what was going on there. and when you look at the mental health implications, i was talking with someone earlier and

i was saying it is really easy to put a cost on infrastructure, and what we need that way. but when we look at the human cost, the human factor, we do not know what that is going to be. some of it, we are going to have to wait and see what happens. carol: is it a reminder that our society puts values on people differently? karen: yes. what happened in the city of flint, even though there were other cities in michigan taken over by emergency managers, they put cost over the public health and well-being of the people. because it could have cost something as small as $100 a day for corrosion control, and this would not have happened. carol: right. shortsighted. one last question. should he be gone after? and charged? karen: yes. and that is what we have said for every level of government. from the bottom from the top. we want everybody held accountable for what happened in flint. if that means the governor, it means the governor as well. carol: do we feel like we now know exactly what happened? that one individual? are all the pieces in place? karen: there are still some unknowns. carol: because we don't want another flint to happen. karen: no, we don't.

and i hope people are paying attention to what happened in flint. because one of the things i have said is don't let us go through a crisis and you don't learn from us. this should never have happened. it should not have happened from the beginning. carol: where are we today? we have talked about you are fixing 18,000 pipes. i think you are almost there? karen: we are almost there. we had three years in which to fix these pipes. and we said we would do 6000 a year over three years, so we have until to we have until the end of next year to get this accomplished. we are ahead of schedule. we have less than 150 to go. carol: is then the problem fixed? karen: not quite but we are on the right track. carol: what else needs to be done? karen one of the things we have talked about is after those are fixed, right now, we are still on bottled and filtered water. but the reason is because with the amount of construction going on in the city, the epa has said he still have a public health risk until we get all of those pipes removed and replaced. carol: what guarantees do you feel like you can give your

citizens this won't happen again? how do we ensure that does not happen again? karen: that is one of the things we have talked about is looking at changing the standards in place. we should be able to take water quality standards for granted. but we can't. we can't. and the standards in place are old and outdated and need to be looked at and raised. so, we have been working on that in the state of michigan. but the other thing is i have told them, i said i am not signing off on this. i have not told anyone to drink water from the tap and will not until we get all the lines replaced. even though those have been identified, we want to check the other ones. we want to make sure if we are going to do it right, we are going to do it right. we are going to check those. then we have to have the medical immunity sign off. and that is when the all clear will be. carol: and jason, we know flint as a city has had troubles for decades. some have been the result of conditions ignored for years. and you might say the same for

the new york city transit system. jason: you certainly could. the new york city transit system is massive, old, and complicated. in january of 2018, andy biford was hired to fix it. he is a u.k. native. he has turned around railways all over the world. in australia and most recently in canada. this looks to be his toughest challenge yet. andy: the biggest problem is reliability of the service. that is what people want. that is the clamor. and you know, obviously, that is the big challenge here. there have been decades of underinvestment in transit and the fact the service has progressively, relentlessly declined in many ways. i always caveat that by reminding people we do move eight million people a day. most people most days are not delayed. but there has been a slow decline in the reliability of the service. so, that is what needs to be done. but i think we can harvest that, we can mine that, we can use

that frustration to build a compelling case for what needs to be done. i said on day one it is not tinkering, it is all out modernization of transit. jason: your day one was not that long ago in terms of this new york city job. 10 months ago? january 17 was your first day on the job. you obviously knew what you were getting into to some extent. and let's be clear, this is not ever the oldest system you have worked on. you worked on the tube which is even older. what has been your biggest surprise? andy: i think a numbner -- like i said, the biggest has been the scale of the task. i had a big job in toronto, it's the third-largest transit in north america. in itself, it had a myriad of problems that needed to be fixed. and has seven bus depots. we have 27 bus depots. the tcc has 14,000 employees. new york city transit has 50,000 employees. tcc carries around two million people a day. we carry eight million people a day. so i think it is the scale of

the job and the scale of the challenge. we are dealing with equipment, signals that are safe, but some nearly 100 years old, that is ridiculous. jason: so old that the manufacturer does not even make it anymore. may not even exist. andy: we make our own parts. jason: but there has to be this moment where you say, "are you kidding me?" andy: what it says to me is we must prevail in this conversation that we started on pretty much day one to say if we want to rebuild this thing and give new yorkers the transit system they deserve, we need a plan. be careful what you wish for, we now have a plan. it was put together within 100 days of my arrival. it is called the fast-forward plan. it says that we don't need tinkering. we have got to modernize transit from top to bottom, every aspect of it. renew the signaling system, rebuild the stations, rebuild the track and critical infrastructure, get the buses moving again, make the system

fully accessible. it comes with a cost, but it can be done. jason: what is that cost? andy: well, it is billions of dollars, and i have said publicly, broadly around $40 billion over 10 years. jason: up next, iac ceo joey levin looks ahead to 2019 in the digital world. carol: and who better to talk about the future of luxury? jason: this is "bloomberg businessweek." ♪

♪ jason: welcome back to "bloomberg businessweek." i'm jason kelly. carol: and i am carol massar. you can also listen to us on the radio on sirius in new york, boston, washington, d.c. jason: and in the bay area and london and on the bloomberg business app. and of course we can't look ahead to 2019 without checking out two spaces that continue to evolve very quickly.

digital media and luxury. carol: lots of changes. first up we have got to talk about the digital space. joey levin dug into the price of data and privacy. joey: when we think about data, what we think the most important thing is that the price to value exchange is both one that has the user consent but also passes the smell test. consent can be a tricky thing. >> even people who are relatively tech savvy do not necessarily understand what they are giving up. joey: correct. it is hard to explain in a small set of words what they are giving up. number one, you need to give control to consumers. number it needs to pass the two, smell test. for example, cambridge

analytica, that did not. it was some personality test thing that had no real value to the consumer. in exchange, their data went a lot of places the consumer would not have imagined. when they realized that they said, hold on, that is a big problem. i think a company can know that. i'm not saying it happened intentionally. i think a lot of those things were accidents. operators of businesses have to be doing a price to value exchange on a valid basis. they have to be able to look themselves in the mirror and say we charged a fair price for this thing, and that price was a users' data. and that is ok, but people have to understand it and it has to be fair. when it is not, that is a big problem. we generally favor subscription businesses. that's crystal-clear. you pay $20 a month, you get access to this. >> so using your analogy, let's say cambridge analytica is a rotting fish. where does facebook sit on the spectrum? joey: i think they are figuring that out.

and i don't think they were doing it with bad intentions. meaning, i don't think they said, "let's see how much we can extract from users." >> intention aside, there is a responsibility that should come with that. joey: i think a lot of people were surprised by the power of that platform. and the extent to which misdeeds would or could be done. and that was a wake-up call for a lot of people. so, it's perhaps possible that facebook did not even understand fully the price that they were charging. you could say this data is ok, this data changes ok, but when that data can be used in this other weaponized way, it became you gave up much more in ways they did not understand they were giving up. >> what do you make of the gyrations going on over there? you do a lot of business with them, right? joey: we are advertisers on facebook and we have been partners with facebook on

things. i don't envy what they are going through. i think it is hard. everybody is coming after them right now. it is a tough spot. i think they will come through. i think they have been incredibly smart and innovative as a company that executes unbelievably well and quickly. but this is going to slow them down for sure. i think they will power through that. but it is probably an unpleasant time right now because everyone loves a pile on and everyone is piling on. carol: last but not least we have to talk about luxury. jason: the perfect person to talk about it, the guy who shares credit for creating the very concept of a boutique hotel. ian: what has happened in europe, which we usually follow, is that in london, you have the aristocrats. and you don't have much of a middle class. and then you have a big segment of the population. unfortunately, i think we are

heading in the same way, which is why i think luxury has to be responsive to that. we have what they call here the 1%, and then you have another big group. what i found in the hotel business is that wealthy people as much as anybody else want to get a good bargain. and if you can stay in a hotel room and you get the same kind of feeling and the same kind of experience that you get in a much more expensive hotel, wealthy people would also like to get that bargain. so, if you can stay in a hotel and spend $200 and feel as good and have the same access to entertainment and excitement, rather than staying in a hotel

you pay 10 times more, people will take it. not millennials, not people who don't have a lot of money. anybody. carol: "bloomberg businessweek" is available on newsstands now. jason: and also online at businessweek.com and our mobile app. carol: so jason kelly, what were the major themes you took away from the year ahead? jason: i loved getting that sneak peek of talking to john gray, talking about volatility. turbulence we're seeing in the market. it is an opportunity for them to make big money. carol: seems like we might see more volatility in 2019. i like hearing once again about the use of data. it is not going away and i think we're going to hear more about it in the coming year. jason: more and more. carol: we have enjoyed bringing you the highlights from bloomberg's year ahead summit. you can watch the entire event on bloomberg live's youtube channel and on bloomberg.com. jason: and join us on all of our platforms including our daily podcast. carol: more bloomberg television starts right now. ♪

♪ emily: he is one of the longest running ceos in tech history. hailing from west virginia, john chambers got his start at ibm before landing a job at cisco in the early 1990's. he became ceo in 1995, five years before the tech industry went bust. chambers led tech's bellwether out of the devastation. he ultimately grew cisco's revenue from $70 million to $47 point billion when he stepped down in 2015. he is now focusing on finding the next cisco, investing in a raft of start-ups that he believes are the secret to keeping america great.

joining me today on "bloomberg studio 1.0," former cisco ceo and chair john chambers. now founder of j.c.2 ventures. thank you for joining us. john: it is a pleasure to be on your show again. emily: i want to start in the middle when you joined cisco. i understand your first day on the job they put you in a telephone closet. you were not a nobody. you'd had a 15-year career, but is that true? john: it is true. i had come from the east coast with an east coast mentality. i was a prior i.b.m.er. and a company called wang liberties with 32,000 people. i came to silicon valley and i had always heard it was unusual, but the first day, our company was growing so rapidly. i joined when there were 400 people. they had no space. so they put me in a telephone switching closet. i immediately thought, should i give my wife a call and say i'm coming back to boston? then there was a problem with a customer and i jumped into it and found our customer support team, and there was none.

so i knew what the problem was and i was off to the races. i knew the difference i could make. i loved the valley, how fast we moved, but it was a cultural adjustment. emily: i want to talk about where that guy came from. the guy who was willing to sit in the telephone closet. you were raised in west virginia. tell me about your upbringing. john: i was raised by two doctors. they were in med school at the time that i came along. i might have been a surprise because that's not necessarily the logical time to have a child. they both were amazing. my dad taught me about vision and strategy. he could see five and 10 years out. he talked to me about how to do it, which was unusual for a doctor. usually they're not good business leaders. mom was internal medicine and psychiatry. she taught me the emotional side. they are two of my idols in life. emily: you've been very open about growing up dyslexic. how much of a struggle was that for you? john: it was a big struggle.

this was at a time dyslexia was not understood. you read backwards. you invert letters. you can make the same wrong turn driving again and again and again. to answer your question how it makes you feel, my hands are sweaty now talking about it. tremendous weakness. i would never have disclosed it except on a take your father to workday 20 years ago, a young girl came up and tried to ask a question in front of 500 of her peers and she couldn't get it out. she had written it down. she started to cry and leave. i came off the stage and said something and she said she was dyslexic. i said i was too. we sat down on the floor and i walked her through, how to get the question how the like you're talking to somebody. i remembered i had a microphone on and had announced to the world i was dyslexic. contrary to what i thought, a lot of people said we appreciate the openness, but a lot of people said, i am too or can you

help my child understand this? so dyslexics don't think serially. they go a, b, c. a, c, b. if you learn how to use that to a strength, you can picture things in a way that other people cannot. emily: how does it impact you as the ceo? john: you live with it. everybody has this in life. you play to your strengths and deal with limitations, but you can also decide how far you take that weakness and make it a strength. for me, i like to go a, b, c, so i can connect to the dots quickly and see a trend in the market, a chances to, instead of selling routers, set up the internet and change the world. i get that. emily: you became ceo of cisco. you joined in 1991 and by 1995, you were in the top job. how did that happen? john: they promised me the top job in two years. it took four. emily: yet they still put you in the telephone closet. john: the culture. if you don't fit into a very relaxed, fast moving pace in

silicon valley, you're going to struggle. i believe that we are all equal in life in my office should not be nicer than the executives. that's what we always did. we put employees around the windows before it was popular. and we created a culture that there was no reserved parking including for the c.e.o. it's rare you get to take a company from 400 people to 75,000. from $70 million to $47 billion and change the world at the same time in terms of how the internet made a difference and all our lives. emily: five years into your tenure, the dot-com bubble burst. did your bubble burst in that moment? john: when i saw wang fall from grace and 32,000 people lose their job -- and i watched what happened at ibm, where it should have been the leader in the

world forever, and yet it felt for almost 20 years. it has just slightly improved since then. i knew transitions happen. i had been told that leadership was learning, but it was about as lonely as it gets in 2001. emily: how so? john: people who had been complementary, some of them turned. to me, you are consistent in your behavior and life. something changes, you don't turn on the person you said good things to. there were tough comments made, that is part of leadership. if you can't take constructive criticism, you can't lead. but this is the amazing thing we did again and again at cisco, i developed an approach to how you deal with transitions or opportunities. we acquired 180 companies. our playbook was the best in the industry. when you get knocked down, you determine how much was self-inflicted, how much is market, how long it will last, which is usually longer than you think. it will probably be deeper than you think. then you share with everyone what you would look like when you recover. here is what you will do to get there, and then here is how you measure success. you share that with your shareholders, employees, customers. emily: when you were down, did you lay out a strategy about how to lead the company out of it? or figure it out along the way? john: our business, if you can imagine, grew at 70% the first week of december in 2000. there was no indication of

problems. by the third week in january, it was minus 30%. 25% of my customers disappeared. didn't stop ordering, disappeared. when i saw that number, i went on a plane and toured the world for about two weeks. i decided this is a 100 year flood and i said we will adjust appropriately and quickly and made all changes in 51 days. i painted a picture of what we would look like when we came out of it. we tried to do the best to take care of employees who were laid off. we were out of that and gaining market share at the time when most of my peers did not change. and most of them were left behind. many of them disappeared. emily: you went on to run cisco for 24 years. john: yes. emily: biggest regret? john: i did not see 2001 coming. i'm usually really good at connecting the dots.

we did see the big recession in 2008 coming, so i learned from it and in the middle of 2007 i said there's something wrong in the financial market. our numbers are fine, above the quarter again, the next quarter was shaping up nicely. but all of a sudden the big banks lowered their ordering. my numbers are fine but i learned not to just trust numbers. i called the ceos and they said not a big issue. we're just slowing a little bit. i have seen that pattern. i said we have a problem coming at us. the stock went down, of course. by mid-2008, we were in the biggest recession we've seen. but this time we were ready. we powered through it. emily: you left after 24 years. why not make it an even 25? john: most ceos don't survive more than five or six years. emily: you must be one of the longest running ever. john: it was a lot of fun. but it was the rush to know when you have to change. my last 10 years, i wanted to make a smooth transition.

i said i will re-up for five years and then suddenly i said i'm re-upping for two to four. everyone knew that meant i wanted to move on to my next chapter and wanted to get my family in good shape to make it through the next transition. three years to the day was the date we announced i would move to executive chairman and make for a smooth transition. ♪ emily: is silicon valley too arrogant for its own good? john: yes. ♪

emily: there was a time when cisco was one of the top tech companies getting all the glory. was it hard to watch amazon and google and facebook and apple become that? john: not at all. my dad taught me you always take pride in your peers' success. and it's so important the industry does well.

emily: that's awfully benevolent. john: no, it is practical. i believe you don't win by yourself, you win as a team. why should you object to someone else being successful? also i'm getting another chance to do the next cisco with these start-ups. i always enjoyed it when my peers were successful. not by competitors but my peers. emily: the ground is shifting the need facebook and google and apple and amazon. what is your take on the controversy about how facebook was slow to act when it comes to election meddling and fake news, and how management was asleep at the wheel? john: one of the things for your audience watching this, and you have asked me a really tough question, so i will first avoid it and tweak it a little bit. i just agree that they were asleep at the wheel. i'm a big fan of cheryl sandberg and believe in gender diversity. i was the first ceo to ask her to speak to my leadership team

of 3,000 people and required everybody to read the book. emily: i remember that. john: i said you are too tough on the women. for us men, we have to lean in, we're not doing our job. emily: do you think she is too tough on women? john: i think her book was a little bit too tough on women. she was making a point. she said we have to control our destiny and lean in. when you are breaking out of a challenge, you have to do it by making bold statements. emily: as much as i have benefited from lean in and the message of lean in, you can't lean in if the door is nailed shut and don't companies need to lean in more, too? john: yes, they do. using cisco's example when i was there, we had 30% of our board female before anybody started using those numbers. and we didn't do it because it was just the right thing to do. we had really talented female leaders who were amazingly good. you have to pay everybody equally. that should be a given for the same job.

it's easy to do in a large company. you just rank people. people at the same rank should be paid at the same level. period. in a startup, if you require people to interview one female for every open position, we saw the numbers change dramatically. emily: we know you are friends with sheryl. i know it is tough to answer this question, but what do you think sheryl and mark should be doing differently? john: this is where i am believer in replicatable playbooks. how you handle a challenge or when disaster strikes or whatever you want to call it. the first thing you do is determine how much was external and how much was internal, how long it will last, how deep it will be. you then outline your strategy for it and paint the picture of what your company should look like coming out. i think it is important all high companies and leaders do that. and realize that in today's world you have to be very transparent and because it will get out anyhow. you have to be realistic that

you can't stiff-arm government. you have to say, how do we work towards legitimate goals? you have to build trust relationships and a track record of being able to do it. the lesson learned is, the minute you find yourself with a major challenge in front of you, you realize how serious it will be. i think silicon valley is struggling for tech versus good and tech versus bad, and are we a force for the good for the majority of america and around the world? i think we can be, but we have lost that focus. it is important we get back to it. emily: do you think facebook is a threat to democracy? john: no. the interesting thing is that when a company or leaders are doing well, everybody sings your praises. like me in 2001, the minute i tripped, people turned on me i never dreamed would. by the way, we came back. every time we got knocked down, we came back stronger. that is the likelihood for facebook as well, but it means they have to do things differently.

mark and sheryl are good people, but they have to deal with issues in front of them and deal with them decisively. you have to say what does it look like an work jointly with government to say, how do we get there? emily: given how many times you have seen this movie before, do you think facebook will recover? john: the answer is, any company that doesn't constantly think they're under threat has a problem. you saw the press on amazon, jeff bezos, who is a good leader, but he said to his employees that amazon could be one step away from failure if we don't have the courage to reinvent ourselves and deal with tough issues that come at us. we will get left behind. 40% of the fortune 500 won't exist in 10 years. the same is true of high tech companies, maybe even more. if they don't navigate through their problems, they will get left behind. emily: it's interesting you mentioned amazon. they just said they're going to create 50,000 new jobs and you have people in new york

protesting in the streets. they don't want amazon in their city. why is that? john: anybody who doesn't want amazon in their city with a talent they attract should think about it a little bit more. secondly, and i think jeff is aware of this, we have to create an environment where we create more jobs than we destroy. i would have loved to have seen them locate one of their two locations in the midwest, where we are losing jobs. it's an area that if we don't create a start-up culture in new jobs, we'll have the voting patterns you're seeing now. for the first time -- and i lived in north carolina and georgia and west virginia and ohio and indiana and illinois -- and for the first time people in that part of the world think they won't have as good of lives as their parents and their children won't have as good as lives as them. all they want is a shot and i think the high-tech community needs to jump in and make a difference. emily: is silicon valley too arrogant for its own good? john: yes. you have to be very careful. first is inclusiveness.

secondly, people around the country don't want to be told who they should vote for. or we'll give you a stipend if your job is displaced. people in west virginia, ohio, and georgia, they just want a good job and be proud of that. secondly, we have to realize that what we do is very good, but we are also destroying jobs, and we have to deal with that. with the internet, we knew it would destroy a certain number of jobs, so cisco put network academies in every state in the u.s. and trained 7 million students when i was there, many went on to college. we went into the middle east, palestine, created a partnership between startups and the arabs and jewish population about how we work together and the gdp went from .5% in high tech to 6.5% in three years. this is where i would like to see silicon valley come back to do what we do best, change the world in a positive way.

we have to be careful that our overconfidence is probably erring on being too arrogant. ♪ emily: where do you think the next silicon valley is? john: india. ♪

emily: where do you see the biggest potential for disruption? john: the answer will occur in every industry. it will wipe out 40% of the fortune 500. the big companies won't exist in 10 years. they'll be uber'd or amazon'd or netflix'd, or whatever word you want to use. by the way, each of those big companies could get displaced as well. you are in a period where you disrupt, are disrupted, and have to reinvent yourself constantly. a while the job of the ceo used to be vision and strategy, develop, recruit, retain and change the leadership team, culture, and communications, that job is three times faster. emily: you're investing globally.

john: yes. emily: where do you think the next silicon valley is? john: india, if i had to bet on one country. it is also why it is so important to realize how important selective immigration is for this country. we want to be the place where the best and brightest from all over the world want to go with proper security clearance when they come in. in india, they graduate 600,000 engineers a year. we only do 60,000 a year in the u.s. a huge amount of startups are out of i.t. pools in india, like stanford, m.i.t., polytechnique out of france. but they're a much larger scale. emily: are you worried india or china could surpass the u.s. and that our policies might enable that? john: absolutely. i think it is something we have to be very realistic on. it has to be a level playing field. india and the u.s. should be the

most strategic partnership in the world. emily: here we are in a trade war with china. is that the right strategy? john: it's not the most gentle way to solve it, but the issue is real simple. you have to have the same level playing field in china for american businesses as china has here. our government has to be careful. we have to tell china coming here is what you need to do to get back to normal relationships. so the pressure is probably the right thing to do, maybe not as gentle as i would like to see it. but it does have to get fixed. it cannot continue to do the way it has been. emily: this brings me to politics. you describe yourself as a john mccain republican and co-chaired his campaign and have given money to both parties and voted for hillary clinton? john: yes. emily: what you think about trump's policy? john: i think he has identified a key note throughout the mid part of this country and the southeast, and that is what we alluded to earlier, people are

no longer optimistic their children will have a better life. for me, it is hard to understand. but i do grasp that things have to change. this is where it needs to change. i tend to work with both parties very well. i get along with nancy pelosi, kevin mccarthy, chuck schumer, and i get along with the top republican senate leadership. and this is where our countries have a chance to come together and make a difference. we can do it around startups and job creation. everyone grasps, regardless of whether you're in new york or minneapolis or indianapolis or charleston, west virginia, or silicon valley, it's about start-ups, where the jobs can be created. if we can do that uniformly across the 50 states, let's put a person on the moon, let's dream. let's do it. emily: you're traveling the world. you are advising president macron, prime minister modi. how do they think about how the president treats them? john: those countries realize we need a relationship between each other. you don't have any conversations with heads of states as fixed

presidents have told me in the u.s. i'm dating myself -- if you go out and share the conversation afterwards. i think the practicality is we need india. if you watch the relationship between prime minister modi and president trump, it is very good. i think the relationship on average is good between president macron and president trump. emily: in 2020, what do you want to see? are you going to be involved in that? john: i would like to be. i was not in the last election. it is the first time i sat out an election. i got asked election night in portugal who i voted for. i said -- i already voted by absentee ballot. i said i had voted for democrats for the first time. as i look forward, i think it is important that both parties get back to the middle. america does not want to be led from the far right or far left, and yet that is what we are doing in gerrymandering the territories, et cetera.

i think we need to get our act together and be led from the center and do it inclusively. emily: would you like to see a serious republican challenger to president trump? john: we need whoever is leading, whether president trump for the next four years, or a democrat, or an outsider. we need to get the country back to the middle and inclusive. a country divided is not good for the rest of the world. the rest of the world, even they're frustrated with us at times, they still know america has to lead. i think some of the issues being addressed from tax policy to ease of doing business should have been done decades ago. and taking on china, if someone is not treating you fair and you don't stand up to them, is the problem the person doing that or ourselves because we don't? it took us 19 years to redo our tax code. we are just getting regulations addressed, so it is important to realize both parties have good ideas. president clinton and president

bush taught me that. i was close to both of them, and still ask for advice and help on tough issues. i think america will come back again. i think it has to be around startups as a logical uniting point. emily: you have written a new book, "connecting the dots." you are sharing your life lessons from the battlefield. we are in this time where many people are questioning is the world really getting better or worse? so what is your advice to people building companies now? john: the speed of change will be so fast. this is where government leaders know they cannot do it by themselves because they need the industry and technology to help understand but if the technology and industry doesn't understand the legitimate needs of government, then government will take action which will probably hurt both sides. so i would like to see business and government working closer together. am i an optimist on the future? oh, yeah. in the end, america always does the right thing. emily: that is a great place to leave it. former c.e.o. of cisco and founder of j.c. ventures.

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emily: he invested alongside bono, men toward mark zuckerberg and made an investment in facebook. co-founder the private equity firm silver lake and elevation partners. never one to shy away from voicing his opinion, he has a new acid for facebook, they are getting it all wrong, dividing countries and putting democracy in peril. roger. me today, great to have you here. >> this is a great honor to be

on your show. emily: i have never had the opportunity to ask how did roger mcnamee become roger mcnamee. i am glad we have a chance to do that. it roger: i grew up in albany, new york. i had a wonderful childhood. i had problems as a kid. at 10, i had a traumatic injury that required life-saving surgery and it was one of those experiences you come through and it forms your personality. emily: how did this impact you as a child? roger: i became more introverted and essentially i got used to having to go my own way because the digestive disorder i had meant i could not eat anything that had any grain in it. you grew up without a birthday cakes and cookies and bread and cereal and those things and you have to develop tremendous

self-control and you are sitting there -- you become an investor, what are trades that are really useful. emily: did you want to become an investor as a child? roger: no, i am saying when i look back, the experience from zero to 10 had an influence. the willingness to be different from everybody else because i was always different from my classmates. le.ly: you went to yae roger: i took a one year lead, but my father died and with him went the family finances. my mother was forced to sell the house at a huge loss. there was no money to pay for college. i stayed out for 2.5 years. i got lucky i found a job where i was selling advertising space for weekly newspapers and i was selling and collecting. you have to learn to analyze businesses to figure out which ones are going to pay you.

you don't want to sell to somebody who will not pay you. that is when i discovered wall street and i bought 100 shares of a little airplane company called beach aircraft. they had a brand-new plane they called the king air. and the stock went up from $20 to $26 the week i owned it. i did not know you could work there. i was not going to be a traitor -- i did not know what the jobs were they had. i earned enough money and went back to college and figured out you can get a job, people get paid to do research. i managed to persuade goldman sachs to give me a job in the summer of 1981. ratesas the year interest peaked for all time. somethingnt to 21% or . municipal bonds with the aaa rating were 15 or 16% yield.

a bear981, we are in market, there are no jobs anywhere. i sent a resume to t. rowe price. i go in for my closing interview at the end of this two day thing and sit down next to the head guy and go, i love this place, i want to work here and i know you are not going to hire me. i watch his face and realize it is like a cartoon. his whole expression, he is totally shocked and paused and goes, this is amazing. he goes, i was not going to hire you and there were three reasons and you got them in the correct order. you said we are in the business of hiring people who are good judges of people and situations who can anticipate what other people are thinking and feeling. i have never seen anybody try that tactic for.

it was a great piece of analysis. would you like to work at t. .owe price and i said, you bet starting my career in the first day of a bull market being assigned to cover technology meant the first rule of wall street is timing is everything. emily: were you smart or were you lucky? roger: i was totally lucky. you can base my entire career on a great starting date. your dumb luck. to is terrible in the 1980's. they create the science and technology fund. in 19 days before the crash. after ag is down 31% month. they move the guys off and say, roger, why don't you take off? i said, cool, but you have to

let me do it my way. yearnt 120 to 150 days a traveling. at a time when institutional investors top analysts were doing 29 visits a year, i was doing 400 face-to-face meetings. nobody had done that before. in the late 80's. it worked so well in tact. emily: you went on to cofound silver lake. roger: we raised the money in 1999 and buy stocks i was involved in. seagate technology, a thing called day tech, which you would now know as ameritrade. they also had this amazing technology platform that drives nasdaq and gartner group, a consulting firm. that first 6 deals year, but i did three of them right at the top of market.

in the second quarter of 2000. you think nothing would work. we got very lucky again and strategy worked well. emily: as i understand it, you got pushed out. roger: apple introduced a product called the ipod. i called steve jobs and said this is really amazing, your stock, your company options are 40 and the stock is at 12. the stock is trading for cash value, let's do an lbl. if you want to do it, you can buy up to 18% of the company, come on the board and we will do this thing together. i took that idea to silver lake and they said no. emily: steve wanted you to join the board of apple and silver lake said no. roger: they said no to the whole deal and bono calls up and says i want to buy universal music group and they say we love this

idea, but we don't want you to do it. why don't you want me to do it? we think it is time for you to go. i went, really? after day tech and seatac on gartner, you want me to go? anyway, they said, yeah. i went, okay. i was crushed. officeing started in my and was my idea and hugely successful. i had just been voted out. bono tonew york, i call say i don't think the deal is happening because i am leaving the firm. bono said, we will start our own firm, the same day. want to do aou firm?

help my i think i can work in africa by raising my profile among the people i raise money from, bill gates and warren buffett and rupert murdoch and people like that. he loved raising money, he was amazing at it. he would go and talk to the employees of palm or facebook or wherever and he was so motivating. of hisone day a week time and we were open about this. one day of bono -- there was nothing like him in that world. if you are trying to intersect at the -- trade -- intimately involved. we had some strong personalities and he was the one who solved all the internal issues and he is such a beautiful person, he is that rare celebrity who is in

real like all the good things you see in their celebrity and a whole bunch more. ♪ is in you think facebook an accidental crisis? roger: i do. ♪

emily: you met mark zuckerberg in 20 -- 2006. roger: i get a call from one of the senior executives and says my boss has an existential crisis. i think you are the right guy to help him solve it. he is 22 years old and it's like march of 20 -- 2006. emily: two years after facebook was founded. roger: correct. i think they had 9 million in revenue and i am sitting here and said mark, i need to tell you something before we start. if i don't tell you now, you will never believe me later and

assume i am trying to appeal to you. i think you have created the most important company since google and within a few years you will be bigger than google is today. you have solved the problem of identity and take privacy seriously. those values are powerful. the problem with this thing is if it hasn't happened already either microsoft or yahoo! will offer a billion dollars for your company. your parents, your board of directors, your management team are all gonna tell you to take it. -- will tellture philanthropista and you will do another thing as cool as facebook. i am here to tell you that is nuts. no one has been able to replicate the great idea at the perfect time. you don't get a chance to do that a second time. you either miss on the timing or on the idea. youou believe in this idea,

have to remind everybody they got involved in this because of this mission you are on and they cannot force you off of it. there then and sue the longest most painful silence of my entire career and he is like a cartoon character. he goes like this and like this and like in this and it seemed like it went on for an hour. it probably only went on for four or five minutes. what do you do? a cloud bubble appears over his head and you can see his blood pressure comes down and you are not even going to believe this. in my bag, i have a contract from one of those two companies and every single one of you -- those things you said already happen for it i said, do you want to sell the company? he says, no, but i don't want to disappoint all these people. you will not be disappointing them. this is such a good idea, you -- they will not be sad

you turned it down. the company didn't have the right set of people and there was an issue with one of the senior executives and there was createdd magazine that issues for him. i helped him get through those sorts of things and then the smartphone thing started happening. immobile became real and they were not -- he did not believe in mobile, not at the beginning. i had the ability to bring really great technologists in to help them understand mobile. in the end, that wound up being an important thing i did. emily: you also help to meet sheryl sandberg. roger: when mark has a problem it is time to monetize and he has -- he is having issues with senior executives i said, there is no exactly comparable thing. the closest thing anybody has .one is creating adwords

it is sheryl sandberg. have you met her? he said he thought he shook her hand at a party one time. to her aboutk becoming your chief operating officer at which point, basically, they did not need me anymore. she is way smarter than i am, one of the most capable people i have ever met. emily: how much facebook stock did you buy ultimately? roger: i did not buy that much, but it turned into a lot of value. emily: how much did you make? roger: a lot. facebook was the gift that kept on giving. inly: you think facebook is an existential crisis and you have not been shy about that. roger: early in 2016i noticed that actors doing things on the platform and i did not know what i was seeing. initially it was the democratic primary and then it was related to a firm scraping facebook --

people interested in black lives matter and selling it to police departments. then there was brexit where all of a sudden it was like, the leave campaign has this set your hair on fire the immigrants are going to take away your jobs and -- facebook is biased in favor of anger and fear and therefore people who run campaigns based on anger and fear have a huge cost advantage from reach point of view and that is how breaks it happened. in october 2016, i am really concerned and i write an op-ed for re-code and instead of publishing, i sent it to mark and cheryl. they did not take it seriously. they treated me very graciously. they responded instantly. they did not think it was real. they think this is isolated things not represented and you are missing it. here is dan rose white and he was so patient with me for like

10 days in a row he let me send him stuff and talk to him and then the election happened. at that point i went crazy. ♪ emily: how big a role do you think facebook had to play in the election of donald trump? ♪

emily: how big a role do you think facebook had to play in the election of donald trump? roger: without facebook, it is inconceivable he would have been nominated. emily: he would not even have been nominated? roger: i think his nomination was much more impactful than the daesh divide the american people. they took these polarizing issues like guns, immigration, the rights of women, black lives matter and they would try and divide the country by ceding both and causing arguments. trump showed up and adopted the

same themes they had been doing it i assumed it was just because that is the way he thought. he effectively got this free ride off two or three years of russian investment and republicans were running standard campaigns, so they were .efenseless he had been campaigning for three years before they had even started and that is how he got nominated. we cannot fix 2016. my goal is i believe the advertising business model creates the wrong incentives for facebook and that, essentially, it forces them to use highly and towith technology basically push people to increasingly extreme positions. polarization is good for their business. anger and fear are good for their business. emily: what do you believe we are at risk for now because of the way facebook is constructed?

roger: it's not just facebook, all the social media platforms. they are the most effective. google,e issues with youtube, search, snapchat, twitter. facebook is the most important. 40% of the country thinks it is okay for a hostile power to interfere in our most basic civil liberties, voting. they are totally excusing it. emily: some people at facebook haven't taken this criticism so well. andrew bosworth set i worked at facebook for 12 years and i after -- i have to ask who the f is roger mcnamee and goes on to accuse you of anger and and isaac -- roger: what possible gain do i have from doing what i have now? i am trying to mentor at a

distance. speakt 4 months trying to to them without talking to anybody in the outside world and i spent five months researching everything i could to understand it. what i would say to andrew is i know facebook did not intend to have these outcomes, but this is really simple and all these bad outcomes are happening and their users are being harmed. that is their responsibility per it all i am saying is you have won, you don't need to have this kind of business model. there is a way to have a business model that is actually better. i would like to spend $10 a month and i want to be able to control my newsfeed. i want to take the ads out and be more valuable to them and have one version that is politics, one that is family, one that is sports, one that is health and fitness and one that is work-related and be able to toggle through them and control things and i want them to be

successful. emily: they say they are hand ring tent -- hiring 10,000 more people. is that not enough? roger: it is completely irrelevant. this damage after the fact with people policing. these things are embedded in the algorithms. the same thing that makes facebook the most compelling platform makes it the perfect platform for bad actors to abuse people. you can only fix this problem by fixing the algorithm. emily: how so? roger: you have to change the business model. make it so anger and fear are people predominant ways are motivated to act on facebook. without advertising -- if you are not dependent on advertising or not as dependent, you don't need people to be addicted. you don't need to make them fearful. emily: how do they not -- make money them? roger: i am saying i want to pay

a subscription. i want to pay $10 a month. i am look at this and saying name the price. you want to still have ads for some people, fine, give me the option of a different thing. what they are doing now is the lazy way out. emily: what about regulation? roger: i think regulation is important and the way to think about this is the most important thing is for the employees to recognize things have come off the rails and they have the power to fix it. emily: have you heard from mark? have you heard from cheryl? roger: no, but i suspect their lawyers have told them not to do i would love to. the way you know when people have a problem and they are serious about fixing it is they reach out to their critics to understand the issues. i understand what -- people would be mad at me. i really do. i would have everybody ask the question, what is in this for me? i don't need this.

emily: if they don't need this, what do you think will happen? roger: our democracy is in extreme power and we don't -- peril and we don't have a lot of time to fix this. elections are coming up in november and we don't have a lot of time. it's not just the russians you have to worry about. it is terrible for our children, this addiction thing is being imposed on kids. we are doing this in pursuit of profit. for what? emily: elevation doesn't exist anymore. roger: it is basically me. emily: are you still investing? this is your mission? roger: i have been doing this nonstop since october 2016. the same way mark outgrew me, this thing should outgrow me, too. as this is a form of

public service. at least i hope it is. if they are worried, read what i have written, think about it, ask yourself the question, are you addicted? i am, hopelessly so. i cannot help but check the thing. i tell people, turn off your notifications. think about how you use these products. are they taking over your life? if you are on slack, do you want to allow them to browbeat you into having notifications for every little thing and interrupting everything you do? if you do, they control you. take your time back. it take yourself back. these people are billionaires. they don't need our help -- they need our help, but they do not need us rolling over for them. emily: roger mcnamee, thank you so much for joining us. great to have you. ♪

>> is one of the few tech uniforms founded by a tech occupant nor -- female entrepreneur. packing boxes of clothing and mailing them to new customers. they kept coming back and multiplying. after early stage investment, 50 venture capitalists turned her down. that was a mistake. aitch fix went public, now at $2.5 billion valuation and expanded to new categories including not just women, but men. plus size, maternity, and kids.

blake became the first woman founder ceo to take an internet company public in years. joining me today on "bloomberg .tudio 1.0," katrina lake the so glad to have you on show. you have helped millions of customers discover their own sense of style. first women and then men and everyone from plus size to pregnant. what is the number one mission of stitch fix the business today? the thing we all love about being part of the business is every day we get to help 2.5 million men and women everywhere look and feel their best. we are bringing this luxury of personal shopping and making it democratic and expectable -- accessible. anyone in any place of the country can let us know there style preferences and sizes. emily: how many boxes are you sending each month? how many stylists do you have

curating the boxes? katrina: we have over 3000 stylists all over the country. they are trained by us and our stylists mostly work part-time. there is some flexibility around how many clients they serve. the most recent number is we are styling 2.5 million clients. emily: growing up, you were the kids wearing raver boots and janco genes. i want -- jenco jeans. what was it like growing up katrina like? in ana: i grew up multicultural bilingual, bicultural household. dadom is from japan and my is an american and that introduced a lot of cultural curiosity and a sense of adventure and exploration and learning. in my household, my younger sister was really the fashionista. she would wear purple sequin

whatever and definitely the one more about pushing the limits of fashion. it so it was a way to be able to express your identity and experiment with your style and who you are and i think that fun part of trying to understand your style is a big part of what stitch fix is now. emily: your grandmother had an influence on you. katrina: my japanese grandmother was born and raised at a time women did not have a ton of opportunity. she had two daughters, my mom and her sister and she felt this great obligation with the had -- my mom and her sister both moved here and would be americans and my grandmother would follow suit.

given a lotwasn't of opportunity and the circumstances in which she was bold goals set these for yourself and achieve them. emily: this was about the same time mark zuckerberg was on campus going to stanford parties. in that time, did you ever think you could do what he was doing? katrina: it was not even close to on my radar. as ank of my past andering one and i had preconceived notion of what a founder, especially a founder of a tech company looked like. it was not even visible to me as a career path. i looked at retail and thought there are so many different ways you can incorporate data and

technology into the way retail works and i didn't feel like i saw companies that were doing that. at first, i was on a journey to find that company. it was looking at pre-existing retailers and seeing which one did i think would win and working at a vc and beating -- ands to find abound find a founder i could join. doing retail in a different way i could found that company myself. emily: ultimately you went to harvard and that is where you started stitch fix. you sent the first stitch fix from your apartment in 2011. how did you get there? katrina: i had this thesis around retail is changing. stores are closing and the way people buy clothing is not convenient or sustainable. i felt like going to business school was a riskier way to do

it. i was not somebody who was going to quit my job and work out of my garage and have a gap on my resume. i want to get funded and pay myself a salary and my student loans the day i graduate. if i can do that, i confound -- find -- i can find entrepreneurship is a tenable path, i would have an mba from harvard and a lot of opportunities. emily: you had a co-founder and you bought a ton of clothing on credit cards? katrina: a lot of the testing and trying i did with my own credit card and finances. this was a business that early on, we were lucky enough to have steve anderson who believed in the company and put in money. luckily, i did not have to try to expand my credit limit too much. emily: what made it early on that made you realize this could work? katrina: we grew incredibly rapidly all organically. the product market fit of this is something that women

everywhere really gravitate towards, i don't have time, i don't want to spend my days at the mall or go through hundreds of things online free and i can find clothing i love in a way that is personalized and convenient. was soue proposition strong that early growth was kind of a testament and manifestation of that. emily: it wasn't obvious to everyone. there were dozens of investors who said no. katrina: people had a hard time getting passionate about it and i think there were questions around can this be a billion-dollar business or not? we have done $1 billion in the past 12 months. we had clients all over the country, in states i had never been to. we felt like we had the data to support this broad concept that has broad appeal. it was hard and i think there are a lot of venture investors who did not feel super passionate about it and could not get there.

emily: how much of that do you think is because you are a woman pitching to mail investors for a product focused on woman -- women and they did not get it? katrina: i think that has to do with the element of someone being passionate. i had venture investors like i want to be passionate about all the companies i invest in and i want to feel like i can add value and i cannot get there with women's clothing. there is part of that i cannot disagree with. i also want them to feel passionate and at the time, 94% of veteran investors were men. there is some natural bias that kind of gets introduced, i think, when you have such a homogenous group of people. emily: ultimately you did get interest from bill gurley, who also invested in uber and i think he has his own assistant because she became addicted to

stitch fix. katrina: amy who is his assistant and many of her friends and people in the benchmark office all love stitch fix. he was curious and was like, i have to understand what this company is doing. as i got to know him, it was clear he would add a lot of value and it has been amazing for my development and it helped the company make changes in the way we operate and we have been lucky to work with him. emily: you and your co-founder eventually parted ways and you -- new -- to -- erikwas able paulsen who came from netflix so there has been a lot of continuity in the leadership of

the team. emily: was it hard breaking up with your co-founder, essentially? katrina: it is some of the hardest stuff founders go through. you see things through a different light and the world through two different lenses and like they don't meet. at the same time, being able to have mike and eric who have been with the company for a lot of years. i feel fortunate to have a team --t there are many people somebody that helped us as we looked at milestones as we grew in scale and ultimately as we forgot about becoming -- thought about becoming a public company. this has a 72% chance of working, this has a 38% chance of working and that data presents you the style. ♪

emily: stitch fix was profitable two years before you went public. was that i priority for you? was that a choice? katrina: i think companies are rewarded for growth. our business has been growing about 25% the last four quarters. companies are rewarded for growth more than profitability. there's not of -- a lot of pressure for companies to get profitable. i understand the decisions any others are making. that wasn't necessarily a choice we had. our first quarter profitability was in 2014 and this was a business that was really hard to raise money for. our company is better because of it. emily: stitch fix went public at a 1.5 billion-dollar valuation. you are the youngest female founder to take a company public. how did that feel? katrina: the public offering process was rocky for us as a

public. it wasn't as smooth as you would want it to be. i think it really did not matter and this is a company that has been underestimated before and we are happy to prove ourselves in the public market. that day of being able to celebrate and remember the journey we were on was an incredible day and it was an incredible day to be able to share with our clients and employees and investors. and the people who had such a meaningful impact on how we got to where we are. it was a day we will never forget. emily: what is it like on the others? post ipo? katrina: it is different. in the seven years i have been doing this, every year, i think of myself as rehiring myself in a new job and re-committing to that job. every year has been so different than the years past.

there have been years where my job was making sure everyone is in line getting fixes out the door and that was the most important thing i was doing in 2012. emily: what is your job this year? katrina: i have private and public market investors we are building trust with and earning the trust of there are small things that change. in the way it is different, i -- we focus on building long-term value for shareholders .nd includes employees i think we feel responsibility for that. katrina: the apparel market is a 300 billion-dollar market that is growing. you hear a lot about the death of retail. it is this tailwind of post

consumer behavior and stores closing and what is going on in the macro environment. double the number of bodies we could address. nordstrom and the gap, does that turnaround? katrina: i always think there will be a place for physical retail. it is a great space to experience the brand. an idea a brand would have hundreds or thousands of stores across the u.s. is going to be hard. i think the natural preference of consumers is they want to transact online. stores have to have a different reason for being. emily: everyone seems to be worried about amazon no matter what business you are in? katrina: they have successful subscription businesses. -- they have not done apparel, what is stopping them? katrina: amazon is amazing if you want something cheap and

fast. the reality is apparel is much more nuanced. having millions of pairs of jeans to choose from isn't that helpful is what all you are looking for is genes that fit your body well -- jeans that fit your body well. we feel confidence and strength in our focus on the discovery element and that is a bit of a different business than what we are seeing most e-commerce in today. emily: would you ever sell to amazon or a larger retail giant? katrina: i think it is clear we have chosen an independent path. we have thought about what are all the outcomes potentially available to us. we have a deep belief and still do that this is a company that deserves to be an independent publicly traded company and we are very focused on the independent path. emily: there are a lot of other companies trying to do what you do, other subscription services whether daily look -- what

different -- katrina: what differentiates our business is not the subscription tag. the business is one you can do monthly. you can also do it a la carte. people are not paying the same amount every month as you would in a normal subscription business. we are in the business of personalization. we do one to one human personalization. emily: how real is the data and ar -- ai platform? katrina: it is so real and valuable. we are doing high signal data that people are actively sharing exactly tot pertains the experience they are having. people will try five things on and let us know these were too big, too small, too expensive. i love this, i already have it. i love it in a different color. these are things people are sharing to help us understand what they are liking and not

liking. 100% of the time because of the data, we know what dies like. a 25-year-old woman in louisiana bought these genes. 85% of the time we know why. she is letting us know this is too expensive or too cheap. i love the way this fate on my body. eadth and depth of that data is valuable. emily: if you have all the data, do you need stylists? veryna: the stylists are a important part. the data allows us to have a predictability on clothing and people and what will happen. we are able to highly accurately predict this has a 72% chance of working. that data is presented to the stylist. the stylist is part of the selection process and the relationship building of explaining why she chose things

and building that relationship in a human way. one thing i see a lot of founders do that is part of the problem is they hire their friends and the people they work with.

emily: as the youngest female founder to take a company public, do you feel a greater sense of pressure or responsibility to pave the way for other women then you did when you started this a journey? katrina: there is a time a few years ago where i was more averse to being a female founder or female ceo. the reality is the world needs it now. i think about myself when i was writing my business school applications or figuring out who i wanted to be in the world. i am proud i can be an example of a different kind of tech ceo.

i treat that responsibility -- it is very important to me. emily: you recently wrote a --et about the you have an incredible power to speak out. how do you use that power? katrina: my powers are best deployed -- the biggest impact i -- have is by creating people love to get fixes from and be a client of emily: you did not feel like you always had the power? katrina: in the introduction of my book you read about how you heard -- bragging about his hot tub. how youme about navigated that kind of thing in the early days? katrina: i was exposed to bias both kind of deliberate and not

deliberate and i hope those days are far behind us. i think there is a much greater awareness of i think back then could have been seen in a tone deaf way. i think people recognize being inclusive and having a diverse portfolio and employee base, these things are good for business. emily: you reportedly even told bill gurley during the uber drama he had a responsibility to fix what is -- what was going on. how do you decide when to press those buttons? katrina: i have a great relationship with bill and i feel like he is somebody who is happy to listen to my very direct opinion about what i was seeing. i have so much respect for bill and benchmark and it was a series of really difficult decisions they have made in the last year, two years.

hispreciate bill for openness and listening to my direct opinions. emily: you had your own me too problem, with an adjuster who was accused by many women. i now, legally you cannot discuss it, which is part of silicon valley's problem, forcing people to sign nda's, what is your reaction to the broader stories that has been -- have been told by women in silicon valley and washington? katrina: the last year has been a big moment of change. i think there is a lot of that has led up to this and in many cases, there were decades of behavior coming out in the last year. i am more excited about looking ahead and particular founders for change moving forward are two initiatives i think is forward -- exciting.

moving forward allows people to see the sexual harassment and discrimination policies of d.c. and have a point of contact. that is a step change from where we were in the past. emily: founders for change includes founders agreed to consider diversity when deciding whether to take the check. do they have women or people of color? katrina: it also says i am a founder for change and i am going to build an inclusive team . the founder is taking responsibility for their team and company and asking for that from the va. this is a massively different environment. people are having to write conversations and there are protective measures in place. if i reflect on the experience i have founding a company and this is a much better environment to do it. i think about what it would be like today and i think it is a lot better. i am really optimistic. emily: you are building an incredibly diverse team for you took your full maternity leave

and i know that was important to you to send that as a signal for your employees. talk about what other founders can learn from you? katrina: one thing i see a lot of founders do that is part of the problem is they hire their friends and the people they have worked with. being able to have a wide lens for the hires you are making and feeling like you are looking at the broader context and saying is this the best person for the job, that has been my secret to building a diverse team. emily: i know you are passionate to help other women found -- find their confidence. especially woman entrepreneurs looking at you and saying how do i do that? katrina: surround yourself with it,ibility and try it, do experiment. i believe in so much more have gainednow -- i so much over the years and i am

excited to see many more women take the plunge. emily: katrina lake, thank you so much for joining us. really great to have you. ♪

emily: they're twin brothers who grew up in wartime iran, teaching themselves how to code on a commodore 64. then, after perhaps a life-saving break from the u.s. immigration system, they realized the quintessential american dream. getting degrees from harvard and silicon valley, eventually striking startup gold with companies that sold to microsoft and myspace. with their financial future secure, hadi and ali partovi became prolific angel investors, backing facebook, uber and dropbox, and focused on democratizing the opportunity that gave them success with code.org. it is a nonprofit that aims to

bring coding to students everywhere. they kicked off a campaign that went to number one on youtube with some of tech's most iconic faces. joining me today on bloomberg studio 1.0, founders of code.org, hadi and ali partovi. i'm used to interviewing you guys separately, but it is a pleasure to have you here together. i'm curious, what was it like growing up as the brothers partovi? >> it's just really wonderful to be a twin. so, i always felt that i had something amazing that not everybody else had. because i had someone i could trust with everything and look up to. and try to be as good as him. emily: and you are identical right? >> [in unison] right. emily: how are you similar and different? >> we are similar in being competitive and driven. our backgrounds are similar.

we're both harvard computer science majors. we're the only set of twins to both sell companies to microsoft. a lot of the things we have done are similar. >> i think our differences are part of what makes us unique. i think i'm more of a stress case. my brother is more easy-going comparatively. emily: you were born in tehran. you were six years old when the iran-iraq war broke out. what was living through that like? >> it was pretty horrific. my childhood, i remember just feeling scared almost of the time. either scared of my neighborhood being bombed, which is certainly was, and i also remember always being worried about something bad would happen to my parents. that i would come home from school and i wouldn't have my parents there anymore. there was a period during the bombardment when we would spend the nights in the basement holding our ears, because our neighborhood was actually being bombed. so it was also pretty rough. i will say though, having gotten out of that, it is certainly something that makes me feel much stronger, because i feel like i can take on anything. and you know, if you can survive that, it makes day-to-day problems today seem much easier to deal with.

emily: how did your parents communicate to you what was going on? >> one of the things i remember is my dad, he tried to make it seem like the bombardment wasn't actually our neighborhood. he'd say how these planes are breaking the sound barrier so you can hear them from hundreds of miles away. he would wake up in the morning to go see whose homes were still standing. emily: what did your parents do? >> my dad was a professor of a university of technology called sharif university. our mom, she had a masters in computer science and she was a systems analyst. once the revolution happened, it was hard to keep a job. women were just so oppressed at the time. emily: and in the midst of this, is that when you learn how to code? >> yes, we were nine years old. my dad was a physicist so he had gone to a physics conference and brought back a commodore 64. this was 1981 or so? no games, no software, just a

couple of books on how to program in basic. and he spent maybe the first hour or two with us, getting us started. and then we just read the books and basically taught each other how to do it. and he spent a lot of time then giving us ideas for what one could create. a big part of learning computer programming is the imagination part, imagining what you might do, and then kind of feeling the confidence that it's possible and then just go out and tackle it. emily: was there a moment when you thought, this is what i want to do? or did that come later? hadi: well, one great thing about computer programming in iran during the war, it really was an escape. all of our family had left iran to come to the united states. so we were alone without family. when you are programming a computer, you can close that all out and create whatever you want.

emily: you moved to the united states when you were 11? >> yes, leaving a country like iran, for starters, it's not that easy. especially during a war. so it took a lot of time to get the paperwork done and so on, to be able to get out. so first of all we moved to europe, and then we were traveling around for a whole summer, trying to find a u.s. embassy who would grant us visas to be able to enter the united states. and i think we had reached the point where, one more rejection, it would be like, you can never come to the u.s. and so, i remember we had rented an apartment in italy, we were there, and the phone rang. my mom picked it up, thank god it was our mom, and not our dad. so, our mom picked it up, and it was a woman on the other end of the line informing her that we had been rejected. so my mom, who is, like many iranian women, fiery and fearless. i mean, she started sobbing, saying that this is not fair, that if we had to go back her sons would probably die in the war.

she asked the woman, can you please tell the head of the consulate to give us another chance? and the woman on the other side said, actually, i am ahead of the consulate. and so somehow they had a connection, and she asked the state department to make a special exception for us. and so, we found out a few days later that we had been accepted, so we were this close to never coming here. and i would say, ever since then, i have always felt that the world would be a much happier place if there were more women in leadership positions. emily: if you want something done, get a mother on it. she will get it done. iran was on a list of travel ban countries. what is it like being an iranian immigrant in the age of donald trump? >> it was difficult, but at least we made it. it would have been completely impossible today. we wouldn't even have applied. we would've been banned. i think being an immigrant from any country is difficult, in a time when one group is being singled out for being bad. so much of what makes america what it is is that we are a land of immigrants, especially for ourselves, knowing how different

it would be for us, especially right now, it is quite difficult. emily: your family is quite successful. the ceo of uber is your cousin, one of your cousins also funded the a.i. company nirvana systems which was bought by intel. should that be a lesson to president trump? adi: there's a lot of iranians and immigrants who are very successful in tech. our family of well, obviously, but there's many others as well. immigrants have created a lot of companies, they have created the largest number of jobs in this country. and part of why i started code.org was to show an immigrant can give back opportunity and create opportunity in a country that seems like it is lacking it. emily: you both ended up at harvard studying computer science. how did you get there, and what happened next? >> we both worked really hard to get grades good enough to be accepted into harvard. we were lucky they provided financial aid. and we also spent all of our

summers working in high school as computer programmers to help us save money to help pay for college. what happened next, graduating in 1994 at the dawn of the internet, it was such a wonderful time to be in tech and already fully knowledgeable. this is when companies that are all famous today were basically getting started, over the next 10 years. so much of our career got shaped by being at the right place at the right time with a network of people who are now many of the greatest folks in tech. emily: so you started working at microsoft, and you started working at oracle. this was as the dotcom boom hitting a fever pitch. ali: hadi's career was already at a higher pitch than mine. within two years of graduation, i left oracle and joined a startup that was not doing well and was doomed. meanwhile, hadi headed joined the microsoft explorer team, the creator of the browser, and it was probably one of the most exciting jobs in the whole tech industry.

emily: and didn't you try to convince microsoft to do search, and they didn't? adi: so at the time, this was 1998, search advertising did not exist. yahoo! was big banner advertising. we tried to convince microsoft the biggest way to monetize search was to have text-based ads that are keyword targeted and to sell them on an auction basis. which is exactly what adwards is today, except we called it keywords. turned out, it just wasn't something microsoft was prepared to invest in at the time. emily: did you ever tell bill gates or steve ballmer, "i told you so?" hadi: ali wrote a letter to steve after leaving microsoft, i had a great experience here, but as i leave, you should keep your eyes on this new startup called google, they have really, really great potential. it was a very diplomatically worded email, but very prescient

as well. we will invest in something that we think is a bad idea if we like the person. ♪

emily: you do have possibly the most impressive list of angel investments of anyone, including facebook, airbnb, uber, dropbox, zappos. how did you get into all those deals? >> i think investing in good people is really the most important thing. every investor talks about investing in good people. we take it a lot more seriously. the way i mean that is, we will invest in something that we think is a bad idea if we like the person.

emily: you also invested in mark zuckerberg. how did that happen? >> we were lucky to get introduced via a number of routes, when facebook was still eight or nine people. that was an unbelievable thing to get to see the company at such a stage. a lot of people at the time were saying, why are you even involved in this company? i remember my wife saying at the time, are you trying to get into fraternity parties or something? because facebook at that time was in just about 100 colleges, kind of just a way for college students to meet each other and flirt. but i remember the very first time i met mark, my immediate reaction was like, this guy is more like bill gates than anyone else i have met. it reminded me of a time i had interacted with bill at microsoft, i remember the level of vision he had and where he wants to take it was so much more than the fraternity angle. >> the dropbox story is my favorite, because it captures several parts of what hadi and i brought together to investing.

so there was a senior at mit that hadi already knew from having had him as an intern. his name is mac, and we were trying to recruit to a small startup. and mac had his eyes set on a bigger company, because he was just graduated from college. we referred for him to go to facebook, which then was 200 people or so. hadi asked him, can you tell us who the smartest guys are in your class at mit are? he said everybody knows this guy, but he will not join your startup either, because he has his own new company. we then learned about his startup, which was dropbox. it was just a two-person company. at this point, we had them fly out to the west coast and gave them coding tests to assess how good of computer programmers they actually are, and this is something that's part of our routine for all investments. basically, if we're investing in a company, we won't do it unless the technical funder can pass a rigorous technical interview. and based on his coding skills, we decided to invest in dropbox, and we spent the next several years, even quite recently, helping dropbox recruit engineers.

emily: what about uber? >> uber we weren't as early in. in fact, i wish we'd an earlier investors in uber because so many of our network was early in uber. >> getting into later stage investment, not everyone has access. part of what has enabled us to have access to investments like that, it is not just based on who we know, it is because we have developed a reputation for helping companies like facebook or dropbox, with recruiting. emily: when you are watching from the outside at uber, what do you think went wrong there? >> it's really hard to manage hypergrowth. and i think there was a culture of no holds barred approach to competitiveness. and i think there are some holds that you should bar, some lines that you should not cross. >> it's really hard for a company that large to know, which laws are we paying attention to? which laws are we ok breaking? who gets to decide that? at that point, you get into this cultural situation where anything kind of goes, and i think things got a little bit

out of control. emily: do you think at this late stage, that dara khosrowshahi, who also happens to be your cousin, can turn things around? >> i do. it's still an incredibly healthy business at its core. i mean, consider the turmoil that happened, where the entire senior staff was axed. did anyone miss a ride? did we hear any reports about cars stopping? drivers not picking up their passengers? dara is just a prince among men. he is just somebody who inherently because of the humility and incredible respect that his personal character brings, people want to see him succeed. the sheer goodness of his character is enough to change some of the things. starting with changing the culture, as hadi mentioned, and changing the way other people interact with the company. >> the key to getting u.s. education to adopt computer science has been the american

teacher. ♪

emily: there's something missing from your stories about the amazing people in your network, and the people you funded, and that is, women. and i'm curious how you would describe the role of women in those early days of the dotcom boom, and how you have seen that evolve or not evolve, given that the numbers haven't really changed. >> the lack of women in tech i think, bothers everybody, and bothers women and men alike. it's very personal to us. our mom, she had a masters in computer science, so i grew up with a mom who was a woman in tech. a large part of why ali and i started code.org was to help fix the diversity issue, starting with the pipeline. and the diversity problems in tech obviously are about the promotion path, but also, about the pipeline.

if the graduating population is 80% white and asian males, it is hard to have a balanced workforce when the students coming into the field are so imbalanced. >> what we've done at code.org has completely changed the high school and the k-12 picture. we start using code.org materials as early as elementary or kindergarten. the code.org student base now is 25 million students, which is much larger than the software engineering population in the united states. and it's 45% girls. so, there are almost 12 million girls coding on code.org. emily: so how did you do that? >> the answer to that really, is teachers. i mean, we did a lot of great things at code.org, but the key to getting u.s. education to adopt computer science has been the american teacher. if we want to which every student, especially the students were at least likely to have opportunity, they are not going

to summer camp or afterschool clubs. we have to reach them in school. >> code.org's entire curriculum and platform is free, it is on the web. in fact, the school could say, they could assign it as homework if they don't have enough time on the schedule or enough computers in the classroom. but that is still much easier for kids to do it, if they feel like it is a standard part of school. >> everyone learns fractions, whether they like it or not. so, when a school teaches it, it gives them a sense of social universality that you cannot accomplish necessarily, at home. emily: how do you recruit teachers when those teachers could be making a lot of money at google or facebook? >> so, we don't get computer scientists to become teachers, we get teachers to learn computer science. so we are by far one of the largest workforce retraining operators in the country now. emily: and how are you convincing schools who are already resource strapped to add these teachers and these courses? >> the teachers are convincing their schools. emily: so they already work at these schools? >> yes, they're already working in the school, it's the math teacher, english teacher,

science teacher, they see our materials and they realize, our school should be doing this. the teacher in oakland who decided, why isn't oakland doing computer science? the first teacher there, her name is claire, she taught herself computer science on her own and started a class, and then she decided she wanted it to be in every school in oakland, so she came to code.org. and we said, but will train one teacher in every school and every district. two years later, every district teaches computer science. emily: so, what are the challenges that still remain? >> changing the school system is hard. funding is hard as well. emily: and code.org is a nonprofit? >> we are a nonprofit. and i should say we are funded by the same tech companies that i believe should be fixing a lot of the gender issues in tech, so we are part of the solution, i believe. so those same companies should get credit for the work that we do, so amazon, facebook and especially, microsoft, those are our three largest donors. and when we're bringing 12 million girls into this field,

those companies should get the credit for funding an operation like this. emily: eric roberts, longtime computer science professor at stanford, wrote a paper where he talked about the capacity collapse and the ability to handle computer science students. so, in 1984, the max out, everybody is so excited about studying computer science, schools can't accommodate, so they start turning students away and actually the number of computer science degrees starts dropping. it happened again in the dotcom boom. he warns that we are facing another potential capacity collapse today because so many people are interested, but they can't accommodate. >> that's happening now. the university of seattle, washington turns away three-quarters of the students trying to get into computer science.

>> it's not based on their gender, but it's based on grades. which, you know, i think everybody should have a chance to learn. the university system really needs to recognize that if it cannot teach students the most important subject that students want to learn, then the university system either needs to change, or students will go to learn some other way. this is a really, really big program for our country, and it is a problem which -- i know that code.org is in some ways exacerbating the problem because 25 million students are interested in the field and because you are bringing interest in this problem. the university faces a problem that is only going to get worse. and they need to absolutely adapt to that demand. emily: my concern is that will hurt women again. because, if you are filtering students based on their experience and their grades, when traditionally, boys have had the computer in their room. >> not necessarily, it could. carnegie mellon has a similar situation, where there are so many spots for computer science. you can't just elect to choose that major, you have to apply. they have basically, by edict,

said they will accept 50% female computer science applicants. so, they are essentially going to give an equal number of spots to men and women. >> and that might actually tilt things in favor of women over time. emily: so, if you are a parent right now, what should you be doing if you want your kids to have a chance in this field? >> the first thing i'd say is make sure that if your kids are in school, make sure that your school teaches computer science, because most schools don't teach computer science. and most americans don't think the school system can change, but we have now shown that a massive scale of tens of thousands of schools that schools can change. and if parents ask the teacher, there is usually one teacher at the school who wants to see computer science taught at that school, and that teacher will pick up code.org and start doing it. change happens at the local level. but the difference is, the parents usually want to think, what should my kids do? we tell them, what should your school do? emily: let us talk about neo. neo is your new thing. >> yes. emily: it's a community of engineers, there's a venture arm attached to it. what is it? >> it's focused on finding the tech leaders of tomorrow.

so, our aim is to identify future tech leaders as young as sophomores in college. so we identify, include them in the community, and invest in them. hadi: we have brought together this amazing spectrum of people that includes the cto of microsoft, the original cto of google, the original cto of facebook, as well as these amazing people who have created amazing things. so, founders, the woman who founded task rabbit, for example, or the guy who invented photo tagging, or the guy who created ios, all these people, not all of them are famous, but they have all contributed something amazing to the world of technology. and so we're bringing them together with a pool of young people, who have been curated and selected based on their talent and their promise. emily: so how is it similar or different to something like y combinator? >> i'd say it's similar in the youthful energy and the belief in unlimited possibility. extremely different in that

these are not founders with companies. some of them are, and some of them might become future founders, but we're not incubating business ideas. we are just trying to find 10 or 15 of the best computer scientists in the country, and bring them into the community. emily: for the young men and women, boys and girls out there who want to make it in silicon valley, be an investor, entrepreneur, be an engineer, what is your advice? >> my first and most important thing is just to believe in yourself. the tech industry is something that even come from very humble beginnings, and make it, based on what is in your head and your heart, and hard work. >> studying computer programming is like learning a sport or an instrument. anybody can start, and if they put time into it, they can become successful. >> i would add to that and say, even if you don't want to become a coder, learning computer science can help no matter what you want to do in tech. and in this day and age, everybody should have at least a basic background of computer science. it's easy and a lot more fun

than people imagine. it can open doors in any field, but especially in the tech industry. emily: hadi and ali partovi, thank you so much for joining us on studio 1.0. great to have you guys. ♪

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emily: this is what happened the last time we interviewed stewart butterfield. [laughter] [crosstalk] emily: oh my goodness, it's jared leto, everybody. yep, jared leto, the actor, who is also a tech investor, photobombed our chat with stewart butterfield, the seemingly quintessential serial silicon valley entrepreneur. but butterfield's story is anything but. in fact, he founded both of his companies by accident. flickr sold to yahoo for $27 million in 2004. today, slack, a workplace collaboration app, is worth more than $7 billion and it's now battling microsoft, google, and facebook. joining me today is the slack