and get real. we'll have number three in our countdown tomorrow night. that's it for us. thank for watching. "erin burnett outfront" starts now. millions log onto social media. do you take follower with you? one says no. it is suing a former employee. we showed you a video of a little girl ranting about big business and againer roles. 4-year-old riley joins us "outfront" tonight. with the iowa caucus a week away no candidate has broken out from the pack. it's going come down to the wire. let's go "outfront." good evening upon. i'm ali velshi sitting in for erin burnett tonight. out in front, campaign is kicking into high gear.

candidates are criss-crossing the state, trying to pick up last-minute support for the first contest in the race for the gop nomination. let's go straight to the political correspondent. jim acosta is on the ground in iowa. good to see you. lots of campaign events and everybody is back in the game. a recent poll shows 12% of voters in iowa, still undecided. you spoke with the iowa gop chair about the race. what did he have to say? >> reporter: ali, basically he said this is a caucus race in iowa that he has never seen before. basically, this is the most unsettled field of candidates that a lot of republican operatives have seen in the state in a long time. if you look at the polling you have three candidates at the top right now. mitt romney, newt gingrich and ron paul, and below them is a medium tier, the other three candidates campaigning in the state, rick santorum, michele bachmann and rick perry. and basically, according to the chairman of the republican party, any of those candidates could rise or fall over the next seven days.

it's a wide open race and it could go, as you just said, down to the wire. >> let's talk about the evangelicals. exit polls from 2008 show 60% of republican caucusers in iowa describe themselves as evangelical. my colleague, christine romans, is from iowa and likes to point out that she thinks the rest of us, we sort of used this word and don't fully understand what this means and we almost use it interchangeably with religious fundamentals and she says, in iowa, it is substantially broader than that. so how do these court this vote? >> well, they're doing it tonight, there's a prominent social conservative who hosts a radio talk show. his name is steve diest and that talk show host is hosting a town hall that will feature four of the republican candidates, gingrich, santorum, bachmann and rick perry and they'll be calling in. and it will be interesting to

listen to that talk show because basically they're all going to be appealing to this voting bloc. the social conservatives that figure so prominently in the iowa caucuses. folks like pat robertson, the christian broadcaster, has done well in the past. he ran for president, as you know, and did well here in iowa because of that segment of the republican voting population here. it will be interesting to watch rick perry. he's playing harder for this vote maybe more than anybody else in this field right now and it's a smart play. >> jim acosta, thanks for the reporting. we'll talk to you soon. jim acosta in des moines, iowa. >> there's a new national poll just out and it shows that newt gingrich's popularity has faded. the former speaker still at the top of the list. he's at 25%, down from a high of 37% earlier this month. mitt romney, who regrouped his forces, now has 24% support, putting the two in an essential dead heat. newt gingrich might be feeling the heat. he just sat down with a one-on-one interview with wolf blitzer and he slammed his main rival, mitt romney.

>> mitt romney is the guy running the most ads attacking me and he's doing it through the disingenuous, gee, i don't control my staff and my millionaire friends. it's baloney. if he wants to defend his negativity, show up in iowa, 90 minutes face-to-face let the people decide whether or not he'll back up what he's been saying and let him back up his moderate record and not conservative record as governor, and i don't think he'll do it. >> make it moderate a bad word and saying that thing that he likes to say. come and debate me. let's bring in a former mccain adviser and will cain, columnist for theblaze.com. welcome to both of you. hey, nancy, this is in this weird space where perry doesn't like to debate. he said it again to mitt rom ney. come and talk to me 90 minutes, no moderator one-on-one. is this a good strategy for him? >> it's his sweet spot. his sweet spot is not

organization, but i would argue that the longer you run the mike on the former speaker, the more you are apt to get a potential problem. this is an individual who is almost like a shakespearean character. he's got profound strengths and he's got the potential for oops moments that we almost cannot wrap our arms around. i think it is very dangerous for him to be throwing a moderate rock at mitt romney when he criticized paul ryan's budget as right wing social engineering and he was in favor of cap and trade. this is newt gingrich. he was championed in individual mandate, which is the pillar upon which obama care rests. this is not just throwing a rock at a glass house. he has a glass castle. >> it's a tricky rock, will cane, because it's the rock that could help you win the nomination that may not help you win the election. >> it's not a bad word to be any. >> he's on shaky ground here. >> yeah. >> let me talk about why that poll might be coming down, why

newt gingrich's numbers are dropping and we talked about the massive negative. among conservatives, newt gingriches rise with fundamental conservatives with the tea party has been completely confusing event. how can a man that embraces big government principles be the choice of small government enthusiasts. what i tell you, the role of money and politics, these ads being run by mitt romney and ron paul about newt gingrich are having an effect on newt gingrich. and we're seeing the role of money and politics inform the voters about newt gingrich and we're seeing the positive effect of money and politics. >> let's play a little of this conversation that newt gingrich had with wolf blitzer. listen to this. >> a person who thinks the united states was responsible for 9/11, a person who wrote in his newsletter that the world trade center bombing in '93 might have been the cia plot. a person who thinks it doesn't matter if the iranians have a nuclear weapon. i'd rather just say, you look at ron paul's total record of systemic avoidance of reality and you look at his newsletters and then you look at

his ads. his ads are about as accurate as his newsletters. >> now if he were to get the republican nomination -- >> he won't. >> let's say he were. could you vote for him? >> no. >> and that's the headline there. he says he won't vote for ron paul and his views are so outside the mainstream and not only just republicans, but americans. will, i have to say, we've all heard ron paul talking about israel. we know that he doesn't share the views of most of the republican candidates on israel, so i thought newt was pandering a little bit on that particular thing. what he didn't take issue was the remarkable racist and homophobic stuff that was in the newsletters that ron paul has refused to come clean about. he will not tell us who wrote those newsletters but he made money off of them. in mainstream america this will cost him. >> give me a second on this. listen, the role of these newsletter, first of all, did ron paul write them? it's plausible he did not. did he raech them?

we're stretching plauz ability. they're starting to stretch plausiblity more and we're begging the question, is ron paul a racist? by most accounts, his former aides he's not a racist. calling a libertarian a racist is by pointing out an impotent man is a nymphomaniac. it doesn't matter. >> the libertarian doesn't think he should be involved. >> individuals in small government, done embrace that. but, let me say the but, ron paul's letters reflect on his character. they reflect on a man who possibly is a poor manager, a poor leader and aligns himself with people of fringe thoughts, and that's important. >> nancy, final comment from you. first of all, does it pay gingrich to go after ron paul because we see national poll after national poll, he may have an organization in iowa, but he's still standing 11% nationally. >> paul has struck a cord with the essential anti-government crowd, and i would caution gingrich not to be so scathing in his attacks, and this is, unfortunately, i think, one of the potential downfalls for him is he can't resist that

arrogance, that disdainful tone and, frankly, after listening to president obama for the last several years, i think they've had enough of arrogance. >> nancy, good to talk to you. will cain thanks for that. we'll continue the conversation. reminder, live coverage of the iowaic caucus begins next tuesday on cnn at 7:00 p.m. eastern. what if your employer owned all of your twitter followers? a new lawsuit is just about that. the latest developments in the penn state child rape scandal as well. the reporter who was covering the story comes out front with more information about the wife of jerry sandusky and the christmas day fire that killed a family of five. what the fire chief had to say about the tragedy in connecticut. p to t big apple tw! dinner! [ garth ] we get double miles every time we use our card. and since double miles add up fast, we can bring the whole gang! it's hard to beat double miles!

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dottie sandusky, the wife of accused child rapist jerry sandusky, has been coming under

increased scrutiny lately. how can someone be married to a man for 45 years and not know what he was doing. it turns out that dottie sandusky did tell her husband she was worried one day he would be falsely accused. about also a reporter for the patriot news joins us tonight from plantation, florida. good to see you. dotty sandusky was worried that someone would accuse her husband of molestation. she told somebody this. who did she tell and what did he say about it? >> ali, i talked to a man who is now a radio host in state college, pennsylvania, where jerry and dottie sandusky live. he grew up playing with the sandusky's five adopted children, they were neighbors. he's kept in touch with them over the years and he's now in his 30s, he's a grown man, and he's told me that over the years he's had conversations with dottie and particularly this one. he want remember when it was but it was some time in the last decade, probably sometime after

one of the initial investigations by police in 1998 into jerry sandusky's conduct, but definitely before this grand jury investigation began that led to these charges that we're now talking about. he says that dottie had a conversation with jerry and said, look, i think that you might have a boundary issue, and i think that that could lead to a false accusation. we're not talking about child rape which is what's outlined. >> this issue here is what boundary issues means. >> right. exactly. not rape. not anything sexual. more of when they're wrestling and when they're playing football and when they're horsing around. these are all things that jerry has admitted to. he's admitted to touching with the key being that it wasn't sexual. apparently, she had a conversation with him about this. >> there's another thing that you wrote about. one of the alleged victims who said that he was -- jerry sandusky assaulted him in the family's basement and that he screamed for help knowing that dottie was upstairs.

she claimed she heard nothing. no help came for him. what do you get out of that? >> we know dottie has categorically denied that. she's very upset that accusations like that have been made. accusations have been made that assaults happened in her home and she may not have done something about them. she's denied all of that. in a statement through jerry's attorney she says these children were part of our family. they ate meals with our family. they went on trips with our family. we took care of them like they were our own children. this man who i talked to, this neighbor said it was very clear growing up that jerry was busy with recruiting, with football season, with coaching and he was in the spotlight and had a busy life, and dottie was content being behind the scenes and being at home. however, in addition to what he told me about that conversation that she had with her husband, he said she was the kind of person that even though she was content behind the scenes she wasn't afraid to say if she saw something that she believed was

wrong. she was very strict with her kids and he said it doesn't fit into the personality that he knows of dottie for her to be silent and do what these children have alleged, which is to ignore. >> sara ganim, thanks for your great reporting. sarah is a cnn reporter with the patriot news. we'll take a look at what you can expect for 2012. it will probably be different from 2011. one company doing very well, google. we'll take an exclusive look inside the company's new york headquarters. the healing power of touch can be even more powerful. with precise from the makers of tylenol. precise pain relieving cream works quickly to activate sensory receptors. it helps block pain signals fast for relief you can feel precisely where you need it most. precise. only from the makers of tylenol.

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after reporting a sharp decline in holiday sales, sears holdings announced it will close 100 to 120 of its sears and kmart stores. sears holdings reported that sales for the eight weeks leading up to christmas fell by 5.2%. that's not good when you consider that overall retail sales are higher this christmas season compared to last year. despite sears' disappointing news, a new report showed consumer confidence is up for the sixth month in a row. the index rose by 9.3 points. home prices, however, fell at a slower rate. as we near the close of 2011, really, i think what we need to talk about is what the economy is going to look like in 2012.

joining me is nigel galt, he's chief u.s. economist at ihs global insight. and michael gapen, he's a senior u.s. economist at barclays capital. thank you to both of you for joining us. nigel, let's start with you, what's your general outlock for both the u.s. and the global economy in 2012? >> i think for the u.s. economy we see a continuation of the modest growth in 2012. the key drivers are the consumer and housing. housing maybe activity has hit bottom and we're going to see small improvement in 2012, but we're still working off previous excess supply from the boom. the consumer is seeing some improvement in employment and that's helping consumer confidence to pick up and they have a burden of debt. >> sure. >> so i think modest growth is most likely on the u.s. front. globally, the picture is more worrying than in the u.s. we've seen some slowdown in

growth in emerging markets and in the euro zone, we think the picture is for recession and we think the euro zone has already dipped into recession and it's a question of whether they can contain the consequences of that recession in the financial markets. that's the biggest threat to the u.s. in 2012. >> two distinct threats. we know there's no economic growth and whether or not it becomes a credit and banking crisis is the bigger issue. michael gapin, where are the opportunities for our viewers in 2012? is the stock market something they should be staying away from? is real estate something they should sit on the sidelines about? >> we think equity prices may suffer in the first half of the year. some of these uncertainties that nigel mentioned and you mentioned bear little fruit. until we see how that shakes out, real estate and home prices does look a bit better. there's some cleansing that's taking place in the housing market in the u.s. areas that have lower concentrations of foreclosures have been faring much better. some of those regions like

california, nevada, las vegas, florida, they're still suffering, but there's some improvement in the housing market out there and over the longer term and certainly reflect some better opportunity. >> similar views to both of you. it will be a little different in 2012, but you're still very cautious about what will happen. nigel galt and michael gapen, thanks to both of you. happy new year. >> thank you. >> when you think of the best song of the year, you probably thoifr adele, pit bull or justin bieber. the top could be one you never heard of. the official video for why a song written for the upcoming language film 3 was posted to youtube on november 16th. get this, since then it has taken the internet and the world by storm. listen. ♪ ♪

♪ >> the song which roughly tranlates to why this murderous rage, tells a story of a boy rejected by his girlfriend, recorded in tamil and english. you're asking how popular? since last month it was posted by the original video has racked up over 28 million views and the song title is actually the first thing that pops up when you search for just the word why on youtube. it's also spawned hundreds of imitations and parodies including those performed by fans and animated salesmen, and of course, the chipmunks. and youtube individuals that include why this accounts for almost 40 million of youtube's total views. the song's popularity doesn't seem to be waning. last week a flash mob danced to the song. at a mall in auckland, new zealand.

this week police in india started using versions of the song title to help combat road rage and encourage bike riders to wear helmets. if only police campaigns were as catchy in this country. a man faces a lawsuit from his former employer. they claim the company owns his twitter followers and the disturbing details about a christmas day house fire that killed a family of five. what the fire chief told us at today's press conference. and a tragic end to the case of a missing child we told you about last night. "outfront" next. a new belt. some nylons. and what girl wouldn't need new shoes? we talked about getting a diamond. but with all the thank you points i've been earning... ♪ ...i flew us to the rock i really had in mind. ♪ [ male announcer ] the citi thank you card. earn points you can use for travel on any airline, with no blackout dates. nyqui tylenol: me, too. ande cougnasal congestion.ers?e, nyquil:what?

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the stamford, connecticut, fire marshal investigating the christmas day fire that killed five family members said in a press conference today that the cause of the blaze were discarded fireplace embers. >> our preliminary findings have led this office to believe that the fire was accidental in nature. the fire appears to have been caused by hot fireplace ash and embers which had been discarded in this area. >> the three children and the parents of the new york city ad executive madonna badger all died in the fire after. firefighters were turned back by the heat and flames. several neighbors said they were awakened by screams around 5:00 a.m. saturday, and called 911. >> stamford, 911. what's the address of the emergency? >> there is a fire at the house next door to us. >> what is the address, ma'am? >> we're at 2241 shippan avenue,

there's a major fire, there are three kids and a woman. >> the house which was being renovated had no working smoke detectors and had not received a certificate of residence or approval need for occupancy. authorities razed the house after the fire department determined it was unsafe. police in waterville, maine, are hoping a new $30,000 reward will help them find 20-month-old ayla reynolds. the toddler was last seen when her father put her to bed 11 days ago. ayla's grandfather is begging for her safe return. >> just bring her home to us. i want my baby home. >> they say they believe the little girl was abducted and still have no suspects. ayla was wearing green polka dot pajamas at the time she disappeared. it's a horrible and gruesome ending in the search for a missing 9-year-old indiana girl. it turns out the family friend entrusted to watch her, because her mother was sick, has confessed to murdering the young girl.

39-year-old michael plumador was in court today and according to court documents his confession about how he killed her is chilling. joining us on the phone is drew blare. what can you tell us about this confession? >> oh, ali, this was the most devastating confession that could have happened out of this whole story. after three interviews with the allen county sheriff's department, michael admitted to killing aliana lemon by striking her over the head many times with a brick. this happened outside of his home, and then from there the gruesome details just unfolded for what he ended up doing with her body. >> and it is very gruesome to have to listen to, but he admits to dismembering her body. >> that's correct. this again happened in stages. at first he took the little girl's body, put it in plastic trash bags, put her in the freezer of his home.

many hours later he then dismembered her with a hacksaw into several small pieces. many of those -- many of the pieces of the body ended up in a dumpster in a nearby business. other pieces, the child's head, feet and hands still in the freezer. >> wow! any word on a possible motive? did he say anything about that? >> i have asked the allen county sheriff that very question. he said he couldn't tell anything about a motive at the time. i said do you have one? he said no. >> this man was trusted by the family. he was a family friend, a neighbor. what has the family said about this? >> the family actually has been instructed by the fbi to not address the media. so we have not heard anything from that. as far as the allen county sheriff can tell me, they, of course, are devastated. they trusted a man enough to leave their children with him, and any family, you have to have that trust in somebody, and this is more than horrific.

>> drew, this is in fort wayne? is it a suburb of fort wayne? tell me a bit about the community. >> we are in northern allen county, just outside of fort wayne and fort wayne takes up most of allen county and the community itself very small. it's off the beaten path and you wouldn't know it's really there unless you lived here or had to cover a story, unfortunately, about 30 mobile home units and otherwise quiet until something like this happens. >> wow. drew blair, thanks for joining us. it's a sad ending to the story. we spoke to the family members yesterday and we were hoping that it would have a better ending, but it doesn't. drew blair joining us from fort wayne, indiana. do you tweet at work? who do you think owns your twitter followers? you or your company? we'll talk about that. and a 4-year-old girl named riley with big ideas about business. she comes "out front" coming up next. it, i'll be right back. they didn't take a dime.

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those of you who tweet you can follow this show at @outfrontcnn. who owns those accounts? who owns the followers of those accounts? there's a case in federal court right now that could affect you, especially if you tweet at work or for work. the big question is who owns a twitter account? is it the person tweeting or the employer? the case we're talking about is phone dog versus noah kravitz. it's a mobile news and review company. noah kravitz used to work for them.

as an employee, noah tweeted under the name of @phonedog. he accumulated 17,000 followers. when he decided to leave the company he said phone dog told him he could keep his tweeter followers as long as he tweeted on their behalf every once in a weil. noah claims he agreed and changed his twitter to @noahkravitz and he kept on tweeting. but eight months later phone dog sued noah claiming not only did they ask him to completely give up the twitter account when he left and not just the name, the account, but that those 17,000 followers actually belonged to them and they're seeking damages of about $340,000. noah kravitz is now editor-at-large for a company called techno buffalo and he joins me now. noah, good to see you. thank you for being with us. >> thanks for having me. ali let me ask you before we get started, would you like to buy a twitter account? >> do you have one to sell? here's the question. >> no. no.

my followers are their own property, and i love all of them. >> this is what it comes down to. the followers you say are their own property. your former employer claim they're theirs. where does this number come from? $340,000. >> that's a terrific question. i think if you took their valuation and applied it to the twitter accounts of lady gaga or shaq, you would have the gross domestic product of the more than one nation on earth per month. so you would have to ask phone dog and their counsel. >> they in their complaint say when you resigned they told you to relinquish use, that's their word, of the phone dog account. could there be a miscommunication sneer is that what they asked you? do you remember that? did you do so? >> it's unfortunate because i had such a great run working with them. we cover the mobile industry, like you said, and sort of hit the timing right when mobile was exploding in the u.s.

if you go to their site, it's still up there on their site and their youtube channel, my last day at work was friday, october 15, 2010 and i chose to run it the following monday, when i was no longer an official employee and both my written post and the video on the youtube channel both direct people, hey, i don't know what i'm up to next, but if you want to keep tabs on me, go to @noahkravitz. so they knew about the account change. you know, like i said, they brought it up and said, yeah, it's your account. would you tweet for us from time to time and perhaps naively i said, of course, because we had such a great working relationship and i was a fan of what they're doing, and -- >> i'm going to play -- i won't do it right now because i'll talk to a lawyer and i'll play that youtube thing to see whether it's relevant to the case. but you did tweet just a short time ago. social media users be careful when using your company's name with your online handles, you never know how/when your employers might react.

when you joins phone dog, and i'm asking this because when i joins cnn, when i started tweeting it was before we had established policies on this and over time we've established policies and i am now bound by those policies as we went along. what was your situation at phone dog? did you have policies about who owns the name and what you can do with it? >> i don't think any of us knew what a twitter was when i first joins. there was nothing -- >> as it evolved, did you develop policies and did you have conversations with them? >> we had conversations and, you know, i started this account linked to my personal e-mail address, of course, because i was using the company name, you know. we agreed that was a good idea. frankly, this was all born out of sort of, you know, in retrospect, kind of naive, misguided, small business excitement, you know? we'd stumbled upon something when i joined. there was no blog or youtube channel at phone dog and we made

this together and we made a little foothold in our corner of the world. and the youtube channel took off relative to videos about phones and it was a great, great time. >> we reached out to phone dog and we haven't heard back from them. the company made a statement to "the new york times." the cost in resources invested by phone dog media into growing its followers and fans through social media are substantial and considered property of phone dog media llc. we intend to protect our customer list, confidential information, intellectual property, trademarks and brands. noah, do you care that much about your 17,000 followers. i don mean do you care about them, i'm sure you do. is this fight worth it to you? >> you know, i care about each and every one of them. the ironic thing is i picked up a couple thousand followers in the past few days. i mean this -- this whole spat actually started over something else, and my personal situation, i don't think is what the viewers are interested in, and their twitter -- this whole claim

about the twitter thing was delivered to me, you know, i was served with papers on a sunday night in july, entirely out of the blue. >> right. >> there was nothing in any work contract specifically about twitter. they never had nor never asked me for the password to the account. the confidential -- the confidential customer list they're talking about, these are publicly available and go to twitter.com/noahkravitz. or anybody else -- >> all followers are public. >> they're all there. so i'm not sure what this is founded in. >> we'll continue this discussion, thank you for joining us. i want to bring in our legal contributor to talk about the broader implications of a case like this. i just want to know if this is relevant. he posted this -- he recorded this youtube statement and they posted it on their website, so everybody agrees that this was done. let's play this. >> for me, it's time to move on. so you can follow me online on twitter. my new twitter handle is just my name, noah kravitz.

>> okay. so he said if you want to follow -- this is my new twitter name. it was actually the same account because you can change your handle, and that seems to be where this derives from because i don't think they care that he tweets under the name noah kravitz. it's that this is their account. >> well, and they want the 17,000 followers. i think people who don't live in the twitter world -- >> first of all, it's very hard to accumulate followers on twitter. you get a twitter handle and you try to get people to follow you. 17,000 is a substantial number of people. this company, phone dog, is looking at the 17,000 like it's a secret customer list and that they put their resources into the accumulation of the customer list. traditionally, customer lists are considered to be trade secrets. why are they trade secrets? you don't reveal them to your competitors. they're a secret. >> you can see who follows everyone?

>> it's totally. >> so this is a trade secrets lawsuit? where is the secret? if you go into twitter, you click on your name. >> you'll see every one of my followers. >> we know who you're following. so the company is very angry, though, they want the will followers bank and they come up with a novel theory which is buried deep in their complaint. they needed a secret, like coca-cola secret, paragraph 12 of the complaint, the password to the account is the secret and that he was the only one who knew the password and i guess, presumably the company, and he used that secret to then change the account into his own name, thereby stealing the 17,000 customers. now, will a federal court buy this ultimately when all of the discovery is complete? i have my doubts. >> i guarantee you they and everyone else in the social media world and everybody with a twitter account will be watching it very carefully. >> you bet they will. >> thank you for shedding some light on this.

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google. it's a verb. it's a word. everyone on earth knows. erin took an exclusive tour of google's new york headquarters with executive chairman eric schmidt. >> america is the best innovator in the world today. that's going to continue. america has 18 of the world's top research universities.

it's still a place of the best innovation. america is the world's innovation center. it's still possible for two people, three people with a graduate student and so forth to create a brand new company that will change everything in the world today. there's every reason to believe that america can grow very, very successfully with a focus on innovation. >> there's a reason eric schmidt is so confident about the future of america. even in hard economic times, google is thriving. revenue surged more than 30% last quarter. putting schmidt in a good enough mood to give us a rare glimpse behind the scenes. this is the second biggest office for google in the world? >> that's right. >> in manhattan. >> yes. in downtown manhattan. 3,000 people, one large building, and an adjacent building. what is interesting, half and half high quality engineering and sales and marketing. nobody thought you could build the world's best engineering center right in the downtown of manhattan, but you can. >> situated in the heart of the meatpacking district of new york, the unique

office space spans two buildings and an entire city block. >> the old model you'd have your office and the door would be closed and so forth. but this is much better. if people want privacy they put on headphones and listen to music while programming. but they start screening all day. >> i can tell they're engineered designed desks. >> there are snack stations with free food every 150 feet. an incentive to keep people close to their desks. >> the only aspect that matters is people in a company like this. so keeping them here, keeping them motivated, frankly, they work incredibly hard. we give them connections at home. and they work pretty much all the time. after all, they're trying to change the world. so they really care. i don't need to worry if they're at work, i know what they're doing. we can measure, by the way, what they're doing because we can see productivity and know whether they're making progress or not. >> you can literally watch it in realtime. >> and we do. >> people get worried. they say china and indiana are turning out engineers. are they turning out better ones? >> they have the best in the world. we try to hire them. we'd rather have them here in

america working for us and producing great products and benefits for america. >> google is doing everything it can to hire the best and the brightest all over the world, with 60 offices in 30 countries. what countries would you say right now are the least open to what you do? >> the most shocking country of all is north korea. north korea is very difficult to operate in, but it's a country where there's so little conversation and so few people peering into it, that people really do believe that their dear leader really is god-like, even as people are starving in the streets. and some time in the next few years north korea will open up to, it's the last one. >> then a country like china, do you feel you have the opportunities you need in china? because it's amazing to see it's not youtube, it's you koo. it's not google, it's baidu. they've built their own companies for the biggest growing market in the world. >> in the chinese model, there's a chinese equivalent of every american firm.

there's a facebook equivalent, twitter equivalent, google equivalent, which are doing well. chinese laws make it difficult for american companies to enter china and operate. you have to operate through a joint venture and you're subject to these horrendous censorship laws. after five years of trying to make this work, we decided to move to the other china, they love to say one country, two systems. we prefer the open system of hong kong. there is a firewall literally called the great firewall, which blocks content that they don't like between hong kong and the mainland, forcing them to do the censorship. we just could not abide by their rules. >> is this really going to be the century for china? >> china is the world's manufacturer, and they do it very well. they do not yet have all of the advanced society functions that they need, an independent judiciary, the kind of political dynamic, creativity, the kind of advanced universities that are needed to do what we've been able to do in the united states. there's an open question as to how long it will take them to get there.

>> i met a little boy in china this summer, his name was bill. they named him after bill gates. we had done this question as to whether the next bill gates or steve jobs would be born in china or in the united states. part of that is luck, but part isn't really luck. where do you think the next one of those people will be born? >> i think the next one of those people will be born in america and will be a successful american entrepreneur. it's not just the person, it's the system that they're part of. innovators create millions of jobs in america. we need to create them and welcome them from other countries when they want to come and relocate to america. >> we're still not doing that to the level we need to be, are we? >> of all the crazy rules in our government, the craziest of all, bar none, is that we take the smartest people in the world, we bring them to america, we give them ph.d.s in technical sciences, and we kick them out to go found great companies outside of america. this is madness. >> more than 31,000 people work

for google, and new york is the company's second largest office after its sprawling headquarters in mountain view, california. here the motif is classic new york city. hallways with fake subway grates, conference rooms that look like a meat locker and razer scooters to get from one building to the other. i have yo conference rooms line the fake city streets. huddle rooms, designed after city apartments, are there to make people feel at home. woman's apartment. >> yes. >> bra on the bed and a cat. really? and a cat? privacy is always an option, schmidt says the best ideas come from people working together in extremely close proximity. what's the future for google? you've got the google tv, you've got the phones, you've got the search. but you also have wind farms, cancer diagnostics, clean power, all sorts of things. your finger is in a lot of pies which could be a sign of strength or a sign of lack of direction, which is it? >> it's of course, both.

one of our strengths is lack of direction. we actually let people invent new things and we see how far they go. if they work wonderfully, then we will continue them. if they don't work so well, we'll try something new. google is the largest systematic innovator at scale i know of. what we try do is bring out new things and see if they work. we've done particularly well in information technology, information search, which is essentially a math problem. and we do that i think better than anybody else. >> last night's broadcast we played this clip of a 3-year-old girl named riley carefully laying out her problems with business. at the end of last night's segment, i mentioned that i'd love to talk to riley. unlike some of the people actually running for office, she didn't duck my my interview request. riley joined us "outfront" earlier. i think you're carrying an elephant with you. who is this? >> mr. elephant. >> can you hold him up to the camera? mr. elephant. all right. mr. elephant is your toy, but when we saw you in the video, you were complaining that sometimes they make some kind of

toys for girls and some for boys and you didn't like that. tell me what you think about it. >> the girls can buy superheroes and the boys can buy superheroes. >> do you think it should be fair for everybody? >> yeah. >> and do you like superheroes, that was your point? >> plus i have a closet full of superheroes. >> you have a closet full of superheroes. >> and i have all the houses like bat caves and i have a box of action figures. >> so do you think it's fair now? do you think things are getting more fair that boys and girls can buy anything they want? >> yeah. >> in the video, you were complaining that they were tricking girls into buying things that were pink. but you are wearing pink pants. you like pink. >> blue, purple and pink. >> you like blue, purple and pink. you don't mind that girls buy pink stuff. you just think that girls should have a choice? >> yeah. >> tell us about you. we all watched this video about you, but we don't know anything about you. where are you from? >> new york.

>> that's upstate new york. and you go to school. >> yeah, nursery school. >> what do you do at school? >> they have like groups like our table, play room, play tables. >> what did you get for christmas? >> a fruit stand and car thing. >> what do you do with a fruit stand? >> just sell fruit and vegetables. >> you sell fruit and vegetables. so you're like a little businessperson. have you done that yet? >> i think so. >> so you go out there. where do you get the fruit and vegetables from? >> my fruit stand. >> but do you buy them or do you grow them? >> they're plastic. >> oh, they're plastic. i see. then you put them out there and you sell them to people? >> yeah. >> pretend. all right. well, you made a great video. now you're going to go back to school. when does school start, next week? >> mm-hmm. >> you're going to have fun.