ng a great deal of attention to make sure that we're addressing ever-escalating threats to our own operations the banks that we supervise. we are very attentive and have experts who work with the banks to make sure that they are attentive attentive. it is a larger problem and this is one where cooperation is needed among card systems, re retailers and others involved in the financial system and conceivably legislation might be needed in this area. >> thank you. and i'll conclude with this. for the state i represent, indiana, we, for many years, were hit very very hard in the manufacturing sector because of currency manipulation among other areas and i know this has

been mentioned but i would like to make sure that you keep a close eye on this because when we talk about manufacturing, the ability to be competitive and all that was ever said to me by our manufacturers were if it was a fairfield we'll do fine. but if the game is rigged, i don't know how we win that kind of game. and i've always had the same feeling that -- and my ranking member sherrod brown right next to me in ohio has dealt with this with his manufacturers as well -- if currency is fairly valued and we are not successful, our manufacturers, if i can't win a fair game that is on me. but if it is being manipulated against my company, it makes it awful tough to keep the workers working and to keep our economy growing, so i would just ask that you keep that in mind as you move forward. and thank you so much for your service. >> thank you.

>> madam chair. you mentioned that the current unemployment is listed at 5.7%. however, one alternative measure that seems to fully capture a better sense of labor force participation is the u-6 measure that lists total employed and under-employed as 11.3% as of january of 2015. this measure has not dipped below 10% unemployment since before the crisis. according to the bureau of labor statistics data there are now 12 million more americans no longer participating in the work force than in january of 2009. do you agree that the unemployment numbers that you cited, 5.7% in your opening statement, paints a rosie or a better picture of the true unemployment rate that i just

cited? >> senator, it is the u-6 broader measure of unemployment, it includes marginally attached and discouraged workers and also in unusually -- an unusually large number of individuals working part-time who would like full-time jobs. so it is a much broader indicator of under-employment or unemployment in the u.s. economy. and while it has come down, it was 12.1% a year ago and it has down from there to 11.3%. it definitely shows a less rosie picture than u-3 or the 5.7% number. and i did mention that we don't at this point, in spite of the

fact the unemployment rate has come down, don't feel that we have achieved so-called maximum employment in part for these very reasons. labor force participation has come down and been trending down. that is something that will continue for demographic reasons. i don't expect it to move up over time but i do think a portion of the depressed labor force participation does reflect cyclical weakness in the stronger job market and more people would enter. >> but you basically concede that 11.3% of under-employed people, that is not good in this country? >> that is abnormally high level and it signifies weakness that would be good to address. >> um the financial stability board, fsb plays an important

role, as you well know, in implementing financial reforms. including completion of capital framework that you alluded to for banks. the federal reserve is a member of this fsb. the financial stability board. given that the financial stability board is not accountable to congress or to any french of the u.s. government, to my knowledge where do these financial stability board reforms fit in the u.s. regulatory system? my question is, does the federal reserve treat them as mandated directives or suggestions or what? and what statutory basis does the fed have to implement the financial stability board's reforms verbatim? do you think, further, that the fsb decisions are important enough that they should be fully vetted by the fsoc before implemented in the u.s.?

that is two or three questions but they are all tied. >> so a number of regulatory agencies include in the fsb including the administration and other regulators. >> sure. >> nothing that is decided in the fsb has effect in the united states unless the relevant agencies propose rules and those are publicly vetted through the normal public comment process and our rule-making process. so those recommendations have no force in the united states. unless we go through a rule-making process. but there is a good reason for us to participate in the internationalz financial organizations, if we

take action in the united states and other major financial centers don't act in similar ways we will just see activity move out of our borders to other parts of the world and i don't think that will make for a safer global financial system. so we do want to be part of international discussions that lead all countries to work harmoniously together to try to raise standards and maintain a level playing field and that explains why we participate. and we can have a lead player and i think we do play a leadership role in this organization. >> but you don't need to accept that their regulation are verbatim, do you? >> no, we do not. and often we've put in place tougher standards than that have come out of that forum. >> the wall street journal recently reported that the

federal reserve surcharge for the largest banks are hurting u.s. banks because it is not on par with what foreign regulators are applying to foreign banks. the article also indicated that the feds proposal is going beyond an international standard, roughly doubling the surcharge for big u.s. banks. we all want our banks well capitalized. i think that is very important. but does the fed's proposal indicate its belief that foreign banks are not accurately capitalized. that has been said before, when they have stress tests, they are in stress. probably more so than our banks are. >> well our own banks have a cost to our economy and our financial system of possible distress to the largest and most

systemic organizations we chose to propose surcharges capital surcharges that rose above the level that were agreed internationally because we think this will make our financial system safer. there are other jurisdictions that have similarly put in effect super equivalent regimes. switzerland is an example of that. and there are other countries that have gone a similar route. the proposal is out for comment and we look forward to seeing what others say. but we do think it is important for the most systemic institutions whose distress could lead to significant financial impact on the united states. we do think it is important for them to hold appropriate capital. and especially when -- in times

of stress, it is a competitive advantage and not a disadvantage for those firms. >> madam chair, some of the large foreign banks that do business in the u.s., do you hold them to the same capital standards that you do our banks and if not, why not? >> well we have just put in place a rule pertaining to foreign banking organizations that would ask them if their sufficiently large require them to form intermediate holding companies that would maintain their activities in the united states. and that is a way to subject them to the same capital and liquidity standards as u.s. firms doing business in our markets. >> but shouldn't the standard -- in other words, the foreign banks, as i understand what you are saying they shouldn't have an advantage with lower capital

standards than our banks when they are doing business in this country? >> well, to the extent that they are doing business in this country, we are going to subject them to the same standards as our banking organizations. >> thank you. >> thank you mr. chairman. just a comment and a couple of questions and then the subtle wrap-up. i understand madam chair your reluctant to weigh in on specific policy issues that are the province of the congress such as the earned income tax credit. i appreciate you bringing attention to those issues, by which taxpayer and workers will benefit by the itc. and trade is another issue and your predecessor issued trade efficiency and as sarah donnell -- senator donnelly mentioned, agree this needs to be addressed. two questions.

first about living wills. the fdic last summer seemed in position to declare the living wills of some of the nation's largest banks not sufficient, instead though the fdic step back and together you and the fdic ask for resubmissions in july. a couple of questions, two-part question. are you prepared to declare living wills submitted during the next round of submissions notyr credible, if in fact, they aren't. and what actions will you take if the living wills are actually deemed insufficient. >> so, we have worked, as you mentioned, closely with the fdic, to give guidance to the largest firms on what we want to see, what changes we want to see in their living wills in order to improve their resolve ability. there are significant changes that we've asked for.

some pertain to their legal structure, the ability of crit ral operations -- critical operations that support an entire organization to remain available to the firm in a situation of distress, to simplify and make sure that they have a holding company structure that would be functional to promote an orderly bankruptcy. we agreed with the fdic on what we want to see. we are working with the firms to make sure that they understand what we expect. we expect to see resubmissions of these plans by july of 2015. july of this year. and if we haven't -- >> let me -- are you willing to -- are you unwilling to accept any of these banks saying that you haven't given us enough

information on what to do to comply by july? are you unwilling -- are you saying you will not accept that? >> i feel we've given detailed feedback and adequate information and if we don't see the progress we he expect we are fully prepared to declare the living wills to be not credible. >> okay. that's good to hear. one last question. earlier this month a major story broke about a trove of hsbc account holder data that reveals that the swiss banking arm collaborated efforts by account holders to engage on tax evasion on february 10th i asked miss hunter what steps her agency the fed, your agency had taken with regard to these allegations. i gather the investigations of some individual u.s. account holders had been undertaken by irs. and last week geneva raided the

bank offices of hsbc as part of a money laundering investigation and we know hsbc has a history of major u.s. sanctions and major money laundering violations and they now face major new charges of facilitating fax evasion and i know you may be unable to address details of an ongoing investigation but summarize what the fed would normally do to pursue allegations like these regarding tax evasions by major financial institutions and how long you would expect an investigation to take, not specifically here, if you are not able to do that and what steps you would normally take with other federal officials and other countryies' regulators? >> we would have some responsibility for this if it affected operations of a bank in the united states. in this case, the information

has been provided to the justice department. the justice department has primary enforcement responsibilities related to u.s. tax laws. along with the irs. and the justice department normally cooperates with us and provides information to us if they think that we would have jurisdiction, that if banking laws had been violated in the united states and that we should take action. in this case, the justice department has not provided us with information. >> do you ask them or must they make the first move? >> well, we've not been privy to any of this information. and if they thought it appropriate, we would expect them to reach out to us. >> don't news reports suggest that there is no harm, but perhaps reason for you to ask

the justice department for some of this -- any of this information that they might think important to this country's financial system and to these banks and to you. >> this is pretty recent news reports that we've learned about this. >> okay. >> madam chair thank you for appearing again before the committee. we look forward to further appearances and this will conclude the hearing. thank you. meeting adjourned.

finishing up this capital hearing with janet yellen and her presentation of the monetary report to congress. if you missed any of this, we'll have it later in the program schedule and be available shortly to see any time online

at c-span.org. we do have more live programming coming up. join us at 2:30 eastern for remarks from secretary of state john kerry testifying before the senate foreign relations on the fy 16 budget request. and then coming up later, it is ohio governor john kasich delivering the annual state of the state address. the republican a possible 2016 presidential candidate and a state hard hit with job lesses hit by the recession. that is live here on cspan3.sses hit by the recession. that is live here on cspan3.osses hit by the recession. that is live here on cspan3. the cspan city tour takes history tv on the road traveling to u.s. cities to learn about their history and literally live. we partner with comcast with a

trip to galveston, texas. >> with the opening of the suez canal in 1869, sailing ships were almost dealt a death blow. with that opening of the canal, coal-fired ships had a horder route to -- a shorter route to the far east and to india and the markets and so sailing ships needed to find a way to make their own living. so instead of high value cargo they started carrying lower value cargo, coal, oil, cotton. and so alyssa found her niche in carrying any kind of cargo that did not require getting to market at a very fast pace. >> alyssa's connection to galveston is really unique in that she sailed and arrived here in gaveleston probably about 100 yards from where we are standing

now back in 1883 with a cargo full of bananas and she came again a second time later on in 1886 and it was important for gaveleston historical foundation to find a vessel that had a connection and the fact she was a sailing vessel was all the more important. >> watch all of our events from gaveleston saturday march 2nd on cspan's book tv and on sunday march 8th at 2:00 p.m. eastern on cspan3. with live coverage of the u.s. house on cspan and the senate on cspan 2, here on cspan3 we complement that coverage by showing you the most relevant congressional hearings and then on the weekend it is the home to american history tv with programs that tell our nation's story including six unique series, the civil war's history, visiting battlefields and american artifacts and

touring museums to discover what artifacts tell us about our history and the presidency looking at policies and legacyies of the commanders and chief and top college professors delving into the america past and archival government with film from the 1930s through the 1970s. cspan3 cspan3, funded by your local satellite provider. watch us on cspan3 and follow us on facebook and twitter. up next, it is the tech crunch disrupt conference from san francisco. this brings together entrepreneurs and venture capital venures and speakers include bill ready and the rollout of a run-touch mobile payment system and hear from

aspen institute about how hackers and geeks created the digital revolution. from the past september, this is just over an hour and ten minutes. >> a number one fan down there. i hope you had the break. the best things in life is free but the most important thing in life is money. and this guy knows quite a bit about it. so please welcome to the stage bill ready from braintree and our moderator, kim cutler. >> all right so i was checking our old tech crunch post and it looks like it's been about basically almost a year since paypal said it would acquire braintree for $800 million in an all-cash deal.

so a year on how is it going? >> it is going really, really well. the big part of the premise for us when we came together with paypal was we built a bunch of things that were first in the industry around mobile payments sort of one-touch buying experience and these type of things, working with the best next generation, and others out theres and we said even though we are doing $14 billion plus in volume we could take it to a larger audience and build more products that we would have had a harder time building on our own. and our premise was to enable easy access to the most sophisticated payments in the world and those exist in paypal and so to open it up to the world was exciting then and a year later we launched our zero sdk and other things that are fulfilling that premise and so that is good. >> and this is your fourth company. >> the fourth i've been a part

of. >> and how is that different at this point in your career versus the earlier ones you did. >> one of the things that is interesting about this having done it a few times before i spent a lot of time on the front so we had a lot of time around the vision and john donahoe from e-bay and did we have align alignment on what online buying would look like. that look on the front end has led us to a much better experience on the other side tv because all of the things we are building about we talked about before we did the deal. >> and speaking of making mobile payments easier and there is something you want to announce on stage today right? >> that is right. the one-touch buying experience that we had started with touch and put in beta with paypal a few weeks ago, we're now making it generally available. and so it will be the first in the industry to allow a one-touch mobile buying experience, no entering of credit card information or ship ago dress, no user ready and

password for millions of users to do that first across platforms. so that is exciting and a big part of -- when i came to braintree early on a big part of how i felt mobile would play out and the buying experiences and now being able to say today we can put that in the hands of millions of paypal users is huge and has the opportunity to change the way people interact with mobile device for commerce. >> and when we were talking about a year or two years ago there was an experience when you were using partners like ubber and you get an app and you click on it and don't worry about using your credit card. what is that like? >> we used this with ven mo and now what we are doing, with access to the paypal network and ven mo growing rapidly, it is

even faster app that we have -- >> can we roll that on video. will this work? ♪ >> cool. >> it is one of those things that you look at it and it looks slick and simple and why didn't this exist before and why hasn't it been this way on a mobile device and it is years in the making. >> and this will work for all paypal users. >> so anybody with a paypal

mobile app will have access to this. and so, yeah, very exciting news. and i think it has the opportunity to make it so a couple of years now it ought to be the case that this is the default way to buy on a mobile device. >> and the other casing you want to announce is you are allowing merchants to accept bit-coin. >> so one of the things we were -- we have always done is given really easy access to sophisticated payments as a premise of brain free from the very beginning and so that started with one-touch payments, mobile payments, foreign currency and one of the more things happening in that space is bit-coin. and as somebody who has worked with the payment and broken around the underlying payment system, and bit-coin as a protocol has an opportunity to address that and today we are aannouncing the first foray into bit-coin and we are partnering

with coin base and over the coming months we'll allow our merchants to accept bit-coin. that is via the visa sdk that we announced so merchants can accept it like flipping a switch and merchants can accept it via our coin base partnership and it will be part of the visa sdk where the coin base is easily presented for consumers to pay in a highly adaptive mobile optimizing experience. >> when did your personal interest or first interest in bit-coin start? >> so we've been talking about for a long time. they've all been finger tech payments. and in the early days of bit-coin i thought there was promise. >> like in 08-09? >> sort of 2009, 10 started following it. and when is the right time. and there were issues around regulatory compliance and

delivering a kmeers experience and putting in a block chain is not a great consumer buying experience and enough of that is solved to do that in a high quality way, especially for something like coin base. but we are still in the early where there is still a lot of growth for it to happen. >> what made it right time now, just the sheer volume? >> i think it is sort of the right sort of confluence of several factors. one being you have regular providers like coin base solving for regulatory issues and a high quality consumer experience where there is a wallet for these so you are not entering block chain information and demand from merchants that are also interested in looking at how this can solve some of the ailments of the legacy payment system that has existed for the last 30-plus years. so all of those things coming together. so this is now -- we're at the right time to really start to step further into this and see how we can help to propel it

forward. >> so is this just braintree accepting bit-coin or is this paypal? >> so this will be paypal's first foray into bit-coin. it is via the braintree platform which is the primary platform within pay poll. so it is not just a braintree move, it is paypal looking at this and john donahoe, ceo of e-bay is very interested in bit-coin and watching it closely and so for paypal our first move to really embrace bit-coin. but it is via the braintree platform. >> does this mean bigger partners like air b and b will start handling transactions in bit-coin. >> we don't have any specific merchants we are starting to announce yet that will come in the coming months but most of the interesting merchants will be heavily interested and this came together that we are hearing that from them already that they had interest in this that we think the one-touch mobile payments that we announced as well as bit-coin is going to be high interest to a

lot of merchants in the coming months. >> great. well thank you so much for appearing on stage with me. >> excellent. thanks, kim. >> all righty, how many of you have gadgets, from the sea of apple? how many people have a gadget with them right now? none of you are raising your hand? do you hear me? you can. i know you can. chances are this guy was involved in the creation of that gadget and hugely important to the eco-system of hardware. so please welcome to the stage liam casey from pch international and john biggs. >> can you hear me? nobody can hear anything. how many of you know who this is? raise your hands? nobody. how many of you guys own

electronic products? just like one or two. so this guy probably handled most of them. he personally ships a lot of stuff. liam, i was told you were going to wear your traditional irish dress, which is why i dressed like this and i feel very -- i feel out of sorts. that said, you are the guy who does some amazing stuff in hardware. and james in about 2007 went over to china and did a fascinating article about what china makes the world takes and you are the major figures in the article. you are mr. china. first off, tell these folks about pch international in general. >> so we are a chain amount company with a product development expertise so we take ideas for a product and we take it from the concept to the consumer. and that is in the product investment, the nearing here in

san francisco and the manufacturing, the packaging and the logistics to get it to a consumer in the shortest time possible. and we work with tech companies and hardware start-ups and start-ups is an exciting space to be at the moment. >> so back in 2000 you were mr. -- you were called mr. china and you would go to china to build millions of thinks. do you still think you are mr. china? >> for anyone in china for quite sometime, you know very quickly that you know very little about china. i know as little about china today than i went there the first day because it is such a big place and so complex. and we have fantastic people on the ground that are able to execute and it is all about execution and that is what we do. >> does it matter if you are mr. china any more? i guess what has happened over the past decade, let's say, is

that you used to go to china and go there to build a million things and million a reuters or ipads and now you can just build one thing. what is happening over there that can allow that to change. now you can order from alibaba. >> i don't think it is geography. we track data of our products that move from the production lines right to when they land in the consumers' home or into a retail store. we try to replace inventory with data and it is not necessary about making a million things but you might want to make real demand for it and sometimes you don't want to make a million things you just want to make what people will buy. so when you shrink a suppose chain and in some cases the bigger companies would have a supply chain to take a product from a production line in china to a consumer in the western world and take, like, up to three months. we can do that in six days.

so we've done that for some retailers recently where we've taken the product, and re-engineer their whole supply chain and taken the product from production in china to their retail stores inside of six days an then monitor the sell-through on a live base so we can ship direct based on the demand. >> and so these guys are probably going to be thinking more in entrepreneurial terms but what does it take to be successful in hardware right now? >> it is interesting when we look at our start-ups our in cubeator highway 1 and when we look at the applicants that apply to come into highway one, we are looking for the same thing that any incubator or accelerator are looking for and we are looking for a great team. we look for an a-team and a b product is okay. it is all about the team. you can have a great idea and product but if you don't have a great team to deliver it then it won't happen.

so we are -- we predominantly look for great entrepreneurs and we've been fortunate to work with phenomenal entrepreneurs. >> and recently i wrote about how you partnered with radio shack. i haven't been to a radio shack since they started giving out the battery cards. i believe i still have them. i love nine volts because you can put them on your tongue and they hurt. but you guys recently partnered with them and from my understanding it was you were going to put items in the stores some of the customers that you work with but you've essentially changed the entire supply chain for them right? >> i spent ten years in the retail and the fashion business and retail before i set up pch and in retail there is different types of retail. there is destination and high street retail and when you look at, say, typical cell phone

carrier stores, that is a destination retailer. so somebody walks into a destination retailer and in to get a cell phone predominantly that is what they want the product that we work with, that is not where we want them sold. that is where we want them sold with a better experience. today consumers want to have a great experience. if they are going to buy a product, they want the experience. that has been proved by the companies that have improved the experience and we think radio shack is a company that can do a team -- they understand retailing as opposed to destination retailing. anybody walking into a store to get a cell phone and when they walk into a store like a radio shack, they are going in for -- they are more open to becausing and that is where -- browsing and that is where we can create the start-up products but to do that first and the most

important thing for me was that we created a lean supply chain. for our start-ups they can't afford to put inventory into distribution centers around the world because the capital tied up scares the b.c. community. if the capital is tied newspaper a warehouse and it doesn't matter whether it is e-commerce or retail warehouse if you look at the companies, they have 20 30 or 50 warehouses, for a start-up to put their inventory in there it is a huge risk and we have one center, it is in china, we are three hours from all of the factoryies were work with and three days from the consumers around the world so we wanted a lean supply chain. and we did not want to be in distribution centers. and when you can send an astronaut to the space center, the international space center in six hours you don't need distribution centers. and whennelon musk colonizes

mars, we'll do it but until then we are not doing it. >> so from radio shacks around multiple cities in the states it took how many days to get a piece? >> when we looked at the supply chain, and when we look at the customers we look at the suppose play chain and in some cases it can take three months and we are doing it to the radio shack stores in about six days direct to store across a whole range of products, not just our own products but other products they have in the stores and that has replaced a lot of working capital because instead of having it tied up in the channel it is going direct to store and monitoring the sales and shipping based on the sell-through. >> and for ten years you did fashion before you did this and that is not very similar, is it? what is the -- >> it is interesting because the convergence of fashion and technology has a very interesting space and we're seeing a lot of activity in that space. and especially to our highway one companies we're seeing

great companies coming through this, fashion with connected jewelry. so, again, at the end of the day, all of the business is about customer service at some point. >> let's talk about highway one. highway one is what you would call n incubator that you just started and you are making money hand over fist starting businesses for companies that start with a and b and why did you do something for hardware start-ups. >> product innovation in the hardware is challenge. you look at the companies popular five years ago the pace is slow because you have technology road maps and product road maps and that can really slow down the whole -- from bringing an idea to be ready for a consumer and we find that

working with the -- this generation of the entrepreneur, the great software entrepreneurs that venture into the hardware space, they want to bring a piece of hardware to the market and we find in this space inexperience is a phenomenal innovator because they'll ask us why not and why can't you do it and why can't i take it direct from the production line to a consumer anywhere in the world? traditional companies wouldn't ask that question because they have too much experience. so they are much more conservative. we like the whole disruption that comes with the incubator space in highway one and the way the entrepreneurs think they are -- they have a fantastic can-do attitude and their whole approach to bringing a product to market, it is lean and one that actually -- you know, i think that any company today, is a mature company 19 years in

business for me, this is probably one of the most -- it is one of the most dynamic things we've done as a company because it forces us to -- to be able to react to the start-ups and to be able to -- when they say why can't we do it we have to think hard why we can't. and they ask us questions that traditional companies, more mature companies wouldn't. >> so if these guys are the -- the big guys, the old guys are so exhausted. sony is on its last legs and samsung is hanging in there with their phones and what is the future for them. they are making 500,000 and a million units and can they sell those? what is the way forward for those big guys? >> for us it is about being nimble. and we talked about the smiley curve and being up at the high end of the curve awhere we are focused with our engineering and our product development and our

retail and distribution relationships and we have the shop where we sell product and historically we've been down at the bottom of the curve and we've been focused on that and for me we enable great start ups like little bits to take a product from a production line to a consumer and with the same service as a big company without having the burden and the overhead to have to do it. to me it is one of the great enablers for hardware. >> tell me about some of the highway one guys that you've been talking to? little bits is9xob one and blaze is the light bike. you bought her company? >> no. we didn't buy the company. so blaze is out of london. it is emily brook. a fantastic entrepreneur. it came to our access program which is the later stage. and as did little bits which is nod nud [ inaudible ] in new york.

again, a great entrepreneur and they have grade ideas for a product and where they come up with the idea. we love to focus on companies that understand design and that really invest in design the companies that we work with are passionate about their design and brand and consumer experience and we manage that entire process so we can deliver a great experience to end and it is how do you it in orders of one. so anywhere in the world we can monitor a product that is shipping and we can manage that experience. so we do it with -- so a company like blaze they were focused on design. and emily when i met her first she was focused on a design and great experience. >> what other cool stuff do you get to see? >> this week we are shipping the kano product, which is a riso computer and a [ inaudible ] in

the next couple of weeks. >> and do you and neal young and go out and ride the range? >> no. >> does he ride the range? i'm not sure he does. i think he hangs out in minnesota or something? >> see, we have lively -- lively is launching a-watch today which is for -- for helping parents -- or if your parents are living alone or your parents live alone and help them to extend their time in their own home where they don't have to go into care, this is one of the best products that we've seen for monitoring the home remotely and for families to feel they can stay in -- connected to their parents. that is a great one. we just launched it -- for today which is connected to the hub and to the family, which is great. >> so if they fall down they press a button. >> it is one you would watch. it is stylish. >> and i saw pallet home.

>> it is a highway one. >> a george foreman grill with an intelligent far beyond -- >> they are actually here. outside. that is another great one. and now abdid he is another one. and then baking for an ipad. >> do you like making a lot of stuff for big companies or working with these guys? >> i just love the energy that comes from the entrepreneurs and to me that is what is fuelling innovation and what is getting at tension of all of the big companies. you mentioned the big companies. the big companies are really attracted to the start-ups that we work with and sometimes they are very envious of the process which we take them through to bring the product through. >> and you are certain you are not being paid by the big companies to destroy the small companies in their infancy, because you can just not -- if you want to nod or whatever -- if you are holding something

hostage you can let us know. >> we are champions of innovation and we love disruption. >> so i have a couple of last questions. what i -- if you look under your chairs there is apple iphone 6s there. and what i wanted to say, because liam does some work for these guys but to discuss specifically about the iphone 6, you have one in your pocket right now and you're going to give me one right? >> yeah, right. >> we'll do some quick rapid fire questions. the i-watch, do you have one for me? >> i can't hear you. >> and how does it feel to hang out with will i. am a lot? >> another hardware fanatic. >> what are the -- bono and neal young and all of these guys getting into hardware for? >> look i think there is a huge interest in hardware. when i was in the fashion industry, i would go to a fabric mill and i would buy small rolls

of fabric and you could make any garment from that roll of fabric. when i got into the technology world, that was so far from what you could do. you could never -- you had to wait months years for new technology and new innovation. so what we saw in 2008 was great, where there was a downturn and engineers here going into their garages and going through engineers and starting to prototype products and they had -- we notice they had tools for the fabrics of technology that were changing because they had [ inaudible ] and today you have the little bit connected module which is a phenomenal tool used by a lot of companies and you had treaty printed and limits and android and now you have the fabrics to

prototype. and everybody say there is a renaissance in manufacturing and we think there is a renaissance in prototyping but that generates a huge amount of energy around creativity of physical goods. and that's the place where we actually play, and we look for entrepreneurs that want to build companies around that. that's what we're always looking for. today, when, you know you can sketch a piece of hardware and then in a very short time you can actually produce a prototype, that -- you hand somebody a prototype, and it is far more convincing than a keynote presentation. >> super. liam casey pch international highway 1, thank you very much. give this guy a round of applause applause. thank you. >> it would be kind of hard to believe, almost that watching other people play video games

could become a business worth almost a billion dollars. when i was a kid, they would have called that the couch. but these guys have done it. please welcome twitch founders emmitt sheer and kevin lynne and our moderator kyle russell. >> thanks for joining us. the first question is, for the last couple of months i think the assumption was you guys have been purchased by google and then we get the news turns out the giant that was buying you guys is amazon. so you know, how was getting that set up? it seems for a while everyone assumed that google was the way things were going to go down, seemed like a natural fit. so why choose amazon as the partner for growth? >> so i mean, obviously it is

an easy assumption to make when you see it written down, that's what your natural assumption is. amazon is great fit for us for a couple of reasons. we went down, we pitched them, we talked to them about our future we talked to them. they pitched us with what they thought their future was. we got to get some meeting of the minds on gaming what we thought gaming was going and how we saw the future of the gaming industry. we had the same vision for what would happen. we had the same vision for twitch doing it, we were going to be a powerful independent brand and amazon has a great track record of buying companies that way. look at zappos or imdb which they bought ten years ago, founder still running it strong powerful brand on the internet. that made me excited to have that level of independence and get to keep running twitch.

>> you talk about the value of a shared vision. what is the vision of what gaming is going to become then? >> if you look at the history of gaming and go back to the very beginning, you had this social atmosphere, people gamed in arcades. you spent most of your time waiting or watching someone else play video games. that was a start of video games. so as you look at where video games have gone overtime we have gone from video games like social shared audience interactive experience, something you played at home with multiplayer internet gaming and what you've seen is the re-emergence of the arcade and this scale that is millions of times bigger than the arcade ever was where you can fill a whole stadium, you can get massive viewership online. and we see that as the next phase of gaming. there is this new phase of gaming where single player, mull erer multi player, that's the -- we see it

as a new mode for how you can interact with a video game. and, you know, live streaming, especially interactive with the audience. and amazon really also sees that future. and they see this future of video games becoming increasing increasingly net works and social and so that was sort of that -- that was the future they bought into with us. >> okay. so fun fact. the first story i wrote at techcrunch was how google can avoid ruining twitch. and the issues that gamers had at the time people freaking out on reddit and twitter on youtube, the content i.d. system of spot someone streaming, let's play and they play some of their own music, like a deejay, making a cure rated experience for the people watching their stream. and they were worried that content i.d. would mute all their videos and ruin the appeal for their audience. and their fan bases. content i.d. isn't necessarily a problem anymore now. but as you guys are going to become multibillion dollar media

enterprises, presumably it seems like you're going to be a big target for are you guys letting people distribute copy righted materials? so, even if content idea isn't a problem, how do you deal with that going forward? >> if you look at the right situation for video, they let users upload videos to the website. you think about the copy right situation and the -- securing rights. we're in a fortunate position where because we have a very specific set of content that we encourage, because we can limit that and we can stick with just gamg gaming content and fortunate to work with companies excited to have people stream and share their games because they have a functional business model that it supports, it hasn't really -- surprisingly hasn't been a problem because when you're on a general purpose video platform it comes up a lot. when you run a less general purpose -- it is a little more specialized like twitch where you focus on a certain specific

set of content, you can really secure the rights in a more positive way for the users. >> you do have a system in place for monitoring whether people are using copy righted material right? >> we recently launched a audio recognition system to identify unlicensed music. but it actually impacts less than 20% of our videos. so, i mean, it is out there but it is not -- >> 20% of videos, you have a lot of people streaming, streaming for like eight people. there is the big, like, league of legends world tournament where they stream for tens of thousands or hundreds of thousands of people. you say the 20% where is that impacting, you know? >> evenly distributed roughly. >> okay. >> not evenly distributed, once you get down to one or two streams, you can't have 20% of a stream be impacted. it is not like one specific set of users or anything like that. >> that works by muting what people are playing if it finds -- >> we only run it against video

on demand stuff. live is different for a variety of reasons. but, yeah, against vod stuff. >> how do you manage people's expectations, we have to deal with copy righted material? we're a billion dollar company now. >> i think everyone on the internet recognizes that music licensing is a real thing, that you have to deal with and they may not like it, people may not be excited but it is a fact and you have to deal with it. that's how it is. >> the other big fear that everyone had when google was rumored to have acquired you guys is that they would be forced to use google plus profiles. that's clearly not a problem now, but how are you guys -- have you spoken with amazon about how to integrate amazon i.d.s. >> we're excited about the potential ways we can work with amazon. i think there is a lot of really obvious places where there is synergy between the two companies, synergy is a loaded word in this situation, but there is. a lot of synergy. our attitude towards it is not this transaction happened

therefore we have to do x, y and z integrations. it is now we have the opportunity, now we can put our engineering team in contact with their engineering team and see can we use aws? now we can put our music licensing team in touch with their music licensing team and see if we can secure -- we have opportunities that we'll see if they make sense for both companies or not. we're not going to force anything though. >> those integrations, those are on like the back end of things. people don't see for maybe the aws improves the experience overall. i think some people are concerned that twitch is going to become -- people go on twitch already to see someone play games, see if it is right for them to buy. are you going to keep going with that idea and become like a native advertising platform for this is how -- i saw this game, it was great for pc and i decided to buy it. there is a button right there. one, click to add to cart. >> i would say we already are an advertising platform for gaming. we are the place you go on the internet to -- our entire website is a native advertising

unit for video games. and i, yeah, we already drive a huge amount of purchase decisions. our partners use links and a variety offer places you can buy video games, game stop, epp sett cetera. our partners have come to us and said, can you help me sell video games more. so i do think what we're doing a lot more to aid our partners when they want to do that. but there say big difference between that and becoming a storefront for amazon, which i don't think -- if amazon wanted a storefront, they could build it themselves. what they see in twitch, the value we bring is the awesome community of people, who all love video games and gather to celebrate that and share that experience and if you change that into a storefront, you destroy a lot of what is creative about twitch. that's the last thing. that's the last thing i want. the last thing amazon wants too. >> am i going to be watching a stream and go on amazon later

and it says, you might be interested in this? >> we haven't discussed any kind of data sharing like that. and, you know, who knows what the future brings. that's something -- i don't think -- the way we start from, we start from is this something that our users want? is this something that will create a good experience for our users and if the answer is no it is not that exciting. so what might be good experience is, hey, i'm watching this game on twitch, by the way, you can buy this, you know, right now, 20% discount that seems something like our broadcasters would want to offer and our viewers probably like. we might bring something like that to you. we're not going to force -- try to force you know synergy data, all the internet stuff, which i just don't think is that effective and don't think our users will be that excited about. >> buying your company for a billion dollars, seems like amazon expects you to get bigger. where is that growth going to come from? >> i think there is a bunch of

places it comes from. one of the most important things is today we have grown a lot in pc. recently started growing a lot on console as well. due to the xbox one and playstation 4 integrations we did. and there is a huge amount to grow on console because these new generation consoles are suggestively -- the start of the takeoff, they're not -- they don't have the penetration that the last generation did. and so we expect to see a ton of growth in console, expect to continue to see growth on pc. and i think most importantly we expect to see a lot of growth in mobile as well. we started to see really encouraging growth from a lot of the top mobile games as broadcasting from mobile platforms becomes more possible. >> for me, doesn't seem like broadcasting from mobile games seems like that great of a -- doesn't appeal to me of are people watching -- people in high school playing flappy bird. >> do you play clash of clans? >> i do not. >> if you're a clash of clans player, i was really interested

in how i could build my empire better and how i could make the best army i could make, spend my resources most efficiently. there is people on now who are some of the top players sharing strategies, sharing the best way to broadcast -- to play clash. that's super popular actually. just like playing any strategy game for pc is. it is not going to work for every game, right? if you're playing one of those games where you put your phone on your forehead and guess people in the room -- a popular iphone game, that won't translate well. i think what we're seeing is in mobile, an evolution of games towards more and more rich powerful experiences as phones get more powerful, as the media matures and i think that you'll see as a result of that, more and more mobile games on twitch. >> okay. so along with mobile though, there is another big platforming game that is getting a lot of attention, virtual reality with the push behind thewith oculous.

how do you feel about virtual reality. is that an opportunity as well or no? >> anywhere -- our rule of thumb is simple. anywhere that you play video games, and share -- have a video gaming experience, we want tone able you to share that. there is technical barriers in sharing of the r experience. what we have seen is the players heads up point of view is actually rarely the best view for watching the game. it sometimes is. if you think about it like you wouldn't watch football from go pro strapped to the head of an nfl quarterback. it might be interesting for a little bit but it is much better to have a top down view of the field. same thing is true for vr. it might be an amazing way to play a game and maybe if it has high penetration you might trop your drop yourself into the world and watch vr as well. we're very very excited about vr gaming.

we think that like tablet gaming, it offers a huge growth area for gaming in general and anywhere there is gaming we think twitch can be. >> right. so the thing that i'm thinking is that, like, the consoles we have out today are struggling with getting 30 to 60 frames per second at 1080 p. dealing with broadcasting and twitch stream and dealing with virtual reality, and things they have to deal with that, are those systems ready to accommodate, you know, rendering separately a view that is optimal for outside perspective? >> oculous isn't out yet so who knows. but the new generation consoles work well for that kind of stuff. they have got true multitasking built in. they can walk and chew gum at the same time. no trouble playing a game and rendering and streaming it to twitch. i don't think there is a problem there. i think the next generation consoles are prepared for streaming. >> well, with that said, i guess

going back to the vr and making an experience for that, you know, you talked about rendering separately also. is that something where with mobile and vr you have to reach out to developers making things that work well, that might be a good kind of experience to broadcast and saying let's integrate our technology and find ways to provide unique twitch experiences in that. >> yeah, i think so. as emmitt mentioned, there is two sides to be offered. one is the viewing experience where you can sort of enhance the current social experience where it really does feel like you're watching with other em, so you can imagine more of an auditorium style viewing experience, watching an event-based content, watching together something like the championship series versus where game companies can go down the road where as you're watching first person shooter, watching someone's point of view, as someone mentioned, will not be the best viewing experience. the topdown viewing experience may be good. imagine going into a game and moving independently and watch and move around the game to -- at your own volition and offer -- create your own game

experience. i think that's going to be what is fascinateing. couple that with the twitch place game phenomenon where the audience can influence and interact with the game play. that will create very, very cool experiences that don't exist today. i think we're pretty excited about it. but it is -- i think the advancements in vr come fast and quick over the next few year and we'll pay a lot of attention to that. >> so the thing about, you know, providing in game experiences, like spectating vr watching a football game with madden and being in the space is it seems like that's -- like an experience that is best delivered natively. you're not necessarily watching via twitch client. you download, the game itself, or maybe a lighter version, a spectator only free to play or something. how do you get developers to be on board with, you know, making twitch part of that experience not just trying to own an experience themselves. >> i think they are. that is a good example of this where you can watch and go to tv or watch as a spectator.

but what we have built is something that is largely on top of that. it is a more social experience. reaches a broader audience. if you think about it part of the value of twitch to a game company is being able to reach the people who don't play your game. and developing future which a lot of game companies do with us developing better features like in game auto drops. and encouraging people to watch content, in addition to playing the content and closing the loop is what a lot of game companies want to do with us. >> the other thing it is missing, when you have the in game spectator mode experiences which are cool, by the way, is you don't have chat. you can't do it from a web browser. can't watch it on your iphone or android phone, can't stream it to your xbox or playstation and you really have to be on the same platform and what we see increasingly is viewership comes from everywhere. it doesn't just come from one platform. it comes from all of them. and so we think those spectator

clients -- those are coming. we actually have found that they -- when those get released, they grow rather than shrinking it. they become an entry point to learn about this thing. then had you want the chat mode interactivity, get access to asking questions with a broadcaster and interacting with them, sort of in a side channel, next to the game, you come to twitch because we provide that experience the best. that's what we tried to focus on is providing that value above the spectator mode. >> speaking of chat and the community and that is such a huge part of why you grow is people find someone that streams games and gives them an honest opinion and they really get into that personality and follow them. with that said there are some people who stream and the feedback isn't so positive. also i don't know if you've been paying attention to the whole gamergate issue happening recently but i guess that's not so favorable to women is an issue in the gaming community

and you guys, there are female streamers who face abuse. and there are other reasons why someone will get hated on in the comments, but how do you deal with that? you can't police your community so strictly, but you can't make it so people don't want to stream and be open. >> i think that's an inevitable problem anytime you let humans interact with each other over the internet. some people are -- about it and it is unfortunate. if that's the reality of interaction over the internet. our approach to solving this problem is it is a problem that anyone who allows discussion over the internet faces, our approach is to give powerful tools to the streamer where they can appoint moderators for their channel, set up special modes, prevent unverified accounts from chatting, and they can control who has the right to speak in their room and can create the experience they want to have. because some people like to have a little free for all and they're okay with that and they set boundaries on unacceptable behavior but they're okay with -- some people want a more

controlled, more polite experience. i think i would be one of those people as a streamer. in that case, we encourage you to have moderators and enforce that experience yourself as well. we continue to build more powerful tools. we believe in empowering the broadcaster to create the experience they want to create. >> okay. so speaking of -- also along the same lines of empowering broadcasters, you know a lot of celebrities, i guess that emerged among your community, actually have outside gaming sponsorships or are getting scholarships and colleges to play. the thing about that is a lot of those sponsorships are actually for competing scores that -- so digital versions of games, and now amazon is going to have to compete with them? how do they feel about sponsoring gta instead of an amazon store? >> amazon sells steam keys or

xbox points. amazon, like twitch, has the attitude, this is one of those things back to your first question, what can we do that is best for the consumer? if doing something is a pro consumer move, we'll probably find a way to make it a win-win. and amazon is not the kind of company that -- that believes in trying to shut everyone else out and create this thing where no one else gets to sell anything to a customer or talk to a customer again. i don't think we're ever going to ban someone from the site for working with another game store i think that our point of view is we want to offer the best possible experience and hopefully choose the experience we offer. and i think that we really believe in if it is good for the gamer, good for the broadcaster, in the long run that's good for us. and that's the policy we're going to follow. >> okay. so one thing i noticed and it is pretty, like, obvious if you go to the main page, like, league of legends, 120,000 viewers, go to 80,000

counterstrike, 6,000, and then a long tail of, you know, a few thousand people streaming each game to a couple maybe dozen people each. in the long run, do you worry that maybe you're overreliant on the games that draw on the huge audiences. how do you think of the whales versus the long tail? >> not as skewed as you're suggesting there. it may look that way, but there is 600 games live and actually that long tail represents a huge percentage of our overall viewership. so there is a few big games, the biggest games on the site. we have seen an increasing diversity. those games continue to grow. those games aren't getting bigger but the other games that aren't the top ten games are growing faster than the top games are. relatively speaking. that means you're seeing more spread in what people are watching and more variety, which we think is great. we encourage every game to think about what their audience strategy is.

you have a big competitive title, your streaming outreach strategy is more obvious. dewy sports. if you're more like mine craft, it takes more time to figure out how do we build an awesome streaming environment around this? it is not -- it is more creative and different. so we have seen a lot of things take off in big east sports first. we think there is huge potential in games like mine craft, games that don't necessarily have a giant east sports component and the rest are also engaging interactive thing to work with. >> okay. so along with that, i guess -- i guess we're running out of time so i guess one last thing. you got the world finals for the league of legends coming up in south korea next month. how many people do you expect to draw in? it seems like league and you guys are growing unchecked? >> they got a pretty big bar to cross this year. last year online viewership was

3 32 million. this year it is larger venue. asia, south america, as they grow, and all about penetration for both and pc and consoles are being launched in a lot of countries they weren't last generation. more and more people are paying attention to competitive gaming in general. i think they'll hit a pretty big number. they crossed the threshold for championships. i think the nfl better look out. >> last year, quickly, sony did a big site wide sponsorship. can we look forward to anything for the world finals of you know this is like the super bowl of gaming we'll do a big flashy ad, anything like that big sponsors we should be looking for? >> i think the issue is trending towards that overall. as any space gets big in entertainment, bigger and bigger sponsors want to get in on that and reach that audience. this year, who knows. i think over the next couple of years you'll see a lot of big --

come in. you'll see people like coca-colaing people like riot. they'll want to capture that experience. i think the gaming industry as a whole will be much more careful about it. they want to make sure the brands coming in are good for the audience. may take a couple of years to find that balance. >> i think we're out of time then. thank you for joining us. >> thank you. >> you're out of here. you guys did great. because that went over, i'm going to say who is next. one of our next guests is great at telling stories. the other one is really good at giving people away to do that. so we'll get them on stage together to talk about the future of publishing and media. please welcome to the stage ev williams and walterisaacson and matthew ponzarino is our moderator. >> all right. want to go 15 minutes overtime,

prepare yourselves for no lunch. okay, so thank you for coming. appreciate it. so, walter you have a new book coming out. this is it, called "the innovators innovators." it is a book you started before you started writing about steve jobs, correct? >> i started to work on this book about 15 years ago. 20 years ago when i was doing ding tal dithgital media, time inc. i couldn't figure out how did the personal computer and the original main frame computer start, who came up with the logical circuit notions, and then how did the internet develop? and i thought, well, it would be interesting to start gathering strength of all the people i was working with, bob kan who did the internet protocols and steve jobs and bill gates who helped with the personal computer, so i started doing oral histories and

interviews with all of them. i put it aside when i ended up writing a book about steve jobs but that made me more interested in going back to look at the intersection of the internet and the personal computer. >> i've read the book. i finished it last night, actually, i couldn't stop but i really enjoyed it. that aspect of it i really liked the way you took us through. you started way back -- >> ada lovelace is an interesting and little known character. lord byron's only legitimate child. lady byron was not fond of lord byron when ada was growing up for reasons you romantic poets may know. she had ada tutored only mathematics. she ends up with somebody who loves both poetry and mathematics and technology. and so she's the symbol as steve jobs was as somebody who can

connect the humanities to technology. her father was a follower of ned love. but ada love taught the looms to do the beautiful patterns and she said we can do that with calculating machines and do any sort of logical sequencing, not just of numbers, but of music of words, so she comes up with the notion of a computer. i figured i wanted to start with her. >> right. and themeatically it pulls through. a lot of the original concepts she laid out, they're still ringing true. >> she is a spiritual person who brings us ev williams. >> ev is in the book too. >> early on for a blogger because one of the interesting things that happens when the web is created, in the early '90s, those of us in the media business back then, i was there, we started pouring old wine into new bottles.

it really sucked. it was -- we were taking a magazine and trying to make it a website. it was not what the internet was invented to do. but ev was able to create blogger, which was these very simple way to bring a whole lot of people into the ability to publish, but then also the ability to form communities around what was being published. to me, blogger, the first of ev's three you had a trifecta, or a hat trick, i guess you say here in the pacific northwest, that was something that helped take the web and makes it more into an open and community thing as opposed to something that publishing houses would pour their magazines into. >> and you know, ev isaacson's -- walter's book -- i'll call you walter for now, in his book, you know, he mentions justin hall and the prototypical

blogger and then your creation of blogger as a tool. and he doesn't use this analogy specifically and i'll probably get -- over it, but it seems like it is analogous to the printing press, where you have somebody in a castle who can afford to pay a bunch of scribes to translate the king james bible and the printing press comes along and anybody can print protest pliers in their basement. blogger essentially took the architectural knowledge out of the equation and just focused on people with things to say? >> yeah but i think walter makes a good point. the internet itself or the web was really the printing press. but it was the way i always describe blogging was it was finding one of the web's native forms. and it was -- people publishing people putting magazines and newspapers. but the blog was this native form that only made sense on the

web. it took advantage of the fact that there is, you know, you could publish many times a day, there is no limit you could publish a paragraph or something very long. you can interact with the readers of the blog and anyone can do it. and then suddenly you had this new forum that took advantage of the network, which was thereb!s for a few years, before we really realized what do we do with this thing? >> if i could add, you know one thing it does is it makes it simple. that is to me one of the themes of digital success you walk the alley here and watch people doing things. those who can make something much simpler and it starts with the video game, when al alcorn and bushnell takes space wars and says we'll make it simple, insert quarter, avoid klingon. and steve jobs was working the

night shift and waz was coming to visit him and they do breakout and other things. you watch every step of the way, whether it is the ipod where steve is fanatic about keeping it simple or blogger where suddenly in 1994, i think or -- >> 99. >> 99, yeah 99, when suddenly you could just -- something could strike you, insert words in box, push button. >> that's a huge deal. i didn't understand at the time but the way i -- the way about all technology now is if you're creating something and your goal is to fulfill a human desire more easily and conveniently and it is embarrassing at the time that i didn't realize it because we required you to have your own web host for the first year of blogger. we had no hosting at all and you had to set up. and, of course, as soon as we removed that barrier, it started to explode. the process of taking out steps it is the key thing. thought, typing in box, publish completely changed the whole

landscape of blogging. >> so you did an experiment together with this book and i know you did it over a few sites, but you mentioned in the after word that media was more successful. you took sections of the book that may have involved several different people or viewpoints and published them publicly and let those people commentate on them or mark them up online, like a proofreading experiment, right? how did that come about? >> one night i was writing the part about the real creation of arpa where steve crocker and were doing the request for comment, and the original that really is the foundation for what becomes the internet. it was there so that researchers could collaborate. they could put stuff up and get comments from everybody else. i said, well hey, why don't i try to see how that worked on the internet today? i had been involved with editing wikipedia, doing the things where you as a natural citizen

of the web you're doing. i said what if you tried it with a book? in the early days of the internet, we had the bbs and news groups and news net and i said how would those tools compare to the tools we have today? i was looking for places where i could publish a chapter or put a draft of a chapter up and let people say no, here's something interesting. i was there. here's a photograph. or tell -- you should tell the story this way. i did it on maybe seven or eight places. i don't want to name the ones i want as good but without blowing smoke, when i put it on media, it has a collaborative tool, so people can just put in line comments. people from the old days like stewart brand were saying no no, no, we didn't drop -- on the first of -- it was later that night. okay. let me get that one right.

but dan brickman an old friend of yours, said here is how we did visical and why it was an important bridge. i started incorporating that in and it is still, if i may say so in the rudimentary stages i would love it if those of us who write books in the future can say let's crowd source them, have them cure rated, so i can decide that was a wacky thing but this is kind of interesting, and let's find a way to divvy up the royalties and the payment system. have an easy payment system so that people together can create a book, maybe with an author asking as a curator, not as a, you know controlling the whole thing. and say, okay, we have gotten this book, put up your original code for the darwin colonel you put in the operating system or

the new linux, show me the pictures, the code. all of that can be put into a collaborative space with an author so we're trying to keep the narrative going, but giving all this material that was crowd sourced and having a way to -- which ted nelson when he does hypertext in the early days and tim burners lee, when he creates the web in the early '90s, wanted to have systems where everybody could collaborate but you could allocate the resources to those who had collaborated. >> do you see medium as something that -- you have been making a transition, a little bit, in paying people to create content for you, which takes away from the whole pure platform approach. and then you also have been hosting publications that are creating these collections of authors that are writing on a central theme. how do you see the future of medium as a collaboration tool, that can enable authors to do

things like what walter has done. >> collaboration has been a theme of media from the beginning. from a broad perspective, our goal is to say everyone is sharing their ideas and stories all over the web and that's awesome. how can we make the whole greater than the sum of the parts by bringing people together and letting them build off each other. this was one mechanism that we created to do that. and it occurred to us early on that the internet has been great historically bringing people together, to create things that are better than what they could do on their own. you see awesome examples of this, both commercial and noncommercially, especially noncommercially with wikipedia and other types of -- this type of content we deal in it is awesome that someone can create a blog like you did and be their own writer editor, promoter marketer designer, but it seems like we can get more done if we take advantage of specialization

and collaboration. it was something we talked about a lot in the early days and how can we bring people together to help each other create something better than they can on their own. that's a theme we're working on. we look at it as a platform. our publishing efforts are there to help spur that platform along. >> the internet developed with two strands. one was the publishing strand. put everything you want out if you're a blogger like you or whatever, and the other is the community strand, like the well and others even before the web was around gathered people into community. those have had somewhat of attention. i think i quote you when you were originally doing blogger, you thought of it as a publishing platform but it becomes a community platform. i think joining the publishing power of the web with the community power of the internet that forming of online virtual communities, that's where the power lies in the future.

>> that's what twitter is. i came to twitter with information spreading mind set and i think jack was looking at it more as people keeping in touch with each other. that looms into something very powerful when you put them together. i think that's -- if you look at any major platform today it combines those elements. with blogger in fact we didn't have comments in blogger for a long time because who wants to talk to people? i don't want to talk to people on the internet. it turns out people do like to talk to each other. >> one of the central themes in the book as i understand it in my limited understanding having finished it last night and not having thought of it a whole lot is this myth of -- this sort of silicone valley creator myth.

you dissect it. and break it apart to show there are many ideas collaborators, scooping the ideas together, with a sieve and keeping up with the ones that will work to push this thing forward. i think it is one of those things where, like, for instance twitter, there is this constant talk about who invented what and how many things and what the truth is really that a lot of people did, over a certain period of time. >> those of us who are biographers know that we have a dirty little secret, we distort history. we make it seem like there is some guy on a garrett and it is a mall so most of the disruptions of the digital age were done collaboratively by teams. that's why we don't quote who invebtin invented the computer because there were four or five teams

working on it and they were collaborative effort. there is no person who can say i invented the internet. nick belton, who may be here i don't know whether you liked him, but in the twitter book there was an exchange of nobody invented twitter. twitter existed and it was one of the teams. i wanted to years and years ago, when another century just coming out of college, i wrote a book with a friend called "the wise men," a collaboration of six men who create american foreign policy during the cold war. i wanted to get back to that. innovation is a team sport. we buying biographers have to get away. >> it was very clearly just a

series of incremental steps. i didn't invent blogging. there are little thickngs that we stumble upon that become very common and become part of the fabric but they occur to most people working on the internet at the same time. it is the next adjacent thing to what we're all used to. >> you're making our jobs harder. >> you always wanted to know who do i put on the cover? mark andreas and andy grove jeff bezos. the age of the internet is not as geared to putting people on the cover putting them on the pantheon and saying this is the one person. i think it is more interesting to show, for example, on the computer, if you say what was really first computer? you can have a historical argument. if you're a row mandic or

believe in the lone inventor who is in iowa state and in the basement of the physics building, he creates an electronic circuit. he never could get his computer working. he got drafted into the -- goes into the navy, and nobody knows what this machine is then they throw it away. there is a whole team the university of pennsylvania led by john markley with the six women who were doing -- women mathematicians, doing the programming programming, and they build any act and it works. the loan inventorne inventor can't do it. you need a team. >> sometimes if you have a team, it doesn't work.

>> right. >> if you have a lot of execution, you don't have a visionary driving it, then it becomes baron. if you look at the tran sifters, driven by two or three primaries, or the original computer driven by markley eckert the six women, you have to have that right combination of visionaries and team that can execute. >> and i was going to mention timing. if you're a startup there are so many things today you can look back ten years ago and say, oh yeah, that company tried that, but it was too early or whatever else. >> at the right time too. when the things are available that you need to actually make it grow. >> there is one thing that we're almost out of time, but there is one thing i saw you mention

which is interesting you mentioned the concept of an environment or community convincing itself it is revolutionary by saying it is. that reminded me of silicon valley. everybody gets up on a stage like this one and this will evolutionize x. do you think they can self-manifest that by saying it? >> the words have been so used that they sometimes get trained of their meaning. i tried to raid about the scientific revolution and there is a wonderful book by steve chapin. it did happen. he said the way we know it happened is the flem felt they were part of something are revolutionary. if yo look at the way things are

being changed by the conclusion of our devoices, that has so disrupted things. it is like the combination of the steam engine mechanical you know things like it the loom and other things that create the industrial revolution. >> thank you, guys, very much for coming up here to talk. i appreciate it. >> cool. >> togood to see you. >> thank you. this sunday on q&a, baltimore complice polis commission police commissioner anthony bats. >> it was clear to me i had an issue with public trust and people believing things that weren't said. regardless of the fact that i stand in front -- i say use of force is down 46%, lawsuits are down, officer involved shootings are down and we're moving in all

positive ways, people in community say we don't believe it. >> with live coverage of the u.s. house on senate and the senate on c-span2, onb=+$v c-span3 we complement the coverage by showing you the most relevant congressional hearings. on the weekend c-span3 is the home to american history tv. the civil war's 150th anniversary, visiting battlefields and great events. history book shelf, the best known american history writers. the presidency, looking at the policies and leg ties of the commander in chief. lectures in history with top college profersers. and real america futuring educational films from the 1930s through the '70s.

c-span3, created by the cable tv industry and funded by your local cable or satellite provider. secretary of state john kerry told the senate appropriations committee this morning that russia has lied to my face and the face of others on many different occasions about its activities in ukraine. it is likely he'll get more questions about the situation in ukraine, and his department's fiscal year budget request. this afternoon he's before the senate foreign relations committee and we'll have live coverage at 2:30 eastern here on c-span3. until then author liarlarry down says we're in the second generation of disruptive innovation as a result of the digital revolution. a discussion about digital technology data collection and

consumer electronics at the churchill club in san jose, california. >> i'm the chief economist for the consumer electronics association. probably best known as the producers of a small trade show in las vegas called the international cs. we have 2.2 million square feet, 170,000 of your nearest and dearest friends. i'm sure we'll be talking about that today. this is my oprah moment. we have given you all a copy of my news book which just published yesterday. it looks at the history of how we ended up here but also paints a picture of what the implications are when everybody becomes ss digital, connected, sensorized. we see a world where that impacts every experience we have and we'll get into that as well.

larry, let me turn it to you. perhaps you can spend a minute and introduce yourself and robin as well. >> sure. thank you. thank you to the club. and congratulations on your book. i have the privilege of reading it in manuscript. i can say with complete confidence it is going to be a terrific success. and i think it encapsulates a lot of the same kinds of technologies that i've been looking at in the research i've been doing with the basis of the book last year, the big bang disruption. it is more of the same. i think we certainly talk about ces this year but i think one of the big themes i want to look at is what we think of as the second generation of disruptive

innovation. 20 years ago when i first started writing about these trends, the industries that affected immediately were the obvious ones. consumer electronics, computing, communications entertainment and media. the one that were using those technologies all along is the core of their offering. what we found in the research for big bang disruption was that now we're entering a new stage where all the other industries is that weren't affected or weren't as transforms, now it is their turn. a lot of interesting reasons to think about. why are some happening thrower than others, or happening slower than others? zblut all the same things that happened the first time around are now start ing toing to creep up this time. that has an interesting set of

opportunities for incumbent businesses and startup and receivers and other interested parties. those are the technologies that you write about so well in your book. we should talk about some of -- as many as we can. >> robin? >> robin murdoch, i lead our global industry that serves our internet and social compliants ash the world. one of the privileges of working at accenture is i get to work with lots of exciting clients. as i chart my history with accenture, i've been working around digital disruption for the last couple of decades. i was working with the music major when napster hit them. their response or lack there after, and i've done a little

work in the console gaming space. i worked on the last three generations. those are interesting for me because unlike the smartphone that we throw away every couple of years consoles, the likes of playstation and xbox, they have to last for a much longer period of time. sao h so the so the product strategy and how you launch them and how they work through your generations is different from the throw away consumer electronics that we see today. we have been lucky since 20 05, we worked on the global clouds. that's interesting because you're making decisions that are quite often a decade or at stuff

like technology that's a two decade investment that you're looking, peering into the digital future and guess where the world is heading. then as you look at the other areas i worked around, mobile and iut, much more false tykele development. amazing development over the past year around the internet of things. bringing it full circle, i started my career with ford motor company back in europe in vehicle development, around electronics. i worked withed for using silicone graphics and the signer glove you put on and you can see your hand. 20 years late terre worked. back in the day it didn't. we couldn't achieve what we wanted it to. to look at digital disruption, we look at the fast pace we see that everything is changing

really, really fast, that there are these long cycle developments around digital technology that underpin a lot of the change we see and the disruption we see right now. though we look at disruption and say it is happening now, a lot of the seeds and foundations that allow that to occur are actually sewed over a decade or so. delighted to be with both of you and congratulations on the book, sean. i've skimmed it. only had a date. >> it is interesting that all three of us both of you talked about time and you talk about it in the book as well. we tend to think of eureka moments where the information is binary but it is part of this broader evolutionary path that plays out over years or decades. that's what we see with the trends that we're talk about

today. we started first with devices that were owned at very high frequencies, televisions were one of first to become digitize digitized. 98% of households have them. you take something widely owned and start there. we have now gone through all of the core devices we have. and we're starting to spill over into these ajazz enddjacent spaces. what do they start to look like. we can go to the end of the story where everyone gets impacted. what is the sequence of events do we see from now until the end of digitization if you will? >> as a republican jewel one thing we have found in our research is that it sort of happens, there is a fame ous

quote arab schark quote. we found in the industries we looked at is you see a long period of gradual change where the incumbents say, all right this new technology, coming, it may eventually affect our core customers or products, but it is happening. an incremental way and we don't really have to worry about it. one day, somebody finally gets the right combination of technologies and business model and they put it together and they let it go and it is facebook. and all of a sudden all the rules are changed. and i think that's sort of the general trend we're seeing. so as you talk about in the book the price performance and size and utilization is good.

you have this moors law type of effect. it becomes cost effective to start introducing intelligence into more and more things. my takeaway last week, i said in an article that we did for forbes was if there was a sort of one overriding message, it was the theme song from the lego movie, instead of everything is awesome, everything is connected. one that struck me is the nest smart thermostat. they have a partner program called works with nest. and the list of partners officially teamed completely bizarre. the car companies, it was the lock company, it was -- trying to remember -- the fit bit. what do those have to do with the thermostat.

and the dryer, whirl poll is part of it. what is go on? >> if you're -- let's say you get in the car, and you've left okay, well the cartels that to the thermostat the thermostat says -- the dryer can be told, they're not coming back so slow down the cycle or in ten minutes before they arrive, turn it back on get a fresh cycle. or you put your key in the smart lock and it says, shawn just worked in the house. this is the temperature he likes, aso adjust the settings. as you work your way through it, you realize that makes a lot of sense. these are different industries. the car companies, the washingtoning machine companies and the thermostat companies and google, all of these -- they don't normally seem like people who would be partners or things that would go together.

once you get to that incredibly low price point you shove a dozen of sensors into everything. the connections become possible and the idea of industryknow, this is the car industry the manufacturing industry. the very idea of industry starts to fall away and you see these very strange bedfellows. >> yeah, and i think one of the things that happens in technology is we have these periods where we move from a scarcity, take a resource and it goes from a scarcity to a surplus. i think about the '60s and '70s where computing power was a scarcity. so we used it very sparingly. universities may or may not have had computer access. there might have been a mainframe. around 84 we take that scarce resource and kind of becomes an abundance. and we start to waste it. 1984 apple, of course

introduces the mcintosh. prior to that time, we never would've wasted computing power on a user interface. a command window. it hadn't been successful and it was expensive because you were having to pay a premium for that computing power. it tends to switch. i feel like sensors are there today where it's gone from a scarcity to a surplus and start to waste it. and when we do it creates these new opportunities or these new marketplaces. so i think about image sensors on phones. we used to only include one image sensor on the back so you could take pictures and then a second on the front and now multiple ones. but start to include a second one on the front and what happens? it changes our behavior. it introduces the selfie. >> yep. >> and we can argue whether that's a good thing or a bad thing. >> the word of the year two years ago not -- >> right. and that's empowered because we

deployed sensors on the front of that mobile device. and so i think if you're in an industry, you need to think about what are the deployment of sensors going to do to the experience that my end user has? >> that's an example of the gradual and suddenly phenomenon. one of the things that's driving the sensorization of everything is an unexpected event which was the smartphone revolution. and it's created this secondary market for all the parts. >> right. >> if you take a commercial drone, a 3d printer. if you take them apart, what you find is most, most of the pieces in them are smartphone pieces. often the last generation of smartphone pieces you now buy them cheap on the secondary market because they've made in incredible volume. >> right. >> that you say, oh, a gyro scope, the cameras, the displays, the chip sets themselves they're being made

in incredible volume for the smartphone market that spills over into the other industries. and suddenly, what might have been years away from a cost of effective moment in which to start introducing these technologies, oops, now it's happening overnight. >> yeah, i think -- i'd say, you know, if you look at the core technologies, you know, i like to think of it in simplistic terms as the device level, huge advances as both of you rightly say at the sensor level. you've then got the network connectivity, talked about these connected devices. arguably connectivity certainly last mile is not moving as fast as we're seeing the devices the advances in devices. i know you've got the cloud that is just, you know, unlocking incredible creativity. but i'm struck by you know at a technology level there are those things happening. but there are three other things that i think are almost as vital. and i think the reason we're seeing the explosion of

creativity and everything you're seeing is not only the technology development but also the fact that there are kind of open eco systems for development. so if you're a small start-up today, you can now conceivably go into the hardware space. you can work with a variety of different players in the supply chain, you know, shenzen to amazon -- you can get into the hardware space and the software space we've seen many years of open source now. so, you know, you can standen o the shoulders of giants. with android and ios, take those two, and that's 1 billion customer accounts. 1 billion paying users that you as an individual developer if you're willing to sign up and develop for android or ios you can access. well, that's unique, that's something that's happened over the last few years.

and then sort of back to your world, shawn you know just continual rise in consumer electronics spent on consumer electronics. and what's fascinating in that space, is not only are we spending more and more on consumer electronics as the expensive other categories -- opening up and so that kind of feeling of spend in these categories is phenomenal. it comes to the point of how many units of the apple watch will be sold? and it's what's your proxy for how many apple watches will be sold? well, there's such a huge amount of spend that's opening up for these devices. i fully agree. i think we're in an amazing time of creativity in the digital space. and it's almost this moment where we're just seeing the

proliferation of so many so many different products as evidenced. the interesting thing will be which ones of those will survive. which eco systems will survive. and to your point, larry, about you know how will they interact? it's a very good question. you know which services will be the king makers and the platforms that everything will congregate to? will it be ios android some new company we haven't thought of. so i think, you know, absolutely fascinating time, and an incredible amount of change we'll see over the next few years. >> the standards, too. a big part of it. we've been seeing that now on the internet of things the last several years. there's not yet a kind of dominant standard for how these devices will share data and interact. there are three, four, maybe five competing ones. we don't, you know, i wouldn't predict which one is going to win. but we also found in the research that it's very typical in sort of an emerging new eco

system that you will see, in fact, it's a sign of matureity when you see a fight among different possible standards providers and eventually as i say, gets worked out. but until it gets worked out, it's very chaotic. and right now, most of the internet of things solutions and there were many, many more of them this year than last year, but many are point solutions this is the smart baby monitor, the smart electric grill. the smart, what was my favorite? oh the smart yoga mat. that was a good one this year. they're really aimed at a particular solution for a particular audience. they're not really part of some whole, but you can see you know, it's kind of groping towards that. and we know it will happen but as you say we don't know who is going to make the market. >> i think what we're doing is building out the nodes, right? you're building out the nodes of the network and the nodes of the network five years ago were a couple of core devices. primarily pcs mobile phones started to show up, tablets.

but we've changed the structure of the network making the mobile phone right now the center of this network. and so it becomes this hub device for all of these devices. and if you look at many of the devices that are launching, that are connecting to the internet they don't have an interface. >> yeah. >> the interface is the smartphone. that's the view finder into the digital device. i look back 15 years ago, and the -- our digital existence was very separate from our analog existence. we kept those two worlds separate. and we would go online. we even talked about going online or logging online. and we viewed those a very distinct identities. and we see that blurring with that mobile phone really becoming the bridge that allows us to easily toggle between those two rh4midentities, which were once distinct and quickly emerging. i look at younger cohorts. >> which may not be a good thing. >> i think that's an interesting

premise that social norms will start to set in and will start to apply social norms to what we want to have digitized and what we don't want to have digitized. the question now is not, can we digitize it? it's not a technical question anymore. and that used to be the focus. you know, the technical solutions. now it's should we digitize it? and if so, how do we connect it? do we connect it directly over a 4g or 3g or 2g network? do we use bluetooth, some other type of communication protocol? and ultimately, what's the use case scenario? i think that becomes the paramount question. what does that look like for my experience? >> yeah, and one of the sort of -- one of the positive side effects of all this entrepreneurship and innovation, you do get kind of 1,000 flowers blooming and people experimenting and as robin says, it's so easy now, you source the parts over the cloud, build stuff and everything can be done

in such a virtual way that you can really be in the hardware business even if you're one person. and we found some great example of a couple of art teachers making products just for fun. the risk, though, is because there is no head to this monster, it is one of the big problems we're already seeing is concerns about privacy and security. >> yeah. >> which is no surprise. so, you know, a lot of the folks are going into the business of internet of things of you know, sort of smart devices don't have a lot of history, may have no history may literally be start-ups. so they don't understand concepts like privacy by design. they don't think about encryption, don't really think about what's the risk case here? and not so much even the damage, but the bad pr that it causes for everybody when somebody hacks the smart baby monitor and starts talking to somebody else's kid, which is so creepy that people start to step back and say, oh