you will fall behind. the global average is rising. we have got to get serious about this. i'm here with sebastian. >> it is important to be creative about this. to reinvent education today, we have to reinsert every student to go exactly the same pace and think exactly the same thought at the same time. an industry of drones. if you spin this a little further, why wouldn't education be as much fun as a videogame people play games can compete for prizes as part of the class experience as much fun as anything. why shouldn't education be like they say it's boring and there's a lot of old-fashioned things we can perpetuate that's not interactive and we try to retain it. i think we should be

creative. >> a man. amen. i know my species. i happen to legitimately think this is one of the most important topics of conversation that we must be having not just here in california, but across the country and around the world. this is code red and we've got to wake up to this remarkable world all of you have created are around us and the one you have created day in and day out. our educational system reminds me a bit of kodak. you think you're doing fine, your quarterly reports come out and the world you invented is going against you. we have to wake up or we will end up down that same path. >> scrub that. you see at csu.

no finer institution of higher learning in the world, but we can be so much more but we have to be willing to invest in our lead. if you don't invest in the future, you are not going to do well there. >> i want to put in a pitch for the entrepreneurs here who do amazing stuff. ofre's a whole bunch wonderful activities that really shape the future and that activity is the important thing going forward. >> thank you. >> thank you for having us. [applause] ♪ >> michael moretz is a venture capitalist and chairman of sequoia capital. he spoke at the techcrunch disrupt operant about the technological revolution he calls the data factory. ♪

[applause] >> good morning. you can tell we are sitting right here in the center of the world technology because this little clicker doesn't work wirelessly. a bell andcted to then to a light and there's a gentleman that actually moves the slides along, so here we are, right in the center of the technology universe. thank you very much for having sequoia here in the conference this morning. i want to spend the next bit of time sharing some work all of us at sequoia have done over the last year or so trying to distill our thoughts about where we are investing and how we are investing. share a few ideas with

you that are a little rough i hopethe edges, but will give everyone the sense that right here between san francisco and san jose, something utterly remarkable has been going on, is going on and will go on -- something that has only occurred in one or two other places in the whole course of human history. like to go would back and give you a snapshot of life as it was in 1750 and take a close look at the slide for a couple of reasons. one, this farmer with his plow, his most important tool, in 1750, was not living all that differently from other farmers 2000 years before.

he was aiming for self sustenance until his emily and a few close relatives and friends. he did not think much about selling his produce and was disconnected from consumers. the idea of going to an organized workplace would not have crossed his mind. a very small portion, about as small as silicon valley is at the northwest of england, the first phase of the industrial revolution began. take a look at this slide. dramatic change in the organization of the workplace. thecentralization of tools devolution of the textile

industry that changed everything. instead of the farmer working in the field am a people for the very first time were organized in a workplace and in a factory. the factory had a set of and the products were the for consumers, and whole raft of communication and distribution facilities were to help these businesses come about. but the big, big change was the move to an organized workplace. second phase of the industrial revolution occurred here in america. detroit and largely , and apittsburgh

confined geography much like if you valley is today. look at the organization of the workplace, it did not change much with nearly textile mills and the growth of the steel mills and later, the growth of the automobile factories. again, what i suppose people called lou collar workers went to work in those factories and over time, a lot of white-collar jobs were created in and around those factories. but the factory itself was also isolated from consumers. the feedback between consumers was to say the least very lengthy.

history as i'm going to bore you with this morning, but i wanted to go down memory lane because i think it's going to accentuate something. we call it the data factory. i want to spend a couple of minutes six lightning the powers that have enabled the enormous rise of the data factory in the last 10 years. so a few quick thoughts. the explosion of bandwidth and the change here has been unlike anything anyone has ever seen before in any comparable time over the last 25 years. the second is in storage. it's hard for us to imagine today that about 14% of stored

information existed believe it or not on vinyl records. then we all know what has happened with computers and computation. 25 years ago, most of the competing power in the universe -- computing power in the universe was in a pocket jacket later. obviously, that has shifted dramatically as the years have gone by. the other thing that has helped consumersrything for and workers everywhere and these data factories is the absolute massive explosion of applications in the last 40 years. todayor us to conceive

when we have as you see on the right, millions of apps available on a little device that just 40 years ago, there were barely 200 computer applications running on the most popular set of computers in the world. this is the final idea about what has happened. think back to the loom, the assembly line, and the tools in the automobile factory. what has happened to the cost and dispersion and distribution of tools in the last two decades? there has never been anything like it ever in human history. is 1973.t

or apple iphone, the phone you hold in your hand, the equivalent cost of that was about $33r million. bear in mind those ibm computers did not have cameras, didn't have video, audio, they didn't have accelerometers, they didn't have gps. beingsefore have human been furnished with tools as powerful as the smartphones you are able to buy at the drop of a hat today. i would like to put into perspective is the enormous explosion in the size of these tools.

the numbers you see on the slide illustrates the peak production anywhere in the u.s. of automobiles that peaked in nearly 90s at just over 15 million. haveng machines that changed lives over the last 100 everybody in homes and apartments. a peak of 17 million. around 700 million, $33 million computing facilities will be put in the hands of people all around the world. there has never been anything like it. the other thing that has changed, particularly if you are a small business, particularly if you're an individual looking

to set up a small business is what has happened to the price of all the other tools that you need to operate your business. and at the left-hand side imagine what all of these things cost 10 years ago, let alone 20 years ago. today, most of these functions are free or very close to free or can be rented by the sip. same goes for the different functions you need to operate, whether it's a big company or small company, the services that were unavailable or you paid an arm and leg for a decade ago again are verging to free. so you might well ask at this juncture, what does all this mean?

areink the changes extremely profound and it has given rise to something that -- for a lack of a better days -- lack of a better phrase, we call the data factory. let me explain the composition. you will look at the next few slides and you can think of other names that should be on the slides, but you are right. there are companies that specialize in the matching of obviously being the largest, but there are specialty companies that operate in the center matching demand and supply. there are a variety of companies that do the same for the movement and raising of money, ranging from a company like kick starter and companies like kick starter and indy go-go that have

helped a lot with unconventional money raising to companies that are not on this slide like but center,trike, the largest and emerging category of companies in these data factories are the real low -- real factories global data factories. the range and the extent of tools -- think back to the loom and the auto factory, that they millions, maybe hundreds of millions of people around the world with. this has never happened before and it is changing the complexion of our entire lives, starting with the work lace.

this is a true represented the -- representation of the data factory. it has far fewer employees and workers than some of the other examples i gave you earlier. here,ll also notice that and this is an attempt to characterize tools supplied by the data factory how a company like google and amazon and linkedin and others, tools that allow people to contribute and withouthe data factory the data factory having to pay for anything. sits in thetory middle, far more closely to connected to consumer then any auto factory ever was.

immediaten provide enrich feedback and it is all maneuvered and massaged by the central -- central data factories. i will spend a moment explaining some of the implications of all of this. here, i to get across the notion that the data factory benefits from unpaid contribution from lots of people. the, to give a sense that data factory is actually selling a whole bunch of services that, most importantly, allow the purchases of those services to make money for themselves. powerful theow how addition of these data factories is becoming.

so here is one example. this is the only example i will give you of unpaid contributions . think youtube, think yelp, think awful bunch of other services and is the same precise thing. ago,din, about one year started to beef up its content effort and invited people to contribute content. among the contributors are bill , peoplend the president like jamie diamond, they are all contributing content to linkedin for free. linkedin nows been ranks among one of the biggest business sites online in the world and the result has been that traffic on linkedin today thankstiplied eightfold

to a whole bunch of unpaid contributions. interestingly, i would like to talk about what happens when tools are put in the hands of individuals and i'm going to ripple through a whole bunch of ,lides quickly -- quickly starting with three or so examples. i know you heard from the founder of lift earlier, of places really helping people who otherwise would be lost in the low-paid part of the american service economy. done forhat goober has one fellow named sam taylor. local shopping service where this college student is to gain employment, make money, pay rent in a fashion you

would not have been able to do. evident as what i would think about as dollar per hour jobs. whatare some examples of the tools of the data factory should it out to people all over the world. the, going to start with bigger examples and work through to the smaller one. million enabled 25 sellers around the world, including people like those at the bottom of the slide that they could not have managed before ebay. same thing for google which transformed a small business called king arthur flour thanks to the way in which it enabled a little company to get business

area here is an example of youtube. gone from an unknown, but inc.'s to the power of youtube's data factory, they now have a business and following of their own. but probably the biggest eta factory in the world is amazon. sledfellow here has a business that was on its back before amazon came along. thanks to the amazon tools all over the world. put hands in the tools of authors that have transformed their business and allowed authors to get paid far more quickly than they would have done yesteryear. the course of perhaps 60

months since the inception of kendall and kendall direct publishing, there have been a whole bunch of million titles sellers and people making far more income than they could have done in their previous life as normal writers. here's ab services, slightly different example, but it's the same thing, taking pinterest from this tiny little service to 17 million people with fewer than 12 people at the heart. a few other very quick examples, a lady called kerry uses a service and thanks to that, she distributes products all over the world. the tools did not exist 15 years ago. -- people were making a andificant amount of money

they were helping put kids through school, etc.. not exist tools did and this new data factory is enabling a lot of that. a, this lady had a very small real estate business in san diego before the advent of the company and thanks to the services it invites her, it has allowed her not only to but torm the business buy a business. this lady is in canada. this lady has business all over the world thanks to the services house divides. square.an example of they make bracelets and costa rica that employees college

students or contracts with college students all over the country that can sell these bracelets and provide income for people in costa rica thanks to the square service. and then ixamples will begin to wrap up really quickly. unity, there's something very similar for the whole ecosystem of video developers. aboutct you all to know individuals who have been able to build businesses thanks to etsy.-- thanks to this means life is very tough for most people in america. it means life is very tough if you are poor, if you're middle class, it means you have to have the right education to go work at a place that has companies on the right side.

google employs 40,000 people. general motors used to employ 700 thousand people. today, apple including retail employs 80,000 people. us, it is not like tough. median household income is done at last 40 years. it is brutal. memois what happens to the wage in america over the last half-century. we are very lucky here, we are fortunate and we belong in a really small minority. explosion of tools, it has not had much of an impact that 20espite the fact million businesses in america are self-employed is mrs..

despite the fact that those in spite ofw work the tools i just mentioned, hasn't had much of an effect on gross gdp for two reasons. one, because of the decline of the manufacturing in america and thesecond is because difficulties we have had attracting talent to america and keeping them in america. 600 or so to people from spain where there are thousands of people who would be qualified to come work and help put the personal revolution on its way. but the most important thing and the reason it has yet to bring the benefits to america we have talked about with those earlier

revolutions is that this is the first shift in industrial and technology revolution that has aroundd simultaneously the world. technology centers are centered in the middle part of england. , the explosion of these data factories is occurring all over the world. theseive you examples of companies, the same thing is happening in different geographies, most noticeably in china. alibaba areies like that very similar things american companies are doing today. than half of the

most valuable internet companies in the world are not in the united states. that has never been true for the emergence of a huge, abrupt shift in the organization of , that has never occurred in human history before. i see my time is up. you now all have a caffeine break and i appreciate very much being here on behalf of sequoia. thank you. [applause] >> we will have more from the recent techcrunch conference coming up in a moment, beginning with the conversation with the founder and ceo of snapshot, an online photo sharing service. that's hollowed by a look at the future use of robots for household and business uses. later, the ceos of linkedin and twitter on the futures of their companies. we continue our encore presentation of q&a with espn.com columnist craig

easterbrook. he talks about his book, "the king of sports." here's a preview. >> today, most politicians are hacks. -- > >> what brought all of that on in one paragraph? >> congratulations for being able to pronounce that word. chapter where i ask whether football has become a cult. you see some of the tents -- some evidence of this the book.

coaches that have become revered figures and justifiably in some cases. if all men were like tony benjy, the world would be a better place. but coaches have become substitute father figures for a lot of american society. we don't believe in politicians, businessmen, clergy, it intellectual's -- clergy, intellectuals. coaches practice tough love and i think that has to do with their high standing in society. today atr discussion 7:00 eastern here on c-span. fromht at 9:00, highlights the second season of c-span's original history series, "first ladies -- influence and image" which looks at the lives and impact of first ladies. tonight, edith roosevelt to rosalynn carter, including newsreel footage, archival video clips, on location tours of homesteads and historic sites, radio broadcasts and more,

tonight at 9:00 eastern on c- span. >> now, a look at the 800 million dollar photo sharing application called snap chat with that company's founder and ceo, evan spiegel. this is 20 minutes. ♪ rex hey. what's up question mark >> not too much. great to be here. >> great to have you, man. it has been a really long time since we talked a lot about six hours. how have things changed? >> a lot going on. do you want a snap chat update question are >> last time we talked, it was like 200 million snaps a day. >> now we are seeing 350 million snaps every day. >> that's a big number. >> it is super cool. sought a 50% lift on android bases great it is

starting to compete with the iphone crew which is very exciting. >> let's talk about the demographics. , all about the teens, but parents are jumping on it. we were talking about how an older group is using it. what is that looking like western mark >> i was just snapping my mom this morning. going -- we are growing across every demo. i see 16-year-olds using it at the mall and 30-year-olds using it at the airport. >> awesome. things that of disappear and don't last forever on the internet, it is clearly working for you. do you think other apps or social services are going to >> i think the? fundamental imus of snap chat is

that it is better and more fun if you delete everything except the things you want to save the way a loty, of technology works is that you save everything and delete things that make you feel uncomfortable. companies will be interested in this philosophy. that saving those things are important. >> you guys do the photo thing and what is it, like 40 characters? >> the between 30 and 40. >> are you guys going to go into a different vertical? time spent a lot of digging at the future of the product. we hired a sociologist and we have been thinking about what we want to build. he named the term digital

dualism, thinking about the digital and analog world, saying it is separate. trying to take experiences in the analog world and bring them into the digital with something like video chat. but it turns out that video chat is kind of lame because the connection breaks up. you could leverage all these aspects on the digital world. you never have to say goodbye. people acknowledge the hybridization of agile and analog area products will be billed in that vein. >> what will they look like? >> if i told you, i would have to kill you. thinkingr latest

exercises has been around the social media feet. probably one of the biggest innovations in social media as of late and supercharged the growth of a lot of these some bunnies. but the interesting thing about a feed, the more content you consume, the more you look at, the farther away in time you get from your friends. we go to a social media site to catch up with your friends, you end up getting stuck back with toward one year ago. we have been putting a lot of time into thinking about the feed. socialare one of the few apps out there that does not have a feed. without a feed, the ladies companies are monetized is with a feed. -- are you going to

introduce a feed? >> it is one we have to think about because we are a business and have to make money. we think about monetization has changed substantially. to a role model which is a big company in china that makes a vast majority of the revenue on inapt transactions. when they really had to make money, there was not a huge rent advertising market. we're goingot say to be a big company. that's a scary challenge, rather taking millions of dollars

in display ads, we are going to take what people want. great fortunate to have long-term investors that believe in our ability to do that area there'll be great innovation along those lines. >> we talked about that a few months ago. there has been a lot of floating orund, maybe you had links than 33u have more characters. any sense about what we might be buying from snap chat? >> stickers. >> ok, sexing. ting for ahave beensex while.

they can't understand why young kids want to send messages that disappear other than to be doing dirty things. you have not had an opportunity to stand up and be like no, this is what's up. i'm giving you your podium right now. what's the deal with it? >> every time i get this, i have to remind people that snap chat is not a great way to share pictures you want to be secure because people can take a screen -- can take a screenshot or people could trade your trust area my message is we cannot prevent people who are financially motivated with enough time to betray your trust, we cannot prevent that. sendnot a great way to inappropriate photos. >> i'm going to put this right in your mouth. you told me at one point if you t, why wouldd to sex

you want it to disappear in 10 seconds question mark >> i thought that was off the record. competition -- you own a space, you own ephemeral messaging. who do you consider your biggest competitor? >> i think in general, we are going a totally different direct chin than traditional social media. so i'm not sure we view them as a direct competitor. we want to make sure people have those spaces to create and save really pretty photos, things they are proud of , and i want to support the growth of those companies that i think wethat area are going a different direction. >> instagram is the hot dang

right now. are 130 million active users on the site and it is the hot new thing. not to like something that makes you look ready. maybe in terms of you open your phone, which at are you going to choose? it's really about making sure they look great. i don't think they are products that are directly competitive. if anything, they complement each other. >> facebook is big in social. are you a user? what do you think about facebook? think i have an account. >> you think you have an account? that's not promising. >> we have a snap chat page, so my picture is the fish. mark.ly respect

he's done an incredible job. they've done some great recent innovation and they have shown they are going to be around for a long time. that's right for the industry and we think it is great for us. >> what about hope? >> they were clearly copying you productd released the and it was number one for like a i haven't heard anybody mention it and i haven't seen any updates. do you consider it a compliment? you are a small company for us and it really showed the snap chat community is special. it was fun to see all of the snap chatters around the world. that was great. we talked about as the greatest christmas doesn't we ever got.

build coke. did they push you for an acquisition before that question mark >> we have not received any formal acquisition offers great >> have you talked with him? >> i have talked to mark a few times. >> you are snapping with him? money round, you got 60 million. can you tell us about that experience? >> that's a good question. i tend to build those relationships over a long time to make sure investors understand and support the vision of the company. it is less of the pressure is for us toto the deal bring you into our family and we feel fortunate to have an outstanding and thoughtful

investment in our company. >> i'm sure your server bill is out of this world. funding soon? what's that going to look like? are we going to see revenue before your next round? >> hard to say, but i hope so. >> about revenue, i have another question. we talked about inapt purchases, but what about -- they are finding their own way to get on. follow us on snap chat. are you going to get an opportunity to market through the app? >> we like to support their effort. is interesting in supporting that, upcoming artists, people trying to be

actors, that is a lot more exciting. people who don't have a social , we've seen a lot of companies take initiative, like taco bell. they are not the ones i see as needing a lot of help great i like to create a space or people who have lots of talent but not a lot of reach can get an awesome and informed audience. >> what would that help look like? >> i can tell you that. >> it's like sending snaps appear. lawsuit is happening. i'm sure you're not going to say a whole lot about it. is there anything that has come up with all of these court documents that you are upset about it you don't want up there? >> it would be inappropriate to comment about pending litigation. >> there is one thing i did want

to know about the lawsuit before we cut away from it, there's a text you sent to reggie that said i want to know how you came up with disappearing text messages. do you wish you had that cap then? is wee interesting thing look at a lot of competitors in this base. there's a company called stealth text focused on sharing secrets that would disappear because you want to cheat on your wife or something like that. we thought there was an opportunity to do something around self-expression. it's interesting to see that idea explored in many ways and i feel fortunate reggie shared that desire with me. >> ok. snap chat micro is the new app coming out, your first foray off of the smartphone.

that?u excited about it does not really died with snap chat in my mind. >> we think it totally does. we think part of that is reducing the amount of time between seeing something you want to share and really sharing it. maybe it takes a while to get something out of my pocket and get something out of that experience. playing with the prototype of the watch, it was easy to grab it and it will pop up on your phone or you can send it. there's a lot of delight around that with two seconds and that of seven. are obviously interesting. i think they are very popular and we want to make sure we are playing around with them. >> how about google glass? is that something you might consider?

>> i don't think so. >> and you would go for the watch but not the headset? >> i think it may just be our teams feeling about the product. i think the glasses tend to be more invasive. technology mill delay, i don't think that acknowledges the people standing around the person wearing glasses. you feel like you have a gun pointed at you and that does not experience snap chat or make snap chatters feel comfortable. that's not something we are willing to explore. it would be interesting to see these products incorporate a recording light so that you knew. that would be fun to see. >> snap chat is already this thing that has a ghost around it. people want to find something that might the wrong ordered he

just because these messages are disappearing. then you add the layer of you might not know when your photo is being taken. >> i think there is some concern but it's more in the vein of that being a late full experience like a james bond thing. that may be due to the fact that we like to have faith in people. we think people are generally not mean. >> what about sharing with friends? people want an explanation. when the content i'm sending is right but, why are you letting people live who i am talking to? >> at the great question and we get it all the time. when we first built snap chat, there are questions around is this an app to cheat on my significant other? we wanted to show people that sign up for the service that this is friends talking to other friends.

helpful for people to share secrets. we are all about self-expression and having fun and communicating. if you type in so popular space, you, with no will get five best friend instead of three best friends. >> we found that even the three best friends who are sending out a message to our low group was not enough. we started playing around with the idea of having five. >> i'm flattered. >> you have to send me one and then i will get all kinds of crazy stats. what is your favorite app other than snap chat?

what can you not go through a day without? >> i love tweet bought. i run that in twitter. indispensable. i really like uber. it's a great example of one of servicesrid acknowledging all the power of the digital world. these a signal of some of to come. >> is there anyone in the space you want to learn from that is just doing things right and you just want to take some cues from them? >> i have been playing with front back app. i'm not sure we are going to take cues from them, but it's fun, the way they articulate the personalization of those. i think that's really exciting to me.

>> we're just about out of time, but i appreciate you being out here with me. >> thank you. >> thanks, guys. ♪ >> up next, a look at droids and robotics with engineers and executives of some of silicon valley's tech firms. ♪ going to talk about robots. but first we are going to do something a little bit fun. remembers [indiscernible] the problem with talk o copter is that it doesn't exist.

today.st a dream until are we getting video? -- here ites area comes. slightly terrified. [applause] now that the tough part is out what we are going to , everybody probably has an idea in their head about a robot from science fiction like sea three b or the jetsons. that's all we're going to talk about. we are going to talk about robots that don't look like your traditional robots. it might even be a thermostat.

we will start with those science fiction robots and have you tell us does. t> my favorite robot is kit from " knight rider. po.mine is c3 e. i have to go with wall- >> you came up with this idea for the panel. what do you think on the other betweenthe boundary what makes a robot a robot versus a hardware. >> a lot of people think of robotics as humanoid robot that can move around. definition i think of and we think of is something that can , but the surroundings

device can be absolutely anything. think about and enchanted object and that's what i think about as a robot. >> that is good. that definition in mind, we convince us that what you are working on is a robot or has robot like qualities. making his is about ill things come to life and using software to define them to do fascinating things. for us, we are starting with entertainment. to make physical characters understand their surrounding, they understand what they are life tod they come to make experiences possible in the physical world that have never been possible before. that's our first incarnation of

this in people's living room. it's a little different because we have a different challenge. av's and make them as close as possible to a helicopter without a pilot in it. to go to certain locations, do things, come back. when you build a device that are that -- a device that is intelligent, where does that come from? >> from the beginning, we knew we had to build a machine that would learn from you. we built a team like we would have done, we hired a lot of our old colleagues from carnegie mellon, one of them being our old professor to build a thermostat.

when you realize these guys were experts in a robotics, was it a hard sell? >> it was a really easy sell. once you hear the idea like do a thermostat, first you think i'm nuts. then you realize how big the problem is. they are wasting energy, horrible design issues, it becomes pretty obvious. for robot assists, there's fencers and environment changes. >> you have one or multiple thermometers at home? >> i do. >> to boil down what the value proposition is, how would you say that has changed your home life? >> i don't need to worry about what my home is doing when i'm away. i'm confident the temperature will turn down and not run my air conditioning all day.

off go out, it turns automatically. in california, the weather is mild but for the rest of the country, that is a problem and a waste of time of energy that way. -- they waste a lot of time and energy that way. >> did you feel confident? >> 100%. >> that would have been really hard. bit aboutked a little what sky catch is doing. talk about how it is different from other drone companies. >> absolutely. we are working with really large companies and scaling them with a remote control, gathering information. we can deploy hundreds of thousands of these and we do it all using very high tech

technology taking 8 -- keeping a drone in the air. >> you are mostly building this for industrial reasons? >> that's correct. >> construction, mining, wind turbines, solar panels, that's the range we work with. lacks somebody tweeted at me and i would be interested in getting other people's take on ans -- as we move into industrial complex, are we going to put people out of work? goingsonally, i think is to augment our ability to make better decisions. replace people, but we did a test with c davis and we had a farmer there was very skeptical about this.

not goinge said i'm to use this and when he finally got him to test it out, his reaction was like a little kid. we don't know anything about farming. he was able to make decisions right away. >> do you think that is universally true? do you think the existing world forces going to change? >> we have never had this data set before. just like we never had google maps. members saidam this is google map in real time and more high definition. for management, security, for fulfilling resources when you run out of sandor panels.

you can act really quickly. >> the original product is not competitive with human labor. i know there's a bigger vision which we can talk about, but do you think there is a potential competition from the labor perspective? >> a lot of robotics are actually additive. people have been playing toys and games forever, it is just now we are making the first videogame to replace someone whose experiences are better. it just makes the overall efficiency that much higher. >> again, you talked a little bit about the technology already , but you were on stage at their last event at apple. how many people saw that? the world of racecars?

at first it was just like these guys are racecars, whatever, but in terms of what was actually happening? >> for us it is the tip of the iceberg in consumer robotics. we have always been focused on agriculture and industrial defense space. this is the first time that people could expect the technology to come into their lives and have a big impact. all of our robots are engineered to think. they truly understand where they are and their environment. they have a personality. they behave in a way that you would not expect a physical character to behave. that was in some ways our trojan horse. approach has carried over into almost every aspect of daily life. >> cars, eventually?

>> the funny thing is we do have self driving cars in our living rooms. projects that we think of as the holy grail of robot, that is a good 10, 15, 20 year goal. we are approaching from the bottom up. using it as a stepping stone to do more down the road. giving each of these devices personality? can you talk more about that? context of what they use on stage, each of those cars has a role. aggressive.was something you take for granted in a videogame, but when it , it is in front of you

really surprising. another character might be more sneaky or defensive. another one might be trying to avoid the skirmish entirely. this gives us the ability to program personalities the same way that you would do with a videogame character. >> stepping back from the specific companies for a second, you have invested in companies that could be considered robotics companies. could you maybe talk about what connects them and what they are looking for? >> one of the things we look at is if there is something happening in the technology that enables a new set of capabilities that follows what could be more horsepower in the cpu. it could be just more and more wireless and activity, etc.,

looking for things they get better with time. when you look at nests, all three of these companies, they toh out software upgrades their hardware regularly. what winds up happening is just like baseball gloves that we all had that got better the longer you had it. because of these updates, because of the machine learning, the device gets better with time . this is a new relationship and it is something that we look for when we think about robotics related companies. >> what does that do for planned obsolescence? will i never have to replace it? nest, take ae a look at the speakers in your house. what winds up happening is instead of going to a given customer and saying they will become a repeat customer, you start to think of customers as people who advocate for your product.

for the first time in history you have hardware robotics becomees where products higher net promoters over time. the longer someone has the thermostat drone, the more likely they are to advocate to their friends and colleagues to be purchased. >> matt? is that how you? >> we think about it. we think about the relationship with our customer. we deliver software updates for ,ree, an unknown thing everything coming on the internet. it should get better with time, you should love it more and more as time goes on, and that propels us forward. that word-of-mouth is the most valuable thing. as a growing company, we should have new services to get people

to buy things they did not have before. >> i wanted to go back to talking about coming from an academic background, robotics. boris, one of the things you talked about before was the challenge of going from a university setting and being a for-profit company. can you talk about what you have learned, doing that? >> it is totally ok to use a half-million dollar robot with $80,000 sensors and quad cpu's to navigate when you want to make a product and consumer robotics that people can afford and use. you have to be very clever on how you use the clever combinations of components, sensors, computations, doing things at a much cooler price point than would be possible otherwise.

>> is that something you have struggled with as well? had to fit seven sensors, two wireless radios, a package that was like this big, it had to be able to run for years. that is something you have to do in research. performance.about it.eavily constrained, ship >> people with an academic background, did you have to kind of yell at them for a while? >> the way that it is structured is we have the engineering team that implements those cool ideas. and then we have the guys that know how to ship it, ship it. >> graduate school is a very different problem. the roots are actually the same.

the algorithms only made sense years ago, but now they are finding a great place. >> same thing at dod. flying together, doing different figure eights, it was hundreds of thousands of dollars, you cannot really reprobate that into the commercial world. it can be completely autonomous. it can move into a small little board. >> have you succeeded in doing that? different rhythms to keep it.

>> the goal is to make it autonomous. at thean experiment office of a drone following a laser, following a beacon within without any aid from the outside, which is really challenging. further finding the algorithms without too much sentencing guides, it is really challenging. talk about that same issue from the investor perspective. to what extent, when someone first comes in to pitch you, are you thinking about cost structure? we canof the things that find when someone comes in is how much they loved the product and how much they understood the customer. they want something expensive and reliable. we take a look and try to figure

out pretty quickly if this is someone who understands the customer. i know that is not directly the question you are asking, but -- >> right. his cost one of the starters? >> particularly. for a consumer operation we look the atlantic costly billing materials around $30 or $40. maybe it is higher value added. >> right now you mentioned enterprise and consumer. >> we look at both. if you look at the things going on around drones, those applications could be around monitoring or applying .ertilizer with surveillance those can support significantly higher price points. >> one other thing i wanted to a