system. even good people get corrupted because you have to get that money to get elected. >> hello and thanks for watching the show. we'll take you to the cutting edge of education. sebastian thrun now wants to be a game changer in of all things higher education. we'll explore new technologies for doing well and good. a successful micro lender around the world.

find out why the president premal shaw wants to be a new banger to the poor and finally improving technology in government. one amazing woman is leading the charge, jennifer pahlka. you may not know her name today but trust me, you will tomorrow. first, are you ready to throw yourself at the mercy of a self driving car? sebastian thrun swears it will make our roads a lot safer. take a look. >> the nice thing about this kind of innovation is you can use existing infrastructure. amazing for the consumer is one of the problems is the last mile. it's fast, you don't have to focus. it's safe. with a car solution, we solve problems so you can go all the way to your house and drive from the highway to the train.

looking at the car we basically give the driving capability to the car as if he had a chauffeur driving it. sort car to work, one of the google engineers has driven the car manually before, but you have driven the highways. we've driven lots of streets. you get on every street and push a button, it just drives itself. >> it's great to have you on the show. i don't know where to begin there are so many extraordinary things you are well known for but one of the things driving attention now is your driverless cars that you have been advancing and pushing with google for a number of years and now we're starting to see some regulatory changes allowing these driverless cars to actually go out on the streets in a piloted manner. is this for real? >> it is totally for real. we are still in the research stage, the cars still aren't good enough to drive as well as a person, but when that happens

it's going to be good. i've taken my car on commutes, driven it to lake tahoe. it's really, really real. >> the inspiration for you for this, you've been working on it for a long time is a convergence of passions, google and your independent passions have come together. was your inspiration the number of people dying in accidents. >> when i was young i lost one of my best friends to a traffic accident. it was a split second wrong decision in a life of probably really good decisions like quarter of a second to be stupid and he passed away on the scene. while i was doing this work, someone getting food for us died. for young people, it's the cause of death number one in the developed world.

it's more than a million people in the world every year, so safety is the overriding principle, but beyond safety, it's very cool. for the average american, saving an hour a day and doing something more useful, guilt-free texting. >> we'll have to change the laws back. do you think the issue of regulation generally is an inhibitor to the quality of imagination and that innovative spirit not just within the state but across the country? are we keeping up with technological advancement as it receipts to technological environment? >> i think it is an amazingly powerful tool to bring society on the right path, also not used in the best way.

it often constrains people a little too much in my personal opinion and people have a wide array of opinions about this. i came to ative unlimited possibility, the american dream. the american dream comes with the freedom of responsibility of the individual which i believe in. i love the fact that i can build self driving cars on the streets of the united states without running into legal problems and love working with legislators to make them safe. i love working with the various states and so on. as long as we really have a forward-looking vision that this technology can empower people. if we come to the point where we deadlock and forget the emprocedurement of the people, then i take it. >> when do you think these can become commercial? what's a realistic time frame? sometimes we over state how quickly it can go commercial,

but 10 years, 20 years? >> that's the question everybody asks. i wish i had a crystal ball and could tell people. we still have a lot of technical problems. we can drive about half a year without any problems, this is not good enough. the most recent thing was a blowing plastic bag that blew across the highway looked exactly like a deer. our safety driver caught it and everything was safe, but this is not acceptable. before we had these technical problems solved, absolutely during our lifetime, i'm convinced about that, but i hope you live long. >> you want to extend the life of higher education. you've done something remarkable from my perspective. i serve on the board of reege generalities and board of trustees i've watched firsthand what we've done to higher education with cuts to the

budget. and now our capacity to compete in the world, you were for years a professor not just at stonn ford, but carnegie melon but you taught 200 students and you decided it wasn't enough. >> i took my class on line. my personal hero is khan. we listened to a technical talk from him. this former investment banker had more students than i could dream. we got 160,000 students taking it on line. >> i want to repeat that. you were teaching physically in a classroom at stanford to 200 students a career. you decided to put on line in essence what you are teaching in the classroom for free and

160,000 people signed up. >> and 23,000 finished at stanford level performance. >> which means what? >> that means there's more students than all of stanford graduates every year. we had more students than the country of lithuania. >> you say stanford level one tested mid terms and finals and tested them. >> exactly the same way we test at stanford, exactly the same standards for the performance. what that really means is there's a huge unmet need, a huge desire for higher education just isn't met in the nation and world. be it that people are mid-career right now it's hard to get access to higher education without paying an arm and a leg. including in germany higher education wasn't that stellar. i'm a man on a mission not to just change transportation, but all of education. >> this has got to be disruptive from a university like

stanford's perspective if there is a natural attraction to use the advantage of going on line. you can rewind, you can follow, it would have helped me significantly in my education you can make sure you get all the material before you move on to the next topic or the next subject. what was stanford's response? >> stanford was generally enthusiastically supportive because they saw the vision of having an enormous educational impact. they are all about educational impact. there was also a cautionary note, i wrote people a letter saying you just graduated a stanford level. before you flood the market with lots of new certificates, realize you're going to turn everyone's administrative life into a headache with these certificates. actually, it's for free, you go

to stanford, $30,000, $40,000 a year. this has got to be a concern i imagine, even if it hasn't been expressed, vision of institution of higher living that individuals like you can take your vision out of stanford. >> don't worry about the institutions, what about the students in the world and the potential students in the world? 80% of our students at the university aren't currently at the college. if you make it a lifetime deal instead of four years. it should be a lifetime deal. learning never ends. it stops after a number of years and leave you alone. as society moves on, we should be able. think of all the students, since

1982 tuition has risen twice as much as inflation surpassed housing debt, we talk about a housing crisis, it's nothing compared to the education debt crisis. the education total liability for this country exceeds that. we can't operate like this. education is everything. it's what we bring to the world and to our own people. if you are an engineer indictment and fantastic it turns out the automotive industry and bio technical engineering. you have to educate. there's a huge misstep. education should be free goods to people, as free as the freedom of speech. >> in california, we had a master plan a half century ago

that established just that framework, accessibility and high quality with that we moved far away. >> what are we waiting for? now we have the means. >> technology is that means. it's the platform to be able to do these things. >> i think the word is still out there. many companies, but we have a lot of evidence that the more interactive and personalized learning that takes place has a role to play, and if it succeeds to viable off campus education we can do this first with less than a 10th of a% of the cost, for a dollar a student. and we can do it in the convenience of your home, take your own speeds, your own rhythm. you don't to have disrupt your life. there's no need for government loans in that model. there's no need for massive intervention, title four and all these wonderful things. i think there's a way out there

and i'm completely dedicated to making it happen. >> you are not suggesting this is the only way this new way and we have to move away from the old trulyized model. >> life is never binary. there's a wonderful thing about going classes. i think the truth is we have been working with lots of college presidents with the white house with the wonderful governor of california on how to bring these elements into education for lower costs. my dream is $10,000 something campus environment but start accepting full credits in certain institutions, so you can be a 15, 16-year-old and have

half your education done and cut your college education to two years. think of the savings. >> for those not convinced of the experience of on line education, you're taking it to a whole other level of activity. it's not passive lectures. you have a process where you're engaging people in realtime. >> i recommend people spend five minutes and look at the physics class to get a feel. the most notable thing in the physics class is it's taught by i do not brown. he teaches who is not a real professor and he's our best teacher. he's better than me. i'm teaching a statistics class and students say this kid almost, in his 20s is a better instructor than me. the old model of lectures, you want to lose weight and you're going to watch a professor exercise? the truth is to lose weight

exercise yourself. we put the student exercise front and center. we've heard people say they learned more about software engineering than mole semester in college. >> you served your stanford class, that had done both the on line address in class and the overwhelming majority said if they were going to do the class again? >> it blew my mind. normally, these kids, i think i'm actually good professor, a fun guy my 200 students come to see my show and i interact with them. within a week, 170 of them didn't show up. what's happening? >> no, no, there's this new thing, it was actually more fun and you can do it when you want. only 30 students came to class. 170 didn't prefer my presence.

[ laughter ] >> they went to the web. that was an eye opener to me to see how and on top of it, i made so much more student exercise and students learned more. on the final exam, they did significantly better. it was great for the few students who were in the first row but everybody else sit there and say too fast for me. most people know this, they sit in class too fast for me. one size breaks all break the mold. it should be fun. we are born to learn. our brain wants to learn. it's just we have this one size fits all thing. >> we've got this whole generation of digital natives

that understand intuitively. it seems a natural. >> hands down, i do not's a better teacher than me. i thought i was an esteemed professor, a member of the national academy and here comes this 23-year-old. >> sebastian fabulous, it was wonderful to have you on. >> thank you. >> thank you so much. >> when we come back, imagine someone in kenya providing a small loan to a start up in oakland, california. it's happening. loans to small clients in the developing world my interview with premal shaw is next. >>it's the place where democracy is supposed to be the great equalizer, where your vote is worth just as much as donald trump's. we must save the country.

it starts with you.

>>i jump out of my skin at people when i'm upset. do you share the sense of outrage that they're doing this, this corruption based on corruption based on corruption. >>i think that's an understatement, eliot. u>> i'm not prone tot. understatement, so explain to me why that is. i think the mob learned from wall st., not vice versa. >> if nobel peace prize winner is the father of finance, then premal shaw, after pay pal he wanted to take his skills to a whole new level allowing

lenders to get started with $25 at a time. premal, thanks for coming on the show. micro finance for the 21st 21st century utilizing the tools of technology, social media, social movements solve problems of eliminating poverty. tell us about it. >> it's almost like match.com meets micro finance. >> the dating site? >> yes. what's so cool about the internet now is you can see about people and learn about them small businesses around the planet who are looking for capital to get started or expand. these are businesses that are underserved by the traditional banking system. that's where micro finance can be powerful. for example a woman in kenya wants to buy a cow to start a dairy business might need $500. you can come through key.org

find her profile and then make a loan, not a donation, in twenty-five-dollar increments. when her loan funds from you and maybe 40 other people on want inner net, then we have a local field partner on the ground that administers that loan and usually, it's about a year loan, and she'll start paying back every month. if you lend $25, and it's a term month loan material, every month you get $2.50 that lands in your accounts, you can withdraw that money or recycle it and help others. >> you have 800,000 borrowers the last time i looked. >> that's right. >> 60 countries about the world about an equivalent number of people making and lending their money, and over $330 million since you founded it in 2005. did you ever in your imagination

imagined that it would scale at this level? >> no, this has been one of the biggest surprise that been the abundance of enthusiasm, and maybe, you know, we live in a day that the power of a correct idea can spread quickly on the internet. we don't have a huge marketing budget. people are telling people, and word is getting out on facebook and twitter. the cool thing is that when you lend money and you get repaid, it's not that people really want the money back. they love the information of did something go right or did something not go right. it's the information that short feedback loop that is often missing. when you know that something's going right it makes you want to do more and more and tell more of your friends. >> let's go back to that. you make the contribution on the kiva site, identify with something or someone that movers you, their history and story.

there's a feedback loop keeping you abreast of their success. there's a payback provision. you get your $25 back over x number of months. what percentage of people recontribute those dollars? >> 93%. >> it's extraordinary. the whole micro finance movement 1970's, micro finance started taking shape with women in bangladesh. ultimately won the nobel peace prize. was that the inspiration for you? you were a pay pal kid doing well and arguably a completely different track in life and all of a sudden inspire bid what? >> well, what professor eunice pioneered is the idea of social business. it's the idea that he, as well as, you know, myself, really are big believers in business and the markets. if you look at human history a lot of our wealth, our progress

as a society is because of businesses. yet the markets don't always work especially for the poor. you know hyper extreme capitalism we've seen in the last few years if it goes unchecked or is not done in a more responsible way it can hurt a lot of people. >> yes. >> so, i think what we want to do is bring more humanity to business. it's a full approach, we're head and heart as individuals. it's creating businesses that serve the poor. if you make and have it run sustainably, reinvest projects back into further services for the poor. guiding kiva is how do we continue to make sure -- there are billions of people who lack

access to finances, while i have three credit cards in my packet. we want to reinvest kind of any surplus cash into expanding and reaching more people. that's something we both believe in. he's an absolute saint. >> so the question i imagine some people are wondering needs to be asked and answered, is default rates. you make contributions to these small contributions $200, $500, the default rates i imagine people would expect would be relatively high. what are the default rates. >> 1.1% on the $330 million it's raised. there's a 98.9% retainment rate. people ask why is it so high. there's a couple of factors. in micro finance you'll see there is group lending that's happening, which is you lends money to a group usually eight

women. those eight women have kind of self selected based on who they trust in their neighborhood and in their village. so financial collateral or credit score your reputation in your village counts. they self select into a group if one of those eight women, her cow dies, the other seven women will chip in and help cover her. the reason why their future loans at an affordable price is contingent upon that group. that's driving higher payments rates. it's the reason a lot of us pay back our loans today's, because we want to preserve our credit score, saying we want to preserve our ability to get access to future opportunities at an affordable price. >> how does that translate now to the united states domestic lending? you started something called kiva city in detroit, new orleans, recently los angeles

the idea of eight women and a cow, how does that translate domestically. >> domestically, we don't see borrowing groups as much. the theory in the u.s. is that people are more individualistic. i think there are exceptions. you have communities here that are pockets of, you know, recent immigrants from the same community that might approximate what you see in bangladesh or villages in tazinia. the default rates are higher in the u.s. >> give me an idea. >> 90% to 95% repayment rates which is great and there's still a long ways to go, but what we'd like to see actually, is and this is the thesis of kiva, if i can participate in the journey of a small business, i think i'd be willing to

reschedule. go ahead gavin if we went out to dinner and you forget your wallet and you're hey can you spot me 50 bucks i'd say sure, get me back when you can. it's based on me kind of trustedding you, you knowing me, all of that. that's what we think we can do with the internet. when you can see somebody's story, it's powerful and deep in that personal connection. this is the way we want to continue to direct kiva. we think the lenders will be patient in ways that the institutions would never be able to afford to do. >> big banks the cost of servicing a loan, it costs just as much a service a $500 loan as a 500,000 but the return for the bank is substantially smaller, so that's why there's this market, this dessert of contribution coming from the banks in this sector. >> that's right.

i think it's unfair to say that the banks are bad. the banks are just trying to operate a profitable service of high quality that's valued by the people that they serve. that serves a lot of people, and it helps, you know, helps our economy, and yet there are people who are left out, and they're left out because they're perceived to be too risky or the amount of loans they're looking for is too small. a lot of banks in the u.s., if you are a small business just getting started and want a loan of $10,000 it's not worth their time to underwrite you understand your risk and make a loan to you. they probably won't lend to you until you hit a $50,000 loan ask. on the edge of the banks there are about 20 million small businesses that are currently left out not really bankable in terms of the loan. >> micro businesses, one or two people. >> usually employees, five employees. what's really great statistic that i heard recently, because everyone's talking about the

jobless recovery right now. if one in three of these micro,s would hire one employee, we would have full employment right now. i think this is the power of micro finance of supportedding local community development financial institutions technical assistance providers there's a very important eco system to nurture here. >> success leaves clues. i imagine your model of success has been replicated elsewhere. have you seen similar efforts? >> sure. nearly every week, we hear, you know, we're the kiva for x for student loans we're the kiva for... and this is fantastic. >> are you going to fill in the student loan question. >> we're excited to do student loans, we think that is really powerful. getting financing to go college

totally changed my life. i think a lot of the viewers out there can identify with that. what we'd like to do, 50,000 people are coming to the website every day. we'd like to open it up oh other ways that your patient capital can make a difference, not just helping someone start a small business, helping someone go to college, helping a woman in tanzania buy a cook stove and over time, she can pay that back and that's good for her health and the environment. my sense he is that we can expand into so many categories, but right now it's like the preseason in the internet. what we want to see is a lot of things proliferate and easier ways for every day people to get empowered and involved in $10 and $25 chunking by getting involved with others.

>> you should be extraordinary proud. it's really an honor to have you on the show. >> thank you. >> thank you. >> she calls it a peace core for geeks. jennifer pahlka joins us to talk about her battle for innovation in government. coming up next. >> there's not a problem that hasn't been solved by somebody, somewhere. >> a direct line to the gavin newsom show. join the conversation. there she is ! hey, i got a leak !

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axes on >>the rich, you're going to destroy our economy." not true! >> it's newt secret that too often technology coming out of government doesn't work for taxpayers the way ads seem to

work for consumers. jennifer pahlka and her coworkers are trying to change that. i love code for america. i'm a huge fan. started in 2009 and what is it that you're trying to achieve? >> well, we want the citizen internet to work as well as the consumer internet. we've come so far in the past couple years. our lives are changed by web apps and mobile apps that make things convenient and so connected to people, but the government sort of has been left behind. so if we were able to work with the government through apps that were simple, beautiful and easy to use wouldn't we feel different about government and live our lives in a fundamentally different way. >> what is code for america it's a fellowship. you call it a peace corps for geeks, taking experts in technology from the private sector and place them in government institutions, primarily local government to do

exactly what? >> yes, we are a service year program. the same way that teach for america called on graduating 10 years to go teach for america we're saying the same thing but we're talking to the people that have he's skills that are so desperately needed in government super talented developers and designers making twitter and google and all these things we use in our lives we're saying that's great but take a year from your lives and give it back to your country. we work with city governments we think that's the level of government that people can relate to, and our fellows who are so talented and chosen from such a wide range of people really get that, too. they like working with city government, because they can see the changes right away. >> you've gone through a number of iterations now. how successful has this been? >> we've been remarkably successful. i think by the standards we set. one of the standards we set is that if you want to innovate,

you have to experiment and if you're going to experiment, there's going to be some failures. if you hold government to the standard that they can never fail, you are guaranteeing they will never innovate. we've taken a venture capitalist preach, put a lot of projects out there and see what works. we've had great stuff that works. we've had city's apply through this competitive process, we're choosing seven or eight cities for next year and we had them apply with a particular probable area. for instance, two cities this year are date and new orleans and it's no surprise, they wanted us to work on blight issues. they both have problems with blight. they both have problems communicating what the city is doing with the blighted properties to the citizens, figuring out how properties should be reused. that's one example of an issue that we come in to look at. the outcomes are the applications themselves at one level, which is very important.

>> when you say apps, just the kind you get on your android or iphone apps to solve governance challenges for solve issues associated with government, but to have the ease of use and the design that the private sector provides. >> what we say and has really been shown through pretty much everything that the fellows have built last year and this year, is we can create interfaces to government that are beautiful and easy to use. >> are you going true make government more business like or government more like the internet. >> yeah. >> what does that mean, more like the internet? >> there's been this trend of lets make government more like business and there is something to that. we are taking it a step further. it is more radical. the internet is this open platform permissionless, you can build whatever you want on the internet.

maybe no one will use it, but that's the beauty of the internet, what really works does get picked up and move forward. when you think about what you really want government to do, you want it to be a platform for citizen to say create the communities they want to live in, to help each other. you want to create this sort of generative aspect and we see that in some of these technologies that are being built. they are letting people not just express their opinions about how government can use resources but letting people use their hands to help out. it's not just about opinions. it's about, you know, we need to all pitch in. we need to actually feel some responsibility for the communities that we live in. >> when we come back, how a possum and a trash can helped neighbors help neighbors without government getting involved. we'll have more with jennifer pahlka right after the break.

>> we talk a lot about the influence of money in politics. it is the defining issue of this era. the candidate with the most money does win. this is a national crisis.

>> we're back with jennifer pahlka, co founder of code of america, a non-profit working on innovative tools for government use. we talked about the idea of not making government more business like but to look at government as a platform. >> if you think about it, the way that we're thinking that government now is everybody goes to some central resource, you know let's talk about maybe animal control. you have a problem, we had this great story that happened in boston last year, citizens looking for help with a possum in her trash can. the model is, you call up somebody in government and say come help me. every citizens problem is one more thing hitting the tax base. well, we have an app there not something we built something our partners in boston built that allows someone to put in this service request to the city through their mobile device or

perhaps their web browser and that information then was public. anybody could see it. then in that, this case of this woman reporting a possum, turns out her neighbor saw that report walked over to her neighbor's house turned over the trash can and the possum went away. >> that was the solution. >> that was the solution. >> so you can start to see how instead of every request going out to government when you make those open, build the architecture in an open way, you create the possibility that people of helping each other instead of always asking somebody in city government to take care of it. this is one way you can start to see an architecture that looks like the internet. the great thing about that is not only does it scale but instead of costing taxpayers money, it strengthens enables. you've got neighbors helping neighbors. we think we can do a lot more

with that. >> let's talk about your apps. you've talked about the dozens of cities competing to get your fellows working with them. when you started, it was four cities. philadelphia, give me examples of success. >> let me tell you what they're doing in philadelphia this year, which is spreading like wildfire. they're working under the philadelphia 2035 plan city plan, long term, how do you get citizen input? you have a couple of meetings throughout the process they are invited to they're 6:30, downtown, who can go, right? it's not a representative sample of citizens. >> quite the contrary. >> but they have very specific questions. the team created a simple text message interface and a bunch which beautifully design the posters and put them up contextually, you know, relevant to the questions they were asking. so, if you were in city center

and in philadelphia you'll see a poster asking you for your ideas how to make it more kid friendly. you can text that answer to the number on the post-er. should we extend this transit line. you'll see that waiting for that bus stop, right or that rail stop. now that's fantastic. they're getting way better date that very cheaply and easily. >> there's not a central depository you have to express your opinion during these two hours. it's a dialogue that are happening every day in random places throughout the city. >> exactly. they say this is what we heard these are some of the ideas or more people voled yes than no. you don't hear that back. you think government is not listening. we have a problem with government listening and showing they're listening. even if you voted to extend the transit line, at least your part of that. >> that's a successful example

in philadelphia. boston i read about successes there. >> one is called discover b.p.s..org about that there was an article that ran in the boston globe saying how hard it was for parents to get their kids assigned to the right public schools. it was a mess. it was essentially a mapping problem. they asked parents to read a 28 page printed brochure in tiny type. it doesn't tell you which school you are eligible for. the mayor asked the fellows can you do something about this. in about two and a half months, one of our fellows joe mahoney had a very simple web application where you type in your address, do you have any kids in school. it shows you a map and with a

dot on the schools you can go to. basic, simple modern web app. we were told this went through procurement through regular government channels would have taken two years and $2 million. >> you go through a procurement process, open bids, r.f.q.s r.f.p.s, no reason to understand these things, we don't understand them. open competitive bidding through committees, budget cycles, two years and how much? >> it would have cost $2 million. >> it cost how much doing the work? >> basically after you pay the fellows, nothing. if you think about it, one guy and two part timers, two and a half months. it's not that much. if you think about it, why do we have all of these procurement rules? because we ask government to be that safe. >> yeah. >> well, it's not always government's fault. we have to think about what we've been asking government to do. >> you don't traditionally

connect government and creativity. i guess that's fundamental. the gamify occasion, the ability to use the tools of technology to solve problems, not just complain about problems. i love the work you've been doing. thanks so much for being on the show. >> i really appreciate it. thanks so much. >> you heard some fantastic ideas and vision this is hour. how do we get to the next level safer cars, loans without strings attach and smarter government. my thoughts on all of that, coming up next. >> i want to focus on the folks that are making the difference. >> here's how you can connect with the show. >> i'm an outsider on the inside. >> ideas are the best politics.

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