what do you do when the most powerful man in high tech says you're a liar? plus, silicon valley's green energy companies disappointed by the energy bill. and when it comes to market share, why it's sometimes an advantage to be number two. all that and our reporter, jon swartz, of "usa today," and leander kahney, this week on "press: here." good morning. i'm scott mcgrew. the car rental company avis has a slogan that says we try harder. avis has to try harder because its another second biggest car rental company behind hertz. and it plays that up in its

marketing. turns out being second is not a bad place to be. >> here's your care package, traffic rules and a map. >> what would it be like if avis didn't try harder? >> that's because when you're number two, you can rely on the number one company to do most of the marketing for you. and it's true for more than cars. take tablet computers. nobody wanted them the first time they came on the market and now thanks to apple everybody wants one. dell and hp have a pretty good chance of selling a few of their models thanks to apple leading the way. the number one language softwar. they raised millions to spend on marketing, but riding its coat tails is a much smaller company called fluent. >> i'm learning chinese.

>> the miami based company sells computer assisted language lessons with almost no marketing budget. we have one of the founders and in fact teaches spanish this one of the offerings. so you've got to start, you can start any startup you want to, and you pick a startup where your main competitor owns, what, 95% of the market share? >> pretty big, yes. >> why would you do that? >> i have a great answer for that. ultimately, and i think this is what really matters, is that everyone at fluent is radically passionate about languages. and i can sit here and say this confidently and i think that nobody can do it better than us. and that's the bottom line. so you ask, you know, why go be this crazy little guy going

against a huge guy. >> because you're better at it. >> yeah. that's the bottom line. if you look at rosetta stone, and i'll give you the quick sum up, they believe that you should learn a language like a small child. and that means having no explanation whatsoever. and being an avid language herner, well, that is just wrong. there's no way you're -- >> you're teaching -- and i've done rosetta stone, where they show you balls and red balls and green balls and you say, oh, i see. but eventually you have some sort of question and you're answering the question. >> how do you get from red ball to going in the street and grabbing a cab driver and saying can you wait for me for five minutes. >> so theirs is maybe too elementary. do you think yours might be more intuitive? >> i think our approach is more real. if you really want to learn a language, then they're going to have to go beyond just red ball and -- >> for instance how would your service differ from what they do? >> basically and that's why we

went into it, we provide explanations and we look at each language from the point of view of english. so each one of our programs is thought completely different. the way we teach mandarin is different from spanish. and this is in itself is unique and radical in the language learning space. and i don't know why this hasn't been thought before, but why should we teach each language the same in if i come from spanish and i'm going to learn italian, the obstacles i'm going to face are not going to be the same as an english speaker will face learning spanish. so that's the key. in rosetta stone, they teach 30 languages, but 30 of them are taught in the same way. the business is great because you have one script and you use it all along the way. so each language takes forever to make for us. we have to think about each language from english and someone have on camera a that

speaking english and speaks the language. and we learned the languages ourselves. i learned chinese. i know what it was like learning chinese. i know what the obstacles were and i can relate to that. >> does their marketing help you? >> absolutely. >> because that's no explanation. i get when i see your red box, i see the yellow box in barns and noble like rosetta stone. you say there are major differences, but from an instant point of view, i get what it is. >> absolutely. and rosetta stone as paved the way and we're thankful for that. >> did you reach a lot of customers through the internet? >> well, basically the way we've reached our customers is completely organically. up until now, the way we've grown is slowly one box at a time, one customer at a time frk and just by word of mouth. and the idea behind -- and from the beginning we as wanted to create something that's very

real, that has very strong foundation because we are passionate about the product. yes, the business is great, but this is a calling for us and personally for me, it's my face on the product. i'm the teacher in most of them for the source two levels. so this is a personal mission. >> ied a plit to knowing next to nothing about your market. so how many companies besides you and rosetta stone are there in this market? is there just a limited number? >> no, there's a lot of companies, but in terms of a luxury -- let's call it luxury language market space, there's a couple, but i'd say it's between us two. >> does it surprise you to say there was only one brand and i want to to create a brand? >> the space didn't really exist before. they invented it. the price point and the whole -- they spend millions of dollars

every month raising awareness. >> which only benefits you. >> absolutely. the bottom line is this. if i had liked rosetta stone back in the day, i would have never got into this business, period. because i would have felt the necessity was filled. >> sure. >> yes, they helped us that they grow and they do all these things, but it also helps us to know that i can do it better. >> what percentage of your customers are dissatisfied rosetta stone customers who maybe decide they want to try something else? >> i'd say absolutely some of them. i don't know the exact percentage. but for sure a great amount. people that really want to learn the language, you go online and you start researching and immediately you'll find that there's rosetta and then there's fluent and you read and if do you a little bit of research,

you'll decide for yourself what's better for. and that's how we've grown. and also the fact that we always wanted to have a very close relationship with the user. and when i mean a close relationship, i mean like cho. i myself interact -- >> you mean a service? >> we talk. if you're a user, you can connect directly to me through facebook and to all of our team and we actually get feedback every day, real feedback. so the world can change and it it is changiing every day, and e need to be able to -- >> we'll stop it there. that's the time we have. up next on "press: here," silicon valley falls in love with alternative energy only to be left at the altar by washington. but the failed energy bill will cost in green just ahead.

welcome back to "press: here." when democrats in washington pushed through another extension of the job wls benefits, they lost all republican support for the sweeping changes in the energy bill. the sort of changes that might have benefited silicon valley. silicon valley is working hard to position itself as a leader in green technology. there are a number of big solar firms both making and installing solar panels and, of course, fuel cell company bloom energy made huge news with its coming out party earlier this year. and not just hardware. software, too, running smart meters and power plants, software helping companies

measure their car about an output, their green effort, and the savings that result. t the company that helps companies track their car about an outpit and imagine if the energy bill had anything to do with carbon. were you horribly disappointed -- it was all going to be about counting carbons. >> if you go back even to copenhagen, this was a lot of excitement away carbon. what our company focuses is on matching alternative technologies. there's $30 billion put into that. pore chun 5,000 companies have never consumed anything around reducing energy. on so it's $3 trillion killy wat hours. there are 300 kilowatt hours in commercial real estate and opportunity to get energy efficiency and cost savings out of that is the market we're

addressing. >> can i paraphrase you by saying the energy bill would have been nice, but there's so much waste out there -- >> the low hanging fruit is not even low hanging fruit, it's fruit on the noor in terms of billions of dollars in energy savings that we could go after. and that's got to be the focus for america because it's not just about gun to the head regulations that will drive transformation, it's about energy independence and you can start that way fundamentally the way i look at it, i could spend $3 billion building a new utility power plant or spend a billion dollars on energy efficiency and chief the same goal. we can do that today, short term benefit, fast pay back. >> what was impact on your company from the $787 billion stimulus package? i think there was $43 billion at lotted for energy and 4.5 of that was smart grid. did that have a major impact on your business? >> a lot of our partners, but

also our customers, benefited a great deal from that. we worked with the city of las vegas and they're able to leverage that technology, leverage our offer to go enable them to go into energy efficient reduction plan for the city itself and then we actually audit and provide verification of how that money's going back, how the government is using it. it's one of the best stories because it's an example if you're even in the situation where you are with energy and water in the city of las vegas, you can still find cost savings. >> a 1% change in las vegas would be an enormous amount of energy. >> that's what we're hoping to demonstrate that if we can do it in las vegas, the rest of the world should be able to follow. >> unanythinging computers at night? >> it's retrofitting your facilities, thinking about insulation, reflection of roof, changing your lighting, changing your business process, how you actually manufacture. one of our customers actually is

a life sciences company and they use about 25% of fresh water in the watershed that they exist in. what they're now troo trying to do is take out a hot of the water this their piece and go down to maybe 15% of the watershed. huge water conservation drives not only more sustainable community that they're ash, but includes their process. >> what you do if me as a corporation has no outward obviousness to it. is that ever a tough sell? >> that's a difference between brand and profit. and we motivate the corporation to focus on profitability because that's what the shareholders h reward them. so if you can do the nonsexy energy efficiency stuff and drive up your shareholder value, you'll get a better put on the back than just a photo-op in "press: here." >> which is very valuable, though. what's the biggest motivation? is it purely profit? there's profit, there's government intervention, there's brand and consumer demand, i demand that my grocery store

become more green. is it primarily profit that will drive things? >> so far 50% of our customers purchase based on cost savings. 25% generally on brand and the other 25% is what i call risk mitigation. situations like the watershed example. knowing where your natural resources are and what the likely compliance or regulatory impact might be. in london, feks for example, we have a regulation called crc which impacts 5,000 company there is. so they're using the software to try to avoid regulatory issues. in the u.s. market, it's primarily profit driven. i think now what they've come to realize is two things. i think with number one the obama effect that occurred not only in the u.s. but also in japan, there was a big movement in the industrialized countries to say we really have to embed the price of carbon in our long term strategy planning. secondly they started to figure out now that we've stuck our necks out, we now have to put an operational discipline to it, so

they wanted to identify what are the profitable ways to get green without compromising business. because the environment for the last three years has not been one of unbridled rational exuberance. >> back to president obama. you actually have met with him, you've advised president obama. the energy bill comes out and somebody says, so watered down it was liking on the carpet. you're not running the country, i'm not running the country. were he personally disappointed? >> i think the education of where we are around climate change is up for broad discussion. i personally think that there's an obvious reason that climate change needs to be avoided. but secondarily, there's an energy independence issue that for the last 0 year, you go back to nixon, and he's pounding the table going america will be energy independent in ten years. so it's getting engrained in our national psyche.

and i think that that's now the tune that we should -- >> you see the images over the decade, but how much have we advanced? >> we've definitely moved forward in identifying and investing. $30.8 billion in alternative energy techtechnology, right? i think 50% of all megawatts coming up in the u.s. are renewable. we're starting to see the texas model being brilliant. they've laid the infrastructure down. you've got wind power there, you're starting to see solar emerging. starting with breakthroughs in natural gas. we're slowly moving toward the problem of eliminating some of these efforts. one of the good things about the proposed next version of the bill is that it is now highlighting or creating a focus around energy efficiency, which is where our company is trying to drive our corporate customers to. >> amit, thank you for your time.

after the break, bad words that you're not supposed to say on sunday morning. what happens when a powerful ceo says you're full of you know what.

during the recent brew h that h over the iphone 4 antenna, business week reported steve jobs had been warned by engineers that the design was less than perfect. steve jobs read that magazine report and responded publicly. >> it's a total crock. certainly what was portrayed in that article never came across my consciousness. and we talked -- i talked to rueben and rueben said it's total [ bleep ]. >> it's not every day you hear a fortune 500 ceo call your work bs. but jobs said it in front of a crowd of hundreds of reporters

attacking a claim made by bloomberg business week and separately by the "new york times" that jobs had been informed during the design process that the iphone's unusual antenna could cause more dropped calls. no, said jobs, the problem was not apparent to anyone at apple until after the phone went on sale. >> we're just a band of people working our asses off to try to surprise and delight our customers. but we're human and we make mistakes sometimes. >> that accusation by jobs that business week was essentially not telling the truth landed squarely on peter burrows' desk because he's the guy who wrote it. is it true, is it not? i don't want to get into he said/he said, but that must have been quite the shock when they called you out in public like

that. >> it was quite a shock. i was back in new york at bloomberg headquarters. and i saw the headlines come across my iphone. and it was surprising, but we really vet that had story extremely carefully for quite a long time. and we felt very confident in our sourcing. and i actually think there's a bit of misinterpretation what the story actually said. the story didn't say that steve jobs said it this is a fraud product, we have to put it out there anyway. what it said was at the beginning of the development of this phone when they were just getting started on what the heck is the iphone 4 going to be, they had a series of different designs they were looking at, one of which was this one with the antenna in the rim. and at that point this engineer according to our reporting disputed by apple, that at that point, he being a great antenna designer, said this can cause problems if people hold it in

between the sections of the antenna, it can cause problems. >> so apple had once the iphone 4 came out, and incidentally on youtube, very quickly there were, hey, look at this, if i put my finger right there, that day you started to see that it was apple's contention that, okay, there is a flaw or there's a problem here, we just didn't expect it? >> no, i think it was more i think probably every project that apple starts off with incredible engineering challenges -- >> and they talk about it logically. >> they've talked about the potential pitfalls an benefits of every product they designed, so it stands to reason that it probably happened. because you got your attention and since that press conference was strange to me because not only is he contending with your report, but he's also contending with consumer reports' recommendation don't buy it, so they're back in a corner, so maybe you see more of an edge than you might normally see.

. >> we've all covered apfoel a long time and i don't remember a time -- we're certainly not taking credit for him calling the press conference, but it was the f. first time that apple came out and had felt it needed to publicly address it. >> and here's my defense about the press. the secretary half of the press conference was criticizing the press and defending himself against the press. >> is that intimidating to you when a fortune 500 ceo says that? >> we're all in the room. my colleague was there. >> but you know the distortion reality situation with apple. we both know from personal experience, he issues an e-mail saying this is crazy, i don't know where these guys get this stuff. and he becomes the dae fae fact. >> and confuse over the illness.

>> he has a long history of spinning the press. >> but my point is you can say you may have seen reports that -- and these are simply incorrect. or you can say there was this report by this guy and it's what he said and -- i may be speaking off the cuff, but still a conscious choice. here is how i'm going to discuss this article. >> i talked with apple pr obviously before and after, and if there was something -- if we knew of something specific that was wrong, we would correct it. at this point, we've not been told anything that we need to correct. so i think -- i don't know why it came down this way. it's possible that he was responding more to this sense that somehow he had put out a product that he knew was flawed. which is not what we reported. >> that was going to be my next question. and i think we've all experienced this. that there's this ampbly if i indication, i sachlt x and then

t the bloggers pick that up and say business week said x and a little bit more. it becomes an amplification and it can be half an hour after you wrote it. >> yeah. look at the words of the story, and i think you can only say that that happened to some degree in this case. >> that's one of the problems especially with apple. everything is so frenzied and taken and people run with it. i bet some of the conclusions that were made were made by people who hadn't even read it. but one thing that really interested me the most about that was you actually saw a real person there, you at any time see some sort of manufactured moment like a lot of apple press conferences are. and to me that alone was kind of this interesting slice of maybe the way things really are there sometimes. >> it was interesting because he didn't do the classic pr thing of, oh, we're sorry.

he basically said -- tried to put it in perspective to his view. it was a very -- to your point, it was -- i don't know that all the facts were exactly lining up, and i still don't quite understand how the software signal -- >> we said there were several messages that returned the software. oh, it's soft warks don't worry about it, it will be fine. and then that wasn't it either. do you worry about access to apple or is bloomberg business week so powerful they don't worry about access? >> you can't worry about it. i've had a very good relationship with them over the years. it's not comfortable to be calmed ocalm called out like that, but all you can do is do your reporting. they're very secretive company anyway. i don't see them rolling out the

red carpet for anybody. >> i'll leave you with one thought and that is that when i said we were going to have you on, these guys who are your competitors said, oh, he's good. so there you go. peert burrows is with bloomberg business week. that's our snow this week. my thanks for leander kahney and jon swartz. you can find this this episode and our archive of older interviews in our website pressheretv.com. i'm scott mcgrew. thank you for making us a part of your sunday morning.

i was told that i was at risk for sudden cardiac death. i was 23 years old, i wasn't overweight. i never dreamed this would happen to me. when the doctor told me i had three blocked arteries, i felt like i was punched in the gut.