way with tweets and posts and facebook farms? old school chip makers ask why did we stop making things? we are going to -- >> i'm scott mcgrew. silicon valley is called silicon valley for two reasons. you can see the mountains on either side. the silicon part is a bit more questionable. >> hundreds of magnetic disks had to be tested daily.

>> it wasn't always dust. there was a lot of silicon in silicon valley as chip companies turned out millions and billions of silicon based computer processors, what the industry calls hardware. these days the big money is attracted to the softest of software, investors flocking to companies like facebook and twitter. this alarms a small group of traditionalests who meet once a month to save high tech from itself, a tiger team of silicon valley execs who want to stop the valley from turning itself into a giant social app developer. >> trying to talk entrepreneurs out of their love affairs with selling virtual cows on the

internet and ceo of a technology. we are going to talk more. it feels very strange. to the viewer we will talk about why it is pando daily. we have a guest, ralph schmidt. silicon valley is making lots of money selling likes and tweets and virtual cows. you have some concern that we might be going in the wrong direction, though. >> well, i think in order to enable the virtual cows you need silicon to enable that technology. it is a core technology. we are part of a global semi conductor alliance of 400 world wide. we started in 1994. we have really tried to take on the issue with bringing

entrepreneurship back into the silicon heart of the equation. >> don't you think the entrepreneurship is still happening here, but the manufacturing is being shipped overseas. you have intel, research and development happening here, manufacturing, arizona, new mexico, oregon. >> very true. a lot of the innovation still comes out of the startup community. clearly larger semi conductor companies do inovate but the breakthrough innovations come out of startups. the venture community has backed off. it's an industry issue. the funding is one aspect and the cost is another. >> we are seeing companies like nest and square. we are starting to see a few companies that are kind of hot companies right now doing hardware again. are these the isolated rebels making it happen or is there a

tide shifting back to hardware? >> there is definitely a tide going back. even the big names like google and facebook build their own data centers. that's the technology that we want to or we are developing as an industry to enable that. >> and even electric vehicles being manufactured here in northern california, as well. >> that's correct. same thing. the core technology -- >> sarah mentioned nest and square which is sexy companies. nest is the thermostat. and square is the credit card reader created by the founder of twitter. when we think about hardware companies, are you more thinking bethe big iron companies? are there enough of those in silicon valley? >> it's clearly a combination of both. you have to have the infrastructure to run the net,

enable this technology. and then everything is going mobile and consumer oriented. the same technology, basically. >> you run a big iron company. let's say i run a startup making some clever device, am i going to get more venture capital time? >> no because the amount of investment that you have to put into enabling that technology is quite high. anywhere between 30 and $100 million in order to get a product that actually works. and so the venture community is looking at that part of the equation saying i can go invest in a software based solution where i put less capital in and get a better return. >> shorter amount of time. let's talk about china because that is the looming thing in this conversation. a lot of younger companies are able to do what they are able to do because of synergies in

china. a lot of people think that is sort of the grout work. i believe when as a country you don't know how to make things you don't know how to reinvent things. where do you come down on that? >> where manufacturing is part of the solution it's typically where you can really differentiate and do things better. on the silicon aspect there is process technologies that are still done here in silicon valley. there are still fabs here. intel being one. that develop unique things. as it gets kmaudatized it does move over. >> is that okay? can we continue to be the manufacturers. nobody makes television sets in america anymore then let them manufacture for us? >> yes and no. yes from the standpoint if there

is not much added value then you can move it to that part of the world. if you are really inovating and that is what we want to continue to do here in the valley then we need to keep it here. i think you will see an increase in the manufacturing capability in this area. >> what's driving that? >> mostly innovation and uniqueness. when you look at overall costs you don't really save that much especially in our industry in the silicon industry it is not human capital where a lot of savings is. it's mostly in equipment. >> you're saying increased innovation is actually driving. on the flip side you are saying that innovation is leaving silicon val aempt what is truly driving that innovation or what does it truly look like here? >> so you're correct. innovation is not as prevalent

in our particular technology here mostly due to the overall costs have gone up and the funding. >> how about the state and little bit of politics? >> of course. we can get into those types of issues. we also have issues of losing entrepreneurs overseas. president obama talked about it in the state of the union address where we need to keep the people we educate. >> if i were the president and you can have what you want to get innovation. what would you want? >> i think most people in the valley don't want government involvement. >> i am a genie who can make anything happen. what would you want? >> for us it is having the funding and keeping the entrepreneurs here in the valley from thp standpoint of having the dollars there and then

having them welcome to stay here. we have talked about stapling green cards to people that graduate and get diplomas here in the u.s. to try to keep them. if you look at the startup companies out of the valley, more than 70% are immigrant driven. it is a critical issue for us. >> ralph schmidt, we appreciate your visit this morning. up next we are going to talk more with sarah lacey about pando daily. including first question, you called it what? when "press here" continues.

welcome back to "fishing with johnny johnson" s-- welcom back to press here. she has been involved in press here since the very first episode. >> i know you feel we should get

out of this business. do you at least grant the position business reporters have been in there. >> lacey has helped define high tech journalism. she is controversial, often loud and sometimes feared. she is the author of best selling books and most recently made news when she left her job to launch a competing blog called pando daily, a blog she staffed with many former writers. it is funded by many of the people lacey covers, a long list of high tech entrepreneurs from mark to peter teal. sarah lacey has been called predictbly rav udand listed as one of the most influential people in silicon valley and once responded to criticism by sweeting, seriously screw all of you guys. >> i have no filter.

>> let's start with pando daily. why? >> i was working on this project when i was on maternity leave about silicon valley mafias, great families going back to fair child, cycle after cycle made the ecosystem deeper and richer. i heard about the metaphor of pando trees. the root system is all one organism and it is the oldest living organism in the world. no matter what happens above ground it shoots up new trees. it is the perfect metaphor for what i love about silicon valley and what we want to cover with the site which is not just news above ground. we want to cover the root system. what keeps these things sprouting back up? >> we come in so quick laep and

then leave so quickly. these guys are related in ways you didn't understand. >> using the google story as an example. explain how you differ from tech crunch. >> i think predictbly rav udi a udis -- rabbed. we care about this ecosystem. we don't pretend to be people who don't care about the ecosystem. we love being here. when you have something like this google issue where you have evidence that google is alterring search results we are going to call them out and continue to call them out until their answer the question. we are not going to follow where they want the news to go which is what i think a lot of blogs are doing now. we are going to drive the

conversation. that voice was the hole that i saw in the market that we're hoping to fill. >> do we really need another blog? >> yes. >> i think we do. ultimately i think we do and my investors think we do and the contributors think we do. we'll succeed or fail. so far we have done great. the response has been great. ultimately the readers will answer that question. >> you have been very straightforward about your investors. your investors are the people you cover in most cases. why would the people you cover want to fund your blog and what sort of conflict of interest does that create? you have addressed this on your blog. you explained this relationship. >> i'm not independently wealthy. i want to hire reporters and go after this. i believe reporters should be

paid a good salary for blogging. i need to make a salary. i took my baby on most fundraising meetings. i want these terms. how about now? if i were independently wealthy i wouldn't have raised money but i'm not. we are going after this as a business. it is not a hobby. >> it is a business and you'll make money on advertising. >> i have to fill the void first. >> my take on this is you can never sell this business because you sarah lacey have proven that blogs have no value when you buy them because aol bought you and the rest of tech crunch. and then you and the rest of tech crunch left to create pando daily leaving aol. >> kicked out. >> or fired or whatever. there are people there and

continue to have readers. what was tech crunch is gone. now you can't sell it. >> i hope everyone watching this hears that and no one approaches us to buy. >> then why would i invest in it? >> there are other ways to make money. -- >> i need you to prove now. you have a week and a half. a week and a half. >> we can build a big public company. maybe it will take 20 years. huffington post could have done it if they didn't sell. we can build a very cash rich company which a lot of media properties are and we can give dividends that way. >> what was that selling point to say you need to invest in another blog? >> they felt there was a hole. every investor that i talked to. half of them said please do

this. >> was there a hole because of aol buying tech crunch? >> yes. >> i didn't set out to start a blog. i could have started a blog when i joined tech crunch. i loved what mike and heather were builder so i joined them to build it. my intention was coming back after maternity leave and being the editor of tech crunch. that got taken away from me while i was giving birth. i believe tech crunch lost its way. this is my vision. that's my view. >> now mike's working for you. >> yes. which is interesting. >> the creator of tech crunch. >> he has told people that he has accepted a part time job working for me essentially which is interesting. we have a lot of interesting phone calls. ultimately mike and i viewed ourselves of working together. we had a fight which we did from time to time on stories he was the boss and he had his way and

now i have my way. we'll see how that goes. >> you will have to sell page views and advertising in order to make money. that has to be the most not interesting thing in the world for you. >> we are going to hire someone really good to do that. the smartest thing that mike did was hire heather to be his boss at tech crunch. i don't know if that person winds up being a ceo. i'm not going to be selling advertising. i'm going to focus on building an excellent editorial product. >> i feel that people don't appreciate when we talk about blogs. that is adorable. you have your own blog. the metrics on these blogs are enormo enormous. you are more read than some newspapers. >> yeah. this is why i went to tech crunch to begin with. i was trying to business week. it was one of the most wanted

brands in business journalism. i filled in for mike for a week because he went on vacation. i was blown away at the reach and impact of tech crunch. it's that people read everything on it. when we sell a magazine we don't know if they read anything other than the cover story. if you are like me your magazines sit in a pile. these blogs are read and consumed post after post and even more so in a twitter and facebook age. people pass them around and share them and love them and comment on them. >> a regular on "press here" from here on out. if entrepreneurs had an oscar it would look like this. a look ahead of the entrepreneur of the year awards. here."

each week we hear from people who are not just living but reinventing the american dream and reaping tremendous rewards. the most obvious reward for entrepreneurship is money. there's a millionaire on this show most every week and someone worth hundreds of millions of dollars several times ag month. most will tell you they don't do it for the money. >> and the award goes to jessica. >> most don't do it for the recognition, either. many of the people we have introduced to you on "press here" go on to win awards. i'm proud to be both the host of "press here" and the host of the northern california ernst and young entrepreneur of the year awards. >> this is an excuse to get my wife into a slinky dress. >> then ceo and linked in

founder won top honors in ernst and youngs northern california awards and then moved up to take top honors for all of america. now they head on to monte carlo for the global awards ceremony. joe is head of strategic growth markets for ernst and young. i always want to point out to the viewers if there is a conflict of interest. if you paid me money there would be a conflict of interest. there is no conflict of interest. >> is this a negotiating? >> there is a hint. i want to make people understand i do this because i believe in the spirit of entrepreneurship. if you are jeff weiner and you are the ceo of linked in, do you need an award? >> what is interesting about entrepreneurs and we run this program in over 50 countries

around the world. we see entrepreneurs in different stages of growth. they all focus on a couple different things. we think this award is at the core of building the team and getting the brand and are about building the network because that is what they are going to sell their products through and create awareness. we think the award helps drive all of that. >> honestly there is something to be said for putting on a tie and getting an award even if you are the founder or ceo of linked in. >> it is great hardware. >> i have met a lot of former entrepreneurs of the year in different countries around the world. in different countries this really is a massive honor and means a lot. it is the first thing someone says. i'm going to guess for reed offman it is not the first thing he says. no offense to you guys.

the valley is such a machine for starting the company, should there be a higher bar for someone from here winning it versus somebody in indonesia? >> i think it is important to remember this is a competition. so it is competitive in the market. and i think people do look at silicon valley and say who won silicon valley because those are going to be a true market leader. >> should they be held to a higher standard in. >> you used the analogy of the new york yankees. to get there you had to play ten games against the other new york yankees. >> and ultimately we're competing at the national level. that's what the winners from san jose did last year and the winners on june 2 in san francisco will compete in palm springs and then that u.s. winner that linked in this year goes on to monaco.

>> are they held to the same standards? >> it is an independent group of judges that do the selections. it is ceos, past award winners, private equity partners, people who live and breathe innovation in their businesses every day. they hold them to a real high standard. >> last year's northern california awards you had -- we think linked in. >> it was a grocer and a jeweller and a number of scientists. there is innovation in silicon valley that isn't just social networking. >> innovation takes form in different ways. entrepreneurs take advantage of that. howard lester won the award several years ago. he changes the way shopping malls look. we were proud to have them participating in the award.

charlie sweat from earth bound farms won the award. >> largest producer of packaged salad. >> we have about a minute left. >> i'm curious because the former chairman of aol said it is down 20% over the past five years. what is it that an organization like yours can do to spur entrepreneurship. >> we are the leader in advising, guiding and recognizing entrepreneurs. we think this is part of that platform and getting the word out that entrepreneurs are changing america. >> we appreciate you being with us this morning. >> we'll be back in just a second.

my thanks to my guests, a special welcome back to sarah

lacey, new mom, new startup entrepreneur. we will not be on next sunday so that nbc can bring you something not nearly as interesting. then we're back next week. i'm scott mcgrew. thank you for making us part of your sunday morning.