young college grads start selling shares in themselves. we'll tell you how to invest now. jay continues his promising starting streak, startup worth a cool billion. a reporter from "newsweek" and "time" magazine editor this week on "press: here." good morning, everyone. i'm scott mcgrew. billionaires are fairly frequent guests on this show. we'll have one on a bit later. so, too, are very young, very smart kids, people in their mid-20s with nothing but an idea. it's occurred to me more than once, i should give these kids

some money and tell them, pay me back when you're a billionaire. it turns out i'm not the only one who thought about this, dave gerard, former google executive has created a company, a stock brokerage of sorts called "up start" which allows credit investors to invest in young people, browse through potential candidates, select stephanie who has both student debt and unpaid medical bills, help her pay those down, and she will km it to paying you part of her salary for a decade after she becomes a successful startup entrepreneur. dave left his job to help college grads achieve their dreams. harry mccracken of "time."

stephanie was the young lady we saw there, who had a startup named six doors if people are interested. the first question we get all the time, is this illegal. >> before i left the gig i had at google, i wasn't going to take that question lightly. i did a fair bit of work with law firms to understand, is it legal, enforceable, who would regulate it, the myriad of questions. >> the thing that occurred to me inu in dentured servitude. not that. >> not a gold mine to bring back servitude. basically the notion of having a loan and paying it back based on your in come versus an interest rate is popular in a lot of circles, student lending. australia government loans are paid back in such a way and the u.s. government is getting into

this as well. servitude is the notion of loss of choice. upstart we like to think you have more choices, you can do what you want as opposed to feeling what you have to do because you have a lot of student debt. >> dave, first of all, leaving google to do a startup. >> not a lot of people have said that to me, by the way. >> i have a question, who is the ideal candidate for something like this and is there an ideal candidate. >> capital on future potential has broad-based potential. people early in their career who tend to want to do something entrepreneurial, but they have a big burden, student debt or credit card debt, they have freedom to take a chance, pursue something they are excited about. instead of taking that boring corporate job they really don't

want. that's the prototypical upstart. >> sounds like an idea that makes perfect sense for bay area and people involved in tech but does this apply to all people in other parts of the country or another company not tech. >> it's not silicon solution at all, stanford or cal, mit, cam bridge, you have phenomenal amount of choices, people that want to throw money at you. so many choices in that group. i do it more as a main street solution for people who want to build could be a one-person business than tech startup. people who want to do something to have risk associated with it is not guaranteed. to me that's not cambridge, that's the rest of the country. >> in theory i'm going to invest x number of dollars and get a

return. it's not just a loan, but a small percentage of your in come and i'm betting it's going to be fairly high. you can do estimations what people will make. >> the magic underneath we take the data about the person, where they went to school, what they study, what work they will have and predict their income over the next decrease aid. >> kind of the financial are you hot or not? it is. >> we discount those dollars to today's dollars and allow you to, in effect, borrow some of your future earnings from yourself. if you actually do exactly what the model suggests your backers will do reasonable well. if you do less well, they will do less well. if you do much later, you are the next larry page, mark zuckerberg, your backers benefit from that. it's not a passive investment. your backers can help you. >> become mentors and they have every reason to be. >> how much of a percentage of

vetting a person is gut feel, or is it all scientific. >> that's a great question. i think there's a combination of data and human intuition that go together well. we handle the data part, what they have studied and look at the potential income, do they have grit, determination, can they communicate well. those are the softer things you can get from the profile you're not going to get out of the data. >> can i sell someone? can i say, i invested in harry but he's not working out as well as i thought. i'll sell you harry, half of chris. is there a market for this sort of thing. >> first of all, we don't describe it as selling a person. >> harry, who is an excellent human being and will pay off well, just an example. i'll sell you my future interest in harry. >> today there is no secondary

market. once you've invested and going to have a fraction of somebody's in come for a period of time, there is no secondary mark. could there be someday? perhaps. with the notion of a mentor and backer it is more of a person-to-person thing than the notion of simple -- >> i can't believe i sold zuckerberg for $10,000. >> could you founder the possibility of doing this inside google or so new and unusual it had to be a startup itself. >> i think so. it's not a traditional sort of google moonshot, floating balloons, it's like a data science problem and social science problem to solve which isn't in the sweet spot of google. i took it to larry and he said no, but to be honest didn't. >> wish you the best of luck with upstart.com.

thank you for being with us this morning. >> thank you. >> if you had invested in my next guest when he was a small boy in india, that would have paid off. the creator of six separate successful companies. the latest ones with a billion. he's up next.

welcome back to "press: here." my next guest would be amazing in any context. when you consider he grew up in a town with no electricity and now leads a company of $1 billion, it's amazing. as they say on tv. this is his sixth start up. the first company secure i.t. createed with his wife around the kitchen table using their life savings, a company he sold for so much money 70 of his

employees became millionaires. thank you for being with us. six startups, were they all successful. >> thank you. various degrees. >> did they all end up with more money coming out of them than you put into them. >> yes. >> that's successful. that will be enough for us. obviously the question you're going to get all the time is what's the secret. is it really successful startups? the most recent valued at a billion dollars. >> i have looked at simple formulas. timing is everything. looking for the right time to solve the right problem and putting together a wonderful team that can execute. >> is it the same team over and over? are you dragging the same people around? >> no, pretty simple formula. i take more than a third of my previous managers with me. you need new ideas, no people, new innovations. it's generally new people along with some old people. >> you really have thought this out, obviously, because you're on number six. >> tell us about it, why is it a

$1 billion company probably a lot of people haven't heard of. >> startups always have a challenge to get the word out especially if you focus on enterprises. generally you don't's hear that often. my mission was to make sure internet becomes a safe place to do before for enterprises. in the world of cloud and mobility. so we sit as a check post between a user and the internet to make sure nothing bad happens and leaks out. we had to do something differently than hundreds of security companies had in the past. they built boxes that sit some place or another. we built checkpoints around the internet. no matter where you are, traffic from pc, ipad, gets tracked,

inspected. >> generally happens at a corporate level. a corporation subscribes to your service and says, i really don't want my employees looking at facebook. you see the incoming request for facebook. you deal wit and send it back. >> that's correct. it may be facebook, may be a whole host of applications, could be sales force. all traffic going from employees to the intranet goes to us to enforce business policy. >> in a way, and i don't mean to dominate the conversation but i'm the english person who who needs to understand thing in analogy. in a way, what i'm saying would you please ask the internet if i can see this youtube and you decide if that's something you can see and go fetch it. >> a little different. we don't decide. >> based on the criteria.

>> yes. >> for civilians, startups, it's confusing. it's not clear why tumblr is worth more than other companies with more revenue and profit. how does the math work for startups? >> good question, i think two buckets, consumer evaluations very complicated. they go up and down. enterprises it becomes relatively simple. for us, we look it up. what's the total market opportunity out there. how fast are you going in a cloud business. you look at something called annual revenues. we have grown 110% since we started selling over the past three and a half years. with the growth, with market leadershipw some of the largest companies in the world using us, we think we're poised to become sales force for security. >> just the other day we had one that predicted his success as

well. enterprise evaluation is probably more accurate. it's not the it girl. >> it's about making money. >> enterprises need, consumer go and jump overnight. when we become employed we become sticky. >> consumers who assume worldwide web is free. >> absolutely. with 10 million users from 4,000 enterprises. >> where do your customers come from, jay? >> our customers are large enterprises. they come from where everyone needs it. some of the big names who don't like the name to be used. fortune 500 companies to a large beverage company to large financial services company. >> very horizontal in nature. >> horizontal in nature. one common theme if you've got lots of offices, lots of mobile

users, lots of remote applications, you love us. >> nowhere to put the box. employees all over the place. >> game stop, sports authority. thousands of stores out there. how are you going to put those boxes out there, manage and upgrade all that stuff. one thing that sets us apart, hundreds of companies who do security and policy, they are like power generators, sell it for their own. we do power plant. >> are other countries using you, some of your competitors had bad press over iran or libya. are you selling to foreign governments? >> we aren't selling to governments. we are focused on enterprises. also what happens is in the case of -- true distribution. >> resold, your subscription you know who is using your device. >> we're not involved. we know what's happening, where is the traffic coming from, where it's going. so it's pretty well managed

environment. >> are big companies pretty comfortable with the cloud, rather than wanting to control it themselves and put it in a box they can see. >> that question gets asked often. i ask my customers, the traffic coming to us, heading to the internet equally. we're just being an extra layer of security to make sure you don't get in trouble. we don't store any content. it's like a check post to make sure you stay safe. so yes, i've been surprised at the speed some of the largest companies moving to adopt technology like ours. >> lets go back to our formulas. i need to make this the last question as we get short on time. what business -- you're busy running zscaler -- would you be in if you weren't. there's a kid out there saying i want to be the next jay. the hot place to be is -- >> two hottest areas are mobility and cloud. >> sure. >> then the key thing is

figuring out the right area within those. >> all right. >> so i generally look for a new area others haven't gone which is likely to become big. none of us have a crystal ball so you use a lot of gut. if there is idc data about a market segment, it's too late because others are in there. so you need to look for something not too big or too small and make a business bet. >> thank you for being with us this morning. we wish you luck on number seven. please return when you start that one. >> thank you. up next, should you buy or rent your software? do we really own anything anymore s&p "press: here" continues. "press: here" continues. "press: here" continues. "press: here" continues. "press: here" continu continues.

welcome back to "press: here." back in 1988, apple stunned the computing world when it announced next generation imacwould ship without a floppy drive. some of you watching don't know what a floppy is. at the time it was a big deal. apple said the floppy was obsolete even as the format was at the top of its popularity. i bring this up because what seemed crazy at the time becomes obvious in retrospect. adobe, one of the largest sellers of software decided to stop selling software. the company will move to subscription for high-end like photo shop and illustrator and after effects. the man behind that move as adobe's vice president of products. a long history in tech, sold a startup, worked at google, early days of wired magazine as well. thank you for being with us. a lot of users at first did not like this idea. i'd buy a piece of software in a box, take it home, it's mine.

i don't pay you ever again was the old model. they were perfectly happy with that. >> that's right. the way in which we make software has a lot to do with the way we shipped software and people were used to that. adobe is a 30-year old company. the reality is we don't take a bunch of code and put it in a disk on a box in a truck and in a store. we deliver everything over the internet. we call that cloud delivery. so we've been doing that for a while. the model around the old way we were doing that meant we could software -- >> that's right. >> now we can release whenever new features are ready. in the last year we released photo shop four times. the subscription model fits with that. instead of every two years, we can every month. >> i'm a photo shopper, and i like it and my machine.

what is the difference in the user experience using it on the cloud and subscription model as opposed to having it on the hard drive? >> really none. you still have it on the hard drive. we simply install the software via internet connection. it's not like a web browser and clicking around in there. still the same software. >> there was a study in one of the magazines that was going to stay with the latest box released, the last box released. that was right as this cloud idea came out. what have you seen in actuality. >> kind of the opposite. yeah, it's been tremendously successful. >> this analogy here to itunes. you went and bought a record or eight-track and tape, what not. itunes came along. it was still digital but you still owned it, even though it didn't exist. then spotify came along, wait, for the cost of three or four itunes songs i can listen to

whatever i want wherever i want. >> you own it. a lot of industries are facing that. we evenee it in car ownership, zip cars. people are increasingly moving to a model of use it when you need it. >> one of the things that's cool, all you can eat, you don't just get photo shop, all of adobe's products. are you finding people are using more things than they would have and doing cooler things because they have all these tools? >> we have a big suite of software that does, like you said, all these different things. people are trying and learning all sorts of new things. in the creative services world is vital for people's careers. they always have to be moving and mobile apps and have the tools to do that. >> in addition to regular software, you offer products and services. can you describe some of those and the benefits of those. >> sure. we have a couple of

acquisitions, my own company provides font via clouds. instead of having to have thousands of fonts on your computer, you can choose the ones you need when you need them. we also acquired a social network, big creative network where people post their work and get comments and feedback and things like that. you can post your portfolio there and actually get more work by doing that sort of thing. >> do you see customers dipping in and out, i need something every third month, therefore i'm going to be a customer for a month, dip out for three months, come back. >> we see that a lot in the sort of agency space where they wrap up a big project. >> i need this many licenses, if we're going to do a big project. >> a three-month project, bring everybody in, get smaller, a lot of flexibility at that level. it's really important to people. >> go ahead. >> we used to -- some of the most intention applications. as you said, for the most part they are sitting on my hard

drive on my computer but we never see a photo shop run entirely in the clouse in the browser in the way other things work with the browser? >> sure. especially if you start thinking about the mobile devices we have now. i think there are many, many tasks in photo shop and other applications that reduce well to single tasks provided viacom nation of client software on your ipad and cloud services. so for example we demoed the ability to remove the shaky camera picture like most of the photos in my library have movement. incredibly difficult and requires many iterations to do it right, which is a phone can't do. if you take the picture, do work and send you three versions and take the best one. >> does this cause any sort of business planning in i realize this is not your area of expertise, where subscription

models, we don't know how -- makes it easier business plan because we have this many subscription models. does it smooth out we sold, didn't sell, we sold. >> certainly does. it also, i think, where that sort of thing intersects with my work, it helps us to be able to kind of also smooth out the future releases so we don't have to work on stuff and put it on the shelf. >> i have to learn all those features when i go from three to four, four to five. >> it would come out with 1500 new features. >> i've been there. >> right. so smoothing that out as well. i think it's a benefit. >> is this the way of the future for everything? microsoft has a version of office that's what you're doing but they are saying not going to take away the box version but you're saying eventually most everybody will do what you've done? >> i do because the model works so well for being able to do rapid development of software, gets features out to people,

things like that, as well as just being connected. i think the way in which people work looks a lot more like the way they interact socially now. >> a minute left. people will be disappointed if i don't ask this question. you're famous in the font world. why is a person interested in fonts? >> i think the way in which we communicate is as much the words we say as the way it's presented. i started my career in journalism. so in the publishing world we spend a tremendous amount of time and attention to detail of how our messages -- >> favorite font in 20 seconds or less? >> it's like choosing a favorite child. >> that's right. i gave you time. >> my favorite is omni by dardin, dardin studios. >> we'll look it up. we'll be back in just a minute.

that's our show for this week. my thanks to my guests. i'm scott mcgrew. thank you for making us part of your day.

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