♪ your ticket to a better night's sleep ♪ a race between congress and the fcc over net neutrality. who will make the rules first? a former pixar exec meets a new generation of apps for kids. and meet the startup founder who turns venture capitalists away at the door. our reporters, alice strong of the tech block, quartz and quentin hardee "the new york times," this time on "press:here."

good morning, everyone, i'm scott mcgrew. one of the key drivers in silicon valley is venture capital, money to help grow your company in exchange for a piece of the pie. if the value were a living breathing thing then venture capital is its blood and sand hill road is its heart, which is what makes the company, appster, so mysterious started by two teenaged australians who haven't taken a cent of outside money. the company growing so fast it will hire 150 people in san francisco by the end of the month. the young men who share the title of ceo started their company in melbourne with $3,000. last year, appster made 10 million in revenue. josiah humphrey is one half of that team at appster, joined by quentin hardee "the new york times" and alice trond of quartz. you started the company with $3,000 of your own money. i suppose if we are talking about this littlement amount of

money, get specific australian or u.s.? >> australian dollars. >> so $2300 u.s. >> there you go. >> and turned it into a company with $10 million in revenue. >> mm-hmm. >> why did you not take outside funding? >> i think, you know you have to look at the landscape of vc in australia and i point to some of the most successful companies that came out of australia the last ten years. one company raised i think they have a valuation of $3.3 billion but got to around 60 million in revenue before they even took outside funding and i think that was similar for us. there wasn't the notion of vc in australia. it's there to a point you compared to, you know coming to the valley, it is just not out there. >> wasn't available? >> like a bank loan by other means. they don't really do a lot of risk taking is that what you said? >> on your point, i think in a lot of ways you know yes in a lot of ways we were glad it wasn't available because it sort of gave us the opportunity to think, you know we need to get

money in the door you know every single month. got pay the pills every single month. we weren't able to go okay raised $10 million what are we going to spend it on? >> a point of desperation? >> yes, more about survival and i think that was a pen fit for us in the early days, for sure. >> people take money, they want to market stuff, too, get their name out. >> sure. >> you find now with being able to deploy the product across cloud computing environments and across the web to advertise, so cheap, doesn't matter anymore? >> in terms of the early days we focused in terms of how could we market ourselves effectively and really look at focusing on rio. not like we went and spent millions on it. v ads, what are the effective ways we can market ourselves, not only that you working with our clients and making sure they were successful that sort of page the tool for us. >> amounts, too. >> yeah. yeah. we did well our clients, helped them do really well and they spread the word. >> there must be challenges to

scaling, right? >> for sure. there are always challenges for scaling and in the early days making sure we hired the right people. we had trouble with that in the early days you built a robust process around that and at the stage, we hired 50 people last quarter and just doing phenomenal to see the rate we are growing. >> the other thing our noble brethren on sand hill road say in exchange for 60 or 80% of your company, they will give you a level of knowledge and expertise and go to market and counsel that you could never, you pup, get on your own. >> yeah. >> anything to that? i mean, is there some -- some skills or some advice you wish you had picked up that was costly or you learn this stuff other ways? >> i think you know being that i sort of have been a dropout and my attitude has opinion to jump out at something and maybe make some mistakes along the way and i guess now you know in terms of the growth that we have had bringing on some of the executives that we have now, they help us make less business

mistakes that is for sure. >> i find it very interesting. i was looking it he website and seems like you guys do provide a lot of -- not mentorship if the correct word but raising money to, like, the -- to go teching and what bog are you guys in? >> we sort of sit in the middle of, you know technical execution, like to say we are like a technical co-founder without the equity. if an were ennewer or someone has an idea, we want to help them bridge that execution again and that is not just you know building an application right? you have got product strategy you have got, you know, building market and customer discovery and then the technical execution and then you know, of course comes marketing, user acquisition and retention and i think, you know through building the development process that we have built, we help people through that entire lifecycle, which can be very challenging and a lot of people you know, don't even get to the launch stage because of how hard it can be. >> you are just now ramping up in san francisco. >> yes. >> as i said 150 people by the

end of the month, or the end of next month, that would be the end of the first quarter? >> i think it is going to depend on growth trajectory. something that we sort of manage on a month by month basis, yeah we are always hiring. >> relatively late to san francisco, in the sense you started mel pourn and then hong kong and new york? >> we have done mel pourn and we have our indian development center and now san francisco. >> india. okay. okay. but relatively late to what we like to think of the center of the universe. >> for sure. for sure. obviously built late to it we sort of thought where was the place that we could go to find more of the type of people we want to work with you know who are the people that have the best ideas in the world, the most am pinellas people and san francisco, the valley just became the natural decision. >> one thing if i was a vc and you know borrow money, i would be saying aft development, a long-term business or just gonna be a baked in skill for people after a while? >> for sure. for sure.

i think our focus and what we are about and there are a lot of vcs interested in sexy product company puss we are very passionate -- and so are the executive team and the staff and everyone that works at appster you passionate how can we solve the problem, were ennewers around the world that might find it hard to bring on technical processes, hard to figure out how to build a complex project. we sort of want to help them along that process. >> this is your australian training. people are really spread out and it would be good if you helped them. >> correct. >> kind of in the national character. >> there is so much that you can outsource now, right, like app development, outsource your customer service, you can outsource even like your office manager. is all you really need just like a good idea to get started? >> i wish that was the case but it really isn't that easy and why you will see if you go into our mel pournbourne headquarters, we say we are not an app develop and the staff knows that. not just about coming up with an

idea and not just about executing on just that idea alone. so many different things that you need to think about in terms of how you're going to raise funding, how are you going to do product strategy? how are you once you launch your first mvp get users on board and keep them along the way? >> i always promise the viewer if something confuses me i will get clarifications. mvp? >> minute ma'amimum viable product. >> excellent point. alice is right, i have this great idea for an app. how much -- i have a pile of money, how much money do i need -- how much does this cost me? what sort of thing do i need to bring you to say, josiah make me an app? >> think the average project for us would start from maybe, you know 50 to 150,000, that sort of like the paul park of it. you i think that's the thing right, if you're looking to start a company and build an mvp initially, you might have to raise up to $1 million. and so we like to say almost like we are a friend to -- >> what happened on the part

where you had $3400? 'cause i was liking that story. >> yeah yeah. i guess our story is a little different. but like i'm saying i think like you know, there is so much that you need to do in terms of building an engineering team might have to raise $1 million to do this our goal is how do we maybe cut that figure you know, in half or maybe pie a quarter? and so that's sort of the challenge for us how do we get -- >> so 150 k and a good idea could get me an app that could put me on the radar? >> sometimes a lot cheaper than that. that is the paul park of where minimum viable product would fall n >> so much more than just the launch, right? what about the support and -- >> correct. i think that's the exciting thing about what we are doing, it is not just app development, it is looking at how do we do retention and do user acquisition over time and that's how we do our reity rattive development cycle. >> this guy is selling the shovels and pickaxes.

>> made all the money. out of time. 150 you are going to hire or thereabouts, more information who you're hiring at appster.com, i'm assuming? >> app officer hq.com. >> josiah humphrey, thank you for being with us. >> thank you so much. up next, a guy in charge of computers at pixar when someone accidentally erased "toy story 2." that and other stories when "press:here" continues.

welcome back to "press:here." everyone handles getting laid off differently. i want to tell you the story about our next guest, a very young man, among those called, along with others to the offices of pixar which made computers, remember this a long time ago in the company decided it was no longer going to manufacture computers for animation, it was going to do animation and therefore, a pig group of you will have to be laid off and that layoff included orrin jacob, who went home and waited and the following week showed back up at pixar as if nothing had happened. his key card still worked you just went back to work. and he moved up the corporate ladder until he was the number two guy at pixar, the number one guy was steve jobs remember. orrin jacobs rose to cto at pixar from fired intern. jacobs is now himself a ceo, very interesting company, an app company called toy talk a set of interactive games, almost like tv shows for kids in which

you can interact with characters by speaking. orrin is a mentor to all kinds of young people, a business professor at cal, teaching something called lee launchpad. what is lee launchpad? >> thanks for the introduction. the startup movement in general for a while, he has taught classes at cal stanford other universities about how to bring student groups to -- from idea to launched company and of course, one semester. so, eight to ten groups start, four students each a company in market for real by the end of the semester currently week for you with and seen a couple of crazy products presented. >> all the products web based, i would think to get up to speed that quickly, would you have to be? >> different requirements, if you are a medical device company, lots different compliance issue pause web company, row bow company, website or mobile app in markets or you will not pass the class. >> i read somewhere one of these is already funded right? one of the kids -- >> this past week crave jerky, may have seen t. >> that's what it was.

>> came from the class, exited $200 million to hershey's. >> an a if you exit in the class with $200 million more than you started? >> the class is not an incubator, not about funding. trying to get groups still in the stasis of the university realm to try to bring products to markets, talk to customers and learn as fast as they can. what they do after the class is their own business. particular case that group did close its first legitimate enterprise sale. i think it was week seven or eight, $400,000 check to the sale of safe way, put jerky on the shelves in class that semester. >> the pig idea there that the greatest advantage to your product is to get feed become on it? >> that's right. >> process just like get it out into the world and see what the world does and keep poking on it? >> viable product. >> former cto of pixar. >> that may be, you we do not actually judge ideas. in act if a, the crave jerky's credit walked in and wanted to

do beef jerky, what are you doing? jerky. >> needed. this >> we don't judge the idea. what we care about, you get an a in the class, whatever grad school you get, by meeting at least ten or more customers every single week and reporting back every week what you learned about them. end up on week ten with an idea won't work not viable you met 250 customers and suppliers solid a, great. >> i think saying something important about how easy it is to hear pack from people and watch them and react to them. >> very much so also the thing that people in engineering school leave to sometimes. >> i don't think a pixar movie ever did that though. you guys worked that and worked that and worked that internally and released a finished product that was wonderful but all based on your own taste. you didn't focus group anything did you? >> quite not. previous guests on the show katherine danielle recently on here as well, no, that was not what pixar did. >> it isn't universal, is it? >> i think maybe a different thing, when you're constructing a story yourself versus offering a utility functionally on a product, you don't invent

uberpie sitting in your house 2005 years and conducting it on white boards you go to people on cars and see what happens. a different product judges. but in the end, look the ground truth of the were ennewer walking in has some faith-paced belief what they have is an idea worth pursuing. this class is about validating that as much as you can from the customers. pixar, director some idea what they want to make and they show it to us, when i was there the company gets notes pack all the time, profits are similar, one externally facial and one is internally facial. >> you left pixar with the intention of creating your own company and could have created any company, beef jerky uber whatever, you picked an app company, delightful app and i think little kids are not going to realize there was a day you couldn't talk to your ipad. this talking back and forth. why pick that though? i mean obviously, a basis in animation. must have been part of it. you why did you choose that and not beef jerky or ride sharing or whatnot? >> my daughter at the time was 6 1/2 or 7 was on a skype call on her iphone, one or two years

ago with my grandma and got off the call and she turned to her toys on the side of the room and said, dad, can i news to talk to them and i thought for a minute i don't know. that's an interesting question. seven months later, martin and i debating about this particular question, two things weren't sure we could do it at all and if we could, what would happen we don't know. >> she was the first customer you talked to. >> yes, toby i can blame her. >> envision as an app or a physical product you would be able to interact with? >> the highest level it exists to create characters and conversation with audience. express it had at level apps and keep doing that and excited to open up other ways that could happen, physical toys is one, other platforms is two conversation an actual thing we create has not been done before. what it means to craft that on our side and pulling from talent like writers and animators and character designers but processing ai strike emission cloud-based and the rest are here to pull this off. >> as a parent are you

concerned how much time kids are spending in front of screens? >> i am a kid myself very much so a very hotly contested point that every person in my family says all the time. i guess some high level, i believe that if you're talking and talking back you're actually conversing and that's very different kind of connection than sitting and staring at a screen. and i see this with kids and siri siri, the past year or two every kid i talk to heckles siri endlessly for support, they want to talk and express themselves. >> not just passive entertainment. >> not at all. >> i promised the viewer that you were there when you erased, not you personally erased "toy story 2." i only have a minute left. >> straight to 3. >> the level of panic, there was a backup at somebody's house? >> no it is much worse than that. so, the level of panic stretched across several weeks of disaster

upon catastrophe upon disruption. when the show was being actively deleted at that moment and you could see pulse and woody and potato head and ham disappear out of the directories, that was the phone call to the assistant's room pull the machine out of the wall unplug it now. we don't usually pull it out of the wall. boom building goes down. computers went down, we should all go to lunch early and happened bang then it is fine. came pack a day or two later, we'd backup, cool film working on it, which we did. over the next week of working of than restore, we realized the restore was incomplete and had been not up to date for four or five months prior but now built on top of the pad restore. >> nobody refreshed? oh. >> yes, not -- you can't untangle that at that meeting is when you really get serious. the show's gone. >> i'm glad to hear that even pixar makes the same mistakes. >> go back and fill like crazy or -- >> i'm sorry, the best story i've ever heard, but everybody on television will have to --

funny stuff online about it. worth a google. thanks. up next congress takes on the fcc over net neutrality.

on thursday the lead of the fcc gave commissioners his plans to guarantee data would be

treated equally online. the same time, congress is racial its own plan. to get inside the mind of washington, we get inside the mind of the former co-chair of technology for president obama, dropped out of harvard to build his current company, connect. how much of a cliche is that? really, you dropped out of harvard? >> i'm trying to be novel here. >> unlike zucker persian gulf and dates, you sold your first company for like $179 million. >> 170 million and i dropped out of harvard business school. >> okay. so a little different. >> yes. >> your honor far wealthier ironically than gates or zuckerberg when you dropped out of harvard? >> yeah. >> okay. fair enough. so who cares whether congress or the fcc -- why does congress care? >> i actually support tom wheeler, the fcc chairperson's move this week to actually reclassify broad band and reclassify road band under title ii and a big supporter of net neutrality and i believe that all data should be treated equally. >> is congress just want the power to say, no we are going

to be in charge of treating data equally, not the fcc? is it that simple? >> i don't know in the current congress whether they would believe that all data should be treated equally. i think fortunately, fcc chairperson, mr. wheeler, he really does believe we can create a world where data is created equally and not a two-class two-tier internet. >> make enemies in a 50-mile radius raising this question as devil's advocate which is i dig the trenches, i sink the pipes, i run this stuff, you get to use a whole ton of it and interfere with meyer is advice for other people. i'm supposed to consider this fair and even why? >> i'm a capitalist. i believe in competition. the reality of the world that comcast and time warner and at&t operate under is a monopoly. this he don't compete in the same cities. the monopoly we need to treat theses can like utilities, just like water and just like

electricity. >> received numerous breaks where they are anyway in terms of right of ways and band witt what have you? >> they put in hundreds of billions of dollars in infrastructure. your point is well taken. >> okay. >> and we need a world where people have access to the internet where they are not discriminated against based on what they can afford to pay. >> right. so somebody defended the cable companies, we can move past that somebody said the c-word, in which case i need to say, by the way, this television is owned by a parent company, comcast, the most wonderful cable company in the world. >> yes. >> yes. >> i know allison is dying to ask you something, why don't you just come out with t >> i know you because of the mocking your 1200-slide deck about lessons learned in your 20s. >> 1200-slide presentation? >> last birthday i came out with a slide power point, lessons from my 20s. i learned a lot in my 20s, made

mistakes learned business building an organization and put together a deck what i learned so far life the world and entrepreneurship. >> did you present this to people? >> i just put online. >> learn to keep it brief? >> i was very succinct in my 1284 slides. >> people teased you not made $179 million selling the first company. may have had something to say. >> the world of the internet being able to put content online is the new way to reach people and i was really looking at targeting millennials, people under 35 who wanted to be up to big things in the world. as ceo of connect today, we are up to big things in the world at connect and i wanted to put something out there that would enable us to get our message around the world. >> leave out font size a big issue 100 of the slids were concerned. was there one thing wanted to shake people and let them understand through this. >> absolutely. >> what was it?

>> in 2012 my mother passed away from brain timer and the thing i learned from that experience is that we should use our lives to do things that matter. we should live mission-driven lives and that boils down into one soundbite was the point of the deck. >> valuable. >> yeah. >> is there something you think, and i realize you're a young man yourself, that younger were ennewers should be knowing? i mean business not about life necessarily, lesson you have learned in business? >> yeah. so i live in san francisco today. and here in silicon valley, it's an extraordinary time to be building companies, to be an were ennewer, to be a tech were ennewer and excited to be building and mobile and we are in the most extraordinary time over the next five years between 2015 and 2020 to build technologies that change the world. >> you know making $170 million is probably a really great day you also presents a kind of issue that most of us don't face, which is to say, you're in this room with, like, an infinite number of door, you could open any one of them and be doing something.

why did you choose connect? why did you choose to go back to business when you could be doing any number of things? have to do with who you were your skillset or desires? >> you will have to answer that fairly quickly. >> so i built i contact in north carolina for ten years, extraordinary team of 300 people. moved here to california and now building connect to help people deepen their relationships a mission that i think is very worthy of. >> ryan allison of connect. thank you for being with us this morning and thank you for putting up with tv news as well. "press:here" will be back in just a moment.

that's our show this week. thanks to our guests. i'm scott mcgrew. thanks for making us part of your sunday morning.

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