. >> it would create more opportunity, more equality, more more -- more entrepreneurs. but actually the reverse is true. it's creating these enormously powerful monopolyists which are very, very bad for innovation. we don't live -- >> i mean, amazon was -- we never saw amazon coming. we saw all these little stores and all the people who could do e commerce and sell never anticipating that literally

there would be an amazonian monopoly. >> yeah, i think we're back -- if you want to think about the boom/bust in history. we're back in the mid '90s where microsoft at that point was so dominant that it was stymieing innovation. if you think -- if microsoft hadn't been challenged in the courts we never would have had web book 2.0, we never would have had google or facebook. at a similar point where we have the companies are actually also now anti-innovation, and ironically, regulation will make more innovation rather than the reverse. >> andrew, why do you think the silicon valley doesn't have enough contrarians? it's a pretty common -- >> well, i'm enough aren't i? [ laughter ] >> do you think silicon valley -- >> it's a herd mentality. a lot of people -- >> i do think that. >> there's paul carr. i mean there are a number of people who are questioning more

and more what's going on here. >> i think it's normal though when some kind of new technology comes in. oh, my gosh, we have computers in the pocket we have high speed connections around the world. i think it's a fairly normal assumption to see that as something interesting and exciting and maybe accidentally lean too much towards the positive. we invent steam power and, yeah, nobody points out that the coal -- well andrew would, nobody points out that the coal would pollute everything and it would cost jobs. >> that's a serious issues. that's one of the other themes in my book. sure, the industrial revolution was great, i'm not against progress. look at the dark side look at the pollution, child labor and we're at a similar point in the digital revolution. we need to work out a lot of this things. why aren't you reporting on the curmudgeons out there, because

we're all out there, not that i'm a curmudgeon. why do you always report on the good stories and why, scott, are you smiling? >> you're on my television show. >> you should be grimacgrimacing. you should be me. you should be alerting your viewers to the dark side of this. >> i want a little bit of credit for you being on the tv show. >> you get a little bit of credit. >> so a couple or two years i covered security. we talked about how this easily available data and information would blow up in the banks and the retailers and i wrote a book about it. for a long time people thought we were crying wolf. we didn't press our argument hard enough. we may have done it too early. but maybe that's another -- >> but at what point as people lose their jobs as the growing inequality becomes even more troubling at what point do guys like you turn? because you showed me 2007 when i really was on my own.

now this new book has been -- kind of worries me. being sympathetically received. at what point has the zeitgeist shifted so moderate journalists like you get that distinct -- >> i think it started, andrew i'll tell you, because of where we are in san francisco and the bay area. i do see san francisco -- many of the points you make in your book about the haves and the have-nots and what was the book i liked it -- >> precarious. >> precarious. >> i get it, i love it. >> we thought pro hetary yat was bad. >> but san francisco has become a microcosm of that. this may not be so evident in cleveland yet, but god knows it's evident in san francisco with housing prices and with the have's and have-nots. i think we have noticed that. san francisco is a microcosm. >> what about jobs? in my book i have a chapter on rochester which employed 145,000 people when kodak was at the

prime -- it went bust all those people lost their job. in a sense it gets replaced by the instagram moment. two years ago instagram sold to facebook for $1 billion. it employed 15 people. so the bay area is being affected by this too. as growing inequality in the bay area. you need to go between palo alto and east palo alto and see that. >> we'll be doing more stories about economic disparity. i did a story about facebook and the campus and the million dollar organization and you drive a mile and a half away and you drive to palo alto and there are people being arrested and shooting one another. so there's no economic hope. the reaction was incredible. we'll write about the diversity and technology which we have been doing, much to the chagrin of the companies that we write about. and that has consequences but i don't care long term.

>> what do you mean you don't care? >> i don't care. i care about that, but i don't care about their reaction. but i have been doing it long enough. i'm getting close to retirement. what i'm trying -- >> if you still have a job. >> look at what he's doing to you. >> curmudgeonly. >> i think journalists are starting to question some of the valuations that are taking place right now. like start-ups. but taking in more business angle to what's happening. i think -- i think your point though is interesting. what i'm curious about is you talk about you know the internet ruining things. what is your view on like the internet of things? watches and devices in your home and in your car, that are like all of a sudden becoming -- it's much bigger than your phone or computer? >> much bigger. i mean, ericsson says $50 billion connected devices by 2020. and that comes back to the

surveillance. we'll be watching everything we do. we'll be watched where we drive in our homes, our clothing. this is the old cliche in silicon valley but it's true. we are at the beginning of this thing. this stage of revolution is profound. the biggest change of all is about the business model. we need to get away from the free muddle. because if we maintain that free muddle in the internet of things then we'll have 1984 in 2014. we'll have a situation where everyone is being watched all the time because there's no other business model. so we need to start getting companies to force consumers to pay for stuff and consumers have to wake up and understand and unless they pay for the things then they're the product and they're being watched. >> andrew keen's new book is called "the internet is not the answer." i want to mark down that you were positive about the industrial revolution. i said -- you said it earlier and we'll just make a note of that. >> and i smiled. >> and you smiled. you did smile. i'll make a note of that as well. andrew keen, thank you.

"press: here" will be back in a bit.

welcome back to "press: here." this past week, both sally beauty supply and hard rock have been victims of data breaches. the first sally's bad guys got credit card numbers.

companies like elastica in san jose where hundreds of engineers are working to protect data. rehan jalil is a harvard business school grad and thanks for being with us this morning. i realize, you know, the subset of security that you do does not necessarily involve protecting the point of sale at sally beauty supply but speaking on a broader level this has to be incredibly frustrating. that we're doing the target thing about every month with different stores. >> well the reality is it's not just about point of sale. there are millions of ways that you can cyber attack a company. the real issue is that the individuals and the companies, they're facing very determined very well prepared and very well prepared attackers. >> they don't seem to realize that. i realize you don't know anything about sally beauty supply any better than i do, but what are they doing wrong that they're not being able to defend

them? they must know the attacks are coming. >> not just about sally or hard rock which has been in the news right now. >> yeah. >> in general, you will see the kind of attackers we are dealing with. it's very much like an asymmetrical warfare going on. any company sitting here in fact, 95% of the companies have been cyber attacked. it is not just about one company at all. >> sure. >> i think the things that need to be done to be understood it's not just the government is going to protect themselves. the companies have to prepare themselves. they have to understand what kind of technology they have to adopt. and more and more we're going to start realizing that artificial intelligence and machine learning is going to start solving the problems. >> go ahead. >> i was going to say, in the wake of everything happening at sony which is sort of this very very public attack, how does that translate into what you're

doing right now? >> yeah i think -- think of it this way. if you're a large company, take the example of any company, 10,000 employees and any number of cloud applications, you have millions of perhaps user accounts on which the attack can happen. so essentially, the companies like these, they have to understand that cyber attacker can use one simple weakness and with the companies they have to make sure there -- among the millions of possibilities -- >> the bigger you are the more vulnerable you are. >> yeah. we have cloud computing, all the factors in play that increase the chance of being attacked. i want to ask you, do you think more companies are being discovered or attacked or breached when before they didn't know? >> as somebody said there are only two kinds of companies in north america. the companies that have been

hacked, the companies that have yet -- they haven't been hacked. >> the reason i'm asking you this years ago when i used to cover this beat, i remember going to the conference in arizona, the guys from life lock. they had a behind the scenes meeting that was off the record. but one of the things they talked about were all the major brands that had been compromised yet they didn't report because they didn't -- they weren't quite sure of what had happened. i think that's been going on for a long time. i wonder if you think it's becoming more public? >> i think there's times when you have to come out and disclose -- >> and california law does require it. if you know what happened. >> yes. yes. so especially if there are signals in the market for instance, in cases of the breaches, you will see the credit cards and debit cards starting to get used. people can find out where were these cards used before. >> rehan, you mentioned asymmetrical warfare. why don't the companies understand they're in a war? i mean they have the ability to

fight back. but there are such large surprisingly large companies that seem to be caught completely flat footed that they have been hacked. what it is going to take for them to understand that they're going to be the next target? >> i think it's really similar to the invincibility syndrome. everyone feels like it's not going to be me. >> why would the hackers bother with me? >> right. do you use any cloud applications dropbox? do you know if anybody is accessing your accounts? >> probably not. >> take the example, if you multiply that by the number of employees that typically a company would have, it's the complexity of the problem that increases by that much. so i think the larger the company you will see the more chances of getting attacked. >> we're buying into the byob mentality, where we're using our own phones dialing into our work accounts from our own home

computers. do you see a regression from that because that has happened now, but how are companies going to protect themselves if that trend continues to escalate with watches and so on? >> you bring up an important point. one of the biggest trends happening in the enterprise, in the companies right now is the very fast applications of cloud options with or without the permission of the company itself. and there's a good reason for it. because these applications they actually allow an employee to be much more productive. much more collaborative. so in fact i would say the companies have all the incentive to actually enable these applications. employees love the applications but do it in a way which is much more responsible. understand what kind of security needs put in place. i'll give you a simple example. typewriters to pcs, you can make an argument that pcs are much more wonderful, stay on the typewriter. from the mobile i think that's

not the point or stopped people from using the most productive applications. but understanding what kind of threats are out there. i think it's a responsibility of the executive teams of the companies and the ceos of the companies to put the right frameworks in place. there are technologies out there, especially with machines. >> rehan, your company is located in san jose at a time that most are in san francisco. san francisco does a great job -- it's only the last four or five years that san francisco is really attracted the top talent. how are you keeping top talent in the south bay at a time in which it seems like the youngest and brightest going to san francisco? >> i think we're lucky to have in our company for some of the brightest minds. i think certainly a lot of consumer companies have gone to san francisco, but take an example. a company of more than a dozen ph.d.s and in san jose if you're putting the right mission statement in front of the bright minds and giving the right sets of challenges there's a high

insensitive for them to actually work. >> is there a unique setting where you're based? are you based on santana row, like a high end -- how does -- how does logistics work for that if i'm an employee commuting -- >> people love it because they come here because they don't have to feel like they near the corporate environment. they go in and work out out of the coffee shops. >> santana row pushed for more companies. it's mad house on a friday night, but i suppose on tuesday afternoon it's not so bad. >> we have a reverse people. when people come in in the evening -- >> trying to get out. thank you for being with us. "press: here" will be back in a minute.

welcome back to "press: here." we are here with leena rao and john schwartz. there's something like one quarter of a billion dollars in funding. >> yeah, basecally wants to reinvent what we know as credit and they just raised $275 million in funding some of which -- a lot of which was debt because they're giving out loans. then some of which is equity. but basically, what they want to do is -- they want to make loans

at point of sale. so instead of using a credit card, you would just pay for a piece of furniture online and be automatically approved for just the amount that that furniture cost at point of sale which seconds. >> instead of putting in a credit card number you would identify yourself some other way, scott mcgrew is good for it. ship the furniture and we'll deal with the billing and things later. >> that's right. >> what did max levchin need for a quarter of a billion dollars? you'd think he has it in his sofa somewhere. >> well i think some is going to debt. >> to the actual payout to the furniture store. >> right. i think the rest of it is a sign of the times right now with the massive funding realms, you know? and massive valuations and you know, i think almost like normal. >> something's got to give eventually with all the money and all the valuations. >> well, we're starting to see this. a couple of things are shutting

down. >> yeah. we'll do a story based on the collision conference that i just went to. the whole idea that peter teal and mark cuban and -- >> the other -- >> exactly. they advanced us heading towards the bubble. maybe not on the scope of what happened 15 years ago, but the whole concept there's a burn rate problem. a lot of companies it will be a reckoning. so -- go ahead. >> i thought it was interesting that secret shut down. not because it was good or bad, but it didn't matter if it was good or bad, people were continuing to fund it whether it worked or not. it was one of the indications that it allowed you to tell secrets. it's not important what it was, but something shut down. >> right. a lot of froth. there was a -- the first to fall. there might be others. >> i think there will be others. i think so. i think part of what was unique about secret was that it just raised so quickly. before it really had gotten what

i think a lot of people in the valley say like products market fit, it hadn't taken a foot hold in a massive way. and so then it just became well, they have all this money. they're not actually growing. >> perhaps a bit of a canary in a coal mine there. >> yeah. >> all right, leena rao and john schwartz, thank you. "press: here" will be back in a minute.

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

>> "press: here" is sponsored in part by barracuda networks. cloud connected security and simplified i.t. citi bank to help northern california businesses grow.

damian trujillo: hello and welcome to "comunidad del valle." i'm damian trujillo and today, sabor del valle, the wine country returns to the silicon valley. plus, the clean slate tattoo removal program on your "comunidad del valle." male announcer: nbc bay area presents "comunidad del valle" with damian trujillo. damian: we begin today with your chance to save for college. julio martinez is the executive director of the program called scholarshare. welcome to the program. now, this is a program obviously where you can save up now if your child is 1, 2, 3, or 4 years old and start saving up for college. it's not too late. not too early, i should say to begin that savings plan. julio martinez: that is correct. it's important to start saving for your children's college education as early as possible. the sooner the better, that way you have a longer-term horizon to save as much as you can and help that child out once they get to college age. damian: because 3 or 4 years ago, i started doing the math on