"press: here" is sponsored in part by barracuda network. city national bank, providing loans and lines of credit to help northern california businesses grow. this morning we take you inside the mysterious leeco, the chinese behemoth hiring thousands in san jose, turning out all kinds of products, and leaving silicon valley to wonder who are these guys? and later, california says yes to recreational pot. it seems like a big business opportunity, but the next attorney general may snuff it all out. we'll take you inside a pot incubator. our reporters, mark new of cctv, and sarah lacey of the tech blog

panda this week on "press: here". good morning, everyone, i'm scott mcgrew. the only way i can explain the chinese company le eco to you is what if somebody saw what apple is doing and says we need to do that, but bigger. if apple is showing off a new phone, let's have an event showing off a new phone, and a new tv, and vr goggles, and bicycles, and the bicycles should have lasers on them. and to top it all off, an electric car. that's how they introduced themselves to silicon valley. also there was an open bar, so your move, apple. to build all these things, le eco needs people. so they cut a ribbon on a silicon valley headquarters and says they'll hire thousands, which leads us to the question, who are these guys? chief rnd officer at le eco and will put up by all of our questions.

let's start with the basics. how do we pronounce the basics of the company? le eco. >> i'll write that down. >> i'm not french, it means joy in mandarin. the original name was joy and it was, so le tv is what we know the company as. >> it grew into le eco of the idea of an ecosystem, i'm assuming. >> all this from a corporate structure standpoint. that's a publicly traded company and the holding company is le eco holdings. >> like apple and ipod, iphone. >> yeah, i think so. >> very good. you not only were at that event, you were on stage. >> i was. >> did you know it was going to be the amazing thing that it was? >> what were the meetings like? >> let's just say -- >> what were you guys going for? >> what were we going for? look, the founder, he's a

fantastically charismatic person and likes to do things big, and we wanted to make sure we got noticed. there's a little way it happens from the chinese side, blended into what happens in the states and some of it comes across as pretty big and we were going for pretty big, but i can guarantee you, i never did that many rehearsals at qualcomm. >> how many rehearsals did you do? >> i was there for two days beforehand. >> the question i got in addition to who are these guys is, is this real? there are some inherent distrusts with chinese companies, fairly or unfairly, and even companies that have impressed a lot of people, have come under scrutiny lately. so how real is this? >> well, i think one of the ways you should measure how real we are is by the partnerships that we're building and also the people that are joining. myself, danny bowman, a bunch of other executives have come from successful global companies. look, i had the same reaction when i was approached to join. i had just come off a start-up in san francisco and had been at

qualcomm for a long time and i had to really do my homework and what excited me about it and the reason we're real is, the company has successfully built large scale systems and products and listens to their consumers and it rated and now are saying we're going to move globally by coming into the u.s. and establishing a u.s. head kwaurters. the second part, we announced this week, look at our partnerships with companies like at&t. we announced, we were one of the few companies on stage with directv when they announced in new york. that speaks to how real we are. these first tier companies are saying we're going to partner with this company. >> to be fair, about a year ago i was at an event where they sort of announced this ecosystem, with the phones, saying they would have a hollywood headquarters for entertainment, beijing headquarters, and silicon valley headquarters to bring all these parts together, but what do you see as a real business model? seems the phones are so cheap that you're practically giving

it away or at least like amazon's strategy, putting it out at cost and hoping it to bring them in to this whole ecosystem. so where is it where you can make the money? >> well, so in the business, 50 million active users, that's a big business, that subscription is what drives the majority of the revenue stream and le tv started making televisions and phones to bring people into the ecosyst ecosystem, so we had established that studio in l.a. that's at dam goodman from paramount, so that leg you talked about is there. we are actually -- you're correct, we are deriving disruptive pricing in order to bring people boot ecosystem and growing that ecosystem at the same time. you're going to have to watch and wait on that. it's going to take longer. >> rob, i listed all the things you were showing off. i completely forgot, oh, yeah, and you're a movie studio.

>> right. >> the great wall, the great wall is a movie. >> yes. >> so you're a company that makes electric cars. >> making, we haven't made one yet. >> making. come to think of it, there are a lot of companies making electric cars in that sense. >> apple has given up on it. that was going to be one of my questions. apple came out and said, you know what, this is too different from making phones, we can't get the leverage over suppliers we wanted. we don't quite know how to do this. scott opened the show comparing you to apple and, you know, apple has backed off cars. how do you -- why do you have the conviction you guys, with a history in hand sets and tvs, can do cars? >> well, first of all, the real history is in content and building that user experience system. so the success has been how did they even transfer that, because i've only been at the company for three months, but how did yt and other folks transfer into tvs, highly successful. going to be the number one tv

brand in china next year and into hand sets. yt fields this ecosystem to him is more than just the associated sets of companies. he actually wants to have an affect on the real ecosystem of the planet. looking out his window in beijing, saw the pollution, said i want to solve this problem by bringing electric cars. he's been tackling the problem where trying to think about what do electric cars mean in the new kind of economy, where it's ride sharing, might not be in the car that is yours, right, and it's autonomous, so the designs that we're doing, i think, are being done with, sfraul, people leading in the industry. look at the roster of folks as people that did the teslas, people that worked at gm. what yt does is get the best people and then attack the problem. be skeptical, but also look back and say where have we been successful. >> i want to jump in, yt is the

ceo. >> yt, yes. >> very good. you can understand the criticism -- not criticism, suggestion, helpful suggestion of for god sakes pick one. vr, bicycles, movies, cars, to be the head of research and development for all of those things has got to be terrifying. >> would be terrifying. the cars aren't under me. >> they only have to be -- >> so some of these things are going to be products like some of the moon shots at google, things we learn, we iterate. one thing that's exciting is we have this brand position of this thing called up to you where we actively go out and seek the feedback loop. we do it more publicly than a lot of publicly. we do a lot of things more publicly than a lot of companies, and because of that you'll see us iterate, find our way through the markets and things that are going to stick. we're going to do that here, in

india, continue to do it in china. >> rob with le eco. we're going to continue to talk to you, but i have to do a television commercial, pay the bills, and we'll be back in a minute.

welcome back to "press: here." we are talking about leeco, a chinese company that came on the scene in silicon valley and just amazed everyone. let's continue with mark. >> you had huge events. breakfast burritos, open bar. >> i didn't hear about the breakfast burritos. >> bikes going down the stage,

but then a few weeks later a memo hits social media in china that it's from yt and he says that they are spending more money than they should have. correct me -- >> i'll let you go through your language, because i think it's hard to translate it. >> sure. then in a recent interview he said that they were in a phase where they are burning through money. what would you describe as the phase and do you think that they have spent too much? >> well, i don't think we've spent too much. i think we're talking just a minute ago about focus and that, and i think what has happened is as we grew out into the markets and landed in the united states, landed in russia, landed in india, we tried to do a lot of things and we're sort of at the phase a lot of start-ups go to. i was at a small start-up in the bay area, as i talked about up in san francisco and we go through the same cycles in a 30-person company as the size of leeco. you grow really fast. okay, we grew really fast, what

are we doing. so i've had the question often, for example, prior to that and after that, are you doing anything differently? no, i said what is the organization doing, how can i make it better, because that's why they brought me in and i was already adjusting and moving and turning things around because i want to drive great product at great efficiency. in order to do what you asked me before, how i can offer a phone for that price, we have to be efficient. >> are you worried, though, the impression that gave people as you're trying to staff up and hire here? you have a super flashy event and a lot of people have the same reaction we expressed, is this thing for real, should i bet my career on this, and a memo like that comes out, oh, maybe it was too good to be true. does that concern you? >> it does, some is translating. what he was doing was giving a retrospect on himself. he's very self critical and very public. heart on the sleeve kind of guy and he looked back at the 12-year anniversary of the company and said what could i have been doing better. if you actually read the letter,

it's like him being critical of himself and saying, help me, team, to do this better. >> rob, i have an example of what he said in this letter, and, of course, this is in english, but yt says, no company has had such an experience, a simultaneous time in ice and fire. i think this is what you're talking about, right? help me translate. >> can you imagine tim saying that, right? >> as you're trying to recruit these people as head of r&d for leeco, there's also the question of i've not worked necessarily, let's say, for a chinese company and how's that going to be, these cultures? am i as a silicon valley engineer teaching them how silicon valley works or are they teaching me and i need to understand how a chinese company works? >> i would say both. it's a blend of cultures and some things that are really fantastic about how it happens at what i guess you could call a chinese company and some things about a silicon valley company.

i don't know of an typical silicon valley company, but in terms of getting engineers, just as an example, people get excited about the growth prospect of it. leeco is basically a well funded start-up. it's got a parent company going through a lot of stuff, but we have amazing goals. i don't know of any other start-up that's landed in the united states and a year later is seeing a huge deal with somebody like at&t and directv, so it's a great opportunity. people get really excited about it. people are leaving companies that are well established because they want that excitement, that growth, that scale. that's what excited me about it. i like doing products at a global scale. that's why i was at a company like qualcomm. leeco is giving people an opportunity to grow. when we ipo in three years in the united states, it's going to be a fantastic thing. >> do you think it's an extra hurdle as a chinese company and the negative perception of products? somewhat ironic since all

smartphone makers make their product there. but to get people, to drive people to the name, because this product is no, ma'am dadominate western players? >> yeah, i think we do have a challenge and the way we have to deliver and solve the challenge is partnering with the right people, right? we also recently announced we're going to be in retail, not just on our own, but amazon, walmart.com, bestbuy.com and moving into brick and mortar and people will be able to touch and feel the product, and it has to be great. that's my job. >> one of the things you talked about in the presentation, we have the leeco mall and we won't have to deal with brick and mortar. is this a change? you announced a deal with best buy. >> it's not a change. we want that experience, too. certainly in china that's one of the ways things happen. you skip the brick and mortar a lot in china. just as an example of the scale, on december 19th there's a flash sale. 36 hours in china.

4 billion products and services sold. that's $650, $660 billion sold direct to consumers, no middle man. that's the scale of the company. flash sales are different in the u.s., so we're going to be working with a lot of partners. for example, new phone in the u.s., we have to work a lot of channels to get there. >> rob, let me ask you one last question. that is in a blog, yt said that he would build or you would build an ecocity in san jose. the number 12,000 employees got thrown around. how many employees do you have now roughly, do you know? >> a lot less than 12,000. >> 500? >> ballparkish. >> so from 500 to 12,000, hiring 11,500 people, building a city in san jose, is that still happen? >> sure. we bought land from yahoo near levi's stadium and that's part of the plan. we want to make it into just an

office park an integral part of the community. we've been talking to community leaders about how we could make that space really interesting in addition to housing, what we want to do as we grow our business in the united states. plans are still being made, actually. >> we wish you luck with that. head of research and development at leeco. >> thank you, thanks for having me. >> thank you for being here. well, we are just weeks away from legal marijuana in california. up next, the promise of big business in pot when "press: here" continues.

welcome back to "press: here." starting january 1st, californians can try pot for the very first time. all right, in all seriousness, california has pot shops, but they are there to provide marijuana as a medicine. prop 64, which passed at the ballot box in november, makes the recreational use of pot legal, pretty much the same way it's legal in places like colorado and washington state, and there are, obviously, a lot of business opportunities here. this is a pot incubator, teaching people how to create pot sotart-ups. in exchange, they get a cut of the deal just like any other start-ups. ben larson, one of the founders of gateway, years of experience helping start-ups in silicon valley. thanks for being with us. >> is cut of the deal a euphemism? >> explain that to us, right? >> you guys are familiar, right? >> sure. you have a class that comes in, you teach them, you even give

them money, then you expect to see it back. >> basically, we're looking for the ten best start-ups every six months. our program lasts four and a half to five months and culminates into demo day. >> do you have extra services that a typical incubator wouldn't in terms of how to structure these deals, in terms of extralegal things? i know in colorado it's very thorny. if you're an investor, you kind of can't hold your shares unless you have certain residency. are people who get excited about investing in marijuana and people who are okay with the fuzzy legality of it, they start looking at investing in these things and the structures of it in what states allow and don't freaks them out. >> it's quite complicated. we spend a lot of time educating on the founders side and investors side. that's kind of that problem right there, kind of what led us into the industry. you know, coming from the tech space, working with

entrepreneurs in tech space, there's a lot of standard agreements and ways to just the relationships built in silicon valley, there's a very standard way of doing it. in kansas, not so much. you're talking about a black market that's transitioning to mainstream and very, like, quick pace. there's a lot of interesting relationships. the legislation is complicated. so we just work really hard to make sure that everyone understands what's going on. >> i've seen some of your videos where you talked about going beyond just medical and getting high. what are some of those things? i had a glance on your site and saw companies like grow room, a charitable giving platform there was a cannabis in his hands, then something with a banana is used, smoothie, creative stuff, but what is going beyond medical for what you're going to offer? >> sure, sure, so it's a very dynamic structure, talking about hundreds of compounds in the plant that all have different

affects on the body. so yeah, you can smoke it, you can get high. you can also extract certain compounds that don't have the psychoactive effects, but can treat medical illness. just in that makes it very confusing. as human beings we're used to dropping things in a bucket and that's why cannabis is complicated. you do have the medical applications very clear and transparent. you talked about kids with epilepsy that are basically being cured because of certain strains of cannabis. then on the other end you have people creating banana smoothies that are just enjoying -- >> and to repeat, as of january 1st, right, that will be legal in california. >> so technically, yes. it's going to take about a year to put in all the legislation, so 2018 is kind of the target. >> there's no more of this pretending one or doing the other. >> i've got a headache. >> there will still be a medical structure, yeah. >> do you have any in your incubator who are not involved

in the actual getting the product to the consumer? i mean, i imagine there are a lot of businesses which say, yes, i'm in the pot business, but we don't touch the pot, we handle the banking, or we handle the -- are there start-ups doing that? >> yes, we work with about 15 companies at this point and i'd say three-quarters of them don't touch the plant. our first cohort, five of the seven were completely ancillary tech companies, sales tracking, inventory management, application of a.i. for delivering the knowledge, you know, i was explaining, so complicated, the plant's complicated, all these delivery mechanisms and ailments. how's any one person going to have all that knowledge? that's where technology comes in handy. we can compile all the knowledge and provide an experience that is unique to each user. >> i definitely get the value of specialization with something that's this complicated in every sense of the plant and building a business, but do you worry

this is just too narrow of a market? i think if they were hearing you saying you were of pot, no, the point is we don't go narrow. when they hear scott say that, the point is, they can be mattress companies, they can be mobile, they can be chat box, they can be whatever is exciting entrepreneurs. i guess my question is, what motivates you? because i think this is an exciting challenge. it would be hard to convince me that this is the best place to make money. >> sure, sure. yeah, you're not going to see pumping out hundreds of companies every cohort. we're very stuck to working with ten companies. we find a lot of value of the founders being involved with each company. but there is going to be a lot of value. for a couple reasons, and the way we look at it is twofold. the market itself is growing astronomically. it doubled from $2.7 billion in sales to $5.4 in one year.

you're talking about projections of $100 billion by 2029. that's, like, some huge growth. if you're building companies that are getting a lion's share of that market share, you can build a successful company, but it has an opportunity to become a beachhead for industries. if you think about the margins made on the plant compared to tomatoes or lettuce, you're making magnitudes more in the margins. if you're applying the technologies to l.e.d. lighting, vertical farming, once the technology is refined and price is driven down, it could be really impactful. so, you know, china i know is very interested in the l.e.d. technology developed in the cannabis industry and how that might be applied to other mainstream industries. >> at the same time, jeff sessions could be coming into the trump administration as attorney general. not a fan of marijuana. >> most attorney generals aren't. >> your investment, though?

>> it could affect our investment, to be very honest. he's not the most favorable when it comes to cannabis, but neither was loretta lynch, let's be honest. trump and the administration is kind of the big wild card. we had a lot of excitement when eight of the nine states on the ballot all passed, then the next week, oh, these appointees are looking a little scary. but when you're talking about the industry and its ability to impact the american economy and the different industries that impacts, you're talking -- just last week i was seeing articles coming out talking about how these indoor grow facilities were increasing the value of these vacant warehouses. and trump being, you know, a real estate man himself, that is a line of speech he could really understand. >> i feel you're more rationale than he is. >> you're probably right. >> to be fair, what he says and what they end up doing, we don't know. is there any legal exposure to

you, new attorney general zwref sessions says i'm cracking down and you have a piece of every one of these companies. does that put you in legal exposure? >> we've took a very calculated look at this, worked with a very mainstream legal team, so morgan louis is one of the larger legal teams in the u.s., has helped us structure kind of the investment to not only protect us, but also our investments. >> the answer is yes and we're working on it? >> we're working on it. there's a couple things at play here. a, a lot of our companies are just trying to solve problems, like, you know, that's what we learned as a tech industry, identify a problem, people that need it. >> couple of things, i haven't got time. ben larson of gateway, i wish you the best of luck. >> "press: here" will be back in a moment.

that's our show for this week. thanks to my guest, ben larson is one of the cofounders of gateway incubator.

and rob is head of r&d at leeco. you can find both interviews and past interviews at pressheretv.com itunes. lastly, very big thank you to kevin springer, who's directed this tv program since its inception. he's off to new adventures. the rest of us will see you next 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 storage solutions that simplify i.t. city national bank, providing loans and lines of credit to help northern california businesses grow.

valle." i'm damian trujillo, and today, fiestas navidenas at the mexican heritage plaza, plus los mestizos de san jose, on your "comunidad del valle." male announcer: nbc bay area presents "comunidad del valle" with damian trujillo. damian: we begin today with the monthly visit by the mexican consulate in san jose. with me is the mexican consul general, the consul mauricio toussaint here on "comunidad del valle." welcome to the show. welcome back. mauricio: thank you, thank you. thanks for your invitation, and it's an honor and a pleasure as you showed to me for being here in the comunidad, with "comunidad del valle" audience particular. damian: yeah, no, absolutely. it's always a pleasure. the door is always open. well, we've had an election here in the united states, and that's drawn a lot of fears within the mexican immigrant--well, a lot of